WEBVTT - PIMCO Global Economic Advisor Rich Clarida discusses the Federal Reserve

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<v Speaker 1>With us around the type on places side. The film

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<v Speaker 1>of fed Vice chat which of cloud is with us?

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<v Speaker 1>Still with Us? Is about Michael Jpmulgan Acid Management.

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<v Speaker 2>Rich.

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<v Speaker 1>It's good to see you, sir. Let's start with you.

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<v Speaker 1>You listen to Mike. You saw the changes in the statement.

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<v Speaker 1>What do you make of what we just had?

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<v Speaker 3>Well, I'm a bit surprised, actually, I mean not with

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<v Speaker 3>the adjectives. They needed to change some adjectives up, but

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<v Speaker 3>I was a bit surprised about the reference to the

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<v Speaker 3>attuned and attentive to the balanced outlook. I mean, that's

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<v Speaker 3>certainly correct. The chair has been making that point, but

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<v Speaker 3>I think it is relevant that they included it in

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<v Speaker 3>the statement. He will, certainly, I think, reinforce it in

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<v Speaker 3>the press conference, and I think I do think it

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<v Speaker 3>does tee up Jackson Hole. There'll be some more information

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<v Speaker 3>before then.

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<v Speaker 2>I look at it, and this show is the best

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<v Speaker 2>one we've ever done. We've got Dudley with his important

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<v Speaker 2>Bloomberg opinion piece a couple number of days ago, and

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<v Speaker 2>I want to go to you on what you own,

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<v Speaker 2>which is the high ground on the x anty X

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<v Speaker 2>post debate. You've got the Economist magazine article you did

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<v Speaker 2>a year or whatever ago. You got your January twenty

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<v Speaker 2>twenty two context and consequence of speech on an ex

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<v Speaker 2>anti aspirational FED, I don't hear that here they're waiting.

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<v Speaker 2>They're waiting, They're waiting, they are waiting.

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<v Speaker 3>I think they are getting greater confidence. But I think

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<v Speaker 3>the key point not to toot my own horn is

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<v Speaker 3>my view all on It's okay. I think I've said

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<v Speaker 3>so on this show is that the pal FED really

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<v Speaker 3>the goal is to get inflation to two points something

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<v Speaker 3>and then they would start thinking about the next step,

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<v Speaker 3>which would be easy, not running an easy policy, but

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<v Speaker 3>removing restrictions. So I do think this is what we're seeing,

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<v Speaker 3>and if we do get the cut in Septembers, I

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<v Speaker 3>think we and markets expect it will be because they

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<v Speaker 3>expect inflation x antes to continue to fall.

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<v Speaker 2>But are we anywhere near that? I'm sorry, this is

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<v Speaker 2>an ex post FED. Going back to Arthur Burns, there

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<v Speaker 2>is data dependent as I've ever seen.

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<v Speaker 3>Yeah, they are data dependent, but I think that they

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<v Speaker 3>attenuated and focused on the statement today emphasized both sides

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<v Speaker 3>of the mandate. So I do think they're looking at

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<v Speaker 3>just the labor market as well as the inflation data.

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<v Speaker 4>Well, what's your take on this? It seems like it's

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<v Speaker 4>less dubbish, a little bit more balanced than you initially thought.

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<v Speaker 4>Do you think this just is trying to move as

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<v Speaker 4>incrementally as possible.

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<v Speaker 5>I think they preserve full optionality heading into Jackson Hall.

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<v Speaker 5>I also think that central bankers are mindful of what

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<v Speaker 5>happened to the ECB earlier this year, where you could

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<v Speaker 5>have made the same argument, if you're going to go

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<v Speaker 5>next month, why not go this month? And then of

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<v Speaker 5>course you saw what happened. So I don't see too

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<v Speaker 5>much different than what we expected, other than they just

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<v Speaker 5>decided to maintain the full optionality. We'll see what happens

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<v Speaker 5>as we roll into September. We're still very much expecting

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<v Speaker 5>twenty five basis points in September.

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<v Speaker 1>No, doctor if renmac just writes in publishes with language

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<v Speaker 1>like this, it means the Fed will have to make

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<v Speaker 1>a more pronounced shift in language in September. I'm surprised

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<v Speaker 1>stocks are holding up well on this statement. Perhaps equities

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<v Speaker 1>are looking ahead to the news conference. The news conference

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<v Speaker 1>starts in about twenty four minutes time. It goes on

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<v Speaker 1>to say the FED is waiting for additional data. Can

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<v Speaker 1>they even articulate why inflation might reaccelerate from Hick pick

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<v Speaker 1>up on that question, Bob, can you articulate the risk

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<v Speaker 1>surround inflation? Why might it reaccelerate from here?

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<v Speaker 5>Corporate profitability still looks great. We talked about S and

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<v Speaker 5>P five hundred earnings. They're coming in ahead of expectations.

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<v Speaker 5>You look at the guidance companies are giving you. They're

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<v Speaker 5>up twelve percent next quarter. So we're not in a recession.

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<v Speaker 5>We're slowing down in some parts of it. We'll see.

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<v Speaker 5>You know, I can't find really the argument what's going

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<v Speaker 5>to cause inflation to reaccelerate, to be honest, Well, Rich,

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<v Speaker 5>we were.

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<v Speaker 4>Talking about how this was definitely going to be unanimous,

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<v Speaker 4>and I wonder how much of wrangling of cats there

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<v Speaker 4>is in the room and whether this is basically a

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<v Speaker 4>representation of that that there's some members who believe that

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<v Speaker 4>inflation has been killed, it is nowhere in sight that

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<v Speaker 4>labor is important. And then you have others who say, well,

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<v Speaker 4>you know, wait for the year over year, cops. Is

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<v Speaker 4>that kind of what we're seeing here?

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<v Speaker 3>I think it could be an element. You know, we've

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<v Speaker 3>had some members of the committee, and I know most

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<v Speaker 3>of these folks, but it's different committee than the one

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<v Speaker 3>I was on, and many of them do emphasize both

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<v Speaker 3>sides of the dual mandate, so I'm sure that reflects

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<v Speaker 3>a number of folks views. I do think though, this

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<v Speaker 3>is a committee that certainly got burned earlier in this

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<v Speaker 3>year because the inflation data went the wrong way into

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<v Speaker 3>their credit. They became very data dependent, as Tom indicated,

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<v Speaker 3>I think that they put it this way. I think

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<v Speaker 3>they think they're going to go in September. There is

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<v Speaker 3>a range of data where they wouldn't, but I think

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<v Speaker 3>it's a pretty small range, and I think that's really

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<v Speaker 3>the balance of trying to strike. And I think we'll

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<v Speaker 3>hear that in the press conference.

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<v Speaker 4>We were speaking earlier with James Bullard formally Saint Louis

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<v Speaker 4>FED and he was talking about how he always raised

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<v Speaker 4>the question at meetings that if you wanted to cut rates,

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<v Speaker 4>most certainly at the next meeting, why not cut him now.

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<v Speaker 4>Bob was sort of discussing that earlier, and it sets

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<v Speaker 4>up the sort of difficult period of time where every

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<v Speaker 4>data point could potentially upset the apple cart if it

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<v Speaker 4>doesn't comply. Do you think that they are in that

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<v Speaker 4>zone right now.

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<v Speaker 3>I don't really. I mean, I've certainly during my time

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<v Speaker 3>on the committee we found ourselves there a couple of times,

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<v Speaker 3>so it can happen. I think the data we have gotten,

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<v Speaker 3>you know, the Chair did a lot of communication before blackout,

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<v Speaker 3>and the data since then has reinforced that view. So

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<v Speaker 3>I think there's a pretty wide range of data where

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<v Speaker 3>they'll feel comfortable going in September. So I don't think

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<v Speaker 3>they're in that danger zone.

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<v Speaker 1>Can you confirm that Jim actually said those things to

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<v Speaker 1>the FMC mas.

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<v Speaker 3>Well, of course I would never reveal what was said

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<v Speaker 3>in the FMC ME except what I say, all the

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<v Speaker 3>brilliant things I said

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<v Speaker 1>So alongside form of FET Vice chair Rich Clouder,