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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: So here's the latest this morning, investors looking ahead to

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Speaker 2: key dates this month, starting with next Friday's payrolls report,

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Speaker 2: followed by CPI at a federate decision at the end

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Speaker 2: of the month. Claudie Salm of New Century Advisors noting

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Speaker 2: the FED Summary of Economic projections isn't living up to promises,

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Speaker 2: writing tension has been building around the SEP at the

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Speaker 2: pal FED. The FED has long been data driven in

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Speaker 2: its decisions, but the complexities of the post pandemic economy

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Speaker 2: have led it seemingly to rely on data over forecast.

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Speaker 2: Powell even admitted as much at the press conference. Claudia

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Speaker 2: Joint just now for more, Claudia, welcome to the program

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Speaker 2: and a very happy new year to you. It's good

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Speaker 2: to see you once again. How is this complicating decision

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Speaker 2: making on the f WEBC Well, I think.

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Speaker 3: You know, a real theme of the last FMC meeting

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Speaker 3: was how much uncertainty there is about the outlook for

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Speaker 3: twenty twenty five, and a lot of that comes from

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Speaker 3: policy uncertainty out of fiscal policy.

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Speaker 4: But you know, the FED has.

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Speaker 3: Increasingly underpower become very, very data driven and it's hard

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Speaker 3: to believe it, but I think we're actually going to

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Speaker 3: see a year where the data plays an even bigger rule,

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Speaker 3: and we already know that that can create a lot

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Speaker 3: of unnecessary volatility because it's hard to measure a thirty

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Speaker 3: trillion dollar economy in real time with a lot of accuracy.

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Speaker 4: So they were going to continue to see this.

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Speaker 3: Real overreaction, and we saw this yesterday with the initial

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Speaker 3: claims for unemployment data to just you know, these little

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Speaker 3: scraps of data we get on how strong, how strong

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Speaker 3: labor market is, how hot inflation is.

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Speaker 4: You know, so buckle up, well, Claudie.

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Speaker 1: This is a reason why people can't liken the moment

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Speaker 1: that we're into a dark room with a blindfold on

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Speaker 1: with lots of furniture going around and trying not to

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Speaker 1: bump into anything because the data is messy. We keep

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Speaker 1: talking about distortions, but forecasts have been wrong, and the

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Speaker 1: whole concept of transitory is a huge scar over this fed.

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Speaker 1: So is there a forecast or an economic model that

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Speaker 1: they should be following. And I'm asking you of this

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Speaker 1: some rule who has come out and talked about how

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Speaker 1: every rule has its options and it's difficult to really

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Speaker 1: come up with these.

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Speaker 4: Right, Yeah, this is the past.

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Speaker 3: Forward and a half year have not been kind to

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Speaker 3: rules or rules of thumb or how it's usually in

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Speaker 3: the past. But we also can't become hamstrung by a

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Speaker 3: mistake or a misjudgment that was.

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Speaker 4: Made in twenty twenty one about inflation.

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Speaker 3: Right, we have moved forward and there are we've seen

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Speaker 3: the economy slowly overtime heal. We're seeing patterns that make

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Speaker 3: a lot more sense than they did in the early

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Speaker 3: days of the post pandemic recovery. So the FED, yes,

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Speaker 3: and that's exactly how it feels in a dark room

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Speaker 3: moving We know there's furniture, but part of the Fed's

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Speaker 3: job is to help turn the lights on and at

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Speaker 3: least chart a path. And yes, that could be redirecting,

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Speaker 3: but to just well, you know what we do this

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Speaker 3: next year is going to be all about the data

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Speaker 3: points we get. That really sets up I think a

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Speaker 3: lot of unnecessary volatility, Like the FED is injecting volatility

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Speaker 3: because it's saying, just follow those data points, and we

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Speaker 3: know we get bounced around by them. So you kind

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Speaker 3: of you need have a grand plan in terms of

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Speaker 3: how you're working your way through the year. It's it's tricky,

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Speaker 3: like the policy uncertainty is real for this year and

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Speaker 3: for the FED. So I'm not saying like I have

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Speaker 3: an easy solution for them, but now is not the

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Speaker 3: time to back away from some of.

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Speaker 4: The forward looking the heuristics that we have.

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Speaker 1: Mom and Alaria, I would agree with you, and he's

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Speaker 1: talked about this as much the whole over data point dependence.

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Speaker 1: What patterns are you observing that you think are going

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Speaker 1: to be important and prescriptive for what's to come in

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Speaker 1: the US economy?

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Speaker 3: Right, So I tend to I keep all eyes on

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Speaker 3: the labor market and that's such a linchpin to the

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Speaker 3: resilient economy we've had in the ongoing recovery. In addition

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Speaker 3: to you know, millions of Americans lives really depend on

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Speaker 3: their paychecks. And this is one where I worry that

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Speaker 3: the FED is somewhat come place. I think they're being

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Speaker 3: hyper visional mod inflation, as we know the FED often

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Speaker 3: is and should be. But their outlook that most of

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Speaker 3: the officials laid out in the last time of economic rejections,

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Speaker 3: there's a pretty optimistic one on the labor market and

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Speaker 3: basically saying, hey, we're back, We're back to normal. We're

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Speaker 3: back in I think Mary Daily even use the words

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Speaker 3: kind of an equilibrium. You got one vacancy for one

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Speaker 3: unemployed worker, and it's close to what the FED things

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Speaker 3: the long run unemployment rate is, and they project that

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Speaker 3: to stay with us, like, hey, we've got back to equilibrium.

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Speaker 3: We've got back to a good place. We're going to

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Speaker 3: stay there. And I think there's a lot of other dimensions.

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Speaker 3: You can look at the labor market, particularly the differences

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Speaker 3: between the hiring and the firing. When the hiring doesn't

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Speaker 3: look so good, the firing looks really pretty great, Like

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Speaker 3: that's not typical for a labor market. You know, that's

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Speaker 3: in balance, that's in equilibrium. And so I think there

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Speaker 3: are some signs and that's why we have to keep

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Speaker 3: an eye on it or the places where it doesn't

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Speaker 3: make sense. And in other big pieces, we've had a

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Speaker 3: big push from the increase in labor supply from the

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Speaker 3: immigration into this country, which has been extraordinarily high in

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Speaker 3: recent years.

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Speaker 4: And that that's turning.

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Speaker 3: Or even if we don't have mass deportations, we're not

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Speaker 3: going to have a big push from the outside immigration.

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Speaker 3: And that's an important that's been an important dynamic of

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Speaker 3: the labor market. We're gonna watch it on wine. So

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Speaker 3: I don't think things are as calm in the labor

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Speaker 3: market as the FED kind of in their latest projection.

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Speaker 4: Seems to view.

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Speaker 3: And I mean, you know, we're gonna get our first

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Speaker 3: taste of the data next week.

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Speaker 2: For the with the report IROs come on January tenth.

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Speaker 2: Just quickly, Claudia, how unusual would it be for unemployment

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Speaker 2: to stabilize at these levels after coming off the lows

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Speaker 2: to the extent that they have.

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Speaker 3: It would be very unusual to stabilize and hold in

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Speaker 3: this place for like the next three years, which is

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Speaker 3: essentially what the FED is projecting. But that's saying that

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Speaker 3: we're in a good place and we're going to stay there.

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Speaker 3: But we have there is a sense that, you know,

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Speaker 3: barring a lot of this policy uncertainty, this year twenty

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Speaker 3: twenty five really could could be.

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Speaker 4: It still could be, but it was don't have to be.

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Speaker 3: Like we get to the sustainable place, we work out

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Speaker 3: some of the last disruptions, So we'll see.

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Speaker 2: I hope you're right. Claudia samp of New Century Advice

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Speaker 2: is Claudia, share your time. Thank you a thing we

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Speaker 2: all hope Claudius right