WEBVTT - Single Best Idea with Tom Keene: Frances Donald & Robert Kaplan

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, A.

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<v Speaker 2>Single best idea, how about an extended version? Just some

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<v Speaker 2>phenomenal conversation. Major shout out to the FED deicides team yesterday,

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<v Speaker 2>it was not only the most interesting meeting of the

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<v Speaker 2>years we've done, the FED decides it was the most

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<v Speaker 2>interesting meeting. I'll say back to the early eighties and

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<v Speaker 2>Wayne Angel I'm guessing there, back to the vulgar years.

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<v Speaker 2>Absolutely twisted. I don't mean that in a negative way,

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<v Speaker 2>but just a twisted meeting of convolutions, discombobulated, I'll let

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<v Speaker 2>you pick the right word for it. Market's all over

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<v Speaker 2>the place during the meeting, and then a moonshot this

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<v Speaker 2>morning as people tried to figure out a new accommodation

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<v Speaker 2>by her central Bank. We called upon Francis Donald's she's

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<v Speaker 2>at RBCT Capital Markets. Her interpretation of what was wrought.

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<v Speaker 3>I felt like it was more like a breakdancing than

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<v Speaker 3>ballet yesterday because there was a little bit more chaos

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<v Speaker 3>and not necessarily super clear messaging. It didn't feel like

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<v Speaker 3>it was very well choreographed in general, or at least

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<v Speaker 3>there were dislocations within it. What I heard yesterday from

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<v Speaker 3>Chair Powell, I know you've probably already talked about it

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<v Speaker 3>one hundred times. Was there are no risk free paths ahead?

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<v Speaker 3>This was a haunting comment from a central banker, but

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<v Speaker 3>it also reflects the underlying US economy, which is that

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<v Speaker 3>we are still in the air pocket before we will

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<v Speaker 3>know the impact of this once in one hundred year

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<v Speaker 3>trade shock that has hit the US economy. It is

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<v Speaker 3>our view that there are still significant inventories in the

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<v Speaker 3>United States, and we don't know whether companies will truly

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<v Speaker 3>pass on those costs to inflation or whether they will

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<v Speaker 3>have to cut their own costs, and that will come

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<v Speaker 3>down to labor. And so when you talk about data dependency,

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<v Speaker 3>Tom I'm looking at is one single data point, which

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<v Speaker 3>is how many inventories are left in the United States

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<v Speaker 3>and how long until we answer that question? Because neither

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<v Speaker 3>of those paths are good, but they result in very

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<v Speaker 3>different focuses from a central.

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<v Speaker 2>Bank Francis Donald on inventories, looking at the tariff impact,

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<v Speaker 2>which I was shocked with so little discussed yesterday as well.

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<v Speaker 2>Each former president and frankly president President of the Central Bank,

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<v Speaker 2>the many of them have a different character. It was

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<v Speaker 2>a perfect day to speak to Robert Kaplan, former president

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<v Speaker 2>of the Dallas FED, with all of his work at

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<v Speaker 2>HBS and at Goldman Sachs on innovation, on process, on technology,

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<v Speaker 2>on the Central Bank. Robert Kaplan of Goldman Sex on

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<v Speaker 2>the FED and the economy.

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<v Speaker 4>I think that the FED pays attention to financial markets,

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<v Speaker 4>but it's got to set monetary policy based on the economy.

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<v Speaker 4>And right now you have a divergence. You've got regulatory

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<v Speaker 4>review reform coming, you've got tax incentives coming, accelerated appreciation,

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<v Speaker 4>you got an AI boom. Those three things are not

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<v Speaker 4>really in the economy quite yet, and so you've got

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<v Speaker 4>a sluggish economy and you have a booming financial market.

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<v Speaker 4>I actually think the tailwinds are significant, and so if

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<v Speaker 4>you're at the FED, on the one hand, you pay

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<v Speaker 4>attention to it, but you got to set monetary policy

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<v Speaker 4>based on the underlying economy, and I think that's I

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<v Speaker 4>think that's the right thing to do right now, and

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<v Speaker 4>that's what they're doing. This is not one of those

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<v Speaker 4>stock markets that's being fueled by excess monetary policy, in

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<v Speaker 4>my opinion, It's being fueled by other structural drivers, and

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<v Speaker 4>the FED would do well to recognize that.

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<v Speaker 2>Robert Kaplan of Goldman Sachs on our podcast on Apple

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<v Speaker 2>and Spotify. Good morning on the Pacific Rim. Thank you

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<v Speaker 2>so much for the podcast. Interest across a Pacific Rim

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<v Speaker 2>across Asia as well and on YouTube podcasts. It's single

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<v Speaker 2>best idea.