WEBVTT - Bloomberg Surveillance TV: September 15th, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordert. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.640 Terminal and the Bloomberg Business app. Christian Melting the global 0:00:37.720 --> 0:00:40.640 Chief Investment Officer at Deutsche Bank Private Bank. Writing with 0:00:40.680 --> 0:00:44.440 inflation appearing contained and labor market cracks emerging, the FED 0:00:44.560 --> 0:00:46.680 is bound to pivot from its courtious stants and begin 0:00:46.760 --> 0:00:49.199 easing in September, Christian. 0:00:48.920 --> 0:00:50.800 Joins us now for more. Christian. Welcome back to the 0:00:50.840 --> 0:00:52.840 program Sir. I think we all understand. 0:00:52.560 --> 0:00:55.360 They'll be coming interest rates on Wednesday, all looking for 0:00:55.400 --> 0:00:57.000 that twenty five basis point reduction. 0:00:57.240 --> 0:00:57.560 Christian. 0:00:57.600 --> 0:00:59.640 The question we've all got is what happens after that? 0:01:00.000 --> 0:01:02.840 What are they allowed? What can they ultimately forecast and 0:01:02.920 --> 0:01:04.839 guide to for twenty twenty six? 0:01:06.160 --> 0:01:06.440 Yeah? 0:01:06.480 --> 0:01:08.960 So I think we all agree on this probably cut. 0:01:09.120 --> 0:01:11.280 The question is twenty five or fifty. I would be 0:01:11.319 --> 0:01:13.679 really in the camp of twenty five, because why would 0:01:13.680 --> 0:01:16.160 you surprise the market, to be very honest, and if 0:01:16.200 --> 0:01:18.280 you go for fifty this time, I would say the 0:01:18.319 --> 0:01:20.880 market could also argue, do they know more about the 0:01:20.959 --> 0:01:21.520 labor market? 0:01:21.600 --> 0:01:25.080 Is that weeker than expected? So I think it's twenty five. 0:01:25.160 --> 0:01:27.000 And then, as you rightly say, there's more to come, 0:01:27.040 --> 0:01:29.440 I think there's room for the Fed to cut. We 0:01:29.480 --> 0:01:32.559 would expect over the next twelve months, way into twenty six. 0:01:32.600 --> 0:01:35.640 As you're saying, we expect five cuts, a bit less 0:01:35.680 --> 0:01:39.840 than the market because we think there's still some inflation pressure, 0:01:39.920 --> 0:01:43.199 not massively going higher. But I would say it's five 0:01:43.240 --> 0:01:45.360 cuts over the next twelve months, and the market is, 0:01:45.400 --> 0:01:47.440 if I look at Woomberg, six cuts. 0:01:47.600 --> 0:01:49.360 Christian, forgive me for getting stuck in some of the 0:01:49.400 --> 0:01:51.600 small print, but I think we've got to We'll all 0:01:51.640 --> 0:01:54.240 go to the Summary of Economic Projections on Wednesday, the 0:01:54.280 --> 0:01:56.760 guests delivered alongside the statement, and in that at the 0:01:56.800 --> 0:01:59.520 moment for twenty twenty five, they've got unemployment for year 0:01:59.560 --> 0:02:02.080 rundo four point five percent, and I'm just wondering how 0:02:02.120 --> 0:02:03.840 much has actually changed. For a lot of people on 0:02:03.880 --> 0:02:07.320 the committee looking at the labor market, they don't forecast payrolls, 0:02:07.560 --> 0:02:09.279 they have to forecast unemployment. 0:02:09.440 --> 0:02:10.880 Has that picture changed that much? 0:02:11.960 --> 0:02:12.160 Yeah? 0:02:12.440 --> 0:02:14.720 I agree, right, it still looks very close to being 0:02:14.760 --> 0:02:16.880 at say, full employment in the US. But I think 0:02:16.880 --> 0:02:20.000 if you look at the trend, it's weakening a little bit. 0:02:20.160 --> 0:02:23.080 I'm not saying it's massively going higher, but I think 0:02:23.240 --> 0:02:25.280 what the market is also prising is the fact is 0:02:25.320 --> 0:02:28.600 doing something not a recession, but they want to cut now, 0:02:28.960 --> 0:02:32.040 and from that perspective that should be positive for the economy. 0:02:32.280 --> 0:02:34.679 And from that perspective, yes, we don't talk. And that's 0:02:34.720 --> 0:02:38.440 the big difference Johnson to other cycles. Normally you cut 0:02:38.480 --> 0:02:41.239 into a feared recession. That's not the case. And that's 0:02:41.280 --> 0:02:43.560 one reason why we say it's probably only five cuts, 0:02:43.560 --> 0:02:46.080 still a lot from my point of view, compared to 0:02:46.120 --> 0:02:48.720 the market, who's maybe saying six or even more. 0:02:48.800 --> 0:02:51.399 Christian from an investment standpoint, does this make you more 0:02:51.440 --> 0:02:54.120 willing to go into US assets because of the prospect 0:02:54.400 --> 0:02:58.080 potentially a faster growth or free because of the potential 0:02:58.280 --> 0:02:59.320 for faster inflation. 0:03:00.520 --> 0:03:02.720 I think if you look at this year twenty twenty five, 0:03:02.760 --> 0:03:05.960 it's very interesting. So it started with being here in 0:03:06.000 --> 0:03:08.960 Europe with a nice outperformance of Europe for the first 0:03:08.960 --> 0:03:11.800 time in many years. I would say that has changed 0:03:11.840 --> 0:03:14.480 in the second quarter, where the US came back. It's 0:03:14.520 --> 0:03:18.200 a lot about of course technology AI in the US. 0:03:18.440 --> 0:03:20.840 I think that doesn't change from my point of view. 0:03:21.080 --> 0:03:24.280 I'm not fleeing US equities at all. My question is 0:03:24.360 --> 0:03:27.240 rather do we see a change in Europe, and maybe 0:03:27.240 --> 0:03:29.960 there's more room for upset in Europe as well, because 0:03:30.040 --> 0:03:33.280 if you look at rate cuts which are anticipated, which 0:03:33.320 --> 0:03:35.640 normally is good for the market. If you look at 0:03:35.640 --> 0:03:38.320 earnings in the US quite decent, right up eight percent 0:03:38.480 --> 0:03:42.120 expected for twenty twenty five, and Europe is down one percent. 0:03:42.200 --> 0:03:45.200 And we do still hope for and expect some fiscal 0:03:45.240 --> 0:03:48.480 spending maybe coming from Germany. There's a lot of debate 0:03:48.600 --> 0:03:51.320 in Parliament this week, so maybe you see some results 0:03:51.360 --> 0:03:53.880 and that could be also positive for Europe, not only 0:03:53.920 --> 0:03:54.520 for the US. 0:03:54.800 --> 0:03:57.000 Hope doesn't necessarily they'll get their returns. And I am 0:03:57.080 --> 0:03:59.320 wondering how much you're seeing people double down on this 0:03:59.400 --> 0:04:02.720 Europe at at a time where the US potentially could 0:04:02.800 --> 0:04:04.800 grow a lot faster because of ray cuts, and then 0:04:04.800 --> 0:04:07.800 you've got France getting downgraded over the weekend. You have, yes, 0:04:07.840 --> 0:04:10.840 this potential spend by Germany, but even the ECB is 0:04:10.880 --> 0:04:13.320 talking about a one percent one point three percent growth 0:04:13.360 --> 0:04:16.600 rate over the next number of years. Are you suggesting 0:04:16.720 --> 0:04:20.839 clients double down on that European story or are you saying, 0:04:21.240 --> 0:04:24.200 let's just hold out, watch and keep hoping love. 0:04:25.000 --> 0:04:27.280 I would say we suggest to double down on Europe 0:04:27.279 --> 0:04:30.279 because we do expect fiscal spending. I agree the absolute 0:04:30.360 --> 0:04:33.000 number one point three one point two percent growth doesn't 0:04:33.040 --> 0:04:36.680 sound very compelling, but if you think of the potential 0:04:36.760 --> 0:04:39.880 growth in Europe is roughly zero point four percent, much 0:04:39.920 --> 0:04:42.320 lower than the US, by the way, and maybe you 0:04:42.360 --> 0:04:44.560 can bring this a little bit up with fiscal spending. 0:04:44.600 --> 0:04:46.240 I think there's room for performance. 0:04:46.640 --> 0:04:50.040 And as we see, Europe is clearly underinvested in many 0:04:50.080 --> 0:04:52.919 many client portfolios, from the US, from the rest of 0:04:52.960 --> 0:04:56.160 the world, from Asia, and interestingly, I get a lot 0:04:56.200 --> 0:04:59.559 of requests to explain about euro and normally that comes 0:04:59.600 --> 0:05:02.039 with some money which is then invested later. But it 0:05:02.080 --> 0:05:05.560 needs a trigger, and I would say now debates on 0:05:05.600 --> 0:05:09.200 fiscal spending, especially from Germany, could be a trigger that 0:05:09.240 --> 0:05:12.240 this gets more intention and that probably could lead to 0:05:12.279 --> 0:05:13.240 some money flows as well. 0:05:13.400 --> 0:05:16.520 Christian language is important, you said, especially from Germany. Is 0:05:16.560 --> 0:05:18.520 it exclusively from Germany? 0:05:20.000 --> 0:05:22.479 I think most is coming from Germany because obviously in 0:05:22.520 --> 0:05:24.880 France there's not so much room. Yeah, I would say 0:05:24.960 --> 0:05:27.360 look at Germany first, but it's the large economy in 0:05:27.400 --> 0:05:30.520 the European Union. So from that perspective, I would expect 0:05:30.520 --> 0:05:33.279 some money to go into Germany because that should be 0:05:33.279 --> 0:05:36.479 in the news with the budget discussions this week and 0:05:37.240 --> 0:05:40.320 next week as well. So from that perspective, maybe start 0:05:40.360 --> 0:05:42.880 with Germany. That's what we also tell the clients who. 0:05:42.760 --> 0:05:44.880 And what do you think benefits from that fiscal spending 0:05:45.000 --> 0:05:47.520 in Germany. We've already seen a monster rally in the 0:05:47.520 --> 0:05:48.960 European banks earlier this year. 0:05:50.640 --> 0:05:52.720 Yeah, if you look from that perspective, right, So here 0:05:52.800 --> 0:05:55.239 the picture is a bit different, right. We do expect 0:05:55.240 --> 0:05:58.240 from the ECB, not as many cuts as we do 0:05:58.279 --> 0:06:01.440 expect from the fat max of one where, if at all. 0:06:01.560 --> 0:06:03.880 So it's a lower level of course, ECB being a 0:06:03.920 --> 0:06:07.080 two percent feed for much higher of course, but if 0:06:07.080 --> 0:06:10.599 you look, we still have some inflationary pressures, not too much, 0:06:10.839 --> 0:06:13.680 but there's still a steep curve and that's positive for financials. 0:06:13.760 --> 0:06:16.719 So that call we made quite some time ago is 0:06:16.720 --> 0:06:19.320 still on. From that perspective, we thing it's quite interesting 0:06:19.360 --> 0:06:21.200 to still look into this and many banks are still 0:06:21.200 --> 0:06:24.600 training below book value, so from that perspective it remains 0:06:24.680 --> 0:06:27.200 quite interesting given the interest rate environment we are in 0:06:27.240 --> 0:06:27.920 here in Europe. 0:06:28.000 --> 0:06:30.680 That's the medium term this week. I'm curious about the 0:06:30.680 --> 0:06:33.120 reaction function markets. If we do get a signal from 0:06:33.120 --> 0:06:35.000 the Fed that they're going to cut more steeply, do 0:06:35.040 --> 0:06:35.800 you go out. 0:06:35.600 --> 0:06:36.200 And buy gold? 0:06:38.040 --> 0:06:40.480 We have already a lot of gold in the portfolios. 0:06:40.520 --> 0:06:43.160 To be very honest, I still like it. Our forecast 0:06:43.200 --> 0:06:45.839 also to give you a number three eight hundred, so 0:06:46.080 --> 0:06:48.599 up from here. Again, it has been quite a call 0:06:48.680 --> 0:06:51.440 because there's so much discussions which currency you want to investment. 0:06:51.480 --> 0:06:55.279 Of course dollar, but everything in Europe probably also not everything. 0:06:55.800 --> 0:06:56.080 We know. 0:06:56.240 --> 0:06:59.920 That's why people look into buying gold. We think that's continuing. 0:07:00.080 --> 0:07:03.400 Central banks are buying gold, but also retail investors are 0:07:03.440 --> 0:07:06.520 looking into this. I think the trend will continue. But 0:07:06.720 --> 0:07:09.279 we have already quite a portion of gold and enjoying 0:07:09.520 --> 0:07:11.840 quite a nice ready. But as I said, we think 0:07:11.880 --> 0:07:14.680 that could continue as well, with our forecast being three 0:07:14.720 --> 0:07:15.559 thy eight hundred. 0:07:15.840 --> 0:07:19.760 Underlying that question is this question about government bonds and 0:07:19.880 --> 0:07:22.880 just the develop markets whether they still count as the 0:07:22.920 --> 0:07:25.840 haven asset. Do you view the rally that we've seen 0:07:25.880 --> 0:07:27.880 in long term bonds, particularly in the United States, not 0:07:27.920 --> 0:07:33.520 necessarily in Europe, as reaffirming this quality of the securities 0:07:33.560 --> 0:07:35.400 at a time where they have had a lot of questions. 0:07:36.320 --> 0:07:37.880 Yeah, I think it's quite interesting. 0:07:37.920 --> 0:07:40.240 I've just discussed with a lot of clients that also 0:07:40.280 --> 0:07:42.600 if you look at corporates, that's quite interesting, right, look 0:07:42.600 --> 0:07:45.600 at the size of some corporates and then the discussions 0:07:45.600 --> 0:07:48.920 about higher debt levels. What's quite interesting for me what 0:07:48.960 --> 0:07:50.960 we have seen is the US year is not moving 0:07:51.040 --> 0:07:53.640 higher in Europe. You have seen some years moving higher 0:07:53.640 --> 0:07:56.560 also in Asia. So there seems to be a lot 0:07:56.600 --> 0:07:59.560 of discussion about the US government bonds. But maybe at 0:07:59.600 --> 0:08:02.440 one point in time, I think if years were to 0:08:02.480 --> 0:08:05.560 go to hire, maybe some FED action can also be expected. 0:08:06.000 --> 0:08:08.200 On the other hand, if you look at Europe, France 0:08:08.240 --> 0:08:11.360 of course moving higher better today, but there was also 0:08:11.360 --> 0:08:14.200 a downgrade. So I think, yes, it's still an anchor, 0:08:14.280 --> 0:08:17.320 but I think clients should also take into count the 0:08:17.360 --> 0:08:20.400 power of a lot of corporate bonds, and from that perspective, 0:08:20.840 --> 0:08:23.640 investment great corporate bonds, I think is a very important trait. 0:08:23.920 --> 0:08:25.080 Clients should also debate. 0:08:26.280 --> 0:08:29.760 Stay with us more Bloomberg surveillance coming up after this, 0:08:38.840 --> 0:08:41.800 Trader spelling with there certainty the Federal Reserve or cut 0:08:41.800 --> 0:08:44.800 interest rates by twenty five basis points this week, joining 0:08:44.880 --> 0:08:48.240 us to discuss the former New York Fed President Bill Dudley. 0:08:48.440 --> 0:08:50.480 But welcome back, So let's go straight to it. What 0:08:50.520 --> 0:08:54.880 are you expecting to say this coming Wednesday, right. 0:08:54.760 --> 0:08:57.040 Along with everybody else, I expect a quarter point cut. 0:08:57.080 --> 0:08:58.959 It's baked in the cake. I'd be surprised if that 0:08:59.040 --> 0:08:59.840 they do anything else. 0:09:00.080 --> 0:09:01.600 Do you think they'll guide much beyond that? 0:09:03.400 --> 0:09:05.560 Well, they'll be guide in because they're going to publish 0:09:05.559 --> 0:09:08.200 the Summary of Economic Projections, which shows their interest rate 0:09:08.240 --> 0:09:10.280 outlook for the rest of the year and into twenty 0:09:10.320 --> 0:09:13.120 twenty six and twenty twenty seven. And I think the 0:09:13.120 --> 0:09:15.160 big debate there is do they show one more cut 0:09:15.200 --> 0:09:17.880 after September or do they shoot show two more cuts? 0:09:18.080 --> 0:09:19.480 And I think it's going to be a very close 0:09:19.520 --> 0:09:20.920 call between those two outcomes. 0:09:21.000 --> 0:09:22.679 Yeah, Bill, I think we should build on that that's 0:09:22.679 --> 0:09:25.880 the interesting piece of information for me. At the last meeting, 0:09:25.920 --> 0:09:28.280 the last round of forecasts, if you will, they were 0:09:28.280 --> 0:09:31.720 forecasting two cuts and they had unemployment year end at 0:09:31.720 --> 0:09:33.839 about four point five percent, and Bill, we could have 0:09:33.920 --> 0:09:37.360 this really strange situation where people are basically looking for 0:09:37.400 --> 0:09:39.880 the unemployment rate to stay study in the forecast, but 0:09:39.960 --> 0:09:43.560 all the dots to come down. Just what's happening there? 0:09:43.679 --> 0:09:46.080 What is actually driving the outlook for rate cuts. If 0:09:46.080 --> 0:09:47.360 it's not unemployment, what is it. 0:09:48.720 --> 0:09:51.280 I think you're right that the forecast is evolving pretty 0:09:51.280 --> 0:09:54.120 close to what they had last summer of our economic 0:09:54.200 --> 0:09:57.360 projections in June. So if they're on the same forecast track, 0:09:57.400 --> 0:10:00.839 where would they pencil in more recuts? Thing that's changed 0:10:00.920 --> 0:10:03.679 is the just this weakness of the labor market in 0:10:03.720 --> 0:10:06.520 the sense of perial employment growth. So I've been thirty 0:10:06.559 --> 0:10:08.720 thousand a month over the last three months, and you 0:10:08.800 --> 0:10:10.800 see a lot of indicators that the labor market is 0:10:10.800 --> 0:10:13.760 continuing to soften. So I think it's more the softness 0:10:13.760 --> 0:10:16.200 of a lot of the labor market indicators that are 0:10:16.240 --> 0:10:20.080 getting them concerned that the libor market could continue to deteriorate. 0:10:20.120 --> 0:10:22.640 So I think they think that's the biggest risk right now, 0:10:22.920 --> 0:10:25.000 and so that's what's causing them to have a little 0:10:25.000 --> 0:10:26.400 bit greater urgency bill. 0:10:26.520 --> 0:10:27.719 Doesn't the market agree with them? 0:10:27.840 --> 0:10:29.880 Isn't that the takeaway from the rally that we've seen 0:10:29.920 --> 0:10:31.040 in the long end of the yield curve? 0:10:32.280 --> 0:10:32.480 Yeah? 0:10:32.520 --> 0:10:35.600 Absolutely, I mean market is an agreement that rates are 0:10:35.640 --> 0:10:37.760 coming down not just this year, but in twenty twenty 0:10:37.760 --> 0:10:39.640 six and twenty twenty seven. In fact, the market you 0:10:39.640 --> 0:10:42.120 look at the federal funds futures market, it's has rates 0:10:42.160 --> 0:10:43.920 coming all the way down to about three percent on 0:10:43.960 --> 0:10:47.760 the federal funds rate the end of end of next year. 0:10:48.120 --> 0:10:50.600 So there's a lot of rate cuts priced in. I think, 0:10:50.920 --> 0:10:53.160 you know, personally, I think it's not quite so clear 0:10:53.200 --> 0:10:55.280 that they're going to go that far over the medium 0:10:55.280 --> 0:10:58.800 to longer term, because the financial conditions are already very 0:10:58.880 --> 0:11:02.319 very accommodative and the economy is not falling out of bed. 0:11:02.679 --> 0:11:05.000 I also think we haven't seen the full effects of 0:11:05.080 --> 0:11:07.240 the tarifts in terms of prices yet, so I think 0:11:07.600 --> 0:11:09.960 inflation is going to stay sticky over the next six 0:11:10.040 --> 0:11:10.720 to twelve months. 0:11:10.800 --> 0:11:12.320 So I want to dig a little bit deeper into 0:11:12.320 --> 0:11:13.080 what you just said. 0:11:13.120 --> 0:11:15.080 The idea that the long end of the yield curve 0:11:15.160 --> 0:11:18.559 is pricing in steeper cuts. You could make the argument 0:11:18.840 --> 0:11:21.040 that if the economy isn't falling out of bed, that 0:11:21.160 --> 0:11:24.800 any steeper cuts would cause a reacceleration and inflation and 0:11:24.840 --> 0:11:26.320 potentially some. 0:11:26.240 --> 0:11:27.360 Deterioration and the dollar. 0:11:27.440 --> 0:11:29.400 That could cause kind. 0:11:29.200 --> 0:11:31.320 Of the opposite in a long end in terms of 0:11:31.360 --> 0:11:35.040 a selloff and a yield curve steepening. What's your understanding 0:11:35.200 --> 0:11:37.560 of why the market doesn't seem concerned about that? 0:11:39.360 --> 0:11:41.480 Well, I think they think that the reasons for cutting 0:11:41.520 --> 0:11:45.160 now are actually quite compelling, given that the inflation path 0:11:45.240 --> 0:11:48.160 through from terrace has been smaller than expected and the 0:11:48.240 --> 0:11:50.240 weakness in the labor market has been at least as 0:11:50.960 --> 0:11:51.880 large as expected. 0:11:51.920 --> 0:11:54.480 So I think the market is shares the view of J. 0:11:54.640 --> 0:11:57.840 Powell that the downside risk to the labor market outweigh 0:11:57.840 --> 0:12:01.959 the upside risk to the inflation, so therefore redcuts are warranted. 0:12:02.640 --> 0:12:04.679 But I think the question is how far are they 0:12:04.679 --> 0:12:06.400 going to go over the medium to longer term. That's 0:12:06.400 --> 0:12:08.199 where the markets I think, maybe a little bit ahead 0:12:08.200 --> 0:12:11.079 of themselves now. Some of this it's hard to factor 0:12:11.120 --> 0:12:13.520 in how much is the pressure of the Trump administration 0:12:13.600 --> 0:12:16.800 on the Fed, and some risks that the Trump administration 0:12:16.960 --> 0:12:19.480 could compromise the independence of the FED. Now, obviously, if 0:12:19.720 --> 0:12:23.000 the Trump administration is successful in doing that, that's gonna 0:12:23.000 --> 0:12:24.959 be lower rates, but it's also going to be higher inflation. 0:12:25.280 --> 0:12:27.000 Well, just to talk about what we might get from 0:12:27.000 --> 0:12:29.840 the news conference as well with Sham and Pal, how 0:12:29.880 --> 0:12:32.079 difficult is it going to be for him to establish 0:12:32.160 --> 0:12:35.000 a consensus at this meeting. If you go back to 0:12:35.040 --> 0:12:37.480 the last dot plot, and things may have changed, but 0:12:37.559 --> 0:12:39.800 in the last dot plot, there were a big group 0:12:39.840 --> 0:12:43.240 of individuals that saw no cuts in twenty twenty five, 0:12:43.240 --> 0:12:45.160 And I'm just wondering how much has changed, not just 0:12:45.200 --> 0:12:47.320 for Sham and Pal. He's indicated a lot has changed 0:12:47.360 --> 0:12:49.280 based on the last few times we've heard from him, 0:12:49.440 --> 0:12:50.920 but for other members of the committee. 0:12:52.080 --> 0:12:53.600 I think most people are going to go along with 0:12:53.600 --> 0:12:58.160 what Chirpowell wants because they're not in disagreement about direction 0:12:58.280 --> 0:13:00.440 of rates. They're just to maybe be we have a 0:13:00.480 --> 0:13:03.880 small disagreement about timing. Should we start in September? Shall 0:13:03.880 --> 0:13:06.160 we wait a little bit longer. So the fact that 0:13:06.160 --> 0:13:08.360 they are all in agreement that rates are going to 0:13:08.400 --> 0:13:10.000 be coming down, I think they're going to give the 0:13:10.040 --> 0:13:10.920 chairman what he wants it. 0:13:10.960 --> 0:13:11.600 This means, so I'm. 0:13:11.520 --> 0:13:14.960 Actually expecting very few descents on the side of no 0:13:15.120 --> 0:13:18.839 rate cuts, maybe zero or one the other side of 0:13:18.880 --> 0:13:21.640 the equations that are going to get fifty people supporting 0:13:21.679 --> 0:13:24.080 a fifty bas appoint raycut. I think one person I'm 0:13:24.120 --> 0:13:27.560 expecting there and perhaps is Steve Moran if he gets 0:13:27.640 --> 0:13:31.440 confirmed and is sitting on the FLUC on Wednesday afternoon. 0:13:31.640 --> 0:13:33.719 Bill, do you think that it's healthy to have a 0:13:33.840 --> 0:13:38.040 character like Stephen Marian Meran on the Federal Reserve on 0:13:38.080 --> 0:13:40.800 the Board of Governors to really foster a robust debate 0:13:41.320 --> 0:13:44.120 about not just whether to cut twenty five or fifty 0:13:44.160 --> 0:13:47.120 basis points, but the overarching framework that the FED is 0:13:47.200 --> 0:13:47.719 operating in. 0:13:49.080 --> 0:13:50.920 I think it's good to have a diversity of views 0:13:51.000 --> 0:13:54.679 on the Federal Reserves to debate a lot of the framework. 0:13:55.200 --> 0:13:57.079 I think the FED could do quite a bit more 0:13:57.120 --> 0:13:59.599 in terms of developing a framework for quantitative easing and 0:13:59.679 --> 0:14:02.560 quantity tight and I've written about that over the last 0:14:02.800 --> 0:14:05.240 few months, so I think there are things for the 0:14:05.320 --> 0:14:08.079 FED to do. I think it's a little odd as 0:14:08.160 --> 0:14:11.319 someone that's essentially on loan from the administration for four 0:14:11.400 --> 0:14:16.000 months to vote at two or three meetings. So and 0:14:16.120 --> 0:14:17.600 I don't think that you know, Steve rant is going 0:14:17.679 --> 0:14:21.240 to get a lot of difference at the meeting this 0:14:21.600 --> 0:14:22.080 coming week. 0:14:22.520 --> 0:14:24.680 For people who aren't familiar with the meeting, a meeting 0:14:24.720 --> 0:14:27.160 that you've been a part of many many times, can 0:14:27.240 --> 0:14:29.360 you describe to them what that kind of room will 0:14:29.400 --> 0:14:33.240 look like, that situation, how the meeting actually progresses, who 0:14:33.360 --> 0:14:37.280 runs things, and what kind of opportunity Steven Mann would 0:14:37.280 --> 0:14:39.760 have as he sits around that table to make his points. 0:14:41.200 --> 0:14:45.040 So the meetings typically are obviously chaired by the chairman, 0:14:45.200 --> 0:14:49.280 and there's a typically a discussion about the economy. Everybody 0:14:49.320 --> 0:14:51.120 goes around and gives their views out of the economy, 0:14:51.120 --> 0:14:53.800 and then there's a discussion about monetary policy. Everybody goes 0:14:53.840 --> 0:14:56.280 around the room and talks about their views on monetary policy. 0:14:56.720 --> 0:14:58.640 So Steve Rann will have a chance to speak on 0:14:58.760 --> 0:15:00.480 both of those, but he's going to be only one 0:15:00.520 --> 0:15:03.400 of nineteen people speaking. So you know, the idea that 0:15:03.480 --> 0:15:05.240 he would go there and dominate the media, I don't 0:15:05.240 --> 0:15:07.400 think he's I think his influence is gonna be quite small. 0:15:07.560 --> 0:15:08.720 But will you take it in turns? 0:15:08.760 --> 0:15:10.520 Are there any kind of debates at all or do 0:15:10.560 --> 0:15:13.000 you just go around one by one by one around 0:15:13.040 --> 0:15:14.040 nineteen individuals. 0:15:14.920 --> 0:15:17.280 Now, there's there can be some back and forth. You know, 0:15:17.480 --> 0:15:20.280 people do respond to what other people said say. But 0:15:20.400 --> 0:15:23.000 I mean, remember, everybody's looking at the same set of information, 0:15:23.240 --> 0:15:28.080 So the disagreements tend to be small, you know, more 0:15:28.120 --> 0:15:30.240 at the margin rather than large, because everybody's looking at 0:15:30.240 --> 0:15:32.400 the same set of information and hearing the same staff 0:15:32.480 --> 0:15:36.320 for work ask evaluating the same economic information. 0:15:37.560 --> 0:15:40.920 Stay with us more Bloomberg surveillance coming up after this. 0:15:50.080 --> 0:15:52.640 Abaga one if ups rights in the following here's the quote. 0:15:52.680 --> 0:15:55.600 We expect the FMC wants to signal a series of 0:15:55.720 --> 0:15:58.400 rate cuts. We expect a total of one hundred basis 0:15:58.440 --> 0:16:01.400 points of rate cuts this year. Abigail joined us now 0:16:01.440 --> 0:16:03.720 for more Abigail, good morning, this year as in the 0:16:03.760 --> 0:16:06.560 rest of twenty twenty five. Yes, okay, quick math some 0:16:06.680 --> 0:16:08.600 a simple point. The three meets, So it's one hundred 0:16:08.600 --> 0:16:10.080 basis points. You expect a fifty. 0:16:10.520 --> 0:16:13.880 Yeah, So we've been expecting the Fed would deliver one 0:16:13.920 --> 0:16:16.360 hundred basis points of using this year since April. So 0:16:16.480 --> 0:16:19.360 we had after the Liberation Day tariff announcements, we felt 0:16:19.480 --> 0:16:22.560 that you know, we would see it come to the 0:16:22.640 --> 0:16:24.240 four that the Fed would have to make this decision 0:16:24.320 --> 0:16:27.440 essentially between kind of the potential for an uplift and 0:16:27.480 --> 0:16:29.920 inflation versus the weakness in the labor market. We thought 0:16:29.920 --> 0:16:33.040 that would become most acute at this September meeting. And 0:16:33.120 --> 0:16:35.880 you know, we continue to expect that we'll see the 0:16:36.120 --> 0:16:40.040 twenty five basis point cut delivered this week. Our expectations 0:16:40.080 --> 0:16:41.880 for the fifty you know, we do have that penciled 0:16:41.920 --> 0:16:44.560 in for December. I think our senses that we continue 0:16:44.560 --> 0:16:47.120 to see this weakness in the economy persisting, and it's 0:16:47.160 --> 0:16:49.600 something that you know, could actually accelerate as we go 0:16:49.720 --> 0:16:51.880 into the kind of fourth quarter of the year. I 0:16:51.920 --> 0:16:53.560 think one of the key things you know it obviously 0:16:53.640 --> 0:16:56.200 retail sales, right. I think for us, one of the 0:16:56.280 --> 0:16:58.240 things that I would know is, you know, you've seen 0:16:58.280 --> 0:17:00.880 a relatively weak consumer this year, it right, You've seen 0:17:00.920 --> 0:17:03.440 the consumer running below trend so far this year. 0:17:03.520 --> 0:17:05.200 You saw July popping a little bit higher. 0:17:05.280 --> 0:17:07.119 So I do think that August print is going to 0:17:07.119 --> 0:17:09.480 be an important one just in terms of getting a 0:17:09.560 --> 0:17:11.080 sense of how this consumer is vary. 0:17:11.400 --> 0:17:13.440 So is twenty twenty five going to be a mirror 0:17:13.520 --> 0:17:16.199 image of twenty twenty four when it comes to one 0:17:16.240 --> 0:17:19.880 hundred basis points of rate cuts into data that only 0:17:19.960 --> 0:17:21.399 gets better economically. 0:17:22.400 --> 0:17:25.040 Yeah, So I think it's interesting because you know, we 0:17:25.160 --> 0:17:27.200 are expecting to see kind of more weakness in the 0:17:27.280 --> 0:17:30.119 labor market side. Right if we remember the kind of 0:17:30.240 --> 0:17:33.159 layoff program from the federal government side, you've got a 0:17:33.240 --> 0:17:36.439 slug of around seventy seventy five thousand workers that are 0:17:36.480 --> 0:17:38.280 expected to come off the payroll at the end of 0:17:38.320 --> 0:17:38.960 the fiscal year. 0:17:39.040 --> 0:17:41.879 So that's going to dent your average right through the 0:17:42.000 --> 0:17:42.480 end of the year. 0:17:42.560 --> 0:17:44.439 So I do think there are signs that you'll continue 0:17:44.440 --> 0:17:47.280 to see that weakness in the labor market data. I 0:17:47.320 --> 0:17:49.120 think the key thing to note here is you've seen 0:17:49.119 --> 0:17:51.119 that weakness in the consumer but you've not seen the 0:17:51.200 --> 0:17:52.280 impact of tariffs yet. 0:17:52.400 --> 0:17:53.000 Right, We're just. 0:17:53.080 --> 0:17:55.360 Starting to see some of those price increases coming through 0:17:55.440 --> 0:17:59.560 for consumers. We saw reports obviously from Walmart recently around 0:17:59.600 --> 0:18:02.200 potentially passing through some price increases in August. 0:18:02.400 --> 0:18:04.840 So I think that's why we're watching very closely. 0:18:04.640 --> 0:18:06.800 You know, what's happening in this retail sales data this week, 0:18:07.200 --> 0:18:10.000