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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. I

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Speaker 1: want to bring a Danny blanche Flat, Dartmouth University professor

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Speaker 1: and former bank having the policymaker. Danny, you think the

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Speaker 1: Fed's made a mistake? Why, well, I do. I don't

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Speaker 1: think there's any real data from the real world that

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Speaker 1: actually justifies this. I think the other thing guys right,

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Speaker 1: that the data looks quite good. But actually oftentimes at

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Speaker 1: times like this, the data revisions of what gets you

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Speaker 1: excuse me, run cold. Um, that's what happened into than

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Speaker 1: an age. And I've challenged people for quite a long time. Obviously,

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Speaker 1: the data, the GDP data is relatively strong, driven a

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Speaker 1: lot by the stimulus, but these rate rises take a

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Speaker 1: while to work their way through. So yes, the data

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Speaker 1: may be strong, but the question is what are the

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Speaker 1: rate rise affects being? And well, it will take us

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Speaker 1: a while to know. And I think the evidence is

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Speaker 1: that actually that the fundamental belief they have that the

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Speaker 1: narrows around Born a half is wrong. There's no doubt

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Speaker 1: in my mind that that's wrong. They have no explanation

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Speaker 1: as to why there's weak wage growth. So I think

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Speaker 1: this these rate rises, that the eight of them, with

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Speaker 1: a slowing global economy, will kill off growth. So I

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Speaker 1: think you have to sit there and say, what, what

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Speaker 1: data from the real world actually justifies this. There's no inflation,

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Speaker 1: Inflation expectations are pretty well anchored. They have no explanation

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Speaker 1: for weak wage growth in a slowing global economy. It

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Speaker 1: just seems to the Chairman is understating the importance of

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Speaker 1: the inflation mandate, and he seems to be focused on

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Speaker 1: what is going to happen with financial imbalances, or potentially

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Speaker 1: with financial imbalances. And we hear that from the Chairman

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Speaker 1: again and again and again. Are you saying that's wrong? Well,

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Speaker 1: I'm not sure that actually dealing with it through sets

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Speaker 1: of interest rate increases maybe wrong. I mean, and one

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Speaker 1: possibility is you could have just held back on the

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Speaker 1: interest rate increases and perhaps have shrunk the size of

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Speaker 1: the balance sheet rather more. I mean, they'll deal with

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Speaker 1: that way. If you're worried about imbalances and financial stability

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Speaker 1: deal with it with financial stability measures. It's not clear

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Speaker 1: that you know using your mallet. If you're the only

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Speaker 1: thing you have, a mallet of the interest rate will

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Speaker 1: solve your problem for you, it'll kill off the real economy. Um.

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Speaker 1: And I think your point is very good. That pal

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Speaker 1: has kind of vacillated from one place to the other,

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Speaker 1: and that's brought the President of the United States on

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Speaker 1: his back, and so I think that sort of threatens

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Speaker 1: the very independence of the bank. Are they making decisions

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Speaker 1: to just sort of show themselves to be independent? But

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Speaker 1: I think the marketsin Guy was right, The markets don't

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Speaker 1: really believe them. I don't think they're doing right. A

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Speaker 1: large number of other people think that this is an error,

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Speaker 1: and recoveries end very often because the FED makes an error.

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Speaker 1: In reason soon, the global economy is slowing. And when

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Speaker 1: I was looking a couple of days ago in Germany

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Speaker 1: and Italy both both had negative courses in the last quarter.

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Speaker 1: So the global economy is weakening and it will take

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Speaker 1: a while for us to work out where we are now.

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Speaker 1: And in all probability, the US economy is slowing now, Danny.

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Speaker 1: The real reaction from the market yesterday came at the

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Speaker 1: point that the FED was talking about power, was talking

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Speaker 1: about the balance sheet. Is the Fed underestimating a the

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Speaker 1: effect that this this kind of balance sheet runoff on

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Speaker 1: rails is having on sentiments and be the effect that

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Speaker 1: it's having on liquidity, because that seems to be. The

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Speaker 1: market was kind of okay with the other stuff, it seems,

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Speaker 1: but it was kind of when we started talking about

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Speaker 1: that that you've got this real downdraft, particularly in equities. Well,

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Speaker 1: I think probably that's right. I mean, I think that

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Speaker 1: the story is having sat in room I and and

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Speaker 1: boted on these things, my memory is that we really

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Speaker 1: had very little idea what the effect of the asset

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Speaker 1: buying was gonna be as we bought it. We also

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Speaker 1: had absolutely no idea what the effects would be once

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Speaker 1: you started to sell them off. And I think that

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Speaker 1: in a way, the right way to think of it

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Speaker 1: was do it a little, be cautious, try and sit

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Speaker 1: and think about what the effects would be. Just to

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Speaker 1: believe that the FED knows what the effects on liquidity

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Speaker 1: and other things of these of these assets sales would

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Speaker 1: know is living in dream world. They have absolutely no idea.

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Speaker 1: There's no economics to tell you this. So the potential

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Speaker 1: is that these are having effects that they're unaware of

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Speaker 1: and the market and it's given the market digitis. So

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Speaker 1: I think we should be in caution mode raising rates

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Speaker 1: in this in this stream without really knowing what's going on,

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Speaker 1: I think is what's generating the concern in the markets. Right.

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Speaker 1: Always great to catch up with you to talk about

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Speaker 1: the world of central banking. Danny Blanche Dalnmouth University fessor, Danny,

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Speaker 1: when's the book out? Thank you? He's not gonna tell us, No,

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Speaker 1: he's not. Is it a secret? Is it a secret? Guy?

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Speaker 1: He's gone though, hasn't he He's not gonna tell us.

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Speaker 1: I think it's going to be called it's the labor

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Speaker 1: market stupid or something like that. At least that's what

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Speaker 1: he told me twelve months ago. That could have been

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Speaker 1: the working title. Oh okay, let's get a take from

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Speaker 1: Howard Ward. Now give belly fund seat I oh of

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Speaker 1: growth aqulties, he joins us. Now, how did the FED

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Speaker 1: make a mistake yesterday? I think the big mistake was

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Speaker 1: in uh somewhat dismissing the role of quantitative tightening the

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Speaker 1: balance sheet reduction. Um I think that's important. That's fifty

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Speaker 1: billion dollars a month rolling off the FED balance sheet,

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Speaker 1: the six billion dollars a year of liquidity being sucked

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Speaker 1: out of the economy. I think that's important, and I

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Speaker 1: don't think that Powell gave that it's due consideration. I

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Speaker 1: also think that tightening eight times over the course of

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Speaker 1: two years is uh too rapid a move, given the

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Speaker 1: eighteen month lag that's associated with monetary policy changes in

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Speaker 1: terms of having the full impact on the economy. So

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Speaker 1: we've had five or six increases in the pipeline that

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Speaker 1: really have yet to be fully digested by the economy.

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Speaker 1: So I do think that given the lack of inflation,

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Speaker 1: and given the behavior of the global capital markets and

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Speaker 1: the housing market here in the It's days, I think

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Speaker 1: the Fed very easily could have justified taking a pause.

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Speaker 1: Uh So, I think they struck the wrong tone, and

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Speaker 1: I think the dismissal of quantitative tightening was a big mistake.

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Speaker 1: And so, I you know, the market is in a

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Speaker 1: down trend and I don't think the Fed's comments yesterday

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Speaker 1: are very helpful. So what happens now the market has

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Speaker 1: learned what from this? Well, I think the market has

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Speaker 1: learned that the so called FED put is is no more.

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Speaker 1: I think it's UH. I for one, went into this

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Speaker 1: meeting feeling that the FED got it, that the FED

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Speaker 1: had heard the markets. And I say that because a

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Speaker 1: couple of weeks ago, Richard Clarda, the vice chairman of

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Speaker 1: the FED, came out and walked back some of Powell's

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Speaker 1: earlier comments which seemed to indicate a robotic approach to

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Speaker 1: raising rates. And not only that, but James buellerd just

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Speaker 1: a couple of days ago, the head of the St.

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Speaker 1: Louis FED, came out and said maybe the FED shouldn't

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Speaker 1: raise rates at all in December, which is of course

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Speaker 1: the yesterday's meeting. And so I think that gave the

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Speaker 1: market some indication that the FED was more dovish than

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Speaker 1: it turns out they actually are. And to see the

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Speaker 1: eleven the eleven of the sixteen members felt that you

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Speaker 1: might need to raise rates UH at least twice next year,

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Speaker 1: and you had five or six or seven thought maybe

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Speaker 1: three times or more. I find that astonishing when I

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Speaker 1: look around the world and see what's happening to global

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Speaker 1: growth the FED. The old saying is the FED always

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Speaker 1: tightens until something breaks and I think we are on

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Speaker 1: that pathway right now, although there's still time for for

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Speaker 1: the Fed to limit the damage that they've already done.

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Speaker 1: And I say that because a slowdown is baked into

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Speaker 1: the economy for the next year, and it would be

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Speaker 1: baked in even if the Fed had done nothing yesterday.

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Speaker 1: And that's again because of the lagged impact of monetary policy.

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Speaker 1: The FED admitted as much when they lowered their own

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Speaker 1: GDP forecast for next year from to five to two three,

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Speaker 1: and that number will probably be lower than that. At

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Speaker 1: this point, Howard sentiment is totally shot. Just watching this

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Speaker 1: feed on itself yesterday was incredible. I mean a full

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Speaker 1: perc move from the highs to when the day where

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Speaker 1: we ended the day. Where are we going to get

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Speaker 1: some comfort? Where do the bulls find comfort? Here? Is

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Speaker 1: it in the dates through the endings in quell and

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Speaker 1: where does it come from? Well, I mean it's a

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Speaker 1: very good point. I think that Dow had a reversal

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Speaker 1: of about seven and thirty points yesterday from peak to close.

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Speaker 1: And uh, interestingly enough, if you looked at the American

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Speaker 1: Association of Individual Investor sentiment data on the market from

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Speaker 1: last week, it was the largest increase in barysh sentiment

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Speaker 1: UH in a number of years. In fact, the barry

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Speaker 1: sentiment was forty eight point nine percent, that's the highest

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Speaker 1: reading since April of two thousand and thirteen, and the

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Speaker 1: bullish sentiment was at twenty point nine percent, which was

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Speaker 1: the weakest reading since May of two thousand and sixteen. Now,

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Speaker 1: typically when you have extreme sentiment like that that's negative,

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Speaker 1: that's a good sign the markets do for a bounce,

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Speaker 1: and therefore I find it all the more interesting that

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Speaker 1: the market really didn't bounce. The market had quite a

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Speaker 1: reversal yesterday and declined, and so I do think that

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Speaker 1: I'm going to follow the general rule of technicians, which

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Speaker 1: is that the deeper the decline and the wider the

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Speaker 1: range of stocks that are declining, the longer it takes

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Speaker 1: to stage a real recovery in the market. And so

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Speaker 1: we've done a lot of damage to the stock market.

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Speaker 1: I think it's gonna take a while for us to

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Speaker 1: recover to the point of new highs. But it's going

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Speaker 1: to take a series of things. It's gonna take good earnings,

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Speaker 1: good guidance. It's gonna need a resolution of the trade

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Speaker 1: problem with China UH and I'm not that optimistic that

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Speaker 1: there's anything other than a short term fix for that,

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Speaker 1: but that would be helpful. But the Fed is gonna

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Speaker 1: have to play a role here too. Howard, you've given

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Speaker 1: us so much time on Bloomberg TV and Bloomberg Radio

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Speaker 1: today and we really appreciate your insight. Thank you very much,

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Speaker 1: not just for today but throughout. Howard would give Belly

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Speaker 1: fund c io of Growth Equity. I want to bring

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Speaker 1: in Catherine Man, City Global chief Economist who joins us

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Speaker 1: in New York studio. Katherine, your thoughts on that subject?

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Speaker 1: How important is it what is happening right now for

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Speaker 1: the Federal Reserve? Well, we have to look at a

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Speaker 1: broad measure of financial conditions, and when we look at

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Speaker 1: that where they're actually still accommodative, there are still accommodative

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Speaker 1: and so what you know, what we need to do

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Speaker 1: is sort of pass through how these different components of

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Speaker 1: financial conditions, whether it be equities, whether it be high yield,

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Speaker 1: whether it be credit, regular credit, uh, the dollar, these

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Speaker 1: follow through and affect businesses in different ways across different sectors.

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Speaker 1: And yes, I do agree that we have to be

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Speaker 1: concerned about the technicals becoming the fundamentals. But once we

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Speaker 1: pass through these, for example uh an equity crash, how

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Speaker 1: does that affect the real economy? Well, it might affect

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Speaker 1: the real economy through the wealth effect and consumption spending.

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Speaker 1: But in fact, since wealth is so concentrated and held

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Speaker 1: directly of very few people in the US actually hold

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Speaker 1: direct stocks directly UM, that has statistically very little impact

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Speaker 1: on consumption. People who hold wealth in four oh one

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Speaker 1: case UM or mutual funds. Turns out they don't feel

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Speaker 1: richer when the stock market went up, they don't feel

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Speaker 1: poorer when it goes down. So the consumption effect through

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Speaker 1: that channel is relatively low. And now think about high yield, Well,

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Speaker 1: you know, there were a bunch of um. That's a

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Speaker 1: narrow market. It's not. It's a much bigger than it

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Speaker 1: used to be, of course, but it is it is

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Speaker 1: still a narrow market relative to the path you know,

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Speaker 1: the span of businesses that are engaged in employing people,

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Speaker 1: paying them wages and producing product. So a vast swath

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Speaker 1: of the of the U S economy, and this is

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Speaker 1: true for for Europe as well. Are you know they

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Speaker 1: are plain vanilla borrowers and some of them actually don't

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Speaker 1: even borrow right, So those those are on a pathway

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Speaker 1: and and they're they're selling that they're feeling pretty good

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Speaker 1: about the way the economies are running right now. Leverage

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Speaker 1: LANs is a bigger market than high yield. The triple

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Speaker 1: base part of investment right is a big bigger than

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Speaker 1: high yield. This is a big, big market and all

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Speaker 1: of them are kind of coming undepression right now, Catherine, Well,

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Speaker 1: but they should be. They should be. I mean, we've

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Speaker 1: had ten years worth of quantitative easing, which was designed

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Speaker 1: to narrow risk spreads, which it did do uh, and

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Speaker 1: it's now time to move towards the normal risk spreads.

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Speaker 1: And that is associated with restrictions on credit UH and

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Speaker 1: a broad arrange of valuations. But again, when we look

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Speaker 1: at financial conditions on a on a on a broad basis,

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Speaker 1: not just narrowly on a couple of one segment versus

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Speaker 1: another segment, we are still in a common dative territory. Catherine,

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Speaker 1: what's the lag? Where are we with this with this story?

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Speaker 1: Because I keep hearing this argument time and time again

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Speaker 1: this morning that the Fed has made a mistake and

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Speaker 1: policy acts with a lag. I kind of put that

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Speaker 1: into context for me from your from your research. Well, yes,

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Speaker 1: policy acts with a lag, that's for sure. Now the

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Speaker 1: Fed making a mistake. Um. You know, they could have

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Speaker 1: died until next year to see um a little bit

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Speaker 1: more about how the digestion and the financial markets was doing. Um.

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Speaker 1: But you know, they had to weigh the UM way

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Speaker 1: the concerns that the financial markets might be more concerned

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Speaker 1: if they didn't move, because after all, the expectations were

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Speaker 1: that the Fed was going to move in December, and

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Speaker 1: if they didn't move, then, in fact, the markets might say, Wow,

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Speaker 1: the Fed knows more than we do. In fact, the

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Speaker 1: economy is much slower than we think, and so that

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Speaker 1: could have caused the market to tank even more than

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Speaker 1: than we observed in yesterday's session. So um, you know

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Speaker 1: they're in a they're in a data dependent mode. The

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Speaker 1: data that they are looking at is both the real

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Speaker 1: side of the economy and the financial side of the economy.

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Speaker 1: And there is quite a divorce right now between the

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Speaker 1: data when you look at the data for the real economy, uh,

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Speaker 1: and the data that you look at for the financial markets.

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Speaker 1: There's a huge divergence between those two right now. And

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Speaker 1: we do worry about self fulfilling prophecies the financial markets

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Speaker 1: being ultimately the decider for the real economy. We do

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Speaker 1: worry about that a lot, which is why we focus

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Speaker 1: on these financial condition indexes, which give us some guidance

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Speaker 1: for not just the delta on how much you know

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Speaker 1: where we are with the equity markets, for example, but

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Speaker 1: also the level. These are both important indicators, not just

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Speaker 1: not just how much things change, but what is the level. Okay,

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Speaker 1: so you've got two different things going on here, um,

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Speaker 1: and two different aspects which will affect the real economy

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Speaker 1: and what kind of happens next. So so is your

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Speaker 1: view currently that the FED is is making a mistake

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Speaker 1: and I'm being very black and white about this, or

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Speaker 1: is the market making a mistake in its assessment of

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Speaker 1: what is happening here, because, as you say, they're very

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Speaker 1: different things happening here in terms of the messages they're communicating. Well,

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Speaker 1: if I had to, I mean, I just wrote about

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Speaker 1: this saying that that there's these two is a big

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Speaker 1: divergence between the financial markets assessment of the real economy

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Speaker 1: and the data in the real economy's assessment and measure

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Speaker 1: and signal about what's going on in the real economy,

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Speaker 1: and and I say, the divorces is dramatic right now.

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Speaker 1: And the question is, um, if we if we pars

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Speaker 1: down a little bit deeper, UH and we look at

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Speaker 1: which parts of the real economy are the ones that

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Speaker 1: are the strongest UH. It is the parts of the

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Speaker 1: economy that basically doesn't engage deeply with Wall Street and

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Speaker 1: doesn't really engage deeply with the global economy. In other words,

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Speaker 1: the trade war doesn't matter too much to these to

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Speaker 1: these businesses, and they are a vast swath of the U.

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Speaker 1: S economy, and they all are actually a vast swath

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Speaker 1: of the European economy as well. And we can see that,

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Speaker 1: for example, in in the German data where we look

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Speaker 1: at the small businesses um UH valuations relative to the

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Speaker 1: large businesses, valuations of small businesses are actually doing better.

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Speaker 1: So you know, that is an important distinction that I

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Speaker 1: think is important when we think about the potential channels

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Speaker 1: through which financial market turbulence might affect the real economy.

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Speaker 1: The channels are limited. Now, on top of all this,

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Speaker 1: we haven't I've mentioned at once, but you know, we

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Speaker 1: can't kind of ignore this trade war issue, which is

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Speaker 1: a material risk for growth in the global economy, for

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Speaker 1: the U. S economy and of course for others as well.

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Speaker 1: We spent the year waiting for the global softening in

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Speaker 1: the economy and the markets, the feedback into the United States.

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Speaker 1: The US market was resilient for a while until the

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Speaker 1: previous three months. Then bangets happened. Now the concern is

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Speaker 1: that the feedback loop comes from the global economy into

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Speaker 1: the U. S. Economy. Just as a final question, Catherine,

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Speaker 1: is we look ahead to nineteen, do you see the

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Speaker 1: global economy economy becoming much more of a headwind to

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Speaker 1: US growth next year? Well, we do have a down

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Speaker 1: We did write down based on what we've already seen

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Speaker 1: in terms of the trade war having an impact on

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Speaker 1: on on economies. UM, you know for the US or

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Speaker 1: what we have for is we still actually have a

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Speaker 1: lot of fiscal impetus coming through the US economy from

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Speaker 1: the from the original budget spending bill from last year.

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Speaker 1: A lot of it shows up in UM. And then

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Speaker 1: we also actually have a fair degree of domestic investment

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Speaker 1: resilience because we also expect the fiscal cliff that is

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Speaker 1: associated with the budget caps in twenty to actually be

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Speaker 1: kicked the can down the road. Uh, we've We've observed

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Speaker 1: that happening in previous kind of election years. So we

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Speaker 1: have a profile for the US growth rate that is

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Speaker 1: a more modest uh profile that moves um deterioration and

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Speaker 1: growth further out. Now there is a deceleration. We do

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Speaker 1: have a deceleration, but we're not talking about a deceleration

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Speaker 1: to below two percent, So you know, we're still pretty strong.

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Speaker 1: Catherine Maunt always quite a catch shop with you, and

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Speaker 1: we've got to thank you for everything this year as well.

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Speaker 1: Catherine Man, City's global chief of a missed on a

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Speaker 1: fascinating couple of days from New York City for our

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Speaker 1: audience worldwide. This is Bloomberg Surveillance with Guy Johnson stepping

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Speaker 1: in for Tom Keen. Tomp Keens at home, Guy Johnson

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Speaker 1: out of London. I'm Jonathan Faroe in New York. Let's

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Speaker 1: get you some economic data, shall, where your indicators brought

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Speaker 1: to you as always common Towe our financial network. The

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Speaker 1: number one are a broker dealer that j D paris

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Speaker 1: named hiest an Independent Advice and Satisfaction among financial investment

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Speaker 1: firms five times in a row lettle More at Commonwealth

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Speaker 1: dot Com. Let's get some economic data, Shall, we here's

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Speaker 1: Finnish je Jonathan and Guy. Good morning. Well, the data

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Speaker 1: on the labor market suggested still solid. Jobless claims up

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Speaker 1: a bit to two fourteen thousand last week, but that's

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Speaker 1: still close to a half century low. The report generally

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Speaker 1: in line with forecast the prior week two hundred six thousand.

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Speaker 1: We also have figures coming up the index of Leading

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Speaker 1: Economic Indicators from November, a gauge or where we may

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Speaker 1: be three to six months from now. Economist surveyed by

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Speaker 1: Bloomberg looking for that index to whole steady stall. If

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Speaker 1: you're a pessimist, We'll see the Fed says the economy

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Speaker 1: is healthy. Let's see what the l E I says.

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Speaker 1: I'm Vinny del Judas, Bloomberg Radio. Let's go back to

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Speaker 1: new work in London. Hey, Vinny, thank you very much.

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Speaker 1: In Guy, this data just speaks to the problem the

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Speaker 1: Federal Reserve has. The data is okay. The market it's like, yeah,

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Speaker 1: I know it's okay, but show me. That's a tough

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Speaker 1: thing to to do right now. The market and the

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Speaker 1: Fed just seems to be on completely different pages. Um,

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Speaker 1: and I guess if you sort of take a step

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Speaker 1: back and look at this from thirty thou feet John,

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Speaker 1: you can understand why we are going through a readjustment

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Speaker 1: that has never really been attempted before, and everybody is

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Speaker 1: kind of bumping their way across the darkened room trying

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Speaker 1: to understand this this process. Let's try and get a

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Speaker 1: little bit of clarity now on kind of what is

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Speaker 1: going on. Marianna Coach Lakota, University of Rochester professor of

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Speaker 1: economics and former Federal Reserve Bank of Minneapolis President, and

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Speaker 1: bloom Both View columnist joins us. Now, good morning. The

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Speaker 1: thing that everybody, the well, the market seemed to react

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Speaker 1: to yesterday, Marianna, was this was this idea that the

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Speaker 1: chair said, basically that the Fed is going to keep

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Speaker 1: QUT on autopilots and use rates to manage the situation.

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Speaker 1: And it was that statement that the market seemed to

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Speaker 1: react to. We didn't talk about the balance sheet in

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Speaker 1: the run up to this, and a great it's sort

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Speaker 1: of a great deal. Are you surprised that that is

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Speaker 1: what the market reacted to? Yeah, thanks for all for

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Speaker 1: having me on. I am quite surprised by that because, uh,

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Speaker 1: you know, central communication uh is remains an art rather

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Speaker 1: than a science. But I thought that was a point

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Speaker 1: of the FED ha been very clear about UM that

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Speaker 1: they were planning to use. The balance sheet was going

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Speaker 1: to be on autopilot, and the tool choice during the

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Speaker 1: UH in terms of reacting a shock now was going

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Speaker 1: to be the path of short term interest rates. So

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Speaker 1: I am surprised by that that market somehow thought that

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Speaker 1: the FED was going to back away from that. UM. Honestly,

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Speaker 1: if the FED were ever to back away from that,

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Speaker 1: which I do not expect, it would take a long

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Speaker 1: time from the reach that stage, they would have to

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Speaker 1: telegraph it through speeches, through UM, through the minutes. UM.

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Speaker 1: It was not gonna happen yesterday. You aren't afraid of

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Speaker 1: putting your hand up and saying this is bad policy.

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Speaker 1: Would you have dissented yesterday? Yes? I I would have, UM.

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Speaker 1: I Earlier in the year I spoke about UM. How

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Speaker 1: I remained concerned about recessionary risks, not so much in

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Speaker 1: terms of there being very high probability, but really in

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Speaker 1: terms of what kind of tool kit that FED had

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Speaker 1: had available to deal with those. Arguably we those recessory

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Speaker 1: risks have, isn't UM? You know that maybe a singing

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Speaker 1: the old cake from markets and when you're close as

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Speaker 1: close to the zero brown as the FED remains. Um.

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Speaker 1: The rule of thumb is you want to keep rates

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Speaker 1: low in order to keep the economy healthy. There's this

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Speaker 1: there's this meme out there that the said wants to

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Speaker 1: race stor rate so they can lower them during during

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Speaker 1: a recession. That that is not correct. Um. You want

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Speaker 1: to keep them low to keep the patient healthy. Should

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Speaker 1: we get rid of the dots um? You know? I

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Speaker 1: was never a fan of the dots um, you know.

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Speaker 1: I I I'm not sure if that's out yet, but

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Speaker 1: I was never a fan of the dots on I uh. Um,

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Speaker 1: So I would say, yes, we should, but we will not.

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Speaker 1: I I just think it's very once you release a

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Speaker 1: piece of communication, very difficult to to back away from it.

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Speaker 1: I do not know any of the communication changes FED makes.

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Speaker 1: We were all is aware. You're stuck with them forever, professor.

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Speaker 1: Just as a final question, is the playbook a useful

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Speaker 1: guide to what we're going through right now or is

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Speaker 1: it really different two years later? That's a great question. Um,

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Speaker 1: you know, I think because I think it highlights the

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Speaker 1: movements and markets that I find more concerning than what's

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Speaker 1: going on in equities. Which is it receives more of

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Speaker 1: the attention. You know, I think that the decline in

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Speaker 1: tips break evens is something I would be tracking very carefully,

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Speaker 1: was if I was in the committee, and that feels

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Speaker 1: to me more like early um. You know, want you

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Speaker 1: want to keep watching and see what's going on. If

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Speaker 1: I continued to see declines in that, I would expect

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Speaker 1: that the Fed would would want to take account of

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Speaker 1: that in their policy decision. Notana Coach of the COTA.

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Speaker 1: Great to catch up with you as always, University of

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Speaker 1: Rochester Professor of Economics and of course, former Federal Reserve

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Speaker 1: Bank of Minneapolis President and Bloomberg View columnists. Thanks for

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Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to

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Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

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Speaker 1: I'm on Twitter at Tom Keene before the podcast. You

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Speaker 1: can always catch us worldwide. I'm Bloomberg Radio