00:00:02 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 00:00:09 Speaker 2: This is a breaking news update from Bloomberg instant reaction and analysis from our three thousand journalists and analysts around the world. 00:00:20 Speaker 3: I'm going to start with a quote from a lay fed chair This one from Anna Greenspan. 00:00:25 Speaker 2: I know you think you understand. 00:00:26 Speaker 3: What you thought I said, but I'm not sure you realize that what you heard is not what I meant. I don't think anyone really understood much the last forty five minutes in the market right now, still trying to figure it out. The chairman talked about this market move we've seen in between meetings. This market is playing the ball and not the referee. Take a listen. 00:00:45 Speaker 4: Nominal and real yields are materially higher across the treasury curve. In fact, some of the increases in market interest rates between FMC meetings are among the most significant in the last last two decades. In the inter meeting period, market attention centered on real data and real economic developments. Prices reacted in real time to incoming information, and the reduction in forward guidance may have been a factor. Market participants are learning to play the ball, not the referee, and market prices will continue to respond in the direction and magnitude they see fit. 00:01:30 Speaker 3: So it's the FED chair outsourcing monetment policy to the market. And if it is, is this market starting to wonder whether this FED will actually follow through the most important part of this move today in this market, crossessor is in the bond market. 00:01:42 Speaker 2: Check this out. 00:01:43 Speaker 3: Look at the yield curve two year yields questioning whether this FED will actually follow through on an interest rate high yields dropping at the front end by six basis points, and with that questioning the conviction to actually do something about the inflation that the chairman is telling you they will do something about. Look at the longer end of the yield curve, thirties untethered yields up by seven basis points five p. Sixteen on thirties, Lisa, that's an interesting market reaction to a FED share that for many was confusing over the past forty five minutes. 00:02:15 Speaker 5: Frankly, he came out said that he was really happy to have the input of the market, but he wasn't outsourcing the Fed's decision to the market. He talked about these four goals, these deep questions that we talk about every single day, but gave no conclusion as to direction. You talked about a divided committee as not divided but united in a determination to bring down inflation, and this market said, you know what, we're going to call bs on this, and you're not going to hike rates and you're going to try to job on us, and you think that we're going to do the job for you, and so they're calling the bluff. 00:02:45 Speaker 6: I would like us to extend the show to five PM. Frankly, John, I know you got early hours tomorrow morning, but that was in historic press conference. There was all sorts of little tidbits there, and we've got wonderful guests to talk to about this, but every sense of that was radically different than anything we've seen in recent. 00:03:05 Speaker 3: And allow me to quote another central banker, and this is the FED governor on the board right now, Chris Waller, going into the quiet period, he made this statement, Stanley's staring at inflation until it mounts before our withering gaze is not an option, Bramo, Is it an option? 00:03:21 Speaker 5: So what I love from Renaissance and Macro from Neil Duddy came over and he said, worsh judgment is this is a period of watchful thinking. So I guess the withering gaze is an option. Because ultimately, Kevin worsh could not answer the question, if you still believe that inflation is a problem, why did you not hike today? He could not answer that question, what would make you hike? 00:03:42 Speaker 2: Reaction function? 00:03:44 Speaker 5: Reaction function is just guidance, is just a prediction hidden in that? 00:03:47 Speaker 7: Is that true? 00:03:48 Speaker 5: No, it's an understanding of which data and what can potentially make you pull the trigger. What I also think was interesting he kept saying that the market is a pure input into what the market believes, that the data showing us no. And Neildta points this out too. It was a reaction to Fed speeches. They were indicating they were moving any more hawkish direction. This is very difficult to say that this market is just playing the ball and not the referee. 00:04:11 Speaker 2: Three descents. 00:04:12 Speaker 3: At this Federal Reserve meeting, Race kept unchanged the confusing news conference for the past forty five minutes. Bramo, did you nail it? 00:04:19 Speaker 5: I missed and missed by twenty seconds. I believe no, no, no, by by seventeenth. 00:04:24 Speaker 3: On how much this news conference would last, I came pretty close. 00:04:27 Speaker 7: Forty five thirty two. 00:04:28 Speaker 6: It was a forty five play the Ball from Caddyshack. 00:04:32 Speaker 2: You're not sure where that quote is from? Play the Ball, not the referee? Wow, Like, well, no, I think so, from the world. Yeah, I think so. 00:04:39 Speaker 6: It was from the rural. 00:04:40 Speaker 2: Okay, all right? 00:04:41 Speaker 6: Two? 00:04:41 Speaker 3: Your yearlds down by seven basis points. Stopped to running the program Towston's Slock of Apolo where it's around the table Tilston, Good afternoon, for a big challenge for you, buddy. First up, translate the last forty five minutes. What did your land? 00:04:52 Speaker 8: Well, the first observation is that pol action you also had three descents in April, and you also have three descents in December, so having descents is not unusual. That's not a watsht thing. We also had that on the Powell. But that being said, there's very little to hang your hat on in the market. We didn't get any guidance in any direction, and it was also a little bit complicated to figure out what was the basis for the decision today, in the sense of when Mike McKee asked, well, what are we waiting for? We didn't get a clear answer for what exactly are we waiting for? Which was of course, was a subtle way to try to get some forward guidance. 00:05:23 Speaker 7: But this is the part of the challenge. 00:05:25 Speaker 8: We're not delivering forward guidance that when Mike and others ask about what is it that you're watching, what exactly should we be watching, then the answer is that we're not really giving any guidance and the market can figure it out on their own. 00:05:36 Speaker 3: The price for that is volatility, and you could see that in the swing in the market over the last hour or so. Equities were positive, if they turned negative again, bring up the bondboard if we can, and just look at twos, tens, and thirties. This move in the yield curve toss And I'd love to get your reaction to this, because you were watching this closely throughout the news conference, this move of the front end and how it informs this move at the long end of the curve. 00:05:57 Speaker 8: Well, what was interesting was that tenure rates really went up and down like a yo yo better part of the conference. 00:06:03 Speaker 7: That's a little bit unusual. 00:06:04 Speaker 8: Normally ten ure rates take a step either up or down as we move forward in the press conference. But the fact that there was such a swing it is also telling you that markets are trying to figure out are they hiking at the next meeting. So yes, from Futures are saying now there's a seventy percent chance that they will hike at the next meeting. But what was also the interesting question is when he was asked about, well, if markets are not predicting, say eighty percent ninety percent chance of a hike going into a meeting, are you going to deliver on that, And the answer was no, we're not going to deliver on that. It will all be contingent on the debate that we're having, and markets may be pricing what they're pricing, but we're still going to go with just what the committee is thinking. So in that sense, the market pricing in some sense is helpful. But at the same time, we in markets can't really even rely on that if pictations are saying we're getting a hike at the next meeting, that we are actually getting a hike. 00:06:48 Speaker 5: What this market is saying right now is that he's bluffing, because if you take a look at it, it was seventy percent chance of a September rate hike. Now it's fifty percent chance of a September rate hike, and dropping in real time. How much do you view the thirty is the real tell in terms of what the market is taking from this fad, which is potentially you're not going to hike rates and you're going to hope that job owning is just going to. 00:07:07 Speaker 6: Do the job. 00:07:07 Speaker 8: Yeah, because thirty r rates are basically saying, if you're not hiding rates, then we are hiking rates. And that's why thirty hour rates have just made it much more expensive to borrow to buy a house. And as a result of that, financial conditions are tightening. And he didn't tighten financial conditions, but the market decided to say, well, then we think it's time to tighten financial And. 00:07:23 Speaker 6: John, I know you've got a question. The key thing to meet John is thirty yr rates. Five twenty is a key print. We're at five seventeen. Five twenty is an OMG print. 00:07:31 Speaker 3: The price of volatility is that what we're learning, the price of reducing guidance, reducing communication, being very very unclear about what on earth they're going to do with policy, and we pin the price this morning, in this afternoon. 00:07:44 Speaker 8: But that's why the task forces will be very very interesting because they will certainly also on their communication task force. They will have to discuss what is the best approach. Is it the best approach to have no forward guidance? Is it a better approach to have forward guidance. If you do not have forward guidance, you do have more volatility. But in fairness to Kevin Watsh's point, it did say that, well, when we don't say anything, Margat's reacting to the data as we go along. But the risk, of course is that if de marget is only reacting to some data, that then also needs to be resolved in the task force on communication, namely, is that the right way to do it because it runs the risk, as you're saying, John, that you will get had mobile. 00:08:19 Speaker 7: It's Citizy Turist's thrilled. 00:08:20 Speaker 6: To have you here with this really odd press conference. There was a bombshell in there where he went back to twenty fourteen and a paper he did on the Lucas critique. It's just slipped in there for a second, but to academic economists that is a bombshell. What he said, and what he's basically saying is the distrust that Robert Lucas, the laureate had of models. Are we you know, I think I Claudia, Sam Lisa, you mentioned this earlier, the idea of reaction functions. Is this a new almost model free federal reserve away to Lucas and even away from the giant Olivia Blanchard. 00:08:58 Speaker 8: It does lean into the Chicago stand for a school of thinking Nami that when you have a policy that you're changing, you should not run regressions and look historically at the data up to where we are now, because the change in the policy is going to change how people say a new model. 00:09:12 Speaker 6: Then is there a new fresh Worsh model we need to discover? 00:09:15 Speaker 8: Yeah, because I think he's saying that you can't just look at all the models that look back, because when we are now changing policy, then forward looking people are going to change behavior. 00:09:24 Speaker 6: And how do you determine an inflation rate? A process? If you take dsge Richard Claire to Girdler Brown, if you take the mathematics of that, throw it out the window for this show. But the bottom line is inflation is the measurement we use. How will we measure inflation with a new Worsh Lucas model? 00:09:41 Speaker 7: But that's exactly right, Tom. 00:09:42 Speaker 8: That's why if you don't have the models that look at the latest data, then what are you then looking at? What are you then relying on for forecasting what inflation will do going forward? So in other ways, if I'm not allowed to look backwards and say this is where the data is coming from, and the trend is whatever, this or that, well, then what am I then. 00:09:58 Speaker 7: Using as the guidepost? 00:10:00 Speaker 8: I was thinking about what inflation will do going forward? 00:10:02 Speaker 3: Basis point move on thirties there it is well most time by eleven basis points and closing in on five nineteen. I'm thinking of all the people that would be unhappy with this news conference in the last sixty minutes. Forget market participants. Imagine being at the Treasury right now and you're Scott Besson and you're seeing yields go higher on tens, materially higher on thirties. And then I'm thinking about the others on the committee. I'm not an establishment guy. I'm very very happy to blow things up and have a new era. I've got no problem with that. I'm open to new ideas. But I just wonder how offended some of the sitting officials might be by how patronizing much of that news conference was over the last sixty minutes. 00:10:43 Speaker 8: Well, it's clear that the sitting committee that he came into had already thought about basically all areas of the task forces before. 00:10:49 Speaker 7: So it's clear that the market. 00:10:51 Speaker 8: Here is saying, well, if we now are getting a day with a no hike, well then the long end of course is moving, basically telling you that, well, this is all about credibilite. Are you really going to follow through on inflation? And that's of course the thing that THEFMC needs to go home and think about. Now. The market reaction speaks very clearly that now we need to talk about what is the credibility of the committee because it cannot only be talk. 00:11:12 Speaker 7: You will eventually have to follow through. 00:11:14 Speaker 8: And that's why the probability, given this market reaction now has gone up quite significantly that they will have to move at the next meeting. 00:11:20 Speaker 2: But this is really important. 00:11:21 Speaker 5: In other words, you're saying that the reaction the long en of the yield curve has a challenge the credibility of this federal reserve and will force their hand that if they do not hike grate since September, you will see some sort of unmooring of long term yields. 00:11:33 Speaker 8: Yeah, because The risk is if you keep on just talking tough, tough, tough, and therefore markets end up saying, well, this is just a lot of talk and you don't deliver on that tough talk. The risk is of course that the long end will say, well, if you don't deliver, we worry that you implicity allow inflation to be higher despite the talk about not allowing inflations to be higher, and that is indeed a question about the ultimate credibility. 00:11:53 Speaker 7: Is the committee ready to vote next time? 00:11:55 Speaker 8: This was not only Kevin wash This was nine members who voted to keep interest rates at this meeting. So at the next meeting many of them must look at the reactions today and come to the conclusion, if we want to keep our curitybigency, we do have to move to make sure that inflation comes down and therefore ultimately long rates also begin to go down. 00:12:12 Speaker 3: Michael McKay was in the room. Our colleague joins us snap for more from Washington, d C. Michael McKay, we'd love your review of the last sixty minutes. What's the big tank? 00:12:19 Speaker 6: Kawai? 00:12:20 Speaker 9: I think it's very similar to yours. A lot of words, not much information, and the FED chair leaves with markets probably going the wrong way from what he would like to see at this point. The thing he wouldn't answer is what they actually did today. He talked a lot about talking, but when are they actually going to do something, whether it is acknowledging that the three and a half to three seven five rate range is adequate for the job they want, or it's not and they need to raise interest rates, And there was no acknowledgment of what the case was really on either side. It was a lot of talk about while we're talking, and that don't get the markets anywhere, and people aren't going to be very happy with what they heard. 00:13:03 Speaker 3: I think, Mike, there was an interesting exchange and you were part of it too when he was asked why didn't you raise interest rates and he basically said, well, I think rates did rise, and he talked about the move in the last forty two days, and Mike, rates rose because for many people they thought this FED might follow through on the data that we've been seeing over the subsequent few weeks, follow through on some of the FED speak that we'd seen from the likes of Walla, the likes of Hammack and others too, and Mike and then it got to this moment where I just thought, Okay, is the FED share outsource in monetary policy to the market, And if he is, but I don't think he's going to hike interest rates. We'll take all that back and Mike, then we see this move in the bond market, and I don't want to have made too much of a big deal of this move. We can take it back tomorrow and the next week or so, but it's material. You're up eleven basis points at the long end of the curve on thirties. And Mike, the conversation we're having around the table, do you believe that is a market beginning to question the credibility of this institution. 00:14:00 Speaker 9: I don't know if that's necessarily true because it's still so early in his chairmanship, but it is an indication that the market disagrees with what the FED is doing. The market thinks at this point that interest rates should be higher. And whether or not you believe it's because they're only looking at the data, it is telling the market something that data. 00:14:22 Speaker 2: I suspect that the markets are still. 00:14:25 Speaker 9: Looking at the data and putting it in context of, well, what's the FED going to do? 00:14:29 Speaker 6: About it. 00:14:29 Speaker 9: Because the FED controls the benchmark lending rate for the country. The markets don't. The markets react, the markets move around, but the benchmark rate is going to be set by the Fed, and the Fed is going to be reacting to the conditions in the economy. And we got nothing on what he thought the conditions in the economy are or would be. And we got nothing basically on why the markets might be right or wrong and whether that's an adequate response, an adequate measure to keep inflation under control. 00:14:59 Speaker 2: Thank you about it. 00:15:00 Speaker 3: These comments from the president certainly want how so, we've got the White House review of things they've just published. This is from the president. Kevin Walsh is fantastic. Wash has a board. It's a political one. Wassh would love to see lower interest rates. Given the move we're seeing on the screen right now, thirty yields up by eleven basis points. Those comments from the President this afternoon will not help. 00:15:22 Speaker 5: Thirty year yields have just broken through the highest levels going back to two thousand and seven. Just to give you a sense right now of the bond vigilanteism that you're seeing in bond markets, because they are seeing a more potentially politically motivated, not necessarily that being the case, but given the lack of clarity, a lot of circular talk, the lack of any kind of straight answers about reaction function, are exactly why they remained on hold. And then the president's comments are not a good brew. 00:15:49 Speaker 3: For this particular lime Attol and Bremo to your point, I think we're both on the same page about this. I don't believe that Kevin Wassh is doing the president's bidding right now. He's widely backed by several establishment figures when he got the nomination for this job. 00:16:01 Speaker 2: I'm thinking of one. 00:16:02 Speaker 3: I can't think of anyone more establishment than Mark Calmy, the Canadian Prime minister, who gave him a pretty fantastic endorsement when he got selected for the position. I don't think he's doing the president's bidding, but the optics of it absolutely stink. When you have a problem with inflation and you're saying you're committed to doing something about it, but don't follow through and then highlight the market that's doing the work for you, and now the market is beginning to push back, and at the same time, the President's putting out words saying that this is actually what Kevin Wassh wants. 00:16:29 Speaker 2: The optics of that, the backdrop for it not. 00:16:32 Speaker 5: A good one, and conflicting the idea of a FED funds rate with the market rate, and saying that there was something that happened and that we have done something because that moved the market, saying we're not that silly, we're not that ignorant. 00:16:45 Speaker 2: We know how this is done. 00:16:46 Speaker 5: It was an anticipatory It was an anticipatory market and if you're not going to make good on that, we're going to call your bluff. 00:16:53 Speaker 6: Jen, this is an historic more. But the charts I'm seeing on the screen right now, John, I've never seen this is basically was called a rever vers operation twist in real time. We've never seen it in what's key here? Which tourist and I know you've got Stephanie Roth and Deeck. The first and second derivatives of this move have to be digested by a huge body of the American economy. Let's just start with a housing market as just one example. 00:17:19 Speaker 3: Well, let's just start with what we thought this was all about. There was a belief that we were reducing forward guidance so that we could introduce some volatility into the front end of the curve, which would help cap longer end yields. That you'd start to be more uncertain about what this fed might do, but in a different way that maybe the outcome would be more hawkish than it would have been otherwise. And what we saw more recently, Lisa, was that dynamic people were talking about it. This would contribute to longer yields over time at the longer end of the curve, lower yields over time. 00:17:49 Speaker 2: That's not what you see this afternoon. 00:17:50 Speaker 3: When you drop by five basis points at the front end and you are seeing a move of eleven at the long end through five twenty on thirties. 00:17:59 Speaker 2: That's not good. But that is not the outcome people we're looking for. No volatility. 00:18:03 Speaker 5: If you truly are potentially on the fence and are going to move, is one thing. But if you've got a parent who's saying, if you do that again, I'm going to turn the car right around and go home, and the kids keeps doing that, and the parent keeps driving straight to go to the amusement park, well guess what, the kid's going to keep goofing around in the back seat, and that's what's going to keep happening, because ultimately, if you don't believe that they're actually going to do anything, why should you start to prepare and price that in. 00:18:24 Speaker 2: That right there, that's experience, take case, that's experience. That's whys real world experience. 00:18:29 Speaker 6: When you're driving and you lean over to. 00:18:34 Speaker 2: More than one need to have. 00:18:38 Speaker 3: Definitely, Wroth of Wolf Research joins a snaff and more. Stephanie, welcome. It's a confusing one. Sometimes this is straightforward. The last hour is anything. But what's your take away? 00:18:47 Speaker 10: Yeah, I mean, I think markets just don't believe them. 00:18:49 Speaker 1: The thing is, I do think that the FED will ultimate that the data will ultimately bail out the FED to some extent, because the market saying we don't believe that the FED is necessarily going to be hiking in September, you know, the raises his inflation expectations. That does exactly the opposite of exactly what worsh had set out to do. 00:19:04 Speaker 10: Today. If we do end up seeing inflation data come in a little bit softer, that might bail him out. 00:19:09 Speaker 1: He's basically rather than doing latchful thinking, he's really doing wishful thinking. If the data ends up coming in line with his side. This may all work out, but if not, it could end pretty poorly. 00:19:18 Speaker 5: You said his side, and this is important, Stephanie. It seems like the takeaway is that Kevin worsh is much more dubbish than people previously thought. Do you think that that's the correct interpretation. 00:19:28 Speaker 7: Yeah. 00:19:28 Speaker 1: I think he didn't want to say anything because he didn't want to make it clear that he is, you know, in favor of staying unfold. 00:19:34 Speaker 10: He wants to make to have markets do the work for him. 00:19:37 Speaker 1: The problem is, like you all were talking about earlier, that might have worked up until now being at being following what we've heard today, the markets are going to be the exact opposite. 00:19:46 Speaker 10: And then what is he going to say in September? 00:19:47 Speaker 1: So I think this is the market realizing that the first FMC was him trying to establish credibility, trying to come across as hawkish, and now Marcus are just not buying it. 00:19:58 Speaker 6: Tursted Sluck. I've got the thirty year at a five point two zero rounded up to five point two to one. We can do that this late in the day. I have us moved into thirty years old. I'm up to standard deviations. How will finance obviously your good people will apollow, but how will finance adapt to what they heard, adapt to this reverse twist? I've never seen it? How do you adapt tomorrow morning? 00:20:23 Speaker 8: Well, this is a very historic day in the sense that we have seen a very significant steepening of the curve that is quite dramatic. I'm trying to think back when we've ever seen like twenty basis points move in the curve in this deepness like this. 00:20:34 Speaker 7: It is really unusual. 00:20:35 Speaker 8: And the answer to your question is that there's sensitive components of GDP that are interest sensitive. Of course, housing and autos will probably continue to struggle. They have struggled for quite some time when interest rates up in high but the tailwinds to growth coming from AI spending, coming from the one pepot of a bill coming from the home shoring, those things will still continue to see tailwind That's why we might get in the next half hour when the news come from both the hyperscalers today and tomorrow. This would also create more volatility because that will also begin to become a macro event. If that does begin to send signals around what is the outpoot for the broad economy, especially around the data center. 00:21:08 Speaker 3: Build out Tustin, Can we talk about the price of the data center build out and the capital raising that we're saying worldwide right now, thirty eight yields up eleven basis points. That's before we even find out the capex and tentions of some major companies in the next twenty four hours or so. How much price heer does the cost of capital get with this federal reserve. 00:21:27 Speaker 8: Well, that's exactly the discussion because not only, of course, have spreads on hyperscalers widen out and CDs as also widened out. 00:21:32 Speaker 7: Now the base rate has also moved up and in this. 00:21:34 Speaker 8: Case actually much more than spreads and widen out, So they're all in yield for financings. Of course, in the public market for hyperscalers have definitely increased quite significantly. The issue now becomes, well, if your returns in ai I expect it to be like ten fifteen percent or higher, Well, then these things are relatively small peanuts relative to the big picture of the returns that are going to come along. But ultimately that discussion is all about the economics one on one, namely, what is the marginal revenue you expect to generate and what is the module cost of producing that piece of revenue. 00:22:04 Speaker 7: So, for compute, the debate is. 00:22:06 Speaker 8: Around, well, now that rates have gone up and all in yields have gone up, is the case that we're reaching a level of all in yields or all in cost of capsule that's beginning to become more problematic for the hyperscaler. 00:22:16 Speaker 7: So far that has not been the case. 00:22:18 Speaker 8: But the question is, of course, over the next twenty four hours whether we get any either confirmation that that's happening, or whether we in the contrary, beginning to see still more upside risks to more data center build out just continuing. 00:22:30 Speaker 2: And this is the reason why. 00:22:31 Speaker 5: And Stephani, I'd love your thought and what Torsen said earlier that all of this is not a virtuous cycle and it's not something that FED wants to see. And so Torsen was saying that he thinks that the probability of a September rate hike is even greater now to try to control the long end of the yield curve and prevent this sort of higher borrowing costs for some of these hyperscalers in the build out. 00:22:50 Speaker 2: Do you agree with that, I. 00:22:52 Speaker 10: Mean, I do if the data don't improve. 00:22:53 Speaker 1: So if we're sitting here in September and the data just continue to remain firm, especially on the inflation side, also on the growth in the kepex data in terms of capa AI related catbec just continuing to move higher, then yeah, absolutely that increases the odds that they're going to ultimately be hiking. 00:23:11 Speaker 10: I do think that we'll see seasonality and the inflation. 00:23:13 Speaker 1: Data and a bit of a cooling such a thing that this may all work out, such as that doesn't actually have to cut September, and in that environment, it will do so in an environment that's a little bit more market friendly. But if that forecast is wrong, then absolutely they're going to This makes them even more likely to have to be cutting in September, because it tells you that they're making a policy mistake. 00:23:33 Speaker 6: I look at this moment, John, of course, I got to go to the quality, full faith, and credit documents. SpaceX is thirty year bond six point sixty five percent. We're enjoying it at seven point eight percent right now, not quite through a new low. But again, the mystery to me is the permeation of this through Wall Street. It's not just about Fom's Lucas critique and all that. What does this do to Wall Street? 00:23:57 Speaker 2: Starting in Asia here in X number of hours and SpaceX. 00:24:00 Speaker 3: So they came out with the dead issue in the last month or so, and the demand was softer, below average, and then we had Amazon follow up TK and concessions were larger, and then you start to see spreads widen out in the secondary market to across a number of tech names as well. Tom and We've been talking about this dynamic for a while, the crowding out of the market, that there is a race to raise capital, and that we've been worrying about the additional supply coming from the treasury for the best part of fifteen twenty years. 00:24:31 Speaker 2: The deficit. 00:24:32 Speaker 3: It was okay at the time because not everybody else was doing the same thing. Now we talked about this already earlier in the program. Germany has gone away from fiscal prudence to borrowing and spending. Germany has moved onto something else. Japan has as well. They've had decades of deflation. They now have inflation anchors away there for that bond market yields up. We've now got the hyper scalers moving away from buying their own equity to negative free cash flow and now issuing equity and issuing debt. That's a di supply here, there, and everywhere and every way you look. Right now, there are increased capital demands. So to have the fed chare perform in the way he has in the last sixty minutes to see the market reaction to that that's led to high yields at the long end at a curve. To have that in this moment laser things get tied to, things get harder, and yields go up, and the price for capital gets more expensive. 00:25:22 Speaker 5: The value of the dollar on the global stage goes down, and we're seeing that in a pretty big way. It is notable to see the long end of the yield curve in particular perform this way. And has Torsen made a good point about the hyperscalers. They have been issuing disproportionately at the long end of the yield curve. They have issued more on the long end than the US government, And you have to wonder how much this is going to constrain some of the productivity and the virtuous aspects of what a lot of people are expecting and prolong the uncomfortable mismatch period that he was talking about. 00:25:49 Speaker 8: That's also the additional challenge that if you take your textbook out and interest rates go up in the long end, the dollars should be going up. So that's why you're in now beginning to ask, well, the's a dollar and our beginning to react to front end rates. 00:26:00 Speaker 7: It is long end that moves the dollar most. 00:26:02 Speaker 8: So that's a lot of considerations also around why is the dollar going down so much at the same time while short rates are moving down and long rates are moving up. 00:26:10 Speaker 3: Stephanie, in the next two weeks will all be very focused on the Fed Speak. We were calling this a three part act all day. The statements one act, the news conference is another. It was quite an act. The third act is going to be the speeches of all the officials that haven't had their say yet. What are you looking for from the Fed speak in the coming weeks. 00:26:33 Speaker 1: Yeah, so we're certainly going to hear from those that descended, why did they dissent? Because worst certainly didn't really answer that question, So we'll here, we'll certainly hear that argument. And I'm going to be looking for you know, eventually in the next speech by Waller, because that's going to give us a sense of what did the core of the committee actually, what is he thinking. He's been amongst the most transparent and represents more of the middle folks on the committee, and that's going to give us a much better sense of what are they thinking, what are they leaning, and what does he think about what price action is doing? Because he is somebody who's very willing to give his reaction function and his thoughts on what markets and the data are going to do. 00:27:08 Speaker 6: That's right where I wanted to go. Stephanie Tourresten Slock. How does chairmansh react to what we're seeing on the screen the data And the fact is he's going to have to amend the way he speaks the concepts he speaks the McKinsey mba of it and talk to academic economists. 00:27:27 Speaker 8: I think that it's not only him, it is the nine versus three on the committee here that there were nine members who voted to keep raids constant today. So the consideration for the whole committee must be to go home and think hard about how do we communicate this? 00:27:39 Speaker 7: Do we do this before their meeting? 00:27:41 Speaker 8: What do we say at the press conference, how do you communicate in this statement, because it is clear that this is a somewhat worrying development, especially in the long end. We do have next week nonfarm payrolls. Let's not forget that. So to Stephanie's good point, the data could begin to move in the opposite direction. 00:27:56 Speaker 7: So who knows. 00:27:57 Speaker 8: We all have all kinds of views on what might be happening on the late market at the moment. So far it's been read very strong, But you're right, tom at this point it must really inspire them to look themselves in the mirror here and begin to think about how do we think about this situation. 00:28:11 Speaker 3: And given what just happened to be lots of FED chairs make communication errors, particularly at the start of their term. We've seen that repeatedly and feder Reserve history, this in that way might be no different. We do have to go through this process and start to understand how this new FED chair communicates what it means to markets. And I mentioned this earlier, this move in the bond market. Don't know where it goes. We could take it back tomorrow. That's not really the point. The point is whether this is by design or not Is this the intention? Is this actually what Kevin Wash, the new FED chair, wants to see. Is this the outcome to that news conference that he was looking for. 00:28:45 Speaker 6: Well, if the. 00:28:46 Speaker 5: Data is speaking, the market is speaking, and the market is saying, right now, we don't believe you, So does he have to come out and high grates? 00:28:52 Speaker 7: Who is his audience? 00:28:54 Speaker 5: Who is he speaking to? I asked that because typically FED chairs have an odd job of try trying to toggle between the broader public and the markets. He wasn't speaking to the markets, or if he was, then he's not getting the reaction. Then necessarily he wants given the fact that they've talked about wanting to bring down mortgage rates in particular, and this is going to move it in the opposite direct. 00:29:15 Speaker 2: Stephanie, It's good to see. It's always great to catch up. 00:29:17 Speaker 3: Stephanie Rofair of Wolf Tolson Slock of Apollo wank In on this decision from the FED share Kevin Wash and a decision by the committee to keep interest rates unchanged with three per cents from three regional FED presidents and then a very confusing news conference that has come with the price and that price this afternoon is high Yield to the long end of the curve. 00:29:38 Speaker 5: Yeah, the highest levels that we've seen since two thousand and seven. At one point in the final moments of the trading session. You have to wonder, to your point, whether he is satisfied, as well as whether he is going to rethink how much information he would like to disclose. It seems like he thinks the less information he gives us a virtue. However, I think a lot of people would say that maybe this is not the controlled kind of response that leads to any kind of predictability. 00:30:02 Speaker 6: John Quickley, the bank rate thirty year mortgage is six point seven zero percent. Are we going to enjoy an eight percent mortgage soon after? 00:30:09 Speaker 2: This is going up? 00:30:10 Speaker 3: I don't know about eight, but it's gone up after this. If this continues, without a doubt, the FED check Kevin Walsh wrapping up his news conference the good news. Maybe it's bad news for you, I don't know, but we'll be here at every meeting because there will be a news conference for the rest of this year after every meeting, a commitment to that from the FED chair. 00:30:27 Speaker 2: Again, why then. 00:30:28 Speaker 5: Would it he introduce the idea of not potentially having one. There's so many questions here. The lack of clarity is one thing, if it's instrumental in creating volatility, or if it's lack of clarity for lack of clarity's sake, because ultimately you don't want to put invoke political ire. 00:30:41 Speaker 2: I don't know, and let's see if these moves stick.