WEBVTT - Bloomberg Surveillance TV: August 18th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:37.040 Bloomberg Terminal and the Bloomberg Business App. Claudia joins us 0:00:37.080 --> 0:00:39.040 now from Mark. Claudia, Welcome to the program. Let's just 0:00:39.040 --> 0:00:41.360 start with that speech on Friday and the decision a 0:00:41.360 --> 0:00:43.960 month away. Just how finely balanced our things at the moment. 0:00:46.200 --> 0:00:49.560 The FED is facing a really difficult decision. It's clear 0:00:49.640 --> 0:00:52.199 from the reason data pri jeally employment data, that we 0:00:52.280 --> 0:00:55.240 have a dual mandate that is in conflict and that 0:00:55.240 --> 0:00:58.080 that is the hardest situation for the FED to navigate. 0:00:58.120 --> 0:01:00.240 It's something that they talk about in their framework. Sure, 0:01:00.240 --> 0:01:02.840 he'll talk about that on Friday, but it's you know, 0:01:02.920 --> 0:01:06.560 this is this is tricky, and there's no that's why 0:01:06.560 --> 0:01:09.039 they need the data. They need each individually as members 0:01:09.040 --> 0:01:12.120 to think about their outlooks, their forecasts, where does this land. 0:01:12.200 --> 0:01:15.480 So that's why I think it's appropriate for Power to 0:01:15.480 --> 0:01:18.440 outline how tricky the decision is, as opposed to like 0:01:18.480 --> 0:01:21.240 trying to in September it's October, like not get into timing, 0:01:21.360 --> 0:01:22.880 just lay out what it is that they're trying to 0:01:22.920 --> 0:01:23.600 deliberate on. 0:01:23.959 --> 0:01:26.560 So Laudia, let's get into that. The idea of the framework. 0:01:26.680 --> 0:01:29.800 There's on one hand, the two percent inflation target, which 0:01:29.840 --> 0:01:32.440 they already have talked about average targeting, and they're going 0:01:32.480 --> 0:01:35.000 to have to illuminate on that and discuss whether they 0:01:35.040 --> 0:01:38.160 want to actually increase that target slightly. And then there's 0:01:38.200 --> 0:01:41.680 a question of how they treat policy when there is 0:01:41.840 --> 0:01:44.959 a conflict between the dual mandate, So what are you 0:01:45.000 --> 0:01:47.040 expecting them to come out with and how much could 0:01:47.080 --> 0:01:50.680 that actually shift market expectations of how much they'll. 0:01:50.480 --> 0:01:53.880 Cut right, So there's going to be a lot changing 0:01:53.880 --> 0:01:56.760 in the framework. I think if you're wanting to understand 0:01:56.800 --> 0:01:58.920 current policy, maybe you can send some of that to 0:01:59.000 --> 0:02:02.280 the side, because it really assumptions that the pandemic overturned 0:02:02.280 --> 0:02:04.600 and they're kind of catching up in their strategies and tools. 0:02:05.360 --> 0:02:08.440 The pieces of the framework that aren't changing on Friday 0:02:08.480 --> 0:02:11.160 are some of the ones most important right now. So 0:02:11.240 --> 0:02:15.320 the two percent target, Powell has said repeatedly it was 0:02:15.560 --> 0:02:18.600 off the table for this framework review, Like, they will 0:02:18.639 --> 0:02:21.639 affirm the two percent target, and oh, let's all remember 0:02:21.800 --> 0:02:24.639 we've been above two percent for more than four years, right, 0:02:24.680 --> 0:02:27.280 So that setting is important. And then the piece that 0:02:27.320 --> 0:02:29.560 will get a little tweak but probably remain intact is 0:02:29.560 --> 0:02:32.080 how they deal with when the when the mandate's intention 0:02:32.520 --> 0:02:34.760 They think about how far do we expect this to 0:02:34.760 --> 0:02:37.440 get off track and how long is it going to 0:02:37.480 --> 0:02:39.600 take us to get back to the goal for each 0:02:39.639 --> 0:02:42.359 the employment and the inflation mandate. And I think again, 0:02:42.440 --> 0:02:44.080 if you look at the data we have in hand 0:02:44.120 --> 0:02:46.280 and we think hard about where inflation is and where 0:02:46.280 --> 0:02:49.600 it's been the last four years, inflation still comes up 0:02:49.639 --> 0:02:51.960 on top as the primary concern of the Fed and 0:02:52.040 --> 0:02:54.760 thus calls for the restrictive rate cuts. But it's a 0:02:54.840 --> 0:02:57.519 very dynamic situation. New data comes down on the labor market, 0:02:57.520 --> 0:03:00.000 the risks are, you know, things could move pretty fast. 0:03:00.160 --> 0:03:02.840 But like those two pieces of the framework think are 0:03:02.919 --> 0:03:06.160 really really important for like thinking about how does the 0:03:06.200 --> 0:03:09.080 FED go forward as they're learning more about the economy. 0:03:09.200 --> 0:03:11.120 For people who are listening to this and think that 0:03:11.160 --> 0:03:14.920 it's an academic exercise and coming up with different puzzles 0:03:14.919 --> 0:03:18.920 to put things together, it's actually incredibly important to understand 0:03:18.960 --> 0:03:21.600 whether this is just an inherently dubvish FED, Whether this 0:03:21.720 --> 0:03:24.640 is a FED that wants to prolong the economic cycle 0:03:24.680 --> 0:03:27.519 for as long as possible because it takes so long 0:03:27.560 --> 0:03:29.359 to get jobs back when there is some sort of 0:03:29.520 --> 0:03:32.519 huge wave of layoffs. Do you expect them to sort 0:03:32.520 --> 0:03:35.400 of codify that type of approach which has been the 0:03:35.400 --> 0:03:37.480 assumption right now in markets for a long time, that 0:03:37.520 --> 0:03:40.520 they are more willing to allow inflation to be higher 0:03:40.560 --> 0:03:43.640 for longer in order to avoid that type of punitive 0:03:43.920 --> 0:03:46.760 and long lasting reaction in labor markets. 0:03:48.360 --> 0:03:52.400 So I'm somewhat concerned that the new framework is going 0:03:52.440 --> 0:03:55.160 to be read as hawkish, like not, you know, going 0:03:55.200 --> 0:03:56.840 to bat for the labor market in the same sense, 0:03:56.920 --> 0:03:59.600 I don't think that's the right interpretation. I think when 0:03:59.640 --> 0:04:01.720 the change were made of the framework five years ago, 0:04:02.200 --> 0:04:04.200 we were in you know, the years after the global 0:04:04.240 --> 0:04:08.400 financial crisis, low inflation, low interest rates, unemployment rate was low, 0:04:08.440 --> 0:04:10.200 the FED was like trying to find tools to give 0:04:10.240 --> 0:04:12.880 some more oomph to the economy, to keep us away 0:04:12.920 --> 0:04:16.360 from the zero lower bound. And so there were changes 0:04:16.400 --> 0:04:20.320 made tolerating unemployment that gets unusually low because you know, 0:04:20.480 --> 0:04:22.520 like that that could be good for the labor market 0:04:22.520 --> 0:04:24.600 going forward, and it didn't cause inflation in the past, 0:04:24.640 --> 0:04:27.480 and allowing for a period of time modestly above two 0:04:27.560 --> 0:04:30.480 percent inflation. Again, that was all about giving the economy 0:04:30.520 --> 0:04:33.600 some extra ooh. The last five years, the problem has 0:04:33.680 --> 0:04:35.800 not been the extra ooth in the economy, like we 0:04:35.839 --> 0:04:37.920 had inflation risks that really came back. We had labor 0:04:37.960 --> 0:04:40.080 shorges for a period of time. So there's going to 0:04:40.160 --> 0:04:43.039 be changes that reflect some of the challenges the FED 0:04:43.080 --> 0:04:44.760 is seen in the last five years. But I would 0:04:44.760 --> 0:04:48.520 not see that as a fundamental Oh we need to, 0:04:48.720 --> 0:04:51.440 you know, put less emphasis on the labor market. It's 0:04:51.480 --> 0:04:54.000 just it's realizing that we have some new challenges. I 0:04:54.000 --> 0:04:55.960 think we'll see some more about like the supply side 0:04:55.960 --> 0:04:58.839 of the labor market, structural changes that we're seeing that 0:04:58.920 --> 0:05:00.000 could get mentioned as well. 0:05:00.040 --> 0:05:00.240 Well. 0:05:00.279 --> 0:05:02.800 So it's a tricky document to read, but I don't 0:05:02.839 --> 0:05:04.479 think one should come at this and say, oh, the 0:05:04.520 --> 0:05:07.279 FED is going to leave the labor market behind. I 0:05:07.279 --> 0:05:10.120 think it's just really balancing the challenges they face with 0:05:10.200 --> 0:05:12.560 inflation with the challenges they face with the labor. 0:05:12.360 --> 0:05:14.400 Market, Claudia, before spending a little bit more time in 0:05:14.440 --> 0:05:16.560 the labor market, can I just ask a perhaps obvious 0:05:16.640 --> 0:05:18.840 questions for people setting at home, what's the value of 0:05:18.880 --> 0:05:21.880 a framework review conducted by a lame duck FED? Share? 0:05:23.279 --> 0:05:23.440 Right? 0:05:23.440 --> 0:05:26.120 So this is absolutely the right time for the framework review. 0:05:26.360 --> 0:05:29.400 The FED started this in twenty twelve. They started with 0:05:29.440 --> 0:05:34.240 a framework. It's about transparency. It's a communication tool. It 0:05:34.279 --> 0:05:37.039 is to clearly explain. It's a short document. It's pretty dense, 0:05:37.040 --> 0:05:41.560 but it's a short document to explain their principles, their strategies, 0:05:41.800 --> 0:05:45.080 big picture, high level, what are they doing. They started 0:05:45.120 --> 0:05:47.520 doing the five year reviews in twenty twenty. Again, this 0:05:47.600 --> 0:05:52.040 is about transparency and accountability and having processes that they 0:05:52.080 --> 0:05:55.480 can be judged against. And it is true, this is 0:05:55.480 --> 0:05:58.280 in all likelihood Powell's last speech at Jackson Hole as 0:05:58.560 --> 0:06:03.200 FED Chair. Yet the framework is not the FED chair's framework, 0:06:03.360 --> 0:06:05.840 it's the committee's framework. It is an agreement that they 0:06:05.880 --> 0:06:10.000 make together, and it isn't about one person and Also, 0:06:10.400 --> 0:06:12.279 this has been his tenure in the last five years, 0:06:12.320 --> 0:06:14.760 so in exercise and accountability in them saying, you know, 0:06:14.800 --> 0:06:16.800 some of the assumptions we made in twenty twenty, those 0:06:16.839 --> 0:06:18.960 didn't turn out to be the right assumptions. We've got 0:06:18.960 --> 0:06:21.520 to make some adjustments. So it's a great time. And 0:06:21.560 --> 0:06:24.120 above all, they told us five years ago they were 0:06:24.160 --> 0:06:26.640 going to do this review. There's a lot that's changed. 0:06:26.680 --> 0:06:28.719 It's not a comfortable environment for the FED to be 0:06:28.760 --> 0:06:31.920 out in public. Sure they're doing the review, and that 0:06:32.080 --> 0:06:34.640 is so reassuring that we have a process that's working 0:06:34.680 --> 0:06:35.279 as planned. 0:06:35.400 --> 0:06:37.400 We'd love to het your assumptions on a few things, 0:06:37.440 --> 0:06:39.680 and particularly the labor market, So let's start with that. 0:06:40.000 --> 0:06:41.840 You know the source of great division on Wall Street 0:06:41.839 --> 0:06:43.880 at the moment, and that's whether the step down in 0:06:43.920 --> 0:06:46.880 payrolls growth is a factor because of what we've seen 0:06:46.920 --> 0:06:49.840 in the economy, a cyclical turn or maybe a structural 0:06:49.839 --> 0:06:51.800 shift with what we've seen on the supply side of 0:06:51.839 --> 0:06:53.800 the labor market. Claudia, do you have a biases to 0:06:53.800 --> 0:06:54.880 which one it is right now? 0:06:56.120 --> 0:06:58.200 It's almost certainly both. I think there's a lot of 0:06:58.240 --> 0:07:00.720 supply side in there right now. We can see this 0:07:00.839 --> 0:07:05.680 at utilization numbers, like the unemployment rate has been basically flat, right, 0:07:05.720 --> 0:07:08.080 so we're not seeing the unemployment rate climb as of yet. 0:07:08.880 --> 0:07:12.480 And also wage growth has not really you know, weakened, 0:07:12.680 --> 0:07:14.600 and those would be signs that it's demand. Now, there 0:07:15.040 --> 0:07:17.880 are absolutely risk the labor market and they're not hypothetical anymore. 0:07:17.880 --> 0:07:20.080 We can point to data that's slowing jobs growth is 0:07:20.120 --> 0:07:23.880 it could be a real issue. And yet there are 0:07:24.040 --> 0:07:28.440 policies supply policies that are at play too. And when 0:07:28.440 --> 0:07:30.400 we think about the FED and the way the FED 0:07:30.440 --> 0:07:33.000 thinks about the labor market, it's important to remember the 0:07:33.000 --> 0:07:35.800 FED does not fight the trend. It can't fight the 0:07:35.880 --> 0:07:39.320 labor supply. It's trying to smooth out the sharp movements 0:07:39.320 --> 0:07:42.120 and demand that you know, can cause you know, a 0:07:42.160 --> 0:07:46.600 weakening in the labor market. So it's it's a tricky situation, 0:07:46.640 --> 0:07:48.720 but I think there really are signs that a good 0:07:48.720 --> 0:07:51.120 bit of this is supply. And it is almost exactly 0:07:51.160 --> 0:07:53.360 the reverse of what we were trying to sift through 0:07:53.440 --> 0:07:56.400 last year, and we had the surgeon immigration cly. 0:07:56.480 --> 0:07:59.400 This mights it really very difficult to communicate anything at 0:07:59.400 --> 0:08:02.200 the federals. And given the title, if this year has 0:08:02.240 --> 0:08:04.960 get together? Is a labor market in transition? Do you 0:08:05.040 --> 0:08:07.120 believe that the chairman has to make a call hit 0:08:07.240 --> 0:08:11.040 going into September as to the dominant factor he thinks 0:08:11.480 --> 0:08:15.000 is driving markets the labor market specifically at the moment, 0:08:17.920 --> 0:08:18.520 I doubt that. 0:08:18.680 --> 0:08:21.320 He'll give us the full picture. I mean, it's one 0:08:21.320 --> 0:08:25.880 that's still developing again, you know, I think by widening 0:08:25.960 --> 0:08:28.280 and not just saying, oh, well, yes, labor market's weakening, 0:08:28.320 --> 0:08:29.920 that job growth is too low. Like, he's not going 0:08:29.960 --> 0:08:32.240 to make a definitive statement that things are really you know, 0:08:32.920 --> 0:08:35.079 you know, the risks are really rising rapidly. I think 0:08:35.080 --> 0:08:38.840 it'll lay out all the different pieces that they're grappling with. 0:08:38.960 --> 0:08:41.160 And what better thing for them to spend a weekend 0:08:41.360 --> 0:08:44.600 grappling with the research and talking to scholars and people 0:08:44.679 --> 0:08:47.559 near it than structural changes in the labor market or 0:08:47.679 --> 0:08:49.559 like they need to be as on the cutting edge 0:08:49.559 --> 0:08:51.240 as they can be as they sift through the data 0:08:51.320 --> 0:08:54.200 and they decide the policy. But they're not there yet, 0:08:54.240 --> 0:08:56.560 and he's not going to front run the committee and 0:08:56.600 --> 0:08:59.760 make the decision for September. What possible good would that do? 0:09:00.040 --> 0:09:02.440 He can be transparent about the process, be honest about 0:09:02.440 --> 0:09:05.120 what they see in the data, and you know, we'll 0:09:05.400 --> 0:09:07.400 see where this goes in terms of a decision. I 0:09:07.440 --> 0:09:09.760 do expect him to affirm that the next move will 0:09:09.760 --> 0:09:10.840 probably be a cut. 0:09:11.040 --> 0:09:11.160 Right. 0:09:11.160 --> 0:09:14.240 We're talking about timing here, yep, We're not you know, 0:09:14.320 --> 0:09:17.520 talking about you know, do they raise rates next? So 0:09:17.600 --> 0:09:19.480 I think, you know, we just keep it all in context. 0:09:19.480 --> 0:09:23.000 We're not going to get the answer that maybe investors 0:09:23.000 --> 0:09:25.520 are looking for. But that's because the FED is still deliberating. 0:09:26.240 --> 0:09:28.599 Clodia Sam with the latest on the labor market and 0:09:28.600 --> 0:09:30.600 the Federal serve. Tadia, thank you, Toldia Sam of New 0:09:30.640 --> 0:09:44.439 Century Advisors, Investors bracing for FED chair Japus speech of 0:09:44.520 --> 0:09:47.800 the fed's annual symposium, and Jackson Hole Nail Dnswer of 0:09:47.840 --> 0:09:52.200 Renaissance Macro Research, writing, don't expect a strong signal and 0:09:52.240 --> 0:09:54.160 they will join us now for more. Neil, welcome to 0:09:54.200 --> 0:09:56.320 the program. Let's start with the labor market. Is this 0:09:56.360 --> 0:09:58.240 a labor market in transition? 0:10:00.320 --> 0:10:00.480 Well? 0:10:00.520 --> 0:10:03.559 I think so, you know, I think if you look 0:10:03.600 --> 0:10:07.120 at things like underemployment, you know, discourage workers out of 0:10:07.160 --> 0:10:12.480 the workforce, college unemployment, black unemployment, I mean, these are 0:10:12.840 --> 0:10:17.520 you know, there's clearly some weakening in the jobs market, 0:10:18.040 --> 0:10:23.240 leaving the slowdown impayial growth aside. And to me, what's 0:10:23.240 --> 0:10:26.640 important about it is that it really undercuts this argument 0:10:26.679 --> 0:10:29.240 that a lot of Hawks are making that the slowing 0:10:29.280 --> 0:10:32.040 in the jobs market is largely a supply driven phenomenon. 0:10:32.080 --> 0:10:35.760 I mean, did we have a bunch of college graduates 0:10:35.760 --> 0:10:38.120 swarming across the border over the last three years? So 0:10:38.200 --> 0:10:41.119 I do think that, you know, demand is the principal 0:10:41.520 --> 0:10:45.200 reason why labor market conditions have slowed, and you know 0:10:45.240 --> 0:10:47.560 that's something that FED ultimately will need to respond to. 0:10:48.040 --> 0:10:50.400 Is it problematic for you that stocks are at all 0:10:50.440 --> 0:10:53.000 time highs and that corporate bond spreads are at the 0:10:53.000 --> 0:10:56.080 lowest level since nineteen ninety eight at a time where 0:10:56.160 --> 0:10:58.720 you and others are making the argument that the economy 0:10:58.760 --> 0:11:00.640 is weakening to a significant A great. 0:11:01.400 --> 0:11:05.040 If financial conditions are actually this easy, why is it 0:11:05.160 --> 0:11:08.560 that lending standards in the fed's own Senior Loan Officer 0:11:08.640 --> 0:11:11.840 Survey continue to tighten? Why is it that housing market 0:11:11.880 --> 0:11:14.800 conditions are weak? I mean, I think the argument is 0:11:14.880 --> 0:11:18.640 essentially conflating financial market conditions with financial conditions for the 0:11:18.640 --> 0:11:21.360 real economy, and the FED needs to respond to what's 0:11:21.400 --> 0:11:23.000 actually happening in the real economy. 0:11:23.160 --> 0:11:26.079 Does it complicate though the Fed's messaging at a time 0:11:26.240 --> 0:11:29.080 where the economic data has been somewhat conflicted, There have 0:11:29.080 --> 0:11:31.600 been questions about the integrity of it just by virtue 0:11:31.640 --> 0:11:34.320 of how many people respond to these surveys. And you 0:11:34.360 --> 0:11:37.280 have a highly politicized environment with the President continuing to 0:11:37.360 --> 0:11:39.679 job bone the FED to cut rates significantly. 0:11:40.840 --> 0:11:45.520 No, I mean, there's a lot of noise and uncertainty, 0:11:45.600 --> 0:11:48.640 but it's also the fed's responsibility to make decisions under 0:11:48.720 --> 0:11:53.640 these difficult circumstances. And you know, I think that's the 0:11:53.679 --> 0:11:56.920 tension that the chairman has to deal with. You know, 0:11:57.000 --> 0:12:00.719 I don't believe that the FED can cut, so it's 0:12:00.800 --> 0:12:04.000 kind of pointless to even talk about it. You know, 0:12:04.400 --> 0:12:08.680 you have to basically understand where the other people on 0:12:08.720 --> 0:12:11.360 the other side of the argument are. I mean, basically, 0:12:11.360 --> 0:12:13.320 you have a FED at the moment that is split 0:12:13.400 --> 0:12:16.680 between people that think they should cut twice and not 0:12:16.840 --> 0:12:20.200 at all. So it's really hard to just move the 0:12:20.240 --> 0:12:23.240 overton window and be like, yeah, let's go fifty. That's 0:12:23.280 --> 0:12:25.720 not I don't think that's going to really persuade people. 0:12:25.760 --> 0:12:28.600 So you have to kind of you know, pick the 0:12:28.600 --> 0:12:33.320 battles wisely, and that's why I think going twenty five 0:12:33.400 --> 0:12:37.280 makes sense as an insurance policy essentially. I mean, if 0:12:37.320 --> 0:12:40.760 the labor market deteriorate further, you know, then the FED 0:12:40.840 --> 0:12:43.160 can get more aggressive. But if you're calling for fifty 0:12:43.280 --> 0:12:45.720 right now, I mean, I think what you're basically saying, 0:12:45.760 --> 0:12:49.120 that's really a call option on another really bad jobs number. 0:12:49.440 --> 0:12:50.880 So you know, you kind of have to see it 0:12:50.920 --> 0:12:52.240 before you can kind of commit to it. 0:12:52.440 --> 0:12:54.880 Yeah, that's what the Treasury secretary is calling for. Does 0:12:54.880 --> 0:12:57.280 he think the economy is worse than you think it is? 0:12:58.920 --> 0:13:00.760 No, I think he thinks the FED is more behind 0:13:00.800 --> 0:13:01.760 than I think they might be. 0:13:02.480 --> 0:13:04.600 When it comes to Treasury sector. Jim Bianco is putting 0:13:04.640 --> 0:13:08.080 out this argument that Besson is providing filler names basically, 0:13:08.120 --> 0:13:11.880 and that maybe his argument potential speculations that Trump's already 0:13:11.880 --> 0:13:14.440 cut a deal with Besant to take the job for 0:13:14.520 --> 0:13:17.080 next year. What do you think of that kind of 0:13:17.200 --> 0:13:19.280 argument as you track who is going to be the 0:13:19.320 --> 0:13:19.960 new FED chair? 0:13:21.480 --> 0:13:21.800 I mean, the. 0:13:21.800 --> 0:13:24.920 Treasury Secretary said repeatedly that he wants that he's in 0:13:25.000 --> 0:13:27.640 the job that he wants, and that he's been offered 0:13:27.679 --> 0:13:29.520 the job and said no, So I would take him 0:13:29.559 --> 0:13:32.360 at his word, you know, in terms of I mean 0:13:32.440 --> 0:13:34.720 what we are seeing is a flood the zone strategy. 0:13:34.720 --> 0:13:39.720 I mean, the presidents said very clearly that that you know, 0:13:40.040 --> 0:13:42.760 as well by three or four people that he's actively considering. 0:13:43.120 --> 0:13:46.040 And you know, I do think perhaps a lot of 0:13:46.040 --> 0:13:47.800 these other names are just kind of flooding the zone 0:13:47.840 --> 0:13:51.200 to advocate for fifty. You know, folks like Laurie Logan 0:13:51.240 --> 0:13:53.280 you had up on your screen. You know, she's a 0:13:53.360 --> 0:13:57.600 voter next year. Maybe if you know, if she thinks 0:13:57.600 --> 0:13:59.280 she might have a chance at the job, maybe she'll 0:13:59.320 --> 0:14:01.600 start advocating for fifty. I mean, I don't know. I think, 0:14:01.880 --> 0:14:03.679 you know, most of these people that are up there, 0:14:05.080 --> 0:14:06.959 they're not going to fall for it, And I don't 0:14:07.000 --> 0:14:11.360 think the market is either. But I do think it's 0:14:11.400 --> 0:14:14.000 you know, it's an interesting strategy of getting additional people 0:14:14.040 --> 0:14:16.080 to kind of come out and support a more aggressive 0:14:16.160 --> 0:14:16.880 rate cutting path. 0:14:17.000 --> 0:14:18.920 Up front, No, just before you go, got about a 0:14:18.920 --> 0:14:21.200 minute left, just time for I think an important question. 0:14:21.200 --> 0:14:23.680 You've called this economy really quite well. You've talked about 0:14:23.680 --> 0:14:26.200 a slowdown that actually started at the end of last 0:14:26.280 --> 0:14:28.640 year and continued into this year. With regards to the 0:14:28.680 --> 0:14:31.280 labor market, the chairman has anchored his view around the 0:14:31.280 --> 0:14:34.240 headline unemployment rate. You've raised questions about that. How are 0:14:34.240 --> 0:14:36.640 you anchoring your view? What are you focused on? 0:14:38.720 --> 0:14:41.320 Well, I'm focused on a number of factors. Might talk 0:14:41.360 --> 0:14:46.080 to them. I highlighted them, but you know, I mean, 0:14:46.080 --> 0:14:48.360 I think it's important to look at a wide body 0:14:48.400 --> 0:14:52.200 of indicators. And you know, the Conference for Labor Differential 0:14:52.240 --> 0:14:54.760 as an example. So what are consumers telling you about 0:14:55.240 --> 0:14:58.160 labor market conditions. They're telling you they're getting worse at 0:14:58.160 --> 0:15:01.120 the margin, that jobs are getting harder to get, jobs 0:15:01.160 --> 0:15:05.120 aren't plentiful. Historically, this has had a strong relationship to 0:15:05.160 --> 0:15:07.840 what actually happens with the unemployment rate. That's not surprising 0:15:07.880 --> 0:15:10.600 because people tend to see things in their own local 0:15:10.600 --> 0:15:13.240 economies before the data actually picks up on it. Or 0:15:14.120 --> 0:15:16.359 small businesses. I mean, there was a lot of enthusiasm 0:15:16.440 --> 0:15:19.200 around small business sentiment rising, but look at what small 0:15:19.240 --> 0:15:22.440 businesses they're telling you about sales, that they're citing that 0:15:22.520 --> 0:15:26.640 as one of their single biggest problems, weak sales. And 0:15:26.720 --> 0:15:30.200 so historically, again, when that happens, you start to see 0:15:30.240 --> 0:15:34.400 unemployment going up. And then looking at the employment data itself. 0:15:34.880 --> 0:15:37.160 I mean, look, we can talk about lower break even 0:15:37.240 --> 0:15:40.840 rates all you want, but I don't think a lot 0:15:40.840 --> 0:15:43.400 of people had like sub fifty on jobs on their 0:15:43.400 --> 0:15:45.760 bingo card in the second quarter. Okay, And that's kind 0:15:45.760 --> 0:15:47.160 of where we are right now, and you have to 0:15:47.240 --> 0:15:51.400 ask yours where are we going? And I do think 0:15:51.640 --> 0:15:55.840 it's probably weaker from here, particularly with respect to housing 0:15:55.880 --> 0:15:56.720 related industries. 0:15:56.800 --> 0:15:59.720 Nala appreciate your time, as always. No answer of Renmac 0:16:00.080 --> 0:16:13.240 the slow down he sees in the economy. Bernardi Goldberg 0:16:13.280 --> 0:16:16.240 of TV Security, saying, assuming the next round of inflation 0:16:16.360 --> 0:16:19.480 and payroll data largely behaves, we believe the path phase 0:16:19.480 --> 0:16:23.360 September rate cut by the fat has been cleared. Gannadi 0:16:23.440 --> 0:16:26.200 joins us snaw for more good monitor. Thanks very welcome 0:16:26.240 --> 0:16:28.560 to the program. How high is the bar to deround 0:16:28.600 --> 0:16:30.480 that rate cut expectation for September? 0:16:30.600 --> 0:16:32.200 I mean, all he has to do is really not 0:16:32.320 --> 0:16:34.520 say a ton. I think if he just kind of 0:16:34.520 --> 0:16:37.080 clears the way and says, look, we're you know, we're 0:16:37.160 --> 0:16:40.200 definitely looking at the data. But if all goes well, 0:16:40.360 --> 0:16:42.840 you know, the market pricing is the market pricing. I 0:16:42.880 --> 0:16:45.360 think that blessing alone would be fine. I think the 0:16:45.360 --> 0:16:47.400 big risk for market if he is If he sounds 0:16:47.480 --> 0:16:50.400 very noncommittal, that's when in the October and the December 0:16:50.480 --> 0:16:53.240 pricing there's about thirty five basis POINTSPLI between those two. 0:16:53.640 --> 0:16:55.720 That's when that starts to move around. If he sounds 0:16:55.760 --> 0:16:56.880 like a noncommittal. 0:16:56.440 --> 0:16:59.000 Tritter, what's the incentive to Sam commits it to anything 0:16:59.080 --> 0:17:00.120 on Friday? 0:17:00.320 --> 0:17:03.760 Tie. I think that's the the you mean. I'd say 0:17:03.600 --> 0:17:06.600 the bar is pretty high at this point. The data 0:17:06.640 --> 0:17:08.280 has been all over the place. You've seen the bigger 0:17:08.320 --> 0:17:11.840 vision to payrolls. I think they've seen enough to start 0:17:11.880 --> 0:17:14.119 to move. I think that's the key here. You know 0:17:14.119 --> 0:17:17.960 we're looking for a cut in September, October, December. I 0:17:18.000 --> 0:17:20.080 think they've seen enough to start moving. But you're right, 0:17:20.240 --> 0:17:23.159 in order to commit to October December, they need to 0:17:23.200 --> 0:17:25.120 really know that things are slowing down. I don't think 0:17:25.160 --> 0:17:26.840 that's the case. So I don't think these calls for 0:17:26.880 --> 0:17:30.159 fifty bases point rate cuts in September are justified, at 0:17:30.240 --> 0:17:32.200 least not yet. But they're going to keep that or 0:17:32.240 --> 0:17:34.560 open everything. I think the bigger problem is if he 0:17:34.600 --> 0:17:37.639 comes in and pushes back on this market pricing and 0:17:37.680 --> 0:17:39.960 he says, you know, why do we need to cut 0:17:40.000 --> 0:17:42.680 it all? That's really when markets will start to get upset, 0:17:42.680 --> 0:17:44.480 because right now markets are trading as though that cut 0:17:44.520 --> 0:17:45.000 is secured. 0:17:45.320 --> 0:17:47.439 Do you think that it's awkward that they're talking about 0:17:47.480 --> 0:17:51.199 cutting rates in twenty five basis points sequential moves for 0:17:51.240 --> 0:17:53.920 the rest of this year, at a time when investment 0:17:53.920 --> 0:17:56.360 grade credits for RIZ or the Titus is nineteen ninety eight. 0:17:57.080 --> 0:18:00.159 I think that the issue is things are okay on 0:18:00.200 --> 0:18:02.360 the surface level. If you dig down into certain parts 0:18:02.359 --> 0:18:04.200 of the economy, if you look at housing, for example, 0:18:04.440 --> 0:18:06.680 if you look at certain portions of the US consumer, 0:18:07.040 --> 0:18:09.520 there are some stresses, but overall, if you do kind 0:18:09.520 --> 0:18:12.400 of a top down analysis, there's really two problems. One 0:18:12.440 --> 0:18:15.080 is that inflation is a little bit uncomfortably high, and 0:18:15.119 --> 0:18:17.199 we don't quite know the pass through yet. We know 0:18:17.240 --> 0:18:19.280 it's kind of getting through there, but it's not as 0:18:19.359 --> 0:18:21.920 terrible as predicted. And the other one is that, yes, 0:18:21.960 --> 0:18:25.760 consumers are moderating, they're purchasing, so do they need a 0:18:25.760 --> 0:18:27.560 little bit of help? Does housing need a little bit 0:18:27.560 --> 0:18:30.120 of help? I think twenty five basis when increments makes sense, 0:18:30.119 --> 0:18:32.440 you kind of start the process and you know, to 0:18:32.520 --> 0:18:35.600 John's point, you don't commit to anything. You just make 0:18:35.640 --> 0:18:37.600 sure that you kind of react to the data as 0:18:37.600 --> 0:18:38.720 it comes in, you know. 0:18:38.760 --> 0:18:40.719 I'm just I keep thinking about a conversation that we 0:18:40.720 --> 0:18:42.680 were having last week about can you have your cake 0:18:42.720 --> 0:18:45.760 and eat it too? Can you essentially have a really 0:18:45.800 --> 0:18:48.359 good economy and a labor market that continues to be 0:18:48.440 --> 0:18:51.480 robust at a time where inflation continues to go down, 0:18:51.800 --> 0:18:54.399 even though right now you still have it at a 0:18:54.400 --> 0:18:57.840 relatively sticky pace, can you? Or is that a fantasy? 0:18:58.240 --> 0:19:00.760 I think it's you know, that would be a fantastic 0:19:00.880 --> 0:19:03.200 end to chair Powace career, where you know you've got 0:19:03.240 --> 0:19:06.359 inflation basically back at two percent, the labor market at 0:19:06.359 --> 0:19:08.919 full employment, and you could just sail out into the sunset. 0:19:08.920 --> 0:19:12.320 That would be fantastic. Reality is often different, But of 0:19:12.359 --> 0:19:14.800 course reality is often a little bit different. I think 0:19:14.800 --> 0:19:17.160