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

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Speaker 2: This is a FED.

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Speaker 3: He's a lot more certainty ahead, but not yet enough

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Speaker 3: to make any moves. While Powell said that peak uncertainty

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Speaker 3: happened in April and we are getting some clarity, there's

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Speaker 3: still a lot to learn until the data becomes clear.

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Speaker 3: They're on hold and are in a good place.

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Speaker 2: Take a listen.

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Speaker 4: We feel like the right thing to do is to

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Speaker 4: be where we are, where our policy stance is, and

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Speaker 4: just learn more. In particular, we feel like we're going

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Speaker 4: to learn a great deal more over the summer on tariffs.

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Speaker 4: We hadn't expected them to show up much by now,

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Speaker 4: and they haven't. And we will see whether to the

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Speaker 4: extent to which they do overcoming months, and I think

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Speaker 4: that's going to inform our thinking.

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Speaker 3: Trompewell also asked about the situation in the White House,

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Speaker 3: dismissing questions around the future for him on FED to reserve.

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Speaker 5: I need to ask, assuming you are not reappointed, would

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Speaker 5: you stay on as governor when you're term as chair?

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Speaker 4: And I'm not thinking about that. I'm thinking about this.

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Speaker 3: Is a retlacement of some of the earlier moves we

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Speaker 3: are seeing. Bond yields actually climbed back to basically where

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Speaker 3: they were, and then some from before the press conference

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Speaker 3: tom It seemed like this was a FED chair saying

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Speaker 3: that we are past peak uncertainty, but we probably will

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Speaker 3: get more information leaders to stop at It's.

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Speaker 6: Sure the press conference looking at the correlation of equities, bonds, currencies, commodities, so.

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Speaker 7: Sort of up and downy and up and downy.

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Speaker 6: I didn't get any real conviction out of it. The

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Speaker 6: one tone I saw from him that I hear in

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Speaker 6: some conversations is what if we're underestimating the power of

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Speaker 6: this American economy. There's a gloomy call that GDP numbers

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Speaker 6: come down, inflation's up, Woe is me? But and that

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Speaker 6: butt was just there for a bit where he said,

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Speaker 6: on what it is a resilient economy?

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Speaker 3: You have said the phrase that I think about all

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Speaker 3: the time, which is that companies adapt and adjust. And

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Speaker 3: we hear that from so many companies that are doubling

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Speaker 3: down on some of their forecasts. Your own tariffs, yes, exactly,

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Speaker 3: because they have to look past that and they can

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Speaker 3: handle some of these tariffs. What I thought was interesting

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Speaker 3: was that this was a FED chair that actually said

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Speaker 3: if we were backward looking at the data, we probably

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Speaker 3: would be cutting more quickly. But because of the tariffs

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Speaker 3: and the forward expectation for more inflation, it does create

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Speaker 3: a greater degree of uncertainty, which is the reason why

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Speaker 3: we still are happy to stand tight.

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Speaker 6: You don't see this, folks, but Lisa during the press conference,

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Speaker 6: she's got one of those little clicker things like in

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Speaker 6: a movie theater, and every time they say uncertainty, you're

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Speaker 6: moving your thumb around, and it.

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Speaker 8: Was drinking one hundred and fifty.

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Speaker 6: Well, it's surveying on his beverage time. The issue here, Lisa,

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Speaker 6: is the uncertainty issue was given to them. They didn't

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Speaker 6: invent it. The president's comments today outrageous comments. Do you

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Speaker 6: see what he did to McKee? He slammed Michael McKee

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Speaker 6: after those rude McKee like questions tarriffs, Bob Michael saying

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Speaker 6: do we know what tariffs will raise? We have no

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Speaker 6: clue what they will raise, which.

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Speaker 3: Is the reason why they aren't necessarily going to make

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Speaker 3: any big moves right now. Joining us now is Stephanie

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Speaker 3: Roth of Wolf Research. So pleased to say that you're

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Speaker 3: here in studio. Stephanie, what was your take on a

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Speaker 3: press conference with this FED chair so that he had

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Speaker 3: more certainty.

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Speaker 2: But there'll be more later on.

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Speaker 9: I think the single most important line that he said

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Speaker 9: is rates aren't very high, and when we're thinking about

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Speaker 9: the next couple of months, what we're going to learn

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Speaker 9: is more information about the reconciliation bill, So then they're

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Speaker 9: going to incorporate that fully into SEP, in which case

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Speaker 9: that's going.

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Speaker 8: To look a lot more hawkish.

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Speaker 9: So our base case is this year they're not cutting,

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Speaker 9: and the two cuts are going to eventually get get

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Speaker 9: sort of rolled away. At this point, they were very

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Speaker 9: close on the edge of between one and two, and

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Speaker 9: they're probably going to eventually not end up cutting this

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Speaker 9: year because the economy will be resilient and fine and

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Speaker 9: inflation's elevated.

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Speaker 6: On the core GDP equation is there, where's your Do

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Speaker 6: you have any conviction at all? And c IG or NX,

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Speaker 6: I mean, I don't know how you do it. I

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Speaker 6: don't know how you come up with a real GDP statistic.

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Speaker 9: Yeah, we're looking for one point four percent GDP this year,

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Speaker 9: so not that different from the FED. But I think

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Speaker 9: the important thing to focus on is for twenty twenty six,

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Speaker 9: we're my forecasts are a lot higher than what the

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Speaker 9: FED has. I'm looking for something that's close to two percent,

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Speaker 9: if not a bit above our forecast. Is that reconciliation

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Speaker 9: bill could boost the economy by but forty basis points,

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Speaker 9: So that could be a notable acceleration versus where we

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Speaker 9: are today. And that's what the market's going to start

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Speaker 9: focusing on.

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Speaker 6: Is Lisa helped me. Is a reconciliation build a big,

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Speaker 6: beautiful thing.

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Speaker 3: It's one basic, beautiful bee, It's one big.

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Speaker 2: One three B. Yes, we can cary gotten more uncertainty. Well,

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Speaker 2: that's the problem.

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Speaker 3: And I really was struck by the idea that Fetcher

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Speaker 3: Powell brought to the four, which is in response to

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Speaker 3: Nick tim moros As the Wallstreet Journal's question, why aren't

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Speaker 3: you looking at some of the weakening trend that we're

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Speaker 3: seeing in inflation and say, you know what, we're actually

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Speaker 3: quite restrictive. Why are you saying that this is actually

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Speaker 3: an appropriate n And the FED chair said, well, the

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Speaker 3: reason why is because we have to look forward and

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Speaker 3: we have to say this could potentially be inflationary. We

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Speaker 3: don't know, and we will learn more in the next

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Speaker 3: couple of months. But we're not sure how much we're

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Speaker 3: going to learn. Is that good enough for you? Does

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Speaker 3: that ring true to you that that is an appropriate

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Speaker 3: stance for this FED.

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Speaker 9: I think it's fair for them to be in wait

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Speaker 9: and see. They know that the tariffs will be inflationary.

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Speaker 9: He very much emphasize someone's going to be paying the

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Speaker 9: cost and eventually they're going to try to get it

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Speaker 9: to the consumer, and I think that's the right way

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Speaker 9: to think about it. It's going to eventually flow through

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Speaker 9: some portion of it to the consumer. Our numbers are

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Speaker 9: similar to the fed's forecast that inflation should be close

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Speaker 9: to three percent at the end of this year, and

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Speaker 9: at this point we don't know how much. It's hard

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Speaker 9: to forecast these things, but I think the main takeaway

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Speaker 9: is inflation will be elevated this year, but growth should

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Speaker 9: probably hold up.

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Speaker 3: Just fine, which is essentially what they were saying, albeit

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Speaker 3: at a slower pace.

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Speaker 2: Right now, we're so.

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Speaker 3: Lucky to have Torston's Slock of Apollo joining us. Tourston,

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Speaker 3: thank you so much for being here. What was your

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Speaker 3: take on the press conference on the FED stance and frankly,

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Speaker 3: the market taking this based in stride saying that they're

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Speaker 3: getting much new information here.

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Speaker 1: I think the banner hanging over this entire press conference

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Speaker 1: and the forecast is stackflation. They've revised down GDP growth

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Speaker 1: to one point four and they revised up inflation to

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Speaker 1: three percent. That's telling you that they are beginning to

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Speaker 1: worry about the things that are hitting the US economy.

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Speaker 1: And is no longer just trade and teriffs. That's stackflationary.

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Speaker 1: All prices are also stackflationary, meaning higher inflation, lower GDP growth,

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Speaker 1: and restrictions and immigration is also stackflationary. We already saw

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Speaker 1: in the last mpotant report upward pressure on wages, and

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Speaker 1: of course that ultimately means downward pressure unemployment if we're

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Speaker 1: going to do, in particular deportations at the current pace.

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Speaker 7: So the conclusion is.

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Speaker 1: It is not surprising that the fittest beginning to worry

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Speaker 1: about their mandate being torn in the opposite direction because

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Speaker 1: inflation higher says that you'd be hiking GDP growth lower

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Speaker 1: says that should be cutting.

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Speaker 7: So that's why at the moment the stay put and.

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Speaker 1: The conclusion therefore is that he didn't really give much

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Speaker 1: other than say we will likely be cutting. And that's

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Speaker 1: what's in the dot plot but the conclusion is this

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Speaker 1: is a very difficult situation for them when there's both,

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Speaker 1: as he said, meaningful expectations of upward pressure on inflation

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Speaker 1: and at the same time ever vision down on GDP growth.

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Speaker 6: Turstan he alluded to their data capture which is perhaps

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Speaker 6: showing a more resilient GDP, a better stronger America. Steve

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Speaker 6: Shuta Mizuo is heated about this that we could see

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Speaker 6: GDP better. Is that in any probability for you?

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Speaker 1: Well, I think that when it comes to a particular trait.

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Speaker 1: Forgive the picture here, but the pig is coming through

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Speaker 1: the python. Someone needs to pay for the tax increase

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Speaker 1: on impulse. Tariffs have gone up, and if companies are

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Speaker 1: not passing this on to consumers.

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Speaker 7: Let's say that inflation does not go off as much

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Speaker 7: as we would have expected.

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Speaker 1: Then the conclusion is, well, then earnings will simply be

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Speaker 1: going down more because this tax increase beats because that

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Speaker 1: it will begin to see some downward pressure on GDP

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Speaker 1: and potentially some more downward pressure on earnings.

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Speaker 7: So that's another way of saying.

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Speaker 1: We saw effective tarry frates go up from three percent

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Speaker 1: in January to now eighteen percent today and that effect

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Speaker 1: will still be playing out, and he said very clearly

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Speaker 1: he does expect a meaningful increase in inflation over the

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Speaker 1: coming months. So combining that with he said, we could

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Speaker 1: also see you cooling down on the label market. It

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Speaker 1: does mean that just maybe inflation will not go up

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Speaker 1: so much, but the consequence of that will be well,

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Speaker 1: then we will instead see Terry's coming through instead through

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Speaker 1: lower GDP growth and a bigger hit to earnings.

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Speaker 3: And he expects to see some data on that front

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Speaker 3: in the upcoming months. Right now, let's bring back in

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Speaker 3: Bloomberg's Michael McKee, if you are just joining us. We

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Speaker 3: did just conclude the FEDS press conference for Mike. You

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Speaker 3: put him on the spot there with the political question.

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Speaker 3: I don't know that he loved answering it. We were

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Speaker 3: all glad that you asked it. What was your takeaway

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Speaker 3: from the press conference in terms of what you felt

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Speaker 3: was the most new information that we gleaned.

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Speaker 5: Well, I think the takeaway is fairly obvious here, and

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Speaker 5: I'm not sure that my economist's friends all agree with me,

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Speaker 5: But I think the line that you want to look

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Speaker 5: at is how many time Jay Powell said nobody on

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Speaker 5: the committee has a lot of conviction about these forecasts.

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Speaker 5: In other words, this is all going to change and

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Speaker 5: we had to write down something, so we did. So

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Speaker 5: don't take us seriously in terms of the number of

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Speaker 5: rate cuts. Don't take us seriously in terms of the forecast.

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Speaker 5: It's the best we can do at the moment. But

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Speaker 5: we know this is all going to be different, so

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Speaker 5: don't I would translate that into don't invest on the

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Speaker 5: idea that the Fed is going to be doing two

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Speaker 5: rate cuts by the end of the year.

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Speaker 3: Michael McKee, thank you so much for being with us,

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Speaker 3: and Stephanie. We were kind of laughing around the table

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Speaker 3: when he said We just kind of turned to each

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Speaker 3: other and say, what did you write down?

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Speaker 2: You know, I don't know. I'm kind of throwing a

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Speaker 2: dart at the dartboard.

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Speaker 3: But it does feel like they are trying to message

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Speaker 3: something to markets. And do you think that this is saying, ultimately,

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Speaker 3: we understand our dual mandate and we are going to

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Speaker 3: respond potentially to a weaker jobs picture.

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Speaker 9: I think it's saying there are risks to both sides

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Speaker 9: of our mandate. We don't know if it's going to

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Speaker 9: be on the inflation or the growth side. We're in

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Speaker 9: wait and see mode. I think the ultimate destination will

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Speaker 9: be that the economy holds up. Okay, inflation does pick up.

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Speaker 9: I totally agree with Torson's comments. If it doesn't pick up,

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Speaker 9: that's almost a bad sign because that's going to come

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Speaker 9: from company margins. But at the end of the day,

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Speaker 9: we'll come through this okay, and then the focus will

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Speaker 9: be on twenty twenty six for markets, which is an

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Speaker 9: economy that's just fine.

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Speaker 6: Your core ability is the math and the dynamics of

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Speaker 6: our math. The toughest math is productivity. Is productivity still

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Speaker 6: in play? Is there a total factor productivity right now

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Speaker 6: that we underestimate?

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Speaker 8: Yeah.

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Speaker 9: I think that's certainly the case, and hopefully it's the case,

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Speaker 9: especially given that our labor supply is shrinking, so we

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Speaker 9: kind of need that to some extent. And our base

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Speaker 9: case is that the productivity should be fairly solid throughout

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Speaker 9: the course of this year into next year. It is

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Speaker 9: hard to estimate, but I do think AI is going

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Speaker 9: to slowly have that impact over the course of the

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Speaker 9: next couple of years.

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Speaker 2: With productivity gains.

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Speaker 3: Tors And I'd love you to wait on this because

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Speaker 3: you've been really good on this, We're not necessarily going

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Speaker 3: to get recession. A lot of people say that's not

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Speaker 3: their base case, but we are going to get slow

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Speaker 3: down at a time of increasing inflation.

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Speaker 2: People seem to think.

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Speaker 3: If there's a recession, that's really bad. If there's not

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Speaker 3: a recession, that's really good. What is that breaking point

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Speaker 3: where you have growth slowing enough that it becomes really

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Speaker 3: terrible for companies in terms of where inflation is and

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Speaker 3: growth just not keeping up.

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Speaker 1: The chocol world is at the moment, Namy, we do

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Speaker 1: have a number of things that are weighing on growth,

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Speaker 1: as we're talking about here in naming higher oil prices,

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Speaker 1: higher terriffs were now also have restrictions on immigration, meaning

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Speaker 1: removing labor. All those things would argue for GDP growth

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Speaker 1: slowing down as the consensus expects over the coming quarters.

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Speaker 1: But at the other end of the robe, in this

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Speaker 1: talk of wall, we have definitely the productivity increases that

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Speaker 1: we potentially could seem. It did respond to the question

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Speaker 1: around whether this be labor replacing or labor augmenting, and

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Speaker 1: we still just really don't know the answers to that question. Yes,

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Speaker 1: it is the case in the census surveys when businesses

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Speaker 1: are asked have you adopted AI in the last two

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Speaker 1: weeks that about ten percent of companies and a rising

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Speaker 1: share is saying, yes, we are new using today's AI

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Speaker 1: tools to improve our productivity. But this speed with with

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Speaker 1: productivity gains and to Tom's point, total fatster productivity naming

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Speaker 1: how well laiban capital work together, the speed with which

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Speaker 1: we'll see that in the data is probably going to

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Speaker 1: take quite a bit longer. So I worry more about

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Speaker 1: the cyclical downward pull on GDP growth. I do think

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Speaker 1: that at what time we will see the AI gains,

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Speaker 1: but it's just not probably not going to come quick

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Speaker 1: enough relative to some of the downward pull coming from

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Speaker 1: the cyclical forces of tariff's higher oil prices, and at

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Speaker 1: the same time also the restrictions on immigrations we're.

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Speaker 3: Seeing given that backdrop towurstin, do you think that, based

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Speaker 3: on what this FED said, they are just moderately restrictive.

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Speaker 3: Do you think they're more restrictive than that, or do

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Speaker 3: you think that this really is closer to neutral than

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Speaker 3: many people think.

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Speaker 1: Well, that's why this discussion, Lisa around, as we have

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Speaker 1: all talked about for so many years now, our style

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Speaker 1: and where are we related to that? Note how he

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Speaker 1: didn't bring that up today. This conversation about where are

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Speaker 1: we related to neutral has almost become a back seat

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Speaker 1: issue us now there are some cyclical issues that are

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Speaker 1: overwhelming the structural discussion around where neutral rates are. So,

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Speaker 1: but I do think that the fed's on framework and

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Speaker 1: the New York FEDS estimates would certainly say that neutral

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Speaker 1: is lower, and as it did, hint a little bit

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Speaker 1: that we are in slightly restrictive territory.

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Speaker 7: But the issue is still here is they are battling.

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Speaker 1: The major issue is that, as you said, they expect

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Speaker 1: to see meaningful upside pressure on inflation, and that makes

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Speaker 1: sense not only headline inflation because of all the prices,

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Speaker 1: but also because of terriffs and again because of the

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Speaker 1: emerging pressure we're seeing on wages. So the short answer

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Speaker 1: to your question is, I think that this discussion of

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Speaker 1: restrictive or not restrictive is taking a little bit of

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Speaker 1: a back seat because we now have some cyclical forces

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Speaker 1: pushing inflation up over the coming months.

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Speaker 3: Torson Slock of Apollo, thank you so much for being

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Speaker 3: with us and for those comments.

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Speaker 2: Joining us now as Sebadro or Jappa SoC Gen.

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Speaker 3: Just curious to Bodra what you make of this idea

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Speaker 3: that rates are not very high, that policy is monestily restrictive,

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Speaker 3: but not necessarily causing the restraint that many people would expect.

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Speaker 2: Do you think that this was an appropriate fat.

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Speaker 10: Meeting, You know, let's call a spade a spade. I

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Speaker 10: must say I didn't get a lot of new information

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Speaker 10: out of this meeting. I think Mike McKey summed it up.

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Speaker 10: There's a lot of uncertainty. The first half of the year,

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Speaker 10: the economy has been extraordinarily resilient. There's a chance that

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Speaker 10: we get higher inflation in the second half.

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Speaker 2: There's a chance.

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Speaker 10: That the growth could slow down as well. But that

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Speaker 10: doesn't really give us a lot of information or exactly

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Speaker 10: what they're going to do on the policy front. Yes,

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Speaker 10: the dots are showing two cuts for this year, but

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Speaker 10: there's a good chance that they don't cut at all

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Speaker 10: this year, or they have to cut as early as

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Speaker 10: the September meeting is the data deteriorates, So for me,

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Speaker 10: the informational value was very little. I think that there's

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Speaker 10: a lot of uncertainty, which was highlighted again and again

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Speaker 10: during the press conference, and I think that they're going

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Speaker 10: to wait till they have enough information to confirm a

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Speaker 10: rate cut.

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Speaker 2: So for me, this is status quo.

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Speaker 10: The market pricing hasn't really changed. The market really has

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Speaker 10: reacted much. So it's it's it's we need more information.

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Speaker 7: So padre, is the.

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Speaker 6: Information going to come in the yield curve? A really

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Speaker 6: informed question come in about the vanilla twos ten spread

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Speaker 6: or all you pick the spread that matters. Are we

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Speaker 6: going to go back to yield curve steepness as we

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Speaker 6: saw many years ago?

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Speaker 10: Yeah, the five to thirties part of the yell curve

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Speaker 10: has been steepening.

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Speaker 2: The FED.

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Speaker 10: You know, the front end is pegged to policies of

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Speaker 10: the two years is kind of stuck between three seventy

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Speaker 10: five and four percent, and the five thirties part of

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Speaker 10: the yell curve has the potential to steepen. But again,

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Speaker 10: a lot depends on what we get out of that

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Speaker 10: big beautiful bill. If it is actually more deficit inducing

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Speaker 10: than what we are anticipating, then there's a potential that

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Speaker 10: we could see a rebuild in term premiere. But you

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Speaker 10: know that those negotiations are still ongoing, and really it's

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Speaker 10: the fiscal side that determines what the shape of the

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Speaker 10: yel curve is, not so much how much the FED

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Speaker 10: is going to cut, because cuts between now and the

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Speaker 10: middle of nextsuare are quite modest. You're looking at maybe

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Speaker 10: seventy five to one hundred basis points of cuts at

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Speaker 10: the most.

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Speaker 6: Stephanie, where are you on the fiscal space? I mean,

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Speaker 6: I think this is about Michael brought it up in

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Speaker 6: others before, but this is a huge mystery that's unspoken.

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Speaker 6: We don't have a clue where our debt and deficit

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Speaker 6: is doing. We have no clue.

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Speaker 9: We have one clue, and that's not good. So it's

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Speaker 9: not heading in a very good direction. We all know that,

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Speaker 9: but I think the bond market has largely internalized it.

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Speaker 8: So what we're.

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Speaker 9: Talking with clients about is, at this point, once they

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Speaker 9: actually passed the reconciliation bill base cases, there's not a

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Speaker 9: big sort of.

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Speaker 8: Bond market riot as a result.

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Speaker 9: It's a risk, but I think maybe over the summer,

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Speaker 9: the bigger news is going to be the inflation prints,

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Speaker 9: which could be a headwind for equities, and the employment

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Speaker 9: data which might seasonally surprise, plus the downward sort of

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Speaker 9: projection on immigration that could be sort of the bigger

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Speaker 9: news over the summer. I don want to anticipate it's

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Speaker 9: going to be surprised on the deficit front, because we

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Speaker 9: largely know what's going to be in the and they're

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Speaker 9: going to kind of negotiate from here. But I don't

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Speaker 9: expect it to be a major surprise at this point.

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Speaker 2: All I can say is this feels a little bit.

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Speaker 3: I keep saying this like when you put too many

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Speaker 3: commands into a computer and it says I'm buffering, I'm buffering,

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Speaker 3: and it just kind of we have no idea what

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Speaker 3: the headlines they are going to be in a couple

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Speaker 3: of months. To baj Or Jappovsacchen, thank you so much

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Speaker 3: for joining us and for really being honest, which is

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Speaker 3: we didn't really learn all that much joining us now

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Speaker 3: is Jeff Rosenberg of Black Rock.

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Speaker 2: The one thing that did stand out.

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Speaker 3: Was this idea that this is not a FED that

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Speaker 3: feels urgency to cut rates, even though you have a

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Speaker 3: president basically jaw owning them and you have people in

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Speaker 3: the market saying we are seeing cracks.

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Speaker 2: What was your take, Jeff from this meeting. Yeah, you know, there's.

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Speaker 11: Something we're not talking about which could have been you know,

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Speaker 11: the headline, which is this is the first statement of

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Speaker 11: economic projections posts the tariff uncertainty, and mostly he got

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Speaker 11: away with not really talking about that. Torsten just highlighted

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Speaker 11: a second ago it's stagflationary. I don't think anybody raised

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Speaker 11: that once that word ever came up, So we really

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Speaker 11: kind of pivoted away from what might have been kind

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Speaker 11: of an interesting storyline to the storyline that we're hearing,

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Speaker 11: which is watching paint dry. And I think that's an

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Speaker 11: excellent outcome for the FED. That's what they want us

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Speaker 11: to talk about, paint drying, and not the FED opining

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Speaker 11: on the impact of policy. They really ended up pivoting

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Speaker 11: the conversation towards a repeat of nothing to see here,

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Speaker 11: and you know, we don't know, and it's much more

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Speaker 11: about the uncertainty than it is about the forecast that

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Speaker 11: we just wrote down.

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Speaker 2: I think that's kind.

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Speaker 7: Of an interesting takeaway.

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Speaker 11: I think, as your previous guests just highlighted, that is

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Speaker 11: the takeaway that the markets are, you know, having from today.

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Speaker 11: And when you listen to the opening press conferences, I do.

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Speaker 11: I pull up last month's press conference and you can

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Speaker 11: follow along. It's almost verbatim with the exception of the

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Speaker 11: insertion of the SEP changes, which you downplayed, and maybe

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Speaker 11: the introduction of, you know, waiting for more information as

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Speaker 11: opposed to waiting for the uncertainty to clear. This is

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Speaker 11: very much a repeat of what we got last month.

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Speaker 6: And Jeff Rozenberg, when you look at what the president

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Speaker 6: said in the lawn today, we're benumbed by presidential criticism

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Speaker 6: of your own Powell, is this a fad as we're

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Speaker 6: all half asleep in a snoozefest representing the haves in

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Speaker 6: the financial industry, or are they actually representing a good

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Speaker 6: part of America that does not agree with this dialogue

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Speaker 6: and says they're flat on their backs right now?

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Speaker 11: There are There are a lot of questions in there,

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Speaker 11: Tom for me to avoid answering, So I don't do

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Speaker 11: my best imitation of Powell to pivot to answering it

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Speaker 11: the way he answered Mike McKee's question and basically restating

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Speaker 11: what you know he wanted to answer, which is they

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Speaker 11: believe they're they're following, you know, the right path, they

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Speaker 11: are answering the right questions, they're pursuing the policy for

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Speaker 11: the benefit of the economy overall that benefits the most

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Speaker 11: of Americans.

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Speaker 8: And I think kind of he.

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Speaker 11: Answered that question the way I am answering that question,

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Speaker 11: the way Power Answeredi's question.

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Speaker 3: Absolutely gorgeous, Jeff, very well done. I will answer this.

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Speaker 2: I will ask it.

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Speaker 6: Oh, it's compliance from Black Lives.

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Speaker 3: You're doing great, So, Jeff, you passed that compliance test.

447
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Speaker 3: I guess another way to ask the question a little

448
00:20:26,320 --> 00:20:29,679
Speaker 3: bit more directly is, to your point, this was not

449
00:20:29,760 --> 00:20:32,080
Speaker 3: a FED who is challenged a Fetschhair who is challenged

450
00:20:32,080 --> 00:20:35,080
Speaker 3: on this diyflation point, who said, when your dual mandate

451
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Speaker 3: really comes called into question, would you tolerate higher inflation

452
00:20:38,520 --> 00:20:41,199
Speaker 3: for longer in order to protect a labor market that

453
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Speaker 3: has left a lot of people to Tom's point out,

454
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Speaker 3: and that has left people behind in a participation rate

455
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Speaker 3: that is lower than we previously had. Were you surprised

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Speaker 3: that that wasn't asked, That this is a FED that

457
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Speaker 3: really hasn't had to address that thorny question.

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Speaker 11: Yeah, and it's going to be the more interesting conversation.

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Speaker 11: I feel like this is the period where we're kind

460
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Speaker 11: of between two environments where the kind of pre tariff

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00:21:07,080 --> 00:21:10,080
Speaker 11: environment and he got asked the question. You know, hey,

462
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Speaker 11: back in December, you were cutting rates. Why aren't you

463
00:21:12,160 --> 00:21:16,280
Speaker 11: cutting rates now given the inflation is even lower than

464
00:21:16,320 --> 00:21:19,600
Speaker 11: it was in December, And he very kind of clearly

465
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Speaker 11: laid out there's been a change in information, and the

466
00:21:22,280 --> 00:21:26,280
Speaker 11: change in information is the impact the uncertainty of much

467
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Speaker 11: higher than.

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Speaker 2: Expected tariff policy.

469
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Speaker 11: What we're waiting for is it to show up in

470
00:21:31,680 --> 00:21:34,520
Speaker 11: the data now. When he got pushed back from one

471
00:21:34,520 --> 00:21:37,000
Speaker 11: of the questions of well, are you data dependent? Sounds

472
00:21:37,040 --> 00:21:39,760
Speaker 11: like you're forecast dependent. Why are you now saying you're

473
00:21:40,680 --> 00:21:43,199
Speaker 11: forecast dependent when you always tell us your data dependent,

474
00:21:43,200 --> 00:21:44,840
Speaker 11: And he gave the answer on what we have to

475
00:21:44,880 --> 00:21:48,520
Speaker 11: be forward looking, not necessarily forecast dependent. And so we're

476
00:21:48,520 --> 00:21:51,080
Speaker 11: going to get to this period where the inflation does

477
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Speaker 11: show up in the data. And now I think the

478
00:21:53,960 --> 00:21:57,199
Speaker 11: question is in everybody on this show so far has

479
00:21:57,240 --> 00:22:01,080
Speaker 11: been calling it the inflation increase. Let's be careful here.

480
00:22:01,359 --> 00:22:06,680
Speaker 11: Powell is not calling the rise in inflation and inflation increase.

481
00:22:06,800 --> 00:22:10,120
Speaker 11: He's calling it a temporary or one time passed through

482
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Speaker 11: with the expectation that it goes back down. That's not inflation.

483
00:22:14,240 --> 00:22:17,159
Speaker 11: That's a one time pass through. The difficulty we're going

484
00:22:17,200 --> 00:22:19,600
Speaker 11: to have is how do you know while you're seeing

485
00:22:19,680 --> 00:22:22,440
Speaker 11: the increase in the prices passing through that it's one

486
00:22:22,520 --> 00:22:25,720
Speaker 11: time and how long are you going to be willing

487
00:22:26,119 --> 00:22:28,919
Speaker 11: to wait to figure that out? That's going to be

488
00:22:28,960 --> 00:22:31,399
Speaker 11: the more interesting challenge. And then listen to your question.

489
00:22:31,600 --> 00:22:34,640
Speaker 11: It's going to press on the dual mandate because if

490
00:22:34,680 --> 00:22:37,400
Speaker 11: they're seeing the increase in inflation at the same time

491
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Speaker 11: as we're seeing which we're starting to see the very

492
00:22:39,760 --> 00:22:42,920
Speaker 11: early signs of right now, the slowdown in the labor markets,

493
00:22:42,960 --> 00:22:46,200
Speaker 11: if that accelerates now, you're going to have this tension

494
00:22:46,280 --> 00:22:49,119
Speaker 11: between the two policy goals. They kind of address it

495
00:22:49,160 --> 00:22:52,520
Speaker 11: a little bit with like the distance between the two

496
00:22:52,640 --> 00:22:56,639
Speaker 11: goals and the time expected to meet those two goals,

497
00:22:56,640 --> 00:22:59,399
Speaker 11: but they're going to have a lot more questions to

498
00:22:59,440 --> 00:23:01,880
Speaker 11: answer how they're balancing those two trade offs.

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Speaker 3: Jeff Rosenberg of Black Rock, thank you so much as

500
00:23:04,560 --> 00:23:07,719
Speaker 3: always for being with us. Stephanie Roth of Well Research

501
00:23:07,760 --> 00:23:10,200
Speaker 3: still with us, and I'm curious for the final word,

502
00:23:10,640 --> 00:23:13,359
Speaker 3: how you see this dual mandate as playing out. And

503
00:23:13,359 --> 00:23:15,399
Speaker 3: you had a great question for the FED chair that

504
00:23:15,520 --> 00:23:19,480
Speaker 3: was not asked, especially at a time of such confusing

505
00:23:19,520 --> 00:23:20,920
Speaker 3: frankly data, Yeah.

506
00:23:20,760 --> 00:23:22,840
Speaker 9: And I think The question we want to know over

507
00:23:22,880 --> 00:23:25,160
Speaker 9: the summer is when we start to see payroll gains

508
00:23:25,160 --> 00:23:28,240
Speaker 9: slow down, potentially below one hundred thousand, with the unemployment

509
00:23:28,320 --> 00:23:31,159
Speaker 9: rate remaining largely steady, how does the FED react to

510
00:23:31,160 --> 00:23:33,680
Speaker 9: that and our base cases at this point and could

511
00:23:33,680 --> 00:23:36,560
Speaker 9: certainly after today there seemed to be very much in

512
00:23:36,640 --> 00:23:38,360
Speaker 9: wait and see mode and they're probably going to do nothing,

513
00:23:38,359 --> 00:23:40,040
Speaker 9: which then means that two cuts are going to have

514
00:23:40,080 --> 00:23:42,160
Speaker 9: to fade to no cuts.

515
00:23:42,640 --> 00:23:45,800
Speaker 6: Is a four point two percent unemployment rate now the

516
00:23:45,840 --> 00:23:49,399
Speaker 6: same as a four point two percent unemployment rate thirty

517
00:23:49,480 --> 00:23:52,600
Speaker 6: years ago. I'm not sure it is. There's a lot

518
00:23:52,600 --> 00:23:55,040
Speaker 6: of noise in there. I'm not sure it is.

519
00:23:55,480 --> 00:23:56,760
Speaker 8: Yeah, that's that's totally fair.

520
00:23:56,760 --> 00:23:58,760
Speaker 9: And of course they're going to think about the directionality

521
00:23:58,760 --> 00:24:02,120
Speaker 9: here and they're expecting it go to four five. I'm

522
00:24:02,160 --> 00:24:04,480
Speaker 9: worried it goes down to closer to four percent with

523
00:24:04,520 --> 00:24:07,440
Speaker 9: the impact of it might go the other way. And

524
00:24:07,480 --> 00:24:08,920
Speaker 9: I think that's the thing that is going to be

525
00:24:08,960 --> 00:24:11,920
Speaker 9: a really interesting dynamic for the FED to potentially watch here.

526
00:24:12,119 --> 00:24:13,800
Speaker 8: This is a real tightening of the labor market.

527
00:24:14,000 --> 00:24:16,280
Speaker 9: You have the cross currents with the slowing economy and

528
00:24:16,320 --> 00:24:19,000
Speaker 9: then the real tightening of labor supply. We had five

529
00:24:19,040 --> 00:24:22,680
Speaker 9: hundred and thirty thousand people from Cuba haiting Nicaragua Venezuela.

530
00:24:22,720 --> 00:24:25,240
Speaker 8: The visas are expectively expired overnight.

531
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Speaker 3: Stephanie Rotha Fullf Research looking forward to continuing this conversation

532
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Speaker 3: on Friday, su