WEBVTT - Criticism From All Sides, As Fed Signals More Cuts 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel Podcast. I'm Paul swing you 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma Waits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:25.319 at Bloomberg dot com. Carrika Donna, chief US economist for 0:00:25.360 --> 0:00:28.800 Bloomberg Economics, to stay with us. We are ten seconds 0:00:28.880 --> 0:00:32.320 away from when we expect to get j. Powell's speech, 0:00:32.400 --> 0:00:34.879 at least the release of the text that he is 0:00:34.880 --> 0:00:39.000 delivering to Jackson Hole uh and currently it is out. 0:00:39.080 --> 0:00:41.400 He is saying that the economy is in a favorable place, 0:00:41.640 --> 0:00:45.960 although it does face significant risks, so trying to thread 0:00:46.000 --> 0:00:49.280 that needle, highlighting the need for the Fed to be 0:00:49.360 --> 0:00:53.280 on high lord while also remaining confident in the US economy. 0:00:53.560 --> 0:00:56.080 He said, we are carefully watching developments as we assess 0:00:56.120 --> 0:00:58.280 their implications for the u S outlook in the path 0:00:58.280 --> 0:01:02.520 of monetary policy. Interestingly, he said, well, monetary policy is 0:01:02.560 --> 0:01:05.920 a powerful tool that works to support consumer spending, business investment, 0:01:05.920 --> 0:01:09.960 in public confidence. It cannot provide a settled rule book 0:01:10.360 --> 0:01:14.600 for international trade. Matt Bosler is over in Jackson Hole 0:01:14.720 --> 0:01:17.919 joining US now. Matt Bosler covers the economy and the 0:01:17.959 --> 0:01:21.280 Matt Bosler is over in Jackson Hole, joining US now. 0:01:21.360 --> 0:01:24.160 Matt Bosler covers the economy and the FED for US 0:01:24.200 --> 0:01:27.040 at Bloomberg News. So, Matt, what stood out to you 0:01:27.120 --> 0:01:31.200 most from the text of FED chair J Powell speech? Yes? 0:01:31.360 --> 0:01:34.720 So the really the main takeaway from j. Powell speech 0:01:34.760 --> 0:01:37.840 today and Jackson Hole, UM is he's talking about the 0:01:38.200 --> 0:01:41.800 outlook for policy over the next you know, a few 0:01:41.840 --> 0:01:44.800 weeks and months. And he says that the three weeks 0:01:44.800 --> 0:01:48.160 since our July MC meeting have been eventful, beginning with 0:01:48.200 --> 0:01:51.280 the announcement of new tariffs on imports from China. He 0:01:51.320 --> 0:01:54.600 talks about the global slowdown in some of the negative 0:01:54.680 --> 0:01:56.840 data that we've gotten out of Germany and China lately. 0:01:57.240 --> 0:01:59.840 H plus geopolitical events like the rising risk of a 0:02:00.000 --> 0:02:03.840 are Brexit and tensions in Hong Kong, the dissolution of 0:02:03.840 --> 0:02:06.680 the Italian government. So you put all these things together 0:02:06.720 --> 0:02:09.040 and I think it indicates that, um, you know, just 0:02:09.080 --> 0:02:11.480 since the July of form C meeting, UH, they have 0:02:11.520 --> 0:02:13.880 a lot of new things on their plate to consider, 0:02:14.200 --> 0:02:17.320 and probably all of those things, uh, you know, point 0:02:17.560 --> 0:02:22.040 toward further easing later this year. So, Matt, it's interesting 0:02:22.080 --> 0:02:26.160 the do you think the chairman pals he really has 0:02:26.200 --> 0:02:27.959 to throwd the needle here, doesn't he because he's got 0:02:28.080 --> 0:02:30.120 lots of cross currents ahead of them, as does the 0:02:30.120 --> 0:02:33.400 FED Reserve overall. Yeah, that's exactly right. So I mean, 0:02:33.400 --> 0:02:35.280 of course, the flip side of this story, which Powell 0:02:35.320 --> 0:02:38.080 also refers to in his speeches, that you know, the 0:02:38.160 --> 0:02:40.320 U S data have been pretty strong and we haven't 0:02:40.320 --> 0:02:43.919 really seen much deterioration in the US economic data yet 0:02:44.120 --> 0:02:47.799 outside of UM you know, a few key admittedly sectors 0:02:47.840 --> 0:02:51.040 like business investment and what's going on in manufacturing. But 0:02:51.320 --> 0:02:53.760 of course you have to balance that with UM, you know, 0:02:53.840 --> 0:02:57.120 the low unemployment rates, the strong labor market data, UM, 0:02:57.200 --> 0:03:00.320 and this conviction that inflation is still going to go 0:03:00.360 --> 0:03:03.160 back up to their two percent target and so UM. Certainly, 0:03:03.160 --> 0:03:05.400 all of the Fed speak and what we saw in 0:03:05.400 --> 0:03:08.480 the minutes on Wednesday indicated that this is still a 0:03:08.560 --> 0:03:11.840 very split committee on the need for easing at this point. 0:03:12.080 --> 0:03:14.280 And so J. Powell's job is really to try to 0:03:14.639 --> 0:03:18.040 you know, convey the message while keeping the committee together. 0:03:18.560 --> 0:03:22.440 So right now we are looking at bond yields heading 0:03:22.520 --> 0:03:26.000 lower does appear to be perceived as a dobish uh 0:03:26.200 --> 0:03:29.360 FED speech, And Dave Wilson Blobrick Socks editor here in 0:03:29.440 --> 0:03:32.640 our Bloomberg eleven three oh studios, let's just get a 0:03:32.680 --> 0:03:35.880 sense of the read through right now of market reaction, 0:03:35.920 --> 0:03:39.360 because this has been perceived again as J. Powell in 0:03:39.400 --> 0:03:43.240 some ways confirming the market view that even though things 0:03:43.320 --> 0:03:46.120 look pretty good, they are willing to act in face 0:03:46.440 --> 0:03:49.040 in the face of uncertainty, which if you think about it, 0:03:49.120 --> 0:03:52.360 considering the China, you know, put up those seventy five 0:03:52.520 --> 0:03:56.680 billion dollars of retaliatory tarroriffts, that's exactly what you would 0:03:56.720 --> 0:04:00.320 want to hear. I mean, they start kicking in next week. 0:04:00.440 --> 0:04:02.600 You know, we'll see more of them out of December. 0:04:03.000 --> 0:04:05.760 So that's you know, a more direct sort of concern. 0:04:06.120 --> 0:04:08.000 And and you know, the Fed has a lot on 0:04:08.040 --> 0:04:10.920 its plate, so the idea that you know, they're going 0:04:11.040 --> 0:04:14.680 to move further if they need to sustain you know, 0:04:14.840 --> 0:04:18.160 the economic expansion, I mean, that's that's just really what 0:04:18.240 --> 0:04:20.040 people would want to hear at this point. I mean 0:04:20.040 --> 0:04:22.800 I'm watching the auto stocks as an example, because they 0:04:22.839 --> 0:04:26.840 took a hit, uh, right after the China move, and 0:04:27.120 --> 0:04:30.159 you know, we're seeing those losses being trimmed. I mean, 0:04:30.400 --> 0:04:32.960 Ford in general motors down less than one percent at 0:04:32.960 --> 0:04:35.440 this point. So you know, I mean there's sort of 0:04:35.480 --> 0:04:38.120 a good uh, sort of the litmus test, you might say, 0:04:38.120 --> 0:04:41.039 if only because you know the automakers relatively sensitive to 0:04:41.080 --> 0:04:43.159 what's going on with interest rates, and that's where the 0:04:43.160 --> 0:04:46.200 FED pops in. So Carl, Carl, Rico, Donna Bloomer Economic 0:04:46.240 --> 0:04:47.760 still with us. Carl, what are your thoughts were your 0:04:47.760 --> 0:04:49.760 initial kind of read through here? Well, I think Matt 0:04:49.760 --> 0:04:51.520 Bosler hit the nail on the head in terms of 0:04:51.520 --> 0:04:55.120 pulling out the key operative line of that speech. The 0:04:55.279 --> 0:04:57.520 three weeks since the last FO m C meeting have 0:04:57.640 --> 0:05:01.080 been eventful, uh. And that is a chair pal saying 0:05:01.640 --> 0:05:06.400 basically what we had placed into the profile on July 0:05:06.560 --> 0:05:08.840 thirty one, that we can rip up that script. Uh. 0:05:08.839 --> 0:05:11.799 And we're now looking at a different course, which obviously 0:05:11.880 --> 0:05:13.480 is going to be a more devish course here. So 0:05:13.520 --> 0:05:16.120 the FED was looking at one or two cuts now 0:05:16.160 --> 0:05:18.680 I think this is a pal's way of signaling maybe 0:05:18.680 --> 0:05:21.080 a little bit more and just one final thought there. 0:05:21.560 --> 0:05:24.440 President Trump earlier this morning tweeted, now the Fed can 0:05:24.480 --> 0:05:27.200 show their stuff. Uh, this is not the type of 0:05:27.240 --> 0:05:30.520 speech that President Trump wanted, where he would presumably want 0:05:30.520 --> 0:05:33.280 a much more aggressive FED. So this is this is devish, 0:05:33.320 --> 0:05:35.279 but not nearly as devish is what the President wants. 0:05:35.320 --> 0:05:37.120 So I will certainly be keeping an eye on the 0:05:37.200 --> 0:05:41.040 foot on his Twitter feed and potential dissatisfaction or maybe 0:05:41.200 --> 0:05:42.760 if it's not coming from the Fed, then he's going 0:05:42.800 --> 0:05:45.240 to get it on the tariff front exactly. Carlock Down, 0:05:45.480 --> 0:05:48.400 Bloomberg Economics, thanks so much for joining us for your thoughts. 0:05:48.520 --> 0:05:50.560 Right now, we want to turn to Kathleen Hayes. Kathleen's 0:05:50.560 --> 0:05:54.440 a global policy and economics editor for Bloomberg News. Kathleen 0:05:54.520 --> 0:05:58.440 loved to get your initial thoughts here on the commentary 0:05:58.520 --> 0:06:03.440 from FED chairman Pale. They're still open to rate cuts. Uh, 0:06:03.520 --> 0:06:06.640 no clear sign that they're going to walk through all though. 0:06:06.680 --> 0:06:10.400 Jim Bullard prison St. Louis said said earlier today that 0:06:11.040 --> 0:06:13.560 he does see the need for more cuts, and I 0:06:13.560 --> 0:06:15.600 think that's a somewhat different tone than we heard from 0:06:15.640 --> 0:06:18.320 him just a couple of weeks ago. So clearly there 0:06:18.360 --> 0:06:20.200 are some. In fact, I think he specifically mentioned the 0:06:20.279 --> 0:06:23.360 yold curve. Uh. And of course in UH, that's that 0:06:23.560 --> 0:06:27.440 key part of j. Pale's speech where he talked about 0:06:27.440 --> 0:06:29.680 the three weeks. That's one of the things he mentioned, 0:06:29.680 --> 0:06:32.760 of course, is markets and market volatility and and and 0:06:32.760 --> 0:06:34.520 and everyone knows third to your bond fell below two 0:06:34.520 --> 0:06:37.080 percent for the first time ever. Right, it's back above. Nevertheless, 0:06:37.360 --> 0:06:40.960 I think it's also important that there's another line where 0:06:40.960 --> 0:06:45.000 he says, because he's talking about three phases of Monterrey policy. 0:06:45.080 --> 0:06:48.320 Phase one was several years of bringing inflation down. Phase 0:06:48.360 --> 0:06:51.479 two keeping rates very low, but then you had financial successes. 0:06:51.680 --> 0:06:55.040 Phase three, since the Great Recession, getting back on track, 0:06:55.080 --> 0:06:56.800 trying to keep it going. But then at some point 0:06:56.880 --> 0:06:59.800 in this final section he throws in, I'll pair of 0:07:00.320 --> 0:07:02.760 but you know, now we're trying to visit policy in 0:07:02.760 --> 0:07:05.279 the middle of the trade war. You know, this really 0:07:05.440 --> 0:07:07.760 muddies the water so much it makes it much more difficult. 0:07:07.800 --> 0:07:10.360 He talks about having to look down the road. Here 0:07:10.440 --> 0:07:12.000 we are now, but we have to look over the 0:07:12.080 --> 0:07:16.200 next year. Seems to me that if I'm gonna say, gosh, 0:07:16.880 --> 0:07:18.600 you asked Kathleen one one way or the other. Do 0:07:18.600 --> 0:07:20.960 you think he's four right cuts or not. I think 0:07:20.960 --> 0:07:23.320 he may be gently on the side of those, saying, 0:07:23.640 --> 0:07:26.280 you know, maybe one more isn't such a bad idea. 0:07:26.880 --> 0:07:28.800 You know what, man, I just wanna get a funal 0:07:28.800 --> 0:07:30.200 thought for you. We know you have to run. You've 0:07:30.200 --> 0:07:34.360 got a lot on your plate there. I'm curious about 0:07:34.600 --> 0:07:38.840 what your take is on how j Powell addressed trade. 0:07:38.920 --> 0:07:41.760 This has been a key issue. He acknowledged this has 0:07:41.800 --> 0:07:44.600 been a key driver in this slowdown, but also said 0:07:45.000 --> 0:07:48.160 that monetary policy basically implying it's an imperfect tool to 0:07:48.240 --> 0:07:52.720 address it. So what's your take on that? Kathleen nailed it. 0:07:52.760 --> 0:07:54.920 I mean, there's a big portion in Jay's speech where 0:07:54.960 --> 0:07:57.000 he talks about just the fact that, you know, the 0:07:57.000 --> 0:07:59.640 models that they've been using to make monetary policy for 0:07:59.680 --> 0:08:01.840 the last you know, thirty or forty years or so 0:08:01.960 --> 0:08:05.240 don't really have some variable for trade developments in them, right, 0:08:05.280 --> 0:08:07.560 So in that sense, this is just not something they're 0:08:07.600 --> 0:08:10.000 used to dealing with. Um. One interesting thing I also 0:08:10.040 --> 0:08:12.200 wanted to flag from the speech that kind of gets 0:08:12.240 --> 0:08:16.160 to this is Paul also talked about how, along with 0:08:16.280 --> 0:08:20.640 July's rate cut, the shifts in the anticipated path of policy. Um, 0:08:20.680 --> 0:08:22.480 you know, over the remainder of the year, have eased 0:08:22.560 --> 0:08:25.520 financial conditions, and he says that helps explain why the 0:08:25.560 --> 0:08:29.680 outlook for inflation and employment remains largely favorable. So he's 0:08:29.720 --> 0:08:31.600 kind of hinting that, you know, not only the July 0:08:31.720 --> 0:08:34.319 rate cut, but also what is price in the markets 0:08:34.320 --> 0:08:37.600 for beyond is a big reason why the outlook um 0:08:37.679 --> 0:08:39.600 is still favorable in their minds. And so I think 0:08:39.640 --> 0:08:43.079 that potentially constitutes another hint that, um, you know, if 0:08:43.120 --> 0:08:45.800 you thought that they had to follow through on the 0:08:45.840 --> 0:08:48.720 promise of a July rate cut, um, that kind of 0:08:48.760 --> 0:08:51.280 thinking may still be you know, top of mind for 0:08:51.320 --> 0:08:53.680 them going forward over the next couple of weeks and months. 0:08:55.080 --> 0:08:56.960 Matt Boso, thank you so much for joining us. Matt 0:08:57.080 --> 0:09:00.360 from Bloomberg News giving us his thoughts on Chairman House 0:09:00.760 --> 0:09:04.000 comments from this morning. Dave Wilson, looking at the you know, 0:09:04.040 --> 0:09:06.520 the markets here kind of they came back a little bit. 0:09:06.559 --> 0:09:08.760 We have the SMP down five, NaSTA Act down about 0:09:08.760 --> 0:09:11.559 twenty five doll down six, so coming back a little bit, 0:09:11.600 --> 0:09:14.439 so proceed perhaps a little bit dubbish coming out of 0:09:14.480 --> 0:09:16.679 the Fed, but still you've kind of got that ying 0:09:16.760 --> 0:09:19.760 and Yang of the Fed and monetary policy. But trade 0:09:19.840 --> 0:09:22.280 on the other hand, right, you know you still do 0:09:22.400 --> 0:09:27.439 no question and uh, you know, as much as bringing 0:09:27.520 --> 0:09:30.560 down interest rates, we'd probably counter that to some extent. 0:09:31.040 --> 0:09:33.880 I mean, we won't know how much and whether it's 0:09:33.920 --> 0:09:36.360 really going to be effective for some time. You know, 0:09:36.559 --> 0:09:40.240 especially as you know the Chinese tariffs ramp up. You 0:09:40.240 --> 0:09:42.920 know it's going to be even more that the Central 0:09:42.960 --> 0:09:46.840 Bank may or may not decide to offset in terms 0:09:46.880 --> 0:09:49.680 of where they go with monetary policy. So when you 0:09:49.720 --> 0:09:53.599 put it all together, it's not like, I mean, the 0:09:54.080 --> 0:09:57.920 playing field has really changed all that much from where 0:09:57.960 --> 0:10:01.000 we've been for the last few week. Eggs with you know, 0:10:01.120 --> 0:10:04.160 people anticipating that rates are going to come down multiple 0:10:04.240 --> 0:10:08.559 times and soon. I want to bring in Bob Eisenbie's 0:10:08.600 --> 0:10:11.959 he's vice chair and chief Monetary economistic Cumberland Advisors, and 0:10:12.000 --> 0:10:14.120 also he is the former director of research at the 0:10:14.120 --> 0:10:18.040 Atlanta Fed. We're talking about j. Powell's speech, So with 0:10:18.160 --> 0:10:21.679 us is Kathleen Hayes as well as Dave Wilson. Bob, 0:10:21.920 --> 0:10:24.439 I want to get your sense of this speech right 0:10:24.440 --> 0:10:27.280 now is being perceived by markets, is indicating a greater 0:10:27.360 --> 0:10:29.720 willingness on the part of the FED to cut interest 0:10:29.800 --> 0:10:33.040 rates some looking right now about two point four cuts 0:10:33.040 --> 0:10:36.440 now being priced into the market by year end. Do 0:10:36.480 --> 0:10:40.720 you think this is a correct reading of J. Powell's words, Well, 0:10:40.760 --> 0:10:44.120 I hope it's not a correct reading, because I think 0:10:44.160 --> 0:10:47.680 that's not really the appropriate path. And one of the 0:10:47.720 --> 0:10:50.160 things I found sort of interesting is when you looked 0:10:50.160 --> 0:10:54.160 at the minutes of the last MC meeting, in fact, 0:10:54.640 --> 0:10:57.400 the staff had marked up growth projections in the near 0:10:57.600 --> 0:11:00.760 term and also barked up the inflation rejections, and you 0:11:00.840 --> 0:11:03.959 put that together with the kind of rhetoric we heard 0:11:04.000 --> 0:11:07.040 from the interviews with several of the Reserve Bank presidents 0:11:07.400 --> 0:11:11.360 who were sort of saying, now is not h German 0:11:11.440 --> 0:11:16.199 Pollock has a real difficult path ahead dealing with this 0:11:16.360 --> 0:11:20.640 mix of views on his committee. And uh, I'm I'm 0:11:20.679 --> 0:11:25.360 concerned that. Um, when you try to deal with uncertainty 0:11:25.480 --> 0:11:29.280 using policy, I don't know if any models that say 0:11:29.360 --> 0:11:32.880 that policy changes can deal with uncertainty. It can deal 0:11:32.920 --> 0:11:36.360 with risk, but it can't deal with uncertainty because uncertainty 0:11:36.360 --> 0:11:40.679 means we don't know what's going to happen. So it's 0:11:40.720 --> 0:11:43.000 hard to take out an insurance policy when you don't 0:11:43.040 --> 0:11:45.839 know what's going to happen. So, Kathleen Hayes want to 0:11:45.880 --> 0:11:47.920 bring you back. I mean, are you surprised that to 0:11:47.960 --> 0:11:52.240 the extent that the chairman Pal seems to be recognizing, 0:11:52.600 --> 0:11:54.840 you know, kind of what is a persistent, if not growing, 0:11:55.360 --> 0:11:58.880 global trade concerns. I'm not at least bit surprised. I 0:11:58.920 --> 0:12:00.600 don't see how he could avoid it. And I would 0:12:00.640 --> 0:12:02.600 like to throw into the mix something very interesting that 0:12:02.679 --> 0:12:07.719 Carmen Reinhardt, Harvard University professor UM said UM last night 0:12:07.840 --> 0:12:09.880 on our USA Asia shows when I interviewed her that 0:12:09.960 --> 0:12:12.400 she thinks, I said, what about this concern about recession 0:12:12.400 --> 0:12:14.640 and should have said be preemptive. She said, she thinks 0:12:14.640 --> 0:12:17.880 people are downplaying, um, the potential of shocks, and she 0:12:17.960 --> 0:12:20.560 specifically mentioned what's going on in Hong Kong. I said, 0:12:20.600 --> 0:12:22.760 but how would that cause a shock, you know, with 0:12:23.000 --> 0:12:25.000 Hong Kong losing brown as a financial center, with the 0:12:25.080 --> 0:12:29.080 Chinese government like Russian aggressively And she said, well, whatever 0:12:29.200 --> 0:12:31.240 that happened, She said, you know, shocks don't always happen 0:12:31.240 --> 0:12:32.599 with a bank. They can happen with a whimper. But 0:12:32.640 --> 0:12:35.280 there's also bregsit we have seen all the global slowdown. 0:12:35.600 --> 0:12:37.520 I totally get if I had, if I was on 0:12:37.559 --> 0:12:39.480 the committee. I don't know how to vote because I 0:12:39.559 --> 0:12:41.760 know exactly what what Bob saying, I know what Erica 0:12:41.840 --> 0:12:46.040 Rosenbrand say esther George. The whole question is, you know, 0:12:46.160 --> 0:12:48.079 can you wait? And I think actually one of the 0:12:48.120 --> 0:12:50.199 reasons that people like Erik rosen Gren want to wait 0:12:50.760 --> 0:12:52.800 is because the funds, right, it's barely over two percent 0:12:52.960 --> 0:12:55.040 if they do kiwie, so you've got a tenure. Note 0:12:55.160 --> 0:12:56.920 what one point six percent is. Eric said in that 0:12:57.000 --> 0:12:59.600 interview Monday, you know that you don't have too much 0:12:59.640 --> 0:13:01.440 to do buying bonds to push down long term race 0:13:01.480 --> 0:13:03.959 throaty so low right, and you can't race But he 0:13:04.040 --> 0:13:05.959 didn't say that exactly, but that's what I think is 0:13:06.000 --> 0:13:08.200 part of the reason for people to say, let's don't 0:13:08.200 --> 0:13:11.480 go yet. Well, Bob, then I want to just pivot 0:13:11.520 --> 0:13:14.040 back to you and your points, basically saying that the 0:13:14.480 --> 0:13:16.960 FED is not it would not be appropriate for them 0:13:17.000 --> 0:13:18.959 to cut raids given the fact that inflation is starting 0:13:18.960 --> 0:13:21.080 to pick up, in growth is strong. I'm just wondering 0:13:21.559 --> 0:13:24.880 what is the risk of overheating here? Because a lot 0:13:24.920 --> 0:13:28.120 of people say that it is still pretty small, while 0:13:28.160 --> 0:13:31.920 the chances of a FED error that causes the market 0:13:32.120 --> 0:13:35.439 tank and thus send it it's closer to recession is 0:13:35.559 --> 0:13:38.160 much greater. Where do you weigh in on that, Well, 0:13:38.280 --> 0:13:40.599 two things. First of all, agree with the points that 0:13:40.760 --> 0:13:45.920 Kathleen has made, and most expansions and become because of 0:13:46.040 --> 0:13:49.080 some sort of a shock, uh. And I don't see 0:13:49.320 --> 0:13:53.480 a FED holding off as being sort of a contributory 0:13:53.600 --> 0:13:57.719 shock that might essentially be one of those events that 0:13:57.840 --> 0:14:01.440 would lead to a recession. So I don't see policy 0:14:01.720 --> 0:14:05.200 and a policy mistake playing into that role. At this point. 0:14:05.280 --> 0:14:08.439 We've got trade, We've got all these other factors that 0:14:08.520 --> 0:14:11.640 are going on, which I think, frankly are a bit 0:14:11.800 --> 0:14:15.000 overblown when it comes to the importance of trade to 0:14:15.120 --> 0:14:18.720 our economy relative to what's going on on the domestic side. 0:14:19.280 --> 0:14:22.960 So uh, you know, I think that if they were 0:14:23.000 --> 0:14:25.760 to make a cut, all that's gonna do is sort 0:14:25.800 --> 0:14:29.000 of call for more cuts down the road, and it's 0:14:29.000 --> 0:14:30.680 going to put them on a path where they're going 0:14:30.720 --> 0:14:32.840 to use up all their ammunition. And I think that's 0:14:33.240 --> 0:14:35.880 sort of the view that Eric rosen Grin and some 0:14:36.000 --> 0:14:38.160 of the other people around They don't want to sort 0:14:38.160 --> 0:14:43.840 of preemptively lose control of their tools. So Dave Wilson 0:14:43.920 --> 0:14:45.640 just looking at the markets here, the SMP kind of 0:14:45.680 --> 0:14:48.920 you know, software again down about ten, the down down fifty. 0:14:48.920 --> 0:14:50.400 It looks like the markets just you know a little 0:14:50.400 --> 0:14:54.320 bit again unsure about the the ultimate path of the 0:14:54.400 --> 0:14:56.720 Federal Reserve here not you know, taking you know, a 0:14:57.040 --> 0:15:00.800 particularly hawkish Ordeavors view. It has that look to it. 0:15:01.080 --> 0:15:03.080 And you know, at the same time, and you have 0:15:03.240 --> 0:15:05.600 so many issues in the back robbing, cluding the ones 0:15:05.640 --> 0:15:09.560 that were alluded to. Uh so you put it all together, 0:15:09.880 --> 0:15:13.440 and you know, we're kind of looking ahead and trying 0:15:13.520 --> 0:15:15.680 to kind of get a feel for, you know, how 0:15:15.800 --> 0:15:18.800 things shake out in terms of monetary policy, and you know, 0:15:18.960 --> 0:15:22.240 it is not quite as clear cut as a lot 0:15:22.320 --> 0:15:24.240 of people would like it to be at this point, 0:15:24.520 --> 0:15:27.320 given the focus that there has been on bringing down 0:15:27.440 --> 0:15:30.520 interest rates. Kathleen, Kathleen and his can you just give 0:15:30.600 --> 0:15:32.960 us a sense of what the mood is like in 0:15:33.120 --> 0:15:38.440 Jackson Hole. Well, it's hard to sum it all up, 0:15:38.560 --> 0:15:44.080 but I think everybody is really concerned about where the 0:15:44.200 --> 0:15:46.320 world is and where it's going. And one of the 0:15:46.400 --> 0:15:50.280 things I keep asking people about uh, in interviews or 0:15:50.360 --> 0:15:53.600 just talking is what's going on? None of the bondyles 0:15:53.640 --> 0:15:56.760 we get more every day, right, UM, you know this 0:15:56.880 --> 0:15:59.440 big dropping rate very interesting. This is maybe a little 0:15:59.480 --> 0:16:02.440 bit nerdy, but maybe Bob Bison bis will appreciate this. UM. 0:16:02.680 --> 0:16:04.880 John Liskey, who's the former number two at the I 0:16:05.080 --> 0:16:07.440 m F and you know, was that JP Morgan as 0:16:07.480 --> 0:16:11.400 our GP economist for years, etcetera. UM said. Stanford Institute 0:16:11.440 --> 0:16:13.760 for Economic Research came out with a speech this week. 0:16:13.840 --> 0:16:17.800 I was seeking a research piece arguing that because of technology, 0:16:18.200 --> 0:16:20.880 that inflation is even not higher than we've think, but 0:16:21.040 --> 0:16:23.600 much lower than we think. And if that's the case, 0:16:23.680 --> 0:16:26.080 real interest rates are higher, and so in that context, 0:16:26.480 --> 0:16:30.520 maybe lower yields makes sense. Jacob Frankel, jepen Borg and 0:16:30.600 --> 0:16:33.560 Chase International, former head of the Banking Israel, etcetera. UM 0:16:34.000 --> 0:16:36.040 is concerned. He thinks negative yield are a bad sign. 0:16:36.080 --> 0:16:39.120 He thinks they kind of blunt the transmission of easy 0:16:39.200 --> 0:16:41.840 policies through the financial system because it's hard for banks 0:16:41.960 --> 0:16:45.480 to pass it on. So there's definitely concern here and people, 0:16:45.880 --> 0:16:47.240 I think a lot of people feel to like, you 0:16:47.280 --> 0:16:50.000 know what, the FED isn't doesn't have any better idea 0:16:50.040 --> 0:16:53.200 than anybody else of where we are and where to 0:16:53.280 --> 0:16:54.840 go next. They're just going to do the best they 0:16:54.920 --> 0:16:58.480 can and hope it works. Kathleen Hayes, thank you so 0:16:58.600 --> 0:17:02.280 much for joining us. Kathleen's Glow Policy and economics editor 0:17:02.320 --> 0:17:05.080 for Bloomberg News and Bloomberg Television. Bob, just want to 0:17:05.119 --> 0:17:07.400 get one more thought from you. I mean, it's clear 0:17:07.560 --> 0:17:10.359 that Chairman Pal and the Fed are are concerned about 0:17:10.760 --> 0:17:13.480 global trade, but boy, we've got some weak numbers out 0:17:13.560 --> 0:17:16.800 of Germany earlier this week. Um, that's got to be 0:17:16.840 --> 0:17:20.119 an issue. Well, it is. It's a big issue for 0:17:20.240 --> 0:17:24.199 Germany and for Europe as a whole, because they're going 0:17:24.240 --> 0:17:28.560 to be really suffering as we see the Chinese reimposing 0:17:28.680 --> 0:17:31.640 some of the tariffs, particularly on autos. When you consider 0:17:31.720 --> 0:17:33.840 how much of the German autos are made here in 0:17:33.880 --> 0:17:37.639 the United States, which would ultimately be exported to China. 0:17:37.800 --> 0:17:42.520 So you know they're deeply entwined across the whole global 0:17:42.680 --> 0:17:48.399 environment and that it's not without consequences when you have 0:17:48.560 --> 0:17:51.000 these kinds of trade wars going on and it turns 0:17:51.040 --> 0:17:53.800 out there not so easy to win. Bobyes, and Bye's 0:17:53.880 --> 0:17:57.159 Vice chair in chief Monetary Economistic Cumberland Advisers, as well 0:17:57.240 --> 0:17:59.280 as the former director of research at the Atlanta FAD. 0:17:59.320 --> 0:18:01.280 Thank you so much for being with us. Dave Wilson, 0:18:01.320 --> 0:18:03.920 Libric Stocks Editor, thank you so much also for joining 0:18:04.040 --> 0:18:06.760 us and giving us the view from the market's desk, 0:18:06.840 --> 0:18:29.680 and we will be getting more from you. Well. Lisa 0:18:29.720 --> 0:18:32.639 and I've been waiting for President Trump to tweet his 0:18:32.760 --> 0:18:35.960 thoughts of FED Chairman Pal's comments this morning, and here 0:18:36.000 --> 0:18:39.960 we have them. Uh from Donald President Donald Trump's tweeting 0:18:40.520 --> 0:18:42.960 quote as usual, the FED did nothing all caps. It 0:18:43.080 --> 0:18:46.280 is incredible that they can speak without knowing or asking 0:18:46.440 --> 0:18:48.720 what I am doing, which will be announced shortly. We 0:18:48.800 --> 0:18:51.120 have a very strong dollar and a very week FED. 0:18:51.280 --> 0:18:53.840 I will work brilliantly with both, and the US will 0:18:53.920 --> 0:18:57.399 do great. Second tweet, My only question is who is 0:18:57.400 --> 0:19:02.320 our bigger enemy? J Pal or Rman? She so certainly 0:19:02.520 --> 0:19:09.560 provocative tweets President Trump expressing his um I think not 0:19:10.040 --> 0:19:12.080 lack of support is probably the safe way to say 0:19:12.119 --> 0:19:13.639 it for kind of what he's seeing out of the 0:19:13.680 --> 0:19:16.439 Federal Reserve. But Paul, you raised a really interesting question, 0:19:16.520 --> 0:19:19.479 which is, yes, there's a J. Powell aspect, but Chairman 0:19:19.520 --> 0:19:23.600 Gee Juan Ping of China. How does he view this saying, wait, 0:19:23.680 --> 0:19:26.240 hold on a second, I'm your enemy. So let's bring 0:19:26.280 --> 0:19:29.760 in Christopher Balding. He's associate professor at Fulbright University of Vietnam, 0:19:29.880 --> 0:19:34.040 a Bloomberg opinion columnist, spent a decade in Beijing. Uh, 0:19:34.320 --> 0:19:36.920 and I'm just trying to figure out. I think that 0:19:37.359 --> 0:19:39.680 Paul raises a really good question here. Is this going 0:19:39.760 --> 0:19:43.440 to be surprising to Jijun Ping that he's being publicly 0:19:43.560 --> 0:19:46.880 sort of flogged as an enemy. I don't think it's 0:19:46.920 --> 0:19:49.600 going to come as that big of a surprise. Despite 0:19:49.600 --> 0:19:52.399 all of the polite words that Trump uses in public 0:19:52.480 --> 0:19:56.479 and on Twitter about Chairman She, Chairman She understands very 0:19:56.560 --> 0:19:59.080 clearly how he's being treated in the in the conflict 0:19:59.160 --> 0:20:01.040 between them. So I don't think he gives a lot 0:20:01.080 --> 0:20:03.000 of weight to those polite words, and I don't think 0:20:03.000 --> 0:20:07.160 it's going to surprise him. Uh. This type of criticism interesting. 0:20:07.400 --> 0:20:09.600 One of j Pal thinks being put in the same 0:20:09.600 --> 0:20:12.760 company as Chairman She. But we'll get to that later. Um. 0:20:13.040 --> 0:20:16.679 So Christopher, let's talk about the real hard news today 0:20:16.840 --> 0:20:21.240 on the trade front, which is China announcing retaliatory tariffs 0:20:21.280 --> 0:20:24.280 on another seventy five billion dollars of US goods. What 0:20:24.480 --> 0:20:27.240 is your view of kind of this move. I think 0:20:27.320 --> 0:20:31.440 it's largely a semi irrelevant move in the sense that 0:20:31.600 --> 0:20:36.760 China this year has actually actively moved to constrict imports 0:20:37.080 --> 0:20:39.960 from a wide variety of countries, not just the United States. 0:20:40.520 --> 0:20:43.440 We see this, We see this especially with with Asian 0:20:43.520 --> 0:20:46.919 trading partners in Australia, and this is large This largely 0:20:47.000 --> 0:20:49.600 comes from various types of non tariff barriers or just 0:20:49.800 --> 0:20:53.920 orders to buy domestic Chinese production. Um, So I don't 0:20:53.960 --> 0:20:57.080 think it's going to have nearly that significant and impact. 0:20:58.200 --> 0:21:02.720 I'm trying to figure out the actual supply chain rejiggering 0:21:02.840 --> 0:21:04.879 looks like. And I think it's really telling that you 0:21:04.960 --> 0:21:07.439 went from Beijing to Vietnam to Vietnam and a lot 0:21:07.480 --> 0:21:09.359