WEBVTT - Bloomberg Surveillance TV: August 21st, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.519 Terminal and the Bloomberg Business App. Heading into this the 0:00:37.600 --> 0:00:41.160 Fence Jackson Hole Economic Symposium, kicking off today in Wyoming, 0:00:41.440 --> 0:00:44.640 Kansas City. FED President Jeffrey Smith sang officials will be 0:00:44.680 --> 0:00:48.760 closely watching inflation data ahead of next month's interest rate decision. 0:00:48.800 --> 0:00:51.320 He spoke with Bloomberg's My McKee just yesterday. 0:00:51.840 --> 0:00:55.880 This is, you know, kind of an interesting month because 0:00:55.920 --> 0:00:59.600 we've got Jackson Hole and then we've got quite a 0:00:59.600 --> 0:01:02.080 few weeks of data to kind of pull in. So 0:01:03.440 --> 0:01:06.520 I'm really I think everybody's quite interested in some of 0:01:06.560 --> 0:01:09.200 the maybe the prints that happened in the last couple 0:01:09.200 --> 0:01:11.680 of months and kind of where they go from here. 0:01:12.680 --> 0:01:15.679 So I'm like everybody. 0:01:15.880 --> 0:01:21.319 I think there was some fascinating conversations at the last FMC. 0:01:21.720 --> 0:01:24.480 As you know, there were a couple of cents. I 0:01:24.520 --> 0:01:28.600 think my interpretation of what's happening, especially in the labor market, 0:01:29.080 --> 0:01:31.840 is that the first couple quarters, a lot of business 0:01:31.840 --> 0:01:35.720 people were just saying, there's uncertainty enough, and I think 0:01:35.760 --> 0:01:38.200 they kind of cooled a little bit on the higher side. 0:01:38.520 --> 0:01:40.680 But the most recent couple of weeks that we've been 0:01:40.720 --> 0:01:43.640 talking to businesses in the district, there seems to be 0:01:44.040 --> 0:01:47.640 a burgeoning optimism again that they've kind of digested and 0:01:48.000 --> 0:01:50.200 they've been agile enough to try to work their way 0:01:50.240 --> 0:01:53.600 through some of the new policies from the administration, and 0:01:53.680 --> 0:01:56.520 maybe going forward, maybe we'll see a little bit uptick. 0:01:56.840 --> 0:02:00.280 That said, I still believe there's that the that the 0:02:00.280 --> 0:02:04.080 inflation number is trending closer to three than two. 0:02:04.480 --> 0:02:06.720 Well, we saw that in the minutes that in general 0:02:06.880 --> 0:02:09.919 the Open Market Committee felt that inflation was a bigger 0:02:10.000 --> 0:02:11.120 danger at this point. 0:02:11.440 --> 0:02:15.080 Would you say that's your view now? It would be 0:02:15.120 --> 0:02:15.600 my view now. 0:02:15.840 --> 0:02:18.920 I think with an understanding that what may have happened 0:02:18.919 --> 0:02:21.119 in the first couple quarters on the labor side, which 0:02:21.160 --> 0:02:26.480 I think concerned several people on the committee and me included. 0:02:26.800 --> 0:02:31.240 But I think this PPI was interesting, that print was interesting. 0:02:31.280 --> 0:02:34.880 But I really believe that when we talked to a 0:02:34.919 --> 0:02:38.920 lot of a lot of folks in our district, is 0:02:38.960 --> 0:02:42.240 that if you had to kind of lean or have 0:02:42.320 --> 0:02:44.600 a bias toward, it would be on the inflation side. 0:02:44.880 --> 0:02:48.400 Maybe you've moved toward the middle in terms of whether 0:02:48.600 --> 0:02:51.000 you should hold rates or cut rates. 0:02:51.560 --> 0:02:54.760 You know, it's really fascinating you think about and you 0:02:54.760 --> 0:02:57.080 have great experience in this when you get to the 0:02:57.120 --> 0:03:05.240 policy table, when you're talking about it, everything's connected to 0:03:05.240 --> 0:03:09.600 to the dual mandate, right, and when inflation is really 0:03:09.720 --> 0:03:13.040 ramping up, you have a blunt instrument and you act, 0:03:13.120 --> 0:03:16.880 which is what we did. Now, as you get closer 0:03:16.919 --> 0:03:21.560 to the optimum dual mandate numbers, it actually becomes more 0:03:21.600 --> 0:03:24.639 difficult to make decisions on the margin relative to where 0:03:24.639 --> 0:03:28.239 that policy rate should go. And so I think that's 0:03:28.280 --> 0:03:31.240 where you're seeing a lot of the debate now is 0:03:31.440 --> 0:03:34.440 you know where's your lean is it? Where do you 0:03:34.480 --> 0:03:37.000 believe things are too restrictive on the policy rate side 0:03:37.080 --> 0:03:40.520 or not. I think they're modestly restrictive. I'm still trying 0:03:40.520 --> 0:03:44.120 to find ways of what's being inhibited in the economy 0:03:44.360 --> 0:03:48.080 from where our policy rate is today. But I think 0:03:48.120 --> 0:03:49.000 we're on a good path. 0:03:49.400 --> 0:03:52.760 So at this point, it probably would be a mistake 0:03:52.880 --> 0:03:56.600 for Parenbau on Friday to say definitely we're going to 0:03:56.640 --> 0:03:57.840 cut as he did last year. 0:03:57.960 --> 0:04:02.960 Yeah, yeah, I always can't wait for that speech. I 0:04:03.000 --> 0:04:05.720 think he keeps it close fast. I wouldn't front round 0:04:05.760 --> 0:04:09.240 him even if I knew. But I think that we've 0:04:09.240 --> 0:04:13.680 been doing so much work this year around the framework, 0:04:13.880 --> 0:04:18.240 around around really getting into where how we get this 0:04:18.400 --> 0:04:22.800 soft landing to two percent without breaking anything. So I 0:04:23.080 --> 0:04:25.360 think he has a lot of different directions to go, 0:04:25.440 --> 0:04:29.080 and I think it'll be a very anticipated discussion. 0:04:29.120 --> 0:04:32.000 Well, how do you think you should communicate going forward? 0:04:32.040 --> 0:04:35.359 Because there are some people who are candidates for to 0:04:35.400 --> 0:04:37.839 be the next chair who say the FED talks too much. 0:04:38.160 --> 0:04:43.279 Yeah, wow, Well you hear both sides of that coin 0:04:43.640 --> 0:04:46.240 all the time, right, One, do we keep too much 0:04:46.279 --> 0:04:47.080 to our best? 0:04:47.120 --> 0:04:47.360 Two? 0:04:47.920 --> 0:04:53.360 Why aren't we doing more kind of transmitting future crystal 0:04:53.400 --> 0:04:58.000 ball or how are we interpreting the numbers to a 0:04:58.080 --> 0:05:02.160 future event? You know, the SEP and the dot plot 0:05:02.560 --> 0:05:05.719 is maybe some of that, but I don't hear a 0:05:05.760 --> 0:05:11.120 lot that we don't talk enough or express ourselves enough. 0:05:11.320 --> 0:05:14.760 I think it's more important where the American public is concerned. 0:05:14.800 --> 0:05:17.559 As they understand, we do a better job on helping 0:05:17.600 --> 0:05:19.000 them understand. 0:05:18.560 --> 0:05:20.280 What we're doing and why we're doing it. 0:05:21.120 --> 0:05:24.400 And the dual mandate and the christness of those two 0:05:24.400 --> 0:05:25.960 mandates help us help us. 0:05:25.880 --> 0:05:28.159 A lot in the role we have. 0:05:28.720 --> 0:05:31.520 I have to ask you about the latest presidential tweets 0:05:31.600 --> 0:05:36.479 and the attack on Lisa Cook, Governor Cook. I know 0:05:36.560 --> 0:05:39.760 that FED officials will always say, we don't let politics 0:05:39.800 --> 0:05:42.280 come into the boardroom. We do just what we think 0:05:42.320 --> 0:05:43.840 we should do. On the ECCONUOM, we don't even talk 0:05:43.839 --> 0:05:46.480 about it. But you've got to be getting sick of this. 0:05:48.279 --> 0:05:53.680 Well, Look, I'm a little philosophical about the whole conversation 0:05:53.760 --> 0:05:58.160 of FED independence and where our role is in the 0:05:58.520 --> 0:06:02.360 American economy. We're almost two hundred and fifty years old 0:06:02.360 --> 0:06:05.200 as a nation. I think there's something to be said. 0:06:05.240 --> 0:06:08.360 We were built on words, and we continue to debate 0:06:08.400 --> 0:06:15.680 those words legislatively and judicially, whatever friction we might have 0:06:15.880 --> 0:06:19.719 with other branches of the government. I think great steels 0:06:19.760 --> 0:06:22.960 tested by fire so what we can always be better. 0:06:22.960 --> 0:06:25.880 We can always do this better. But I think the 0:06:26.000 --> 0:06:31.200 nature of independence and I think, don't believe me, believe 0:06:31.240 --> 0:06:35.200 other nations that have central banks and don't it seems 0:06:35.240 --> 0:06:38.560 to work. But I'm always open for the conversation of 0:06:38.560 --> 0:06:39.479 how do we make it better? 0:06:39.680 --> 0:06:42.400 Well, do you think the FED has suffered to hit 0:06:42.400 --> 0:06:45.679 to credibility by the constant attacks from Washington? 0:06:46.960 --> 0:06:50.800 So I think the credibility issue is more in are 0:06:50.839 --> 0:06:54.680 we fulfilling our responsibility and role around the actions of 0:06:55.320 --> 0:06:59.760 monetary policy and monetary operations? And I think the work 0:06:59.800 --> 0:07:02.599 we do on behalf of the American people is very 0:07:02.640 --> 0:07:08.240 important to their lifestyle and their living and I want 0:07:08.279 --> 0:07:11.560 to make sure that our reputations stay strong around the 0:07:11.600 --> 0:07:15.880 things that we're mandated to do by Congress. Other than that, 0:07:16.200 --> 0:07:19.440 there's a lot of noise outside of that dual mandate. 0:07:20.080 --> 0:07:24.080 And look, you take this chair, you do this job, 0:07:24.120 --> 0:07:27.400 and people are going to have opinions, and I'm fine 0:07:27.440 --> 0:07:27.640 with that. 0:07:27.840 --> 0:07:30.360 Then when you talk to people, do they understand why 0:07:30.360 --> 0:07:31.720 you're not lowering interest rates? 0:07:33.040 --> 0:07:37.200 Actually, it's interesting. So we're going to have two sets 0:07:37.200 --> 0:07:39.000 of folks that we would talk to. One are going 0:07:39.040 --> 0:07:42.200 to be business people and finance people that really they 0:07:42.280 --> 0:07:45.080 understand because they have to. I mean, I'm a former banker. 0:07:45.680 --> 0:07:48.920 You have to risk manage the cycles of rates to 0:07:49.120 --> 0:07:55.160 run your bank well and profitably. It's the general public 0:07:55.240 --> 0:07:58.720 that we continue to try to reach to give them 0:07:58.760 --> 0:08:01.480 some sense of what this do mandate means to them. 0:08:02.520 --> 0:08:05.360 And I think there's a little bit of perfection in 0:08:05.880 --> 0:08:11.720 the healthy friction between full employment and stable prices. And 0:08:11.760 --> 0:08:14.760 I actually like that friction, and it allows us to 0:08:14.880 --> 0:08:17.640 kind of balance and rebalance what we're doing on their behalf. 0:08:17.920 --> 0:08:20.720 And it's one hundred percent on their behalf. If you 0:08:20.880 --> 0:08:24.360 reach full employment and if you keep prices stable, people 0:08:24.400 --> 0:08:28.000 can work and thrive. And I think that's an important 0:08:28.000 --> 0:08:29.000 piece of what FED does. 0:08:30.360 --> 0:08:32.800 I was in Kansas City, FED President Jeffrey Smith sitting 0:08:32.840 --> 0:08:35.439 down with Bloomberg's my McKee. It is five point thirty 0:08:35.440 --> 0:08:37.840 am at Jackson Homeway. I make sunrise at about forty 0:08:37.840 --> 0:08:40.440 five minutes or so. My McKee's safely and comfortable in 0:08:40.480 --> 0:08:42.480 his hotel room. I believe, Mike, good morning. He's a 0:08:42.480 --> 0:08:45.560 fantastic exchange. As always, this line stood out for us 0:08:45.559 --> 0:08:47.320 all if you had to lean or have a bus 0:08:47.360 --> 0:08:50.839 towards it would be on the inflation side. Will Chairman 0:08:50.960 --> 0:08:52.760 Powell be in the same boat tomorrow. 0:08:56.760 --> 0:08:59.320 He's probably in the same boat. The issue is whether 0:08:59.360 --> 0:09:01.520 he will talk about it at length enough for us 0:09:01.559 --> 0:09:04.440 to know where he lands. And I think he's going 0:09:04.480 --> 0:09:06.480 to try to avoid that because at this point they 0:09:06.480 --> 0:09:08.679 don't know what the next data are going to show. 0:09:09.120 --> 0:09:11.600 It was interesting I thought that Schmid, who has. 0:09:11.520 --> 0:09:13.480 Been one of the most hawkish members on the FED 0:09:13.559 --> 0:09:17.560 and has pushed against rate cuts anytime soon, is now 0:09:17.600 --> 0:09:20.320 saying he's open to it if the data show that 0:09:20.520 --> 0:09:22.480 they need to do that. So if we get a 0:09:22.600 --> 0:09:28.319 bad employment report and a reasonably moderate inflation number, then 0:09:28.360 --> 0:09:31.000 you might see more people on the Fed than Waller 0:09:31.120 --> 0:09:34.120 and Bowman who are willing to vote for a rate 0:09:34.200 --> 0:09:35.160 cut in September. 0:09:35.440 --> 0:09:37.400 What was interesting there is that we did get about 0:09:37.440 --> 0:09:40.160 employment report and he hasn't changed his views. So when 0:09:40.200 --> 0:09:42.000 you look at the Federal Reserve min it's from yesterday, 0:09:42.000 --> 0:09:44.520 and everyone turns around and says the super stale that dated, 0:09:44.800 --> 0:09:47.800 ignore them. I just wonder how many people have maintained 0:09:47.800 --> 0:09:51.200 those views from that Federal Reserve meetings even with the 0:09:51.240 --> 0:09:53.199 payrolls report, Because two days later. 0:09:56.960 --> 0:09:59.760 You probably have most of the board retaining those views 0:10:00.000 --> 0:10:04.920 because basically it was seventeen, well sixteen against eighteen, since 0:10:04.960 --> 0:10:09.120 Coogler didn't vote, saying that inflation was the bigger risk, 0:10:09.280 --> 0:10:13.400 and so there's a bias going into September that they 0:10:13.440 --> 0:10:16.600 shouldn't move, which is not at all what the markets think. 0:10:17.000 --> 0:10:19.200 And they're going to want to see the data, and 0:10:19.240 --> 0:10:21.160 again it's going to come down to a question of 0:10:21.200 --> 0:10:24.240 how bad the employment report is and how bad the 0:10:24.280 --> 0:10:28.480 inflation report is. If inflation shows signs of really picking up, 0:10:28.840 --> 0:10:31.520 then probably September seventeenth is going to be a tough 0:10:31.559 --> 0:10:32.680 sell for a raid cut. 0:10:32.800 --> 0:10:36.400 Mike, just quickly. The increased scrutiny of this institution, an 0:10:36.400 --> 0:10:40.000 institution that you've covered for a long long time. It's 0:10:40.080 --> 0:10:42.600 kind of the elephant in the room in Jackson hallw Wyoming. Now, 0:10:42.880 --> 0:10:45.080 the pressure that's coming from the White House and elsewhere 0:10:45.080 --> 0:10:48.240 in Washington, d C. They clearly want to change this institution. 0:10:48.600 --> 0:10:51.280 They're clearly pursuing that objective in different ways. Mike, I 0:10:51.440 --> 0:10:53.320 just wonder what the reaction's been on the ground in 0:10:53.360 --> 0:10:55.040 the last few days while you've been there. 0:10:59.040 --> 0:11:01.959 Well, basically everybody agrees that something needs to change in 0:11:02.000 --> 0:11:04.880 the Fed's framework, which Jay Powell is expected to outline 0:11:04.960 --> 0:11:08.000 on Friday, because they put a lot more weight on 0:11:08.120 --> 0:11:12.040 employment in the last framework, and obviously inflation is now 0:11:12.360 --> 0:11:14.719 a bigger issue for most of them. And then the 0:11:14.800 --> 0:11:18.280 question becomes, what's the new leader going to do? What's 0:11:18.320 --> 0:11:21.880 he going to pursue in terms of FED policy. Some 0:11:21.960 --> 0:11:24.440 have said, as we were discussing in the interview with 0:11:24.679 --> 0:11:27.480 Jeff Schmidt, that the FED talks too much. They should 0:11:27.520 --> 0:11:32.200 dial back on their community individual communications and try to 0:11:32.280 --> 0:11:35.920 explain more about what they're doing. But does that really 0:11:35.960 --> 0:11:39.120 make a difference in the sense of American people paying 0:11:39.160 --> 0:11:42.400 attention to this? Wall Street pays attention minute to minute, 0:11:42.400 --> 0:11:44.800 But do the American people pay attention to it other 0:11:44.880 --> 0:11:47.000 than basically when they go to the grocery store. 0:11:47.800 --> 0:11:51.280 Stay with us? Multiple implex savanas coming up off to this. 0:12:00.400 --> 0:12:04.120 The Federal Reserve heading into Jackson hold facing down upside 0:12:04.200 --> 0:12:07.400 risk to inflation and downside risk to employment. The minutes 0:12:07.400 --> 0:12:10.440 from the Fed's last meeting indicating quote, a majority of 0:12:10.480 --> 0:12:13.920 participants judge the upside risk to inflation as the greater 0:12:14.400 --> 0:12:17.080 of these two risks. The former FED governor Bessie Jude 0:12:17.160 --> 0:12:19.400 joined us now for more. Bessie, welcome back to the program. 0:12:19.440 --> 0:12:21.920 It's good to lean on your experience. As always, Let's 0:12:21.920 --> 0:12:23.760 just start with the premise of the issue. Do you 0:12:23.880 --> 0:12:27.000 believe that we do see as your mandate in conflict. 0:12:28.679 --> 0:12:30.319 I'm not sure it's quite in conflict. 0:12:30.400 --> 0:12:30.679 Yet. 0:12:30.960 --> 0:12:33.520 When you look at the unemployment numbers and you go 0:12:33.640 --> 0:12:37.120 back to the last projections that the FED did, the 0:12:37.240 --> 0:12:42.200 median participant thought that the long term rate of unemployment 0:12:42.240 --> 0:12:44.240 would be a four point two, which is exactly where 0:12:44.280 --> 0:12:48.560 we are. So I'm not sure that the number of 0:12:48.679 --> 0:12:53.000 jobs created because of supply side issues, as you were discussing, 0:12:53.480 --> 0:12:56.560 is enough to consider that out of whack. 0:12:57.000 --> 0:13:00.400 So Betsy, going into the speech from Chairman Powell, wonder 0:13:00.400 --> 0:13:02.600 how much has actually changed for him since we got 0:13:02.640 --> 0:13:05.559 that payroll report a few fridays ago. 0:13:06.440 --> 0:13:08.120 I don't think a lot has changed. 0:13:08.640 --> 0:13:13.000 The payroll numbers are the most unreliable indicator that you 0:13:13.160 --> 0:13:17.079 get because they're so frequently revised, and the revisions, I 0:13:17.120 --> 0:13:19.559 think the average revision is one hundred thousand jobs, so 0:13:20.320 --> 0:13:24.240 that is huge. I'll tell you one story when I 0:13:24.280 --> 0:13:27.439 was at the FED with Jay and we were discussing 0:13:27.520 --> 0:13:30.960 launching QE three, and there was a lot of concern 0:13:31.200 --> 0:13:34.880 amongst Jay, myself and Jeremy. 0:13:36.480 --> 0:13:39.360 About launching Q three, and we got a bad payroll number. 0:13:39.400 --> 0:13:41.360 We launched Q three a. 0:13:41.360 --> 0:13:43.920 Year later, when you look at how that number had 0:13:43.920 --> 0:13:47.240 been adjusted, it would not have justified launching Q three 0:13:47.240 --> 0:13:48.640 at all. 0:13:48.720 --> 0:13:53.120 So, then, Betsy, this time around, if he's having to 0:13:53.160 --> 0:13:56.760 deal with those inputs, but then also having to deal 0:13:57.080 --> 0:14:02.320 with Muslim daily ironically cooked who have all turned more Dubvish, 0:14:02.640 --> 0:14:07.480 does Powell necessarily need to incorporate those views when he speaks. 0:14:07.640 --> 0:14:10.240 Does he need to also have some of that Dubvish 0:14:10.320 --> 0:14:13.679 lean incorporated into his outlook because. 0:14:13.360 --> 0:14:15.439 Some of the rest of the FMC is going there. 0:14:16.760 --> 0:14:19.480 He is always aware of where every member of the 0:14:19.560 --> 0:14:22.560 FOMC is because the job of the Chairman is to lead. 0:14:22.640 --> 0:14:27.440 It's not to set policy and force everybody to agree. 0:14:27.600 --> 0:14:29.360 The job of the chairman is to lead. 0:14:29.160 --> 0:14:31.880 And to know where all of the participants, all the 0:14:31.920 --> 0:14:34.680 members of the FMC are at any given time. 0:14:36.080 --> 0:14:38.680 If his speech, though, also has to do with cementing 0:14:38.720 --> 0:14:42.560 his legacy, Betsy, considering where we go from here, considering 0:14:42.560 --> 0:14:45.360 there will be a new fed governor in twenty twenty six. 0:14:45.800 --> 0:14:47.480 You know the man, Well, what do you expect that 0:14:47.680 --> 0:14:48.280 to look like? 0:14:48.440 --> 0:14:49.120 From Powell? 0:14:49.120 --> 0:14:51.520 What does it sound like to have a FED chair 0:14:51.600 --> 0:14:54.600 who tries to come out and defend independence and have 0:14:54.640 --> 0:14:58.160 that legacy but without provoking the politics of the moment 0:14:58.200 --> 0:14:58.920 and the White House. 0:15:00.160 --> 0:15:00.600 I think J. 0:15:00.800 --> 0:15:03.440 Powell, in terms of his legacy is looking at what 0:15:03.560 --> 0:15:06.720 happens to his mandate, what happens to inflation, what happens 0:15:06.720 --> 0:15:10.080 to employment, and how well does he manage that. It's 0:15:10.120 --> 0:15:14.600 not any single speech, and I would would be shocked 0:15:14.680 --> 0:15:15.960 if he was viewing. 0:15:15.760 --> 0:15:16.160 It that way. 0:15:16.360 --> 0:15:18.200 Event See, do you think there is a bias when 0:15:18.240 --> 0:15:21.360 it comes to handling and targeting inflation over say, the 0:15:21.400 --> 0:15:23.920 prospects for the labor market? Do you have a bias? 0:15:24.040 --> 0:15:27.440 Is there an inherent bias on the committee to prioritize 0:15:27.440 --> 0:15:28.160 one over the other? 0:15:29.720 --> 0:15:32.960 You know, so everybody who comes on the committee ultimately 0:15:33.000 --> 0:15:36.680 gets led as a hawk or a dove. I don't 0:15:36.680 --> 0:15:41.600 think it's that clear cut. I think for myself, I 0:15:41.640 --> 0:15:44.120 probably do have a bit of a bias on inflation, 0:15:44.320 --> 0:15:47.920 because you know, I started my career in the seventies 0:15:47.920 --> 0:15:49.120 and the vulgar years, when. 0:15:49.160 --> 0:15:51.040 When inflation was just out of control. 0:15:51.240 --> 0:15:54.000 But I don't think there's a real bias inside the 0:15:54.080 --> 0:15:56.520 room one way or the other. It's more a matter 0:15:56.560 --> 0:15:58.680 of which one seems the most difficult to manage at 0:15:58.680 --> 0:15:59.280 the time. 0:15:59.480 --> 0:16:01.000 And what do you think is the most difficult to 0:16:01.040 --> 0:16:01.800 manus Right now? 0:16:02.720 --> 0:16:04.840 I still think inflation is much more difficult. 0:16:05.280 --> 0:16:06.800 And do you think it gets harder in the months 0:16:06.840 --> 0:16:08.880 to come? Do you suspect we will see more passed 0:16:08.880 --> 0:16:10.360 through from the tariffs? 0:16:10.360 --> 0:16:13.040 Well, yeah, it's going to be very hard to determine 0:16:13.200 --> 0:16:16.360 once you start getting passed through. Is that passed through 0:16:16.400 --> 0:16:18.640 a one time price change or is it going to 0:16:18.680 --> 0:16:21.840 be persistent? And you really, really, they're going to be 0:16:21.880 --> 0:16:26.080 watching what expectations are. Inflation expectations are going to be 0:16:26.080 --> 0:16:29.960 the key over the next year or two. If inflation 0:16:30.160 --> 0:16:32.160 expectations get out of line, then the that will be 0:16:32.280 --> 0:16:33.000 very concerned. 0:16:33.080 --> 0:16:35.040 But Betty, isn't there an argument to be made which 0:16:35.120 --> 0:16:38.080 Neil Dutta Renaissance Macro makes that it's the direction of 0:16:38.120 --> 0:16:41.000 travel that's troubling. That inflation, for the most part has 0:16:41.000 --> 0:16:43.360 been traveling in the right way, but the labor market 0:16:43.440 --> 0:16:44.720 is traveling in the wrong way. 0:16:47.200 --> 0:16:50.760 Again, I just don't see that. I think inflation has 0:16:50.840 --> 0:16:54.280 been fairly steady. It hasn't been coming down as much 0:16:54.320 --> 0:16:58.360 as I would have expected if the current setting of 0:16:58.400 --> 0:17:01.640 monetary policy was restrictive as some seem to think. 0:17:02.000 --> 0:17:04.600 So, Betsy, just bringing me all back around about what 0:17:04.640 --> 0:17:07.080 we're going to get from the Fed governor tomorrow. Do 0:17:07.119 --> 0:17:09.840 you expect there to be any change for how we 0:17:09.960 --> 0:17:11.920 view where the path of policy is. 0:17:12.119 --> 0:17:13.600 After we hear from Jay Powell? 0:17:13.880 --> 0:17:17.399 Or will tomorrow be inconsequential as far as that goes. 0:17:17.680 --> 0:17:20.919 If where we means where we the media, where we 0:17:20.960 --> 0:17:23.399 investors think policy is going, I think there may be 0:17:23.440 --> 0:17:28.280 a change because I don't see any any chance that 0:17:28.359 --> 0:17:30.800 there's a nod toward a September cut or any promise 0:17:30.920 --> 0:17:33.399 to September cut. I think he's going to first focus 0:17:33.440 --> 0:17:39.560 primarily on the decision framework and not give any indication 0:17:39.680 --> 0:17:41.120 of where he's leaning for sept Chamber. 0:17:42.720 --> 0:17:46.159 Stay with us. Mulblanberg, Savannah's coming up off to this. 0:17:54.880 --> 0:17:57.400 John Stelfhis of w Oppenheimer, the biggest bull on Wall 0:17:57.400 --> 0:18:01.000 Street writing some profit taking without fomo to be expected 0:18:01.240 --> 0:18:04.600 with Pounds address on Friday, a catalyst capable of moving 0:18:04.640 --> 0:18:07.159 the direction of the market. John joins a staff and 0:18:07.200 --> 0:18:09.639 more junk of mornic. Good morning, John, How are you 0:18:09.680 --> 0:18:11.360 explaining the last few days to clients? 0:18:11.800 --> 0:18:14.720 Well, I would say very simply, it is to be 0:18:14.840 --> 0:18:18.280 expected that after a tremendous run up from the lows 0:18:18.280 --> 0:18:21.840 on April eighth that were tested and then all of 0:18:21.920 --> 0:18:25.080 a sudden, we came back very powerfully over the course 0:18:25.119 --> 0:18:27.280 of I guess the last three weeks or so. You 0:18:27.320 --> 0:18:30.359 can't go up every day, and we've got a great 0:18:30.440 --> 0:18:36.600 catalyst for bears, skeptics and nervous investors to take profits 0:18:36.640 --> 0:18:40.639 without FOMO right now or fear of missing out myths. 0:18:41.920 --> 0:18:45.359 What's likely a secular ball market because you have the 0:18:45.440 --> 0:18:49.760 FED on Friday at Jackson Hole. Then beyond that, everybody's 0:18:49.840 --> 0:18:52.080 looking for the first week in September where you get 0:18:52.119 --> 0:18:54.639 the jobs number. What's the story going to be or 0:18:54.640 --> 0:18:57.080 we're going to get another set of worrisome revisions. 0:18:57.840 --> 0:18:59.760 Is it going to be a big miss. 0:18:59.400 --> 0:19:02.840 In terms of expectations and all that really in the 0:19:02.880 --> 0:19:08.119 process of some really heavy duty transitions related to technology 0:19:08.200 --> 0:19:11.760 and innovation related to AI, as well as an administration 0:19:12.320 --> 0:19:14.880 that really, you know, for all the criticism it gets 0:19:14.960 --> 0:19:17.920 in some ways is dealing with cans that have been 0:19:18.880 --> 0:19:22.520 kicked down the proverbial road for decades by both sides 0:19:22.520 --> 0:19:25.400 of the aisle. And so with that kind of uncertainty, 0:19:25.480 --> 0:19:28.479 what happens is you get some turbulence in the market, 0:19:28.520 --> 0:19:31.240 but we say, don't just buy. You don't want to 0:19:31.240 --> 0:19:33.720 buy the dips just blindly. You want to look for 0:19:33.760 --> 0:19:36.679 babies that get thrown out with the bath water. For 0:19:36.880 --> 0:19:41.000 intermediate long term investors, very interesting time, I think to 0:19:41.040 --> 0:19:44.720 see things like that. And for traders in any turbulence, 0:19:44.760 --> 0:19:46.080 that's where they make their money. 0:19:46.119 --> 0:19:48.240 And so John, some paksibodies. You make two big points, 0:19:48.320 --> 0:19:50.600 one of the fat the other onnce Tex stocks. Let's 0:19:50.600 --> 0:19:53.119 deal with them individually. Want to start with the Federal serve. Okay, 0:19:53.160 --> 0:19:56.240 the minute yesterday showed just how oftside this committee was 0:19:56.240 --> 0:19:58.800 gone into the payroll report two days after the meet. Think, well, 0:19:58.840 --> 0:20:00.359 we're all trying to gage. It's just how much that 0:20:00.400 --> 0:20:03.520 payroll support has changed things on this committee. If so, 0:20:03.960 --> 0:20:06.159 by how much and how much will that change this 0:20:06.200 --> 0:20:07.920 address that we get from Sham and Pounds tomorrow. 0:20:08.200 --> 0:20:10.119 I don't think a heck of a lot really, because 0:20:10.160 --> 0:20:12.399 the FED is one thing it's shown since March of 0:20:12.440 --> 0:20:16.960 twenty twenty two, incredible sensitivity that is related to its 0:20:17.000 --> 0:20:19.760 dual mandate. So there'll be some kind of a balance 0:20:19.800 --> 0:20:22.640 here because the idea the dual mandate is relatively simple 0:20:23.000 --> 0:20:28.040 in concept, difficult to implement and practice, but essentially provide 0:20:28.040 --> 0:20:33.040 an an interest rate regime that is conducive to sustainable 0:20:33.080 --> 0:20:36.560 growth without untoward levels of inflation, and on the other 0:20:36.640 --> 0:20:39.760 side of that, without overturning the apple card for the 0:20:39.840 --> 0:20:42.800 jobs market. So I think, you know, we still expect 0:20:42.840 --> 0:20:44.960 a twenty five BIPs cut in September. 0:20:46.200 --> 0:20:48.600 We could even see a pair of or. 0:20:50.240 --> 0:20:53.639 A pair of cuts this year, with something in December 0:20:54.440 --> 0:20:56.480 another twenty five. I don't think they're going to cut 0:20:56.520 --> 0:20:58.920 a lot, but I think they make another down payment 0:20:59.600 --> 0:21:02.280 for both Wall Street and Main Street to show that 0:21:02.359 --> 0:21:06.280 indeed the FED hike cycle is beginning to end, if 0:21:06.320 --> 0:21:10.040 not at the same pace everybody wants and the independence 0:21:10.080 --> 0:21:12.679 of the Fed, John I think is an imperative. I 0:21:12.680 --> 0:21:15.800 think Powell has done an excellent job. He missed it 0:21:16.119 --> 0:21:19.880 before before March of twenty twenty two, then he got 0:21:19.880 --> 0:21:23.560 on the case. They've raised rates eleven times, been on 0:21:23.720 --> 0:21:29.200 pause I think for something like fourteen times or so 0:21:29.800 --> 0:21:34.679 in terms of the FOMC meetings and no recession yet extraordinary, 0:21:34.920 --> 0:21:38.159 and now it's going to be you know, it's he's 0:21:38.240 --> 0:21:41.359 walking the type rope like Leon Russell might have said. 0:21:41.600 --> 0:21:43.359 By the way, apparently there's a Wall Street Journal that 0:21:43.440 --> 0:21:45.600 story that said Powell swims three times a week and 0:21:45.640 --> 0:21:47.639 has a personal trainer to try to relieve some of 0:21:47.680 --> 0:21:49.920 this stress. So I guess it's working to your point. 0:21:49.920 --> 0:21:54.360