Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along
Speaker 1: with Jonathan Faroll and Lisa Abramowitz. Join us each day
Speaker 1: for insight from the best and economics, geopolitics, finance and investment.
Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and
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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. Well, let's
Speaker 1: get straight to it. This. Francis Donald be Global Chief
Speaker 1: Economists and Strategist at Manulife Investment Management. Francis an easy one.
Speaker 1: What did you make of that? That's not an easy one, John,
Speaker 1: because there's a lot of parcel through there. But the
Speaker 1: main takeaway for me is, yes, we could talk about
Speaker 1: terminal rate estimates and the pace of hikes, but what
Speaker 1: I'm hearing is just more data dependence and myopic. Data
Speaker 1: dependence can always be dangerous, but it is particularly problematic
Speaker 1: in an environment where we have weather distortion, seasonal adjustment distortion,
Speaker 1: low survey responses. We are in data that is really
Speaker 1: having trouble setting us a clear signal, at least over
Speaker 1: the long term, and I'm concerned that We're going to
Speaker 1: see markets that are overreacting to data points that of
Speaker 1: false decision, and potentially even a central bank that's moving
Speaker 1: too quickly and making big policy changes even via communication
Speaker 1: off of data that I think is going to be
Speaker 1: very bumpy in the next three to six months. Francis,
Speaker 1: with a shock that we saw yesterday, does disinflation come
Speaker 1: to the rescue? Can we get a rapidity of sharply
Speaker 1: lower inflation? You know, I think the FED may not
Speaker 1: be focused on specifically some of those traditional inflation measures,
Speaker 1: but that rise we've seen in inflation expectations and market
Speaker 1: based measures, that's what's keeping me up at night. That
Speaker 1: is moving in the wrong direction. Now it's countered by
Speaker 1: inflation expectations among consumers that are still going lower, and
Speaker 1: I'm hoping that the FED is focusing on those long
Speaker 1: term inflation expectations, which are coming down quite a bit.
Speaker 1: One of my bigger concerns is this summer, we're probably
Speaker 1: going to lose some of the disinflation momentum that's largely
Speaker 1: going to be base effects. So this downward momentum that
Speaker 1: we've seen is probably going to stall. That's when we're
Speaker 1: going to start hearing those words like stagflation come back,
Speaker 1: and if we haven't seen some slowdown in jobs by then,
Speaker 1: a feed that's going to stay hawkish through the summer
Speaker 1: after what was rot yesterday? Is it walk it back Wednesday?
Speaker 1: I mean, do you see come out today to the
Speaker 1: house and change the tune a little bit. The only
Speaker 1: way we're going to walk back this pricing for the
Speaker 1: March meeting is what we see in the jobs data
Speaker 1: in the next few days. And when I say jobs data,
Speaker 1: I mean we've got jobless claims, we've got job openings,
Speaker 1: we've got challengers, ADP, NFP. It's a variable buffet of
Speaker 1: jobs data that's going to be coming through, and no
Speaker 1: one number is going to be I think more important
Speaker 1: than the sum of those stories, especially in an environment
Speaker 1: where we're really trying to dig deeper. We got to
Speaker 1: look at private sector jobs data right now, people looking
Speaker 1: at job postings on things like LinkedIn, And indeed, if
Speaker 1: you want to understand what the feed is going to
Speaker 1: be doing a year or two years from now, which
Speaker 1: I think is even more important than the March meeting,
Speaker 1: you've got to be looking at all of the data
Speaker 1: available and really making sure that you understand the comprehensive
Speaker 1: story behind it. Francis, I understand what a bind freedhair J.
Speaker 1: Powell is and how unique this moment is, and yet
Speaker 1: the flip flopping of his messages is jarring. It's starring
Speaker 1: for markets, and it's starring for people who are trying
Speaker 1: to get a sense of what the compass is for
Speaker 1: this feder reserve. Do you think that that in and
Speaker 1: of itself is detrimental or advantageous given that that uncertainty
Speaker 1: actually creates some of the market conditions that are potentially
Speaker 1: tighter than they'd otherwise be. Well, it certainly makes our
Speaker 1: job a heart or at Lisa because instead of saying, well,
Speaker 1: they've provided forward guidance and we can kind of rest
Speaker 1: on all laurels for six months. We have to be
Speaker 1: a lot more flexible when it comes to the data
Speaker 1: that's coming in. But there is a lot of short
Speaker 1: termism in this industry and financial media. When you're an economist,
Speaker 1: you're always looking for what is the next big story
Speaker 1: and I don't want to miss that inflection point. But problematically,
Speaker 1: we have a lot of data that's moving, you know,
Speaker 1: two steps forward, one back. It's getting dangerous to extrapolate
Speaker 1: too far in the future. We have portfolios that are
Speaker 1: training technically and they need to be moving off of that.
Speaker 1: But if you're a longer term investor, a lot of
Speaker 1: this is noise that's distracting from the signal you need
Speaker 1: to be focusing twelve to eighteen months or even in
Speaker 1: some cases, we have to produce five year forecasts to
Speaker 1: tell us where our strategic portfolio should be positioned over
Speaker 1: the very long term. And so some of this focus
Speaker 1: on the FED moving back and forth in a month
Speaker 1: to month basis. It's not valuable to investors, and sometimes
Speaker 1: it can actually be distracting in some cases even dangerous.
Speaker 1: Where do you think the market is getting the economy
Speaker 1: wrong right now? I'm not sure the market's getting the
Speaker 1: economy wrong. Again, it depends on your time frame. So
Speaker 1: Q one is certainly much stronger than many people expected.
Speaker 1: That consumer is holding in strong. But the challenge comes
Speaker 1: back to, and I've heard a lot of your guests
Speaker 1: talk about this, where are we going to be down
Speaker 1: the road? And it is very difficult to discount the
Speaker 1: probability of a recession twelve to eighteen months from now.
Speaker 1: So if we're talking about the next three months, sure
Speaker 1: there's no problem in saying this economy is stronger than
Speaker 1: we expected in November December. But if you want to
Speaker 1: argue for no recession, you have to discount almost every
Speaker 1: single leading indicator that has very reliably predicted a recession
Speaker 1: later in the year or twelve to eighteen months. You
Speaker 1: can try to do that. We have a very different
Speaker 1: labor market, we have excess savings, but for my view,
Speaker 1: it's a very hard sell. One thing you can say
Speaker 1: is that the leads and lags in this economy may
Speaker 1: be different than what we've previously expected. But I would
Speaker 1: just really focus on your timelines. Are you talking about
Speaker 1: the economy in the next three months solid or are
Speaker 1: you talking about the eighteen months outlook. I think a
Speaker 1: lot of strategists, including myself, you need to work on
Speaker 1: really being clear about their timelines for their forecast friends
Speaker 1: to send that degree of confidence around each timeline. Do
Speaker 1: you have more confidence about where we'll be in six
Speaker 1: months than maybe where we'll be next week after CPI? Oh, absolutely,
Speaker 1: And I think that's actually the game is what does
Speaker 1: the economy look like twelve to eighteen months from now?
Speaker 1: Actually I'm concerned about that. I think it's going to
Speaker 1: look a little more stagflationary than we'd be comfortable with.
Speaker 1: I'm less concerned about a technical recession. We know the
Speaker 1: playbook to trade recessions, we know what those look like historically.
Speaker 1: I'm more concerned about eighteen months from now. We've been
Speaker 1: in a very slow growth environment for a pretty extended
Speaker 1: period of time, and we have inflation stuck around three
Speaker 1: to four percent, and problematically, in the inflation that's rested
Speaker 1: in the system that's still there is likely to be
Speaker 1: less interest rate sensitive than the inflation that we've managed
Speaker 1: to kind of dissipate over this period of time. So
Speaker 1: this word stagflation, there's lots of ways to define it,
Speaker 1: There's lots of ways people can talk about it. I
Speaker 1: think that's going to be more of a theme for
Speaker 1: us moving forward than we thought it was going to
Speaker 1: be even just a few months ago. Francis wonderful as
Speaker 1: always to get your perspective. Great to see if francis
Speaker 1: down at there of Manualife Investment Management. We're lucky this
Speaker 1: morning we've got Cassie Barrow from JP Malkin with us. Now.
Speaker 1: Kelsie thought she'd get a clean slate come here to
Speaker 1: speak on behalf of Bob Michael and the team. Then
Speaker 1: Bob Michael got in there first and said this to focus.
Speaker 1: Like Cassie, I've got no idea what this is about.
Speaker 1: But here's the quote from him. He thinks that if
Speaker 1: we go back to fifty, it would be pretty confusing
Speaker 1: to the market. I hope they don't do it. I
Speaker 1: hope they're willing to run a string at twenty five
Speaker 1: basis point increases. Now, Kelsey, thanks for being with us.
Speaker 1: The chairmans open the door to fifty. How problematic is there? Yeah,
Speaker 1: So if you think about the way that Powell has
Speaker 1: been communicating about getting restrictive right, there's three dimensions to that.
Speaker 1: There's the pace, there's the level, and then there's the duration.
Speaker 1: And what Powell has been doing for months now is saying, Okay,
Speaker 1: we've hiked a lot, and so don't worry about the
Speaker 1: pace so much. It's about the level that we get
Speaker 1: to and the duration at which we stay at that
Speaker 1: restrictive level. Yesterday he essentially threw that out the window.
Speaker 1: That is confusing, And I think the key takeaway is
Speaker 1: that if we are going to consider re accelerating to
Speaker 1: fifty based on the data and they are very data dependent.
Speaker 1: The risk of a hard landing does go up in
Speaker 1: that scenario, and the yield curve is telling you as much.
Speaker 1: What we saw yesterday twelve basis points higher on the
Speaker 1: two year flat on the ten year break evens narrower.
Speaker 1: The yield curve twos tends getting to minus one hundred.
Speaker 1: That is the risk of overtightening that the bond market
Speaker 1: is picking up on. And that's also why you're seeing
Speaker 1: very sticky resistance on tens at four percent, which is
Speaker 1: something we've been watching and saying, Yeah, people are interested
Speaker 1: at bonds even in this repricing. The yields are there,
Speaker 1: and the diversification benefits are going to become even more
Speaker 1: important if the FED is going towards that hard landing
Speaker 1: Scenariomas agrees with Mike Lee writes this morning about the
Speaker 1: importance of the level we're at right now. Does that
Speaker 1: level indicate restriction? Does that level indicrate not the drama
Speaker 1: of super restrictive, but that we're finally at levels that
Speaker 1: really click in. Well, this is obviously the debate. Now
Speaker 1: we think that we are getting to level levels that
Speaker 1: are sufficiently restrictive. So last year the thing that I
Speaker 1: was always quoting was the real Fed funds rate, so
Speaker 1: saying the Fed wasn't going to stop hiking until the
Speaker 1: real Fed funds rate turned positive. So essentially you needed
Speaker 1: the Fed funds rate to move above the level of inflation.
Speaker 1: We are making progress on that. You know, if you
Speaker 1: look at COREPC, it's around four point six percent. The
Speaker 1: Fed is now expected to get to five maybe five
Speaker 1: and a half. That's going to be a significantly positive
Speaker 1: real Fed funds rate. And I think we have to
Speaker 1: think about the way in which policy impacts the economy.
Speaker 1: It impacts housing first, then manufacturing, then consumer and labor,
Speaker 1: and it's actually playing out in that traditional way. Housing
Speaker 1: home prices have been deflating for six straight months. Business
Speaker 1: investment is starting to rolling over. Now what's only left
Speaker 1: is the consumer in the labor market. It just takes time.
Speaker 1: We have the patients as long term investors that the
Speaker 1: FED may not have the luxury of having. In this moment,
Speaker 1: I was going to say, perhaps patients that the Fed
Speaker 1: doesn't have. Right now, I'm looking at a ten year
Speaker 1: yields of about four percent just under that, and you're
Speaker 1: talking talking about value in bonds. Are yields at this
Speaker 1: level on the longer term debt instruments pricing in a
Speaker 1: soft landing of sorts with rates remaining higher for longer
Speaker 1: and no crash. Well, I think that with the yield
Speaker 1: curve this inverted, you are looking at a rates market
Speaker 1: that is suggesting the risk of hard landing is rising. Now,
Speaker 1: where I think the discontinuity is is really more in
Speaker 1: the spread market, so in credit, so spreads are still
Speaker 1: on the narrow end of the recent ranges end of history,
Speaker 1: So that's where I would say more of the complacency is.
Speaker 1: But I think in the rates market itself, I think
Speaker 1: you are seeing the risk of overtightening playing through within
Speaker 1: the very inverted yield curve. I guess, to put this
Speaker 1: another way, there's a feeling that even if we get
Speaker 1: some sort of recession or some sort of landing, aside
Speaker 1: from the no landing idea that people were talking about
Speaker 1: for a while, that we're going to have higher rates
Speaker 1: for longer, and that is a persistent theme regardless of
Speaker 1: even a crash. Do you agree with that? Do you
Speaker 1: think that if the FED does crash the economy, we
Speaker 1: will still end up with higher terminal rates for a
Speaker 1: longer period of time. Yeah, so we do think that
Speaker 1: we're in a new regime, and the starting point of
Speaker 1: that new regime was the fact that this is the
Speaker 1: first hiking cycle in thirty years, that the peak of
Speaker 1: that hiking cycle is higher than the prior one. Right,
Speaker 1: So we were having higher or lower highs and lower
Speaker 1: lows for thirty years. That's the bull market of fixed income.
Speaker 1: We are now going in the opposite direction. So this
Speaker 1: is a meaningful shift because the next time that the
Speaker 1: FED cuts, we don't think it's going to be back
Speaker 1: to the zero lower bound. So there is some changes
Speaker 1: that are happening here, but those are slow moving. They're
Speaker 1: still going to be cyclical shifts in yields throughout our
Speaker 1: broader structural view that we could be entering into a
Speaker 1: phase of higher highs and higher lows. Let's pick up
Speaker 1: on that, because Bob's given it a lot of thought
Speaker 1: as well. Calcum in the team. Are you thinking about
Speaker 1: repeated cycles of that for the next couple of decades.
Speaker 1: It's the reason to believe we've got tailwinds for it.
Speaker 1: There are some reasons to believe, and obviously these are
Speaker 1: are very abstract topics. Things that we're not going to
Speaker 1: know until very very far into hindsight, but there are
Speaker 1: tailwinds as it relates to demographics. Here, we think that
Speaker 1: inflation structurally is not necessarily going to struggle as much
Speaker 1: to get to that two percent level. So if you
Speaker 1: think about pre or pre COVID, but post GFC, it
Speaker 1: was very hard for the FED to achieve two percent
Speaker 1: core PC. In fact, on average it was about one
Speaker 1: and a half percent, So we were remissing it to
Speaker 1: the downside by about fifty basis points all the time.
Speaker 1: Now I think you can say maybe things have started
Speaker 1: to shift because of deglobalization, because of other factors, that
Speaker 1: it will be easier for the FED to get to
Speaker 1: that two percent. You know, we're not suggesting a materially
Speaker 1: higher regime for inflation and rates, but it is one
Speaker 1: that is shifting over time. Could be the last thirty
Speaker 1: years in reverse. Take here, this a magical coming from
Speaker 1: the team, Cassie Bob. The call here is you guys
Speaker 1: aren't leverage players, but there's a huge part of the
Speaker 1: alternative investment in fixed income market that is usual utilizing leverage.
Speaker 1: Here did they get hammered yesterday? Is there a misuse
Speaker 1: of leverage? Right now. So I think the strength of
Speaker 1: the move and choose yesterday clearly shows that some people
Speaker 1: were off sides and there are positions that needed to
Speaker 1: be to be cleaned out. How's the Austria Bob doing, Cassie,
Speaker 1: you know what, that's the perfect place to leave it,
Speaker 1: Cassie barrow King asset management. That was golden And Alicia
Speaker 1: Levine with us right now being why melon she's over there.
Speaker 1: It's like the bradmon Kim was on her. Well you
Speaker 1: were talking, show us to jump in, jump in respond
Speaker 1: to what we were talking about. This hurt. Look. I
Speaker 1: think what Powell did yesterday was the right thing to do.
Speaker 1: The data has been hot, and if he didn't put
Speaker 1: fifty on the table, it then threatens a further loosening
Speaker 1: of financial conditions, which will un anchor inflation expectation. So
Speaker 1: he had to put it on the table. I actually
Speaker 1: think it was the right thing to do. But now
Speaker 1: the problem is he's locked in because if they don't
Speaker 1: go fifty right, it's been a series of locking in.
Speaker 1: The FED talks too much. I have thought that throughout
Speaker 1: this whole cycle there's too much talking, too much talk
Speaker 1: of disinflation. Eight weeks ago thirteen times, but in the end,
Speaker 1: by putting fifty on the table in the near term,
Speaker 1: they're almost forced to go through it. I think a
Speaker 1: two hundred number on Friday would do it. I want
Speaker 1: to pick up on Lisa's think of this morning so far.
Speaker 1: If two hundred k gets it done, it's a pretty
Speaker 1: low bar. Was stock so resilient? That is confounding and
Speaker 1: the question of the year, And to your point, why
Speaker 1: was Nazak leading yesterday? So let's just point out that
Speaker 1: even after the price action yesterday, stocks were where they
Speaker 1: were on Thursday, and the disconnect between the bond volatility
Speaker 1: and what's happening in the stock market is ever widening
Speaker 1: this year. In year to date in twenty twenty three,
Speaker 1: the market has been remarkably resilient, as have credit spreads,
Speaker 1: as you've just talked about, which is what's holding up
Speaker 1: the market here. So I think what the market is
Speaker 1: seeing is that ultimately that ten years having a hard
Speaker 1: time over four percent, and ultimately the ten years going
Speaker 1: to move lower because a slowdown will be coming. The
Speaker 1: Fed's going to wind up pushing us into recession. So
Speaker 1: I get a lot of hate mail about being too gloomy,
Speaker 1: and people who think that I always a glass half
Speaker 1: empty in just you know, I should go have a
Speaker 1: little bit more fun. And so some people will say that,
Speaker 1: you know, if you take a look at what's been
Speaker 1: going on, trying and let's try to look at the
Speaker 1: bright side, maybe stocks and credit spreads are seeing a
Speaker 1: picture that you know, the rate volatility isn't Maybe there
Speaker 1: is this resilience. Maybe that strength is you know, going
Speaker 1: to carry through even if rates do go up to
Speaker 1: six percent. Do you buy that? So I do buy
Speaker 1: the thought that the economy appears to be less sensitive
Speaker 1: to rate hikes than originally thought. I mean, we are
Speaker 1: now at four fifty four, seventy five and twelve months.
Speaker 1: Whither the crisis, whither the great knock on effects? We're nowhere, okay,
Speaker 1: And I think that surprised a lot of us who've
Speaker 1: seen other rate cycles here. So that has to do
Speaker 1: with the fact that most of mortgages are fixed rate
Speaker 1: at three percent. People are making the spread on a
Speaker 1: five percent six months treasury right, so they're actually making
Speaker 1: money on this trade. But even if the economy is
Speaker 1: less resilient, the FED will probably have to go higher
Speaker 1: and will eventually work. It's just going to take longer.
Speaker 1: The data and the real economy continues to be fairly strong.
Speaker 1: You're seeing weakening in certain parts of the economy such
Speaker 1: as housing. Clearly commercial real estate is at risk. That's
Speaker 1: flashing a warning sign here, But that's really the beginning
Speaker 1: of it. It just hasn't happened yet. As long as
Speaker 1: labor is strong and as long as workers are getting
Speaker 1: wage increases, which they are, you can keep this going further.
Speaker 1: So what do you do with the idea of a
Speaker 1: six percent FED funds rate? What do you do with
Speaker 1: a fifty basis point rate hike on March twenty second?
Speaker 1: How does that change what you buy? So it's a
Speaker 1: really interesting things. So far cyclicals this year have worked,
Speaker 1: as have growth, right, and I think that begins to
Speaker 1: change a little bit. You have to think of this
Speaker 1: as if the FED has to go to six percent
Speaker 1: or even higher. It's not our base case, but you
Speaker 1: have to start opening your mind to the fact that
Speaker 1: it could happen. Then you start having to see a
Speaker 1: recession by the end of the year or even into
Speaker 1: twenty twenty four. The confounding part of this year is
Speaker 1: that the recession hasn't happened yet, and it's very hard
Speaker 1: to predict with the strength we see in other sectors
Speaker 1: such as the service sector, which continues to hold up
Speaker 1: the economy, but you have to expect it within let's say,
Speaker 1: the next twelve months. And with that you do start
Speaker 1: asking the question, will cyclicals continue to outperform? And and
Speaker 1: that's really where you have to go with this, because
Speaker 1: the defensive stocks have been terrible this year, right Healthcare
Speaker 1: has been tough, staples have been tough, utilities have been tough,
Speaker 1: and the cyclicals have ripped. So the question is what
Speaker 1: happens if the recession really starts to be priced in.
Speaker 1: I'm not going to mince on International Women's Day. There
Speaker 1: are many women that have provide leadership, and you have
Speaker 1: with bulletproof mathematics and education. I mean, your path here
Speaker 1: was painful in terms of like lean over the desk.
Speaker 1: Right now, we are at a moment where we've got
Speaker 1: massive first and second derivative moves and it comes down
Speaker 1: to not seeing Teleb's math. The gravity's back, and as
Speaker 1: Talleb says, you got to have skin in the game,
Speaker 1: which means all the shadows are out there, all the
Speaker 1: worries are out there and you study it on a
Speaker 1: tail with the Plassant distribution. We're not going to go
Speaker 1: into the math this morning, but no, I'm not. I'm
Speaker 1: not going to go into the math this morning. But
Speaker 1: are we there now where we've got legitimate tail risk
Speaker 1: of his Hilarion would say, the unknown unknowns out there, Yes,
Speaker 1: we do. We've always thought that simply because we don't
Speaker 1: think you get out of a rate cycle that quickly.
Speaker 1: I think what's unspoken in this conversation today is the
Speaker 1: debt ceiling that could change what the FED does rather
Speaker 1: remarkably and rather quickly as well, and the fact that
Speaker 1: the US hasn't had a recession in the third year
Speaker 1: of a presidential term because it's an election cycle coming up.
Speaker 1: What happens to the pressure on Powell? If we actually
Speaker 1: get that recession by the end of the year, can
Speaker 1: he finish the job? I don't think Powell's burns yet.
Speaker 1: The question is will he be burns in the future.
Speaker 1: I think for now Powell's sticking to the Volker playbook,
Speaker 1: and I think he's doing a pretty good job at it.
Speaker 1: The question is, if we get that recession, if your
Speaker 1: unemployment rate goes to three point eight percent from here,
Speaker 1: which doesn't feel like a lot. You'll begin and he'll
Speaker 1: be getting pressure from the right and the left. You're
Speaker 1: just much more diplomatic than I am. Als going to
Speaker 1: stick with a selection of aiding net fam ymn it.
Speaker 1: You should point out that, well, an International Woman's Day.
Speaker 1: You can be a reporter who says I got a
Speaker 1: fancy degree from Chicago, but I know nothing about bonds,
Speaker 1: and through sheer inspiration and perspiration you learn about bonds.
Speaker 1: What was it like, Lisa Brand was your first day
Speaker 1: in the bond world? Well, it was in two thousand
Speaker 1: and seven in August, when the commercial paper market was freezing.
Speaker 1: Definitely a moment of real tension and drama that people
Speaker 1: don't associate with bonds. Did you just pile up fifteen
Speaker 1: books around you and just read FABOZI cover to cover
Speaker 1: and the rest of it. No. I called traders and
Speaker 1: a number of them cursed and hung up, because that
Speaker 1: was the moment that we were in in terms of
Speaker 1: the intense feeling. And I do wonder we saw the
Speaker 1: lack of drama for a decade or more, almost two decades,
Speaker 1: and here we are in the drama. It's getting very
Speaker 1: Oh seventy. Someone that knows that is Diane Swank. She's
Speaker 1: chief economist at KPMG, and Diane, I'm just thrilled that
Speaker 1: you are here today. And I placed you in a
Speaker 1: group with Abby Joseph Cohen of Goldman Sachs now at
Speaker 1: Columbia University, and of course the wonderful Sally Crawchuk as well,
Speaker 1: who changed securities research at Sanford Bernstein years ago. And
Speaker 1: then there was Swank in nineteen eighty five. I think
Speaker 1: she was out of junior high school at the time,
Speaker 1: and she was in Chicago landing a job at First
Speaker 1: Chicago Corporation. What was it like the first day on
Speaker 1: the job, Diane, I mean out of Michigan. It was.
Speaker 1: It was unique at the time, right, it was unique,
Speaker 1: And to be honest with you, then I went on
Speaker 1: to University of Chicago as well. But you know, I
Speaker 1: wrote up The l Escalator and I often described the
Speaker 1: person I was mentoring in the eighties, and that person
Speaker 1: was me. And I looked like a man in some
Speaker 1: ways with my short cropped hair, my male dominated kind
Speaker 1: of women's suit, and I even had wingtip pumps, which
Speaker 1: says a lot. Although I refused to wear those I
Speaker 1: had bow tie and I took it off. I just
Speaker 1: couldn't take it anymore, and I put it around my waist,
Speaker 1: which is kind of me as well. But you know,
Speaker 1: until I got to step into for me my femininity,
Speaker 1: my career didn't take off. And luckily that occurred very
Speaker 1: shortly thereafter, and I had a terrific mentor. You always
Speaker 1: need someone that is a terrific mentor. And he once
Speaker 1: said to me, it's not that I'm altruistic, Diane, you
Speaker 1: make me look good. What do we need to do
Speaker 1: forward an International Women's Day? I mean, there's all sorts
Speaker 1: of cohorts here in debates and that miss Swank, you've
Speaker 1: lived it. What do we need to do forward to
Speaker 1: get more women into economics, finance, and investment. What's really
Speaker 1: kind of a sad commentary, particularly in economics on the
Speaker 1: academic side. And you know, the bottom line is that
Speaker 1: we need to all be able to step into our
Speaker 1: truth and who we are, and that is not allowed
Speaker 1: in a lot of these fields. And that's something that
Speaker 1: I have a really hard time struggling with because it
Speaker 1: took me a long time to do that. I had
Speaker 1: to work through two maternity leaves, my son almost died.
Speaker 1: I was on TV four weeks after I delivered my daughter.
Speaker 1: I don't wish that for anyone. And the bottom line
Speaker 1: is we have to acknowledge the biology, and the biology
Speaker 1: is that women are delivering babies, and you know, same
Speaker 1: sex couples are able to have children. We have to
Speaker 1: support paternity leave and that is really important. We just
Speaker 1: don't do it. The fact that our female participation rate
Speaker 1: and our male participation rate among twenty five to fifty
Speaker 1: four year olds, a group I no longer belong to,
Speaker 1: is the lowest in the G twenty, which is really
Speaker 1: the G nineteen because we don't RuSHA anymore. That is
Speaker 1: really despicable. Our neighbors to the north, Canada as a
Speaker 1: twelve percent higher participation right among primage women than we
Speaker 1: do in the United States. So a tear with some
Speaker 1: you know, I have a sadness to this day in
Speaker 1: the fact that I wasn't able to do more and
Speaker 1: I still got a lot of work to do for
Speaker 1: everyone behind me. Lisa, why don't you pick it up here?
Speaker 1: I mean, there's some themes there that are really really
Speaker 1: trench it and how alone America is in this debate. Well,
Speaker 1: I want to go to what you managed to accomplish
Speaker 1: in that time, Dane, which is an incredible reputation and
Speaker 1: prowess within the economics field. At a moment that it's
Speaker 1: highly tenuous, we're trying to put together a lot of
Speaker 1: real uncertainty into some sort of forecast. What did you
Speaker 1: make of what Jerome Powell said yesterday on Capitol Hill? Well,
Speaker 1: you know, I thought he finally stepped into where we
Speaker 1: knew the FED was and the fact that all the
Speaker 1: headlines actually reported the same Chairman Jay Powell is really important,
Speaker 1: and that is they are data dependent. The data and
Speaker 1: the narrative has shifted, and that does put a half
Speaker 1: percent on the table. Now could it change. There's two
Speaker 1: more key data points coming out before they meet on
Speaker 1: March twenty first, But I think it's important that he
Speaker 1: laid out just how data dependent they are and the
Speaker 1: willingness to pivot. You've got another Powell pivot, and that
Speaker 1: is that we could get a half percent at this
Speaker 1: next meeting, and that rates are going higher faster. I
Speaker 1: think that's very important information to have. It's one than
Speaker 1: we've been arguing. And yes, the data has been out
Speaker 1: there officially since the Valentine's Day massacre of that inflation
Speaker 1: number we came out, but the revisions to that we're
Speaker 1: out prior to that, the friday before it, and we're
Speaker 1: looking at it going, oh my gosh, this has changed
Speaker 1: the entire narrative. Well is the data that we've gotten
Speaker 1: since then? And I think about the ADP data that
Speaker 1: a lot of people are dismissive of as it confirmed
Speaker 1: that strength, or is there any sign that perhaps we're
Speaker 1: going to see some sort of downward revision or some
Speaker 1: sort of downside surprise in labor market that has surprised
Speaker 1: for almost a year straight to the upside. We certainly
Speaker 1: could see some cooling, and I think we are seeing
Speaker 1: some cooling, and I think the ADP data is now
Speaker 1: the way that they've redone it. And I give a
Speaker 1: lot of credit to Nila Richardson over at ADP for
Speaker 1: not making it a forecast of the official payrolls data.
Speaker 1: It is its own data set. But it still shows
Speaker 1: that there's a lot of strength and wage gains there.
Speaker 1: That's terrific for wage earners. But to the extent that
Speaker 1: we're seeing continued upward pressure on inflation tied to demand,
Speaker 1: which is tied to the wages people earn. That is
Speaker 1: a concern for the FED, and I think that data,
Speaker 1: I mean, we know the month of January. Part of
Speaker 1: the reason ADP's report was so weak was because it
Speaker 1: is more sensitive to the floods we saw in California.
Speaker 1: So people who didn't work the whole week didn't show
Speaker 1: up as much on payrolls in that week that was
Speaker 1: the survey week. It was not the same for the
Speaker 1: national data. If they got paid even a dime that week,
Speaker 1: they showed up on national payrolls. So I do think
Speaker 1: we'll see some downside surprises as well as we come
Speaker 1: off this unseasonably hot January in many ways. But the
Speaker 1: bottom line is you need the threshold to get us
Speaker 1: to the Fed feeling like it's actually got inflation under
Speaker 1: control and then inflation will not become a more entrenched
Speaker 1: inflation is very very high. That means their threshold to
Speaker 1: slowdown rate hikes is high right now, Dan Swank, thank
Speaker 1: you for joining us today, of course, with kpe MG.
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