Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each
Speaker 2: day for insight from the best in markets, economics, and
Speaker 2: geopolitics from our global headquarters in New York City. We
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Speaker 2: or anywhere else you listen, and as always on the
Speaker 2: Bloomberg Terminal and the Bloomberg Business app. We begin the
Speaker 2: sour stocks rising as traiders await the FED decision and
Speaker 2: earnings from big tech. Julian and Manuel have Evercore staying
Speaker 2: overweight tech on a three month view. While the dust settles,
Speaker 2: many of these names, particularly the Semis, may remain pressured
Speaker 2: on a three quarter and three year view. You want
Speaker 2: to buy these, Julian joins us now for more. Junian,
Speaker 2: good morning, good morning. I can't believe it's only Wednesday.
Speaker 2: I said on Tuesday. It found like it's already Friday.
Speaker 2: Let's get into these earn little bit like say you say,
Speaker 2: maybe by over a three quarter, multi year view.
Speaker 3: Why because essentially what we saw over the last three
Speaker 3: days tells you that the importance of AI as a
Speaker 3: revolutionary technology that's going to advance the world is not
Speaker 3: only robust, but is an absolute imperative. Okay, and the
Speaker 3: stocks reacted the way they did on Monday because of
Speaker 3: this sort of psychological displacement with regard to deep seek.
Speaker 3: But what it really means is that now the race
Speaker 3: is on to implement and from our work twenty twenty
Speaker 3: five and the work we did almost two years ago
Speaker 3: now when AI first it was introduced, is that twenty
Speaker 3: twenty five was going to be the inflection year in
Speaker 3: adoption and this catalyzes it.
Speaker 2: So what does that mean for sector preferences as we
Speaker 2: shift away from Annapolis to adopt us.
Speaker 4: What does that look like?
Speaker 3: So there has been over the last year or to
Speaker 3: a swath of companies across industries who constantly.
Speaker 4: Speak to the idea of AI.
Speaker 3: Again, a lot of it is largely anecdotal, because I
Speaker 3: think there's been a reticence to talk about what cost
Speaker 3: savings looks like versus things that drive revenue, and frankly,
Speaker 3: companies are still trying to figure out.
Speaker 4: What that mix looks like.
Speaker 3: But those are the companies that are forward about it,
Speaker 3: and we're going to hear a lot more. It's not
Speaker 3: just the earnings calls of the mag seven this period
Speaker 3: that matter.
Speaker 4: It's the earnings calls of the other companies.
Speaker 3: And those that are talking about it and telling you
Speaker 3: how they're deploying.
Speaker 4: Are the names you want to own?
Speaker 5: Do you think that this is actually the tipping point
Speaker 5: that so many people were waiting for were suddenly some
Speaker 5: of the biggest winners. And it's not just in Nvidia,
Speaker 5: it's also the power generators which didn't recover really yesterday
Speaker 5: are not going to necessarily benefit in the same way
Speaker 5: that they did in twenty twenty four.
Speaker 3: There's a bifurcation going on, and you actually, if you're
Speaker 3: j Powell and you're Donald Trump, you like the fact
Speaker 3: that yields have come in over the last couple of
Speaker 3: days because the implication is the news that we had
Speaker 3: over the weekend in terms of deep seek is actually
Speaker 3: a disinflationary impulse. But the downside of that is as
Speaker 3: a power producer, it's much more difficult to see what
Speaker 3: the next three years looks like. And whenever you have
Speaker 3: a company or a theme that one moment had sort
Speaker 3: of this concept of infinite growth, whatever that number was,
Speaker 3: and then all of a sudden, it's infinite minus a handicap.
Speaker 3: That's punishing for the stocks.
Speaker 5: Is that the right way to interpret the movie yields
Speaker 5: that it was an expression of greater disinflation as a
Speaker 5: result of technological advance or was it simply a risk
Speaker 5: off move knee jerk basically by bonds.
Speaker 3: Well, you would have said that except for the fact
Speaker 3: that yields ended up on their lows yesterday basically unchanged
Speaker 3: with the market recovering. So I think there was certainly
Speaker 3: an element of that on Monday. But the other message,
Speaker 3: and again obviously overnight we've seen more rhetoric about the
Speaker 3: intention to reduce the size of government. All in this
Speaker 3: has calmed the bond market down, and from our point
Speaker 3: of view, talking about the names and the sectors that
Speaker 3: we like, the bull market leaders, yield's remaining calm is
Speaker 3: a very important part of that thesis.
Speaker 2: It, Sonning depends why on the conference board numbers yesterday
Speaker 2: went great? Why have we settled down on bond yoats?
Speaker 2: Is it just good stuff or is this some pad
Speaker 2: stuff in that too.
Speaker 3: Look, even when things are going gangbusters in an economy.
Speaker 3: You can always find the one, two or three items
Speaker 3: that are unsettling. You look deep enough, you find them.
Speaker 3: But frankly, from our point of view, you're in a
Speaker 3: mode where and again I'll go back to your introduction,
Speaker 3: we think.
Speaker 4: It's skip not pause.
Speaker 3: Okay, why because basically, the trend towards inflation if you
Speaker 3: think about it, the last several months, very much like
Speaker 3: the spring of twenty twenty four, you had a couple
Speaker 3: of months in there where the thesis was questioned about
Speaker 3: the trend of travel of inflation.
Speaker 4: You paused, but yet it kept going.
Speaker 3: And the weakening of some of those data elements, continuing
Speaker 3: claims moving to new multi year highs among them, tell
Speaker 3: you that the trend of inflation moving lower is intact.
Speaker 4: And that's what the Fed wants.
Speaker 2: Is that cool? Traite dependent. We'll head down to Washington,
Speaker 2: catchup with the marine about five minutes time. Is your
Speaker 2: call on a skip and not a pause? Traite dependent?
Speaker 2: And what happens this weekend? Avoid tariffsaw implement them?
Speaker 3: So very good question, and I think the answered there
Speaker 3: is is, if you look back, Donald Trump learned a
Speaker 3: lot from his first term in office, okay. And one
Speaker 3: of the things that he learned was that the bond
Speaker 3: market really could call the shots for the degree of
Speaker 3: policy implementation. And you know how far you pressed once
Speaker 3: things were announced. So in that respect, there is an
Speaker 3: element of that to it. But we do think that,
Speaker 3: you know, you go back to the original appointment of Vessent,
Speaker 3: there is an acknowledgment of the importance of financial markets
Speaker 3: and the desire not to disrupt that narrative to be
Speaker 3: able to long term implement policy.
Speaker 5: We'll get into the details when we speak with Emory
Speaker 5: in just a moment, but you said, just in general,
Speaker 5: as a stock analyst, as an equity analyst, more broadly,
Speaker 5: looking at the path of policy, it looks like basically
Speaker 5: a repeat of twenty eighteen. And yet in twenty eighteen
Speaker 5: the S and P ended the year down six and
Speaker 5: a quarter percent, and why is this time different?
Speaker 3: So if you look at it, the path in twenty
Speaker 3: eighteen was very violatile, and actually at midyear you were
Speaker 3: up substantially, almost double digits, and then what happened was
Speaker 3: you got to a point where the bottom vigilantes stepped in.
Speaker 3: In twenty eighteen, three percent on the ten year yield
Speaker 3: was the equivalent of five percent on the ten year
Speaker 3: yield right now, and.
Speaker 4: We've already seen.
Speaker 3: Whether it's the last couple months, we're going back to
Speaker 3: the start of this bull market cycle, that once you
Speaker 3: get towards five percent, the markets don't like that.
Speaker 4: And so that is well known.
Speaker 5: Which is the reason why the commentary that we will
Speaker 5: get this afternoon won't necessarily be from Mark Zuckerberg, it
Speaker 5: won't necessarily be from Sacha Nadella, it won't necessarily be
Speaker 5: from fedchair J. Powell, will be from Donald Trump in
Speaker 5: response to fedshair J. Powell with regardless of what he said,
Speaker 5: and if there is a pause and not a skip,
Speaker 5: if there is an indication that this is it and
Speaker 5: they are on and that frankly there's even a chance
Speaker 5: of them hiking rates again, how big would the tantrum
Speaker 5: be in markets?
Speaker 4: Pretty substantial. I mean you're talking to help big with
Speaker 4: the tantrum be in the White House?
Speaker 6: Well, I mean we already know that that answer. I
Speaker 6: mean the question is, you know, this.
Speaker 5: Is sort of par for the course, so they already
Speaker 5: have it and pre write they basically just presco anyway,
Speaker 5: carry on.
Speaker 3: But again the point being here that at the valuations
Speaker 3: where we are in the market. Both you know, less
Speaker 3: than perfect and or very good news is met with
Speaker 3: violent reactions. So basically we have deep seek. On Monday,
Speaker 3: we have, you know, a pretty substantial selloff, but that
Speaker 3: was preceded by ten days of literally parabolic gains given
Speaker 3: the fact that the inflation news was so good. So
Speaker 3: where's the next three to five percent? Well, let's see
Speaker 3: what we hear from the White House, and you know,
Speaker 3: let's see what the corporate what the dialogue around deep
Speaker 3: seek is in these reporters this afternoon. The long term
Speaker 3: trend of travel is still higher in our view.
Speaker 2: At least we were talking about this earlier this morning
Speaker 2: before we came on air, that we were basically seen
Speaker 2: from Donald Trump, the President, a similar approach that we've
Speaker 2: seen from Elon Musk, the CEO, but this time to
Speaker 2: federal government and not to a private company.
Speaker 5: Similar approach, I would say, basically the same approach. In fact,
Speaker 5: the email sent to federal workers yesterday had.
Speaker 6: The subject fork in the road.
Speaker 5: That is the same email subject that Elon Musk used
Speaker 5: in an email to Twitter now Acts when he was
Speaker 5: talking about downsizing the staff. There can you do the
Speaker 5: same in a federal government, the courts will.
Speaker 2: Decide Juda and Emmanuel. Of ever, course, still with us, Julian,
Speaker 2: A lot to unpack here. Let's start with trade. Lisa
Speaker 2: mentioned GM. She's right to pick up on General Motors.
Speaker 2: GM's numbers went bad, The outlook was okay, nothing wrong here.
Speaker 2: Stock was down by close to nine percent of the close.
Speaker 2: How investible are somebody sectors some of these stocks without
Speaker 2: getting that clarity on trade?
Speaker 3: Well, I mean the share proce reaction, yes, spoke for itself.
Speaker 3: But again similar to how one is thinking about the
Speaker 3: share price reactions in the mag seven, et cetera on
Speaker 3: Monday to deep seek. These are the kinds of things
Speaker 3: that if you're a long term investor, you know that
Speaker 3: whatever comes out in the beginning, whether it's it's you know,
Speaker 3: twenty five percent across the board or what have you.
Speaker 3: And we know that the automobile industry is going to
Speaker 3: be the most impacted if that kind of tax is
Speaker 3: taken towards Mexico, but that it is not likely to
Speaker 3: sustain itself infinitely.
Speaker 4: It sort of never has.
Speaker 3: And those are the kinds of times, particularly at valuations,
Speaker 3: when you're talking about four and five times earnings. Granted,
Speaker 3: the earnings will be handicapped, but that's where long term
Speaker 3: investors find value.
Speaker 6: Just hold on a second.
Speaker 5: Are you saying that you bought GM yesterday.
Speaker 4: I'm not saying, okay, I'm.
Speaker 6: Just wondering, you know, is it too early?
Speaker 4: Right? Is it?
Speaker 5: Basically this right now is noise and you can't really
Speaker 5: get involved in it. And at a certain point you
Speaker 5: can start to say, all right, now I can start
Speaker 5: picking up the pieces.
Speaker 3: Well again, it's it's it's evaluation sensitive thing. A lot
Speaker 3: of these companies, if you look at it, we like
Speaker 3: five year average valuations. Okay, a lot of these companies
Speaker 3: are trading at substantial discounts to their five year average valuation.
Speaker 3: So I have a numerical advantage coming in that allows
Speaker 3: me to sort of ride out the volatility, even if
Speaker 3: it's multiple quarters for that kind of you know, potential
Speaker 3: change in earnings.
Speaker 2: Chilly and certainly volatile, volatile week, that's for sure. I
Speaker 2: have an apost few days, gentle amen. While of Ebico
Speaker 2: Basis shout out to Mulk and Stanley, saying the search
Speaker 2: in long term bond yields has created a headwind for
Speaker 2: US equacies, which have ridden valuation expansion for the better
Speaker 2: part of twenty seven months. The market narrative is now
Speaker 2: focused on show me Earning's achievement. Lisa John's staff more,
Speaker 2: Lasa Kimonic Komarnick cost some Earning's achievement over in Europe
Speaker 2: ass them out just absolutely stunning, and we saw how
Speaker 2: stock investors rewarded them. Would you look for from some
Speaker 2: of the big tech players not just the southfternoon, but
Speaker 2: over the next week.
Speaker 7: So look, I think obviously, you know, tech is under
Speaker 7: the spotlight, you know, not just given the fact that
Speaker 7: their performance has been somewhat really lackluster since you know,
Speaker 7: the first week in December. But you know, the expectation
Speaker 7: for twenty twenty five and twenty twenty six is that
Speaker 7: earnings growth rates are going to decelerate, right, and that
Speaker 7: that element has been math and that's what's kind of
Speaker 7: baked in, And so I think people are looking for
Speaker 7: that guidance more than what they do for the fourth quarter,
Speaker 7: but looking for that guidance to see, you know, are
Speaker 7: in fact the tech companies more measured or are they
Speaker 7: more optimistic? And I think that's that guidance forward guidance
Speaker 7: that's really going to carry the day here, because you know,
Speaker 7: coming into twenty twenty five twenty twenty six for tech companies,
Speaker 7: I think some of the expectations were a little bit
Speaker 7: more realistic.
Speaker 2: Does it get hard is to justify the big spending
Speaker 2: they've been doing following the news of the last week
Speaker 2: and the price sanction of Monday.
Speaker 7: Certainly, you know, it raises the question on what is
Speaker 7: your capex efficiency?
Speaker 2: Right?
Speaker 7: Do you really need to spend you know, as much
Speaker 7: capex and build as many data centers with as many
Speaker 7: GPUs that use as many in video chips? Are you
Speaker 7: going to be able to, through process and software engineering,
Speaker 7: as we've seen, do things you know, cheaper and faster,
Speaker 7: especially if you're willing to use an open source chassis.
Speaker 7: And I think that these open source chassis are going
Speaker 7: to get more and more and more sophisticated, and they're free.
Speaker 6: And that's that's.
Speaker 7: I think the magic here that we're going to have
Speaker 7: to watch and look. I don't think that this is
Speaker 7: new news to Sam Altman or or you know, to
Speaker 7: the folks at Microsoft and Google, but I do think
Speaker 7: they're going to now.
Speaker 6: Have to talk about it.
Speaker 5: Earning Season used to be launched by the big banks,
Speaker 5: and it seems as if now that's shifted, it really
Speaker 5: is the tech players and there is a broader economic
Speaker 5: read through depending on what happens there. We've been talking
Speaker 5: a lot about whether we are reaching the tipping point
Speaker 5: at which investment in AI is moving away from the
Speaker 5: chips and the data centers into broader application.
Speaker 6: What would you have to hear at today's.
Speaker 5: Earnings reports to think this is truly that tipping point.
Speaker 7: I think it's it's them, not you know, taking up
Speaker 7: the guidance on cap X. I think it's them answering
Speaker 7: the questions, hey, we've put the number out there at X,
Speaker 7: you know that's our number, right, and being somewhat combative
Speaker 7: with analysts on that. I think that would scare people
Speaker 7: if they're if they suggest that there's no incremental upside
Speaker 7: to their CAPAX spend.
Speaker 5: As an investment, does that make you more optimistic about
Speaker 5: the rest of the universe they could potentially benefit from
Speaker 5: AI adaption.
Speaker 7: Yeah, So that's to me, I think the great question Lisa, Right,
Speaker 7: So I think that there's two things.
Speaker 6: I think there's.
Speaker 7: One among the mag seven themselves who are going to
Speaker 7: be the ones who actually grab onto this and say,
Speaker 7: you know what, we've actually been studying this. We do
Speaker 7: think we're going to be able to be more effective,
Speaker 7: more efficient and spend twenty percent less. And then there's
Speaker 7: going to be the folks who are the adopters, right,
Speaker 7: who are apps, guys are who are actually developing tools
Speaker 7: that are using you know, agent AI, the sales forces
Speaker 7: of the world, the accentures.
Speaker 6: Of the world.
Speaker 7: Who are that next wave of companies who are who
Speaker 7: are going to say, hey, we're using these tools, We're
Speaker 7: driving efficiencies and effectiveness, we know how to do this,
Speaker 7: and that they're the next market leaders in this you know,
Speaker 7: tech diffusion cycle.
Speaker 2: Is it too early to jump on that theme? Would
Speaker 2: you think the starting gun was found on Monday?
Speaker 7: I well, I think the starting gun on it was
Speaker 7: probably fired in the fourth quarter of last year. If
Speaker 7: you look at those stocks, they've started to move, but
Speaker 7: you know, for them, we still think it's kind of
Speaker 7: bottom of the first inning, top of the second.
Speaker 2: When do we start to see the big efficiency gains
Speaker 2: and sectors like the financials We've been hearing about this
Speaker 2: now for years. When it comes to the bank, Yeah,
Speaker 2: the banks could benefit big time. You could see them
Speaker 2: become really efficient we hear from the CEOs, each additional
Speaker 2: dollar revenue will become less and less labor intensive. Are
Speaker 2: we close to that?
Speaker 7: So I want to define close? Right? Look, I think
Speaker 7: a lot of effort is being expended, a lot of money,
Speaker 7: a lot of consulting dollars are being expended here. I
Speaker 7: still think that in terms of moving the needle on margins,
Speaker 7: you're still probably two to three years away from seeing,
Speaker 7: you know, companies truly be able to say we're hiring
Speaker 7: many fewer people, our productivity has gone up by you know, x,
Speaker 7: Y or z. Because it's most of these businesses, the
Speaker 7: stakes of getting it wrong are so high that before
Speaker 7: you really start pulling people out and relying on machines
Speaker 7: to do your you know, client service or your customer
Speaker 7: interaction or your billing or whatever, you're going to have
Speaker 7: to know that it works.
Speaker 5: This is all very nuanced, and a lot of areer
Speaker 5: clients are probably thinking.
Speaker 6: All right, market's going to go up or down, and.
Speaker 5: What do we have to look at to figure out
Speaker 5: where we should invest? And if there is some sort
Speaker 5: of macro theme, it really does come down to the
Speaker 5: yield space. This idea that you see some of these
Speaker 5: stories is potentially constructive, earning's growth is potentially positive, and
Speaker 5: yet it all hinges on what happens today.
Speaker 6: We've about to share J.
Speaker 5: Powell, not necessarily today, but just generally with the bond market.
Speaker 6: Can you talk about that relationship? Sure?
Speaker 7: I mean, look, I think what we've seen is, you know,
Speaker 7: the magic number has been four point five percent. When
Speaker 7: we get yields through four point five percent on the
Speaker 7: ten year, we've seen those positive correlations between yields and
Speaker 7: stock prices. You know the quote that Jonathan started with it,
Speaker 7: you know that starts becoming a headwind to valuations. Now,
Speaker 7: why is four point five percent such a magic number?
Speaker 6: Right?
Speaker 7: I constantly explain to people, Look, we've been in an
Speaker 7: economy that's been nominally growing at more than five percent
Speaker 7: per year, and as long as you're growing faster than
Speaker 7: your cost of capital, you're going to be able to
Speaker 7: cover your interest payments. Right as those interest rates get
Speaker 7: closer and closer to that nominal growth rate of five percent,
Speaker 7: that ability to cover pay interest payments gets harder. You
Speaker 7: start thinking, well, are some of these companies actually going
Speaker 7: to have dented margins because they're their cost of capital
Speaker 7: may actually be six and maybe you know GDP is
Speaker 7: only five and so you know, we're we're watching the
Speaker 7: direction of the long end. What we have observed is
Speaker 7: that a lot of the movement on the long end
Speaker 7: has been driven by two things, not inflation expectations, actually.
Speaker 6: By our analytics.
Speaker 7: What we're looking at is we've had positive economic growth surprises, right,
Speaker 7: so that's taken up the real component. And we've had
Speaker 7: an increase in the term premium. And as I know,
Speaker 7: you know, you know, having kind of you know, studied
Speaker 7: fixed income for a really long time, you know, over
Speaker 7: the last you know, eighty years, term premiums on the
Speaker 7: long end have been as wide as one hundred and
Speaker 7: fifty basis points.
Speaker 6: Term premiums, for your listeners.
Speaker 7: Who may not know this, are basically just the extra
Speaker 7: risk premium that investors demand for policy uncertainty, right, for
Speaker 7: for the fact that time over time things change anything
Speaker 7: from policy to technology to.
Speaker 6: Et cetera.
Speaker 7: And so, you know, I think what we what we're
Speaker 7: looking at is, you know, what are the drivers of
Speaker 7: those interest rates. What has been interesting is FED expectations
Speaker 7: got crushed in the fourth quarter. So for us, our
Speaker 7: observation of what's happened over the last you know, six
Speaker 7: eight weeks is it hasn't been that much about the FED.
Speaker 7: So this is a very long winded way of me
Speaker 7: answering your question. Look, I think Powell today is gonna
Speaker 7: be very measured. I think he's going to say very
Speaker 7: little in this press conference, and I think he's going
Speaker 7: to try to say as little as possible about anything
Speaker 7: that has to do at the White House, anything about tariffs,
Speaker 7: anything about debts and deficits. I think he's going to
Speaker 7: really walk a very fine line, and he's going.
Speaker 6: To stick to the script of we're data driven. That's it.
Speaker 7: We've had some stronger data. We think inflations under control.
Speaker 7: We're watching and waiting.
Speaker 5: So all of that said, if the FED is no
Speaker 5: longer in the driver's seat, the policy uncertainty is in
Speaker 5: the driver's seat. What kind of move up we're looking
Speaker 5: at a tenure right now four point five to three percent.
Speaker 5: What kind of move up would you have to see
Speaker 5: real serious declines inequities.
Speaker 7: I think if we surge back through four seventy five,
Speaker 7: you know sometime over the next month, that just stops
Speaker 7: stocks in their tracks again.
Speaker 2: Just twenty two basis points away. Lisa is good to
Speaker 2: see you gay Lisa shan At that of Morgan Stanley
Speaker 2: on the federerser the former Kansas City FED president Esther
Speaker 2: George jounderstand for more, Esther, Welcome to the program. We're
Speaker 2: all looking forward to Chairman Power a little bit later.
Speaker 2: How boring can he make this and is that the
Speaker 2: objective later on this afternoon?
Speaker 1: Oh, I think he'd love to make it just as
Speaker 1: boring as he can, in the sense that it doesn't
Speaker 1: stir up new speculation. So we'll we'll see. He's got
Speaker 1: a tough job.
Speaker 5: Well, what do you think, Esther, the idea that right
Speaker 5: now markets are really concerned that the FED might be
Speaker 5: on a path to basically hold rates here for the
Speaker 5: rest of the year.
Speaker 6: If he has asked that, how would you characterize not
Speaker 6: doing anything today a pause or a skip? How will
Speaker 6: he answer?
Speaker 4: Well?
Speaker 1: Is I think we got a clue from the December
Speaker 1: meeting right the minutes have told us that there was
Speaker 1: a sense that inflation was not coming down quickly enough,
Speaker 1: that that disinflationary process may have stalled out, and so
Speaker 1: for their mandate they have to be cautious at this point,
Speaker 1: I think, and watch to see how things will unfold.
Speaker 1: The challenge for them, of course, is it is for
Speaker 1: many people today, is saying, how do you manage through
Speaker 1: this uncertainty? How do you look at the risk and
Speaker 1: the outlook ahead when you don't have clarity in the moment,
Speaker 1: And the truth is you rarely have that clarity. It'd
Speaker 1: be unusually high right now in terms of uncertainty, which
Speaker 1: means you have to pivot, in my view, to thinking
Speaker 1: about the long run, and that where I hope we
Speaker 1: hear the focus not so much on next month's data
Speaker 1: and the next but really where we're coming out in
Speaker 1: the long run for inflation esther.
Speaker 5: There's also the added complication right now that we have
Speaker 5: a really disparate FED. Right the different FED members seem
Speaker 5: to be pretty split. Is this a unique feature right now?
Speaker 5: Does it seem like it is more divided than it
Speaker 5: has been when you are there or in previous administrations?
Speaker 1: So I think there is always a diversity. That is
Speaker 1: the design of this committee. I think what creates what
Speaker 1: may sound like dissonance right now comes at what I
Speaker 1: call turning points. There are times in the economy when
Speaker 1: the decision making is less clear, when the path ahead
Speaker 1: is less clear, and that's when you will tend to
Speaker 1: see surface in this discussion a range of views, and
Speaker 1: depending on how strong those voices are, the chairman has
Speaker 1: to bring those together because you have to make a decision,
Speaker 1: and sometimes that decision is to wait and see. And
Speaker 1: I think today is going to be one of those times.
Speaker 2: I'd love you of you on what you'd be doing.
Speaker 2: How would you balance the evolving data with expected policy changes?
Speaker 2: Why would you put the most weight?
Speaker 1: So for me, the weight is always on thinking about
Speaker 1: the inflation because that is the most direct influence that
Speaker 1: the central Bank has on its mandate. And having seen
Speaker 1: the disinflationary process slow down, we are now in a
Speaker 1: fifth year of inflation running well above the Fed's target.
Speaker 1: I would be in a position myself to say we
Speaker 1: can wait, we should wait. The economy is performing well.
Speaker 1: We have a number of risks that are evolving here
Speaker 1: in terms of telling us what the outlook might be,
Speaker 1: and now seems a particularly good time to sit on
Speaker 1: the sidelines and wait for more clarity.
Speaker 2: Esther, it's good to hear from you. Miss your voice
Speaker 2: on the FMC as the George there, the former Kansas
Speaker 2: City FED president. This is the bloomberg surveillance podcast, bringing
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