Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is a FED.
Speaker 3: He's a lot more certainty ahead, but not yet enough
Speaker 3: to make any moves. While Powell said that peak uncertainty
Speaker 3: happened in April and we are getting some clarity, there's
Speaker 3: still a lot to learn until the data becomes clear.
Speaker 3: They're on hold and are in a good place.
Speaker 2: Take a listen.
Speaker 4: We feel like the right thing to do is to
Speaker 4: be where we are, where our policy stance is, and
Speaker 4: just learn more. In particular, we feel like we're going
Speaker 4: to learn a great deal more over the summer on tariffs.
Speaker 4: We hadn't expected them to show up much by now,
Speaker 4: and they haven't. And we will see whether to the
Speaker 4: extent to which they do overcoming months, and I think
Speaker 4: that's going to inform our thinking.
Speaker 3: Trompewell also asked about the situation in the White House,
Speaker 3: dismissing questions around the future for him on FED to reserve.
Speaker 5: I need to ask, assuming you are not reappointed, would
Speaker 5: you stay on as governor when you're term as chair?
Speaker 4: And I'm not thinking about that. I'm thinking about this.
Speaker 3: Is a retlacement of some of the earlier moves we
Speaker 3: are seeing. Bond yields actually climbed back to basically where
Speaker 3: they were, and then some from before the press conference
Speaker 3: tom It seemed like this was a FED chair saying
Speaker 3: that we are past peak uncertainty, but we probably will
Speaker 3: get more information leaders to stop at It's.
Speaker 6: Sure the press conference looking at the correlation of equities, bonds, currencies, commodities, so.
Speaker 7: Sort of up and downy and up and downy.
Speaker 6: I didn't get any real conviction out of it. The
Speaker 6: one tone I saw from him that I hear in
Speaker 6: some conversations is what if we're underestimating the power of
Speaker 6: this American economy. There's a gloomy call that GDP numbers
Speaker 6: come down, inflation's up, Woe is me? But and that
Speaker 6: butt was just there for a bit where he said,
Speaker 6: on what it is a resilient economy?
Speaker 3: You have said the phrase that I think about all
Speaker 3: the time, which is that companies adapt and adjust. And
Speaker 3: we hear that from so many companies that are doubling
Speaker 3: down on some of their forecasts. Your own tariffs, yes, exactly,
Speaker 3: because they have to look past that and they can
Speaker 3: handle some of these tariffs. What I thought was interesting
Speaker 3: was that this was a FED chair that actually said
Speaker 3: if we were backward looking at the data, we probably
Speaker 3: would be cutting more quickly. But because of the tariffs
Speaker 3: and the forward expectation for more inflation, it does create
Speaker 3: a greater degree of uncertainty, which is the reason why
Speaker 3: we still are happy to stand tight.
Speaker 6: You don't see this, folks, but Lisa during the press conference,
Speaker 6: she's got one of those little clicker things like in
Speaker 6: a movie theater, and every time they say uncertainty, you're
Speaker 6: moving your thumb around, and it.
Speaker 8: Was drinking one hundred and fifty.
Speaker 6: Well, it's surveying on his beverage time. The issue here, Lisa,
Speaker 6: is the uncertainty issue was given to them. They didn't
Speaker 6: invent it. The president's comments today outrageous comments. Do you
Speaker 6: see what he did to McKee? He slammed Michael McKee
Speaker 6: after those rude McKee like questions tarriffs, Bob Michael saying
Speaker 6: do we know what tariffs will raise? We have no
Speaker 6: clue what they will raise, which.
Speaker 3: Is the reason why they aren't necessarily going to make
Speaker 3: any big moves right now. Joining us now is Stephanie
Speaker 3: Roth of Wolf Research. So pleased to say that you're
Speaker 3: here in studio. Stephanie, what was your take on a
Speaker 3: press conference with this FED chair so that he had
Speaker 3: more certainty.
Speaker 2: But there'll be more later on.
Speaker 9: I think the single most important line that he said
Speaker 9: is rates aren't very high, and when we're thinking about
Speaker 9: the next couple of months, what we're going to learn
Speaker 9: is more information about the reconciliation bill, So then they're
Speaker 9: going to incorporate that fully into SEP, in which case
Speaker 9: that's going.
Speaker 8: To look a lot more hawkish.
Speaker 9: So our base case is this year they're not cutting,
Speaker 9: and the two cuts are going to eventually get get
Speaker 9: sort of rolled away. At this point, they were very
Speaker 9: close on the edge of between one and two, and
Speaker 9: they're probably going to eventually not end up cutting this
Speaker 9: year because the economy will be resilient and fine and
Speaker 9: inflation's elevated.
Speaker 6: On the core GDP equation is there, where's your Do
Speaker 6: you have any conviction at all? And c IG or NX,
Speaker 6: I mean, I don't know how you do it. I
Speaker 6: don't know how you come up with a real GDP statistic.
Speaker 9: Yeah, we're looking for one point four percent GDP this year,
Speaker 9: so not that different from the FED. But I think
Speaker 9: the important thing to focus on is for twenty twenty six,
Speaker 9: we're my forecasts are a lot higher than what the
Speaker 9: FED has. I'm looking for something that's close to two percent,
Speaker 9: if not a bit above our forecast. Is that reconciliation
Speaker 9: bill could boost the economy by but forty basis points,
Speaker 9: So that could be a notable acceleration versus where we
Speaker 9: are today. And that's what the market's going to start
Speaker 9: focusing on.
Speaker 6: Is Lisa helped me. Is a reconciliation build a big,
Speaker 6: beautiful thing.
Speaker 3: It's one basic, beautiful bee, It's one big.
Speaker 2: One three B. Yes, we can cary gotten more uncertainty. Well,
Speaker 2: that's the problem.
Speaker 3: And I really was struck by the idea that Fetcher
Speaker 3: Powell brought to the four, which is in response to
Speaker 3: Nick tim moros As the Wallstreet Journal's question, why aren't
Speaker 3: you looking at some of the weakening trend that we're
Speaker 3: seeing in inflation and say, you know what, we're actually
Speaker 3: quite restrictive. Why are you saying that this is actually
Speaker 3: an appropriate n And the FED chair said, well, the
Speaker 3: reason why is because we have to look forward and
Speaker 3: we have to say this could potentially be inflationary. We
Speaker 3: don't know, and we will learn more in the next
Speaker 3: couple of months. But we're not sure how much we're
Speaker 3: going to learn. Is that good enough for you? Does
Speaker 3: that ring true to you that that is an appropriate
Speaker 3: stance for this FED.
Speaker 9: I think it's fair for them to be in wait
Speaker 9: and see. They know that the tariffs will be inflationary.
Speaker 9: He very much emphasize someone's going to be paying the
Speaker 9: cost and eventually they're going to try to get it
Speaker 9: to the consumer, and I think that's the right way
Speaker 9: to think about it. It's going to eventually flow through
Speaker 9: some portion of it to the consumer. Our numbers are
Speaker 9: similar to the fed's forecast that inflation should be close
Speaker 9: to three percent at the end of this year, and
Speaker 9: at this point we don't know how much. It's hard
Speaker 9: to forecast these things, but I think the main takeaway
Speaker 9: is inflation will be elevated this year, but growth should
Speaker 9: probably hold up.
Speaker 3: Just fine, which is essentially what they were saying, albeit
Speaker 3: at a slower pace.
Speaker 2: Right now, we're so.
Speaker 3: Lucky to have Torston's Slock of Apollo joining us. Tourston,
Speaker 3: thank you so much for being here. What was your
Speaker 3: take on the press conference on the FED stance and frankly,
Speaker 3: the market taking this based in stride saying that they're
Speaker 3: getting much new information here.
Speaker 1: I think the banner hanging over this entire press conference
Speaker 1: and the forecast is stackflation. They've revised down GDP growth
Speaker 1: to one point four and they revised up inflation to
Speaker 1: three percent. That's telling you that they are beginning to
Speaker 1: worry about the things that are hitting the US economy.
Speaker 1: And is no longer just trade and teriffs. That's stackflationary.
Speaker 1: All prices are also stackflationary, meaning higher inflation, lower GDP growth,
Speaker 1: and restrictions and immigration is also stackflationary. We already saw
Speaker 1: in the last mpotant report upward pressure on wages, and
Speaker 1: of course that ultimately means downward pressure unemployment if we're
Speaker 1: going to do, in particular deportations at the current pace.
Speaker 7: So the conclusion is.
Speaker 1: It is not surprising that the fittest beginning to worry
Speaker 1: about their mandate being torn in the opposite direction because
Speaker 1: inflation higher says that you'd be hiking GDP growth lower
Speaker 1: says that should be cutting.
Speaker 7: So that's why at the moment the stay put and.
Speaker 1: The conclusion therefore is that he didn't really give much
Speaker 1: other than say we will likely be cutting. And that's
Speaker 1: what's in the dot plot but the conclusion is this
Speaker 1: is a very difficult situation for them when there's both,
Speaker 1: as he said, meaningful expectations of upward pressure on inflation
Speaker 1: and at the same time ever vision down on GDP growth.
Speaker 6: Turstan he alluded to their data capture which is perhaps
Speaker 6: showing a more resilient GDP, a better stronger America. Steve
Speaker 6: Shuta Mizuo is heated about this that we could see
Speaker 6: GDP better. Is that in any probability for you?
Speaker 1: Well, I think that when it comes to a particular trait.
Speaker 1: Forgive the picture here, but the pig is coming through
Speaker 1: the python. Someone needs to pay for the tax increase
Speaker 1: on impulse. Tariffs have gone up, and if companies are
Speaker 1: not passing this on to consumers.
Speaker 7: Let's say that inflation does not go off as much
Speaker 7: as we would have expected.
Speaker 1: Then the conclusion is, well, then earnings will simply be
Speaker 1: going down more because this tax increase beats because that
Speaker 1: it will begin to see some downward pressure on GDP
Speaker 1: and potentially some more downward pressure on earnings.
Speaker 7: So that's another way of saying.
Speaker 1: We saw effective tarry frates go up from three percent
Speaker 1: in January to now eighteen percent today and that effect
Speaker 1: will still be playing out, and he said very clearly
Speaker 1: he does expect a meaningful increase in inflation over the
Speaker 1: coming months. So combining that with he said, we could
Speaker 1: also see you cooling down on the label market. It
Speaker 1: does mean that just maybe inflation will not go up
Speaker 1: so much, but the consequence of that will be well,
Speaker 1: then we will instead see Terry's coming through instead through
Speaker 1: lower GDP growth and a bigger hit to earnings.
Speaker 3: And he expects to see some data on that front
Speaker 3: in the upcoming months. Right now, let's bring back in
Speaker 3: Bloomberg's Michael McKee, if you are just joining us. We
Speaker 3: did just conclude the FEDS press conference for Mike. You
Speaker 3: put him on the spot there with the political question.
Speaker 3: I don't know that he loved answering it. We were
Speaker 3: all glad that you asked it. What was your takeaway
Speaker 3: from the press conference in terms of what you felt
Speaker 3: was the most new information that we gleaned.
Speaker 5: Well, I think the takeaway is fairly obvious here, and
Speaker 5: I'm not sure that my economist's friends all agree with me,
Speaker 5: But I think the line that you want to look
Speaker 5: at is how many time Jay Powell said nobody on
Speaker 5: the committee has a lot of conviction about these forecasts.
Speaker 5: In other words, this is all going to change and
Speaker 5: we had to write down something, so we did. So
Speaker 5: don't take us seriously in terms of the number of
Speaker 5: rate cuts. Don't take us seriously in terms of the forecast.
Speaker 5: It's the best we can do at the moment. But
Speaker 5: we know this is all going to be different, so
Speaker 5: don't I would translate that into don't invest on the
Speaker 5: idea that the Fed is going to be doing two
Speaker 5: rate cuts by the end of the year.
Speaker 3: Michael McKee, thank you so much for being with us,
Speaker 3: and Stephanie. We were kind of laughing around the table
Speaker 3: when he said We just kind of turned to each
Speaker 3: other and say, what did you write down?
Speaker 2: You know, I don't know. I'm kind of throwing a
Speaker 2: dart at the dartboard.
Speaker 3: But it does feel like they are trying to message
Speaker 3: something to markets. And do you think that this is saying, ultimately,
Speaker 3: we understand our dual mandate and we are going to
Speaker 3: respond potentially to a weaker jobs picture.
Speaker 9: I think it's saying there are risks to both sides
Speaker 9: of our mandate. We don't know if it's going to
Speaker 9: be on the inflation or the growth side. We're in
Speaker 9: wait and see mode. I think the ultimate destination will
Speaker 9: be that the economy holds up. Okay, inflation does pick up.
Speaker 9: I totally agree with Torson's comments. If it doesn't pick up,
Speaker 9: that's almost a bad sign because that's going to come
Speaker 9: from company margins. But at the end of the day,
Speaker 9: we'll come through this okay, and then the focus will
Speaker 9: be on twenty twenty six for markets, which is an
Speaker 9: economy that's just fine.
Speaker 6: Your core ability is the math and the dynamics of
Speaker 6: our math. The toughest math is productivity. Is productivity still
Speaker 6: in play? Is there a total factor productivity right now
Speaker 6: that we underestimate?
Speaker 8: Yeah.
Speaker 9: I think that's certainly the case, and hopefully it's the case,
Speaker 9: especially given that our labor supply is shrinking, so we
Speaker 9: kind of need that to some extent. And our base
Speaker 9: case is that the productivity should be fairly solid throughout
Speaker 9: the course of this year into next year. It is
Speaker 9: hard to estimate, but I do think AI is going
Speaker 9: to slowly have that impact over the course of the
Speaker 9: next couple of years.
Speaker 2: With productivity gains.
Speaker 3: Tors And I'd love you to wait on this because
Speaker 3: you've been really good on this, We're not necessarily going
Speaker 3: to get recession. A lot of people say that's not
Speaker 3: their base case, but we are going to get slow
Speaker 3: down at a time of increasing inflation.
Speaker 2: People seem to think.
Speaker 3: If there's a recession, that's really bad. If there's not
Speaker 3: a recession, that's really good. What is that breaking point
Speaker 3: where you have growth slowing enough that it becomes really
Speaker 3: terrible for companies in terms of where inflation is and
Speaker 3: growth just not keeping up.
Speaker 1: The chocol world is at the moment, Namy, we do
Speaker 1: have a number of things that are weighing on growth,
Speaker 1: as we're talking about here in naming higher oil prices,
Speaker 1: higher terriffs were now also have restrictions on immigration, meaning
Speaker 1: removing labor. All those things would argue for GDP growth
Speaker 1: slowing down as the consensus expects over the coming quarters.
Speaker 1: But at the other end of the robe, in this
Speaker 1: talk of wall, we have definitely the productivity increases that
Speaker 1: we potentially could seem. It did respond to the question
Speaker 1: around whether this be labor replacing or labor augmenting, and
Speaker 1: we still just really don't know the answers to that question. Yes,
Speaker 1: it is the case in the census surveys when businesses
Speaker 1: are asked have you adopted AI in the last two
Speaker 1: weeks that about ten percent of companies and a rising
Speaker 1: share is saying, yes, we are new using today's AI
Speaker 1: tools to improve our productivity. But this speed with with
Speaker 1: productivity gains and to Tom's point, total fatster productivity naming
Speaker 1: how well laiban capital work together, the speed with which
Speaker 1: we'll see that in the data is probably going to
Speaker 1: take quite a bit longer. So I worry more about
Speaker 1: the cyclical downward pull on GDP growth. I do think
Speaker 1: that at what time we will see the AI gains,
Speaker 1: but it's just not probably not going to come quick
Speaker 1: enough relative to some of the downward pull coming from
Speaker 1: the cyclical forces of tariff's higher oil prices, and at
Speaker 1: the same time also the restrictions on immigrations we're.
Speaker 3: Seeing given that backdrop towurstin, do you think that, based
Speaker 3: on what this FED said, they are just moderately restrictive.
Speaker 3: Do you think they're more restrictive than that, or do
Speaker 3: you think that this really is closer to neutral than
Speaker 3: many people think.
Speaker 1: Well, that's why this discussion, Lisa around, as we have
Speaker 1: all talked about for so many years now, our style
Speaker 1: and where are we related to that? Note how he
Speaker 1: didn't bring that up today. This conversation about where are
Speaker 1: we related to neutral has almost become a back seat
Speaker 1: issue us now there are some cyclical issues that are
Speaker 1: overwhelming the structural discussion around where neutral rates are. So,
Speaker 1: but I do think that the fed's on framework and
Speaker 1: the New York FEDS estimates would certainly say that neutral
Speaker 1: is lower, and as it did, hint a little bit
Speaker 1: that we are in slightly restrictive territory.
Speaker 7: But the issue is still here is they are battling.
Speaker 1: The major issue is that, as you said, they expect
Speaker 1: to see meaningful upside pressure on inflation, and that makes
Speaker 1: sense not only headline inflation because of all the prices,
Speaker 1: but also because of terriffs and again because of the
Speaker 1: emerging pressure we're seeing on wages. So the short answer
Speaker 1: to your question is, I think that this discussion of
Speaker 1: restrictive or not restrictive is taking a little bit of
Speaker 1: a back seat because we now have some cyclical forces
Speaker 1: pushing inflation up over the coming months.
Speaker 3: Torson Slock of Apollo, thank you so much for being
Speaker 3: with us and for those comments.
Speaker 2: Joining us now as Sebadro or Jappa SoC Gen.
Speaker 3: Just curious to Bodra what you make of this idea
Speaker 3: that rates are not very high, that policy is monestily restrictive,
Speaker 3: but not necessarily causing the restraint that many people would expect.
Speaker 2: Do you think that this was an appropriate fat.
Speaker 10: Meeting, You know, let's call a spade a spade. I
Speaker 10: must say I didn't get a lot of new information
Speaker 10: out of this meeting. I think Mike McKey summed it up.
Speaker 10: There's a lot of uncertainty. The first half of the year,
Speaker 10: the economy has been extraordinarily resilient. There's a chance that
Speaker 10: we get higher inflation in the second half.
Speaker 2: There's a chance.
Speaker 10: That the growth could slow down as well. But that
Speaker 10: doesn't really give us a lot of information or exactly
Speaker 10: what they're going to do on the policy front. Yes,
Speaker 10: the dots are showing two cuts for this year, but
Speaker 10: there's a good chance that they don't cut at all
Speaker 10: this year, or they have to cut as early as
Speaker 10: the September meeting is the data deteriorates, So for me,
Speaker 10: the informational value was very little. I think that there's
Speaker 10: a lot of uncertainty, which was highlighted again and again
Speaker 10: during the press conference, and I think that they're going
Speaker 10: to wait till they have enough information to confirm a
Speaker 10: rate cut.
Speaker 2: So for me, this is status quo.
Speaker 10: The market pricing hasn't really changed. The market really has
Speaker 10: reacted much. So it's it's it's we need more information.
Speaker 7: So padre, is the.
Speaker 6: Information going to come in the yield curve? A really
Speaker 6: informed question come in about the vanilla twos ten spread
Speaker 6: or all you pick the spread that matters. Are we
Speaker 6: going to go back to yield curve steepness as we
Speaker 6: saw many years ago?
Speaker 10: Yeah, the five to thirties part of the yell curve
Speaker 10: has been steepening.
Speaker 2: The FED.
Speaker 10: You know, the front end is pegged to policies of
Speaker 10: the two years is kind of stuck between three seventy
Speaker 10: five and four percent, and the five thirties part of
Speaker 10: the yell curve has the potential to steepen. But again,
Speaker 10: a lot depends on what we get out of that
Speaker 10: big beautiful bill. If it is actually more deficit inducing
Speaker 10: than what we are anticipating, then there's a potential that
Speaker 10: we could see a rebuild in term premiere. But you
Speaker 10: know that those negotiations are still ongoing, and really it's
Speaker 10: the fiscal side that determines what the shape of the
Speaker 10: yel curve is, not so much how much the FED
Speaker 10: is going to cut, because cuts between now and the
Speaker 10: middle of nextsuare are quite modest. You're looking at maybe
Speaker 10: seventy five to one hundred basis points of cuts at
Speaker 10: the most.
Speaker 6: Stephanie, where are you on the fiscal space? I mean,
Speaker 6: I think this is about Michael brought it up in
Speaker 6: others before, but this is a huge mystery that's unspoken.
Speaker 6: We don't have a clue where our debt and deficit
Speaker 6: is doing. We have no clue.
Speaker 9: We have one clue, and that's not good. So it's
Speaker 9: not heading in a very good direction. We all know that,
Speaker 9: but I think the bond market has largely internalized it.
Speaker 8: So what we're.
Speaker 9: Talking with clients about is, at this point, once they
Speaker 9: actually passed the reconciliation bill base cases, there's not a
Speaker 9: big sort of.
Speaker 8: Bond market riot as a result.
Speaker 9: It's a risk, but I think maybe over the summer,
Speaker 9: the bigger news is going to be the inflation prints,
Speaker 9: which could be a headwind for equities, and the employment
Speaker 9: data which might seasonally surprise, plus the downward sort of
Speaker 9: projection on immigration that could be sort of the bigger
Speaker 9: news over the summer. I don want to anticipate it's
Speaker 9: going to be surprised on the deficit front, because we
Speaker 9: largely know what's going to be in the and they're
Speaker 9: going to kind of negotiate from here. But I don't
Speaker 9: expect it to be a major surprise at this point.
Speaker 2: All I can say is this feels a little bit.
Speaker 3: I keep saying this like when you put too many
Speaker 3: commands into a computer and it says I'm buffering, I'm buffering,
Speaker 3: and it just kind of we have no idea what
Speaker 3: the headlines they are going to be in a couple
Speaker 3: of months. To baj Or Jappovsacchen, thank you so much
Speaker 3: for joining us and for really being honest, which is
Speaker 3: we didn't really learn all that much joining us now
Speaker 3: is Jeff Rosenberg of Black Rock.
Speaker 2: The one thing that did stand out.
Speaker 3: Was this idea that this is not a FED that
Speaker 3: feels urgency to cut rates, even though you have a
Speaker 3: president basically jaw owning them and you have people in
Speaker 3: the market saying we are seeing cracks.
Speaker 2: What was your take, Jeff from this meeting. Yeah, you know, there's.
Speaker 11: Something we're not talking about which could have been you know,
Speaker 11: the headline, which is this is the first statement of
Speaker 11: economic projections posts the tariff uncertainty, and mostly he got
Speaker 11: away with not really talking about that. Torsten just highlighted
Speaker 11: a second ago it's stagflationary. I don't think anybody raised
Speaker 11: that once that word ever came up, So we really
Speaker 11: kind of pivoted away from what might have been kind
Speaker 11: of an interesting storyline to the storyline that we're hearing,
Speaker 11: which is watching paint dry. And I think that's an
Speaker 11: excellent outcome for the FED. That's what they want us
Speaker 11: to talk about, paint drying, and not the FED opining
Speaker 11: on the impact of policy. They really ended up pivoting
Speaker 11: the conversation towards a repeat of nothing to see here,
Speaker 11: and you know, we don't know, and it's much more
Speaker 11: about the uncertainty than it is about the forecast that
Speaker 11: we just wrote down.
Speaker 2: I think that's kind.
Speaker 7: Of an interesting takeaway.
Speaker 11: I think, as your previous guests just highlighted, that is
Speaker 11: the takeaway that the markets are, you know, having from today.
Speaker 11: And when you listen to the opening press conferences, I do.
Speaker 11: I pull up last month's press conference and you can
Speaker 11: follow along. It's almost verbatim with the exception of the
Speaker 11: insertion of the SEP changes, which you downplayed, and maybe
Speaker 11: the introduction of, you know, waiting for more information as
Speaker 11: opposed to waiting for the uncertainty to clear. This is
Speaker 11: very much a repeat of what we got last month.
Speaker 6: And Jeff Rozenberg, when you look at what the president
Speaker 6: said in the lawn today, we're benumbed by presidential criticism
Speaker 6: of your own Powell, is this a fad as we're
Speaker 6: all half asleep in a snoozefest representing the haves in
Speaker 6: the financial industry, or are they actually representing a good
Speaker 6: part of America that does not agree with this dialogue
Speaker 6: and says they're flat on their backs right now?
Speaker 11: There are There are a lot of questions in there,
Speaker 11: Tom for me to avoid answering, So I don't do
Speaker 11: my best imitation of Powell to pivot to answering it
Speaker 11: the way he answered Mike McKee's question and basically restating
Speaker 11: what you know he wanted to answer, which is they
Speaker 11: believe they're they're following, you know, the right path, they
Speaker 11: are answering the right questions, they're pursuing the policy for
Speaker 11: the benefit of the economy overall that benefits the most
Speaker 11: of Americans.
Speaker 8: And I think kind of he.
Speaker 11: Answered that question the way I am answering that question,
Speaker 11: the way Power Answeredi's question.
Speaker 3: Absolutely gorgeous, Jeff, very well done. I will answer this.
Speaker 2: I will ask it.
Speaker 6: Oh, it's compliance from Black Lives.
Speaker 3: You're doing great, So, Jeff, you passed that compliance test.
Speaker 3: I guess another way to ask the question a little
Speaker 3: bit more directly is, to your point, this was not
Speaker 3: a FED who is challenged a Fetschhair who is challenged
Speaker 3: on this diyflation point, who said, when your dual mandate
Speaker 3: really comes called into question, would you tolerate higher inflation
Speaker 3: for longer in order to protect a labor market that
Speaker 3: has left a lot of people to Tom's point out,
Speaker 3: and that has left people behind in a participation rate
Speaker 3: that is lower than we previously had. Were you surprised
Speaker 3: that that wasn't asked, That this is a FED that
Speaker 3: really hasn't had to address that thorny question.
Speaker 11: Yeah, and it's going to be the more interesting conversation.
Speaker 11: I feel like this is the period where we're kind
Speaker 11: of between two environments where the kind of pre tariff
Speaker 11: environment and he got asked the question. You know, hey,
Speaker 11: back in December, you were cutting rates. Why aren't you
Speaker 11: cutting rates now given the inflation is even lower than
Speaker 11: it was in December, And he very kind of clearly
Speaker 11: laid out there's been a change in information, and the
Speaker 11: change in information is the impact the uncertainty of much
Speaker 11: higher than.
Speaker 2: Expected tariff policy.
Speaker 11: What we're waiting for is it to show up in
Speaker 11: the data now. When he got pushed back from one
Speaker 11: of the questions of well, are you data dependent? Sounds
Speaker 11: like you're forecast dependent. Why are you now saying you're
Speaker 11: forecast dependent when you always tell us your data dependent,
Speaker 11: And he gave the answer on what we have to
Speaker 11: be forward looking, not necessarily forecast dependent. And so we're
Speaker 11: going to get to this period where the inflation does
Speaker 11: show up in the data. And now I think the
Speaker 11: question is in everybody on this show so far has
Speaker 11: been calling it the inflation increase. Let's be careful here.
Speaker 11: Powell is not calling the rise in inflation and inflation increase.
Speaker 11: He's calling it a temporary or one time passed through
Speaker 11: with the expectation that it goes back down. That's not inflation.
Speaker 11: That's a one time pass through. The difficulty we're going
Speaker 11: to have is how do you know while you're seeing
Speaker 11: the increase in the prices passing through that it's one
Speaker 11: time and how long are you going to be willing
Speaker 11: to wait to figure that out? That's going to be
Speaker 11: the more interesting challenge. And then listen to your question.
Speaker 11: It's going to press on the dual mandate because if
Speaker 11: they're seeing the increase in inflation at the same time
Speaker 11: as we're seeing which we're starting to see the very
Speaker 11: early signs of right now, the slowdown in the labor markets,
Speaker 11: if that accelerates now, you're going to have this tension
Speaker 11: between the two policy goals. They kind of address it
Speaker 11: a little bit with like the distance between the two
Speaker 11: goals and the time expected to meet those two goals,
Speaker 11: but they're going to have a lot more questions to
Speaker 11: answer how they're balancing those two trade offs.
Speaker 3: Jeff Rosenberg of Black Rock, thank you so much as
Speaker 3: always for being with us. Stephanie Roth of Well Research
Speaker 3: still with us, and I'm curious for the final word,
Speaker 3: how you see this dual mandate as playing out. And
Speaker 3: you had a great question for the FED chair that
Speaker 3: was not asked, especially at a time of such confusing
Speaker 3: frankly data, Yeah.
Speaker 9: And I think The question we want to know over
Speaker 9: the summer is when we start to see payroll gains
Speaker 9: slow down, potentially below one hundred thousand, with the unemployment
Speaker 9: rate remaining largely steady, how does the FED react to
Speaker 9: that and our base cases at this point and could
Speaker 9: certainly after today there seemed to be very much in
Speaker 9: wait and see mode and they're probably going to do nothing,
Speaker 9: which then means that two cuts are going to have
Speaker 9: to fade to no cuts.
Speaker 6: Is a four point two percent unemployment rate now the
Speaker 6: same as a four point two percent unemployment rate thirty
Speaker 6: years ago. I'm not sure it is. There's a lot
Speaker 6: of noise in there. I'm not sure it is.
Speaker 8: Yeah, that's that's totally fair.
Speaker 9: And of course they're going to think about the directionality
Speaker 9: here and they're expecting it go to four five. I'm
Speaker 9: worried it goes down to closer to four percent with
Speaker 9: the impact of it might go the other way. And
Speaker 9: I think that's the thing that is going to be
Speaker 9: a really interesting dynamic for the FED to potentially watch here.
Speaker 8: This is a real tightening of the labor market.
Speaker 9: You have the cross currents with the slowing economy and
Speaker 9: then the real tightening of labor supply. We had five
Speaker 9: hundred and thirty thousand people from Cuba haiting Nicaragua Venezuela.
Speaker 8: The visas are expectively expired overnight.
Speaker 3: Stephanie Rotha Fullf Research looking forward to continuing this conversation
Speaker 3: on Friday, su