Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The single best idea is maybe I should take off
Speaker 2: when vix explodes from eighteen out to twenty three. I
Speaker 2: guess it was out to sixty. Quite a Monday, to
Speaker 2: say the least. And I thought that a lot of
Speaker 2: the coverage was spot on and wonderful. A major shout
Speaker 2: out to Bloomberg and Tokyo, who I thought off Bloomberg Intelligence,
Speaker 2: Bloomberg Markets, and Bloomberg News had some really informed coverage.
Speaker 2: Where I take issue is the waiting of the worry
Speaker 2: waiting I mean not wait, but w eighd the waiting
Speaker 2: of the different worries. And it was a joy to
Speaker 2: have Mohammado Arian with us today. This was scheduled and
Speaker 2: just wonderful to have them on as we pick up
Speaker 2: the pieces of maybe a flash crash. Maybe it's more
Speaker 2: than that. It's not for me to say, but to me,
Speaker 2: there has to be a study of the worst financial
Speaker 2: experiment in my lifetime, which is Japan. This has been
Speaker 2: a theme of Bloomberg surveillance for years, going back to
Speaker 2: Martin Feldstein of Harvard University. I should mention Robbie Feldman
Speaker 2: of Morgan Stanley providing a wonderful perspective. Here, my visits
Speaker 2: to Japan years ago really underscored not a malaise but
Speaker 2: just a unique demography of Japan. Here is Mohammad Alarian
Speaker 2: of Queen's College on the legacy of Martin Feldstein and Japan.
Speaker 1: When you won an economy at low growth, high debt,
Speaker 1: zero interest rates, and quantitative easing for a number of decades,
Speaker 1: and that's what happened to Japan, then you get first
Speaker 1: the contrast that Madi Feldstein correctly pointed out, which is
Speaker 1: the numbers are awful, but the stock numbers are great.
Speaker 1: So a wealthy economy that nevertheless doesn't grow. But importantly,
Speaker 1: you encourage that wealth to go seek higher returns elsewhere.
Speaker 1: And that's what happened. The Japanese financial system became very
Speaker 1: large holders of other people's securities. Then when you change
Speaker 1: the regime and you raise interest rates, the currency appreciates,
Speaker 1: inflation comes back. Suddenly people cannot refinance these positions and
Speaker 1: are either actual or perceived sales. So what happened in
Speaker 1: the last few days is a shock that started in
Speaker 1: the US migrated to Japan. It then exposed a vulnerability
Speaker 1: that a lot of people knew about but didn't take
Speaker 1: a serious way, and then that got amplified, and then
Speaker 1: it came back here one day.
Speaker 2: And of course I should mention all of his great
Speaker 2: work and his academics as he went to the IMF.
Speaker 2: In his ute was game theory of really really thinking.
Speaker 2: And I should mention that in the United Kingdom there's
Speaker 2: a cottage industry, a heritage around names like Ramsey and
Speaker 2: Morganthon and others of game theory. And this is something
Speaker 2: Alarian is definitive. I kid him about tea decisions and
Speaker 2: all that one of the TA decisions is what will
Speaker 2: the FED do now? When the facts change? They change?
Speaker 2: And doctor Alarian was adamant that it is a different
Speaker 2: Jackson Hole as of yesterday. Here's Mohammad Alarian on Powell
Speaker 2: at Jackson Hall.
Speaker 1: The marketplace thinks it is whether to cut twenty five,
Speaker 1: fifty or seventy five in September. That is what the
Speaker 1: marketplace thinks. I would bring you to the end of
Speaker 1: this month and Jackson Hall. He has a golden opportunity
Speaker 1: to regain control of the policy narrative, and to do
Speaker 1: that he has to pay some risk in laying out
Speaker 1: what he thinks the neutral interest rate is in discussing
Speaker 1: like the back I think has discussed what structural changes
Speaker 1: are happening to the domestic economy and to the global economy.
Speaker 1: So for me, his teen decision is actually at Jackson Hall,
Speaker 1: whether he just gives a mail in speech or whether
Speaker 1: he tries to regain control of the policy narrative.
Speaker 2: Brilliantly said, and this so often Doctoral Aria and maybe
Speaker 2: elucidates what we're thinking but can't quite do with his
Speaker 2: great skill. Lisa Bramwots and I will attend Jackson Hall
Speaker 2: with the wonderful Michael McKee. We're already working on a
Speaker 2: great guest list. It's going to be fascinating. I do
Speaker 2: agree with doctor Larian that the dialogue changed yesterday for
Speaker 2: Jackson Hall. That could easily make it eventful. We'll get
Speaker 2: some more jobs reports and such to make it exciting.
Speaker 2: But I really do agree that then all of a sudden,
Speaker 2: Jackson Hall is a chance for the chairman to write
Speaker 2: the ship. After that audio that you just heard, I
Speaker 2: asked him about measured fed action versus some more ad
Speaker 2: hoc fed and go back and listen to the entire interview. Folks,
Speaker 2: A generous amount of time with doctor Alarian. Of course
Speaker 2: he had to go after the Mets, and we didn't
Speaker 2: mention it was Jets New York, Jets free here and
Speaker 2: the pillars of our economy and our crisis yesterday Mohammed
Speaker 2: al Arian.
Speaker 1: So, yesterday was an example where we lost three anchors.
Speaker 1: We lost a notion that of the US economic exceptionalism.
Speaker 1: That anchor was put in doubt with the data. We
Speaker 1: lost a notion of policy anchors because people started calling
Speaker 1: on the FED due to an intermeding cut. That was
Speaker 1: I mean, there was a lot, a lot of ridiculous
Speaker 1: things being said, and we lost Tom Keane's calm voice.
Speaker 2: There, Mohammed Hilarian pointing out, I was looking at the phone.
Speaker 2: I got the batphone out about ten am. I was
Speaker 2: having a momos. I spilled the thing all over Vettvil.
Speaker 2: It was terrible. I mean, there was the shock yesterday.
Speaker 2: I take one day off and you think it was
Speaker 2: a sabbatical like what Hilaria will take at Cambridge In
Speaker 2: the coming months as well, we will continue our coverage
Speaker 2: across all of our platforms. Look at YouTube, subscribe to YouTube.
Speaker 2: We were stunned at the audience yesterday, absolutely stunned. Thank
Speaker 2: you so much for this nascent project that we're doing.
Speaker 2: Subscribe to Bloomberg Podcasts, out at YouTube, and of course
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