WEBVTT - Bloomberg Surveillance TV: December 11, 2024

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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<v Speaker 2>with Lisa Bromwitz and Amrie Hordern. Join us each day

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<v Speaker 1>Publican Congressman French Hill of Arkansas Rock and a green

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<v Speaker 1>tie with lots of dogs are on it. Joining us now. Congressman,

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<v Speaker 1>I want to start with this question of how available

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<v Speaker 1>congress members are going to be to implement some of

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<v Speaker 1>these proclamations on truth social I know that you are

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<v Speaker 1>up for leading the House Services Financial Services Committee. What

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<v Speaker 1>would your priorities on day one?

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<v Speaker 3>Well, first, Lisa A Marie, great to be with you. First,

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<v Speaker 3>I think we have to coordinate with the Income and

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<v Speaker 3>Trump administration about their regulatory priorities.

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<v Speaker 4>That's number one.

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<v Speaker 3>Number two, we want to roll back the most egregious

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<v Speaker 3>burdensome part of the Biden Harris regulatory agenda, whether that's

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<v Speaker 3>at the CFPB or the SEC or through the bank regulators,

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<v Speaker 3>we want more clarity, more transparency, less cost in the

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<v Speaker 3>system while preserving safety and soundness. Next, we need to

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<v Speaker 3>pursue something that's unfinished business in this Congress, which is

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<v Speaker 3>to create a market structure for digital assets and bring

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<v Speaker 3>up that clarity for innovators, for coders, for venture capitalists

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<v Speaker 3>who are engaged in the next next range of investment

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<v Speaker 3>in the web Web three, which has got blockchain as

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<v Speaker 3>a critical feature of it. So I'd say those are

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<v Speaker 3>some of the top priorities among many, but those are

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<v Speaker 3>some of the top priorities.

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<v Speaker 5>So those would be your priorities if you were to

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<v Speaker 5>get the gavel. I'm told that this is been very

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<v Speaker 5>competitive to lead this committee. We're going to see this

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<v Speaker 5>vote take place in the next twenty four to forty

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<v Speaker 5>eight hours. How close do you think you are to

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<v Speaker 5>leading the committee and getting the nod?

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<v Speaker 3>Well, I've worked very hard over the last few months

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<v Speaker 3>to talk about my vision for the committee, my ability

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<v Speaker 3>to be ready day one to implement President Trump and

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<v Speaker 3>House Republicans' Financial Services priorities and regulatory rollback using budget reconciliation,

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<v Speaker 3>making community banking great again by both legislative and regulatory

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<v Speaker 3>changes countering China. So I've talked about my experience. I

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<v Speaker 3>was a private sector bank CEO, I've been a Denovo

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<v Speaker 3>Bank founder and CEO. I've been a public company director,

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<v Speaker 3>and of course worked in the both the executive branch

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<v Speaker 3>and the legislative branch, specifically on economic and financial services policy.

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<v Speaker 3>So I've talked about why I believe I'm the best

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<v Speaker 3>candidate based on that management experience, that ready to go

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<v Speaker 3>vision I have for the Committee, and the work I've

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<v Speaker 3>done here in the House.

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<v Speaker 5>When it comes to the first one hundred days of

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<v Speaker 5>the Republican sweep through the House and the Senate and

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<v Speaker 5>the White House, there's a debate now and incoming Senate

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<v Speaker 5>Majority Leader John Fuhn is talking about but he wants

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<v Speaker 5>to do two bills, border and energy in one and

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<v Speaker 5>tax cuts in another. But your colleague in the House,

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<v Speaker 5>Jason Smith, wants one large package with immigration, energy as

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<v Speaker 5>well as those tax cuts. What do you think is

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<v Speaker 5>the best path forward?

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<v Speaker 3>Well, and Marie, what I think we have to do

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<v Speaker 3>is be on the same page I think Senate leadership,

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<v Speaker 3>led by incoming Majority Leader John Thune, our great Speaker

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<v Speaker 3>Mike Johnson, and the incoming leadership in the Trump administration

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<v Speaker 3>need to have their own view and have it be

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<v Speaker 3>a consistent and combined view for both the House and Senate.

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<v Speaker 3>I think that maximizes the leverage we have for using

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<v Speaker 3>bucket budget reconciliation. You have to navigate the parliamentarian and

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<v Speaker 3>the Senate. You have to make sure you have a

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<v Speaker 3>clear plan, but most importantly, in a narrow majority in

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<v Speaker 3>the House, we got to make sure we have republic

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<v Speaker 3>can only votes for that. So that's why I think

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<v Speaker 3>all three parties, the executive branch, the House, and Senate

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<v Speaker 3>Republicans all need to be on the same page.

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<v Speaker 1>Congressman, we talk a lot with different investment managers about

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<v Speaker 1>the sequencing next year and how things are going to

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<v Speaker 1>get through from President Trump's agenda. People talking that probably

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<v Speaker 1>we're going to get tariffs first. We see a great

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<v Speaker 1>willingness to do that. Do you understand the mechanism by

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<v Speaker 1>which tariffs bring revenues into the country in a way

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<v Speaker 1>that could actually offset the deficit.

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<v Speaker 3>Well, that's a big, big step to make the assertion

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<v Speaker 3>that tariffs are somehow going to offset a two trillion

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<v Speaker 3>dollar death sit that is projected to be at that

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<v Speaker 3>level for the next ten years. I think this is

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<v Speaker 3>much more about setting long term spending reform and spending priorities,

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<v Speaker 3>as opposed to that you're going to balance the budget

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<v Speaker 3>through some revenue mechanism. We need to get serious about

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<v Speaker 3>prioritizing discretionary spending, but that's only a third of the budget,

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<v Speaker 3>and we really need a bipartisan by cameral process to

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<v Speaker 3>make long term spending reforms in what we think can

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<v Speaker 3>call the mandatory spending programs, which is eighty percent.

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<v Speaker 4>Of the budget.

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<v Speaker 3>If we do that, we'll put America's financing on a

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<v Speaker 3>much more sustainable course, and that will be the ticket,

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<v Speaker 3>in my view, to countering China, meeting all of our

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<v Speaker 3>domestic priorities, and having a long term future that doesn't

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<v Speaker 3>continue to indebt the next generation.

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<v Speaker 5>So what do you think the end goal President Electroump

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<v Speaker 5>has when it comes to the tariffs he's discussed on

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<v Speaker 5>the campaign trail.

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<v Speaker 4>Well.

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<v Speaker 3>I think he wants to use tariffs as a major

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<v Speaker 3>cudgel in bringing people to the negotiating table, and I

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<v Speaker 3>believe one of the priorities will be make sure that

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<v Speaker 3>the USMCA, which he negotiated as president and replaced the

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<v Speaker 3>North American Free Trade Agreement, is working just as American policymakers.

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<v Speaker 4>Believed it should.

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<v Speaker 3>Maybe we could strengthen it, make sure that people can't

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<v Speaker 3>take advantage.

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<v Speaker 4>Of it inappropriately.

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<v Speaker 3>Perhaps we could even add countries to it, which I

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<v Speaker 3>think is an exciting prospect to use that as a

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<v Speaker 3>real inducement to get more partners trading partners for the

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<v Speaker 3>United States, Canada, and Mexico. And I think that would

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<v Speaker 3>be a real ticket to bring FDI that the President

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<v Speaker 3>talked about yesterday, foreign direct investment coming into the United States.

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<v Speaker 6>Congressman Hill, just to be clear, then, is it your

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<v Speaker 6>expectation that we will not see sweeping tariffs, that it

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<v Speaker 6>is simply a negotiating employee.

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<v Speaker 3>I think it's a principal cudgel that the President has

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<v Speaker 3>in bringing people to the table to get better open

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<v Speaker 3>access for American products and be treating our services and

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<v Speaker 3>merchandise fairly and make sure that we can get into

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<v Speaker 3>other countries on a fair and equitable basis. And over

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<v Speaker 3>the years that's really deteriorated, and I think that's the

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<v Speaker 3>purpose of using tariffs is to say you're not going

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<v Speaker 3>to dump your products into our country at subsidized, cheap prices,

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<v Speaker 3>and we want access to your markets.

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<v Speaker 1>Congressman, before we let you go, one other big question

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<v Speaker 1>that we keep hearing about has been how much of

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<v Speaker 1>the Doege Committee can really push through some of the

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<v Speaker 1>efficiencies that can help offset a number of the expenditures.

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<v Speaker 1>How willing do you think congress members are going to

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<v Speaker 1>be to sign off on some of the proposals to

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<v Speaker 1>cut staff dramatically across the board.

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<v Speaker 3>Well, look, I think the Doze exercise led by Elon

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<v Speaker 3>Musk and Vivek Ramashwami is a good one. I think

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<v Speaker 3>having outside voices take a look at the calcification of

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<v Speaker 3>the barnacles that have been built up on the whole

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<v Speaker 3>of state for decades is really important. And I think

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<v Speaker 3>they'll have ideas that can be done by executive management

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<v Speaker 3>on being more efficient and procurement, or policies about employment.

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<v Speaker 3>But a lot of the tough changes will come that

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<v Speaker 3>they'll recommend, it will have to be vetted by Congress

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<v Speaker 3>and approved by Congress. And I can say on the

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<v Speaker 3>House Republican side, tremendous enthusiasm to see these two successful

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<v Speaker 3>business guys brainstorm work with the cabinet secretaries and make

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<v Speaker 3>constructive recommendations for making the government better, more efficient, and

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<v Speaker 3>of course less costly to the American people.

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<v Speaker 1>Congressman, thank you so much. You are very generous with

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<v Speaker 1>your time, and we look forward to speaking to you

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<v Speaker 1>after that Thursday vote. Congressman French Hell on everything else.

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<v Speaker 1>David Kelly of JP Morgan with a reaction to what

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<v Speaker 1>we just got basically bang in line with expectations. I

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<v Speaker 1>imagine you're going to sort of talk about how this

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<v Speaker 1>is exactly as expected, the disinflationary trend intact.

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<v Speaker 4>What's your take?

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<v Speaker 7>Well, I think it's pretty interesting because when you dig

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<v Speaker 7>into the data, what we have is rich American inflation.

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<v Speaker 7>We've got poor world deflation. So if you actually look

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<v Speaker 7>at the you know, where do we see inflation? In

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<v Speaker 7>November we saw another four tenths. In airline affairs we

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<v Speaker 7>saw another five tenths. And hotel rates we saw another

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<v Speaker 7>six tenths. And new vehicle prices, so the stuff that

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<v Speaker 7>the rich buy because they got money is going up.

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<v Speaker 7>But if you look at you know, energy in recent

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<v Speaker 7>months has come down a lot and then as Michael

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<v Speaker 7>was pointing out to the things that have been holding

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<v Speaker 7>inflation up, which are shelter costs and auto insurance, we're

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<v Speaker 7>both very mild in this report. So what that tells

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<v Speaker 7>me is if borrowing some shock, the CPI numbers will

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<v Speaker 7>trend down next year, and you know, the next few

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<v Speaker 7>months are going to show some high year of year numbers.

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<v Speaker 7>But by next spring, I think we're going to be

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<v Speaker 7>below two percent a year of year CPI. But it's

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<v Speaker 7>really going to be.

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<v Speaker 4>Because of a lot.

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<v Speaker 7>Of ordinary goods and services, both by ordinary people seeing

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<v Speaker 7>some deflation pressure. Even while things that the playthings and

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<v Speaker 7>play activities and the rich get more expensive.

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<v Speaker 1>We are seeing right now, to your yells, take a

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<v Speaker 1>leg lower as people. I'll look through this and get

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<v Speaker 1>on board with what you're talking about, David, in terms

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<v Speaker 1>of inflation coming in.

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<v Speaker 4>How do you.

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<v Speaker 1>Dismiss this idea that some of the drivers of inflation

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<v Speaker 1>I'm thinking about airplane costs, I'm thinking of cars, I'm

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<v Speaker 1>thinking about other sectors are likely starting to see another

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<v Speaker 1>revival of inflation. How do you discount some of those

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<v Speaker 1>anecdotes at a time where the cycle has been so confusing.

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<v Speaker 7>Yeah, I don't think that's likely to happen barring policies,

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<v Speaker 7>some policy change, right. You know, what I focus on

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<v Speaker 7>a lot is things like labor costs, and we see

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<v Speaker 7>no evidence that American workers are getting the kinds of

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<v Speaker 7>wage increases which would ultimately generate inflation from below. So

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<v Speaker 7>I don't think that's what's going to happen. But I

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<v Speaker 7>do think that when the Federal Reserve looks at it,

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<v Speaker 7>they're going to have to look with one eye on

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<v Speaker 7>what's really going on the economy right now and one

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<v Speaker 7>eye of what might be coming in terms of policy

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<v Speaker 7>going forward. So I do expect that the dot plot

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<v Speaker 7>next week will be a little bit more cautious than

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<v Speaker 7>the one in September. I think they'll try and take

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<v Speaker 7>some rat cuts off the table here in the host years,

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<v Speaker 7>even though I expect they'll cut in December. So right now,

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<v Speaker 7>how I'd say, the inflation story is still benign. It's cooling,

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<v Speaker 7>It's cooling very slowly, but it's still cooling. But the

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<v Speaker 7>question is what are we going to do to that

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<v Speaker 7>when we attack this with policy changes next year?

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<v Speaker 6>And of course, David, the Fed is not political, but

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<v Speaker 6>how do they avoid a potential political firestorm if they

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<v Speaker 6>start to take cuts off the table for twenty twenty

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<v Speaker 6>five in what will be the first year of Trump's

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<v Speaker 6>second term as president.

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<v Speaker 4>That seems like something.

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<v Speaker 6>That would absolutely invoke a truth social tweet opposed. So

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<v Speaker 6>whatever you call it on next now, well, I.

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<v Speaker 7>Think they should try and sneak it into the Summary

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<v Speaker 7>of Economic projections right now rather than disappoint with not

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<v Speaker 7>cutting rates when people expect them to next year. And

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<v Speaker 7>so I think we'll see a bit of that. I

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<v Speaker 7>don't think, you know, I think that they won't assume,

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<v Speaker 7>as Ja Palace point out, they don't speculate, they don't assume,

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<v Speaker 7>they don't guess, they're I'm going to assume the impact

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<v Speaker 7>of all of the potential immigration and tariff policies or

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<v Speaker 7>deed fiscal stimus in twenty twenty six on inflation. They

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<v Speaker 7>won't assume that. But I think that the individual bank

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<v Speaker 7>presidents will probably take a rate cutter two off the

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<v Speaker 7>table for twenty twenty five twenty twenty six. I'm put

0:12:08.240 --> 0:12:10.600
<v Speaker 7>in the Summary of economic projections and see if you know,

0:12:10.640 --> 0:12:14.800
<v Speaker 7>because the danger of a big political firestorm over a

0:12:14.920 --> 0:12:17.679
<v Speaker 7>dot plot when people, you know, when Americans faure I'm

0:12:17.679 --> 0:12:19.959
<v Speaker 7>paying that much attention to the dot plot. I don't

0:12:19.960 --> 0:12:21.720
<v Speaker 7>think there's that great danger. I think it's better for

0:12:21.760 --> 0:12:24.720
<v Speaker 7>them to set up expectations for less easy and going forward.

0:12:24.880 --> 0:12:27.440
<v Speaker 7>Set that up now so they don't have to they

0:12:27.440 --> 0:12:30.719
<v Speaker 7>don't have to defend not cutting when people expected them

0:12:30.760 --> 0:12:31.920
<v Speaker 7>to in the middle of next year.

0:12:32.120 --> 0:12:34.560
<v Speaker 6>In the meantime, there's just been this huge surge in

0:12:34.640 --> 0:12:37.720
<v Speaker 6>optimism as all these soft surveys really follow the politics

0:12:37.720 --> 0:12:41.520
<v Speaker 6>pretty clearly. There's ones from CEOs from the Business Roundtable

0:12:41.559 --> 0:12:43.679
<v Speaker 6>saying that they plan to spend more on capex, they

0:12:43.679 --> 0:12:46.760
<v Speaker 6>plan to hire more small business Optimism is off the

0:12:46.840 --> 0:12:49.400
<v Speaker 6>charts too, David. At what point does that go from

0:12:49.440 --> 0:12:51.760
<v Speaker 6>soft data to hard data. Is there a potential for

0:12:51.840 --> 0:12:54.240
<v Speaker 6>some of that to act as an inflationary force.

0:12:56.160 --> 0:12:59.800
<v Speaker 7>I don't think so, but I mean there is I

0:12:59.800 --> 0:13:01.920
<v Speaker 7>think people are happy to have the election behind us.

0:13:02.160 --> 0:13:05.400
<v Speaker 7>I think there is optimism on deregulation, but I think

0:13:05.400 --> 0:13:09.040
<v Speaker 7>there is also a fair amount of concern about, you know,

0:13:09.040 --> 0:13:10.720
<v Speaker 7>how far we're going to push things in terms of

0:13:10.760 --> 0:13:14.920
<v Speaker 7>tariffs or in terms of deportations, and I think so.

0:13:15.080 --> 0:13:17.080
<v Speaker 7>I think there's a little bit of caution still out there,

0:13:17.080 --> 0:13:19.679
<v Speaker 7>and I don't think that the amount of spending that's

0:13:19.720 --> 0:13:23.040
<v Speaker 7>going to go into the economy is in twenty twenty

0:13:23.040 --> 0:13:26.520
<v Speaker 7>five is going to cause more inflation, particularly because we've

0:13:26.640 --> 0:13:28.680
<v Speaker 7>now got a stronger dollar, which is going to reduce

0:13:28.679 --> 0:13:32.360
<v Speaker 7>import prices go weak global oil prices. We've got a

0:13:33.000 --> 0:13:36.520
<v Speaker 7>kind of mediocre global economies. There's nothing external that's generating inflation.

0:13:36.600 --> 0:13:39.000
<v Speaker 7>I don't see wages in the US generating internal inflation.

0:13:39.360 --> 0:13:42.160
<v Speaker 7>So right now, I think we're still on a you know,

0:13:42.440 --> 0:13:44.480
<v Speaker 7>there's a very good track. It's it's steady growth, a

0:13:44.520 --> 0:13:47.920
<v Speaker 7>little bit above trend growth, with inflation gradually easing down.

0:13:47.960 --> 0:13:48.439
<v Speaker 4>At the question.

0:13:48.440 --> 0:13:51.880
<v Speaker 7>You know, this is a really good economy for financial markets.

0:13:52.040 --> 0:13:54.880
<v Speaker 7>The question is can we sustain it in twenty twenty five.

0:13:55.160 --> 0:13:58.840
<v Speaker 5>Constrictor immigration flows though, could that be a cause for

0:13:58.880 --> 0:14:01.240
<v Speaker 5>potentially higher wages and wage inflation.

0:14:02.280 --> 0:14:05.040
<v Speaker 7>Oh yes, yeah. I mean if we do mass deportations

0:14:05.080 --> 0:14:08.600
<v Speaker 7>of people who are currently working, whether they're legal or not,

0:14:08.679 --> 0:14:12.040
<v Speaker 7>If they're currently working and we deport them. The problem

0:14:12.120 --> 0:14:14.360
<v Speaker 7>is the native born working hit population in the United

0:14:14.360 --> 0:14:18.720
<v Speaker 7>States is declining. So if we don't, if we slam

0:14:18.760 --> 0:14:22.960
<v Speaker 7>the door on both legal and illegal immigration, then we'll

0:14:22.960 --> 0:14:24.840
<v Speaker 7>have a problem. But I really don't think that's what's

0:14:24.880 --> 0:14:26.920
<v Speaker 7>going to happen. I think we'll have to see how

0:14:26.920 --> 0:14:29.680
<v Speaker 7>it plays out. I think we will see some greater deportation,

0:14:29.760 --> 0:14:32.200
<v Speaker 7>but I think American business is very anxious that we

0:14:32.240 --> 0:14:35.000
<v Speaker 7>continue to have skilled workers from around the world come

0:14:35.040 --> 0:14:37.240
<v Speaker 7>to the United States and help our economy grow, and

0:14:37.280 --> 0:14:38.920
<v Speaker 7>I think that probably will be sustained.

0:14:39.200 --> 0:14:41.920
<v Speaker 1>David Kelly of JP Morgan, thank you as always for

0:14:42.080 --> 0:14:54.880
<v Speaker 1>your insight. Joining us now is jap Brice and of

0:14:55.000 --> 0:14:59.000
<v Speaker 1>Wells Fargo. Jay, your initial reaction to a hugely surprising

0:14:59.040 --> 0:15:02.040
<v Speaker 1>print of exactly online what everybody was expecting.

0:15:02.240 --> 0:15:04.240
<v Speaker 4>Well, so you'll use a phrase. I'm sure, Danny you're

0:15:04.240 --> 0:15:06.520
<v Speaker 4>familiar with this. It's kind of a damp squib, right,

0:15:07.240 --> 0:15:08.480
<v Speaker 4>there's nothing to see here.

0:15:09.360 --> 0:15:09.560
<v Speaker 7>Yeah.

0:15:09.840 --> 0:15:12.520
<v Speaker 4>I agree with Mike, and I think this will I

0:15:12.520 --> 0:15:14.760
<v Speaker 4>think the FOMC will go ahead now and cut by

0:15:14.800 --> 0:15:17.240
<v Speaker 4>twenty five basis points next week. It'd be interesting really

0:15:17.800 --> 0:15:20.760
<v Speaker 4>going forward because we're not at two percent yet. You know,

0:15:20.840 --> 0:15:22.920
<v Speaker 4>if you take this number and you annualize it, you're

0:15:22.960 --> 0:15:24.920
<v Speaker 4>at the core number. You're still running at three and

0:15:24.960 --> 0:15:28.400
<v Speaker 4>a quarter percent. That's still well above where the FOMC

0:15:28.480 --> 0:15:30.440
<v Speaker 4>wants to see it now. Tomorrow we'll get you know,

0:15:30.440 --> 0:15:32.520
<v Speaker 4>we'll get PPI and that will help us to true

0:15:32.600 --> 0:15:36.200
<v Speaker 4>up our PCE numbers, which is the more important number

0:15:36.360 --> 0:15:38.640
<v Speaker 4>for the Fed. But you know, this is this right here.

0:15:38.720 --> 0:15:41.480
<v Speaker 4>There's nothing here that would say the Fed doesn't hike

0:15:42.040 --> 0:15:43.120
<v Speaker 4>cut rates next week.

0:15:43.000 --> 0:15:46.480
<v Speaker 1>Which especially comes after the unemployment rate ticked up just

0:15:46.520 --> 0:15:49.080
<v Speaker 1>a little bit in the prior NFP that we got

0:15:49.160 --> 0:15:52.600
<v Speaker 1>last Friday. I just wonder what data is really going

0:15:52.640 --> 0:15:57.200
<v Speaker 1>to become incredibly important going forward, or essentially if the

0:15:57.240 --> 0:15:59.960
<v Speaker 1>Fed is going to really open up a blank check

0:16:00.080 --> 0:16:02.200
<v Speaker 1>to do whatever it wants next year because of the

0:16:02.200 --> 0:16:03.920
<v Speaker 1>policy uncertainty on the table.

0:16:04.280 --> 0:16:07.280
<v Speaker 4>Yeah. So, I mean the two big numbers are always

0:16:07.280 --> 0:16:09.280
<v Speaker 4>going to continue to be, at least for the foreseeable future.

0:16:09.280 --> 0:16:10.960
<v Speaker 4>It's going to be continued to be the labor market

0:16:11.040 --> 0:16:14.200
<v Speaker 4>report in the CPI slash PCE sort of numbers. But

0:16:14.200 --> 0:16:16.120
<v Speaker 4>they will look at the totality of the numbers. We'll

0:16:16.160 --> 0:16:19.520
<v Speaker 4>get retail spending the day before the FOMC meets. You know,

0:16:19.600 --> 0:16:22.680
<v Speaker 4>that's still an important number. It's not a list like

0:16:23.440 --> 0:16:25.320
<v Speaker 4>those two, but those I think will be the real

0:16:25.400 --> 0:16:27.200
<v Speaker 4>key numbers as we continue to move forward.

0:16:27.320 --> 0:16:29.320
<v Speaker 6>First of all, Jay, Thank you for using the phrase

0:16:29.360 --> 0:16:31.520
<v Speaker 6>damp squid. Not enough people say it in this country,

0:16:31.520 --> 0:16:33.880
<v Speaker 6>and it's perfect for a moment like this. What do

0:16:33.920 --> 0:16:36.000
<v Speaker 6>you expect then, now that you know we're missing maybe

0:16:36.040 --> 0:16:38.040
<v Speaker 6>like that tiny piece of the puzzle, But we have

0:16:38.280 --> 0:16:42.280
<v Speaker 6>labor figures, we have CPI. When it comes to what

0:16:42.320 --> 0:16:45.400
<v Speaker 6>they project forward for twenty twenty five, what are we

0:16:45.560 --> 0:16:47.640
<v Speaker 6>likely to hear from the Fed? Is this an FOMC

0:16:47.760 --> 0:16:50.280
<v Speaker 6>that wants to give themselves more optionality to pause at

0:16:50.280 --> 0:16:50.760
<v Speaker 6>this moment?

0:16:51.160 --> 0:16:55.000
<v Speaker 4>Well, so, I don't expect Chair palan his press conference

0:16:55.080 --> 0:16:59.160
<v Speaker 4>to be real specific about policy assumptions. I think we'll

0:16:59.200 --> 0:17:01.480
<v Speaker 4>be interesting is when you look at the dot plot

0:17:01.480 --> 0:17:04.280
<v Speaker 4>for twenty twenty five, I think that you're probably going

0:17:04.359 --> 0:17:06.920
<v Speaker 4>to see a lot of dispersion there depending on what

0:17:07.359 --> 0:17:11.399
<v Speaker 4>policy assumptions different FOMC members are making. So you know,

0:17:11.400 --> 0:17:15.159
<v Speaker 4>if you're the president of a FED somewhere and you

0:17:15.160 --> 0:17:17.240
<v Speaker 4>think there's going to be lots of tariffs next year,

0:17:17.520 --> 0:17:20.200
<v Speaker 4>you're probably going to have a higher dot than otherwise.

0:17:20.240 --> 0:17:22.639
<v Speaker 4>And so we won't know what those assumptions are. I'm

0:17:22.680 --> 0:17:24.639
<v Speaker 4>going to assume that during the FOMC meeting there will

0:17:24.680 --> 0:17:27.200
<v Speaker 4>be a robust discussion about that, but we're not going

0:17:27.240 --> 0:17:30.159
<v Speaker 4>to actually know what they discuss until five years from

0:17:30.160 --> 0:17:32.040
<v Speaker 4>now when the actual transcripts come out, right.

0:17:31.880 --> 0:17:34.040
<v Speaker 5>But putting this all together, what's your base case for

0:17:34.080 --> 0:17:36.840
<v Speaker 5>twenty twenty five? It feels like with this inflation data,

0:17:37.000 --> 0:17:40.760
<v Speaker 5>basically Defense given this green light to cut next week,

0:17:41.040 --> 0:17:42.400
<v Speaker 5>but what about for twenty twenty five?

0:17:42.520 --> 0:17:45.879
<v Speaker 4>So what we're assuming is what we've baked into our

0:17:45.920 --> 0:17:50.200
<v Speaker 4>forecast is not the whole ten percent across the board

0:17:50.240 --> 0:17:52.760
<v Speaker 4>tariff sixty percent on China. We've kind of taken half

0:17:52.840 --> 0:17:54.960
<v Speaker 4>of that and we've said, Okay, we think it's probably

0:17:55.000 --> 0:17:56.720
<v Speaker 4>going to come maybe in the second half of the year.

0:17:56.840 --> 0:17:59.520
<v Speaker 4>So our base case is in the second half of

0:17:59.560 --> 0:18:01.600
<v Speaker 4>next year you see a big slowdown in the US

0:18:01.680 --> 0:18:06.560
<v Speaker 4>economy because of these tariffs, draining purchasing power and then

0:18:07.000 --> 0:18:09.199
<v Speaker 4>inflation coming up. And so you know, we have the

0:18:09.240 --> 0:18:13.320
<v Speaker 4>Fed stopping in the summer of next year with their rad.

0:18:13.280 --> 0:18:15.400
<v Speaker 1>Cuts, and that means that the terminal rate.

0:18:15.359 --> 0:18:17.560
<v Speaker 4>Is three and a half to four, somewhere in that

0:18:17.640 --> 0:18:18.440
<v Speaker 4>sort of vicinity.

0:18:18.640 --> 0:18:20.600
<v Speaker 1>So it'll be interesting to see whether they actually do

0:18:21.040 --> 0:18:24.040
<v Speaker 1>revise their statement of economic projections next week. Jae Brice

0:18:24.080 --> 0:18:26.879
<v Speaker 1>and Falls Fargot, Thank you. Wonderful to see you in person.

0:18:27.960 --> 0:18:31.520
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0:18:31.520 --> 0:18:34.840
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