WEBVTT - Instant Reaction: Jay Powell on Fed Policy 0:00:04.840 --> 0:00:08.799 This is Bloomberg Surveillance with Tom Keane, Jonathan Perrow, and 0:00:08.840 --> 0:00:11.319 Lisa Abramowitz on Bloomberg Radio. 0:00:11.840 --> 0:00:14.880 This was operation Say Nothing, where you basically repeat data 0:00:14.960 --> 0:00:17.520 dependent over and over again but didn't say which data, 0:00:17.600 --> 0:00:20.040 and then you basically had a little bit for everybody 0:00:20.079 --> 0:00:24.240 basically saying they are concerned about inflation, but recognizing that 0:00:24.320 --> 0:00:27.760 inflation has come in somewhat. This was operation do no 0:00:27.880 --> 0:00:30.000 harm and say nothing and get out of there as 0:00:30.040 --> 0:00:31.440 quickly as possible, which she just did. 0:00:31.520 --> 0:00:34.800 Highly repetitive, sometimes tedious in a bond market, be able 0:00:34.800 --> 0:00:38.320 to well hire going into this decision lower following get 0:00:38.320 --> 0:00:40.120 the two ye yield is down Tom by about three 0:00:40.200 --> 0:00:42.120 or four basis points in a bond market right now 0:00:42.200 --> 0:00:44.360 TK four eighty three natty one. 0:00:44.320 --> 0:00:46.080 Some yield was as good as a Gini smile like 0:00:46.159 --> 0:00:48.199 the New York Times pulling the Barbie movie here to 0:00:48.240 --> 0:00:52.000 give us the spirit of the American economy. January thirty one, 0:00:52.159 --> 0:00:55.640 two thousand and twenty four. Is he going to have 0:00:55.680 --> 0:01:00.200 a leguard like press conference first of the year the 0:01:00.240 --> 0:01:04.680 Fed like tomorrow's laguard press conference if he gets a 0:01:04.720 --> 0:01:07.839 GDP slow down, as we heard Bob Michael and Andrew 0:01:07.840 --> 0:01:12.400 Hollenhorst talk about I'm fascinated about the luxury he has 0:01:12.520 --> 0:01:16.080 right now of a buoyant American economy and if that 0:01:16.200 --> 0:01:20.080 drifts away, I'm not predicting that. But if that drifts away, John, 0:01:20.600 --> 0:01:22.440 is it laguard like in January? 0:01:22.520 --> 0:01:24.000 He is predicting it won't drift away. 0:01:24.200 --> 0:01:25.240 Yes, very much. 0:01:25.280 --> 0:01:28.960 The Fed staff is saying no recession in their forecast. 0:01:29.000 --> 0:01:31.880 Germany is living one currently. On the balance of risk 0:01:31.920 --> 0:01:33.440 around the economy, take a listen to what the Fed 0:01:33.520 --> 0:01:34.640 chairman had to say. 0:01:35.560 --> 0:01:37.280 It's really a question of how do you balance the 0:01:37.280 --> 0:01:39.280 two risks, the risk of doing too much or doing 0:01:39.319 --> 0:01:43.000 too little? And you know, I would say that, you know, 0:01:43.040 --> 0:01:45.240 we're coming to a place where where there really are 0:01:45.360 --> 0:01:47.880 risks on both sides. It's hard to say exactly whether 0:01:47.960 --> 0:01:51.160 whether they're in balance or not. But as our stances 0:01:51.200 --> 0:01:54.880 become more restrictive and inflation moderates, we do increasingly face 0:01:54.920 --> 0:01:55.360 that risk. 0:01:56.400 --> 0:01:59.160 If you ask that question twelve months ago, the answer 0:01:59.200 --> 0:02:01.600 was obvious. What's the biggest risk right now? Doing too much? 0:02:01.640 --> 0:02:03.320 Doing too little? They would have told you straight off 0:02:03.320 --> 0:02:05.640 the bat, The biggest risk right now is doing too little. 0:02:05.680 --> 0:02:07.880 We need to hike, hike fifty, go even more than 0:02:07.960 --> 0:02:11.200 that TK. The further along you get into this journey 0:02:11.240 --> 0:02:14.200 of Chairman Powll and co. The less obvious the answer 0:02:14.240 --> 0:02:17.400 to that he comes. And we're at that point right now. 0:02:17.480 --> 0:02:20.280 We're post pandemic without a theory. And if you're at 0:02:20.320 --> 0:02:23.000 Berkeley taking your PhD, maybe you can figure out a 0:02:23.040 --> 0:02:26.920 theory post pandemic. But I don't see it. William Dudley 0:02:27.000 --> 0:02:29.359 joins us now. He's a former New York Fed president, 0:02:29.720 --> 0:02:32.920 has the immense advantages of years with Ed McKelvey doing 0:02:33.040 --> 0:02:36.760 market economics at Golden Seachs. We're thrilled that doctor Dudley 0:02:36.760 --> 0:02:39.040 could join us this morning. Bill, we got to wake 0:02:39.080 --> 0:02:44.000 everybody up after a summer press conference. You ancient pass Bill, 0:02:44.080 --> 0:02:48.000 This is twenty thirty days ago. The great US Treasury 0:02:48.120 --> 0:02:51.839 bound route is far from over. What I have not 0:02:52.040 --> 0:02:55.880 heard today is a discussion about higher interest rates. What 0:02:56.000 --> 0:02:59.359 is your belief that we could see higher interest rates? 0:03:00.880 --> 0:03:02.840 Well, I think the chair Pole made a very clear 0:03:02.919 --> 0:03:05.679 in the press conference that he doesn't see the need 0:03:05.720 --> 0:03:06.919 to go that much further. 0:03:08.080 --> 0:03:09.880 You know, the very fact that it's sort of meaning 0:03:09.919 --> 0:03:12.000 by meeting now tells you that he. 0:03:12.000 --> 0:03:14.000 Thinks that, you know, maybe there's one more rate hike, 0:03:14.040 --> 0:03:16.799 maybe there's no more rate hikes as we go forward. 0:03:17.200 --> 0:03:19.400 But that's a very different story than what does that 0:03:19.480 --> 0:03:22.720 mean for the bond market. Because bonnios are low relative 0:03:22.760 --> 0:03:24.960 to short term interest rates, I think there's a number 0:03:24.960 --> 0:03:27.720 of reasons why bonios could move higher. Number one, inflation 0:03:27.800 --> 0:03:29.560 is probably not going to average two percent over the 0:03:29.560 --> 0:03:31.160 next ten years. It's probably going to average a bit 0:03:31.200 --> 0:03:34.960 higher because the Fed has an asymmetric regime where when 0:03:35.000 --> 0:03:37.480 they miss inflation to the downside, they try to offset 0:03:37.480 --> 0:03:39.360 that with missions of the upside, but not the. 0:03:39.320 --> 0:03:40.080 Other way around. 0:03:40.720 --> 0:03:43.040 Also, if you look at the savings investment balance, it's 0:03:43.080 --> 0:03:46.200 not as favorable now as it was before because we 0:03:46.280 --> 0:03:50.680 have a lot more investment programs motivated by Biden administration policies, 0:03:51.120 --> 0:03:54.800 and the savings is also affected by the very large 0:03:54.800 --> 0:03:57.880 fiscal imbalances that the US is likely to run for many, 0:03:57.920 --> 0:04:01.600 many many years. So that implies that perhaps the neutral 0:04:01.960 --> 0:04:04.920 Fenel fund rate consistent with neutral montrepoles a little bit 0:04:05.000 --> 0:04:07.360 higher than in the past. And then lastly, the risks 0:04:07.360 --> 0:04:09.080 are two sided now for the bomb mark. Before it's 0:04:09.120 --> 0:04:11.760 all about I could homeole Pole bonds and if we 0:04:11.920 --> 0:04:14.320 ended up in a recession and the fat got stuck 0:04:14.320 --> 0:04:16.960 at the zero lore bound, the bond marker would protect me. 0:04:17.520 --> 0:04:19.880 But now we're a long way from the lower bound. 0:04:20.160 --> 0:04:22.480 So the risk of getting stuck at the zero lower 0:04:22.520 --> 0:04:25.000 bound seemed very diminished at this point, and the rest 0:04:25.040 --> 0:04:27.800 of inflation being sticky, I think is you know, remains 0:04:27.839 --> 0:04:29.400 a very relevant to the botmb linker. 0:04:29.520 --> 0:04:29.719 Bill. 0:04:29.760 --> 0:04:32.440 We had an article at Bloomberg this week, folks, John 0:04:32.560 --> 0:04:37.320 Authors and Isabelle Lee reported on the Strategy World and 0:04:37.360 --> 0:04:41.520 how absolutely it's brutal has been for Wall Street strategist 0:04:41.520 --> 0:04:45.040 Bill Dudley lived this at gulb and six years ago. 0:04:45.440 --> 0:04:48.839 How clear is the Dudley crystal ball right now? Bill? 0:04:49.080 --> 0:04:52.280 How how what's the vision you've got? Are you making 0:04:52.279 --> 0:04:53.120 it up as you go? 0:04:53.960 --> 0:04:55.840 Well, I'm a lot less clear now than I was, 0:04:55.920 --> 0:04:57.280 say a year or a year and a half ago. 0:04:57.320 --> 0:04:58.719 I mean, at that point, it is very clear that 0:04:58.720 --> 0:05:00.760 the said was way behind it in terms of the 0:05:00.839 --> 0:05:03.200 need to type monitary policy. They were going to have 0:05:03.240 --> 0:05:04.760 to go to restrictive and they're going to have to 0:05:04.800 --> 0:05:07.719 move fast to get there to keep inflation from getting 0:05:08.000 --> 0:05:11.040 control totally out of control. Now they're at a restrictive setting, 0:05:11.040 --> 0:05:13.600 and so the question is, you know, how how high 0:05:13.640 --> 0:05:16.039 do they have to go to be sufficiently restrictive and 0:05:16.080 --> 0:05:16.840 how long do they. 0:05:16.760 --> 0:05:17.480 Have to stay there? 0:05:17.839 --> 0:05:20.200 And I think, you know, they've been the kind of 0:05:20.279 --> 0:05:22.440 news has been breaking in a favorable direction in the 0:05:22.480 --> 0:05:26.280 sense that they're getting quite a bit of disinflation without 0:05:26.400 --> 0:05:30.040 actually affecting the growth rate very much or without actually 0:05:30.080 --> 0:05:31.480 putting a lot of people out of work. I mean, 0:05:31.520 --> 0:05:33.799 the fact that inflation has come down and the uniplying 0:05:33.880 --> 0:05:36.880 rates still three point six percent is really good news 0:05:36.920 --> 0:05:38.000 from the face perspective. 0:05:38.360 --> 0:05:40.400 But my own view is, you know, I'm still where 0:05:40.400 --> 0:05:40.960 I was before. 0:05:40.960 --> 0:05:42.479 I think the Fed's going to have to be you know, 0:05:42.800 --> 0:05:45.280 tighter for longer, and I think they're going to probably 0:05:45.279 --> 0:05:48.360 emphasize the longer piece. If you look at their you know, 0:05:48.440 --> 0:05:50.800 their forecast, they don't see inflation getting back to two 0:05:50.800 --> 0:05:53.800 percent until twenty twenty five, so they think the process 0:05:53.800 --> 0:05:54.760 still has a long way to go. 0:05:54.960 --> 0:05:56.080 And I agree with them. 0:05:56.120 --> 0:05:58.680 Bill, How important do you think it is that essentially 0:05:58.720 --> 0:06:01.320 this is a FED no longer are giving forward guidance. 0:06:03.040 --> 0:06:05.359 Well, I think that's sort of appropriate, you know, if 0:06:05.400 --> 0:06:07.520 you've gotten in the vicinity of where you think you 0:06:07.640 --> 0:06:12.760 need to be and you're uncertain about what's next because. 0:06:12.440 --> 0:06:14.080 You don't know if you've done enough. 0:06:14.120 --> 0:06:16.440 You don't know much about the long and variable lags 0:06:16.480 --> 0:06:19.040 of Audrey policy, you don't know how financial conditions are 0:06:19.080 --> 0:06:20.680 to react, are going to react. 0:06:20.400 --> 0:06:22.160 To what you say and what you do. 0:06:22.960 --> 0:06:24.360 I think at that point you don't really want to 0:06:24.360 --> 0:06:26.560 get for guys, because the Ford guidance is probably going 0:06:26.640 --> 0:06:30.920 to be misleading as opposed to illuminating. So I think 0:06:30.960 --> 0:06:33.280 it makes sense for them to talk about, you know, 0:06:33.560 --> 0:06:35.400 going meeting to meeting. One thing I was a little 0:06:35.440 --> 0:06:37.719 surprised today was that there wasn't much talk about the 0:06:37.720 --> 0:06:40.000 long and variable lags of Madre policy and the need 0:06:40.040 --> 0:06:43.560 to slow down the tightening the rate of the tightening process. 0:06:43.880 --> 0:06:47.000 Paul very clearly puts the September meeting back on the table, 0:06:47.400 --> 0:06:49.359 and I was a little surprised by that because the 0:06:49.440 --> 0:06:52.400 last meeting was all about the need to slow down 0:06:52.600 --> 0:06:55.200 and go at a slower pace, and now I find 0:06:55.200 --> 0:06:57.960 out today that male September is a lot of meeting. 0:06:57.839 --> 0:07:01.119 Well, and he was actually pretty blunt that someone asked 0:07:01.200 --> 0:07:04.359 him specifically, how does this job with what you said 0:07:04.480 --> 0:07:07.480 at the previous meeting, and he basically was like, that's 0:07:07.480 --> 0:07:08.680 all I'm going to say about that. I'm not going 0:07:08.720 --> 0:07:11.080 to continue. I'm wondering whether you think it's actually more 0:07:11.160 --> 0:07:14.600 confusing that there wasn't dissent at a time where there 0:07:14.600 --> 0:07:16.960 clearly is a range of opinions and we have a 0:07:17.000 --> 0:07:19.640 feed schair just reading the same thing over and over 0:07:19.640 --> 0:07:21.440 again in response to everyone's questions. 0:07:22.120 --> 0:07:24.000 Well, the lack of dissent just means that people are 0:07:24.000 --> 0:07:26.960 pretty comfortable with the general trajectory of where Mantre policy 0:07:27.080 --> 0:07:29.200 is today, and they're happy about the fact that inflation's 0:07:29.240 --> 0:07:31.320 coming down, and they're happy about the fact that's coming 0:07:31.320 --> 0:07:34.680 down without actually having to really, you know, push up 0:07:34.680 --> 0:07:37.440 the unemployer rail a lot. At least at this point. 0:07:37.720 --> 0:07:39.720 I think what's the problem that Paul is great for 0:07:39.760 --> 0:07:42.000 themselves is what do you actually do in September? 0:07:42.440 --> 0:07:44.120 So in September you're going to have a coup couple 0:07:44.160 --> 0:07:44.440 of things. 0:07:44.600 --> 0:07:46.720 If you decide not to hike, what are you going 0:07:46.760 --> 0:07:48.520 to show in the summary of economic projection? Are you 0:07:48.560 --> 0:07:51.240 going to sh show further rate hikes? And if you 0:07:51.280 --> 0:07:52.920 do show fur the rate hikes it's going to raise 0:07:52.920 --> 0:07:55.760 the question why did you do it in September, just 0:07:55.800 --> 0:07:57.920 like what we saw at the last meeting, And if 0:07:57.960 --> 0:08:01.680 you do hike, then the question is, okay, well, why 0:08:01.720 --> 0:08:04.400 are you going so much quicker now? And do you 0:08:04.440 --> 0:08:07.280 show further rate hes in the economic productions after a 0:08:07.320 --> 0:08:09.920 September rate egg. So I think he's made it very 0:08:09.960 --> 0:08:14.000 awkward for himself in terms of tying the projections of 0:08:14.040 --> 0:08:15.480 what's going to have in the future to what they 0:08:15.480 --> 0:08:18.400 actually decided to do in September or decide not to 0:08:18.440 --> 0:08:21.720 do in September. In terms of keeping rates unchange, I 0:08:21.760 --> 0:08:23.760 think they've created a bit of confusion. I think it 0:08:23.800 --> 0:08:26.760 would be better to stick to the story of Madre 0:08:26.800 --> 0:08:29.080 policy long and verable legs. At this point, we're close 0:08:29.120 --> 0:08:30.560 to where we think we need to be. Therefore we're 0:08:30.560 --> 0:08:33.200 going to go most more slowly. But he definitely puts 0:08:33.200 --> 0:08:35.400 September back on the table. I mean, he basically talked 0:08:35.400 --> 0:08:37.439 about the fact that we have two more and Plomber 0:08:37.520 --> 0:08:40.360 reports by until September. We have two more CBI reports 0:08:40.360 --> 0:08:43.760 before September. So he put the September meeting back on 0:08:43.760 --> 0:08:45.840 the table more than I would have thought he would 0:08:45.920 --> 0:08:49.160 have done. Given that he talked about the need to 0:08:49.200 --> 0:08:51.600 go more slowly because of long and variable legs. 0:08:51.640 --> 0:08:52.840 So I found that a little bit confused. 0:08:53.080 --> 0:08:56.600 Some people frustrated about this September conversation. Bill I tried 0:08:56.600 --> 0:08:58.080 to jump in to end it, but we can carry 0:08:58.160 --> 0:09:00.439 on if you want. Barry that wrote it, and he 0:09:00.520 --> 0:09:04.320 said this. Questions about whether they high in September were 0:09:04.320 --> 0:09:06.760 in name. He went on to say, the press conference 0:09:06.800 --> 0:09:10.000 went poorly given no questions about fiscal policy working at 0:09:10.000 --> 0:09:13.240 cross purposes with monetary policy, nor any questions about the 0:09:13.240 --> 0:09:15.480 deep curve inversion of impact on small banks and the 0:09:15.480 --> 0:09:17.320 supply of credit. Bill, can we pick up on the 0:09:17.320 --> 0:09:20.280 first piece just briefly, Where the fiscal policy right now 0:09:20.320 --> 0:09:22.959 is working at cross purposes with monetary policy? 0:09:23.000 --> 0:09:23.640 Do you think it is? 0:09:24.800 --> 0:09:25.000 Well? 0:09:25.040 --> 0:09:27.920 I don't think fiscal policy is stimulative right now in 0:09:27.960 --> 0:09:30.920 the sense of the fiscal impulse. But we have very 0:09:31.040 --> 0:09:33.760 large chronic budget deviicits and those budget deviaits that are 0:09:33.760 --> 0:09:36.240 going to continue as far as the eye can see. 0:09:36.559 --> 0:09:39.040 So the way that plays out is it means that 0:09:39.080 --> 0:09:42.440 the demand and the pool savings is higher because the 0:09:42.440 --> 0:09:45.679 government's taking down so much of the supply of savings. 0:09:46.120 --> 0:09:47.520 Over the next year, we're going to see a lot 0:09:47.559 --> 0:09:48.480 more treasury supply. 0:09:48.800 --> 0:09:51.840 Right now that the debt limit prices behind us. 0:09:51.720 --> 0:09:55.400 The treasures can be ramping up their borrowing needs very substantially, 0:09:56.000 --> 0:09:58.640 and the Federal reserves is going to continue to sell. 0:10:00.120 --> 0:10:03.000 Can can continue at nine hundred billion a year of 0:10:03.040 --> 0:10:06.560 treasuries and Morgan securities throughout. So they've made tremendous amount supply, 0:10:06.640 --> 0:10:08.520 and I think that's weigh on the bond market. 0:10:09.000 --> 0:10:09.240 Bill. 0:10:09.360 --> 0:10:13.280 The hallmark of your work at Gulben secs Ages ago 0:10:13.720 --> 0:10:18.480 was an optimism about the American economics experiment. The most 0:10:18.520 --> 0:10:21.520 memorable moment today was Jennie Smilek of The New York 0:10:21.559 --> 0:10:25.880 Times folding in the Barbie movie into a discussion with 0:10:25.960 --> 0:10:29.720 the Chairman of the Federal Reserve about the resiliency of 0:10:29.760 --> 0:10:34.440 the American economy. The smart guys like you, everybody assembled 0:10:34.480 --> 0:10:37.760 in the room, everybody in the economics racket. Do we 0:10:38.040 --> 0:10:41.439 just get wrong the resiliency of America? 0:10:42.960 --> 0:10:45.760 Well, I think that we have gotten wrong the resiliency 0:10:45.840 --> 0:10:50.200 of the US consernaert. I think what's driving it as 0:10:50.280 --> 0:10:53.319 the fact that during the pandemic there were large fiscal 0:10:53.360 --> 0:10:56.679 transfers from the federal government to the household sector, and 0:10:56.800 --> 0:10:58.679 household sector basically did three. 0:10:58.520 --> 0:11:00.040 Things of it. 0:11:00.240 --> 0:11:02.560 About a third of that was spent, about a third 0:11:02.600 --> 0:11:04.920 of it was used to paid on debt, and about. 0:11:04.640 --> 0:11:05.800 A third of it was saved. 0:11:06.320 --> 0:11:09.200 And so coming out of the pandemic, the household balance 0:11:09.240 --> 0:11:11.400 sheets were in much better shape than they typically are 0:11:11.480 --> 0:11:13.520 late in the cycle, and I think that's why the 0:11:13.800 --> 0:11:16.200 US consumer has been pre resilient. I think the point 0:11:16.200 --> 0:11:18.680 that Gino was making was just that, you know, going 0:11:18.720 --> 0:11:23.400 to Barbie uh in a in a theater is perfect 0:11:23.440 --> 0:11:27.480 example of discretionary mess of you know, discretionary consumption. People 0:11:27.520 --> 0:11:29.400 can decide to do that or not that decided to 0:11:29.400 --> 0:11:31.480 do It's not sort of core necessity. 0:11:31.760 --> 0:11:33.760 And so the fact that the box office. 0:11:33.440 --> 0:11:36.160 For Barbie and Openhearmer were so good was was was 0:11:36.320 --> 0:11:38.839 sort of evidence from from her perspective that the consumers 0:11:38.840 --> 0:11:41.000 still got some life life in them. 0:11:41.240 --> 0:11:44.800 It's a surveillance movie. Ask did he go? 0:11:45.040 --> 0:11:47.839 You gotta ask again, Bill Dentley and I'm bomping. So 0:11:48.000 --> 0:11:49.400 if you want to know, you can find out Bill, 0:11:49.440 --> 0:11:50.880 did you did you watch it over the weekend? 0:11:51.840 --> 0:11:51.880 No? 0:11:52.160 --> 0:11:54.040 I went to the mission possible. I haven't gone to 0:11:54.160 --> 0:11:57.360 Barbie or Openham. That's not the that's on my plans. 0:11:57.040 --> 0:12:03.760 Though one're there that we're doings conference in the next week. 0:12:03.800 --> 0:12:07.280 Kem Bill, Thank you, sir as always both incredibly insightful, 0:12:07.360 --> 0:12:09.920 lived it at the Federal Reserve as the New York 0:12:09.960 --> 0:12:11.960 Fed President. If you are just chuning in, welcome to 0:12:11.960 --> 0:12:14.200 the program this afternoon. Good afternoon to you all. The 0:12:14.200 --> 0:12:17.640 Federal Reserve. Hikin interest rates twenty five basis points the 0:12:17.679 --> 0:12:21.839 Federal Reserve chair saying that he believes monetary policy is restrictive. 0:12:21.880 --> 0:12:24.280 There was a moment in this news conference when Mike McKee, 0:12:24.280 --> 0:12:27.200 our good friend and colleague down in Washington, DC, asked 0:12:27.240 --> 0:12:29.400 about that and pleased to say that Mike McKey joined 0:12:29.440 --> 0:12:32.640 just now, Mike, the evidence that policy is restrictive, can 0:12:32.679 --> 0:12:33.319 you point to it? 0:12:34.800 --> 0:12:37.360 Well, he's point of the fact that inflation has come down, 0:12:37.400 --> 0:12:40.000 in that the Fed funds rate is now above the 0:12:40.679 --> 0:12:44.760 CPI in all cases, in both core and headline, and 0:12:44.800 --> 0:12:49.000 that real interest rates are starting to rise above zero. 0:12:49.160 --> 0:12:51.720 So they do see some restriction on the economy. But 0:12:52.040 --> 0:12:54.040 I think one of the key things he said was 0:12:54.080 --> 0:12:56.480 in his answer to me when he said policy has 0:12:56.480 --> 0:13:00.760 not been restrictive enough long enough. He doesn't want to 0:13:00.760 --> 0:13:04.920 put a time frame or a actual number on what 0:13:05.080 --> 0:13:09.080 restrictive is, but clearly they could be there. They just 0:13:09.160 --> 0:13:11.839 have to leave it there longer. This was a man 0:13:11.880 --> 0:13:15.120 who wanted to basically keep his options open and not 0:13:15.200 --> 0:13:18.079 get tied down to anything at this point. 0:13:18.240 --> 0:13:21.480 Mike, what does this twenty five basis point move due 0:13:21.880 --> 0:13:25.160 to our listeners and viewers I get and what this 0:13:25.280 --> 0:13:27.559 was alluded to by a number of our guests, big 0:13:27.559 --> 0:13:31.079 impact a year ago, two years ago. What's the impact 0:13:31.160 --> 0:13:35.760 today of this lift for housing, for food, for the 0:13:35.880 --> 0:13:37.199 day to day life that we have. 0:13:38.720 --> 0:13:40.880 Well, it's probably not going to have much of an 0:13:40.920 --> 0:13:44.480 impact overall in a twenty five basis point, since it's 0:13:44.520 --> 0:13:48.200 the cumulative amount of tightening that's been done. That's what 0:13:48.320 --> 0:13:51.560 Jay Powell has been referring to over the last year 0:13:51.559 --> 0:13:54.080 and a half, where they've gone five hundred and fifty 0:13:54.120 --> 0:13:54.800 basis points. 0:13:54.840 --> 0:13:56.600 Now, what you're. 0:13:56.400 --> 0:14:00.320 Looking at is decisions made on interest rates for a 0:14:00.360 --> 0:14:02.199 period of time. You don't buy a house every day, 0:14:02.200 --> 0:14:04.480 you don't buy a car every day, you don't spend 0:14:04.960 --> 0:14:07.400 money investing in a new factory every day, So it 0:14:07.440 --> 0:14:09.520 does take time for that to work its way into 0:14:09.559 --> 0:14:14.120 the economy. They don't know how restrictive they have to be. Clearly, 0:14:14.400 --> 0:14:18.520 they haven't been restrictive enough in the housing sense because 0:14:18.880 --> 0:14:23.880 home prices have still been rising. But overall they're getting 0:14:23.920 --> 0:14:25.080 close to that area. 0:14:25.160 --> 0:14:26.000 And I don't think that. 0:14:26.040 --> 0:14:29.400 The average American is going to notice really anything different 0:14:29.920 --> 0:14:32.760 about this twenty five basis point move Mike. 0:14:32.880 --> 0:14:35.200 Every time the FED has a meeting, you sit there, 0:14:35.240 --> 0:14:38.520 you listen to the tenor the potential staffoos, the way 0:14:38.520 --> 0:14:41.680 that people ask questions. Today you heard a very repetitive, 0:14:42.200 --> 0:14:44.880 very stick to the script J Powell. There was no 0:14:45.000 --> 0:14:48.000 forward guidance. When was the last time this Federal Reserve 0:14:48.360 --> 0:14:51.320 gave no forward guidance about what they were planning to 0:14:51.360 --> 0:14:53.440 do or how they even more thinking about the data 0:14:53.480 --> 0:14:54.240 that's coming in. 0:14:55.360 --> 0:14:59.000 Well, it's been quite some time. The idea today, and 0:14:59.080 --> 0:15:01.400 I said this before the meeting, was that come in, 0:15:01.520 --> 0:15:04.600 do make as little news as possible. They were locked 0:15:04.640 --> 0:15:07.400 into raising rates because the market had decided that's what 0:15:07.440 --> 0:15:09.720 they were going to do, and so the Fed went 0:15:09.760 --> 0:15:13.360 ahead and did that, and beyond that, they tried basically 0:15:13.400 --> 0:15:16.480 to leave their options open. Jay Powell was very scripted 0:15:16.520 --> 0:15:19.480 as you heard he did sound more relaxed than he 0:15:19.560 --> 0:15:23.000 did at the last meeting or the last couple of meetings. 0:15:23.360 --> 0:15:26.640 So from that sendpoint, Lisa, you could say maybe the 0:15:26.720 --> 0:15:30.240 vibe was they're getting close to the end, and I'm 0:15:30.280 --> 0:15:32.720 not sure at this point that they would raise rates again, 0:15:33.120 --> 0:15:36.080 but they don't want the markets to walk away from 0:15:36.080 --> 0:15:38.760 this thinking that they're going to do one thing or another, 0:15:38.840 --> 0:15:41.240 so they tried not to really give any guidance. 0:15:41.360 --> 0:15:44.640 We're covering vibes of news conferences now with Mike McKay. Mike, 0:15:44.680 --> 0:15:47.200 Thank you, Sir Dan in Washington, d C. Appreciate it 0:15:47.240 --> 0:15:51.280 as always. Here's the runway the Canada for you. September twentieth, 0:15:51.520 --> 0:15:54.360 the next Federal Reserve decision Jackson Holl of course, in 0:15:54.400 --> 0:15:57.160 between this meeting and the next mating for the data 0:15:57.640 --> 0:16:03.440 August fourth for Payrowsugust tenth for CPI, September first for payrolls, 0:16:03.680 --> 0:16:08.760 September thirteenth for CPI. So TK two of each CPI 0:16:08.880 --> 0:16:12.400 and payrolls. It's fed meeting and you can take away 0:16:12.480 --> 0:16:15.640 from this meeting, this news conference whatever you want. That 0:16:15.760 --> 0:16:18.400 conversation can change very quickly based on two prints of 0:16:18.480 --> 0:16:20.920 CPI and two prints from payroll. 0:16:20.760 --> 0:16:23.400 At Lisa Naillen. She said, it's this completely data dependent. 0:16:23.440 --> 0:16:25.240 I'm going back to I don't think there's any theory 0:16:25.280 --> 0:16:28.200 involved here. I don't think there's any textbooks. That conversation 0:16:28.360 --> 0:16:31.360 we had before the press conference was just absolutely brilliant 0:16:31.760 --> 0:16:35.320 on the ambiguities of the moment right now with clarity. 0:16:35.360 --> 0:16:39.240 Because he has to manage money, Jeffrey Rosenberg joins this 0:16:39.360 --> 0:16:44.760 portfolio manager of black Rocks Systematic Multi Strategy Fund. Jeff, 0:16:44.800 --> 0:16:49.240 my deepest sympathies. You have to have a conviction, a 0:16:49.360 --> 0:16:54.800 belief forward. What is your conviction now? Given the ambiguities 0:16:54.840 --> 0:16:58.080 we witness today, I think we have a little bit 0:16:58.080 --> 0:16:59.720 of silence here. 0:17:00.000 --> 0:17:03.880 A tennis takes there. I don't you know, Jeff put 0:17:03.880 --> 0:17:05.399 it on me. 0:17:06.520 --> 0:17:10.360 But the ambiguities here, you know, the the ambiguities here 0:17:10.520 --> 0:17:11.320 are important. 0:17:11.480 --> 0:17:13.600 And John, I know that you're in the team meeting 0:17:13.640 --> 0:17:16.000 and Lisa starts throwing stuff at the screen. It's like Brown, 0:17:16.280 --> 0:17:24.080 You're I'm going away to. 0:17:22.080 --> 0:17:25.680 I'm going away tomorrow, and you guys are running the show. 0:17:25.760 --> 0:17:28.159 I'm going I'm going deep to the Northeast. I'm just 0:17:28.240 --> 0:17:30.760 going it's just going to be I'm going away for months. 0:17:30.760 --> 0:17:31.840 It's going to be like a Sabbatan. 0:17:31.840 --> 0:17:33.080 You're taking a month off. 0:17:32.960 --> 0:17:36.879 Taking a month off, and and you guys have the 0:17:36.920 --> 0:17:40.440 former vice chairman of the FED and the arch question 0:17:40.680 --> 0:17:44.600 to Vice Chairman Claid I believe scheduled tomorrow in Bloomberg 0:17:44.600 --> 0:17:47.800 Savants in the morning. Check it out, folks, And I'm John, John, 0:17:47.840 --> 0:17:51.359 I'm sorry. The arch question here is Claire To saying 0:17:51.480 --> 0:17:54.720 we're not going back to We're not going back to 0:17:54.760 --> 0:17:58.040 two percent. Nobody Powell's not talking about. I don't think 0:17:58.080 --> 0:18:00.720 anybody else really is Claire To out front of. 0:18:00.760 --> 0:18:01.159 I'm with you. 0:18:01.160 --> 0:18:04.040 The standout call from former Vice chair Rich Clarider, together 0:18:04.080 --> 0:18:06.560 with Pimco, came out in the Secular Outlook a couple 0:18:06.600 --> 0:18:09.320 of months ago, and ultimately it's this underlying belief that 0:18:09.320 --> 0:18:13.080 they will tolerate higher above target inflation of two points something. 0:18:13.440 --> 0:18:15.919 You've got some indication of that, just a hint of it. 0:18:16.160 --> 0:18:17.800 When he talks about we're not going to hike until 0:18:17.800 --> 0:18:20.240 we get to two percent, that's ridiculous. And also, by 0:18:20.280 --> 0:18:21.720 the way, we don't think we're going to get to 0:18:21.760 --> 0:18:24.960 two percent until twenty twenty five. And within that I 0:18:24.960 --> 0:18:27.280 think there is a message ramo that they are willing 0:18:27.280 --> 0:18:30.359 to tolerate two points something because they're willing to tolerate above 0:18:30.400 --> 0:18:33.119 target inflation from here all the way out to twenty 0:18:33.160 --> 0:18:33.640 twenty five. 0:18:33.680 --> 0:18:35.520 If the Fed chairs correct. 0:18:35.400 --> 0:18:37.560 You know, you pick up a really interesting point because 0:18:37.560 --> 0:18:40.960 it highlights the uncertainty around long and variable lags. He's 0:18:40.960 --> 0:18:43.359 saying that if we wait until inflation gets down to 0:18:43.400 --> 0:18:46.399 two percent, we will have necessarily gone too far. Okay, well, 0:18:46.440 --> 0:18:48.240 then how long do you have to wait before you 0:18:48.359 --> 0:18:51.080