1 00:00:02,920 --> 00:00:07,240 Speaker 1: Broadcasting live to New York, Bloomberg eleventh Rio to Washington, 2 00:00:07,320 --> 00:00:12,360 Speaker 1: d C. Bloomberg to Boston, Bloomberg twelve hundred to San Francisco, 3 00:00:12,480 --> 00:00:17,480 Speaker 1: Bloomberg nine to the country, Jam General one and around 4 00:00:17,480 --> 00:00:20,880 Speaker 1: the globe the Bloomberg Radio plus SAP and Bloomberg got gone. 5 00:00:21,160 --> 00:00:24,880 Speaker 1: This is taking Stock. I'm Kathleen Hayes long pim Fox, 6 00:00:24,880 --> 00:00:27,360 Speaker 1: a special edition of Taking Stock. As we look at 7 00:00:27,400 --> 00:00:29,880 Speaker 1: the Federal Reserves, a decision is decision to hold his 8 00:00:30,000 --> 00:00:32,480 Speaker 1: key rate steady and send a message to the market said, well, 9 00:00:32,560 --> 00:00:35,920 Speaker 1: it may be less worried about the economy, that doesn't 10 00:00:35,960 --> 00:00:38,159 Speaker 1: mean it's ready to send a signal yet that it's 11 00:00:38,159 --> 00:00:40,199 Speaker 1: ready to hike than pim Now we're gonna have more 12 00:00:40,280 --> 00:00:43,840 Speaker 1: with Charles Plosser, former president of the Philadelphia Federal Reserve. 13 00:00:43,920 --> 00:00:46,760 Speaker 1: Also coming up, we've got earnings from Alphabet, the parent 14 00:00:46,840 --> 00:00:50,120 Speaker 1: company of Google, as well as Facebook, am Chin and 15 00:00:50,159 --> 00:00:52,199 Speaker 1: Whole Foods. Right now, that's got to Charlie Pellet in 16 00:00:52,200 --> 00:00:54,959 Speaker 1: the Bloomberg News from for Bloomberg Business Plan. I thank 17 00:00:54,960 --> 00:00:57,360 Speaker 1: you very much, pim Fox. Thank you, Kathleen Hayes. Let's 18 00:00:57,400 --> 00:01:00,280 Speaker 1: begin with stock quotes there on Alphabet parent of Google 19 00:01:00,360 --> 00:01:03,920 Speaker 1: up seven tenths of one percent, seven forty three seventy 20 00:01:03,920 --> 00:01:06,320 Speaker 1: four right now on alphabet Facebook half of the ball 21 00:01:06,480 --> 00:01:09,160 Speaker 1: is tim mentioned up one point four percent, gaining a 22 00:01:09,240 --> 00:01:13,520 Speaker 1: dollar seventy two one right now on shares of Facebook. 23 00:01:13,520 --> 00:01:15,960 Speaker 1: While we're talking about earnings in the Bay Air Hill, 24 00:01:16,040 --> 00:01:19,480 Speaker 1: let's talk about Apple surging seven point three percent, up 25 00:01:19,560 --> 00:01:22,160 Speaker 1: seven oh seven right now one oh three seventy three 26 00:01:22,160 --> 00:01:25,200 Speaker 1: on Apple. But the other big story, Twitter, it is 27 00:01:25,240 --> 00:01:29,040 Speaker 1: plunging fourteen point two percent, down two sixty two to 28 00:01:29,200 --> 00:01:33,240 Speaker 1: fifteen dollars and eighty three cents. Today's big story. We've 29 00:01:33,280 --> 00:01:37,880 Speaker 1: got the Federal Reserve. It does see diminished economy risks, 30 00:01:38,000 --> 00:01:41,360 Speaker 1: Stock showing a little reaction right now the f SMP 31 00:01:41,480 --> 00:01:45,440 Speaker 1: five hundred index climbing a point to seventy, a gain 32 00:01:45,520 --> 00:01:48,640 Speaker 1: of less than point one percent. The Fed leaving interest 33 00:01:48,720 --> 00:01:51,800 Speaker 1: rates unchanged, while saying risks to the U S economy 34 00:01:51,840 --> 00:01:55,560 Speaker 1: have subsided. On the labored market is getting tighter, suggesting 35 00:01:55,600 --> 00:01:59,800 Speaker 1: conditions are getting more favorable for an increase in borrowing costs. 36 00:02:00,240 --> 00:02:04,280 Speaker 1: Arianna Coach Lacorda is a Bloomberg View columnist former FED official. 37 00:02:04,360 --> 00:02:07,280 Speaker 1: He is now at the University of Rochester, and he 38 00:02:07,360 --> 00:02:11,760 Speaker 1: was interviewed reacting to today's FED decision on Bloomberg Radio 39 00:02:11,840 --> 00:02:14,119 Speaker 1: and Television. I think the big challenge with the FED 40 00:02:14,320 --> 00:02:17,760 Speaker 1: is that you're not It's not just about your what 41 00:02:17,919 --> 00:02:19,639 Speaker 1: we were with the central Bankers like to call your 42 00:02:19,639 --> 00:02:22,720 Speaker 1: modal outlook where you expect the economy to go. It's 43 00:02:22,720 --> 00:02:26,720 Speaker 1: about the risk that outlook, and in particular, you're really 44 00:02:26,760 --> 00:02:29,720 Speaker 1: worried about the downside risk that outlook because you don't 45 00:02:29,760 --> 00:02:33,280 Speaker 1: have as many tools in your your kid to offset 46 00:02:33,320 --> 00:02:37,440 Speaker 1: those those downside risks. P five hundred indecks off a point, 47 00:02:37,480 --> 00:02:41,160 Speaker 1: a little change. Their gold up one to thirteen thirty 48 00:02:41,240 --> 00:02:45,239 Speaker 1: seventy ounce. Now the other stories making news. Thank you, 49 00:02:45,360 --> 00:02:48,359 Speaker 1: Charlie from the Bloomberg Newsroom. I'm Jill Schneider. This news 50 00:02:48,440 --> 00:02:50,680 Speaker 1: update is brought to you by the Jeep Grand Cherokee, 51 00:02:50,840 --> 00:02:54,359 Speaker 1: the most awarded suv ever. The Grand Cherokee continues to 52 00:02:54,480 --> 00:02:57,919 Speaker 1: raise the bar with its luxurious interior and legendary four 53 00:02:58,000 --> 00:03:01,480 Speaker 1: by four capability. Drive one your local Jeep dealer. Today, 54 00:03:01,919 --> 00:03:05,960 Speaker 1: Republican presidential nominee Donald Trump lashed out at President Obama 55 00:03:06,080 --> 00:03:08,600 Speaker 1: at a press conference in Florida today. I think President 56 00:03:08,680 --> 00:03:12,720 Speaker 1: Obama has been the most ignorant president in our history. 57 00:03:14,000 --> 00:03:18,680 Speaker 1: His views of the world, as he says, don't jive, 58 00:03:20,200 --> 00:03:23,640 Speaker 1: and the world is a mess. Vice President Joe Biden 59 00:03:23,680 --> 00:03:26,320 Speaker 1: spoke to ABC News today about why so many middle 60 00:03:26,400 --> 00:03:31,239 Speaker 1: class Americans are supporting Donald Trump for president. Very successful 61 00:03:31,280 --> 00:03:34,359 Speaker 1: on playing on their fears and there's not been enough 62 00:03:34,400 --> 00:03:37,680 Speaker 1: focus on playing on their hopes. Biden will speak at 63 00:03:37,680 --> 00:03:41,680 Speaker 1: the Democratic National Convention tonight, as will President Obama. President 64 00:03:41,800 --> 00:03:45,320 Speaker 1: Ronald Reagan's daughter is criticizing a judge's decision to allow 65 00:03:45,400 --> 00:03:48,520 Speaker 1: the release of John Hinckley Jr. From a psychiatric hospital 66 00:03:48,600 --> 00:03:51,000 Speaker 1: where he has been confined for more than thirty five 67 00:03:51,080 --> 00:03:54,040 Speaker 1: years after he tried to assassinate Reagan. In a lengthy 68 00:03:54,080 --> 00:03:57,080 Speaker 1: statement on her website, Patty Davis says she will forever 69 00:03:57,200 --> 00:03:59,360 Speaker 1: be haunted by the day her father almost died in 70 00:04:00,120 --> 00:04:02,080 Speaker 1: one and it's the end of an era for the 71 00:04:02,160 --> 00:04:05,200 Speaker 1: Big Apple Circus. The New York Institution is folding its 72 00:04:05,280 --> 00:04:08,200 Speaker 1: tent after thirty five years, announcing the end today of 73 00:04:08,280 --> 00:04:13,040 Speaker 1: all public performances. Big Apples, clowns, acrobats, and animals performed 74 00:04:13,120 --> 00:04:16,960 Speaker 1: free for disadvantaged kids and the elderly since but the 75 00:04:17,040 --> 00:04:20,239 Speaker 1: nonprofit ran out of money as support from Wall Street faltered. 76 00:04:20,360 --> 00:04:22,800 Speaker 1: Global News twenty four hours a day, powered by more 77 00:04:22,839 --> 00:04:27,080 Speaker 1: than journalists and analysts in more than one d twenty countries. 78 00:04:27,360 --> 00:04:30,720 Speaker 1: I'm Jill Schneider, and this is Bloomberg, Charlie, and we 79 00:04:30,880 --> 00:04:33,520 Speaker 1: thank you and again recapping a move higher for equities 80 00:04:33,560 --> 00:04:36,360 Speaker 1: were brought to you by national Realty Providers of one 81 00:04:36,520 --> 00:04:41,440 Speaker 1: hundred percent satisfaction guaranteed New York City realty investments. See 82 00:04:41,480 --> 00:04:44,720 Speaker 1: them at n r I a dot net smp up 83 00:04:44,760 --> 00:04:48,040 Speaker 1: a point to seventy. I'm Charlie Pelt. That's a Bloomberg 84 00:04:48,120 --> 00:04:53,400 Speaker 1: business flash. He's taking stock the Fed in focus on 85 00:04:53,560 --> 00:04:58,520 Speaker 1: Bloomberg Radio. What did the FED say in its policy statement? 86 00:04:58,600 --> 00:05:02,640 Speaker 1: A tersely worded I've paragraphed piece of paper that markets 87 00:05:02,720 --> 00:05:05,120 Speaker 1: around the world dissect to get a sense of what 88 00:05:05,240 --> 00:05:07,800 Speaker 1: the fet is telling us about a possible interest rate 89 00:05:07,839 --> 00:05:10,520 Speaker 1: increase this year. Let's put that question to someone who 90 00:05:10,560 --> 00:05:14,040 Speaker 1: who they are recently helped craft those policy statements. That's 91 00:05:14,120 --> 00:05:18,080 Speaker 1: Charles Plaster, former president of the Fetter Reserve Bank of Philadelphia. 92 00:05:19,279 --> 00:05:22,160 Speaker 1: Charlie's great to have you back on the show. Good 93 00:05:22,240 --> 00:05:23,920 Speaker 1: to be here. Kathleen, But I want to get right 94 00:05:23,960 --> 00:05:26,920 Speaker 1: to it. What do you take away from this statement? Well, 95 00:05:26,960 --> 00:05:28,880 Speaker 1: I think the same. It was pretty much as expected. 96 00:05:28,960 --> 00:05:31,600 Speaker 1: The most interesting part of it was they went a 97 00:05:31,720 --> 00:05:36,359 Speaker 1: long way, I think, uh, to disavowing, in other words, 98 00:05:36,520 --> 00:05:40,039 Speaker 1: undoing all the fears that they placed at the last 99 00:05:40,120 --> 00:05:42,919 Speaker 1: meeting that prevented them from moving ahead with an interest 100 00:05:43,040 --> 00:05:46,080 Speaker 1: rate hack. So basically what happened in June was as 101 00:05:46,160 --> 00:05:50,520 Speaker 1: they were incredibly sensitive to short term data and they 102 00:05:51,200 --> 00:05:54,159 Speaker 1: instilled fears about all the bad things that could happen, 103 00:05:54,360 --> 00:05:56,280 Speaker 1: and the sense of the two biggest things that they 104 00:05:56,560 --> 00:06:01,160 Speaker 1: stressed with employment and Brexit, those years have clearly not 105 00:06:01,320 --> 00:06:05,359 Speaker 1: come to pass, and um, yes they're still they're always 106 00:06:05,480 --> 00:06:09,200 Speaker 1: risks in the future. And the Committee has been really 107 00:06:09,400 --> 00:06:13,200 Speaker 1: adept at um, you know, pulling risks out of the 108 00:06:13,279 --> 00:06:17,160 Speaker 1: hat and emphasize them to give them an excuse not 109 00:06:17,440 --> 00:06:21,480 Speaker 1: to to move rates up. And so now they kind 110 00:06:21,480 --> 00:06:25,200 Speaker 1: of had to recant. And Uh, it's going to be 111 00:06:25,360 --> 00:06:27,960 Speaker 1: entering to see what they're gonna do because they claim 112 00:06:28,000 --> 00:06:30,280 Speaker 1: their data dependance, but they get whip side by the 113 00:06:30,360 --> 00:06:32,640 Speaker 1: data so easily. So I think they have a huge 114 00:06:32,680 --> 00:06:37,640 Speaker 1: communication problem with the public about what's driving their policy decisions. 115 00:06:37,720 --> 00:06:41,840 Speaker 1: They are basically have no strategy. Mr Plosser, I wonder 116 00:06:41,839 --> 00:06:45,479 Speaker 1: if you could comment on the distinction between being inside 117 00:06:45,600 --> 00:06:48,600 Speaker 1: the bubble of the Federal Reserve and now that you 118 00:06:48,680 --> 00:06:53,200 Speaker 1: are outside, and how you explain to people that are 119 00:06:53,240 --> 00:06:57,479 Speaker 1: trying to invest their money how to do so based 120 00:06:57,520 --> 00:06:59,520 Speaker 1: in the context of what you just described as a 121 00:06:59,680 --> 00:07:05,000 Speaker 1: non policy strategy from the Federal Reserve. Currently, Well, I 122 00:07:05,040 --> 00:07:06,920 Speaker 1: did they have a non policy. They just don't have 123 00:07:07,080 --> 00:07:10,040 Speaker 1: a strategy. I think it's really important for the Fed 124 00:07:10,440 --> 00:07:12,920 Speaker 1: to try to communicate, and I've said this for years, 125 00:07:14,000 --> 00:07:16,400 Speaker 1: what are the data that are driving their decisions and 126 00:07:16,520 --> 00:07:19,520 Speaker 1: how have they react that data? And they typically have 127 00:07:19,720 --> 00:07:24,160 Speaker 1: not been able to articulate that strategy or articulate their 128 00:07:24,560 --> 00:07:27,680 Speaker 1: reaction function, if you will, to the data. And so 129 00:07:27,960 --> 00:07:30,320 Speaker 1: every new meeting there is a new set of data 130 00:07:30,400 --> 00:07:34,240 Speaker 1: on the table that seemed to be driving their policy decisions. 131 00:07:34,560 --> 00:07:35,960 Speaker 1: So that's what I mean is they don't really have 132 00:07:36,080 --> 00:07:39,520 Speaker 1: a having they will articulate a strategy to the markets, 133 00:07:40,080 --> 00:07:42,200 Speaker 1: and I think that's part of the problem that the 134 00:07:42,280 --> 00:07:45,440 Speaker 1: markets have and why you can get whipstocks so reacently. 135 00:07:45,520 --> 00:07:47,760 Speaker 1: So as an investor, you know I think you need 136 00:07:47,800 --> 00:07:50,600 Speaker 1: to look at fundamentals, and I don't think paying much 137 00:07:50,640 --> 00:07:54,760 Speaker 1: attention to the short term movements and and uh comments 138 00:07:54,800 --> 00:07:57,640 Speaker 1: by the said is as important as some people like 139 00:07:57,800 --> 00:08:01,000 Speaker 1: to think. If you're a FED policy meet or UM, 140 00:08:01,280 --> 00:08:02,960 Speaker 1: you could you could argue that in fact, they are 141 00:08:03,040 --> 00:08:06,000 Speaker 1: focused on fundamentals of the economy, and they've got two mandates. 142 00:08:06,080 --> 00:08:07,800 Speaker 1: One is inflation. It's got to get up to two 143 00:08:08,240 --> 00:08:12,080 Speaker 1: on that key measure they watch, and unemployment has to 144 00:08:12,120 --> 00:08:14,160 Speaker 1: move lower. And part of the mandate has occurred, and 145 00:08:14,440 --> 00:08:17,120 Speaker 1: unemployment has moved a lot lower, but the inflation number 146 00:08:17,160 --> 00:08:19,640 Speaker 1: has not moved up that much. That seems to be 147 00:08:19,800 --> 00:08:22,360 Speaker 1: one of the reason why people have been hesitant without 148 00:08:22,400 --> 00:08:27,320 Speaker 1: a clear inflation signal, a clear need to fight inflation. Now, 149 00:08:27,840 --> 00:08:30,760 Speaker 1: it seems that many, including FED chair yelling, have been 150 00:08:31,160 --> 00:08:34,599 Speaker 1: willing to just wait and see what happens. So so 151 00:08:34,880 --> 00:08:37,480 Speaker 1: let's let's let's be clear here one on the employment 152 00:08:37,559 --> 00:08:42,360 Speaker 1: mandate monetary policy in terms of its stance, it's accommodative stance. 153 00:08:42,960 --> 00:08:46,760 Speaker 1: It's more accommodative today on the unemployment rate is four 154 00:08:46,840 --> 00:08:51,600 Speaker 1: point or seven percent, whatever it is, UM, it's more 155 00:08:51,600 --> 00:08:54,719 Speaker 1: accommodative today than it was when the unemployment rate was 156 00:08:54,840 --> 00:08:58,880 Speaker 1: ten percent. Now with an economy that's moved from ten 157 00:08:58,960 --> 00:09:02,079 Speaker 1: percent to less in five percent unemployment rates, and we 158 00:09:02,280 --> 00:09:06,400 Speaker 1: still have an accommodative monetary policy that's even more accommodated 159 00:09:06,440 --> 00:09:10,600 Speaker 1: than it was earlier on. And too we have inflation. 160 00:09:10,760 --> 00:09:13,839 Speaker 1: I agree inflation is below it's its target, although not 161 00:09:14,000 --> 00:09:16,800 Speaker 1: all elements of inflation. If you look at you know, 162 00:09:16,880 --> 00:09:20,520 Speaker 1: the c p I UM you've got, the core c 163 00:09:20,720 --> 00:09:25,080 Speaker 1: p I is to percent or better. UH. The CPI 164 00:09:25,240 --> 00:09:29,360 Speaker 1: for services, which is what what consumers spend their money on, 165 00:09:29,600 --> 00:09:33,040 Speaker 1: is over three percent, and the trimmin and medium c 166 00:09:33,200 --> 00:09:35,520 Speaker 1: p I s are all two percent or better. So 167 00:09:35,600 --> 00:09:38,560 Speaker 1: the only thing that's really holding back headline inflation seems 168 00:09:38,600 --> 00:09:41,679 Speaker 1: to be mostly energy and its effects on the overall. 169 00:09:42,120 --> 00:09:47,760 Speaker 1: So so it's not my concern that inflation is UH 170 00:09:48,760 --> 00:09:51,360 Speaker 1: is a little bit below two percent. You know, wh 171 00:09:51,559 --> 00:09:54,880 Speaker 1: who's going to tell we are we can't forecast. The 172 00:09:55,000 --> 00:09:59,199 Speaker 1: FED nor anyone else can either forecast or even control 173 00:10:00,200 --> 00:10:04,559 Speaker 1: inflation as precisely if somehow we think they can. And 174 00:10:05,120 --> 00:10:07,600 Speaker 1: you know, what's the difference between one point eight inflation 175 00:10:07,679 --> 00:10:11,560 Speaker 1: and to persent inflation? Most people can't tell the difference. 176 00:10:12,320 --> 00:10:14,240 Speaker 1: They only can tell the difference when they read the numbers. 177 00:10:14,760 --> 00:10:17,800 Speaker 1: So I think we're getting a little fixated on the 178 00:10:17,920 --> 00:10:21,840 Speaker 1: precision by which the FED can control inflation. So I'm 179 00:10:21,920 --> 00:10:26,000 Speaker 1: all for the fact that inflation below target means, uh, 180 00:10:26,400 --> 00:10:28,720 Speaker 1: the FED funds rate and the target for FED policy 181 00:10:28,800 --> 00:10:32,120 Speaker 1: ought to be somewhat more accommodated than if there were 182 00:10:32,160 --> 00:10:37,199 Speaker 1: at two. That's perfectly reasonable, but that's it's hard to 183 00:10:37,320 --> 00:10:41,280 Speaker 1: justify it near zero interest rates because inflation is running, 184 00:10:41,760 --> 00:10:44,960 Speaker 1: you know, few tenth books and few tenths below its target. 185 00:10:45,200 --> 00:10:47,480 Speaker 1: We're gonna leave it there, Thank you very much, Charles 186 00:10:47,559 --> 00:10:52,120 Speaker 1: plas a former president of the Philadelphia Federal Reserve. You're 187 00:10:52,160 --> 00:10:55,600 Speaker 1: listening to taking Stockheim pim Fox my co host Kathleen Hayes. 188 00:10:55,920 --> 00:11:04,120 Speaker 1: This is Bloomberg coming up, a look at the markets, 189 00:11:04,200 --> 00:11:07,319 Speaker 1: the reaction or lack of reaction the Fed's decision, and 190 00:11:07,480 --> 00:11:09,520 Speaker 1: we're also going to be looking at Apple's impact on 191 00:11:09,600 --> 00:11:12,160 Speaker 1: the markets today. This is Bloomberg