1
00:00:00,160 --> 00:00:01,800
Speaker 1: Ready placed to say that joining us now is built

2
00:00:01,800 --> 00:00:05,480
Speaker 1: down Lak Bloomberg, opinion columnist and former New York FED President.

3
00:00:05,600 --> 00:00:08,280
Speaker 1: But we've had the benefit of about seventeen minutes to

4
00:00:08,360 --> 00:00:10,560
Speaker 1: go over some of this. What's your reaction to it?

5
00:00:11,960 --> 00:00:14,040
Speaker 2: I think it just reinforces the notion that the Fed's

6
00:00:14,080 --> 00:00:16,000
Speaker 2: not going to be in a rush to cut rates.

7
00:00:16,160 --> 00:00:17,880
Speaker 2: So the last couple of weeks there's been a sort

8
00:00:17,920 --> 00:00:19,960
Speaker 2: of change of view that the fed Greek cuts might

9
00:00:20,320 --> 00:00:23,279
Speaker 2: materialize a little bit more slowly, with less force, And

10
00:00:23,320 --> 00:00:26,840
Speaker 2: I think this just reinforces that Kami's still doing pretty well.

11
00:00:27,280 --> 00:00:28,920
Speaker 2: It looks like we're gonna have growth in the fourth

12
00:00:29,040 --> 00:00:30,440
Speaker 2: quarter of two percent plus.

13
00:00:31,920 --> 00:00:34,720
Speaker 3: Financial conditions have eased a lot over the last couple

14
00:00:34,760 --> 00:00:37,600
Speaker 3: of months, So I think that risks are that the

15
00:00:37,640 --> 00:00:39,360
Speaker 3: Fed is going to keep rates higher for longer.

16
00:00:39,680 --> 00:00:43,640
Speaker 4: Bill an unfair question. Why is the economy doing well?

17
00:00:43,800 --> 00:00:47,880
Speaker 4: Is productivity? Is it a follow on a pandemic stimulus?

18
00:00:48,159 --> 00:00:50,080
Speaker 4: What's the why of what we saw in Q three,

19
00:00:50,159 --> 00:00:54,000
Speaker 4: what Atlanta GDP says about Q four, and maybe a

20
00:00:54,040 --> 00:00:57,000
Speaker 4: few people optimistic about the first half of two thousand

21
00:00:57,000 --> 00:00:58,880
Speaker 4: and four twenty twenty four.

22
00:01:00,000 --> 00:01:01,920
Speaker 3: I think the biggest thing is that there were such

23
00:01:02,160 --> 00:01:05,679
Speaker 3: large fiscal transfers that occurred during the pandemic that households

24
00:01:05,680 --> 00:01:08,840
Speaker 3: and businesses are actually in pretty good financial shape for

25
00:01:08,959 --> 00:01:11,759
Speaker 3: this late and economic cycle, and so people have.

26
00:01:11,680 --> 00:01:14,840
Speaker 5: The ability to continue to spend. This is unusual. I

27
00:01:14,880 --> 00:01:16,000
Speaker 5: Typically what happens.

28
00:01:15,720 --> 00:01:18,840
Speaker 2: Is people get over their skis, they're overextended Fed titans,

29
00:01:18,840 --> 00:01:21,480
Speaker 2: and that actually bites quite a bit on economic activity.

30
00:01:21,720 --> 00:01:24,319
Speaker 2: This time, I don't think people are as overextended, and

31
00:01:24,400 --> 00:01:27,680
Speaker 2: so the Fed rate heights have it had less restraint

32
00:01:27,720 --> 00:01:29,000
Speaker 2: on the economy.

33
00:01:28,959 --> 00:01:30,960
Speaker 6: Given that bill, and especially since you said the Fed

34
00:01:31,000 --> 00:01:32,480
Speaker 6: is not going to be in a rush to cut rates,

35
00:01:32,840 --> 00:01:34,840
Speaker 6: do you think that the market is still pricing in

36
00:01:34,880 --> 00:01:37,360
Speaker 6: too great of a chance of rate cuts if they're

37
00:01:37,400 --> 00:01:39,319
Speaker 6: talking about a fifty percent chance right now?

38
00:01:40,319 --> 00:01:42,320
Speaker 5: Yeah, I do, I do. I think, I mean, I

39
00:01:42,360 --> 00:01:44,120
Speaker 5: think May is more likely. I mean it's the Fed

40
00:01:44,160 --> 00:01:45,000
Speaker 5: wants to cut rates.

41
00:01:45,000 --> 00:01:47,119
Speaker 2: I mean, they made it pretty clear that they knew

42
00:01:47,160 --> 00:01:50,920
Speaker 2: that as inflation falls Maitrey, policy is being tightened, and

43
00:01:50,960 --> 00:01:54,120
Speaker 2: so that they need to follow inflation down. But to

44
00:01:54,160 --> 00:01:55,960
Speaker 2: do that they also have to get some signs that

45
00:01:56,040 --> 00:01:58,760
Speaker 2: the economy is slowing sufficiently so that there's enough slack

46
00:01:58,800 --> 00:02:00,600
Speaker 2: in the economy to bring inflation all the way down

47
00:02:00,640 --> 00:02:01,680
Speaker 2: to two percent and.

48
00:02:01,720 --> 00:02:02,360
Speaker 5: Keep it there.

49
00:02:02,840 --> 00:02:05,160
Speaker 2: You know, the wage trend obviously is something that's going

50
00:02:05,160 --> 00:02:08,720
Speaker 2: to concern them. If wages are rising faster than four

51
00:02:08,760 --> 00:02:11,639
Speaker 2: percent a year, that's probably not considering two percent inflation

52
00:02:12,000 --> 00:02:12,919
Speaker 2: in the medium term.

53
00:02:13,400 --> 00:02:15,720
Speaker 6: Given that, and given the fact that we are seeing

54
00:02:16,120 --> 00:02:18,600
Speaker 6: the rate cuts being priced into the market more than

55
00:02:18,639 --> 00:02:20,919
Speaker 6: you think is warranted by the Federal Reserve, how much

56
00:02:20,960 --> 00:02:23,200
Speaker 6: do you think it set them back? The FED officials

57
00:02:23,440 --> 00:02:25,600
Speaker 6: that the markets did rally as much as they did

58
00:02:25,880 --> 00:02:27,440
Speaker 6: into your end, how much do you think that I'm

59
00:02:27,440 --> 00:02:29,080
Speaker 6: going to ask you the same question I asked Alan Ruskin,

60
00:02:29,120 --> 00:02:31,040
Speaker 6: how many how much do you think that turbo charged

61
00:02:31,240 --> 00:02:32,200
Speaker 6: the US economy?

62
00:02:33,520 --> 00:02:35,880
Speaker 5: I don't think it turbo charged US economy that much.

63
00:02:35,919 --> 00:02:38,600
Speaker 2: I mean, the easier financial conditions just haven't been in

64
00:02:38,639 --> 00:02:39,520
Speaker 2: place for that long.

65
00:02:39,560 --> 00:02:41,639
Speaker 5: It's really only been a couple of months. But I

66
00:02:41,680 --> 00:02:42,240
Speaker 5: do think the.

67
00:02:42,200 --> 00:02:44,160
Speaker 2: FED is a little frustrated by the fact that the

68
00:02:44,160 --> 00:02:48,320
Speaker 2: market always must be more dubbish than the FED wants,

69
00:02:48,400 --> 00:02:51,120
Speaker 2: because that makes the Fed's job more more difficult, because

70
00:02:51,360 --> 00:02:54,120
Speaker 2: as the market rallies that easiest financial conditions, that adds

71
00:02:54,120 --> 00:02:57,000
Speaker 2: impetus to the economy, which means that then that there's

72
00:02:57,040 --> 00:02:58,880
Speaker 2: more for the FED to do rather than less.

73
00:02:59,160 --> 00:03:00,680
Speaker 5: So I think they're a little bit frustrated.

74
00:03:01,040 --> 00:03:03,200
Speaker 2: Powell was asked about this in his Breast Last Breast

75
00:03:03,240 --> 00:03:05,040
Speaker 2: conference and he basically said yes, at the end of

76
00:03:05,040 --> 00:03:06,120
Speaker 2: the day though that you know.

77
00:03:06,200 --> 00:03:07,520
Speaker 5: These things have to come together.

78
00:03:07,720 --> 00:03:10,560
Speaker 2: What the FED does ultimately determines where the markets are

79
00:03:10,600 --> 00:03:12,560
Speaker 2: going to end up. And so the FED does hold

80
00:03:12,560 --> 00:03:14,760
Speaker 2: the whipped and they'll get their way. And I think

81
00:03:14,760 --> 00:03:16,320
Speaker 2: the way they get their way is they'll just be

82
00:03:16,360 --> 00:03:17,800
Speaker 2: slowly the what the Martin expects.

83
00:03:17,919 --> 00:03:21,239
Speaker 4: Bill Dudley, I've got to do an acclaimed surveillance audible

84
00:03:21,520 --> 00:03:23,800
Speaker 4: and look at the celebration by you and the New

85
00:03:23,880 --> 00:03:28,800
Speaker 4: York Fed over doctor Massellam joining the Saint Louis FED.

86
00:03:28,960 --> 00:03:31,880
Speaker 4: Bullard was always with great respect to the gentleman from

87
00:03:31,880 --> 00:03:36,960
Speaker 4: Indiana University and outlier. His doc plot was always unique.

88
00:03:37,240 --> 00:03:39,480
Speaker 4: What kind of doc plot are we going to generate

89
00:03:39,840 --> 00:03:44,240
Speaker 4: with Alberto Mussolam taking over at the venerable Saint Louis FED.

90
00:03:45,640 --> 00:03:47,560
Speaker 2: Well, I don't have a really strong view that Alberto

91
00:03:47,640 --> 00:03:50,040
Speaker 2: that's going to, you know, be dubbish or hawkish. I

92
00:03:50,080 --> 00:03:51,920
Speaker 2: think he's going to take the information as he sees

93
00:03:51,960 --> 00:03:54,800
Speaker 2: it and respond accordingly. I think what he brings to

94
00:03:54,840 --> 00:03:57,040
Speaker 2: the Federal Reserve, though, is the fact that he not

95
00:03:57,080 --> 00:03:59,120
Speaker 2: only is he a really good economist, but he also

96
00:03:59,280 --> 00:03:59,960
Speaker 2: understands Mark.

97
00:04:00,080 --> 00:04:02,080
Speaker 5: It's really deeply so that.

98
00:04:02,040 --> 00:04:05,520
Speaker 2: Combination of macroeconomic knowledge and also market experience. I think

99
00:04:05,560 --> 00:04:08,920
Speaker 2: it's pretty rare in the Federal Reserve system. So he

100
00:04:09,000 --> 00:04:11,640
Speaker 2: brings really a good, great tool set to the Fed.

101
00:04:12,840 --> 00:04:15,360
Speaker 4: I look Bill Dudley also, just within the crush of

102
00:04:15,360 --> 00:04:17,599
Speaker 4: the jobs report, we have to look at your really

103
00:04:17,680 --> 00:04:22,120
Speaker 4: spirited essay, not the fragility of our banking system, but

104
00:04:22,320 --> 00:04:26,760
Speaker 4: just the idea of where we're going in twenty twenty

105
00:04:26,760 --> 00:04:30,760
Speaker 4: four and shoring up the supervision of our banks. Are

106
00:04:30,760 --> 00:04:35,440
Speaker 4: you optimistic we can get that important job done well.

107
00:04:35,480 --> 00:04:37,560
Speaker 2: I think that it's pretty clear, based on events that

108
00:04:37,600 --> 00:04:41,800
Speaker 2: happened last last March, that their supervision needs to do better.

109
00:04:42,040 --> 00:04:44,440
Speaker 5: They need to be more forceful in forcing banks to

110
00:04:44,520 --> 00:04:47,039
Speaker 5: remedy problems more quickly.

111
00:04:47,400 --> 00:04:49,320
Speaker 2: But one way I think that to do that, though,

112
00:04:49,400 --> 00:04:51,880
Speaker 2: is to actually release some of these supervisory five things

113
00:04:51,880 --> 00:04:55,880
Speaker 2: that currently are secret. If you knew that the supervirus

114
00:04:56,200 --> 00:04:58,000
Speaker 2: advisory finers were going to come out with a lag

115
00:04:58,040 --> 00:05:02,120
Speaker 2: of say sponsors, so that huge incentives on bank managements

116
00:05:02,160 --> 00:05:04,760
Speaker 2: and banks boards to get going to remedy the problems.

117
00:05:05,320 --> 00:05:07,080
Speaker 2: Right now, a lot of these problems are not known

118
00:05:07,120 --> 00:05:10,200
Speaker 2: by people in the marketplace, and I think that makes

119
00:05:10,240 --> 00:05:13,560
Speaker 2: it easier for the banks to sort of delay and

120
00:05:13,920 --> 00:05:15,960
Speaker 2: not proceed as quickly as they need to do to

121
00:05:16,320 --> 00:05:17,239
Speaker 2: remedy their problems.

122
00:05:17,400 --> 00:05:20,520
Speaker 1: Bill, fantastic column they came out from you earlier this week.

123
00:05:20,560 --> 00:05:22,520
Speaker 1: Appreciate it. Bill. I just wanted to squeeze one further

124
00:05:22,600 --> 00:05:25,279
Speaker 1: question in if I can. But we've been ahead of

125
00:05:25,279 --> 00:05:27,599
Speaker 1: the curve big time on how far this FED would

126
00:05:27,640 --> 00:05:29,480
Speaker 1: have to go. Do you think there is still a

127
00:05:29,560 --> 00:05:31,680
Speaker 1: risk that they have to move again, that another high

128
00:05:31,680 --> 00:05:32,599
Speaker 1: could be in our future.

129
00:05:34,400 --> 00:05:35,839
Speaker 5: I think it's pretty unlikely.

130
00:05:36,000 --> 00:05:38,840
Speaker 2: I think that the bard to raising rates again would be,

131
00:05:39,279 --> 00:05:42,279
Speaker 2: you know, they have to totally reevaluate their whole framework. I

132
00:05:42,320 --> 00:05:45,200
Speaker 2: think more likely story is that if things turn out

133
00:05:45,200 --> 00:05:47,839
Speaker 2: to be stronger, they'll just keep rates higher for longer

134
00:05:47,880 --> 00:05:49,479
Speaker 2: before they actually start to queer reduce for.

135
00:05:49,520 --> 00:05:51,120
Speaker 5: You, So I think the bard of raising rates again

136
00:05:51,200 --> 00:05:52,200
Speaker 5: is pretty high at this point.

137
00:05:52,279 --> 00:05:54,480
Speaker 1: Bill Dudley, thank you, sir, appreciate it. And Happy New

138
00:05:54,560 --> 00:05:57,320
Speaker 1: Year to Pritty in Built Utley, former New York Fed President,