WEBVTT - Biden Keeps Powell as Fed Chief, Preserves Continuity 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Karl Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.680 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.479 Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You 0:00:23.480 --> 0:00:25.439 can also listen to our radio show at two pm 0:00:25.440 --> 0:00:28.400 Eastern Time on Bloomberg Radio or watch us on YouTube 0:00:28.400 --> 0:00:31.840 search Bloomberg Global News. Well, it has certainly been top 0:00:31.840 --> 0:00:34.519 of mind for weeks, really months. Would J Powell get 0:00:34.520 --> 0:00:36.199 a second term as head of the US Fed? Well, 0:00:36.240 --> 0:00:39.479 no more guessing or wondering. We know President Biden preserving 0:00:39.520 --> 0:00:42.640 continuity at the Fed by selecting J. Powell for that 0:00:42.720 --> 0:00:46.120 second term as chair and elevating Lalle Brainer to vice chair. 0:00:46.560 --> 0:00:48.920 As the US Central Bank rapples with the fastest inflation 0:00:48.960 --> 0:00:51.720 in three decades and really lingering effects of COVID nineteen, 0:00:51.720 --> 0:00:53.880 what's going on in Europe? A reminder that we are 0:00:53.920 --> 0:00:56.560 far from being out of this pandemic let's get to 0:00:56.640 --> 0:01:00.000 it with Bloomberg News International Economics and Policy correspondent Michael 0:01:00.040 --> 0:01:02.320 McKey with us in our interactive broker studio here in 0:01:02.360 --> 0:01:05.480 New York. Bloomberg Economics chief US economist down along on 0:01:05.520 --> 0:01:08.319 the phone from the nation's capital. Mike, let's kick it 0:01:08.360 --> 0:01:11.520 off with you. Um, I can't say I'm not surprised. 0:01:12.200 --> 0:01:15.200 What is the important takeaway of the news from the 0:01:15.200 --> 0:01:18.039 president today and now who is at the FED? I 0:01:18.040 --> 0:01:20.120 think you take away a couple of things. One is 0:01:20.160 --> 0:01:23.319 that the President has gone back to the old way 0:01:23.360 --> 0:01:26.960 of nominating FED chairs, keeping somebody in office who is 0:01:27.000 --> 0:01:28.959 considered to have done a good job, not just by 0:01:29.000 --> 0:01:32.000 politicians but by Wall Street, even if they're a member 0:01:32.040 --> 0:01:36.360 of the other party. Back to the non politicization of 0:01:36.400 --> 0:01:39.360 the FED. Another thing that you can say is a 0:01:39.400 --> 0:01:41.840 bit of a surprise was Lele brainer not getting the 0:01:41.880 --> 0:01:45.920 supervisory job. But that leaves open that position for the 0:01:45.959 --> 0:01:50.840 President to perhaps appoint someone even stricter on regulation. Make 0:01:50.920 --> 0:01:54.640 the Elizabeth Warren wing of the Democratic Party happy with 0:01:54.720 --> 0:01:58.840 that nomination. We should get that in a couple of weeks. Overall, 0:01:58.960 --> 0:02:02.600 it means continuity. It means that Wall Street knows what 0:02:02.640 --> 0:02:05.600 the policy will be going into next year. It's not 0:02:05.640 --> 0:02:07.320 a question of what will be done, it's a question 0:02:07.320 --> 0:02:09.440 of when it will be done, and that will depend 0:02:09.440 --> 0:02:11.960 on the data, and so they can start making some 0:02:12.080 --> 0:02:16.520 pricing plans as they go forward. Bloomberg Chief US Economist 0:02:16.520 --> 0:02:18.480 and A. Wong You're a really fabulous piece of the 0:02:18.480 --> 0:02:21.800 weekend about how a Brainard FED would differ from a 0:02:21.840 --> 0:02:24.400 pal FED. In the end, it's academic, right, because she's 0:02:24.400 --> 0:02:27.360 she's the vice chair. But it was interesting she opened 0:02:27.360 --> 0:02:31.880 her remarks on stage with the words bringing inflation down 0:02:31.440 --> 0:02:35.239 and is it not academic because she's got a really 0:02:35.320 --> 0:02:38.480 key role now at the FED. Yeah, a trick question, 0:02:38.520 --> 0:02:40.880 but but I mean once you're read on her policy 0:02:40.919 --> 0:02:45.480 going forward. Right. So in my peace I did talk 0:02:45.520 --> 0:02:49.520 about how even though Brainards seemed to be more delpish, 0:02:49.680 --> 0:02:52.600 but she's at the core of who she is is 0:02:52.639 --> 0:02:58.559 a very data dependent and practical policy maker. Her experience 0:02:58.560 --> 0:03:01.560 in the past ten years in has been reacting to 0:03:01.680 --> 0:03:05.120 these fire drills, these these financial crisis, first with the 0:03:05.160 --> 0:03:09.079 European softeign debt crisis and then the child slow down 0:03:09.160 --> 0:03:13.000 in two and a paper tantrum. And so I think 0:03:13.160 --> 0:03:15.440 her what she is is that she's gonna look at 0:03:15.440 --> 0:03:18.600 the data and if the data is showing that. And 0:03:18.680 --> 0:03:23.120 she actually laid out three very clear metrics of when 0:03:23.240 --> 0:03:26.799 she will get worried about inflation. One it is uh 0:03:26.840 --> 0:03:30.640 if the rest hole part that she's the's higher rents, 0:03:30.680 --> 0:03:34.760 that's happening too. If if she sees that inflation is 0:03:34.840 --> 0:03:38.080 on anchoring, such as if there's this sign of wage 0:03:38.120 --> 0:03:41.680 price firal, uh, then she'd be alignment. And we don't 0:03:41.720 --> 0:03:45.080 see evidence of that happening yet. And we're playing to 0:03:45.120 --> 0:03:47.840 write a deeper piece about how the set thinks about 0:03:47.840 --> 0:03:52.400 wage press spiral and um and and it's and just 0:03:52.480 --> 0:03:56.720 the third if there's a more COVID struckdowns going forward. 0:03:56.760 --> 0:04:00.040 So so anyway, so um, yeah, we think that you 0:04:00.040 --> 0:04:03.360 will be data independent. The data depends well, I have 0:04:03.440 --> 0:04:05.080 to say, and I'm going to jump in because my 0:04:05.160 --> 0:04:08.000 kids sounds like, wait, I've heard that data depending phrase 0:04:08.040 --> 0:04:10.440 a lot. It sounds like in terms of the kinds 0:04:10.480 --> 0:04:12.520 of conversations that we're gonna have at the FED are 0:04:12.520 --> 0:04:16.240 no different from what we were having before. Yeah, And 0:04:16.279 --> 0:04:19.120 that was kind of the point of the nomination today 0:04:19.120 --> 0:04:22.640 that we know what we're getting with j Powell, we 0:04:22.680 --> 0:04:24.520 know what we're getting with Leo Brainer and we should 0:04:24.520 --> 0:04:28.200 add that the vice share almost never votes against the chair, 0:04:28.279 --> 0:04:31.200 so you can expect them to be not only because 0:04:31.240 --> 0:04:34.000 they think alike, but because of the positions. They'll be 0:04:34.040 --> 0:04:36.920 in lockstep going forward in terms of what to do. 0:04:37.000 --> 0:04:40.240 But as Anna says, it's a question of, uh, what 0:04:40.360 --> 0:04:44.560 happens with the pandemic, whether or not the inflation numbers 0:04:44.600 --> 0:04:47.800 that we get start to roll over, and there's some 0:04:47.839 --> 0:04:51.599 evidence that some of them are, but we're still a 0:04:51.640 --> 0:04:54.200 long way from knowing uh. And then it's a question 0:04:54.200 --> 0:04:58.240 of do they at the December meeting decide to taper 0:04:58.320 --> 0:05:02.200 more quickly, giving them the tionality of being able to 0:05:02.240 --> 0:05:04.120 tighten sooner. I gotta say the thing that jumped out 0:05:04.160 --> 0:05:05.640 to me, and I'm gonna put this to both Mike 0:05:05.680 --> 0:05:07.839 and Anna. Anna. Maybe the first is that I felt 0:05:07.880 --> 0:05:12.040 like the idea of an independent FED was woven through everything, 0:05:12.040 --> 0:05:14.919 and if we saw anybody be independent, we saw j Powell, 0:05:14.920 --> 0:05:17.640 who was appointed by President Trump but nonetheless stand up 0:05:17.680 --> 0:05:20.440 to him during his tenure. Um there is something to 0:05:20.440 --> 0:05:24.560 be said by that and the political win with that. Anna, Yes, 0:05:24.640 --> 0:05:26.839 for sure, I think this is a definitely a win 0:05:26.920 --> 0:05:30.160 for Biden, at least in the eyes of economic history 0:05:30.160 --> 0:05:36.520 books for guarding the institutional independence of the said. Right. 0:05:36.600 --> 0:05:41.719 But you know, sorry, go ahead please okay? Um. You 0:05:41.760 --> 0:05:44.960 know one point that Mike mentioned about, um, you know, 0:05:45.279 --> 0:05:49.840 vice to surprise a layout being being appointed as vice chair. 0:05:50.279 --> 0:05:54.400 I think that there's also something there because the vice 0:05:54.480 --> 0:05:59.360 chair pos um, for example, Rich Clarida, how he made 0:05:59.400 --> 0:06:02.920 of this pro He was basically the architect, the intellectual 0:06:03.240 --> 0:06:07.480 architect behind this new average inflation targeting framework. Right. And 0:06:07.640 --> 0:06:10.920 the next policy framework review could be as early as 0:06:11.400 --> 0:06:15.919 end of three. Right. And perhaps Brainard, who probably is 0:06:15.960 --> 0:06:19.760 the one who who chose to who preferred the spice 0:06:19.800 --> 0:06:23.640 chair post rather than the supervision post. Maybe she's thinking 0:06:23.680 --> 0:06:26.479 that she wants to leave a legacy up said and 0:06:26.480 --> 0:06:29.440 in the next policy review she could push for a 0:06:29.480 --> 0:06:35.000 climate change creates digital currencies and now and we gotta run, 0:06:35.080 --> 0:06:37.640 Thank you so much. Bloomberg Economics Chief US economist down 0:06:37.640 --> 0:06:40.920 along along with Bloomberg News International Economics and Policy correspondent 0:06:41.080 --> 0:06:45.279 Mike McKee. This is Bloomberg Business Week with Carol Masser 0:06:45.520 --> 0:06:49.800 and Bloomberg Quick Takes. Tim Stinovic from Bloomberg Radio back 0:06:49.800 --> 0:06:52.200 with us. Dr Ian laws Pader, Clinical Professor of Medicine 0:06:52.240 --> 0:06:54.200 at n y U Landgown. He's with us on the 0:06:54.279 --> 0:06:56.479 phone in New York City. Ian, good to have you here. 0:06:56.800 --> 0:06:59.400 With Ed Ludlow, one of my colleagues here at Bloomberg. 0:07:00.839 --> 0:07:02.800 What are you seeing when it comes to COVID, Because 0:07:02.800 --> 0:07:04.800 I think the fear out there, safe to say, is 0:07:04.839 --> 0:07:07.320 that what's happening in Europe is going to happen here 0:07:07.320 --> 0:07:10.960 in the United States. I've seen this movie before, Yes, 0:07:11.040 --> 0:07:13.880 for sure, High Carol and Ed. Hope everyone is safe 0:07:13.880 --> 0:07:16.400 and doing well. You know. I think what's happening in 0:07:16.440 --> 0:07:19.559 Europe with their fourth wave really relates to a number 0:07:19.560 --> 0:07:24.120 of things. One is relatively low vaccination rate, some countries 0:07:24.160 --> 0:07:28.120 only sixty or so for one vaccine, other countries Italy 0:07:28.240 --> 0:07:34.040 higher and Portugal higher, so there's some vaccine hesitancy. There's 0:07:34.080 --> 0:07:37.000 also breakthrough infection, so people who have had the two 0:07:37.320 --> 0:07:40.240 as we know, after six months or eight months with 0:07:40.360 --> 0:07:46.600 the alpha vaccines, Delta is breaking through. In addition, those 0:07:46.640 --> 0:07:49.840 who are lucky enough to get the third booster. We 0:07:49.960 --> 0:07:53.200 really only have data for about thirty days or so 0:07:53.280 --> 0:07:55.920 after that, and it does seem fairly effective. But we 0:07:55.960 --> 0:07:58.840 don't know, you know months later how effective it is, 0:07:59.400 --> 0:08:02.560 and so in part by doing all of these lockdowns, 0:08:03.480 --> 0:08:08.000 it's really somewhat unproven, right, So you're lacking to people, 0:08:08.040 --> 0:08:10.880 some of whom have been already infected. It's not as 0:08:10.920 --> 0:08:13.800 if you're doing it for the first time. And lastly, 0:08:13.880 --> 0:08:17.320 open borders, I mean you've got people who who are 0:08:17.320 --> 0:08:20.880 coming and going and people are not really being tested regularly. 0:08:20.920 --> 0:08:22.720 So I think there are a number of things that 0:08:22.760 --> 0:08:25.600 are contributing to what's happening in Europe. And I think 0:08:25.640 --> 0:08:30.080 in the US are numbers are are stabilizing. I really 0:08:30.360 --> 0:08:33.480 there may be a little surge after Thanksgiving, but I 0:08:33.520 --> 0:08:37.160 think we are looking at a few more months. Um, 0:08:37.200 --> 0:08:40.040 but I don't think much more than that at this point, 0:08:40.120 --> 0:08:43.439 assuming no mutations occur. Let me ask you real quickly, 0:08:43.440 --> 0:08:46.280 because I think you know Jim and I have talked 0:08:46.280 --> 0:08:48.200 to you about this a lot, but it's on Ed's mind, 0:08:48.200 --> 0:08:50.600 Like in terms of getting a booster. If you're six 0:08:50.640 --> 0:08:53.280 months or in uh sooner, if you've gotten a J 0:08:53.400 --> 0:08:57.240 and J investor invest in vaccine, excuse me, if you 0:08:57.280 --> 0:09:00.600 haven't gotten your booster, go get it right, Yeah, no 0:09:00.720 --> 0:09:03.480 question right, six months out all adults are now approved 0:09:03.520 --> 0:09:06.839 for for MADERNA and viser. Some people are getting some 0:09:06.880 --> 0:09:09.600 reactions to it. Certainly very reasonable to do it, and 0:09:09.679 --> 0:09:11.920 J and J is a shorter interval, and any of 0:09:11.920 --> 0:09:14.880 the vaccines are fined for J and J as a booster, 0:09:15.120 --> 0:09:18.800 and that we think can be helpful. The data is 0:09:18.800 --> 0:09:21.840 fascinating you, right, because in Germany there are fifteen million 0:09:21.920 --> 0:09:24.880 holdouts right who have not been vaccinated at all, and 0:09:24.920 --> 0:09:27.079 the country is kind of really ramped up its vaccination 0:09:27.120 --> 0:09:29.760 program that all the doses that are being given out 0:09:29.800 --> 0:09:32.720 are boosters. So how do they fix the remainder? What 0:09:32.880 --> 0:09:36.280 is the solution here? Is it a mandate making a 0:09:36.360 --> 0:09:40.320 vaccine compulsory, as they've done in Austria. Really, you know, 0:09:40.360 --> 0:09:44.760 the approach to any pandemic is prevention with vaccines, testing. 0:09:44.840 --> 0:09:48.040 People should be tested nasal swabs or spit test, antigen 0:09:48.480 --> 0:09:51.160 and treatment and we do have some treatment that also 0:09:51.280 --> 0:09:54.720 can be preventative. In other words, there are monoclonal antibody 0:09:54.720 --> 0:09:57.600 treatments that are very effective if given within seven to 0:09:57.679 --> 0:10:01.199 ten days. They're also monoclonal shy. You know, we've been 0:10:01.200 --> 0:10:03.440 dealing with this two years and we should have been 0:10:03.480 --> 0:10:07.240 doing more sensive studies on ways to treat and not 0:10:07.400 --> 0:10:11.439 just rely on vaccines, because obviously not everyone will get 0:10:11.440 --> 0:10:14.200 a vaccine, so we do have some options. These are 0:10:14.240 --> 0:10:17.600 not cheap, of course, the monoclonal antibodies UM and I 0:10:17.640 --> 0:10:20.120 think you need a multi pronged approach. Just taking one 0:10:20.160 --> 0:10:24.400 approach like vaccine or lockdown is one sized as now 0:10:24.480 --> 0:10:27.160 set all. You know, we really should have several approaches, 0:10:27.400 --> 0:10:29.680 all right, So I want to know as Ed is 0:10:29.800 --> 0:10:33.160 in London, he's not normally there, He's normally in San Francisco, 0:10:33.400 --> 0:10:36.520 so he's doing some traveling. People are traveling. I got 0:10:36.520 --> 0:10:39.280 an airplane, as you know, for the first time in October, 0:10:39.400 --> 0:10:42.200 I was at the UBS Arena. We did a live broadcast. 0:10:42.200 --> 0:10:45.920 There are lots of people, workers, professionals, you name it, 0:10:45.960 --> 0:10:49.200 everybody walking around for the most part without masks. What's 0:10:49.200 --> 0:10:51.360 your advice though, as we continue to move forward when 0:10:51.360 --> 0:10:55.160 it comes to mask wearing, you know, unfortunately the vaccines 0:10:55.160 --> 0:11:00.080 are not all perfect, including boosters will help masks in 0:11:00.200 --> 0:11:04.040 unless they're in ninety are not perfect. If you're flying 0:11:04.040 --> 0:11:07.440 on a crowded airplane and they're not testing people beforehand, 0:11:08.080 --> 0:11:10.920 that's all a bit of a risk, stay in shape, 0:11:10.960 --> 0:11:14.439 take some botamin D, get your levels up. Um. Certainly 0:11:14.480 --> 0:11:17.240 get tested if you feel it's sick at all before 0:11:17.320 --> 0:11:21.280 and certainly after the flight. You know, Fortunately we were 0:11:21.320 --> 0:11:24.280 most people, not all are, are vaccinated, and I think 0:11:24.280 --> 0:11:27.520 it's a calculated risk. But I think we have all 0:11:27.520 --> 0:11:31.040 of this though. This all sounds like common sense stuff 0:11:31.120 --> 0:11:33.640 if we is the biggest takeaway from this global pandemic 0:11:33.760 --> 0:11:36.960 just the prize the pandemic. We weren't that hygienic, you know, 0:11:37.080 --> 0:11:41.760 none of us have been washing our hands properly. Well, 0:11:41.800 --> 0:11:45.120 I'm just asking, is this the reality from here on in? No. 0:11:45.280 --> 0:11:47.559 I wish it was as simple as just washing hands 0:11:47.559 --> 0:11:50.040 and coughing and masks. I think all of those help. 0:11:50.200 --> 0:11:53.840 This is what pandemics do. They not everyone is vaccinated 0:11:53.880 --> 0:11:56.520 at the same time. It spreads around the world. It 0:11:56.640 --> 0:12:00.600 usually takes three years, if you're going by the Spanish 0:12:00.600 --> 0:12:03.120 flu the H one N one. And I think we're 0:12:03.200 --> 0:12:06.599 a little naive to think that we could have controlled 0:12:06.640 --> 0:12:10.280 this perfectly unless we had been more aggressive very early 0:12:10.360 --> 0:12:13.960 on and developed treatment more early on, and got everyone 0:12:14.040 --> 0:12:17.360 vaccinated early on. So once the cats out of the bag, 0:12:18.280 --> 0:12:22.000 we're dealing with. Really, what are natural consequences, and I 0:12:22.040 --> 0:12:23.880 think we like to think, oh, if we lock down, 0:12:23.920 --> 0:12:25.480 or if we do this, or the mask is the 0:12:25.559 --> 0:12:28.120 right approach. I think they're all helpful, but it's not 0:12:28.160 --> 0:12:30.560 going to solve the problem. I'm afraid, all right, Gonna 0:12:30.640 --> 0:12:32.840 leave it there. Um Ian, have a wonderful and safe 0:12:33.080 --> 0:12:35.199 Thanksgiving and so good to check in with you. We'll 0:12:35.200 --> 0:12:36.760 talk to you next week. Dr Ian last beat our 0:12:36.760 --> 0:12:38.839 clinical professor of Medicine at n y U lend Going 0:12:38.920 --> 0:12:41.840 Medical Center. On the phone in New York City. You're 0:12:41.920 --> 0:12:45.880 listening to Bloomberg Business Week with Carol Masser and Bloomberg 0:12:45.960 --> 0:12:50.200 Quick Takes Tim Stinovic on Bloomberg Radio. So this week's 0:12:50.200 --> 0:12:52.679 special double issue of Bloomberg Business Week magazine. It's out 0:12:52.679 --> 0:12:55.120 on newsstands, online at Bloomberg dot com, bus this Week 0:12:55.160 --> 0:12:58.599 dot com, and of course on the Bloomberg terminal. It's 0:12:58.640 --> 0:13:01.560 an inflation takeover. Several stories looking at the ugly green 0:13:01.640 --> 0:13:05.199 monster from several different angles, including whether FED Chief J. 0:13:05.320 --> 0:13:07.360 Powell need to take a page from the playbook of 0:13:07.760 --> 0:13:10.880 one iconic fedhead and the tough decision that he had 0:13:10.920 --> 0:13:13.320 to make. So let's get to this story. The person 0:13:13.360 --> 0:13:15.760 who wrote it is Bloomberg News Markets editor Joe wisn't all. 0:13:15.800 --> 0:13:19.200 He's in our Bloomberg Interactive Broker studio joining Ed Ludlow 0:13:19.280 --> 0:13:21.520 and me. Hey, Joe, I love this story. Thank you. 0:13:21.559 --> 0:13:23.880 I love the whole inflation takeover because it's like inflation 0:13:24.000 --> 0:13:25.720 is back. But do we need to be so freaked 0:13:25.720 --> 0:13:28.320 out about it? Tell us about Paul Vulker and what 0:13:28.400 --> 0:13:30.480 he had to do back to his tenure. So the 0:13:30.480 --> 0:13:32.840 fan has for a long time had this dual mandate 0:13:33.040 --> 0:13:37.720 of you know, stable prices and full employment, and inflation 0:13:37.920 --> 0:13:40.400 in the late seventies early eighties was perceived to be 0:13:40.440 --> 0:13:44.959 getting to out of control, and Volkers remembered essentially for 0:13:45.640 --> 0:13:50.200 having the uh temerity to induce a recession and millions 0:13:50.200 --> 0:13:51.640 of people got out of work. But that broke the 0:13:51.679 --> 0:13:55.640 back of inflation, and he raised rates very aggressively until 0:13:55.840 --> 0:13:59.440 it meaning until it induced a recession, and in the 0:13:59.480 --> 0:14:01.320 dou show that you know, that kind of put an 0:14:01.400 --> 0:14:03.640 end to inflation, and then we had this sort of 0:14:03.760 --> 0:14:08.640 multi decade period of pretty stable prices since then, the question, 0:14:08.679 --> 0:14:10.640 you know, now we're coming off of like ten years 0:14:10.720 --> 0:14:14.760 of underemployment of the Great Financial Crisis, chronic underemployment. We're 0:14:14.760 --> 0:14:18.280 still five million UH at least maybe six or seven 0:14:18.280 --> 0:14:22.200 million underemployed. And so the idea in my piece was 0:14:22.280 --> 0:14:26.400 like maybe to pull a Vulcar and is to ignore 0:14:26.400 --> 0:14:29.680 the inflation side of the mandate for now, the opposite 0:14:29.680 --> 0:14:32.320 of what Vulker did, and make the commitment on jobs, 0:14:32.320 --> 0:14:35.200 which polosed on multiple times, and make the bet that 0:14:35.240 --> 0:14:38.640 inflation is transitory, as the Fed more or less still 0:14:38.720 --> 0:14:42.160 believed the time is interesting. They're right because pal Is 0:14:42.200 --> 0:14:46.800 stressed a commitment to maximum employment not just for weeks 0:14:46.800 --> 0:14:48.560 but for months, and then you've got that really hot 0:14:48.600 --> 0:14:51.880 CPI print for October. You know, I wasn't around in 0:14:51.880 --> 0:14:58.440 the seventies. I wasn't around either inflation right exactly. But 0:14:58.840 --> 0:15:01.960 I mean, did that inflation print change things for j 0:15:02.080 --> 0:15:05.120 Pound the Fed? It was? I mean, it definitely changed 0:15:05.160 --> 0:15:08.720 the political conversation about inflation. And I think that, you know, 0:15:08.760 --> 0:15:11.720 there were a lot of people. That number rattled the 0:15:11.720 --> 0:15:14.640 White House clearly, and since then we've seen Biden talking 0:15:14.680 --> 0:15:17.440 more about inflation and even trying to pitch some of 0:15:17.480 --> 0:15:20.880 his fiscal plans is inflation fighting. I'm not so sure. 0:15:20.960 --> 0:15:23.720 I think most people don't really buy that completely regardless. 0:15:23.760 --> 0:15:26.640 That's how much a jarred the politics. I got a 0:15:26.640 --> 0:15:29.520 lot of people to say the transitory is a myth, etcetera. 0:15:30.160 --> 0:15:33.000 And so it's certainly if nothing else ratches up the heat, 0:15:33.760 --> 0:15:35.720 um powl, It's like, all right, do you really have 0:15:35.920 --> 0:15:39.360 the like, how how convinced are you Jay still that 0:15:39.400 --> 0:15:42.560 inflation is transitory? And I think the heat has now 0:15:42.600 --> 0:15:44.840 been turned on the feed of hotter. So Joe, what's 0:15:44.840 --> 0:15:46.880 the economic like? I'm thinking, Okay, I'm bringing up my 0:15:46.920 --> 0:15:50.040 economic books and trying to understand. So if he continues 0:15:50.080 --> 0:15:54.479 to keep rates low, is that going to then encourage 0:15:54.560 --> 0:15:56.760 more people to come back to the workforce because the 0:15:56.800 --> 0:15:59.520 economic momentum will continue. I think the way to think 0:15:59.560 --> 0:16:03.160 about it perhaps is not that low rates will encourage 0:16:03.160 --> 0:16:05.640 people to come back per se, because look, people point out, 0:16:05.680 --> 0:16:07.640 it's like you cover rates is zero, That doesn't suddenly 0:16:07.680 --> 0:16:11.160 make economic growth happen. What I think you can say 0:16:11.240 --> 0:16:14.000 is the opposite, that for rate hikes to have an 0:16:14.000 --> 0:16:17.560 effect on inflation, you really wouldn't need to go hard. 0:16:17.880 --> 0:16:20.560 That if you just hike rates twenty five basis points 0:16:20.600 --> 0:16:23.680 fifty basis points, you're not doing too much, and so 0:16:23.960 --> 0:16:26.320 I think the argument is more that, Okay, you want 0:16:26.320 --> 0:16:28.960 the FED to take care of inflation. This is what 0:16:29.000 --> 0:16:30.800 it's gotta be. We're not it's gotta be a real 0:16:30.880 --> 0:16:33.120 series of hard hikes. And is that something you want 0:16:33.160 --> 0:16:36.400 to do with a five million employment hole? Do you 0:16:36.440 --> 0:16:38.720 really want to go down that road of slowing demand? 0:16:38.880 --> 0:16:40.960 And there's so many people still who want to come 0:16:41.000 --> 0:16:44.320 back into the workforce once there's you know, pandemic and 0:16:44.400 --> 0:16:46.520 other just live destructions come to an end. We're still 0:16:46.520 --> 0:16:50.000 in the middle of a pandemic. Joe. It's an unfair question, 0:16:50.080 --> 0:16:52.080 but it'd be remissing me not to ask about the 0:16:52.080 --> 0:16:57.360 new duo, you know, a brain Odd Pal Combo. Yeah, 0:16:57.600 --> 0:16:59.680 how would that have changed how you've gone about writing 0:16:59.680 --> 0:17:02.400 that page? You know? I think, to be honest, I 0:17:02.440 --> 0:17:05.879 don't think there was as much daylight on monetary policy 0:17:05.920 --> 0:17:09.199 as some people like to imagine. I mean, there was 0:17:09.240 --> 0:17:13.600 this perception of like BRAINERD having been more duvish. I 0:17:13.640 --> 0:17:17.440 don't really think that's. Yeah. I don't really think that's 0:17:17.440 --> 0:17:19.960 basin all that much. I think more or less of 0:17:20.040 --> 0:17:23.080 you look at their track records, Uh, they're probably more 0:17:23.080 --> 0:17:26.320 in line. I suspect that BRAINERD believes a little bit more, 0:17:26.359 --> 0:17:29.720 and perhaps some of the FED supervisory roles perhaps believe 0:17:29.880 --> 0:17:33.000 that the FED could take on more climate responsibilities, although 0:17:33.160 --> 0:17:35.919 German police talked about that recently too. But you know, 0:17:36.000 --> 0:17:38.359 from the perspective of the markets, from the perspective of 0:17:38.400 --> 0:17:41.040 like gauging, with the policy path of rate hikes, I 0:17:41.080 --> 0:17:44.359 would be surprised if either one had a sort of 0:17:44.400 --> 0:17:49.879 like materially uh different vision in mind about the existing trajectory. 0:17:50.040 --> 0:17:51.560 One thing I wonder too, is that if I think 0:17:51.600 --> 0:17:53.520 about the economy as you as you kicked it off 0:17:53.560 --> 0:17:55.760 with Joe, is the idea that you know, rates were 0:17:55.840 --> 0:17:58.280 so low for so long like this was you know, 0:17:58.280 --> 0:18:00.920 we've got a generation easily at people investors in Wall 0:18:00.920 --> 0:18:03.480 Street who have never seen a high rate environment. So 0:18:03.880 --> 0:18:06.639 was that the true picture or is it all of 0:18:06.680 --> 0:18:09.240 a sudden the bump that we're seeing kind of a 0:18:09.320 --> 0:18:12.720 catch up from all of those years of low inflation, 0:18:12.800 --> 0:18:14.879 Like what's the what's the true picture? I guess is 0:18:14.920 --> 0:18:17.280 my question? You know, I would say two things. I mean, 0:18:17.320 --> 0:18:19.760 one is, you know, we did have nine hikes uh 0:18:20.640 --> 0:18:24.560 started in and the market absorbed them a lot better 0:18:24.560 --> 0:18:26.000 than I think a lot of people would guess, because 0:18:26.000 --> 0:18:29.240 I remember a lot of people like, oh, this market 0:18:29.280 --> 0:18:31.600 is going to be dependent on ZERP forever, and that 0:18:31.640 --> 0:18:33.240 didn't turn out to be the case. It turned out 0:18:33.240 --> 0:18:36.080 that started with Yelling and then into Powell there were 0:18:36.080 --> 0:18:38.159 a series of rate hikes. Then of course, you know, 0:18:38.200 --> 0:18:41.879 we had the slowdown in so they got reversed in 0:18:42.680 --> 0:18:46.000 then of course the pandemic and that erased everything. But 0:18:46.080 --> 0:18:50.520 the market then showed an ability to withstand rate hikes. Look, 0:18:50.640 --> 0:18:53.600 I think that from a macro perspective, and Biden said 0:18:53.640 --> 0:18:56.679 this today. He's like, you know, we should pursue it 0:18:56.760 --> 0:18:59.000 an economy where and I don't know the exact words, 0:18:59.040 --> 0:19:02.280 but he said, we're in lawyers are fighting over workers 0:19:02.359 --> 0:19:05.000 rather than workers fighting for jobs. And if that were 0:19:05.040 --> 0:19:06.600 to be sustained, I mean we kind of see it 0:19:06.640 --> 0:19:08.639 these days, but if that were to be sustained for 0:19:08.680 --> 0:19:10.920 any like period of time, that would be a very 0:19:10.960 --> 0:19:13.159 different regime from what any of us are used to 0:19:13.160 --> 0:19:15.600 in recent decades. It's a really good point. Very different economy, 0:19:15.720 --> 0:19:19.320 very different. I mean, this is just ignorance in my path. 0:19:19.359 --> 0:19:22.280 But is there a policy path where they can meet 0:19:22.320 --> 0:19:26.160 the Jewel mandate? Surely one as based on. This has 0:19:26.200 --> 0:19:28.359 to to suffer the expense of the other for the 0:19:28.520 --> 0:19:32.760 short term. Yeah, I mean right and right now you 0:19:32.760 --> 0:19:36.080 would say, uh, you know, if you just looked into isolation, 0:19:36.080 --> 0:19:38.359 you'd say unemployment rate at four and a half percent 0:19:38.800 --> 0:19:41.440 and inflation six point two. They're missing on the inflation side. 0:19:41.840 --> 0:19:45.560 The counter argument is that, look, some of the big 0:19:45.600 --> 0:19:47.919 some big drivers of inflation really do seem to be 0:19:47.920 --> 0:19:51.000 IDIOSYNCREDI or transitory. We know that used cars is still 0:19:51.040 --> 0:19:54.560 a really big factor even after all this time, and 0:19:54.600 --> 0:19:57.240 then there's good reason to think that raising rates doesn't 0:19:57.359 --> 0:20:00.720 solve that. And are they hitting on the b ployment side? 0:20:00.840 --> 0:20:04.160 Not clear of that either, because although unemployment is low, 0:20:04.440 --> 0:20:06.840 numerous measures are still a long way to go. It's 0:20:06.840 --> 0:20:10.000 easy to imagine though, close to full employment in nine 0:20:10.000 --> 0:20:12.560 months and are an inflation starting to turn the corner 0:20:13.040 --> 0:20:16.160 and the dual mandate maybe ahead. So listen. The drop 0:20:16.200 --> 0:20:17.800 off in the economy then the big bounce back so 0:20:17.920 --> 0:20:21.600 quickly has reminded you how quickly things can change depending 0:20:21.600 --> 0:20:24.240 on what's going on. UM Joe wisn'tal it's a must read, 0:20:24.359 --> 0:20:26.960 Thank you so much. He is Digital News executive editor 0:20:26.960 --> 0:20:30.440 here at Bloomberg News. This is Bloomberg Business Week with 0:20:30.520 --> 0:20:35.320 Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:20:35.800 --> 0:20:38.400 We want to talk about the Bloomberg New Economy Form, 0:20:38.400 --> 0:20:41.720 which hosted its annual form in person in Singapore last week. 0:20:41.760 --> 0:20:44.480 The event is, you know, uh, from the many interviews 0:20:44.480 --> 0:20:46.760 and stories that we highlighted on air last week, is 0:20:46.760 --> 0:20:49.639 all about illuminating the challenges facing the new economy and 0:20:49.640 --> 0:20:52.880 really getting to the solutions and the voices who are 0:20:53.000 --> 0:20:56.000 in that journey. Here with a look back at the 0:20:56.040 --> 0:20:58.480 week some of the major themes and newsmakers is Bloomberg 0:20:58.520 --> 0:21:01.320 New Economy Editorial Director Andy Brown joins us in our 0:21:01.359 --> 0:21:05.520 Bloomberg Interactive Broker Studio. First of all, congratulations you pulled 0:21:05.520 --> 0:21:09.280 it off in person in Singapore. Tell us about kind 0:21:09.280 --> 0:21:12.359 of the mood of the event. Well, thanks, Carol, It 0:21:12.400 --> 0:21:16.280 was an incredible event. We We got three hundred delegates, 0:21:16.880 --> 0:21:23.520