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Speaker 1: Let's get over there and join the next guest to

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Speaker 1: Danielle Di Martine Boots, CEO and chief Strategies at Quill Intelligence.

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Speaker 1: So she's here to discuss the speech by FED Chad J. Powell,

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Speaker 1: and thanks for joining us, Daniel. We got the J

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Speaker 1: Pale cementing expectations ultimately the federal step away from its

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Speaker 1: aggressive pace of tightening next month, and he was presenting

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Speaker 1: a case for achieving their inflation without tipping the economy

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Speaker 1: into a deep recession. Daniel, do you do you buy it? No,

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Speaker 1: I don't and I don't buy it solely given the

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Speaker 1: the many, many economic data points that that came out today.

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Speaker 1: We saw the Chicago p m I, which is kind

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Speaker 1: of the it's the heart of the industrial sector in

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Speaker 1: the United States. We saw that collapse to thirty seven.

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Speaker 1: At the headline Bloomberg Forecast was calling, the consensus was

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Speaker 1: calling forty seven. The last three months, we've seen a

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Speaker 1: hundred and sixty four thousand job losses in the manufacturing sector,

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Speaker 1: which echoes what's happening in the industrial region via the

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Speaker 1: Chicago p m I UM, the biggest number of which

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Speaker 1: was this morning the negative one print. So markets I

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Speaker 1: think they are celebrating that the data is so bad

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Speaker 1: that it looks like it's going to force Powell to

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Speaker 1: the sidelines. And yet when you see the Dow, John's

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Speaker 1: industrial that headline, Jeep, the Dow's up seven points, that

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Speaker 1: just gives him, I think, in my view, more ammunition

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Speaker 1: to take it from fifty. But then he'll get back

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Speaker 1: to you. So let's take a look at the bond market,

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Speaker 1: because many people lean towards the bond market more than

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Speaker 1: the stock market to get the real story. Is the

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Speaker 1: bond market telling the said that it has, as you suggest, overtightened. Well,

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Speaker 1: I think that that's certainly the message that we're getting,

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Speaker 1: because we are beginning to see a steepening of the

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Speaker 1: yield curve that has been so deeply inverted, the most

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Speaker 1: inverted since seeing the beginnings of a reversal that typically

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Speaker 1: goes hand in hand with the economy being in recession,

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Speaker 1: not warning of recession um and you've actually seen that

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Speaker 1: on the global stage as well. Obviously it's the global

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Speaker 1: uh Guild curve inverting. So I think one thing that

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Speaker 1: that your listeners should really bear in mind is that

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Speaker 1: there's a bigger globality to the current downturn in the

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Speaker 1: global economy. There's there's gonna be more companies, more countries,

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Speaker 1: excuse me, encompassed by the downturn. In other words, there's

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Speaker 1: gonna be fewer places for the United States to hide

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Speaker 1: from the downturn. Yeah, that's just said, isn't it. I mean,

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Speaker 1: with Europe looking pretty bad, and you've got to also

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Speaker 1: China with all sorts of issues that it confronts right now.

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Speaker 1: But I will also just say to you one thing here, Daniel,

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Speaker 1: which is that the United States has never really suffered

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Speaker 1: a recession which has been imported. It's been quite happy

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Speaker 1: to export on the That would certainly be the case

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Speaker 1: with the fiscal overspending, exporting inflation to the rest of

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Speaker 1: the world. That was then compounded by Russia invading Ukraine

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Speaker 1: which created the energy crisis, and obviously food inflation that

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Speaker 1: were exogenous factors that just piled onto the inflation that

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Speaker 1: the United States was exporting. But again, everything we're seeing,

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Speaker 1: we've we've got twenty nine states in the United States

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Speaker 1: with rising initial jobless claims, we continuing claims, the percentage

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Speaker 1: of Americans collecting unemployment insurance that's up year over year.

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Speaker 1: We have I can throw out as many validating points

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Speaker 1: as you want, which is why Cities Economic Surprise Indicator

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Speaker 1: it's flashing as read as it is. Well, we've had

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Speaker 1: this big change in China. We spoke about this a

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Speaker 1: lot yesterday, and I think some of our colleagues I

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Speaker 1: thought maybe we went a little bit too far about

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Speaker 1: a change coming, but we saw now more of it

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Speaker 1: today with the comments from Vice Premiere sunshun Land. And

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Speaker 1: the reason I bring this up is that if China,

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Speaker 1: a lot of what China has suffered from has been

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Speaker 1: sort of an own goal, self induced. If they decide

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Speaker 1: to to you know, sort of get with the rest

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Speaker 1: of the world the way that's handling COVID, that could

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Speaker 1: be uh, that could be uh, you know, a big input,

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Speaker 1: positive input to the global economy. Do you think that

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Speaker 1: that may brings the US back a little bit? I

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Speaker 1: think that if we're looking for a repeat of O

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Speaker 1: eight oh nine or the industrial recession of two thousand

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Speaker 1: six um that the evidence that we have is that

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Speaker 1: China's stimulus can be of a more gradual nature as

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Speaker 1: opposed to the explosive g Look, there's all of Latin America.

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Speaker 1: We're gonna pull it away all of the central banks

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Speaker 1: there looked to be on an easing precipice. I don't

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Speaker 1: think that, given the amount of stimulus that China has

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Speaker 1: to deploy domestically, that it has the wherewithal the financing

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Speaker 1: the two trillion dollar wall of municipal bonds that have

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Speaker 1: to be refinanced in China. I don't think there's enough

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Speaker 1: to go around to make sure that it safeguards its

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Speaker 1: own domestic economy and bails out the rest of the world.

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Speaker 1: I just don't think there's enough there. Okay, So the

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Speaker 1: final question is what's going to happen next? And one

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Speaker 1: of the dangers of a policy mistake, So I think

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Speaker 1: um and this was echoed prior to by at least

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Speaker 1: a cooking member the Federal's report. Until the job is done,

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Speaker 1: I don't think there's a sufficient appreciation. If you look

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Speaker 1: at money growth of the effect of quantitative tightening, it's

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Speaker 1: not just a month the United States, it's seven a

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Speaker 1: month globally, so that liquidity continues to come out of

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Speaker 1: the system, regardless of whether the pace declines from seventy

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Speaker 1: five to fifty in December and then from fifty five

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Speaker 1: basis points on February one. You've still got this depletion

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Speaker 1: of liquidity in the global financial system, but I daresay

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Speaker 1: cannot be ignored. M. Danielle, thanks very much for joining us.

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Speaker 1: We really appreciate it. Danielle di Martino, Booth, CEO and

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Speaker 1: chief Strategist at Quill Intelligence