1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,200 --> 00:00:13,840 Speaker 2: This is a breaking news update from Bloomberg instant reaction 3 00:00:14,120 --> 00:00:17,959 Speaker 2: and analysis from our three thousand journalists and analysts around 4 00:00:18,000 --> 00:00:18,480 Speaker 2: the world. 5 00:00:19,200 --> 00:00:21,159 Speaker 3: The Chairman of the Federal Reserve, if there was a 6 00:00:21,160 --> 00:00:23,919 Speaker 3: good meeting to scrap the forecast, then this one was 7 00:00:24,000 --> 00:00:28,160 Speaker 3: probably it. The Chairman, de emphasizing the projections, re emphasizing 8 00:00:28,400 --> 00:00:30,760 Speaker 3: the uncertainty, focused on the shock in the Middle East. 9 00:00:30,760 --> 00:00:33,400 Speaker 3: We had one question, how would they respond to it? 10 00:00:33,479 --> 00:00:37,360 Speaker 3: Would they look through it? The answer, it's not that simple. 11 00:00:37,600 --> 00:00:40,680 Speaker 3: Equities in response negative. This session loads right now down 12 00:00:40,720 --> 00:00:43,200 Speaker 3: one percent on the S and P five hundred. Likewise 13 00:00:43,320 --> 00:00:45,960 Speaker 3: on the NASDAK. In the bond market, twos, tens, and thirties, 14 00:00:46,240 --> 00:00:48,760 Speaker 3: yields higher, particularly at the front end of the yield curve, 15 00:00:48,840 --> 00:00:51,560 Speaker 3: up by seven basis points on a two year three 16 00:00:51,920 --> 00:00:54,840 Speaker 3: seventy five. If you, like me, thought this would be boring, 17 00:00:54,880 --> 00:00:57,400 Speaker 3: this was not a snooze. The Federal Reserve chair asked 18 00:00:57,400 --> 00:00:59,880 Speaker 3: about succession. Take a listen to what he had. 19 00:01:01,160 --> 00:01:03,880 Speaker 2: If my successor is not confirmed by the end of 20 00:01:03,920 --> 00:01:06,440 Speaker 2: my term as chair, I would serve as chair pro 21 00:01:06,560 --> 00:01:09,959 Speaker 2: tem until he is confirmed. I have no intention of 22 00:01:10,040 --> 00:01:13,240 Speaker 2: leaving the board until the investigation is well and truly over, 23 00:01:13,560 --> 00:01:16,679 Speaker 2: with transparency and finality. On the question of whether I 24 00:01:16,680 --> 00:01:19,120 Speaker 2: will then continue to serve as a governor after my 25 00:01:19,240 --> 00:01:22,200 Speaker 2: term ends and after the investigation is over, I have 26 00:01:22,360 --> 00:01:23,680 Speaker 2: not made that decision yet. 27 00:01:24,360 --> 00:01:26,800 Speaker 3: Three points from the chairman of the Federal Reserve. Let's 28 00:01:26,840 --> 00:01:29,520 Speaker 3: go through them individually. Point one, I will stay on 29 00:01:29,560 --> 00:01:33,080 Speaker 3: his chair until a successor is confirmed. Point two, I 30 00:01:33,120 --> 00:01:35,360 Speaker 3: have no intention of leaving the FED while the DOJ 31 00:01:35,520 --> 00:01:39,520 Speaker 3: investigation is ongoing. And point three, even after that is complete, 32 00:01:39,800 --> 00:01:42,800 Speaker 3: I haven't made a decision on how long I'll stay. 33 00:01:42,800 --> 00:01:45,280 Speaker 3: On a big headline in that news conference. 34 00:01:45,000 --> 00:01:47,680 Speaker 4: He actually engaged with the question. We all were wondering 35 00:01:47,760 --> 00:01:49,720 Speaker 4: whether he would give some sort of clarity, and we've 36 00:01:49,720 --> 00:01:52,000 Speaker 4: got it. He is going to be the FED chair 37 00:01:52,120 --> 00:01:55,280 Speaker 4: until Kevin worsh is in the seat. There's this question 38 00:01:55,400 --> 00:01:58,240 Speaker 4: of what as well and truly over in terms of 39 00:01:58,240 --> 00:02:00,680 Speaker 4: the investigation actually mean of people are going to be 40 00:02:00,720 --> 00:02:02,800 Speaker 4: wondering that and the fact that he hasn't made a 41 00:02:02,800 --> 00:02:05,560 Speaker 4: decision yet, what is going to tip the scales for 42 00:02:05,640 --> 00:02:09,560 Speaker 4: him to understand when he can make the decision either way. 43 00:02:09,760 --> 00:02:12,120 Speaker 4: This wasn't a boring news conference in any way shape or. 44 00:02:12,120 --> 00:02:13,840 Speaker 3: For if we can bring up just an inter day 45 00:02:13,919 --> 00:02:15,760 Speaker 3: chart the front end of the yield curve, So bring 46 00:02:15,840 --> 00:02:17,720 Speaker 3: up the two year inter day and just have a 47 00:02:17,720 --> 00:02:20,359 Speaker 3: look where things started to pick up. The Fed chat 48 00:02:20,360 --> 00:02:23,760 Speaker 3: throughout this news conference was leaning into anchoring inflation expectations. 49 00:02:23,919 --> 00:02:27,079 Speaker 3: That was notable, But we started to really bounce out 50 00:02:27,120 --> 00:02:29,560 Speaker 3: to session highs when he started to lean into that 51 00:02:29,680 --> 00:02:32,120 Speaker 3: question about his future. And I just wonder, Bremo, we 52 00:02:32,120 --> 00:02:34,280 Speaker 3: can have that conversation with guests over the next fifteen 53 00:02:34,320 --> 00:02:37,600 Speaker 3: minutes or so whether those two things are connected to 54 00:02:37,639 --> 00:02:38,440 Speaker 3: some extent on. 55 00:02:38,880 --> 00:02:41,680 Speaker 4: The margins, this market seems to be treating a Kevin 56 00:02:41,760 --> 00:02:45,200 Speaker 4: WORSHFED as being more dubbish simply because we have President 57 00:02:45,240 --> 00:02:47,960 Speaker 4: Trump tweeting or truth social lying every single day saying 58 00:02:48,560 --> 00:02:51,200 Speaker 4: two late Powell needs to lower rates right now. You see, 59 00:02:51,480 --> 00:02:54,079 Speaker 4: there is no full recut getting priced into the FED 60 00:02:54,120 --> 00:02:57,240 Speaker 4: Fund's futures until June of next year. So that's how 61 00:02:57,280 --> 00:02:59,400 Speaker 4: far we've pushed it on. There was a one two 62 00:02:59,520 --> 00:03:03,280 Speaker 4: punch fredschir J. Powell also said it's too so soon 63 00:03:03,360 --> 00:03:06,440 Speaker 4: to know the full economic effects from Middle East, and 64 00:03:06,480 --> 00:03:08,240 Speaker 4: then he said he would stay on, and we have 65 00:03:08,400 --> 00:03:10,920 Speaker 4: known this is a pretty balanced fed. They're weighing the 66 00:03:11,000 --> 00:03:14,560 Speaker 4: risks and clearly the specter of twenty twenty two hangs over. 67 00:03:14,919 --> 00:03:15,320 Speaker 5: He's fed. 68 00:03:15,400 --> 00:03:17,760 Speaker 6: Chair, Okay, you go, you'll go out to the specter 69 00:03:17,880 --> 00:03:19,920 Speaker 6: of it. In the view Ford, I like what Lizayne Saunders. 70 00:03:19,960 --> 00:03:23,919 Speaker 6: That's retreating Claudia Sam. Finally Powell throws the SEP under 71 00:03:23,919 --> 00:03:27,680 Speaker 6: the bus skipet. Thank you doctor sum for that. My observation, 72 00:03:27,800 --> 00:03:31,320 Speaker 6: John is it's ten twenty one pm and Doha, and 73 00:03:31,400 --> 00:03:34,800 Speaker 6: I'm looking at the headlines while the chairman speaking, and 74 00:03:34,840 --> 00:03:37,160 Speaker 6: I get the worst view forward in the crystal ball 75 00:03:37,200 --> 00:03:39,880 Speaker 6: gazing six months. I think we got to gaze out 76 00:03:39,920 --> 00:03:43,200 Speaker 6: twenty four hours right now. That's the tension I see 77 00:03:43,240 --> 00:03:45,760 Speaker 6: in the Iran the Iran headlines that we get out 78 00:03:45,760 --> 00:03:47,960 Speaker 6: of Tel Aviv, and we're getting out of Dubai right 79 00:03:47,960 --> 00:03:48,640 Speaker 6: now from Bloomberg. 80 00:03:48,680 --> 00:03:50,080 Speaker 3: And this is why it makes it so difficult to 81 00:03:50,080 --> 00:03:52,600 Speaker 3: provide four casts in a moment like this one. I'm 82 00:03:52,600 --> 00:03:55,120 Speaker 3: a chairman. Qui Roby talked about the need for humility 83 00:03:55,440 --> 00:03:58,560 Speaker 3: the duration of this show. Yes, energy assets are in 84 00:03:58,640 --> 00:04:00,760 Speaker 3: play in the minds of some people now after the strikes, 85 00:04:00,760 --> 00:04:04,080 Speaker 3: we saw on Iranian energy assets just earlier this morning, 86 00:04:04,400 --> 00:04:06,200 Speaker 3: crewed at the moment of one O nine on Brent 87 00:04:06,320 --> 00:04:09,480 Speaker 3: WTI around ninety eight. The Chairman is well aware that 88 00:04:09,520 --> 00:04:12,680 Speaker 3: they've missed their inflation target for the previous five years, 89 00:04:12,880 --> 00:04:16,040 Speaker 3: overwhelmed by a series of shocks, and this is another one. 90 00:04:16,120 --> 00:04:16,280 Speaker 5: Now. 91 00:04:16,320 --> 00:04:18,880 Speaker 3: You may still believe ultimately this Federal Reserve will look 92 00:04:18,920 --> 00:04:21,120 Speaker 3: through this shock. But that wasn't a chairman that wanted 93 00:04:21,160 --> 00:04:23,480 Speaker 3: to make that point in this specific news conference. 94 00:04:23,560 --> 00:04:25,560 Speaker 4: He didn't want to say the T word, even though 95 00:04:25,680 --> 00:04:29,720 Speaker 4: essentially this forecast would suggest transitory. He tried to play 96 00:04:29,720 --> 00:04:31,560 Speaker 4: the part of an oil expert. He tried to play 97 00:04:31,560 --> 00:04:34,200 Speaker 4: the part of a generative AI expert. But nonetheless he 98 00:04:34,240 --> 00:04:36,839 Speaker 4: said it is too soon to say so many times 99 00:04:36,880 --> 00:04:39,800 Speaker 4: over again that we lost count. They are facing off 100 00:04:39,800 --> 00:04:42,839 Speaker 4: with a series of shocks. With the backward view of 101 00:04:42,880 --> 00:04:45,599 Speaker 4: what happened in the post pandemic era, you had inflation 102 00:04:45,680 --> 00:04:47,880 Speaker 4: that creeped up to nine percent. He will not want 103 00:04:47,920 --> 00:04:50,800 Speaker 4: to continue that, especially with core PCE creeping higher in 104 00:04:50,839 --> 00:04:53,400 Speaker 4: the wrong direction. Before even getting this out, well, the. 105 00:04:53,400 --> 00:04:54,720 Speaker 6: Headline to me, John, I know we got to get 106 00:04:54,720 --> 00:04:57,120 Speaker 6: to doctor Slark, but the headline to me was a 107 00:04:57,200 --> 00:04:59,880 Speaker 6: lack of descent. I mean, this was very green SPAN 108 00:05:00,160 --> 00:05:03,200 Speaker 6: and everybody on the same page supporting this journ. 109 00:05:03,080 --> 00:05:05,280 Speaker 3: We stand out here TK and for our listeners and 110 00:05:05,320 --> 00:05:08,520 Speaker 3: our audience worldwide. Just Chune again. The decision dropped about 111 00:05:08,640 --> 00:05:11,640 Speaker 3: an hour and a half ago. The interest rate remained unchanged. 112 00:05:11,640 --> 00:05:14,240 Speaker 3: The medium dot still implied one cut for this year. 113 00:05:14,360 --> 00:05:17,320 Speaker 3: Lots of noise though beneath those headlines, the outlook for 114 00:05:17,320 --> 00:05:20,000 Speaker 3: growth was better, the outlook for inflation was higher. But 115 00:05:20,080 --> 00:05:23,320 Speaker 3: that single descent was Governor Myron and Governor Waller was 116 00:05:23,360 --> 00:05:26,440 Speaker 3: expected to descend. He sat around this table only a 117 00:05:26,480 --> 00:05:28,760 Speaker 3: week two weeks ago and said it depends on the 118 00:05:28,760 --> 00:05:31,480 Speaker 3: next job's report. An hour later, the job's report came 119 00:05:31,520 --> 00:05:34,000 Speaker 3: in way weaker than expected, and we all thought, we 120 00:05:34,080 --> 00:05:35,880 Speaker 3: know what the governor's going to do. He's going to 121 00:05:35,960 --> 00:05:38,600 Speaker 3: vote for an interest rate reduction. And then he didn't. 122 00:05:38,760 --> 00:05:40,040 Speaker 3: And that's off the back of the shock of the 123 00:05:40,040 --> 00:05:41,440 Speaker 3: Middle East. And that's more than notable. 124 00:05:41,520 --> 00:05:44,200 Speaker 4: Governor Chris Waller, I think is arguably the most interesting 125 00:05:44,600 --> 00:05:46,680 Speaker 4: person on the FED right now in terms of what 126 00:05:46,800 --> 00:05:49,440 Speaker 4: his decision actually was driven by. I'm curious if he 127 00:05:49,520 --> 00:05:51,800 Speaker 4: comes out and says he is getting spooked by the 128 00:05:51,800 --> 00:05:55,080 Speaker 4: direction of core PCEE. He's getting spooked by the component 129 00:05:55,360 --> 00:05:57,240 Speaker 4: of what oil prices do. Do that, and we talk 130 00:05:57,279 --> 00:06:01,040 Speaker 4: about wage inflation. Wage inflation is still above where it 131 00:06:01,200 --> 00:06:03,280 Speaker 4: was in the pre pandemic period. 132 00:06:03,480 --> 00:06:05,760 Speaker 6: John, I was looking at F one in Japan here, 133 00:06:05,800 --> 00:06:07,880 Speaker 6: and you said, do something serious. So I looked at 134 00:06:07,880 --> 00:06:11,320 Speaker 6: the price of oil here. As you mentioned earlier, Brent 135 00:06:11,440 --> 00:06:14,599 Speaker 6: crude up eighty one percent from whatever the bottom was, 136 00:06:15,200 --> 00:06:17,840 Speaker 6: Saudi Light, Persian golf. 137 00:06:17,920 --> 00:06:20,000 Speaker 5: The physical mind hundred and. 138 00:06:19,760 --> 00:06:24,680 Speaker 6: Forty five percent, same number, this is eighty one and 139 00:06:24,680 --> 00:06:25,120 Speaker 6: forty five. 140 00:06:25,160 --> 00:06:27,039 Speaker 3: It's the point that Jeff Carry of Carlisle was making 141 00:06:27,120 --> 00:06:28,880 Speaker 3: a little bit earlier on this morning. There's a big 142 00:06:28,920 --> 00:06:31,920 Speaker 3: gap right now between the physical market where Spot is trading, 143 00:06:32,279 --> 00:06:34,360 Speaker 3: and the paper market, and he thinks it needs to close. 144 00:06:34,800 --> 00:06:36,520 Speaker 3: He thinks the paper market needs to wake up to 145 00:06:36,560 --> 00:06:38,839 Speaker 3: the real risk emerging in the Middle East. That's one opinion, 146 00:06:38,880 --> 00:06:41,839 Speaker 3: one view. Other people aren't as concerned, but ultimately that's 147 00:06:41,880 --> 00:06:42,360 Speaker 3: his opinion. 148 00:06:42,400 --> 00:06:44,719 Speaker 4: Every oil strategist that comes on says, why is everybody 149 00:06:44,720 --> 00:06:47,400 Speaker 4: else too complacent? What we're seeing is really a different 150 00:06:47,440 --> 00:06:49,560 Speaker 4: scenario than we've ever seen before, and a lot of 151 00:06:49,600 --> 00:06:51,880 Speaker 4: people say yeah, yeah, yeah, you guys always get it wrong, 152 00:06:51,880 --> 00:06:54,360 Speaker 4: and so ultimately this debate will continue to be it. 153 00:06:54,240 --> 00:06:55,960 Speaker 3: Was a few weeks ago. If you want to make 154 00:06:56,000 --> 00:06:58,320 Speaker 3: a fall of someone on Wall Street, US recruit forecast. 155 00:06:58,680 --> 00:07:01,400 Speaker 3: That's always been the way. Is the hardest thing to forecast. 156 00:07:01,440 --> 00:07:03,480 Speaker 3: Torston slock is not a full He joined us from 157 00:07:03,480 --> 00:07:05,880 Speaker 3: a pilot. Tolston, good afternoon, Good to see you. I've 158 00:07:05,880 --> 00:07:07,400 Speaker 3: had some time to go through this one. A big 159 00:07:07,400 --> 00:07:08,040 Speaker 3: reaction place. 160 00:07:08,120 --> 00:07:10,320 Speaker 7: Well, I think one interesting thing here is that if 161 00:07:10,320 --> 00:07:14,240 Speaker 7: we begin to describe everything as another shock, there's another shock, 162 00:07:14,280 --> 00:07:17,000 Speaker 7: there's another shock, and we're looking through that, it almost 163 00:07:17,000 --> 00:07:18,520 Speaker 7: makes it sound like, well, I don't really have to 164 00:07:18,560 --> 00:07:21,160 Speaker 7: react to anything because I've identified well, now there's just 165 00:07:21,200 --> 00:07:23,280 Speaker 7: another shock coming along on all the prices. There was 166 00:07:23,320 --> 00:07:26,000 Speaker 7: another shock from trade Wall, that was another shock from COVID. 167 00:07:26,280 --> 00:07:27,960 Speaker 7: It makes it sound like that you should never do 168 00:07:28,000 --> 00:07:30,040 Speaker 7: anything as a central banker. So now we have a 169 00:07:30,040 --> 00:07:32,400 Speaker 7: shock that is very serious, and it's very very clear 170 00:07:32,640 --> 00:07:35,320 Speaker 7: that they decided to just basically completely ignore the Middle 171 00:07:35,360 --> 00:07:37,920 Speaker 7: Eastern shock that we're facing here. So from that perspective, 172 00:07:38,200 --> 00:07:40,760 Speaker 7: it is quite interesting. As Lisa is saying, why was 173 00:07:40,800 --> 00:07:43,320 Speaker 7: it that Waller suddenly changed his mind, because it must 174 00:07:43,320 --> 00:07:45,560 Speaker 7: be that he did put more weight on the Middle 175 00:07:45,560 --> 00:07:48,040 Speaker 7: Eastern and the Iranian shock than what the average committee 176 00:07:48,040 --> 00:07:48,400 Speaker 7: member did. 177 00:07:48,400 --> 00:07:50,560 Speaker 4: Here, do you think that you can infer anything from 178 00:07:50,560 --> 00:07:52,840 Speaker 4: the price action? As John was laying out the idea 179 00:07:52,880 --> 00:07:55,720 Speaker 4: that two year yields and ten year yields inflected upward 180 00:07:56,200 --> 00:07:59,240 Speaker 4: as FED Shair J. Powell said that he planned to 181 00:07:59,400 --> 00:08:03,400 Speaker 4: stay on should there not be another FED chair nominated 182 00:08:03,440 --> 00:08:05,920 Speaker 4: and in the seat by the time his term expired. 183 00:08:06,040 --> 00:08:08,200 Speaker 7: Absolutely, let's just talk about it the way it is. 184 00:08:08,360 --> 00:08:10,800 Speaker 7: At the last meeting there were ten people voting for 185 00:08:10,920 --> 00:08:13,360 Speaker 7: interstration to stay unchanged. At this meeting, that are now 186 00:08:13,360 --> 00:08:16,080 Speaker 7: eleven people voting for interstrations to stay unchanged. It's very 187 00:08:16,120 --> 00:08:18,880 Speaker 7: clear Stevie ran at both meetings voted for race being lower. 188 00:08:19,120 --> 00:08:21,840 Speaker 7: But at this instance what he certainly now says, I 189 00:08:21,920 --> 00:08:24,520 Speaker 7: may be staying on until this is well and truly 190 00:08:24,640 --> 00:08:27,920 Speaker 7: investigated and complete. The risk is beginning to rise that well, 191 00:08:27,960 --> 00:08:30,760 Speaker 7: maybe we'll have another hawkish member sitting for a longer period, 192 00:08:31,040 --> 00:08:33,439 Speaker 7: and assuming therefore that Trump will appoint a more dubbish 193 00:08:33,440 --> 00:08:36,240 Speaker 7: member that does of course lean more towards that we 194 00:08:36,280 --> 00:08:38,280 Speaker 7: will have a more hawkish fit if he does stay 195 00:08:38,280 --> 00:08:39,080 Speaker 7: on for longer period. 196 00:08:39,160 --> 00:08:39,840 Speaker 5: He's got hawkish. 197 00:08:40,040 --> 00:08:41,559 Speaker 4: Why is he considered hawkish? 198 00:08:41,600 --> 00:08:43,800 Speaker 7: Well, his hawkish relative to the alternative of a more 199 00:08:43,880 --> 00:08:45,000 Speaker 7: dubbish member coming along. 200 00:08:45,679 --> 00:08:48,400 Speaker 6: You were weaned de Deutsche Bank under Focus land out 201 00:08:48,400 --> 00:08:51,320 Speaker 6: with Adam Saminsky and Paul Senki. Their back of the 202 00:08:51,760 --> 00:08:56,720 Speaker 6: report Excel spreadsheet was absolutely definitive about the supply and 203 00:08:56,760 --> 00:09:00,320 Speaker 6: demand of hydrocarbons. Take that experience now, and how do 204 00:09:00,360 --> 00:09:03,559 Speaker 6: you apply that apollo when you look at the American economy. 205 00:09:03,600 --> 00:09:04,320 Speaker 5: Well, it's very. 206 00:09:04,160 --> 00:09:06,040 Speaker 7: Clear when you think about demand and supply and on 207 00:09:06,280 --> 00:09:08,960 Speaker 7: that the supply equation just changed quite dramatically. Now that 208 00:09:09,000 --> 00:09:11,160 Speaker 7: we certainly have much less supply because of the strait 209 00:09:11,160 --> 00:09:14,160 Speaker 7: of Homeost being closed, and because all the cascade of 210 00:09:14,200 --> 00:09:16,320 Speaker 7: effects that are likely to come along. If this does 211 00:09:16,520 --> 00:09:19,120 Speaker 7: continue for a longer period, so on the supply side, 212 00:09:19,200 --> 00:09:22,160 Speaker 7: we will likely continue to have the very important question, namely, 213 00:09:22,200 --> 00:09:24,319 Speaker 7: how long time is going to last before we get 214 00:09:24,360 --> 00:09:26,679 Speaker 7: supply up to the levels where demand is. And if 215 00:09:26,679 --> 00:09:28,720 Speaker 7: that's going to take a longer time, then the risk 216 00:09:28,840 --> 00:09:31,040 Speaker 7: is that energy prices and oil prices are going to 217 00:09:31,040 --> 00:09:33,960 Speaker 7: stay more elevated it's also fuel prices of course that 218 00:09:34,200 --> 00:09:36,440 Speaker 7: of course going to jet fuel. It's also of course 219 00:09:36,480 --> 00:09:38,960 Speaker 7: fuel prices that are marine fuel. All these parts of 220 00:09:39,120 --> 00:09:42,080 Speaker 7: energy complex are absolutely seeing some upward lift. And the 221 00:09:42,120 --> 00:09:44,800 Speaker 7: longer the shot lasts, the more we will see energy 222 00:09:44,800 --> 00:09:45,840 Speaker 7: prices stay more elevated. 223 00:09:45,880 --> 00:09:48,240 Speaker 3: When does this get real for you? At the start 224 00:09:48,280 --> 00:09:50,520 Speaker 3: of this crisis, and we can call it that, people 225 00:09:50,600 --> 00:09:54,000 Speaker 3: came on Bloomberg Surveillance on Bloomberg TV and made the 226 00:09:54,000 --> 00:09:56,400 Speaker 3: point that if its days not weeks, it's okay. And 227 00:09:56,440 --> 00:09:58,000 Speaker 3: here we are more than two weeks into this, and 228 00:09:58,000 --> 00:10:00,480 Speaker 3: now we hear if it's weeks and not months, it's okay. 229 00:10:00,679 --> 00:10:01,600 Speaker 3: When is it not okay? 230 00:10:01,720 --> 00:10:03,600 Speaker 7: Well, the next one will probably people saying this is months, 231 00:10:03,600 --> 00:10:05,480 Speaker 7: it's not quarters. Then we will also have a change. 232 00:10:05,480 --> 00:10:07,720 Speaker 7: So you're absolutely right. The fear is, of course, that 233 00:10:07,760 --> 00:10:10,240 Speaker 7: it does continue at the FED level. If you put 234 00:10:10,240 --> 00:10:12,679 Speaker 7: this into Fergus the Feed's model of ER's economy, it 235 00:10:12,720 --> 00:10:14,239 Speaker 7: has to last at least. 236 00:10:14,000 --> 00:10:15,800 Speaker 5: One quarter, because that's the only. 237 00:10:15,679 --> 00:10:17,440 Speaker 7: Way you can get a real serious shock to begin 238 00:10:17,480 --> 00:10:19,400 Speaker 7: to feed through. If it begins to last, of course 239 00:10:19,440 --> 00:10:22,000 Speaker 7: several quarters, then it's a much more serious effect. But 240 00:10:22,080 --> 00:10:24,839 Speaker 7: it is ultimately about that duration question, and that's what 241 00:10:24,840 --> 00:10:26,360 Speaker 7: the market is trying to figure out. And the fit 242 00:10:26,520 --> 00:10:28,840 Speaker 7: very clearly told you today that they do not think 243 00:10:28,840 --> 00:10:30,480 Speaker 7: that this is going to last a long time. 244 00:10:30,640 --> 00:10:32,960 Speaker 3: Mi McKay in the news conference is run back half 245 00:10:32,960 --> 00:10:35,000 Speaker 3: for us might welcome back to the program. Some key 246 00:10:35,080 --> 00:10:37,559 Speaker 3: headlines in that news conference. What jumped out for you? 247 00:10:38,640 --> 00:10:40,960 Speaker 8: I think two things, John. One, there was a sort 248 00:10:40,960 --> 00:10:43,600 Speaker 8: of more humble aspect to what Jay Powell was saying 249 00:10:43,840 --> 00:10:46,440 Speaker 8: when it came to tariff price inflation. Ne was a 250 00:10:46,520 --> 00:10:49,120 Speaker 8: conceding that it wasn't doing what they thought it would do, 251 00:10:49,480 --> 00:10:53,920 Speaker 8: lasting longer than they had anticipated, and now layer on 252 00:10:54,000 --> 00:10:56,480 Speaker 8: top of that inflation that will come into the energy 253 00:10:56,480 --> 00:11:00,520 Speaker 8: markets and perhaps others because of oil, and so he 254 00:11:00,520 --> 00:11:03,720 Speaker 8: he was less saying the idea that, well, we're prepared 255 00:11:03,720 --> 00:11:06,079 Speaker 8: to go either way depending on what happens with the economy, 256 00:11:06,440 --> 00:11:09,360 Speaker 8: as he was saying, we've been fooled and we're not 257 00:11:09,520 --> 00:11:11,880 Speaker 8: going to put ourselves in that position. We're going to 258 00:11:11,880 --> 00:11:15,640 Speaker 8: sit back and wait so that we don't react wrong 259 00:11:15,840 --> 00:11:18,599 Speaker 8: because we've been wrong. The other thing, of course, was 260 00:11:18,640 --> 00:11:22,120 Speaker 8: what Paul said about whether he's staying on or not 261 00:11:22,360 --> 00:11:25,920 Speaker 8: because he's refused to talk about that so far. He 262 00:11:25,960 --> 00:11:29,400 Speaker 8: did acknowledge what his lawyers told the Department of Justice 263 00:11:29,520 --> 00:11:32,480 Speaker 8: in their deposition. But the most interesting thing was he 264 00:11:32,520 --> 00:11:36,880 Speaker 8: said he's staying as chairman pro tem and that's the law. Well, 265 00:11:36,920 --> 00:11:41,160 Speaker 8: there's a Presidential Council's Office memorandum that says no, it's 266 00:11:41,200 --> 00:11:45,280 Speaker 8: the president who can appoint somebody as the chair pro tem. 267 00:11:45,559 --> 00:11:48,360 Speaker 8: So we could be looking at another big legal fight 268 00:11:48,440 --> 00:11:50,800 Speaker 8: down the road if they don't get Kevin warsh in 269 00:11:50,840 --> 00:11:51,840 Speaker 8: there by May fifteenth. 270 00:11:51,960 --> 00:11:54,720 Speaker 3: Yeah, Mike, this is why the problems arise. With the 271 00:11:54,840 --> 00:11:58,640 Speaker 3: chairman really engaging in this topic this afternoon. Does it 272 00:11:58,679 --> 00:12:03,240 Speaker 3: provide consistency or just introduce even more controversy. 273 00:12:05,040 --> 00:12:08,080 Speaker 8: Well, he's trying to provide consistency, I suppose by saying 274 00:12:08,120 --> 00:12:10,680 Speaker 8: not much is going to change until my successor gets here. 275 00:12:11,160 --> 00:12:14,080 Speaker 8: But whether or not that's a shot at the President 276 00:12:14,800 --> 00:12:17,440 Speaker 8: or some sort of way to push back on the 277 00:12:17,440 --> 00:12:20,880 Speaker 8: pressure he's been getting, we don't really know. But at 278 00:12:20,880 --> 00:12:23,920 Speaker 8: this point you have to think the White House is 279 00:12:23,960 --> 00:12:27,959 Speaker 8: going to disagree with that interpretation of whose chairman pro tem. 280 00:12:28,040 --> 00:12:30,240 Speaker 8: Now it's important to realize too that the chairman pro 281 00:12:30,400 --> 00:12:33,520 Speaker 8: tem of the Board of governors is largely irrelevant for 282 00:12:33,559 --> 00:12:37,679 Speaker 8: a short period of time until they get Kevin Worshk confirmed. 283 00:12:38,000 --> 00:12:40,599 Speaker 8: It's staying as chair of the Open Market Committee. That 284 00:12:40,600 --> 00:12:44,120 Speaker 8: would really bother the president because as Torston was just saying, 285 00:12:44,400 --> 00:12:47,120 Speaker 8: leaves somebody who's more hawkish more likely to vote for 286 00:12:47,160 --> 00:12:48,559 Speaker 8: a hold on the board. 287 00:12:48,960 --> 00:12:51,280 Speaker 3: Ma McKay with the lightst thank you, sir, appreciate it. 288 00:12:51,320 --> 00:12:53,720 Speaker 3: Great job as always might there are the Federal Reserve 289 00:12:53,760 --> 00:12:56,240 Speaker 3: down in Washington, D C. Tolson, can you answer that question. 290 00:12:56,320 --> 00:12:58,760 Speaker 3: We've touched on it briefly with you just expand on it. 291 00:12:58,760 --> 00:13:02,199 Speaker 3: Does it provide consistent and see or introduce controversy? 292 00:13:02,400 --> 00:13:03,319 Speaker 5: Well, it would. 293 00:13:03,040 --> 00:13:04,920 Speaker 7: Definitely be a lot cleaner if you have a fit 294 00:13:05,000 --> 00:13:07,160 Speaker 7: chair and then that fitchair walks out and a new 295 00:13:07,160 --> 00:13:09,320 Speaker 7: fittchure sits down and then we continue with a new 296 00:13:09,320 --> 00:13:09,679 Speaker 7: fit chair. 297 00:13:09,720 --> 00:13:10,760 Speaker 3: But now it usually works. 298 00:13:10,800 --> 00:13:12,439 Speaker 7: That's how normally is that's how we want a green 299 00:13:12,480 --> 00:13:14,440 Speaker 7: span Yellen on the Penanke. 300 00:13:14,800 --> 00:13:16,320 Speaker 5: But now that you shuttaenly have this. 301 00:13:16,320 --> 00:13:19,240 Speaker 7: Issue that the existing fit chair either he may stay 302 00:13:19,360 --> 00:13:21,680 Speaker 7: on the committee, which is also a huge issue, or 303 00:13:21,720 --> 00:13:23,720 Speaker 7: we may not have Kevin wash in the seat. 304 00:13:23,760 --> 00:13:25,600 Speaker 5: And as Mike was just saying. 305 00:13:25,480 --> 00:13:27,680 Speaker 7: That will raise all these other legal issues around will 306 00:13:27,760 --> 00:13:29,520 Speaker 7: is this something that you can do or not do? 307 00:13:29,640 --> 00:13:31,480 Speaker 7: And that of course begins to just raise a lot 308 00:13:31,520 --> 00:13:34,720 Speaker 7: more certainly about FED independence and what is the institution 309 00:13:34,840 --> 00:13:35,920 Speaker 7: making of decisions. 310 00:13:36,000 --> 00:13:39,400 Speaker 1: Do you think that it's leading market participants to not 311 00:13:39,520 --> 00:13:42,320 Speaker 1: take into account some of the forward guidance or some 312 00:13:42,400 --> 00:13:44,920 Speaker 1: of the discussions on the FED that there is less 313 00:13:44,960 --> 00:13:48,600 Speaker 1: credibility as a result of some of the increasing political 314 00:13:48,679 --> 00:13:50,280 Speaker 1: rhetoric around this institution. 315 00:13:50,440 --> 00:13:52,360 Speaker 7: Well, I think that we're moving towards a FED where 316 00:13:52,400 --> 00:13:53,600 Speaker 7: the focus will be at. 317 00:13:53,440 --> 00:13:54,800 Speaker 5: The extreme on dissence. 318 00:13:55,160 --> 00:13:57,679 Speaker 7: Today we had eleven versus one that was very clear, 319 00:13:57,880 --> 00:14:00,720 Speaker 7: but going forward we are likely going to especially over 320 00:14:00,800 --> 00:14:03,480 Speaker 7: the next level quotas as although IFMC members might be leaving, 321 00:14:03,720 --> 00:14:06,000 Speaker 7: we will have much more scrutiny of what are the 322 00:14:06,040 --> 00:14:08,880 Speaker 7: existing members saying. What's the difference is the speeches, what's 323 00:14:08,880 --> 00:14:10,840 Speaker 7: the difference is in footnotes between someone. 324 00:14:10,679 --> 00:14:12,240 Speaker 5: Who was dubbished someone was hawkish. 325 00:14:12,400 --> 00:14:14,719 Speaker 7: We are entering an era of fit watching where things 326 00:14:14,760 --> 00:14:17,480 Speaker 7: are getting much more complicated because it has this political 327 00:14:17,520 --> 00:14:19,960 Speaker 7: dimension of why is this person saying this? Is this 328 00:14:20,000 --> 00:14:22,480 Speaker 7: person staying on the committee for political reasons? It just 329 00:14:22,560 --> 00:14:25,360 Speaker 7: opens up a whole different dimension to fit watching than 330 00:14:25,400 --> 00:14:26,680 Speaker 7: what we've been used to for a long time. 331 00:14:26,880 --> 00:14:29,800 Speaker 6: Parlor game. But in your expert at this on a 332 00:14:29,840 --> 00:14:33,200 Speaker 6: global basis, this central banker to the world to borrow 333 00:14:33,240 --> 00:14:36,640 Speaker 6: from Bill Rhodes, Jerome Powell has to look at the 334 00:14:36,720 --> 00:14:40,960 Speaker 6: varying energy intensities. With Brent crude at nearly one hundred 335 00:14:40,960 --> 00:14:43,120 Speaker 6: and ten a gallon, we've gone one oh six to 336 00:14:43,200 --> 00:14:46,800 Speaker 6: one oh nine here right now off headlines of the Bloomberg. 337 00:14:47,280 --> 00:14:50,440 Speaker 6: When you look at the way em is crushed by 338 00:14:50,480 --> 00:14:55,360 Speaker 6: these prices food, energy and the rest that you're expert at, touristen, 339 00:14:55,560 --> 00:14:59,520 Speaker 6: does the dialogue just shift from the conventional parlor game. 340 00:15:00,080 --> 00:15:02,720 Speaker 7: Has been discussionate about the swap lines. There's been discussion 341 00:15:02,760 --> 00:15:05,040 Speaker 7: about in the broader context of things, what is the 342 00:15:05,080 --> 00:15:07,480 Speaker 7: feeds mandate, And is the feeds mandate to take care 343 00:15:07,520 --> 00:15:09,560 Speaker 7: of the US economy and the people who live within 344 00:15:09,600 --> 00:15:12,480 Speaker 7: the US fifty states, or is this someone who is 345 00:15:12,480 --> 00:15:14,600 Speaker 7: supposed to take care of the global economy. And it's 346 00:15:14,720 --> 00:15:16,960 Speaker 7: very clear that the trend of travel here is certain 347 00:15:17,000 --> 00:15:19,440 Speaker 7: received to be that we're moving towards that the FEDS 348 00:15:19,440 --> 00:15:21,040 Speaker 7: should really be caring mainly about. 349 00:15:20,800 --> 00:15:22,200 Speaker 5: The US economic outlook. 350 00:15:22,320 --> 00:15:24,560 Speaker 6: Is an expressive currency or is that what we're not 351 00:15:24,680 --> 00:15:26,000 Speaker 6: seeing in the Q two. 352 00:15:26,240 --> 00:15:29,040 Speaker 7: Well, given that foreigners own roughly around twenty percent of 353 00:15:29,040 --> 00:15:32,160 Speaker 7: treasuries and twenty percent of credit and roughly a third, 354 00:15:32,200 --> 00:15:34,600 Speaker 7: of course also of equities, we still have in a 355 00:15:34,680 --> 00:15:37,800 Speaker 7: situation where foreigners do play a very important role in 356 00:15:37,960 --> 00:15:41,320 Speaker 7: US financial markets, So that key issue of what is 357 00:15:41,400 --> 00:15:43,720 Speaker 7: the goal of the FED becomes very very important. 358 00:15:43,920 --> 00:15:46,600 Speaker 4: I'm just struck by how historic this is. The last 359 00:15:46,640 --> 00:15:50,440 Speaker 4: person to stay on at the at the Federal Reserve 360 00:15:50,640 --> 00:15:54,000 Speaker 4: as FED chair after his term was Mariner Accles. This 361 00:15:54,200 --> 00:15:56,080 Speaker 4: was in nineteen forty eight when his term was up, 362 00:15:56,200 --> 00:15:58,160 Speaker 4: and he stayed on because he was concerned about the 363 00:15:58,160 --> 00:16:01,560 Speaker 4: post Bretton Wood's order and an economy that was torn 364 00:16:01,640 --> 00:16:03,520 Speaker 4: from the war that we had just seen, and he 365 00:16:03,560 --> 00:16:06,320 Speaker 4: wanted that consistency. That was the last time this happened. 366 00:16:06,400 --> 00:16:09,280 Speaker 4: And I'm obstruct by the historical parallel at a time 367 00:16:09,280 --> 00:16:13,040 Speaker 4: when we are questioning geopolitical alliances, when we're questioning how 368 00:16:13,080 --> 00:16:16,200 Speaker 4: exactly is some of these monetary policies are going to 369 00:16:16,240 --> 00:16:18,600 Speaker 4: work in an inflationary world at a time of increased 370 00:16:18,600 --> 00:16:20,760 Speaker 4: government debt, it is interesting that we're dealing with the 371 00:16:20,760 --> 00:16:23,520 Speaker 4: same discussions, and I think it can't be forgotten these 372 00:16:23,560 --> 00:16:25,520 Speaker 4: sort of echoes that we feel from nineteen forty eight. 373 00:16:25,640 --> 00:16:28,320 Speaker 3: I think it's easy to introduce one's opinion into this situation, 374 00:16:28,480 --> 00:16:31,400 Speaker 3: So I'll just allow the market to guide us. Clearly, 375 00:16:31,400 --> 00:16:35,240 Speaker 3: the chairman is concerned about a threat to independence, is 376 00:16:35,280 --> 00:16:38,600 Speaker 3: he right to be? Look at inflation expectations right now. 377 00:16:38,680 --> 00:16:43,160 Speaker 3: Market based inflation expectations have remained really well anchored throughout 378 00:16:43,200 --> 00:16:46,280 Speaker 3: all of this. So whether you're concerned about the chairman's 379 00:16:46,280 --> 00:16:48,640 Speaker 3: attack on the institution or not, let's just focus on 380 00:16:48,680 --> 00:16:52,120 Speaker 3: the markets. Markets have decided it's not a credible threat. 381 00:16:52,920 --> 00:16:54,800 Speaker 3: So does the chairman actually have a role here that 382 00:16:54,840 --> 00:16:57,560 Speaker 3: he needs to play? Is this a card he needs 383 00:16:57,560 --> 00:17:00,600 Speaker 3: to hand to hold? I don't really understand that. I'm 384 00:17:00,600 --> 00:17:03,720 Speaker 3: struggling with that. That's something I'm wrestling with. My opinion 385 00:17:03,720 --> 00:17:06,040 Speaker 3: doesn't really matter. The market's telling me there isn't a 386 00:17:06,080 --> 00:17:09,080 Speaker 3: concern with central bank independence. The market is telling me 387 00:17:09,600 --> 00:17:12,520 Speaker 3: there isn't a concern with inflation expectations, and the data 388 00:17:12,600 --> 00:17:14,480 Speaker 3: is telling me that the rest of the world's not 389 00:17:14,520 --> 00:17:17,080 Speaker 3: worried either. Because when I look at foreign ownership of 390 00:17:17,200 --> 00:17:20,879 Speaker 3: US assets, they are rock solid. And for treasuries, I 391 00:17:20,920 --> 00:17:23,040 Speaker 3: think there are all time heights at the last data 392 00:17:23,080 --> 00:17:25,240 Speaker 3: point I saw tourced And so is there a problem 393 00:17:25,240 --> 00:17:27,320 Speaker 3: here that the chairman even needs to address? 394 00:17:27,400 --> 00:17:30,480 Speaker 7: Well, that's why the key question becomes what does confidence mean? 395 00:17:30,600 --> 00:17:33,960 Speaker 7: Is a confidence by J Paul? Is it confidence by foreigners? 396 00:17:34,040 --> 00:17:36,399 Speaker 7: Is it confidence by markets? It does become a very 397 00:17:36,400 --> 00:17:39,000 Speaker 7: important debate. That's why this discussion around who will be 398 00:17:39,040 --> 00:17:40,879 Speaker 7: the next fairture now we know it's Kevin Wash that 399 00:17:41,000 --> 00:17:43,080 Speaker 7: wasn't around that time also got a lot of discussion 400 00:17:43,080 --> 00:17:45,399 Speaker 7: around it could have been someone else who might not 401 00:17:45,440 --> 00:17:48,040 Speaker 7: have been perceived as credible as Kevin is. So for 402 00:17:48,080 --> 00:17:51,439 Speaker 7: that reason I completely agree. Who is the judge ultimately 403 00:17:51,680 --> 00:17:54,160 Speaker 7: of what fake credibility is? And where do we look 404 00:17:54,200 --> 00:17:56,119 Speaker 7: and where does the market look for evidence whether the 405 00:17:56,119 --> 00:17:57,439 Speaker 7: fair credibility. 406 00:17:56,920 --> 00:17:57,439 Speaker 5: Is being threatened? 407 00:17:57,440 --> 00:18:00,480 Speaker 3: And look how many establishment figures came out when Kevin 408 00:18:00,480 --> 00:18:04,439 Speaker 3: Walsh was nominated by the president. How many establishment figures. 409 00:18:04,440 --> 00:18:08,240 Speaker 3: And forgive me, if you're insulted by being establishment, get 410 00:18:08,240 --> 00:18:10,119 Speaker 3: a Gopinath formerly at the IMF. I don't think it 411 00:18:10,160 --> 00:18:14,080 Speaker 3: gets more establishment than that. Endorsing Kevin Walsh and saying 412 00:18:14,119 --> 00:18:17,360 Speaker 3: you to make a great FED chair. Mark Carney of Canada, 413 00:18:18,119 --> 00:18:19,720 Speaker 3: the former governor of the Bank of England and now 414 00:18:19,720 --> 00:18:23,280 Speaker 3: Prime Minister, endorsing Kevin Walsh as a future FED chair. 415 00:18:23,359 --> 00:18:26,280 Speaker 3: What exactly is the chairman defending care when it is 416 00:18:26,400 --> 00:18:29,719 Speaker 3: standard protocol to leave once your term is up. 417 00:18:29,760 --> 00:18:32,000 Speaker 4: Well, I think that that's a fair question, and ultimately 418 00:18:32,960 --> 00:18:34,840 Speaker 4: my personal opinion doesn't matter. Frankly, I don't know what 419 00:18:34,880 --> 00:18:37,280 Speaker 4: my personal opinion is. I just think that there is 420 00:18:37,359 --> 00:18:39,919 Speaker 4: a sense right now in markets to the point that 421 00:18:39,960 --> 00:18:43,320 Speaker 4: fedher j Powell made that even on Congress' is level, 422 00:18:43,640 --> 00:18:45,440 Speaker 4: they have confidence and they would like to see FED 423 00:18:45,440 --> 00:18:49,200 Speaker 4: independence continue. And that's you see in Tom Tillis's move. 424 00:18:49,359 --> 00:18:51,639 Speaker 4: So what would make him stay on? I guess that 425 00:18:51,640 --> 00:18:54,320 Speaker 4: that's one of the questions. What would change his mind 426 00:18:54,400 --> 00:18:56,720 Speaker 4: to actually remain on as governor passed his term as 427 00:18:56,720 --> 00:18:59,639 Speaker 4: FED chair? If Kevin Walsh were in the seat, that 428 00:18:59,680 --> 00:19:02,440 Speaker 4: would can feel like he needed to uphold this spred independence. 429 00:19:02,520 --> 00:19:04,880 Speaker 3: Jeff Frosenberg of black Rock John just now for more. Jeff, 430 00:19:04,880 --> 00:19:06,959 Speaker 3: I imagine you want to we'll let this topic go together, 431 00:19:07,240 --> 00:19:09,560 Speaker 3: so I'll ask you about the substance of the news conference, 432 00:19:09,600 --> 00:19:11,840 Speaker 3: the chunk from the Middle East and whether it threatens 433 00:19:11,880 --> 00:19:13,800 Speaker 3: to upend the outlook for this economy. 434 00:19:15,200 --> 00:19:18,439 Speaker 9: Yeah, I mean, look, the conclusion here on the substance 435 00:19:18,520 --> 00:19:21,920 Speaker 9: really pivoted on that moment. I would argue, though, that 436 00:19:22,000 --> 00:19:26,000 Speaker 9: the pivot was less about the conversation about whether he 437 00:19:26,080 --> 00:19:28,679 Speaker 9: was staying on and that part of the conversation, and 438 00:19:28,720 --> 00:19:30,240 Speaker 9: really his answer to the. 439 00:19:30,240 --> 00:19:32,160 Speaker 10: Question that occurred right before that. 440 00:19:32,160 --> 00:19:33,320 Speaker 5: That was the question. 441 00:19:33,040 --> 00:19:36,480 Speaker 10: About, Hey, aren't you more worried about the employment outlook, 442 00:19:36,680 --> 00:19:41,200 Speaker 10: and he definitively said no to that, and then pivoted 443 00:19:41,280 --> 00:19:44,840 Speaker 10: to the challenge on inflation. And from my reckoning and 444 00:19:44,880 --> 00:19:48,399 Speaker 10: the meeting, that was the point at which the meeting 445 00:19:48,440 --> 00:19:52,320 Speaker 10: turned hawkish, because the majority of the discussion around the 446 00:19:52,359 --> 00:19:55,840 Speaker 10: meeting is around inflation, whether it was the tariff, inflation 447 00:19:55,960 --> 00:19:59,360 Speaker 10: not coming down as much as expected, the unknown impact 448 00:19:59,400 --> 00:20:02,159 Speaker 10: of energy rice on future inflation. So you have this 449 00:20:02,280 --> 00:20:06,359 Speaker 10: kind of backdrop of forces that are pushing up inflation 450 00:20:06,520 --> 00:20:10,800 Speaker 10: and disappointing the expectations for inflation to decline in the 451 00:20:10,800 --> 00:20:14,720 Speaker 10: backdrop of stable unemployment rates, and so that really I 452 00:20:14,720 --> 00:20:19,680 Speaker 10: think pivoted the market reaction to this FED is much 453 00:20:19,680 --> 00:20:24,600 Speaker 10: more hawkish. The front end flattening the equity markets responding, 454 00:20:24,640 --> 00:20:27,040 Speaker 10: And that was the moment in the meeting where this 455 00:20:27,680 --> 00:20:30,760 Speaker 10: moved from what had started off as a kind of 456 00:20:30,800 --> 00:20:34,320 Speaker 10: dovish statement interpretation holding the waller to sent to the 457 00:20:34,320 --> 00:20:38,160 Speaker 10: side for a second, into a definitively hawkish press conference. 458 00:20:38,359 --> 00:20:41,160 Speaker 4: Jeff, I'm looking right now, and we've completely priced out 459 00:20:41,240 --> 00:20:43,680 Speaker 4: a rate cut for twenty twenty six. The first rate 460 00:20:43,720 --> 00:20:47,320 Speaker 4: cut now isn't priced in until July of twenty twenty seven. 461 00:20:47,600 --> 00:20:50,159 Speaker 4: Does that matter for risk assets? Does that matter in 462 00:20:50,160 --> 00:20:51,840 Speaker 4: any way, shape or form er. Is the FED been 463 00:20:51,840 --> 00:20:53,640 Speaker 4: totally sidelined by other events? 464 00:20:55,640 --> 00:20:58,280 Speaker 10: Well, I think it does matter, because that's what you're 465 00:20:58,280 --> 00:21:00,840 Speaker 10: seeing in the markets right Risk acid are going down, 466 00:21:01,359 --> 00:21:04,760 Speaker 10: and I think they're going down because of a pricing 467 00:21:04,880 --> 00:21:07,720 Speaker 10: in of a more hawkish FED. This is a risk 468 00:21:07,880 --> 00:21:11,040 Speaker 10: asset market that has benefited for a very long time 469 00:21:11,080 --> 00:21:14,760 Speaker 10: from a highly accommodative FED, both in terms of price 470 00:21:15,119 --> 00:21:17,280 Speaker 10: and quantity. When you think about the impact of the 471 00:21:17,320 --> 00:21:21,000 Speaker 10: balance sheets, so as we debate what the future FED 472 00:21:21,040 --> 00:21:24,800 Speaker 10: looks like, there's both a price and quantity uncertainty there, 473 00:21:24,840 --> 00:21:26,760 Speaker 10: but both of those in the past have been highly 474 00:21:26,800 --> 00:21:30,879 Speaker 10: supportive When you challenge that that immediately reprices. You know, 475 00:21:30,920 --> 00:21:34,040 Speaker 10: the fed's near term expectations what you're talking about, but 476 00:21:34,160 --> 00:21:36,960 Speaker 10: also the degree to which that liquidity and price and 477 00:21:37,040 --> 00:21:40,560 Speaker 10: quantity is supported and will have the outlook continuing to 478 00:21:40,600 --> 00:21:41,800 Speaker 10: support risky assets. 479 00:21:42,000 --> 00:21:43,840 Speaker 6: Jeff, John and I are going back and forth during 480 00:21:43,880 --> 00:21:46,679 Speaker 6: a press conference about what the flight demands is going 481 00:21:46,720 --> 00:21:49,560 Speaker 6: to be the first week of September. It's already up 482 00:21:49,640 --> 00:21:53,240 Speaker 6: sixty percent. It's most sixty percent to the Milan. 483 00:21:53,200 --> 00:21:55,760 Speaker 3: N F one already as well as well. 484 00:21:55,800 --> 00:21:57,439 Speaker 6: Jeff, where are we going to be to both of you? 485 00:21:57,520 --> 00:22:01,119 Speaker 6: Let me start with Jeff Rosenberg here. Destruction to me 486 00:22:01,359 --> 00:22:04,879 Speaker 6: is tangible when you see a given fancy plane ticket 487 00:22:04,880 --> 00:22:07,520 Speaker 6: go up sixty percent or a gallon of guess what 488 00:22:07,560 --> 00:22:10,680 Speaker 6: does Blackrock say about demand destruction? 489 00:22:12,320 --> 00:22:16,639 Speaker 10: Well, it's interesting because the last question in the press 490 00:22:16,640 --> 00:22:20,359 Speaker 10: conference the premise was, if you remember it, how high 491 00:22:20,359 --> 00:22:24,200 Speaker 10: does do energy prices have to go before you'll consider 492 00:22:24,520 --> 00:22:27,960 Speaker 10: hiking rates? And that just misses this whole point about 493 00:22:27,960 --> 00:22:32,320 Speaker 10: demand destruction because the scenario where this goes on longer 494 00:22:32,359 --> 00:22:35,679 Speaker 10: and is more disruptive to oil prices is a scenario 495 00:22:36,000 --> 00:22:39,560 Speaker 10: where you shift the focus from inflation, which is today's 496 00:22:39,880 --> 00:22:42,800 Speaker 10: and maybe the last couple of weeks story to a 497 00:22:42,840 --> 00:22:45,879 Speaker 10: growth story. And it's not how high the oil prices 498 00:22:45,920 --> 00:22:48,360 Speaker 10: go before you hike, but how high and for how 499 00:22:48,359 --> 00:22:51,480 Speaker 10: long the oil prices get before you cut. And I 500 00:22:51,520 --> 00:22:53,720 Speaker 10: think that's the swing there. 501 00:22:53,880 --> 00:22:56,280 Speaker 6: The term on that that's exactly where I am is 502 00:22:56,320 --> 00:22:59,960 Speaker 6: that this is a GDP story of constructing GDP under 503 00:23:00,200 --> 00:23:01,280 Speaker 6: massive price stress. 504 00:23:01,600 --> 00:23:04,320 Speaker 7: Absolutely, because now we'll begin to watch on the weekly data, 505 00:23:04,359 --> 00:23:06,040 Speaker 7: on the monthly data, and we have data for how 506 00:23:06,119 --> 00:23:08,520 Speaker 7: many miles are driven in the US, we have data 507 00:23:08,560 --> 00:23:10,760 Speaker 7: for how much money is spent on gas at the pump. 508 00:23:10,920 --> 00:23:12,960 Speaker 7: We also have data for our airfares and how much 509 00:23:13,080 --> 00:23:15,920 Speaker 7: people are spending on buying airline tickets. So for that reason, 510 00:23:15,960 --> 00:23:18,119 Speaker 7: if those things begin to come out, especially even with 511 00:23:18,119 --> 00:23:20,520 Speaker 7: the anydotal limits of this slowing down, this should begin 512 00:23:20,600 --> 00:23:21,439 Speaker 7: to be more worrying. 513 00:23:21,720 --> 00:23:24,080 Speaker 6: John, close a loop with you utility prices in the 514 00:23:24,160 --> 00:23:26,920 Speaker 6: United coh it's the same thing we're not. I mean, 515 00:23:27,000 --> 00:23:29,560 Speaker 6: I think your own pile's aware of this, frankly, but 516 00:23:29,840 --> 00:23:34,680 Speaker 6: the zeitgeist is not talking about the GDP demand. 517 00:23:34,720 --> 00:23:36,520 Speaker 3: They're going to get me in shine much trouble with 518 00:23:36,560 --> 00:23:38,239 Speaker 3: regards to the UK. They've got a problem over there, 519 00:23:38,240 --> 00:23:40,080 Speaker 3: and his name is Ed miliband I believe it there 520 00:23:40,240 --> 00:23:41,760 Speaker 3: and you could sell that out yourselnds, because I don't 521 00:23:41,760 --> 00:23:43,800 Speaker 3: live there anymore. I'm going to talk about the shark 522 00:23:43,840 --> 00:23:46,359 Speaker 3: with COVID and the inverse, the mirror image of what 523 00:23:46,359 --> 00:23:48,720 Speaker 3: we see now, which is something Jeff Curry of Karla 524 00:23:48,880 --> 00:23:51,400 Speaker 3: was talking about earlier on this morning on Bloomberg TV. 525 00:23:51,560 --> 00:23:54,080 Speaker 3: In COVID, we had a massive demand shock and it 526 00:23:54,160 --> 00:23:57,960 Speaker 3: took negative prices to rebalance the market. The Homer's crisis 527 00:23:58,080 --> 00:24:00,040 Speaker 3: is the complete inverse of that. So you've got a 528 00:24:00,200 --> 00:24:03,960 Speaker 3: massive supply shock that requires much much higher prices to 529 00:24:04,040 --> 00:24:06,840 Speaker 3: rebalance the market. So to your point, the question is 530 00:24:06,880 --> 00:24:09,480 Speaker 3: whether one hundred dollars in the paper market in futures 531 00:24:09,520 --> 00:24:11,480 Speaker 3: right now, the futures curve going at to December, the 532 00:24:11,480 --> 00:24:14,680 Speaker 3: price is something in the high seventies is sufficient enough 533 00:24:14,680 --> 00:24:16,000 Speaker 3: to do that at the moment. 534 00:24:16,080 --> 00:24:18,440 Speaker 7: Well, that's why what's interesting about also what Tom is saying. 535 00:24:18,480 --> 00:24:21,440 Speaker 7: If you look at the is SUP they've revised inflation up. 536 00:24:21,440 --> 00:24:23,360 Speaker 5: Lists degree that makes total sense. 537 00:24:23,359 --> 00:24:26,440 Speaker 7: But they also revised GDP up telling you that they're 538 00:24:26,480 --> 00:24:29,960 Speaker 7: not assuming any demands whatsoever. So well, the TEXTOK, would 539 00:24:29,960 --> 00:24:32,160 Speaker 7: certainly tell you that at oil price shock is tafletion, 540 00:24:32,400 --> 00:24:34,960 Speaker 7: you get higher prices and lower GDP, and there was 541 00:24:35,000 --> 00:24:37,479 Speaker 7: no evidence of that in the SUP today. 542 00:24:37,600 --> 00:24:39,760 Speaker 3: Jeff, that's a big question. I think it's an important one. 543 00:24:40,119 --> 00:24:43,399 Speaker 3: Where's the hit to growth from the higher inflation from 544 00:24:43,440 --> 00:24:45,160 Speaker 3: the higher outlook for energy prices. 545 00:24:47,040 --> 00:24:49,920 Speaker 10: Well, it's certainly not in their forecasts. And that's that's 546 00:24:49,960 --> 00:24:52,560 Speaker 10: the clear kind of takeaway is that the forecasts are 547 00:24:52,600 --> 00:24:57,240 Speaker 10: basically talking about a temporary transitory to use that word impact, 548 00:24:57,240 --> 00:24:59,080 Speaker 10: So that's not in the forecast. I don't think we 549 00:24:59,119 --> 00:25:00,679 Speaker 10: want to take too much away from that, because if 550 00:25:00,680 --> 00:25:04,160 Speaker 10: you look at page sixteen of the SEP, it talks 551 00:25:04,200 --> 00:25:07,040 Speaker 10: about the uncertainty in the forecast. The uncertainty in these 552 00:25:07,040 --> 00:25:09,640 Speaker 10: forecasts is greater than the mean, and so that really 553 00:25:09,680 --> 00:25:13,200 Speaker 10: tells you there's not a huge amount of forecast accuracy here. 554 00:25:13,280 --> 00:25:17,000 Speaker 10: So let's kind of put aside that these are actual forecasts. 555 00:25:16,520 --> 00:25:17,439 Speaker 5: Of where we're going to go. 556 00:25:17,560 --> 00:25:19,679 Speaker 10: For what is really important here is it kind of 557 00:25:19,720 --> 00:25:24,080 Speaker 10: tells us about the tone and the consideration of the committee, 558 00:25:24,119 --> 00:25:27,000 Speaker 10: and that is basically, and Powell talked about this a 559 00:25:27,040 --> 00:25:30,000 Speaker 10: little bit of upgrading the longer term upgrade to growth, 560 00:25:30,040 --> 00:25:32,080 Speaker 10: I think is the message. The little bit of the 561 00:25:32,400 --> 00:25:38,280 Speaker 10: longer term upgrade to the Fed Fund's terminal rate going up, 562 00:25:38,359 --> 00:25:40,480 Speaker 10: and it's a little bit of a productivity story, but 563 00:25:40,560 --> 00:25:44,520 Speaker 10: that is ignoring any kind of short term impact becoming 564 00:25:44,600 --> 00:25:47,679 Speaker 10: bigger issues for twenty twenty six in the economic outlook 565 00:25:47,680 --> 00:25:49,080 Speaker 10: from the oil price shock. 566 00:25:49,320 --> 00:25:51,320 Speaker 3: Jeff, it's going to say sprite to catch out Jeff 567 00:25:51,359 --> 00:25:52,440 Speaker 3: Risen fat black crow,