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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along

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Speaker 1: with Jonathan Farrow and Lisa Abramowitz joined us each day

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Speaker 1: for insight from the best and economics, geopolitics, finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

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Speaker 1: anywhere you get your podcasts, and always I'm Bloomberg dot Com,

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Speaker 1: the Bloomberg Terminal and the Bloomberg Business App. From Richard Claridis,

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Speaker 1: with US Global Economic advisor at PIMCO and student of

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Speaker 1: his economic history professor claren As. Somebody spoke of creative

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Speaker 1: destruction this morning, and that reminded me of a guy

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Speaker 1: named Hyman Minsky who long ago in faraway had Chumpeter

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Speaker 1: as his doctoral advisor. And of course Hyman Minsky, and

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Speaker 1: the lore talks about a Minsky moment, or maybe talks

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Speaker 1: about the efficacy of regulation. Let's bring over the cacophony

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Speaker 1: of another time in Hyman Minsk over to what Michael

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Speaker 1: Barr at the FED needs to do. What is the

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Speaker 1: best outcome of bank the new bank regulation and the

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Speaker 1: lessons we're learning in this march. Well, I think that

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Speaker 1: you know, there's been a lot of progress DoD Frank

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Speaker 1: and in particular for the large, systemically important institutions with

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Speaker 1: stress testing and liquidity and all the rest. I think

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Speaker 1: what this episode does reveal is that institutions may look small,

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Speaker 1: they can get big, as you know, a SVB, for example,

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Speaker 1: tripled in size in a couple of years, and even

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Speaker 1: institutions of that size, as we saw with the Weekend,

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Speaker 1: can be systemic. So I think the clearer direction of

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Speaker 1: travel is going to be that under existing statutes and laws,

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Speaker 1: the FED has enormous flexibility in the way that it

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Speaker 1: supervises institutions on a case by case basis, and I

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Speaker 1: think we're going to see that level of supervision, in

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Speaker 1: particular scrutiny of things like the hold of maturity portfolios

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Speaker 1: being under water, and liquidity and the uninsured deposits. They're

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Speaker 1: all going to be factors in So the direction of

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Speaker 1: tap travel is going to be Tighter's vision. Would you

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Speaker 1: suggest our Central Bank will have to adapt to the

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Speaker 1: political realities of Republicans hugely distrustful of the big accumulation

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Speaker 1: of capital, almost in a Jacksonian way. How big will

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Speaker 1: that umbrella extend out from the too big defails? I

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Speaker 1: think I think it's going to certainly extend into a

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Speaker 1: number of the names that are in that one hundred

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Speaker 1: to two hundred and fifty. I remind you that was

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Speaker 1: actually by statute in twenty eighteen. The statute said that

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Speaker 1: less prudential scrutiny for banks under two hundred and fifty billion.

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Speaker 1: But again, the legislation given the FAT a lot of

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Speaker 1: autonomy within that on an individual bank basis, and we're

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Speaker 1: going to see see that, I think with tighter supervision.

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Speaker 1: What we just saw, though, a lot of people are

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Speaker 1: putting the finger at the Federal Reserve and saying that

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Speaker 1: they should have had more supervision of this bank, and

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Speaker 1: that this was a policy failure that has really interfered

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Speaker 1: now at their ability to raise rates elsewhere. Do you

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Speaker 1: think that that's fair? Do you think that this was

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Speaker 1: a policy mistake, or do you think that this is

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Speaker 1: a direct result of rolling back that aspect of Dodd

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Speaker 1: Frank in twenty eighteen. Well, I've looked into it a

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Speaker 1: little bit again. You know, I'm no longer in that

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Speaker 1: building or talking to those folks. The interesting thing, Lisa,

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Speaker 1: is that the stress tests that were set up very

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Speaker 1: successfully after Dodd Frank typically looked at scenarios with deep recessions,

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Speaker 1: high unemployment and falling interest rates, and SVP would have

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Speaker 1: done great in that scenario. They didn't have a lot

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Speaker 1: of direct exposure in lending or the like, but what

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Speaker 1: they did have, obviously is a lot of exposure in

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Speaker 1: long duration treasuries and mortgages. In particular. There's something called

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Speaker 1: a global market shock that looks into to that. I've

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Speaker 1: also seen some work that indicates, again I can't judge,

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Speaker 1: but that SVP would have passed the standard liquidity test.

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Speaker 1: So clearly, I think they're going to be setting this

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Speaker 1: on where to pre judge where they end up, but

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Speaker 1: I think that is going to be reviewed and changed.

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Speaker 1: That's said rich And this is a point that Neil

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Speaker 1: Data made and he's going to be on later in

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Speaker 1: the show. He said, you know, the FED basically is

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Speaker 1: hiked a lot. Why are they surprised by duration risk

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Speaker 1: and why is it being treated as a bug rather

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Speaker 1: than a feature of the hiking program. From your vantage point,

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Speaker 1: do you think that perhaps there has been a bit

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Speaker 1: of complacency about the resilience of an economy that so

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Speaker 1: far hasn't broken, but now it's starting to show some

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Speaker 1: more acute strains. I don't think i'd use the term complacency.

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Speaker 1: What I would say is I broadly agree with Neil

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Speaker 1: in the direction of travel. Look, when you raise rates,

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Speaker 1: you invert the yield curve on a sustained basis that

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Speaker 1: is intended to tighten financial and credib conditions, and it

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Speaker 1: is tightening financial and credit conditions. And so I don't

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Speaker 1: I hope nobody in the building spot that we could

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Speaker 1: get to this point without there being a tightening and

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Speaker 1: lending now importantly, and let me get this on the table.

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Speaker 1: What the FED did Sunday night was exactly the right move.

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Speaker 1: It's essentially expanding the discount window authority to lend against

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Speaker 1: good collateral, which has been in place since nineteen thirteen,

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Speaker 1: and that's an entirely appropriate thing for the FED to do,

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Speaker 1: to give institutions liquidity against their security portfolio. So I

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Speaker 1: think that was right. But yes, I'm broadly in that

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Speaker 1: camp that when you raise rachel and you invert the curve,

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Speaker 1: you're going to make lending more expensive and intermediaries are

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Speaker 1: going to bear some of that burden. Absolutely, how much

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Speaker 1: more likely is a hard landing in your view? A

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Speaker 1: recession that does inflict some more pain today than say,

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Speaker 1: a week ago. It's certainly more likely. You know, I've

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Speaker 1: been in the camp consistently. I think since doing your

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Speaker 1: show last all that we we more likely than that

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Speaker 1: we will see a recession with a with a rise

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Speaker 1: and unemployment and some negative prints on GDP. Again, we

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Speaker 1: have a rat hiph cycle of this magnitude and how

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Speaker 1: quickly that is going to be the outcome. But yeah,

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Speaker 1: have the odds of a hard landing gone up? They

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Speaker 1: certainly have. I'm still I don't think that's my baseline

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Speaker 1: for a hardline landing, but sure the odds have to

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Speaker 1: have gone up somewhat riche and I just want to

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Speaker 1: finish on this this line that you often hear when

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Speaker 1: central banks don't do something you expected them to do,

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Speaker 1: and you hear things like they might know something we

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Speaker 1: don't know. Does the FED ever know something we don't know? Well, look,

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Speaker 1: the short answer is yes, not often, and not to

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Speaker 1: a great degree. I tell you one one situation where

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Speaker 1: we didn't know anything that people didn't know was about

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Speaker 1: the coronavirus, and so we didn't have any special briefings

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Speaker 1: or insight banking troubles. Richard if they weren't. Banking trouble

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Speaker 1: was behind the scenes, So they things that the FED

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Speaker 1: wouldn't know about but wouldn't talk about. Well, yes, because

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Speaker 1: the FAT has supervisors on the ground with thousands of

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Speaker 1: banks at a very granular level, and so certainly some

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Speaker 1: of that information is not in the public domain and

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Speaker 1: appropriately So that's why things become so speculative. TOMP in

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Speaker 1: the next week down into this decision. It's so difficult

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Speaker 1: for this FED chair. Should we have cleared on tomorrow?

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Speaker 1: Can we get a man for another? I think he's

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Speaker 1: joining us every day. You're out next week. What you

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Speaker 1: don't know is that Richard clod is going to be

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Speaker 1: he He's going to be guest anry next week. Richard,

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Speaker 1: Thank you sir for being with us. What an important morning,

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Speaker 1: Richard Clardy. There the form of FED chair, FED Vice

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Speaker 1: Chair and currently of pimcut Donic Constant does not have

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Speaker 1: Laren Jackson. He's going to make a cool he's the

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Speaker 1: head of macro strategy at MAZOOO Americus Dominic. Let's start here, ECB. First,

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Speaker 1: how much daylight is there between what you think they

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Speaker 1: should do and what you expect they will do? Um? Well,

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Speaker 1: well not too much. I mean, I think they are

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Speaker 1: a little bit behind the FED in terms of raising

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Speaker 1: real rates and fighting inflation. So if I were to

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Speaker 1: expect the FED, for the sake of argument, to stop

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Speaker 1: and the ECB was expected to raise fifty, it is

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Speaker 1: pretty easy for them to just scale that back and

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Speaker 1: sort of signal that they're almost done. But I would

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Speaker 1: expect them to sort of still push push rates a

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Speaker 1: little bit higher. In a famous Constant twenty twenty hindsight, Dominique,

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Speaker 1: you absolutely nailed it on this show a number of

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Speaker 1: weeks ago. You pounded the table, a lonely table, saying

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Speaker 1: they are super restrictive. Is they go into these set

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Speaker 1: of meetings? Are they still super restrictive? Yeah, I mean

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Speaker 1: financial conditions are actually tightening through all of this. You know,

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Speaker 1: the idea is, I don't know, if you recall last year,

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Speaker 1: there was this FED paper talking around sort of our

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Speaker 1: double star, that's we won't know it until we see it.

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Speaker 1: And I think the idea is that we're seeing it

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Speaker 1: now that rates have basically been getting to sort of

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Speaker 1: break aspects of the financial system, particularly in the US,

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Speaker 1: which is a different situation than say Europe. But yeah,

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Speaker 1: I mean absolutely super restrictive if you, I think it's

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Speaker 1: part of the speed with which rates have gone up,

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Speaker 1: so you can sort of maybe revisit these levels in

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Speaker 1: a more calmer tone. But the fact is, if you

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Speaker 1: want to find inflation, you better sort out your financial

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Speaker 1: system first. You can't fight inflation and solve a financial

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Speaker 1: system at the same time by raising rates. Dominic, we're

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Speaker 1: expecting to hear from Janet Yellen later this morning that

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Speaker 1: everything is fine in the financial system, that we have

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Speaker 1: real resilience. What would it say from your advantage point

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Speaker 1: to risk markets if the FED comes out and says,

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Speaker 1: you know what we were wrong. Inflation isn't the pre

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Speaker 1: eminent concern, and even though everything is stable, we're not

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Speaker 1: going to raise rates anymore. Don't that don't don't don't

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Speaker 1: think that could potentially be a liability for some of

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Speaker 1: the risk your assets. Well, the issue for the financial

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Speaker 1: system in a sense. If you say it's fine from

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Speaker 1: a capital perspective, you know that's that's largely true. But

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Speaker 1: obviously it's from a liquidity perspective that you've got the issue.

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Speaker 1: And we saw it in the guilt market last year,

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Speaker 1: whereby liquidity problems can become solvency problems for in that

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Speaker 1: example of the insurance sector, and that's what you're seeing

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Speaker 1: in the medium sized bank. So you you know, you

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Speaker 1: do you know it is true. You can say, you know,

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Speaker 1: financial system is fine, but you've got to focus on

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Speaker 1: liquidity and on that basis you have to kind of

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Speaker 1: when the liquidity problems coming from the so called you know,

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Speaker 1: risk free rate and the Treasury yeel curve that's attached

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Speaker 1: to that, then then that's your problem. So you can't

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Speaker 1: basically fight inflation. And I agree that does maybe give

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Speaker 1: people a cause for concerning around the credibility around inflation.

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Speaker 1: But the other thing that we've been arguing for a

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Speaker 1: while is this inflation is sticky and it's almost beyond

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Speaker 1: the control of the FED. There's a time element with

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Speaker 1: which inflation will come down that the FAT can't necessarily control.

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Speaker 1: Domini const you invented the linkage quantitative finance into economics

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Speaker 1: of credit suis with Neil Sas years ago. You do

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Speaker 1: have experience a credit suis to say the least. Can

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Speaker 1: you imagine UBS merging with the credit suis? You know, oh, absolutely, yes,

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Speaker 1: I mean that's I think that's the h you know,

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Speaker 1: I don't think. I mean that what the Swiss National

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Speaker 1: Bank has done is obviously extremely important, a massive liquidity facility.

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Speaker 1: There a lot of idiosyncratic problems obviously, you know, at

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Speaker 1: Credit Suis. It would it's kind of fairly intuitive that

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Speaker 1: in the long run or the medium term, some sort

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Speaker 1: of resolution would involve the Swiss banks finding some kind

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Speaker 1: of uh tie up, you know, good bank, bad bank,

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Speaker 1: whatever you want to call it. The main thing about

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Speaker 1: Credit Suie is they have a wonderful private bank and

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Speaker 1: that's what they kind of want to preserve. An investment

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Speaker 1: bank is you know, it is what it is. Would

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Speaker 1: that private bank be valuable to other UK, Continental or

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Speaker 1: American banks? I mean there's a mystery here to the

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Speaker 1: new culture of credit. Sueetz, do you denote a new culture? Yeah,

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Speaker 1: I mean I'm not a bank analyst, but I mean

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Speaker 1: I would say the private bank has always been the

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Speaker 1: sort of jewel in the crown, and you know, it's

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Speaker 1: it's been very impressive and I would I would absolutely

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Speaker 1: imagine it would be attractive to a lot of people. Yes,

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Speaker 1: I think we're all bank analysts this week. Thank you,

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Speaker 1: you know, Dominate Constant, Thank you, sir of Missouo. Let's

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Speaker 1: go straight to the guest, Peter Roppenheimer, Chief Global equity

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Speaker 1: strategistic Gamer Sacks. Peter, great to catch up with the

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Speaker 1: really difficult moments. So thanks for having at some time

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Speaker 1: in your schedule. You did like European banks. The facts

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Speaker 1: have changed in the last week. Do you still like them?

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Speaker 1: We do, clearly. In a situation like this is massive uncertainty,

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Speaker 1: and I think the volatility that you've been speaking of

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Speaker 1: Lisa discussed is going to continue. But I do think

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Speaker 1: it's important to recognize the underlying fundamentals here are pretty good.

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Speaker 1: You've got strong capital buffers kill core to one capital

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Speaker 1: of around fifteen percent from head about five percent to

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Speaker 1: the European banks during the crisis in two thousand and eight.

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Speaker 1: You've got stable funding dynamics one point eight trillion of

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Speaker 1: excess deposits, and you've got very ample liquidity and the

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Speaker 1: liquidity coverage ratios around one hundred and fifty percent at

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Speaker 1: the end of last year. So it's a very different

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Speaker 1: fundamental situation. And indeed, rising interest rates, which we've been

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Speaker 1: seeing is actually very good for the banks, but confidences everything,

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Speaker 1: and while this uncertainty continues they're likely to remain volatile,

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Speaker 1: but they are cheap, and I think they're fundamentally in

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Speaker 1: a relatively strong place. Peter, we note your decades of

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Speaker 1: experience and seeing multiple crises. I know you've been to

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Speaker 1: Zurich any number of times that what matters is to

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Speaker 1: take lunch at the Chronoole. Does restaurant Chronoole, that's what

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Speaker 1: everybody does in Zeroca is the only place to eat.

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Speaker 1: I get it. But when you're eating there now in

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Speaker 1: this crisis a Chronoole? Is Switzerland part of Europe? Or

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Speaker 1: is Switzerland still separate from Europe amid this crisis? Well,

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Speaker 1: I don't think in a banking crisis that anything is

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Speaker 1: really separate, and particularly in a banking situation where you've

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Speaker 1: got cross border integration and connectivity. So other central banks

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Speaker 1: around the world will be talking to the Swiss authorities,

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Speaker 1: and I think will be also preparing statements or willing

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Speaker 1: to provide as much liquidity that's required if this situation

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Speaker 1: continues to unwide. Obviously there's a difficult decision that the

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Speaker 1: CB have got to make, as Lisa was saying earlier,

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Speaker 1: but I think again they will emphasize the robustness of

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Speaker 1: the underlying system and their readiness to provide liquidity using

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Speaker 1: some of the existing tools that they already have, potentially

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Speaker 1: providing more. But I think they'll take some comfort from

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Speaker 1: the underlying balance sheet strength of the banking sector in Europe,

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Speaker 1: which of course we couldn't have said a decade ago.

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Speaker 1: So I think from that perspective it's a much more

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Speaker 1: robust underlying situation. Peter, will you still be bullish on

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Speaker 1: European banks? Off? The ECB does not code, does not

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Speaker 1: hike rates today and indicates that they're on pause until

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Speaker 1: they have more clarity. I think that it's very unlikely

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Speaker 1: they'll say they're on pause, because that will, if anything,

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Speaker 1: provide some sort of sense that they're concerned about the

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Speaker 1: contagion effects of this. I think they've got to look

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Speaker 1: at the underlying fundamentals of the economy. Actually that's looking

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Speaker 1: pretty good. We don't expect a recession this year in Europe. Inflation,

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Speaker 1: core inflation, underlying inflations above their target rate. They've signaled

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Speaker 1: quite strongly they expect a raiser. It's by fifty basis points.

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Speaker 1: And the banking system, again, as I would say, appears

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Speaker 1: fundamentally resilient and so I think they would want to

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Speaker 1: sort of stay the course, but at the same time

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Speaker 1: provide statements that are reassuring about their willingness to provide liquidity,

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Speaker 1: to emphasize existing tools that are in place that have

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Speaker 1: been built up over the last few years since the

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Speaker 1: sovereign debt crisis, and their ability to look at other

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Speaker 1: things as well if it's required. And Peter, do you

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Speaker 1: think that tighter financial conditions, tighter lending standards are just

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Speaker 1: inevitable now after what we've seen in the last week. Yes,

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Speaker 1: I do, and I think this is all really a

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Speaker 1: function of a massive shift in the cost of capital

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Speaker 1: that we've been seeing over the last year year and

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Speaker 1: a half. I mean, you only have to go back

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Speaker 1: a year and a half and about a course of

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Speaker 1: all government debt around the world had a negative yield.

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Speaker 1: You know, people were paying for the privilege of lending

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Speaker 1: money to governments. That world has changed. You're getting close

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Speaker 1: to five percent on US dollar cash for zero volatility

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Speaker 1: and risk, and that's high hurdle for asset markets to pass.

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Speaker 1: But it also means that there is a tightening in

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Speaker 1: financial conditions and arise in the cost of cattle, which

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Speaker 1: is inevitably having an impact on pushing valuations of assets down,

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Speaker 1: and it's clearly causing some friction in areas of the

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Speaker 1: financial markets. But if the underlying situation is robust and

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Speaker 1: the cattle buffers are in place, it won't prevent these problems,

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Speaker 1: but may restrict the contagion and the systemic fallout from them.

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Speaker 1: And that's I think fundamentally the important point to take

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Speaker 1: away from this delicate moment. But we appreciate your time

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Speaker 1: this morning. Thank you. Up in hind there of Garment Sex.

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Speaker 1: I think they're going to look asymmetrically and they're gonna say,

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Speaker 1: if we make decision A, what does it mean on

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Speaker 1: an asymmetric basis B and C as well? And to

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Speaker 1: give us clarity on that not only in the United States,

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Speaker 1: but in a Europe that surprised a lot of people

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Speaker 1: with optimism is Neil Datta. He's out of you as

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Speaker 1: economic research at Renaissance Macro and he has absolutely nailed

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Speaker 1: the resilient American economic experiment over the last number of quarters. Neil,

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Speaker 1: wonderful to have you with us and try to get

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Speaker 1: away from talking about banking crisis. Just in all of

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Speaker 1: your study of economics at NYU Neil Datta. Is it

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Speaker 1: just simple the ECB will ignore the data and the

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Speaker 1: ECB will be on plan as scheduled. I don't know,

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Speaker 1: that's an open question. My own sense is that they

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Speaker 1: probably don't go fifty. I mean, remember, wasn't it Laguard

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Speaker 1: that was called picking up the phone? And how terrible

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Speaker 1: of a decision it was for him to let Lehman

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Speaker 1: go under. So you know, she's again, We'll see that

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Speaker 1: she's probably going to air on the side of faustion

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Speaker 1: here and we'll see that again in the next hour

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Speaker 1: here with daylight savings time in America. And you know,

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Speaker 1: I've never heard dot to talk about ECB, so that's

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Speaker 1: pretty cool. You know that this is a moment where

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Speaker 1: all experts in random things that just seem to pop

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Speaker 1: up day to day. And that's sort of the question

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Speaker 1: that I have for you is how do you even

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Speaker 1: chart a path forward when the facts change this quickly

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Speaker 1: and they are material because this leads to an actual

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Speaker 1: tightening and credit conditions with lending. Yeah, I mean that's true.

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Speaker 1: I mean the question is exactly. I mean, part of

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Speaker 1: the reason why the economy was so resilient, remember, was

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Speaker 1: that it wasn't especially credit sensitive to begin with, right,

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Speaker 1: that's one of the reasons why you know, the folks

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Speaker 1: talking about long and variable lags for the last eighteen months,

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Speaker 1: then shifted talking about the weather, then shifted talking about

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Speaker 1: seasonal adjustment issues, and now are saying, oh, look, the

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Speaker 1: lags finally kicked in. You know sometimes in this business

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Speaker 1: lease that's better to be lucky than good. Well, and

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Speaker 1: this raises this issue of how do we even know

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Speaker 1: what our biggest challenge, what our biggest threat is. And

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Speaker 1: I go back to what Nerio Rubini was saying, which is,

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Speaker 1: if the FED pauses, if the ECP pauses, this could

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Speaker 1: allow an unmooring of inflation expectations at a time when

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Speaker 1: you do have an economy with strength. What is your

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Speaker 1: concern about that? Is that still a pre eminent risk

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Speaker 1: or will the tightening take care of itself? No? Absolutely,

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Speaker 1: I think it's a risk. I mean I don't think

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Speaker 1: what's happened right now in the banking system, as unnerving

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Speaker 1: as it may be, is enough to really send the

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Speaker 1: US economy into a below potential growth state. I mean remember,

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Speaker 1: I mean, as the data make clear, we went into

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Speaker 1: this with a lot of momentum, right, You're talking about

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Speaker 1: Atlanta FED tracking three three and a half percent, and

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Speaker 1: you're talking about inflation running five percent, so you're talking

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Speaker 1: about an eight nine percent nominal growth environment. That helps

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Speaker 1: grease the wheels a little bit. So, you know, even

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Speaker 1: though the data is still let's try to remember them,

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Speaker 1: the momentum going into all this is pretty robust, and

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Speaker 1: that gives us a bit of a shock absorber once

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Speaker 1: this goes on. At the same time, the inflation data

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Speaker 1: are not encouraging. I mean, people looking at PPI and saying, oh,

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Speaker 1: you know, this is a reason for them to back off.

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Speaker 1: I mean, it's absolutely ridiculous. You know, core inflation is

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Speaker 1: running hot. Inflation has been so strong over the first

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Speaker 1: two months of the year that if it didn't do

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Speaker 1: anything for the rest of the year, it'd still be

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Speaker 1: up one percent. So yeah, I mean, I think the

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Speaker 1: risk is if they pause, they may have to come

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Speaker 1: in later and then they may have to be even

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Speaker 1: more aggressive. So I tend to sympathize with that view.

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Speaker 1: You'll give me a level here, And one of my

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Speaker 1: great themes is Europe just flat out does not have

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Speaker 1: a nominal GDP persistency like America. We are generally because

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Speaker 1: of technology and maybe a different demographic and economy set

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Speaker 1: at a higher level. If I'm right on that, what's

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Speaker 1: your run rate a nominal GDP? I think we're in

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Speaker 1: a five to six percent underlying nominal growth environment right now.

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Speaker 1: You know, you talk about two two and a half

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Speaker 1: percent real growth around four percent inflation, So you know,

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Speaker 1: six percent I think is a reasonable benchmark. That seems

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Speaker 1: to me to be pretty constructive as well. Can they pause,

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Speaker 1: I mean ECB today or FED here in a number

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Speaker 1: of days. Can they pause with a strong statement that

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Speaker 1: they will resume rate hikes is appropriate at some point.

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Speaker 1: I mean, they could do that, but I mean my

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Speaker 1: sense was, in reading the events of last weekend and

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Speaker 1: what the FED is done, my assessment is it goes

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Speaker 1: back to the Bernanke discussion about using the right tools

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Speaker 1: for the right job. What they did was try to

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Speaker 1: ring fence the banking system to create the space for

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Speaker 1: themselves to keep hiking to deal what's slowing down the economy,

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Speaker 1: you know, an underlying demand. Remember, rates are a blunt

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Speaker 1: tool that affects you know, all industries at the same time, right,

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Speaker 1: not just the banking sector. So I thought, in some

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Speaker 1: ways you can make the argument that what they did

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Speaker 1: over the weekend was a way to create the space

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Speaker 1: to ultimately hike you know, at the margin, obviously it

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Speaker 1: makes fifty basis points less likely. You can't talk about

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Speaker 1: a systemic risk exception and still go fifty. But I

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Speaker 1: think you can make a reasonable argument to keep going

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Speaker 1: twenty five. You know, the data remain quite strong and

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Speaker 1: we're not at a point yet that suggests significant economic

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Speaker 1: damage as a result of this. As Michael McKey mentioned,

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Speaker 1: I mean, home building stocks have been doing well. Housing

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Speaker 1: can't work if credit isn't flowing to households. Neil just

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Speaker 1: quickly here. Has a chance of a very hard landing

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Speaker 1: or a harder landing become more likely in the past

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Speaker 1: week as we've seen some of the tensions come to

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Speaker 1: the four. Yes, it has because I think the biggest

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Speaker 1: risk of a hard landing as if the FED follows

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Speaker 1: the markets pricing of interest rates, because the markets, the

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Speaker 1: fixed income market has an implicit Dubash bias, and if

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Speaker 1: the FED follows that, it risks in trenching inflation, which

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Speaker 1: further will push the FED away from where the markets are,

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Speaker 1: and that will I mean, risk a much harder adjustment later.

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Speaker 1: Yell Dotta, thank you so much. Through a usance macro

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Speaker 1: research this morning. Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify,

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