Speaker 1: This is the FED decides. On Bloomberg Television, on Bloomberg Radio,
Speaker 1: Tom King, Jonathan Fair, Lisa A Bram West John Off
Speaker 1: Today and really I've got to just go straight to
Speaker 1: the markets. What the FED said is we don't have
Speaker 1: any decisions about any further rate hikes. What the market
Speaker 1: heard is you're done, and you could see a rally
Speaker 1: in bonds. You're here seeing irrally in stocks.
Speaker 2: Tom.
Speaker 1: That caught my attention at a time when the FED
Speaker 1: is trying to parse through nuance and the market only
Speaker 1: here's one thing.
Speaker 3: The most are so correlated and so abrupt, including Oil
Speaker 3: West Texas Intermedia almost getting down to a seventy nine handle,
Speaker 3: which the chairman alluded to in the final question on
Speaker 3: the war in the Eastern Mediterranean. But in the bond market, Lisa,
Speaker 3: what's so important here is these moves are so large.
Speaker 3: I have to go to a standard deviation analysis. Conventional
Speaker 3: financial TV doesn't capture the magnitude of the vote. You're seeing.
Speaker 3: David Rosenberg, always brilliant out of Toronto, I know, making
Speaker 3: clear this is a FED that is done. And yet
Speaker 3: the singular point was Leastman of CNBC and McKee of Bloomberg,
Speaker 3: where he stopped in the middle of his conversation to say,
Speaker 3: we stand ready to be hawkish against this entire arc
Speaker 3: of we're done.
Speaker 1: Q whether or not they've lost some credibility because he
Speaker 1: could say, we're prepared to hike again. We've made no decisions.
Speaker 1: We're going to have a consensus on the Federal Reserve.
Speaker 1: The market again really is starting to price out further
Speaker 1: rate hikes more materially. I will just say this in
Speaker 1: terms of whether the market is doing the work for them.
Speaker 1: He speculated that it was really persistent changes in financial conditions,
Speaker 1: and it's too soon to say everything was hedged. Everything
Speaker 1: was going back to the notes, Everything was very rode.
Speaker 1: He did as much as he could, as little as possible.
Speaker 3: Yeah, I'll go with that. And I like the idea
Speaker 3: that everything was hedged in the sense of we didn't
Speaker 3: near data dependency much, which surprised me. I thought we'd say, Okay,
Speaker 3: the jobs report, maybe we finally see a crap in
Speaker 3: an economy coming off four point x percent real GDP.
Speaker 3: I think that this was taken by the markets, which
Speaker 3: is really what I would focus on. The diwop two
Speaker 3: hundred and fifty points one point six percent move Nasdaq
Speaker 3: at one hundred and seventeen basis points of soft landing
Speaker 3: in the ten year yield. The market is speaking volumes.
Speaker 1: They loved what they hurt, and this is going to
Speaker 1: of course be due to revision with time, and we've
Speaker 1: known that the knee jerk reaction is not always the
Speaker 1: one that sticks. But tom to me the fact that
Speaker 1: the market is jumping on this and that earlier in
Speaker 1: the day you saw yields tick lower because their funding announcement,
Speaker 1: then even lower, particularly on the long end, after economic
Speaker 1: data that came in weaker than expected, and then Chair
Speaker 1: Powell coming in and pushing them that much further lower
Speaker 1: as people expect them to be done.
Speaker 3: Yeah, it's going to be interesting to see this, say least,
Speaker 3: We'll continue to monitor markets, and we have a stellar
Speaker 3: group of people to drive the conversation forward. Let's drive
Speaker 3: the conversation forward right now. Almost quoting off Star Wars,
Speaker 3: he was very far, very far away. A question from
Speaker 3: Michael McKee. Let us listen to the chairman here on
Speaker 3: what is out there.
Speaker 4: We're going meeting my meeting. We're asking ourselves whether we've
Speaker 4: achieved a stance of policy that is sufficiently restrictive to
Speaker 4: bring inflation down to two percent over time. That's the
Speaker 4: question we're asking. We're looking at the full range of
Speaker 4: economic data, including financial conditions and all of those things
Speaker 4: that we look at, and then we're you know, we've
Speaker 4: come very far with this rate hiking cycle, very far.
Speaker 3: Who nailed this the very far of it was William
Speaker 3: Dudley out of Berkeley for years of course at Golden
Speaker 3: Sachs and the former New York Federal Reserve President, huge
Speaker 3: value at Bloomberg Economics and a senior advisor in economics
Speaker 3: for all of Bloomberg. Bill Dudley, you and I were
Speaker 3: in the lofty, cool climbs of Marrakesh a few weeks ago.
Speaker 3: Is the international community confronted a unique American experiment, a
Speaker 3: dynamic fiscal inducement, a fiscal stimulus?
Speaker 5: To where we are now?
Speaker 3: Your essay in the last two hours for Bloomberg makes
Speaker 3: clear you have immense concern that the Fed, given the
Speaker 3: cards dealt, could get this wrong. What did the chairman
Speaker 3: not address in this press conference.
Speaker 6: I think that he's quite confident that policy is restrictive
Speaker 6: enough to slow the ecomedy down. And I think the
Speaker 6: fact that we just had a growth quarter about nearly
Speaker 6: five percent calls that a little bit into question. Also
Speaker 6: to the notion that financial conditions are truly tight to
Speaker 6: enough to slow the coming down, I think is also
Speaker 6: pretty questionable because if you look at most financial conditioning indexes,
Speaker 6: the CHIAP, the biggest impulse towards restraint really happened last year,
Speaker 6: not right now. So I think that, you know, maybe
Speaker 6: they have done enough, maybe they haven't. But I think
Speaker 6: the reason why markets are hearing this so confidently is
Speaker 6: he he feels very confident that FED has done a lot.
Speaker 6: It feels policy is restrictive, and so I think, you know,
Speaker 6: the market is taking away the notion that he thinks
Speaker 6: he's done. And obviously, you know that depends on how
Speaker 6: the economy of allso has to inflation, what happens to
Speaker 6: the labor market. And another thing that the market is
Speaker 6: taking a lot of a positive signal from is he
Speaker 6: talked about how all these pandemic effects are washing out
Speaker 6: now in a good way. So labor market is becoming
Speaker 6: much more in balance, labor force growth is picked up.
Speaker 6: It's a very benign story about how this stall played out.
Speaker 6: It's basically a story where the FED really hasn't had
Speaker 6: to do that much to bring inflation down, and the
Speaker 6: FED basically is saying we don't think we're going to
Speaker 6: have to do much more from here.
Speaker 1: Char Powell also didn't seem to think that there was
Speaker 1: any casualty in pausing, letting time go on, and then
Speaker 1: restarting rate hikes. He said that that wasn't problematic at all.
Speaker 1: Do you disagree.
Speaker 6: Obviously, if it turns out that they need to do more,
Speaker 6: they're probably going to have to do more than just
Speaker 6: one quarter point move. You know, if you've taken a
Speaker 6: break for let's say six months, and the evidence accumulates
Speaker 6: that Madre policy is not as tight as you think
Speaker 6: it is, and inflation expectations are starting to become un anchored,
Speaker 6: labor markets not loosening, wages are stuck at four and
Speaker 6: a half percent, then it's unlikely that one quarter point
Speaker 6: move is going to be sufficient to do the job.
Speaker 6: So I think it's either zero or multiple rate hikes.
Speaker 1: Which is the reason why I probably some people are
Speaker 1: looking at this like yourself and saying they could be
Speaker 1: on the brink of an error. There was a question
Speaker 1: about how financial conditions really played into the Fed's decision
Speaker 1: whether higher yields were doing their work. He had some
Speaker 1: nuance around this, talking about a sustained move higher. Take
Speaker 1: a listen to Chair Powell speaking on the issue.
Speaker 4: Persistent changes in broader financial conditions can have implications for
Speaker 4: the path of monetary policy. In this case, the title
Speaker 4: financial conditions we're seeing from higher long term rates, but
Speaker 4: also from other sources like the stronger dollar and lower
Speaker 4: equity prices could matter for future rate decisions. With financial conditions,
Speaker 4: we're looking for persistent changes that are material.
Speaker 1: Bill Dudley, from your vantage point, does this give any
Speaker 1: clarity as to how the Fed is counting yields in
Speaker 1: their picture of what restrictive really looks like?
Speaker 6: Well, I think I agree with him that persistence is
Speaker 6: what matters. I mean, bonials go up for a week
Speaker 6: or two and then come right back down. That's not
Speaker 6: going to presert much restraint on the economy. You know,
Speaker 6: one problem I think that Chairman has at this point
Speaker 6: is by talking to the markets in a sort of
Speaker 6: supportive way, stocks rally, bonial's fall, that's loosening financial conditions,
Speaker 6: and so that's removing some of the restraint that was
Speaker 6: creating some impetus for not tightening laundry policy further, the.
Speaker 3: Harder the matter to me, Bill, and I don't want
Speaker 3: to turn this into Dale Jorgenson's through three ratio course,
Speaker 3: and Juliet Coronado has been brilliant on this as well.
Speaker 3: So let's listen to doctor Coronado and doctor Dudley, Folks,
Speaker 3: and Bill Dudley said, barring unexpectedly fast productivity growth, there
Speaker 3: seems to be almost a hope and prayer Bill Dudley,
Speaker 3: that this time is different and instantly we have a
Speaker 3: new elevated productivity. Do you see any signal of this
Speaker 3: in post pandemic America.
Speaker 6: I think it's really too soon to make any decisions
Speaker 6: about protivty at all. Protivy growth took a real hit
Speaker 6: during the pandemic, and then it picked up as we reopened.
Speaker 6: What the trend is at this point is very, very uncertain.
Speaker 6: And you noticed that Chapaul did not talk about protin
Speaker 6: growth at that trend changing. What he talked about was
Speaker 6: a labor force growth had picked up a lot because
Speaker 6: labor ports, participation on you know, adult workers have climbed
Speaker 6: a lot, and immigration I picked up. He saw that
Speaker 6: as a positive supply side surprise. But I don't think
Speaker 6: that the FED, or or Eye for that matter, think
Speaker 6: that there is a pro to vy growth miracle right
Speaker 6: around the corner.
Speaker 3: Bill Dudley's Wednesday, We're going to a job's report on Friday.
Speaker 3: Let's go back to Dudley and mckelviy, Gold and Sex
Speaker 3: a few years ago. What's an appropriate non firm payroll statistic?
Speaker 3: Not on Friday, but say three month moving average out
Speaker 3: where you can say all clear. And finally, we have
Speaker 3: a labor economy settling down? Is it sub one hundred thousand?
Speaker 6: Yeah, it's probably in that ballpark. I mean, as pure
Speaker 6: Paul said, we are getting a surgeon liver force this year,
Speaker 6: but I think he also expects that that will peter
Speaker 6: out over time, and then you're just stuck with the
Speaker 6: growth rate of the working age population, which is probably
Speaker 6: only growing in about a half a percent a year,
Speaker 6: and so that's consistent with payroll gains of maybe one
Speaker 6: hundred thousand a months or even a little bit less.
Speaker 6: So I think that eventually the FED needs to bring
Speaker 6: payroll growth below one hundred thousand if they're going to
Speaker 6: generate enough slack in the labor market to bring wage
Speaker 6: inflation down to levels consistent with two percent inflation.
Speaker 1: Given the volatility that we've seen in the bond market, Bill,
Speaker 1: how concerned are you about a real blowback on Friday
Speaker 1: should we get a job report that comes in materially
Speaker 1: hotter than expected and we continue to see those upsides
Speaker 1: surprises that you say may post the biggest risk.
Speaker 6: Well, I personally would not put too much attention on
Speaker 6: any one given economic release at this point because the
Speaker 6: Fed is basically said we are patient now, and so
Speaker 6: one economic report is not going to change their thinking.
Speaker 6: It's only accumulation of evidence to suggests that policy is
Speaker 6: not sufficiently restricted to do the job, which will cause
Speaker 6: the FED to start to tighten Entrey Pauls again, So
Speaker 6: I think we need to maybe downplay any single report
Speaker 6: at this point. It's going to take an accumulation of
Speaker 6: evidence for the FED to decide that they need to
Speaker 6: do more on Luntary Pauls.
Speaker 3: Bill Dudley, thank you so much, greatly, greatly appreciated this morning, folks.
Speaker 3: I'll send out the essay across all my social heres
Speaker 3: op ed is really must read some really good writing
Speaker 3: just in the last twenty four hours from a number
Speaker 3: of people within the zeitgeist. I need to do a
Speaker 3: market check here because this is an historic move. They say,
Speaker 3: I'm going to be as quick as I can only
Speaker 3: says you go to Michael McKee. The Dow up two
Speaker 3: hundred and fifty eight points, heading towards a one percent lift.
Speaker 3: I got a one percent lift, SMP five one hundred
Speaker 3: up solid forty seven points, Nasdaq one hundred on fire
Speaker 3: up one point seven percent. That into Apple earnings tomorrow
Speaker 3: at Lisa, I should point out tenure yield eighteen basis
Speaker 3: points modest move as well, and the real yield Lisa
Speaker 3: craters two point five oh percent after my first glass
Speaker 3: of tang this morning, and we are down sixteen basis
Speaker 3: points on the inflation of just a yield. The operative word, folks,
Speaker 3: is never. I don't think I've ever seen that.
Speaker 1: It has been a pretty significant move and continues to
Speaker 1: be as the session grows older. Let's check back in
Speaker 1: with our own Michael McKee, who is in the room
Speaker 1: in Washington, DC. Mike, do you think the FED would
Speaker 1: be disappointed to see the market's reaction to Fed shair
Speaker 1: j Palace press conference?
Speaker 2: Not disappointed in that sense, clearly, If we continue to
Speaker 2: see this kind of drop in yields, it's going to
Speaker 2: take some of that market pressure off of the economy,
Speaker 2: and the FED sort of goes backwards a little bit.
Speaker 2: But I don't think they are counting on the markets
Speaker 2: being tight for a long time to completely do their
Speaker 2: job for them, because, as you mentioned just a moment ago,
Speaker 2: if you get a blowout number on Friday, then everybody's
Speaker 2: going to reverse. I think the takeaway here is that
Speaker 2: the FED would like to be done, or at least
Speaker 2: at peak, and switch to the idea of how long,
Speaker 2: but they can't be sure yet. And I think the
Speaker 2: analogy I would use is the FED chairman is Potter
Speaker 2: Stewart at this point, the former Supreme Court justice who
Speaker 2: said that he could not define pornography, but he knew
Speaker 2: it when he sees it. At this point, the FED
Speaker 2: can't define what sufficiently tight.
Speaker 1: Is, but meeting by meeting, they.
Speaker 5: Will decide what they see.
Speaker 2: So you kind of throw out the dot plot, which
Speaker 2: is what I was getting at with my question sem
Speaker 2: The markets can't predict anymore what the FED is going
Speaker 2: to do. They have to go into every meeting trying
Speaker 2: to assess what the FED will think about conditions at
Speaker 2: the time rather than some sort of objective data release.
Speaker 3: Mike McKee and your tenure back to Arthur Burns, you
Speaker 3: were young buck there with Arthur Burns a few years ago.
Speaker 3: Have you ever seen a FED working away from theory,
Speaker 3: away from the orthodox They seem to be literally as
Speaker 3: you and Steve Lesman alluded to, making it up meeting
Speaker 3: to meeting.
Speaker 2: Yeah, I mean orthodoxy changes obviously, and the time from
Speaker 2: Burns to green Span it changed quite a bit. And
Speaker 2: it's still a FED truism that the inflation is kind
Speaker 2: of the key to everything. But they don't know what's
Speaker 2: going on. The models don't work or haven't worked coming
Speaker 2: out of the pandemic. It's all something new. So they
Speaker 2: are doing their best to try to figure out what's
Speaker 2: going on without using some of the history based models
Speaker 2: and previous outcomes that they would have had to use
Speaker 2: in the past. And this will in gender a lot
Speaker 2: of rewrites of monetary policy. Thinking, I'm sure.
Speaker 1: Going down the road just to sum this all up,
Speaker 1: is strategically patient, the news sufficiently restrictive.
Speaker 2: I saw that comment and I think it is. It
Speaker 2: sums it up pretty well. They are going to be
Speaker 2: patient they're going to have to have a good reason
Speaker 2: to do whatever, whether it's cutting rates, raising rates, they
Speaker 2: will not have to have a good reason to just
Speaker 2: leave rates where they are.
Speaker 5: They could just go with the economy as they see it.
Speaker 1: Michael McKee, thank you, and wonderful question. As always, strategically
Speaker 1: are you strategically patient?
Speaker 3: Last night at nine pm?
Speaker 1: I was not absolutely with the sugar highs, etc. But
Speaker 1: this to me really highlights what they're saying. And then
Speaker 1: you put the stock chart and you put the bond
Speaker 1: chart next to it, and you hear what the bond
Speaker 1: market is hearing. Just want to point this out to
Speaker 1: your yields four point ninety three percent, getting close to
Speaker 1: crossing that threshold into the four point ninety. No, it's
Speaker 1: a bouncing around, but just highlights what a massive move
Speaker 1: we've seen on the front end.
Speaker 3: Massive is definement by the pros folks, and we welcome
Speaker 3: all of you not part of global Wall Street. People
Speaker 3: look at this strange phrase standard deviation, and all you
Speaker 3: need to know is you look back twenty days, forty days, whatever,
Speaker 3: twenty weeks and you try to figure out how much
Speaker 3: have we moved off the center trend. Jeffrey Rosenberg of
Speaker 3: Blackrock knows we've seen a standard deviation move. He is
Speaker 3: with their systematic multi strategy fund. Oh, I can see
Speaker 3: you in the classroom as a freshman at Carnegie Melon
Speaker 3: Jeff Rosenberg going, what in God's name is standard deviation?
Speaker 1: Did we get a jump condition today?
Speaker 3: Jeff Rosenberg towards a less restrictive FED well.
Speaker 7: As Lisa pointed out earlier, there's a lot of data
Speaker 7: coming out today, and so parsing out the reaction from
Speaker 7: the Fed versus the earlier you know, kind of main
Speaker 7: event behind the Treasury refunding is a little bit tricky,
Speaker 7: but I would highlight that the main differentiation is really
Speaker 7: the reaction in the front end of the curve, right
Speaker 7: from the refunding announcement.
Speaker 5: That was really the back end.
Speaker 7: As Lisa highlighted, a little bit of the weaker data
Speaker 7: on pmis also helping the back end rally, But the
Speaker 7: Fed market.
Speaker 5: Reaction was really in the front end.
Speaker 7: So I think, Powell, you want to look at the statement,
Speaker 7: and you want to look at the opening to the
Speaker 7: press conference. That's what they intended to say versus what
Speaker 7: the market interpreted from the Q and A.
Speaker 5: What they intended to say was to try to be balanced.
Speaker 7: Resiliency on economic growth implies we need to stay tight,
Speaker 7: maybe do one more against the tightening of financial conditions,
Speaker 7: which implies maybe.
Speaker 5: We've done enough. That's what they were hoping to say.
Speaker 7: Clearly, what the market saw was a preference for the
Speaker 7: worry of tightening financial conditions where at sufficiently restricted we
Speaker 7: can be done, and so you price out a little
Speaker 7: bit of probability for the next hike. That's the market reaction,
Speaker 7: as you went over in the earlier segment with Dudley.
Speaker 7: You know, it remains to be seen. The data will
Speaker 7: dictate that. But certainly to your question, Tom big reaction,
Speaker 7: I think a lot more of that standard deviation move
Speaker 7: has to do with the refunding earlier a little bit
Speaker 7: coming out of this press comp How do.
Speaker 1: You play this then, Jeff, if you think that the
Speaker 1: market is reading way too much into what Jay Powell said,
Speaker 1: which is trying to stick close to the script, although
Speaker 1: perhaps giving a different tone than people thought of, do
Speaker 1: you then sell to your notes and wait for them
Speaker 1: for yields to go back up, for them to cheapen
Speaker 1: and buy them back.
Speaker 7: Well, you know, I think it's less a question about
Speaker 7: selling the two year note. Now, I think given the
Speaker 7: pricing and given the data that we have that Powell
Speaker 7: refer to two more inflation prints, two more labor prints,
Speaker 7: and what Dudley was just hinting at, You know, are
Speaker 7: we really seeing the degree of tightness. The degree is
Speaker 7: sufficiently restrictive given the trajectory of growth that we just
Speaker 7: came off of. Obviously no one expects that to persist.
Speaker 7: But the risk there is that you're not pricing enough
Speaker 7: of the possibility of another hike, and so maybe you
Speaker 7: hold off on adding twoes for me at these levels.
Speaker 3: And jeffrom while you said at black Rock and I
Speaker 3: understand there's an index play here, but there's some active
Speaker 3: management and you're watching everybody else in the game.
Speaker 5: What's the bet of.
Speaker 3: The market right now? Is the bet that we're going
Speaker 3: to get this fed done in a more dubvish, less
Speaker 3: restrictive tone, or is a bet, hey, we're scared stiff
Speaker 3: and we may move higher.
Speaker 7: Well, I mean, you have a number, you have a
Speaker 7: couple of different cross currents on there.
Speaker 6: You know.
Speaker 7: Obviously there's been a lot of talk about movement into
Speaker 7: the long end, movement of retail flows buying the long end.
Speaker 7: That's very much kind of we're we're at or close
Speaker 7: to the end, and we're going back to the old
Speaker 7: playbook that you know, once the FED is done tightening,
Speaker 7: then you get a big rally.
Speaker 5: I think I think you.
Speaker 7: Got to be a little bit cautious about we're just
Speaker 7: simply going back to the old playbook, but certainly, you
Speaker 7: know there's a degree of that in the market. And
Speaker 7: then the other really big kind of consensus story is
Speaker 7: around the steepness of the curve, that the curve is
Speaker 7: just way too inverted, that you need to see normalization
Speaker 7: of the curve, all the factors around that. You know,
Speaker 7: the refunding was a little bit of that. That that
Speaker 7: kicked in post the August refunding announcement Japan and the
Speaker 7: news on the boj and yield curve coroll, you know,
Speaker 7: deficit financing.
Speaker 5: There's a litany of list but there's a.
Speaker 7: Very popular positioning around the steepening, and I think the
Speaker 7: reaction to the refunding earlier today really reflects that very
Speaker 7: crowded steepening position that exacerbates that standard deviation move that
Speaker 7: we saw earlier.
Speaker 3: Je If I want to go full circle to where
Speaker 3: Lisa and I were early this morning. Folks, we've been
Speaker 3: livecence two am this morning. It's really, you know, you know,
Speaker 3: quite something, And Jeff, it's about the commercial banking system
Speaker 3: of America, which the chairman alluded to maybe a little
Speaker 3: bit and maybe not enough for my taste. Can we
Speaker 3: get a bond market that heals to take those bond
Speaker 3: losses and drift them away into twenty twenty five where
Speaker 3: things can even get better if we don't get a
Speaker 3: massive bond move, but just enough of a bond move.
Speaker 3: Is there really the strategy here?
Speaker 7: No, And you did hear that question. It was probably
Speaker 7: one of the few questions on that topic. I mean,
Speaker 7: this is a historic move in terms of interest rates.
Speaker 7: So you know, even if you get a modest kind
Speaker 7: of cut in interest rates that the bond market in
Speaker 7: the second half of twenty twenty four is anticipating, that's
Speaker 7: nowhere near enough to kind of unwind the unrealized losses
Speaker 7: that you're talking about from this historic move from zero
Speaker 7: to five.
Speaker 5: So that's really about.
Speaker 7: A long term story of repairing capital and dealing with
Speaker 7: those issues within the banking system that if you kind
Speaker 7: of repair the funding concerns and that was what the
Speaker 7: bank term funding question was referring to. Then maybe that
Speaker 7: doesn't become a crisis moment, but it still becomes kind
Speaker 7: of a longer term drag in terms of capital repair
Speaker 7: that even a small rally is is anticipated in the
Speaker 7: bond market pricing for twenty twenty four isn't going to
Speaker 7: be sufficient to repair.
Speaker 1: Jeff, you talked about positioning, and I want to go
Speaker 1: there because a lot of people are saying short squeeze,
Speaker 1: This is a positioning squeeze, and we've been hearing that
Speaker 1: a lot. How much is levered funds that have come
Speaker 1: into the treasury market. How much is that what's underpinning
Speaker 1: some of the incredible volatility that we've seen over recent weeks.
Speaker 7: Well, you know, that's a tough one to sort of
Speaker 7: pin it on leverage. You know, there's a lot of
Speaker 7: drivers to that volatility into that uncertainty. You know, positioning
Speaker 7: and crowded positioning exacerbates those moves, and that can be levered,
Speaker 7: it can be unlevered. It can be just asset managers
Speaker 7: who favor particular positions.
Speaker 1: I don't mean to interrupt to Jeff, but there's a
Speaker 1: difference between real money investors who are making a long
Speaker 1: term vet on treasuries and people who are fast positioning
Speaker 1: trying to make a trade. Or is the market right
Speaker 1: now being determined by the trading types not by the
Speaker 1: real money.
Speaker 7: I mean in short term reactions, absolutely, right, leverage is
Speaker 7: going to exacerbate reactions to price movements. So I think
Speaker 7: it's really about you know, decoupling, and you said it earlier.
Speaker 7: You know, the near term reaction isn't always to any
Speaker 7: data point where whether we're talking about the press conference
Speaker 7: or on Friday to payroll or CPI, that near term
Speaker 7: move yes, that's going to be dictated by algos, it's
Speaker 7: going to be dictated soon by AI. It's going to
Speaker 7: be dictated by the levered positions and crowded positioning.
Speaker 5: But let's separate that.
Speaker 7: From kind of the longer run impact of the fundamental signaling.
Speaker 7: And as you mentioned earlier, you know, you can have
Speaker 7: the near term reaction and then a day later or
Speaker 7: two days later, you know, it's a very different trend
Speaker 7: as we parse the totality of the data. But certainly
Speaker 7: very short term price reactions are going to be driven
Speaker 7: by those levered factors.
Speaker 1: Jeff Rosenberg, thank you so much. As always for your
Speaker 1: comment on this incredibly important day. It was supposed to
Speaker 1: be a snoozefest. It was not absolutely certainly a live
Speaker 1: induction into it wasn't either because the refunding announcement as
Speaker 1: well as some of the economic data. But really what
Speaker 1: we are seeing is a market coalescing around the idea
Speaker 1: for now that the Fed is done with rate hikes
Speaker 1: for this cycle.
Speaker 3: And this is completely outside left field, but I guess
Speaker 3: it's stay tuned for Bloomberg in Asia and what Yvonne
Speaker 3: Man will lead with its six seven eight pm as well.
Speaker 3: If you get a market like this in the West,
Speaker 3: if you get this, joy to the world. Is this
Speaker 3: the moment where the Bank of Japan can slide in
Speaker 3: and do something constructively about their busted theory?
Speaker 1: Little EDATORI light, well blinker, I'm sorry they had to
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Speaker 1: for listening. I'm Lisa Abramowitz, and this is Bloomberg