1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,000 Speaker 2: Terminal and the Bloomberg Business App. Let's turn to the 10 00:00:37,000 --> 00:00:39,440 Speaker 2: economic policy fed shared Jay Powell and for Size, and 11 00:00:39,479 --> 00:00:41,640 Speaker 2: the Central Bank is in wait and see mode pending 12 00:00:41,680 --> 00:00:45,760 Speaker 2: trade negotiations. Noria Rabini of NYU Stern is saying, no pain, 13 00:00:45,800 --> 00:00:49,240 Speaker 2: no gain. American democracy will survive the show, and after 14 00:00:49,320 --> 00:00:52,839 Speaker 2: an initial period of pain, the US economy will thrive. 15 00:00:53,320 --> 00:00:55,400 Speaker 2: Noria joins us now for more nor how good to 16 00:00:55,400 --> 00:00:56,160 Speaker 2: see you. 17 00:00:56,160 --> 00:00:57,240 Speaker 3: You're often created. 18 00:00:57,000 --> 00:00:59,040 Speaker 2: As Doom and Gloom, the big Bear, But I've spent 19 00:00:59,160 --> 00:01:01,680 Speaker 2: many a time with you, and we've had conversations where 20 00:01:01,720 --> 00:01:03,680 Speaker 2: you're constructive, and it feels like this is that moment. 21 00:01:03,720 --> 00:01:05,959 Speaker 2: What are the factors that lead to that constructive view 22 00:01:06,280 --> 00:01:06,840 Speaker 2: for you. 23 00:01:07,600 --> 00:01:11,640 Speaker 4: Well, and recently said that tech Trump stariffs, and what 24 00:01:11,680 --> 00:01:14,640 Speaker 4: I mean is that US is really number one in 25 00:01:14,920 --> 00:01:18,360 Speaker 4: many of the technologies of the future AI, machine learning, 26 00:01:18,440 --> 00:01:25,440 Speaker 4: robotic automation, semi fusion, quantum defence, tech, green tech, arc tech, fintech, 27 00:01:25,480 --> 00:01:27,840 Speaker 4: you un nem it, and I expect that actually US 28 00:01:27,840 --> 00:01:31,360 Speaker 4: potential growth because of that could increase from the current 29 00:01:31,360 --> 00:01:33,880 Speaker 4: two percent towards four percent by the end of the decade. 30 00:01:33,959 --> 00:01:36,919 Speaker 4: So that's the two undred business points increase potential growth. 31 00:01:37,560 --> 00:01:40,080 Speaker 4: Even tariffs and there'll be some of the escalation and 32 00:01:40,120 --> 00:01:43,560 Speaker 4: re stixtion migration. Best estimates that they could reduce potential 33 00:01:43,560 --> 00:01:45,840 Speaker 4: growth by fifty business points. You have two hundred on 34 00:01:45,880 --> 00:01:48,400 Speaker 4: the plus fifty on the minus. So is the ratio 35 00:01:48,400 --> 00:01:51,480 Speaker 4: between four to one. So I think that that's why 36 00:01:51,520 --> 00:01:54,000 Speaker 4: that over the medium term, the fact that the US 37 00:01:54,080 --> 00:01:57,320 Speaker 4: is very innovative implies that whatever Trump does doesn't matter. 38 00:01:57,360 --> 00:02:01,520 Speaker 4: So tech trumpstariff, Tech trumps Trap two, and the traders 39 00:02:01,560 --> 00:02:04,520 Speaker 4: of course trump Trump and they forced him to back 40 00:02:04,600 --> 00:02:07,040 Speaker 4: down to market discipline. The most powerful people in the 41 00:02:07,080 --> 00:02:10,080 Speaker 4: world that the Bombagilantes. So I think it's Box team. 42 00:02:10,120 --> 00:02:13,440 Speaker 4: There'll be the escalation, We'll still have an inflation rate. 43 00:02:13,919 --> 00:02:18,120 Speaker 4: I expect that the trade imply that for most of 44 00:02:18,160 --> 00:02:20,440 Speaker 4: the world you have tartists between ten to fifteen percent. 45 00:02:20,639 --> 00:02:23,800 Speaker 4: On China sixty. But even with ten and sixty, that 46 00:02:23,960 --> 00:02:26,920 Speaker 4: is what actually Trump was announcing in the campaign trail. 47 00:02:27,360 --> 00:02:30,120 Speaker 4: You get inflation core PC towards four percent by the 48 00:02:30,200 --> 00:02:32,840 Speaker 4: end of the year. Let's say to a disposable income, 49 00:02:33,280 --> 00:02:35,880 Speaker 4: you have a weekending of consumer and business sentiment, you 50 00:02:35,919 --> 00:02:39,280 Speaker 4: get a shortened shallow recession by Q four. It's going 51 00:02:39,320 --> 00:02:41,080 Speaker 4: to be shortened shallow because then the FED is going 52 00:02:41,120 --> 00:02:44,359 Speaker 4: to cut rights since inflation expectations are the young chort 53 00:02:44,440 --> 00:02:47,880 Speaker 4: but well, we'll have a shortened shallow recession. But that's 54 00:02:47,919 --> 00:02:48,960 Speaker 4: poorly highly likely. 55 00:02:49,040 --> 00:02:50,040 Speaker 3: Can I jump on that point? 56 00:02:50,280 --> 00:02:52,240 Speaker 2: What gives you the confidence the FED can respond to that, 57 00:02:52,520 --> 00:02:54,160 Speaker 2: because there are some people who are worried about the 58 00:02:54,160 --> 00:02:56,400 Speaker 2: inflation that might pick up and the fact that might 59 00:02:56,440 --> 00:02:58,600 Speaker 2: constrain the FED stablished bias. 60 00:02:59,120 --> 00:03:01,400 Speaker 5: No, you're right, That's why are people already saying they 61 00:03:01,400 --> 00:03:04,000 Speaker 5: should have cut in May or in June or July. 62 00:03:04,120 --> 00:03:06,639 Speaker 4: I don't think it's going to happen before September, because, 63 00:03:06,680 --> 00:03:10,280 Speaker 4: as Powell said, yesterday, inflation will be higher, unemployment is 64 00:03:10,280 --> 00:03:12,480 Speaker 4: going to be higher. Last time around, they made a mistake. 65 00:03:12,520 --> 00:03:15,120 Speaker 4: They thought that increase in inflation was temporary and was not, 66 00:03:15,520 --> 00:03:17,720 Speaker 4: and then they had to catch up on it and 67 00:03:17,800 --> 00:03:19,760 Speaker 4: so on. So this time around, you can make the 68 00:03:19,880 --> 00:03:22,880 Speaker 4: argument that since inflation expectations are anchored, since the Fed 69 00:03:23,000 --> 00:03:26,480 Speaker 4: is not winding out, and for being forced by the 70 00:03:26,520 --> 00:03:29,519 Speaker 4: White House to cut rates right now, when inflation arises, 71 00:03:29,560 --> 00:03:33,080 Speaker 4: going to be a level effect rather than the. 72 00:03:32,120 --> 00:03:32,919 Speaker 5: Rate of inflation. 73 00:03:33,000 --> 00:03:36,040 Speaker 4: If inflation expectation remains anchored, if you don't have second 74 00:03:36,120 --> 00:03:39,280 Speaker 4: round effects, then once unemployment goes higher that week as 75 00:03:39,320 --> 00:03:41,680 Speaker 4: the labor market, then effects are going to feel comfortable 76 00:03:41,720 --> 00:03:44,000 Speaker 4: to cut rates. But right now they have to stay 77 00:03:44,000 --> 00:03:46,720 Speaker 4: on hold exactly because they need to cut once then 78 00:03:46,720 --> 00:03:48,520 Speaker 4: the economy we can significantly. 79 00:03:48,680 --> 00:03:52,480 Speaker 6: People have been talking about styflationary like scenarios. The growth 80 00:03:52,520 --> 00:03:55,440 Speaker 6: is slowing, and as you acknowledge that would probably happen 81 00:03:55,520 --> 00:03:57,680 Speaker 6: to some degree in the near term, and that inflation 82 00:03:57,800 --> 00:03:59,760 Speaker 6: was going to main higher, some of the trade or 83 00:04:00,120 --> 00:04:04,280 Speaker 6: means get readjusted. Why is that not a significant concern 84 00:04:04,360 --> 00:04:06,640 Speaker 6: for you at a time? Or even the Fed seems 85 00:04:06,640 --> 00:04:08,560 Speaker 6: to not have clarity on whether that's going to be 86 00:04:08,600 --> 00:04:09,440 Speaker 6: the predominant theme. 87 00:04:10,880 --> 00:04:14,560 Speaker 4: It's circulationary growth is going to be lower, neuro sexeal 88 00:04:14,600 --> 00:04:17,120 Speaker 4: inflation is going to be higher. I think the difference 89 00:04:17,160 --> 00:04:19,520 Speaker 4: between now and said in nineteen seventies, when you're the 90 00:04:19,600 --> 00:04:22,000 Speaker 4: old shock of seventy three or seventy nine, was the 91 00:04:22,040 --> 00:04:24,680 Speaker 4: inflation was already high in rising and the FED was 92 00:04:24,720 --> 00:04:27,039 Speaker 4: behind the curve, and then you had the uncording of 93 00:04:27,080 --> 00:04:29,880 Speaker 4: inflation expectation. This time around, I think they have shown 94 00:04:30,200 --> 00:04:32,320 Speaker 4: some credibility in uncoding. 95 00:04:31,960 --> 00:04:33,280 Speaker 5: Inflation inflation expectation. 96 00:04:33,920 --> 00:04:36,440 Speaker 4: You're right, however, that you never know second round effects 97 00:04:36,440 --> 00:04:38,520 Speaker 4: may occur. You have not only the impact of the 98 00:04:38,640 --> 00:04:41,920 Speaker 4: tariff now the dollars weakening. That's another impact on import prices. 99 00:04:42,279 --> 00:04:44,600 Speaker 4: That's why the FED has to wait until the hard 100 00:04:44,680 --> 00:04:46,839 Speaker 4: data show that there is the beginning of or a session. 101 00:04:46,880 --> 00:04:49,440 Speaker 4: If they start cutting great earlier, then you have the 102 00:04:49,520 --> 00:04:52,159 Speaker 4: uncording and inflation expectation, and that's going to be a problem. 103 00:04:52,440 --> 00:04:55,160 Speaker 6: How much of the Fed's hands tied because the long 104 00:04:55,279 --> 00:04:57,560 Speaker 6: end of the yield curve is not necessarily anchored to 105 00:04:57,600 --> 00:05:00,360 Speaker 6: FED policy in the same way, especially given some of 106 00:05:00,440 --> 00:05:02,760 Speaker 6: the deficit concerns. And I know that that congress member 107 00:05:02,800 --> 00:05:05,280 Speaker 6: wanted to talk about what was going to happen with 108 00:05:05,440 --> 00:05:08,080 Speaker 6: the total pool of debt, not the debt GP. But 109 00:05:08,240 --> 00:05:10,680 Speaker 6: I'm actually curious about how they issue that debt and 110 00:05:10,800 --> 00:05:13,039 Speaker 6: just what that does to some of the yield premium 111 00:05:13,120 --> 00:05:13,719 Speaker 6: going forward. 112 00:05:14,360 --> 00:05:15,000 Speaker 5: Well, the long it. 113 00:05:15,080 --> 00:05:17,640 Speaker 4: Depends on the FED in terms of inflation expectation and 114 00:05:17,720 --> 00:05:20,160 Speaker 4: the fences. As you point out this premium or term 115 00:05:20,240 --> 00:05:24,320 Speaker 4: premium on fiscal policy. I think the administration is sensitive 116 00:05:24,400 --> 00:05:27,880 Speaker 4: to the idea that if you'll have a very large deficit, 117 00:05:27,960 --> 00:05:31,160 Speaker 4: eventually bondiles can go higher, they can further crowd out 118 00:05:31,200 --> 00:05:34,719 Speaker 4: economic recovery. And we'll see the results of these fiscal plans. 119 00:05:34,839 --> 00:05:37,360 Speaker 4: Some of the stuff they're doing and increase the deficit. 120 00:05:37,800 --> 00:05:38,760 Speaker 5: Some of it like. 121 00:05:39,360 --> 00:05:43,839 Speaker 4: Tariffs or reduction in highris subsidies, medicaid, those cuts will 122 00:05:43,880 --> 00:05:46,560 Speaker 4: reduce the deficit. I think they'll be quite sensitive not 123 00:05:46,640 --> 00:05:49,240 Speaker 4: to have a headline number for deficit next year higher 124 00:05:49,279 --> 00:05:51,480 Speaker 4: this year, because then bodiles will go much higher and 125 00:05:51,560 --> 00:05:54,160 Speaker 4: that's going to hurt further the economy. But because you're 126 00:05:54,160 --> 00:05:56,480 Speaker 4: going to have a physical drug I think most likely 127 00:05:56,640 --> 00:05:59,240 Speaker 4: next year than the FED as zoom for using a 128 00:05:59,279 --> 00:06:01,640 Speaker 4: little bit more now they want to start all so 129 00:06:01,720 --> 00:06:05,160 Speaker 4: manipulating the long end of the bonding curve. You know, 130 00:06:05,200 --> 00:06:08,719 Speaker 4: I wrote this paper with Steve Miran criticizing what Yaren 131 00:06:08,880 --> 00:06:11,480 Speaker 4: was doing by reducing the supply of long debt and 132 00:06:11,560 --> 00:06:12,720 Speaker 4: issue more of the short one. 133 00:06:13,040 --> 00:06:14,599 Speaker 5: But this time I run is not just the ratio 134 00:06:14,640 --> 00:06:15,200 Speaker 5: between the two. 135 00:06:15,360 --> 00:06:18,080 Speaker 4: They're talking about buybacks literally buying more of the long 136 00:06:18,200 --> 00:06:19,640 Speaker 4: term to get the outBut. 137 00:06:19,440 --> 00:06:20,800 Speaker 5: Marketution more of the short term. 138 00:06:21,120 --> 00:06:23,920 Speaker 4: That is doubling down on these itthei policy just doing 139 00:06:24,000 --> 00:06:26,080 Speaker 4: more of it actually rather less of it. 140 00:06:26,200 --> 00:06:27,960 Speaker 2: No, there's only one person I know with more rare 141 00:06:28,000 --> 00:06:30,400 Speaker 2: moles than you, and it's our friend muhammadal Aian. You 142 00:06:30,520 --> 00:06:35,160 Speaker 2: travel the world a ton, have attitudes towards US assets changed? 143 00:06:35,520 --> 00:06:38,320 Speaker 2: Have the conversation shifted in the past few months. 144 00:06:38,680 --> 00:06:40,840 Speaker 4: They've shifted, But I would say there's going to be 145 00:06:40,920 --> 00:06:44,320 Speaker 4: a difference between fixing come investors. Many of them can 146 00:06:44,400 --> 00:06:48,800 Speaker 4: be solving either central banks or SOMN wealth funds. These 147 00:06:48,839 --> 00:06:51,479 Speaker 4: folks are worried about the deficit, are worried about us 148 00:06:51,560 --> 00:06:54,040 Speaker 4: having damage the creability of the United States. 149 00:06:54,120 --> 00:06:56,920 Speaker 5: That's why you had higher bond deals and weakening dollars. 150 00:06:57,320 --> 00:06:59,760 Speaker 4: So that trend may be continuing because they're going to 151 00:06:59,760 --> 00:07:01,279 Speaker 4: have to be doubt and the rivals of the US, 152 00:07:01,400 --> 00:07:03,679 Speaker 4: like China, they have to get out of dollar assets 153 00:07:03,960 --> 00:07:05,640 Speaker 4: probably got to go into the gold in terms of 154 00:07:05,720 --> 00:07:08,320 Speaker 4: that sort. But my view is that since there will 155 00:07:08,320 --> 00:07:12,200 Speaker 4: be an investment boom driven by this increasing productivity, capex 156 00:07:12,320 --> 00:07:13,760 Speaker 4: in the units is going to be much higher. The 157 00:07:13,800 --> 00:07:17,200 Speaker 4: current account divers is going to become larger even even 158 00:07:17,280 --> 00:07:20,000 Speaker 4: with the tariffs, just because investment is going to be higher. 159 00:07:20,000 --> 00:07:22,400 Speaker 4: As a shut GDP savings are going to remain low 160 00:07:22,440 --> 00:07:25,240 Speaker 4: because private and public say below. So our current account 161 00:07:25,240 --> 00:07:27,360 Speaker 4: dets are going to be wider, but the influence financing 162 00:07:27,480 --> 00:07:30,080 Speaker 4: is going to be both FDI and portfolio investment into 163 00:07:30,120 --> 00:07:33,600 Speaker 4: equity market. So you have actually more even overweight in 164 00:07:33,720 --> 00:07:37,560 Speaker 4: US equity assets over time because of the increasing cycle large. 165 00:07:37,320 --> 00:07:38,800 Speaker 3: Which is say on that this is really important. 166 00:07:38,880 --> 00:07:40,880 Speaker 2: So we've been depending there for a number of months 167 00:07:40,880 --> 00:07:42,840 Speaker 2: apout whether this was a cycle level shock or a 168 00:07:42,920 --> 00:07:45,720 Speaker 2: system level shock. The policy announcement at the last month, 169 00:07:45,760 --> 00:07:48,400 Speaker 2: and we wanted whether that structure long into the US dollar, 170 00:07:48,400 --> 00:07:51,360 Speaker 2: which is a system level story, would be disrupted. Are 171 00:07:51,400 --> 00:07:53,240 Speaker 2: you saying that will stay the same that you just 172 00:07:53,320 --> 00:07:55,520 Speaker 2: see this flood of money keep coming in to the 173 00:07:55,600 --> 00:07:57,040 Speaker 2: United States into US assets. 174 00:07:57,560 --> 00:07:58,920 Speaker 5: As I said in fixing. 175 00:07:58,640 --> 00:08:00,520 Speaker 4: Income, maybe people are going to try to get out, 176 00:08:00,720 --> 00:08:03,360 Speaker 4: especially if the death is are larger, unless bond years 177 00:08:03,400 --> 00:08:05,680 Speaker 4: are much higher. But I see an investment moving in 178 00:08:05,680 --> 00:08:08,760 Speaker 4: the United States, an increasing productivity, secular. 179 00:08:08,480 --> 00:08:11,440 Speaker 5: Boom and therefore being overweight in usycut. 180 00:08:11,040 --> 00:08:13,360 Speaker 4: Is going to become the story over the next two years, 181 00:08:13,480 --> 00:08:16,720 Speaker 4: and that's going to compensate any exit out of fixing 182 00:08:16,760 --> 00:08:18,480 Speaker 4: come assets. So the dollar is going to weakend, that's 183 00:08:18,480 --> 00:08:21,160 Speaker 4: going to weekend gradually, and there's a currency role of 184 00:08:21,200 --> 00:08:23,800 Speaker 4: the dollar is going to be dented, but not damage 185 00:08:23,800 --> 00:08:24,800 Speaker 4: to any signing extent. 186 00:08:24,920 --> 00:08:26,559 Speaker 5: So we can live in a world in which actually 187 00:08:26,560 --> 00:08:26,880 Speaker 5: the US. 188 00:08:26,840 --> 00:08:29,000 Speaker 4: Current account deft is going to be much larger, but 189 00:08:29,160 --> 00:08:32,640 Speaker 4: driven more by booming investment rather than week into sublic savings. 190 00:08:32,920 --> 00:08:35,000 Speaker 4: The dollar remains strong, and we're going to live with 191 00:08:35,080 --> 00:08:36,680 Speaker 4: that because there'll be strong economic growth. 192 00:08:37,000 --> 00:08:38,520 Speaker 2: You mentioned some of the divers I find that you 193 00:08:38,520 --> 00:08:40,839 Speaker 2: could see a wife from the dollar to things like gold, 194 00:08:41,160 --> 00:08:43,800 Speaker 2: any of the thoughts somewhere that money might go beyond 195 00:08:43,960 --> 00:08:44,360 Speaker 2: just gold. 196 00:08:45,760 --> 00:08:48,160 Speaker 4: Well, you know, if your arrival at the US, say China, 197 00:08:48,679 --> 00:08:51,240 Speaker 4: if you dump your treasury first, you have a market 198 00:08:51,240 --> 00:08:54,000 Speaker 4: to market loss on the value of those things. If 199 00:08:54,040 --> 00:08:57,280 Speaker 4: you sell treasury in by RMB, you appreciate the RMB. 200 00:08:57,120 --> 00:08:58,000 Speaker 5: Something you don't want to do. 201 00:08:58,600 --> 00:09:01,800 Speaker 4: If you sell dollar instead of buying r mvu by 202 00:09:02,040 --> 00:09:04,319 Speaker 4: yen and euro, you appreciate the yen and you and 203 00:09:04,320 --> 00:09:06,599 Speaker 4: you upset the Japanese the Europeans. You want to have 204 00:09:06,679 --> 00:09:09,040 Speaker 4: good relations, So what do you do. The best thing 205 00:09:09,080 --> 00:09:11,480 Speaker 4: you can do is to sell treasuries. 206 00:09:11,000 --> 00:09:13,560 Speaker 5: And buy gold. And that's why gold has been going. 207 00:09:13,480 --> 00:09:15,880 Speaker 4: Higher, because the goal is the only reserve asset that 208 00:09:16,000 --> 00:09:18,760 Speaker 4: cannot be seized. Because we've seen the actual Ukraine that 209 00:09:18,880 --> 00:09:21,839 Speaker 4: even yeah and euro Swiss frank palents can be seized. 210 00:09:22,080 --> 00:09:26,360 Speaker 4: So I would see gold being the biggest winner now. 211 00:09:26,440 --> 00:09:28,040 Speaker 4: Over time, of course, the Chinese want to have a 212 00:09:28,080 --> 00:09:30,920 Speaker 4: new rail of payment systems, that is bypassing the US 213 00:09:31,000 --> 00:09:34,240 Speaker 4: dollar and swift, and they are now technology that gradually 214 00:09:34,320 --> 00:09:36,319 Speaker 4: over time they're going to allow them to do so. 215 00:09:36,840 --> 00:09:38,600 Speaker 5: But the thing is going to be a very gradual. 216 00:09:38,320 --> 00:09:42,080 Speaker 4: Process, so the dollars going to remain meaningful global reserve currency. 217 00:09:42,280 --> 00:09:44,760 Speaker 2: Are super thoughtful. As always, it's going to say thanks 218 00:09:44,800 --> 00:09:58,800 Speaker 2: to dropping buy no repny that of n Yu Starnel, 219 00:09:58,840 --> 00:10:01,959 Speaker 2: emphasizing a waiting see approach as a growing chorus on 220 00:10:02,040 --> 00:10:06,560 Speaker 2: Wall Street lifts recession onds citing tariff related stankflation concerns. 221 00:10:06,640 --> 00:10:09,200 Speaker 2: Johning us now to discuss is the former Kansas City 222 00:10:09,240 --> 00:10:11,840 Speaker 2: Fed President Esther George as the welcome back to the program. 223 00:10:12,200 --> 00:10:15,640 Speaker 2: It is the central bankers dilemma, the prospect of higher inflation, 224 00:10:16,080 --> 00:10:19,240 Speaker 2: higher unemployment, and decelerating economic growth. 225 00:10:19,360 --> 00:10:20,079 Speaker 3: It's a challenge. 226 00:10:20,200 --> 00:10:22,560 Speaker 2: What did you make of the chairman's ability to rise 227 00:10:22,600 --> 00:10:24,760 Speaker 2: to that challenge in yesterday's news conference? 228 00:10:26,240 --> 00:10:28,000 Speaker 1: Well, I thought, based on what I heard in the 229 00:10:28,080 --> 00:10:32,280 Speaker 1: market reaction, he stuck to the story that he's been telling, 230 00:10:32,480 --> 00:10:35,800 Speaker 1: which is we're holding these rates until we can get 231 00:10:35,880 --> 00:10:39,320 Speaker 1: more clarity about the policy mix. And I also heard 232 00:10:39,480 --> 00:10:43,560 Speaker 1: in his comments something interesting. He certainly highlighted tariffs that's 233 00:10:43,640 --> 00:10:47,160 Speaker 1: been the topic of the day, but he also mentioned 234 00:10:47,360 --> 00:10:51,079 Speaker 1: we have to think about the impact of immigration policy changes, 235 00:10:51,320 --> 00:10:55,760 Speaker 1: fiscal policy changes, and this emerging prospect of how regulation 236 00:10:56,200 --> 00:10:58,760 Speaker 1: might change around this. So that is a pretty big 237 00:10:58,920 --> 00:11:03,959 Speaker 1: dynamic to try to play out when you're judging the 238 00:11:04,080 --> 00:11:06,040 Speaker 1: appropriate stance of monetary policy. 239 00:11:06,360 --> 00:11:08,280 Speaker 6: Es, do do you have a better sense of what 240 00:11:08,440 --> 00:11:11,760 Speaker 6: the reaction function is when it comes to looking at 241 00:11:11,800 --> 00:11:14,640 Speaker 6: different indicators, whether it's soft data or hard data, and 242 00:11:14,800 --> 00:11:19,320 Speaker 6: understanding how the FED would prioritize certain readings, how they 243 00:11:19,320 --> 00:11:23,720 Speaker 6: would respond to, say, an increase in unemployment if also 244 00:11:23,880 --> 00:11:26,080 Speaker 6: it came in tandem with increasing inflation. 245 00:11:28,040 --> 00:11:31,520 Speaker 1: So I think, Lisa, the soft data is really important 246 00:11:31,600 --> 00:11:35,040 Speaker 1: right now, and you do see the FED looking at that. 247 00:11:35,200 --> 00:11:38,320 Speaker 1: You see that come through in the Reserve banks. 248 00:11:38,200 --> 00:11:39,319 Speaker 7: Beayes, book data. 249 00:11:39,880 --> 00:11:43,480 Speaker 1: You know they are out there really just combing the 250 00:11:43,600 --> 00:11:46,880 Speaker 1: landscape to hear from different parts of the economy what 251 00:11:47,040 --> 00:11:49,080 Speaker 1: they expect. And I think what they're hearing right now 252 00:11:49,320 --> 00:11:54,079 Speaker 1: is we're not sure we are pausing, We're waiting. The 253 00:11:54,160 --> 00:11:58,319 Speaker 1: FED knows that even pausing has a negative impact on 254 00:11:58,480 --> 00:12:01,800 Speaker 1: the economy, and I think for the US, we've come 255 00:12:01,920 --> 00:12:05,199 Speaker 1: into this at a time of strength in that economy, 256 00:12:05,800 --> 00:12:09,560 Speaker 1: and judging how much will come off of growth, how 257 00:12:09,679 --> 00:12:14,120 Speaker 1: much will hit the employment numbers, and certainly watching inflation 258 00:12:14,320 --> 00:12:18,079 Speaker 1: expectations at a time like this are a dynamic that 259 00:12:18,440 --> 00:12:20,719 Speaker 1: just takes time, I think to figure out. 260 00:12:21,040 --> 00:12:24,840 Speaker 6: Yesterday on Bloomberg TV, Abob Michael of JPMorgan Asset Management 261 00:12:24,960 --> 00:12:28,440 Speaker 6: noted that the word transitory was used as recently as 262 00:12:28,520 --> 00:12:32,360 Speaker 6: the March nineteenth meeting, the last time the Federal Reserve met. 263 00:12:32,920 --> 00:12:35,560 Speaker 6: Do you think that it was a mistake for them 264 00:12:35,600 --> 00:12:38,640 Speaker 6: to say that it was notably absent from yesterday in 265 00:12:38,800 --> 00:12:42,280 Speaker 6: reference to any kind of inflationary impact from the tariffs 266 00:12:42,559 --> 00:12:43,160 Speaker 6: that have been put on. 267 00:12:44,840 --> 00:12:47,840 Speaker 1: Well, I think it probably was intentional to drop that word. 268 00:12:47,960 --> 00:12:52,520 Speaker 1: It has taken on some very negative connotations, maybe rightly so. 269 00:12:52,800 --> 00:12:55,959 Speaker 1: But the truth is, we know that these kinds of 270 00:12:56,120 --> 00:12:59,400 Speaker 1: shocks can be a one time price level shock. I 271 00:12:59,480 --> 00:13:01,920 Speaker 1: think what we can't know right now is the fact 272 00:13:02,000 --> 00:13:05,880 Speaker 1: that we already have elevated inflation relative to the Fed's target. 273 00:13:06,520 --> 00:13:10,640 Speaker 1: We know that certain measures of inflation expectations are moving 274 00:13:11,360 --> 00:13:15,760 Speaker 1: in ways that flash caution, and so I think you 275 00:13:15,920 --> 00:13:20,520 Speaker 1: can't know how this dynamic unfolds with inflation without a 276 00:13:20,600 --> 00:13:25,120 Speaker 1: little more sense of when these policies get a better 277 00:13:25,200 --> 00:13:28,160 Speaker 1: able to be quantified and put into the models that 278 00:13:28,240 --> 00:13:31,439 Speaker 1: the Fed's looking at to know. Not if I think 279 00:13:31,600 --> 00:13:33,599 Speaker 1: this is a FED that is clear we are on 280 00:13:34,080 --> 00:13:37,559 Speaker 1: a cutting path, we've taken a pause. It's really a 281 00:13:37,679 --> 00:13:38,680 Speaker 1: question of when. 282 00:13:39,280 --> 00:13:41,199 Speaker 2: How do you know as to the difference between the two, 283 00:13:41,640 --> 00:13:44,040 Speaker 2: Because clearly the committee struggled with what was trying to 284 00:13:44,120 --> 00:13:46,520 Speaker 2: trie and what wasn't coming out of the pandemic. So 285 00:13:46,600 --> 00:13:48,520 Speaker 2: how would they know the difference this time around, the 286 00:13:48,559 --> 00:13:52,200 Speaker 2: difference between inflation being short lived and more persistent. 287 00:13:52,320 --> 00:13:54,280 Speaker 3: Do you just have to wait, wait a long long time. 288 00:13:54,679 --> 00:13:55,680 Speaker 3: How do you know the difference? 289 00:13:56,520 --> 00:13:59,920 Speaker 1: Well, you absolutely cannot know the difference, and that is 290 00:14:00,160 --> 00:14:04,280 Speaker 1: really the crux of uncertainty for a policy maker is 291 00:14:04,520 --> 00:14:09,120 Speaker 1: to read into this whether you will continue a disinflationary 292 00:14:09,240 --> 00:14:13,959 Speaker 1: path that underlying sense of inflation where we were and 293 00:14:14,160 --> 00:14:18,079 Speaker 1: really watching inflation expectations. So for me, I think keeping 294 00:14:18,120 --> 00:14:21,360 Speaker 1: an eye on those inflation expectations will tell the committee 295 00:14:21,480 --> 00:14:26,640 Speaker 1: a lot about what they're dealing with relative to a 296 00:14:26,720 --> 00:14:30,360 Speaker 1: one time versus a more permanent impact to inflation. 297 00:14:30,520 --> 00:14:31,760 Speaker 3: And that's just a double down on that. 298 00:14:31,840 --> 00:14:34,480 Speaker 2: Do you put more weight on survey based expectations or 299 00:14:34,560 --> 00:14:35,920 Speaker 2: market based expectations? 300 00:14:37,480 --> 00:14:39,240 Speaker 1: Well, I think you have to look at both, and 301 00:14:39,360 --> 00:14:42,520 Speaker 1: normally you might say that some of these household survey 302 00:14:42,640 --> 00:14:46,400 Speaker 1: measures and other things are not so definitive around where 303 00:14:46,400 --> 00:14:49,840 Speaker 1: inflation is going. I think what's gotten my attention this 304 00:14:50,000 --> 00:14:53,440 Speaker 1: time is how dramatically they are moving and so that 305 00:14:53,720 --> 00:14:57,360 Speaker 1: in and of itself tells you that the volatility you're 306 00:14:57,400 --> 00:15:01,560 Speaker 1: dealing with has to give you some pause. And I 307 00:15:01,640 --> 00:15:04,400 Speaker 1: think it's right for the FID to pay attention here 308 00:15:04,600 --> 00:15:06,320 Speaker 1: to how these dynamics are unfolding. 309 00:15:06,400 --> 00:15:08,560 Speaker 2: And that's certainly what they're doing. As to appreciate your take. 310 00:15:08,640 --> 00:15:11,640 Speaker 2: As always the former Kansas City FED President Esther George 311 00:15:11,680 --> 00:15:13,520 Speaker 2: on the challenge this feder Reserve faces. 312 00:15:23,880 --> 00:15:26,240 Speaker 3: We are all in wait and see mode, including the 313 00:15:26,280 --> 00:15:27,520 Speaker 3: FED chair J. Powell. 314 00:15:27,720 --> 00:15:30,200 Speaker 2: Claudia Sam of New Century Advice is right in the following. 315 00:15:30,280 --> 00:15:32,400 Speaker 2: I agree with the first decision to hold rates and 316 00:15:32,480 --> 00:15:35,680 Speaker 2: flank the risk of higher unemployment and inflation. However, it 317 00:15:35,800 --> 00:15:38,160 Speaker 2: was a missed opportunity to lay out how it plans 318 00:15:38,200 --> 00:15:42,480 Speaker 2: to decide whether the tariff induced inflation is temporary. Claudia 319 00:15:42,520 --> 00:15:44,280 Speaker 2: joint is now for more. Claudia, welcome to the program. 320 00:15:44,400 --> 00:15:46,000 Speaker 2: Let's build on some of that. What would you have 321 00:15:46,120 --> 00:15:48,800 Speaker 2: liked to hear, specifically from the chairman in that news conference. 322 00:15:51,160 --> 00:15:53,920 Speaker 7: I like to hear their framework, what kind of data 323 00:15:53,960 --> 00:15:56,400 Speaker 7: they're looking at, how they're going to move back into 324 00:15:56,720 --> 00:16:00,920 Speaker 7: some forecasting, right, what is it they're going to use 325 00:16:00,960 --> 00:16:02,760 Speaker 7: to But it's It's clear that the FED, or at 326 00:16:02,840 --> 00:16:05,920 Speaker 7: least Powell, has not They're not embracing this. It's the 327 00:16:06,000 --> 00:16:09,280 Speaker 7: textbook case inflation when it's because of tariffs. It's temperate. 328 00:16:09,320 --> 00:16:11,480 Speaker 7: Now we do do your Governor Waller making that case. 329 00:16:11,520 --> 00:16:13,960 Speaker 7: We got to be brave and it's temper. We need 330 00:16:14,080 --> 00:16:16,640 Speaker 7: more than that, right, Like what are they looking at 331 00:16:16,800 --> 00:16:19,040 Speaker 7: in the data? And this is where I think, I 332 00:16:19,240 --> 00:16:23,000 Speaker 7: you know, looking more broadly, not just the CPI, the 333 00:16:23,320 --> 00:16:26,359 Speaker 7: labor report, but how are they using all these services 334 00:16:26,480 --> 00:16:29,640 Speaker 7: of business or surveys of businesses, the surveys of consumers, 335 00:16:29,680 --> 00:16:33,040 Speaker 7: that soft data that seems somewhat maligned, Like what are 336 00:16:33,080 --> 00:16:35,000 Speaker 7: they going to use to make that decision? And I 337 00:16:35,200 --> 00:16:38,040 Speaker 7: just I mean, I know they must be doing that work. 338 00:16:38,080 --> 00:16:40,880 Speaker 7: It's just I think sharing more of that before we 339 00:16:41,040 --> 00:16:43,080 Speaker 7: actually get to the position where the dual mand data 340 00:16:43,120 --> 00:16:45,560 Speaker 7: is in conflict would really be helpful as a guide. 341 00:16:46,040 --> 00:16:48,080 Speaker 5: Claudia, do you agree with FED Shair J. 342 00:16:48,280 --> 00:16:51,480 Speaker 6: Powell that there isn't that big of a cost to waiting. 343 00:16:53,920 --> 00:16:56,400 Speaker 7: I mean, the FEDCE tools work with a lag, so 344 00:16:56,640 --> 00:17:00,680 Speaker 7: like there are costs to waiting now I agree that 345 00:17:00,800 --> 00:17:03,920 Speaker 7: at this moment too, it's too fluid, right, and this 346 00:17:04,119 --> 00:17:07,520 Speaker 7: is a historic shock that is facing the economy and 347 00:17:07,680 --> 00:17:10,359 Speaker 7: businesses are just starting to work through it, and it 348 00:17:10,400 --> 00:17:12,200 Speaker 7: could go in a lot of different directions. So again 349 00:17:12,200 --> 00:17:15,080 Speaker 7: I understand why this is a moment where you know, 350 00:17:15,440 --> 00:17:20,439 Speaker 7: holding makes sense and yet like there are costs to waiting. 351 00:17:21,240 --> 00:17:24,040 Speaker 7: And I think one of the issues I really took 352 00:17:24,520 --> 00:17:27,240 Speaker 7: in the press commerce was how you know reinforcing Well, 353 00:17:27,280 --> 00:17:30,760 Speaker 7: but the data are fine. You know, the inflation's fine, 354 00:17:30,800 --> 00:17:34,919 Speaker 7: the unemployment's fine. Like the data are not fine. Right 355 00:17:35,040 --> 00:17:37,679 Speaker 7: if we look at say into the first quarter GDP, 356 00:17:38,000 --> 00:17:41,440 Speaker 7: that surge and imports, that is telling us this is 357 00:17:41,560 --> 00:17:44,720 Speaker 7: a really big shock that's coming at the economy. This 358 00:17:44,880 --> 00:17:49,600 Speaker 7: is out of expectations. Businesses are pulling in, rushing imports, 359 00:17:49,640 --> 00:17:52,320 Speaker 7: probably building inventories. That all comes at a cost. And 360 00:17:52,480 --> 00:17:54,639 Speaker 7: remember what we thought in the first quarter was going 361 00:17:54,680 --> 00:17:57,600 Speaker 7: to be the tarif increase, It's actually worse now. So 362 00:17:58,080 --> 00:18:00,920 Speaker 7: like it's already here, people are changing behavior. No it's 363 00:18:00,960 --> 00:18:03,239 Speaker 7: not in CPI, No, it's not in the unemployment rate yet, 364 00:18:03,680 --> 00:18:07,320 Speaker 7: but it's coming. So you know, prepare, You can wait, 365 00:18:07,440 --> 00:18:09,040 Speaker 7: but you really need to be prepared. 366 00:18:09,760 --> 00:18:11,760 Speaker 6: There was another aspect of this press conference that I 367 00:18:11,800 --> 00:18:14,600 Speaker 6: found particularly interesting, and it was when fedcher J. Powell 368 00:18:14,680 --> 00:18:17,800 Speaker 6: said that the twenty twenty four rate cuts were not preemptive. 369 00:18:18,200 --> 00:18:20,400 Speaker 6: If anything, it was a little late, And of course 370 00:18:20,480 --> 00:18:24,120 Speaker 6: this is referring to the unemployment rate that had increased 371 00:18:24,520 --> 00:18:27,160 Speaker 6: by a half a percentage point, as the som rule 372 00:18:27,240 --> 00:18:31,320 Speaker 6: dictates your rule, and they did respond and then some. 373 00:18:31,400 --> 00:18:33,119 Speaker 7: Of that data was revised upward. 374 00:18:33,240 --> 00:18:36,680 Speaker 6: Actually, what did you make of that, that comment that, 375 00:18:36,760 --> 00:18:38,800 Speaker 6: if anything, we were a bit late. 376 00:18:40,800 --> 00:18:43,560 Speaker 7: I don't think they anticipated going straight up with fifty 377 00:18:43,640 --> 00:18:46,520 Speaker 7: basis points. I think the fifty basis points was a 378 00:18:46,600 --> 00:18:49,480 Speaker 7: ketchup that they should have started one meeting earlier. I 379 00:18:49,560 --> 00:18:52,480 Speaker 7: think that's the late and it's because they weren't. They 380 00:18:52,520 --> 00:18:55,480 Speaker 7: weren't reacting to the bottom falling out. It was a 381 00:18:55,600 --> 00:18:57,920 Speaker 7: we don't want to see further weakening. So I think 382 00:18:58,040 --> 00:19:00,520 Speaker 7: the FED probably would have preferred to have had that in, 383 00:19:00,720 --> 00:19:03,159 Speaker 7: you know, more spread out, in like twenty five basis 384 00:19:03,160 --> 00:19:06,720 Speaker 7: point increments. But I think that's where it came from. 385 00:19:06,760 --> 00:19:09,879 Speaker 7: But that's such a fine point on timing, so I 386 00:19:09,960 --> 00:19:12,240 Speaker 7: can understand whether that's a little seems a little modeled. 387 00:19:12,560 --> 00:19:14,439 Speaker 2: I think it's important to go back over it, though 388 00:19:14,520 --> 00:19:16,640 Speaker 2: Lisa I'm place you brought it up. We've had somebody 389 00:19:16,680 --> 00:19:18,399 Speaker 2: guests say this Fed it's willing to be late, and 390 00:19:18,440 --> 00:19:20,760 Speaker 2: we're all struggling to defind what latest to the FED reserve. 391 00:19:21,000 --> 00:19:23,000 Speaker 2: If last year was late, I think the market would 392 00:19:23,000 --> 00:19:23,200 Speaker 2: take that. 393 00:19:23,520 --> 00:19:23,960 Speaker 3: Is that late? 394 00:19:24,359 --> 00:19:26,680 Speaker 2: One hundred basis points in the summer, little drift, tire 395 00:19:26,680 --> 00:19:27,359 Speaker 2: and unemployment. 396 00:19:27,480 --> 00:19:30,000 Speaker 6: Yeah, if that's late, that is the most dubvish message 397 00:19:30,000 --> 00:19:32,880 Speaker 6: you possibly send, because that means that being late means 398 00:19:33,040 --> 00:19:34,760 Speaker 6: being on time for a lot of other people. 399 00:19:35,080 --> 00:19:36,080 Speaker 5: That seems to be my take. 400 00:19:36,240 --> 00:19:39,160 Speaker 2: Claudia, you're one of the best, always clinical. Appreciate your time. Claudia, 401 00:19:39,240 --> 00:19:52,000 Speaker 2: sound there of New Century Advisors. Councy Barrow of JP 402 00:19:52,119 --> 00:19:54,440 Speaker 2: Morgan Asset Management righting this, we expect the FED to 403 00:19:54,480 --> 00:19:57,200 Speaker 2: look through Tarif related inflation so long as it is 404 00:19:57,280 --> 00:20:00,080 Speaker 2: perceived to be a one time price level reset. This 405 00:20:00,160 --> 00:20:02,879 Speaker 2: will take time to determine CAUSI joins is now for 406 00:20:02,960 --> 00:20:05,199 Speaker 2: more Cassie, good monic, good morning. Ask my question, how 407 00:20:05,240 --> 00:20:07,480 Speaker 2: long does it take to understand whether this is short 408 00:20:07,520 --> 00:20:09,320 Speaker 2: lived or persistent? What defines that? 409 00:20:09,760 --> 00:20:11,600 Speaker 5: Yeah, it's a difficult question. 410 00:20:11,760 --> 00:20:14,840 Speaker 8: And tera Powell was asked that exact question, and he 411 00:20:15,040 --> 00:20:17,720 Speaker 8: didn't give a lot of guidance on that. I don't 412 00:20:17,720 --> 00:20:20,600 Speaker 8: think he ruled out a cut in June, or I 413 00:20:20,640 --> 00:20:24,280 Speaker 8: don't think he ruled out really anything. He created max 414 00:20:24,400 --> 00:20:27,960 Speaker 8: optionality for himself, which he's become very good at doing. 415 00:20:28,119 --> 00:20:31,080 Speaker 8: I mean, if anything, I look at the reaction of 416 00:20:31,160 --> 00:20:33,840 Speaker 8: the bond market to the meeting, and I think it's 417 00:20:33,960 --> 00:20:36,880 Speaker 8: thought on exactly what he wanted, which is very little 418 00:20:37,000 --> 00:20:41,760 Speaker 8: movement at all. So kudos to him. Let the policy 419 00:20:42,040 --> 00:20:45,920 Speaker 8: and the shifts and policy drive the bond market, not 420 00:20:46,240 --> 00:20:49,320 Speaker 8: the Fed right now, because just like the market, the 421 00:20:49,400 --> 00:20:52,200 Speaker 8: Fed is waiting for more guidance on what's coming next. 422 00:20:52,280 --> 00:20:53,800 Speaker 2: It's build on that. You went to the bond market. 423 00:20:53,840 --> 00:20:56,480 Speaker 2: What's it signal about that debate about whether it's short 424 00:20:56,520 --> 00:20:58,680 Speaker 2: lived or whether it's more persistent, or are different ways 425 00:20:58,680 --> 00:21:02,880 Speaker 2: to gage inflation expectation, survey methods, market based expectations. What's 426 00:21:02,920 --> 00:21:04,359 Speaker 2: the market signal to us? 427 00:21:04,400 --> 00:21:07,080 Speaker 8: It's pretty clear the market is signaling that this is 428 00:21:07,160 --> 00:21:10,720 Speaker 8: going to be short lived. And the repricing within the 429 00:21:10,920 --> 00:21:15,239 Speaker 8: inflation market tips break evens falls inflation swaps has been 430 00:21:15,480 --> 00:21:20,080 Speaker 8: very efficient efficient, meaning that the inflation per of the 431 00:21:20,160 --> 00:21:23,879 Speaker 8: inflation impact is really concentrated to the next twelve to 432 00:21:23,960 --> 00:21:27,360 Speaker 8: twenty four months, and then beyond that you're seeing very 433 00:21:27,440 --> 00:21:30,800 Speaker 8: little impact. If anything, the market is pricing in a 434 00:21:30,880 --> 00:21:33,560 Speaker 8: probability that beyond the next twelve to twenty four months, 435 00:21:33,640 --> 00:21:38,920 Speaker 8: inflation actually falls below target. Because ultimately, what we're thinking 436 00:21:38,960 --> 00:21:43,000 Speaker 8: about here is what are tariffs. Ultimately their attacks on 437 00:21:43,040 --> 00:21:47,760 Speaker 8: the consumer. They reduce demand, and ultimately that's something that 438 00:21:48,200 --> 00:21:51,000 Speaker 8: weekends economy weekends prices, not the other way around. 439 00:21:51,440 --> 00:21:54,320 Speaker 6: I'm looking at the cuts that other central banks around 440 00:21:54,320 --> 00:21:57,600 Speaker 6: the world have made since the middle of last year, 441 00:21:57,840 --> 00:22:00,399 Speaker 6: the ECB one hundred and seventy five base points, the 442 00:22:00,440 --> 00:22:03,399 Speaker 6: Bank of Canada two hundred and twenty five basis points. 443 00:22:03,480 --> 00:22:05,640 Speaker 6: After this morning, the expectation is the Bank of inngend 444 00:22:05,720 --> 00:22:08,000 Speaker 6: will have done one hundred basis points, like the Federal Reserve. 445 00:22:08,440 --> 00:22:11,320 Speaker 6: Is there a world in which it could be disinflationary 446 00:22:11,440 --> 00:22:15,119 Speaker 6: these tariffs for the entirety of the developed world, but 447 00:22:15,280 --> 00:22:17,040 Speaker 6: not the United States In. 448 00:22:17,080 --> 00:22:19,879 Speaker 8: The short term probably, But in the longer term. I 449 00:22:20,080 --> 00:22:23,600 Speaker 8: do think that you are going to see the negative 450 00:22:23,640 --> 00:22:28,960 Speaker 8: demand impulse overwhelm the short term impact of tariffs. But 451 00:22:29,800 --> 00:22:32,360 Speaker 8: I think it's really interesting what you just said highlighting 452 00:22:32,480 --> 00:22:34,840 Speaker 8: that other central banks around the world are continuing with 453 00:22:34,960 --> 00:22:38,480 Speaker 8: their easing policy. I was just checking before I came 454 00:22:38,560 --> 00:22:43,000 Speaker 8: on today what the return on the global bond Index. 455 00:22:42,800 --> 00:22:43,560 Speaker 5: Is year to date. 456 00:22:43,680 --> 00:22:46,040 Speaker 8: So the USAG is up about two and a half percent, 457 00:22:46,160 --> 00:22:49,600 Speaker 8: pretty respectable given them volatilities to still working as a 458 00:22:49,640 --> 00:22:52,880 Speaker 8: diversifier in your portfolio. The global AAG is up five 459 00:22:52,960 --> 00:22:55,200 Speaker 8: and a half percent year to date, right. I think 460 00:22:55,240 --> 00:22:58,520 Speaker 8: people really underappreciate that that there's quite a lot of 461 00:22:58,560 --> 00:23:02,399 Speaker 8: opportunity outside the US in terms of developed bond market, 462 00:23:03,080 --> 00:23:07,000 Speaker 8: government bond markets, and also other central banks. The tradeoff 463 00:23:07,119 --> 00:23:11,840 Speaker 8: is much much less ambiguous. It's much more clear both 464 00:23:12,400 --> 00:23:15,479 Speaker 8: the growth aspect and the inflation aspect are telling them 465 00:23:15,520 --> 00:23:16,879 Speaker 8: to continue to cut rates, which is. 466 00:23:16,920 --> 00:23:19,000 Speaker 6: What we expect the BOE to do at seven am. 467 00:23:19,240 --> 00:23:21,399 Speaker 6: This is the reason why the wait and see for 468 00:23:21,520 --> 00:23:23,040 Speaker 6: FED Powell FED Chair J. 469 00:23:23,240 --> 00:23:25,040 Speaker 7: Powell is a reason that. 470 00:23:25,240 --> 00:23:28,480 Speaker 6: A number of investors around the world are increasingly looking 471 00:23:28,560 --> 00:23:30,760 Speaker 6: elsewhere other than the United States, because wait and see 472 00:23:30,840 --> 00:23:33,040 Speaker 6: is not a good strategy for investors in a lot 473 00:23:33,080 --> 00:23:37,240 Speaker 6: of ways. Steve major Over at HSBC said this morning, 474 00:23:37,440 --> 00:23:40,800 Speaker 6: we prefer taking duration exposure in the US and stay 475 00:23:40,920 --> 00:23:43,480 Speaker 6: neutral on US treasuries as they wait for some of 476 00:23:43,560 --> 00:23:45,600 Speaker 6: the policy uncertainties to subside. 477 00:23:46,080 --> 00:23:46,879 Speaker 3: Do you agree with that? 478 00:23:47,040 --> 00:23:48,160 Speaker 6: Is that kind of what you're thinking. 479 00:23:48,560 --> 00:23:49,919 Speaker 5: Yeah, so, I would say. 480 00:23:49,800 --> 00:23:53,000 Speaker 8: In general, I think longer dated yields are somewhat range 481 00:23:53,080 --> 00:23:55,400 Speaker 8: found here. We've had a range for the ten year 482 00:23:55,480 --> 00:23:58,560 Speaker 8: treasury of around three seventy five to four fifty, so 483 00:23:58,680 --> 00:24:01,200 Speaker 8: we're on the higher end of that range. And what 484 00:24:01,359 --> 00:24:04,800 Speaker 8: that means is that there is some asymmetry there. For example, 485 00:24:04,880 --> 00:24:07,119 Speaker 8: you know, if we did see an increase in initial 486 00:24:07,200 --> 00:24:11,280 Speaker 8: jobless claims at eight point thirty this morning, we would expect, 487 00:24:11,400 --> 00:24:14,040 Speaker 8: you know, there is significant room for yields to move lower, 488 00:24:14,200 --> 00:24:17,120 Speaker 8: for the market to price in a more aggressive fed 489 00:24:17,320 --> 00:24:20,240 Speaker 8: cutting cycle. But in the near term, you know, I 490 00:24:20,320 --> 00:24:23,520 Speaker 8: think that the market has been fairly US stable. It's 491 00:24:23,560 --> 00:24:28,760 Speaker 8: been consolidating in a narrower and narrower range, and ultimately 492 00:24:28,800 --> 00:24:30,920 Speaker 8: what's going to break us out of that is going 493 00:24:31,000 --> 00:24:33,760 Speaker 8: to be an indication on policy, whether it be fiscal 494 00:24:33,840 --> 00:24:37,760 Speaker 8: policy or trade policy. I think that one of the 495 00:24:37,880 --> 00:24:40,400 Speaker 8: things that is going to become more of a focus. 496 00:24:40,920 --> 00:24:45,760 Speaker 8: So far, trade policy, we had the escalation aspect of it, 497 00:24:46,040 --> 00:24:49,040 Speaker 8: and then when is the escalation going to stop. We 498 00:24:49,160 --> 00:24:52,680 Speaker 8: got peak escalation, then we are on the de escalation train. 499 00:24:52,760 --> 00:24:54,720 Speaker 8: What I think people need to start focusing on is 500 00:24:54,760 --> 00:24:56,320 Speaker 8: where are we going to end up? What is that 501 00:24:56,400 --> 00:24:58,960 Speaker 8: effective terif rate that we're going to settle at. The 502 00:24:59,080 --> 00:25:02,560 Speaker 8: negotiations to with the UK are going to do essentially 503 00:25:02,640 --> 00:25:05,040 Speaker 8: nothing to change that effective terror freiate. It is still 504 00:25:05,680 --> 00:25:10,320 Speaker 8: on track to be extraordinarily high. So while maybe this 505 00:25:10,520 --> 00:25:13,360 Speaker 8: is good news, I'm not necessarily sure it's a roadmap 506 00:25:13,440 --> 00:25:17,640 Speaker 8: for the rest of the world. And really what we'll 507 00:25:17,680 --> 00:25:19,760 Speaker 8: be driving sentiment in the market as we turn to 508 00:25:19,800 --> 00:25:22,720 Speaker 8: the next week will probably be more likely the negotiations 509 00:25:22,760 --> 00:25:23,840 Speaker 8: with China over the weekend. 510 00:25:24,040 --> 00:25:26,920 Speaker 2: Kelsey, I appreciate the update and the reaction. Calsie Barrow 511 00:25:27,119 --> 00:25:29,800 Speaker 2: at JP Morgan Asset Management framing things I think quite well. 512 00:25:30,600 --> 00:25:31,159 Speaker 5: This is the. 513 00:25:31,200 --> 00:25:36,440 Speaker 2: Bloomberg Surveillance Podcast, bringing you the best in markets, economics, angiopolitics. 514 00:25:36,720 --> 00:25:39,159 Speaker 2: You can watch the show live on Bloomberg TV weekday 515 00:25:39,240 --> 00:25:42,399 Speaker 2: mornings from six am to nine am Eastern. Subscribe to 516 00:25:42,480 --> 00:25:45,680 Speaker 2: the podcast on Apple, Spotify or anywhere else you listen, 517 00:25:46,000 --> 00:25:48,560 Speaker 2: and as always on the Bloomberg Terminal and the Bloomberg 518 00:25:48,600 --> 00:25:49,200 Speaker 2: Business app.