Speaker 1: Hello, and welcome to a special episode of the Odd
Speaker 1: Lots Podcast.
Speaker 2: I'm Joe Wisenthal and I'm Tracy Alloway Racy, So we are.
Speaker 1: Here for you and me the first ever time at
Speaker 1: Jackson Hall.
Speaker 2: I know I always wanted to go, partly for the scenery,
Speaker 2: but also just to get a feel for some of
Speaker 2: the economic discussions and wonkery. I've seen this described or
Speaker 2: heard this described as the super Bowl for central bankers.
Speaker 3: You know what. I like the description.
Speaker 1: It's very apt because like when I think of the
Speaker 1: Super Bowl, I think of like a bunch of like
Speaker 1: parties and people just hang out if.
Speaker 3: There's the game.
Speaker 1: But seriously, like you said, like partly for the scenery,
Speaker 1: I would say, like for me, that's like ninety five.
Speaker 1: I was so jar dropped the first time I walked in.
Speaker 1: It was gogeous, like the gran I was just like,
Speaker 1: I'm like totally flabbered gust.
Speaker 2: Also the chance to finally break out my cowboy boots.
Speaker 2: I don't get to do that that often in New York.
Speaker 1: If anyone sell the photos of me on Twitter this
Speaker 1: week and Wednesday morning, as I was scrambling out of
Speaker 1: the house, I could not locate I have multiple cowboy boots.
Speaker 3: I couldn't find any of them there.
Speaker 2: Sure, Joe, Sure they all go conveniently missing right before
Speaker 2: you need them. No, but it is an amazing event.
Speaker 2: It's really interesting to sort of witness it for the
Speaker 2: first time because it is at this kind of unusual
Speaker 2: moment for central bankers.
Speaker 1: Yes, right, and so it's like this like weird uneasy piece,
Speaker 1: which is like inflation has come down a lot, the
Speaker 1: labor mark is robust. We had this hiking cycle, but
Speaker 1: no one really knows why and how it all happened
Speaker 1: and what exactly the mechanism was. And I think that
Speaker 1: leads to a little bit of anxiety about what will
Speaker 1: the inflation the disinflation persist.
Speaker 2: I think it leads to a lot of anxiety. I mean,
Speaker 2: these are central bankers who are steeped in economic theory,
Speaker 2: things like the Phillips curve, which tell you that inflation
Speaker 2: shouldn't be coming down without a corresponding rise in the
Speaker 2: unemployment rate. And we've seen the exact opposite happen. And
Speaker 2: if anything, it seems like there are some signs that
Speaker 2: the economy is accelerating. Now you have the Atlanta Fed
Speaker 2: GDP now right, which is kind of crazy after we've
Speaker 2: seen this huge run up in interest rates.
Speaker 1: Now I know there's something like there's I'm thinking trying
Speaker 1: to think of some gift of like some of the
Speaker 1: person like sort of awkwardly smiling and it's.
Speaker 3: Like, yeah, things are good. Well, we can't entirely explain
Speaker 3: why that's sort of.
Speaker 2: The vibe I would say, right, yeah, I think that's right.
Speaker 1: All right, So what have we learned? We're going to
Speaker 1: try and do a little bit of summation of this
Speaker 1: extraordinary weekend with some very special guest. For this special episode,
Speaker 1: we are going to be speaking with two of our
Speaker 1: illustrious colleagues here at Bloomberg. We're going to be speaking
Speaker 1: with Bloomberg Surveillance co host Tom Keen, who happened to
Speaker 1: be the first ever ODLOTGS guest years ago. And then
Speaker 1: afterwards we will be speaking to Bloomberg TV's policy correspondent
Speaker 1: Michael McKee, the legend Tom Keen, co host of Bloomberg's Surveillance. Tom,
Speaker 1: thank you so much for coming back on the odd line.
Speaker 4: It's great to be here. But you gotta paint this.
Speaker 4: I mean, you don't know, you don't have a video for.
Speaker 3: This podcast, I'll take a photo.
Speaker 4: We're sitting here in literally an historic landmark. Back in
Speaker 4: my ute, you there weren't planes, there weren't trains.
Speaker 2: Tom.
Speaker 4: You went west in the car with four screaming kids
Speaker 4: and no air conditioning, and you went out to the
Speaker 4: National Parks and there were these little gorgeous nineteen sixties
Speaker 4: mad men bungalows. Yes, and I expect Rock Hudson and
Speaker 4: Kim Novak to walk through the door at any moment.
Speaker 2: These are definitely bungalows. So for people who haven't been
Speaker 2: to the Jackson Lake Lodge, they're kind of rustic. There's
Speaker 2: no TV. There's a warning sign in the room saying
Speaker 2: if you encounter mice or bats, please call staff, don't
Speaker 2: try to trap them yourself.
Speaker 4: Take ants.
Speaker 3: I haven't, but it doesn't get too hot. But there's
Speaker 3: no air conditioning either.
Speaker 2: Yeah, air conditioning has at to option.
Speaker 3: How many times you've been here to Tom, I have
Speaker 3: been here roughly.
Speaker 4: I haven't kept count like Davos, but I've been roughly
Speaker 4: seventeen years. What I'll say is off and on, but
Speaker 4: I've had a good fortune of being here most of
Speaker 4: the maximum tension years.
Speaker 1: Tracey, you know what I really like about here, And
Speaker 1: Tom mentioned Davos, which is why I bring it up.
Speaker 1: In Davos, you know, they clear out all the civilians,
Speaker 1: like when all the everyone comes, like you cannot get
Speaker 1: into that whole town. Here, it's like we're around by tourists,
Speaker 1: like anyone could actually just sort of come hang out
Speaker 1: here and sort of like sit on one of the
Speaker 1: couches and the Jackson like lodge. You just got to
Speaker 1: like buy like a hotel room or something. It's like
Speaker 1: a much more like peaceful vibe.
Speaker 2: It's true. I did actually have this older Australian couple
Speaker 2: that came up to me and they were looking at
Speaker 2: the Bloomberg TV setup and they sort of tapped me
Speaker 2: on the shoulder and they were like, what's going on,
Speaker 2: what's happening? And I was trying to get them very
Speaker 2: excited about Oh, Jerome pal is here and maybe even
Speaker 2: someone from the RBA is around. They were into it.
Speaker 4: Yeah, Bud Nethel was once on the coach. They're hanging
Speaker 4: out with this guy sixty five years old Gray they're
Speaker 4: talking about so how sure it's the wonderful Irvin King from.
Speaker 3: The Baker, It's great. What have you learned. What struck
Speaker 3: you about Paul speech.
Speaker 4: Well, well, not much about Paul speech. I mean I
Speaker 4: listened to it. It's in my ear and we've got
Speaker 4: all sorts of production issues going on at the time,
Speaker 4: So to be honest, I don't hear it word for
Speaker 4: word like you guys do, and Tracy really sits on
Speaker 4: it and listens. But different than any other meeting, even
Speaker 4: CenTra and Portugal, this is a meeting where you have
Speaker 4: no clue what the zeitgeist is going to be until
Speaker 4: deep into Friday. And the one word for me this
Speaker 4: unique moment in our history is complexity. Everyone of every
Speaker 4: shape and flavor is overwhelmed by the complexities of the moment.
Speaker 2: I think that's exactly right. And do you the people
Speaker 2: you speak to, do they express much anxiety about this
Speaker 2: current period of economic time or is the vibe very much? Well,
Speaker 2: last year pwe was talking about how we'd have to
Speaker 2: have lots of pain in order to bring down to
Speaker 2: claci media.
Speaker 4: Yeah, that's the media. That's a no.
Speaker 2: No.
Speaker 4: These are people, is you all know? These are the
Speaker 4: people who were first in their fourth grade class in
Speaker 4: math and they had a meeting in June with their
Speaker 4: parents to say, well, we think he should jump to
Speaker 4: sixth grade. They were those kind of people, and so
Speaker 4: they have a huge arrogance about how smart they are,
Speaker 4: but also a built in humility, and the humility right
Speaker 4: now is maxed out. I don't care if they're you know,
Speaker 4: Barry Iiking Green of Berkeley or the youngest peahd he
Speaker 4: was lucky to breathe the air. Here, they're all humbled
Speaker 4: beyond belief about how wrong they've been.
Speaker 1: I mean, I I the final paragraph. I think of
Speaker 1: Powell's speech. He talked about the cloudy skies, which I
Speaker 1: you know, because the whole question is like the stars
Speaker 1: are a star neutral rate, which.
Speaker 3: You know, one knows what they are.
Speaker 1: And I think, you know, Paul expressed that in the
Speaker 1: speech that it's like the guy's are cloudy. Even if
Speaker 1: even if such stars even exist, it does not seem
Speaker 1: like we could see them right now.
Speaker 4: I live in New York where there's like one damn
Speaker 4: star in the sky. It's our terrorists. If you think
Speaker 4: it's Stevie Winwood and Arc of the Diver, it's one
Speaker 4: of the stars on the record album You Come out Here,
Speaker 4: and it's the stars were in the sky last night.
Speaker 4: You know, there'll be a lot of analysis. Frankly, you
Speaker 4: guys are better at that than me. It'll be hawkish,
Speaker 4: hawkish and this level in that. I think they're overwhelmed
Speaker 4: by the non economic, non monetary things, and to me,
Speaker 4: it's just an extension of the pandemic and we really
Speaker 4: don't know where we are in that continuum.
Speaker 2: Yeah, it seems like they're struggling with some of the
Speaker 2: real economy aspects of this. And you saw it in
Speaker 2: Pal's speech where he was talking about supply chain pressures
Speaker 2: starting to ease, what's going on in housing. It feels
Speaker 2: like that's not that's not their comfort spot.
Speaker 4: It's oh decidedly not. I mean to take it academic,
Speaker 4: and to take a structure like a Hicksey and Islm structure,
Speaker 4: which is, you know, blah blah blah nineteen thirty eight.
Speaker 4: I don't think that's in play right now. You let
Speaker 4: meet with a Phillips curve, which was what fifty two.
Speaker 4: I'm going to think, London School of Economics. None of
Speaker 4: this is working right now. I don't know what the
Speaker 4: twenty twenty fourth theory is. It waits odd lots to
Speaker 4: tell us.
Speaker 1: You brought up nothing is working right now, and I'm convinced.
Speaker 1: I mean, I did a TV hit yesterday. We were
Speaker 1: talking about the disinflation and something Someone's like, well, in
Speaker 1: a year, will we have more sense? And I kind
Speaker 1: of think that, like this is going to be a
Speaker 1: period that not next year, not ten years, like for
Speaker 1: twenty and thirty years, people will be writing papers about
Speaker 1: this period right now and what happened. And I suspect
Speaker 1: we are not going to ever really have something that
Speaker 1: resembles a consensus.
Speaker 4: I strongly agree with that. My book of the Summer
Speaker 4: is Olivia Blanchard, very controversial right now, we don't need
Speaker 4: to go into it. But the answer is Olivier has
Speaker 4: this phrase for all the stuff we don't get, called
Speaker 4: other factors. It's like an academic usage with quotes around it,
Speaker 4: and that we're overwhelmed by the other factors. I mean,
Speaker 4: look at what we have right now, Tracy. We've got
Speaker 4: labor dynamics, pandemic dynamics, the uaw thing that's happening, Pharaoh's gone,
Speaker 4: He's going to make one hundred and seventy thousand a
Speaker 4: year at UPS. And then you got the fact the
Speaker 4: Red Sox beat the Houston anstro of seventy to one.
Speaker 4: There are other factors out there that matter.
Speaker 2: There's a lot happening, that's for sure. So on that
Speaker 2: note she jured me. This is called a pivot. This
Speaker 2: is what I learned from the Central Bank meetings. Hot
Speaker 2: a pivot. So on this note, I'm curious you've been
Speaker 2: going for a long time. One thing I was kind
Speaker 2: of surprised about is so much of the focus from us,
Speaker 2: you know, reporters here to talk about this event is
Speaker 2: on the short term policy outlook. But the event itself
Speaker 2: is supposed to be discussing the longer term analytical framework
Speaker 2: for monetary policy. How has the sort of emphasis of
Speaker 2: this symposium changed over time?
Speaker 4: Tom Hanig and I had a nice chat out front
Speaker 4: of the door here at the lodge. Tom Hanig reinvented
Speaker 4: Jackson Hole in the Kansas City FED. This started for
Speaker 4: years ago with Paul Volker. They said, Paul, I know
Speaker 4: you hate conferences, you don't want to travel. There's fly fishing.
Speaker 4: So I Volker showed up, literally, I kid you not.
Speaker 4: That's how they started this thing, and off the top
Speaker 4: of my head, eighty two.
Speaker 2: Well it worked.
Speaker 4: And it still works to this day. But they had
Speaker 4: to get reinvigorated, and Tom A. Honig did that his
Speaker 4: head of the Kansas City Fed before Esther George. But
Speaker 4: what Honig had to do was police the modern media,
Speaker 4: and they it's sort of been a you know, you
Speaker 4: see it. You come out of the lodge folks, and
Speaker 4: there's this huge mountain range picture and there's this place
Speaker 4: where they take the photos of the central bankers, and
Speaker 4: off to the right it looks like the Republican National Convention.
Speaker 4: You know, it's like three networks lined up everything but
Speaker 4: the satellite trucks and the And the answer is that
Speaker 4: Kansas City Fed has had to police the short term
Speaker 4: analysis with papers looking out thirty years. Yeah.
Speaker 1: It does seem, however, in different years. And obviously the
Speaker 1: chairman doesn't not every year that most years the chairman
Speaker 1: gives a speech. But every once in a while I
Speaker 1: think that German doesn't come. Yeah, I think it's twenty
Speaker 1: I feel like twenty.
Speaker 3: Thirteen or something.
Speaker 1: Yeah, but it feels like to some extent it's sort
Speaker 1: of the dial goes back and forth about how academic
Speaker 1: they're so like right now and last year was probably
Speaker 1: more famous.
Speaker 3: You know, there's like that pow'll.
Speaker 1: Give an eight minute speech in twenty twenty two, which
Speaker 1: I've characterized as like, we're not here to make friends,
Speaker 1: We're here to get inflation done. This year, I think
Speaker 1: this speech was closer to maybe like fifteen or twenty
Speaker 1: minutes or something like that, but still like not a
Speaker 1: particularly academic speech. But if you go back to twenty
Speaker 1: nineteen or twenty eighteen and Polo speech is very much
Speaker 1: like talk about the different stars, So it feels like
Speaker 1: you sort of get a feel for the moment based
Speaker 1: on how academic that speech.
Speaker 4: And sometimes this happens, and it happened. I believe it
Speaker 4: was a droggy. It may have been thrche, but the
Speaker 4: moment here is the European Central Bank, in my conversation
Speaker 4: with Christine Linguard, is an example of the urgency in
Speaker 4: in ECB to to September sixteenth and beyond and the
Speaker 4: complete mystery of the europe An experiment. It makes us
Speaker 4: look like virtual certitude. What we're doing, it's all insane.
Speaker 2: So when you come here, what are the goals?
Speaker 4: Like?
Speaker 2: What would what constitutes a good Jackson hole for you?
Speaker 4: And the tom han is to get me out of
Speaker 4: a suit. He came up to me once and he said,
Speaker 4: can we lose the tie?
Speaker 5: What do you wear BOTHA?
Speaker 4: I traveled when I first joined Bloomberg. Actually I wore
Speaker 4: a bolo once. We interviewed the art director of mad Men,
Speaker 4: and I wore a bolo. That was some endorsement from
Speaker 4: mad Men or something. I can't remember, but it at
Speaker 4: Jackson's Hole. I travel like I always travel, which is
Speaker 4: as simple as I can, because I used to travel
Speaker 4: NonStop for the company. And you know, I started out
Speaker 4: like Audrey Hepburn and charade with seven suitcases and a
Speaker 4: hat box, and then I got down to three suitcases,
Speaker 4: and now it's like you get to one.
Speaker 2: I did ask Mike McKee, who we are about to
Speaker 2: speak to, actually how many hats he typically brings with
Speaker 2: him to Jackson Hole. I was disappointed to hear it
Speaker 2: was only one. I imagine him Audrey Hepburn style with
Speaker 2: like seven hat boxes on the plane.
Speaker 1: But I didn't realize he's a he's a western man.
Speaker 3: He's Colorado. So this is a joke come out? Did
Speaker 3: I make that.
Speaker 4: He's milking every Western jun kid, the.
Speaker 1: Economic Western He's like, this is my natural habitat.
Speaker 4: Yeah, he's north of here. He's up by Jellystone Park
Speaker 4: in Idaho or someplace he's here. Then he'll go down
Speaker 4: to Arizona. What he's got the whole Mountain time thing.
Speaker 4: He's nailed it.
Speaker 2: Well, now we have to ask Mike about this.
Speaker 5: Nice true.
Speaker 2: Okay, one more question from me. For people out there
Speaker 2: who are trying to understand Jackson Hole, what's your most
Speaker 2: important piece of advice? What should they be looking out
Speaker 2: for the thing?
Speaker 4: And particularly for younger people, this is so true social
Speaker 4: media podcasts, The blah blah I do doesn't cut it.
Speaker 4: You have to read the material. And the material can
Speaker 4: be books, obviously, it can be papers, it can be
Speaker 4: longer commentaries. You know, what's what we did when we
Speaker 4: were kids. You read the Economist to cover. I mean,
Speaker 4: that's how you do it. There's no substitute for reading.
Speaker 4: There's just absolutely no substitute for reading. That's just it's
Speaker 4: as simple as that.
Speaker 2: Did you read all the papers?
Speaker 4: Jeff?
Speaker 1: I hate to admit it, but Tom is totally right.
Speaker 1: And this is like it's taken me like forty three
Speaker 1: years of my life too, like acknowledge, like actually, you
Speaker 1: kind of have to do the reading. And if you
Speaker 1: read an academic paper, you can't just like for years,
Speaker 1: I just read the abstract and then skipped to the
Speaker 1: end and look for a chart that I could screenshot
Speaker 1: and tweet. And I have to admit that there might
Speaker 1: be actually some good meat in the middle.
Speaker 2: The good stuff's in the footnotes.
Speaker 3: I know, all right.
Speaker 1: My last question, you know, a few more months of
Speaker 1: this year, three FED meetings before the end of the year.
Speaker 3: What are you watching for?
Speaker 4: Like?
Speaker 1: What do you what do you what are you looking
Speaker 1: out for for the rest of the year, both from
Speaker 1: the MACRO and the FED, like, what do you what
Speaker 1: interest you read the.
Speaker 4: Word I over use the TV. People will say to me,
Speaker 4: why are you saying vector? No one knows what that is.
Speaker 4: I think a lot of people know what a vector is.
Speaker 4: It's a straight line essentially, but in two or three
Speaker 4: dimensional space to the end of this year, with all
Speaker 4: that we've got, Joe, it's a massive three dimensional space
Speaker 4: right now. I want to know the power of any
Speaker 4: of these vectors, like inflation. I want to know which
Speaker 4: way they're going. I have no idea what the vector
Speaker 4: is on Javas claims, no idea at all, but I
Speaker 4: want to see established to the end of the year,
Speaker 4: any belief in these vectors. Well, you know, we make
Speaker 4: jokes about I'm so pessimistic. I'm in the triple leverage
Speaker 4: doll cash front. I haven't usually no, no, there's a
Speaker 4: new offering coming up in February. It's forbule leverage. But
Speaker 4: the answer is I have a huge optimism. It's like
Speaker 4: Churchill said about America, We'll figure it out at some point.
Speaker 4: I have a huge optimism forward about our exceptionalism on
Speaker 4: technology getting us into twenty twenty four.
Speaker 2: Well, Jackson Hole is definitely a place that makes you
Speaker 2: believe in America.
Speaker 1: I was dming with someone early like you need to
Speaker 1: travel for America is so much, so.
Speaker 3: Much, Tom, that was a blast, so much time.
Speaker 4: Can I take them out? Yes?
Speaker 1: And now let's let's chat with our colleague Mike mcka.
Speaker 1: Mike McKeith, thank you so much for joining us. Happy
Speaker 1: to be here, Mike, really important question to start. So
Speaker 1: Tom said, you're not really Western. He's like, oh, Mike
Speaker 1: mc so, he just pretends to be a cowboy. What
Speaker 1: what's the truths there?
Speaker 5: I will gladly take Tom out on the range with me.
Speaker 5: I grew up in Colorado, grew up writing, come out
Speaker 5: here every year and uh help my friends on the ranch,
Speaker 5: and so yeah, I mean I can cowboy.
Speaker 1: Okay, because you for those who haven't seen the pictures,
Speaker 1: Mike wears a cowboy. A lot of people like to
Speaker 1: dress up, but you know, I think Mike is a
Speaker 1: little more credible than most.
Speaker 2: I think Mike probably has the best Jackson Hole wardrobe.
Speaker 2: I put it that way.
Speaker 5: Yes, it's what I would wear. I mean, this is
Speaker 5: this is Jackson Hole.
Speaker 3: It's Jackson Hole.
Speaker 2: How many hats do you actually have with you?
Speaker 5: Well, I only have one hat with me. I own seven.
Speaker 3: And how many times have you've been out here?
Speaker 5: I don't know how an exact count, but the first
Speaker 5: time I came was nineteen ninety seven, and most years
Speaker 5: between ninety seven and now I've been here.
Speaker 2: So one thing I didn't realize about Jackson Hall. I
Speaker 2: kind of assume that, you know, media was invited and
Speaker 2: that media would have access to the actual conference. But
Speaker 2: that's not the case. They have a kind of weird system.
Speaker 2: Can you describe that to us?
Speaker 5: Basically, it's one representative from each news media organization and
Speaker 5: Bloomberg Radio TV, and unfortunately you guys are blumped under
Speaker 5: that gets one, and Bloomberg News gets one, and then
Speaker 5: the Wall Street Journal, the New York Times, et cetera.
Speaker 5: And so the media presence is there, but it's not huge.
Speaker 1: So we're talking about this with Tom earlier. But it
Speaker 1: feels like the.
Speaker 3: Dial changes from time to time.
Speaker 1: And some years it's this is clear, you know, the
Speaker 1: interest is in something very academic, and then some years
Speaker 1: it feels like the interest is in how fast is
Speaker 1: the FED GETNA raise right? And over the next three
Speaker 1: or four months. How does this ear feel different or
Speaker 1: similar to past Jackson halls You've.
Speaker 5: Been Well, it's maybe a little more in the middle.
Speaker 5: What happened basically was it was an it is an
Speaker 5: academic conference. People think that something goes on in there
Speaker 5: that doesn't happen. It's academic economic papers with econometrics math
Speaker 5: in there, and they talk about things that might happen
Speaker 5: in the future and in terms of economics. But the
Speaker 5: chairman always gets to give a speech. And in two
Speaker 5: thousand and nine Ben Bernanke had something he wanted to
Speaker 5: say because this was just before they were going to
Speaker 5: start QE, and so he announced it here and then
Speaker 5: the following year he announced Round two because they still
Speaker 5: had the recession and the economic problems, and then that
Speaker 5: got Wall Street's attention, and it became obvious to central bankers,
Speaker 5: to the chairman that they could make some news or
Speaker 5: they could steer because not much as else is happening
Speaker 5: in August anyway, and so some years when they've had
Speaker 5: something to say, they've used this platform. Last year, Jay
Speaker 5: Powell gave his famous eight minute slap the markets upside
Speaker 5: the head speech and got a lot of attention. So
Speaker 5: that didn't focus is everybody's attention on this year, and
Speaker 5: he gave an economic outlook speech. I think he wanted
Speaker 5: to set the predicate for going into September, but we
Speaker 5: could easily go back to something anodyne next year.
Speaker 2: What was your favorite Jackson hole? Is there one that
Speaker 2: stands out to you as a sort of seminal moment?
Speaker 5: I think probably the most interesting seminal one was two
Speaker 5: thousand and five. Alan Greenspan was retiring, and they set
Speaker 5: this up as a sort of hay geography to Alan Greenspan,
Speaker 5: because remember we had had the great moderation and productivity
Speaker 5: gains and the Fed had its soft landing, and so
Speaker 5: everybody was here to praise Alan Greenspan except for Ragaran Regin,
Speaker 5: who was at the University chicag Go and then later
Speaker 5: the governor of the Indian Central Bank. He came here
Speaker 5: and said, you guys are all missing it. We are
Speaker 5: going to have a crisis because we've got this borrowing bubble.
Speaker 5: And he was sort of ostracized by the economic community
Speaker 5: and the people here until obviously he was proven right
Speaker 5: and came back a couple of years later.
Speaker 1: So I knew that Rogen had given that speech. I
Speaker 1: didn't realize that was a jackson Hole speech, and I
Speaker 1: certainly did not realize that it was essentially at you know,
Speaker 1: the sort of big Allen Greenspan run at the party.
Speaker 1: I hadn't realized the context of that before.
Speaker 5: Yeah, it was. It was kind of fascinating because he
Speaker 5: stood it stood out so much from what everybody else
Speaker 5: was saying. Because the John Clutchiche was the ECB president
Speaker 5: at the time, came here to talk about how great
Speaker 5: Alan Greenspan was.
Speaker 2: Is anyone getting ostracized this year? Is there someone we
Speaker 2: should be paying more attention to?
Speaker 5: I think this year everybody is kind of welcome at
Speaker 5: the table, even esther George, who has retired, is back
Speaker 5: to see her old buddies, and I talked to her.
Speaker 5: She said she's very happy to sit in the back
Speaker 5: and not have to worry about it this year.
Speaker 1: So something that we were talking about before is that,
Speaker 1: you know, there's compared to last year obviously, when I think,
Speaker 1: you know, CPI picked around nine percent.
Speaker 3: The FED probably.
Speaker 1: Feels and many central bankers probably feel better about things,
Speaker 1: but there's a few to you know, there's an uneasiness
Speaker 1: right because no one really knows why inflation fell as
Speaker 1: fast as it did, given that we saw three and
Speaker 1: a half percent unemployment, and no one really knows why
Speaker 1: GDP growth seems to be accelerating in Q three despite
Speaker 1: the FED having raised rates to five percent. And then
Speaker 1: on top of that, you just have all these other
Speaker 1: things going on.
Speaker 3: What was the term that Tom.
Speaker 1: Used started just all the flexity, other factors and vectors.
Speaker 2: I think he said, very very tough vectors matter.
Speaker 5: That was a terrible time, Tom Dictionary somewhere.
Speaker 1: Can you talk a little bit like, you know, it
Speaker 1: feels like we're just in a period of it's a cliche,
Speaker 1: but just like real uncertainty about what is going on.
Speaker 5: Well, two thoughts on that one is that coming into
Speaker 5: this meeting. I talked earlier in the week with a
Speaker 5: central banker who said, this is a tough one for
Speaker 5: us because it was easy last year, right inflation, we
Speaker 5: know what we need to say. We're going to raise rates.
Speaker 5: We're going to raise rates. We're going to raise rates
Speaker 5: this year. We don't know what's going to happen, and
Speaker 5: it's kind of hard to convince people that we don't
Speaker 5: know and we don't have a plan and we're going
Speaker 5: to be data dependent. That was one thought. The other is,
Speaker 5: if you remember in Jay Powell's speech he said we
Speaker 5: are trying to navigate by the stars under cloudy skies. Well,
Speaker 5: you'll appreciate this, Joe, because you're a musician. It's a
Speaker 5: little bit like listening to an oldie, maybe an old
Speaker 5: grateful dead song, and you remember the lyrics because you
Speaker 5: were around. That came from his two thousand and eight speech,
Speaker 5: eighteen speech, his first speech here when he talked about
Speaker 5: about our star u stars, et cetera. And so I
Speaker 5: think it was Jay Powell's little inside joke to everybody
Speaker 5: about we don't really know where we are now.
Speaker 2: I have a media naval gazing question, which is, why
Speaker 2: did this expectation that he was going to give some
Speaker 2: big r star policy stance come about anyway, because if
Speaker 2: you look at the twenty eighteen speech, he was always
Speaker 2: kind of doubtful about it, And of course he is
Speaker 2: not an economist by training, and so I don't know
Speaker 2: where that expectation came from that he was suddenly going
Speaker 2: to give a very academic speech about how maybe the
Speaker 2: neutral rate was higher than we thought.
Speaker 5: Yeah, I'm not exactly sure. The estimates of the neutral
Speaker 5: rate that the New York Fed did got suspended during
Speaker 5: the pandemic because the data weren't accurate enough to make
Speaker 5: any kind of determination. They brought it back late this
Speaker 5: spring in May, I think, and then you had some
Speaker 5: articles about it that and whether or not it was accurate,
Speaker 5: and John Williams view that we would see the neutral
Speaker 5: rate fall back to where it was. And then this
Speaker 5: week the Wall Street Journal wrote about our star debate
Speaker 5: actually suggested it wasn't going to come down like John Williams,
Speaker 5: but it wasn't in the context of a Jay Pole speech.
Speaker 5: But some of the people somewhere picked up and ran
Speaker 5: with it. And then what happens is the Wall Street
Speaker 5: economists start writing about it because they're reading it in
Speaker 5: the paper, and then the people who are writing for
Speaker 5: the papers pick up the Wall Street economists things, and
Speaker 5: it becomes this circular thing. And if you knew the fad,
Speaker 5: you knew he's never going to talk about that because
Speaker 5: he doesn't like our star and because it's too imprecise,
Speaker 5: there's just no.
Speaker 3: Way to know.
Speaker 1: I think that description of how the news works, which
Speaker 1: is like, hey, I saw someone else writing about that,
Speaker 1: and then the economist is like, well, I got to
Speaker 1: weigh in, and then we write about is like one
Speaker 1: of the best descriptions of I mean, we all hope
Speaker 1: to avoid it, right, we hope to avoid group thing
Speaker 1: or echo chambers. But that was probably one of because
Speaker 1: people like look at the media and like all it
Speaker 1: everyone's like there is if it's a conspiracy or like
Speaker 1: there's some we all get back together, but really it's
Speaker 1: just a bunch of people looking around at each other.
Speaker 3: Is like that talking about it, Well, we better talk
Speaker 3: about it.
Speaker 5: Too, Yeah, And everybody was trying to figure out what
Speaker 5: to say about Jackson Hall this year. Because of the uncertainty,
Speaker 5: there wasn't any kind of obvious speech for j Pidle
Speaker 5: to give.
Speaker 2: So the other thing I wanted to ask you is
Speaker 2: just on this question of uncertainty and why inflation has
Speaker 2: come down. I haven't heard anyone here utter the dreaded
Speaker 2: word transitory for obvious reasons, but it does feel like
Speaker 2: there is an element of the supply side creeping in here.
Speaker 2: So in Pal's speech, for instance, you see him talking
Speaker 2: about maybe some of the supply constraints are starting to ease.
Speaker 2: Maybe that's a factor. And then one of the papers
Speaker 2: that was presented was all about the supply chain and
Speaker 2: reshoring away from China and things like that. Do you
Speaker 2: see more economists and policymakers paying attention to the sort
Speaker 2: of real economy aspect of inflation.
Speaker 5: Well, I think everybody is. They're looking for evidence that
Speaker 5: what they're seeing with inflation is going to last. I
Speaker 5: heard this phrase the other day and I thought it
Speaker 5: was great. After a period of long COVID, we've got
Speaker 5: long transitory. Yeah, it is a lot of supply side
Speaker 5: stuff that the FED was right would go back down,
Speaker 5: but they got the timing wrong.
Speaker 1: I just want to say, you know, you mentioned the
Speaker 1: grateful dead. So when I walked in I got here
Speaker 1: on Wednesday afternoon and there was like, no one here.
Speaker 1: And in the lodge I saw Chairman Powell and he
Speaker 1: was chatting with CNBC's Steve Leishman, and I was like,
Speaker 1: I wanted to introduce me, but I couldn't think of
Speaker 1: anything to say.
Speaker 3: You know, I was like, I don't.
Speaker 1: But in retrospect, I was like, Oh, that's like that's
Speaker 1: the Grateful Dead Caucus right there, because I think.
Speaker 5: Leaman plays in a tribute.
Speaker 3: Baseman is a dead head.
Speaker 1: Powell is a dead head, so I should have made
Speaker 1: some crack and Steve, Steve's a competitor but a friend,
Speaker 1: and he knows members of the dead and uh he
Speaker 1: talks to them all the time, and so I'm sure
Speaker 1: he was telling j Powell, we could maybe introduce you.
Speaker 3: That should have been my lines a deadline you're in.
Speaker 1: Also, I do think that staring at stars under a
Speaker 1: cloudy sky would be like a great thirteen minute Robert
Speaker 1: Hunter instrumental Jam instrumental. So what do you We asked
Speaker 1: Tom this earlier, but you know, like for the coming months,
Speaker 1: and the irony is, of course this is an academic conference,
Speaker 1: but like ninety nine percent of the media attention is like, yeah,
Speaker 1: but okay, what does it mean for the next three
Speaker 1: FED meeting or whatever, like the most narrow version of
Speaker 1: the focus. But I'm going to ask you that in
Speaker 1: terms of like what are you looking for now?
Speaker 5: Well, I think we will probably see relatively restrained inflation,
Speaker 5: probably rise a little bit, just on base effects and
Speaker 5: things like that. But if we can maintain a sort
Speaker 5: of level inflation rate, you'll see the FED on hold
Speaker 5: for September. We'll watch the inflation rate and the unemployment
Speaker 5: rate for November, and they might act. Then the trick
Speaker 5: is going to be if they don't think they need
Speaker 5: to raise right away, what do they say to keep
Speaker 5: people from thinking we're done? If they're still worried about
Speaker 5: inflation possibly coming back, they have a December meeting, then
Speaker 5: they meet again in late January. Do they leave a
Speaker 5: rate increase as a live possibility. That'll be the thing
Speaker 5: to watch for.
Speaker 2: I think I have just one more question, which is
Speaker 2: what's your favorite Jackson Hole moment? I just want to
Speaker 2: hear the Jackson hole lore, like, did Alan Greenspan wants
Speaker 2: run into a grizzly bear or something like that.
Speaker 5: No. Don Cone, who was vice chairman, was known as
Speaker 5: a slave driver on the trails because when they would
Speaker 5: go hiking, he would just power up the trails and
Speaker 5: people had to follow him. But I think the most
Speaker 5: fun that people have had is when they've taken us
Speaker 5: out a couple of times to ranch for the horse whisperer,
Speaker 5: to see horse whisper training of horses. And then of
Speaker 5: course there are those of us who slip away to
Speaker 5: the Jackson Hole Rodeo and have a great deal.
Speaker 3: We're taking me and Tracy at the rodeo tomorrow.
Speaker 5: All right, we're all going to the rodeo.
Speaker 2: Thank you, Mike. Wait, I just thought of one more question.
Speaker 2: I heard a rumor that you have a plaque at
Speaker 2: the bar, the famous bar in Jackson, the.
Speaker 5: Million dollar Cowboy Bar.
Speaker 4: Yeah.
Speaker 5: Yeah, I try to hide that, but there have been
Speaker 5: some memorable moments there, but we can't talk about them
Speaker 5: on that What happens as.
Speaker 1: Soon as we turn off the microphone, we'll get this. Yeah,
Speaker 1: there we go, Mike mckaith, thank you so much for
Speaker 1: coming off here.
Speaker 3: Tracy. I love talking. I love our colleagues.
Speaker 5: You know, what do you do?
Speaker 1: You remember the old ESPN commercials? Did you ever see
Speaker 1: those where it's.
Speaker 2: Like you're gonna have to describe them.
Speaker 3: To me, it's like.
Speaker 1: They're walking through the ESPN grounds and there's all these
Speaker 1: like famous athletes just doing stuff like filling up the
Speaker 1: coffee pot and like raking and stuff like that. That's
Speaker 1: what I often feel like that working at Bloomberg, it's
Speaker 1: like it's I love getting to run it talk to
Speaker 1: our college.
Speaker 2: No, it's absolutely fantastic. And I love hearing the old
Speaker 2: sort of Jackson Hole war from Mike and Tom. I
Speaker 2: gotta say, we need to set up like a satellite
Speaker 2: au Lolot's office here in Jackson.
Speaker 3: Hole for listeners.
Speaker 1: All weekend, Tracy has just been talking about why can't
Speaker 1: we have a Bloomberg jackson Hole bureau like twenty four
Speaker 1: or seven.
Speaker 2: I would move here in an instant.
Speaker 1: Tracy is like I would live in a Bloomberg dorm,
Speaker 1: kind of like a fox Con dorm if it meant
Speaker 1: I could just be in Jackson Hole all the time.
Speaker 2: Joe, what's your favorite Jackson Hole moment?
Speaker 4: Uh?
Speaker 1: Well, I really enjoyed hiking. I really every morning. The
Speaker 1: view I just like have not gotten over, Like the
Speaker 1: view of the Grand Tetant behind the lodge here is incredible.
Speaker 2: I am looking forward to actually going into Jackson tonight
Speaker 2: and going to the Silver Dollar Bar and trying to
Speaker 2: find Mike's plaque.
Speaker 3: I'm looking forward to that.
Speaker 1: Should we talk ekon for a second.
Speaker 3: Should we talk about.
Speaker 2: You don't just want to talk about Jackson Hole? Yes, okay.
Speaker 2: I actually thought Pal's speech leaned a little bit dubbish,
Speaker 2: and I've seen it. It's sort of like a warsh
Speaker 2: test I think for everyone's preferred policy positions at this
Speaker 2: point in time. Because I've seen some people say it
Speaker 2: was hawkish and others say it was dubbish. I lean
Speaker 2: towards the dubbish camp. He's saying that policy is restrictive.
Speaker 2: I think they're gonna have to see a really significant
Speaker 2: deterioration in the data to justify any sort of rate cut.
Speaker 1: Yeah, and I think like the market is coming here
Speaker 1: on to your view, and like even a month ago
Speaker 1: there or like more rate cuts priced in, and I think, like, yeah,
Speaker 1: it's like it would be tough to make. We're still
Speaker 1: the FED is a long way from feeling like they'd
Speaker 1: be comfortable stopping the hikes, let alone cutting rates.
Speaker 3: I think, like, you know, both.
Speaker 1: Tom and Mike talked about it, but like it still
Speaker 1: feels like if there were a way to measure uncertainty.
Speaker 2: Yeah, it would be high, be very high right now.
Speaker 3: For so many different reasons. And I do think like.
Speaker 1: You brought this up with Tom, which is that like
Speaker 1: things like supply chains, things like the effects of Russia's
Speaker 1: invasion of Ukraine, et cetera, like climate spending. I don't
Speaker 1: think there's like particularly comfortable ground for monetary economists who
Speaker 1: are sort of like it's you know, navigate these waters.
Speaker 1: But like, I think this is like kind of uncharted
Speaker 1: territory for me.
Speaker 2: Right, you're telling a bunch of economists that used car
Speaker 2: prices are now a significant portion of inflation, and so
Speaker 2: they all need to become experts in the used car market.
Speaker 1: Yeah, and they have to understand like a semiconductors that
Speaker 1: are going to allow for the expansion, Like they're all
Speaker 1: these sort of distinct variables.
Speaker 2: Yeah, all right, shall we leave it there for now?
Speaker 5: Let's leave it there.
Speaker 2: This has been another episode of the All Thoughts Podcast.
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway and.
Speaker 1: I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 1: Follow our guests Tom Keane. He's at Tom Keen and
Speaker 1: Michael McKee at mconomy. Follow our producers Carmen Rodriguez at
Speaker 1: Carmen Armant and dash O Bennett at Dashbot, and our
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