WEBVTT - Lots More on What Just Happened With the Fed at Jackson Hole 0:00:02.480 --> 0:00:07.080 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.560 --> 0:00:09.400 How many Jackson Holes have you actually been to? 0:00:09.520 --> 0:00:09.760 Now? 0:00:10.840 --> 0:00:12.760 It's a little hard to say, but my first one 0:00:12.800 --> 0:00:13.880 was nineteen ninety seven. 0:00:14.080 --> 0:00:14.240 Wow. 0:00:14.280 --> 0:00:16.520 I've missed a few here and there as breaking news 0:00:16.520 --> 0:00:18.520 has happened and I've had to be somewhere else. But 0:00:18.720 --> 0:00:21.200 so somewhere around twenty five to thirty. 0:00:21.360 --> 0:00:23.880 So, Joe, if we keep doing this for another forty years, 0:00:23.920 --> 0:00:27.000 we'll notch up as many Jackson Holes as Mike has 0:00:27.040 --> 0:00:27.319 been to. 0:00:27.480 --> 0:00:30.080 Maybe not if he does another forty earlier. Yeah, we 0:00:30.080 --> 0:00:30.920 can never ketch. 0:00:30.880 --> 0:00:34.080 Up if Mike stops now and we keep doing it 0:00:34.159 --> 0:00:35.000 until we're eighty. 0:00:35.520 --> 0:00:40.199 Maybe work job. I did a deadlist. 0:00:40.280 --> 0:00:43.800 I'm both the most popular trader and most successful trader 0:00:44.000 --> 0:00:45.200 at Citadel. 0:00:44.880 --> 0:00:48.440 That is gone viral barges. This is an after school special, 0:00:48.520 --> 0:00:49.240 except I've. 0:00:49.080 --> 0:00:51.839 Decided I'm going to base my entire personality going forward 0:00:51.880 --> 0:00:54.720 on campaigning for a strategic pork reserve in the US. 0:00:54.920 --> 0:00:55.680 Black goals. 0:00:55.760 --> 0:00:57.240 These are the important question. 0:00:57.360 --> 0:00:58.760 Is that robots taking over the world. 0:00:58.840 --> 0:01:01.960 No. I think that in a couple of years, the 0:01:02.000 --> 0:01:04.240 AI will do a really good job of making the 0:01:04.240 --> 0:01:07.320 Odd lotch podcast. One day that person will have the 0:01:07.319 --> 0:01:08.200 mandate of heaven? 0:01:08.440 --> 0:01:10.600 How do I get more popular and successful? 0:01:10.920 --> 0:01:15.520 We do have the welcome to lots More where we 0:01:15.560 --> 0:01:17.360 catch up with friends about what's going. 0:01:17.200 --> 0:01:20.160 On right now, because even when odd Loots is over, 0:01:20.520 --> 0:01:22.880 there's always lots more And. 0:01:22.760 --> 0:01:28.720 We really do have the perfect guest. We are, of 0:01:28.760 --> 0:01:31.720 course talking to the one and only Mike McKee of 0:01:31.840 --> 0:01:34.559 Bloomberg TV. A little surprising speech today. 0:01:34.680 --> 0:01:37.360 Huh Yeah, I was wrong, as we're the majority of 0:01:37.400 --> 0:01:39.920 analysts who thought that Jay Pow would want to leave 0:01:40.120 --> 0:01:44.319 his options open for September, because, as we've been repeating 0:01:44.400 --> 0:01:47.240 over and over again, there's another jobs report, there's another 0:01:47.280 --> 0:01:51.800 CPI report before the next meeting, and so what happens 0:01:51.840 --> 0:01:54.040 if we see a reversion to the mean we had 0:01:54.080 --> 0:01:56.440 a weak jobs report. What if the next one comes 0:01:56.480 --> 0:02:01.800 in strong, we had inflation go through CPI at a 0:02:01.800 --> 0:02:05.000 low level. Does that pick up a lot in which 0:02:05.000 --> 0:02:07.480 case you don't want to cut rates. So it was 0:02:07.520 --> 0:02:10.560 a bit of a surprise that he said basically opened 0:02:10.600 --> 0:02:12.639 the door to a rate cut, because now it's really 0:02:12.720 --> 0:02:13.680 hard to close that door. 0:02:13.960 --> 0:02:15.720 Tracey, have you read Analong's take yet? 0:02:16.200 --> 0:02:16.600 I have not. 0:02:16.960 --> 0:02:18.600 So she has a new piece out on the terminal 0:02:18.600 --> 0:02:20.520 which you U should read. But she argues that's not 0:02:20.639 --> 0:02:23.000 so devision if you use the twenty twenty four speech 0:02:23.000 --> 0:02:25.639 as the benchmark, which is true. For sure, that was 0:02:25.680 --> 0:02:28.959 a more dubbish speech. But what I think the vibe 0:02:29.040 --> 0:02:31.560 is that maybe the three of us have it's certainly 0:02:31.600 --> 0:02:33.840 division the context of a lot of people suddenly like, 0:02:33.919 --> 0:02:35.720 let's look at the inflation side again. 0:02:35.480 --> 0:02:37.679 Well, this is exactly it. So, Mike, I think you 0:02:37.760 --> 0:02:39.760 had the same experience as us, which is a lot 0:02:39.760 --> 0:02:41.960 of the people from the FED that you've been talking 0:02:41.960 --> 0:02:44.679 to over the past couple of days, they sounded more 0:02:44.720 --> 0:02:47.919 hawkish than they did, you know, perhaps like just three 0:02:48.000 --> 0:02:48.800 or four weeks ago. 0:02:49.440 --> 0:02:51.880 Yeah, and I have to think that or I have 0:02:51.960 --> 0:02:55.080 to caution myself to look at this as perhaps as 0:02:55.120 --> 0:02:59.760 a statistician would say, selection error, because we happened to 0:02:59.840 --> 0:03:04.799 hit people who were more hawkish. Obviously, the chairman basically 0:03:04.880 --> 0:03:10.800 validated Chris Swaller's forecast that they've decided that inflation is 0:03:10.840 --> 0:03:12.640 going to go up, but it's going to go up slowly. 0:03:12.680 --> 0:03:14.960 It'll take a while to get into the economy and 0:03:15.080 --> 0:03:18.080 sector bisector. It'll be a one time price rise and 0:03:18.160 --> 0:03:20.400 not a continuing price increase. 0:03:20.400 --> 0:03:26.280 Setting aside the actual technical economic details of the speech itself. 0:03:26.680 --> 0:03:29.800 Were you surprised that there wasn't something more? I don't know. 0:03:29.800 --> 0:03:31.560 I valedictory is the word, but you know, it's the 0:03:31.639 --> 0:03:34.000 last speech as the chairman. It comes at a time 0:03:34.040 --> 0:03:37.400 when we were all talking about the sort of threats 0:03:37.440 --> 0:03:41.000 to federal reserve independence. Were you surprised it was such 0:03:41.000 --> 0:03:43.440 a policy speech and not any sort of knowledge to 0:03:43.480 --> 0:03:44.480 some of these bigger things. 0:03:44.920 --> 0:03:48.200 I was not surprised by that. Paul is very selfle facing. 0:03:48.240 --> 0:03:50.760 He's not somebody who likes to toot his own horn, 0:03:50.840 --> 0:03:53.480 and we kind of knew going in that he didn't 0:03:53.480 --> 0:03:55.280 want to make a big deal of this being his 0:03:55.400 --> 0:03:59.600 last Jackson Hole as chair The fed independence thing was 0:03:59.600 --> 0:04:02.240 a bit of a surprise because it has been such 0:04:02.440 --> 0:04:05.080 a big issue. But I think given the message he 0:04:05.120 --> 0:04:08.800 wanted to send to the markets about the policy going forward, 0:04:09.000 --> 0:04:11.240 plus he had the whole section on the new framework 0:04:11.280 --> 0:04:14.000 he had to discuss. Yeah, I think they felt it 0:04:14.040 --> 0:04:16.440 was just going to be too long, too much, and 0:04:16.480 --> 0:04:20.640 that would come up in many other fora to talk about. 0:04:20.720 --> 0:04:23.640 It is funny no one's talking about the framework the 0:04:23.680 --> 0:04:26.640 results of like five years of work on the framework 0:04:26.680 --> 0:04:29.039 are published today and they're just lost in all that. 0:04:29.160 --> 0:04:32.400 I have asked FED officials about this. I said, why 0:04:32.480 --> 0:04:35.440 do you do this? Because they came up with this 0:04:35.480 --> 0:04:39.479 new framework in twenty twenty that didn't work, and a 0:04:39.560 --> 0:04:42.039 year into it, Jay Powell said, well, we've junked the 0:04:42.080 --> 0:04:45.000 framework because we've got inflation. And so if you're going 0:04:45.080 --> 0:04:47.120 to go to all this work to create a framework 0:04:47.120 --> 0:04:49.440 and then as soon as the economy turns you junk it, 0:04:49.560 --> 0:04:52.680 kind of what's the point. Their argument is that it 0:04:52.720 --> 0:04:54.760 gives them sort of a reference point of how they 0:04:54.760 --> 0:04:57.479 want to think about things, and today really they went 0:04:57.520 --> 0:05:00.760 back to twenty twelve, which was we'll do whatever the 0:05:00.760 --> 0:05:02.520 economy needs when it needs it. 0:05:02.480 --> 0:05:04.960 It's important to remember it's interesting thinking about that twenty 0:05:05.000 --> 0:05:09.839 twenty framework because we're so the existence of that framework 0:05:10.279 --> 0:05:14.040 is so twenty tens, right, It's so like thinking about, well, 0:05:14.080 --> 0:05:18.520 the main problem of monetary policy is long periods of undershoot. 0:05:18.160 --> 0:05:20.080 The zero bound, the zero. 0:05:19.920 --> 0:05:24.120 Bound constantly under two percent, How are we going to 0:05:24.160 --> 0:05:26.479 credibly get it above and then five minutes later we 0:05:26.480 --> 0:05:29.120 have the worst inflation. Yeah, in forty years. That was 0:05:29.160 --> 0:05:32.280 a real that framework from twenty twenty was like, is 0:05:32.320 --> 0:05:33.559 an artifact of a time? 0:05:34.240 --> 0:05:38.360 Yeah, absolutely, And the feds new framework sort of takes 0:05:38.440 --> 0:05:41.520 into account the fact that that could happen again, Yeah, 0:05:41.560 --> 0:05:47.240 because they're not using shortfall anymore in employment and they've 0:05:47.240 --> 0:05:50.520 also dropped references to the zero lower bound. But they 0:05:50.560 --> 0:05:54.320 basically they're saying, we admit that we can't steer the 0:05:54.360 --> 0:05:58.240 economy in quite as precise a way as we thought 0:05:58.279 --> 0:06:01.400 we could because the underlying conditions that we're working off 0:06:01.480 --> 0:06:04.600 of can change faster than we anticipated. 0:06:04.920 --> 0:06:07.239 I will just note I know that Powell didn't speak 0:06:07.240 --> 0:06:10.880 about central bank independence directly, but there is at least 0:06:10.920 --> 0:06:14.080 one paper being presented at the conference that does deal 0:06:14.160 --> 0:06:18.120 with this issue, by Emmy Nakamora from Berkeley, and we 0:06:18.160 --> 0:06:20.240 have a really good episode coming up with her. So 0:06:20.640 --> 0:06:24.440 there is some thematic discussion. It's just we're not all 0:06:24.440 --> 0:06:28.200 hearing it because it's closed doors. Although, Mike, you get 0:06:28.200 --> 0:06:30.160 to go inside the conficce I get to go inside, 0:06:30.200 --> 0:06:33.120 all right, So what's the vibe like in the room. 0:06:33.520 --> 0:06:36.640 Well, I hate to disappoint everybody, but it's rather quite 0:06:36.640 --> 0:06:40.240 boring unless you're an academic economist. Because these papers are 0:06:40.279 --> 0:06:43.280 written by academic economists, and they're designed to look at 0:06:43.320 --> 0:06:46.440 longer term issues and try to put them into context 0:06:46.440 --> 0:06:49.680 so that the central bankers can think about them. Okay, 0:06:49.880 --> 0:06:52.560 here's a problem that's come up. What's the research said 0:06:52.600 --> 0:06:54.760 about it in the past. That sort of thing. It's 0:06:54.800 --> 0:06:56.400 not a meeting where people come in and go, Okay, 0:06:56.400 --> 0:06:59.440 here's unemployment and here's prices and what do we do 0:06:59.480 --> 0:07:02.920 with the next That doesn't get discussed at all. Even 0:07:03.080 --> 0:07:05.800 the Open Market Committee officials who are here, they're not 0:07:05.800 --> 0:07:08.840 going to be really talking about that because they talk 0:07:08.880 --> 0:07:11.000 about that all the time. They're here to fish and 0:07:11.720 --> 0:07:15.160 hike and enjoy the scenery along with these academic papers. 0:07:15.240 --> 0:07:19.080 So inside it's an academic conference. They present the papers, 0:07:19.200 --> 0:07:21.160 they have a discussion, who talks about the papers, and 0:07:21.200 --> 0:07:24.600 then people can ask questions. And if you notice, you know, 0:07:24.600 --> 0:07:27.240 if you're watching your Bloomberg terminal, it's almost never a 0:07:27.280 --> 0:07:31.320 headline inside because nobody says anything that would move markets 0:07:31.400 --> 0:07:32.760 or interest people. Really. 0:07:33.280 --> 0:07:35.960 You know, other regional offeds have their conferences, so you know, 0:07:36.040 --> 0:07:40.080 there's a Boston FED one in November. There's an Atlanta 0:07:40.120 --> 0:07:42.600 FED line. I think it's somewhere in Florida. At some 0:07:42.720 --> 0:07:45.520 point in the year. The only thing that's really special 0:07:45.560 --> 0:07:49.440 here is that, and Powell alluded to it. It's Jackson 0:07:49.480 --> 0:07:52.320 Hole in August, and anyone would be a fool to 0:07:52.360 --> 0:07:54.400 say no to coming there. And that's how they got 0:07:54.480 --> 0:07:56.760 Vulgar to come because they like fly fishing, Like this 0:07:56.880 --> 0:07:58.880 is what ary like. They could all show up at 0:07:58.880 --> 0:08:02.400 the other ones, but was going to say, and as 0:08:02.440 --> 0:08:04.120 you mentioned, people are here to fly fish. I think 0:08:04.120 --> 0:08:06.280 that's actually an important element, even though it's just a 0:08:06.320 --> 0:08:09.720 fun element, which is that late summer, it's kind of 0:08:09.800 --> 0:08:12.760 like halfway between vacation and work out here for almost everyone. 0:08:13.360 --> 0:08:16.120 Another reason that it has become important, though, is starting 0:08:16.120 --> 0:08:18.880 with Ben Bernanke during the Great Financial Crisis. He came 0:08:18.960 --> 0:08:22.360 and the chairman usually gave a speech to open the 0:08:22.440 --> 0:08:26.680 conference on the conference topic, and it was like, Okay, 0:08:26.720 --> 0:08:28.960 we're talking about long term labor issues. That's a really 0:08:29.000 --> 0:08:31.040 good thing to talk about, and we're glad you're all 0:08:31.040 --> 0:08:34.640 here kind of thing. Then he announced basically that they 0:08:34.640 --> 0:08:36.240 were going to do q E for the first time 0:08:36.679 --> 0:08:39.000 at this meeting, and then the next year he also 0:08:39.080 --> 0:08:42.720 had an announcement about q e QT and what they 0:08:42.760 --> 0:08:44.040 were going to do and then all of a sudden, 0:08:44.040 --> 0:08:47.280 the focus became what's the chairman going to say? Because 0:08:48.000 --> 0:08:50.840 if there's rarely a FED meeting in August, just the 0:08:50.840 --> 0:08:53.280 way the calendar falls, maybe at the very beginning, and 0:08:53.320 --> 0:08:55.679 then there'sn't one until September, so you have this long 0:08:55.800 --> 0:08:59.800 month where there's no reference point for the markets, and 0:09:00.200 --> 0:09:03.120 that this became the reference point. So everybody pays attention 0:09:03.240 --> 0:09:05.400 to it, and as you know, it's a big build 0:09:05.480 --> 0:09:07.640 up to it. Oh, we've got Jackson Hole next week. 0:09:07.679 --> 0:09:10.800 What's the chairman going to say? And so that's really 0:09:11.160 --> 0:09:13.840 focused a lot of attention on it, which then feeds 0:09:13.880 --> 0:09:16.840 on itself because it becomes important, so people want to 0:09:16.840 --> 0:09:18.439 be there because it is important. 0:09:18.679 --> 0:09:21.160 This reminds me there was an old study. It was 0:09:21.200 --> 0:09:22.760 done a few years ago, so I would love to 0:09:22.760 --> 0:09:24.880 see a new study. But it basically looked at all 0:09:24.880 --> 0:09:29.079 the FOMC statements and speeches over time, and starting from 0:09:29.400 --> 0:09:34.480 two thousand and nine, they exploded in both length and complexity. 0:09:34.600 --> 0:09:36.400 So I think it used to be you could have, like, 0:09:36.920 --> 0:09:40.000 you know, a high school reading level and be fine 0:09:40.080 --> 0:09:42.600 reading some of the FOMC statements. They were very short, 0:09:42.640 --> 0:09:46.000 like four hundred words and then they became like two 0:09:46.040 --> 0:09:49.080 thousand words and you needed a college degree at a 0:09:49.120 --> 0:09:52.440 minimum to fully understand them. Talk to us about just 0:09:52.520 --> 0:09:55.280 like the format of the speech, because this is something 0:09:55.280 --> 0:09:57.920 else that people like to do, is dissect like the 0:09:58.040 --> 0:10:00.400 number of words and things like that. And it is true, 0:10:00.400 --> 0:10:03.320 this is a longer speech this year versus the relatively 0:10:03.360 --> 0:10:07.760 short speech from last year where Pale very definitively opened 0:10:07.800 --> 0:10:08.720 the door to a cut. 0:10:09.240 --> 0:10:12.240 Yeah. Well, I think what made this speech long was 0:10:12.960 --> 0:10:17.640 talking about the framework. It's, as we said, maybe somewhat irrelevant, 0:10:17.679 --> 0:10:19.880 but he had to go through it. They've been doing 0:10:19.880 --> 0:10:23.160 this exercise and it was anticipated he would announce it here, 0:10:23.200 --> 0:10:27.080 so basically he went through it. We've now done the exercise, 0:10:27.160 --> 0:10:29.439 and now we've explained it to you, and so you'll 0:10:29.520 --> 0:10:32.480 understand going forward if we refer to this. So that 0:10:32.600 --> 0:10:36.240 made it longer. The part that was really kind of 0:10:36.280 --> 0:10:39.400 to the point was the stuff about the economy. He 0:10:39.480 --> 0:10:43.600 outlined what they were thinking about the labor market and 0:10:43.640 --> 0:10:45.880 what they were thinking about inflation, and then how those 0:10:45.880 --> 0:10:49.240 two knit together. If this had been an ordinary speech 0:10:49.320 --> 0:10:52.960 without the framework, it wouldn't have been as long. Maybe 0:10:53.000 --> 0:10:55.040 it would have come across as even more punchy because 0:10:55.040 --> 0:10:57.720 it was just on that subject. You were talking about 0:10:57.720 --> 0:11:01.360 the FED statements getting very long the post Great Financial 0:11:01.400 --> 0:11:04.000 Crisis heres, and the FED realized that at one point, yeah, 0:11:04.640 --> 0:11:07.520 two or three years ago, they've cut them back significantly. 0:11:07.520 --> 0:11:09.720 We used to have very long statements where they tried 0:11:09.760 --> 0:11:13.320 to explain every little thing, and people found that too much. 0:11:13.360 --> 0:11:15.199 So now they're just kind of saying, here's we got 0:11:15.200 --> 0:11:18.000 one paragraph on where the economy is at, a paragraph 0:11:18.040 --> 0:11:19.560 that says, here's what we're doing about it. 0:11:19.720 --> 0:11:22.720 You know, another nice thing about Jackson Hole in late 0:11:22.760 --> 0:11:24.840 August is you don't just get, you know, just lure 0:11:24.880 --> 0:11:27.720 the FED share there. You lure central bankers all around 0:11:27.760 --> 0:11:30.839 the world. But I feel like in this moment, the 0:11:31.320 --> 0:11:34.080 FED itself, the FED is always first among equals. Most 0:11:34.120 --> 0:11:36.319 people would agree with that, but the Fed because of 0:11:36.320 --> 0:11:38.240 all the dramas like this black hole sucking up all 0:11:38.240 --> 0:11:41.280 the energy. Is your perception, you know, we saw the 0:11:41.320 --> 0:11:45.199 walk where Powell was with Leguard and Bailey and Ueda. 0:11:45.320 --> 0:11:50.480 Is your perception that all the developed market central banks 0:11:50.559 --> 0:11:53.600 are roughly wrestling with still the same things. Because there's 0:11:53.679 --> 0:11:56.080 just been there's been this global factor of the inflation 0:11:56.200 --> 0:11:59.360 and so forth. They all sort of basically feeling the 0:11:59.400 --> 0:12:01.400 same stresses they are. 0:12:01.720 --> 0:12:05.240 We're still living in a post pandemic world, so data 0:12:05.360 --> 0:12:08.199 are somewhat difficult to read, and you see the ups 0:12:08.240 --> 0:12:10.880 and downs of the economies that you may or may 0:12:10.880 --> 0:12:13.280 not be able to track. But the biggest thing at 0:12:13.280 --> 0:12:17.680 the moment is that they're all wrestling with Trump fiscal policy. 0:12:18.240 --> 0:12:21.440 But they fiscal policy has different impacts on different countries. 0:12:21.480 --> 0:12:24.320 For the United States, it's inflationary. For many of the 0:12:24.320 --> 0:12:28.000 countries out there, it's deflationary because their currency is going down, 0:12:28.040 --> 0:12:32.400 the dollars getting stronger, and so they have different problems 0:12:32.440 --> 0:12:34.280 they have to deal with. They all have a problem 0:12:34.320 --> 0:12:38.040 with the consequences of the Trump policy, but the consequences 0:12:38.040 --> 0:12:39.280 are different for each one. 0:12:39.400 --> 0:12:41.960 Well, you were talking about this on TV earlier, because 0:12:42.000 --> 0:12:44.280 when it comes to tariffs, there is still a huge 0:12:44.280 --> 0:12:47.280 debate over how inflationary they might actually be, because in 0:12:47.320 --> 0:12:50.000 traditional economics you would view them as a tax which 0:12:50.040 --> 0:12:53.920 tends to destroy demand and can lead to deflation. On 0:12:53.960 --> 0:12:57.240 the other hand, we have seen producer prices start to 0:12:57.360 --> 0:13:00.320 pick up. What have you learned about just how policy 0:13:00.400 --> 0:13:04.880 makers are actually viewing the impact of tariffs at this conference. 0:13:04.920 --> 0:13:07.839 Well, there has been division. We have the Chriskwaller version 0:13:07.840 --> 0:13:10.600 who went to the textbook and said tariffs are a 0:13:10.600 --> 0:13:15.080 one time increase in the price level. And then since 0:13:15.120 --> 0:13:17.240 he first said that in July, what we've seen is 0:13:17.240 --> 0:13:19.880 the President delaying these tariffs, so they come on one 0:13:19.920 --> 0:13:22.600 by one and that drags the process out. Now, what 0:13:22.640 --> 0:13:26.120 the chairman seem to decide was that it's still going 0:13:26.160 --> 0:13:29.200 to be a one time increase sector by sector, So 0:13:29.240 --> 0:13:31.120 it might drag out, but it's not going to be 0:13:31.160 --> 0:13:36.120 an ongoing process of each sector prices rise, so the 0:13:36.280 --> 0:13:40.400 impacts they have a hard time judging because it's not 0:13:40.679 --> 0:13:44.040 like you pass smooth Holly and on a certain day 0:13:44.080 --> 0:13:46.960 it takes effect and you see the immediate price impact 0:13:47.240 --> 0:13:50.079 and then you can measure what's happening and it's going 0:13:50.120 --> 0:13:52.640 to do. Here, they have to take into account each sector, 0:13:53.080 --> 0:13:57.320 whether the exporter absorbs any of it, whether the importer 0:13:57.520 --> 0:14:00.640 absorbs any of it. What companies do into of pricing. 0:14:00.679 --> 0:14:03.160 Do they take some out of their margins because they 0:14:03.200 --> 0:14:05.120 don't want to lose market share, or do they just 0:14:05.160 --> 0:14:08.200 pass it along to people. These are all complex questions 0:14:08.200 --> 0:14:10.880 and as one of the fat economists said to me, 0:14:11.320 --> 0:14:14.560 each one affects another. So because so much of this 0:14:14.600 --> 0:14:18.160 stuff is intermediate goods that are used to price something else, 0:14:18.600 --> 0:14:20.680 so it gets very complicated. So it is hard for 0:14:20.720 --> 0:14:23.840 them to know exactly how this is going to play out. 0:14:24.400 --> 0:14:27.480 Say I have a take, Oh oh, do you a surprise? 0:14:27.560 --> 0:14:28.280 All right, go ahead. 0:14:28.720 --> 0:14:31.320 I was thinking about this when we're on errors. Maybe 0:14:31.720 --> 0:14:35.320 the answer is that tariffs are one off in terms 0:14:35.320 --> 0:14:39.520 of the inflationary impulse, but that the underlying political impulse 0:14:39.720 --> 0:14:42.480 to impose tariffs, this desire for everyone to have all 0:14:42.520 --> 0:14:47.240 their stuff and protect their home countries, industries, and so forth, 0:14:47.480 --> 0:14:49.400 is going to be this new permanent feature that is 0:14:49.440 --> 0:14:50.080 not a one off. 0:14:50.120 --> 0:14:52.080 Would that feature be inflationary? 0:14:52.160 --> 0:14:53.840 And if that is sustained then maybe it is. 0:14:54.040 --> 0:14:56.480 Yeah. I mean there is an irony here, which is 0:14:57.000 --> 0:15:01.840 the Trump administration has long criticized work and government bureaucracy 0:15:01.920 --> 0:15:04.320 and things like that, and I cannot even imagine how 0:15:04.400 --> 0:15:07.440 much time companies are spending trying to figure out tariffs 0:15:07.520 --> 0:15:12.160 right now and doing customs documentation and stuff like that. Okay, Mike, 0:15:12.680 --> 0:15:15.040 next year, we're going to have a new fed chair, 0:15:15.920 --> 0:15:19.600 new vibes at Jackson Hole potentially, who are you watching 0:15:19.600 --> 0:15:21.680 out for right now? 0:15:21.720 --> 0:15:24.800 I'm still watching out for the original Trump list that 0:15:24.960 --> 0:15:29.040 Kevin's has it in worsh and for Chris Waller. You 0:15:29.080 --> 0:15:33.080 could argue that the speech today improved Waller's chances if 0:15:33.120 --> 0:15:35.440 you were looking at it from a Las Vegas point 0:15:35.440 --> 0:15:38.080 of view in terms of odds, because he was right 0:15:38.320 --> 0:15:40.560 right at least at least a fed is saying he 0:15:40.680 --> 0:15:43.280 was right. But this is Donald Trump, so we have 0:15:43.400 --> 0:15:45.680 no idea. I think most of the people who've been 0:15:45.720 --> 0:15:48.200 sort of added on in the talking about stage in 0:15:48.240 --> 0:15:51.400 terms of the list are more red herrings. Some of 0:15:51.400 --> 0:15:53.880 them are obviously not going to be the chair. But 0:15:53.960 --> 0:15:56.440 what he's been able to do is get more people 0:15:56.480 --> 0:16:00.480 on TV getting interviewed about are you going to the chair? 0:16:00.800 --> 0:16:03.120 And they're all saying, well, we need to cut rates. 0:16:03.440 --> 0:16:05.120 You're not on the list if you're not going to 0:16:05.360 --> 0:16:09.840 cut rates. So are they really serious candidates? And Scott 0:16:09.840 --> 0:16:11.600 Besson says, okay, I got eleven people I'm going to 0:16:11.600 --> 0:16:14.040 bring in. The president keeps saying I got three people 0:16:14.080 --> 0:16:15.840 I'm going to choose from, So I think you go 0:16:15.880 --> 0:16:18.840 back to the original list. He's comfortable with those people. 0:16:19.320 --> 0:16:22.320 They all look like they could be fed chairs. And 0:16:22.360 --> 0:16:25.880 we know the impression that the person makes is important, 0:16:26.320 --> 0:16:29.800 so they're the most likely ones to choose from. I'm 0:16:29.800 --> 0:16:32.320 not saying he couldn't surprise. He surprises in almost everything 0:16:32.400 --> 0:16:32.760 he does. 0:16:33.520 --> 0:16:36.640 Have you interacted with Waller before, I've never met him, so, oh. 0:16:36.520 --> 0:16:38.680 I know Chris quite well. The one thing about Chris 0:16:38.760 --> 0:16:43.040 is we've extrapolated the Lisa Cook thing to if the 0:16:43.080 --> 0:16:46.040 president got four people on the board, then they can 0:16:46.080 --> 0:16:48.960 fire all the bank presidents, etc. Etc. And he have 0:16:49.120 --> 0:16:51.800 all this control. I don't think Waller would go along 0:16:51.840 --> 0:16:56.160 with that. He's in favor of lower interest rates. He 0:16:56.240 --> 0:16:58.320 has his own ideas about the economy. But he's a 0:16:58.440 --> 0:17:03.240 very smart economist, and you could defend what he says 0:17:03.520 --> 0:17:05.720 even if you don't necessarily agree with it. But he's 0:17:05.760 --> 0:17:10.200 an institutionalist. He's somebody who follows what the FED has 0:17:10.240 --> 0:17:12.040 done in the past, and I don't think he would 0:17:12.200 --> 0:17:14.720 give into the President's desire to do something that would 0:17:14.800 --> 0:17:17.840 hurt the FED, hurt its credibility, hurt its ability to 0:17:17.880 --> 0:17:19.120 do its jobs. 0:17:19.359 --> 0:17:22.439 Twenty twenty five. I think David Zervis looks like a fetcher. 0:17:23.520 --> 0:17:25.920 Okay, I'm going to go fly fishing. I'm going to 0:17:25.960 --> 0:17:27.719 do what I'm supposed to do at Jackson Hall and 0:17:27.720 --> 0:17:28.200 go fish. 0:17:28.280 --> 0:17:28.800 Let's Got. 0:17:33.240 --> 0:17:36.280 Lots More is produced by Carmen Rodriguez and dash Ell Bennett, 0:17:36.320 --> 0:17:38.680 with help from Moses Ondom and Cal Brooks. 0:17:39.040 --> 0:17:42.080 Our sound engineer is Blake Maples. Sage Bauman is the 0:17:42.080 --> 0:17:43.480 head of Bloomberg Podcasts. 0:17:43.680 --> 0:17:46.800 Please rate, review, and subscribe to Odd, Lots and Lots 0:17:46.840 --> 0:17:49.720 More on your favorite podcast platforms, and. 0:17:49.800 --> 0:17:52.360 Remember that Bloomberg subscribers can listen to all of our 0:17:52.400 --> 0:17:56.639 podcasts and free by connecting through Apple Podcasts. Thanks for listening.