Speaker 1: Broadcasting live to New York, Bloomberg eleventh Rio to Washington,
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Speaker 1: This is taking Stock. I'm Kathleen Hayes long pim Fox,
Speaker 1: a special edition of Taking Stock. As we look at
Speaker 1: the Federal Reserves, a decision is decision to hold his
Speaker 1: key rate steady and send a message to the market said, well,
Speaker 1: it may be less worried about the economy, that doesn't
Speaker 1: mean it's ready to send a signal yet that it's
Speaker 1: ready to hike than pim Now we're gonna have more
Speaker 1: with Charles Plosser, former president of the Philadelphia Federal Reserve.
Speaker 1: Also coming up, we've got earnings from Alphabet, the parent
Speaker 1: company of Google, as well as Facebook, am Chin and
Speaker 1: Whole Foods. Right now, that's got to Charlie Pellet in
Speaker 1: the Bloomberg News from for Bloomberg Business Plan. I thank
Speaker 1: you very much, pim Fox. Thank you, Kathleen Hayes. Let's
Speaker 1: begin with stock quotes there on Alphabet parent of Google
Speaker 1: up seven tenths of one percent, seven forty three seventy
Speaker 1: four right now on alphabet Facebook half of the ball
Speaker 1: is tim mentioned up one point four percent, gaining a
Speaker 1: dollar seventy two one right now on shares of Facebook.
Speaker 1: While we're talking about earnings in the Bay Air Hill,
Speaker 1: let's talk about Apple surging seven point three percent, up
Speaker 1: seven oh seven right now one oh three seventy three
Speaker 1: on Apple. But the other big story, Twitter, it is
Speaker 1: plunging fourteen point two percent, down two sixty two to
Speaker 1: fifteen dollars and eighty three cents. Today's big story. We've
Speaker 1: got the Federal Reserve. It does see diminished economy risks,
Speaker 1: Stock showing a little reaction right now the f SMP
Speaker 1: five hundred index climbing a point to seventy, a gain
Speaker 1: of less than point one percent. The Fed leaving interest
Speaker 1: rates unchanged, while saying risks to the U S economy
Speaker 1: have subsided. On the labored market is getting tighter, suggesting
Speaker 1: conditions are getting more favorable for an increase in borrowing costs.
Speaker 1: Arianna Coach Lacorda is a Bloomberg View columnist former FED official.
Speaker 1: He is now at the University of Rochester, and he
Speaker 1: was interviewed reacting to today's FED decision on Bloomberg Radio
Speaker 1: and Television. I think the big challenge with the FED
Speaker 1: is that you're not It's not just about your what
Speaker 1: we were with the central Bankers like to call your
Speaker 1: modal outlook where you expect the economy to go. It's
Speaker 1: about the risk that outlook, and in particular, you're really
Speaker 1: worried about the downside risk that outlook because you don't
Speaker 1: have as many tools in your your kid to offset
Speaker 1: those those downside risks. P five hundred indecks off a point,
Speaker 1: a little change. Their gold up one to thirteen thirty
Speaker 1: seventy ounce. Now the other stories making news. Thank you,
Speaker 1: Charlie from the Bloomberg Newsroom. I'm Jill Schneider. This news
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Speaker 1: spoke to ABC News today about why so many middle
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Speaker 1: on playing on their fears and there's not been enough
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Speaker 1: the Democratic National Convention tonight, as will President Obama. President
Speaker 1: Ronald Reagan's daughter is criticizing a judge's decision to allow
Speaker 1: the release of John Hinckley Jr. From a psychiatric hospital
Speaker 1: where he has been confined for more than thirty five
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Speaker 1: I'm Jill Schneider, and this is Bloomberg, Charlie, and we
Speaker 1: thank you and again recapping a move higher for equities
Speaker 1: were brought to you by national Realty Providers of one
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Speaker 1: them at n r I a dot net smp up
Speaker 1: a point to seventy. I'm Charlie Pelt. That's a Bloomberg
Speaker 1: business flash. He's taking stock the Fed in focus on
Speaker 1: Bloomberg Radio. What did the FED say in its policy statement?
Speaker 1: A tersely worded I've paragraphed piece of paper that markets
Speaker 1: around the world dissect to get a sense of what
Speaker 1: the fet is telling us about a possible interest rate
Speaker 1: increase this year. Let's put that question to someone who
Speaker 1: who they are recently helped craft those policy statements. That's
Speaker 1: Charles Plaster, former president of the Fetter Reserve Bank of Philadelphia.
Speaker 1: Charlie's great to have you back on the show. Good
Speaker 1: to be here. Kathleen, But I want to get right
Speaker 1: to it. What do you take away from this statement? Well,
Speaker 1: I think the same. It was pretty much as expected.
Speaker 1: The most interesting part of it was they went a
Speaker 1: long way, I think, uh, to disavowing, in other words,
Speaker 1: undoing all the fears that they placed at the last
Speaker 1: meeting that prevented them from moving ahead with an interest
Speaker 1: rate hack. So basically what happened in June was as
Speaker 1: they were incredibly sensitive to short term data and they
Speaker 1: instilled fears about all the bad things that could happen,
Speaker 1: and the sense of the two biggest things that they
Speaker 1: stressed with employment and Brexit, those years have clearly not
Speaker 1: come to pass, and um, yes they're still they're always
Speaker 1: risks in the future. And the Committee has been really
Speaker 1: adept at um, you know, pulling risks out of the
Speaker 1: hat and emphasize them to give them an excuse not
Speaker 1: to to move rates up. And so now they kind
Speaker 1: of had to recant. And Uh, it's going to be
Speaker 1: entering to see what they're gonna do because they claim
Speaker 1: their data dependance, but they get whip side by the
Speaker 1: data so easily. So I think they have a huge
Speaker 1: communication problem with the public about what's driving their policy decisions.
Speaker 1: They are basically have no strategy. Mr Plosser, I wonder
Speaker 1: if you could comment on the distinction between being inside
Speaker 1: the bubble of the Federal Reserve and now that you
Speaker 1: are outside, and how you explain to people that are
Speaker 1: trying to invest their money how to do so based
Speaker 1: in the context of what you just described as a
Speaker 1: non policy strategy from the Federal Reserve. Currently, Well, I
Speaker 1: did they have a non policy. They just don't have
Speaker 1: a strategy. I think it's really important for the Fed
Speaker 1: to try to communicate, and I've said this for years,
Speaker 1: what are the data that are driving their decisions and
Speaker 1: how have they react that data? And they typically have
Speaker 1: not been able to articulate that strategy or articulate their
Speaker 1: reaction function, if you will, to the data. And so
Speaker 1: every new meeting there is a new set of data
Speaker 1: on the table that seemed to be driving their policy decisions.
Speaker 1: So that's what I mean is they don't really have
Speaker 1: a having they will articulate a strategy to the markets,
Speaker 1: and I think that's part of the problem that the
Speaker 1: markets have and why you can get whipstocks so reacently.
Speaker 1: So as an investor, you know I think you need
Speaker 1: to look at fundamentals, and I don't think paying much
Speaker 1: attention to the short term movements and and uh comments
Speaker 1: by the said is as important as some people like
Speaker 1: to think. If you're a FED policy meet or UM,
Speaker 1: you could you could argue that in fact, they are
Speaker 1: focused on fundamentals of the economy, and they've got two mandates.
Speaker 1: One is inflation. It's got to get up to two
Speaker 1: on that key measure they watch, and unemployment has to
Speaker 1: move lower. And part of the mandate has occurred, and
Speaker 1: unemployment has moved a lot lower, but the inflation number
Speaker 1: has not moved up that much. That seems to be
Speaker 1: one of the reason why people have been hesitant without
Speaker 1: a clear inflation signal, a clear need to fight inflation. Now,
Speaker 1: it seems that many, including FED chair yelling, have been
Speaker 1: willing to just wait and see what happens. So so
Speaker 1: let's let's let's be clear here one on the employment
Speaker 1: mandate monetary policy in terms of its stance, it's accommodative stance.
Speaker 1: It's more accommodative today on the unemployment rate is four
Speaker 1: point or seven percent, whatever it is, UM, it's more
Speaker 1: accommodative today than it was when the unemployment rate was
Speaker 1: ten percent. Now with an economy that's moved from ten
Speaker 1: percent to less in five percent unemployment rates, and we
Speaker 1: still have an accommodative monetary policy that's even more accommodated
Speaker 1: than it was earlier on. And too we have inflation.
Speaker 1: I agree inflation is below it's its target, although not
Speaker 1: all elements of inflation. If you look at you know,
Speaker 1: the c p I UM you've got, the core c
Speaker 1: p I is to percent or better. UH. The CPI
Speaker 1: for services, which is what what consumers spend their money on,
Speaker 1: is over three percent, and the trimmin and medium c
Speaker 1: p I s are all two percent or better. So
Speaker 1: the only thing that's really holding back headline inflation seems
Speaker 1: to be mostly energy and its effects on the overall.
Speaker 1: So so it's not my concern that inflation is UH
Speaker 1: is a little bit below two percent. You know, wh
Speaker 1: who's going to tell we are we can't forecast. The
Speaker 1: FED nor anyone else can either forecast or even control
Speaker 1: inflation as precisely if somehow we think they can. And
Speaker 1: you know, what's the difference between one point eight inflation
Speaker 1: and to persent inflation? Most people can't tell the difference.
Speaker 1: They only can tell the difference when they read the numbers.
Speaker 1: So I think we're getting a little fixated on the
Speaker 1: precision by which the FED can control inflation. So I'm
Speaker 1: all for the fact that inflation below target means, uh,
Speaker 1: the FED funds rate and the target for FED policy
Speaker 1: ought to be somewhat more accommodated than if there were
Speaker 1: at two. That's perfectly reasonable, but that's it's hard to
Speaker 1: justify it near zero interest rates because inflation is running,
Speaker 1: you know, few tenth books and few tenths below its target.
Speaker 1: We're gonna leave it there, Thank you very much, Charles
Speaker 1: plas a former president of the Philadelphia Federal Reserve. You're
Speaker 1: listening to taking Stockheim pim Fox my co host Kathleen Hayes.
Speaker 1: This is Bloomberg coming up, a look at the markets,
Speaker 1: the reaction or lack of reaction the Fed's decision, and
Speaker 1: we're also going to be looking at Apple's impact on
Speaker 1: the markets today. This is Bloomberg