1 00:00:02,480 --> 00:00:07,080 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,560 --> 00:00:09,400 Speaker 2: How many Jackson Holes have you actually been to? 3 00:00:09,520 --> 00:00:09,760 Speaker 3: Now? 4 00:00:10,840 --> 00:00:12,760 Speaker 4: It's a little hard to say, but my first one 5 00:00:12,800 --> 00:00:13,880 Speaker 4: was nineteen ninety seven. 6 00:00:14,080 --> 00:00:14,240 Speaker 1: Wow. 7 00:00:14,280 --> 00:00:16,520 Speaker 4: I've missed a few here and there as breaking news 8 00:00:16,520 --> 00:00:18,520 Speaker 4: has happened and I've had to be somewhere else. But 9 00:00:18,720 --> 00:00:21,200 Speaker 4: so somewhere around twenty five to thirty. 10 00:00:21,360 --> 00:00:23,880 Speaker 2: So, Joe, if we keep doing this for another forty years, 11 00:00:23,920 --> 00:00:27,000 Speaker 2: we'll notch up as many Jackson Holes as Mike has 12 00:00:27,040 --> 00:00:27,319 Speaker 2: been to. 13 00:00:27,480 --> 00:00:30,080 Speaker 1: Maybe not if he does another forty earlier. Yeah, we 14 00:00:30,080 --> 00:00:30,920 Speaker 1: can never ketch. 15 00:00:30,880 --> 00:00:34,080 Speaker 2: Up if Mike stops now and we keep doing it 16 00:00:34,159 --> 00:00:35,000 Speaker 2: until we're eighty. 17 00:00:35,520 --> 00:00:40,199 Speaker 1: Maybe work job. I did a deadlist. 18 00:00:40,280 --> 00:00:43,800 Speaker 2: I'm both the most popular trader and most successful trader 19 00:00:44,000 --> 00:00:45,200 Speaker 2: at Citadel. 20 00:00:44,880 --> 00:00:48,440 Speaker 1: That is gone viral barges. This is an after school special, 21 00:00:48,520 --> 00:00:49,240 Speaker 1: except I've. 22 00:00:49,080 --> 00:00:51,839 Speaker 2: Decided I'm going to base my entire personality going forward 23 00:00:51,880 --> 00:00:54,720 Speaker 2: on campaigning for a strategic pork reserve in the US. 24 00:00:54,920 --> 00:00:55,680 Speaker 4: Black goals. 25 00:00:55,760 --> 00:00:57,240 Speaker 3: These are the important question. 26 00:00:57,360 --> 00:00:58,760 Speaker 2: Is that robots taking over the world. 27 00:00:58,840 --> 00:01:01,960 Speaker 1: No. I think that in a couple of years, the 28 00:01:02,000 --> 00:01:04,240 Speaker 1: AI will do a really good job of making the 29 00:01:04,240 --> 00:01:07,320 Speaker 1: Odd lotch podcast. One day that person will have the 30 00:01:07,319 --> 00:01:08,200 Speaker 1: mandate of heaven? 31 00:01:08,440 --> 00:01:10,600 Speaker 2: How do I get more popular and successful? 32 00:01:10,920 --> 00:01:15,520 Speaker 1: We do have the welcome to lots More where we 33 00:01:15,560 --> 00:01:17,360 Speaker 1: catch up with friends about what's going. 34 00:01:17,200 --> 00:01:20,160 Speaker 3: On right now, because even when odd Loots is over, 35 00:01:20,520 --> 00:01:22,880 Speaker 3: there's always lots more And. 36 00:01:22,760 --> 00:01:28,720 Speaker 1: We really do have the perfect guest. We are, of 37 00:01:28,760 --> 00:01:31,720 Speaker 1: course talking to the one and only Mike McKee of 38 00:01:31,840 --> 00:01:34,559 Speaker 1: Bloomberg TV. A little surprising speech today. 39 00:01:34,680 --> 00:01:37,360 Speaker 4: Huh Yeah, I was wrong, as we're the majority of 40 00:01:37,400 --> 00:01:39,920 Speaker 4: analysts who thought that Jay Pow would want to leave 41 00:01:40,120 --> 00:01:44,319 Speaker 4: his options open for September, because, as we've been repeating 42 00:01:44,400 --> 00:01:47,240 Speaker 4: over and over again, there's another jobs report, there's another 43 00:01:47,280 --> 00:01:51,800 Speaker 4: CPI report before the next meeting, and so what happens 44 00:01:51,840 --> 00:01:54,040 Speaker 4: if we see a reversion to the mean we had 45 00:01:54,080 --> 00:01:56,440 Speaker 4: a weak jobs report. What if the next one comes 46 00:01:56,480 --> 00:02:01,800 Speaker 4: in strong, we had inflation go through CPI at a 47 00:02:01,800 --> 00:02:05,000 Speaker 4: low level. Does that pick up a lot in which 48 00:02:05,000 --> 00:02:07,480 Speaker 4: case you don't want to cut rates. So it was 49 00:02:07,520 --> 00:02:10,560 Speaker 4: a bit of a surprise that he said basically opened 50 00:02:10,600 --> 00:02:12,639 Speaker 4: the door to a rate cut, because now it's really 51 00:02:12,720 --> 00:02:13,680 Speaker 4: hard to close that door. 52 00:02:13,960 --> 00:02:15,720 Speaker 1: Tracey, have you read Analong's take yet? 53 00:02:16,200 --> 00:02:16,600 Speaker 2: I have not. 54 00:02:16,960 --> 00:02:18,600 Speaker 1: So she has a new piece out on the terminal 55 00:02:18,600 --> 00:02:20,520 Speaker 1: which you U should read. But she argues that's not 56 00:02:20,639 --> 00:02:23,000 Speaker 1: so devision if you use the twenty twenty four speech 57 00:02:23,000 --> 00:02:25,639 Speaker 1: as the benchmark, which is true. For sure, that was 58 00:02:25,680 --> 00:02:28,959 Speaker 1: a more dubbish speech. But what I think the vibe 59 00:02:29,040 --> 00:02:31,560 Speaker 1: is that maybe the three of us have it's certainly 60 00:02:31,600 --> 00:02:33,840 Speaker 1: division the context of a lot of people suddenly like, 61 00:02:33,919 --> 00:02:35,720 Speaker 1: let's look at the inflation side again. 62 00:02:35,480 --> 00:02:37,679 Speaker 2: Well, this is exactly it. So, Mike, I think you 63 00:02:37,760 --> 00:02:39,760 Speaker 2: had the same experience as us, which is a lot 64 00:02:39,760 --> 00:02:41,960 Speaker 2: of the people from the FED that you've been talking 65 00:02:41,960 --> 00:02:44,679 Speaker 2: to over the past couple of days, they sounded more 66 00:02:44,720 --> 00:02:47,919 Speaker 2: hawkish than they did, you know, perhaps like just three 67 00:02:48,000 --> 00:02:48,800 Speaker 2: or four weeks ago. 68 00:02:49,440 --> 00:02:51,880 Speaker 4: Yeah, and I have to think that or I have 69 00:02:51,960 --> 00:02:55,080 Speaker 4: to caution myself to look at this as perhaps as 70 00:02:55,120 --> 00:02:59,760 Speaker 4: a statistician would say, selection error, because we happened to 71 00:02:59,840 --> 00:03:04,799 Speaker 4: hit people who were more hawkish. Obviously, the chairman basically 72 00:03:04,880 --> 00:03:10,800 Speaker 4: validated Chris Swaller's forecast that they've decided that inflation is 73 00:03:10,840 --> 00:03:12,640 Speaker 4: going to go up, but it's going to go up slowly. 74 00:03:12,680 --> 00:03:14,960 Speaker 4: It'll take a while to get into the economy and 75 00:03:15,080 --> 00:03:18,080 Speaker 4: sector bisector. It'll be a one time price rise and 76 00:03:18,160 --> 00:03:20,400 Speaker 4: not a continuing price increase. 77 00:03:20,400 --> 00:03:26,280 Speaker 1: Setting aside the actual technical economic details of the speech itself. 78 00:03:26,680 --> 00:03:29,800 Speaker 1: Were you surprised that there wasn't something more? I don't know. 79 00:03:29,800 --> 00:03:31,560 Speaker 1: I valedictory is the word, but you know, it's the 80 00:03:31,639 --> 00:03:34,000 Speaker 1: last speech as the chairman. It comes at a time 81 00:03:34,040 --> 00:03:37,400 Speaker 1: when we were all talking about the sort of threats 82 00:03:37,440 --> 00:03:41,000 Speaker 1: to federal reserve independence. Were you surprised it was such 83 00:03:41,000 --> 00:03:43,440 Speaker 1: a policy speech and not any sort of knowledge to 84 00:03:43,480 --> 00:03:44,480 Speaker 1: some of these bigger things. 85 00:03:44,920 --> 00:03:48,200 Speaker 4: I was not surprised by that. Paul is very selfle facing. 86 00:03:48,240 --> 00:03:50,760 Speaker 4: He's not somebody who likes to toot his own horn, 87 00:03:50,840 --> 00:03:53,480 Speaker 4: and we kind of knew going in that he didn't 88 00:03:53,480 --> 00:03:55,280 Speaker 4: want to make a big deal of this being his 89 00:03:55,400 --> 00:03:59,600 Speaker 4: last Jackson Hole as chair The fed independence thing was 90 00:03:59,600 --> 00:04:02,240 Speaker 4: a bit of a surprise because it has been such 91 00:04:02,440 --> 00:04:05,080 Speaker 4: a big issue. But I think given the message he 92 00:04:05,120 --> 00:04:08,800 Speaker 4: wanted to send to the markets about the policy going forward, 93 00:04:09,000 --> 00:04:11,240 Speaker 4: plus he had the whole section on the new framework 94 00:04:11,280 --> 00:04:14,000 Speaker 4: he had to discuss. Yeah, I think they felt it 95 00:04:14,040 --> 00:04:16,440 Speaker 4: was just going to be too long, too much, and 96 00:04:16,480 --> 00:04:20,640 Speaker 4: that would come up in many other fora to talk about. 97 00:04:20,720 --> 00:04:23,640 Speaker 2: It is funny no one's talking about the framework the 98 00:04:23,680 --> 00:04:26,640 Speaker 2: results of like five years of work on the framework 99 00:04:26,680 --> 00:04:29,039 Speaker 2: are published today and they're just lost in all that. 100 00:04:29,160 --> 00:04:32,400 Speaker 4: I have asked FED officials about this. I said, why 101 00:04:32,480 --> 00:04:35,440 Speaker 4: do you do this? Because they came up with this 102 00:04:35,480 --> 00:04:39,479 Speaker 4: new framework in twenty twenty that didn't work, and a 103 00:04:39,560 --> 00:04:42,039 Speaker 4: year into it, Jay Powell said, well, we've junked the 104 00:04:42,080 --> 00:04:45,000 Speaker 4: framework because we've got inflation. And so if you're going 105 00:04:45,080 --> 00:04:47,120 Speaker 4: to go to all this work to create a framework 106 00:04:47,120 --> 00:04:49,440 Speaker 4: and then as soon as the economy turns you junk it, 107 00:04:49,560 --> 00:04:52,680 Speaker 4: kind of what's the point. Their argument is that it 108 00:04:52,720 --> 00:04:54,760 Speaker 4: gives them sort of a reference point of how they 109 00:04:54,760 --> 00:04:57,479 Speaker 4: want to think about things, and today really they went 110 00:04:57,520 --> 00:05:00,760 Speaker 4: back to twenty twelve, which was we'll do whatever the 111 00:05:00,760 --> 00:05:02,520 Speaker 4: economy needs when it needs it. 112 00:05:02,480 --> 00:05:04,960 Speaker 1: It's important to remember it's interesting thinking about that twenty 113 00:05:05,000 --> 00:05:09,839 Speaker 1: twenty framework because we're so the existence of that framework 114 00:05:10,279 --> 00:05:14,040 Speaker 1: is so twenty tens, right, It's so like thinking about, well, 115 00:05:14,080 --> 00:05:18,520 Speaker 1: the main problem of monetary policy is long periods of undershoot. 116 00:05:18,160 --> 00:05:20,080 Speaker 2: The zero bound, the zero. 117 00:05:19,920 --> 00:05:24,120 Speaker 1: Bound constantly under two percent, How are we going to 118 00:05:24,160 --> 00:05:26,479 Speaker 1: credibly get it above and then five minutes later we 119 00:05:26,480 --> 00:05:29,120 Speaker 1: have the worst inflation. Yeah, in forty years. That was 120 00:05:29,160 --> 00:05:32,280 Speaker 1: a real that framework from twenty twenty was like, is 121 00:05:32,320 --> 00:05:33,559 Speaker 1: an artifact of a time? 122 00:05:34,240 --> 00:05:38,360 Speaker 4: Yeah, absolutely, And the feds new framework sort of takes 123 00:05:38,440 --> 00:05:41,520 Speaker 4: into account the fact that that could happen again, Yeah, 124 00:05:41,560 --> 00:05:47,240 Speaker 4: because they're not using shortfall anymore in employment and they've 125 00:05:47,240 --> 00:05:50,520 Speaker 4: also dropped references to the zero lower bound. But they 126 00:05:50,560 --> 00:05:54,320 Speaker 4: basically they're saying, we admit that we can't steer the 127 00:05:54,360 --> 00:05:58,240 Speaker 4: economy in quite as precise a way as we thought 128 00:05:58,279 --> 00:06:01,400 Speaker 4: we could because the underlying conditions that we're working off 129 00:06:01,480 --> 00:06:04,600 Speaker 4: of can change faster than we anticipated. 130 00:06:04,920 --> 00:06:07,239 Speaker 2: I will just note I know that Powell didn't speak 131 00:06:07,240 --> 00:06:10,880 Speaker 2: about central bank independence directly, but there is at least 132 00:06:10,920 --> 00:06:14,080 Speaker 2: one paper being presented at the conference that does deal 133 00:06:14,160 --> 00:06:18,120 Speaker 2: with this issue, by Emmy Nakamora from Berkeley, and we 134 00:06:18,160 --> 00:06:20,240 Speaker 2: have a really good episode coming up with her. So 135 00:06:20,640 --> 00:06:24,440 Speaker 2: there is some thematic discussion. It's just we're not all 136 00:06:24,440 --> 00:06:28,200 Speaker 2: hearing it because it's closed doors. Although, Mike, you get 137 00:06:28,200 --> 00:06:30,160 Speaker 2: to go inside the conficce I get to go inside, 138 00:06:30,200 --> 00:06:33,120 Speaker 2: all right, So what's the vibe like in the room. 139 00:06:33,520 --> 00:06:36,640 Speaker 4: Well, I hate to disappoint everybody, but it's rather quite 140 00:06:36,640 --> 00:06:40,240 Speaker 4: boring unless you're an academic economist. Because these papers are 141 00:06:40,279 --> 00:06:43,280 Speaker 4: written by academic economists, and they're designed to look at 142 00:06:43,320 --> 00:06:46,440 Speaker 4: longer term issues and try to put them into context 143 00:06:46,440 --> 00:06:49,680 Speaker 4: so that the central bankers can think about them. Okay, 144 00:06:49,880 --> 00:06:52,560 Speaker 4: here's a problem that's come up. What's the research said 145 00:06:52,600 --> 00:06:54,760 Speaker 4: about it in the past. That sort of thing. It's 146 00:06:54,800 --> 00:06:56,400 Speaker 4: not a meeting where people come in and go, Okay, 147 00:06:56,400 --> 00:06:59,440 Speaker 4: here's unemployment and here's prices and what do we do 148 00:06:59,480 --> 00:07:02,920 Speaker 4: with the next That doesn't get discussed at all. Even 149 00:07:03,080 --> 00:07:05,800 Speaker 4: the Open Market Committee officials who are here, they're not 150 00:07:05,800 --> 00:07:08,840 Speaker 4: going to be really talking about that because they talk 151 00:07:08,880 --> 00:07:11,000 Speaker 4: about that all the time. They're here to fish and 152 00:07:11,720 --> 00:07:15,160 Speaker 4: hike and enjoy the scenery along with these academic papers. 153 00:07:15,240 --> 00:07:19,080 Speaker 4: So inside it's an academic conference. They present the papers, 154 00:07:19,200 --> 00:07:21,160 Speaker 4: they have a discussion, who talks about the papers, and 155 00:07:21,200 --> 00:07:24,600 Speaker 4: then people can ask questions. And if you notice, you know, 156 00:07:24,600 --> 00:07:27,240 Speaker 4: if you're watching your Bloomberg terminal, it's almost never a 157 00:07:27,280 --> 00:07:31,320 Speaker 4: headline inside because nobody says anything that would move markets 158 00:07:31,400 --> 00:07:32,760 Speaker 4: or interest people. Really. 159 00:07:33,280 --> 00:07:35,960 Speaker 1: You know, other regional offeds have their conferences, so you know, 160 00:07:36,040 --> 00:07:40,080 Speaker 1: there's a Boston FED one in November. There's an Atlanta 161 00:07:40,120 --> 00:07:42,600 Speaker 1: FED line. I think it's somewhere in Florida. At some 162 00:07:42,720 --> 00:07:45,520 Speaker 1: point in the year. The only thing that's really special 163 00:07:45,560 --> 00:07:49,440 Speaker 1: here is that, and Powell alluded to it. It's Jackson 164 00:07:49,480 --> 00:07:52,320 Speaker 1: Hole in August, and anyone would be a fool to 165 00:07:52,360 --> 00:07:54,400 Speaker 1: say no to coming there. And that's how they got 166 00:07:54,480 --> 00:07:56,760 Speaker 1: Vulgar to come because they like fly fishing, Like this 167 00:07:56,880 --> 00:07:58,880 Speaker 1: is what ary like. They could all show up at 168 00:07:58,880 --> 00:08:02,400 Speaker 1: the other ones, but was going to say, and as 169 00:08:02,440 --> 00:08:04,120 Speaker 1: you mentioned, people are here to fly fish. I think 170 00:08:04,120 --> 00:08:06,280 Speaker 1: that's actually an important element, even though it's just a 171 00:08:06,320 --> 00:08:09,720 Speaker 1: fun element, which is that late summer, it's kind of 172 00:08:09,800 --> 00:08:12,760 Speaker 1: like halfway between vacation and work out here for almost everyone. 173 00:08:13,360 --> 00:08:16,120 Speaker 4: Another reason that it has become important, though, is starting 174 00:08:16,120 --> 00:08:18,880 Speaker 4: with Ben Bernanke during the Great Financial Crisis. He came 175 00:08:18,960 --> 00:08:22,360 Speaker 4: and the chairman usually gave a speech to open the 176 00:08:22,440 --> 00:08:26,680 Speaker 4: conference on the conference topic, and it was like, Okay, 177 00:08:26,720 --> 00:08:28,960 Speaker 4: we're talking about long term labor issues. That's a really 178 00:08:29,000 --> 00:08:31,040 Speaker 4: good thing to talk about, and we're glad you're all 179 00:08:31,040 --> 00:08:34,640 Speaker 4: here kind of thing. Then he announced basically that they 180 00:08:34,640 --> 00:08:36,240 Speaker 4: were going to do q E for the first time 181 00:08:36,679 --> 00:08:39,000 Speaker 4: at this meeting, and then the next year he also 182 00:08:39,080 --> 00:08:42,720 Speaker 4: had an announcement about q e QT and what they 183 00:08:42,760 --> 00:08:44,040 Speaker 4: were going to do and then all of a sudden, 184 00:08:44,040 --> 00:08:47,280 Speaker 4: the focus became what's the chairman going to say? Because 185 00:08:48,000 --> 00:08:50,840 Speaker 4: if there's rarely a FED meeting in August, just the 186 00:08:50,840 --> 00:08:53,280 Speaker 4: way the calendar falls, maybe at the very beginning, and 187 00:08:53,320 --> 00:08:55,679 Speaker 4: then there'sn't one until September, so you have this long 188 00:08:55,800 --> 00:08:59,800 Speaker 4: month where there's no reference point for the markets, and 189 00:09:00,200 --> 00:09:03,120 Speaker 4: that this became the reference point. So everybody pays attention 190 00:09:03,240 --> 00:09:05,400 Speaker 4: to it, and as you know, it's a big build 191 00:09:05,480 --> 00:09:07,640 Speaker 4: up to it. Oh, we've got Jackson Hole next week. 192 00:09:07,679 --> 00:09:10,800 Speaker 4: What's the chairman going to say? And so that's really 193 00:09:11,160 --> 00:09:13,840 Speaker 4: focused a lot of attention on it, which then feeds 194 00:09:13,880 --> 00:09:16,840 Speaker 4: on itself because it becomes important, so people want to 195 00:09:16,840 --> 00:09:18,439 Speaker 4: be there because it is important. 196 00:09:18,679 --> 00:09:21,160 Speaker 2: This reminds me there was an old study. It was 197 00:09:21,200 --> 00:09:22,760 Speaker 2: done a few years ago, so I would love to 198 00:09:22,760 --> 00:09:24,880 Speaker 2: see a new study. But it basically looked at all 199 00:09:24,880 --> 00:09:29,079 Speaker 2: the FOMC statements and speeches over time, and starting from 200 00:09:29,400 --> 00:09:34,480 Speaker 2: two thousand and nine, they exploded in both length and complexity. 201 00:09:34,600 --> 00:09:36,400 Speaker 2: So I think it used to be you could have, like, 202 00:09:36,920 --> 00:09:40,000 Speaker 2: you know, a high school reading level and be fine 203 00:09:40,080 --> 00:09:42,600 Speaker 2: reading some of the FOMC statements. They were very short, 204 00:09:42,640 --> 00:09:46,000 Speaker 2: like four hundred words and then they became like two 205 00:09:46,040 --> 00:09:49,080 Speaker 2: thousand words and you needed a college degree at a 206 00:09:49,120 --> 00:09:52,440 Speaker 2: minimum to fully understand them. Talk to us about just 207 00:09:52,520 --> 00:09:55,280 Speaker 2: like the format of the speech, because this is something 208 00:09:55,280 --> 00:09:57,920 Speaker 2: else that people like to do, is dissect like the 209 00:09:58,040 --> 00:10:00,400 Speaker 2: number of words and things like that. And it is true, 210 00:10:00,400 --> 00:10:03,320 Speaker 2: this is a longer speech this year versus the relatively 211 00:10:03,360 --> 00:10:07,760 Speaker 2: short speech from last year where Pale very definitively opened 212 00:10:07,800 --> 00:10:08,720 Speaker 2: the door to a cut. 213 00:10:09,240 --> 00:10:12,240 Speaker 4: Yeah. Well, I think what made this speech long was 214 00:10:12,960 --> 00:10:17,640 Speaker 4: talking about the framework. It's, as we said, maybe somewhat irrelevant, 215 00:10:17,679 --> 00:10:19,880 Speaker 4: but he had to go through it. They've been doing 216 00:10:19,880 --> 00:10:23,160 Speaker 4: this exercise and it was anticipated he would announce it here, 217 00:10:23,200 --> 00:10:27,080 Speaker 4: so basically he went through it. We've now done the exercise, 218 00:10:27,160 --> 00:10:29,439 Speaker 4: and now we've explained it to you, and so you'll 219 00:10:29,520 --> 00:10:32,480 Speaker 4: understand going forward if we refer to this. So that 220 00:10:32,600 --> 00:10:36,240 Speaker 4: made it longer. The part that was really kind of 221 00:10:36,280 --> 00:10:39,400 Speaker 4: to the point was the stuff about the economy. He 222 00:10:39,480 --> 00:10:43,600 Speaker 4: outlined what they were thinking about the labor market and 223 00:10:43,640 --> 00:10:45,880 Speaker 4: what they were thinking about inflation, and then how those 224 00:10:45,880 --> 00:10:49,240 Speaker 4: two knit together. If this had been an ordinary speech 225 00:10:49,320 --> 00:10:52,960 Speaker 4: without the framework, it wouldn't have been as long. Maybe 226 00:10:53,000 --> 00:10:55,040 Speaker 4: it would have come across as even more punchy because 227 00:10:55,040 --> 00:10:57,720 Speaker 4: it was just on that subject. You were talking about 228 00:10:57,720 --> 00:11:01,360 Speaker 4: the FED statements getting very long the post Great Financial 229 00:11:01,400 --> 00:11:04,000 Speaker 4: Crisis heres, and the FED realized that at one point, yeah, 230 00:11:04,640 --> 00:11:07,520 Speaker 4: two or three years ago, they've cut them back significantly. 231 00:11:07,520 --> 00:11:09,720 Speaker 4: We used to have very long statements where they tried 232 00:11:09,760 --> 00:11:13,320 Speaker 4: to explain every little thing, and people found that too much. 233 00:11:13,360 --> 00:11:15,199 Speaker 4: So now they're just kind of saying, here's we got 234 00:11:15,200 --> 00:11:18,000 Speaker 4: one paragraph on where the economy is at, a paragraph 235 00:11:18,040 --> 00:11:19,560 Speaker 4: that says, here's what we're doing about it. 236 00:11:19,720 --> 00:11:22,720 Speaker 1: You know, another nice thing about Jackson Hole in late 237 00:11:22,760 --> 00:11:24,840 Speaker 1: August is you don't just get, you know, just lure 238 00:11:24,880 --> 00:11:27,720 Speaker 1: the FED share there. You lure central bankers all around 239 00:11:27,760 --> 00:11:30,839 Speaker 1: the world. But I feel like in this moment, the 240 00:11:31,320 --> 00:11:34,080 Speaker 1: FED itself, the FED is always first among equals. Most 241 00:11:34,120 --> 00:11:36,319 Speaker 1: people would agree with that, but the Fed because of 242 00:11:36,320 --> 00:11:38,240 Speaker 1: all the dramas like this black hole sucking up all 243 00:11:38,240 --> 00:11:41,280 Speaker 1: the energy. Is your perception, you know, we saw the 244 00:11:41,320 --> 00:11:45,199 Speaker 1: walk where Powell was with Leguard and Bailey and Ueda. 245 00:11:45,320 --> 00:11:50,480 Speaker 1: Is your perception that all the developed market central banks 246 00:11:50,559 --> 00:11:53,600 Speaker 1: are roughly wrestling with still the same things. Because there's 247 00:11:53,679 --> 00:11:56,080 Speaker 1: just been there's been this global factor of the inflation 248 00:11:56,200 --> 00:11:59,360 Speaker 1: and so forth. They all sort of basically feeling the 249 00:11:59,400 --> 00:12:01,400 Speaker 1: same stresses they are. 250 00:12:01,720 --> 00:12:05,240 Speaker 4: We're still living in a post pandemic world, so data 251 00:12:05,360 --> 00:12:08,199 Speaker 4: are somewhat difficult to read, and you see the ups 252 00:12:08,240 --> 00:12:10,880 Speaker 4: and downs of the economies that you may or may 253 00:12:10,880 --> 00:12:13,280 Speaker 4: not be able to track. But the biggest thing at 254 00:12:13,280 --> 00:12:17,680 Speaker 4: the moment is that they're all wrestling with Trump fiscal policy. 255 00:12:18,240 --> 00:12:21,440 Speaker 4: But they fiscal policy has different impacts on different countries. 256 00:12:21,480 --> 00:12:24,320 Speaker 4: For the United States, it's inflationary. For many of the 257 00:12:24,320 --> 00:12:28,000 Speaker 4: countries out there, it's deflationary because their currency is going down, 258 00:12:28,040 --> 00:12:32,400 Speaker 4: the dollars getting stronger, and so they have different problems 259 00:12:32,440 --> 00:12:34,280 Speaker 4: they have to deal with. They all have a problem 260 00:12:34,320 --> 00:12:38,040 Speaker 4: with the consequences of the Trump policy, but the consequences 261 00:12:38,040 --> 00:12:39,280 Speaker 4: are different for each one. 262 00:12:39,400 --> 00:12:41,960 Speaker 2: Well, you were talking about this on TV earlier, because 263 00:12:42,000 --> 00:12:44,280 Speaker 2: when it comes to tariffs, there is still a huge 264 00:12:44,280 --> 00:12:47,280 Speaker 2: debate over how inflationary they might actually be, because in 265 00:12:47,320 --> 00:12:50,000 Speaker 2: traditional economics you would view them as a tax which 266 00:12:50,040 --> 00:12:53,920 Speaker 2: tends to destroy demand and can lead to deflation. On 267 00:12:53,960 --> 00:12:57,240 Speaker 2: the other hand, we have seen producer prices start to 268 00:12:57,360 --> 00:13:00,320 Speaker 2: pick up. What have you learned about just how policy 269 00:13:00,400 --> 00:13:04,880 Speaker 2: makers are actually viewing the impact of tariffs at this conference. 270 00:13:04,920 --> 00:13:07,839 Speaker 4: Well, there has been division. We have the Chriskwaller version 271 00:13:07,840 --> 00:13:10,600 Speaker 4: who went to the textbook and said tariffs are a 272 00:13:10,600 --> 00:13:15,080 Speaker 4: one time increase in the price level. And then since 273 00:13:15,120 --> 00:13:17,240 Speaker 4: he first said that in July, what we've seen is 274 00:13:17,240 --> 00:13:19,880 Speaker 4: the President delaying these tariffs, so they come on one 275 00:13:19,920 --> 00:13:22,600 Speaker 4: by one and that drags the process out. Now, what 276 00:13:22,640 --> 00:13:26,120 Speaker 4: the chairman seem to decide was that it's still going 277 00:13:26,160 --> 00:13:29,200 Speaker 4: to be a one time increase sector by sector, So 278 00:13:29,240 --> 00:13:31,120 Speaker 4: it might drag out, but it's not going to be 279 00:13:31,160 --> 00:13:36,120 Speaker 4: an ongoing process of each sector prices rise, so the 280 00:13:36,280 --> 00:13:40,400 Speaker 4: impacts they have a hard time judging because it's not 281 00:13:40,679 --> 00:13:44,040 Speaker 4: like you pass smooth Holly and on a certain day 282 00:13:44,080 --> 00:13:46,960 Speaker 4: it takes effect and you see the immediate price impact 283 00:13:47,240 --> 00:13:50,079 Speaker 4: and then you can measure what's happening and it's going 284 00:13:50,120 --> 00:13:52,640 Speaker 4: to do. Here, they have to take into account each sector, 285 00:13:53,080 --> 00:13:57,320 Speaker 4: whether the exporter absorbs any of it, whether the importer 286 00:13:57,520 --> 00:14:00,640 Speaker 4: absorbs any of it. What companies do into of pricing. 287 00:14:00,679 --> 00:14:03,160 Speaker 4: Do they take some out of their margins because they 288 00:14:03,200 --> 00:14:05,120 Speaker 4: don't want to lose market share, or do they just 289 00:14:05,160 --> 00:14:08,200 Speaker 4: pass it along to people. These are all complex questions 290 00:14:08,200 --> 00:14:10,880 Speaker 4: and as one of the fat economists said to me, 291 00:14:11,320 --> 00:14:14,560 Speaker 4: each one affects another. So because so much of this 292 00:14:14,600 --> 00:14:18,160 Speaker 4: stuff is intermediate goods that are used to price something else, 293 00:14:18,600 --> 00:14:20,680 Speaker 4: so it gets very complicated. So it is hard for 294 00:14:20,720 --> 00:14:23,840 Speaker 4: them to know exactly how this is going to play out. 295 00:14:24,400 --> 00:14:27,480 Speaker 2: Say I have a take, Oh oh, do you a surprise? 296 00:14:27,560 --> 00:14:28,280 Speaker 2: All right, go ahead. 297 00:14:28,720 --> 00:14:31,320 Speaker 1: I was thinking about this when we're on errors. Maybe 298 00:14:31,720 --> 00:14:35,320 Speaker 1: the answer is that tariffs are one off in terms 299 00:14:35,320 --> 00:14:39,520 Speaker 1: of the inflationary impulse, but that the underlying political impulse 300 00:14:39,720 --> 00:14:42,480 Speaker 1: to impose tariffs, this desire for everyone to have all 301 00:14:42,520 --> 00:14:47,240 Speaker 1: their stuff and protect their home countries, industries, and so forth, 302 00:14:47,480 --> 00:14:49,400 Speaker 1: is going to be this new permanent feature that is 303 00:14:49,440 --> 00:14:50,080 Speaker 1: not a one off. 304 00:14:50,120 --> 00:14:52,080 Speaker 2: Would that feature be inflationary? 305 00:14:52,160 --> 00:14:53,840 Speaker 1: And if that is sustained then maybe it is. 306 00:14:54,040 --> 00:14:56,480 Speaker 2: Yeah. I mean there is an irony here, which is 307 00:14:57,000 --> 00:15:01,840 Speaker 2: the Trump administration has long criticized work and government bureaucracy 308 00:15:01,920 --> 00:15:04,320 Speaker 2: and things like that, and I cannot even imagine how 309 00:15:04,400 --> 00:15:07,440 Speaker 2: much time companies are spending trying to figure out tariffs 310 00:15:07,520 --> 00:15:12,160 Speaker 2: right now and doing customs documentation and stuff like that. Okay, Mike, 311 00:15:12,680 --> 00:15:15,040 Speaker 2: next year, we're going to have a new fed chair, 312 00:15:15,920 --> 00:15:19,600 Speaker 2: new vibes at Jackson Hole potentially, who are you watching 313 00:15:19,600 --> 00:15:21,680 Speaker 2: out for right now? 314 00:15:21,720 --> 00:15:24,800 Speaker 4: I'm still watching out for the original Trump list that 315 00:15:24,960 --> 00:15:29,040 Speaker 4: Kevin's has it in worsh and for Chris Waller. You 316 00:15:29,080 --> 00:15:33,080 Speaker 4: could argue that the speech today improved Waller's chances if 317 00:15:33,120 --> 00:15:35,440 Speaker 4: you were looking at it from a Las Vegas point 318 00:15:35,440 --> 00:15:38,080 Speaker 4: of view in terms of odds, because he was right 319 00:15:38,320 --> 00:15:40,560 Speaker 4: right at least at least a fed is saying he 320 00:15:40,680 --> 00:15:43,280 Speaker 4: was right. But this is Donald Trump, so we have 321 00:15:43,400 --> 00:15:45,680 Speaker 4: no idea. I think most of the people who've been 322 00:15:45,720 --> 00:15:48,200 Speaker 4: sort of added on in the talking about stage in 323 00:15:48,240 --> 00:15:51,400 Speaker 4: terms of the list are more red herrings. Some of 324 00:15:51,400 --> 00:15:53,880 Speaker 4: them are obviously not going to be the chair. But 325 00:15:53,960 --> 00:15:56,440 Speaker 4: what he's been able to do is get more people 326 00:15:56,480 --> 00:16:00,480 Speaker 4: on TV getting interviewed about are you going to the chair? 327 00:16:00,800 --> 00:16:03,120 Speaker 4: And they're all saying, well, we need to cut rates. 328 00:16:03,440 --> 00:16:05,120 Speaker 4: You're not on the list if you're not going to 329 00:16:05,360 --> 00:16:09,840 Speaker 4: cut rates. So are they really serious candidates? And Scott 330 00:16:09,840 --> 00:16:11,600 Speaker 4: Besson says, okay, I got eleven people I'm going to 331 00:16:11,600 --> 00:16:14,040 Speaker 4: bring in. The president keeps saying I got three people 332 00:16:14,080 --> 00:16:15,840 Speaker 4: I'm going to choose from, So I think you go 333 00:16:15,880 --> 00:16:18,840 Speaker 4: back to the original list. He's comfortable with those people. 334 00:16:19,320 --> 00:16:22,320 Speaker 4: They all look like they could be fed chairs. And 335 00:16:22,360 --> 00:16:25,880 Speaker 4: we know the impression that the person makes is important, 336 00:16:26,320 --> 00:16:29,800 Speaker 4: so they're the most likely ones to choose from. I'm 337 00:16:29,800 --> 00:16:32,320 Speaker 4: not saying he couldn't surprise. He surprises in almost everything 338 00:16:32,400 --> 00:16:32,760 Speaker 4: he does. 339 00:16:33,520 --> 00:16:36,640 Speaker 2: Have you interacted with Waller before, I've never met him, so, oh. 340 00:16:36,520 --> 00:16:38,680 Speaker 4: I know Chris quite well. The one thing about Chris 341 00:16:38,760 --> 00:16:43,040 Speaker 4: is we've extrapolated the Lisa Cook thing to if the 342 00:16:43,080 --> 00:16:46,040 Speaker 4: president got four people on the board, then they can 343 00:16:46,080 --> 00:16:48,960 Speaker 4: fire all the bank presidents, etc. Etc. And he have 344 00:16:49,120 --> 00:16:51,800 Speaker 4: all this control. I don't think Waller would go along 345 00:16:51,840 --> 00:16:56,160 Speaker 4: with that. He's in favor of lower interest rates. He 346 00:16:56,240 --> 00:16:58,320 Speaker 4: has his own ideas about the economy. But he's a 347 00:16:58,440 --> 00:17:03,240 Speaker 4: very smart economist, and you could defend what he says 348 00:17:03,520 --> 00:17:05,720 Speaker 4: even if you don't necessarily agree with it. But he's 349 00:17:05,760 --> 00:17:10,200 Speaker 4: an institutionalist. He's somebody who follows what the FED has 350 00:17:10,240 --> 00:17:12,040 Speaker 4: done in the past, and I don't think he would 351 00:17:12,200 --> 00:17:14,720 Speaker 4: give into the President's desire to do something that would 352 00:17:14,800 --> 00:17:17,840 Speaker 4: hurt the FED, hurt its credibility, hurt its ability to 353 00:17:17,880 --> 00:17:19,120 Speaker 4: do its jobs. 354 00:17:19,359 --> 00:17:22,439 Speaker 1: Twenty twenty five. I think David Zervis looks like a fetcher. 355 00:17:23,520 --> 00:17:25,920 Speaker 2: Okay, I'm going to go fly fishing. I'm going to 356 00:17:25,960 --> 00:17:27,719 Speaker 2: do what I'm supposed to do at Jackson Hall and 357 00:17:27,720 --> 00:17:28,200 Speaker 2: go fish. 358 00:17:28,280 --> 00:17:28,800 Speaker 1: Let's Got. 359 00:17:33,240 --> 00:17:36,280 Speaker 3: Lots More is produced by Carmen Rodriguez and dash Ell Bennett, 360 00:17:36,320 --> 00:17:38,680 Speaker 3: with help from Moses Ondom and Cal Brooks. 361 00:17:39,040 --> 00:17:42,080 Speaker 1: Our sound engineer is Blake Maples. Sage Bauman is the 362 00:17:42,080 --> 00:17:43,480 Speaker 1: head of Bloomberg Podcasts. 363 00:17:43,680 --> 00:17:46,800 Speaker 3: Please rate, review, and subscribe to Odd, Lots and Lots 364 00:17:46,840 --> 00:17:49,720 Speaker 3: More on your favorite podcast platforms, and. 365 00:17:49,800 --> 00:17:52,360 Speaker 1: Remember that Bloomberg subscribers can listen to all of our 366 00:17:52,400 --> 00:17:56,639 Speaker 1: podcasts and free by connecting through Apple Podcasts. Thanks for listening.