WEBVTT - Former St. Louis Fed President Jim Bullard Talks Basis Points 0:00:02.520 --> 0:00:08.960 Bloomberg Audio Studios, podcasts, radio news. Joining us now is 0:00:09.000 --> 0:00:11.879 someone who is very familiar with these types of speeches. 0:00:11.880 --> 0:00:15.400 Saint Louis FED President James Bullard, who recently was in 0:00:15.560 --> 0:00:18.760 the media talking about his preference for one hundred basis 0:00:18.760 --> 0:00:22.720 points of ray cuts this year heading into twenty twenty six, 0:00:23.040 --> 0:00:25.640 also a potential contender. I should say to be the 0:00:25.680 --> 0:00:29.120 next FED chair James Jim, how much are you seeing 0:00:29.160 --> 0:00:32.159 what we heard from Fedchair j Powell and seeing anything 0:00:32.200 --> 0:00:34.919 different that you would really say say if you were 0:00:34.960 --> 0:00:36.600 at that podium. 0:00:38.400 --> 0:00:44.800 He used the speech to solidify expectations for twenty five 0:00:44.840 --> 0:00:49.040 basis points in September. I was expecting that anyway, Marcus 0:00:49.120 --> 0:00:50.040 were expecting that. 0:00:51.240 --> 0:00:53.240 He leaned into the most. 0:00:53.000 --> 0:00:57.720 Recent labor market report, which was very soft, and so 0:00:57.760 --> 0:01:01.680 I think that's a done deal. He didn't say too 0:01:01.760 --> 0:01:05.920 much about beyond that, what you want to do with 0:01:06.000 --> 0:01:08.800 the October meeting or the December meeting. I have set 0:01:08.840 --> 0:01:13.080 one hundred basis points, you know, going into twenty twenty six, 0:01:13.120 --> 0:01:16.840 so I think you could adjust as you go forward 0:01:17.520 --> 0:01:20.560 and eventually get a full hundred basis points. But I 0:01:20.560 --> 0:01:23.400 would go slowly in order to watch the data and 0:01:23.440 --> 0:01:27.319 then on the Framework review. I'm sure much earlier in 0:01:27.319 --> 0:01:30.679 the year they had targeted that they would have the 0:01:30.800 --> 0:01:33.759 framework discussion and that they would use the Jackson Hole 0:01:33.840 --> 0:01:35.360 speech to talk. 0:01:35.160 --> 0:01:36.560 About changes for the framework. 0:01:37.000 --> 0:01:40.000 I thought those were thoughtful and they were well presented 0:01:41.000 --> 0:01:45.720 in this speech, and they're about what many have speculated on. 0:01:46.600 --> 0:01:48.320 So I think they did about as much as they 0:01:48.400 --> 0:01:49.520 can on the framework side. 0:01:51.560 --> 0:01:54.560 Jim Bowler, Tom Keenan, good morning to you. I definitely 0:01:54.640 --> 0:01:58.760 consider this my conversation of the day. You served a 0:01:58.880 --> 0:02:03.160 lengthy term the Saint Louis Fed. You have lived the 0:02:03.240 --> 0:02:07.720 decline of a greater economy decades and decades ago in 0:02:07.760 --> 0:02:12.120 the effort to provide for a resurgence Saint Louis is 0:02:12.160 --> 0:02:14.720 a next chairman of the FED, whoever that may be. 0:02:15.480 --> 0:02:19.080 Do they have to manage for two American economies, a 0:02:19.200 --> 0:02:24.679 technology driven exceptional economy and another, to use a cliche, 0:02:24.760 --> 0:02:28.960 America flat on their back. How would a chairman execute 0:02:29.320 --> 0:02:30.800 those two Americas? 0:02:31.680 --> 0:02:35.520 Everything? Yeah, I think in commonwealth distribution have become more 0:02:36.000 --> 0:02:40.080 salient topics for the FED. It's not that clear how 0:02:40.160 --> 0:02:45.280 much the FED can really do providing interest rate policy 0:02:45.400 --> 0:02:49.320 for the whole economy. If you change the rate structure, 0:02:49.360 --> 0:02:53.400 that affects everyone, not just one particular group that. 0:02:53.400 --> 0:02:55.919 You might be targeting. 0:02:56.040 --> 0:02:59.720 So I think that's been something we've had to wrestle with, 0:03:00.040 --> 0:03:03.639 and I've actually done research on it myself to try 0:03:03.639 --> 0:03:05.800 to understand it better from my point of view. 0:03:05.880 --> 0:03:08.920 So I think there's been been a theme for. 0:03:08.840 --> 0:03:12.360 A while, and that'll be an important theme in macroeconomics 0:03:12.720 --> 0:03:13.360 going forward. 0:03:15.320 --> 0:03:17.720 Mike McKee's got a lot of smarter questions than me 0:03:17.840 --> 0:03:19.960 on the immediacy of this speech. I'm going to ask 0:03:20.080 --> 0:03:25.160 one more distant questions, Jim Bollard. You're at Purdue executing 0:03:25.400 --> 0:03:32.079 online technology education every single day. How do you define 0:03:32.200 --> 0:03:37.800 the new technology productivity that America faces? Is it enough 0:03:38.120 --> 0:03:41.080 to save us? Is it enough to really add on 0:03:41.600 --> 0:03:43.480 to our present GDP. 0:03:45.000 --> 0:03:45.400 Oh yeah. 0:03:45.480 --> 0:03:51.000 I think that the AI boom is, you know, it's 0:03:51.040 --> 0:03:55.119 a general purpose technology that will diffuse through the economy. 0:03:55.120 --> 0:03:57.680 I think the key question is how fast does that 0:03:57.880 --> 0:04:02.480 actually diffuse? And sometimes marcus can get ahead of themselves 0:04:02.480 --> 0:04:05.320 and think it's going to happen sooner. Sometimes they're too 0:04:05.400 --> 0:04:09.400 late and it happens faster than markets think. But nevertheless, 0:04:10.520 --> 0:04:13.080 anyway you look at it, It's an important technology. It 0:04:13.120 --> 0:04:17.360 can drive productivity, and I think in higher education is 0:04:17.520 --> 0:04:19.640 one of the places where you can really have the 0:04:19.680 --> 0:04:23.840 biggest impact. We put a AI requirement in at the 0:04:23.920 --> 0:04:27.200 Dannuel School here for every single student, and we're trying 0:04:27.200 --> 0:04:30.919 to expand that to all produce. So I think that 0:04:31.040 --> 0:04:34.599 just shows you how important this technology is. 0:04:35.839 --> 0:04:38.680 Jim, it's Mike McKee. I have a question about sort 0:04:38.680 --> 0:04:42.440 of the process involved in this speech. The chairman is 0:04:42.839 --> 0:04:45.760 giving his own speech, but basically when he says it's 0:04:45.839 --> 0:04:49.520 time to maybe adjust policy, he's speaking for the entire 0:04:49.640 --> 0:04:54.080 Open Market Committee. Going into a speech like this, would 0:04:54.120 --> 0:04:56.359 he have polled everybody? Does he think he has the 0:04:56.480 --> 0:04:59.880 votes for that, because we've been speaking with FED officials 0:05:00.279 --> 0:05:03.239 in Jackson Hole and there are still some who were saying, well, 0:05:03.360 --> 0:05:05.000 we're not sure that we need to do that. 0:05:05.120 --> 0:05:09.960 Yet He's going to report on the center of gravity 0:05:09.640 --> 0:05:12.480 of the committee, even though there might be people that 0:05:12.960 --> 0:05:17.159 have misgivings. At the June meeting, the committee had a 0:05:17.240 --> 0:05:21.040 median dot dot plot of two rate reductions by the 0:05:21.120 --> 0:05:26.479 end of the year, and I think the minutes, you know, 0:05:26.600 --> 0:05:29.440 suggested something that was more like fifty to fifty, but 0:05:29.560 --> 0:05:32.599 then the labor market report came in. I think that 0:05:32.720 --> 0:05:35.760 tilted the balance, so he could have he could have 0:05:35.839 --> 0:05:38.720 pushed back a little bit. I think financial markets were 0:05:38.800 --> 0:05:41.640 expecting him to come be a little bit more hawkish 0:05:41.680 --> 0:05:45.120 here and try to set up a fifty to fifty 0:05:45.160 --> 0:05:49.120 meeting where you would wait and see for the rest 0:05:49.160 --> 0:05:51.599 of the data to come in. But I don't think 0:05:51.640 --> 0:05:54.359 that's where the center of gravity is on the committee, so. 0:05:55.800 --> 0:05:57.479 He went ahead and leaned in. 0:05:58.240 --> 0:06:00.160 I thought there was quite a bit of talk about 0:06:00.160 --> 0:06:03.880 the labor market at the at the beginning. You know, 0:06:03.920 --> 0:06:07.039 you could have could have been a little more, you know, 0:06:07.160 --> 0:06:10.040 a little more emphasis on the low unemployment rate, for instance. 0:06:10.120 --> 0:06:12.480 And you know he did come out at the end 0:06:12.520 --> 0:06:14.040 of that discussion saying, well, it's. 0:06:13.920 --> 0:06:16.240 In balance, but we're a little bit nervous. 0:06:16.279 --> 0:06:22.680 So I think, you know, I think he's accurately describing 0:06:22.800 --> 0:06:24.279 where the bulk of the committee is. 0:06:26.640 --> 0:06:29.640 Well, where would you be on this question, because we've 0:06:29.680 --> 0:06:32.960 heard FED officials for some time now saying, yes, we 0:06:33.080 --> 0:06:36.560 had poor job creation in recent months, but the unemployment rate, 0:06:36.600 --> 0:06:40.040 as you just mentioned, has been low, and they've described 0:06:40.120 --> 0:06:42.560 the labor market as solid. Now this seems to be 0:06:42.600 --> 0:06:45.279 sort of a major shift in the way they view 0:06:45.480 --> 0:06:49.599 the outlook and the sort of balance between the two mandates. 0:06:51.120 --> 0:06:54.040 Yeah, what he did at the end of that discussion, 0:06:54.080 --> 0:06:55.800 he said, well, it's in balance. 0:06:56.200 --> 0:06:58.960 But I think the committee's nervous. 0:06:59.640 --> 0:07:03.120 I think it has been slowing, and I think the 0:07:03.160 --> 0:07:07.520 policy rate is moderately restrictive. Is maybe you know, one 0:07:07.600 --> 0:07:11.200 hundred and twenty five basis points above the neutral rate. 0:07:11.320 --> 0:07:13.920 Is that really where you want to be in this circumstance. 0:07:14.000 --> 0:07:17.000 I think the answers no, So you can come down 0:07:17.120 --> 0:07:22.440 some and still have moderately restrictive monetary policy that puts 0:07:22.520 --> 0:07:26.440 gentle downward pressure on inflation. And then the other thing 0:07:26.520 --> 0:07:30.480 I think has happened is that this argument from Chris 0:07:30.520 --> 0:07:35.480 Waller and others on the committee that the you know, 0:07:35.520 --> 0:07:38.200 you should look through the one time increase in goods 0:07:38.240 --> 0:07:39.920 prices coming from tariffs. 0:07:40.880 --> 0:07:42.320 I think that's carrying the day. 0:07:42.560 --> 0:07:46.200 And you know, then he emphasized that inflation expectations remain 0:07:46.280 --> 0:07:49.600 anchored and so on, and so I think that sets 0:07:49.680 --> 0:07:52.400 up a modest move downward in September. 0:07:54.280 --> 0:07:56.440 Jim, We've been talking with you for years and you 0:07:56.480 --> 0:08:00.320 are very focused on the discipline of economics. Right now, 0:08:00.360 --> 0:08:03.520 I'm looking at the headlines that are crossing from the 0:08:03.560 --> 0:08:06.800 past hour. The top one, of course, is a Jerome 0:08:06.840 --> 0:08:10.040 Powell FED chair saying that shifting risks may warrant adjusting rates. 0:08:10.200 --> 0:08:12.440 The second one is that Trump says that he'll fire 0:08:12.480 --> 0:08:15.600 the Fed's Lisa's Cook if she doesn't resign as someone 0:08:15.680 --> 0:08:18.600 who is thought to be a contender to become the 0:08:18.640 --> 0:08:21.760 next FED chair. Jim, how much does it concern you 0:08:21.800 --> 0:08:25.560 that there's this increasing political noise around the seat and 0:08:25.600 --> 0:08:27.920 exactly what the path of policy forward looks like. 0:08:28.800 --> 0:08:31.720 Yeah, I want to see due process around something like this. 0:08:32.760 --> 0:08:34.920 I want to see you know, you can make. 0:08:34.840 --> 0:08:39.000 Charges against anybody about anything, I guess, and you know 0:08:39.520 --> 0:08:43.680 the person can answer the charges, and the dojken decide 0:08:43.720 --> 0:08:46.280 what they want to do and so on. So I 0:08:46.320 --> 0:08:49.520 think this has, you know, should have longer to play 0:08:49.600 --> 0:08:54.480 out before you took that step. Otherwise it's just is 0:08:54.559 --> 0:08:58.400 kind of the wild West and sheet reinstated later, I 0:08:58.440 --> 0:09:01.120 guess or something if there wasn't a conviction. 0:09:01.280 --> 0:09:03.000 So seems messy to me. 0:09:03.920 --> 0:09:07.719 I think these kinds of these kinds of charges are 0:09:07.720 --> 0:09:11.480 made from time to time against various officials around Washington, 0:09:11.600 --> 0:09:13.959 but I'd like to see due process there. 0:09:15.920 --> 0:09:19.199 Jim, there's another question here, and aside from Governor Cook 0:09:19.240 --> 0:09:23.960 and what happens there, about how the perception of political 0:09:23.960 --> 0:09:28.720 interference handles the market reaction to Fed policy. There is 0:09:28.720 --> 0:09:31.400 this perception that that could cause the dollar a week 0:09:31.440 --> 0:09:33.440 in more because there is more of an emphasis on 0:09:33.480 --> 0:09:36.680 supporting growth and supporting the label market than containing inflation. 0:09:37.120 --> 0:09:39.280 And some people are worried that if the Fed does 0:09:39.360 --> 0:09:42.360 cut by fifty seventy five one hundred basis points, as 0:09:42.360 --> 0:09:45.000 you were talking about this past week, that you could 0:09:45.000 --> 0:09:47.560 see a move up in long end yields akin to 0:09:47.600 --> 0:09:49.880 what we saw last year. If you are on the 0:09:49.880 --> 0:09:53.280 FED currently and you did see yields along the long 0:09:53.400 --> 0:09:57.240 end moving up in response to near term FED rate cuts, 0:09:57.600 --> 0:09:58.319 what would you do? 0:10:00.280 --> 0:10:01.880 That would definitely be a concern. 0:10:02.000 --> 0:10:05.560 And that's the tricky part of this business is that 0:10:06.200 --> 0:10:09.360 you know, you think you're pursuing a dubbish policy at 0:10:09.400 --> 0:10:12.240 the short end, but the long end goes up because 0:10:12.240 --> 0:10:17.720 inflation expectations start to rise, Markets start to lose confidence 0:10:17.760 --> 0:10:20.520 in the FED and the credibility of the FED, and 0:10:20.920 --> 0:10:25.240 that can go very very badly, and unfortunately fairly quickly. 0:10:25.360 --> 0:10:27.920 So I think you do have to be come. You 0:10:27.960 --> 0:10:29.280 do have to be careful here. 0:10:30.040 --> 0:10:32.719 But I'm saying that I think that committee has room 0:10:32.760 --> 0:10:36.400 to maneuver if they proceed carefully over the remainder of 0:10:36.440 --> 0:10:39.160 twenty five and the first half of twenty twenty six. 0:10:40.800 --> 0:10:42.520 I don't want to get out front of the debate 0:10:42.600 --> 0:10:45.040 here at the moment Jim Bullard, but what I would 0:10:45.040 --> 0:10:47.040 say to Chairman Bullart and Mike McKee, I got to 0:10:47.080 --> 0:10:49.040 turn to you. You and I used to sit and 0:10:49.080 --> 0:10:51.760 look at the dots and go which one is Bullart? 0:10:52.360 --> 0:10:53.120 I mean you and I do. 0:10:53.280 --> 0:10:55.439 It's fairly easy after a while to figure out. 0:10:55.520 --> 0:11:00.360 I've Jim, Chairman Bullard, is your first act if you 0:11:00.440 --> 0:11:02.959 take over the FED as your first act to get 0:11:03.040 --> 0:11:04.640 rid of the dots. 0:11:05.520 --> 0:11:07.840 Yeah. I've threatened to well. 0:11:07.840 --> 0:11:10.760 As president, I threatened to withdraw from the dot plot. 0:11:11.240 --> 0:11:13.600 I think this could be done better. This was discussed 0:11:13.640 --> 0:11:16.640 at the Framework conference and former chair. 0:11:16.520 --> 0:11:21.360 Of Bernanke gave a very nice presentation and talk about 0:11:22.160 --> 0:11:26.000 a quarterly monetary policy report, get more organized about it, 0:11:26.040 --> 0:11:27.360 put out a forecast. 0:11:27.640 --> 0:11:29.000 I think all of that could be done. 0:11:29.160 --> 0:11:32.800 I've advocated that for a long time, and so I 0:11:32.840 --> 0:11:35.640 think that would sort of clear up some of the 0:11:35.679 --> 0:11:37.640 misconceptions around the dot plot. 0:11:39.080 --> 0:11:41.040 Okay, this is really really important for US. Is Jim 0:11:41.080 --> 0:11:43.000 Bullard made He can have a history i'd say a 0:11:43.040 --> 0:11:48.439 decade ago with a small, short paper forceful on regime change. 0:11:48.920 --> 0:11:51.880 How do we get a new FED away from the 0:11:51.960 --> 0:11:55.720 guessing and the certitude and the silly parlor game of it, 0:11:55.840 --> 0:11:59.040 Jim Bullard, with great respect, how do we get to 0:11:59.760 --> 0:12:04.240 that more discipline study around the game of the FED 0:12:04.679 --> 0:12:07.880 and regime change? 0:12:08.160 --> 0:12:11.920 Yeah, I think regime switching is a great way to 0:12:12.000 --> 0:12:16.560 think about the global economy and the US economy and 0:12:16.600 --> 0:12:22.000 how it operates. There are relatively long periods of time 0:12:22.200 --> 0:12:26.199 where you might have let's say, slow growth and very 0:12:26.240 --> 0:12:28.600 low interest rates, and then you might switch to another 0:12:28.679 --> 0:12:32.319 time with faster growth and higher interist rates. I think 0:12:32.480 --> 0:12:37.480 understanding that and understanding how that affects policy choices is 0:12:37.480 --> 0:12:41.120 a great thing to study further and talk about further 0:12:42.400 --> 0:12:45.719 in the years ahead. So you know, I think it's 0:12:45.800 --> 0:12:48.120 very salient for what the Committee does. 0:12:50.240 --> 0:12:54.480 Jim Bullard, FED, former FED President of the Saint Louis Bank, 0:12:54.720 --> 0:12:57.440 will be sticking with us. Right now. In markets, you 0:12:57.440 --> 0:13:00.720 can see a cheering across Wall Street to the opening 0:13:00.880 --> 0:13:04.440 the door to a potential rate cut next month. Potentially more. 0:13:04.480 --> 0:13:08.640 You could see equities surging higher across the different of 0:13:08.679 --> 0:13:11.840 the different indexes, led by some of the more interest 0:13:11.920 --> 0:13:15.080 rate sensitive sectors. The Russell two thousand. You can see 0:13:15.120 --> 0:13:18.200 ten year yields down now about six basis points, even 0:13:18.240 --> 0:13:21.000 more at the front end, down ten basis points. As 0:13:21.120 --> 0:13:24.600 people look to the prospect of the FED looking through 0:13:24.840 --> 0:13:27.400 some of the inflation from tariffs, you could see the 0:13:27.440 --> 0:13:31.880 dollar markedly weaker one p seventeen on the euro dollar cross, 0:13:32.080 --> 0:13:35.000 up on nine tenths of a percent. In terms of 0:13:35.240 --> 0:13:38.120 just the percentage rise up about a basis point. And 0:13:38.160 --> 0:13:41.080 there's a real question here about what this means going forward. 0:13:41.160 --> 0:13:43.560 City Wealth Chief Investment Officer Kate Moore is still with 0:13:43.679 --> 0:13:45.760 us freezing a little bit because it is a little 0:13:45.760 --> 0:13:48.280 bit chilly here, nippy in the morning. I am curious 0:13:48.320 --> 0:13:52.440 though about what you're hearing in terms of prospective FED 0:13:52.559 --> 0:13:55.400 chairs and the politicization of the Federal Reserve. If this 0:13:55.559 --> 0:13:58.480 is a FED willing to air on the duttish side, 0:13:58.840 --> 0:14:02.720 does that mean something that materially is higher with respect 0:14:02.720 --> 0:14:05.319 to returns and with respect to risk appetite. 0:14:05.559 --> 0:14:08.800 Look, markets love certainty, and our investors love certainty, and 0:14:08.840 --> 0:14:11.360 we want a certainty in terms of the process around 0:14:11.520 --> 0:14:14.880 making monetary policy decisions. So I don't have any insight 0:14:14.960 --> 0:14:18.000 into who might be named next FED chair, but what 0:14:18.040 --> 0:14:19.920 I will say is if there is a sense that 0:14:20.000 --> 0:14:22.400 the process is changing, I think that will lead to 0:14:22.440 --> 0:14:25.560 some pause and perhaps some volatility in the market. You know, 0:14:25.640 --> 0:14:28.120 our expectation is that regardless of who takes the next 0:14:28.200 --> 0:14:30.400 chair and what its seats are filled, we'll have a 0:14:30.440 --> 0:14:34.040 continuous continuation of the process of being data dependent, of 0:14:34.080 --> 0:14:36.920 being thoughtful, of having you know, great debate and discussion 0:14:37.000 --> 0:14:40.520 amongst the FED governors and their staff. But if that 0:14:40.560 --> 0:14:43.240 were to change, I think that would introduce volatility. I 0:14:43.240 --> 0:14:45.680 think the most important thing for us right now is 0:14:45.720 --> 0:14:48.920 to recognize that so much of the data is going 0:14:49.000 --> 0:14:51.920 to be mixed through the back half of the year, 0:14:52.160 --> 0:14:54.120 and that's going to have a huge impact, I think 0:14:54.160 --> 0:14:56.640 in terms of investor sentiment, and I would suggest even 0:14:56.680 --> 0:14:58.560 more crowding in some of the favored trades. 0:14:58.880 --> 0:15:01.200 We tend to get reactions like we're seeing in the 0:15:01.200 --> 0:15:03.880 market now on a day when news breaks, But I 0:15:03.920 --> 0:15:07.840 think we're probably going to see extended rally here because 0:15:07.880 --> 0:15:11.840 people are anticipating rate cuts. Does that worry you in 0:15:11.960 --> 0:15:17.800 terms of a bubble forming or some sort of excess 0:15:17.880 --> 0:15:22.760 spending that would push up inflation because of inflated asset prices. 0:15:23.080 --> 0:15:25.320 Yeah, so I have been a little bit worried actually 0:15:25.360 --> 0:15:27.880 about positioning. I feel like I've been a little bit 0:15:27.880 --> 0:15:30.200 more cautious frankly than some of my peers on the 0:15:30.200 --> 0:15:33.920 street and saying, you know, people own the highest quality 0:15:33.960 --> 0:15:36.200 parts of the market. It's quite crowded. Some of the 0:15:36.240 --> 0:15:38.120 shorts when we're looking at some of the fast money 0:15:38.160 --> 0:15:42.280 a community are very similar across the board, and we've 0:15:42.320 --> 0:15:45.760 seen people kind of shrug off concerns around economic growth 0:15:45.880 --> 0:15:49.600 or even the technological disruption across a lot of industries. 0:15:49.920 --> 0:15:52.680 We've seen significant improvements in terms of the earnings or 0:15:52.720 --> 0:15:56.520 vision ratios, City Economic Surprise index has moved up, you know, 0:15:56.600 --> 0:15:59.040 and all of this together, I think sets us up 0:15:59.400 --> 0:16:02.720 for you a little bit of weakness if there was 0:16:02.840 --> 0:16:04.720 a bad data point or if there was a bit 0:16:04.760 --> 0:16:09.240 of a shock where there's a lot of consensus positioning, well, Jim. 0:16:09.200 --> 0:16:11.160 Jim Bullard, I'd love to bring you back in here. 0:16:11.360 --> 0:16:13.840 How much does that concern you that sort of a 0:16:13.960 --> 0:16:17.880 bias to cut rates could cause uset price inflation to 0:16:18.000 --> 0:16:20.560 get ahead maybe of where the economy is. 0:16:22.920 --> 0:16:25.960 Yeah, equities, except for just recently, equities have been doing 0:16:26.040 --> 0:16:30.440 very well as they've digested the new trade policy of 0:16:30.480 --> 0:16:32.480 the US and how that's going to play out. 0:16:32.480 --> 0:16:32.960 Globally. 0:16:33.440 --> 0:16:37.040 You've got the AI boom going on, really a driver 0:16:38.600 --> 0:16:42.160 for the big tech companies, and you know, I do 0:16:42.240 --> 0:16:45.920 get concerned that things we get ahead of ourselves. Sure 0:16:45.960 --> 0:16:49.760 it's a great technology and everything, but how fast is 0:16:49.800 --> 0:16:54.280 it really going to interfuse into actual productivity. 0:16:53.840 --> 0:16:56.160 In the economy. But overall, I would. 0:16:55.960 --> 0:17:01.200 Say, you know, it's possible that we'll get higher productivity 0:17:01.240 --> 0:17:05.719 growth ahead and really a good outcome for the second 0:17:05.720 --> 0:17:08.400 half of the twenty twenties here, much as we had 0:17:08.400 --> 0:17:10.240 in the half of the nineteen nineties. 0:17:11.200 --> 0:17:13.920 All right, let me talk to the chief investment strategist 0:17:13.920 --> 0:17:16.200 Purdue University right now. I'm going to do a double 0:17:16.200 --> 0:17:19.400 barreled question, first to doctor Bullard and then to doctor Moore. 0:17:19.520 --> 0:17:22.119 Jim Bullard as simple as I can all of my 0:17:22.240 --> 0:17:27.040 conversations rather Jakomnagel Bundesbank, Kate Moore City Group and on 0:17:27.160 --> 0:17:30.960 and on is about an elevated or persistent nominal GDP. 0:17:31.680 --> 0:17:34.399 Do you frame out that we're going to have an 0:17:34.440 --> 0:17:38.560 animal spirit in the country, whether it's better real growth okay, 0:17:38.600 --> 0:17:43.120 inflation too much inflation, okay, real growth, But what we're 0:17:43.119 --> 0:17:47.240 talking about forward is an elevated nominal GDP. 0:17:51.200 --> 0:17:53.119 If you think real growth is going to be faster 0:17:53.280 --> 0:17:56.760 than yes, nominal gp growth would be faster even if 0:17:56.800 --> 0:17:59.920 the Fed hits it's two percent inflation target over that period. 0:18:00.119 --> 0:18:05.879 So yeah, you would see faster nominal GDP growth. 0:18:07.880 --> 0:18:09.320 I mean, I look at this, Kate More, and it's 0:18:09.320 --> 0:18:11.439 a higher the matter, I'm really surprised by your comments. 0:18:11.440 --> 0:18:14.640 I think they're extremely important our back to the US quality, 0:18:15.040 --> 0:18:17.760 et cetera. But it sounds like City Group is modeling 0:18:17.800 --> 0:18:21.760 out through all the emotion, the fear, the turmoil, the 0:18:21.800 --> 0:18:24.320 political debate, as we just signed next to the eight 0:18:24.320 --> 0:18:27.640 foot bear in the lobby. The answer here is you're 0:18:27.800 --> 0:18:31.040 modeling out that will be okay and there'll be a 0:18:31.040 --> 0:18:34.119 better nominal GDP. It leads into revenue, et cetera. 0:18:34.480 --> 0:18:36.880 Look, I think we're going to have an okay growth environment. 0:18:36.960 --> 0:18:38.600 But one thing we keep on talking about is sort 0:18:38.600 --> 0:18:40.560 of the K shape right. There are the haves and 0:18:40.640 --> 0:18:44.040 have nots across all the different industries and different consumer groups, 0:18:44.359 --> 0:18:47.040 and so I don't think that we want to assume 0:18:47.040 --> 0:18:50.000 that everyone is going to experience strong growth in the 0:18:50.040 --> 0:18:52.200 second half the year. And we're seeing this, of course 0:18:52.200 --> 0:18:54.600 in the consumer companies. We're seeing this across you know, 0:18:54.640 --> 0:18:58.000 segments of different households. We're seeing this even in technology companies, 0:18:58.119 --> 0:19:00.680 those that have made the investments that are reaping dividends 0:19:00.720 --> 0:19:04.280 from it. So yes, we may have these good headline numbers, 0:19:04.320 --> 0:19:06.320 but I think as investors we have to really pay 0:19:06.359 --> 0:19:08.679 attention to what's going on beneath the surface, and I 0:19:08.680 --> 0:19:11.960 think there's an opportunity for differentiation over the next couple quarters. 0:19:12.680 --> 0:19:15.280 We are looking at a market that is moving, We 0:19:15.320 --> 0:19:18.160 are looking at headlines that are coming. And I want 0:19:18.160 --> 0:19:21.199 to bring this to you that Canada is planning to 0:19:21.240 --> 0:19:25.359 remove retaliatory tariffs on many US products in an olive 0:19:25.400 --> 0:19:29.439 branch to President Trump, and there is this feeling that 0:19:29.600 --> 0:19:32.360 maybe some of the tariffs are fungible, that we are 0:19:32.400 --> 0:19:34.800 going to see some of them removed or used as 0:19:34.800 --> 0:19:35.760 a negotiating routate. 0:19:36.000 --> 0:19:38.200 I strongly agree with what you're saying this was sort 0:19:38.240 --> 0:19:40.320 of out there in the ether last night, but to 0:19:40.320 --> 0:19:44.040 see these headlines is another example we adjust well. 0:19:44.040 --> 0:19:45.920 And that's one of the reasons why there has been 0:19:45.960 --> 0:19:48.440 a focus on the labor market. Fed Chair to Rome 0:19:48.520 --> 0:19:53.560 Powell speaking just moments ago, really focusing on the complications 0:19:53.600 --> 0:19:56.320 for the labor market overall. 0:19:56.520 --> 0:19:58.960 While the labor market appears to be imbalance, it is 0:19:59.000 --> 0:20:02.120 a curious kind of that results from a marked slowing 0:20:02.160 --> 0:20:06.359 in both the supply of and demand for workers. This 0:20:06.560 --> 0:20:10.680 unusual situation suggests that downside risks to employment are rising, 0:20:11.720 --> 0:20:14.520 and if those risks materialize, they can do so quickly 0:20:14.600 --> 0:20:17.600 in the form of sharply higher layoffs and rising unemployment. 0:20:19.680 --> 0:20:22.600 Some people might say that FED Chair J. Powell is 0:20:22.640 --> 0:20:25.520 coming around the Chris Waller view of things, that there 0:20:25.600 --> 0:20:29.000 is this feeling of potentially the weakening and the labor 0:20:29.040 --> 0:20:32.240 marketing taking priority over inflation at a time where some 0:20:32.280 --> 0:20:35.280 of these tariffs are put on taken off, and that's 0:20:35.280 --> 0:20:37.640 what we're seeing a little bit in terms of negotiation 0:20:37.760 --> 0:20:38.240 this morning. 0:20:38.280 --> 0:20:39.760 Well, the given the take and it goes back to 0:20:39.840 --> 0:20:42.800 Kate Moore's optimism on investment in America, and you see 0:20:42.840 --> 0:20:45.639 it a dollar thank you for putting up that wonderful 0:20:46.119 --> 0:20:49.640 dollar Larny chart and you see things adjusts and you wonder, Okay, 0:20:49.640 --> 0:20:51.679 what do we do with China, what do we do 0:20:51.760 --> 0:20:57.120 with Mexico with the produce debate and pharmaceuticals with Europe? 0:20:57.320 --> 0:21:01.159 Guess what there may be constructive supp rises. Is a 0:21:01.359 --> 0:21:04.479 certitude of the tariff debate gives way, It makes it 0:21:04.560 --> 0:21:08.080 easier for the next chairman and maybe maybe I'll get 0:21:08.080 --> 0:21:10.240 out of triple leverge. Doll cash is fifty fifty. 0:21:10.400 --> 0:21:12.280 Oh, now is the time to definitely do it? Yeah, 0:21:12.320 --> 0:21:13.720 for sure, Jim. 0:21:13.880 --> 0:21:15.240 Before we let. 0:21:15.040 --> 0:21:17.119 You get on with your day, I do want to 0:21:17.160 --> 0:21:20.880 finish there that have we seen from tariffs that there 0:21:20.960 --> 0:21:23.719 is this fungibility there that they get put on, they 0:21:23.760 --> 0:21:26.240 get taken off, and that right now the path of 0:21:26.280 --> 0:21:29.159 travel is lower from where we were maybe on April second, 0:21:29.280 --> 0:21:32.439 not higher again, and so you can look through in 0:21:32.480 --> 0:21:36.320 another kind of way some of the inflationary impact. 0:21:37.119 --> 0:21:39.680 Yeah, I mean, I think it was great to reach 0:21:39.720 --> 0:21:41.280 a pluminary deal with the EU. 0:21:41.440 --> 0:21:44.480 That's one of the bigger blocks in the world. 0:21:45.320 --> 0:21:50.000 China put on the back burner markets like that for now, 0:21:50.960 --> 0:21:51.600 and then you've. 0:21:51.440 --> 0:21:52.680 Got Canada and Mexico. 0:21:53.720 --> 0:21:59.200 Looks like we're headed toward renegotiation of the USMCA, which 0:21:59.680 --> 0:22:03.080 I think would be a fine thing to revisit. Was 0:22:03.119 --> 0:22:07.720 scheduled for twenty twenty six anyway, so it's maybe a 0:22:07.800 --> 0:22:11.680 little bit more settled than it was earlier this year, 0:22:11.960 --> 0:22:14.960 and I think markets are liking that. 0:22:14.960 --> 0:22:19.080 That's making it easier to plan. So far, so good 0:22:19.200 --> 0:22:19.600 on that. 0:22:22.119 --> 0:22:25.680