WEBVTT - Instant Reaction: Jay Powell's Jackson Hole Speech 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.880 Business app. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.200 or watch us live on YouTube. 0:00:27.640 --> 0:00:30.280 Joining us now is someone who is very familiar with 0:00:30.320 --> 0:00:33.720 these types of speeches. Saint Louis FED President James Bullard, 0:00:33.720 --> 0:00:37.639 who recently was in the media talking about his preference 0:00:37.680 --> 0:00:40.120 for one hundred basis points of rate cuts this year 0:00:40.400 --> 0:00:44.280 heading into twenty twenty six. Also a potential contender, I 0:00:44.280 --> 0:00:48.000 should say to be the next FED chair James Jim, 0:00:48.040 --> 0:00:50.400 how much are you seeing what we heard from Fedchair 0:00:50.479 --> 0:00:53.320 j Powell and seeing anything different that you would really 0:00:53.360 --> 0:00:56.120 say say if you were at that podium. 0:00:56.840 --> 0:01:03.200 He used the speech to solidify expectations for twenty five 0:01:03.240 --> 0:01:07.480 basis points in September. I was expecting that anyway markets 0:01:07.520 --> 0:01:12.399 were expecting that. He leaned into the most recent labor 0:01:12.440 --> 0:01:16.480 market report, which was very soft, and so I think 0:01:16.560 --> 0:01:20.800 that's a done deal. He didn't say too much about 0:01:21.200 --> 0:01:25.080 beyond that, what you want to do with the October 0:01:25.080 --> 0:01:27.680 meeting or the December meeting. I have set one hundred 0:01:27.680 --> 0:01:31.760 basis points, you know, going into twenty twenty six. I 0:01:31.800 --> 0:01:36.959 think you could adjust as you go forward and eventually 0:01:37.000 --> 0:01:39.319 get a full hundred basis points, but I would go 0:01:39.440 --> 0:01:42.160 slowly in order to watch the data and then on 0:01:42.200 --> 0:01:46.080 the framework review. I'm sure much earlier in the year 0:01:46.280 --> 0:01:50.320 they had targeted that they would have the framework discussion 0:01:50.560 --> 0:01:53.400 and that they would use the Jackson Hole speech to. 0:01:53.360 --> 0:01:55.000 Talk about changes to the framework. 0:01:55.400 --> 0:01:58.400 I thought those were thoughtful, and they were well presented 0:01:59.400 --> 0:02:03.280 in this speed each and they're about what many. 0:02:03.080 --> 0:02:04.120 Have speculated on. 0:02:05.000 --> 0:02:06.800 So I think they did about as much as they 0:02:06.800 --> 0:02:08.120 can on the framework side. 0:02:08.280 --> 0:02:11.359 Jim Bowler, Tom keenan good morning to you. I definitely 0:02:11.360 --> 0:02:15.480 consider this my conversation of the day. You served a 0:02:15.600 --> 0:02:19.560 lengthy term at the Saint Louis FED. You have lived 0:02:19.800 --> 0:02:24.280 the decline of a greater economy decades and decades ago 0:02:24.360 --> 0:02:27.800 in the effort to provide for a resurgence Saint Louis 0:02:28.760 --> 0:02:31.440 is a next chairman of the FED, whoever that may be. 0:02:32.200 --> 0:02:35.840 Do they have to manage for two American economies, a 0:02:35.919 --> 0:02:41.400 technology driven exceptional economy and another, to use a cliche, 0:02:41.520 --> 0:02:45.680 America flat on their back? How would a chairman execute 0:02:46.080 --> 0:02:47.520 those two Americas. 0:02:47.840 --> 0:02:51.560 Yeah, I think in commonwealth distributsha have become more salient 0:02:51.680 --> 0:02:53.000 topics for the FED. 0:02:53.760 --> 0:02:57.320 Is not that clear how much the FED can really do. 0:02:58.639 --> 0:03:02.720 Providing interest rate Paul, for the whole economy of if 0:03:02.760 --> 0:03:07.360 you change the rate structure, that affects everyone, not just one. 0:03:07.200 --> 0:03:10.920 Particular group that you might be targeting. 0:03:11.040 --> 0:03:14.760 So I think that's been something we've had to wrestle with, 0:03:14.919 --> 0:03:18.679 and I've actually done research on it myself to try 0:03:18.680 --> 0:03:20.880 to understand it better from my point of view. 0:03:20.919 --> 0:03:23.840 So I think there's been been a theme. 0:03:23.720 --> 0:03:26.560 For a while, and that'll be an important theme in 0:03:26.560 --> 0:03:28.359 Macreconowics going forward. 0:03:28.680 --> 0:03:31.080 Mike McKee's got a lot of smarter questions than me 0:03:31.160 --> 0:03:33.320 on the immediacy of this speech. I'm going to ask 0:03:33.400 --> 0:03:38.480 one more distant question, Jim Bollard. You're at Purdue executing 0:03:38.760 --> 0:03:45.440 online technology education every single day. How do you define 0:03:45.520 --> 0:03:50.000 the new technology productivity that America faces? 0:03:50.240 --> 0:03:52.200 Is it enough to save us? 0:03:52.320 --> 0:03:55.800 Is it enough to really add on to our present 0:03:55.880 --> 0:03:56.960 gdp Oh. 0:03:57.040 --> 0:04:00.520 Yeah, I think that the AI boom is. 0:04:02.280 --> 0:04:05.920 You know, it's a general purpose technology that will diffuse 0:04:06.040 --> 0:04:08.640 through the economy. I think the key question is how 0:04:08.720 --> 0:04:13.240 fast does that actually diffuse? And sometimes marcus can get 0:04:13.400 --> 0:04:15.840 ahead of themselves and think it's going to happen sooner. 0:04:16.360 --> 0:04:19.960 Sometimes they're too late and it happens faster than markets think. 0:04:20.040 --> 0:04:24.840 But nevertheless, anyway you look at it, it's an important technology. 0:04:24.839 --> 0:04:26.880 It can drive productivity and. 0:04:26.800 --> 0:04:30.200 I think in higher education is one of the places 0:04:30.200 --> 0:04:32.800 where you can really have the biggest impact. We put 0:04:32.839 --> 0:04:36.919 a AI requirement in at the Danniel School here for 0:04:37.000 --> 0:04:40.240 every single student, and we're trying to expand that to 0:04:40.320 --> 0:04:43.600 all produce. So I think that just shows you how 0:04:43.640 --> 0:04:45.080 important this technology is. 0:04:45.400 --> 0:04:46.520 Jim, it's Mike McKee. 0:04:46.560 --> 0:04:49.440 I have a question about sort of the process involved 0:04:49.440 --> 0:04:53.680 in this speech. The chairman is giving his own speech, 0:04:53.720 --> 0:04:57.599 but basically when he says it's time to maybe adjust policy, 0:04:57.680 --> 0:05:01.280 he's speaking for the entire open market. Can going into 0:05:01.560 --> 0:05:05.120 a speech like this, would he have polled everybody? Does 0:05:05.160 --> 0:05:07.840 he think he has the votes for that? Because we've 0:05:07.920 --> 0:05:10.719 been speaking with FED officials here in Jackson Hall and 0:05:11.080 --> 0:05:13.559 there's still some who were saying, well, we're not sure 0:05:13.560 --> 0:05:14.919 that we need to do that yet. 0:05:15.040 --> 0:05:17.200 Now he's going to report on the center of gravity 0:05:17.240 --> 0:05:20.080 of the committee, even though there might be people that 0:05:20.560 --> 0:05:24.760 have misgivings. At the June meeting, the committee had a 0:05:24.839 --> 0:05:28.600 median dot dot plot of two rate reductions by the 0:05:28.720 --> 0:05:34.080 end of the year, and I think the minutes, you know, 0:05:34.200 --> 0:05:36.839 suggested something that was more like fifty to fifty. 0:05:36.920 --> 0:05:39.680 But then the labor market report came in. 0:05:39.800 --> 0:05:42.640 I think that tilted the balance, so he could have 0:05:42.920 --> 0:05:44.800 he could have pushed back a little bit. I think 0:05:45.360 --> 0:05:48.320 financial markets were expecting him to come be a little 0:05:48.320 --> 0:05:51.919 bit more hawkish here and try to set up a 0:05:51.960 --> 0:05:55.880 fifty to fifty meeting where you would wait and see 0:05:55.920 --> 0:05:58.200 for the rest of the data to come in. But 0:05:58.720 --> 0:06:01.080 I don't think that's where the center of gravity is 0:06:01.120 --> 0:06:03.480 on the committee, so so. 0:06:03.400 --> 0:06:05.039 He went ahead and leaned in. 0:06:05.839 --> 0:06:07.680 I thought there was quite a bit of talk about 0:06:07.720 --> 0:06:11.480 the labor market at the at the beginning. You know, 0:06:11.520 --> 0:06:13.920 you could have could have been a little more, uh, 0:06:14.440 --> 0:06:17.040 you know, a little more emphasis on the low unemployment rate, 0:06:17.040 --> 0:06:19.800 for instance. And you know, he did come out at 0:06:19.800 --> 0:06:22.200 the end of that discussion saying, well, it's in balance, 0:06:22.560 --> 0:06:26.800 but we're a little bit nervous. So I think, you know, 0:06:27.160 --> 0:06:31.200 I think he's accurately uh describing where the bulk of 0:06:31.240 --> 0:06:31.960 the committee is. 0:06:32.040 --> 0:06:35.040 Well where would you be on this question, because we've 0:06:35.040 --> 0:06:38.359 heard FED officials for some time now saying, yes, we 0:06:38.440 --> 0:06:41.920 had poor job creation in recent months, but the unemployment rate, 0:06:41.960 --> 0:06:45.480 as you just mentioned, has been low, and they've described 0:06:45.480 --> 0:06:47.920 the labor market as solid. Now, this seems to be 0:06:48.000 --> 0:06:50.680 sort of a major shift in the way they view 0:06:50.880 --> 0:06:55.000 the outlook and the sort of balance between the two mandates. 0:06:55.360 --> 0:06:58.240 Yeah, what he did at the end of that discussion, 0:06:58.320 --> 0:06:59.960 he said, well, it's in balance. 0:07:00.440 --> 0:07:03.279 But I think the committee's nervous. 0:07:03.880 --> 0:07:07.359 I think it has been slowing, and I think the 0:07:07.400 --> 0:07:11.720 policy rate is moderately restrictive. Is maybe you know, one 0:07:11.840 --> 0:07:15.400 hundred and twenty five basis points above the neutral rate. 0:07:15.560 --> 0:07:18.160 Is that really where you want to be in this circumstance. 0:07:18.240 --> 0:07:21.240 I think the answers no, So you can come down 0:07:21.320 --> 0:07:26.679 some and still have moderately restrictive monetary policy that puts 0:07:26.760 --> 0:07:30.680 gentle downward pressure on inflation. And then the other thing 0:07:30.760 --> 0:07:34.720 I think has happened is that this argument from Chris 0:07:34.720 --> 0:07:39.720 Waller and others on the committee that the you know, 0:07:39.760 --> 0:07:42.440 you should look through the one time increase in goods 0:07:42.480 --> 0:07:44.160 prices coming from tariffs. 0:07:45.120 --> 0:07:46.600 I think that's carrying the day. 0:07:46.800 --> 0:07:50.440 And you know, then he emphasized that inflation expectations remain 0:07:50.520 --> 0:07:53.840 anchored and so on, and so I think that sets 0:07:53.920 --> 0:07:56.640 up a modest move downward in September. 0:07:56.800 --> 0:07:58.960 Jim, We've been talking with you for years and you 0:07:59.000 --> 0:08:02.800 are very focused on the discipline of economics. Right now, 0:08:02.840 --> 0:08:06.000 I'm looking at the headlines that are crossing from the 0:08:06.040 --> 0:08:09.280 past hour. The top one, of course, is a Jerome 0:08:09.360 --> 0:08:12.520 Powell fedchair saying that shifting risks may warrant adjusting rates. 0:08:12.680 --> 0:08:14.960 The second one is that Trump says that hell fire 0:08:14.960 --> 0:08:18.080 the Fed's Lisa's cook if she doesn't resign as someone 0:08:18.200 --> 0:08:21.120 who is thought to be a contender to become the 0:08:21.160 --> 0:08:24.280 next FED chair. Jim, how much does it concern you 0:08:24.320 --> 0:08:28.040 that there's this increasing political noise around the seat and 0:08:28.120 --> 0:08:30.440 exactly what the path of policy forward looks like. 0:08:31.320 --> 0:08:34.240 Yeah, I want to see due process around something like this. 0:08:35.280 --> 0:08:37.760 I want to see you know, you can make charges 0:08:37.800 --> 0:08:42.160 against anybody about anything, I guess, and you know the 0:08:42.200 --> 0:08:46.200 person can answer the charges and the dojke and decide 0:08:46.200 --> 0:08:48.080 what they want to do and so on. 0:08:48.520 --> 0:08:51.199 So I think this has, you know, should. 0:08:51.000 --> 0:08:54.520 Have longer to play out before you took that step. 0:08:55.520 --> 0:08:58.360 Otherwise it's just is kind of the wild West, and 0:08:59.040 --> 0:09:02.640 she can get reinstate later, I guess, or something if 0:09:02.679 --> 0:09:03.640 there wasn't a conviction. 0:09:03.800 --> 0:09:05.520 So seems messy to me. 0:09:06.440 --> 0:09:10.240 I think these kinds of these kinds of charges are 0:09:10.240 --> 0:09:14.000 made from time to time against various officials around Washington, 0:09:14.120 --> 0:09:15.200 but I'd. 0:09:14.960 --> 0:09:16.439 Like to see due process there. 0:09:16.559 --> 0:09:19.800 Jim, there's another question here, and aside from Governor Cook 0:09:19.840 --> 0:09:24.560 and what happens there, about how the perception of political 0:09:24.559 --> 0:09:29.320 interference handles the market reaction to Fed policy. There is 0:09:29.360 --> 0:09:32.040 this perception that that could cause the dollar a week 0:09:32.080 --> 0:09:34.080 in more because there is more of an emphasis on 0:09:34.120 --> 0:09:37.320 supporting growth and supporting the label market than containing inflation. 0:09:37.760 --> 0:09:39.920 And some people are worried that if the Fed does 0:09:40.000 --> 0:09:43.000 cut by fifty seventy five one hundred basis points, as 0:09:43.000 --> 0:09:45.640 you were talking about this past week, that you could 0:09:45.640 --> 0:09:48.200 see a move up in long end yields akin to 0:09:48.240 --> 0:09:50.480 what we saw last year. If you are on the 0:09:50.520 --> 0:09:53.920 FED currently and you did see yields along the long 0:09:54.040 --> 0:09:57.880 end moving up in response to near term FED rate cuts, 0:09:58.240 --> 0:09:58.959 what would you do? 0:10:00.120 --> 0:10:01.200 Definitely be a concern. 0:10:01.320 --> 0:10:04.880 And that's the tricky part of this business, is that 0:10:05.559 --> 0:10:08.719 you know, you think you're pursuing a dubbish policy at 0:10:08.720 --> 0:10:11.559 the short end, but the long end goes up because 0:10:11.600 --> 0:10:14.880 in place and expectations start to rise, markets start to 0:10:15.120 --> 0:10:19.079 lose confidence in the FED and the credibility of the FED, 0:10:19.600 --> 0:10:24.600 and that can go very very badly and unfortunately fairly quickly. 0:10:24.679 --> 0:10:27.280 So I think you do have to be come You 0:10:27.320 --> 0:10:30.600 do have to be careful here. But I'm saying that 0:10:30.679 --> 0:10:32.880 I think that committee has room to maneuver if they 0:10:32.960 --> 0:10:37.000 proceed carefully over the remainder of twenty five and the 0:10:37.000 --> 0:10:38.520 first half of twenty twenty six. 0:10:38.920 --> 0:10:40.640 I don't want to get out front of the debate 0:10:40.720 --> 0:10:43.319 here the moment, Jim Bullard, But what I would say 0:10:43.360 --> 0:10:44.560 to Chairman Bullard and Mike. 0:10:44.520 --> 0:10:46.040 McKee, I got to turn to you. 0:10:46.040 --> 0:10:47.640 You and I used to sit and look at the 0:10:47.679 --> 0:10:49.920 dots and go which one is Bullard? 0:10:50.480 --> 0:10:51.240 I mean, you and I do. 0:10:51.400 --> 0:10:53.559 It's fairly easy after a while to figure out. 0:10:53.640 --> 0:10:58.760 I've Chairman Bullard, is your first act if you take 0:10:58.800 --> 0:11:01.480 over the FED as your act to get rid. 0:11:01.360 --> 0:11:02.000 Of the dots? 0:11:02.960 --> 0:11:03.200 Yeah. 0:11:03.880 --> 0:11:07.160 I've threatened to well, ex President, I threatened to withdraw 0:11:07.240 --> 0:11:10.120 from the dot plot. I think this could be done better. 0:11:10.200 --> 0:11:13.920 This was discussed at the Framework conference and former chair 0:11:13.920 --> 0:11:18.880 of Bernanke gave a very nice presentation and talk about 0:11:19.600 --> 0:11:23.400 a quarterly monetary policy report, get more organized about it, 0:11:23.480 --> 0:11:24.520 put out a forecast. 0:11:25.040 --> 0:11:26.440 I think all of that could be done. 0:11:26.600 --> 0:11:30.240 I've advocated that for a long time, and so I 0:11:30.280 --> 0:11:33.040 think that would sort of clear up some of the 0:11:33.080 --> 0:11:34.880 misconceptions around the dot plot. 0:11:35.280 --> 0:11:36.959 Okay, this is really really important, Folcus. 0:11:37.080 --> 0:11:39.840 Jim Bullard made he can history i'd say, a decade ago, 0:11:40.160 --> 0:11:45.280 with a small, short paper forceful on regime change. How 0:11:45.320 --> 0:11:48.600 do we get a new FED away from the guessing 0:11:48.679 --> 0:11:51.920 and the certitude and the silly parlor game of it, 0:11:52.040 --> 0:11:55.240 Jim Bullard, with great respect, how do we get to 0:11:56.040 --> 0:12:00.439 that more disciplined study around the game of the FED 0:12:00.920 --> 0:12:02.319 and regime change? 0:12:02.679 --> 0:12:06.440 Yeah, I think regime switching is a great way to 0:12:06.520 --> 0:12:11.120 think about the global economy and the US economy and 0:12:11.160 --> 0:12:16.520 how it operates. There are relatively long periods of time 0:12:16.760 --> 0:12:20.760 where you might have let's say, slow growth and very 0:12:20.760 --> 0:12:23.480 low interest rates, and you might switch to another time 0:12:23.600 --> 0:12:27.719 with faster growth and higher interest rates. I think understanding 0:12:27.800 --> 0:12:32.120 that and understanding how that affects policy choices is a 0:12:32.160 --> 0:12:37.080 great thing to study further and talk about further in 0:12:37.120 --> 0:12:40.560 the years ahead, So you know, I think it's very 0:12:40.600 --> 0:12:42.600 salient for what the committee does. 0:12:43.040 --> 0:12:47.280 Jim Bullard, former FED President of the Saint Louis Bank, 0:12:47.520 --> 0:12:49.079 will be sticking with us. 0:12:49.160 --> 0:12:49.520 Right now. 0:12:49.559 --> 0:12:52.120 In markets, you can see a cheering across Wall Street 0:12:52.559 --> 0:12:55.760 to the opening the door to a potential rate cut 0:12:55.840 --> 0:12:59.840 next month. Potentially more. You could see equities surging higher 0:13:00.080 --> 0:13:03.840 across the different of the different indexes, led by some 0:13:03.880 --> 0:13:07.000 of the more interest rate sensitive sectors. The Russell two thousand. 0:13:07.400 --> 0:13:10.080 You can see ten year yields down now about six 0:13:10.120 --> 0:13:12.320 basis points, even more at the front end, down ten 0:13:12.360 --> 0:13:15.880 basis points. As people look to the prospect of the 0:13:15.920 --> 0:13:19.760 Fed looking through some of the inflation from tariffs. You 0:13:19.760 --> 0:13:23.320 could see the dollar markedly weaker one seventeen on the 0:13:23.360 --> 0:13:26.760 euro dollar cross up on nine tenths of a percent 0:13:27.120 --> 0:13:30.200 in terms of just the percentage rise up about a 0:13:30.240 --> 0:13:32.880 basis point. And there's a real question here about what 0:13:32.920 --> 0:13:35.640 this means going forward. City Wealth Chief Investment Officer Kate 0:13:35.679 --> 0:13:38.000 Moore is still with us, freezing a little bit because 0:13:38.040 --> 0:13:39.319 it is a little bit chilly. 0:13:39.040 --> 0:13:40.200 Here, nippy in the morning. 0:13:40.320 --> 0:13:44.000 I am curious though about what you're hearing in terms 0:13:44.040 --> 0:13:47.760 of prospective FED chairs and the politicization of the Federal Reserve. 0:13:47.920 --> 0:13:50.199 If this is a FED willing to err on the 0:13:50.240 --> 0:13:55.040 Dubvish side, does that mean something that materially is higher 0:13:55.040 --> 0:13:58.200 with respect to returns and with respect to risk appetite. 0:13:58.360 --> 0:14:01.600 Look, markets love certainty and our investors love certainty, and 0:14:01.640 --> 0:14:04.200 we want a certainty in terms of the process around 0:14:04.320 --> 0:14:07.680 making monetary policy decisions. So I don't have any insight 0:14:07.760 --> 0:14:10.800 into who might be named next FED chair, But what 0:14:10.840 --> 0:14:12.760 I will say is if there is a sense that 0:14:12.800 --> 0:14:15.200 the process is changing, I think that will lead to 0:14:15.240 --> 0:14:18.360 some pause and perhaps some volatility in the market. You know, 0:14:18.440 --> 0:14:20.960 our expectation is that regardless of who takes the next 0:14:21.040 --> 0:14:23.800 chair and what seats are filled, we'll have a continuous 0:14:23.920 --> 0:14:27.600 continuation of the process of being data dependent, of being thoughtful, 0:14:27.640 --> 0:14:31.520 of having great debate and discussion amongst the FED governors 0:14:31.680 --> 0:14:34.200 and their staff. But if that were to change, I 0:14:34.240 --> 0:14:36.960 think that would introduce volatility. I think the most important 0:14:36.960 --> 0:14:39.760 thing for us right now is to recognize that so 0:14:39.880 --> 0:14:43.680 much of the data is going to be mixed through 0:14:43.680 --> 0:14:45.600 the back half of the year, and that's going to 0:14:45.600 --> 0:14:48.200 have a huge impact I think in terms of investor sentiment, 0:14:48.360 --> 0:14:50.480 and I would suggest even more crowding in some of 0:14:50.480 --> 0:14:51.360 the favored trades. 0:14:51.680 --> 0:14:53.960 We tend to get reactions like we're seeing in the 0:14:54.000 --> 0:14:56.720 market now on a day when news breaks. But I 0:14:56.720 --> 0:15:00.680 think we're probably going to see extended rally here because 0:15:00.680 --> 0:15:04.680 people are anticipating great conscience. Does that worry you in 0:15:04.800 --> 0:15:10.640 terms of a bubble forming or some sort of excess 0:15:10.720 --> 0:15:15.480 spending that would push up inflation because of inflated asset prices. 0:15:15.920 --> 0:15:18.120 Yeah, so I have been a little bit worried actually 0:15:18.160 --> 0:15:20.680 about positioning. I feel like I've been a little bit 0:15:20.720 --> 0:15:23.000 more cautious frankly than some of my peers on the 0:15:23.040 --> 0:15:26.760 street and saying, you know, people own the highest quality 0:15:26.760 --> 0:15:29.040 parts of the market. It's quite crowded. Some of the 0:15:29.040 --> 0:15:30.920 shorts when we're looking at some of the fast money 0:15:31.000 --> 0:15:35.120 a community are very similar across the board, and we've 0:15:35.120 --> 0:15:38.600 seen people kind of shrug off concerns around economic growth 0:15:38.680 --> 0:15:42.400 or even the technological disruption across a lot of industries. 0:15:42.720 --> 0:15:45.520 We've seen significant improvements in terms of the earnings or 0:15:45.560 --> 0:15:49.320 vision ratios, City Economic surprise index has moved up, you know, 0:15:49.400 --> 0:15:51.840 and all of this together I think sets us up 0:15:52.240 --> 0:15:55.280 for you know, a little bit of weakness if there 0:15:55.480 --> 0:15:57.440 was a bad data point, or if there was a 0:15:57.440 --> 0:16:00.600 bit of a shock where there's a lot of consensus positioning. 0:16:01.240 --> 0:16:03.480 Well, Jim, Jim Bullard, I'd love to bring you back 0:16:03.480 --> 0:16:06.440 in here. How much does that concern you that sort 0:16:06.480 --> 0:16:09.720 of a bias to cut rates could cause asset price 0:16:09.840 --> 0:16:13.360 inflation to get ahead maybe of where the economy is. 0:16:13.720 --> 0:16:16.760 Yeah, equities, except for just recently, equities have been doing 0:16:16.880 --> 0:16:21.240 very well as they've digested the new trade policy of 0:16:21.280 --> 0:16:23.800 the US and how that's going to play out globally. 0:16:24.280 --> 0:16:27.880 You've got the AI boom going on, really a driver 0:16:29.400 --> 0:16:32.760 for the big tech companies, and you know. 0:16:32.680 --> 0:16:36.480 I do get concerned that things we get ahead of ourselves. 0:16:36.560 --> 0:16:40.440 Sure it's a great technology and everything, but how fast 0:16:40.520 --> 0:16:43.480 is it really going to in diffuse into actual productivity 0:16:44.640 --> 0:16:48.840 in the economy. But overall, I would say, you know, 0:16:49.000 --> 0:16:52.960 it's possible that we'll get higher productivity growth ahead and 0:16:54.160 --> 0:16:57.000 really a good outcome for the second half of the 0:16:57.040 --> 0:17:00.160 twenty twenties here, much as we had in the for 0:17:00.200 --> 0:17:01.080 the nineteen nineties. 0:17:01.440 --> 0:17:04.240 Let me talk to the chief investment strategist Purdue University 0:17:04.320 --> 0:17:06.280 right now. I'm going to do a double barrel question 0:17:06.400 --> 0:17:09.080 first to doctor Bullard and then to doctor Moore. Jim 0:17:09.119 --> 0:17:12.400 Bullard as simple as I can all of my conversations 0:17:12.480 --> 0:17:16.880 rather Jakamnagel, Bundesbank, Kate Moore, City Group and on and on, 0:17:17.320 --> 0:17:20.359 is about an elevated or persistent nominal GDP. 0:17:21.080 --> 0:17:22.760 Do you frame out that. 0:17:22.720 --> 0:17:25.480 We're going to have an animal spirit in the country, 0:17:25.760 --> 0:17:31.000 whether it's better real growth okay, inflation too much inflation, okay, 0:17:31.040 --> 0:17:34.560 real growth, But what we're talking about forward is an 0:17:34.600 --> 0:17:36.640 elevated nominal GDP. 0:17:38.240 --> 0:17:40.160 If you think real growth is going to be faster 0:17:40.320 --> 0:17:43.800 than yes, nominal gp growth would be faster even if 0:17:43.840 --> 0:17:47.000 the Fed hits it's two percent inflation target over that period. 0:17:47.119 --> 0:17:53.000 So yeah, you would see higher, faster nominal GDP growth. 0:17:53.240 --> 0:17:54.639 I mean, I look at this, Kate Moore, and it's 0:17:54.640 --> 0:17:55.240 a higher manner. 0:17:55.240 --> 0:17:57.160 And I'm really surprised by your comments. I think they're 0:17:57.160 --> 0:18:00.600 extremely important our back to the US quality, etc. 0:18:00.960 --> 0:18:01.720 But it sounds like. 0:18:01.720 --> 0:18:05.760 City Group is modeling out through all the emotion, the fear, 0:18:05.920 --> 0:18:07.960 the turmoil, the political debate. 0:18:08.000 --> 0:18:10.120 As we just sign next to the eight foot there 0:18:10.200 --> 0:18:10.920 in the lobby. 0:18:11.119 --> 0:18:14.840 The answer here is you're modeling out that will be 0:18:15.040 --> 0:18:18.320 okay and there'll be a better nominal GDP, it leads 0:18:18.320 --> 0:18:19.200 into revenue, etc. 0:18:19.800 --> 0:18:22.200 Look, I think we're going to have an okay growth environment. 0:18:22.280 --> 0:18:23.920 But one thing we keep on talking about is sort 0:18:23.920 --> 0:18:25.919 of the ke shape. Right there are the haves and 0:18:25.960 --> 0:18:29.359 have nots across all the different industries and different consumer groups. 0:18:29.680 --> 0:18:32.359 And so I don't think that we want to assume 0:18:32.359 --> 0:18:35.280 that everyone is going to experience strong growth in the 0:18:35.359 --> 0:18:37.520 second half the year. And we're seeing this, of course 0:18:37.520 --> 0:18:39.919 in the consumer companies. We're seeing this across you know, 0:18:39.960 --> 0:18:43.360 segments of different households. We're seeing this even in technology companies, 0:18:43.480 --> 0:18:46.000 those that have made the investments and are reaping dividends 0:18:46.040 --> 0:18:49.600 from it. So yes, we may have these good headline numbers, 0:18:49.640 --> 0:18:51.680 but I think as investors we have to really pay 0:18:51.680 --> 0:18:53.960 attention to what's going on beneath the surface, and I 0:18:54.000 --> 0:18:57.280 think there's an opportunity for differentiation over the next couple quarters. 0:18:58.000 --> 0:19:00.600 We are looking at a market that is moving, We 0:19:00.640 --> 0:19:03.440 are looking at headlines that are coming. And I want 0:19:03.480 --> 0:19:06.520 to bring this to you that Canada is planning to 0:19:06.560 --> 0:19:10.720 remove retaliatory tariffs on many US products in an olive 0:19:10.720 --> 0:19:14.760 branch to President Trump. And there is this feeling that 0:19:14.920 --> 0:19:17.600 maybe some of the tariffs are fungible, that we are 0:19:17.640 --> 0:19:20.000 going to see some of them removed, or US as 0:19:20.040 --> 0:19:20.960 a negotiating state. 0:19:21.240 --> 0:19:23.440 I strongly agree with what you're saying. This was sort 0:19:23.480 --> 0:19:25.560 of out there in the ether last night, but to 0:19:25.600 --> 0:19:29.280 see these headlines is another example we adjust well. 0:19:29.320 --> 0:19:31.160 And that's one of the reasons why there has been 0:19:31.200 --> 0:19:33.679 a focus on the labor market fed chair to ome 0:19:33.760 --> 0:19:38.800 Powell speaking just moments ago, really focusing on the complications 0:19:38.840 --> 0:19:40.440 for the labor market overall. 0:19:40.560 --> 0:19:42.879 While the labor market appears to be in balance, it 0:19:42.960 --> 0:19:45.359 is a curious kind of balance that results from a 0:19:45.400 --> 0:19:49.360 marked slowing in both the supply of and demand for workers. 0:19:49.640 --> 0:19:54.080 This unusual situation suggests that downside risks to employment are rising, 0:19:54.240 --> 0:19:57.040 and if those risks materialize, they can do so quickly 0:19:57.119 --> 0:19:59.960 in the form of sharply higher layoffs and rising unemployment. 0:20:00.400 --> 0:20:03.320 Some people might say that a fetcher J. Powell is 0:20:03.359 --> 0:20:06.040 coming around to the Chris Waller view of things, that 0:20:06.080 --> 0:20:09.399 there is this feeling of potentially the weakening and the 0:20:09.440 --> 0:20:12.840 labor market taking priority over inflation at a time where 0:20:12.880 --> 0:20:15.800 some of these tariffs are put on taken off, and 0:20:15.840 --> 0:20:17.639 that's what we're seeing a little bit in terms of 0:20:17.720 --> 0:20:19.240 negotiation this morning. 0:20:19.000 --> 0:20:20.520 Well, the given the take and it goes back to 0:20:20.600 --> 0:20:23.520 Kate Moore's optimism on investment in America and you see 0:20:23.600 --> 0:20:25.720 it a dollar thank you, and you putting up that 0:20:25.800 --> 0:20:29.679 wonderful dollar Looney chart and you see things adjusts and 0:20:29.720 --> 0:20:31.920 you wonder, Okay, what do we do with China, what 0:20:31.960 --> 0:20:35.959 do we do with Mexico with the produce debate? And 0:20:36.240 --> 0:20:41.240 pharmaceuticals with Europe? Guess what there may be constructive surprises 0:20:41.760 --> 0:20:44.760 is the certitude of the tariff debate gives way, It 0:20:44.840 --> 0:20:48.440 makes it easier for the next chairman, and maybe maybe 0:20:48.480 --> 0:20:51.000 I'll get out of triple levers all cash. It's fifty fifty. 0:20:51.160 --> 0:20:53.040 Oh, now is the time to definitely do it? Yeah, 0:20:53.080 --> 0:20:56.639 for sure, Jim. Before we let you get on with 0:20:56.720 --> 0:20:59.320 your day, I do want to finish there that have 0:20:59.440 --> 0:21:03.120 we seen from tariffs that there is this fungibility there 0:21:03.200 --> 0:21:05.520 that they get put on, they get taken off, and 0:21:05.560 --> 0:21:08.199 that right now the path of travel is lower from 0:21:08.200 --> 0:21:11.119 where we were maybe on April second, not higher again, 0:21:11.320 --> 0:21:13.919 And so you can look through in another kind of 0:21:13.960 --> 0:21:16.040 way some of the inflationary impact. 0:21:16.520 --> 0:21:19.040