WEBVTT - Fed Maintains Monetary Stimulus, Cites Moderating Recovery 0:00:00.280 --> 0:00:02.920 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:02.920 --> 0:00:05.760 Bloomberg Quick Takes Tim Stanebeck. We're here every day bringing 0:00:05.760 --> 0:00:08.280 you the latest news from the worlds of business and finance, 0:00:08.320 --> 0:00:12.120 plus technology, politics, economics, all harnessing the power of Business 0:00:12.119 --> 0:00:15.600 Week reporters and editors, not to mention our journalists and 0:00:15.640 --> 0:00:18.080 analyst in more than one and twenty countries. You can 0:00:18.120 --> 0:00:21.720 download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:21.880 --> 0:00:23.600 You can also listen to our radio show at two 0:00:23.640 --> 0:00:26.320 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:26.360 --> 0:00:32.159 YouTube search Bloomberg Global News. Let's learn a little bit 0:00:32.159 --> 0:00:34.239 more about what we got from the Fed. Joining us 0:00:34.320 --> 0:00:37.840 Kathleen Hayes, Global Economics and Policy editor at Bloomberg News. 0:00:37.840 --> 0:00:40.519 She's here in our New York City bureau along with 0:00:40.600 --> 0:00:42.760 Dave Wilson stocks Or at Bloomberg News on the remote 0:00:42.760 --> 0:00:46.479 access from New Jersey. So, Kathleen, I feel like steady, 0:00:46.560 --> 0:00:48.920 She goes, Uh, we know pretty much what we expected 0:00:48.920 --> 0:00:51.680 from the FED. What we expected, and that's going to 0:00:51.720 --> 0:00:56.280 be very reassuring to the markets because there has been, uh, 0:00:56.360 --> 0:00:58.720 there's been comments made in the last say two or 0:00:58.760 --> 0:01:01.240 three months by ay and ful of Fed officials that 0:01:01.360 --> 0:01:04.039 depending on the economy, they could see that FEDS starting 0:01:04.040 --> 0:01:07.440 to taper its bond purchases in the second half of 0:01:07.480 --> 0:01:11.119 this year. So what they said today, I think let 0:01:11.120 --> 0:01:14.319 me grab another headline here that is very important. The 0:01:14.360 --> 0:01:18.280 Fed repeats in its policy statement that it's buys, it's 0:01:18.360 --> 0:01:22.160 it's bond buys will continue until quote substantial further progress. 0:01:22.200 --> 0:01:25.399 And I'll add to that headline has been made because 0:01:25.440 --> 0:01:29.920 this is language they've added recently to underscore that they 0:01:30.080 --> 0:01:34.399 want to see not just the moderating economy and job 0:01:34.440 --> 0:01:36.600 market they mentioned, which which you were just reading from 0:01:36.600 --> 0:01:39.639 the headlines. They want to see not just inflation starting 0:01:39.640 --> 0:01:42.120 to move higher. They want to see inflation at two 0:01:42.160 --> 0:01:46.319 percent and above. They want to see a lot better uh, 0:01:46.760 --> 0:01:49.760 job growth. They want to see claims coming down, And Kathleen, 0:01:49.800 --> 0:01:51.400 they're willing to let it run a little bit of hot. 0:01:51.400 --> 0:01:53.480 We've heard this a lot from J. Powell and company 0:01:53.680 --> 0:01:56.080 because because they want to see and make sure that 0:01:56.120 --> 0:01:58.280 the economy gets back on a firmace. Well, two things here. 0:01:58.400 --> 0:02:00.520 Number One, you got let around hot, I think is 0:02:00.520 --> 0:02:03.360 the idea to ever even have a chance in in 0:02:03.440 --> 0:02:08.760 you know where to get inflation above two percent. And 0:02:08.800 --> 0:02:11.519 then the second thing is, you know something They even 0:02:11.560 --> 0:02:13.480 added it's a small thing, but it means a lot. 0:02:13.520 --> 0:02:16.519 I think when they said that the economy's path will 0:02:16.520 --> 0:02:20.040 depend significantly, they said not just on the coronavirus itself, 0:02:20.080 --> 0:02:24.639 but also on progress with inoculations. That's another word for vaccinations, right, 0:02:24.960 --> 0:02:28.040 So they're very hopeful, as many people are, that the 0:02:28.120 --> 0:02:32.239 vaccine rollout will go quickly. When I spoke to Lotmesters, 0:02:32.240 --> 0:02:36.280 president Kansas City Fed, a couple excuse me, Cleveland Fed. Sorry, Lauretta, sorry, Yester. 0:02:36.880 --> 0:02:39.480 Straight there you go, two powerful women there no one 0:02:39.480 --> 0:02:42.360 to get their fed banks mixed up. But she said 0:02:42.440 --> 0:02:45.519 she thinks by the third quarter that will have you know, 0:02:45.639 --> 0:02:48.720 not full vaccination, but with so much of the population 0:02:48.760 --> 0:02:50.280 will have it that that's where we're going to start 0:02:50.280 --> 0:02:53.280 seeing a really strong rebound to the economy. At the 0:02:53.320 --> 0:02:55.679 press conference of j POWE, that's going to be listening for. 0:02:56.440 --> 0:02:58.360 I think one more interesting thing I've been thinking about 0:02:58.400 --> 0:03:00.600 the last couple of days. If you start seeing that 0:03:00.639 --> 0:03:03.560 strong rebound and there's all this like another maybe two 0:03:03.600 --> 0:03:06.959 trillion dollars of stimulus being debated, you know, One of 0:03:07.000 --> 0:03:08.760 the people who have in the middle here is Janet Yellen, 0:03:08.800 --> 0:03:10.480 and she has said, right now, you gotta act big. 0:03:10.480 --> 0:03:12.440 You've got to act now. But I think this is 0:03:12.440 --> 0:03:15.360 a very interesting question that Republicans will probably raise. Look, 0:03:15.400 --> 0:03:16.919 if we're getting ready for a big reround, do we 0:03:17.040 --> 0:03:19.239 really need to spend that much now? I hope that's 0:03:19.240 --> 0:03:22.960 another question that j Pal gets asked today. Dave Wilson, 0:03:23.000 --> 0:03:25.200 come on in here, Stocks editor at Bloomberg News joining 0:03:25.240 --> 0:03:27.720 us on the remote from New Jersey. Um, what do 0:03:27.720 --> 0:03:29.840 you see in the equity markets as far as reaction 0:03:29.880 --> 0:03:32.480 to the FED decision? I mean, energy still higher in 0:03:32.720 --> 0:03:35.520 every other s and p sector lower. Basically a lack 0:03:35.600 --> 0:03:38.880 of reaction. And maybe that's not a surprise because you've 0:03:38.920 --> 0:03:43.120 got sort of two overarching stories at work beyond what 0:03:43.360 --> 0:03:46.440 the FED is doing. One is what's happening in terms 0:03:46.440 --> 0:03:49.360 of earnings in fests looking at the results and not 0:03:49.480 --> 0:03:52.080 so much focusing on the past quarter, but on the 0:03:52.120 --> 0:03:55.360 outlook and not liking what they're seeing for the most part. 0:03:55.600 --> 0:03:59.240 I mean, you consider a company like Anthem and Health 0:03:59.280 --> 0:04:02.480 Insurance down more than six percent, Starbucks down more than 0:04:02.520 --> 0:04:07.000 six percent. You look at the semiconductor companies concerned that 0:04:07.040 --> 0:04:09.920 they may have supply issues down the line, So you 0:04:09.960 --> 0:04:13.200 see declins and advanced micro devices and Texas instruments. There 0:04:13.240 --> 0:04:15.840 are a lot of stories like that, And then there 0:04:16.000 --> 0:04:18.920 is what you might call the Reddit market, where shares 0:04:19.000 --> 0:04:24.400 just revolution. I'm kind of loving that. Well, whether meeting, 0:04:24.440 --> 0:04:28.360 I'm interested, we shall see that in any case, I may. 0:04:28.440 --> 0:04:32.159 We're seeing shares just take off again. Game stops more 0:04:32.160 --> 0:04:37.000 than doubled, AMC Entertainment, the movie house owner, and the 0:04:37.240 --> 0:04:40.479 expressive power retailer is more than tripled. And you know 0:04:40.520 --> 0:04:43.400 what else has my stock of the day, which I'll 0:04:43.440 --> 0:04:48.520 be talking about about two hours. You know, it's I 0:04:48.760 --> 0:04:51.680 know exactly what you're talking about, Dave. I'm ready for it. Um, Dave, 0:04:51.760 --> 0:04:54.400 I I gotta get you just to talk more about this, because, 0:04:54.400 --> 0:04:56.920 as I mentioned, this has been like dominating Twitter, dominating 0:04:56.920 --> 0:04:59.600 our show throughout the day today. Um, how does it end? 0:05:00.560 --> 0:05:06.360 You know? That's a very good question. Yeah, I mean, 0:05:06.400 --> 0:05:10.320 because you see it today to some extent. I'm just 0:05:10.360 --> 0:05:13.880 taking a quick look at Pitney Bows because those shares 0:05:13.920 --> 0:05:18.040 had run up eighty one percent yesterday. Uh. Somebody out 0:05:18.080 --> 0:05:22.080 on the financial website Seeking Alpha was comparing the maker 0:05:22.160 --> 0:05:26.200 of postage meters to game Stop. Well, today the shares 0:05:26.240 --> 0:05:30.200 are down twenty six percent, so you know, I mean 0:05:30.200 --> 0:05:32.320 they've given back a whole lot of what they made 0:05:32.440 --> 0:05:36.320 yesterday and you still have making money on all that volatility. 0:05:36.360 --> 0:05:38.960 Oh yeah, and you're gonna have to presume that at 0:05:39.000 --> 0:05:41.920 some point you're gonna see this with a whole lot 0:05:41.960 --> 0:05:44.320 of other shares. I was just gonna point out that 0:05:44.920 --> 0:05:48.240 the former SEC chairman, Arthur Levitt, a member of our 0:05:48.279 --> 0:05:52.920 board here at Bloomberg LP, has a commentary out today 0:05:53.160 --> 0:05:56.839 history has a warning for game Stop traders, So you know, 0:05:56.960 --> 0:06:00.360 look out for the Securities and Exchange Commission. That's something 0:06:00.440 --> 0:06:04.320 that will definitely be worth the watching for. Well, yeah, 0:06:04.320 --> 0:06:06.120 go ahead, come yeah. I was wondering what Arthur was. 0:06:06.240 --> 0:06:08.279 I'm assuming our team had had brought it up with Arthur, 0:06:08.279 --> 0:06:09.839 because I was curious what he had to think, you know, 0:06:09.880 --> 0:06:12.040 what he what he was thinking in terms of regulatory 0:06:12.279 --> 0:06:14.800 And I'll say that we did just here minutes ago 0:06:14.839 --> 0:06:16.880 in the White House press briefing room. The Biden team 0:06:16.920 --> 0:06:20.080 is quote monitoring the situation when it comes to game Stop, 0:06:20.360 --> 0:06:23.679 right exactly. I saw that coming in right right, It's reached. 0:06:23.720 --> 0:06:26.679 I tweeted this has reached the White House press briefing room. 0:06:26.720 --> 0:06:29.920 It has. Yeah, I mean, Dave and I know we're 0:06:29.960 --> 0:06:31.520 supposed to be talking about the FED, but I do 0:06:31.560 --> 0:06:33.320 feel like in terms of the equity markets, I mean, 0:06:33.360 --> 0:06:36.080 this is what people are watching because it's not just 0:06:36.160 --> 0:06:37.960 one or two. It feels like it's picking up a 0:06:38.000 --> 0:06:42.000 lot more momentum and spreading out to a lot more names. Here. Oh, absolutely, 0:06:42.040 --> 0:06:46.040 there's no question about that. I mean, you can just 0:06:46.400 --> 0:06:48.800 go to a list if you can pull it together 0:06:49.279 --> 0:06:52.440 of companies saying the Russell three thousand index a pretty 0:06:52.440 --> 0:06:56.640 broad gage of US stocks, uh that had the biggest 0:06:57.200 --> 0:07:01.039 short positions relative to their float. Now there the most 0:07:01.080 --> 0:07:05.400 shares barred and sold relative to the number available for trading. 0:07:05.640 --> 0:07:08.520 And you just look at them from across the board, 0:07:08.560 --> 0:07:11.640 they're higher. Got it? Got it? Hey, Kathleen, save forty 0:07:11.640 --> 0:07:14.440 seconds for you. Here already are a live blog on 0:07:14.520 --> 0:07:17.320 the FED meeting today and the upcoming FED press conference. 0:07:17.600 --> 0:07:20.560 Democratic lawmakers will no doubt cite the fed's new language 0:07:20.560 --> 0:07:23.040 about the weakening of the economic company and pushing for 0:07:23.080 --> 0:07:25.160 the full one. Certainly, as I said, I think that 0:07:25.280 --> 0:07:29.480 this is definitely going to enter into conversations around this 0:07:29.880 --> 0:07:33.240 need for money. The gem Democrats are already some of 0:07:33.240 --> 0:07:37.960 them acknowledging that maybe it shouldn't be sending checks to everybody, 0:07:38.160 --> 0:07:39.960 maybe this could be more targeted. I want to quickly 0:07:40.040 --> 0:07:43.400 throw in something. In the last two days, uh in China, 0:07:43.640 --> 0:07:47.080 p BOC said they're not going to remove stimulus prematurely. 0:07:47.760 --> 0:07:51.000 But they also Ye Gong, the head of PBOC, says, 0:07:51.160 --> 0:07:56.320 but we're watching debt risks closely. A former economic advisor 0:07:56.360 --> 0:07:59.760 to the p bocs warns warns of equity bubbles, acid 0:07:59.760 --> 0:08:01.640 bubb So I should say they had a huge sell 0:08:01.680 --> 0:08:03.640 off in stocks, a big jump in bond yields are 0:08:03.680 --> 0:08:06.600 overnight repo rate jump. Bond markets around the world are 0:08:06.760 --> 0:08:09.840 very nervous about this whole question of central bank tapering. 0:08:10.560 --> 0:08:13.360 I think game Stop is an amazing story today. I've 0:08:13.360 --> 0:08:15.600 been on watching all and listening to all this coverage. 0:08:15.600 --> 0:08:17.200 At the same time, I think when you step back 0:08:17.200 --> 0:08:20.480 for some of these big market moves, this is something 0:08:20.600 --> 0:08:23.760 that the FED reassured the markets on today. Let's see 0:08:23.760 --> 0:08:27.720 what j Pal says in about what an hour? Alright, yeah, 0:08:27.920 --> 0:08:30.600 just about twenty minutes. All right, let's guys, thank you 0:08:30.680 --> 0:08:33.560 so much, Kathleen Dave, thank you so much. This is 0:08:33.600 --> 0:08:37.520 Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. 0:08:37.600 --> 0:08:41.920 Tim Stinovic from Bloomberg Radio. Let's get some analysis from 0:08:41.960 --> 0:08:44.880 Francis Donald. She's global chief Economist, head of macro Strategy 0:08:44.920 --> 0:08:47.840 over Manual Life Investment Management. She's with us on the 0:08:47.920 --> 0:08:50.360 phone from Toronto. I write Jersey with us as well, 0:08:50.440 --> 0:08:53.600 Chief US Interest Rate Strategies at Bloomberg Intelligence on the 0:08:53.640 --> 0:08:56.240 phone in New Jersey. Frances, I'm going to start with you. 0:08:56.640 --> 0:08:59.440 We got pretty much what we expected. What's important here though, 0:08:59.480 --> 0:09:03.360 in your view, Well, the race of course when the 0:09:03.360 --> 0:09:05.839 said statements come out is to do that comparison this 0:09:06.040 --> 0:09:08.959 one versus last one, and they have this mark to market. Yes, 0:09:09.040 --> 0:09:12.319 the economy, the pace of the recovery has moderated. They 0:09:12.320 --> 0:09:14.840 have to say this. The data has been worth. What's 0:09:14.920 --> 0:09:17.760 really fascinating to me is that in the past they 0:09:17.800 --> 0:09:19.880 have told us that the path of the economy will 0:09:19.920 --> 0:09:21.760 depend on the course of the virus. But they have 0:09:22.000 --> 0:09:26.160 added in this little sentence which now says including progress 0:09:26.200 --> 0:09:29.480 on vaccinations. Now that kind of seems obvious, but there's 0:09:29.520 --> 0:09:31.960 another central banks that did that last week the Bank 0:09:32.000 --> 0:09:34.600 of Canada, and what it appears to me is happening 0:09:34.600 --> 0:09:37.360 is that central banks are giving themselves an off ramp 0:09:37.480 --> 0:09:40.160 if they need it. They're giving themselves a caveat that 0:09:40.280 --> 0:09:43.640 if vaccinations are delayed, it will give them an excuse 0:09:43.679 --> 0:09:46.559 to perhaps appear maybe less like they want to taper, 0:09:46.640 --> 0:09:49.079 give them that ability to be more debblish. It also 0:09:49.160 --> 0:09:51.600 means we are all now going to become obsessed even 0:09:51.640 --> 0:09:54.240 more than we are with vaccinations data. I said, the 0:09:54.320 --> 0:09:56.720 fact that becomes the data du jour for the rest 0:09:56.720 --> 0:09:58.360 of the month and into the next one, Like we 0:09:58.440 --> 0:10:00.760 could be any more obsessed because Tim and I are 0:10:00.800 --> 0:10:03.560 incredibly obsessed. Are come on in on here. Um you 0:10:03.640 --> 0:10:07.040 just heard what francis her takeaway? Um, do you concur 0:10:07.160 --> 0:10:09.240 and what jumps out for you? Yeah? I mean the 0:10:09.280 --> 0:10:11.920 statement The last couple of meetings, quite frankly, has been 0:10:12.040 --> 0:10:16.080 pretty dull affair generally speaking, it's really the press conference 0:10:16.120 --> 0:10:19.560 that has has generated some of the fireworks and market movements. 0:10:19.559 --> 0:10:22.320 So I think that you know, j Powell being asked, 0:10:22.520 --> 0:10:24.840 you know, maybe to clarify things on you know, what 0:10:25.000 --> 0:10:27.280 is what did he mean by it's not time to 0:10:27.320 --> 0:10:30.600 think about thinking about raising rates, like what would change that? 0:10:31.400 --> 0:10:34.960 What would what's the outlook on inflation with inflation expectations 0:10:35.000 --> 0:10:39.080 above two percent? And uh, some market measures, although in 0:10:39.120 --> 0:10:41.160 my view a lot of those market measures are being 0:10:41.200 --> 0:10:44.080 manipulated a little bit by the fed's action of buying 0:10:44.120 --> 0:10:47.679 a lot of the assets uh that underlie them. So 0:10:47.480 --> 0:10:49.840 so I think I think the press conference could see 0:10:50.280 --> 0:10:52.760 additional market moves. I would be shocked if he wasn't 0:10:52.800 --> 0:10:55.640 asked about some of the craziness going on, and you 0:10:55.679 --> 0:10:58.040 know game Stop in those names too. Um, he won't 0:10:58.040 --> 0:11:00.280 answer them, I think, except to say that you know, 0:11:00.280 --> 0:11:02.480 the regulators will look into it, the SEC as the 0:11:02.520 --> 0:11:04.800 regulator of record for that, you know, that kind of thing. 0:11:04.840 --> 0:11:07.280 But nonetheless, he's going to be asked and and you know, 0:11:07.800 --> 0:11:10.880 some of the comments that he makes could move the 0:11:10.960 --> 0:11:13.640 rates markets quite a lot. If if he suggests that, 0:11:13.840 --> 0:11:16.160 you know, if vaccinations go really well, that they could 0:11:16.200 --> 0:11:18.280 be hiking next year, which you know it is not 0:11:18.320 --> 0:11:20.320 our base case scenario, but it's certainly something that the 0:11:20.320 --> 0:11:22.319 market is going to look out for. Yeah. I want 0:11:22.320 --> 0:11:24.320 to stick on that because, as you know, I'm absolutely 0:11:24.360 --> 0:11:26.520 obsessed with this game Stop story. I mean, what questions 0:11:26.559 --> 0:11:29.560 would you ask ask the FED share about this if 0:11:29.559 --> 0:11:32.160 you could, well, well, if I could, I would ask 0:11:32.200 --> 0:11:36.000 him about that inflation story, like how much stock does 0:11:36.000 --> 0:11:38.920 the FED put into the tips market? And what the 0:11:38.960 --> 0:11:42.240 tips markets showing about inflation, because you know, the FED 0:11:42.280 --> 0:11:45.160 has always talked about, you know, very weak wages and 0:11:45.200 --> 0:11:47.760 the employment situation the way it is that it's not 0:11:47.920 --> 0:11:50.920 likely to see an inflationary impulse, but that's not what 0:11:50.960 --> 0:11:53.920 the markets are pricing at the moment. And of course 0:11:53.960 --> 0:11:56.440 you know how much of that is being manipulated by 0:11:56.920 --> 0:11:59.800 by the feds massive purchases of the tips market. We 0:11:59.800 --> 0:12:02.640 have to appreciate the FED used to own around eight 0:12:02.679 --> 0:12:05.600 percent of the tips market back in February of last year, 0:12:06.120 --> 0:12:09.320 UM and now they own of the market, so you'd 0:12:09.320 --> 0:12:11.640 think that they're having some impact on the pricing there. 0:12:11.760 --> 0:12:13.880 All right, Francis, come on in on it. What would 0:12:13.920 --> 0:12:15.760 be kind of some of the questions you want to ask? 0:12:15.800 --> 0:12:18.480 And I'm curious if you're as interested too in this 0:12:18.600 --> 0:12:23.120 game stop trade that we've been kind of all obsessed with. Yeah, 0:12:23.200 --> 0:12:25.080 of course, I mean you come in, you see moves 0:12:25.120 --> 0:12:26.720 like this, How could you not be obsessed with it? 0:12:26.800 --> 0:12:28.800 But then let's take a step back. What's really going 0:12:28.880 --> 0:12:31.360 to change the outlooked for the market. It's when is 0:12:31.400 --> 0:12:33.959 the FED going to high rate market now pricing name 0:12:34.040 --> 0:12:37.400 for three. What I find so fascinating is I, like 0:12:37.480 --> 0:12:40.160 everybody else, am obsessed with infletion. We spent a huge 0:12:40.200 --> 0:12:42.280 amount of time looking at that. But the Fed has 0:12:42.320 --> 0:12:44.920 a dual mandate. And while it is clear that inflation 0:12:45.080 --> 0:12:47.200 is going to spice off and then probably enough around 0:12:47.200 --> 0:12:51.439 two percent, the employment mandate is doing terribly. We've had 0:12:51.440 --> 0:12:54.240 two very bad weeks of jobless claim we had a 0:12:54.360 --> 0:12:57.120 negative number on non found carerolls in December. And sure, 0:12:57.520 --> 0:12:59.640 maybe a huge amount of people will be were hired, 0:12:59.640 --> 0:13:03.120 but we have ten million Americans that need to be rehired. 0:13:03.280 --> 0:13:05.160 And I'm struggling to see why the set is not 0:13:05.240 --> 0:13:08.240 emphasizing the employment side of their mandate more. I'd want 0:13:08.240 --> 0:13:10.760 to ask him, why are you so nonchalant about this? 0:13:10.840 --> 0:13:13.520 Where are we just misinterpreting your views? I think that's 0:13:13.520 --> 0:13:15.719 a really part of the story. The market just does 0:13:15.800 --> 0:13:18.600 not buy that the SET is equally waiting both sides 0:13:18.640 --> 0:13:21.360 of its mandate. And that's really peculiar because with average 0:13:21.360 --> 0:13:24.199 infletion targeting, the market should be understanding this and we're 0:13:24.240 --> 0:13:26.400 just not there yet. Ira. I also do wonder, you know, 0:13:26.400 --> 0:13:28.760 it's it's gonna be an interesting environment because you've got 0:13:29.080 --> 0:13:31.960 FED Chief J Powell, You've got the incoming Treasury Secretary, 0:13:32.040 --> 0:13:34.920 a former FED Chief Janet Yellen, And I do wonder 0:13:34.960 --> 0:13:38.040 about that relationship, that understanding, and what that might mean 0:13:38.559 --> 0:13:43.160 in terms of smart monetary policy or policy that's needed 0:13:43.160 --> 0:13:47.160 by the economy. Well, I think that Janet Yellen, having 0:13:47.520 --> 0:13:49.840 been at the FED, you know, and been a colleague 0:13:49.840 --> 0:13:52.080 of of J. Powell's, I think that she'll try to 0:13:52.080 --> 0:13:54.360 be someone hands off. I would be surprised if some 0:13:54.400 --> 0:13:56.480 people at the SET didn't ask her, maybe for her 0:13:56.520 --> 0:13:59.199 advice or whatever. But but but I think she understands 0:13:59.240 --> 0:14:02.880 that an independent central bank is very important. And you know, 0:14:02.960 --> 0:14:05.679 unlike some of the rhetoric that came out of the 0:14:05.720 --> 0:14:07.760 Trump white House, I think that the Biden White House 0:14:07.760 --> 0:14:09.520 will be a little bit more hands off when it 0:14:09.520 --> 0:14:12.440 comes to things like monetary policy. But yeah, you know, 0:14:12.760 --> 0:14:17.280 after after the UM the Dodd Frank regulations were passed 0:14:17.320 --> 0:14:20.440 ten years ago or so, UM, you know, the Treasury 0:14:20.480 --> 0:14:23.600 Secretary now has a lot of power and control in 0:14:23.960 --> 0:14:26.600 what the FED can do in terms of emergency measures. 0:14:26.640 --> 0:14:29.760 So we have to remember that that by design, Congress 0:14:29.800 --> 0:14:33.800 gave the Treasury Secretary quite a bit of of power 0:14:34.000 --> 0:14:37.480 over the fed UM. You know, not not monetary policy, 0:14:37.760 --> 0:14:40.800 but those special things like the Main Street facility and 0:14:40.840 --> 0:14:43.920 some of the corporate bond buying program for example, and 0:14:43.920 --> 0:14:46.240 things like that have to be approved by the Treasury Secretary. 0:14:46.280 --> 0:14:47.920 So so I think by design there has to be 0:14:47.960 --> 0:14:50.080 at least a cordial relationship between the White House and 0:14:50.120 --> 0:14:52.880 the Treasury extume me between the Treasury Department and the 0:14:52.920 --> 0:14:55.960 fed UM. Otherwise, you know, in another crisis, it won't work. 0:14:56.200 --> 0:14:59.400 Francis I. I I wonder what we'll hear from j. Powell 0:14:59.400 --> 0:15:02.960 in terms of his message for lawmakers. In the past 0:15:03.000 --> 0:15:06.280 few months, we've really heard him say, hey, we've done 0:15:06.320 --> 0:15:09.560 what we can do from the perspective of monetary policy. 0:15:09.920 --> 0:15:12.080 Now there is a new Congress in session, now there 0:15:12.120 --> 0:15:14.040 is a new president. What is the message that you 0:15:14.040 --> 0:15:16.080 think he's going to have for lawmakers to try to 0:15:16.120 --> 0:15:20.240 compel them to act on fiscal stimulus. Well, he'll probably 0:15:20.240 --> 0:15:23.400 get questions about how much of the fiscal are you incorporating? 0:15:23.560 --> 0:15:26.280 Usually that I'd likes to see it actually delivered before 0:15:26.280 --> 0:15:29.160 it's incorporated into their comments. But we're going to hear 0:15:29.200 --> 0:15:31.120 the same thing we hear from all Central Bank, which 0:15:31.120 --> 0:15:34.080 is seed more fiscal. What I'd like to hear is 0:15:34.160 --> 0:15:36.560 whether j poll can make some sort of comment about 0:15:36.600 --> 0:15:41.320 regulation that helps to prevent bubbles from developing, or more 0:15:41.360 --> 0:15:43.760 focused on some of the other areas the Central Bank 0:15:43.800 --> 0:15:47.480 has been focused on climate change, into qualities housing. I mean, 0:15:47.520 --> 0:15:50.080 the things the set is looking at are really expanding 0:15:50.120 --> 0:15:52.720 beyond this installation and employment. It would be good to 0:15:52.760 --> 0:15:54.880 get a sense of how he sees the Central banks 0:15:54.960 --> 0:15:58.080 roll on those topics, would have which has traditionally been 0:15:58.120 --> 0:16:00.200 something more at play in Washington, right, and so was 0:16:00.240 --> 0:16:02.760 something we've heard about from President Biden a lot this week. 0:16:02.840 --> 0:16:04.680 And I remember you and I on the last FED 0:16:04.760 --> 0:16:07.600 meeting when we heard J Powell talk about climate change. 0:16:07.640 --> 0:16:09.560 That was one of the things that stood out for us. 0:16:09.920 --> 0:16:11.760 I want to pose a question to both of you, 0:16:12.080 --> 0:16:14.840 uh and are maybe take it first. I mean, I 0:16:14.920 --> 0:16:18.640 am curious what line J. Powell will walk when it 0:16:18.680 --> 0:16:21.360 comes to that one point nine trillion dollar stimulus plan. 0:16:21.520 --> 0:16:24.200 Do you think that we might hear words from his 0:16:24.280 --> 0:16:26.520 mouth that are going to be more supportive of a 0:16:26.560 --> 0:16:29.840 bigger stimulus package versus a smaller one, because you know 0:16:29.880 --> 0:16:31.920 the press community that's going to be a lot of 0:16:31.920 --> 0:16:34.040 the questioning. And I know, I think Francis you brought 0:16:34.040 --> 0:16:35.520 it up, and I know some of our other team 0:16:35.800 --> 0:16:38.600 Kathleen Hay saying that's what I want to know. Yeah, 0:16:38.640 --> 0:16:41.360 I think he's gonna say what he said before Congress 0:16:41.440 --> 0:16:44.080 a couple of a month or so ago, and that's that, 0:16:44.480 --> 0:16:46.480 you know, the fiscal stimulus is up to you, but 0:16:46.560 --> 0:16:49.880 it needs to be targeted. It should be UM. It 0:16:49.920 --> 0:16:52.880 should make sure that it affects the sectors of the 0:16:52.880 --> 0:16:55.880 economy that our hardest hit. UM. So he'll I think 0:16:55.880 --> 0:16:58.800 he'll continue to with that rhetoric. UM. There is a 0:16:59.000 --> 0:17:00.800 there is a limit I think to what he's able 0:17:00.840 --> 0:17:02.280 to say. But he'll say it has to be big 0:17:02.400 --> 0:17:05.480 enough to spur the economy. It's not his job to UM, 0:17:05.520 --> 0:17:08.040 you know, to give any precise number. UM. But then 0:17:08.080 --> 0:17:11.160 I'll say, you know, maybe he'll say like bigger is better, 0:17:11.280 --> 0:17:13.920 Like that's not out of the question that he says 0:17:13.960 --> 0:17:16.000 something like that. I don't think he will UM, but 0:17:16.119 --> 0:17:18.360 he might hint at that maybe in words, And I'm 0:17:18.400 --> 0:17:20.760 sure he's you know, tried the word Smith the last 0:17:20.760 --> 0:17:23.240 couple of hours thinking about how to answer the many 0:17:23.320 --> 0:17:25.880 questions that he's likely to get on the stimulus. Francis, 0:17:25.880 --> 0:17:31.040 what about your thoughts on that? You know, I'm going 0:17:31.119 --> 0:17:34.600 through the press conferencing about one thing and one thing only, 0:17:34.640 --> 0:17:36.359 and i know it wasn't your question, but I'm just 0:17:36.480 --> 0:17:39.400 upset with it, which is how the heck is how 0:17:39.440 --> 0:17:42.000 we going to get people to stop talking about papering. 0:17:42.560 --> 0:17:45.480 It hasn't come up. He clearly doesn't want us talking 0:17:45.480 --> 0:17:47.960 about papering, so maybe even bringing it up isn't a 0:17:47.960 --> 0:17:50.520 good idea. But he has to get this market just 0:17:50.600 --> 0:17:53.160 stop thinking about it, and one of the only ways 0:17:53.200 --> 0:17:55.600 he can do that is really come down super hard 0:17:55.720 --> 0:17:58.040 during the press conference. So you know, there's gonna be 0:17:58.119 --> 0:18:00.720 questions about fitzol, there's many questions about same stop maybe 0:18:00.760 --> 0:18:03.159 put a different way. But what I really need to 0:18:03.200 --> 0:18:06.480 hear from him is are you happy that Bostic rays 0:18:06.560 --> 0:18:08.440 papering and that we're starting to think about it or 0:18:08.480 --> 0:18:10.359 do you want us to put us aside? And my 0:18:10.560 --> 0:18:12.880 entire freed view for the next three to six months 0:18:13.000 --> 0:18:15.520 is based on the tone of that commentary. That's what's 0:18:15.520 --> 0:18:18.000 really going to drive rates here? So what else would 0:18:18.000 --> 0:18:24.000 you ask him personally? Yeah, yeah, sure, So I have 0:18:24.080 --> 0:18:26.320 a whole list. I want to hear about something. I 0:18:26.320 --> 0:18:30.880 don't want to hear about employment versus inflation, convinced markets 0:18:30.880 --> 0:18:34.040 that you really do are doing average inflation targeting, because 0:18:34.040 --> 0:18:37.200 they clearly don't do that. I'd also love to hear 0:18:37.280 --> 0:18:40.840 how he's used short term downside risks versus medium term 0:18:40.880 --> 0:18:44.800 outlook improving now the statement actually took out the words 0:18:45.119 --> 0:18:47.800 short term and medium term, which I think are very interesting. 0:18:47.800 --> 0:18:50.080 I think they just want to give themselves some optionality. 0:18:50.359 --> 0:18:52.479 But how is he thinking about just how bad the 0:18:52.520 --> 0:18:55.320 next two months can be versus how much better twelve 0:18:55.320 --> 0:18:57.680 months from now should be. That's also going to put 0:18:57.720 --> 0:18:59.760 some stuff in here, And of course we got lots 0:18:59.760 --> 0:19:01.720 of new is about the e c D not being 0:19:01.840 --> 0:19:04.640 very expended about market pricing, on the possibility of rate 0:19:04.680 --> 0:19:07.480 cuts today. I think they're talking down the euro. You 0:19:07.560 --> 0:19:10.520 might get a question into one usc he won't answer it, 0:19:10.600 --> 0:19:13.600 but I'd probably ask it anyway. Yeah, if I can 0:19:13.680 --> 0:19:15.640 like just to go on that. I think that near 0:19:15.760 --> 0:19:17.760 term and medium term is interesting because I think that 0:19:17.800 --> 0:19:20.399 goes to the point that you know they're trying to 0:19:20.400 --> 0:19:22.840 get away from needing to answer the question like when 0:19:22.840 --> 0:19:24.840 will we taper or when are we going to hike rate? 0:19:24.840 --> 0:19:27.000 It's like like that that's something that they just want 0:19:27.000 --> 0:19:28.600 to get out of the vernacular. I agree with that 0:19:28.720 --> 0:19:32.040 that idea. I don't think you can though, because because ultimately, 0:19:32.080 --> 0:19:34.880 like if you're if you're trading a five year treasury note, 0:19:35.000 --> 0:19:37.399 you have to have some kind of view on what 0:19:37.520 --> 0:19:39.439 short term magistrates are going to be and going to 0:19:39.480 --> 0:19:42.520 average over the next five years. So so the question 0:19:42.560 --> 0:19:44.680