Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Robert Kaplan joins US Vice Sherman Goldblin Sachs and of
Speaker 2: course all of his experience at the Dallas FED. You
Speaker 2: have a beautiful sentence, doctor Kaplan about the idea of
Speaker 2: we need to build relationships. So when you entered the FED,
Speaker 2: what do you do? Do you have lunch with the chairman?
Speaker 2: Is that how this is going to work with Chairman.
Speaker 3: Wars Those aren't the relationships I was referring to. For
Speaker 3: Kevin worsh and for me when I went into the FED,
Speaker 3: and for anybody coming in from outside. You want to
Speaker 3: get to know the staff, particularly the economists. You want
Speaker 3: to get you want to meet the heads of supervision.
Speaker 3: There's twenty two thousand people at the FED. You want
Speaker 3: to meet all of the bank presidents. When I say relationships,
Speaker 3: you're going to want to start getting into a conversation
Speaker 3: with them about what issues they're seeing, where they're coming from,
Speaker 3: and you want to start assessing personnel. That's all the
Speaker 3: things that the new chair will need to do in
Speaker 3: the first number of weeks and months.
Speaker 4: What do you expect, Robert from this incoming chairman? Kevin
Speaker 4: Walsh based upon his testimony, based upon what we know
Speaker 4: in his past experience, what are you expecting.
Speaker 3: He's going to accelerate, in my opinion, and work closely
Speaker 3: with Mickey Bowman to accelerate move along bank deregulation, particularly
Speaker 3: tailoring for smaller banks, which they're still in the process
Speaker 3: of trying to do.
Speaker 1: He's going to work more closely.
Speaker 3: We know that with Scott Besson on the balance sheet,
Speaker 3: which will come back to that, and I think he's
Speaker 3: going to encourage he may de emphasize or even eliminate
Speaker 3: the dot plot, you know, the forward guidance, and he's
Speaker 3: going to want to encourage folks around the FOMC table
Speaker 3: to anticipate that a is going.
Speaker 1: To be disinflationary.
Speaker 3: He's going to get he's going to have the debate
Speaker 3: on that one, and that they'll agree with the argument,
Speaker 3: but they want to see demonstrable improvement in headline inflation,
Speaker 3: and the war is going to make that harder.
Speaker 1: So he's going to have to debate that out.
Speaker 4: Robert the A lot of critics of the FED oftentimes
Speaker 4: cite the types of data that the FED uses, principally
Speaker 4: that it's a rearwood rear word looking backward, looking as
Speaker 4: opposed to con anticipatory. Do you think Kevin Wors can
Speaker 4: have an impact there at all?
Speaker 1: Well, yeah, he ought to. And in fairness to the FED, the.
Speaker 3: Calls with CEOs, the fact that the boards around the
Speaker 3: FED systems are made up of local leaders CEOs, community leaders,
Speaker 3: labor leaders, et cetera, community education leaders. So they've got
Speaker 3: to be careful. And I always used to argue this,
Speaker 3: you want to be careful, not to folk. You want
Speaker 3: to understand the data, but you've got to be out
Speaker 3: in the world understanding what the structural changes are in
Speaker 3: which actually going on on the ground, because it might
Speaker 3: it might be different than what.
Speaker 1: The data is telling you.
Speaker 3: Because data is lagging and it's often aggregated, and we're
Speaker 3: better yet it's wrong. It gets revised two and three times,
Speaker 3: So you've got to be careful about data.
Speaker 2: Can I go nerd sure?
Speaker 1: Okay?
Speaker 2: Robert kaplan with U, folks, and his charm is no
Speaker 2: one within our FED apparatus is a better understanding of
Speaker 2: business process, financial process, his efforts at Goldman Sacks and
Speaker 2: then the monetary fiscal dual mandate process of the Dallas Fed. Okay,
Speaker 2: so let's go beneath the headline data or Robert, we
Speaker 2: can do this. Trimmed mean was not invented at Dallas.
Speaker 2: It was Steve Chikeetti and the crew up at the
Speaker 2: Cleveland fed some of that coming out of the University
Speaker 2: of Michigan. That's a school north of Kansas. Robert, in
Speaker 2: case you didn't.
Speaker 1: Know that, I've heard of it.
Speaker 2: And then Jim Dolmas codified this in Dallas. And when
Speaker 2: Powell talks about the trimmed mean, he's talking about Robert
Speaker 2: Keplin shop. Are you gonna stay on the trim mean
Speaker 2: with Dolmos or are you going to have another inflation
Speaker 2: gauge under chairman Warship.
Speaker 3: So it's a here's the answer. There's a whole bunch
Speaker 3: of inflation indicators. That trim mean is one of them.
Speaker 3: And let me just tell you for your audience what
Speaker 3: the trim mean is. It's a simple way of saying,
Speaker 3: it xes out extreme moves to the upside and the downside,
Speaker 3: and it gives you another estimate of quote unquote core inflation.
Speaker 3: The reason you got to be careful and I love
Speaker 3: the trim mean. We own it that the Dallas Vetterick
Speaker 3: Jim Dolmas came up with it is it can it
Speaker 3: can mislead you?
Speaker 1: And here's why.
Speaker 3: In March of twenty twenty one, what was the trim
Speaker 3: mean reading about one six, one seven, even though inflation
Speaker 3: later in the year was going to nine. So what
Speaker 3: happens when you have an oil price spike like you
Speaker 3: do right now? Initially it's one item, the trim mean
Speaker 3: trims it out over a period of months on oil
Speaker 3: price spikes, bleeds quote unquote right into twenty or thirty
Speaker 3: other items, and all of a sudden what started as
Speaker 3: a spike. And then so wouldn't shock me if the
Speaker 3: trim mean three months from now is you know, closer
Speaker 3: to three than two. And so you got to be
Speaker 3: very careful about.
Speaker 2: Each one in I got to get this in mcloone's
Speaker 2: on deck here on oil, so we got to get
Speaker 2: this in with Can I Can I do a second
Speaker 2: a follow up, Chairman Sweeney? Can I do a follow
Speaker 2: up question? Yep, I'll do a follow up question with
Speaker 2: Robert Kaplan. Robert, can you apply these wonderful statistical methods
Speaker 2: given a K shaped economy where the inflation for the
Speaker 2: halves and there's six thousand foot houses down in Dallas
Speaker 2: and Austin is different than half of America flat and
Speaker 2: they're back.
Speaker 1: Yeah.
Speaker 3: This is why the FED I don't think should or
Speaker 3: will or I don't think it should abandon the two
Speaker 3: percent target. Why to your point, if headline inflation is
Speaker 3: running two and three quarters to three, if I make
Speaker 3: fifty or fifty five grand a year or less, that's
Speaker 3: eighty five million workers.
Speaker 1: By the way, my headline inflation rate, SUREFF wallet might
Speaker 1: be six or seven or eight.
Speaker 3: So that's why the low modern income workers are getting suffocated.
Speaker 3: And so their problem is that not that they don't
Speaker 3: have jobs. They're employed, but they can't make ends meet.
Speaker 3: And so I think the FED needs to stay on
Speaker 3: the inflation fight.
Speaker 2: This has been wonderful, Robert Kevin, generous of you from
Speaker 2: Golden Sechs, from Harvard, from Kansas, and also from the
Speaker 2: Dallas Fed. Thank you, thank you so much,