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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.
Speaker 1: I'm Charlie Pelletta. Down day for Wall Street stock slipping
Speaker 1: in a volatile session as remarks from Federal Reserve officials
Speaker 1: lifted optimism on the economy while also bolstering speculation interest
Speaker 1: rates could rise as soon as next month. The SMP
Speaker 1: five hundred index fell three points to end the week
Speaker 1: at twenty one sixty nine, a drop of two tenths
Speaker 1: of one percent. For the week, the index was down
Speaker 1: seven tenths of one percent. NASDAK had it up day
Speaker 1: up six points to eighteen, a gain of one tenth
Speaker 1: of one percent. Down Industrials down fifty three, a drop
Speaker 1: there of three tenths of one percent. The tenure down
Speaker 1: thirteen thirty seconds, the old one point six two percent,
Speaker 1: Gold Laurel little change down twenty cents, thirteen twenty one
Speaker 1: the ounce. I'm Charlie Pallett, and that's a Bloomberg Business flash.
Speaker 1: You're listening to Taking a stock with Kathleen pim Fox
Speaker 1: line from the Jackson Hole Economic symposium. Von Bloomberg Radio
Speaker 1: channel is the FED chair and as she as a
Speaker 1: FED chirt, traditionally does here at the Kansas City Federal
Speaker 1: Reserve Banks Annual Symposium. She opened the symposium to Dave
Speaker 1: remarks about the economy, in particular how it's continuing to improve.
Speaker 1: She's a little bit concerned about some factors, likely productivity,
Speaker 1: but in the end she seemed to echo others saying, yes,
Speaker 1: the conditions are ripening for an interest rate move this year,
Speaker 1: much much more. This is the context of a very
Speaker 1: deep and broad discussion of how to most effectively operate
Speaker 1: monetary policy in a world of zero interest rates or
Speaker 1: even lower. Randy Krasner joins this now. He is a
Speaker 1: perennial attendee here. In fact, he's going to be a
Speaker 1: discussing and moderator one of the panels as the supposium
Speaker 1: continues on Saturday. Former Federal Reserve Governor, professor of economics
Speaker 1: with a Cargo Booth School. Randy, welcome, great to be
Speaker 1: with you. Jenny Allen stan Fisher, what what's the message? Well,
Speaker 1: I think they've been saying a fairly consistent message that
Speaker 1: they have been seeing the conditions getting more and more
Speaker 1: likely for the next hike. They they waited over the
Speaker 1: summer because they're concerned about what might happen if Brexit occurred.
Speaker 1: And then Brexit occurred, and so they wanted to see
Speaker 1: what the consequences were. The consequences seemed to have been
Speaker 1: quite small for the international markets, and so I think
Speaker 1: another rate rise sometime before the end of the year
Speaker 1: is is quite likely. Mr Krosner. If it's taking this
Speaker 1: long to raise interest rates basis points and this much
Speaker 1: discussion and hand ringing, what does that tell you about
Speaker 1: the actual process of crafting monetary policy. I think they're
Speaker 1: people have very different views sitting around that table, and
Speaker 1: I think given that we're in somewhat uncharted territory, reason
Speaker 1: why people can can disagree and uh and obviously there
Speaker 1: have been a lot of disagreements. Some people wanted to
Speaker 1: move much more rapidly than than others. And I think UM,
Speaker 1: as Yellen has said many times, their movements are going
Speaker 1: to be gradual, gentle. They're not going to move very
Speaker 1: rapidly up to UM let's say roughly three percent or so.
Speaker 1: That's going to take a long long time. Sure is
Speaker 1: because you know it dawned on me finally, Randy, that
Speaker 1: talk about gradual. The Fed raised the key rate last December.
Speaker 1: If it raises it this December, one basis point increase
Speaker 1: a year way at that rate to get to three percent,
Speaker 1: it's going to be a while. It certainly would be
Speaker 1: a while. I don't think it will necessarily be that slow.
Speaker 1: If the economy really does start to to come back,
Speaker 1: if we start to see some inflation pressures, uh, they'll
Speaker 1: they'll move a little bit more rapidly, but we still
Speaker 1: haven't seen those. The discussion here last year was exactly
Speaker 1: on this sort of inflation dynamic. As the labor market recovers,
Speaker 1: we have always seen a lot of wage pressure. We're
Speaker 1: discussions last year. Are we in a different regime? We've
Speaker 1: now been at roughly five percent unemployment rate for the
Speaker 1: last year, and we seem very little wage pressure. So
Speaker 1: a lot of controversy about whether the traditional dynamics will
Speaker 1: eventually kick in or we're in a new regime. Do
Speaker 1: you believe that they've cried wolf? What do you mean
Speaker 1: by that? Well, I mean that they've been talking about
Speaker 1: this for so long. It can be the kind of
Speaker 1: situation where they invite everybody to a party, nobody shows up,
Speaker 1: or you know, you try wolf after a while, no
Speaker 1: one starts listening to you, and you actually discount what
Speaker 1: the what the people in charge of saying. So certainly
Speaker 1: I think that they have focused on the data and
Speaker 1: they have said they've given sort of a broad outline
Speaker 1: of where they think they would be going, but they
Speaker 1: have certainly never given a concrete timetable when events like Brexit,
Speaker 1: war or other changes in data came in. But James
Speaker 1: just at breaking in, but I mean James Bullard today
Speaker 1: at the St. Louis FED he basically dismissed issues like Brexit,
Speaker 1: saying that's not necessarily going to be relevant for policy
Speaker 1: and the US economy. Well, and of course uh uh
Speaker 1: Jim Bullard um. And I'm glad he picked up on
Speaker 1: that pan because I think he is a voice that
Speaker 1: I don't hear, you don't see her here is often
Speaker 1: on the Federal Open Market Committee that things like Brexit, China,
Speaker 1: those concerns are going to be a factor that would
Speaker 1: influence the FEDS policy making decision. H Randy. When you
Speaker 1: look at what is top of the list for the
Speaker 1: FED right now, what would you say, is there there
Speaker 1: more They're they're talking a lot about global concerns, but
Speaker 1: is that really such a big deal or what is
Speaker 1: What is the number one? So I think god number
Speaker 1: one is certainly the potential for inflation UM and UH
Speaker 1: and the wage pressures that may be coming with with
Speaker 1: the tight tight labor markets. Certainly, if they're looking at
Speaker 1: at risks, they'll be looking at global risks. UM doesn't
Speaker 1: seem like the risks in Europe are as high as
Speaker 1: they had been, but they still concerned about some of
Speaker 1: the issues in banking there. Obviously there are risks associated
Speaker 1: with China that those seem to be much less than
Speaker 1: they were than they were last year at this time
Speaker 1: where there was an incredible volatively in the in the markets.
Speaker 1: And so with most of these global risks, UM washing
Speaker 1: out a bit. With UM continuing strength and the labor market,
Speaker 1: I think they feel that the time for the next
Speaker 1: next rise is coming soon, but they're not going to
Speaker 1: give a definitive timetable because they want to see how
Speaker 1: the data are evolving. Alright, Randy Krosner, thank you so
Speaker 1: very much, so great to have you once again joining
Speaker 1: us on Boomberg Radio here in Jackson Hall, Cancity. Fancy Poseum.
Speaker 1: Great to be with your of course, former feder Preserve
Speaker 1: a governor professor of economics to the Chicago Booth School. Well,
Speaker 1: as we wrap things up, I first of all, Pim,
Speaker 1: before we see anything else, I want to thank our
Speaker 1: field producer Charlie Vollmark. He is a stalwart for us
Speaker 1: on how we would get done in the field without him.
Speaker 1: Back in Bloomberg World headquarters, Reggie Basil, our technical director
Speaker 1: of course Sam land I can put it all together
Speaker 1: on the show for us every single day, So we
Speaker 1: will look forward to seeing you on Monday. We'll be
Speaker 1: watching to see what the market ramifications are of FED
Speaker 1: comments coming out of Jackson Hall. I'm Kathleen Hayes along
Speaker 1: with Pam Fox. This is Bloomberg. Coming up, Bloomberg Law
Speaker 1: will explore whether Puerto Rico's alternative minimum tax is unconstitutional.
Speaker 1: That's next on Bloomberg