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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: To find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com,

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Speaker 1: and of course on the Bloomberg terminal. Right now, let

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Speaker 1: us look at what matters to America, and it's far

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Speaker 1: more than the economics, finance, investment. It's the stock market

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Speaker 1: that we do. It's about housing. Let us take four

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Speaker 1: days across four FED meetings of two thousand twenty two

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Speaker 1: and look at the mortgage, the thirty year bank rate

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Speaker 1: fixed mortgage, and the yield has gone up three point

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Speaker 1: seven three percent, four point four seven percent, jumping up

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Speaker 1: to five point five zero percent and on the six

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Speaker 1: percent which Julian Cornado note last week, Kelsey Barrow joins

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Speaker 1: US now with JP Morgan as well Lincoln the JP

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Speaker 1: Morgan World of bonds, yield price dynamics into real estate

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Speaker 1: in the third year fixed mortgage. Yeah, absolutely, So if

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Speaker 1: you look at the FED funds rate, it's it's risen

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Speaker 1: a hundred and fifty basis points. But the third year

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Speaker 1: fixed mortgage rate has risen by double that three hundred

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Speaker 1: basis points all the way to six percent UM, and

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Speaker 1: we already are seeing the impact on the housing market

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Speaker 1: from that move, and we will continue to see the

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Speaker 1: housing market decline. But I think what's really important to

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Speaker 1: note about this move, this move in financial conditions, is

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Speaker 1: it's been so severe that in any other scenario, the

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Speaker 1: FED would have paused. The reason that they haven't paused

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Speaker 1: this time, despite the fact that mortgage rates are up

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Speaker 1: three hundred basis points, is that the inflation environment is

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Speaker 1: just not letting them. And I think what really spooked

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Speaker 1: them UM last week on Friday is that University of

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Speaker 1: Michigan sentiment Yester. Yeah, absolutely, he mentioned the University of

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Speaker 1: Michigan sent meant tipping up, ticking up. Now, what we

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Speaker 1: do know about the University of Michigan sentiment data UH

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Speaker 1: and the University of Michigan inflation expectations is it's very

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Speaker 1: correlated to gasoline prices, and some of that increase in

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Speaker 1: gasoline prices is out of their control. So they're putting

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Speaker 1: themselves in a very difficult situation, but one where they're

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Speaker 1: clearly saying we're going to prioritize inflation overgrowth. I mean, Lisa,

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Speaker 1: one of the stories here is oil has only gone

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Speaker 1: eighteen on brent. I mean, we barely had a pullback, Lisa,

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Speaker 1: in oil, and it isn't necessarily translating into a pullback

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Speaker 1: at the pump because gas prices, refined goods are not

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Speaker 1: getting cheaper because of a lack of refineries. How does

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Speaker 1: this really bleed into credit, Kelsey, has been a question

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Speaker 1: that we talked about with a lot of investors yesterday.

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Speaker 1: They were seeing the prospect of wider credit spreads, of

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Speaker 1: more credit losses kind of being implied despite the fact

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Speaker 1: that you don't see near term maturities. Do you agree

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Speaker 1: that it's the up and quality trade going to higher

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Speaker 1: rated debt or do you think that there's some value

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Speaker 1: given the eight and a half per that yields and

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Speaker 1: high led Well, clearly financial conditions are tightening and the

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Speaker 1: risk of recession is rising. But if you look at

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Speaker 1: current default rates, obviously they're very low. They need to

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Speaker 1: normalize somewhat. But corporate fundamentals are really strong, and companies

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Speaker 1: have done a number of things to set them up

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Speaker 1: for an environment where we're not particularly concerned about credit losses.

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Speaker 1: They've done things like increase their cash, reduce their leverage,

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Speaker 1: and also turn out their debt. So if I look

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Speaker 1: at the high old market, for instance, less than six

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Speaker 1: percent of the market is maturing in two or three

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Speaker 1: So there's not that much sensitivity UH in the high

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Speaker 1: old market, which has become much more higher in quality

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Speaker 1: than it has historically to these higher rates. Now, I

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Speaker 1: think that there is going to be volatility, and what

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Speaker 1: we're focused on this summer is increasing the liquidity of

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Speaker 1: our portfolios because the one thing that share Powell didn't

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Speaker 1: talk about in the press conference was q T. But

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Speaker 1: QT is happening. We're seeing massive moves, and we want

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Speaker 1: to have the liquidity to sell it when it's expensive

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Speaker 1: rather than need to buy it um when when there's

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Speaker 1: a challenge. Lisa is quote unquote increasing liquidity the same

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Speaker 1: as go to cash. Well, Kelsey, that's exactly what I

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Speaker 1: was going to ask. How do you do that? Is

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Speaker 1: is it with E T F S, is it with

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Speaker 1: cash or is it with the securities that are most traded?

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Speaker 1: I mean it is dependent on the portfolio. If you

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Speaker 1: think at the very baseline we're thinking about, you know,

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Speaker 1: going from off the runs to on their own treasuries,

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Speaker 1: getting out of tips and into nominals. You know, things

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Speaker 1: that are going to have less ability to be intermediated

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Speaker 1: when markets are quiet, when people are going out on

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Speaker 1: summer vacation, and things are more likely to trade more

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Speaker 1: volat with more volatility um. So essentially the bond market

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Speaker 1: has gotten much bigger, and dealer balance sheets have not

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Speaker 1: risen to the same size to accommodate that, and so

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Speaker 1: we want to be prepared when people need liquidity to

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Speaker 1: be able to give it. This is shocking to me, Tom,

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Speaker 1: and really a reversal of what we've seen for so

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Speaker 1: long when people were seeking out illiquidity. We are looking

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Speaker 1: at the prospect of a fed driven volatility cycle that

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Speaker 1: we have not seen in a long time. And credit

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Speaker 1: I'm just looking at the the you know that I've

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Speaker 1: been to Kelsey. This has been a crusade of mine

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Speaker 1: is we're in a bond bear market and nobody's talking

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Speaker 1: about it because nobody's used to it. And the answer is,

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Speaker 1: if I look at the Bloomberg, the Barclays, a Lehman

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Speaker 1: Total return US aggregate bond portfolio, these are double digit losses, right. Absolutely,

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Speaker 1: what's the plan? Absolutely? There's the two sides to that coin. Right,

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Speaker 1: You've seen massive losses, particularly in long bonds. The moves

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Speaker 1: and yields. You know, if I look at the move

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Speaker 1: over the week or the move over the month and

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Speaker 1: you compare them to the last five years, these aren't

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Speaker 1: just two standard deviation moves. These are four, five, six,

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Speaker 1: seven standard deviation moves. I mean, it's just incredible. But

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Speaker 1: then on the other side you have the yield the

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Speaker 1: new starting guild. If you were to invest fresh capital now,

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Speaker 1: that is a lot more attractive, as Lisa mentioned, and

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Speaker 1: a half percent on US high yield is very attractive

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Speaker 1: and it's consistent with the long term returns um in

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Speaker 1: the equity markets as well. We round up the digits

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Speaker 1: negative in the US aggregate portfolio. Kelsey get the work,

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Speaker 1: Kelsey Barrow. Where this is JP Morgan Asset Management as

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Speaker 1: we dive into it with Andrew Chase, he's chief crosssset strategist.

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Speaker 1: Hit Morgan Stanley really coalescing in mathematically statistically as his

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Speaker 1: Brown University math of what the total, the whole view

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Speaker 1: is and the summary Andrew is simple. Morgan Stanley thinks

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Speaker 1: like Joe Stiglett's growth matters tell me why growth matters. Yeah, thanks,

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Speaker 1: thanks Tom, and it's it's great to be here. So

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Speaker 1: I think this is a backdrop where the FED is

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Speaker 1: shown that it's going to have to be very data

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Speaker 1: dependent over data that it doesn't necessarily have a great

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Speaker 1: deal of control over because the actions that it's taking now,

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Speaker 1: is you discussed earlier on your program, are not necessarily

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Speaker 1: going to do anything about gasoline prices, airfares over the

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Speaker 1: next month or three months that are driving these inflation

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Speaker 1: surprises that share Powell mentioned. So you have a situation

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Speaker 1: where I think the FED is somewhat captive to the

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Speaker 1: incoming inflation data that matters a lot, and then the

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Speaker 1: growth outlook is also very uncertain. I think the FED

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Speaker 1: acknowledge that uncertainty. I think you know, we see it

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Speaker 1: in our own forecasts, where there is a lot of

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Speaker 1: different data point of different trajectors for the economy. Where

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Speaker 1: we come out of all of that is to try

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Speaker 1: to be relatively defensive, to try to keep positioning light

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Speaker 1: as you continue to have a number of cross currents

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Speaker 1: going on here. And it's amazing to me that we

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Speaker 1: talk so much about the prospective recession and yet we've

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Speaker 1: hardly talked about Dan grinning earnings. I beank channing with

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Speaker 1: Deutsche Bank on yesterday. I think it was the first

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Speaker 1: time I've spoken to someone on Wall Street and equity

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Speaker 1: strategist who is actually cutting their earnings expectations, first time

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Speaker 1: in a while. And I know that you and my

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Speaker 1: Wilson have been on telpodes story too. What do you

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Speaker 1: make give that that we haven't had the warnings from corporations,

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Speaker 1: we haven't seen the straight down great earnings in a

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Speaker 1: way that would match this recession conversation. Yeah, Jonathan, I

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Speaker 1: think this is what's so fascinating about what's going on

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Speaker 1: is I think that's exactly right in terms of the

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Speaker 1: next thing to focus on. You know, when when we

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Speaker 1: think about the market, in particularly the US equity market,

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Speaker 1: you know, my colleague Mike Wilson thinks the market has

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Speaker 1: generally adjusted to the rate rise that we've seen roughly.

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Speaker 1: What it has not adjusted to is earnings downgrades, which

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Speaker 1: you usually get when you've had this sort of reduction

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Speaker 1: in financial conditions, when you have had these sort of

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Speaker 1: risks around growth, when you have the declines in p

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Speaker 1: m I s that we think are likely. So I

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Speaker 1: think that's now where the rubber meets the road. There

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Speaker 1: there is a scenario that's more positive than ours, where

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Speaker 1: the companies are continue companies are able to continue to

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Speaker 1: earn profits and and hit those consensus numbers, and in

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Speaker 1: that case, the market could stabilize around current levels if

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Speaker 1: they cut earnings as we expect, and then we still

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Speaker 1: think that there's some downside risk here, and it's too

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Speaker 1: early to try to enter the market, Andrew, which is

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Speaker 1: the reason why perhaps you're looking elsewhere. I was kind

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Speaker 1: of surprised to see where else you're looking Japan. Why,

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Speaker 1: based on the fact that you've seen that the end

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Speaker 1: appreciate so significantly and a lot of people expect that

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Speaker 1: they will eventually the Bank of Japan will eventually have

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Speaker 1: to follow its fellow developed market central banks. Yeah, that's

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Speaker 1: a that's a fair question. So it's pretty apparent that

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Speaker 1: that every major global equity market in the world has

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Speaker 1: its own particular challenges. We just discussed the US. Europe

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Speaker 1: has active ECB hiking, it has the war in Ukraine,

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Speaker 1: China has the challenge of a zero COVID policy, and

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Speaker 1: Japan also has very easy central bank policy that's increasingly

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Speaker 1: disconnected from the more hawkish policy elsewhere, but we think

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Speaker 1: for the moment that's one of the better challenges to have.

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Speaker 1: We think the Japanese market is not priced for the

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Speaker 1: end appreciation that we've seen so far. We think that

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Speaker 1: that if the end were to stay around one thirty five,

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Speaker 1: or move higher, move weaker, that would result in earnings

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Speaker 1: upgrades at a time when other regions can be seen

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Speaker 1: earnings downgrades. Japan is derated significantly. It's not nearly as

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Speaker 1: expensive versus history as some other markets are. And we

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Speaker 1: do think that the Bank of Japan will stay patient

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Speaker 1: a little while longer because the inflationary pressures in Japan

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Speaker 1: not not only aren't a severe right now, they've been

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Speaker 1: so much lower for so much longer than the US.

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Speaker 1: So when you talk about creating some sort of ballast

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Speaker 1: to the portfolio, I understand the bet on Japan to

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Speaker 1: some degree. However, there's got to be some bigger pool

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Speaker 1: of securities that have to come from a place like

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Speaker 1: the United States or like Europe. If you don't like

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Speaker 1: stucks right now because of that earnings uncertainty, how much

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Speaker 1: conviction can you have around the long bond at a

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Speaker 1: time when the Fed is going really aggressive yeah, no,

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Speaker 1: I think that's that's one of the challenges. I mean,

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Speaker 1: I think this is an environment where are overall exposures

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Speaker 1: gross exposures. Investors should be trying to keep those lower

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Speaker 1: and to stay more liquid because as we've just seen

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Speaker 1: over the last twenty four hours, the price action can

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Speaker 1: be extremely volatile, it can be extremely harder to manage

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Speaker 1: those risks, and there's large amounts of uncertainty. So I

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Speaker 1: think keeping you know, lower exposures generally in this environment

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Speaker 1: makes a lot of sense. I think it's trying to

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Speaker 1: look for kind of relative value, putting more relative risk

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Speaker 1: into relative value strategies than than directional strategies. At the moment,

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Speaker 1: as I think we are seeing a number of instances

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Speaker 1: where relative value is working despite the volatile environment. And

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Speaker 1: then it would be something like oil, which is an

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Speaker 1: asset that we like, where you have an inflation hedge

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Speaker 1: that pays you quite well to hold it given how

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Speaker 1: backwardated that oil curve is. And so that's the way

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Speaker 1: to generate some yield wall also providing some protection and

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Speaker 1: to just to kind of five thirty four hundreds still

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Speaker 1: the number for you guys on SMP. Yeah, that's where

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Speaker 1: that's where we think the risk reward starts to look

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Speaker 1: more compelling. Okay, shakes that Morgan Stanley. Some downside still

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Speaker 1: to come then for the team over a Morgan Stanley.

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Speaker 1: Andrew sets the working closely with Mike Wilson, of course,

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Speaker 1: and Morgan Stanley too. It's right now, Andrew Sliman joins

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Speaker 1: us senior portfolio manager, Morgan Stanley, someone who was inequities,

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Speaker 1: someone who was congenitally long and optimistic, except maybe he's not.

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Speaker 1: He joins us. Now amid the gloom, Come on, Andrew,

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Speaker 1: the gloom, there's blood on the streets. Do you load

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Speaker 1: the boat here? Uh? You know, Look, I think there's

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Speaker 1: an opportunity coming. I just think it's too early. It's

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Speaker 1: the stock market. Regardless of your view of the economy.

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Speaker 1: My view is basically, the stock market's got a hard

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Speaker 1: time with tenure where it is given the multiple from

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Speaker 1: that remains on the market until we get resolution in

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Speaker 1: terms of interest rates and inflation. I just think it's

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Speaker 1: too early to get aggressive. But you know it's out there.

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Speaker 1: It's just it's just too early. Amid the loom. What

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Speaker 1: is a lesson on use of cash? We saw d

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Speaker 1: E Sha go after FedEx. They've amended. We saw targ

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Speaker 1: with a big dividend increase as well. How does use

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Speaker 1: of cash change given the gloom that's the Bremo like

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Speaker 1: gloom that's out there. Well, it is interesting that you

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Speaker 1: know you are seeing companies increased stock buy backs. You

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Speaker 1: know you're seeing insider buying. So I think there is

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Speaker 1: some reason to believe that the collapse in earnings won't

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Speaker 1: be there. Uh, And I think that's a lot to

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Speaker 1: do with inflation. Frankly, that companies can pass along there

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Speaker 1: there you know, inflationary costs to the consumer. The question

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Speaker 1: becomes will they may be able to maintain the margins

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Speaker 1: or will consumers push back before their costs come down?

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Speaker 1: And right now that has not happened. So companies feel

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Speaker 1: pretty good about their business and they're raising dividends, buying backstock.

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Speaker 1: That's what's happening. Aroun Now, we haven't seen the collapse

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Speaker 1: in margins that many of the bears and predicted. So Andrew,

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Speaker 1: let's say that we do get a continued sell off

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Speaker 1: as many people to expect. Is the real yield, not

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Speaker 1: only the nominal yield, but the real yield in the

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Speaker 1: United States resets to levels that we have not seen

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Speaker 1: since two thousand and eighteen and earlier, depending on which

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Speaker 1: measure you look at, When are we there? When do

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Speaker 1: you start saying we have baked in the depth of

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Speaker 1: the pain? Let's go well, I think first of all, timing,

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Speaker 1: you know, it would be nice to be a little

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Speaker 1: bit later into this summer because I suspect another seventy

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Speaker 1: five basepoint increase will cause further catharsis. It would be

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Speaker 1: nice when you guys are out having your burger and

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Speaker 1: y over or whatever you said top, you know, if

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Speaker 1: the FED were to you know, ease up, I think

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Speaker 1: that would be good. So timing first Number two is

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Speaker 1: where did the market go if it gets down you know,

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Speaker 1: it's sixteen times forwarderings, if we start to see fourteen

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Speaker 1: times you know, in the you know, kind of mid

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Speaker 1: three thousands, I think that would be helpful. Or if

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Speaker 1: you saw rates back off to uh closer to three percent,

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Speaker 1: which clearly is not happening today. We're starting to see

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Speaker 1: some inflationary inputs we can, but certainly not oil, and

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Speaker 1: that's there's too much, too many things driven by oil prices,

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Speaker 1: so inflation backs off, rates back off or the market

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Speaker 1: comes down to a multiple that's more reasonable with three

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Speaker 1: and a half percent. I think those are the two scenarios,

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Speaker 1: and I suspect all that will happen going into it

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Speaker 1: later this summer. I just think it's too early, so

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Speaker 1: you remain defensive until then. Andrew, what does it mean

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Speaker 1: to remain defensive when you have to be fully invested? Yeah,

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Speaker 1: I mean for me, look, I think we want Okay,

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Speaker 1: So number one, what's amazing is you know what is

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Speaker 1: working here today? Energy utilities, defensive stocks. Those are late

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Speaker 1: cycle stocks. The market has told you that we're into

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Speaker 1: a you know, a slow down. The way you position

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Speaker 1: as long equity managers, make sure that you aren't your

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Speaker 1: beta isn't above the market. Make sure you have plenty

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Speaker 1: of these defensive stocks and energy. The however, though, Lisa

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Speaker 1: is early cycle is a consumer sucks and those have

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Speaker 1: been absolutely crushed. There are a ton of opportunity in

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Speaker 1: consumer stocks, and as I said before, when the consumer

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Speaker 1: sentiment is at an all time low, you have to

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Speaker 1: stand up and say, huh, the rate of change at

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Speaker 1: some point is going to be uh, you know, positive.

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Speaker 1: And I think those are the types of stocks you

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Speaker 1: want to start to prepare do the analysis on because

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Speaker 1: I think that's the next what I would call the

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Speaker 1: next fat pitch UH is to move into more of

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Speaker 1: these early cycle stocks. I just think it's too early. Andrew.

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Speaker 1: Are you saying that it might be time to think

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Speaker 1: about fighting some of the energy move then? After the

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Speaker 1: months the running we've seen in energy stocks? Yeah, well so, Jonathan,

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Speaker 1: what's Here's what's interesting. So the utility sector through May

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Speaker 1: had outperformed the SMP by base points. You to day

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Speaker 1: utilities are fading, right, So they have faded going into June.

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Speaker 1: So I just wonder whether we're going to look back

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Speaker 1: and say we were in a recession. We're already in

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Speaker 1: a recession, and the playbook would say, then you want

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Speaker 1: to start to fade the late cycle. If you tell me, Jonathan,

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Speaker 1: their recession is, you know, end of the year, next year, Oh,

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Speaker 1: that is too early to sell energy. It's too early

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Speaker 1: to begin to reduce the defensive. If you tell me

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Speaker 1: we're in it now or it's happening, then yeah, I

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Speaker 1: want to get you know, I want to start to

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Speaker 1: fade those that if we were in a recession and

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Speaker 1: let's say it was right now, whatever that means what

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Speaker 1: kind of recession would you be expecting. I see that

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Speaker 1: our world gets run around all the time, would be

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Speaker 1: expect Well, well, we're uh, you know, the problem with

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Speaker 1: the d procession right now, right now is you're not

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Speaker 1: getting the fundamental drop off that the big earnings destruction.

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Speaker 1: Now It's what scares me is you're starting to see

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Speaker 1: some of these financial issues like Swiss bank raising rates.

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Speaker 1: You know, my contention has always been ultimately, uh, you know,

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Speaker 1: something unfortunately, something breaks in the system and a kind

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Speaker 1: of perverted not a very nice way of saying about

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Speaker 1: a dead body floes to the surface. That's the kind

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Speaker 1: of thing that you know, Marx bombs in you know, recessions.

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Speaker 1: But I you're right now, as we said, if it

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Speaker 1: is going to be a shallow recession because we haven't

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Speaker 1: had the drop off in fundamentals to the magnitude of

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Speaker 1: a deeper recession. Andrew swimming Nuance for you as always

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Speaker 1: certain to catch out with you from Morgan Stanley Investment Management.

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Speaker 1: Right now, a gentleman from the Republican persuasion and from Arkansas,

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Speaker 1: french Hill joins us on Uh, this aut economy. French Hill,

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Speaker 1: I believe in Arkansas, you have a three point two

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Speaker 1: percent inflation rate. You are the Kings of Chicken. Chicken

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Speaker 1: is in ascendant in this nation because of the price

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Speaker 1: of beef, etcetera. Can things get any better for Arkansas? Well,

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Speaker 1: Arkansas consumers tom good morning or really hurting from high

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Speaker 1: gas prices. Were a rural, rural state. And when I

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Speaker 1: was in private business before I came to Congress, I

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Speaker 1: had many employees in my company that drove almost an

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Speaker 1: hour every day to work. And so gas prices are

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Speaker 1: really hurting our families. They woke up Monday morning and

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Speaker 1: Little Rock to crossing the five dollar mark on gas.

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Speaker 1: And so inflation is the top thing I hear about

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Speaker 1: when I'm talking both the small businesses and families. And

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Speaker 1: the second thing, and this is the irony in the economy.

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Speaker 1: You're a percent right. The second thing that's brought up

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Speaker 1: is quality workforce. Trying to fill these open jobs in business? Well,

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Speaker 1: do you fill them by raising wages? I mean, what

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Speaker 1: is the prescription? It's the oddest thing, folks, All this

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Speaker 1: day to day crisis we're reporting on, and yet the

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Speaker 1: joy of a fully employed Arkansas, Right, how do we

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Speaker 1: solve this conundrum? Well, first, I think Arkansas spending a

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Speaker 1: lot of time, and I've contributed in every way I can,

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Speaker 1: both in my business career and now in Congress to

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Speaker 1: better workforce preparation, better skill training for those coming out

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Speaker 1: of incarceration, those coming out of high school, those still

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Speaker 1: in high school, to make sure they have a path

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Speaker 1: to the pursuit of happiness that's not a college degree.

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Speaker 1: So we've got to do more workforce preparation, and believe me,

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Speaker 1: our state and our counties are doing that every day. Secondly,

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Speaker 1: I think there's a real issue with getting people back

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Speaker 1: to work and you raise pay and let me give

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Speaker 1: you a quick example from Central Arkansas. Amazon has recently

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Speaker 1: come into a little with one point three million square

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Speaker 1: feet purchased, opening up their major logistics operations and they're

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Speaker 1: offering about eighteen dollars as a starting wage there. So

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Speaker 1: that is also really disrupting that full time, forty hour

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Speaker 1: a week person that's at a starting career. So you're

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Speaker 1: seeing rising wages at the bottom in Central Arkansas. Congress

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Speaker 1: been how crucial is it to increase immigration to the

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Speaker 1: United States and open up some of the pathways for

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Speaker 1: people to come in At a time where you're talking

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Speaker 1: about such a labor shortage. Yeah, at least, it's such

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Speaker 1: an important question, and it's been something where America has

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Speaker 1: been stuck for a number of years of trying to

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Speaker 1: do that in a smarter way by doing more merit

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Speaker 1: based immigration policy as well as clearing the decks on

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Speaker 1: people who have been waiting ten years or so with

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Speaker 1: a professional degree waiting for a permanent residency status. So

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Speaker 1: we let about a million people in legally in this

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Speaker 1: country every year, it's something that we always look at

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Speaker 1: rebound on seeing that on the legal admissions, I would

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Speaker 1: think more merit based admissions would be good to get

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Speaker 1: our our markets more in line with the talent that

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Speaker 1: we need. Yeah, Congressman, how difficult is that for some

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Speaker 1: of your fellow Republican congress members to swallow considering the

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Speaker 1: fact that for so long there was a discussion about

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Speaker 1: reducing immigration or limiting much more substantially. I mean, how

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Speaker 1: much are you representative of the mainstream of the Republican

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Speaker 1: Party versus an outlier? Right? Well, thanks for that question,

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Speaker 1: because it all centers on the fact that just as

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Speaker 1: we're seeing every day here record numbers of people crossing

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Speaker 1: the Southwest border illegally and So the for years lease

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Speaker 1: of the idea was if we can achieve border security,

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Speaker 1: border control, or is our Secretary of Homeland put it

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Speaker 1: the other day operational control, which they don't have, UH,

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Speaker 1: that would open up the day. I think to modify

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Speaker 1: a lot of our internal immigration policies, and that's what

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Speaker 1: we need to do. French Shaw out of Vanderbilt years ago,

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Speaker 1: I know you still have your Jerry Ford whipping inflation

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Speaker 1: now button. You know is a smart banker guy that

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Speaker 1: you can't fix inflation. Joe Biden can't fix inflation. Even

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Speaker 1: Elizabeth Warren can't flick fix inflation. What do you need

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Speaker 1: from Jerome Powell to fix inflation? Well, Tom, I think

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Speaker 1: he took a bowl move yesterday, putting the Fed on

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Speaker 1: record that inflation is UH their enemy number one right now.

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Speaker 1: Considering we have such a surplus of job openings, we

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Speaker 1: have a very strong labor market. So the seventy basis

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Speaker 1: point move I thought was a bold one. He knows

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Speaker 1: he's behind, Tom, You and I've lived through this for

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Speaker 1: many decades. He knows he's behind. He wants to send

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Speaker 1: the signal that the FEDS committed to not letting inflation

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Speaker 1: expectations get entrenched UH incorporations and pricing. And in the meantime,

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Speaker 1: I think clearly we have to do everything we can

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Speaker 1: to get the supply chain open by unleashing America's power

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Speaker 1: to get people back to work, supply chains open. And this,

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Speaker 1: as you say, not an easy task. That's why they

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Speaker 1: call it the anguish of central banking. Tremendously difficult right now, Congressman,

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Speaker 1: always fantastic to hear from you. French Hilda with the

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Speaker 1: lightest in d C. And this is the Bloomberg Surveillance Podcast.

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