WEBVTT - Bloomberg Surveillance TV: June 18th, 2026 0:00:02.360 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:35.840 Terminal and the Bloomberg Business app. 0:00:36.360 --> 0:00:38.920 Begin this hour with stocks rising and bond heels falling 0:00:38.960 --> 0:00:41.680 after Kevin Worsh made it clear the Central Bank will 0:00:41.720 --> 0:00:44.840 not tolerate high inflation. Ed yourd any of your Denny research, 0:00:44.880 --> 0:00:48.920 calling Worsh a quote hawk in Dove's clothing, writing we 0:00:49.000 --> 0:00:51.560 thought he was a dove who favored lowering the federal 0:00:51.600 --> 0:00:55.760 funds rate. Instead, he hammered home a strict orthodox message 0:00:55.800 --> 0:00:58.800 on inflation with a strong commitment to price stability and. 0:00:58.920 --> 0:01:00.760 Joins us now for more at great to see. Thank 0:01:00.840 --> 0:01:01.600 you for being here. 0:01:01.960 --> 0:01:05.520 So is this more of an Alan Greenspan rather than 0:01:05.840 --> 0:01:06.960 say and Alan Burns. 0:01:07.200 --> 0:01:09.199 I really can't answer that because I have a test 0:01:09.240 --> 0:01:13.039 force working on that. We all it's very green span. 0:01:13.240 --> 0:01:15.960 I mean, it's you know, not a lot of information, 0:01:16.560 --> 0:01:20.160 a lot of ambiguity, and you know, occasionally some surprises. 0:01:20.240 --> 0:01:22.160 So he started right off the bat with the surprise. 0:01:23.360 --> 0:01:25.040 You know, it's kind of like he had an interview 0:01:25.040 --> 0:01:28.840 with the President Trump and yes, told him everything that 0:01:29.640 --> 0:01:32.160 he wanted. Yes, we're going to lower interest rates, SAI 0:01:32.240 --> 0:01:34.319 is created, creating productivity. Then as soon as he got 0:01:34.360 --> 0:01:38.880 the job, it's like the old worsh concerned about price stability. 0:01:38.920 --> 0:01:41.920 He mentioned price stability over and over again. Not only that, 0:01:42.000 --> 0:01:45.559 but he pretty much committed to two percent. He didn't 0:01:45.840 --> 0:01:47.360 finagel that too much at all. 0:01:47.600 --> 0:01:52.080 Mike readif RBC said, by their account, inflation was mentioned 0:01:52.080 --> 0:01:56.000 by Kevin Walsh nineteen times. The character four times where 0:01:56.040 --> 0:01:59.240 he mentioned the labor market is this, and the labor 0:01:59.280 --> 0:02:02.960 market is looking right exactly. There is no mention mandate 0:02:03.120 --> 0:02:05.640 or a sense that maybe there's some weakness there in 0:02:05.720 --> 0:02:07.160 conflict in the dual mandate. 0:02:07.720 --> 0:02:09.400 Is this all talk and not action? 0:02:09.560 --> 0:02:09.680 Right? 0:02:09.680 --> 0:02:10.280 I Mean, if you. 0:02:10.240 --> 0:02:12.280 Were skeptical, you would say this is somebody who wants 0:02:12.320 --> 0:02:14.840 to job on the market. You're seeing the move that 0:02:14.840 --> 0:02:17.360 he wanted in the flattening of the yield curve, and 0:02:17.400 --> 0:02:18.240 then he won't necessarily. 0:02:18.480 --> 0:02:21.560 I think he's hoping that he'll be lucky because so far, 0:02:21.639 --> 0:02:23.720 so good. I mean, the price of oils coming down, 0:02:23.880 --> 0:02:26.600 as you mentioned, the price of gasolines coming down. We 0:02:26.680 --> 0:02:30.800 are going to see the headline inflation used coming down substantially. 0:02:31.000 --> 0:02:34.799 And if he's lucky and the recent inflation surge doesn't 0:02:34.840 --> 0:02:39.040 spread into the rest of the inflation numbers, then he 0:02:39.160 --> 0:02:42.040 may very well just kind of sit back and let 0:02:42.080 --> 0:02:44.399 that all happen, and then he'll say, well, look, things 0:02:44.440 --> 0:02:46.440 are going in the right direction. We don't have to 0:02:46.480 --> 0:02:49.480 do anything, and at the same time signal that down 0:02:49.560 --> 0:02:52.640 the road, maybe the productivity story will come back as 0:02:52.680 --> 0:02:56.440 a reason to lower rates, but right now it may 0:02:56.480 --> 0:02:58.280 be do nothing fed for a while. 0:02:58.520 --> 0:03:00.880 What if we see a labor market does weaken, Now, 0:03:00.960 --> 0:03:02.840 what's his reactionary function going to be? 0:03:03.880 --> 0:03:06.160 Well, he kind of locked himself in. I mean, you know, 0:03:06.600 --> 0:03:10.440 he didn't say very much except on price stability. He 0:03:10.560 --> 0:03:13.840 said that over and over again, and I think that 0:03:14.160 --> 0:03:18.200 if you get a weaker labor market, he's going to 0:03:18.880 --> 0:03:24.200 be called on. If he suddenly becomes very liberal, you know, 0:03:24.480 --> 0:03:27.600 in the mandate and said, well, people are getting hurt. 0:03:27.639 --> 0:03:30.959 We've got to focus on the unemployment rate. He basically 0:03:31.000 --> 0:03:33.200 said that in order to have a healthy economy, in 0:03:33.240 --> 0:03:35.560 order to have a healthy labor market, you have to 0:03:35.600 --> 0:03:38.520 have a price stability, which, by the way, is deja 0:03:38.640 --> 0:03:41.640 vu all over again, because that's what Powell had been 0:03:41.640 --> 0:03:42.680 saying for quite some time. 0:03:43.000 --> 0:03:44.360 Do you think he was the one that threw out 0:03:44.400 --> 0:03:48.200 the proposal of discussing a rate cut at the meeting 0:03:48.400 --> 0:03:50.200 just so he can, you know, when he has breakfast 0:03:50.240 --> 0:03:52.160 with the Treasury Secretary say, look I threw it out 0:03:52.160 --> 0:03:53.400 there and I was pushed back. 0:03:54.760 --> 0:03:55.360 We don't know. 0:03:55.560 --> 0:03:59.160 I mean, you know, it's a good conspiracy. 0:03:58.600 --> 0:04:01.400 Theory, right, could work. 0:04:01.960 --> 0:04:04.280 It makes sense. You know. You can go back to 0:04:04.320 --> 0:04:07.360 the President said, hey, I was the one who you 0:04:07.400 --> 0:04:11.040 know well, but he said he didn't vote on the dutlot, 0:04:11.160 --> 0:04:13.160 so you know, I don't know where he is on 0:04:13.240 --> 0:04:13.600 all that. 0:04:13.880 --> 0:04:15.120 So when you take a look at some of the 0:04:15.160 --> 0:04:17.760 projections coming out of a number of different Wall Street houses, 0:04:18.040 --> 0:04:20.680 some have been raising their expectations for a rate hike 0:04:21.120 --> 0:04:23.840 this year. You saw that with Deutsche Bank saying that 0:04:23.920 --> 0:04:26.240 with less communication, they can be more nimble and rate 0:04:26.839 --> 0:04:29.640 hike rates sooner, even City Group, which has been on 0:04:29.680 --> 0:04:32.680 the more dubbish side pushing back the potential for a 0:04:32.800 --> 0:04:36.720 rate cut. If there are rate hikes, does that curtail 0:04:36.839 --> 0:04:39.720 the Roaring twenty twenties and some of the enthusiasm. 0:04:39.240 --> 0:04:40.240 That we're seeing in equities? 0:04:40.640 --> 0:04:44.080 Yes your story, yeah, so does it does affect? 0:04:44.200 --> 0:04:47.080 And last time I was here, I think John mentioned 0:04:47.120 --> 0:04:49.560 that we were six years into the Roaring twenty twenties. 0:04:49.800 --> 0:04:52.240 If you just counted, we're actually seven years into the 0:04:52.320 --> 0:04:54.840 Roaring twenty twenties. And so if I get this year right, 0:04:54.880 --> 0:04:57.320 I only have three more to go. And every year 0:04:57.360 --> 0:04:59.880 there's you know, it's a roller coaster ride. You get 0:05:00.360 --> 0:05:02.520 all sorts of things to worry about. Maybe that's the 0:05:02.520 --> 0:05:04.760 next worry is something we're worrying that. You know, if 0:05:04.760 --> 0:05:07.880 the FED actually has to raise interest rates, then I 0:05:08.000 --> 0:05:11.960 won't that spoiled the Roaring twenty twenties the party we're in, 0:05:11.960 --> 0:05:13.640 And I don't think so. I think I think the 0:05:13.680 --> 0:05:17.279 economy has demonstrated its resilience. People have been kind of 0:05:17.279 --> 0:05:20.039 getting all bent out of shape about the bond yld 0:05:20.320 --> 0:05:22.640 being back up. It's back to four and a hare percent, 0:05:22.720 --> 0:05:25.320 that's kind of normal. I think the bondial is normalized. 0:05:25.360 --> 0:05:29.520 I think FED policy is normalized. I mean, I think, 0:05:30.240 --> 0:05:32.520 you know, worsh can just kind of leave things alone 0:05:32.520 --> 0:05:34.920 here for a while because the economy is performing just fine. 0:05:34.960 --> 0:05:37.360 Those are two different things, though, leaving it alone versus 0:05:37.480 --> 0:05:41.279 hiking rates two different things, and understandably people are watching 0:05:41.279 --> 0:05:44.160 what he does, not what he actually says. At the 0:05:44.240 --> 0:05:47.159 same time, if you do think about hiking two times 0:05:47.160 --> 0:05:49.360 this year, which even Bob Michael of JPMorgan was talking 0:05:49.400 --> 0:05:53.680 about yesterday, how much does that in fact look potentially 0:05:53.720 --> 0:05:54.440 some of what we're saying. 0:05:54.480 --> 0:05:57.760 Look, when the apparel numbers came out real strong, we 0:05:59.200 --> 0:06:01.800 kind of reiterate at our position that there was not 0:06:01.839 --> 0:06:03.960 going to be any rate cuts this year and that 0:06:04.680 --> 0:06:08.360 the FED would probably switch to a tightening bias at 0:06:08.360 --> 0:06:10.839 this meeting, which is exactly what happened. They didn't go 0:06:10.960 --> 0:06:14.480 from easy an easy bias in April to a neutral bias. 0:06:14.520 --> 0:06:17.359 They went right to a tightening bias. And so we 0:06:17.400 --> 0:06:19.760 got that right. And but the thing that really surprised 0:06:19.760 --> 0:06:25.120 me is how hawkish that a worsh came across. If 0:06:25.160 --> 0:06:27.840 the FED were in a position where they had to 0:06:27.920 --> 0:06:30.640 raise rates. It'd be a quarter fifty basis points. It 0:06:30.720 --> 0:06:33.560 wouldn't be a big deal in my humble opinion, and 0:06:33.800 --> 0:06:36.880 the bond market might actually rally on that. Back in 0:06:37.160 --> 0:06:39.640 twenty twenty four, then the fedal overer the Fed funds 0:06:39.720 --> 0:06:41.520 right by one hundred basis points. I said, you know, 0:06:41.839 --> 0:06:43.839 I think you're making a mistake here because the economy 0:06:43.880 --> 0:06:46.680 is resilient and you haven't gotten down to two percent. 0:06:46.720 --> 0:06:49.400 And the bond market agreed with me, my bond vigilanti friends. 0:06:50.040 --> 0:06:52.080 The bond yal went up one hundred basis points. And 0:06:52.160 --> 0:06:54.760 even last year they cut sertenty five basis points on 0:06:54.800 --> 0:06:56.960 the Fed funds rate in the bond yield, where is 0:06:57.000 --> 0:06:59.120 it any four and a half percent? So they haven't 0:06:59.120 --> 0:07:04.920 accomplished anything. So lowering rates hasn't helped, but they may conclude. Look, 0:07:05.000 --> 0:07:06.880 the thing that really came across to me is that, 0:07:07.880 --> 0:07:10.160 and he said it. Wor said, look, we haven't we 0:07:10.240 --> 0:07:13.000 haven't gotten down to our two percent inflation target in 0:07:13.120 --> 0:07:18.480 over five years. And he said he committed the committee 0:07:18.840 --> 0:07:22.480 to get down to get inflation down to two percent, 0:07:23.160 --> 0:07:25.080 So you know, how are you going to do that 0:07:25.160 --> 0:07:29.360 without raising interest rates. So I think the market's got 0:07:29.360 --> 0:07:33.160 it right now when we thought that there would be 0:07:33.160 --> 0:07:38.120 a tightening bias and there could be an increase. If 0:07:38.160 --> 0:07:40.040 the FED really wants to get it down to two percent, 0:07:40.120 --> 0:07:41.920 that may be necessary. 0:07:42.080 --> 0:07:45.239 But what about the FED policy on the housing market, 0:07:45.240 --> 0:07:47.840 because he said that's one area he does think it's restrictive. 0:07:48.360 --> 0:07:51.080 Well, at the same time he's talking about reducing the 0:07:51.120 --> 0:07:55.280 balance sheet and particularly focusing on fed's been talking for 0:07:55.320 --> 0:07:59.040 a while about reducing the mortgage backed securities down to zero. 0:07:59.200 --> 0:08:01.680 That's not going to help, uh, the housing market. I 0:08:01.720 --> 0:08:04.080 don't think they've got an answer for that, you know. 0:08:04.240 --> 0:08:06.720 I mean, it's it's a shotgun, it's not a rifle. 0:08:06.800 --> 0:08:09.120 They there, there's and there's only so much the FED 0:08:09.200 --> 0:08:12.840 can do. I'm a believer that, you know, if the 0:08:12.880 --> 0:08:14.680 FED is not in our face as much as it 0:08:14.840 --> 0:08:17.240 was when Palell was around, I mean, I really don't 0:08:17.240 --> 0:08:22.600 mind less less communication. I finally finally had been calling 0:08:22.640 --> 0:08:26.200 in the Federal Open Mouth Committee. 0:08:26.560 --> 0:08:29.760 Are you on the task force? As this is my 0:08:29.800 --> 0:08:31.800 first question, Eroyd, are you on a task force? Which 0:08:31.800 --> 0:08:33.280 one stay with us? 0:08:33.600 --> 0:08:36.080 Mulple Impex surviance coming up after this. 0:08:45.679 --> 0:08:47.199 My whole life is all about deals. 0:08:47.200 --> 0:08:48.760 That's all I if it did is make deals. 0:08:48.840 --> 0:08:52.120 If they don't honor the agreements, who will probably go 0:08:52.240 --> 0:08:53.480 back to bombing them. 0:08:53.720 --> 0:08:56.280 Here's the latest, President Donald Trump signing an interim peace 0:08:56.320 --> 0:08:59.319 deal with Iran last night. Norman rule of csis writing 0:08:59.360 --> 0:09:02.520 the reported US or on deal is best understood as 0:09:02.559 --> 0:09:05.320 a high value pause in the current military phase of 0:09:05.360 --> 0:09:09.960 the conflict, not a durable strategic settlement. The deal buys time, 0:09:10.160 --> 0:09:12.800 it does not by trust. Norman joins us now from 0:09:12.800 --> 0:09:15.120 more Norman, wonderful to get your perspective. 0:09:15.160 --> 0:09:16.400 Can you just elaborate on that. 0:09:16.720 --> 0:09:19.280 Why do you think that this fourteen point deal is 0:09:19.280 --> 0:09:23.040 simply a placeholder and not necessarily a roadmap for what's 0:09:23.080 --> 0:09:23.480 to come? 0:09:24.720 --> 0:09:27.760 Good morning. The deal certainly has drawn a fair amount 0:09:27.760 --> 0:09:31.840 of criticism from both opponents and supporters of the administration 0:09:32.000 --> 0:09:35.160 for its language, but it provides a mechanism for the 0:09:35.200 --> 0:09:39.640 administration to transfer the process from a military conflict which 0:09:39.640 --> 0:09:42.640 had no longer provided options for a low cost way 0:09:42.679 --> 0:09:45.439 to restore access to the straight and to achieve its 0:09:45.440 --> 0:09:50.000 previous goals, into a diplomatic process. Now, the diplomatic process 0:09:50.400 --> 0:09:54.120 may not offer any optimism for its success, but the 0:09:54.120 --> 0:09:59.920 diplomatic process immediately relieves pressure on the World Energy Mark 0:10:00.280 --> 0:10:03.760 and the world economies and sort of reshuffles the deck 0:10:03.800 --> 0:10:07.360 of options for the administration. Now, in terms of what 0:10:07.400 --> 0:10:10.200 the Iranians will get out of this, absolutely they will 0:10:10.200 --> 0:10:13.839 get some financial relief. But in fairness, the three hundred 0:10:13.920 --> 0:10:17.240 billion dollar fund is described as a plan. There's absolutely 0:10:17.280 --> 0:10:19.920 no reason to believe that anyone in their right mind 0:10:20.000 --> 0:10:23.280 will donate money to this, given the fact that money 0:10:23.320 --> 0:10:27.040 will be hostage to Iran's policy future sanctions, and that 0:10:27.240 --> 0:10:30.400 Gulf states have been victims of Iranian attacks and are 0:10:30.440 --> 0:10:34.079 devoting most of their investments to their own economies. And 0:10:34.120 --> 0:10:36.320 my last point that I would make on this is 0:10:36.360 --> 0:10:40.200 that this process itself is tenuous, and the President and 0:10:40.200 --> 0:10:44.240 the administration will need to improve early on that this 0:10:44.360 --> 0:10:47.440 process is narrow, it is a reversible and it is 0:10:47.480 --> 0:10:51.960 achieving something besides giving the Iranians additional liquidity Norman. 0:10:51.960 --> 0:10:53.800 Given the fact that it is narrow, what happened to 0:10:53.800 --> 0:10:57.000 the president's own red lines that he's spoken about for years? 0:10:58.240 --> 0:11:00.880 Well, his red lines that he mentioned again in the 0:11:00.920 --> 0:11:04.200 press conference yesterday will remain threefold. First, and ron cannot 0:11:04.200 --> 0:11:07.520 have a pathway to a nuclear weapon that remains part 0:11:07.600 --> 0:11:11.280 of this process, and indeed that's the primary effort of 0:11:11.360 --> 0:11:14.480 upcoming talks. Now we've talked about missiles, and his statement 0:11:14.600 --> 0:11:17.480 yesterday is that Ron can have a normal complement of 0:11:17.559 --> 0:11:20.079 missiles that any country in the world might have. That's 0:11:20.120 --> 0:11:23.679 not an ICBM, that's not an intermediate range ballistic missiles, 0:11:23.679 --> 0:11:26.079 but that would be a defensive compliment that any country 0:11:26.120 --> 0:11:28.040 would have, and that's got to be worked out with 0:11:28.080 --> 0:11:30.800 its neighbors. And last day, Ron's got to do something 0:11:30.800 --> 0:11:33.720 about its militias that it can't have a process. The 0:11:33.840 --> 0:11:36.640 sense is that there's conversations that are going on on 0:11:36.679 --> 0:11:39.000 the side of the steel that will work that out. 0:11:39.040 --> 0:11:43.280 But that's a complicated regional diplomatic issue that they don't 0:11:43.280 --> 0:11:46.120 want to put in the same basket as their initial 0:11:46.120 --> 0:11:49.480 discussions with the already very hard nuclear issues. 0:11:49.840 --> 0:11:53.000 The vice president, he was making the rounds doing some interviews, 0:11:53.000 --> 0:11:55.240 as the reporter said that Ron's regen is quote a 0:11:55.320 --> 0:11:58.559 much different group of people for whom quote something has 0:11:58.640 --> 0:12:02.400 fundamentally transformed norm Do you see any evidence that this 0:12:02.559 --> 0:12:03.600 is really a new regime. 0:12:04.559 --> 0:12:08.960 Well, they're a new generation. They were raised in a 0:12:09.000 --> 0:12:13.200 different world of post two thousand and three worldview, So 0:12:13.240 --> 0:12:16.920 certainly they have a different perspective. But there's no evidence 0:12:17.000 --> 0:12:20.600 whatsoever that they believe that Uron should not be a 0:12:20.640 --> 0:12:24.320 regional Hegemen, that they don't believe that they have a 0:12:24.400 --> 0:12:29.000 right to and a reason to run malicious such as 0:12:29.000 --> 0:12:31.959 Hezbollah and the who theis, and that they won't remain 0:12:32.000 --> 0:12:33.760 a threat to their neighbors in the near term. But 0:12:34.040 --> 0:12:38.160 clearly there are conversations going on between the administration and 0:12:38.280 --> 0:12:41.120 some elements in the Iranian government that have given the 0:12:41.160 --> 0:12:43.840 administration reason to believe this may be the case. The 0:12:43.880 --> 0:12:47.840 trick is the administration needs to demonstrate somewhat early on 0:12:47.920 --> 0:12:51.120 in the process that this process is proving that is, 0:12:51.200 --> 0:12:53.920 that possibility may be realized. 0:12:54.280 --> 0:12:56.920 Norm do you think that this realigns the US in 0:12:56.960 --> 0:12:59.400 the region. It seems like the Gulf nations are happy 0:12:59.440 --> 0:13:03.040 that the kinetic conflict will at least cease for now. 0:13:03.360 --> 0:13:07.000 At the same time, Israel is pretty upset because of their. 0:13:06.840 --> 0:13:09.120 Goals have not been reached. Do you think this. 0:13:09.080 --> 0:13:11.880 Aligns the US more closely with Gulf nations and further 0:13:11.920 --> 0:13:13.200 away from Israel. 0:13:14.240 --> 0:13:17.559 Well, let's look at Israel's goals. Iran's nuclear program has 0:13:17.640 --> 0:13:24.040 been devastated. Iran's missile program has been severely damaged. Now 0:13:24.080 --> 0:13:27.240 at the same time, the regime remains in place. The 0:13:27.280 --> 0:13:31.760 militias are no more active than they were prior to this. 0:13:31.920 --> 0:13:34.440 The question I think for Israel is how long would 0:13:34.480 --> 0:13:37.480 that conflict continue? And there are people in Israel and 0:13:37.520 --> 0:13:40.480 the United States would like this conflict to continue, and 0:13:40.520 --> 0:13:44.480 that's an ideological position. Now within the Gulf, they're paying 0:13:44.520 --> 0:13:48.600 the price for that conflict with the missile striking their population. 0:13:48.720 --> 0:13:51.680 There's no evidence the Gulf States as a group oppose 0:13:52.000 --> 0:13:54.920 the deal the President is put forward, and the United 0:13:54.960 --> 0:13:59.359 States is seen as the indispensable security partner of the GCC. 0:13:59.559 --> 0:14:01.959 It may not be sufficient to be the only partner, 0:14:02.200 --> 0:14:04.760 but it is the indispensable partner, and it leaves this 0:14:04.880 --> 0:14:09.520 conflict much closer to all of these of the GCC states. 0:14:09.920 --> 0:14:12.600 Do you think that buying time means sixty days or 0:14:12.600 --> 0:14:14.520 do you think that buying time means till the end 0:14:14.520 --> 0:14:14.920 of the year. 0:14:15.880 --> 0:14:18.600 Yes, I think the answer is it could be either, 0:14:18.679 --> 0:14:21.080 but it's going to depend upon events. And that's important 0:14:21.120 --> 0:14:24.040 because all it takes would be some sort of high 0:14:24.080 --> 0:14:28.280 casualty event. It might take place. God forbid in Lebanon, 0:14:28.560 --> 0:14:31.960 which remains a separate arena from this. Neither Israel nor 0:14:32.040 --> 0:14:34.960 the Lebanese has below or parties to this agreement, although 0:14:35.000 --> 0:14:38.160 Lebanon is mentioned in the agreement. And some sort of 0:14:38.240 --> 0:14:42.840 event could take place during the discussions which could take 0:14:43.400 --> 0:14:47.360 these conversations out of joint and move this into a 0:14:47.400 --> 0:14:50.720 different sort of dynamic. But the administration is going to 0:14:50.760 --> 0:14:53.840 look for some way to show that the Iranians are 0:14:53.920 --> 0:14:57.280 moving in the right direction, and that will take time. Remember, 0:14:57.400 --> 0:15:00.600 nothing moves fast and talks with Iran no matter which 0:15:00.600 --> 0:15:03.760 administration is dealing with him. And these issues are issues 0:15:03.800 --> 0:15:07.560 that every administration has spent years struggling to work with Iran. 0:15:08.000 --> 0:15:11.040 So it would be unfair to have to expect that 0:15:11.120 --> 0:15:13.720 the Trump administration could achieve any of this quickly. 0:15:14.360 --> 0:15:16.480 Stay with US MULTILINPEX diviance. 0:15:16.520 --> 0:15:29.240 Coming up off to this, Claudia sam of New Century Advisors, writing, 0:15:29.280 --> 0:15:31.680 I think it was a mistake by Warsh not to 0:15:31.720 --> 0:15:35.600 participate in the statement of economic projections Orshe is leaving 0:15:35.800 --> 0:15:39.080 huge blanks in his communication. The dot plots days may 0:15:39.080 --> 0:15:42.440 be numbered, but it was critical for credibility. Claudia joins 0:15:42.480 --> 0:15:44.480 US now for more Claudia, great to see you always 0:15:44.480 --> 0:15:45.680 love getting your perspective. 0:15:45.920 --> 0:15:47.680 Let's start there. Why was it a mistake not to 0:15:47.720 --> 0:15:48.800 put a dot on that plot? 0:15:50.040 --> 0:15:50.200 Right? 0:15:50.240 --> 0:15:53.119 Well, I think this statement ended with a very forceful 0:15:53.320 --> 0:15:56.520 this committee will deliver price stability, which leads to a 0:15:56.600 --> 0:15:59.200 natural question of how are you going to do that? 0:15:59.520 --> 0:15:59.680 Right? 0:16:00.000 --> 0:16:02.400 But how are you going to deliver? And then summary 0:16:02.400 --> 0:16:05.760 of economic projections. It is not perfect. It's often misunderstood, 0:16:05.960 --> 0:16:09.960 but that is actually the exercise of the dot plot. 0:16:10.160 --> 0:16:13.960 It's actually each individual is like the FOMC there, what 0:16:14.200 --> 0:16:17.280 is the appropriate path for federal funds rate? What's the 0:16:17.360 --> 0:16:21.000 right monetary policy to get us to the dual mandate 0:16:21.040 --> 0:16:23.680 that price stability? You know, two percent is where all 0:16:23.720 --> 0:16:26.800 those forecasts end in twenty twenty eight. That's because of 0:16:27.080 --> 0:16:29.680 they're working their way towards price stability and they adjust 0:16:29.680 --> 0:16:31.920 their federal funds rate to get there. So they're like 0:16:31.960 --> 0:16:35.800 putting together plans individually. And Kevin Worrish didn't participate in 0:16:35.840 --> 0:16:38.600 that exercise, and he didn't flesh out in the press 0:16:38.600 --> 0:16:42.120 conference his views of what a plan could be of 0:16:42.120 --> 0:16:43.920 how to get to that price stability. 0:16:43.920 --> 0:16:45.720 And this is partly by design, right, I mean He 0:16:45.760 --> 0:16:48.880 talked about how he wanted the market to be one 0:16:48.880 --> 0:16:50.240 of the key metrics that they. 0:16:50.080 --> 0:16:51.800 Do look at, and that the market. 0:16:52.040 --> 0:16:54.880 He wants to have clarity, a focus on the data 0:16:55.160 --> 0:16:57.800 without trying to interpret how the FED would look at 0:16:57.800 --> 0:16:58.400 the data. 0:16:58.200 --> 0:17:00.640 And then respond to the Fed's response to the And 0:17:00.680 --> 0:17:01.720 what do you make of that argument? 0:17:03.800 --> 0:17:06.840 I think it's going to be a tough sell. And honestly, 0:17:06.880 --> 0:17:08.800 I can you know set aside. He doesn't want to 0:17:08.840 --> 0:17:11.800 talk about plans, he doesn't want to talk about the future. Okay, 0:17:11.840 --> 0:17:14.720 that's a debate to have about communication. But what was 0:17:14.760 --> 0:17:17.159 really striking is he didn't want to talk about the 0:17:17.200 --> 0:17:20.080 decision they made this week. I mean, they say they 0:17:20.080 --> 0:17:23.640 want price stability. They voted unanimously to hold rate steady. 0:17:24.200 --> 0:17:26.080 How is that in service of price stability? 0:17:26.359 --> 0:17:28.679 Are you saying he didn't think they should have hiked 0:17:28.720 --> 0:17:29.639 this meeting? 0:17:29.920 --> 0:17:33.800 No, I think they should have explained why they chose 0:17:33.840 --> 0:17:36.840 to hold rate steady. I agree with that decision, but 0:17:36.880 --> 0:17:39.359 it is it's like totally pointless that I agree with it. 0:17:39.400 --> 0:17:42.239 I want to hear what the FED chair thinks about it, 0:17:42.280 --> 0:17:44.439 what the committee thinks about it. Why was that the 0:17:44.520 --> 0:17:47.760 right decision? We know from the summary of economic projections 0:17:47.760 --> 0:17:49.480 that many of them think it's going to be appropriate 0:17:49.520 --> 0:17:51.600 to raise rates later. Many of them don't think it 0:17:51.640 --> 0:17:54.480 will be like, tell me about why you decided to 0:17:54.520 --> 0:17:59.280 do what you did today. It's communications also about accountability, 0:18:00.119 --> 0:18:03.480 understanding who these people are that are making these big decisions. 0:18:03.520 --> 0:18:05.480 Don't They don't have a crystal ball, but I really 0:18:05.480 --> 0:18:08.160 do expect them to explain what they're doing right now 0:18:08.200 --> 0:18:08.960 and show their work. 0:18:09.119 --> 0:18:11.480 Is it potentially that Kevin Morris views as a slippery 0:18:11.520 --> 0:18:14.240 slope to then be an individual that's up there on 0:18:14.280 --> 0:18:16.760 the podium giving forward guidance which he doesn't agree with. 0:18:18.320 --> 0:18:22.280 Again, I don't, you know, don't tell me about the future, 0:18:22.280 --> 0:18:25.080 but I feel like there's some hiding behind the dargon. 0:18:25.200 --> 0:18:27.639 And I will say, first press conference right like this, 0:18:27.880 --> 0:18:31.800 you know, unevenness out of the gate, totally understandable. But 0:18:31.920 --> 0:18:35.240 I do think there's room for adjustment. And if you 0:18:35.400 --> 0:18:38.679 just want to talk about the decision that was made today, fine, 0:18:38.800 --> 0:18:41.480 but do talk about that. And yes, I think it's important, 0:18:41.480 --> 0:18:44.680 you know, the slippery slope, okay, fine, but the service 0:18:44.680 --> 0:18:48.040 of accountability is important and we do need to I think, 0:18:48.119 --> 0:18:51.760 have some insights onto the discussions that they're having and 0:18:51.800 --> 0:18:53.520 how they're weighing the data and what they're thinking about, 0:18:53.520 --> 0:18:58.080 because honestly, right now, monetary policy is tough, right, so 0:18:58.119 --> 0:19:00.880 we should have some insights into the debate that they're 0:19:00.920 --> 0:19:03.920 having about those policies we did. 0:19:04.280 --> 0:19:06.720 We're going to get more information about how they plan 0:19:06.880 --> 0:19:11.560 to communicate going forward. What's the potential consequence of this 0:19:11.680 --> 0:19:13.119 approach in markets? 0:19:13.320 --> 0:19:14.560 Is it more volatility? 0:19:14.720 --> 0:19:18.560 Is it just more uncertainty expressed in other ways? How 0:19:18.600 --> 0:19:22.119 do you filter this into being potentially pernicious in a 0:19:22.119 --> 0:19:24.040 way that maybe people don't understand. 0:19:25.560 --> 0:19:27.760 Markets are going to fill in the blanks, right, They're 0:19:27.760 --> 0:19:30.400 going to try to come up with some views. That's 0:19:30.440 --> 0:19:32.960 going to mean we're going to have more uncertainty about 0:19:32.960 --> 0:19:34.879 what the Federal Reserve is going to do, which is 0:19:34.920 --> 0:19:38.760 going to lead to potentially more volatility and interest rates 0:19:38.800 --> 0:19:40.720 and investors are going to want to be compensated for 0:19:40.760 --> 0:19:43.520 that uncertainty, right, So it does come at a cost, 0:19:44.520 --> 0:19:46.879 and so you know, there's no free lunch here in 0:19:46.960 --> 0:19:51.080 terms of how the Fed interacts with markets. And you know, 0:19:51.119 --> 0:19:56.239 I just we had a FED long ago that liked 0:19:56.240 --> 0:19:59.119 to surprise markets and didn't give a lot of information 0:19:59.640 --> 0:20:02.720 and the recent regime may not be perfect, but we 0:20:02.880 --> 0:20:06.359 moved away from that. The FED surprising markets for a 0:20:06.400 --> 0:20:09.399 lot of good reasons, and I think backtracking into that 0:20:10.080 --> 0:20:15.160 is could cause a lot of problems down the road. 0:20:15.359 --> 0:20:18.159 We did learn something pretty crucial and this added to 0:20:18.160 --> 0:20:21.240 the hawkish message that the market took from the statement 0:20:21.280 --> 0:20:24.400 and frankly the statement of economic projections in particular, which 0:20:24.440 --> 0:20:28.119 is that nine of the eighteen members of the FBC 0:20:28.680 --> 0:20:31.480 saw the next move as a hike later this year. 0:20:31.800 --> 0:20:35.080 That's new and that's significant. How do you interpret that? 0:20:35.200 --> 0:20:37.160