Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Single best idea of post CPI. That's what we do
Speaker 2: of PPI on Thursday and on the retail sales. Everybody
Speaker 2: hanging on this, and of course I love what Neil
Speaker 2: Duddy called the tariff derangement syndrome. And we'll have to
Speaker 2: see just all the cross currents that are going on.
Speaker 2: We had a lot of good conversations. Constance Hunter of
Speaker 2: EIU got us through the inflation report. Jason Furman out
Speaker 2: on Twitter from Harvard with his wonderful four annualized statistics
Speaker 2: one month, three months, six month, twelve month, and on
Speaker 2: and on. I saw twenty eight different flavors of where
Speaker 2: we're heading on inflation. I'll let you decide. We started
Speaker 2: strong with Rebecca Patterson from the Council on Foreign Relations.
Speaker 2: She talked about regime chain.
Speaker 3: I think we're in a new regime for inflation. I
Speaker 3: think we're in a new regime for bond yields. So
Speaker 3: if the economy slows a lot, which Constant Constance was
Speaker 3: talking about right before me, if the economy slows enough,
Speaker 3: that's going to help pull inflation down. But that's not
Speaker 3: a situation anyone wants right. Usually you get deflation when
Speaker 3: you have a deep recession.
Speaker 2: We don't want that.
Speaker 3: But I think for the Federal Reserve, I was trying
Speaker 3: to look at when is the last time we got
Speaker 3: this rate cuts with inflation above target and the job
Speaker 3: market softening? But okay, okay, nineteen ninety five. So at
Speaker 3: the time they did three twenty five basis point insurance cuts,
Speaker 3: inflation was running about two point three, so lower than
Speaker 3: where we are now. The job market was okay, but
Speaker 3: the economy broadly was softening, and so they said we're
Speaker 3: going to try to massage this a little bit, and
Speaker 3: the stock market obviously loved it. It was up about
Speaker 3: fifteen percent over the three cut period the SMP, and
Speaker 3: I think that's probably what we're going to get this time.
Speaker 3: I don't know if it's one cut, two three. I
Speaker 3: lean towards less frankly because of the inflation risk, and
Speaker 3: I think they'll do a cut in September. It's so
Speaker 3: priced in it would be very difficult for the Fed
Speaker 3: to argue against that. But Jackson hole later this month.
Speaker 3: I believe it's August twenty first, twenty third. That'll give
Speaker 3: us some more color. I think on the sidelines of
Speaker 3: where they're leaning.
Speaker 2: Rebecca Patterson just brilliant there on bringing it back to
Speaker 2: the ninety four ninety five analogy, and it's not the same,
Speaker 2: but nevertheless the history is important to note. Ira Jersey
Speaker 2: with us with Bloomberg Intelligence trying to parse out the
Speaker 2: bond market of bills, notes and bonds. Here's Ira Jersey.
Speaker 4: What's interesting is that we're priced now for a September
Speaker 4: rate cut and a December rate cut. My feeling is
Speaker 4: is that once the Fed starts to move, they're going
Speaker 4: to move and keep going. They're not going to skip
Speaker 4: a meeting just at random. So I think that if
Speaker 4: they do cut in September, they'll also go in October
Speaker 4: and then December. Now will they go more than say
Speaker 4: another you know, four cuts and caught a one hundred
Speaker 4: basis points or will they cut more than that? Still
Speaker 4: an open question. I suspect that ultimately they will cut
Speaker 4: to below three percent. So you're talking about one hundred
Speaker 4: and fifty basis points one hundred and seventy five basis
Speaker 4: points of ray cuts this cycle. Well, keep in mind, Tom,
Speaker 4: like you know, the way that they're thinking about this.
Speaker 4: Look inflation right now is two and a half percent
Speaker 4: FED funds is over four percent, so that means you
Speaker 4: have a one and a half percent or more than
Speaker 4: one and a half percent a real funds rate. So
Speaker 4: to get the neutral under be kind of there a
Speaker 4: simplistic view of the world. They should could be able
Speaker 4: to cut one hundred and seventy five base points and
Speaker 4: just be at neutral.
Speaker 2: That's what we like. Rebecca Patterson to Ira Jersey just
Speaker 2: just absolutely brilliant analysis. Some differences there. I think Ira
Speaker 2: looking more aggressively out for raycuts and Rebecca, But at
Speaker 2: the same time, it's the conversation that we're having, given
Speaker 2: this moment that we're living in, and we'll go to
Speaker 2: Jackson Hall here at the end of August all I
Speaker 2: thought it'd be a snooze fest. Wrong. I'd scheduled climbing
Speaker 2: to the top of the tetons. That's not going to
Speaker 2: happen this time. Will be too busy on your podcast
Speaker 2: across the nation on Apple, on Spotify, and on YouTube podcasts.
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