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Speaker 2: us Neil Renaissance Macro for too short a visit Neil.
Speaker 2: Do you still keep a constructive view on the American
Speaker 2: economic experiment?
Speaker 3: Well, that's a great question, Tom. I do think the
Speaker 3: tradeoffs are getting a little bit more challenging here for
Speaker 3: the Fed. You know, my view is that inflation is
Speaker 3: likely to moderate over the next several quarters. Okay, and
Speaker 3: if the Fed is skittish about recalibrating policy given the
Speaker 3: coming slowing in inflation, then that would make me a
Speaker 3: little bit more concerned around the economic Olbum. So that's
Speaker 3: kind of where I'm at. I think the trade offs
Speaker 3: are not as obvious as they were a year ago.
Speaker 3: We look at the labor markets, Tom, if you look
Speaker 3: at average hourly earnings, I mean people talk about stubborn
Speaker 3: or sticky prices. Well, wages are a very sticky price
Speaker 3: in their own right, and wages have been slowing quite meaningfully.
Speaker 3: You know, over the last several months. If you look
Speaker 3: at the three month rate of change in average hourly earning,
Speaker 3: it's running below three percent at an annual rate.
Speaker 2: Uh Paul moments ago, Ian Lingen Bmo Capitol. Real question
Speaker 2: is real spending.
Speaker 1: Real spending that goes to that spend my spending Israel.
Speaker 4: I can tell you that Neil talk to us about
Speaker 4: this two percent inflation data point that the feder Reserve
Speaker 4: talks about is a target?
Speaker 1: How hard of a target is that? Should it be?
Speaker 4: Why can't the world live with I don't know, two
Speaker 4: and a half percent inflation? Two and three quarters percent?
Speaker 1: How do you think about that?
Speaker 5: Well?
Speaker 3: I think the Fed can live with that. I mean,
Speaker 3: they've signaled that they're willing to cut with inflation rates
Speaker 3: above that, So you know, I do think that the
Speaker 3: two percent number, you know, that's a A not necessarily
Speaker 3: a right here right now target. It's just you know,
Speaker 3: kind of a point in time. You know, we want
Speaker 3: to be moving towards that, you know, in that direction
Speaker 3: sort of thing. You know that we've litigated whether that's
Speaker 3: the right number or not. It is what it is.
Speaker 3: I think for the SAD it just needs to be
Speaker 3: moving in that direction in order for them to feel
Speaker 3: comfortable with easing.
Speaker 2: Why is this eight thir dy PCE deflator important just
Speaker 2: except for the you know, the Fed cares. Why is
Speaker 2: this inflation series more important than fourteen others?
Speaker 3: Neil Dotta, Well, remember Tom and we have you know,
Speaker 3: in economics, you have often different ways of measuring the
Speaker 3: same kind of concept. You have cp and GDI, you
Speaker 3: have PC and CPI and the PCE number it just
Speaker 3: covers them. It has a much wider scope, right. That's
Speaker 3: why unlike CPI, forty percent is not shelter, right, I mean,
Speaker 3: because they have it has a much wider scope. But
Speaker 3: also it looks at things covering payments made on behalf
Speaker 3: of an individual. I mean CPI only looks at out
Speaker 3: of pocket expenses. So I think one way I'm thinking
Speaker 3: about it is CPI kind of reflects what people think
Speaker 3: they spend their money on, and the PC data reflects
Speaker 3: what people aggravate their money on. And I think that's
Speaker 3: one of the reasons why that looking at PCEE.
Speaker 2: Neil Dutta does a negative statistic for inflation adjusted personal spending.
Speaker 2: Is that a precursor for inflation adjusted negative wages out
Speaker 2: into the rest of twenty twenty four.
Speaker 3: Well, I mean, it just it just I mean to me,
Speaker 3: the data on real consumption is a reminder that growth
Speaker 3: is not getting away from the Fed. You know, going
Speaker 3: into the year Tom, I mean, there was a lot
Speaker 3: of enthusiasm for economic strength. I think the consensus has
Speaker 3: largely adjusted to that, right, I mean, we went into
Speaker 3: the year very downbeat on growth as a consensus, and
Speaker 3: now people have adjusted, I think, to where they should be,
Speaker 3: and you're going to likely see a mix, a more
Speaker 3: mixed data flow now because people are in the generally speaking,
Speaker 3: I have adjusted. I mean, growth was never going to
Speaker 3: be as weak as it was people thought it would
Speaker 3: be at the end of last year. Now we're kind
Speaker 3: of more in the two to two and a half
Speaker 3: percent camp, so you should expect to see a more
Speaker 3: mixed kind of data flow. Relative to consensus now. But yeah,
Speaker 3: I mean, it just demonstrates that growth isn't getting away
Speaker 3: from the FED. And when you think about consumption, and
Speaker 3: you know, remember that in recent months we had seen
Speaker 3: a bit I think before the revisions, I mean, we
Speaker 3: did see a meaningful decline in the savings rate. So
Speaker 3: there's a limit to how much you can draw down
Speaker 3: savings to finance consumption. So you know, you'd expect to
Speaker 3: see consumer spending follow the growth in incomes more so.
Speaker 3: And you know, as I mentioned, you know, wage growth
Speaker 3: has been moderating, so it's not all that surprising to
Speaker 3: see consumption, you know, slonging a little bit.
Speaker 2: Here key economic data. We're commercial for you for this hour, Paul,
Speaker 2: Why don't you continue with mister Duddo.
Speaker 4: So, Neil, I guess if you look at this data,
Speaker 4: I mean, there's certainly a camp out there that I
Speaker 4: think would look at this data and kind of what
Speaker 4: we've seen over the last several months and say, my
Speaker 4: federal reserve can stay right where they are. They don't
Speaker 4: need to do anything here. Let's let these higher rates
Speaker 4: for longer do their job and pulling inflation down. How
Speaker 4: do you think about that?
Speaker 3: I mean, I think you want to put that argument
Speaker 3: on as short of valicio as possible.
Speaker 5: Okay.
Speaker 3: I think frankly, you never have as much time as
Speaker 3: you think. The risks with the economy are always nonlinear
Speaker 3: in nature. I'll just leave it at that. I think
Speaker 3: it's me it's frankly dangerous. You know, I mean, as
Speaker 3: a policymaker, your job, I mean, you're not a business economist.
Speaker 3: My job is to try to position clients for upside.
Speaker 3: Their job is to try to protect things from the downside.
Speaker 3: It's a risk management job. Okay. And what we know,
Speaker 3: I mean core inflation came in on the nose point two.
Speaker 3: I think it was point twenty five if you round
Speaker 3: it out to the two decimal points. And you know,
Speaker 3: I remember Waller in a recent speech talking about, you know,
Speaker 3: I look forward to the day when I don't have to,
Speaker 3: you know, look at it like out to three decimal places,
Speaker 3: that that that might actually happen soon.
Speaker 2: Okay, But it's a final question, Neil Dota, this is
Speaker 2: really really important. As you say, we've gotten out to
Speaker 2: three decimal points. I'm as guilty as this. The only
Speaker 2: one I know doesn't go to three decimal points is
Speaker 2: Lisa Mateo.
Speaker 1: Right, she's the only one I know.
Speaker 2: Neil data is just simply the great, great call. All
Speaker 2: here of my economist of twenty twenty three is you said,
Speaker 2: I'm sorry, productivity is the are animal spirits there and
Speaker 2: we will clear markets to continue to prosper. Have you
Speaker 2: changed your tune at all?
Speaker 3: Well, the only thing I have a real bone to
Speaker 3: pick with is on inflation. I think there's not as
Speaker 3: much upside to growth estimates. There's plenty of downside to
Speaker 3: inflation estimates relative to the consensus. So the consensus has
Speaker 3: come closer to me on the economy, but I think
Speaker 3: move further away on inflation. And so for me, I
Speaker 3: think the momentum under inflation is lower. I think core
Speaker 3: inflation will. I mean, you can't rule out a point
Speaker 3: one a couple of times here and there between now
Speaker 3: and meeting, you can't rule that out. And once that
Speaker 3: starts to happen, look for the bond markets to rally.
Speaker 3: So I think if I had to pick, I mean,
Speaker 3: as a market economist, stocks or bonds, I would pick
Speaker 3: bonds because either growth is steady and inflation slows, in
Speaker 3: which case bond markets rally or growth start slowing and
Speaker 3: inflation will continue to slow, in which case bond's rally alt.
Speaker 3: So there's an asymmetry here in the market I think
Speaker 3: in favor of fixing.
Speaker 2: Neil Dotta, thank you so much. Really treasure the view
Speaker 2: here at eight thirty on Fair of course with Renaissance
Speaker 2: Macro look for mister data and Jeff to Graf's good literature.
Speaker 2: You'll see that on Twitter and LinkedIn as well. Francis
Speaker 2: Donald joins us out for Manual Life Investment Management. Just wondering.
Speaker 2: We did a great panel in Toronto. It was out
Speaker 2: real fire. Nice Francis Donald from that panel in Toronto
Speaker 2: when I went and saw the new Jersey Devils play
Speaker 2: the Toronto maple LEAs. Thank you Redo keeper of the
Speaker 2: MX for that. Francis from that panel you and I
Speaker 2: did with David Rosenberg two months ago. How has your
Speaker 2: view changed?
Speaker 6: It hasn't. Actually, I just looked up on chat GPT
Speaker 6: give me examples of words for periods without any action
Speaker 6: that is temporary, because I was trying to come up
Speaker 6: with a clever way to say we're in a holding pattern, tom,
Speaker 6: especially in the United States, we are waiting for more information.
Speaker 6: Was Q one inflation temporary. Where will jobs go? The
Speaker 6: balance of risks is that jobs deteriorate from this moment forward.
Speaker 6: But we got to get that June July, August data.
Speaker 6: The FED is not going to be cutting before September,
Speaker 6: but we need more information, and so week to week
Speaker 6: it's bits and bobs on the US economy. Now that's
Speaker 6: true for the US, it's not true elsewhere. We had
Speaker 6: big PCE number this morning in the US. We're not
Speaker 6: talking about that on our team over at Many Life,
Speaker 6: we're talking about intervention in Japan. Might seem small, huge
Speaker 6: downward revision on Canadian GDP. Canada escaped a recession by
Speaker 6: this decibel point in Q three Q four. We have
Speaker 6: the ECB cutting next week, the BOC cutting next week.
Speaker 6: There's a lot of movement in the world, but not
Speaker 6: so much in the US. I think that's the more
Speaker 6: interesting macro picture right now.
Speaker 2: I'm getting on to a late jobs report June seven.
Speaker 2: The survey is still one hundred and eighty thousand. I'm sorry, France,
Speaker 2: there's one hundred and eighty thousand. Non farm payrolls is
Speaker 2: still not maybe not robust. But I'm gonna borrow from
Speaker 2: Bob sinch A solid American economy.
Speaker 6: Yeah, it's not a problem. It's not a problem. And
Speaker 6: this is the big issue facing the FED is that
Speaker 6: the balance of risks is tilting towards an acceleration of
Speaker 6: weakness in the US, but inflation is still above target
Speaker 6: and the job market had not deteriorated. We like to
Speaker 6: say in our team, when the FED starts cutting rates,
Speaker 6: you won't be asking why, right the FED cut weight
Speaker 6: in the next two months, we'd all be shaking our
Speaker 6: heads saying why. So they just don't have the data now.
Speaker 6: That said, when we forecast what's ahead, we think they
Speaker 6: will have enough data by September. But they don't have
Speaker 6: it now, which is why they can't cut in June July,
Speaker 6: and they have to wait.
Speaker 2: Thank god, we're commercial free this hour with key economic
Speaker 2: data and the Marcus lifting off at SPA accept seventeen
Speaker 2: points now first green in days in days. The live
Speaker 2: chat on YouTube is lit up there that I can't Paul,
Speaker 2: this is too much, Brent, Thank you so much. Alcohol
Speaker 2: free Corona is sprite. There you go, Brent, thank you
Speaker 2: for that wisdom.
Speaker 4: So Francis here you talked about the bav cutting rates.
Speaker 4: The European Central bank cutting rates soon. I mean a
Speaker 4: lot of folks out there Francis would say, my Federal
Speaker 4: Reserve is behind the curve here, they should be cutting.
Speaker 1: Now. What do you say to those.
Speaker 6: Folks, Well, I say this is actually very atypical, and
Speaker 6: I think that's what's causing problems. Historically, the FED goes first,
Speaker 6: everybody else follows. EM's go last. The cycle has been
Speaker 6: so fundamentally different. Ems are almost done their cutting cycle.
Speaker 6: We have several developed markets who are cutting ahead of
Speaker 6: the FED. I think this is actually creating some problems.
Speaker 6: And I was talking to my team today. We're so
Speaker 6: used to saying the FED only cares about what's happening domestically,
Speaker 6: and the FED is the ruler of all others central banks.
Speaker 6: But the FED is also going to care about some
Speaker 6: of the global disruptions that is coming from them being
Speaker 6: last or near last. We've got the RBA and the
Speaker 6: BOJ of course, that are still on or still on
Speaker 6: the hawkish glance. And so the number one question that
Speaker 6: I get is what are we doing with currency risk
Speaker 6: and countries that need to cut rates because their economy
Speaker 6: is weakening but can't diverge to substantially from the FED.
Speaker 6: So I think we might see some subtle or I'd
Speaker 6: like to see some subtle references from the FED of
Speaker 6: some of the chaos that's being created by the FED
Speaker 6: going later the end of the day. Though these central
Speaker 6: banks have their own domestic bandates, the FED doesn't have
Speaker 6: justification to be cut. These other central banks that are
Speaker 6: cutting absolutely have to get on the ball or else
Speaker 6: they're going to risk bigger recessions and potentially larger rate divert.
Speaker 1: Well, that's kind of where I want to go. For instance.
Speaker 4: I mean, there are a lot of folks out there
Speaker 4: that are saying, boy, the more this FED r weights
Speaker 4: here in terms of cutting rates, the more we raised
Speaker 4: the risk of a I don't know, an accident happening.
Speaker 1: In the marketplace or something worse. What's that risk to you? Yeah,
Speaker 1: I'm post with Dell an accident, oh those guys. Yeah,
Speaker 1: you know.
Speaker 6: There are a lot of things that are different in
Speaker 6: this post COVID economy. But I am still a traditionalist
Speaker 6: in the sense that I think basic economic relationships hold
Speaker 6: higher rates exist to bring down demand, and we have
Speaker 6: seen already a few small accidents that occur. But I
Speaker 6: think we bury the lead a little bit when we
Speaker 6: hear economists talk about, oh, it's going to be a
Speaker 6: soft landing and the Fed's only going to cut three times.
Speaker 6: Well A, the question is if they don't cut pretty significantly,
Speaker 6: what does the next recession look like. Maybe it's not
Speaker 6: a twenty twenty four, maybe it's not even a twenty
Speaker 6: twenty five, but that recession is likely to be much worse.
Speaker 2: Thank you, Francis Don. What's great? I mean our bookers,
Speaker 2: they have it nailed. So I say it on my
Speaker 2: cell phone in shock over these announcements. The speed of
Speaker 2: the verdict for me as an amateur, all thirty four
Speaker 2: counts for me as an amateur. And I turned to
Speaker 2: the team. You know, we're texting back and forth like
Speaker 2: everybody does today, and there's only one person I wanted
Speaker 2: to talk to, simply put, is a ute out of
Speaker 2: amherst UMass Amherst in Harvard. He worked with Leon Jowarski.
Speaker 2: That's all you have to know. Nick Ackerman joins US
Speaker 2: now with decades of experience in the American judicial system. Nick,
Speaker 2: my first question is simple, how will this moment? How
Speaker 2: will this verdict effect the other matters of litigation that
Speaker 2: Donald Trump faces?
Speaker 5: I don't know as if it will affect it directly.
Speaker 5: It really right now, those other matters I've been delayed
Speaker 5: for various reasons. The big item is in Washington, D C.
Speaker 5: And Atlanta, where they're waiting to see what the Supreme
Speaker 5: Court does with the immunity argument that Trump's set forth.
Speaker 5: So I think that that one really hinges on the immunity.
Speaker 5: But I think it does cast a whole different pail
Speaker 5: on these other cases, which most people have said are
Speaker 5: probably more serious in some ways, although I would agree
Speaker 5: with that, but it certainly puts the pressure to get
Speaker 5: those cases moving and get them into court and tried.
Speaker 2: What does an appeal court look like? I think we
Speaker 2: even if we didn't have TV cameras there, we had
Speaker 2: the great art of sketches, and I think we know
Speaker 2: what Nick, Paul Drake, Perry Mason, I got it done cold.
Speaker 2: But Nick, what does an appeal court actually look like?
Speaker 5: Well, you're saying in appeals court to appeal this conviction, Yes.
Speaker 2: What does the actual physical What do you do with
Speaker 2: an appeals court?
Speaker 5: Well, what you do is you go up to there's
Speaker 5: two podiums, one for the person who's appealing and the
Speaker 5: other for the person who's opposing the appeal. In this case,
Speaker 5: it'll be on the prosecution opposing the appeal, and it'll
Speaker 5: be Trump making the appeal. And you've got in this
Speaker 5: case in the first department, there'll be five judges that
Speaker 5: will hear that appeal, And so the only argument they
Speaker 5: really have is to try and somehow dredge out arguments
Speaker 5: based on the law to appeal this conviction, because essentially,
Speaker 5: once you have a jury verdict and they've decided on
Speaker 5: the credibility of the witnesses and the facts, there's not
Speaker 5: much to appeal after that. And I don't think there's
Speaker 5: much to appeal either on the legal portion of this.
Speaker 5: So I don't think this appeal is going to go
Speaker 5: very far for Donald Trump.
Speaker 4: All right, Nick, then let's turn to the sentencing aspect
Speaker 4: of this case. July eleventh. What are the scenarios? What
Speaker 4: are the most likely sentencing scenarios?
Speaker 5: Nick, Well, before January eleventh, there's going to be a
Speaker 5: couple of reports that you're going to see. I guess
Speaker 5: we won't see him until the time of sentencing, but
Speaker 5: probation does a report that's provided to the court. Both
Speaker 5: sides provide sentencing memoranda to the court. The question, of course,
Speaker 5: is what they're not the DA's office asked for jail time,
Speaker 5: and if they do, whether or not the judge Merchant
Speaker 5: will provide jail time. My opinion is that, based on
Speaker 5: at least the fact that Michael Cohen served three years
Speaker 5: for these violations, and that Alan Weiselberg, the CFO of
Speaker 5: Trump Org, who is instrumental in setting up the phony
Speaker 5: corporate records on this and the payments that went out
Speaker 5: to reimburse Michael Cohen, He's already served three months in
Speaker 5: Rikers Island for you know, unrelated matters, and now he's
Speaker 5: serving three months, another three months in Rikers Island for
Speaker 5: line and it's pretty clear that he is not cooperated
Speaker 5: against Donald Trump. And I think the judge is going
Speaker 5: to have to consider that here are two people that
Speaker 5: were instrumental in this crime that did serve jail time,
Speaker 5: and I find it hard to believe that he is
Speaker 5: not going to feel compelled to give Donald Trump at
Speaker 5: least some jail time.
Speaker 2: Wow, in what way?
Speaker 5: I mean?
Speaker 2: You know, I wish I could stop the clock here
Speaker 2: in the show, Nick Akerman, I can't. I mean, what
Speaker 2: is it? Weekend jail time. I mean, is it something
Speaker 2: creative and different or is it Are you telling me
Speaker 2: the former president of the United States could enjoy a
Speaker 2: month at Rikers Island? Yeah?
Speaker 5: Absolutely, I mean I think what they'd have to do
Speaker 5: is create a presidential suite at Rikers Island because the
Speaker 5: Secret Service has to be there with him, obviously, But
Speaker 5: I think there is a very strong likelihood that he
Speaker 5: is going to be sentenced to in prison.
Speaker 2: Will he be protected from other prisoners? I'll just be
Speaker 2: as direct about it as I can. Absolutely.
Speaker 5: I don't see how in any way he can be
Speaker 5: put into the general population.
Speaker 2: I just don't see that happened. What does he need
Speaker 2: to say at eleven am, Nick Akerman, we got it.
Speaker 2: We're running out of time. Unfortunately. What does the former
Speaker 2: president of the United States have to say at eleven
Speaker 2: am to keep himself on a Rikers Island, a Rikers prison.
Speaker 5: At eleven am. I don't think there's anything he can
Speaker 5: say that's going to help him on that score. This
Speaker 5: is all going to be decided in the courts. Just
Speaker 5: like the jury decided guilt or innocence. The judge is
Speaker 5: going to decide the punishment, and it's totally apart from
Speaker 5: anything that Donald Trump says at eleven am. Nick captains
Speaker 5: something that violates that gag order, he could wind up
Speaker 5: in jail a lot quicker because now that he's been
Speaker 5: convicted by a jury of his peers, I think Judge
Speaker 5: Merchant is going to feel a lot more comfortable enforcing
Speaker 5: that gag order through imprisonment.
Speaker 2: Now, thank you for your service to Bloomberg with Bloomberg Law,
Speaker 2: with June Grasso in Balance of Power is well. Nick
Speaker 2: Ackerman working with Leon Jowarski a few years ago as well,
Speaker 2: Betsy Stevenson and Justin Wolfers out in ann Arbor have
Speaker 2: a textbook out which melds public policy into economics like
Speaker 2: nobody about fifteen to fifteen years ago, Rick Michigan over
Speaker 2: at Columbia did the same thing. Living that reality is
Speaker 2: Jason Furman of Harvard University. And all I can say, folks,
Speaker 2: you sit there and go jeez. I wish I had
Speaker 2: a briefing like they have at the White House, or
Speaker 2: I wish I could just for ten minutes sit in
Speaker 2: the back row of X ten. I won't ask any questions,
Speaker 2: but I just want to know what's going on. No
Speaker 2: one is out on Twitter conveying information about this post
Speaker 2: pandemic time. Like Professor Furman. He joins us now from
Speaker 2: X ten and Harvard at University. Jason, first of all,
Speaker 2: congratulations on your Twitter feed. Are you doing this or
Speaker 2: is this a host of young freshmen at Harvard.
Speaker 7: I'm doing it. I have somebody that helps me with
Speaker 7: the charts.
Speaker 2: There we go. It's like liz Ane Saunders at SWOP. Yeah,
Speaker 2: I mean the kid from Pepperdine's doing it. I mean,
Speaker 2: not Lizan. Someone helps you with the charts. What's the
Speaker 2: most important chart right now? I'm going to go course
Speaker 2: services X something. What's your most important chart? Jason?
Speaker 7: I think probably core PCE market based. I haven't liked
Speaker 7: the imputed stuff being in there for a while. Back
Speaker 7: in twenty twenty two, it was lowering inflation because the
Speaker 7: stock market was falling. Now it's raising inflation because the
Speaker 7: stock market is rising. So I think more of a
Speaker 7: focus on market based inflation is a good thing.
Speaker 2: How do you describe I mean you're gonna be you know,
Speaker 2: you're at Harvard now, but if you were down at
Speaker 2: sixteen hundred Pennsylvania Avenue, you're sitting on the couch with
Speaker 2: President Biden, and you're going, look, people are getting buried
Speaker 2: by home insurance. Forget about this rent Oeer stuff. The
Speaker 2: fact is there's selected levels way above twenty nineteen. What
Speaker 2: would you advise President Biden?
Speaker 7: Look, it's tough, I mean inflation. He doesn't have a
Speaker 7: whole lot of control over for him. There's the fiscal side,
Speaker 7: most of that's with Congress. There are things like student
Speaker 7: loans that may end up costing a trillion dollars which
Speaker 7: are going the wrong way in all of this. But
Speaker 7: the most important thing he needs to think about over
Speaker 7: the next five months is he doesn't have a whole
Speaker 7: lot of control over this. The economy in some respects
Speaker 7: is really really good, but people aren't wrong to be
Speaker 7: frustrated about the pace of real wage growth the growth
Speaker 7: of prices.
Speaker 1: All right, Jason, let's take a look at the consumer here.
Speaker 4: We had personal income come in and zero point three
Speaker 4: percent positive today, right in line with expectations. Personal spending
Speaker 4: smidge light zero point two percent. But how do you
Speaker 4: see the consumer out there? A lot of folks are
Speaker 4: talking about a couple different consumers out there.
Speaker 7: Actually, yeah, we're starting to see a little bit of
Speaker 7: slowing on a real basis. Consumer spending fell in April.
Speaker 7: It had been really strong in February and March. If
Speaker 7: you look at the year as a whole, it's up
Speaker 7: at about a one percent pace so far. Consumers what
Speaker 7: kept us out of recession last year. As the Fed
Speaker 7: raised rates over and over and over again, they're relaxing
Speaker 7: a little bit. The saving rate is around three and
Speaker 7: a half percent. It's that could stay that way for
Speaker 7: some time. I don't think it can stay that way forever.
Speaker 4: All right, So we got some more inflation data today
Speaker 4: and Jason presumably this feder reserva, but we also looking
Speaker 4: at the employment environment that seems pretty solid as well.
Speaker 4: We'll get some more data next week, but the labor
Speaker 4: market seems pretty solid as well.
Speaker 2: Yeah.
Speaker 7: I mean that's the thing. That's part of what's going
Speaker 7: on with rate cuts right now, is there's not much
Speaker 7: reason to cut them. It's economy's growing well, job growth
Speaker 7: is well. We're more nervous about inflation than we are
Speaker 7: to bat inflation, so why move? And I think it's
Speaker 7: going to take a while for the Fed to be reassured.
Speaker 7: Back in December, they were looking at six month core
Speaker 7: se at a one point nine percent annual rate. Now
Speaker 7: it's a three point two percent annual rate. This worm
Speaker 7: can turn very quickly. I think it's going to take
Speaker 7: a while before they can feel reassured enough.
Speaker 2: I'm not rate, Jason. I want to conflate two questions here,
Speaker 2: which is unfair to you, but no one can handle
Speaker 2: it like you. You have led the charge with comparing
Speaker 2: one year, six months, three month annualized, et cetera, et cetera,
Speaker 2: parsing out the timeline that we should choose to study inflation.
Speaker 2: In addition with this is the raging battle over this
Speaker 2: series or that series, or this trimmed or that Cleveland
Speaker 2: CPI firm and CPI whatever. Conflate those two ideas together.
Speaker 2: What's your best picture about a measure inflation?
Speaker 7: Look, I've been having fun with something I call that
Speaker 7: ecumenicalunderlying inflation measure, and I take you eight different ways
Speaker 7: to measure inflation. I look at it over three different
Speaker 7: time horizons. That's twenty four different numbers, and then I
Speaker 7: just take the median of all twenty four of those,
Speaker 7: and you know, statistically it actually works pretty well. It
Speaker 7: gives you a pretty good sense of what underlying inflation is.
Speaker 7: All that said, if I had to pick a conventional number,
Speaker 7: you know, looking at six month core inflation is not
Speaker 7: a bad way to understand.
Speaker 2: We don't want any gossip here. Does does MANQ believe
Speaker 2: in the gospel of Furman ecumenical inflation.
Speaker 7: He's on the record saying he thinks inflation's coming down
Speaker 7: this year. He's optimistic about shelter growth slowing. He said
Speaker 7: that before in public. I'm less sure that there's that
Speaker 7: much more slowing from where we are now. And I
Speaker 7: think there's some other shoes to drop, like goods prices
Speaker 7: aren't going to keep falling the way they have over
Speaker 7: the last six months.
Speaker 2: I'm sorry. It's like Jeremy ben you know, his heads
Speaker 2: are bronzed in some museum and in England somewhere. I mean,
Speaker 2: we're back to unitarian inflation here with the next.
Speaker 4: Exactly approach, Professor, there are a lot of folks out
Speaker 4: there in academia and in practice in the markets that say,
Speaker 4: you know, forget about the first few months of twenty
Speaker 4: twenty four inflations. Kind of it's already whipped. We're in
Speaker 4: good shape. The FED should be cutting now. The risk
Speaker 4: of not cutting is too great. What do you say
Speaker 4: to those folks, I.
Speaker 7: Say that the inflation risk is quite asymmetric. They might
Speaker 7: be right, there might even be like a forty percent
Speaker 7: chance they're right, But there's a thirty percent chance that
Speaker 7: inflation is going to be well above three percent, at
Speaker 7: which point we're in a really unacceptable place in terms
Speaker 7: of the Fed's credibility. So you do that type of
Speaker 7: risk analysis and it says, don't cut. In general, the
Speaker 7: best forecast for the economists that it's going to keep
Speaker 7: doing what it's done, and growth has been strong. Job
Speaker 7: growth has been strong. That's my best guests going forward.
Speaker 7: On the other hand, inflation has been elevated, and that
Speaker 7: probably should be your best guests going forward. So we're
Speaker 7: at an asymmetric place on the dual mandate right now.
Speaker 2: I mean, professor Furman, you're such a hitter like I.
Speaker 2: Did you do a speech at the University College of
Speaker 2: London and did they show you the taxidermied head of
Speaker 2: Jeremy Bentham? Is that where we came up with ecumenical inflation.
Speaker 7: I have not met Jeremy Bentham alive.
Speaker 2: We're dead. There's news you could use from Bloomberg News today.
Speaker 2: Jason Furman, thank you so much. And I can't say
Speaker 2: enough folks about his and his team's effort out on Twitter. Seriously,
Speaker 2: it is the best graphical presentation of where we are.
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