WEBVTT - Debt Ceiling Meeting; Fed President Signals Pause 0:00:02.200 --> 0:00:05.480 From the Bloomberg Interactive Burgers Studios. This is Bloomberg day 0:00:05.480 --> 0:00:07.360 Break for Tuesday, May sixteenth. 0:00:07.400 --> 0:00:10.720 Coming up today, doubts on the dead Speaker McCarthy says 0:00:10.760 --> 0:00:13.240 he's nowhere near a deal with President Biden. 0:00:13.400 --> 0:00:15.800 The US prepares to buy more oil to replenish the 0:00:15.840 --> 0:00:17.000 strategic reserves. 0:00:17.239 --> 0:00:20.400 A top FED official favors pausing great hikes, and. 0:00:20.400 --> 0:00:23.599 Sources say a megadeal in the biotech industry will be 0:00:23.760 --> 0:00:25.120 challenged by regulators. 0:00:25.239 --> 0:00:28.960 Former New York Mayor Rudy Giuliani deni as sexual assault allegations. 0:00:29.000 --> 0:00:32.239 Plus a gunman kills three people while randomly shooting in 0:00:32.280 --> 0:00:35.600 the New Mexico neighborhood. I'm Michael Barr. More ahead from. 0:00:35.560 --> 0:00:38.080 John Stas showering towards the Yankees one in Toronto, the 0:00:38.159 --> 0:00:40.760 Mets lost in Washington. It's down of the final four 0:00:40.840 --> 0:00:42.080 in the Stanley Cup playoff. 0:00:43.720 --> 0:00:47.120 That's all straight ahead on Bloomberg day Break, The Business 0:00:47.159 --> 0:00:49.640 News You need to starn your day in just one 0:00:49.760 --> 0:00:54.240 fifteen minute podcast each morning on Apples, Spotify, the Bloomberg 0:00:54.280 --> 0:00:56.920 Business app, and everywhere you get your podcasts. 0:01:00.000 --> 0:01:01.280 Good morning, I'm Nathan. 0:01:01.040 --> 0:01:04.000 Hager and I'm Karen Moscow. Here are the stories we're 0:01:04.040 --> 0:01:04.840 following today. 0:01:05.080 --> 0:01:07.680 All eyes are back on Washington today for a second 0:01:07.760 --> 0:01:10.080 round of talks on the debt ceiling, with the clock 0:01:10.160 --> 0:01:14.039 ticking toward a potential government default. House Speaker Kevin McCarthy 0:01:14.080 --> 0:01:17.160 says he is nowhere close to a deal with President Biden. 0:01:17.400 --> 0:01:18.119 We only have so. 0:01:18.120 --> 0:01:19.040 Many days left. 0:01:19.520 --> 0:01:22.280 The President decided to wait one hundred. 0:01:22.040 --> 0:01:24.399 Days before he would negotiate. 0:01:25.400 --> 0:01:27.520 He treated this the same way he treated the border. 0:01:27.520 --> 0:01:30.680 He wanted to ignore the problem. Speaker McCarthy says staff 0:01:30.760 --> 0:01:33.759 level talks have not been productive. The President is insisting 0:01:33.800 --> 0:01:36.280 on a clean debt ceiling increase and leaving talks on 0:01:36.360 --> 0:01:39.360 spending to the budget process. But former White House Budget 0:01:39.360 --> 0:01:42.160 Director Mick mulvaney says it seems there's never a right 0:01:42.200 --> 0:01:44.120 time to talk about spending in Washington. 0:01:44.280 --> 0:01:46.320 Apparently, it's not when we do a budget, because that 0:01:46.440 --> 0:01:48.160 leads to a government shutdown. We can't do that. We 0:01:48.200 --> 0:01:50.120 can't do it when i'm debt ceiling because that leads 0:01:50.120 --> 0:01:51.720 to default on the day. But when it is a 0:01:51.720 --> 0:01:53.680 good time. It doesn't seem as ever a good time 0:01:54.040 --> 0:01:56.520 in Washington, DC for some people, at least to talk 0:01:56.560 --> 0:01:59.320 about spending. Less a lot of folks never want to 0:01:59.360 --> 0:02:01.480 have that discuss and that's where I think frustrates a 0:02:01.520 --> 0:02:03.960 lot of Republicans. Just look, we get it. We'd rather 0:02:04.000 --> 0:02:05.720 not talk about it here, We'd rather talk about it 0:02:05.800 --> 0:02:08.440 on a regular day, but no one talks about it 0:02:08.440 --> 0:02:08.760 with us. 0:02:09.200 --> 0:02:11.720 Former White House Budget Director mc mulvaney spoke with our 0:02:11.800 --> 0:02:14.920 Washington correspondent Joe Matthew on Bloomberg's Sound on Catch the 0:02:14.960 --> 0:02:17.840 show weekdays at one pm Eastern on Bloomberg Radio or 0:02:17.880 --> 0:02:19.799 on demand wherever you get your podcasts. 0:02:20.040 --> 0:02:22.280 Well, Nathan, the US is already paying a price for 0:02:22.360 --> 0:02:24.720 its failure to raise the dead limit. That's the word 0:02:24.760 --> 0:02:28.799 from Treasury Secretary Jenety Yellen and a letter can congressional leaders. 0:02:28.880 --> 0:02:32.480 Yellen said, quote, We've already seen Treasury's borrowing costs increase 0:02:32.520 --> 0:02:36.720 substantially for securities maturing in early June. Yellen says that's 0:02:36.760 --> 0:02:39.040 the time when the Treasury risks running out of cash 0:02:39.080 --> 0:02:40.160 for its obligations. 0:02:40.280 --> 0:02:43.320 Well, the debt sailing negotiations continue, Karen, the US is 0:02:43.400 --> 0:02:46.520 buying more oil. The Energy Department's preparing to purchase up 0:02:46.560 --> 0:02:49.240 to three million barrels of crude to refill its strategic 0:02:49.280 --> 0:02:52.880 petroleum Reserve the country's emergency stockpiles at its lowest level 0:02:52.880 --> 0:02:56.079 since nineteen eighty three, after releasing more than two hundred 0:02:56.120 --> 0:02:58.880 million barrels to curb high energy prices last year and 0:02:58.960 --> 0:03:02.440 checking prices right now now NYMXED crewed is up twelve cents. 0:03:02.440 --> 0:03:04.600 It's seventy one dollars twenty three cents a barrel. 0:03:04.880 --> 0:03:07.160 Well, turning to the economy now, Nathan, there are more 0:03:07.200 --> 0:03:09.920 signs the Fed may hold off on more rate hikes 0:03:09.919 --> 0:03:12.720 to be caught up with Atlanta FED President Rafael Bostik. 0:03:13.080 --> 0:03:16.360 In today's environment where there's so much uncertainty in the economy, 0:03:16.680 --> 0:03:19.000 I don't think we can really rule out anything. If 0:03:19.040 --> 0:03:21.359 I had to have a vote right now, i'd probably 0:03:21.440 --> 0:03:24.480 vote to hold. But we've got two more inflation readings, 0:03:24.520 --> 0:03:26.280 we have a jobs report that's got to come out. 0:03:26.440 --> 0:03:28.760 There's a lot more information we're going to have as 0:03:28.800 --> 0:03:29.639 to what's going on. 0:03:30.160 --> 0:03:32.680 And Atlanta FED President Rafael Bostik made the comments in 0:03:32.720 --> 0:03:35.240 an interview with Bloombergy, So Michael McKee stay tuned for 0:03:35.240 --> 0:03:38.240 more of that conversation coming up shortly on Bloombergy Daybreak. 0:03:38.360 --> 0:03:40.720 Now, Under the equity markets, Karen where we're finding out 0:03:40.720 --> 0:03:42.640 what some of the biggest names on Wall Street have 0:03:42.720 --> 0:03:45.960 been doing with their money. Bloomberg's John Tucker joins us 0:03:46.000 --> 0:03:46.560 with details. 0:03:46.640 --> 0:03:50.400 John Yeah Nathan required Quarterly reports filed with regulators show 0:03:50.680 --> 0:03:54.520 Warren Buffett's Berkshire Hathaway made a bet on Capital One 0:03:54.680 --> 0:03:58.200 Financial during the regional bank turmoil. It may have paid 0:03:58.240 --> 0:04:00.920 off if Capital One surged as much is nine point 0:04:00.960 --> 0:04:04.840 six percent. Overall, Buffett was a net seller of stocks 0:04:04.840 --> 0:04:07.280 in the first quarter and pocket at ten point four 0:04:07.400 --> 0:04:11.440 billion dollars. Michael Burry, the money manager made famous in 0:04:11.480 --> 0:04:13.760 The Big Short, now has a big long when it 0:04:13.800 --> 0:04:17.279 comes to China. He boosted bullish bets on e commerce 0:04:17.320 --> 0:04:20.680 giantsjad dot Com and to Ali bomba group. He made 0:04:20.720 --> 0:04:23.640 those bets even as other hedge funds cool on China, 0:04:24.000 --> 0:04:28.120 and the filings also show activists investor Nelson Peltz recently 0:04:28.160 --> 0:04:31.520 adding to his stake in Walt Disney after calling off 0:04:31.520 --> 0:04:34.360 a proxy fight earlier this year in New York. I'm 0:04:34.440 --> 0:04:36.200 John Tucker, Bloomberg day break. 0:04:36.040 --> 0:04:39.160 All right, John? Thanks Meantime, the mood among global fund 0:04:39.240 --> 0:04:42.520 managers appears to be souring, According to Bank of America's 0:04:42.600 --> 0:04:46.279 latest survey investors are flogging to cash amid concerns at 0:04:46.279 --> 0:04:49.360 a recession and credit cruncher looming. The sentiment among fund 0:04:49.400 --> 0:04:52.240 managers and may deteriorated to the most bearish this year. 0:04:52.520 --> 0:04:55.800 Sixty five percent of survey participants say they now expect 0:04:55.839 --> 0:04:56.919 a weaker economy. 0:04:57.120 --> 0:04:59.880 Well this morning, Karen Omega deal in the biotech in 0:05:00.000 --> 0:05:03.600 my history is in jeopardy. Amgen's twenty seven billion dollar 0:05:03.680 --> 0:05:07.800 agreement to buy Horizon Therapeutics will be challenged by federal regulators. 0:05:08.000 --> 0:05:10.520 Sources say the Federal Trade Commissions expected to file a 0:05:10.640 --> 0:05:13.360 lawsuit today to block the purchase. It'll argue the tie 0:05:13.440 --> 0:05:16.279 up with hamper innovation and slow the pace of drug development. 0:05:16.440 --> 0:05:19.400 Shares of Horizon are down eighteen percent in early trading. 0:05:19.760 --> 0:05:22.280 On another corporate news, Nathan Wells Fargo has agreed to 0:05:22.320 --> 0:05:26.440 pay one billion dollars to settle a shareholder lawsuit. Plaintiff's 0:05:26.440 --> 0:05:30.120 accuse the bank of making misleading statements about its compliance 0:05:30.200 --> 0:05:33.080 with federal consent orders that was in the wake of 0:05:33.080 --> 0:05:36.120 the twenty sixteen scandal over opening unauthorized accounts. 0:05:36.200 --> 0:05:38.080 Also are in the banking industry, Care and more job 0:05:38.120 --> 0:05:40.359 cuts maybe on the way. Bloomberg News has learned Morgan 0:05:40.400 --> 0:05:43.360 Stanley's considering a seven percent cut to its Asia Pacific 0:05:43.400 --> 0:05:46.080 investment bank. Deal making slowed in China due to weaker 0:05:46.080 --> 0:05:49.120 economic growth and worsening US relations. The cuts are part 0:05:49.120 --> 0:05:51.839 of Morgan's plan to reduce about three thousand jobs globally 0:05:51.880 --> 0:05:52.839 by the end of this quarter. 0:05:53.240 --> 0:05:55.400 And finally, Nathan Elon Musk is being tied up in 0:05:55.440 --> 0:05:59.000 controversy surrounding Jeffrey Epstein. The Tesla CEO is being issued 0:05:59.000 --> 0:06:02.760 a subpoenas JP Morgan's lawsuit over Epstein, and Bloomberg's Ed 0:06:02.800 --> 0:06:04.039 Baxter has the story. 0:06:04.480 --> 0:06:07.039 This comes from the US Virgin Islands, where the US 0:06:07.080 --> 0:06:11.400 claims JP Morgan Chase knowingly benefited from Jeffrey Epstein's sex 0:06:11.640 --> 0:06:15.560 trafficking operation. The core papers say the government had reasonab 0:06:15.560 --> 0:06:18.960 believe Epstein may have referred or attempted to refer Musk 0:06:19.000 --> 0:06:22.720 as a client. Several other billionaires, including Google co founders 0:06:22.760 --> 0:06:26.440 Larry Page and Sergei Brinn, have also been issued subpoenas. 0:06:26.960 --> 0:06:30.520 The paperwork asks for any documents regarding Epstein's involvement in 0:06:30.600 --> 0:06:34.719 human trafficking in San Francisco. I'm at Baxter Bloomberg Daybreak 0:06:34.760 --> 0:06:35.680 straight ahead. 0:06:35.400 --> 0:06:38.200 Your latest local headlines in the check of sports. This 0:06:38.800 --> 0:06:43.640 is Bloomberg Time Now to take a look at some 0:06:43.640 --> 0:06:45.520 of the other stories making news in New York and 0:06:45.640 --> 0:06:47.440 around the world, with Bloomberg's Michael Vaar. 0:06:47.480 --> 0:06:50.679 Good morning, Michael, Good morning Nathan. Parents and school children 0:06:50.720 --> 0:06:53.599 in New York City are expressing their concerns about the 0:06:53.640 --> 0:06:58.080 city's plan to temporarily house some asylum seekers at school 0:06:58.160 --> 0:07:00.960 gyms as bus loads of Mike griants keep arriving in 0:07:00.960 --> 0:07:03.760 the city. While some parents say the migrants need help, 0:07:03.880 --> 0:07:07.280 they are concerned about safety. This woman lives near PS 0:07:07.360 --> 0:07:09.200 one eighty eight in Coney Island. 0:07:09.400 --> 0:07:11.360 Why don't we put them in Gracie Mansion. You look 0:07:11.400 --> 0:07:13.600 at some place to put them, Put them into people 0:07:13.880 --> 0:07:17.440 who are elected who put this in place, put them 0:07:17.440 --> 0:07:20.800 in their backyards, because you've dumped on us long enough. 0:07:21.000 --> 0:07:23.800 About seventy five adult migrants are staying in the gym 0:07:23.880 --> 0:07:27.120 that is not connected to the school. Attorneys from marine 0:07:27.200 --> 0:07:30.080 veteran Daniel Penny are defending his decision to put Jordan 0:07:30.160 --> 0:07:33.000 Neely in a chokehold on a New York subway train 0:07:33.080 --> 0:07:36.520 earlier this month. Neely, who was homeless was later pronounced dead. 0:07:37.040 --> 0:07:40.880 Penny's defense says Neely had been threatening passengers, but prosecutors 0:07:40.920 --> 0:07:44.360 say there was no indication Neely was violent. Meanwhile, a 0:07:44.440 --> 0:07:47.520 legal defense fund for Penny has surpassed two million dollars 0:07:47.800 --> 0:07:51.320 with donations from kid Rock and endorsement from Florida Governor 0:07:51.360 --> 0:07:55.000 Ron Dessentis. Police in Farmington, New Mexico, say it appears 0:07:55.040 --> 0:07:57.720 an eighteen year old gunman who shot and killed three 0:07:57.760 --> 0:08:01.160 people and wounded six others, fired to add random as 0:08:01.160 --> 0:08:04.560 he roamed the neighborhood. Authorities say it appears the suspect 0:08:04.600 --> 0:08:08.080 fired at least three weapons, including an ar style rifle, 0:08:08.320 --> 0:08:12.120 shooting at homes and cars. Farmington, New Mexico, Police Chief 0:08:12.120 --> 0:08:13.080 Steve Hebby. 0:08:13.080 --> 0:08:16.640 It's difficult to understand how something like this happens, but 0:08:16.680 --> 0:08:18.040 we are doing the best that we can. 0:08:18.800 --> 0:08:22.280 He's through and talk with family members of the suspect. 0:08:22.680 --> 0:08:25.920 Chief Hebby says the gunman was shot and killed. Rudy 0:08:25.960 --> 0:08:29.280 Giuliani is denying sexual assault allegations and a new ten 0:08:29.320 --> 0:08:32.480 million dollar lawsuit. The former mayor of New York City 0:08:32.520 --> 0:08:36.360 is also accused of harassing a former employee, Noelle Dunfee 0:08:36.400 --> 0:08:39.720 claims she has audio recordings to back up her claims. 0:08:40.240 --> 0:08:44.320 Two staffers for Virginia Democratic Congressman Jerry Connolly were attacked 0:08:44.320 --> 0:08:47.720 by a man with a baseball bat in Connolly's district office. 0:08:48.080 --> 0:08:51.280 Sergeant Lisa Gardner of the Fairfax Police. 0:08:50.960 --> 0:08:55.840 We found two victims. They sustained non life threatening, non 0:08:55.880 --> 0:09:00.640 life threatening injuries, and they were both transported to local hospitals. 0:09:00.960 --> 0:09:04.760 Sergeant Gardner says the suspect is in custody. Global News 0:09:04.800 --> 0:09:07.679 twenty four hours a day, powered by more than twenty 0:09:07.720 --> 0:09:10.720 seven hundred journalist nanalysts and over one hundred and twenty countries. 0:09:10.920 --> 0:09:13.120 I'm Michael Barr. This is Bloomberg, Nathan. 0:09:13.120 --> 0:09:20.120 Thanks Michael. Time now for our Bloomberg Sports update, brought 0:09:20.120 --> 0:09:22.679 to you by Tri State Outy. Good morning, John stash. 0:09:22.400 --> 0:09:25.280 Hour, Good morning, Nathan. The Yankees went to Toronto the record 0:09:25.280 --> 0:09:28.480 of just three and nine in series openers, first of 0:09:28.520 --> 0:09:30.680 four with the Blue Jays second batter of the game. 0:09:30.840 --> 0:09:32.839 Two swing at a high drive. 0:09:32.920 --> 0:09:35.320 It's right field and pretty deep for Springer. He's gonna 0:09:35.360 --> 0:09:38.480 turn and watch it. It's gone a home run into the 0:09:38.520 --> 0:09:43.320 elevated Yankee bullpenning straightaway right Aaron Judge is gone yard 0:09:43.440 --> 0:09:45.760 here in the top of the first off, Alex manoah 0:09:46.120 --> 0:09:48.760 it is home run number nine and the Yankees are 0:09:48.760 --> 0:09:50.920 in front one on Wfan. 0:09:51.000 --> 0:09:54.040 Three batters later, a Willie Calhoun two run shot Judge 0:09:54.080 --> 0:09:56.559 it another solo shot eighth in, and that one went 0:09:56.600 --> 0:09:59.280 four hundred and sixty two feet to straightaway centers for 0:09:59.320 --> 0:10:01.960 four homers in the last three games for the American 0:10:02.080 --> 0:10:04.800 League's all time single season leader. The Yanks led seven 0:10:04.840 --> 0:10:07.480 nothing held on to win seven to four. Mets lost 0:10:07.480 --> 0:10:10.440 in Washington ten three. David Peterson's now one in six 0:10:10.480 --> 0:10:13.520 with an eight ERA, and the Mets have lost fifteen 0:10:13.520 --> 0:10:15.600 of their last twenty one, haven't won a series in 0:10:15.640 --> 0:10:18.720 a month, and this next series won't be easy, hosting 0:10:18.760 --> 0:10:21.160 Tampa Bay, who comes in with a record of thirty 0:10:21.200 --> 0:10:24.120 one and eleven. Justin Erlander on the mound tonight, his 0:10:24.200 --> 0:10:27.200 first city field start as the met NBA and NHL 0:10:27.200 --> 0:10:29.600 playoffs both down to the final four. The NBA's West 0:10:29.600 --> 0:10:33.640 Finals start tonight in Denver Nuggets and Lakers. Nuggets have 0:10:33.720 --> 0:10:35.679 never played in the NBA Finals. They are zero to 0:10:35.679 --> 0:10:37.680 four in this round, and three of those losses have 0:10:37.720 --> 0:10:40.440 been against La the East Finals start tomorrow in Boston. 0:10:40.800 --> 0:10:41.720 Celtics and Hey. 0:10:41.679 --> 0:10:44.280 Dallas Stars into the Stanley Cup West Final, beat Seattle 0:10:44.280 --> 0:10:46.800 in game seven two to one, will now take on Vegas. 0:10:46.920 --> 0:10:50.240 NFL broadcasting news Matt Ryan said he's not necessarily retiring 0:10:50.559 --> 0:10:53.000 after fifteen seasons, but he is joining the CBS as 0:10:53.040 --> 0:10:55.040 an analyst, and the NFL says one of the wild 0:10:55.080 --> 0:10:59.400 card playoff games will be aired on Peacock, NBC's streaming service, 0:10:59.440 --> 0:11:03.880 so it won't be on free TV. John Stashedward Bloomberg Sports. 0:11:05.760 --> 0:11:09.160 Live from coast to coast, from New York to San Francisco, 0:11:09.360 --> 0:11:14.440 Boston to Washington, DC, nationwide on SIRISXAM, the Bloomberg Business app, 0:11:14.480 --> 0:11:18.000 and Bloomberg dot Com. This is Bloomberg Daybreak. 0:11:18.920 --> 0:11:21.520 Good morning. I'm Nathan Hager. There is no sign of 0:11:21.600 --> 0:11:23.560 rate cuts in the near term. That's the word from 0:11:23.600 --> 0:11:27.720 Atlanta FED President Rafael Bostik, speaking with Bloomberg's Michael mckeeb 0:11:27.800 --> 0:11:32.040 about monetary policy, inflation, and the recent banking crisis. Bostik 0:11:32.080 --> 0:11:35.200 says there's still ways to go to tame price pressures, 0:11:35.240 --> 0:11:37.920 and he hinted at what the Fed's next move might 0:11:37.960 --> 0:11:41.760 be at next month's FOMC meeting. Let's listen in to 0:11:41.840 --> 0:11:42.559 that conversation. 0:11:42.679 --> 0:11:47.640 Now, headline CPI and core CPI have come down from 0:11:47.800 --> 0:11:50.640 their peaks, but they seem to have kind of stalled out. 0:11:50.960 --> 0:11:55.320 The Atlanta Fed has an underlying inflation dashboard that shows 0:11:55.360 --> 0:11:58.400 a bunch of other measures of inflation, and a lot 0:11:58.440 --> 0:12:01.959 of those are worse now than they were a year ago. 0:12:02.280 --> 0:12:03.800 So has the Fed done enough? 0:12:04.679 --> 0:12:06.959 Well, First of all, thanks for being here. It's really 0:12:07.000 --> 0:12:10.400 good to have Bloomberg is an attendee at our conference. 0:12:10.440 --> 0:12:13.720 This is a really good group and your team really 0:12:13.720 --> 0:12:15.880 contributes a lot to that. And when I think about 0:12:15.920 --> 0:12:19.400 the trajectory of inflation, I think that we've made a 0:12:19.440 --> 0:12:21.920 really good progress on it. If you think about where 0:12:21.960 --> 0:12:25.560 the economy was and where inflation was last summer compared 0:12:25.559 --> 0:12:29.559 to where it is today, we've seen really positive things happen. 0:12:29.559 --> 0:12:32.640 We're not the nine and ten percent levels. We're in 0:12:32.720 --> 0:12:35.400 four and a half to five range. Now, look that's 0:12:35.440 --> 0:12:38.960 still twice two times what our target is, so there's 0:12:39.000 --> 0:12:41.719 still a ways to go. But I do think that 0:12:42.000 --> 0:12:45.800 we've seen a lot of some of the frost really 0:12:46.640 --> 0:12:49.240 come out of the inflation measure. Now, one of the 0:12:49.280 --> 0:12:51.400 things I look at one of the measures I try 0:12:51.480 --> 0:12:54.480 to keep track of is the number of goods in 0:12:54.520 --> 0:12:58.199 the basket of that's used to calculate the CPI that 0:12:58.400 --> 0:13:01.920 are showing inflation above five percent Right now, in the 0:13:02.000 --> 0:13:05.360 latest report, that came under fifty percent, less than half 0:13:05.440 --> 0:13:08.599 no hour in that range from one point it was 0:13:08.640 --> 0:13:10.840 seventy or eighty percent. So I think we're seeing that 0:13:10.880 --> 0:13:13.719 breath narrow and that's a really positive sign. So I 0:13:13.760 --> 0:13:16.720 think we are starting to see our policies really work. 0:13:16.960 --> 0:13:20.160 But do you rule out any more additional rate increases? 0:13:20.960 --> 0:13:21.120 No? 0:13:21.320 --> 0:13:24.400 Oh no. Look in today's environment, where there's so much 0:13:24.480 --> 0:13:26.959 uncertainty in the economy, I don't think we can really 0:13:27.040 --> 0:13:29.599 rule out anything. Look, I think we are in a 0:13:29.640 --> 0:13:32.920 place now where we've been in restrictive territory for something 0:13:32.960 --> 0:13:35.480 like six to eight months. That's about the time you'd 0:13:35.520 --> 0:13:38.840 expect to see our policies start to bind on the economy. 0:13:38.840 --> 0:13:41.800 And when I talk to businesses, they tell me they're 0:13:41.840 --> 0:13:44.440 starting to feel that bind, and that's a really positive thing. 0:13:45.080 --> 0:13:48.560 But as you know, we've had surprise after surprise after 0:13:48.640 --> 0:13:51.280 surprise over the last few years, and most of them 0:13:51.360 --> 0:13:53.679 have been to the negative. When it comes to getting 0:13:53.679 --> 0:13:55.880 closer to our inflation target. So I've got to keep 0:13:55.880 --> 0:13:58.760 that on the table for sure. But right now I'm 0:13:58.800 --> 0:14:03.600 feeling like, let's see how our restrictive policy is working 0:14:04.160 --> 0:14:06.280 and that'll give me a sense of what our next 0:14:06.280 --> 0:14:06.960 move needs to be. 0:14:07.240 --> 0:14:10.040 Well, you still have a PC inflation report and a CPI. 0:14:10.280 --> 0:14:12.679 We got two more exactly for your next meeting. 0:14:13.559 --> 0:14:17.120 What are you thinking now though for the June meeting? 0:14:17.559 --> 0:14:19.120 Well, if you if I had to have a vote 0:14:19.160 --> 0:14:23.000 right now, I'd probably vote to hold. But as you noted, 0:14:23.320 --> 0:14:26.400 we've got two more inflation readings. We have a job's number, 0:14:26.640 --> 0:14:28.600 a jobs report that's going to come out. There's a 0:14:28.640 --> 0:14:30.960 lot more information we're going to have as to what's 0:14:31.040 --> 0:14:34.720 going on. But again, the folks, I'm talking to the 0:14:34.760 --> 0:14:38.400 businesses across the sixth district and even in our survey responses, 0:14:38.440 --> 0:14:40.840 they're all telling us that there is a lot of 0:14:41.640 --> 0:14:44.520 slow down that is that is on the way, and 0:14:44.800 --> 0:14:48.480 that really gives me some comfort that we're kind of 0:14:48.520 --> 0:14:50.320 in a place where we can let that play out 0:14:50.880 --> 0:14:52.440 and then we'll see where what we need to do 0:14:52.480 --> 0:14:53.120 at that point. 0:14:53.440 --> 0:14:56.000 We are speaking with Rafael Bostics, the president of the 0:14:56.200 --> 0:14:59.600 Atlanta Federal Reserve. You're talking about what the businesses are 0:14:59.600 --> 0:15:02.800 telling you. What are they saying about their pricing power 0:15:02.920 --> 0:15:06.120 and their plans to use it or not be able to. 0:15:06.600 --> 0:15:09.320 So, you know what's really interesting. Through most of the pandemic, 0:15:09.440 --> 0:15:12.120 our business contacts have said, if we needed to raise 0:15:12.160 --> 0:15:15.160 prices because our costs are for input, we're going up, 0:15:15.360 --> 0:15:18.320 they could just pass that through, and the consumers were 0:15:18.520 --> 0:15:22.400 accepting that. I'm hearing much much less of that now, 0:15:22.840 --> 0:15:26.280 and many of the businesses and the people in the 0:15:26.280 --> 0:15:29.440 marketplace are telling me they're pretty much at the limit, 0:15:29.800 --> 0:15:33.160 and their ability to continue to raise price and pass 0:15:33.200 --> 0:15:36.880 through those higher costs is far degraded, in part because 0:15:36.920 --> 0:15:40.440 consumers have become a lot more price sensitive, which again 0:15:40.560 --> 0:15:42.560 is I think these are the things that we'd want 0:15:42.600 --> 0:15:45.880 to see if we were getting to a place where 0:15:45.880 --> 0:15:49.880 the economy was moving back to balance, which then would 0:15:49.880 --> 0:15:53.240 get us to that two percent target. So pricing power 0:15:53.280 --> 0:15:57.440 is not nearly as clear and as ruthless as it 0:15:57.480 --> 0:15:59.640 has been. I think that's really positive development. 0:16:00.080 --> 0:16:03.680 What about on the employment side, FED forecast at five 0:16:04.320 --> 0:16:07.360 basis points of tightening should be raising the unemployment rate. 0:16:07.480 --> 0:16:10.200 Instead it's gone down. What are they saying about their 0:16:10.240 --> 0:16:11.080 plans for labor. 0:16:11.280 --> 0:16:13.040 Well, I would say two things on this. So first, 0:16:13.960 --> 0:16:17.720 everyone is telling me that their labor market experiences, their 0:16:18.200 --> 0:16:22.160 ability to hire, and their turnover internal to their business 0:16:22.480 --> 0:16:25.200 is far better than it was last summer. Now it 0:16:25.240 --> 0:16:28.480 is not still elevated and tougher than it was before, 0:16:28.880 --> 0:16:32.920 but there has been progress made. The second piece to this, though, 0:16:33.040 --> 0:16:35.480 is that we just came through a pandemic where many 0:16:35.520 --> 0:16:39.120 families are thinking about how they're going to work. Many 0:16:39.320 --> 0:16:42.560 many employees are thinking what is my connection to the 0:16:42.600 --> 0:16:45.720 labor market. We had all these retirements, so there's a 0:16:45.760 --> 0:16:48.920 lot of churn that's happening. I think that's contributed to 0:16:48.960 --> 0:16:54.080 some of the historically low unemployment numbers that we've seen. 0:16:54.320 --> 0:16:56.120 If I could use a phrase you're not allowed to 0:16:56.160 --> 0:16:58.720 use in economics, is this time different in the sense 0:16:58.760 --> 0:17:01.880 that it was so hard for companies to hire coming 0:17:01.920 --> 0:17:03.800 out of the pandemic, that this time they're going to 0:17:03.840 --> 0:17:06.479 hoard labor and we may not see the kind of 0:17:07.119 --> 0:17:08.880 unemployment rates that you forecast. 0:17:09.320 --> 0:17:12.880 Well, I am hearing that businesses are saying, we don't 0:17:12.880 --> 0:17:15.600 want to let some of our best people go because 0:17:16.920 --> 0:17:18.720 it may be very difficult to get them back. I 0:17:18.760 --> 0:17:21.280 am definitely hearing that, but I'm mindful for how you 0:17:21.320 --> 0:17:25.560 started this. Every time there's a declaration that this time 0:17:25.680 --> 0:17:28.359 is totally different, it winds up not being totally different. 0:17:28.440 --> 0:17:31.199 So we're going to just keep our eyes open, my 0:17:31.280 --> 0:17:33.040 eyes open, and our team. We're going to be out 0:17:33.040 --> 0:17:36.760 there really trying to understand where things stand. I do 0:17:36.840 --> 0:17:42.200 think when the pandemic is triggering some real structural changes 0:17:42.359 --> 0:17:43.920 that it's going to take a while for us to 0:17:44.000 --> 0:17:48.320 understand those things. But we're going to have to understand 0:17:48.400 --> 0:17:51.280 those before I'll be willing to make any declaration that 0:17:51.880 --> 0:17:54.240 the old laws of labor markets don't apply. 0:17:54.480 --> 0:17:55.760 I want to follow up on that in a second, 0:17:55.800 --> 0:17:57.760 but first let me ask you about banks, because there's 0:17:57.760 --> 0:17:59.840 been a lot of talk about that. Thanks all, we 0:18:00.160 --> 0:18:03.000 titan credit standards. When the Fed is raising interest rates 0:18:03.200 --> 0:18:06.639 and loan demand always falls. So the real question is 0:18:06.680 --> 0:18:09.520 are you seeing anything or do you anticipate anything that 0:18:09.600 --> 0:18:12.240 would be worse than normal in terms of credit. 0:18:13.119 --> 0:18:16.360 That's a good question. So look, as you noted, when 0:18:16.400 --> 0:18:19.520 we raise interest rates at the Federal serve, we expect 0:18:19.840 --> 0:18:23.120 loan conditions of learning conditions to tighten. That has happened 0:18:24.040 --> 0:18:26.639 that I usually don't want it to happen as in 0:18:26.800 --> 0:18:29.240 such as volatile a way as it has with the 0:18:29.280 --> 0:18:33.520 Silicon Valley bank challenge and other things. But a lot 0:18:33.520 --> 0:18:36.840 of this is going as expected as I expected it would. 0:18:37.400 --> 0:18:40.119 Now the question is is it going to accelerate, is 0:18:40.160 --> 0:18:41.520 it going to stay where it is, or is it 0:18:41.560 --> 0:18:43.879 going to slow down. The bankers that I talked to 0:18:44.320 --> 0:18:47.879 tell me that the rise of liquidity risk as something 0:18:47.920 --> 0:18:51.159 that's really on their radar screen has caused them to 0:18:51.240 --> 0:18:56.119 want to be more conservative in terms of their willingness 0:18:56.119 --> 0:19:00.199 and desire to lend. But I'm not hearing right now 0:19:00.200 --> 0:19:03.439 that they've gone into hyper mode where we really have 0:19:03.520 --> 0:19:06.520 something that I would characterize as a credit crunch. We're 0:19:06.560 --> 0:19:09.560 not there today, and I'll be monitoring to see if 0:19:09.600 --> 0:19:11.200 we get closer to something like that. 0:19:12.240 --> 0:19:14.560 The fit is sketched out a sort of backward looking 0:19:14.920 --> 0:19:18.000 monetary policy framework, and that you're looking at inflation numbers 0:19:18.000 --> 0:19:21.679 for quote, a clear and convincing evidence that the price 0:19:21.920 --> 0:19:24.760 level is coming down? Is it time to switch to 0:19:24.760 --> 0:19:29.480 you more forward looking kind of policy to find indicators 0:19:29.480 --> 0:19:31.679 that tell you what's going to happen rather than what 0:19:31.840 --> 0:19:33.200 has well I would. 0:19:33.040 --> 0:19:36.560 Say we've always done both right, So we definitely want 0:19:36.560 --> 0:19:39.280 to see what the official numbers are saying. But through 0:19:39.359 --> 0:19:43.120 our Regional Economic Information Network, we are talking to businesses 0:19:43.160 --> 0:19:45.840 all the time through our surveys. We have a pretty 0:19:46.080 --> 0:19:49.000 robust survey shop, and we're talking to businesses and we 0:19:49.040 --> 0:19:51.679 get feedback from businesses in those cases, and some of 0:19:51.720 --> 0:19:55.440 the questions we ask are, as you're setting wages moving forward, 0:19:55.840 --> 0:19:58.520 are you doing that as a catchup because your workers 0:19:58.520 --> 0:20:00.280 feel like they're falling behind, or are you doing that 0:20:00.320 --> 0:20:03.600 because you think that pricing is going to be where 0:20:03.640 --> 0:20:06.520 you need to do that Today, what businesses are telling 0:20:06.600 --> 0:20:09.119 us is that they're in catchup mode. Their employees know 0:20:09.160 --> 0:20:12.679 that they've been their wages have fallen behind inflation, and 0:20:12.720 --> 0:20:15.399