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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along

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Speaker 2: with Paul Sweeney. Join us each day for insight from

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Speaker 2: the best in economics, finance, investment, and international relations. You

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Speaker 2: in New York City. Subscribe to the podcast on Apple, Spotify,

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Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio,

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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. And what

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Speaker 2: we see now with so much of inflation as it

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Speaker 2: comes in decidedly in a disinflationary mode, You're going to

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Speaker 2: see a huge move I would predict in the market

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Speaker 2: equities lift. Here, I'm looking at the ten year real

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Speaker 2: yield Claudia. Some would want me to do it. It

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Speaker 2: plunges out of the recent range and moves from one

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Speaker 2: point nine to nine down to a stunning one point

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Speaker 2: nine zero, a full time basis point move. Paul, go

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Speaker 2: through the list of the inflation You do it better.

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Speaker 4: Than me, CPI Tom just right off the headline is

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Speaker 4: there's a negative symbol. There's a negative symb let's call

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Speaker 4: that out zero point one percent. Tom. The consensus was

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Speaker 4: a positive zero point one percent, So it's lower than

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Speaker 4: the consensus. It's lower than the last month. That gets

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Speaker 4: your attention. X Food and Energy zero point one percent

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Speaker 4: versus the consensus of zero point two percent. So you

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Speaker 4: put that all in for the annualized number, Tom, CPI

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Speaker 4: X Food and Energy year on year came into three

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Speaker 4: point three percent to consensus was three point four percent,

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Speaker 4: and that was what it was last month. So a

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Speaker 4: slower inflationary environment is what we're seeing here, Tom.

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Speaker 2: Average wages pretty much level as well, maybe a little

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Speaker 2: bit of an improvement in weekly earnings.

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Speaker 3: And I would finally state the claims.

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Speaker 2: Reversed from the recent trend to a this is this

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Speaker 2: is Claudia is going to be really impressive, worser claims.

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Speaker 3: How about that.

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Speaker 2: It's a better claims statistic, But it's just one data

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Speaker 2: point on this market moving CPI report futures up eight

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Speaker 2: NASTAC up two tenths of a percent, a ten year

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Speaker 2: real yield craters from a one ninety nine to one

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Speaker 2: point nine one percent.

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Speaker 3: We went with claudia, some claudia.

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Speaker 2: There's a negative sign on CPI month over month, what

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Speaker 2: does that signal?

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Speaker 5: It's good?

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Speaker 1: I mean, this is the what's so important about getting

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Speaker 1: these kind of numbers at this point is it goes back.

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Speaker 1: It tells us what we saw the second half of

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Speaker 1: last year, what wasn't supposed to happen, the disinflation without

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Speaker 1: the pain that was real. And it also tells us

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Speaker 1: a lot of that where we got stuck up at

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Speaker 1: the beginning of this year, that was that was not

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Speaker 1: the right signal. Right, So this is you know, we

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Speaker 1: get one more month of data, but it actually helped

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Speaker 1: to sort out the different conflicting stories that we've had

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Speaker 1: before that you know, we we are on this disinflation

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Speaker 1: path and we have been, and this is this is

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Speaker 1: very good news. It is one data point and you

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Speaker 1: don't you know, it's nice to see a negative ahead

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Speaker 1: of that number. We shouldn't get to, you.

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Speaker 6: Know, wound up about it.

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Speaker 1: But this is the disinflation story. It's here and it

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Speaker 1: has been here. We've just it's been under the hood

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Speaker 1: and been hidden.

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Speaker 4: So how do you think the FED is going to

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Speaker 4: interpret interpret this data? Claudy, Are they going to look

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Speaker 4: at it on a month basis or kind of a

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Speaker 4: maybe three months six month trailing basis. How do they

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Speaker 4: look at some of this CPI data.

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Speaker 1: We we now have three months that are good months,

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Speaker 1: right and frankly, this is is another very good month

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Speaker 1: as with last month. So again they're not going to

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Speaker 1: want to, you know, overreact to one month, but we're

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Speaker 1: getting in their three month moving average range. Of these

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Speaker 1: are good numbers. We need to keep them going. We

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Speaker 1: had a full string of disinflation the second half of

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Speaker 1: last year. The composition we're all talking about top line

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Speaker 1: numbers going on under the food is important and you know,

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Speaker 1: good news is good news here and it is a story.

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Speaker 1: It re enforces the dissemplation story, which is what we

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Speaker 1: need to get back to normal.

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Speaker 2: The market moves, Futures explode up sixteen down, futures up

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Speaker 2: seventy eight, nasdack up three tens an percent, small caps

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Speaker 2: almost up two percent, the vics a much more attractive

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Speaker 2: number twelve point three three. Bloomberg surveillance across the nation

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Speaker 2: with a stunning inflation report, and we are strong with

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Speaker 2: claudiasm of course of Michigan for years and affiliated with

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Speaker 2: the University of Chicago Boos School. The former governor of

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Speaker 2: the Federal Reserve System, Randall Krasner, joins us now the

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Speaker 2: market economist Randy Krausner. Neil Dudda of Renaissance Macro puts

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Speaker 2: out a blistering single sentence, The doves have what they need,

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Speaker 2: It is time to cut. What will the PhDs that

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Speaker 2: the ECCOS building advise Chairman Powell?

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Speaker 6: I will say that we have the foundation for a cut,

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Speaker 6: but they're not going to be ready to go yet.

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Speaker 6: So I think they're As Jay has said over and

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Speaker 6: over again, he needs more data to feel confident that

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Speaker 6: inflation is coming down in a sustained and sustainable way.

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Speaker 6: This is certainly consistent with that, and you could see

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Speaker 6: from the testimony that he gave over the last couple

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Speaker 6: of days he was talking more about the risks to

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Speaker 6: the downside, that is that the FED those rates too

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Speaker 6: long and the economy, in particularly the labor markets lows

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Speaker 6: too much. This is not enough to get them to

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Speaker 6: move at the end of this month. I don't really

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Speaker 6: think that's going to happen, but I do think it

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Speaker 6: sets the foundation for a move in September.

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Speaker 2: Tough question Randy, I'm going to ask it with your brilliance,

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Speaker 2: and particularly in financial economics, people will say the elites

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Speaker 2: are benefited by our FED policy because they are asset heavy.

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Speaker 2: Price up, yield down assets do better when you're around

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Speaker 2: the table the Echos building July thirty one or into September,

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Speaker 2: is there any discussion of the partition of America where

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Speaker 2: so many Americans need that rate cut now?

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Speaker 6: Well, certainly, the FED has been very much focused on

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Speaker 6: the labor market. I mean think back to a few

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Speaker 6: years ago when Jay Powell and the rest of the

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Speaker 6: FED launched the average inflation targeting where they said, well,

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Speaker 6: we could run the economy too hot for a little

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Speaker 6: while and that would be okay. So they are very

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Speaker 6: sensitive to that. That is I think why Jay is

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Speaker 6: starting to speak so much more about that. The unemployment

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Speaker 6: rate has been four percent or below for a very

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Speaker 6: long time. Now, that's a very strong labor market, and

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Speaker 6: there has been a lot of generation of jobs, not

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Speaker 6: just at the high end, but really throughout the entirety

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Speaker 6: of the income income distribution. But they're sensitive to that,

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Speaker 6: and I think that will lead them to cut by September,

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Speaker 6: but not this month.

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Speaker 4: So Randy whinn the FED does begin to cut rates.

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Speaker 4: Do they do it? Did they do it, you know,

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Speaker 4: four or five six meetings in a row? Did they alternate?

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Speaker 4: How does that work?

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Speaker 3: And Paul, your question is the absolute heart of the matter.

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Speaker 6: Sure, for sure, And so I don't think they know

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Speaker 6: yet how they want to do it.

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Speaker 5: I don't think they remember.

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Speaker 6: There's that old phrase that the Island green Span had

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Speaker 6: that you moved a pace that was likely to be measured,

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Speaker 6: so twenty five basis points every meeting for like two years.

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Speaker 6: I don't think they want to do something like that.

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Speaker 2: See, Randy, you're busting my chop. So as Paul asked

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Speaker 2: the money questionnaire. But Randy, we are wedded to a green.

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Speaker 3: Spanny in mathematics on this.

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Speaker 2: Are we wrong to do that? I mean, should we

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Speaker 2: be more creative about it? Back to McChesney, Martin or

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Speaker 2: Arthur Burns. Should we have a new formula forward beside

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Speaker 2: a measured green span.

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Speaker 5: Yeah. I don't think they're going to do the measured pace.

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Speaker 6: I think there was pretty clear consensus even when I

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Speaker 6: was there, which is now a while ago, that measured

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Speaker 6: pace was not the best way to do things.

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Speaker 5: And so I think that they will move.

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Speaker 6: And you can see when they moved inflation interest rates

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Speaker 6: up that was not at a measured pace, that was

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Speaker 6: pretty rapid.

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Speaker 5: So I think they're gonna they'll bring interest rates down.

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Speaker 5: I think they'll bring.

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Speaker 6: Them down somewhat gradually at first, but if they see

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Speaker 6: the libor market really weakening, they'll start to move quickly.

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Speaker 6: That'll be too late to prevent the labor market from

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Speaker 6: softening substantially. But they have to weigh the risks of

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Speaker 6: calling all clear too early, getting back into what happened

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Speaker 6: in the late seventies early eighties, where they did that

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Speaker 6: and then inflation reignited and they had to raise rates

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Speaker 6: really high at a really bad recession. They'd rather wait

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Speaker 6: a little bit, you know, perhaps a little bit too long,

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Speaker 6: to buy some insurance against that upside inflation scenario. But

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Speaker 6: then they can cut and just have a slow down,

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Speaker 6: maybe a mild recession, but something that'll be much less

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Speaker 6: worse than what they had in the early eighties.

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Speaker 4: All right, Rannie, So today's inflation, David, you know, certainly

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Speaker 4: showing some slowing inflation. We heard from FED Chairman J

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Speaker 4: Powell over the last two days speaking in front of

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Speaker 4: Congress focusing. I think a lot of investors said, boy,

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Speaker 4: he's really kind of focused on the labor market, the

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Speaker 4: employment market, and citing some slow downs, there are just

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Speaker 4: some softness there. How do you think about the labor market.

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Speaker 4: How do you think that Federal Reserve thinks about the

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Speaker 4: labor market.

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Speaker 6: So I think they see that, I think is really

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Speaker 6: the key on both the demand side as well as

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Speaker 6: on the supply side. So on the supply side, they

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Speaker 6: look a lot of wage growth, and wage growth has

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Speaker 6: been coming down a bit. It's still now three point

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Speaker 6: nine percent rather than four point one percent, substantially above

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Speaker 6: their inflation target. And given how important wages are in

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Speaker 6: the cost structure of both both certainly services firms, but

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Speaker 6: even manufacturing firms, unless productivity really spikes up, that's going

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Speaker 6: to have to come down a little bit, a little

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Speaker 6: bit more. On the demand side, obviously, when there's good

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Speaker 6: real wage growth as there has been, that is that

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Speaker 6: wages have been growing fast and nominal wages have been

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Speaker 6: growing faster than inflation. That's a that's a big plug

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Speaker 6: or households continuing demand, and they want to keep that

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Speaker 6: balance just right.

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Speaker 2: Professor Krausser, stay with us, don't go away at the

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Speaker 2: Blue School Chicago, with his great work at opening BOS

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Speaker 2: School in London. Here a number of years ago, Randall Krasser,

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Speaker 2: the former governor of.

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Speaker 3: The FED, Randy, we're learning so much.

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Speaker 2: And what I learned was from David Rosenberg at Marylynch

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Speaker 2: a million years ago that the financial media focuses on

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Speaker 2: one statistic, or maybe we get sophisticated and we look

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Speaker 2: at three statistics. Pros like you and Kate Moore for

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Speaker 2: that matter, look at forty seven or fifty five inflation statistics,

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Speaker 2: which is the one you're looking at right now. What

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Speaker 2: is the subset of data that matters to Randall Krasner.

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Speaker 6: And it's not really the CPI, it's the Personal Assumption

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Speaker 6: Expensure Index the PCE that comes out with the with

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Speaker 6: the GDP report.

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Speaker 5: That's what the FED has said that they really focused on.

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Speaker 6: I think that's reasonable because if you look at the

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Speaker 6: waitings in the CPI, a very large fraction of it

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Speaker 6: is around rents, and so you know some of the

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Speaker 6: oddities that we get with rents, whether it's you know,

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Speaker 6: last month, there's a big spike up in New York

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Speaker 6: City rents, there's a big lag in the way that

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Speaker 6: rents are come into, right, its owner occupied housing, but

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Speaker 6: it's really rental numbers that come in that sort of

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Speaker 6: lag things because as you know, people sent you usually

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Speaker 6: signed one year contracts for rents, and so we're finding

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Speaker 6: out a lot about what happened last year rather than

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Speaker 6: what's happening happening currently. Less of a weight on that

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Speaker 6: in the in the PCE index, and so the FED

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Speaker 6: really focuses more on that, and I think that's reasonable

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Speaker 6: to do.

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Speaker 2: Okay, Randy, this is really important, And I mean, you know,

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Speaker 2: Brown University economics pop. It's a little different than Harvard

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Speaker 2: Undergraduate economics. The gentleman at Harvard Jason firm, and I

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Speaker 2: think you know who he is, Randall Cross. Oh, yes,

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Speaker 2: Jason Ferman of X ten Fame launches a tweet out

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Speaker 2: moments ago amazing inflation data for June. What's exclamation points?

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Speaker 2: They do that at Harvard Brown University? Poole said, no

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Speaker 2: exclamation points ever. Come on, Randy, the Fed's got to

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Speaker 2: adjust to this report. Explain how they adjusts. They staggered

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Speaker 2: to July thirty first.

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Speaker 5: So certainly they will take this on board.

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Speaker 6: And I think, as you can see from the minutes,

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Speaker 6: that I think are reflected in some of Jay's recent testimony.

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Speaker 6: There's a lot more concerned about the potential downsides and

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Speaker 6: the risks of keeping interest rates high for too long.

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Speaker 6: They will take that on board, and I think what

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Speaker 6: they will do is I don't think they're going to move,

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Speaker 6: but I think what they're going to do lay the

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Speaker 6: foundation for move in September, because in some sense Jay

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Speaker 6: laid the foundation for changing the wording and changing the

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Speaker 6: changing the press conference UH feeling in July, and because

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Speaker 6: the move the FED in its communication moves at a

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Speaker 6: pace that is likely to be gradual, and so they

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Speaker 6: lay the foundation for changing the wording in July to

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Speaker 6: be able to lay the foundation for actually making a

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Speaker 6: change in September.

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Speaker 5: So I think that's what your most likely to hear.

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Speaker 3: Randy, thank you so much.

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Speaker 2: And just for the record, Professor Krausner, I would kill

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Speaker 2: to get Professor Krasner and Professor fermanon.

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Speaker 3: At the same time.

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Speaker 2: That's a giant in financial economics, in a giant in

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Speaker 2: policy economics.

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Speaker 3: Randy Krasner, the Moose.

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Speaker 4: School, Kate Moore, She's had a thematic strategy and global

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Speaker 4: allocation at a little firm called black rock. So, Kate,

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Speaker 4: I'd love to get your thoughts here on this inflation

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Speaker 4: print we Saul this morning. What is mean for you?

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Speaker 7: Look, I think this is the latest and a string

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Speaker 7: of good news for the equity market. You know, one

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Speaker 7: of the things I was really considering as we finished

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Speaker 7: off the second quarter was that, you know, most people

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Speaker 7: were skeptical about the sustainability of the equity market going

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Speaker 7: into the second half of the year. There are a

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Speaker 7: little anxious that we can't repeat returns. I think this message.

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Speaker 8: That we're getting now that the FED is going to

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Speaker 8: be in.

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Speaker 7: A place where they can continue to or they can

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Speaker 7: start to ease policy and continue to guide us, and

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Speaker 7: that is the path into the beginning of twenty twenty

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Speaker 7: five is going to be quite supportive for equity markets.

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Speaker 7: But it's not the whole story, right, I Mean, lower

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Speaker 7: rates are certainly a support, but that's not what's really

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Speaker 7: driving the equity markets in twenty twenty four. It's really

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Speaker 7: been in earnings and a fundamental story.

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Speaker 8: So now us equity.

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Speaker 7: Investors, we have to turn our attention to earnings, which

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Speaker 7: are kicking off any moment.

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Speaker 4: So what do you expect to see here? We had

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Speaker 4: some of the numbers today. Delta a little bit weaker

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Speaker 4: than expected on some costs, PEPSI, a little bit weaker

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Speaker 4: on some top line there. What are your expectations here

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Speaker 4: for earnings cycle?

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Speaker 8: Yeah, so okay, let's get out this.

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Speaker 7: To begin with, the baseline consensus is looking for a

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Speaker 7: seven and a half to eight percent EPs growth for

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Speaker 7: the second quarter.

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Speaker 8: That's obviously a little bit of an acceleration from the

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Speaker 8: first quarter.

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Speaker 7: So this is what I'm talking about, between the price

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Speaker 7: moves and where consensus is from bottom up basis. You know,

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Speaker 7: we're kind of at a hot place. But I will

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Speaker 7: say as much as people are anxious about a pullback

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Speaker 7: and you know, get worried that multiples have expanded, there

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Speaker 7: are a couple of reasons I think this earning season

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Speaker 7: could meet these high expectations. So first, I'm going to

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Speaker 7: make this point around pre announcements, because I watched this

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Speaker 7: really closely. When you're going into earning season, people may

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Speaker 7: put out all the bad news if they need to early,

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Speaker 7: and there have been very few negative pre announcements this quarter,

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Speaker 7: especially relative to what we got in the first quarter

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Speaker 7: of twenty four, which was.

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Speaker 8: Still a good earnings quarter.

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Speaker 7: So no one is coming out trying to front run

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Speaker 7: the market here and get the bad news out before earnings,

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Speaker 7: which I think is actually a very positive signal.

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Speaker 8: Kay.

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Speaker 2: And then the second thing, Oh, please go on, don't continue, Kate,

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Speaker 2: Kate Moore, you deserve a second thing, Give us a

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Speaker 2: second thing.

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Speaker 7: The second thing I was going to say is that

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Speaker 7: earnings revision ratios. This is like the ratio of upgrades

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Speaker 7: to downgrades from the bottom up analysts. And over the

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Speaker 7: last one month, the earnings revision ratios for the US

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Speaker 7: and particularly for the biggest parts that matter, like tech,

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Speaker 7: have been very positive or have in Tech, we've had

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Speaker 7: more than two upgrades for every one down grade. And

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Speaker 7: you know that's not a sign going into earning season

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Speaker 7: that people aren't seeing any signs of weakness.

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Speaker 2: Ira Jersey is going to be with us in a bit.

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Speaker 2: We're still with Kate Moore, Blackrock and mister Jersey and

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Speaker 2: his team. I mean, Kate, it's not like you or

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Speaker 2: you're you know, you're alone and you're understaffed. Jersey's got

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Speaker 2: like seven people right now writing and working on the moment,

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Speaker 2: and Iris of course talking about key rain just here

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Speaker 2: in the fixed income market, I want you to bring

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Speaker 2: that over to the equity market. Irad Jersey says, four

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Speaker 2: point one eight percent on a ten year yield is

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Speaker 2: a big deal. Right now, the tenure yield is four

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Speaker 2: point two zero percent. How do equities react if yields

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Speaker 2: go price up, yield down outside the recent range.

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Speaker 7: Price up, yield down, I think would be really supportive

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Speaker 7: for big parts of the market. You may actually see

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Speaker 7: a little bit of action in the small and mid caps,

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Speaker 7: which have been, as we know, huge laggards.

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Speaker 3: Up one point eight percent right now.

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Speaker 8: Yeah, and here's what I'll say.

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Speaker 7: Fundamentally, that segment of the market is not as strong

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Speaker 7: as what we see in the large cap indices and

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Speaker 7: the megacap company that said this is the news that

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Speaker 7: we need for smaller segments of the of the business

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Speaker 7: community that rates are on the path down.

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Speaker 8: Because they know that has been a headwind for operations.

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Speaker 2: I got one more question, Kate Moore, when then we

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Speaker 2: got to go over to Jersey to tell us what

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Speaker 2: to do? You you don't remember the analogs that we remember.

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Speaker 2: The nifty sixty I was, you know, nifty fifty rather

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Speaker 2: in the sixties and all that, even ninety nine, two

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Speaker 2: thousand does Kate More have an equity market analog you're

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Speaker 2: working off of or is this a whole new world

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Speaker 2: after all?

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Speaker 8: Yeah, Tom, I do remember ninety nineteen thousand. Don't worry.

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Speaker 8: I'm not that young.

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Speaker 7: But what I will say is I don't see a

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Speaker 7: perfect analog right here. And I know everyone wants to

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Speaker 7: pick a period in history and say it looks just

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Speaker 7: like this, and it's a comfort, you know, people like

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Speaker 7: that comfort. But we are in the midst of, I

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Speaker 7: think a massive technological change here with the advent of AI,

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Speaker 7: and as companies try and figure out how to adopt

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Speaker 7: AI and figure out the use cases and what the

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Speaker 7: best way to work with this technology is, and I

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Speaker 7: think that's going to lead to the incredible, you know,

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Speaker 7: bifurcation in the market. Companies that have access to the

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Speaker 7: technology have access to amazing data sets and are using

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Speaker 7: it appropriately and those that don't. You're starting to see

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Speaker 7: that separation in earnings already. And I just don't know

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Speaker 7: that we, or at least in the lifetime I've been

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Speaker 7: in almost five decades, that we've seen this significant of

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Speaker 7: a technological change.

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Speaker 2: Kate Moore, thank you so much, Blackrock. She's got to

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Speaker 2: talk to her steam. Colleagues at Blackrock right now greatly

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Speaker 2: greatly appreciate that.

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Speaker 3: Ira Jersey joins us.

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Speaker 2: Now with Bloomberg Intelligence, and he is a surveillance soccer expert.

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Speaker 3: Paul, why don't you get us on the straight.

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Speaker 4: And narrow exactly? All right, Ira, we had this inflation print,

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Speaker 4: came in a little bit softer than expected. What's your market?

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Speaker 4: What's the treasury market telling you about what we saw

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Speaker 4: in the inflation print?

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Speaker 9: Yeah, so the treasury market liked it, and the treasury

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Speaker 9: market has rallied.

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Speaker 5: We've seen some we call bull steepening.

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Speaker 9: So you have the front end yield, so yields on

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Speaker 9: the two year note are are lower more than yields

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Speaker 9: on the long end of the yield curve. So that's

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Speaker 9: what we call bull steepening of the curve. And that's

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Speaker 9: not a huge surprise because you know what this data does.

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Speaker 9: It gives more confidence to the market that not only

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Speaker 9: might the Fed cut in September, but once they do

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Speaker 9: start to cut, assuming that we continue to have reasonably

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Speaker 9: decent inflation prints and slowing economy, that the Fed will

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Speaker 9: probably go more regularly. And that's one of the reasons

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Speaker 9: why you see the shorter end of the yield curve

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Speaker 9: at two year note and five year note do a

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Speaker 9: little bit better than the long end because that tends

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Speaker 9: to be far more sensitive to interest rate cuts by

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Speaker 9: the Fed. So it's not a huge surprise. And at tom,

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Speaker 9: as you noted, you know, four point one eight percent

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Speaker 9: on the ten yuere is actually a pretty important technical

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Speaker 9: level because below that we're going to test four percent again.

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Speaker 9: And I think you know four percent is more of

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Speaker 9: a psychological level than anything you know, economically important. But

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Speaker 9: nonetheless you can wind up seeing a pretty big move.

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Speaker 2: We printed under four point one eight, but to pros

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Speaker 2: like you, Ira, you need to close under four point

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Speaker 2: one eight, am.

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Speaker 3: I right, Yeah, that's correct.

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Speaker 9: Yeah, so we do need to see it convince I

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Speaker 9: call it a convincing break. So what often happens is

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Speaker 9: you can make all these lines on charts and ultimately

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Speaker 9: what usually you use those for things like putting stop

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Speaker 9: losses or or stop reverses in so you you if

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Speaker 9: you're if you're short the market, for example, you you

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Speaker 9: hope that interest rates will go up, right, so yields

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Speaker 9: will go up. And if you know so, if you say, okay,

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Speaker 9: four point one eight percents a.

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Speaker 5: Is a key technical level.

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Speaker 9: You'll put you a stop in at four seventeen or

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Speaker 9: four sixteen, So you need a more convincing break than

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Speaker 9: just like half a basis point.

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Speaker 4: AI, Raight, I'm looking at the WORP function world indust

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Speaker 4: rate probability if I'm reading this correctly, Marcus, looking maybe

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Speaker 4: like an eighty five percent chance of a rate cut

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Speaker 4: in September.

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Speaker 3: Oh, listen to you, you're doing it wrap?

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Speaker 2: I am?

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Speaker 4: I am? Can I pencil that in?

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Speaker 8: IRA?

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Speaker 4: Can I put it in with ink? What do we

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Speaker 4: do here?

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Speaker 9: Well, the market certainly is coming around to that thought.

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00:22:09,840 --> 00:22:12,320
Speaker 9: You know, I'd been very skeptical that the FED would

443
00:22:12,320 --> 00:22:15,719
Speaker 9: have enough good data to go in September, but you know,

444
00:22:15,800 --> 00:22:18,399
Speaker 9: today's data was certainly good. We remember, we still have

445
00:22:18,440 --> 00:22:20,320
Speaker 9: a bunch of prints before then, so we still have

446
00:22:20,359 --> 00:22:22,800
Speaker 9: two more inflation data. Plus we have all the PC

447
00:22:23,000 --> 00:22:25,359
Speaker 9: numbers as well as the spending and payrolls, right, so

448
00:22:25,400 --> 00:22:27,520
Speaker 9: we have all of the important data that we're going

449
00:22:27,520 --> 00:22:30,520
Speaker 9: to get over the next couple of months. And you know,

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00:22:30,600 --> 00:22:32,480
Speaker 9: if that turns around and this happens to be the

451
00:22:32,520 --> 00:22:36,600
Speaker 9: weakest inflation print over the over that three month period,

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00:22:36,920 --> 00:22:39,359
Speaker 9: then maybe September is off the table, but the market

453
00:22:39,400 --> 00:22:42,320
Speaker 9: certainly is pricing for a September cut. I think what's

454
00:22:42,440 --> 00:22:45,479
Speaker 9: what's what's important, though, is that we were also priced

455
00:22:45,520 --> 00:22:49,880
Speaker 9: in now for another cut after that in September November.

456
00:22:49,880 --> 00:22:52,960
Speaker 9: Excuse me, so, so basically the market is starting to

457
00:22:53,000 --> 00:22:55,080
Speaker 9: price for a string of cuts as opposed to just

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00:22:55,359 --> 00:22:56,920
Speaker 9: one and then a pause for a little while.

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00:22:56,880 --> 00:23:00,160
Speaker 2: I got one minute, that's I'm so sorry. How does

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00:23:00,200 --> 00:23:03,480
Speaker 2: our world change if we get a close of three

461
00:23:03,560 --> 00:23:06,959
Speaker 2: point ninety nine percent on the ten year yield?

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00:23:07,320 --> 00:23:08,720
Speaker 3: I don't think anybody's ready for that.

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00:23:09,440 --> 00:23:12,280
Speaker 9: Yeah, well, it doesn't change a ton of ton, but

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00:23:12,440 --> 00:23:15,520
Speaker 9: it what the tenuere going down that low? You would

465
00:23:15,520 --> 00:23:18,520
Speaker 9: see lower mortgage rates, right, So you would see, certainly,

466
00:23:19,240 --> 00:23:21,639
Speaker 9: I think some corporates start to come in and maybe

467
00:23:21,680 --> 00:23:24,960
Speaker 9: pre refinance some higher coupon debt that they issued, say

468
00:23:24,960 --> 00:23:27,520
Speaker 9: two or three years ago. So you can end up

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00:23:27,560 --> 00:23:32,320
Speaker 9: having a situation where ironically lower rates leads to easier

470
00:23:32,359 --> 00:23:35,040
Speaker 9: financial conditions, and that actually might work against what the

471
00:23:35,080 --> 00:23:38,880
Speaker 9: FED wants to do, or do the Fed's work for them.

472
00:23:39,200 --> 00:23:41,560
Speaker 9: So certainly, certainly, though, you're only going to get there

473
00:23:41,640 --> 00:23:43,840
Speaker 9: if the market is more convinced that the Fed's going

474
00:23:43,880 --> 00:23:45,760
Speaker 9: to cut pretty aggressively our Jersey.

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00:23:45,840 --> 00:23:48,480
Speaker 2: Thank you so much, greatly appreciate it. This is the

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00:23:48,480 --> 00:23:53,480
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00:23:53,680 --> 00:23:57,280
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