WEBVTT - Instant Reaction: Jay Powell on Fed Policy 0:00:05.200 --> 0:00:08.600 Chairman Powell wrapping up twenty twenty three and unleashing a 0:00:08.760 --> 0:00:12.039 monster rally from New York City this afternoon, Good afternoon, 0:00:12.119 --> 0:00:15.920 Good afternoon, alongside Tom Keen and Lisa Brownbittz'm Jonathan Ferrow 0:00:16.320 --> 0:00:18.320 here with the scores in the equery market right now 0:00:18.320 --> 0:00:19.880 on the S and P five hundred up by more 0:00:19.880 --> 0:00:22.920 than one percent, on the NASDAK up by one point 0:00:22.960 --> 0:00:26.520 one percent. The words of Emily Rowland of John Hancock Investment, 0:00:26.560 --> 0:00:30.360 it's a pivot party and everybody's invited. Chairman Powell just 0:00:30.400 --> 0:00:32.720 turned up the music. In the bond market two year, 0:00:32.840 --> 0:00:35.360 ten year, thirty year, look a little something like this. 0:00:35.440 --> 0:00:38.840 We're down twenty six basis points on a two year 0:00:38.920 --> 0:00:40.879 to four p forty seven on a ten year, we're 0:00:40.920 --> 0:00:44.040 down sixteen to four point zero four percent. We all 0:00:44.080 --> 0:00:46.559 had a big question coming into this news conference with 0:00:46.680 --> 0:00:49.120 Chairman Pow pushed back against these big moves in this 0:00:49.200 --> 0:00:52.200 bond market, these big moves in this stock market. He said, 0:00:52.240 --> 0:00:55.240 we still have a waste to go. Nobody is declaring victory. 0:00:55.480 --> 0:00:58.880 That would be premature. Then just seconds later he said. 0:00:58.640 --> 0:01:03.280 This question of when will it become appropriate to begin 0:01:03.440 --> 0:01:05.720 dialing back the amount of policy restraint in place that 0:01:06.880 --> 0:01:10.440 begins to come into view and is clearly a discush 0:01:10.520 --> 0:01:12.760 topic of discussion now in the world and also a 0:01:12.840 --> 0:01:13.759 discussion for us. 0:01:14.959 --> 0:01:18.520 At our meeting today, we discussed the timing of raycouts 0:01:18.800 --> 0:01:21.319 at today's mate sink Lisa Ramitz, that was not the 0:01:21.319 --> 0:01:23.160 pushback some people be looking forward. 0:01:23.280 --> 0:01:25.800 If this was pushback, he might as well have screamed, 0:01:25.959 --> 0:01:28.319 we did it at pop Champagne right if you're talking 0:01:28.319 --> 0:01:31.640 about a party. He basically endorsed the view that we 0:01:31.760 --> 0:01:33.880 have of the market. Where I'm looking at right now 0:01:34.000 --> 0:01:36.919 is the expectation of one hundred and forty basis points 0:01:36.920 --> 0:01:39.520 of rate cuts being priced into fed Fund's. 0:01:39.280 --> 0:01:40.679 Futures for next year. 0:01:40.959 --> 0:01:44.160 This is basically an endorsement of that bifed share Powell 0:01:44.160 --> 0:01:46.600 who had ample opportunities to push back and did not 0:01:46.800 --> 0:01:48.000 to me as be honest. 0:01:47.720 --> 0:01:50.320 To the real economy. This is truly an historic meeting. 0:01:50.360 --> 0:01:52.600 I did not expect that. I went back to March 0:01:52.960 --> 0:01:56.480 of twenty twenty, let's call it the pandemic meeting, certainly 0:01:56.480 --> 0:01:58.120 with that impact. But I think you've got to go 0:01:58.160 --> 0:02:01.040 back twenty five years. What was on spoken there As 0:02:01.080 --> 0:02:03.480 everybody plays the fed parlor game, and this and that 0:02:03.560 --> 0:02:07.120 and the other is this is a resounding vote in 0:02:07.160 --> 0:02:11.160 the American real economy and in the productivity of the country. 0:02:11.360 --> 0:02:13.520 That's that's going to all be in the research over 0:02:13.560 --> 0:02:14.040 the next. 0:02:13.880 --> 0:02:14.520 Forty eight hours. 0:02:14.639 --> 0:02:18.040 Jus get and that self to me, it's immaculate productivity 0:02:18.800 --> 0:02:21.520 phrase reading to that in a big why yeah. 0:02:21.600 --> 0:02:24.560 This is I can't I got goosebumps right now, folks. 0:02:24.560 --> 0:02:27.200 I can't emphasize how. 0:02:27.200 --> 0:02:28.560 Unique this meeting is. 0:02:29.320 --> 0:02:32.560 I don't have no idea how the Guard and Dudley 0:02:32.840 --> 0:02:35.840 respond to this. I have no idea what Christine Legard 0:02:35.840 --> 0:02:36.360 does tomorrow. 0:02:36.520 --> 0:02:37.480 I like your phrasing. 0:02:37.639 --> 0:02:40.480 Seduced by the idea that they could potentially get a 0:02:40.520 --> 0:02:43.400 soft landing, and the response to the question about the 0:02:43.440 --> 0:02:46.160 easing of financial conditions and whether that worked against their 0:02:46.200 --> 0:02:51.440 goal was not said. It was not particularly I don't 0:02:51.440 --> 0:02:53.400 want to say satisfactory, but didn't really give me a 0:02:53.480 --> 0:02:56.560 sense of what the answer actually was. Right, because we're 0:02:56.600 --> 0:02:59.639 looking at a situation where people are just all in 0:03:00.200 --> 0:03:04.160 endorsing bonds, endorsing stocks, endorsing the soft landing, and it 0:03:04.240 --> 0:03:06.799 is very rare, it is a unicorn, and so how 0:03:06.880 --> 0:03:09.400 much does this start to push things in the opposite direction. 0:03:09.440 --> 0:03:10.200 John, I'm gonna frame this. 0:03:10.280 --> 0:03:11.880 I wrote to Mohammad al Aria and I think it 0:03:11.919 --> 0:03:14.480 was out on Twitter like twenty minutes before, and I said, 0:03:14.480 --> 0:03:17.200 two standard deviations is four point zero six percent. 0:03:17.639 --> 0:03:18.639 That's right where we went. 0:03:18.720 --> 0:03:21.200 I did not expect that we blew through that and 0:03:21.240 --> 0:03:24.280 almost hit the Bramo line, which is three point nine 0:03:24.320 --> 0:03:25.200 to nine x X. 0:03:25.280 --> 0:03:27.040 We didn't get there. We did not get to the 0:03:27.080 --> 0:03:29.240 land of Bramo, but we were really quite close. 0:03:29.320 --> 0:03:31.720 You have to remember, Tom, the end of October when 0:03:31.720 --> 0:03:34.360 people put together the year ahead outlooks for the end 0:03:34.400 --> 0:03:38.480 of twenty twenty four, targets like fifty two hundred was 0:03:38.480 --> 0:03:41.520 twenty percent upside from where we were. And now you 0:03:41.560 --> 0:03:43.400 want to take k is it pullish enough? And that's 0:03:43.400 --> 0:03:46.400 going to make people really, really uncomfortable as we start 0:03:46.440 --> 0:03:50.080 to bring forward a ton of gains into year Row'll. 0:03:49.800 --> 0:03:50.200 Me quick here. 0:03:50.240 --> 0:03:52.800 We got some two special guests for you right now 0:03:52.800 --> 0:03:55.760 on radio and television. But John, what I saw there 0:03:55.920 --> 0:03:59.440 is what I'm going to call non log convexity, which 0:03:59.520 --> 0:04:02.800 is a curve to the Russell two thousand, which is 0:04:02.840 --> 0:04:06.320 an acceleration of money in and I just wonder to 0:04:06.440 --> 0:04:10.600 year in how traditional money reacts and if you get 0:04:10.600 --> 0:04:13.840 what Greg Peters talked about, which is some legit convexity here. 0:04:13.880 --> 0:04:16.120 What's the bet. I think the bet right now, Tom, 0:04:16.200 --> 0:04:18.520 is that growth doesn't get hit hot. This fed's going 0:04:18.560 --> 0:04:20.360 to count based on what we've just been told by 0:04:20.400 --> 0:04:23.279 Chairman Powder, rather what we weren't sold and what's implied 0:04:23.320 --> 0:04:26.800 already in market pricing. But Lisa, what would upset the bet. 0:04:26.920 --> 0:04:28.720 What would upset the bet right now is you've get 0:04:28.720 --> 0:04:31.279 a real down to it in economy that's not part 0:04:31.320 --> 0:04:33.800 of this story that's been priced in at the moment. 0:04:33.680 --> 0:04:36.400 And there's dissonance when the FED statement is saying that 0:04:36.520 --> 0:04:39.960 there is a lagging effect, a lagging impact of FED 0:04:40.040 --> 0:04:42.520 rate hikes that hasn't yet been played out. If that's 0:04:42.520 --> 0:04:45.360 the case, where is that in the statement of economic projection? 0:04:45.520 --> 0:04:48.200 We have a terrific lineup for you, and we start 0:04:48.240 --> 0:04:51.920 strong here after this historic press conference with William Dudley, 0:04:51.960 --> 0:04:54.400 he's a former New York FED president and a student 0:04:54.440 --> 0:04:58.000 at California Berkeley years ago of our monetary history and 0:04:58.040 --> 0:05:01.760 of course Bloomberg economic senior. As I said, Bill, I 0:05:01.839 --> 0:05:07.000 got goosebumps. It just seems to be a massive statement 0:05:07.160 --> 0:05:10.279 that even if we have nominal GDP of four percent, 0:05:10.839 --> 0:05:15.120 we have immaculate productivity and will somehow get through this. 0:05:15.640 --> 0:05:20.560 Do we sustain this market reaction, this belief in America, 0:05:21.120 --> 0:05:25.000 or do we are we inset for some titanic disappointment. 0:05:26.880 --> 0:05:29.479 Well, I think that Peals Prescott has made clear that 0:05:29.560 --> 0:05:32.320 he's really pleased by how the economies performed, the fact 0:05:32.320 --> 0:05:35.400 that you could get inflation down, about the unemployer. 0:05:35.000 --> 0:05:38.240 Rate going up, had some moderation and wages. He thinks 0:05:38.279 --> 0:05:40.919 everything is going really, really well, and I think that's true. 0:05:41.279 --> 0:05:43.200 The question is whether it's going to continue or not, 0:05:43.360 --> 0:05:45.839 and there are definitely things that can go wrong. One 0:05:45.839 --> 0:05:47.680 thing that can could go wrong is the fact keeps 0:05:47.720 --> 0:05:49.760 madret policy too tight for too long and we have 0:05:49.880 --> 0:05:52.680 weaker economy. Another thing that can go wrong is if 0:05:52.680 --> 0:05:56.800 that can ease policy prematurely, or the market itself can 0:05:56.839 --> 0:06:00.880 ease financial conditions prematurely, which will stimulate THEO and make 0:06:00.960 --> 0:06:03.200 it so that the Fed can't cut rates that's at 0:06:03.200 --> 0:06:05.080 all as quickly as the market expects. I think the 0:06:05.080 --> 0:06:07.919 market's getting a little to have itself here in the 0:06:07.960 --> 0:06:12.000 sense of taking the fit's optimism and translating that into 0:06:12.160 --> 0:06:15.479 very large reductions and short term rates in twenty twenty four. 0:06:15.680 --> 0:06:17.279 But what do you think happened to the Chanman pound 0:06:17.320 --> 0:06:19.560 of only two weeks ago. 0:06:20.120 --> 0:06:21.760 I just think that they're very happy with how the 0:06:21.760 --> 0:06:22.679 economy is performed. 0:06:22.680 --> 0:06:26.839 I mean, basically, they've had decent growth, unemploying rates stable, 0:06:26.920 --> 0:06:29.159 and inslation's come down a lot, and. 0:06:29.200 --> 0:06:32.320 That's basically, you know, as good as it can get. 0:06:32.720 --> 0:06:35.640 And that's really what's just summarizing the summary of economic 0:06:35.680 --> 0:06:39.320 production now summary of economic projection shows a very modest 0:06:39.360 --> 0:06:42.200 increase in the unipllyer rate from here and essentially a 0:06:42.240 --> 0:06:45.360 soft landing kind of forecast. Now, soft landings are really 0:06:45.360 --> 0:06:47.640 difficult to pull off, and they're particularly difficult to pull 0:06:47.640 --> 0:06:50.080 off when you've been very late to type monitoring policy. 0:06:50.480 --> 0:06:52.920 And what's allowed this to happen is that there were 0:06:53.000 --> 0:06:57.039 supply disruptions. There was a reduction and labor supply, both 0:06:57.080 --> 0:06:58.920 of those things every verse, and that made the fifth 0:06:59.000 --> 0:07:00.400 job a lot easier. 0:07:00.320 --> 0:07:03.000 Build the prospect of getting sticky in flag shit into 0:07:03.080 --> 0:07:05.200 next year, getting stuck at three. So it makes it 0:07:05.240 --> 0:07:07.440 because six months ago, Bill, we were told that the 0:07:07.520 --> 0:07:10.320 last mile. It was difficult. It was hard. Then Secondary 0:07:10.360 --> 0:07:13.000 and starts sounding like the fat chair again, saying it's 0:07:13.040 --> 0:07:15.120 not that hard. You hear it from chairm and Power 0:07:15.120 --> 0:07:17.920 didn't get any indication it would be particularly difficult into 0:07:17.960 --> 0:07:20.400 next year. Do you think that is the prudent approach 0:07:20.760 --> 0:07:22.320 to what twenty twenty four could look like. 0:07:23.280 --> 0:07:25.440 I think he's telling you what he really thinks. 0:07:25.640 --> 0:07:27.920 I think he's very happy with how things are performed, 0:07:28.280 --> 0:07:31.240 and he didn't say it would necessarily continue, but he 0:07:31.320 --> 0:07:33.000 also said that he was hopeful that. 0:07:33.000 --> 0:07:35.040 These trends would continue into twenty twenty four. 0:07:35.560 --> 0:07:38.360 My own view is that the Fed is going to 0:07:38.480 --> 0:07:40.040 be cutting rates in twenty twenty four. 0:07:40.320 --> 0:07:42.400 We're clearly done in terms of rate hikes. 0:07:43.800 --> 0:07:46.800 The possibility of another radhike is really low at this point. 0:07:47.280 --> 0:07:51.080 The question is really just timing of rate cuts and magnitude, 0:07:51.080 --> 0:07:53.720 and that's going to basically be driven by the strength 0:07:53.760 --> 0:07:57.600 of the economy, pressure on resources, and what actually happens 0:07:57.600 --> 0:07:59.840 to services inflation at this point. 0:08:00.080 --> 0:08:01.120 Bill, do you think that j. 0:08:01.280 --> 0:08:02.559 Powell did a good job. 0:08:02.680 --> 0:08:04.160 Do you think that it was right for him to 0:08:04.160 --> 0:08:06.960 say what he thinks and not push back at all 0:08:07.080 --> 0:08:08.720 against the market Party. 0:08:10.400 --> 0:08:12.280 I always think it's good to say what you really think, 0:08:12.360 --> 0:08:15.440 but I think the problem with doing so is it's 0:08:15.520 --> 0:08:17.200 basically added fuel to the fire. 0:08:18.120 --> 0:08:19.720 Paul talks about the long legs of. 0:08:19.840 --> 0:08:23.160 Entre policy, but financial conditions are much much more commonative 0:08:23.200 --> 0:08:25.240 than there were just a few months ago. And if 0:08:25.280 --> 0:08:27.880 you look at the Fed's own assessment of financial conditions 0:08:27.880 --> 0:08:29.800 back at the end of October, of the impulse from 0:08:29.880 --> 0:08:32.640 financial conditions the economy, based on the fedsal model. 0:08:32.559 --> 0:08:33.320 Was pretty neutral. 0:08:33.559 --> 0:08:38.880 So financial conditions now are actually adding impulse towards the 0:08:38.880 --> 0:08:40.160 economic growth going forward. 0:08:40.920 --> 0:08:42.880 I look Bill at where we are, and it's clearly 0:08:42.920 --> 0:08:46.120 beyond the pandemic. We've had a number of conversations off 0:08:46.120 --> 0:08:49.800 across a long surveillance day about how goods are goods, 0:08:49.840 --> 0:08:53.200 and we've got some deflation and service sector inflation's coming down. 0:08:53.720 --> 0:08:56.760 Is this economy beyond the pandemic? If you were to. 0:08:56.760 --> 0:08:59.880 Talk to Mary Daily in San Francisco, to John will 0:09:00.320 --> 0:09:03.640 at the New York Fed, can we say our economy 0:09:03.760 --> 0:09:05.000 is beyond the pandemic? 0:09:07.040 --> 0:09:10.720 I think mostly in this sense that the conditions today 0:09:10.960 --> 0:09:13.760 are very similar to where we were in February twenty twenty, 0:09:14.240 --> 0:09:16.640 when we had a very tight labor market. The difference 0:09:16.679 --> 0:09:19.080 is wages are a bit higher, inflation's a bit higher, 0:09:19.440 --> 0:09:20.800 and mandre policy. 0:09:20.559 --> 0:09:21.520 Is considerably tighter. 0:09:21.720 --> 0:09:24.360 But it does feel more like February twenty twenty than 0:09:24.400 --> 0:09:26.480 it does between any period. 0:09:26.240 --> 0:09:28.439 After that bill sit tight. I want to bring in 0:09:28.480 --> 0:09:31.880 Mia Kay down in Washington day. Say, Michael McKay, you 0:09:31.920 --> 0:09:34.200 were in that news conference. Were you surprised by the 0:09:34.200 --> 0:09:37.320 approach from Chaman Powell? 0:09:37.440 --> 0:09:39.520 Well, I wasn't surprised by the approach once we'd heard 0:09:40.200 --> 0:09:42.720 from the Fed and in their statement and what we 0:09:42.760 --> 0:09:45.760 saw in the dot plot. But it is a rather 0:09:45.880 --> 0:09:48.640 dramatic change from what he said just twelve days ago 0:09:48.800 --> 0:09:52.280 about it not being time to talk about ray cuts. 0:09:52.559 --> 0:09:53.520 Obviously they did. 0:09:53.559 --> 0:09:57.439 Today they're feeling much better about the overall state of 0:09:57.480 --> 0:10:02.080 the economy. As one analyst put it, today, if good 0:10:02.160 --> 0:10:05.720 inflation report is j PL's idea of a good time, 0:10:06.080 --> 0:10:09.720 then his party has turned into a rager because inflation 0:10:09.880 --> 0:10:13.280 is coming down very quickly. And then the next question becomes, 0:10:13.400 --> 0:10:16.400 as I asked him, when do you cut? And that's 0:10:16.440 --> 0:10:19.679 the part they're not ready to get into yet or describe. 0:10:20.040 --> 0:10:21.599 And so we're probably still. 0:10:21.360 --> 0:10:24.640 In for a few months of the markets watching the 0:10:24.720 --> 0:10:27.600 data and trying to guess when the Fed is going 0:10:27.640 --> 0:10:28.360 to respond. 0:10:28.559 --> 0:10:30.920 Michael, within all the blur of the data and all 0:10:30.960 --> 0:10:34.800 the guestimates forward, did they frame out a subpar GDP, 0:10:35.600 --> 0:10:39.640 either real or nominal? Did they frame out subpar growth? 0:10:41.200 --> 0:10:44.240 Well, basically that's what Paul said, we're going to get 0:10:44.440 --> 0:10:47.840 because the direction of the economy is slower and the 0:10:48.559 --> 0:10:52.439 lagged effects of their rate increases have not yet completely 0:10:52.480 --> 0:10:56.600 been felt, but that the economy will start picking up 0:10:56.640 --> 0:10:59.240 again and growing to potential. And he also admitted the 0:10:59.280 --> 0:11:03.280 possibility of surprise there the economy grows faster than expected 0:11:03.800 --> 0:11:06.960 is also very real. So I think they're at this 0:11:07.040 --> 0:11:10.440 point working on the models that they have, but admitting 0:11:10.480 --> 0:11:12.920 that they have been wrong before and we could see 0:11:12.960 --> 0:11:16.400 faster growth. But the interesting thing was, other than a 0:11:16.520 --> 0:11:19.920 sort of perfunctory caution, he wasn't suggesting that we are 0:11:20.000 --> 0:11:23.599 now that they would go back necessarily to rate increases. 0:11:23.760 --> 0:11:26.720 Mike McKay, thank you so great job today. As always, 0:11:27.200 --> 0:11:30.120 the reaction pouring in this afternoon, This line from Steve 0:11:30.200 --> 0:11:33.920 chevon over it federates it initial takes. He wants to come. 0:11:34.320 --> 0:11:37.920 He always saw inflation as transitory Bramo your favorite. It's 0:11:37.920 --> 0:11:39.960 come down on the supply side. He smells a self 0:11:40.040 --> 0:11:41.880 landing and wants to cut to stick the landing. He 0:11:41.920 --> 0:11:45.360 had no interest in pushing back against market expectations, right 0:11:45.440 --> 0:11:48.280 or wrong. It's bullish for now. As a takeaway from 0:11:48.320 --> 0:11:49.880 Chevon this afternoon. 0:11:49.400 --> 0:11:51.120 That's exactly where I wanted to go, and I wanted 0:11:51.120 --> 0:11:53.559 to get Bill Dudley's opinion about whether we did get 0:11:53.840 --> 0:11:57.880 basically confirmation of transitory. Do you think when we look back, 0:11:58.200 --> 0:12:00.360 the Fed won't have been wrong when it came to 0:12:00.400 --> 0:12:03.240 transitory inflation. They just were premature. 0:12:05.160 --> 0:12:08.040 I think that most of the inflation pressure had which 0:12:08.240 --> 0:12:10.040 was transitory, but not all of it. I mean, I 0:12:10.040 --> 0:12:12.560 think some of the services inflation is due to the 0:12:12.559 --> 0:12:14.920 tightness of the layer market. I think what's really interesting 0:12:14.920 --> 0:12:17.280 about Paul's press conference today is he talked to us 0:12:17.360 --> 0:12:19.560 about the risk of being too late to cut. 0:12:19.920 --> 0:12:21.880 So he actually admitted the possibility that if we. 0:12:21.840 --> 0:12:23.520 Stay tight for too long, we could actually have a 0:12:23.720 --> 0:12:26.840 whip comomy that's too weak relative to what we desire. 0:12:26.840 --> 0:12:28.840 And that's something new from your pom. 0:12:29.320 --> 0:12:32.680 That's a very important point, the ex postedness of it. 0:12:32.720 --> 0:12:35.760 If you will doctor Dudley. They've got a weight weight 0:12:35.840 --> 0:12:39.240 weight after the fact. So let's say something coarse like 0:12:39.320 --> 0:12:42.920 the unemployment rate. How many months do they have to 0:12:43.040 --> 0:12:46.760 wait until they get real confidence that the labor economy 0:12:46.840 --> 0:12:48.959 is caught up with our immaculate disinflation. 0:12:50.800 --> 0:12:52.560 I think they're gonna be looking at what happens to 0:12:52.640 --> 0:12:55.000 the unemployed rate, the tightness of the labor market, and 0:12:55.000 --> 0:12:58.600 what the consequences that are for wages. Paul did admit 0:12:58.679 --> 0:13:00.840 that wage inflation still will bit too high to be 0:13:00.880 --> 0:13:04.000 consistent with two percent inflation. But boy, the FED is 0:13:04.000 --> 0:13:06.600 pretty close to where they want to be in their 0:13:07.360 --> 0:13:08.319 outlook at this point. 0:13:08.640 --> 0:13:11.240 Bill, you've been on the committee before. You can look 0:13:11.280 --> 0:13:14.000 at this from the outside. Now. It's a tricky game, 0:13:14.040 --> 0:13:15.840 this one to get into someone's head, and I think 0:13:15.840 --> 0:13:18.000 maybe what we shouldn't play, but I think on this 0:13:18.040 --> 0:13:20.800 occasion we should. Two weeks ago, I heard from a 0:13:20.880 --> 0:13:23.800 very different FED chairman, and I'm trying to work out 0:13:23.840 --> 0:13:26.199 what happened today. Whether that was just a man who 0:13:26.240 --> 0:13:28.160 was representing his own views and this was a man 0:13:28.200 --> 0:13:32.000 who was representing the committee's view, or whether, like we've indicated, 0:13:32.120 --> 0:13:35.520 he's being seduced by this idea of netting a soft landing, 0:13:35.920 --> 0:13:37.640 and the guy who was trying to act like Vulka 0:13:38.040 --> 0:13:40.320 was never really Vulka. What is it? What do you 0:13:40.320 --> 0:13:42.520 make of who Chairman Powell is and what he ultimately 0:13:42.520 --> 0:13:44.360 thinks about things? 0:13:44.880 --> 0:13:47.800 Well, the fact that he's worried about keeping MADRI policy 0:13:47.880 --> 0:13:49.840 too tight for too long tells you that he's not 0:13:49.920 --> 0:13:51.080 thinking like Paul Bulkery. 0:13:51.600 --> 0:13:55.920 So there is and there's a risk cutting rates prematurely, 0:13:56.360 --> 0:13:56.600 But I. 0:13:56.559 --> 0:13:58.640 Think it's coming from us to the fact that he's 0:13:58.679 --> 0:14:02.080 just really really happy with how things have evolved and that, 0:14:02.440 --> 0:14:06.640 you know, optimism is showing through as it has shown. 0:14:05.920 --> 0:14:08.599 Through from time to time and has pressed conferences. 0:14:09.160 --> 0:14:09.480 Bill. 0:14:09.520 --> 0:14:11.600 It's maybe not your remit, but it's certainly the New 0:14:11.679 --> 0:14:14.840 York Fed's remit. They're going to keep track of flows 0:14:15.520 --> 0:14:19.400 off of declining interest rates. What is a stability or 0:14:19.520 --> 0:14:23.280 instability that you observe in six trillion dollars of cash, 0:14:23.360 --> 0:14:26.440 let's say most of it loaded money market funds? Is 0:14:26.480 --> 0:14:28.720 that yield comes down? Is our system going to be 0:14:28.760 --> 0:14:29.560 able to handle it? 0:14:30.560 --> 0:14:32.200 Yeah? I don't think there's gonna be any problem. 0:14:32.240 --> 0:14:34.440 I mean, you know, the Fed Reserve says the short 0:14:34.520 --> 0:14:36.960 term interest rates and then money market rates trade off 0:14:36.960 --> 0:14:40.120 that if if money market rates, you know, firm up 0:14:40.160 --> 0:14:42.040 a little bit, then money will flow back into the 0:14:42.080 --> 0:14:43.000 money market fature just ones. 0:14:43.000 --> 0:14:45.280 I'm not worried about that at all at this point. 0:14:45.520 --> 0:14:47.920 Bill, Just to wrap it all together, do you think 0:14:47.920 --> 0:14:50.440 that the chance of a hard landing has gone down 0:14:50.560 --> 0:14:53.120 materially over the past month or do you think that 0:14:53.160 --> 0:14:54.920 it's about the same or even has gone up. 0:14:55.920 --> 0:14:58.600 I think it's gone down materially over the last six months. 0:14:58.640 --> 0:14:59.680 I mean over the last month. 0:14:59.680 --> 0:15:03.560 I don't things have changed very much, but definitely the prospects. 0:15:03.120 --> 0:15:06.080 Of the soft landing are the best they've been in 0:15:06.600 --> 0:15:07.440 last year or two. 0:15:07.840 --> 0:15:09.960 Something changed in the last two weeks for Chairman Powell, 0:15:10.480 --> 0:15:13.440 that's for sure. Bill Good to catch up Bill Dudley 0:15:13.440 --> 0:15:16.920 there of Bloomberg Opinion, former New York Fed President. Let's 0:15:16.960 --> 0:15:20.440 recap the price action some well moves across the board 0:15:20.480 --> 0:15:22.880 in the equity market and in bonds since the start 0:15:22.920 --> 0:15:25.680 of November the end of October this afternoon at one 0:15:25.720 --> 0:15:28.120 percent on the SMP. The gains fade a touch, but 0:15:28.240 --> 0:15:30.640 big gains nonetheless on the NaSTA Cup by zero point 0:15:30.720 --> 0:15:33.440 nine percent. How about the Russell the small caps up 0:15:33.480 --> 0:15:36.520 by two point seven percent. We are talking about gains 0:15:36.880 --> 0:15:40.800 of more than ten percent since early November on the 0:15:40.880 --> 0:15:44.160 sm P five hundred a year in a month. In 0:15:44.200 --> 0:15:47.040 the bond market two year, ten year, thirty year, two year, 0:15:47.200 --> 0:15:50.720 four forty seven when the FED met in November, the 0:15:50.760 --> 0:15:53.320 morning at that meeting, on the second day of that meeting, 0:15:53.360 --> 0:15:56.440 four ninety two on a two year right now four 0:15:56.800 --> 0:16:00.760 forty seven, twenty five. What a turnaround? TK close to 0:16:00.800 --> 0:16:02.920 five percent and all the way back down again. 0:16:03.080 --> 0:16:04.160 There's't anybory's looking at. 0:16:04.160 --> 0:16:06.880 I mean, it's something as idiosyncratic as a Turkish liras 0:16:06.920 --> 0:16:08.920 on a bid today for the first time since the 0:16:08.960 --> 0:16:11.760 time began. But yeah, you can look across all of 0:16:11.800 --> 0:16:14.560 the equities, bonds, currencies, commodities and see the effect of this. 0:16:14.880 --> 0:16:16.680 John, I want to go on one week. I want 0:16:16.720 --> 0:16:17.600 to go on two weeks. 0:16:18.000 --> 0:16:23.920 Every strategist out there has to republish and readjust and 0:16:24.000 --> 0:16:26.920 let me tell you got your outlook to bed December five. 0:16:27.240 --> 0:16:30.240 Yeah, let's go in this weekend. We're rewriting it. I mean, 0:16:30.360 --> 0:16:31.400 is this is that dramatic? 0:16:31.440 --> 0:16:33.000 I have to create what I said, I was quoting 0:16:33.120 --> 0:16:35.960 the tenure. The tenure was a fornaty two. The two 0:16:36.040 --> 0:16:38.800 year back in early November was three five percent. These 0:16:38.800 --> 0:16:41.280 are massive changes back down to four forty seven on 0:16:41.320 --> 0:16:44.080 a two year on a tenure just above four percent 0:16:44.520 --> 0:16:45.960 in the effects market. I think we've got to talk 0:16:46.000 --> 0:16:48.000 about this, the Tucker war that we're going to see 0:16:48.000 --> 0:16:50.040 play out now off the back of what we've just 0:16:50.080 --> 0:16:53.640 heard and into tomorrow with the ECB. The euro at 0:16:53.640 --> 0:16:56.120 the moment looks like this one to wait sixty eight, 0:16:56.280 --> 0:16:59.160 that currency pair positive by zero point seven percent. Given 0:16:59.160 --> 0:17:01.000 the moves we've seen in the bobs market, that dollar 0:17:01.480 --> 0:17:03.720 is a whole lot weaker. Where does this leave present 0:17:03.760 --> 0:17:06.120 leguard in to morrow's mathic hold my beer? 0:17:06.280 --> 0:17:08.240 I mean, essentially, is this what she's going to say 0:17:08.359 --> 0:17:11.160 is okay, I'll take that, and I'll raise you by 0:17:11.200 --> 0:17:13.320 saying I think we should raise we should cut reads. 0:17:13.440 --> 0:17:15.639 In March, this is going to be a bigger question. 0:17:16.080 --> 0:17:19.800 Did the whole world experience pandemic era inflation that has 0:17:19.920 --> 0:17:24.160 largely subsided and that was ultimately transfittory or is there 0:17:24.160 --> 0:17:26.679 something else at play? Jpell did not want to embrace 0:17:26.720 --> 0:17:29.680 the question about financial conditions loosening and what that means. 0:17:29.720 --> 0:17:33.000 Are we going to hear the same thing from Christine Lagard. 0:17:33.119 --> 0:17:35.480 There was a moment in that news conference, just a 0:17:35.520 --> 0:17:38.080 moment where he reflected on how wrong so many people 0:17:38.080 --> 0:17:40.840 have been in twenty twenty three, and I think before 0:17:40.880 --> 0:17:43.399 we go home for Christmas, the holidays and look ahead 0:17:43.400 --> 0:17:45.879 to twenty twenty four, tom we need to reflect with 0:17:45.920 --> 0:17:48.800 some humidity about what went wrong in twenty twenty three. 0:17:49.320 --> 0:17:52.159 Last year, twelve months ago, looking out twelve months, we 0:17:52.160 --> 0:17:55.719 were talking about the prospect of recession, of much higher unemployment. 0:17:55.960 --> 0:17:59.960 We called the Fed's forecast aspirational ck. We had bank failure, 0:18:00.320 --> 0:18:02.520 some of the biggest bank failures we've seen in decades, 0:18:02.560 --> 0:18:04.879 not just in this country but around the world. And 0:18:05.000 --> 0:18:08.480 yet a couple of quarters later, we had GDP north 0:18:08.520 --> 0:18:11.840 of fifth point. So when we talk about NED and 0:18:11.880 --> 0:18:14.320 ASoft landing getting all these rate cuts the FED is 0:18:14.359 --> 0:18:17.439 talking about without the economic weakness, I think we've got 0:18:17.480 --> 0:18:21.200 to remember this has been a very very difficult economy 0:18:21.240 --> 0:18:24.679 to forecast, and the next twelve months might best tricky. 0:18:24.800 --> 0:18:27.280 We're repiecing the show together for tomorrow, folks. This is 0:18:27.320 --> 0:18:29.560 so profound. Our team's going to work all evening to 0:18:29.600 --> 0:18:32.320 give you the best tomorrow morning that we can. And 0:18:32.720 --> 0:18:34.679 Amy said to me, who do we talk to? And 0:18:34.760 --> 0:18:37.439 you know the usual names you mentioned, Bob Michael, JP Morgan. 0:18:37.520 --> 0:18:41.000 I think to see a bank like JP Morgan recast. 0:18:41.280 --> 0:18:42.800 Their view forward. 0:18:42.960 --> 0:18:45.320 But I looked to Uri and timmor at Fideli with 0:18:45.560 --> 0:18:49.360 decades of experience of real economy analysis. 0:18:49.400 --> 0:18:52.920