1 00:00:02,520 --> 00:00:07,000 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:09,160 --> 00:00:13,800 Speaker 2: This is a breaking news update from Bloomberg instant reaction 3 00:00:14,080 --> 00:00:17,919 Speaker 2: and analysis from our three thousand journalists and analysts around 4 00:00:17,960 --> 00:00:18,439 Speaker 2: the world. 5 00:00:20,000 --> 00:00:21,680 Speaker 3: I'm going to start with a quote from a lay 6 00:00:21,720 --> 00:00:24,600 Speaker 3: fed chair This one from Anna Greenspan. 7 00:00:25,079 --> 00:00:27,080 Speaker 2: I know you think you understand. 8 00:00:26,560 --> 00:00:28,240 Speaker 3: What you thought I said, but I'm not sure you 9 00:00:28,320 --> 00:00:31,080 Speaker 3: realize that what you heard is not what I meant. 10 00:00:31,160 --> 00:00:33,600 Speaker 3: I don't think anyone really understood much the last forty 11 00:00:33,600 --> 00:00:35,600 Speaker 3: five minutes in the market right now, still trying to 12 00:00:35,600 --> 00:00:38,400 Speaker 3: figure it out. The chairman talked about this market move 13 00:00:38,440 --> 00:00:41,680 Speaker 3: we've seen in between meetings. This market is playing the 14 00:00:41,760 --> 00:00:44,080 Speaker 3: ball and not the referee. Take a listen. 15 00:00:45,720 --> 00:00:50,720 Speaker 4: Nominal and real yields are materially higher across the treasury curve. 16 00:00:51,800 --> 00:00:54,960 Speaker 4: In fact, some of the increases in market interest rates 17 00:00:55,480 --> 00:00:59,720 Speaker 4: between FMC meetings are among the most significant in the 18 00:00:59,800 --> 00:01:03,440 Speaker 4: last last two decades. In the inter meeting period, market 19 00:01:03,480 --> 00:01:09,440 Speaker 4: attention centered on real data and real economic developments. Prices 20 00:01:09,520 --> 00:01:14,720 Speaker 4: reacted in real time to incoming information, and the reduction 21 00:01:15,000 --> 00:01:19,720 Speaker 4: in forward guidance may have been a factor. Market participants 22 00:01:19,720 --> 00:01:23,360 Speaker 4: are learning to play the ball, not the referee, and 23 00:01:23,480 --> 00:01:27,800 Speaker 4: market prices will continue to respond in the direction and 24 00:01:27,920 --> 00:01:29,440 Speaker 4: magnitude they see fit. 25 00:01:30,440 --> 00:01:33,400 Speaker 3: So it's the FED chair outsourcing monetment policy to the market. 26 00:01:33,800 --> 00:01:36,160 Speaker 3: And if it is, is this market starting to wonder 27 00:01:36,160 --> 00:01:39,080 Speaker 3: whether this FED will actually follow through the most important 28 00:01:39,080 --> 00:01:41,840 Speaker 3: part of this move today in this market, crossessor is 29 00:01:41,880 --> 00:01:42,760 Speaker 3: in the bond market. 30 00:01:42,880 --> 00:01:43,360 Speaker 2: Check this out. 31 00:01:43,440 --> 00:01:46,880 Speaker 3: Look at the yield curve two year yields questioning whether 32 00:01:46,920 --> 00:01:49,760 Speaker 3: this FED will actually follow through on an interest rate 33 00:01:49,800 --> 00:01:52,520 Speaker 3: high yields dropping at the front end by six basis points, 34 00:01:52,560 --> 00:01:56,560 Speaker 3: and with that questioning the conviction to actually do something 35 00:01:56,880 --> 00:02:00,240 Speaker 3: about the inflation that the chairman is telling you they 36 00:02:00,280 --> 00:02:02,720 Speaker 3: will do something about. Look at the longer end of 37 00:02:02,760 --> 00:02:06,640 Speaker 3: the yield curve, thirties untethered yields up by seven basis 38 00:02:06,640 --> 00:02:10,600 Speaker 3: points five p. Sixteen on thirties, Lisa, that's an interesting 39 00:02:10,680 --> 00:02:13,520 Speaker 3: market reaction to a FED share that for many was 40 00:02:13,560 --> 00:02:15,560 Speaker 3: confusing over the past forty five minutes. 41 00:02:15,840 --> 00:02:19,440 Speaker 5: Frankly, he came out said that he was really happy 42 00:02:19,440 --> 00:02:21,679 Speaker 5: to have the input of the market, but he wasn't 43 00:02:21,760 --> 00:02:24,880 Speaker 5: outsourcing the Fed's decision to the market. He talked about 44 00:02:24,880 --> 00:02:27,720 Speaker 5: these four goals, these deep questions that we talk about 45 00:02:27,760 --> 00:02:30,960 Speaker 5: every single day, but gave no conclusion as to direction. 46 00:02:31,040 --> 00:02:33,600 Speaker 5: You talked about a divided committee as not divided but 47 00:02:33,760 --> 00:02:36,280 Speaker 5: united in a determination to bring down inflation, and this 48 00:02:36,360 --> 00:02:39,079 Speaker 5: market said, you know what, we're going to call bs 49 00:02:39,080 --> 00:02:40,840 Speaker 5: on this, and you're not going to hike rates and 50 00:02:40,840 --> 00:02:42,360 Speaker 5: you're going to try to job on us, and you 51 00:02:42,400 --> 00:02:43,840 Speaker 5: think that we're going to do the job for you, 52 00:02:44,040 --> 00:02:45,280 Speaker 5: and so they're calling the bluff. 53 00:02:45,360 --> 00:02:48,880 Speaker 6: I would like us to extend the show to five PM. Frankly, John, 54 00:02:48,960 --> 00:02:52,799 Speaker 6: I know you got early hours tomorrow morning, but that 55 00:02:52,960 --> 00:02:55,920 Speaker 6: was in historic press conference. There was all sorts of 56 00:02:55,960 --> 00:02:58,799 Speaker 6: little tidbits there, and we've got wonderful guests to talk 57 00:02:58,840 --> 00:03:03,080 Speaker 6: to about this, but every sense of that was radically 58 00:03:03,080 --> 00:03:05,320 Speaker 6: different than anything we've seen in recent. 59 00:03:05,200 --> 00:03:07,320 Speaker 3: And allow me to quote another central banker, and this 60 00:03:07,520 --> 00:03:10,560 Speaker 3: is the FED governor on the board right now, Chris Waller, 61 00:03:11,040 --> 00:03:14,640 Speaker 3: going into the quiet period, he made this statement, Stanley's 62 00:03:14,639 --> 00:03:17,640 Speaker 3: staring at inflation until it mounts before our withering gaze 63 00:03:18,160 --> 00:03:21,400 Speaker 3: is not an option, Bramo, Is it an option? 64 00:03:21,919 --> 00:03:25,400 Speaker 5: So what I love from Renaissance and Macro from Neil 65 00:03:25,440 --> 00:03:28,800 Speaker 5: Duddy came over and he said, worsh judgment is this 66 00:03:28,840 --> 00:03:31,239 Speaker 5: is a period of watchful thinking. So I guess the 67 00:03:31,280 --> 00:03:35,040 Speaker 5: withering gaze is an option. Because ultimately, Kevin worsh could 68 00:03:35,080 --> 00:03:37,520 Speaker 5: not answer the question, if you still believe that inflation 69 00:03:37,640 --> 00:03:39,960 Speaker 5: is a problem, why did you not hike today? He 70 00:03:40,000 --> 00:03:42,600 Speaker 5: could not answer that question, what would make you hike? 71 00:03:42,920 --> 00:03:43,800 Speaker 2: Reaction function? 72 00:03:44,080 --> 00:03:47,480 Speaker 5: Reaction function is just guidance, is just a prediction hidden 73 00:03:47,520 --> 00:03:47,760 Speaker 5: in that? 74 00:03:47,920 --> 00:03:48,560 Speaker 7: Is that true? 75 00:03:48,680 --> 00:03:50,840 Speaker 5: No, it's an understanding of which data and what can 76 00:03:50,880 --> 00:03:53,680 Speaker 5: potentially make you pull the trigger. What I also think 77 00:03:53,800 --> 00:03:56,520 Speaker 5: was interesting he kept saying that the market is a 78 00:03:56,520 --> 00:03:59,840 Speaker 5: pure input into what the market believes, that the data 79 00:04:00,120 --> 00:04:03,080 Speaker 5: showing us no. And Neildta points this out too. It 80 00:04:03,120 --> 00:04:05,680 Speaker 5: was a reaction to Fed speeches. They were indicating they 81 00:04:05,720 --> 00:04:08,720 Speaker 5: were moving any more hawkish direction. This is very difficult 82 00:04:08,720 --> 00:04:10,480 Speaker 5: to say that this market is just playing the ball 83 00:04:10,480 --> 00:04:11,280 Speaker 5: and not the referee. 84 00:04:11,360 --> 00:04:12,040 Speaker 2: Three descents. 85 00:04:12,200 --> 00:04:15,360 Speaker 3: At this Federal Reserve meeting, Race kept unchanged the confusing 86 00:04:15,400 --> 00:04:18,200 Speaker 3: news conference for the past forty five minutes. Bramo, did 87 00:04:18,200 --> 00:04:18,680 Speaker 3: you nail it? 88 00:04:19,040 --> 00:04:22,920 Speaker 5: I missed and missed by twenty seconds. I believe no, no, no, 89 00:04:23,000 --> 00:04:24,560 Speaker 5: by by seventeenth. 90 00:04:24,720 --> 00:04:26,560 Speaker 3: On how much this news conference would last, I came 91 00:04:26,600 --> 00:04:27,360 Speaker 3: pretty close. 92 00:04:27,320 --> 00:04:28,400 Speaker 7: Forty five thirty two. 93 00:04:28,440 --> 00:04:31,120 Speaker 6: It was a forty five play the Ball from Caddyshack. 94 00:04:32,320 --> 00:04:34,920 Speaker 2: You're not sure where that quote is from? Play the Ball, 95 00:04:35,000 --> 00:04:37,680 Speaker 2: not the referee? Wow, Like, well, no, I think so, 96 00:04:38,040 --> 00:04:39,600 Speaker 2: from the world. Yeah, I think so. 97 00:04:39,600 --> 00:04:40,360 Speaker 6: It was from the rural. 98 00:04:40,880 --> 00:04:41,640 Speaker 2: Okay, all right? 99 00:04:41,640 --> 00:04:41,760 Speaker 6: Two? 100 00:04:41,800 --> 00:04:44,000 Speaker 3: Your yearlds down by seven basis points. Stopped to running 101 00:04:44,040 --> 00:04:46,520 Speaker 3: the program Towston's Slock of Apolo where it's around the 102 00:04:46,520 --> 00:04:49,640 Speaker 3: table Tilston, Good afternoon, for a big challenge for you, buddy. 103 00:04:49,960 --> 00:04:52,480 Speaker 3: First up, translate the last forty five minutes. What did 104 00:04:52,480 --> 00:04:52,839 Speaker 3: your land? 105 00:04:52,960 --> 00:04:55,360 Speaker 8: Well, the first observation is that pol action you also 106 00:04:55,440 --> 00:04:57,240 Speaker 8: had three descents in April, and you also have three 107 00:04:57,240 --> 00:05:00,360 Speaker 8: descents in December, so having descents is not unusual. That's 108 00:05:00,400 --> 00:05:02,240 Speaker 8: not a watsht thing. We also had that on the Powell. 109 00:05:02,640 --> 00:05:05,640 Speaker 8: But that being said, there's very little to hang your 110 00:05:05,680 --> 00:05:08,400 Speaker 8: hat on in the market. We didn't get any guidance 111 00:05:08,400 --> 00:05:10,200 Speaker 8: in any direction, and it was also a little bit 112 00:05:10,240 --> 00:05:12,919 Speaker 8: complicated to figure out what was the basis for the 113 00:05:12,960 --> 00:05:16,560 Speaker 8: decision today, in the sense of when Mike McKee asked, well, 114 00:05:16,720 --> 00:05:18,880 Speaker 8: what are we waiting for? We didn't get a clear 115 00:05:18,920 --> 00:05:20,800 Speaker 8: answer for what exactly are we waiting for? Which was 116 00:05:20,800 --> 00:05:22,480 Speaker 8: of course, was a subtle way to try to get 117 00:05:22,560 --> 00:05:23,520 Speaker 8: some forward guidance. 118 00:05:23,760 --> 00:05:25,560 Speaker 7: But this is the part of the challenge. 119 00:05:25,600 --> 00:05:28,480 Speaker 8: We're not delivering forward guidance that when Mike and others 120 00:05:28,520 --> 00:05:31,320 Speaker 8: ask about what is it that you're watching, what exactly 121 00:05:31,360 --> 00:05:34,280 Speaker 8: should we be watching, then the answer is that we're 122 00:05:34,279 --> 00:05:36,240 Speaker 8: not really giving any guidance and the market can figure 123 00:05:36,279 --> 00:05:36,840 Speaker 8: it out on their own. 124 00:05:36,960 --> 00:05:38,760 Speaker 3: The price for that is volatility, and you could see 125 00:05:38,800 --> 00:05:40,840 Speaker 3: that in the swing in the market over the last 126 00:05:40,880 --> 00:05:43,680 Speaker 3: hour or so. Equities were positive, if they turned negative again, 127 00:05:43,880 --> 00:05:45,760 Speaker 3: bring up the bondboard if we can, and just look 128 00:05:45,800 --> 00:05:48,440 Speaker 3: at twos, tens, and thirties. This move in the yield 129 00:05:48,480 --> 00:05:50,320 Speaker 3: curve toss And I'd love to get your reaction to this, 130 00:05:50,360 --> 00:05:53,239 Speaker 3: because you were watching this closely throughout the news conference, 131 00:05:53,279 --> 00:05:55,480 Speaker 3: this move of the front end and how it informs 132 00:05:55,480 --> 00:05:57,400 Speaker 3: this move at the long end of the curve. 133 00:05:57,800 --> 00:06:00,200 Speaker 8: Well, what was interesting was that tenure rates really went 134 00:06:00,279 --> 00:06:02,400 Speaker 8: up and down like a yo yo better part of 135 00:06:02,400 --> 00:06:02,960 Speaker 8: the conference. 136 00:06:03,200 --> 00:06:04,279 Speaker 7: That's a little bit unusual. 137 00:06:04,320 --> 00:06:06,600 Speaker 8: Normally ten ure rates take a step either up or 138 00:06:06,600 --> 00:06:09,120 Speaker 8: down as we move forward in the press conference. But 139 00:06:09,200 --> 00:06:11,160 Speaker 8: the fact that there was such a swing it is 140 00:06:11,200 --> 00:06:13,400 Speaker 8: also telling you that markets are trying to figure out 141 00:06:13,760 --> 00:06:15,840 Speaker 8: are they hiking at the next meeting. So yes, from 142 00:06:15,920 --> 00:06:17,840 Speaker 8: Futures are saying now there's a seventy percent chance that 143 00:06:17,839 --> 00:06:19,520 Speaker 8: they will hike at the next meeting. But what was 144 00:06:19,520 --> 00:06:23,120 Speaker 8: also the interesting question is when he was asked about, well, 145 00:06:23,200 --> 00:06:25,880 Speaker 8: if markets are not predicting, say eighty percent ninety percent 146 00:06:25,920 --> 00:06:27,440 Speaker 8: chance of a hike going into a meeting, are you 147 00:06:27,480 --> 00:06:29,640 Speaker 8: going to deliver on that, And the answer was no, 148 00:06:29,680 --> 00:06:31,440 Speaker 8: we're not going to deliver on that. It will all 149 00:06:31,480 --> 00:06:33,760 Speaker 8: be contingent on the debate that we're having, and markets 150 00:06:33,800 --> 00:06:36,080 Speaker 8: may be pricing what they're pricing, but we're still going 151 00:06:36,120 --> 00:06:37,680 Speaker 8: to go with just what the committee is thinking. So 152 00:06:37,680 --> 00:06:40,760 Speaker 8: in that sense, the market pricing in some sense is helpful. 153 00:06:41,000 --> 00:06:43,000 Speaker 8: But at the same time, we in markets can't really 154 00:06:43,040 --> 00:06:45,640 Speaker 8: even rely on that if pictations are saying we're getting 155 00:06:45,640 --> 00:06:47,480 Speaker 8: a hike at the next meeting, that we are actually 156 00:06:47,480 --> 00:06:48,000 Speaker 8: getting a hike. 157 00:06:48,279 --> 00:06:50,920 Speaker 5: What this market is saying right now is that he's bluffing, 158 00:06:51,040 --> 00:06:52,440 Speaker 5: because if you take a look at it, it was 159 00:06:52,520 --> 00:06:54,840 Speaker 5: seventy percent chance of a September rate hike. Now it's 160 00:06:54,880 --> 00:06:57,760 Speaker 5: fifty percent chance of a September rate hike, and dropping 161 00:06:57,800 --> 00:06:59,839 Speaker 5: in real time. How much do you view the thirty 162 00:07:00,200 --> 00:07:02,640 Speaker 5: is the real tell in terms of what the market 163 00:07:02,680 --> 00:07:05,080 Speaker 5: is taking from this fad, which is potentially you're not 164 00:07:05,120 --> 00:07:06,440 Speaker 5: going to hike rates and you're going to hope that 165 00:07:06,480 --> 00:07:07,440 Speaker 5: job owning is just going to. 166 00:07:07,400 --> 00:07:07,720 Speaker 6: Do the job. 167 00:07:07,800 --> 00:07:10,080 Speaker 8: Yeah, because thirty r rates are basically saying, if you're 168 00:07:10,080 --> 00:07:12,560 Speaker 8: not hiding rates, then we are hiking rates. And that's 169 00:07:12,600 --> 00:07:14,280 Speaker 8: why thirty hour rates have just made it much more 170 00:07:14,280 --> 00:07:16,400 Speaker 8: expensive to borrow to buy a house. And as a 171 00:07:16,440 --> 00:07:19,400 Speaker 8: result of that, financial conditions are tightening. And he didn't 172 00:07:19,400 --> 00:07:21,720 Speaker 8: tighten financial conditions, but the market decided to say, well, 173 00:07:21,760 --> 00:07:23,280 Speaker 8: then we think it's time to tighten financial And. 174 00:07:23,320 --> 00:07:24,920 Speaker 6: John, I know you've got a question. The key thing 175 00:07:25,080 --> 00:07:27,320 Speaker 6: to meet John is thirty yr rates. Five twenty is 176 00:07:27,360 --> 00:07:30,480 Speaker 6: a key print. We're at five seventeen. Five twenty is 177 00:07:30,480 --> 00:07:31,520 Speaker 6: an OMG print. 178 00:07:31,680 --> 00:07:34,480 Speaker 3: The price of volatility is that what we're learning, the 179 00:07:34,520 --> 00:07:40,800 Speaker 3: price of reducing guidance, reducing communication, being very very unclear 180 00:07:40,840 --> 00:07:42,760 Speaker 3: about what on earth they're going to do with policy, 181 00:07:42,760 --> 00:07:44,640 Speaker 3: and we pin the price this morning, in this afternoon. 182 00:07:44,960 --> 00:07:47,480 Speaker 8: But that's why the task forces will be very very 183 00:07:47,480 --> 00:07:50,480 Speaker 8: interesting because they will certainly also on their communication task force. 184 00:07:50,520 --> 00:07:53,120 Speaker 8: They will have to discuss what is the best approach. 185 00:07:53,440 --> 00:07:55,560 Speaker 8: Is it the best approach to have no forward guidance? 186 00:07:55,600 --> 00:07:57,480 Speaker 8: Is it a better approach to have forward guidance. If 187 00:07:57,560 --> 00:07:59,760 Speaker 8: you do not have forward guidance, you do have more volatility. 188 00:08:00,040 --> 00:08:03,680 Speaker 8: But in fairness to Kevin Watsh's point, it did say that, well, 189 00:08:03,720 --> 00:08:06,560 Speaker 8: when we don't say anything, Margat's reacting to the data 190 00:08:06,560 --> 00:08:08,880 Speaker 8: as we go along. But the risk, of course is 191 00:08:08,920 --> 00:08:11,600 Speaker 8: that if de marget is only reacting to some data, 192 00:08:11,680 --> 00:08:13,760 Speaker 8: that then also needs to be resolved in the task 193 00:08:13,800 --> 00:08:16,280 Speaker 8: force on communication, namely, is that the right way to 194 00:08:16,280 --> 00:08:18,280 Speaker 8: do it because it runs the risk, as you're saying, John, 195 00:08:18,400 --> 00:08:19,440 Speaker 8: that you will get had mobile. 196 00:08:19,480 --> 00:08:21,240 Speaker 7: It's Citizy Turist's thrilled. 197 00:08:20,960 --> 00:08:23,760 Speaker 6: To have you here with this really odd press conference. 198 00:08:24,000 --> 00:08:26,000 Speaker 6: There was a bombshell in there where he went back 199 00:08:26,080 --> 00:08:29,080 Speaker 6: to twenty fourteen and a paper he did on the 200 00:08:29,160 --> 00:08:32,000 Speaker 6: Lucas critique. It's just slipped in there for a second, 201 00:08:32,480 --> 00:08:37,280 Speaker 6: but to academic economists that is a bombshell. What he said, 202 00:08:37,559 --> 00:08:41,360 Speaker 6: and what he's basically saying is the distrust that Robert Lucas, 203 00:08:41,400 --> 00:08:44,880 Speaker 6: the laureate had of models. Are we you know, I 204 00:08:44,920 --> 00:08:47,880 Speaker 6: think I Claudia, Sam Lisa, you mentioned this earlier, the 205 00:08:48,040 --> 00:08:52,360 Speaker 6: idea of reaction functions. Is this a new almost model 206 00:08:52,640 --> 00:08:56,920 Speaker 6: free federal reserve away to Lucas and even away from 207 00:08:56,960 --> 00:08:58,360 Speaker 6: the giant Olivia Blanchard. 208 00:08:58,640 --> 00:09:01,120 Speaker 8: It does lean into the Chicago stand for a school 209 00:09:01,160 --> 00:09:04,280 Speaker 8: of thinking Nami that when you have a policy that 210 00:09:04,360 --> 00:09:07,600 Speaker 8: you're changing, you should not run regressions and look historically 211 00:09:07,640 --> 00:09:09,319 Speaker 8: at the data up to where we are now, because 212 00:09:09,360 --> 00:09:11,440 Speaker 8: the change in the policy is going to change how 213 00:09:11,480 --> 00:09:12,720 Speaker 8: people say a new model. 214 00:09:12,800 --> 00:09:15,000 Speaker 6: Then is there a new fresh Worsh model we need 215 00:09:15,080 --> 00:09:15,560 Speaker 6: to discover? 216 00:09:15,840 --> 00:09:18,000 Speaker 8: Yeah, because I think he's saying that you can't just 217 00:09:18,080 --> 00:09:20,280 Speaker 8: look at all the models that look back, because when 218 00:09:20,320 --> 00:09:23,360 Speaker 8: we are now changing policy, then forward looking people are 219 00:09:23,360 --> 00:09:24,200 Speaker 8: going to change behavior. 220 00:09:24,200 --> 00:09:26,360 Speaker 6: And how do you determine an inflation rate? A process? 221 00:09:26,480 --> 00:09:30,120 Speaker 6: If you take dsge Richard Claire to Girdler Brown, if 222 00:09:30,160 --> 00:09:32,439 Speaker 6: you take the mathematics of that, throw it out the 223 00:09:32,480 --> 00:09:35,480 Speaker 6: window for this show. But the bottom line is inflation 224 00:09:35,679 --> 00:09:38,680 Speaker 6: is the measurement we use. How will we measure inflation 225 00:09:39,240 --> 00:09:41,240 Speaker 6: with a new Worsh Lucas model? 226 00:09:41,320 --> 00:09:42,400 Speaker 7: But that's exactly right, Tom. 227 00:09:42,440 --> 00:09:44,760 Speaker 8: That's why if you don't have the models that look 228 00:09:44,800 --> 00:09:47,480 Speaker 8: at the latest data, then what are you then looking at? 229 00:09:47,600 --> 00:09:50,320 Speaker 8: What are you then relying on for forecasting what inflation 230 00:09:50,360 --> 00:09:52,160 Speaker 8: will do going forward? So in other ways, if I'm 231 00:09:52,160 --> 00:09:54,199 Speaker 8: not allowed to look backwards and say this is where 232 00:09:54,240 --> 00:09:56,400 Speaker 8: the data is coming from, and the trend is whatever, 233 00:09:56,480 --> 00:09:58,600 Speaker 8: this or that, well, then what am I then. 234 00:09:58,880 --> 00:09:59,920 Speaker 7: Using as the guidepost? 235 00:10:00,000 --> 00:10:02,120 Speaker 8: I was thinking about what inflation will do going forward? 236 00:10:02,760 --> 00:10:06,240 Speaker 3: Basis point move on thirties there it is well most 237 00:10:06,320 --> 00:10:09,840 Speaker 3: time by eleven basis points and closing in on five nineteen. 238 00:10:10,200 --> 00:10:12,160 Speaker 3: I'm thinking of all the people that would be unhappy 239 00:10:12,240 --> 00:10:14,640 Speaker 3: with this news conference in the last sixty minutes. Forget 240 00:10:14,760 --> 00:10:18,079 Speaker 3: market participants. Imagine being at the Treasury right now and 241 00:10:18,160 --> 00:10:21,120 Speaker 3: you're Scott Besson and you're seeing yields go higher on tens, 242 00:10:21,480 --> 00:10:24,719 Speaker 3: materially higher on thirties. And then I'm thinking about the 243 00:10:24,800 --> 00:10:28,240 Speaker 3: others on the committee. I'm not an establishment guy. I'm 244 00:10:28,360 --> 00:10:30,400 Speaker 3: very very happy to blow things up and have a 245 00:10:30,480 --> 00:10:32,959 Speaker 3: new era. I've got no problem with that. I'm open 246 00:10:33,000 --> 00:10:36,199 Speaker 3: to new ideas. But I just wonder how offended some 247 00:10:36,360 --> 00:10:40,000 Speaker 3: of the sitting officials might be by how patronizing much 248 00:10:40,040 --> 00:10:42,920 Speaker 3: of that news conference was over the last sixty minutes. 249 00:10:43,320 --> 00:10:45,679 Speaker 8: Well, it's clear that the sitting committee that he came 250 00:10:45,720 --> 00:10:48,559 Speaker 8: into had already thought about basically all areas of the 251 00:10:48,640 --> 00:10:49,600 Speaker 8: task forces before. 252 00:10:49,920 --> 00:10:51,439 Speaker 7: So it's clear that the market. 253 00:10:51,200 --> 00:10:54,120 Speaker 8: Here is saying, well, if we now are getting a 254 00:10:54,240 --> 00:10:56,560 Speaker 8: day with a no hike, well then the long end 255 00:10:56,600 --> 00:10:59,040 Speaker 8: of course is moving, basically telling you that, well, this 256 00:10:59,160 --> 00:11:01,640 Speaker 8: is all about credibilite. Are you really going to follow 257 00:11:01,679 --> 00:11:03,719 Speaker 8: through on inflation? And that's of course the thing that 258 00:11:03,760 --> 00:11:06,000 Speaker 8: THEFMC needs to go home and think about. Now. The 259 00:11:06,120 --> 00:11:08,559 Speaker 8: market reaction speaks very clearly that now we need to 260 00:11:08,559 --> 00:11:11,080 Speaker 8: talk about what is the credibility of the committee because 261 00:11:11,240 --> 00:11:12,240 Speaker 8: it cannot only be talk. 262 00:11:12,520 --> 00:11:14,079 Speaker 7: You will eventually have to follow through. 263 00:11:14,120 --> 00:11:16,800 Speaker 8: And that's why the probability, given this market reaction now 264 00:11:17,160 --> 00:11:19,199 Speaker 8: has gone up quite significantly that they will have to 265 00:11:19,320 --> 00:11:20,320 Speaker 8: move at the next meeting. 266 00:11:20,440 --> 00:11:21,640 Speaker 2: But this is really important. 267 00:11:21,679 --> 00:11:23,800 Speaker 5: In other words, you're saying that the reaction the long 268 00:11:23,840 --> 00:11:25,840 Speaker 5: en of the yield curve has a challenge the credibility 269 00:11:25,880 --> 00:11:27,800 Speaker 5: of this federal reserve and will force their hand that 270 00:11:27,880 --> 00:11:30,280 Speaker 5: if they do not hike grate since September, you will 271 00:11:30,320 --> 00:11:33,440 Speaker 5: see some sort of unmooring of long term yields. 272 00:11:33,559 --> 00:11:35,800 Speaker 8: Yeah, because The risk is if you keep on just 273 00:11:35,880 --> 00:11:39,000 Speaker 8: talking tough, tough, tough, and therefore markets end up saying, well, 274 00:11:39,000 --> 00:11:40,600 Speaker 8: this is just a lot of talk and you don't 275 00:11:40,640 --> 00:11:43,120 Speaker 8: deliver on that tough talk. The risk is of course 276 00:11:43,160 --> 00:11:44,959 Speaker 8: that the long end will say, well, if you don't deliver, 277 00:11:45,240 --> 00:11:47,560 Speaker 8: we worry that you implicity allow inflation to be higher 278 00:11:47,640 --> 00:11:50,160 Speaker 8: despite the talk about not allowing inflations to be higher, 279 00:11:50,320 --> 00:11:53,040 Speaker 8: and that is indeed a question about the ultimate credibility. 280 00:11:53,400 --> 00:11:55,439 Speaker 7: Is the committee ready to vote next time? 281 00:11:55,520 --> 00:11:58,040 Speaker 8: This was not only Kevin wash This was nine members 282 00:11:58,200 --> 00:12:00,920 Speaker 8: who voted to keep interest rates at this meeting. So 283 00:12:01,040 --> 00:12:03,120 Speaker 8: at the next meeting many of them must look at 284 00:12:03,160 --> 00:12:05,319 Speaker 8: the reactions today and come to the conclusion, if we 285 00:12:05,440 --> 00:12:08,240 Speaker 8: want to keep our curitybigency, we do have to move 286 00:12:08,440 --> 00:12:11,079 Speaker 8: to make sure that inflation comes down and therefore ultimately 287 00:12:11,160 --> 00:12:12,480 Speaker 8: long rates also begin to go down. 288 00:12:12,559 --> 00:12:14,680 Speaker 3: Michael McKay was in the room. Our colleague joins us 289 00:12:14,679 --> 00:12:17,160 Speaker 3: snap for more from Washington, d C. Michael McKay, we'd 290 00:12:17,200 --> 00:12:19,079 Speaker 3: love your review of the last sixty minutes. What's the 291 00:12:19,120 --> 00:12:19,440 Speaker 3: big tank? 292 00:12:19,520 --> 00:12:19,760 Speaker 6: Kawai? 293 00:12:20,640 --> 00:12:22,560 Speaker 9: I think it's very similar to yours. A lot of words, 294 00:12:22,880 --> 00:12:26,480 Speaker 9: not much information, and the FED chair leaves with markets 295 00:12:26,720 --> 00:12:29,280 Speaker 9: probably going the wrong way from what he would like 296 00:12:29,400 --> 00:12:32,880 Speaker 9: to see at this point. The thing he wouldn't answer 297 00:12:33,200 --> 00:12:35,959 Speaker 9: is what they actually did today. He talked a lot 298 00:12:36,000 --> 00:12:39,280 Speaker 9: about talking, but when are they actually going to do something, 299 00:12:39,760 --> 00:12:43,320 Speaker 9: whether it is acknowledging that the three and a half 300 00:12:43,400 --> 00:12:47,679 Speaker 9: to three seven five rate range is adequate for the 301 00:12:47,840 --> 00:12:50,719 Speaker 9: job they want, or it's not and they need to 302 00:12:51,000 --> 00:12:54,199 Speaker 9: raise interest rates, And there was no acknowledgment of what 303 00:12:54,360 --> 00:12:56,760 Speaker 9: the case was really on either side. It was a 304 00:12:56,800 --> 00:13:00,240 Speaker 9: lot of talk about while we're talking, and that don't 305 00:13:00,280 --> 00:13:02,280 Speaker 9: get the markets anywhere, and people aren't going to be 306 00:13:02,440 --> 00:13:03,680 Speaker 9: very happy with what they heard. 307 00:13:03,720 --> 00:13:06,120 Speaker 3: I think, Mike, there was an interesting exchange and you 308 00:13:06,240 --> 00:13:08,600 Speaker 3: were part of it too when he was asked why 309 00:13:08,640 --> 00:13:10,880 Speaker 3: didn't you raise interest rates and he basically said, well, 310 00:13:11,480 --> 00:13:13,760 Speaker 3: I think rates did rise, and he talked about the 311 00:13:13,840 --> 00:13:16,240 Speaker 3: move in the last forty two days, and Mike, rates 312 00:13:16,360 --> 00:13:19,240 Speaker 3: rose because for many people they thought this FED might 313 00:13:19,320 --> 00:13:22,480 Speaker 3: follow through on the data that we've been seeing over 314 00:13:22,559 --> 00:13:26,199 Speaker 3: the subsequent few weeks, follow through on some of the 315 00:13:26,280 --> 00:13:28,520 Speaker 3: FED speak that we'd seen from the likes of Walla, 316 00:13:28,600 --> 00:13:30,800 Speaker 3: the likes of Hammack and others too, and Mike and 317 00:13:30,880 --> 00:13:32,920 Speaker 3: then it got to this moment where I just thought, Okay, 318 00:13:33,440 --> 00:13:35,840 Speaker 3: is the FED share outsource in monetary policy to the market, 319 00:13:36,360 --> 00:13:38,120 Speaker 3: And if he is, but I don't think he's going 320 00:13:38,160 --> 00:13:40,640 Speaker 3: to hike interest rates. We'll take all that back and Mike, 321 00:13:40,720 --> 00:13:42,160 Speaker 3: then we see this move in the bond market, and 322 00:13:42,200 --> 00:13:43,360 Speaker 3: I don't want to have made too much of a 323 00:13:43,400 --> 00:13:44,840 Speaker 3: big deal of this move. We can take it back 324 00:13:44,880 --> 00:13:47,760 Speaker 3: tomorrow and the next week or so, but it's material. 325 00:13:47,880 --> 00:13:49,679 Speaker 3: You're up eleven basis points at the long end of 326 00:13:49,679 --> 00:13:51,880 Speaker 3: the curve on thirties. And Mike, the conversation we're having 327 00:13:51,880 --> 00:13:55,080 Speaker 3: around the table, do you believe that is a market 328 00:13:55,160 --> 00:13:58,080 Speaker 3: beginning to question the credibility of this institution. 329 00:14:00,000 --> 00:14:02,040 Speaker 9: I don't know if that's necessarily true because it's still 330 00:14:02,160 --> 00:14:07,079 Speaker 9: so early in his chairmanship, but it is an indication 331 00:14:07,520 --> 00:14:10,080 Speaker 9: that the market disagrees with what the FED is doing. 332 00:14:10,200 --> 00:14:12,920 Speaker 9: The market thinks at this point that interest rates should 333 00:14:12,960 --> 00:14:16,839 Speaker 9: be higher. And whether or not you believe it's because 334 00:14:16,880 --> 00:14:21,120 Speaker 9: they're only looking at the data, it is telling the 335 00:14:21,200 --> 00:14:22,480 Speaker 9: market something that data. 336 00:14:22,960 --> 00:14:25,200 Speaker 2: I suspect that the markets are still. 337 00:14:25,000 --> 00:14:28,000 Speaker 9: Looking at the data and putting it in context of, well, 338 00:14:28,040 --> 00:14:29,040 Speaker 9: what's the FED going to do? 339 00:14:29,120 --> 00:14:29,440 Speaker 6: About it. 340 00:14:29,520 --> 00:14:33,320 Speaker 9: Because the FED controls the benchmark lending rate for the country. 341 00:14:33,440 --> 00:14:36,480 Speaker 9: The markets don't. The markets react, the markets move around, 342 00:14:36,960 --> 00:14:38,480 Speaker 9: but the benchmark rate is going to be set by 343 00:14:38,480 --> 00:14:40,640 Speaker 9: the Fed, and the Fed is going to be reacting 344 00:14:40,760 --> 00:14:43,400 Speaker 9: to the conditions in the economy. And we got nothing 345 00:14:43,480 --> 00:14:46,040 Speaker 9: on what he thought the conditions in the economy are 346 00:14:46,320 --> 00:14:50,080 Speaker 9: or would be. And we got nothing basically on why 347 00:14:50,200 --> 00:14:53,480 Speaker 9: the markets might be right or wrong and whether that's 348 00:14:53,720 --> 00:14:59,080 Speaker 9: an adequate response, an adequate measure to keep inflation under control. 349 00:14:59,440 --> 00:14:59,920 Speaker 2: Thank you about it. 350 00:15:00,040 --> 00:15:02,640 Speaker 3: These comments from the president certainly want how so, we've 351 00:15:02,680 --> 00:15:04,760 Speaker 3: got the White House review of things they've just published. 352 00:15:04,800 --> 00:15:08,040 Speaker 3: This is from the president. Kevin Walsh is fantastic. Wash 353 00:15:08,120 --> 00:15:11,000 Speaker 3: has a board. It's a political one. Wassh would love 354 00:15:11,080 --> 00:15:14,760 Speaker 3: to see lower interest rates. Given the move we're seeing 355 00:15:14,800 --> 00:15:17,680 Speaker 3: on the screen right now, thirty yields up by eleven 356 00:15:17,760 --> 00:15:21,560 Speaker 3: basis points. Those comments from the President this afternoon will 357 00:15:21,640 --> 00:15:22,000 Speaker 3: not help. 358 00:15:22,280 --> 00:15:24,440 Speaker 5: Thirty year yields have just broken through the highest levels 359 00:15:24,480 --> 00:15:26,440 Speaker 5: going back to two thousand and seven. Just to give 360 00:15:26,440 --> 00:15:28,760 Speaker 5: you a sense right now of the bond vigilanteism that 361 00:15:28,800 --> 00:15:31,440 Speaker 5: you're seeing in bond markets, because they are seeing a 362 00:15:31,560 --> 00:15:36,160 Speaker 5: more potentially politically motivated, not necessarily that being the case, 363 00:15:36,560 --> 00:15:40,280 Speaker 5: but given the lack of clarity, a lot of circular talk, 364 00:15:40,960 --> 00:15:43,880 Speaker 5: the lack of any kind of straight answers about reaction function, 365 00:15:44,000 --> 00:15:46,360 Speaker 5: are exactly why they remained on hold. And then the 366 00:15:46,640 --> 00:15:49,400 Speaker 5: president's comments are not a good brew. 367 00:15:49,320 --> 00:15:51,400 Speaker 3: For this particular lime Attol and Bremo to your point, 368 00:15:51,440 --> 00:15:53,080 Speaker 3: I think we're both on the same page about this. 369 00:15:53,680 --> 00:15:56,160 Speaker 3: I don't believe that Kevin Wassh is doing the president's 370 00:15:56,160 --> 00:15:59,960 Speaker 3: bidding right now. He's widely backed by several establishment figures 371 00:16:00,000 --> 00:16:01,640 Speaker 3: when he got the nomination for this job. 372 00:16:01,920 --> 00:16:02,680 Speaker 2: I'm thinking of one. 373 00:16:02,720 --> 00:16:05,360 Speaker 3: I can't think of anyone more establishment than Mark Calmy, 374 00:16:05,800 --> 00:16:09,120 Speaker 3: the Canadian Prime minister, who gave him a pretty fantastic 375 00:16:09,280 --> 00:16:11,880 Speaker 3: endorsement when he got selected for the position. I don't 376 00:16:11,880 --> 00:16:14,000 Speaker 3: think he's doing the president's bidding, but the optics of 377 00:16:14,040 --> 00:16:17,600 Speaker 3: it absolutely stink. When you have a problem with inflation 378 00:16:17,720 --> 00:16:19,920 Speaker 3: and you're saying you're committed to doing something about it, 379 00:16:20,000 --> 00:16:22,120 Speaker 3: but don't follow through and then highlight the market that's 380 00:16:22,160 --> 00:16:24,240 Speaker 3: doing the work for you, and now the market is 381 00:16:24,280 --> 00:16:25,880 Speaker 3: beginning to push back, and at the same time, the 382 00:16:25,960 --> 00:16:28,840 Speaker 3: President's putting out words saying that this is actually what 383 00:16:29,000 --> 00:16:29,880 Speaker 3: Kevin Wassh wants. 384 00:16:29,960 --> 00:16:32,680 Speaker 2: The optics of that, the backdrop for it not. 385 00:16:32,760 --> 00:16:35,080 Speaker 5: A good one, and conflicting the idea of a FED 386 00:16:35,160 --> 00:16:38,280 Speaker 5: funds rate with the market rate, and saying that there 387 00:16:38,360 --> 00:16:40,600 Speaker 5: was something that happened and that we have done something 388 00:16:40,680 --> 00:16:43,920 Speaker 5: because that moved the market, saying we're not that silly, 389 00:16:44,080 --> 00:16:45,480 Speaker 5: we're not that ignorant. 390 00:16:45,680 --> 00:16:46,680 Speaker 2: We know how this is done. 391 00:16:46,720 --> 00:16:50,320 Speaker 5: It was an anticipatory It was an anticipatory market and 392 00:16:50,360 --> 00:16:51,880 Speaker 5: if you're not going to make good on that, we're 393 00:16:51,920 --> 00:16:52,800 Speaker 5: going to call your bluff. 394 00:16:53,320 --> 00:16:55,840 Speaker 6: Jen, this is an historic more. But the charts I'm 395 00:16:55,880 --> 00:16:57,920 Speaker 6: seeing on the screen right now, John, I've never seen 396 00:16:58,000 --> 00:17:01,320 Speaker 6: this is basically was called a rever vers operation twist 397 00:17:01,480 --> 00:17:04,640 Speaker 6: in real time. We've never seen it in what's key here? 398 00:17:05,040 --> 00:17:07,680 Speaker 6: Which tourist and I know you've got Stephanie Roth and Deeck. 399 00:17:08,119 --> 00:17:11,119 Speaker 6: The first and second derivatives of this move have to 400 00:17:11,200 --> 00:17:15,920 Speaker 6: be digested by a huge body of the American economy. 401 00:17:16,119 --> 00:17:19,400 Speaker 6: Let's just start with a housing market as just one example. 402 00:17:19,440 --> 00:17:21,280 Speaker 3: Well, let's just start with what we thought this was 403 00:17:21,320 --> 00:17:24,040 Speaker 3: all about. There was a belief that we were reducing 404 00:17:24,200 --> 00:17:27,480 Speaker 3: forward guidance so that we could introduce some volatility into 405 00:17:27,520 --> 00:17:29,480 Speaker 3: the front end of the curve, which would help cap 406 00:17:30,280 --> 00:17:33,560 Speaker 3: longer end yields. That you'd start to be more uncertain 407 00:17:33,600 --> 00:17:35,560 Speaker 3: about what this fed might do, but in a different 408 00:17:35,600 --> 00:17:38,040 Speaker 3: way that maybe the outcome would be more hawkish than 409 00:17:38,080 --> 00:17:41,000 Speaker 3: it would have been otherwise. And what we saw more recently, Lisa, 410 00:17:41,200 --> 00:17:43,680 Speaker 3: was that dynamic people were talking about it. This would 411 00:17:43,720 --> 00:17:46,320 Speaker 3: contribute to longer yields over time at the longer end 412 00:17:46,760 --> 00:17:48,920 Speaker 3: of the curve, lower yields over time. 413 00:17:49,040 --> 00:17:50,480 Speaker 2: That's not what you see this afternoon. 414 00:17:50,800 --> 00:17:53,000 Speaker 3: When you drop by five basis points at the front 415 00:17:53,119 --> 00:17:56,000 Speaker 3: end and you are seeing a move of eleven at 416 00:17:56,040 --> 00:17:59,000 Speaker 3: the long end through five twenty on thirties. 417 00:17:59,359 --> 00:18:01,560 Speaker 2: That's not good. But that is not the outcome people 418 00:18:01,600 --> 00:18:03,320 Speaker 2: we're looking for. No volatility. 419 00:18:03,480 --> 00:18:05,560 Speaker 5: If you truly are potentially on the fence and are 420 00:18:05,640 --> 00:18:07,439 Speaker 5: going to move, is one thing. But if you've got 421 00:18:07,480 --> 00:18:09,080 Speaker 5: a parent who's saying, if you do that again, I'm 422 00:18:09,080 --> 00:18:10,520 Speaker 5: going to turn the car right around and go home, 423 00:18:10,840 --> 00:18:13,240 Speaker 5: and the kids keeps doing that, and the parent keeps 424 00:18:13,320 --> 00:18:15,560 Speaker 5: driving straight to go to the amusement park, well guess what, 425 00:18:15,640 --> 00:18:17,480 Speaker 5: the kid's going to keep goofing around in the back seat, 426 00:18:17,520 --> 00:18:19,679 Speaker 5: and that's what's going to keep happening, because ultimately, if 427 00:18:19,720 --> 00:18:21,679 Speaker 5: you don't believe that they're actually going to do anything, 428 00:18:22,200 --> 00:18:23,960 Speaker 5: why should you start to prepare and price that in. 429 00:18:24,040 --> 00:18:27,080 Speaker 2: That right there, that's experience, take case, that's experience. That's 430 00:18:27,119 --> 00:18:29,160 Speaker 2: whys real world experience. 431 00:18:29,520 --> 00:18:31,480 Speaker 6: When you're driving and you lean over to. 432 00:18:34,880 --> 00:18:36,359 Speaker 2: More than one need to have. 433 00:18:38,240 --> 00:18:41,359 Speaker 3: Definitely, Wroth of Wolf Research joins a snaff and more. Stephanie, welcome. 434 00:18:41,480 --> 00:18:45,000 Speaker 3: It's a confusing one. Sometimes this is straightforward. The last 435 00:18:45,119 --> 00:18:46,879 Speaker 3: hour is anything. But what's your take away? 436 00:18:47,680 --> 00:18:49,680 Speaker 10: Yeah, I mean, I think markets just don't believe them. 437 00:18:49,720 --> 00:18:51,360 Speaker 1: The thing is, I do think that the FED will 438 00:18:51,400 --> 00:18:53,680 Speaker 1: ultimate that the data will ultimately bail out the FED 439 00:18:53,720 --> 00:18:56,680 Speaker 1: to some extent, because the market saying we don't believe 440 00:18:56,840 --> 00:18:58,760 Speaker 1: that the FED is necessarily going to be hiking in September, 441 00:18:59,640 --> 00:19:02,119 Speaker 1: you know, the raises his inflation expectations. That does exactly 442 00:19:02,200 --> 00:19:04,680 Speaker 1: the opposite of exactly what worsh had set out to do. 443 00:19:04,800 --> 00:19:07,679 Speaker 10: Today. If we do end up seeing inflation data come 444 00:19:07,720 --> 00:19:09,719 Speaker 10: in a little bit softer, that might bail him out. 445 00:19:09,800 --> 00:19:12,560 Speaker 1: He's basically rather than doing latchful thinking, he's really doing 446 00:19:12,640 --> 00:19:14,800 Speaker 1: wishful thinking. If the data ends up coming in line 447 00:19:14,840 --> 00:19:17,119 Speaker 1: with his side. This may all work out, but if not, 448 00:19:17,240 --> 00:19:18,280 Speaker 1: it could end pretty poorly. 449 00:19:18,560 --> 00:19:21,080 Speaker 5: You said his side, and this is important, Stephanie. It 450 00:19:21,160 --> 00:19:24,040 Speaker 5: seems like the takeaway is that Kevin worsh is much 451 00:19:24,080 --> 00:19:26,240 Speaker 5: more dubbish than people previously thought. Do you think that 452 00:19:26,320 --> 00:19:27,480 Speaker 5: that's the correct interpretation. 453 00:19:28,480 --> 00:19:28,680 Speaker 7: Yeah. 454 00:19:28,720 --> 00:19:30,520 Speaker 1: I think he didn't want to say anything because he 455 00:19:30,560 --> 00:19:33,040 Speaker 1: didn't want to make it clear that he is, you know, 456 00:19:33,119 --> 00:19:34,400 Speaker 1: in favor of staying unfold. 457 00:19:34,480 --> 00:19:37,040 Speaker 10: He wants to make to have markets do the work 458 00:19:37,080 --> 00:19:37,399 Speaker 10: for him. 459 00:19:37,480 --> 00:19:39,960 Speaker 1: The problem is, like you all were talking about earlier, 460 00:19:40,200 --> 00:19:43,000 Speaker 1: that might have worked up until now being at being 461 00:19:43,640 --> 00:19:45,440 Speaker 1: following what we've heard today, the markets are going to 462 00:19:45,480 --> 00:19:46,199 Speaker 1: be the exact opposite. 463 00:19:46,200 --> 00:19:47,600 Speaker 10: And then what is he going to say in September? 464 00:19:47,840 --> 00:19:50,800 Speaker 1: So I think this is the market realizing that the 465 00:19:51,160 --> 00:19:54,879 Speaker 1: first FMC was him trying to establish credibility, trying to 466 00:19:54,920 --> 00:19:57,560 Speaker 1: come across as hawkish, and now Marcus are just not 467 00:19:57,640 --> 00:19:58,040 Speaker 1: buying it. 468 00:19:58,480 --> 00:20:00,600 Speaker 6: Tursted Sluck. I've got the thirty year at a five 469 00:20:00,680 --> 00:20:03,000 Speaker 6: point two zero rounded up to five point two to one. 470 00:20:03,400 --> 00:20:05,840 Speaker 6: We can do that this late in the day. I 471 00:20:06,480 --> 00:20:08,200 Speaker 6: have us moved into thirty years old. I'm up to 472 00:20:08,320 --> 00:20:14,040 Speaker 6: standard deviations. How will finance obviously your good people will apollow, 473 00:20:14,160 --> 00:20:18,160 Speaker 6: but how will finance adapt to what they heard, adapt 474 00:20:18,200 --> 00:20:21,680 Speaker 6: to this reverse twist? I've never seen it? How do 475 00:20:21,800 --> 00:20:23,240 Speaker 6: you adapt tomorrow morning? 476 00:20:23,520 --> 00:20:25,480 Speaker 8: Well, this is a very historic day in the sense 477 00:20:25,520 --> 00:20:27,440 Speaker 8: that we have seen a very significant steepening of the 478 00:20:27,520 --> 00:20:30,040 Speaker 8: curve that is quite dramatic. I'm trying to think back 479 00:20:30,080 --> 00:20:32,359 Speaker 8: when we've ever seen like twenty basis points move in 480 00:20:32,440 --> 00:20:33,840 Speaker 8: the curve in this deepness like this. 481 00:20:34,200 --> 00:20:35,160 Speaker 7: It is really unusual. 482 00:20:35,359 --> 00:20:37,800 Speaker 8: And the answer to your question is that there's sensitive 483 00:20:37,840 --> 00:20:40,879 Speaker 8: components of GDP that are interest sensitive. Of course, housing 484 00:20:40,920 --> 00:20:44,040 Speaker 8: and autos will probably continue to struggle. They have struggled 485 00:20:44,040 --> 00:20:45,720 Speaker 8: for quite some time when interest rates up in high 486 00:20:46,040 --> 00:20:48,720 Speaker 8: but the tailwinds to growth coming from AI spending, coming 487 00:20:48,800 --> 00:20:50,800 Speaker 8: from the one pepot of a bill coming from the 488 00:20:50,840 --> 00:20:53,800 Speaker 8: home shoring, those things will still continue to see tailwind 489 00:20:53,840 --> 00:20:56,160 Speaker 8: That's why we might get in the next half hour 490 00:20:56,240 --> 00:20:58,879 Speaker 8: when the news come from both the hyperscalers today and tomorrow. 491 00:20:59,200 --> 00:21:01,680 Speaker 8: This would also create more volatility because that will also 492 00:21:01,720 --> 00:21:03,880 Speaker 8: begin to become a macro event. If that does begin 493 00:21:03,960 --> 00:21:06,240 Speaker 8: to send signals around what is the outpoot for the 494 00:21:06,280 --> 00:21:08,440 Speaker 8: broad economy, especially around the data center. 495 00:21:08,280 --> 00:21:10,000 Speaker 3: Build out Tustin, Can we talk about the price of 496 00:21:10,040 --> 00:21:13,040 Speaker 3: the data center build out and the capital raising that 497 00:21:13,080 --> 00:21:16,600 Speaker 3: we're saying worldwide right now, thirty eight yields up eleven 498 00:21:16,680 --> 00:21:19,120 Speaker 3: basis points. That's before we even find out the capex 499 00:21:19,200 --> 00:21:21,400 Speaker 3: and tentions of some major companies in the next twenty 500 00:21:21,440 --> 00:21:24,280 Speaker 3: four hours or so. How much price heer does the 501 00:21:24,359 --> 00:21:26,720 Speaker 3: cost of capital get with this federal reserve. 502 00:21:27,119 --> 00:21:29,480 Speaker 8: Well, that's exactly the discussion because not only, of course, 503 00:21:29,520 --> 00:21:32,040 Speaker 8: have spreads on hyperscalers widen out and CDs as also 504 00:21:32,119 --> 00:21:32,600 Speaker 8: widened out. 505 00:21:32,720 --> 00:21:34,840 Speaker 7: Now the base rate has also moved up and in this. 506 00:21:34,920 --> 00:21:37,480 Speaker 8: Case actually much more than spreads and widen out, So 507 00:21:37,560 --> 00:21:40,159 Speaker 8: they're all in yield for financings. Of course, in the 508 00:21:40,240 --> 00:21:44,320 Speaker 8: public market for hyperscalers have definitely increased quite significantly. The 509 00:21:44,440 --> 00:21:47,159 Speaker 8: issue now becomes, well, if your returns in ai I 510 00:21:47,280 --> 00:21:50,119 Speaker 8: expect it to be like ten fifteen percent or higher, Well, 511 00:21:50,160 --> 00:21:52,840 Speaker 8: then these things are relatively small peanuts relative to the 512 00:21:52,880 --> 00:21:54,800 Speaker 8: big picture of the returns that are going to come along. 513 00:21:55,000 --> 00:21:58,080 Speaker 8: But ultimately that discussion is all about the economics one 514 00:21:58,119 --> 00:22:00,879 Speaker 8: on one, namely, what is the marginal revenue you expect 515 00:22:00,920 --> 00:22:03,720 Speaker 8: to generate and what is the module cost of producing 516 00:22:03,800 --> 00:22:04,640 Speaker 8: that piece of revenue. 517 00:22:04,760 --> 00:22:06,480 Speaker 7: So, for compute, the debate is. 518 00:22:06,480 --> 00:22:08,439 Speaker 8: Around, well, now that rates have gone up and all 519 00:22:08,520 --> 00:22:10,960 Speaker 8: in yields have gone up, is the case that we're 520 00:22:11,000 --> 00:22:12,960 Speaker 8: reaching a level of all in yields or all in 521 00:22:13,080 --> 00:22:15,600 Speaker 8: cost of capsule that's beginning to become more problematic for 522 00:22:15,600 --> 00:22:16,280 Speaker 8: the hyperscaler. 523 00:22:16,359 --> 00:22:17,880 Speaker 7: So far that has not been the case. 524 00:22:18,160 --> 00:22:19,960 Speaker 8: But the question is, of course, over the next twenty 525 00:22:20,000 --> 00:22:23,240 Speaker 8: four hours whether we get any either confirmation that that's happening, 526 00:22:23,560 --> 00:22:26,720 Speaker 8: or whether we in the contrary, beginning to see still 527 00:22:26,960 --> 00:22:30,240 Speaker 8: more upside risks to more data center build out just continuing. 528 00:22:30,320 --> 00:22:31,199 Speaker 2: And this is the reason why. 529 00:22:31,359 --> 00:22:33,360 Speaker 5: And Stephani, I'd love your thought and what Torsen said 530 00:22:33,400 --> 00:22:36,359 Speaker 5: earlier that all of this is not a virtuous cycle 531 00:22:36,400 --> 00:22:37,960 Speaker 5: and it's not something that FED wants to see. And 532 00:22:38,040 --> 00:22:40,800 Speaker 5: so Torsen was saying that he thinks that the probability 533 00:22:40,800 --> 00:22:42,920 Speaker 5: of a September rate hike is even greater now to 534 00:22:43,040 --> 00:22:45,120 Speaker 5: try to control the long end of the yield curve 535 00:22:45,160 --> 00:22:48,040 Speaker 5: and prevent this sort of higher borrowing costs for some 536 00:22:48,160 --> 00:22:49,800 Speaker 5: of these hyperscalers in the build out. 537 00:22:50,040 --> 00:22:52,199 Speaker 2: Do you agree with that, I. 538 00:22:52,240 --> 00:22:53,800 Speaker 10: Mean, I do if the data don't improve. 539 00:22:53,920 --> 00:22:57,080 Speaker 1: So if we're sitting here in September and the data 540 00:22:57,200 --> 00:22:59,560 Speaker 1: just continue to remain firm, especially on the inflation side, 541 00:23:00,000 --> 00:23:02,200 Speaker 1: also on the growth in the kepex data in terms 542 00:23:02,200 --> 00:23:06,560 Speaker 1: of capa AI related catbec just continuing to move higher, 543 00:23:07,000 --> 00:23:09,879 Speaker 1: then yeah, absolutely that increases the odds that they're going 544 00:23:09,920 --> 00:23:10,920 Speaker 1: to ultimately be hiking. 545 00:23:11,320 --> 00:23:14,119 Speaker 10: I do think that we'll see seasonality and the inflation. 546 00:23:13,880 --> 00:23:17,080 Speaker 1: Data and a bit of a cooling such a thing 547 00:23:17,400 --> 00:23:19,840 Speaker 1: that this may all work out, such as that doesn't 548 00:23:19,840 --> 00:23:23,440 Speaker 1: actually have to cut September, and in that environment, it 549 00:23:23,600 --> 00:23:25,159 Speaker 1: will do so in an environment that's a little bit 550 00:23:25,160 --> 00:23:27,840 Speaker 1: more market friendly. But if that forecast is wrong, then 551 00:23:27,920 --> 00:23:30,600 Speaker 1: absolutely they're going to This makes them even more likely 552 00:23:30,680 --> 00:23:32,480 Speaker 1: to have to be cutting in September, because it tells 553 00:23:32,480 --> 00:23:33,760 Speaker 1: you that they're making a policy mistake. 554 00:23:33,920 --> 00:23:35,600 Speaker 6: I look at this moment, John, of course, I got 555 00:23:35,680 --> 00:23:38,160 Speaker 6: to go to the quality, full faith, and credit documents. 556 00:23:38,240 --> 00:23:42,240 Speaker 6: SpaceX is thirty year bond six point sixty five percent. 557 00:23:42,359 --> 00:23:45,080 Speaker 6: We're enjoying it at seven point eight percent right now, 558 00:23:45,280 --> 00:23:47,919 Speaker 6: not quite through a new low. But again, the mystery 559 00:23:48,000 --> 00:23:51,160 Speaker 6: to me is the permeation of this through Wall Street. 560 00:23:51,240 --> 00:23:54,639 Speaker 6: It's not just about Fom's Lucas critique and all that. 561 00:23:55,280 --> 00:23:56,760 Speaker 6: What does this do to Wall Street? 562 00:23:57,200 --> 00:24:00,680 Speaker 2: Starting in Asia here in X number of hours and SpaceX. 563 00:24:00,800 --> 00:24:02,680 Speaker 3: So they came out with the dead issue in the 564 00:24:02,760 --> 00:24:06,720 Speaker 3: last month or so, and the demand was softer, below average, 565 00:24:07,080 --> 00:24:09,879 Speaker 3: and then we had Amazon follow up TK and concessions 566 00:24:09,920 --> 00:24:12,800 Speaker 3: were larger, and then you start to see spreads widen 567 00:24:12,880 --> 00:24:15,119 Speaker 3: out in the secondary market to across a number of 568 00:24:15,240 --> 00:24:17,600 Speaker 3: tech names as well. Tom and We've been talking about 569 00:24:17,640 --> 00:24:21,480 Speaker 3: this dynamic for a while, the crowding out of the market, 570 00:24:21,840 --> 00:24:24,399 Speaker 3: that there is a race to raise capital, and that 571 00:24:24,840 --> 00:24:27,480 Speaker 3: we've been worrying about the additional supply coming from the 572 00:24:27,560 --> 00:24:30,560 Speaker 3: treasury for the best part of fifteen twenty years. 573 00:24:31,080 --> 00:24:31,680 Speaker 2: The deficit. 574 00:24:32,520 --> 00:24:35,720 Speaker 3: It was okay at the time because not everybody else 575 00:24:35,840 --> 00:24:38,480 Speaker 3: was doing the same thing. Now we talked about this 576 00:24:38,520 --> 00:24:40,800 Speaker 3: already earlier in the program. Germany has gone away from 577 00:24:40,840 --> 00:24:44,520 Speaker 3: fiscal prudence to borrowing and spending. Germany has moved onto 578 00:24:44,560 --> 00:24:47,720 Speaker 3: something else. Japan has as well. They've had decades of deflation. 579 00:24:47,800 --> 00:24:50,800 Speaker 3: They now have inflation anchors away there for that bond 580 00:24:50,880 --> 00:24:53,640 Speaker 3: market yields up. We've now got the hyper scalers moving 581 00:24:53,680 --> 00:24:56,960 Speaker 3: away from buying their own equity to negative free cash 582 00:24:57,000 --> 00:24:59,720 Speaker 3: flow and now issuing equity and issuing debt. That's a 583 00:24:59,760 --> 00:25:02,560 Speaker 3: di supply here, there, and everywhere and every way you look. 584 00:25:02,680 --> 00:25:05,680 Speaker 3: Right now, there are increased capital demands. So to have 585 00:25:05,800 --> 00:25:07,680 Speaker 3: the fed chare perform in the way he has in 586 00:25:07,720 --> 00:25:11,000 Speaker 3: the last sixty minutes to see the market reaction to 587 00:25:11,080 --> 00:25:12,959 Speaker 3: that that's led to high yields at the long end 588 00:25:13,000 --> 00:25:16,680 Speaker 3: at a curve. To have that in this moment laser 589 00:25:16,760 --> 00:25:20,000 Speaker 3: things get tied to, things get harder, and yields go up, 590 00:25:20,040 --> 00:25:21,840 Speaker 3: and the price for capital gets more expensive. 591 00:25:22,240 --> 00:25:24,320 Speaker 5: The value of the dollar on the global stage goes down, 592 00:25:24,359 --> 00:25:26,080 Speaker 5: and we're seeing that in a pretty big way. It 593 00:25:26,240 --> 00:25:28,040 Speaker 5: is notable to see the long end of the yield 594 00:25:28,080 --> 00:25:30,680 Speaker 5: curve in particular perform this way. And has Torsen made 595 00:25:30,680 --> 00:25:33,000 Speaker 5: a good point about the hyperscalers. They have been issuing 596 00:25:33,080 --> 00:25:35,040 Speaker 5: disproportionately at the long end of the yield curve. They 597 00:25:35,080 --> 00:25:37,720 Speaker 5: have issued more on the long end than the US government, 598 00:25:37,960 --> 00:25:40,080 Speaker 5: And you have to wonder how much this is going 599 00:25:40,160 --> 00:25:43,240 Speaker 5: to constrain some of the productivity and the virtuous aspects 600 00:25:43,520 --> 00:25:46,200 Speaker 5: of what a lot of people are expecting and prolong 601 00:25:46,320 --> 00:25:49,080 Speaker 5: the uncomfortable mismatch period that he was talking about. 602 00:25:49,359 --> 00:25:51,439 Speaker 8: That's also the additional challenge that if you take your 603 00:25:51,520 --> 00:25:53,679 Speaker 8: textbook out and interest rates go up in the long end, 604 00:25:54,040 --> 00:25:56,520 Speaker 8: the dollars should be going up. So that's why you're 605 00:25:56,520 --> 00:25:57,840 Speaker 8: in now beginning to ask, well, the's a dollar and 606 00:25:57,880 --> 00:25:59,600 Speaker 8: our beginning to react to front end rates. 607 00:26:00,200 --> 00:26:02,480 Speaker 7: It is long end that moves the dollar most. 608 00:26:02,560 --> 00:26:04,920 Speaker 8: So that's a lot of considerations also around why is 609 00:26:04,960 --> 00:26:07,240 Speaker 8: the dollar going down so much at the same time 610 00:26:07,359 --> 00:26:09,879 Speaker 8: while short rates are moving down and long rates are 611 00:26:09,920 --> 00:26:10,240 Speaker 8: moving up. 612 00:26:10,440 --> 00:26:13,359 Speaker 3: Stephanie, in the next two weeks will all be very 613 00:26:13,480 --> 00:26:16,320 Speaker 3: focused on the Fed Speak. We were calling this a 614 00:26:16,400 --> 00:26:20,119 Speaker 3: three part act all day. The statements one act, the 615 00:26:20,200 --> 00:26:22,920 Speaker 3: news conference is another. It was quite an act. The 616 00:26:23,040 --> 00:26:25,879 Speaker 3: third act is going to be the speeches of all 617 00:26:25,960 --> 00:26:29,480 Speaker 3: the officials that haven't had their say yet. What are 618 00:26:29,520 --> 00:26:32,320 Speaker 3: you looking for from the Fed speak in the coming weeks. 619 00:26:33,240 --> 00:26:35,800 Speaker 1: Yeah, so we're certainly going to hear from those that descended, 620 00:26:35,960 --> 00:26:38,840 Speaker 1: why did they dissent? Because worst certainly didn't really answer 621 00:26:38,880 --> 00:26:42,439 Speaker 1: that question, So we'll here, we'll certainly hear that argument. 622 00:26:42,760 --> 00:26:45,440 Speaker 1: And I'm going to be looking for you know, eventually 623 00:26:45,440 --> 00:26:47,320 Speaker 1: in the next speech by Waller, because that's going to 624 00:26:47,359 --> 00:26:48,879 Speaker 1: give us a sense of what did the core of 625 00:26:48,920 --> 00:26:52,359 Speaker 1: the committee actually, what is he thinking. He's been amongst 626 00:26:52,400 --> 00:26:55,680 Speaker 1: the most transparent and represents more of the middle folks 627 00:26:55,720 --> 00:26:57,000 Speaker 1: on the committee, and that's going to give us a 628 00:26:57,040 --> 00:26:58,960 Speaker 1: much better sense of what are they thinking, what are 629 00:26:59,000 --> 00:27:01,000 Speaker 1: they leaning, and what does he think about what price 630 00:27:01,080 --> 00:27:03,960 Speaker 1: action is doing? Because he is somebody who's very willing 631 00:27:04,040 --> 00:27:06,879 Speaker 1: to give his reaction function and his thoughts on what 632 00:27:07,119 --> 00:27:08,600 Speaker 1: markets and the data are going to do. 633 00:27:08,760 --> 00:27:11,639 Speaker 6: That's right where I wanted to go. Stephanie Tourresten Slock. 634 00:27:11,840 --> 00:27:15,159 Speaker 6: How does chairmansh react to what we're seeing on the 635 00:27:15,240 --> 00:27:18,960 Speaker 6: screen the data And the fact is he's going to 636 00:27:19,000 --> 00:27:22,560 Speaker 6: have to amend the way he speaks the concepts he 637 00:27:22,720 --> 00:27:27,520 Speaker 6: speaks the McKinsey mba of it and talk to academic economists. 638 00:27:27,760 --> 00:27:29,359 Speaker 8: I think that it's not only him, it is the 639 00:27:29,560 --> 00:27:31,600 Speaker 8: nine versus three on the committee here that there were 640 00:27:31,680 --> 00:27:34,359 Speaker 8: nine members who voted to keep raids constant today. So 641 00:27:34,520 --> 00:27:36,680 Speaker 8: the consideration for the whole committee must be to go 642 00:27:36,760 --> 00:27:39,280 Speaker 8: home and think hard about how do we communicate this? 643 00:27:39,600 --> 00:27:41,639 Speaker 7: Do we do this before their meeting? 644 00:27:41,880 --> 00:27:43,720 Speaker 8: What do we say at the press conference, how do 645 00:27:43,800 --> 00:27:46,080 Speaker 8: you communicate in this statement, because it is clear that 646 00:27:46,200 --> 00:27:48,560 Speaker 8: this is a somewhat worrying development, especially in the long end. 647 00:27:48,800 --> 00:27:51,480 Speaker 8: We do have next week nonfarm payrolls. Let's not forget that. 648 00:27:51,680 --> 00:27:54,159 Speaker 8: So to Stephanie's good point, the data could begin to 649 00:27:54,240 --> 00:27:55,359 Speaker 8: move in the opposite direction. 650 00:27:56,160 --> 00:27:57,040 Speaker 7: So who knows. 651 00:27:57,200 --> 00:27:59,199 Speaker 8: We all have all kinds of views on what might 652 00:27:59,240 --> 00:28:01,040 Speaker 8: be happening on the late market at the moment. So 653 00:28:01,200 --> 00:28:03,560 Speaker 8: far it's been read very strong, But you're right, tom 654 00:28:03,720 --> 00:28:07,240 Speaker 8: at this point it must really inspire them to look 655 00:28:07,280 --> 00:28:09,280 Speaker 8: themselves in the mirror here and begin to think about 656 00:28:09,640 --> 00:28:11,480 Speaker 8: how do we think about this situation. 657 00:28:11,680 --> 00:28:13,680 Speaker 3: And given what just happened to be lots of FED 658 00:28:13,800 --> 00:28:16,720 Speaker 3: chairs make communication errors, particularly at the start of their term. 659 00:28:17,040 --> 00:28:20,359 Speaker 3: We've seen that repeatedly and feder Reserve history, this in 660 00:28:20,720 --> 00:28:22,960 Speaker 3: that way might be no different. We do have to 661 00:28:23,000 --> 00:28:25,200 Speaker 3: go through this process and start to understand how this 662 00:28:25,320 --> 00:28:27,520 Speaker 3: new FED chair communicates what it means to markets. And 663 00:28:27,600 --> 00:28:29,680 Speaker 3: I mentioned this earlier, this move in the bond market. 664 00:28:29,840 --> 00:28:31,480 Speaker 3: Don't know where it goes. We could take it back tomorrow. 665 00:28:31,560 --> 00:28:34,280 Speaker 3: That's not really the point. The point is whether this 666 00:28:34,440 --> 00:28:37,359 Speaker 3: is by design or not Is this the intention? Is 667 00:28:37,440 --> 00:28:40,600 Speaker 3: this actually what Kevin Wash, the new FED chair, wants 668 00:28:40,680 --> 00:28:43,480 Speaker 3: to see. Is this the outcome to that news conference 669 00:28:43,520 --> 00:28:45,000 Speaker 3: that he was looking for. 670 00:28:45,360 --> 00:28:45,960 Speaker 6: Well, if the. 671 00:28:46,040 --> 00:28:48,240 Speaker 5: Data is speaking, the market is speaking, and the market 672 00:28:48,320 --> 00:28:50,360 Speaker 5: is saying, right now, we don't believe you, So does 673 00:28:50,440 --> 00:28:52,200 Speaker 5: he have to come out and high grates? 674 00:28:52,960 --> 00:28:54,000 Speaker 7: Who is his audience? 675 00:28:54,400 --> 00:28:57,120 Speaker 5: Who is he speaking to? I asked that because typically 676 00:28:57,600 --> 00:29:00,360 Speaker 5: FED chairs have an odd job of try trying to 677 00:29:01,240 --> 00:29:05,720 Speaker 5: toggle between the broader public and the markets. He wasn't 678 00:29:05,720 --> 00:29:08,120 Speaker 5: speaking to the markets, or if he was, then he's 679 00:29:08,160 --> 00:29:10,640 Speaker 5: not getting the reaction. Then necessarily he wants given the 680 00:29:10,720 --> 00:29:13,160 Speaker 5: fact that they've talked about wanting to bring down mortgage 681 00:29:13,200 --> 00:29:15,080 Speaker 5: rates in particular, and this is going to move it 682 00:29:15,080 --> 00:29:15,800 Speaker 5: in the opposite direct. 683 00:29:15,800 --> 00:29:17,880 Speaker 2: Stephanie, It's good to see. It's always great to catch up. 684 00:29:17,920 --> 00:29:21,360 Speaker 3: Stephanie Rofair of Wolf Tolson Slock of Apollo wank In 685 00:29:21,760 --> 00:29:25,040 Speaker 3: on this decision from the FED share Kevin Wash and 686 00:29:25,120 --> 00:29:27,760 Speaker 3: a decision by the committee to keep interest rates unchanged 687 00:29:27,800 --> 00:29:30,960 Speaker 3: with three per cents from three regional FED presidents and 688 00:29:31,040 --> 00:29:33,920 Speaker 3: then a very confusing news conference that has come with 689 00:29:34,000 --> 00:29:36,920 Speaker 3: the price and that price this afternoon is high Yield 690 00:29:37,000 --> 00:29:37,920 Speaker 3: to the long end of the curve. 691 00:29:38,040 --> 00:29:40,480 Speaker 5: Yeah, the highest levels that we've seen since two thousand 692 00:29:40,480 --> 00:29:43,360 Speaker 5: and seven. At one point in the final moments of 693 00:29:43,480 --> 00:29:46,160 Speaker 5: the trading session. You have to wonder, to your point, 694 00:29:46,320 --> 00:29:49,120 Speaker 5: whether he is satisfied, as well as whether he is 695 00:29:49,200 --> 00:29:52,640 Speaker 5: going to rethink how much information he would like to disclose. 696 00:29:52,680 --> 00:29:54,800 Speaker 5: It seems like he thinks the less information he gives 697 00:29:54,880 --> 00:29:56,920 Speaker 5: us a virtue. However, I think a lot of people 698 00:29:56,960 --> 00:29:59,520 Speaker 5: would say that maybe this is not the controlled kind 699 00:29:59,560 --> 00:30:02,560 Speaker 5: of response that leads to any kind of predictability. 700 00:30:02,680 --> 00:30:05,120 Speaker 6: John Quickley, the bank rate thirty year mortgage is six 701 00:30:05,200 --> 00:30:07,760 Speaker 6: point seven zero percent. Are we going to enjoy an 702 00:30:07,760 --> 00:30:09,440 Speaker 6: eight percent mortgage soon after? 703 00:30:09,560 --> 00:30:10,280 Speaker 2: This is going up? 704 00:30:10,400 --> 00:30:12,160 Speaker 3: I don't know about eight, but it's gone up after this. 705 00:30:12,280 --> 00:30:15,040 Speaker 3: If this continues, without a doubt, the FED check Kevin 706 00:30:15,120 --> 00:30:17,920 Speaker 3: Walsh wrapping up his news conference the good news. Maybe 707 00:30:17,960 --> 00:30:19,840 Speaker 3: it's bad news for you, I don't know, but we'll 708 00:30:19,880 --> 00:30:21,640 Speaker 3: be here at every meeting because there will be a 709 00:30:21,680 --> 00:30:24,680 Speaker 3: news conference for the rest of this year after every meeting, 710 00:30:24,760 --> 00:30:26,800 Speaker 3: a commitment to that from the FED chair. 711 00:30:27,160 --> 00:30:28,520 Speaker 2: Again, why then. 712 00:30:28,400 --> 00:30:30,840 Speaker 5: Would it he introduce the idea of not potentially having one. 713 00:30:31,120 --> 00:30:33,880 Speaker 5: There's so many questions here. The lack of clarity is 714 00:30:33,960 --> 00:30:36,880 Speaker 5: one thing, if it's instrumental in creating volatility, or if 715 00:30:36,920 --> 00:30:39,000 Speaker 5: it's lack of clarity for lack of clarity's sake, because 716 00:30:39,040 --> 00:30:40,960 Speaker 5: ultimately you don't want to put invoke political ire. 717 00:30:41,200 --> 00:30:43,080 Speaker 2: I don't know, and let's see if these moves stick.