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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business App. We begin with our

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Speaker 2: top story, the latest CPI print, boosting expectations for a

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Speaker 2: twenty five basis point cup from the Fed next week.

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Speaker 2: Mohammad al Erin of Queen's College, Cambridge, writing on X

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Speaker 2: that he sees a quote ankorless paradigm, one that is

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Speaker 2: crying out for the stabilization influence that usually comes from

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Speaker 2: a dominant economic narrative rather than the current ping pong

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Speaker 2: one and or forward policy guidance as opposed to this

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Speaker 2: era of excessive data dependency. Muhammad has a lot to say.

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Speaker 2: It's whether it's the next few hours to say it. Muhammed,

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Speaker 2: good morning to see it. Good morning, John, fantastic catch

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Speaker 2: up with you, sir, particularly your observation yesterday about what

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Speaker 2: was developing in the bomb market at the front end

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Speaker 2: of the curve, the swings we saw on the two year.

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Speaker 2: Can you share your observations with our audience right now?

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Speaker 2: What was that about?

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Speaker 3: So we saw a twenty basis points round trip in

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Speaker 3: the two year. Twenty basis points. That's a lot for

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Speaker 3: that maturity, and we learned two things. One is that

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Speaker 3: we have excessive data point dependence. All that happened yesterday

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Speaker 3: in the Infation report, as people know, is that monthly

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Speaker 3: core came slightly harder than expected. Everything else was aligned,

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Speaker 3: and yet we moved ten basis points up. And then

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Speaker 3: we discovered a second technical, which is money on the

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Speaker 3: sideline being put to work quickly, and that I think

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Speaker 3: is our reality, is that we don't have a dominant

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Speaker 3: economic view, so we get swung all over. But the

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Speaker 3: stabilizer right now is this technical of cash on the sideline. Now,

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Speaker 3: financial conditions are good stabilizers with two very important qualifications.

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Speaker 3: They are volatile and they have as much perception as reality.

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Speaker 3: So we are going to continue with this volatile world

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Speaker 3: until we restore either dominant economic paradigm or we saw

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Speaker 3: the power forward policy guidance.

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Speaker 4: You could argue that even in the face of all

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Speaker 4: of this volatility, it shows how strong the economic system

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Speaker 4: is that there wasn't some sort of significant disruption. Isn't

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Speaker 4: that sort of the ultimate stress test, that when the

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Speaker 4: benchmark rate swings around by twenty basis points you don't

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Speaker 4: see any massive selling, why is it more pernicious than

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Speaker 4: it might seem on the surface.

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Speaker 3: So I do think the financial system has been strengthened,

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Speaker 3: and in particular the banks, and we are in a

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Speaker 3: much better place than we were in the past. So

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Speaker 3: you don't get the massive balance sheet effects. You don't

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Speaker 3: get the sort of virtuous cycles good the cycles good

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Speaker 3: or bad that can happen from that. But don't forget

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Speaker 3: that we are the benchmark for the rest of the world,

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Speaker 3: and we cause quite a few spillovers that the rest

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Speaker 3: of the world says, you know what, enough, now we've

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Speaker 3: had enough of this, Please get you act together.

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Speaker 4: I was surprised to at Jackson Hall to your point,

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Speaker 4: there wasn't more of a discussion, at least not out loud,

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Speaker 4: about what the neutral rate is. Essentially that sort of

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Speaker 4: paradigm shift that you're looking for, some sort of real

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Speaker 4: discussion of what this Federal Reserve is willing to accept

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Speaker 4: in terms of inflation and a benchmark rate that'said. It

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Speaker 4: sounds like they just don't agree on one, So how

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Speaker 4: can they come up with one if they don't really

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Speaker 4: have that certainty? And frankly, if the market can't agree

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Speaker 4: on one either, is it better just to have one

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Speaker 4: even if it's wrong.

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Speaker 3: So as usual, you're getting me to front run my

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Speaker 3: financial times of a tomorrow.

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Speaker 2: That's what you hear films.

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Speaker 3: So I think, Lisa, you're absolutely right. But it's not

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Speaker 3: just that we don't know what the destination is. We

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Speaker 3: don't know what the journey is. We don't know what

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Speaker 3: risk mitigation mindset actually means operationally. And also there's disagreement

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Speaker 3: as how quickly will FED official go from backward looking

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Speaker 3: data dependence to forward leaning. So we have these disagreement

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Speaker 3: both within the FOMC and also between the market and

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Speaker 3: the end what seems to be the consensus if there

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Speaker 3: is one on the FED. So this is for me,

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Speaker 3: it's a fascinating time, but it is also a very

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Speaker 3: confusing time.

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Speaker 5: So amongst all this confusion. What do you want to

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Speaker 5: hear from J Powell next week?

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Speaker 3: So what I'd like to hear and what I expect

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Speaker 3: to hear is that he's going to come by twenty

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Speaker 3: five basis points. Beyond that, It's more what I'd like

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Speaker 3: to hear than what I expect to hear. I'd like

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Speaker 3: to get a sense of where he thinks the neutral

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Speaker 3: rate is. I'd like to get a sense of where

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Speaker 3: he sees the balance of risks. The market right now

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Speaker 3: has modeled the FED as a single mandate FED maximum employment.

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Speaker 3: FED official tell us no, no, no, we do mandate FED.

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Speaker 3: Let's not forget the inflation component. I'd like to know

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Speaker 3: where he is on this.

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Speaker 5: Do you want to hear more descent within the Fed?

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Speaker 3: Yeah, I would like to. I mean, I admire the

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Speaker 3: Bank of England. The last decision was five to four.

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Speaker 3: You had a situation where it was six to one.

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Speaker 3: I think that's important because that conveys the uncertainty. Yes,

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Speaker 3: they should have more discent. I think they viewed dissent

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Speaker 3: as weakness. Most of us view descent as having a

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Speaker 3: really important information content that has to be priced into markets.

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Speaker 2: I remember a series of votes at the Bank of

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Speaker 2: England maybe a decade or so ago. I'm sure you

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Speaker 2: remember this too, when the committee was out voting King

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Speaker 2: a governor. King was leading the Central Bank. Think of

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Speaker 2: the time. He wanted to increase QE and you had

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Speaker 2: people on the MPC voting against him. Not only that,

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Speaker 2: there were more people voting against him than voting with him.

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Speaker 2: That's a scenario we don't see at the Federal Reserve.

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Speaker 2: You had a warning coming into the September meeting, and

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Speaker 2: I remember it at the start of summer. You wanted

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Speaker 2: them to reduce interest rates in July, but you acknowledged

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Speaker 2: that the difference between going into September versus July wasn't

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Speaker 2: that great. But you had one fear if we got

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Speaker 2: one hot CPI print, they might get distracted. Was that

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Speaker 2: what we got yesterday? How distracted might they be?

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Speaker 3: I don't think that much, because it was just one

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Speaker 3: element in a broadly consistent data release that certainly was

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Speaker 3: very close to consensus forecast. But if we had missed

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Speaker 3: on headline, if we had missed on care, if the

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Speaker 3: base effects weren't as favorable as they are right now,

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Speaker 3: you would have seen a total mess in the marketplace.

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Speaker 3: So That was my concern is that, as much as

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Speaker 3: they don't want to admit it, they are not just

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Speaker 3: data dependent. There's single point data dependent, and that's pretty

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Speaker 3: scary for policy setting.

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Speaker 2: That's certainly how the market sees it, because it guarded

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Speaker 2: the conversation away from fifty and back to Worlds twenty five.

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Speaker 2: How do you think they'll look to frame this rate

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Speaker 2: cup when they deliver it a week yesterday. Will they

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Speaker 2: call it a mid cycle adjustment? Will they say it's

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Speaker 2: the beginning of a journey back to neutral? Whatever neutral is?

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Speaker 2: How do you think they can frame this decision?

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Speaker 3: I suspect it will be what's called the Douvish twenty

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Speaker 3: five base points, which means this is the first of many,

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Speaker 3: and we may we may be inclined to go even

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Speaker 3: more if the labor market weakens. There was this phrase

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Speaker 3: in the Jackson Hole speech that was really important. We

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Speaker 3: don't want to see the label market get any weaker.

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Speaker 3: That is a very strong statement from the FED chair.

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Speaker 3: Whether everybody else is there, we don't know.

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Speaker 4: Let's say they do what you want and they come out,

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Speaker 4: they see this is what neutral is. This is our journey,

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Speaker 4: this is our mandate, This is what we're going to do.

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Speaker 4: How much have they lost control of the plot anyway,

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Speaker 4: just simply because there are other factors at play. You

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Speaker 4: think about, for example, fiscal coming out and potentially disrupting things,

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Speaker 4: Think about international investment with an auction that's necessarily negative,

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Speaker 4: that kind of forces their hand. How much do they

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Speaker 4: have ability to set the narrative with such a prescriptive

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Speaker 4: tone right now?

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Speaker 3: So they certainly should be incorporating fiscal They must be

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Speaker 3: doing this. They certainly should be incorporating q QT. I mean,

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Speaker 3: we haven't talked about qt QT is ongoing on there.

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Speaker 3: They should certainly should should be doing that, and that

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Speaker 3: should be reflected in what they say. I hope they're

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Speaker 3: doing this internally. I just think they got so burnt

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Speaker 3: in twenty twenty one because they did take a forward

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Speaker 3: leaning view and they were completely wrong that they don't

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Speaker 3: want to make another mistake.

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Speaker 4: What if they say this is a victimless crime. We're

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Speaker 4: not seeing a problem from this that essentially they're getting

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Speaker 4: it right and the markets are generally you hear traders

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Speaker 4: actually say Ashley Powell is doing a pretty good job,

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Speaker 4: so why should they change it? What would your argument be, Well.

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Speaker 3: First We'll go back to the amount of volatility we've

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Speaker 3: had in fixed income. It has been unusual, Lisa, I know.

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Speaker 4: I know, I watched it every day. We were talking yesterday.

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Speaker 3: It was crazy, okay, And that has adverse external effects.

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Speaker 3: It undermines also the credibility of the US as the

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Speaker 3: benchmark for many others, and we are in a world

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Speaker 3: in which countries are building little pipes around the US.

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Speaker 3: We don't want to enable that process further. That's the

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Speaker 3: first issue. The second issue is we have a major

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Speaker 3: reconciliation in our future. We have the treasury part of

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Speaker 3: the fixed income market that is signaling quite a high

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Speaker 3: probability of recession. We have the credit part of the

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Speaker 3: fixed income market that is signaling a very high probability

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Speaker 3: of a soft lending. Now, if liquidity doesn't reconcile these

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Speaker 3: two things, there's going to be even more volatility in

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Speaker 3: this marketplace, and at some point volatility spills back to

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Speaker 3: the real economy. And the only thing keeping this real

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Speaker 3: economy going right now is deliver market.

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Speaker 2: I'm sitting here laughing because we need to clarify what

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Speaker 2: you said. Market participants that think Powell are doing a

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Speaker 2: great job, they're the bullish once. Let's be very clear

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Speaker 2: about that. Accually are still their all time highs. If

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Speaker 2: we weren't there, I think they'd have something different to

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Speaker 2: say about where we were.

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Speaker 4: Maybe they're data point to pedant as well.

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Speaker 2: There's data pointment is the S and P five hundred.

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Speaker 2: You mentioned where the bond market is and where markets

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Speaker 2: are and how their price they want to pick up

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Speaker 2: on the amount of demand we've seen for some issuance.

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Speaker 2: We had a Guild issue last week, Record order Book

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Speaker 2: had an Italian issue this week, Record order Book. We've

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Speaker 2: seen a similar dynamic in US high grade corporate debt

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Speaker 2: in America, particularly last week's he very busy days, lots

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Speaker 2: of demand. Credit spread said very very tight. Can you

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Speaker 2: reconcile what each part of the fixed income market is

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Speaker 2: talentis right now and whether you can make sense of it?

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Speaker 3: And we had yesterday a treasury auction with massive indirect demand.

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Speaker 3: I can only reconcile it by the tone of cash

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Speaker 3: US on the sideline and the fear that if you

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Speaker 3: don't get into and lock indust rates now, you will

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Speaker 3: lose interest income in the future. So every time we

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Speaker 3: have a backup in rates, people wash back in I

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Speaker 3: mean yesterday's dynamic was fascinating for me, that the speed

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Speaker 3: of the round trip was significant.

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Speaker 2: We've seen it a few times in the last week. Muhammad,

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Speaker 2: We're lucky to have you says similar reaction to this,

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Speaker 2: and cross Server. It's a Lindsay pie of stephol Lindsay

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Speaker 2: your thoughts on the data this morning, the data yesterday

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Speaker 2: this morning, and how this sets us up for the

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Speaker 2: Federal Reserve next week.

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Speaker 1: Well, I think coupled with you yesterday's hotter than expected

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Speaker 1: read on the core CPI this morning slightly hotter than

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Speaker 1: expected read on the PPI.

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Speaker 3: It's not enough to.

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Speaker 1: Negate the Fed's intentions to open the door for rate

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Speaker 1: cuts next week, but it is a welcomed reminder of

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Speaker 1: the Fed's ongoing focus on inflation, as price stability is

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Speaker 1: not yet met and with this lingering uncertainty on evenness

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Speaker 1: in terms of the disinflationary trend, I think this underscores

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Speaker 1: the Fed's need to remain on a very patient, tempered

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Speaker 1: approach as we do embark on this policy pathway back

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Speaker 1: towards neutral. Now the market has seemingly removed the expectations

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Speaker 1: for a larger, more aggressive fifty basis point cut next week,

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Speaker 1: but I would argue it was never really on the table.

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Speaker 1: If the FED did take that more aggressive move, I

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Speaker 1: think that would send the wrong signal to investors, or

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Speaker 1: investors would interpret it that incorrectly as the FED maybe

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Speaker 1: taking an intention to rapidly reverse us back to an

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Speaker 1: accommodative stance. But at this point with the econ me

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Speaker 1: still solid, slowing but still solid, I think the Fed's

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Speaker 1: intentions is simply to remove policy firming and get us

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Speaker 1: back to a more neutral state in terms of policy.

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Speaker 3: So lindsay, let's go beyond next week. I completely agree

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Speaker 3: with you. The FED has been stressing to the markets

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Speaker 3: we are a dual mandate central bank, and the market

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Speaker 3: has been responding, no, you're not, your single mandate central bank.

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Speaker 3: And the employment part is critical. So now that the

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Speaker 3: data has reminded us that they should remain a dual

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Speaker 3: mandate central bank, how do you see the west of

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Speaker 3: the curve, in particular, what's fristained all the way out

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Speaker 3: to September of next year evolve in the next few weeks.

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Speaker 1: Well, I do think investors got ahead of themselves, and

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Speaker 1: I think the downward momentum that we've seen on the

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Speaker 1: longer end does have some wiggle rooms, some room to

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Speaker 1: reverse course, not necessarily push us back to earlier highs

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Speaker 1: that we saw at the start of the year, but

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Speaker 1: certainly gain at least ten twenty basis points on the tenure,

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Speaker 1: putting us back into line with a more realistic pathway

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Speaker 1: of the Fed's trajectory back to neutral. Again, I do

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Speaker 1: think a base case is twenty five basis point cuts

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Speaker 1: and not necessarily at every meeting. The FED is going

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Speaker 1: to remain data dependent, and if we see inflation stumble

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Speaker 1: for back to back months as we saw in yesterday's

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Speaker 1: in today's reading, I think they're very likely and very

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Speaker 1: willing to skip a meeting. And so I do think

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Speaker 1: that again, the market's expectation for this rapid reduction back

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Speaker 1: to neutral or even falling below the neutral range by

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Speaker 1: mid of next year, is well beyond what the FED

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Speaker 1: is realistically willing to do.

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Speaker 4: Lindsay, what in the specifics of the inflation data gives

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Speaker 4: you pause about just how much inflation is coming down?

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Speaker 4: In other words, what are the sticky components that you

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Speaker 4: worry most about.

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Speaker 1: One of the biggest worries is the housing component, and

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Speaker 1: we saw that in yesterday's a CPI report, one of

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Speaker 1: the primary drivers of that hotter than expected read. If

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Speaker 1: we continue to see the shelter component rise or rise

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Speaker 1: above expectations given the sizeable weighting that housing has, not

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Speaker 1: just in the CPI, but even in the PCE, that's

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Speaker 1: going to be very difficult for the FED to maintain

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Speaker 1: a two percent target or achieve that two percent target

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Speaker 1: on a sustainable basis. So housing is one of those

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Speaker 1: very sticky components that we're focused in on. That being said,

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Speaker 1: even when we do strip out housing and we look

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Speaker 1: at one of the more narrow measures of inflation, the supercore,

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Speaker 1: so we're talking core services excluding housing, we still see

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Speaker 1: that that's a read above four percent, so more than

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Speaker 1: double the feds intended target. So there are still a

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Speaker 1: number of underlying components and underlying measures that are not

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Speaker 1: yet cooperating quite as much as the FED would like,

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Speaker 1: as they are nearing presumably that first round rate cut

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Speaker 1: next week.

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Speaker 2: Lindsay, we've got to leave it that appreciate it, LINDSAYPX

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Speaker 2: that stathl Let's ask pri did you come right at

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Speaker 2: taivy securities that question right now? Perd You welcome to

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Speaker 2: the show. I'm sure you heard that question from Mohammad.

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Speaker 2: Your thoughts on it plays, Oh.

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Speaker 6: Thank you, so yes, easib as expected right now and

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Speaker 6: I think, as you mentioned, this is the key question.

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Speaker 6: If they are seeing inflation to be at target in

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Speaker 6: twenty twenty five, why this slow approach? I think from

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Speaker 6: ECB's perspective, the question right now is pretty but basically

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Speaker 6: the wage inflation and which is actually standing at five

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Speaker 6: point one percent, and this is much about what we

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Speaker 6: have seen in the twenty nineteen level, which was around

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Speaker 6: two percent. So so far, Laggard has always talked about

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Speaker 6: this WPP model, which is wages, productivity and profit margins,

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Speaker 6: and I think that's where she will be asked, is

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Speaker 6: productivity actually increasing that can help to reduce these wages,

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Speaker 6: which doesn't seem the case right now, So I think yes,

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Speaker 6: definitely a very key question for Laguard right now is

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Speaker 6: if you are seeing inflation at target, why is this

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Speaker 6: five percent in wage inflation still being so sticky and

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Speaker 6: why are they not cutting rates more aggressively?

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Speaker 3: In UWPP, she will be speaking today in the context

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Speaker 3: of the Drug Report, and the Drug Report basically says

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Speaker 3: without major policy actions that aim at improving the way

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Speaker 3: the economy functions, there are no productivity gains that can

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Speaker 3: be sustained. Do you agree with that view?

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Speaker 6: Yes, no, totally. I think even when you look at

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Speaker 6: the weakness in Germany, it's more for structural weakness and

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Speaker 6: not a cyclical weakness. So cutting rates does not help

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Speaker 6: German growth. And I think I do agree with Graggy's

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Speaker 6: model and that we do need that investment, that productivity

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Speaker 6: coming from Europe. But we also know that that's a

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Speaker 6: long process that cannot happen in one day. And I

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Speaker 6: think ECB at this state really needs to think about

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Speaker 6: do they just go by the survey data which are

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Speaker 6: basically suggesting that wages will reduce aggressively in twenty twenty

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Speaker 6: five six, or they stick to the current heard data

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Speaker 6: which tells you that if pages are very sticky.

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Speaker 4: What do you think would happened in markets? And I'm

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Speaker 4: wondering about the market reaction function in addition to the

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Speaker 4: ECP reaction function. What would happen in markets if Christie

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Speaker 4: mcgoth came out and talked about a more aggressive rate

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Speaker 4: cutting pass, particularly the time where the euro is baking

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Speaker 4: in sort of the FED and the ECP moving in Tanda.

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Speaker 6: So again, if they tell us more aggressive path, yes,

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Speaker 6: the front end rallies, we are not prime. We were

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Speaker 6: pricing in one and a half rate cuts, so possibly

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Speaker 6: going closer to two. But we also know the time

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Speaker 6: until the October meeting is basically five weeks, so there's

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Speaker 6: nothing much that's changing right now from ECB's data perspective,

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Speaker 6: So I think they would have a big downside risk

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Speaker 6: to grow at this meeting, which doesn't seem the case

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Speaker 6: when we read the statement, So I doubt they are

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Speaker 6: going to be very open about the October cut. But

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Speaker 6: what is more like is ECB sounding more optimistic about

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Speaker 6: reaching the inflation targets, especially given the fact that global

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Speaker 6: growth is actually a negative right now across the board,

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Speaker 6: especially when we look at US and China, which means

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Speaker 6: markets should start pricing more cuts and more aggressive form

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Speaker 6: of cuts in twenty twenty five and pull forward this

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Speaker 6: neutral rate which is around two.

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Speaker 5: Percent, which how difficult is the guard's job in the

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Speaker 5: sense that inflation is quite different while you look at

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Speaker 5: Central Europe or the periphery.

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Speaker 6: Yeah, no, that is the key issue for ECB. I

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Speaker 6: think when it comes to EACP, they do have to

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Speaker 6: take Europe as aggregate, So even if German growth is

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Speaker 6: minus zero point three, they still need to actually look

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Speaker 6: at the entire euro growth which is still above stagnation.

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Speaker 6: So this is a tricky job as long as financial

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Speaker 6: conditions are seen across the board, which has been the

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Speaker 6: case since twenty twenty. I think ECB will not go

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Speaker 6: a country by country, but look at the total target

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Speaker 6: because even like when you said, in Europe, creation negotiations

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Speaker 6: work very differently from country to country, so they cannot

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Speaker 6: actually say by October they'll have the right number of

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Speaker 6: wages for the entire euro area. So I think they

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Speaker 6: do need to work more on surveys and Europe as

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Speaker 6: a whole.

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Speaker 2: Poga, We've got to leavey there. We appreciate it. Pog,

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Speaker 2: you come around there. Of TD Security, Michael Shout joins

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Speaker 2: US now as Ion Asset Management. Michael, good morning to you, sir.

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Speaker 2: Good morning base case. At the moment, the doves won't

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Speaker 2: get their fifty, can they achieve the same outcome by

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Speaker 2: leaning very heavily on the top plot.

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Speaker 7: Yeah, I mean I think we'll probably see a big

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Speaker 7: dispersion in the dot plot. You know, at this week's meeting,

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Speaker 7: I think that's the way that people are going to

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Speaker 7: really say, you know, we think we should be doing more,

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Speaker 7: we think we should be we think we should be

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Speaker 7: doing less. And then the sort of third part of

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Speaker 7: this is which way is j Powell going to lean

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Speaker 7: when he talks publicly following the meeting. Is he going

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Speaker 7: to be, you know, pointing towards the doves or you know,

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Speaker 7: more in the middle of a pack.

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Speaker 3: So too far off questions immediately one is giving you

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Speaker 3: expectations of more dispersion or right to look at the median.

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Speaker 6: Or not?

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Speaker 3: And second, isn't it obvious which way Chair Powell is

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Speaker 3: going to lean?

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Speaker 7: I would probably say no and no, you know, you know,

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Speaker 7: it's it's really not clear, you know, which side is

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Speaker 7: going to really dominate. I think it's not clear exactly

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Speaker 7: who the doves are and who who the hawks are.

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Speaker 7: I think Powell sensibly is trying to steer a middle

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Speaker 7: path between both bodies, and I think he's happy to

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Speaker 7: jump ship to the left or the right, depending on

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Speaker 7: what you know. He's probably the most data driven part

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Speaker 7: of the FED.

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Speaker 5: You think it's unclear what he says or it's unclear

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Speaker 5: how much they cut by.

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Speaker 7: Oh, I think he'll be very clear. He'll be very

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Speaker 7: clear that he doesn't know exactly what they're going to do,

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Speaker 7: and he's going to wait until he gets the information

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Speaker 7: and to tell him what he should be doing. I mean,

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Speaker 7: I think it's going to be very clear about that,

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Speaker 7: But what the outcome is is going to be extremely unclear.

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Speaker 4: We were talking earlier about how this fusual reserve doesn't

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Speaker 4: have this sort of overarching framework of the destination and

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Speaker 4: the journey that we have going forward. I wonder if

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Speaker 4: as an investor you do can you have that clarity

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Speaker 4: if you don't get it for them with this sort

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Speaker 4: of conviction that the FED will ultimately follow whatever it

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Speaker 4: is that you're seeing that is not with any extra

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Speaker 4: data that everybody else doesn't have.

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Speaker 7: No, you know, I think the FED, all things being equal,

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Speaker 7: is going to start to cut and is going to

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Speaker 7: put us on a path for a gradual a gradual easing.

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Speaker 7: But the bigger question in my mind is what's actually

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Speaker 7: happening in the underlying economy. And when you see members

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Speaker 7: of the FED almost having to make up words to

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Speaker 7: describe it, there's a long piece using the term equipoise.

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Speaker 7: It's a very weird it's a very weird environment.

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Speaker 2: So noticed that John Williams has got a phosaurus. I

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Speaker 2: thought it was saying yes, yes, I was impressed. I

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Speaker 2: was to say, ex repose is somebody who tries too

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Speaker 2: hard to make a point, But maybe maybe I shouldn't anyway.

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Speaker 2: You know, it's a very strange economy because a lot

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Speaker 2: of the strength that we had, a lot of the

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Speaker 2: overheating that we've had, has gone away, but it hasn't

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Speaker 2: really been replaced by any obvious weakness.

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Speaker 7: The labor market is. I haven't seen a labor market

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Speaker 7: like this with no real underlying growth, no real power

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Speaker 7: to it, and yet absolutely no deterioration and initial claims

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Speaker 7: yet again this week confirmed that nobody's hiring, but nobody's firing.

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Speaker 7: So it's really the way that that gets resolved that

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Speaker 7: ultimately matters much more than what the FED does. The

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Speaker 7: FED is going to be responsive to that outcome. I

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Speaker 7: don't think it's going to cause it one way or yeah.

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Speaker 2: I'll attempt to be direct. Then what are you buying?

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Speaker 7: I still think precious medals come out here. I think

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Speaker 7: they're the way that you play a policy mistake. I

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Speaker 7: think you know, if effed is is a little bit

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Speaker 7: too too on the easy side and tries to get

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Speaker 7: ahead of things. I think precious medals really over winners.

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Speaker 2: The policy mistake then, just to be very clear, is

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Speaker 2: amazing too much correct. Interesting, Michael. Thank you, sir Michael

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Speaker 2: Schau of ION. This is the Bloomberg Surveillance Podcast, bringing

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