1 00:00:05,200 --> 00:00:08,600 Speaker 1: Chairman Powell wrapping up twenty twenty three and unleashing a 2 00:00:08,760 --> 00:00:12,039 Speaker 1: monster rally from New York City this afternoon, Good afternoon, 3 00:00:12,119 --> 00:00:15,920 Speaker 1: Good afternoon, alongside Tom Keen and Lisa Brownbittz'm Jonathan Ferrow 4 00:00:16,320 --> 00:00:18,320 Speaker 1: here with the scores in the equery market right now 5 00:00:18,320 --> 00:00:19,880 Speaker 1: on the S and P five hundred up by more 6 00:00:19,880 --> 00:00:22,920 Speaker 1: than one percent, on the NASDAK up by one point 7 00:00:22,960 --> 00:00:26,520 Speaker 1: one percent. The words of Emily Rowland of John Hancock Investment, 8 00:00:26,560 --> 00:00:30,360 Speaker 1: it's a pivot party and everybody's invited. Chairman Powell just 9 00:00:30,400 --> 00:00:32,720 Speaker 1: turned up the music. In the bond market two year, 10 00:00:32,840 --> 00:00:35,360 Speaker 1: ten year, thirty year, look a little something like this. 11 00:00:35,440 --> 00:00:38,840 Speaker 1: We're down twenty six basis points on a two year 12 00:00:38,920 --> 00:00:40,879 Speaker 1: to four p forty seven on a ten year, we're 13 00:00:40,920 --> 00:00:44,040 Speaker 1: down sixteen to four point zero four percent. We all 14 00:00:44,080 --> 00:00:46,559 Speaker 1: had a big question coming into this news conference with 15 00:00:46,680 --> 00:00:49,120 Speaker 1: Chairman Pow pushed back against these big moves in this 16 00:00:49,200 --> 00:00:52,200 Speaker 1: bond market, these big moves in this stock market. He said, 17 00:00:52,240 --> 00:00:55,240 Speaker 1: we still have a waste to go. Nobody is declaring victory. 18 00:00:55,480 --> 00:00:58,880 Speaker 1: That would be premature. Then just seconds later he said. 19 00:00:58,640 --> 00:01:03,280 Speaker 2: This question of when will it become appropriate to begin 20 00:01:03,440 --> 00:01:05,720 Speaker 2: dialing back the amount of policy restraint in place that 21 00:01:06,880 --> 00:01:10,440 Speaker 2: begins to come into view and is clearly a discush 22 00:01:10,520 --> 00:01:12,760 Speaker 2: topic of discussion now in the world and also a 23 00:01:12,840 --> 00:01:13,759 Speaker 2: discussion for us. 24 00:01:14,959 --> 00:01:18,520 Speaker 1: At our meeting today, we discussed the timing of raycouts 25 00:01:18,800 --> 00:01:21,319 Speaker 1: at today's mate sink Lisa Ramitz, that was not the 26 00:01:21,319 --> 00:01:23,160 Speaker 1: pushback some people be looking forward. 27 00:01:23,280 --> 00:01:25,800 Speaker 3: If this was pushback, he might as well have screamed, 28 00:01:25,959 --> 00:01:28,319 Speaker 3: we did it at pop Champagne right if you're talking 29 00:01:28,319 --> 00:01:31,640 Speaker 3: about a party. He basically endorsed the view that we 30 00:01:31,760 --> 00:01:33,880 Speaker 3: have of the market. Where I'm looking at right now 31 00:01:34,000 --> 00:01:36,919 Speaker 3: is the expectation of one hundred and forty basis points 32 00:01:36,920 --> 00:01:39,520 Speaker 3: of rate cuts being priced into fed Fund's. 33 00:01:39,280 --> 00:01:40,679 Speaker 4: Futures for next year. 34 00:01:40,959 --> 00:01:44,160 Speaker 3: This is basically an endorsement of that bifed share Powell 35 00:01:44,160 --> 00:01:46,600 Speaker 3: who had ample opportunities to push back and did not 36 00:01:46,800 --> 00:01:48,000 Speaker 3: to me as be honest. 37 00:01:47,720 --> 00:01:50,320 Speaker 5: To the real economy. This is truly an historic meeting. 38 00:01:50,360 --> 00:01:52,600 Speaker 5: I did not expect that. I went back to March 39 00:01:52,960 --> 00:01:56,480 Speaker 5: of twenty twenty, let's call it the pandemic meeting, certainly 40 00:01:56,480 --> 00:01:58,120 Speaker 5: with that impact. But I think you've got to go 41 00:01:58,160 --> 00:02:01,040 Speaker 5: back twenty five years. What was on spoken there As 42 00:02:01,080 --> 00:02:03,480 Speaker 5: everybody plays the fed parlor game, and this and that 43 00:02:03,560 --> 00:02:07,120 Speaker 5: and the other is this is a resounding vote in 44 00:02:07,160 --> 00:02:11,160 Speaker 5: the American real economy and in the productivity of the country. 45 00:02:11,360 --> 00:02:13,520 Speaker 5: That's that's going to all be in the research over 46 00:02:13,560 --> 00:02:14,040 Speaker 5: the next. 47 00:02:13,880 --> 00:02:14,520 Speaker 6: Forty eight hours. 48 00:02:14,639 --> 00:02:18,040 Speaker 1: Jus get and that self to me, it's immaculate productivity 49 00:02:18,800 --> 00:02:21,520 Speaker 1: phrase reading to that in a big why yeah. 50 00:02:21,600 --> 00:02:24,560 Speaker 5: This is I can't I got goosebumps right now, folks. 51 00:02:24,560 --> 00:02:27,200 Speaker 5: I can't emphasize how. 52 00:02:27,200 --> 00:02:28,560 Speaker 6: Unique this meeting is. 53 00:02:29,320 --> 00:02:32,560 Speaker 5: I don't have no idea how the Guard and Dudley 54 00:02:32,840 --> 00:02:35,840 Speaker 5: respond to this. I have no idea what Christine Legard 55 00:02:35,840 --> 00:02:36,360 Speaker 5: does tomorrow. 56 00:02:36,520 --> 00:02:37,480 Speaker 4: I like your phrasing. 57 00:02:37,639 --> 00:02:40,480 Speaker 3: Seduced by the idea that they could potentially get a 58 00:02:40,520 --> 00:02:43,400 Speaker 3: soft landing, and the response to the question about the 59 00:02:43,440 --> 00:02:46,160 Speaker 3: easing of financial conditions and whether that worked against their 60 00:02:46,200 --> 00:02:51,440 Speaker 3: goal was not said. It was not particularly I don't 61 00:02:51,440 --> 00:02:53,400 Speaker 3: want to say satisfactory, but didn't really give me a 62 00:02:53,480 --> 00:02:56,560 Speaker 3: sense of what the answer actually was. Right, because we're 63 00:02:56,600 --> 00:02:59,639 Speaker 3: looking at a situation where people are just all in 64 00:03:00,200 --> 00:03:04,160 Speaker 3: endorsing bonds, endorsing stocks, endorsing the soft landing, and it 65 00:03:04,240 --> 00:03:06,799 Speaker 3: is very rare, it is a unicorn, and so how 66 00:03:06,880 --> 00:03:09,400 Speaker 3: much does this start to push things in the opposite direction. 67 00:03:09,440 --> 00:03:10,200 Speaker 6: John, I'm gonna frame this. 68 00:03:10,280 --> 00:03:11,880 Speaker 5: I wrote to Mohammad al Aria and I think it 69 00:03:11,919 --> 00:03:14,480 Speaker 5: was out on Twitter like twenty minutes before, and I said, 70 00:03:14,480 --> 00:03:17,200 Speaker 5: two standard deviations is four point zero six percent. 71 00:03:17,639 --> 00:03:18,639 Speaker 6: That's right where we went. 72 00:03:18,720 --> 00:03:21,200 Speaker 5: I did not expect that we blew through that and 73 00:03:21,240 --> 00:03:24,280 Speaker 5: almost hit the Bramo line, which is three point nine 74 00:03:24,320 --> 00:03:25,200 Speaker 5: to nine x X. 75 00:03:25,280 --> 00:03:27,040 Speaker 6: We didn't get there. We did not get to the 76 00:03:27,080 --> 00:03:29,240 Speaker 6: land of Bramo, but we were really quite close. 77 00:03:29,320 --> 00:03:31,720 Speaker 1: You have to remember, Tom, the end of October when 78 00:03:31,720 --> 00:03:34,360 Speaker 1: people put together the year ahead outlooks for the end 79 00:03:34,400 --> 00:03:38,480 Speaker 1: of twenty twenty four, targets like fifty two hundred was 80 00:03:38,480 --> 00:03:41,520 Speaker 1: twenty percent upside from where we were. And now you 81 00:03:41,560 --> 00:03:43,400 Speaker 1: want to take k is it pullish enough? And that's 82 00:03:43,400 --> 00:03:46,400 Speaker 1: going to make people really, really uncomfortable as we start 83 00:03:46,440 --> 00:03:50,080 Speaker 1: to bring forward a ton of gains into year Row'll. 84 00:03:49,800 --> 00:03:50,200 Speaker 6: Me quick here. 85 00:03:50,240 --> 00:03:52,800 Speaker 5: We got some two special guests for you right now 86 00:03:52,800 --> 00:03:55,760 Speaker 5: on radio and television. But John, what I saw there 87 00:03:55,920 --> 00:03:59,440 Speaker 5: is what I'm going to call non log convexity, which 88 00:03:59,520 --> 00:04:02,800 Speaker 5: is a curve to the Russell two thousand, which is 89 00:04:02,840 --> 00:04:06,320 Speaker 5: an acceleration of money in and I just wonder to 90 00:04:06,440 --> 00:04:10,600 Speaker 5: year in how traditional money reacts and if you get 91 00:04:10,600 --> 00:04:13,840 Speaker 5: what Greg Peters talked about, which is some legit convexity here. 92 00:04:13,880 --> 00:04:16,120 Speaker 1: What's the bet. I think the bet right now, Tom, 93 00:04:16,200 --> 00:04:18,520 Speaker 1: is that growth doesn't get hit hot. This fed's going 94 00:04:18,560 --> 00:04:20,360 Speaker 1: to count based on what we've just been told by 95 00:04:20,400 --> 00:04:23,279 Speaker 1: Chairman Powder, rather what we weren't sold and what's implied 96 00:04:23,320 --> 00:04:26,800 Speaker 1: already in market pricing. But Lisa, what would upset the bet. 97 00:04:26,920 --> 00:04:28,720 Speaker 1: What would upset the bet right now is you've get 98 00:04:28,720 --> 00:04:31,279 Speaker 1: a real down to it in economy that's not part 99 00:04:31,320 --> 00:04:33,800 Speaker 1: of this story that's been priced in at the moment. 100 00:04:33,680 --> 00:04:36,400 Speaker 3: And there's dissonance when the FED statement is saying that 101 00:04:36,520 --> 00:04:39,960 Speaker 3: there is a lagging effect, a lagging impact of FED 102 00:04:40,040 --> 00:04:42,520 Speaker 3: rate hikes that hasn't yet been played out. If that's 103 00:04:42,520 --> 00:04:45,360 Speaker 3: the case, where is that in the statement of economic projection? 104 00:04:45,520 --> 00:04:48,200 Speaker 5: We have a terrific lineup for you, and we start 105 00:04:48,240 --> 00:04:51,920 Speaker 5: strong here after this historic press conference with William Dudley, 106 00:04:51,960 --> 00:04:54,400 Speaker 5: he's a former New York FED president and a student 107 00:04:54,440 --> 00:04:58,000 Speaker 5: at California Berkeley years ago of our monetary history and 108 00:04:58,040 --> 00:05:01,760 Speaker 5: of course Bloomberg economic senior. As I said, Bill, I 109 00:05:01,839 --> 00:05:07,000 Speaker 5: got goosebumps. It just seems to be a massive statement 110 00:05:07,160 --> 00:05:10,279 Speaker 5: that even if we have nominal GDP of four percent, 111 00:05:10,839 --> 00:05:15,120 Speaker 5: we have immaculate productivity and will somehow get through this. 112 00:05:15,640 --> 00:05:20,560 Speaker 5: Do we sustain this market reaction, this belief in America, 113 00:05:21,120 --> 00:05:25,000 Speaker 5: or do we are we inset for some titanic disappointment. 114 00:05:26,880 --> 00:05:29,479 Speaker 7: Well, I think that Peals Prescott has made clear that 115 00:05:29,560 --> 00:05:32,320 Speaker 7: he's really pleased by how the economies performed, the fact 116 00:05:32,320 --> 00:05:35,400 Speaker 7: that you could get inflation down, about the unemployer. 117 00:05:35,000 --> 00:05:38,240 Speaker 8: Rate going up, had some moderation and wages. He thinks 118 00:05:38,279 --> 00:05:40,919 Speaker 8: everything is going really, really well, and I think that's true. 119 00:05:41,279 --> 00:05:43,200 Speaker 9: The question is whether it's going to continue or not, 120 00:05:43,360 --> 00:05:45,839 Speaker 9: and there are definitely things that can go wrong. One 121 00:05:45,839 --> 00:05:47,680 Speaker 9: thing that can could go wrong is the fact keeps 122 00:05:47,720 --> 00:05:49,760 Speaker 9: madret policy too tight for too long and we have 123 00:05:49,880 --> 00:05:52,680 Speaker 9: weaker economy. Another thing that can go wrong is if 124 00:05:52,680 --> 00:05:56,800 Speaker 9: that can ease policy prematurely, or the market itself can 125 00:05:56,839 --> 00:06:00,880 Speaker 9: ease financial conditions prematurely, which will stimulate THEO and make 126 00:06:00,960 --> 00:06:03,200 Speaker 9: it so that the Fed can't cut rates that's at 127 00:06:03,200 --> 00:06:05,080 Speaker 9: all as quickly as the market expects. I think the 128 00:06:05,080 --> 00:06:07,919 Speaker 9: market's getting a little to have itself here in the 129 00:06:07,960 --> 00:06:12,000 Speaker 9: sense of taking the fit's optimism and translating that into 130 00:06:12,160 --> 00:06:15,479 Speaker 9: very large reductions and short term rates in twenty twenty four. 131 00:06:15,680 --> 00:06:17,279 Speaker 1: But what do you think happened to the Chanman pound 132 00:06:17,320 --> 00:06:19,560 Speaker 1: of only two weeks ago. 133 00:06:20,120 --> 00:06:21,760 Speaker 8: I just think that they're very happy with how the 134 00:06:21,760 --> 00:06:22,679 Speaker 8: economy is performed. 135 00:06:22,680 --> 00:06:26,839 Speaker 7: I mean, basically, they've had decent growth, unemploying rates stable, 136 00:06:26,920 --> 00:06:29,159 Speaker 7: and inslation's come down a lot, and. 137 00:06:29,200 --> 00:06:32,320 Speaker 8: That's basically, you know, as good as it can get. 138 00:06:32,720 --> 00:06:35,640 Speaker 7: And that's really what's just summarizing the summary of economic 139 00:06:35,680 --> 00:06:39,320 Speaker 7: production now summary of economic projection shows a very modest 140 00:06:39,360 --> 00:06:42,200 Speaker 7: increase in the unipllyer rate from here and essentially a 141 00:06:42,240 --> 00:06:45,360 Speaker 7: soft landing kind of forecast. Now, soft landings are really 142 00:06:45,360 --> 00:06:47,640 Speaker 7: difficult to pull off, and they're particularly difficult to pull 143 00:06:47,640 --> 00:06:50,080 Speaker 7: off when you've been very late to type monitoring policy. 144 00:06:50,480 --> 00:06:52,920 Speaker 7: And what's allowed this to happen is that there were 145 00:06:53,000 --> 00:06:57,039 Speaker 7: supply disruptions. There was a reduction and labor supply, both 146 00:06:57,080 --> 00:06:58,920 Speaker 7: of those things every verse, and that made the fifth 147 00:06:59,000 --> 00:07:00,400 Speaker 7: job a lot easier. 148 00:07:00,320 --> 00:07:03,000 Speaker 1: Build the prospect of getting sticky in flag shit into 149 00:07:03,080 --> 00:07:05,200 Speaker 1: next year, getting stuck at three. So it makes it 150 00:07:05,240 --> 00:07:07,440 Speaker 1: because six months ago, Bill, we were told that the 151 00:07:07,520 --> 00:07:10,320 Speaker 1: last mile. It was difficult. It was hard. Then Secondary 152 00:07:10,360 --> 00:07:13,000 Speaker 1: and starts sounding like the fat chair again, saying it's 153 00:07:13,040 --> 00:07:15,120 Speaker 1: not that hard. You hear it from chairm and Power 154 00:07:15,120 --> 00:07:17,920 Speaker 1: didn't get any indication it would be particularly difficult into 155 00:07:17,960 --> 00:07:20,400 Speaker 1: next year. Do you think that is the prudent approach 156 00:07:20,760 --> 00:07:22,320 Speaker 1: to what twenty twenty four could look like. 157 00:07:23,280 --> 00:07:25,440 Speaker 8: I think he's telling you what he really thinks. 158 00:07:25,640 --> 00:07:27,920 Speaker 7: I think he's very happy with how things are performed, 159 00:07:28,280 --> 00:07:31,240 Speaker 7: and he didn't say it would necessarily continue, but he 160 00:07:31,320 --> 00:07:33,000 Speaker 7: also said that he was hopeful that. 161 00:07:33,000 --> 00:07:35,040 Speaker 8: These trends would continue into twenty twenty four. 162 00:07:35,560 --> 00:07:38,360 Speaker 7: My own view is that the Fed is going to 163 00:07:38,480 --> 00:07:40,040 Speaker 7: be cutting rates in twenty twenty four. 164 00:07:40,320 --> 00:07:42,400 Speaker 8: We're clearly done in terms of rate hikes. 165 00:07:43,800 --> 00:07:46,800 Speaker 7: The possibility of another radhike is really low at this point. 166 00:07:47,280 --> 00:07:51,080 Speaker 7: The question is really just timing of rate cuts and magnitude, 167 00:07:51,080 --> 00:07:53,720 Speaker 7: and that's going to basically be driven by the strength 168 00:07:53,760 --> 00:07:57,600 Speaker 7: of the economy, pressure on resources, and what actually happens 169 00:07:57,600 --> 00:07:59,840 Speaker 7: to services inflation at this point. 170 00:08:00,080 --> 00:08:01,120 Speaker 3: Bill, do you think that j. 171 00:08:01,280 --> 00:08:02,559 Speaker 4: Powell did a good job. 172 00:08:02,680 --> 00:08:04,160 Speaker 3: Do you think that it was right for him to 173 00:08:04,160 --> 00:08:06,960 Speaker 3: say what he thinks and not push back at all 174 00:08:07,080 --> 00:08:08,720 Speaker 3: against the market Party. 175 00:08:10,400 --> 00:08:12,280 Speaker 7: I always think it's good to say what you really think, 176 00:08:12,360 --> 00:08:15,440 Speaker 7: but I think the problem with doing so is it's 177 00:08:15,520 --> 00:08:17,200 Speaker 7: basically added fuel to the fire. 178 00:08:18,120 --> 00:08:19,720 Speaker 8: Paul talks about the long legs of. 179 00:08:19,840 --> 00:08:23,160 Speaker 7: Entre policy, but financial conditions are much much more commonative 180 00:08:23,200 --> 00:08:25,240 Speaker 7: than there were just a few months ago. And if 181 00:08:25,280 --> 00:08:27,880 Speaker 7: you look at the Fed's own assessment of financial conditions 182 00:08:27,880 --> 00:08:29,800 Speaker 7: back at the end of October, of the impulse from 183 00:08:29,880 --> 00:08:32,640 Speaker 7: financial conditions the economy, based on the fedsal model. 184 00:08:32,559 --> 00:08:33,320 Speaker 8: Was pretty neutral. 185 00:08:33,559 --> 00:08:38,880 Speaker 7: So financial conditions now are actually adding impulse towards the 186 00:08:38,880 --> 00:08:40,160 Speaker 7: economic growth going forward. 187 00:08:40,920 --> 00:08:42,880 Speaker 5: I look Bill at where we are, and it's clearly 188 00:08:42,920 --> 00:08:46,120 Speaker 5: beyond the pandemic. We've had a number of conversations off 189 00:08:46,120 --> 00:08:49,800 Speaker 5: across a long surveillance day about how goods are goods, 190 00:08:49,840 --> 00:08:53,200 Speaker 5: and we've got some deflation and service sector inflation's coming down. 191 00:08:53,720 --> 00:08:56,760 Speaker 6: Is this economy beyond the pandemic? If you were to. 192 00:08:56,760 --> 00:08:59,880 Speaker 5: Talk to Mary Daily in San Francisco, to John will 193 00:09:00,320 --> 00:09:03,640 Speaker 5: at the New York Fed, can we say our economy 194 00:09:03,760 --> 00:09:05,000 Speaker 5: is beyond the pandemic? 195 00:09:07,040 --> 00:09:10,720 Speaker 7: I think mostly in this sense that the conditions today 196 00:09:10,960 --> 00:09:13,760 Speaker 7: are very similar to where we were in February twenty twenty, 197 00:09:14,240 --> 00:09:16,640 Speaker 7: when we had a very tight labor market. The difference 198 00:09:16,679 --> 00:09:19,080 Speaker 7: is wages are a bit higher, inflation's a bit higher, 199 00:09:19,440 --> 00:09:20,800 Speaker 7: and mandre policy. 200 00:09:20,559 --> 00:09:21,520 Speaker 8: Is considerably tighter. 201 00:09:21,720 --> 00:09:24,360 Speaker 7: But it does feel more like February twenty twenty than 202 00:09:24,400 --> 00:09:26,480 Speaker 7: it does between any period. 203 00:09:26,240 --> 00:09:28,439 Speaker 1: After that bill sit tight. I want to bring in 204 00:09:28,480 --> 00:09:31,880 Speaker 1: Mia Kay down in Washington day. Say, Michael McKay, you 205 00:09:31,920 --> 00:09:34,200 Speaker 1: were in that news conference. Were you surprised by the 206 00:09:34,200 --> 00:09:37,320 Speaker 1: approach from Chaman Powell? 207 00:09:37,440 --> 00:09:39,520 Speaker 10: Well, I wasn't surprised by the approach once we'd heard 208 00:09:40,200 --> 00:09:42,720 Speaker 10: from the Fed and in their statement and what we 209 00:09:42,760 --> 00:09:45,760 Speaker 10: saw in the dot plot. But it is a rather 210 00:09:45,880 --> 00:09:48,640 Speaker 10: dramatic change from what he said just twelve days ago 211 00:09:48,800 --> 00:09:52,280 Speaker 10: about it not being time to talk about ray cuts. 212 00:09:52,559 --> 00:09:53,520 Speaker 4: Obviously they did. 213 00:09:53,559 --> 00:09:57,439 Speaker 10: Today they're feeling much better about the overall state of 214 00:09:57,480 --> 00:10:02,080 Speaker 10: the economy. As one analyst put it, today, if good 215 00:10:02,160 --> 00:10:05,720 Speaker 10: inflation report is j PL's idea of a good time, 216 00:10:06,080 --> 00:10:09,720 Speaker 10: then his party has turned into a rager because inflation 217 00:10:09,880 --> 00:10:13,280 Speaker 10: is coming down very quickly. And then the next question becomes, 218 00:10:13,400 --> 00:10:16,400 Speaker 10: as I asked him, when do you cut? And that's 219 00:10:16,440 --> 00:10:19,679 Speaker 10: the part they're not ready to get into yet or describe. 220 00:10:20,040 --> 00:10:21,599 Speaker 4: And so we're probably still. 221 00:10:21,360 --> 00:10:24,640 Speaker 10: In for a few months of the markets watching the 222 00:10:24,720 --> 00:10:27,600 Speaker 10: data and trying to guess when the Fed is going 223 00:10:27,640 --> 00:10:28,360 Speaker 10: to respond. 224 00:10:28,559 --> 00:10:30,920 Speaker 5: Michael, within all the blur of the data and all 225 00:10:30,960 --> 00:10:34,800 Speaker 5: the guestimates forward, did they frame out a subpar GDP, 226 00:10:35,600 --> 00:10:39,640 Speaker 5: either real or nominal? Did they frame out subpar growth? 227 00:10:41,200 --> 00:10:44,240 Speaker 10: Well, basically that's what Paul said, we're going to get 228 00:10:44,440 --> 00:10:47,840 Speaker 10: because the direction of the economy is slower and the 229 00:10:48,559 --> 00:10:52,439 Speaker 10: lagged effects of their rate increases have not yet completely 230 00:10:52,480 --> 00:10:56,600 Speaker 10: been felt, but that the economy will start picking up 231 00:10:56,640 --> 00:10:59,240 Speaker 10: again and growing to potential. And he also admitted the 232 00:10:59,280 --> 00:11:03,280 Speaker 10: possibility of surprise there the economy grows faster than expected 233 00:11:03,800 --> 00:11:06,960 Speaker 10: is also very real. So I think they're at this 234 00:11:07,040 --> 00:11:10,440 Speaker 10: point working on the models that they have, but admitting 235 00:11:10,480 --> 00:11:12,920 Speaker 10: that they have been wrong before and we could see 236 00:11:12,960 --> 00:11:16,400 Speaker 10: faster growth. But the interesting thing was, other than a 237 00:11:16,520 --> 00:11:19,920 Speaker 10: sort of perfunctory caution, he wasn't suggesting that we are 238 00:11:20,000 --> 00:11:23,599 Speaker 10: now that they would go back necessarily to rate increases. 239 00:11:23,760 --> 00:11:26,720 Speaker 1: Mike McKay, thank you so great job today. As always, 240 00:11:27,200 --> 00:11:30,120 Speaker 1: the reaction pouring in this afternoon, This line from Steve 241 00:11:30,200 --> 00:11:33,920 Speaker 1: chevon over it federates it initial takes. He wants to come. 242 00:11:34,320 --> 00:11:37,920 Speaker 1: He always saw inflation as transitory Bramo your favorite. It's 243 00:11:37,920 --> 00:11:39,960 Speaker 1: come down on the supply side. He smells a self 244 00:11:40,040 --> 00:11:41,880 Speaker 1: landing and wants to cut to stick the landing. He 245 00:11:41,920 --> 00:11:45,360 Speaker 1: had no interest in pushing back against market expectations, right 246 00:11:45,440 --> 00:11:48,280 Speaker 1: or wrong. It's bullish for now. As a takeaway from 247 00:11:48,320 --> 00:11:49,880 Speaker 1: Chevon this afternoon. 248 00:11:49,400 --> 00:11:51,120 Speaker 3: That's exactly where I wanted to go, and I wanted 249 00:11:51,120 --> 00:11:53,559 Speaker 3: to get Bill Dudley's opinion about whether we did get 250 00:11:53,840 --> 00:11:57,880 Speaker 3: basically confirmation of transitory. Do you think when we look back, 251 00:11:58,200 --> 00:12:00,360 Speaker 3: the Fed won't have been wrong when it came to 252 00:12:00,400 --> 00:12:03,240 Speaker 3: transitory inflation. They just were premature. 253 00:12:05,160 --> 00:12:08,040 Speaker 7: I think that most of the inflation pressure had which 254 00:12:08,240 --> 00:12:10,040 Speaker 7: was transitory, but not all of it. I mean, I 255 00:12:10,040 --> 00:12:12,560 Speaker 7: think some of the services inflation is due to the 256 00:12:12,559 --> 00:12:14,920 Speaker 7: tightness of the layer market. I think what's really interesting 257 00:12:14,920 --> 00:12:17,280 Speaker 7: about Paul's press conference today is he talked to us 258 00:12:17,360 --> 00:12:19,560 Speaker 7: about the risk of being too late to cut. 259 00:12:19,920 --> 00:12:21,880 Speaker 8: So he actually admitted the possibility that if we. 260 00:12:21,840 --> 00:12:23,520 Speaker 7: Stay tight for too long, we could actually have a 261 00:12:23,720 --> 00:12:26,840 Speaker 7: whip comomy that's too weak relative to what we desire. 262 00:12:26,840 --> 00:12:28,840 Speaker 8: And that's something new from your pom. 263 00:12:29,320 --> 00:12:32,680 Speaker 5: That's a very important point, the ex postedness of it. 264 00:12:32,720 --> 00:12:35,760 Speaker 5: If you will doctor Dudley. They've got a weight weight 265 00:12:35,840 --> 00:12:39,240 Speaker 5: weight after the fact. So let's say something coarse like 266 00:12:39,320 --> 00:12:42,920 Speaker 5: the unemployment rate. How many months do they have to 267 00:12:43,040 --> 00:12:46,760 Speaker 5: wait until they get real confidence that the labor economy 268 00:12:46,840 --> 00:12:48,959 Speaker 5: is caught up with our immaculate disinflation. 269 00:12:50,800 --> 00:12:52,560 Speaker 7: I think they're gonna be looking at what happens to 270 00:12:52,640 --> 00:12:55,000 Speaker 7: the unemployed rate, the tightness of the labor market, and 271 00:12:55,000 --> 00:12:58,600 Speaker 7: what the consequences that are for wages. Paul did admit 272 00:12:58,679 --> 00:13:00,840 Speaker 7: that wage inflation still will bit too high to be 273 00:13:00,880 --> 00:13:04,000 Speaker 7: consistent with two percent inflation. But boy, the FED is 274 00:13:04,000 --> 00:13:06,600 Speaker 7: pretty close to where they want to be in their 275 00:13:07,360 --> 00:13:08,319 Speaker 7: outlook at this point. 276 00:13:08,640 --> 00:13:11,240 Speaker 1: Bill, you've been on the committee before. You can look 277 00:13:11,280 --> 00:13:14,000 Speaker 1: at this from the outside. Now. It's a tricky game, 278 00:13:14,040 --> 00:13:15,840 Speaker 1: this one to get into someone's head, and I think 279 00:13:15,840 --> 00:13:18,000 Speaker 1: maybe what we shouldn't play, but I think on this 280 00:13:18,040 --> 00:13:20,800 Speaker 1: occasion we should. Two weeks ago, I heard from a 281 00:13:20,880 --> 00:13:23,800 Speaker 1: very different FED chairman, and I'm trying to work out 282 00:13:23,840 --> 00:13:26,199 Speaker 1: what happened today. Whether that was just a man who 283 00:13:26,240 --> 00:13:28,160 Speaker 1: was representing his own views and this was a man 284 00:13:28,200 --> 00:13:32,000 Speaker 1: who was representing the committee's view, or whether, like we've indicated, 285 00:13:32,120 --> 00:13:35,520 Speaker 1: he's being seduced by this idea of netting a soft landing, 286 00:13:35,920 --> 00:13:37,640 Speaker 1: and the guy who was trying to act like Vulka 287 00:13:38,040 --> 00:13:40,320 Speaker 1: was never really Vulka. What is it? What do you 288 00:13:40,320 --> 00:13:42,520 Speaker 1: make of who Chairman Powell is and what he ultimately 289 00:13:42,520 --> 00:13:44,360 Speaker 1: thinks about things? 290 00:13:44,880 --> 00:13:47,800 Speaker 7: Well, the fact that he's worried about keeping MADRI policy 291 00:13:47,880 --> 00:13:49,840 Speaker 7: too tight for too long tells you that he's not 292 00:13:49,920 --> 00:13:51,080 Speaker 7: thinking like Paul Bulkery. 293 00:13:51,600 --> 00:13:55,920 Speaker 8: So there is and there's a risk cutting rates prematurely, 294 00:13:56,360 --> 00:13:56,600 Speaker 8: But I. 295 00:13:56,559 --> 00:13:58,640 Speaker 7: Think it's coming from us to the fact that he's 296 00:13:58,679 --> 00:14:02,080 Speaker 7: just really really happy with how things have evolved and that, 297 00:14:02,440 --> 00:14:06,640 Speaker 7: you know, optimism is showing through as it has shown. 298 00:14:05,920 --> 00:14:08,599 Speaker 8: Through from time to time and has pressed conferences. 299 00:14:09,160 --> 00:14:09,480 Speaker 6: Bill. 300 00:14:09,520 --> 00:14:11,600 Speaker 5: It's maybe not your remit, but it's certainly the New 301 00:14:11,679 --> 00:14:14,840 Speaker 5: York Fed's remit. They're going to keep track of flows 302 00:14:15,520 --> 00:14:19,400 Speaker 5: off of declining interest rates. What is a stability or 303 00:14:19,520 --> 00:14:23,280 Speaker 5: instability that you observe in six trillion dollars of cash, 304 00:14:23,360 --> 00:14:26,440 Speaker 5: let's say most of it loaded money market funds? Is 305 00:14:26,480 --> 00:14:28,720 Speaker 5: that yield comes down? Is our system going to be 306 00:14:28,760 --> 00:14:29,560 Speaker 5: able to handle it? 307 00:14:30,560 --> 00:14:32,200 Speaker 8: Yeah? I don't think there's gonna be any problem. 308 00:14:32,240 --> 00:14:34,440 Speaker 7: I mean, you know, the Fed Reserve says the short 309 00:14:34,520 --> 00:14:36,960 Speaker 7: term interest rates and then money market rates trade off 310 00:14:36,960 --> 00:14:40,120 Speaker 7: that if if money market rates, you know, firm up 311 00:14:40,160 --> 00:14:42,040 Speaker 7: a little bit, then money will flow back into the 312 00:14:42,080 --> 00:14:43,000 Speaker 7: money market fature just ones. 313 00:14:43,000 --> 00:14:45,280 Speaker 8: I'm not worried about that at all at this point. 314 00:14:45,520 --> 00:14:47,920 Speaker 3: Bill, Just to wrap it all together, do you think 315 00:14:47,920 --> 00:14:50,440 Speaker 3: that the chance of a hard landing has gone down 316 00:14:50,560 --> 00:14:53,120 Speaker 3: materially over the past month or do you think that 317 00:14:53,160 --> 00:14:54,920 Speaker 3: it's about the same or even has gone up. 318 00:14:55,920 --> 00:14:58,600 Speaker 8: I think it's gone down materially over the last six months. 319 00:14:58,640 --> 00:14:59,680 Speaker 8: I mean over the last month. 320 00:14:59,680 --> 00:15:03,560 Speaker 7: I don't things have changed very much, but definitely the prospects. 321 00:15:03,120 --> 00:15:06,080 Speaker 9: Of the soft landing are the best they've been in 322 00:15:06,600 --> 00:15:07,440 Speaker 9: last year or two. 323 00:15:07,840 --> 00:15:09,960 Speaker 1: Something changed in the last two weeks for Chairman Powell, 324 00:15:10,480 --> 00:15:13,440 Speaker 1: that's for sure. Bill Good to catch up Bill Dudley 325 00:15:13,440 --> 00:15:16,920 Speaker 1: there of Bloomberg Opinion, former New York Fed President. Let's 326 00:15:16,960 --> 00:15:20,440 Speaker 1: recap the price action some well moves across the board 327 00:15:20,480 --> 00:15:22,880 Speaker 1: in the equity market and in bonds since the start 328 00:15:22,920 --> 00:15:25,680 Speaker 1: of November the end of October this afternoon at one 329 00:15:25,720 --> 00:15:28,120 Speaker 1: percent on the SMP. The gains fade a touch, but 330 00:15:28,240 --> 00:15:30,640 Speaker 1: big gains nonetheless on the NaSTA Cup by zero point 331 00:15:30,720 --> 00:15:33,440 Speaker 1: nine percent. How about the Russell the small caps up 332 00:15:33,480 --> 00:15:36,520 Speaker 1: by two point seven percent. We are talking about gains 333 00:15:36,880 --> 00:15:40,800 Speaker 1: of more than ten percent since early November on the 334 00:15:40,880 --> 00:15:44,160 Speaker 1: sm P five hundred a year in a month. In 335 00:15:44,200 --> 00:15:47,040 Speaker 1: the bond market two year, ten year, thirty year, two year, 336 00:15:47,200 --> 00:15:50,720 Speaker 1: four forty seven when the FED met in November, the 337 00:15:50,760 --> 00:15:53,320 Speaker 1: morning at that meeting, on the second day of that meeting, 338 00:15:53,360 --> 00:15:56,440 Speaker 1: four ninety two on a two year right now four 339 00:15:56,800 --> 00:16:00,760 Speaker 1: forty seven, twenty five. What a turnaround? TK close to 340 00:16:00,800 --> 00:16:02,920 Speaker 1: five percent and all the way back down again. 341 00:16:03,080 --> 00:16:04,160 Speaker 6: There's't anybory's looking at. 342 00:16:04,160 --> 00:16:06,880 Speaker 5: I mean, it's something as idiosyncratic as a Turkish liras 343 00:16:06,920 --> 00:16:08,920 Speaker 5: on a bid today for the first time since the 344 00:16:08,960 --> 00:16:11,760 Speaker 5: time began. But yeah, you can look across all of 345 00:16:11,800 --> 00:16:14,560 Speaker 5: the equities, bonds, currencies, commodities and see the effect of this. 346 00:16:14,880 --> 00:16:16,680 Speaker 6: John, I want to go on one week. I want 347 00:16:16,720 --> 00:16:17,600 Speaker 6: to go on two weeks. 348 00:16:18,000 --> 00:16:23,920 Speaker 5: Every strategist out there has to republish and readjust and 349 00:16:24,000 --> 00:16:26,920 Speaker 5: let me tell you got your outlook to bed December five. 350 00:16:27,240 --> 00:16:30,240 Speaker 6: Yeah, let's go in this weekend. We're rewriting it. I mean, 351 00:16:30,360 --> 00:16:31,400 Speaker 6: is this is that dramatic? 352 00:16:31,440 --> 00:16:33,000 Speaker 1: I have to create what I said, I was quoting 353 00:16:33,120 --> 00:16:35,960 Speaker 1: the tenure. The tenure was a fornaty two. The two 354 00:16:36,040 --> 00:16:38,800 Speaker 1: year back in early November was three five percent. These 355 00:16:38,800 --> 00:16:41,280 Speaker 1: are massive changes back down to four forty seven on 356 00:16:41,320 --> 00:16:44,080 Speaker 1: a two year on a tenure just above four percent 357 00:16:44,520 --> 00:16:45,960 Speaker 1: in the effects market. I think we've got to talk 358 00:16:46,000 --> 00:16:48,000 Speaker 1: about this, the Tucker war that we're going to see 359 00:16:48,000 --> 00:16:50,040 Speaker 1: play out now off the back of what we've just 360 00:16:50,080 --> 00:16:53,640 Speaker 1: heard and into tomorrow with the ECB. The euro at 361 00:16:53,640 --> 00:16:56,120 Speaker 1: the moment looks like this one to wait sixty eight, 362 00:16:56,280 --> 00:16:59,160 Speaker 1: that currency pair positive by zero point seven percent. Given 363 00:16:59,160 --> 00:17:01,000 Speaker 1: the moves we've seen in the bobs market, that dollar 364 00:17:01,480 --> 00:17:03,720 Speaker 1: is a whole lot weaker. Where does this leave present 365 00:17:03,760 --> 00:17:06,120 Speaker 1: leguard in to morrow's mathic hold my beer? 366 00:17:06,280 --> 00:17:08,240 Speaker 3: I mean, essentially, is this what she's going to say 367 00:17:08,359 --> 00:17:11,160 Speaker 3: is okay, I'll take that, and I'll raise you by 368 00:17:11,200 --> 00:17:13,320 Speaker 3: saying I think we should raise we should cut reads. 369 00:17:13,440 --> 00:17:15,639 Speaker 3: In March, this is going to be a bigger question. 370 00:17:16,080 --> 00:17:19,800 Speaker 3: Did the whole world experience pandemic era inflation that has 371 00:17:19,920 --> 00:17:24,160 Speaker 3: largely subsided and that was ultimately transfittory or is there 372 00:17:24,160 --> 00:17:26,679 Speaker 3: something else at play? Jpell did not want to embrace 373 00:17:26,720 --> 00:17:29,680 Speaker 3: the question about financial conditions loosening and what that means. 374 00:17:29,720 --> 00:17:33,000 Speaker 3: Are we going to hear the same thing from Christine Lagard. 375 00:17:33,119 --> 00:17:35,480 Speaker 1: There was a moment in that news conference, just a 376 00:17:35,520 --> 00:17:38,080 Speaker 1: moment where he reflected on how wrong so many people 377 00:17:38,080 --> 00:17:40,840 Speaker 1: have been in twenty twenty three, and I think before 378 00:17:40,880 --> 00:17:43,399 Speaker 1: we go home for Christmas, the holidays and look ahead 379 00:17:43,400 --> 00:17:45,879 Speaker 1: to twenty twenty four, tom we need to reflect with 380 00:17:45,920 --> 00:17:48,800 Speaker 1: some humidity about what went wrong in twenty twenty three. 381 00:17:49,320 --> 00:17:52,159 Speaker 1: Last year, twelve months ago, looking out twelve months, we 382 00:17:52,160 --> 00:17:55,719 Speaker 1: were talking about the prospect of recession, of much higher unemployment. 383 00:17:55,960 --> 00:17:59,960 Speaker 1: We called the Fed's forecast aspirational ck. We had bank failure, 384 00:18:00,320 --> 00:18:02,520 Speaker 1: some of the biggest bank failures we've seen in decades, 385 00:18:02,560 --> 00:18:04,879 Speaker 1: not just in this country but around the world. And 386 00:18:05,000 --> 00:18:08,480 Speaker 1: yet a couple of quarters later, we had GDP north 387 00:18:08,520 --> 00:18:11,840 Speaker 1: of fifth point. So when we talk about NED and 388 00:18:11,880 --> 00:18:14,320 Speaker 1: ASoft landing getting all these rate cuts the FED is 389 00:18:14,359 --> 00:18:17,439 Speaker 1: talking about without the economic weakness, I think we've got 390 00:18:17,480 --> 00:18:21,200 Speaker 1: to remember this has been a very very difficult economy 391 00:18:21,240 --> 00:18:24,679 Speaker 1: to forecast, and the next twelve months might best tricky. 392 00:18:24,800 --> 00:18:27,280 Speaker 5: We're repiecing the show together for tomorrow, folks. This is 393 00:18:27,320 --> 00:18:29,560 Speaker 5: so profound. Our team's going to work all evening to 394 00:18:29,600 --> 00:18:32,320 Speaker 5: give you the best tomorrow morning that we can. And 395 00:18:32,720 --> 00:18:34,679 Speaker 5: Amy said to me, who do we talk to? And 396 00:18:34,760 --> 00:18:37,439 Speaker 5: you know the usual names you mentioned, Bob Michael, JP Morgan. 397 00:18:37,520 --> 00:18:41,000 Speaker 5: I think to see a bank like JP Morgan recast. 398 00:18:41,280 --> 00:18:42,800 Speaker 6: Their view forward. 399 00:18:42,960 --> 00:18:45,320 Speaker 5: But I looked to Uri and timmor at Fideli with 400 00:18:45,560 --> 00:18:49,360 Speaker 5: decades of experience of real economy analysis. 401 00:18:49,400 --> 00:18:52,920 Speaker 6: And this is the regard distinction. If we do four 402 00:18:52,960 --> 00:18:55,560 Speaker 6: percent nomenal, what's the character of that. 403 00:18:55,600 --> 00:18:59,959 Speaker 5: American four percent growth versus whatever number you have in Europe? 404 00:19:00,320 --> 00:19:04,200 Speaker 5: They don't have the technological pop that we have. 405 00:19:04,440 --> 00:19:06,040 Speaker 1: Can we introduce some politics into this? 406 00:19:07,240 --> 00:19:08,959 Speaker 6: Did you speak with Chirbiden? 407 00:19:09,119 --> 00:19:12,160 Speaker 1: This gets really really difficult going into next year. Okay, 408 00:19:12,200 --> 00:19:14,359 Speaker 1: let's say we get seventy five basis points of cuts. 409 00:19:14,680 --> 00:19:18,000 Speaker 1: Where are they landing and does the political calendar shape 410 00:19:18,000 --> 00:19:20,520 Speaker 1: where you think that comes later? Given that we're going 411 00:19:20,560 --> 00:19:24,160 Speaker 1: to have campaign in full flow, full flow going through 412 00:19:24,200 --> 00:19:25,879 Speaker 1: next year, are you telling me they're going to wait 413 00:19:25,920 --> 00:19:28,560 Speaker 1: until June. We had Matt Lazelli, a Deutsche Bank on 414 00:19:28,600 --> 00:19:30,560 Speaker 1: the program a little bit earlier, Lisa, and he said, 415 00:19:30,560 --> 00:19:32,040 Speaker 1: they start in June and they go one hundred and 416 00:19:32,080 --> 00:19:34,480 Speaker 1: seventy five basis points they start in June and go 417 00:19:34,520 --> 00:19:36,280 Speaker 1: on seventy five into the election. 418 00:19:36,600 --> 00:19:39,199 Speaker 3: Right now, there is a seventy four percent chance of 419 00:19:39,240 --> 00:19:42,320 Speaker 3: a rate cut at the March meeting for the Federal Reserve. 420 00:19:42,480 --> 00:19:44,119 Speaker 3: That is what I'm looking at in terms of what 421 00:19:44,160 --> 00:19:47,000 Speaker 3: people are expecting. If the FED is currently talking about 422 00:19:47,000 --> 00:19:50,679 Speaker 3: cutting rates, why would they wait until June? From politics? 423 00:19:50,800 --> 00:19:53,600 Speaker 3: For politics, they could be accused of political interference either 424 00:19:53,640 --> 00:19:56,240 Speaker 3: way deciding on when they meet. 425 00:19:55,920 --> 00:19:56,840 Speaker 1: TK that's the question. 426 00:19:57,040 --> 00:19:58,800 Speaker 6: Why wait, Well, there's a y. 427 00:19:58,800 --> 00:20:00,879 Speaker 5: Weight, but there's also a look the further data, and 428 00:20:00,880 --> 00:20:03,960 Speaker 5: again I'm skewed towards a study of the real economy. 429 00:20:04,280 --> 00:20:05,160 Speaker 6: We finished stronger. 430 00:20:05,240 --> 00:20:10,399 Speaker 5: Jeffrey Rosenberg with his portfolio manager, Blackrock Systematic Multi Strategy Fund, 431 00:20:10,520 --> 00:20:15,960 Speaker 5: he will be systematically reviewing everything after this historic meeting. Jeff, 432 00:20:16,040 --> 00:20:18,240 Speaker 5: you know we're at gunpoint at Carnegie. Mellen you were 433 00:20:18,280 --> 00:20:21,560 Speaker 5: required to read both volumes of Alan Meltzer and get 434 00:20:21,560 --> 00:20:24,679 Speaker 5: out the sixties and seventies and FED meeting. And what 435 00:20:25,000 --> 00:20:27,280 Speaker 5: doctor Meltzer would say is it is at the end 436 00:20:27,320 --> 00:20:30,720 Speaker 5: of the day about the real economy. What did Jerome 437 00:20:30,840 --> 00:20:35,800 Speaker 5: Powell today say about the American economy? With the stunning 438 00:20:35,840 --> 00:20:38,159 Speaker 5: statement the dots in the Q and A. 439 00:20:39,920 --> 00:20:44,720 Speaker 11: Yeah, it was overall a validation of the transitory view. 440 00:20:44,880 --> 00:20:47,440 Speaker 11: And you know, what was a little bit feared going 441 00:20:47,440 --> 00:20:49,800 Speaker 11: into the press conference was whether he would push back. 442 00:20:50,680 --> 00:20:54,360 Speaker 11: He got the softball from Nick Timmeros on financial. 443 00:20:54,000 --> 00:20:59,399 Speaker 12: Conditions now being nice and clearly, you know, chose not 444 00:20:59,520 --> 00:21:01,200 Speaker 12: to hit it out out of the park in terms 445 00:21:01,240 --> 00:21:03,760 Speaker 12: of pushing back on on financial conditions, and that was 446 00:21:03,800 --> 00:21:07,359 Speaker 12: a green light to continue the initial reaction from what 447 00:21:07,400 --> 00:21:11,160 Speaker 12: we got in the statement of economic projections and the 448 00:21:11,200 --> 00:21:13,720 Speaker 12: dots and the seventy five basis points and the dots 449 00:21:13,800 --> 00:21:14,880 Speaker 12: is clearly the surprise. 450 00:21:15,440 --> 00:21:17,919 Speaker 4: So you know, this is a green light for investors. 451 00:21:17,960 --> 00:21:20,520 Speaker 11: I think nixt question and this question of financial conditions, 452 00:21:20,560 --> 00:21:22,919 Speaker 11: and Bill Dudley mentioned in a minute ago this is 453 00:21:22,960 --> 00:21:25,439 Speaker 11: the problem is that this can go on for a 454 00:21:25,520 --> 00:21:29,440 Speaker 11: while and it can get overdone in terms of how 455 00:21:29,520 --> 00:21:33,240 Speaker 11: much easing the market does before the FED. But the 456 00:21:33,320 --> 00:21:35,760 Speaker 11: message today is the Fed is very happy with what 457 00:21:35,800 --> 00:21:36,359 Speaker 11: they've seen. 458 00:21:36,720 --> 00:21:39,400 Speaker 4: What changed. You know, clearly it's. 459 00:21:39,280 --> 00:21:43,040 Speaker 11: The validation on the inflation story, and they're very pleased 460 00:21:43,080 --> 00:21:46,200 Speaker 11: that after getting it wrong for so long, they're really 461 00:21:46,240 --> 00:21:48,400 Speaker 11: getting the validation in getting it right. 462 00:21:48,560 --> 00:21:51,000 Speaker 1: So, Jeff, what do you do. Stay on the bill, 463 00:21:51,040 --> 00:21:53,399 Speaker 1: hold on to it tightly, don't let go what you do. 464 00:21:54,520 --> 00:21:57,080 Speaker 11: I mean the short term is, you can't really fight 465 00:21:57,200 --> 00:22:01,040 Speaker 11: this until there's some kind of fundamental data from the 466 00:22:01,080 --> 00:22:04,240 Speaker 11: economy side that pushes back, and there hasn't been. 467 00:22:04,280 --> 00:22:06,359 Speaker 4: It's all been coming up. 468 00:22:06,600 --> 00:22:11,280 Speaker 11: Soft landing, inflation declines yesterday. You can squint at Core Corp. 469 00:22:11,640 --> 00:22:14,199 Speaker 11: Nobody seems to look at Corecorp anymore. He mentioned it 470 00:22:14,320 --> 00:22:17,840 Speaker 11: very briefly. It actually popped up. So there are some, 471 00:22:17,920 --> 00:22:20,960 Speaker 11: you know, vulnerabilities, but the message and the concern, no 472 00:22:21,000 --> 00:22:24,040 Speaker 11: one's looking at the vulnerabilities. They're looking at the validation. 473 00:22:24,240 --> 00:22:27,359 Speaker 11: And so with that validation, this bullish sentiment can go 474 00:22:27,400 --> 00:22:29,320 Speaker 11: on for a while until we get a new. 475 00:22:29,240 --> 00:22:30,880 Speaker 4: Round of economic data. 476 00:22:30,960 --> 00:22:33,800 Speaker 11: And until then, I think, I think the message is 477 00:22:34,119 --> 00:22:37,560 Speaker 11: pretty clear that the FED is more than willing to 478 00:22:37,600 --> 00:22:40,960 Speaker 11: see an easy in financial conditions, won't step in the 479 00:22:40,960 --> 00:22:41,440 Speaker 11: way of that. 480 00:22:41,640 --> 00:22:45,000 Speaker 3: Kathy Jones of Schwab Josh Schwab put this out on 481 00:22:45,520 --> 00:22:48,159 Speaker 3: x or Twitter. With that, I have to revise my 482 00:22:48,200 --> 00:22:49,639 Speaker 3: twenty twenty four outlook. 483 00:22:49,720 --> 00:22:50,639 Speaker 4: Happy to do it. 484 00:22:50,720 --> 00:22:53,679 Speaker 3: Are you revising your twenty twenty four outlook after this meeting? 485 00:22:54,880 --> 00:22:57,760 Speaker 11: You know, I've done this for so long that I 486 00:22:57,800 --> 00:23:01,440 Speaker 11: don't do the whole you know, Christmas in July outlooks 487 00:23:01,440 --> 00:23:04,240 Speaker 11: in October kind of thing, because you end up with 488 00:23:04,320 --> 00:23:07,159 Speaker 11: this problem. So no, I don't have to revise it 489 00:23:07,200 --> 00:23:09,240 Speaker 11: because I just I just haven't put it out yet. 490 00:23:10,000 --> 00:23:13,160 Speaker 4: So that's that's a good plan. 491 00:23:13,359 --> 00:23:18,560 Speaker 5: B Look, Jeff, at where we are, and I just 492 00:23:18,560 --> 00:23:21,480 Speaker 5: looked up one of the black Rock money market funds 493 00:23:21,560 --> 00:23:25,760 Speaker 5: five point two four nine one percent. Where's all that 494 00:23:25,880 --> 00:23:28,720 Speaker 5: money going? I mean, this is right up your wheelhouse. 495 00:23:28,760 --> 00:23:32,040 Speaker 6: Where's all that money going when that yield comes down? 496 00:23:33,280 --> 00:23:33,480 Speaker 4: Yeah? 497 00:23:33,520 --> 00:23:35,720 Speaker 11: You know you ask this question in the pre segment 498 00:23:35,760 --> 00:23:37,560 Speaker 11: to one of the guests, and I was listening in, 499 00:23:37,640 --> 00:23:39,840 Speaker 11: and you know, this is the change. 500 00:23:39,960 --> 00:23:40,560 Speaker 4: This is the. 501 00:23:40,440 --> 00:23:44,440 Speaker 11: Turning point because last year it was all about you're 502 00:23:44,520 --> 00:23:47,239 Speaker 11: rewarded for staying in cash when the cash rates are 503 00:23:47,280 --> 00:23:50,560 Speaker 11: going up. When the cash rates start going down, now 504 00:23:50,600 --> 00:23:53,480 Speaker 11: your rate of return starts going down in cash. So 505 00:23:53,640 --> 00:23:57,199 Speaker 11: it is the signal to start moving out of cash 506 00:23:57,480 --> 00:24:00,400 Speaker 11: into into more term rates in fixed income, to lock 507 00:24:00,480 --> 00:24:02,760 Speaker 11: in rates at their highest yields. If you're going into 508 00:24:02,800 --> 00:24:06,480 Speaker 11: a cutting cycle, to move back into risk. As we 509 00:24:06,520 --> 00:24:10,400 Speaker 11: talked about earlier, the lack of the hard landing, the 510 00:24:10,440 --> 00:24:14,480 Speaker 11: over forecasting of recession fears, the legacy of the damage 511 00:24:14,480 --> 00:24:18,320 Speaker 11: of twenty twenty two that's kept people happily in cash. 512 00:24:18,359 --> 00:24:21,600 Speaker 4: All of that dissipates, and I think that's what I 513 00:24:21,640 --> 00:24:22,600 Speaker 4: was referring to before. 514 00:24:22,800 --> 00:24:25,560 Speaker 11: You got to be careful as to how big that 515 00:24:25,680 --> 00:24:29,760 Speaker 11: easing and financial conditions can become and how that can 516 00:24:29,920 --> 00:24:33,080 Speaker 11: undo some of what the FED thinks is the right stance. 517 00:24:33,200 --> 00:24:35,760 Speaker 11: But that being said, this is a turning point, and 518 00:24:35,800 --> 00:24:37,680 Speaker 11: I think you do start to see that money move 519 00:24:37,760 --> 00:24:40,520 Speaker 11: out of money markets into risk of your assets, into 520 00:24:40,520 --> 00:24:42,320 Speaker 11: more term rates to lock. 521 00:24:42,200 --> 00:24:43,040 Speaker 4: In higher rates. 522 00:24:43,080 --> 00:24:46,080 Speaker 11: As the cash rates start to come down. You're penalized 523 00:24:46,119 --> 00:24:49,119 Speaker 11: now in twenty twenty four for holding cash because the 524 00:24:49,240 --> 00:24:52,879 Speaker 11: rates and the prospect of the rates is to go lower. 525 00:24:53,000 --> 00:24:55,320 Speaker 1: Jeff, what would you advocate for You're sitting in cash, 526 00:24:55,320 --> 00:24:57,000 Speaker 1: You've missed the rally of the last month, You see 527 00:24:57,040 --> 00:24:59,760 Speaker 1: yield drop and you get nervous. Reinvestment risk is not 528 00:24:59,800 --> 00:25:00,760 Speaker 1: just going to worry about. 529 00:25:00,800 --> 00:25:01,240 Speaker 4: It's real. 530 00:25:01,480 --> 00:25:02,959 Speaker 1: You see the moves in a single day of more 531 00:25:03,000 --> 00:25:04,960 Speaker 1: than twenty basis points. What are you antificating for? 532 00:25:06,880 --> 00:25:09,919 Speaker 11: Well, I think there's lots of different ways to step 533 00:25:10,000 --> 00:25:13,680 Speaker 11: out of cash into It depends on the risk perspective, 534 00:25:13,720 --> 00:25:16,240 Speaker 11: but in fixed income, you know that movement into the 535 00:25:16,240 --> 00:25:18,359 Speaker 11: front end of the curve, you can step out a 536 00:25:18,359 --> 00:25:21,080 Speaker 11: little bit more into the belly. It's going to lock 537 00:25:21,160 --> 00:25:24,280 Speaker 11: in not only some yield levels, but you'll pick up 538 00:25:24,320 --> 00:25:27,840 Speaker 11: a bit more price appreciation in a total return context. 539 00:25:27,960 --> 00:25:30,439 Speaker 4: In a falling rate environment, I think you can go further. 540 00:25:30,880 --> 00:25:34,919 Speaker 11: The soft landing the lack of economic recession. It bolsters 541 00:25:35,240 --> 00:25:39,119 Speaker 11: yield and you'll pick up in terms of income and 542 00:25:39,400 --> 00:25:40,119 Speaker 11: credit risk. 543 00:25:40,320 --> 00:25:43,439 Speaker 4: That credit risk it's priced in, but it's not going 544 00:25:43,520 --> 00:25:44,320 Speaker 4: to collapse. 545 00:25:44,560 --> 00:25:48,080 Speaker 11: And so if you avoid the recession, investors can can 546 00:25:48,119 --> 00:25:51,280 Speaker 11: step out on the risk spectrum and fixed income increase 547 00:25:51,359 --> 00:25:55,040 Speaker 11: yield levels relative to cash, lock those in and as 548 00:25:55,080 --> 00:25:57,879 Speaker 11: long as that recession outlook is avoided. And that's not 549 00:25:57,920 --> 00:26:00,359 Speaker 11: a guarantee, but that seems again with what the data 550 00:26:00,440 --> 00:26:03,679 Speaker 11: is showing to be the more likely scenario. You know 551 00:26:03,720 --> 00:26:07,000 Speaker 11: you'll lock in those yields and achieve a higher return 552 00:26:07,119 --> 00:26:09,200 Speaker 11: than what you're going to get out of sitting cap. 553 00:26:09,400 --> 00:26:11,439 Speaker 3: I want to just point out that we're down now 554 00:26:11,480 --> 00:26:13,919 Speaker 3: about a percentage point in less than a month on 555 00:26:14,000 --> 00:26:17,320 Speaker 3: ten year benchmark yields. This is full faith and credit, 556 00:26:17,359 --> 00:26:19,720 Speaker 3: the most liquid market in the world, and we're seeing 557 00:26:19,760 --> 00:26:23,280 Speaker 3: fluctuations that we have never seen before. Does that raise 558 00:26:23,320 --> 00:26:26,000 Speaker 3: any concerns for you that we are seeing such incredible 559 00:26:26,080 --> 00:26:31,960 Speaker 3: volatility in just the market's psychology on not that much 560 00:26:32,160 --> 00:26:34,639 Speaker 3: different in terms of news, as you pointed out earlier. 561 00:26:36,000 --> 00:26:38,879 Speaker 11: Yeah, it's a really good point when thinking about what 562 00:26:39,080 --> 00:26:43,400 Speaker 11: the fixed income market looks like from a portfolio context. 563 00:26:43,600 --> 00:26:46,320 Speaker 11: We just have to get more used to this higher 564 00:26:46,400 --> 00:26:49,119 Speaker 11: level of volatility. You know, the AG index, the benchmark 565 00:26:49,480 --> 00:26:51,720 Speaker 11: for fixed income, used to be a three to four 566 00:26:51,800 --> 00:26:55,800 Speaker 11: percent volatility instrument. Today it's about double that. So when 567 00:26:55,800 --> 00:26:58,840 Speaker 11: you're balancing out portfolios, there's just a higher level of risk. 568 00:26:58,880 --> 00:27:02,159 Speaker 11: You can mitigate that by being shorter in terms of duration. 569 00:27:02,359 --> 00:27:04,480 Speaker 11: Some of the more attractiveness in the front end of 570 00:27:04,520 --> 00:27:07,199 Speaker 11: the curve is you've got still the highest yields and 571 00:27:07,320 --> 00:27:10,520 Speaker 11: with the lower duration, less volatility, but a bit less 572 00:27:10,520 --> 00:27:12,639 Speaker 11: price appreciation too, So there's a little bit of a 573 00:27:12,680 --> 00:27:14,840 Speaker 11: trade off there, But it is to Lisa's point, you 574 00:27:14,880 --> 00:27:18,119 Speaker 11: gotta expect this isn't the old fixed income market. 575 00:27:18,160 --> 00:27:19,480 Speaker 4: It's a newer fixed income market. 576 00:27:19,560 --> 00:27:22,800 Speaker 11: It means higher volatility better yields still in the front 577 00:27:22,840 --> 00:27:23,879 Speaker 11: end until we normally. 578 00:27:23,760 --> 00:27:24,760 Speaker 6: Jet One final question. 579 00:27:24,840 --> 00:27:27,400 Speaker 5: Torston, Slack and Apollo head out a stunning chart today 580 00:27:27,400 --> 00:27:30,800 Speaker 5: of a spike in bankruptcies within all this, and I 581 00:27:30,840 --> 00:27:34,960 Speaker 5: mean from a political economic standpoint, the history of this meeting, 582 00:27:35,040 --> 00:27:37,679 Speaker 5: the shock of this meeting. Is this a meeting that 583 00:27:37,800 --> 00:27:41,760 Speaker 5: just benefits the halves of America? Half does countries flat 584 00:27:41,800 --> 00:27:44,399 Speaker 5: on their back and the others are living large. The 585 00:27:44,480 --> 00:27:47,399 Speaker 5: dows up four hundred and sixty points. Is this just 586 00:27:47,440 --> 00:27:52,480 Speaker 5: about almost the financialization and advantage of the elite in America? 587 00:27:53,840 --> 00:27:55,720 Speaker 4: So I love Torreston, love his work. 588 00:27:55,760 --> 00:27:58,160 Speaker 11: You know what he's highlighting now, and he's done this 589 00:27:58,200 --> 00:28:02,040 Speaker 11: for a while. Is there there's a distributional aspect of 590 00:28:02,080 --> 00:28:05,520 Speaker 11: our economy that gets lost in these aggregate statistics. And 591 00:28:05,560 --> 00:28:08,840 Speaker 11: so there is an impact of rising interest rates, There 592 00:28:08,960 --> 00:28:12,920 Speaker 11: is an impact of the significant tightening and interest rate policy, 593 00:28:13,160 --> 00:28:15,160 Speaker 11: but you don't see it as much in the aggregate. 594 00:28:15,200 --> 00:28:18,520 Speaker 11: You see it when you disaggregate, and that distributional side. 595 00:28:18,520 --> 00:28:22,159 Speaker 11: So the bottom end of consumers, the bottom end of 596 00:28:22,320 --> 00:28:26,000 Speaker 11: credit is more vulnerable, and you're starting to see that, 597 00:28:26,400 --> 00:28:29,520 Speaker 11: but it's still a distributional story. It's what you would 598 00:28:29,560 --> 00:28:32,320 Speaker 11: expect to see in the tails, and it is showing 599 00:28:32,359 --> 00:28:35,200 Speaker 11: the effect of that. But that doesn't necessarily mean that 600 00:28:35,359 --> 00:28:40,600 Speaker 11: story is exacerbated strapolated into the aggregate view. 601 00:28:40,680 --> 00:28:42,960 Speaker 4: It's part of the story, it's an important part. 602 00:28:43,280 --> 00:28:45,800 Speaker 11: Credit cycles begin from the bottom, and so you got 603 00:28:45,840 --> 00:28:49,360 Speaker 11: to watch that. But the counterpoint is that the rest 604 00:28:49,480 --> 00:28:53,880 Speaker 11: of the distribution has created a lot of immunity, if 605 00:28:53,880 --> 00:28:57,040 Speaker 11: you will, not permanent immunity, but a lot of reservoirs 606 00:28:57,320 --> 00:29:01,600 Speaker 11: to buffer the increases in interest rates. On the consumer side, 607 00:29:01,640 --> 00:29:04,560 Speaker 11: that's from savings. On the corporate side, that's from fixing 608 00:29:05,520 --> 00:29:08,720 Speaker 11: maturities and turming out interest rates. And the reason is 609 00:29:08,760 --> 00:29:12,440 Speaker 11: we had such a prolonged period of zero interest rates 610 00:29:12,640 --> 00:29:14,880 Speaker 11: so that the shock of interest rates isn't as much 611 00:29:14,880 --> 00:29:17,080 Speaker 11: of a shock as it appears it can be. And 612 00:29:17,120 --> 00:29:19,200 Speaker 11: we have to watch it, and you're certainly seeing it. 613 00:29:19,200 --> 00:29:21,480 Speaker 11: It's tors and highlighting, you know, in some of the tales, 614 00:29:21,520 --> 00:29:24,000 Speaker 11: but it's not really the aggregate story yet. 615 00:29:24,120 --> 00:29:26,440 Speaker 1: Jeff, I've got a few seconds. Pick a month for 616 00:29:26,520 --> 00:29:28,600 Speaker 1: the first rate cut, and you're not gonna give us 617 00:29:28,600 --> 00:29:30,040 Speaker 1: an outlook, but just pick a month. 618 00:29:29,920 --> 00:29:34,120 Speaker 11: Jeff, I'm gonna give I'm gonna give you. I'm gonna 619 00:29:34,120 --> 00:29:38,120 Speaker 11: give you June. You know, sometime in the summer, I 620 00:29:38,120 --> 00:29:41,000 Speaker 11: think the March, and I know Neil maybe a little 621 00:29:41,000 --> 00:29:41,480 Speaker 11: bit early. 622 00:29:41,920 --> 00:29:42,959 Speaker 4: What's the rush. 623 00:29:43,000 --> 00:29:46,200 Speaker 11: They still want to make sure they've nailed the inflations. 624 00:29:46,200 --> 00:29:48,120 Speaker 1: We've got to leave it that. Jeff got to catch out, Buddy, 625 00:29:48,160 --> 00:29:50,880 Speaker 1: always says Jeff Rosenberg there of black Rock, the Federal 626 00:29:50,920 --> 00:29:52,960 Speaker 1: Reserve chair, does not want a claim victory. Let me 627 00:29:53,000 --> 00:29:54,960 Speaker 1: tell you this market already has. 628 00:29:56,480 --> 00:30:00,480 Speaker 5: This is the Bloomberg Surveillance Podcast. Thanks for listening. Join 629 00:30:00,560 --> 00:30:04,160 Speaker 5: us live weekdays from seven to ten am Eastern on 630 00:30:04,240 --> 00:30:08,480 Speaker 5: Bloomberg Radio and on Bloomberg Television each day from six 631 00:30:08,600 --> 00:30:13,680 Speaker 5: to nine am for insight from the best in economics, finance, investment, 632 00:30:13,840 --> 00:30:20,880 Speaker 5: and international relations. And subscribe to the Surveillance podcast on Apple, Podcastsoundcloud, 633 00:30:21,280 --> 00:30:22,640 Speaker 5: Bloomberg dot com. 634 00:30:22,320 --> 00:30:25,640 Speaker 6: And of course on the terminal. I'm Tom Keen, and 635 00:30:25,760 --> 00:30:29,680 Speaker 6: this is Bloomer