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Speaker 1: Let's get to Chuck Camello, president and CEO at Essex

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Speaker 1: Financial Service at the time eight minutes past the hour. Chuck,

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Speaker 1: does anyone have a dark rocket to hit the FED asteroid? Well,

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Speaker 1: that's the that's the sort of humorous, humorous question. But

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Speaker 1: I do I do have a question that might make

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Speaker 1: you wins a little bit, which is much more serious. Um,

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Speaker 1: the FED has has broken the stock market. You're here,

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Speaker 1: you're hearing this now from people that the FED has

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Speaker 1: broken the stock market is broken, the bond market and

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Speaker 1: now f X, and you've got three other interconnected areas

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Speaker 1: that are poised to break corporate earnings, jobs, and the

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Speaker 1: US economy itself. Are these people making these arguments wrong

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Speaker 1: to say it's inevitable? Well, I thank you so much

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Speaker 1: for having me and listen. I don't think it's inevitable. Um.

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Speaker 1: I think it's a very accurate statement of the risks

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Speaker 1: that we have. And if you allow me this crude

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Speaker 1: analogy of you know, during the pandemic and you're from

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Speaker 1: really from the great you know, financial crisis from OAP,

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Speaker 1: especially with the pandemic, that liquidity pendulum and how much

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Speaker 1: money was in the system swung so far out over

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Speaker 1: to zero and stated zero. Well, right now it's coming back,

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Speaker 1: but it's not coming back as a pendulum. It's coming

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Speaker 1: back as a wrecking ball and it is just smashing

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Speaker 1: everything in its way. Um So, do I think it's inevitable? No,

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Speaker 1: but the FETE has made it very clear, as again

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Speaker 1: as your updates just stated. I mean, they are going

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Speaker 1: to get price stability at any and all costs, and

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Speaker 1: we can argue the merits of that and the impact

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Speaker 1: on on the citizens of the country that it's going

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Speaker 1: to affect. But you know, inflation is an insidious force.

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Speaker 1: It's one of the most regressive things that's out there,

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Speaker 1: and them trying to get control of it, you know,

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Speaker 1: they've they've they missed on one side, and you know

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Speaker 1: the concerns are going to overshoot on the other. Chuck,

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Speaker 1: I means to say that the recession is avoidable is

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Speaker 1: perhaps living in some sort of dreamland. What's your take? Yeah,

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Speaker 1: I am in the camp that, you know, I think

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Speaker 1: at this point, knowing what we know, that that has

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Speaker 1: become more and more likely. I think that really the

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Speaker 1: only question in my opinion is how you know shallow

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Speaker 1: or deep is this recession? I mean, I think in

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Speaker 1: the United States we have you know, employment and consumer

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Speaker 1: spending that are hanging in there for now. But again,

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Speaker 1: if the FET is intending to break quote unquote employment,

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Speaker 1: that's going to be a challenge. Well, the implied question

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Speaker 1: from your comment, which you already raised, is is it

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Speaker 1: worth it what the FET is doing? Well, Listen, I

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Speaker 1: think it's all in the in the matter of the

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Speaker 1: degree of which they go about doing it, right. I mean,

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Speaker 1: having inflation at eight is not sustainable, right it it

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Speaker 1: It has to be brought under control. The challenges the

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Speaker 1: FT has one very blunt instrument to do it, and

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Speaker 1: and that is to destroy the demand side of things.

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Speaker 1: There are things, though, on the inflation side that are

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Speaker 1: more positive, right. Commodities have come down, Gas has come down,

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Speaker 1: some input costs have come down. More onshoring of manufacturing

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Speaker 1: should help longer term. Some input costs have come down. Um,

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Speaker 1: But again, keeping inflation where it is, it's also not

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Speaker 1: absolutely not palatable palatable politically, and so it needs to

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Speaker 1: come down in that regard. And again we can argue

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Speaker 1: of how we got here, but it can't stay where

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Speaker 1: it is. So that David's research chance of a recession

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Speaker 1: that's a fairly categorical there. But again, um, there is

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Speaker 1: I suppose anyone game in town and that's a fed

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Speaker 1: Yeah listen, they shout, you're very you're very accurate in

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Speaker 1: that statement. That is right now, what's driving you know,

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Speaker 1: driving this market. But in the other part of this

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Speaker 1: it really is starting to take over as well as

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Speaker 1: because of the said, because of the rise and rates,

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Speaker 1: not just in the US, but I mean obviously we're

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Speaker 1: sort of leading the pack here but across the world.

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Speaker 1: Is then the impact of what a recession is going

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Speaker 1: to have and again, as we mentioned earlier, how deep

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Speaker 1: and how long. But you know, you know, we're in

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Speaker 1: relatively good shape here in the US. I mean Europe

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Speaker 1: is a completely different story. You know, that's a that

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Speaker 1: is a you know, a massive, massive headwinds and issues

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Speaker 1: they're facing. Um, so it really is just an issue

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Speaker 1: of how it could you look to try to position

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Speaker 1: to be a little bit more defensive as you go

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Speaker 1: into this type of environment. And it's not an easy

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Speaker 1: thing to do. Right now, Yeah, you probably don't want

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Speaker 1: to be out because you have two ginormous pivots that

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Speaker 1: are out there and they will happen at some time.

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Speaker 1: But when is it's the question. One is the experiment

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Speaker 1: of Hong Kong leads to China finally ditching COVID COVID zero,

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Speaker 1: That'll be a huge, huge pivot. And the second one,

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Speaker 1: obviously is the FED says, okay, we pause here. Which

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Speaker 1: comes first? Do you think, chuck? And how long do

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Speaker 1: we have to wait? Well, that is a great question, Brian.

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Speaker 1: I mean this the FED when they came out, you know,

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Speaker 1: after their last meeting with the News that they think,

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Speaker 1: you know, by the end of three they think they're

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Speaker 1: going to be around four point six percent, and by

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Speaker 1: the end of this year at four point four, which

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Speaker 1: is a lot higher. If I had to bet on

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Speaker 1: the FED or China at this point, I probably bet

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Speaker 1: on the FED. And again that those are those are

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Speaker 1: not too great bets to to offer me um but

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Speaker 1: I but if I had to pick one, I would

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Speaker 1: pick the FED. But because I think they're you're you

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Speaker 1: sort of have their telegraphing a little, you know, to

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Speaker 1: as much as they can. They're telegraphing what they're doing.

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Speaker 1: I do think at some point they're going to need

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Speaker 1: to take a pause and see exactly what this is doing,

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Speaker 1: because it is having very real world effects on just

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Speaker 1: about every area of our economy. Does it seem like

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Speaker 1: they're focusing on unemployment now more than inflation that that

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Speaker 1: you know, the inflation is doing what it's doing, and

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Speaker 1: you kind of see that, but they really want to

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Speaker 1: see the job market crack. Once that happens, then you

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Speaker 1: know the plan changes. Well, that's excellent point. I think

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Speaker 1: that's a huge piece going forward. You know, in terms

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Speaker 1: of the uh, you know, the last jobs number which

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Speaker 1: was I think around you three hundred and some odd

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Speaker 1: thousand new jobs, right was down from the month before,

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Speaker 1: but still a very strong number. Um you get you know,

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Speaker 1: if you get a surprise and jobs are completely flat

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Speaker 1: or negative, that will show them that their efforts are working.

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Speaker 1: And but listen, there's a lot of still open jobs

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Speaker 1: that are out there. So I'm not sure that that

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Speaker 1: that's the right thing to focus on. But if that

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Speaker 1: is what they focus on, that will lead to a

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Speaker 1: lot of pain oil press on the way down. We've

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Speaker 1: got various other causes of inflation at the moment also

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Speaker 1: turning lower. You know, this is at a time when

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Speaker 1: the Fed is getting more and more hawkish. Now. The

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Speaker 1: thing is, Chuck, is this perhaps the un arguably the

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Speaker 1: worst policy mistake and concerted global policy mistake being made

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Speaker 1: in economic history. Well, I don't know, there's a there's

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Speaker 1: a lot of them that are out there, right, So

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Speaker 1: I mean that the big thing, sorry, that are out there.

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Speaker 1: But yeah, there's a there's a wreckage of those decisions

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Speaker 1: in our history. But I think I think what makes

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Speaker 1: this so challenging is the environment that they're trying to

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Speaker 1: come out of, that that they're trying to come from, right,

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Speaker 1: I mean it's clear there's no new news, right. They

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Speaker 1: botched you know this most recent uh, most recent action

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Speaker 1: in terms of thing as loose as they were for

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Speaker 1: as long. I mean literally it's hard to believe that

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Speaker 1: in literally in March of two they were buying bonds.

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Speaker 1: So you know, So now I think the risk is

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Speaker 1: they're going to overshoot um. And again I think they're

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Speaker 1: what they're trying to do is noble, right. Inflation affects

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Speaker 1: everybody in the worst possible ways, unsadly affect that the

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Speaker 1: part of the population that can't afford it the most.

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Speaker 1: Let me sneak in another mistake gone now is the

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Speaker 1: period where deficits didn't matter and people spoke of modern

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Speaker 1: monetary theory. UK policymakers seem to be unaware of that.

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Speaker 1: Your thoughts, Yeah, I don't know. I think the market

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Speaker 1: is giving the opinion on that one right now. Yeah, yeah,

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Speaker 1: absolutely pounded sinking all right, Thanks Chuck, Always a pleasure.

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Speaker 1: Thank you so much for joining? Is that? Chuck commented

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Speaker 1: that joining as a president and the chief executive Essex

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Speaker 1: Financial Services, getting his latest on the global markets and then, indeed,

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Speaker 1: according the FED, a wrecking ball