1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:35,840 Speaker 2: Terminal and the Bloomberg Business app. 10 00:00:36,560 --> 00:00:39,000 Speaker 3: You and Nuclear Watchdog Saying in Richmond. 11 00:00:39,080 --> 00:00:42,519 Speaker 1: Facilities in Iran have taken direct military strikes. 12 00:00:42,600 --> 00:00:44,239 Speaker 3: Joining us now is I'm so pleased to. 13 00:00:44,240 --> 00:00:49,480 Speaker 1: Say the IAEA Director General, Raphael Grossi, Director General, You've 14 00:00:49,520 --> 00:00:51,640 Speaker 1: had a very busy couple of weeks. 15 00:00:51,640 --> 00:00:53,360 Speaker 3: Thank you so much for making time for us. 16 00:00:53,479 --> 00:00:56,400 Speaker 1: I wanted to start with what damage has been done 17 00:00:56,520 --> 00:00:58,800 Speaker 1: and what remains operational in Iran. 18 00:00:59,640 --> 00:01:01,640 Speaker 4: Well, thank you very much. A pleasure to be with you. 19 00:01:03,040 --> 00:01:06,160 Speaker 5: There has been a number of There have been a 20 00:01:06,240 --> 00:01:09,080 Speaker 5: number of attacks since the beginning of the operation. First 21 00:01:09,120 --> 00:01:12,600 Speaker 5: of all, a very important facility in Athans was badly 22 00:01:12,680 --> 00:01:19,560 Speaker 5: hit with a full enrichment operating hall being destroyed completely 23 00:01:19,640 --> 00:01:26,680 Speaker 5: above ground means that it means then the electrical substation 24 00:01:27,120 --> 00:01:33,560 Speaker 5: and power infrastructure in this big facility also being taken 25 00:01:33,560 --> 00:01:39,160 Speaker 5: out with a direct impact on a very important underground 26 00:01:39,560 --> 00:01:43,800 Speaker 5: enrichment facility which is which is also there because of 27 00:01:43,800 --> 00:01:47,319 Speaker 5: the sudden loss of power that caused of course immediate 28 00:01:47,480 --> 00:01:51,160 Speaker 5: damage to these very delicate systems that the ultra centrifugues 29 00:01:51,240 --> 00:01:54,000 Speaker 5: that produce the enriched uranium are. 30 00:01:54,480 --> 00:01:55,360 Speaker 4: So this is one thing. 31 00:01:55,960 --> 00:02:00,880 Speaker 5: Is Soahan, another very important nuclear compound which was repeatedly 32 00:02:01,320 --> 00:02:05,920 Speaker 5: hit with a few buildings being affected. The one that 33 00:02:06,720 --> 00:02:11,920 Speaker 5: has not sustained a similar degree of damage seems to 34 00:02:11,919 --> 00:02:16,240 Speaker 5: be so far a very important facility which is also 35 00:02:17,000 --> 00:02:23,560 Speaker 5: has the most important and sensitive parts secuted underground deep 36 00:02:23,680 --> 00:02:27,080 Speaker 5: in the mountains, which is the facility at four door today. 37 00:02:27,520 --> 00:02:30,600 Speaker 6: So you mentioned Isfahan, So if I could just jump in, 38 00:02:31,400 --> 00:02:33,919 Speaker 6: is the four hundred and nine kilogram stockpile of highly 39 00:02:34,040 --> 00:02:38,519 Speaker 6: urined uranium still safely underground and that site. 40 00:02:38,800 --> 00:02:43,120 Speaker 5: Well, to say safely, I'm not so sure what could 41 00:02:43,120 --> 00:02:44,240 Speaker 5: be could be the case. 42 00:02:44,680 --> 00:02:46,320 Speaker 4: Let me say, let me say one thing. 43 00:02:46,160 --> 00:02:49,360 Speaker 5: Which is very very important. It is it is in principle, 44 00:02:49,480 --> 00:02:52,280 Speaker 5: it is there. It is stored there, as you can imagine, 45 00:02:52,680 --> 00:02:55,200 Speaker 5: at a time of war. At a time of war, 46 00:02:56,280 --> 00:03:01,600 Speaker 5: all nuclear sites are closed, so are in inspecters who 47 00:03:01,680 --> 00:03:06,800 Speaker 5: are still i must say still in Iran, although they 48 00:03:06,800 --> 00:03:09,720 Speaker 5: are in a protected place as you can imagine, but 49 00:03:09,800 --> 00:03:15,079 Speaker 5: they are not inspecting no inspection, normal activity can take place. 50 00:03:15,240 --> 00:03:19,560 Speaker 5: We assume we have not seen anything that would suggest 51 00:03:20,320 --> 00:03:23,840 Speaker 5: that the stockpile has been moved, but of course this 52 00:03:24,480 --> 00:03:28,200 Speaker 5: might need to be reconfirmed as soon as we have access. 53 00:03:28,720 --> 00:03:30,840 Speaker 5: One has to say that Iran is aware of the 54 00:03:30,880 --> 00:03:36,960 Speaker 5: fact that this stockpile needs to be there under iaa 55 00:03:37,240 --> 00:03:38,440 Speaker 5: constant supervision. 56 00:03:38,800 --> 00:03:41,440 Speaker 6: Well, even before hostilities began, Iran had told you they 57 00:03:41,440 --> 00:03:45,440 Speaker 6: would implement special measures to protect its enriched uranium stockpile. 58 00:03:45,520 --> 00:03:48,640 Speaker 6: What specifically are those special measures and how are they 59 00:03:48,720 --> 00:03:50,960 Speaker 6: impacting your team that's on the ground. 60 00:03:51,680 --> 00:03:52,200 Speaker 7: We don't know. 61 00:03:52,720 --> 00:03:56,160 Speaker 5: We have been informed, as you rightly say, and I 62 00:03:56,320 --> 00:04:00,200 Speaker 5: was also totally one of my last personal meetings with 63 00:04:00,360 --> 00:04:06,000 Speaker 5: a foreign minister, doctor Abbas ACTI, that in case something happened, 64 00:04:07,160 --> 00:04:11,680 Speaker 5: Iran would take measures to protect its material, equipment and 65 00:04:11,760 --> 00:04:15,480 Speaker 5: so forth. But we haven't been informed of anything in detail. 66 00:04:15,560 --> 00:04:19,080 Speaker 5: We have reminded, and I have personally reminded in a 67 00:04:19,160 --> 00:04:23,080 Speaker 5: letter to Foreign Minister or ACGLY that there are obligations 68 00:04:23,240 --> 00:04:26,480 Speaker 5: that need to be observed and that of course we 69 00:04:26,600 --> 00:04:31,120 Speaker 5: would be available in case they want to share with us, 70 00:04:31,960 --> 00:04:34,360 Speaker 5: as they should, what they are planning to do. If 71 00:04:34,400 --> 00:04:36,960 Speaker 5: they are planning to do anything, we don't know what 72 00:04:37,000 --> 00:04:40,120 Speaker 5: these protective additional measures could be. 73 00:04:40,640 --> 00:04:42,200 Speaker 3: Even before the hostilities. We know. 74 00:04:42,279 --> 00:04:46,040 Speaker 6: Your inspectors also reported that there was no systemic weapons programmed. 75 00:04:46,080 --> 00:04:49,880 Speaker 6: Does that mean that no smoking gun existed to justify 76 00:04:49,880 --> 00:04:53,960 Speaker 6: what we're seeing right now with preemptive invasion, Well, I. 77 00:04:53,880 --> 00:04:57,359 Speaker 5: Don't know the metric of a smoking gun. How you 78 00:04:57,440 --> 00:04:58,600 Speaker 5: would define that. 79 00:05:00,440 --> 00:05:01,640 Speaker 3: To making a nuclear weapons? 80 00:05:01,880 --> 00:05:03,880 Speaker 4: I have said, let me get to that. 81 00:05:04,279 --> 00:05:08,840 Speaker 5: I have said that no country in the world is 82 00:05:09,080 --> 00:05:13,640 Speaker 5: enriching uranium at this level of sixty percent, which is 83 00:05:13,680 --> 00:05:18,560 Speaker 5: technically almost equivalent of ninety percent, which is needed to 84 00:05:18,640 --> 00:05:20,479 Speaker 5: have a nuclear weapon. 85 00:05:21,000 --> 00:05:22,960 Speaker 4: At the same time, we are inspectors. 86 00:05:22,960 --> 00:05:28,520 Speaker 5: We are not political analysts or national political officials, so 87 00:05:28,839 --> 00:05:33,159 Speaker 5: we have to have concrete proof in order to say 88 00:05:33,520 --> 00:05:37,240 Speaker 5: that there is an active program to make a nuclear 89 00:05:37,279 --> 00:05:41,920 Speaker 5: weapon which we have not seen. That doesn't mean that 90 00:05:41,960 --> 00:05:46,120 Speaker 5: doesn't mean that they are in a territory which is 91 00:05:46,520 --> 00:05:50,599 Speaker 5: of concern, and this is the reason why there is 92 00:05:50,680 --> 00:05:54,560 Speaker 5: international concern. Why I had a very i would say 93 00:05:54,800 --> 00:05:58,359 Speaker 5: serious report that I presented, as you may know, to 94 00:05:58,480 --> 00:06:01,960 Speaker 5: the Board of Governors of the EYE a few days ago. 95 00:06:03,400 --> 00:06:07,359 Speaker 5: I should also mention that in my conversations with my 96 00:06:07,400 --> 00:06:10,719 Speaker 5: Iranian counter counterparts, they have always reminded that there is 97 00:06:10,760 --> 00:06:14,039 Speaker 5: a fatua from the leader saying that no nuclear weapon 98 00:06:14,120 --> 00:06:17,479 Speaker 5: would be compatible with Islam and things like that. But 99 00:06:17,520 --> 00:06:20,200 Speaker 5: at the same time I have told them that many 100 00:06:20,320 --> 00:06:25,080 Speaker 5: high officials have said that Iran has all the pieces 101 00:06:25,360 --> 00:06:29,360 Speaker 5: of the puzzle, so to speak. So there has been 102 00:06:29,440 --> 00:06:32,400 Speaker 5: a lot of ambiguity, and this is never good. 103 00:06:32,680 --> 00:06:35,720 Speaker 1: Director General, There's a real question about what type of 104 00:06:36,200 --> 00:06:39,279 Speaker 1: nuclear risk there is should there be some sort of 105 00:06:39,320 --> 00:06:41,400 Speaker 1: explosion at some of these facilities. I know you've been 106 00:06:41,720 --> 00:06:43,599 Speaker 1: directing a number of studies on this. 107 00:06:44,040 --> 00:06:45,360 Speaker 3: What if you detected so far? 108 00:06:45,600 --> 00:06:49,760 Speaker 1: And how concerned are you that a direct strike on 109 00:06:50,000 --> 00:06:53,760 Speaker 1: Photo in particular could release nuclear material into the environment. 110 00:06:54,480 --> 00:06:57,160 Speaker 5: Well, there could be, of course a release. We are 111 00:06:57,200 --> 00:07:02,480 Speaker 5: following as good and as much as we can every 112 00:07:03,120 --> 00:07:06,919 Speaker 5: military activity and assessing. 113 00:07:06,560 --> 00:07:10,960 Speaker 4: The radiological impact of those. 114 00:07:11,040 --> 00:07:16,200 Speaker 5: For example, I informed that in Natans, this facility that 115 00:07:16,560 --> 00:07:21,720 Speaker 5: sustained the most I would say serious damage. There has 116 00:07:21,800 --> 00:07:25,960 Speaker 5: been some contamination, but it is contained inside the perimeter 117 00:07:26,320 --> 00:07:28,920 Speaker 5: if you want, of the facility, so there is no 118 00:07:29,200 --> 00:07:33,200 Speaker 5: immediate danger for the population. Then if you move to 119 00:07:33,520 --> 00:07:40,960 Speaker 5: a higher amount of material like for example, these highly 120 00:07:41,040 --> 00:07:43,800 Speaker 5: enriched uranium and more, because there is not only let's 121 00:07:43,800 --> 00:07:47,440 Speaker 5: not forget, there's not only the sixty percent, there's the 122 00:07:47,680 --> 00:07:52,440 Speaker 5: five percent stop pile, there's the twenty percent stockpile. There's 123 00:07:52,520 --> 00:07:56,600 Speaker 5: a lot of nuclear material around in the country. And 124 00:07:56,680 --> 00:08:00,680 Speaker 5: of course a direct impact would have a radiological sequences 125 00:08:00,720 --> 00:08:03,800 Speaker 5: which would be commensurate with the attack. So this is 126 00:08:03,840 --> 00:08:09,360 Speaker 5: why I must I unfortunately cannot be as precise as 127 00:08:09,400 --> 00:08:12,560 Speaker 5: I would like to, because it would depend if only 128 00:08:12,600 --> 00:08:17,320 Speaker 5: a part of it is affected or more. But certainly, 129 00:08:17,600 --> 00:08:23,920 Speaker 5: certainly the possibility of a radiological impact environmental impact exists. 130 00:08:24,200 --> 00:08:27,560 Speaker 5: And as you also know, there are other facilities, including 131 00:08:27,600 --> 00:08:32,480 Speaker 5: a nuclear power plant in Iran, which of course should 132 00:08:32,520 --> 00:08:37,400 Speaker 5: never be touched because this could be another level of. 133 00:08:39,960 --> 00:08:46,400 Speaker 4: Concern and environmental damage. So this is where this is 134 00:08:46,440 --> 00:08:47,079 Speaker 4: what we see at. 135 00:08:47,040 --> 00:08:48,240 Speaker 3: The moment, Director General. 136 00:08:48,400 --> 00:08:50,680 Speaker 1: This is one reason why some people have speculated that 137 00:08:50,720 --> 00:08:54,439 Speaker 1: there has been hesitance by Israelis as well as by 138 00:08:54,440 --> 00:08:58,040 Speaker 1: the United States truly dropping some of the bunker bombers 139 00:08:58,080 --> 00:09:03,679 Speaker 1: and other types of military equipment to try to destroy 140 00:09:03,800 --> 00:09:05,920 Speaker 1: some of this weaponry. Do you think that this is 141 00:09:05,960 --> 00:09:08,880 Speaker 1: actually a real risk, the sort of release potentially of 142 00:09:09,080 --> 00:09:13,319 Speaker 1: radiological material into the environment that you think people are 143 00:09:13,320 --> 00:09:16,880 Speaker 1: taking seriously. Have you had conversations with the US or Israel. 144 00:09:18,000 --> 00:09:22,199 Speaker 5: Well, we have reminded everyone not that we need to 145 00:09:22,840 --> 00:09:26,800 Speaker 5: be honest, because I think in the United States, you 146 00:09:26,880 --> 00:09:30,720 Speaker 5: are the leading country in nuclear science and technology in 147 00:09:30,800 --> 00:09:35,679 Speaker 5: the world. So I think there is complete awareness. And 148 00:09:35,720 --> 00:09:38,760 Speaker 5: also in Israel and in Iran, and in the region 149 00:09:38,840 --> 00:09:41,400 Speaker 5: and in Europe. I'm talking to and I would say 150 00:09:41,440 --> 00:09:44,720 Speaker 5: in the Gulf States, I'm getting lots of calls from 151 00:09:45,440 --> 00:09:49,240 Speaker 5: high officials, ministers, prime ministers. They are all very, very 152 00:09:49,280 --> 00:09:54,880 Speaker 5: concerned about this probability. And I think, of course, I'm 153 00:09:54,880 --> 00:09:58,520 Speaker 5: a diplomat, I'm not private to military decision making. But 154 00:09:59,360 --> 00:10:01,880 Speaker 5: I want to believe and I think this should be 155 00:10:01,920 --> 00:10:06,319 Speaker 5: the case that the potential radiological consequences of any military 156 00:10:06,400 --> 00:10:10,240 Speaker 5: action is well taken into into account. But it's important 157 00:10:10,320 --> 00:10:13,280 Speaker 5: is to return to the diplomatic to the diplomatic table 158 00:10:13,400 --> 00:10:16,480 Speaker 5: as soon as possible, because what it's a state is very. 159 00:10:16,280 --> 00:10:18,319 Speaker 3: Serious given the hostilities. 160 00:10:18,360 --> 00:10:20,840 Speaker 6: Can you just walk us through the gap that exists 161 00:10:20,840 --> 00:10:24,360 Speaker 6: from your inspectors and how potentially what the i a 162 00:10:24,480 --> 00:10:27,280 Speaker 6: e a does every single day is being degraded. 163 00:10:28,600 --> 00:10:33,440 Speaker 5: Well, obviously, I think nothing will be like in the past. 164 00:10:34,200 --> 00:10:36,679 Speaker 5: We have crossed the line in the sense that there 165 00:10:36,720 --> 00:10:39,280 Speaker 5: is a there is a war. There is a military 166 00:10:39,280 --> 00:10:46,080 Speaker 5: conflict which has been triggered rightly or wrongly, on the 167 00:10:46,120 --> 00:10:49,120 Speaker 5: assumption of certain nuclear. 168 00:10:48,800 --> 00:10:50,360 Speaker 4: Activities taking place in Iran. 169 00:10:50,640 --> 00:10:56,080 Speaker 5: And all these facilities which are or where the facilities 170 00:10:56,120 --> 00:10:59,840 Speaker 5: that the i a e a. Inspectors were looking at 171 00:11:00,280 --> 00:11:03,719 Speaker 5: day by day, some of them have been destroyed, some 172 00:11:03,800 --> 00:11:06,480 Speaker 5: of them have been affected, and we do not know 173 00:11:06,960 --> 00:11:10,560 Speaker 5: what the future holds in terms of what may happen 174 00:11:11,080 --> 00:11:12,680 Speaker 5: over the next few days. 175 00:11:12,880 --> 00:11:16,280 Speaker 4: So there will, of course there will be a reshuffle. 176 00:11:17,040 --> 00:11:24,440 Speaker 5: We will continue inspecting and carrying out our activities, but 177 00:11:24,559 --> 00:11:26,920 Speaker 5: that will be and I think we have to be 178 00:11:27,000 --> 00:11:30,480 Speaker 5: realistic about this. That will be a function of the 179 00:11:30,520 --> 00:11:35,000 Speaker 5: political and military evolution. Iran has said, and you mentioned 180 00:11:35,000 --> 00:11:38,240 Speaker 5: this just now in our conversation. Iran has said that 181 00:11:38,280 --> 00:11:42,280 Speaker 5: they might take additional measures. There are people in Iran saying, 182 00:11:42,400 --> 00:11:45,560 Speaker 5: for example, which I hope will not be the case, 183 00:11:45,600 --> 00:11:48,000 Speaker 5: that Iran should leave the Treaty on the Non Proliferation 184 00:11:48,080 --> 00:11:52,280 Speaker 5: of Nuclear Weapons and expelled the IAEA, as it was 185 00:11:52,360 --> 00:11:55,280 Speaker 5: the case in North Korea, as you remember a few 186 00:11:55,360 --> 00:12:01,080 Speaker 5: years ago. So here, I think is a big political 187 00:12:01,679 --> 00:12:07,080 Speaker 5: scenario unfolding which will hold a lot of events that 188 00:12:07,120 --> 00:12:11,000 Speaker 5: we will have to take into consideration for international peace 189 00:12:11,040 --> 00:12:13,079 Speaker 5: and security in the region and in the world. 190 00:12:13,160 --> 00:12:16,840 Speaker 1: Quite obviously, IAEA Director General Raphael Grossi, thank you so 191 00:12:16,920 --> 00:12:20,160 Speaker 1: much for spending time with us amid this conflict that 192 00:12:20,200 --> 00:12:32,720 Speaker 1: I know you are closely following. Here's the latest markets 193 00:12:32,720 --> 00:12:35,839 Speaker 1: awaiting the FED rate decision out later today. The consensus 194 00:12:35,880 --> 00:12:39,800 Speaker 1: widely expecting the FED to hold rate steady, but updated 195 00:12:39,920 --> 00:12:42,400 Speaker 1: economic forecast, which might be the most interesting part. 196 00:12:42,480 --> 00:12:43,440 Speaker 3: Former Saint Louis. 197 00:12:43,240 --> 00:12:46,520 Speaker 1: FED President Jim Bullard joins us now for more. Jim, 198 00:12:46,600 --> 00:12:47,839 Speaker 1: so glad that you could join us. 199 00:12:47,840 --> 00:12:48,240 Speaker 3: Thank you. 200 00:12:48,360 --> 00:12:50,640 Speaker 1: I want to start with why would they say anything 201 00:12:50,679 --> 00:12:54,280 Speaker 1: today at all? Can they avoid I guess his better question, 202 00:12:54,520 --> 00:12:56,560 Speaker 1: can they avoid saying anything at a time where there 203 00:12:56,600 --> 00:12:57,640 Speaker 1: is so much uncertainty? 204 00:12:58,920 --> 00:12:59,199 Speaker 7: Yeah? 205 00:12:59,240 --> 00:13:02,400 Speaker 8: Well, the FEDS certainly not taking the headlines today with 206 00:13:02,520 --> 00:13:06,160 Speaker 8: the war in the Middle East, so that might play 207 00:13:06,160 --> 00:13:08,080 Speaker 8: to their benefit. I don't think they would have said 208 00:13:08,120 --> 00:13:12,480 Speaker 8: too much anyway. I do think there is the SEP 209 00:13:12,840 --> 00:13:16,920 Speaker 8: coming out, and this will be the first SEP post 210 00:13:17,040 --> 00:13:20,280 Speaker 8: April seconds, and so I think it will be a 211 00:13:20,320 --> 00:13:26,240 Speaker 8: more stagflationary SVP, and I think markets are already anticipating that, 212 00:13:26,280 --> 00:13:30,080 Speaker 8: but there is some room there for surprise depending on 213 00:13:30,160 --> 00:13:33,320 Speaker 8: where that goes. And so I think during the Chairs 214 00:13:33,559 --> 00:13:37,959 Speaker 8: press conference, he'll want to be talking about the SEP. 215 00:13:38,320 --> 00:13:41,800 Speaker 1: Well, yeah, the idea of whether they do downgrade growth 216 00:13:41,920 --> 00:13:45,040 Speaker 1: and increase their expectations for inflation at the same time, 217 00:13:45,440 --> 00:13:47,120 Speaker 1: how do they respond with the dot plot, how do 218 00:13:47,160 --> 00:13:48,760 Speaker 1: they respond with the reaction function? 219 00:13:48,800 --> 00:13:50,280 Speaker 3: And that's really the ultimate question. 220 00:13:50,600 --> 00:13:53,320 Speaker 1: Do they place the emphasis on inflation or do they 221 00:13:53,320 --> 00:13:56,640 Speaker 1: place the emphasis on the slowing growth and potential hits 222 00:13:56,640 --> 00:13:58,679 Speaker 1: the labor market. Do you have a sense, Jim, of 223 00:13:58,720 --> 00:14:02,520 Speaker 1: whether the Fed this FED is more focused on inflation 224 00:14:02,880 --> 00:14:05,240 Speaker 1: than growth or if their focus is shifting just a 225 00:14:05,280 --> 00:14:06,839 Speaker 1: little more with some of the weakening data that we've 226 00:14:06,880 --> 00:14:08,599 Speaker 1: seen over the past couple of weeks. 227 00:14:09,200 --> 00:14:12,880 Speaker 8: Well, that's why this will be moderately interesting. I think 228 00:14:12,960 --> 00:14:16,440 Speaker 8: you've also got comments from many members of the committee, 229 00:14:16,440 --> 00:14:19,880 Speaker 8: But I think that if it was me, I'd be 230 00:14:19,960 --> 00:14:23,280 Speaker 8: talking about slower growth due to the trade war, because 231 00:14:23,360 --> 00:14:26,920 Speaker 8: that's what happened in twenty eighteen twenty nineteen, and I'd 232 00:14:27,000 --> 00:14:30,200 Speaker 8: play down the inflation effects because I didn't really see 233 00:14:30,240 --> 00:14:34,480 Speaker 8: too much in that earlier trade war. In fact, course, 234 00:14:34,680 --> 00:14:38,640 Speaker 8: PC inflation actually declined in the first half of twenty nineteen, 235 00:14:39,400 --> 00:14:41,400 Speaker 8: and by the time you got to the summer of 236 00:14:41,440 --> 00:14:43,360 Speaker 8: twenty nineteen, that economy. 237 00:14:42,960 --> 00:14:45,320 Speaker 7: Was slower and the FED lowered the policy rate. 238 00:14:45,480 --> 00:14:49,280 Speaker 8: So I think the baseline would be here to get 239 00:14:49,360 --> 00:14:54,280 Speaker 8: to September and make a judgment there about how they 240 00:14:54,320 --> 00:14:56,520 Speaker 8: want to play this for the rest of twenty twenty five. 241 00:14:56,680 --> 00:14:59,760 Speaker 6: Well, Jim, given your analysis and given the actual hard 242 00:14:59,840 --> 00:15:02,080 Speaker 6: day that we have seen with inflation coming down in 243 00:15:02,080 --> 00:15:05,080 Speaker 6: the past four prints, why wouldn't the FED be cutting 244 00:15:05,080 --> 00:15:07,000 Speaker 6: today or do you think they would if they weren't 245 00:15:07,040 --> 00:15:10,920 Speaker 6: so concerned about the uncertainty from policymakers in Washington. 246 00:15:13,040 --> 00:15:16,200 Speaker 8: Yeah, I mean, I think one thing is just to 247 00:15:16,200 --> 00:15:21,280 Speaker 8: get past this deadline, the ninety day deadline on trade deals, 248 00:15:21,760 --> 00:15:24,600 Speaker 8: and see what comes out of that whether that would 249 00:15:24,640 --> 00:15:27,720 Speaker 8: be extended or whether there would just be deal set 250 00:15:27,920 --> 00:15:31,280 Speaker 8: or preliminary deal set. I think that would provide a 251 00:15:31,320 --> 00:15:33,840 Speaker 8: lot of information to the committee. Also, the data on 252 00:15:33,880 --> 00:15:37,600 Speaker 8: the economy has been reasonably good. Looks like second quarter 253 00:15:38,880 --> 00:15:41,880 Speaker 8: GDP now is I just checked it three and a 254 00:15:41,920 --> 00:15:45,440 Speaker 8: half percent, So that'll off set a week first quarter 255 00:15:45,640 --> 00:15:49,880 Speaker 8: and keep the first half on average around two percent 256 00:15:50,000 --> 00:15:52,840 Speaker 8: or a little below two percent growth. So you're okay 257 00:15:52,840 --> 00:15:55,560 Speaker 8: on that. A lot of the other indicators are pretty good. 258 00:15:56,480 --> 00:15:59,720 Speaker 8: Core PC inflation or dallas FTRIM mean about two and 259 00:15:59,760 --> 00:16:02,840 Speaker 8: a half a half percent on an annual basis is still 260 00:16:02,880 --> 00:16:05,200 Speaker 8: a little bit high, and so I think the committees 261 00:16:05,920 --> 00:16:07,800 Speaker 8: probably got about the right stance here. 262 00:16:07,840 --> 00:16:11,440 Speaker 7: But they can decide to do something a little bit. 263 00:16:11,400 --> 00:16:14,320 Speaker 8: Later in the year, or if the data do come 264 00:16:14,360 --> 00:16:17,200 Speaker 8: in in an adverse way, they can push things off 265 00:16:17,200 --> 00:16:18,240 Speaker 8: to twenty twenty six. 266 00:16:18,400 --> 00:16:20,600 Speaker 6: There's another point of consternation as well at this meeting, 267 00:16:20,640 --> 00:16:23,680 Speaker 6: and of course that's the hostilities going on between Israel 268 00:16:23,760 --> 00:16:26,520 Speaker 6: and Iran and the concern that there's going to be 269 00:16:26,760 --> 00:16:29,400 Speaker 6: prolonged elevated oil prices. 270 00:16:29,680 --> 00:16:30,960 Speaker 3: How does the FED deal with this? 271 00:16:32,560 --> 00:16:35,440 Speaker 8: Yeah, Well, price shocks are always always vexing. From the 272 00:16:35,440 --> 00:16:38,720 Speaker 8: FED point of view, I think the response so far 273 00:16:39,000 --> 00:16:42,560 Speaker 8: has been muted. Considering that this is open warfare between 274 00:16:42,680 --> 00:16:44,640 Speaker 8: Israel and Iran. 275 00:16:46,040 --> 00:16:49,200 Speaker 7: I think Iran militarily. 276 00:16:48,480 --> 00:16:51,680 Speaker 8: Speaking, doesn't look like they're in a very good position here. 277 00:16:51,720 --> 00:16:55,160 Speaker 8: So possibly we get some kind of resolution one way 278 00:16:55,240 --> 00:16:58,600 Speaker 8: or another, and markets are. 279 00:16:58,480 --> 00:17:01,280 Speaker 7: Waiting to see where that's going to come out. But 280 00:17:02,000 --> 00:17:03,080 Speaker 7: it certainly does. 281 00:17:02,920 --> 00:17:06,560 Speaker 8: Affect headline inflation, does affect what people actually pay at 282 00:17:06,560 --> 00:17:10,600 Speaker 8: the pump and in the US and so and around 283 00:17:10,680 --> 00:17:13,359 Speaker 8: the world, and so that's definitely. 284 00:17:13,000 --> 00:17:14,200 Speaker 7: A factor, Jim. 285 00:17:14,400 --> 00:17:16,440 Speaker 1: As we look ahead, a lot of people are saying 286 00:17:16,520 --> 00:17:19,600 Speaker 1: that this is increasingly a lame duck FED chair and 287 00:17:19,640 --> 00:17:22,240 Speaker 1: that after he is gone, there's going to be someone 288 00:17:22,280 --> 00:17:24,520 Speaker 1: new in his seat who will be a lot more dubvish. 289 00:17:24,680 --> 00:17:26,639 Speaker 1: How realistic do you think that that actually is? 290 00:17:29,160 --> 00:17:31,399 Speaker 8: Well, one share at a time, and it's really the 291 00:17:31,400 --> 00:17:34,560 Speaker 8: committee that makes policy. It's not really any one person. 292 00:17:35,480 --> 00:17:37,800 Speaker 8: Certainly Chair PubL guides the committee, but. 293 00:17:39,280 --> 00:17:40,679 Speaker 7: It's having been on it. 294 00:17:41,040 --> 00:17:45,720 Speaker 8: There's many people with their own staffs and their own analysis, 295 00:17:45,840 --> 00:17:49,080 Speaker 8: and they've got their own ideas about where policy should go. 296 00:17:49,160 --> 00:17:51,479 Speaker 7: I do think that the committee's. 297 00:17:51,200 --> 00:17:54,320 Speaker 8: Smarter than any one person on the committee, and it 298 00:17:54,400 --> 00:17:57,240 Speaker 8: really pays off to have a lot of different viewpoints 299 00:17:57,080 --> 00:18:00,640 Speaker 8: as you're trying to make reason judgments where to take 300 00:18:00,680 --> 00:18:02,520 Speaker 8: monetary policy for the United States. 301 00:18:02,760 --> 00:18:03,280 Speaker 3: Jim, do you. 302 00:18:03,200 --> 00:18:06,440 Speaker 1: Think that most of the committee members agree with you 303 00:18:06,520 --> 00:18:09,080 Speaker 1: that they should be taking the slowing growth more into 304 00:18:09,080 --> 00:18:12,040 Speaker 1: consideration than the inflationary potential shock given the fact that 305 00:18:12,080 --> 00:18:14,440 Speaker 1: they haven't really seen it yet, or do you think 306 00:18:14,480 --> 00:18:16,960 Speaker 1: that they are focusing on what some people have said 307 00:18:17,080 --> 00:18:19,720 Speaker 1: is fighting the last war, which is inflation that got 308 00:18:19,760 --> 00:18:20,960 Speaker 1: maybe a little away from them. 309 00:18:22,119 --> 00:18:24,440 Speaker 8: Yeah, it's a little bit. I think about half the committee. 310 00:18:24,880 --> 00:18:29,040 Speaker 8: It's once burned twice shy. I think they really don't 311 00:18:29,080 --> 00:18:34,560 Speaker 8: want to let anything occur that would send inflation expectations 312 00:18:35,200 --> 00:18:40,320 Speaker 8: meaningfully higher. You do have these survey based expectations. Those 313 00:18:40,400 --> 00:18:42,879 Speaker 8: seem to have a big political element to them, and 314 00:18:42,920 --> 00:18:45,119 Speaker 8: so I think you have to discard them right now. 315 00:18:45,440 --> 00:18:50,600 Speaker 8: The tips market five year tips inflation compensation about two 316 00:18:50,640 --> 00:18:55,520 Speaker 8: thirty two today trading right in that area. So that 317 00:18:55,600 --> 00:18:59,880 Speaker 8: sounds pretty good for a five year outlook on inflation. 318 00:19:00,040 --> 00:19:01,720 Speaker 8: And if you think some of that's a little bit 319 00:19:01,760 --> 00:19:05,159 Speaker 8: of risk premium, so market is pretty confident as the 320 00:19:05,280 --> 00:19:08,960 Speaker 8: FED will hit the inflation target over the five year horizon, 321 00:19:09,040 --> 00:19:12,159 Speaker 8: which is really about the best you can do as 322 00:19:12,200 --> 00:19:12,880 Speaker 8: far as the FED. 323 00:19:13,359 --> 00:19:15,879 Speaker 1: Former Saint Louis FED President jimbull Ard, thank you so 324 00:19:16,000 --> 00:19:17,880 Speaker 1: much for being with us. 325 00:19:27,280 --> 00:19:29,280 Speaker 3: Recovery of black Rock. Writing this. 326 00:19:29,680 --> 00:19:32,760 Speaker 1: The Federal keep rates on hold and highlight elevated uncertainty. 327 00:19:32,920 --> 00:19:33,720 Speaker 3: No surprise there. 328 00:19:33,920 --> 00:19:36,600 Speaker 1: All eyes will be on the statement of economic projections. 329 00:19:36,720 --> 00:19:39,800 Speaker 1: Gargee joins us. Now for more gargy. How focused are 330 00:19:39,840 --> 00:19:42,480 Speaker 1: you on the FED? How focused are you on the geopolitics? 331 00:19:42,520 --> 00:19:44,000 Speaker 1: How do you sort of weigh the two? 332 00:19:44,359 --> 00:19:48,199 Speaker 9: Absolutely, good morning, great to be here. Usually, you know, 333 00:19:48,240 --> 00:19:50,560 Speaker 9: the saying goes the marketing can only focus on one 334 00:19:50,560 --> 00:19:53,360 Speaker 9: thing at a time, and we've had many one things 335 00:19:53,400 --> 00:19:58,240 Speaker 9: this year. Obviously oil prices, the impact of geopolitics, what 336 00:19:58,359 --> 00:20:01,840 Speaker 9: that might do to headline inflation to consumer, that's top 337 00:20:01,840 --> 00:20:04,920 Speaker 9: of mind, but I wouldn't. I mean, obviously this is 338 00:20:04,920 --> 00:20:08,760 Speaker 9: an SEP FED meeting. I think that's also going to 339 00:20:08,800 --> 00:20:13,400 Speaker 9: be important. In particular whether they're going to hint at 340 00:20:13,720 --> 00:20:15,840 Speaker 9: two more rate cuts or just one more I think 341 00:20:15,880 --> 00:20:16,840 Speaker 9: that is relevant. 342 00:20:17,200 --> 00:20:18,160 Speaker 3: And at the same. 343 00:20:18,000 --> 00:20:23,359 Speaker 9: Time, how they handled all this additional uncertainty to your 344 00:20:23,480 --> 00:20:26,720 Speaker 9: drinking blood game. I think all of that is going 345 00:20:26,760 --> 00:20:28,480 Speaker 9: to weigh on them. So I think both are going 346 00:20:28,480 --> 00:20:31,160 Speaker 9: to be important. But obviously the market is the most 347 00:20:31,160 --> 00:20:33,960 Speaker 9: important thing right now for both the humans involved, as 348 00:20:34,000 --> 00:20:38,159 Speaker 9: well as oil prices and broader risks off in the markets, 349 00:20:38,200 --> 00:20:40,680 Speaker 9: even for a short term. Is certainly the geopolitics in 350 00:20:40,720 --> 00:20:41,200 Speaker 9: the Middle East. 351 00:20:41,280 --> 00:20:43,400 Speaker 3: And just to be clear, the drinking game is with water. 352 00:20:43,440 --> 00:20:45,440 Speaker 1: We all should be hydrated, So clearly that is where 353 00:20:45,440 --> 00:20:48,679 Speaker 1: we're going online. But there is this question going forward 354 00:20:48,680 --> 00:20:51,080 Speaker 1: about how much this economy needs that kind of support 355 00:20:51,760 --> 00:20:55,200 Speaker 1: versus has some sort of threat, not necessarily of overheating, 356 00:20:55,240 --> 00:20:57,920 Speaker 1: but facing a real sticky inflation that could. 357 00:20:57,760 --> 00:20:59,320 Speaker 3: Be really punitive. 358 00:20:59,359 --> 00:21:02,360 Speaker 1: I'm just wondering from your perspective, and the message from 359 00:21:02,359 --> 00:21:06,199 Speaker 1: markets aren't equity is telling us that actually there is 360 00:21:06,240 --> 00:21:09,280 Speaker 1: no problem, even though the economic data might suggest otherwise. 361 00:21:09,359 --> 00:21:12,320 Speaker 9: So time and again we've seen that when there is 362 00:21:12,440 --> 00:21:15,840 Speaker 9: geopolitical uncertainty in the markets, yes, we see that spike 363 00:21:15,880 --> 00:21:18,800 Speaker 9: and oil prices. Historically this has been a great time 364 00:21:18,840 --> 00:21:21,680 Speaker 9: to be diversified into products like gold, because that has 365 00:21:21,720 --> 00:21:26,199 Speaker 9: been an excellent diversifier. But historically what we've seen is 366 00:21:26,200 --> 00:21:28,280 Speaker 9: that the three month forward or even the one month 367 00:21:28,320 --> 00:21:31,960 Speaker 9: forward on high quality parts of equity markets. They have 368 00:21:32,080 --> 00:21:35,960 Speaker 9: looked through geopolitical uncertainty. However, I think as we go 369 00:21:36,080 --> 00:21:38,960 Speaker 9: into two and two thirty pm today, let's take a 370 00:21:39,000 --> 00:21:41,600 Speaker 9: look back of what we've gotten since the May sixth, 371 00:21:41,640 --> 00:21:46,919 Speaker 9: May seventh FOMC last meeting. Inflation has been you know, 372 00:21:47,400 --> 00:21:50,639 Speaker 9: there have been no impacts of tariffs yet yesterday, I 373 00:21:50,680 --> 00:21:53,760 Speaker 9: think the most important thing was around the weakness of 374 00:21:53,800 --> 00:21:57,560 Speaker 9: retail sales and global ip that is softening, and I 375 00:21:57,600 --> 00:22:00,280 Speaker 9: think that is important and perhaps had some lot of 376 00:22:00,320 --> 00:22:02,920 Speaker 9: an impact on price action in markets yesterday, and I 377 00:22:02,960 --> 00:22:05,960 Speaker 9: think the FED recognizes that and more importantly at eight 378 00:22:06,080 --> 00:22:10,000 Speaker 9: thirty today, initial jobless claims and the continuing claims that 379 00:22:10,119 --> 00:22:13,080 Speaker 9: have ever so slightly gotten worse. I think those are 380 00:22:13,119 --> 00:22:15,679 Speaker 9: the important things that we should all be looking forward to. 381 00:22:16,440 --> 00:22:19,240 Speaker 9: But at the same time, like we've seen before, the 382 00:22:19,280 --> 00:22:23,960 Speaker 9: market does tend to sort of look through neo term 383 00:22:24,080 --> 00:22:27,720 Speaker 9: shifts in volatility, and I think the macro picture for 384 00:22:27,920 --> 00:22:32,440 Speaker 9: now is still not too weak, so equities or especially 385 00:22:32,520 --> 00:22:36,240 Speaker 9: quality equities and AI equities are probably going to be okay. 386 00:22:36,280 --> 00:22:37,480 Speaker 3: But gardy is that a mistake? 387 00:22:37,560 --> 00:22:39,240 Speaker 6: For all we know the president right now is still 388 00:22:39,240 --> 00:22:42,040 Speaker 6: weighing his options, and one of those options is a strike. 389 00:22:43,040 --> 00:22:45,439 Speaker 9: You know, one of those options is a strike. The 390 00:22:45,480 --> 00:22:51,560 Speaker 9: market always responds in probabilities, not binary outcomes, So let's 391 00:22:51,560 --> 00:22:54,600 Speaker 9: think about the probability of that. Yes, that's the headlines 392 00:22:54,680 --> 00:22:59,600 Speaker 9: right now, with the surrender headlines from yesterday, for the 393 00:22:59,760 --> 00:23:05,520 Speaker 9: US to get involved, for retaliatory retaliatory strikes to come through. 394 00:23:05,560 --> 00:23:07,399 Speaker 9: I think that's going to be a big thing for 395 00:23:07,440 --> 00:23:10,760 Speaker 9: the markets. Absolutely. And that's again why I would suggest 396 00:23:10,800 --> 00:23:12,560 Speaker 9: that if you're listening to this right now, if you're 397 00:23:12,600 --> 00:23:18,840 Speaker 9: an investor, having diversifying stuff in your portfolio, having diversifying 398 00:23:19,800 --> 00:23:23,280 Speaker 9: asset classes like international equities, having some bonds in the 399 00:23:23,320 --> 00:23:25,080 Speaker 9: front end of the curve and the belly of the curve, 400 00:23:25,400 --> 00:23:29,480 Speaker 9: having things like gold and having inflation protection is really important. 401 00:23:29,560 --> 00:23:31,720 Speaker 6: How much have you been advocating for more gold and 402 00:23:31,760 --> 00:23:34,480 Speaker 6: our portfolio since Trump took office. 403 00:23:34,800 --> 00:23:36,920 Speaker 9: I won't say it's to do with Trump. I think 404 00:23:36,920 --> 00:23:39,120 Speaker 9: that we were talking about gold even if you think 405 00:23:39,160 --> 00:23:43,240 Speaker 9: back to last year, just as another way in which 406 00:23:43,280 --> 00:23:47,680 Speaker 9: you can diversify against people moving away other countries moving 407 00:23:47,720 --> 00:23:51,240 Speaker 9: away from the US dollar. It's certainly a geopolitical risk, 408 00:23:51,280 --> 00:23:54,200 Speaker 9: and by the way, we've been faced with geopolitical risk 409 00:23:54,400 --> 00:23:58,240 Speaker 9: much before November twenty twenty four. This was something that 410 00:23:58,280 --> 00:24:02,960 Speaker 9: has the geopolitical fragmentation we're seeing wars in the up Pakistan, Israel, 411 00:24:03,080 --> 00:24:06,560 Speaker 9: Gaza and now of course with Iran. That's been going 412 00:24:06,600 --> 00:24:09,560 Speaker 9: on for some time. So we've been talking about that, 413 00:24:09,600 --> 00:24:11,679 Speaker 9: and I think it's a balast and a portfolio that 414 00:24:11,800 --> 00:24:12,640 Speaker 9: investors need. 415 00:24:12,720 --> 00:24:14,240 Speaker 1: I'm going to put you on the spot, so I 416 00:24:14,280 --> 00:24:17,280 Speaker 1: apologize in advance. But a lot of people have been 417 00:24:17,280 --> 00:24:20,119 Speaker 1: talking about stock selection, and they've been talking about the 418 00:24:20,160 --> 00:24:22,840 Speaker 1: importance of going away from indexes. 419 00:24:22,720 --> 00:24:24,560 Speaker 3: And moving into companies. 420 00:24:24,600 --> 00:24:28,560 Speaker 1: We're not focusing necessarily on big existential risk, but you're 421 00:24:28,600 --> 00:24:31,480 Speaker 1: focusing on AI adoption, or you're focusing on the fact 422 00:24:31,520 --> 00:24:32,639 Speaker 1: that people are eating more. 423 00:24:32,480 --> 00:24:34,400 Speaker 3: Breadsticks at this particular company. 424 00:24:34,880 --> 00:24:38,560 Speaker 1: How much is that challenging some of the ETF landscape 425 00:24:38,600 --> 00:24:40,119 Speaker 1: and the indexing landscape. 426 00:24:40,160 --> 00:24:41,560 Speaker 3: They got a lot of popularity at. 427 00:24:41,520 --> 00:24:43,560 Speaker 1: A time where there was a much more beta type 428 00:24:44,080 --> 00:24:47,159 Speaker 1: a trend rather than this sort of alpha aspect of 429 00:24:47,160 --> 00:24:48,399 Speaker 1: the conversations we have today. 430 00:24:48,440 --> 00:24:50,960 Speaker 9: Absolutely not a challenge at all. Actually, when we think 431 00:24:51,000 --> 00:24:53,959 Speaker 9: about where black Rock has been able to garner the 432 00:24:53,960 --> 00:24:57,359 Speaker 9: most amount of flows. It is investors more and more 433 00:24:57,560 --> 00:25:02,560 Speaker 9: adopting active ETFs. Exactly. The trend that you're portraying is 434 00:25:02,640 --> 00:25:06,040 Speaker 9: playing out in the markets where activetfs such as BAI 435 00:25:06,240 --> 00:25:10,120 Speaker 9: that focuses on AI in an active manner because obviously 436 00:25:10,119 --> 00:25:12,679 Speaker 9: you can't just set it and forget about it. Things 437 00:25:12,760 --> 00:25:15,680 Speaker 9: like bink, which is flexible fixed income where you're focusing 438 00:25:15,720 --> 00:25:18,720 Speaker 9: on harnessing income in the markets, those have been so 439 00:25:18,960 --> 00:25:22,639 Speaker 9: popular that pickers investors are recognizing the need to be 440 00:25:22,720 --> 00:25:26,520 Speaker 9: dynamic as well as quite nimble in this environment. Having 441 00:25:26,600 --> 00:25:30,720 Speaker 9: said that, for many investors who are just entering the 442 00:25:30,800 --> 00:25:33,960 Speaker 9: markets that need to understand the market is theirs to own. 443 00:25:34,400 --> 00:25:37,840 Speaker 9: Perhaps owning just a simple index is a very good 444 00:25:37,920 --> 00:25:40,320 Speaker 9: first step to be in the markets. And frankly, when 445 00:25:40,320 --> 00:25:42,520 Speaker 9: we look at the flows, there's a tremendous amount of 446 00:25:42,560 --> 00:25:46,320 Speaker 9: inflows to products like bitcoin for example, ibit one of 447 00:25:46,359 --> 00:25:49,640 Speaker 9: the it's obviously an index product, but something that has 448 00:25:49,640 --> 00:25:53,600 Speaker 9: gonered huge amount of inflows, yurtel date and products like 449 00:25:53,680 --> 00:25:56,200 Speaker 9: the very front end of the fixed income markets with ASGOV. 450 00:25:56,320 --> 00:25:59,479 Speaker 9: So there is a place for both, but absolutely no 451 00:25:59,640 --> 00:26:03,800 Speaker 9: doubt investors are focusing on more and more bespoke ways 452 00:26:04,000 --> 00:26:06,560 Speaker 9: to access the market with active fixed income and active 453 00:26:06,560 --> 00:26:07,680 Speaker 9: equity ETF. 454 00:26:07,520 --> 00:26:10,359 Speaker 1: Bitcoin ETF in tandem with the gold ETF. 455 00:26:10,400 --> 00:26:13,080 Speaker 3: I just wonder, how do you have bitcoin? 456 00:26:13,359 --> 00:26:17,080 Speaker 1: That's the underlying to an ETF that people we can get. 457 00:26:16,920 --> 00:26:19,480 Speaker 3: In that gargiechattery and flat round. Thank you so much. 458 00:26:29,880 --> 00:26:33,360 Speaker 1: Joining us now is Claudius Sum of New Century Advisors. Claudia, 459 00:26:33,440 --> 00:26:34,960 Speaker 1: great to see you, Thank you so much for being 460 00:26:34,960 --> 00:26:37,399 Speaker 1: with us. I want to start with this idea that 461 00:26:37,440 --> 00:26:39,800 Speaker 1: the weight and see FED doesn't have to tell us anything. 462 00:26:39,920 --> 00:26:42,919 Speaker 1: A lot of people would argue and push back and say, actually, 463 00:26:42,920 --> 00:26:44,560 Speaker 1: they have to give us a sense of what their 464 00:26:44,560 --> 00:26:47,800 Speaker 1: scenario analysis looks like at a time or potentially that 465 00:26:47,920 --> 00:26:51,720 Speaker 1: it could increase their chance of stagflation. What's your sense 466 00:26:52,280 --> 00:26:55,920 Speaker 1: of what their scenario analysis looks like. What's their response 467 00:26:56,000 --> 00:26:56,879 Speaker 1: mechanism to that? 468 00:26:58,520 --> 00:26:58,639 Speaker 8: Right? 469 00:26:58,680 --> 00:27:00,879 Speaker 10: I think that'll be a really important part of the 470 00:27:00,920 --> 00:27:03,639 Speaker 10: press conference today is to have how talk through the 471 00:27:03,760 --> 00:27:07,399 Speaker 10: risks the scenarios that the FED is considering. Unfortunately, their tools, 472 00:27:07,440 --> 00:27:09,400 Speaker 10: like the Summary of Economic Projections, the way it's put 473 00:27:09,440 --> 00:27:11,720 Speaker 10: together right now, doesn't do a great job of getting 474 00:27:11,800 --> 00:27:15,040 Speaker 10: you know, scenarios across, but it is so clear that 475 00:27:15,080 --> 00:27:18,879 Speaker 10: the FED is in risk management mode, right, this is 476 00:27:18,920 --> 00:27:21,800 Speaker 10: about where inflation could go, how it could persist, and 477 00:27:21,840 --> 00:27:23,639 Speaker 10: that you know, this is this is kind of an 478 00:27:23,720 --> 00:27:27,679 Speaker 10: insurance pause, right. They want to avoid those risk outcomes. 479 00:27:27,800 --> 00:27:29,879 Speaker 10: And so then it is a big part of explaining 480 00:27:29,920 --> 00:27:32,639 Speaker 10: why why is it you're on hold? Inflation's coming down, 481 00:27:33,240 --> 00:27:35,920 Speaker 10: you know, why aren't you cutting now? So I think 482 00:27:35,920 --> 00:27:37,879 Speaker 10: they really do need to kind of spell that out 483 00:27:37,920 --> 00:27:39,800 Speaker 10: and give us a sense of what they're looking for 484 00:27:40,000 --> 00:27:41,479 Speaker 10: in the data as it's coming in. 485 00:27:42,400 --> 00:27:44,560 Speaker 6: What potential damage could they do if they are too 486 00:27:44,640 --> 00:27:50,359 Speaker 6: late and they should be cutting because inflation's coming down. 487 00:27:49,080 --> 00:27:52,080 Speaker 10: Well, it's it's unnecessary weakness on the economy. I mean, 488 00:27:52,080 --> 00:27:54,520 Speaker 10: if you look at interest rate sensitive sectors like the 489 00:27:54,560 --> 00:27:59,239 Speaker 10: housing market, the higher rates they are having an effect, right, 490 00:27:59,240 --> 00:28:01,480 Speaker 10: They're having a on people who are out there trying 491 00:28:01,480 --> 00:28:03,399 Speaker 10: to buy homes, builders who are trying to you know, 492 00:28:03,680 --> 00:28:04,800 Speaker 10: construct new housing. 493 00:28:05,440 --> 00:28:09,480 Speaker 11: So you know, if like that, that is a pain. 494 00:28:09,680 --> 00:28:12,760 Speaker 10: It may be necessary to keep inflation under control, to 495 00:28:12,840 --> 00:28:17,000 Speaker 10: keep inflation expectations under control, but there is a cost, right, 496 00:28:17,040 --> 00:28:19,560 Speaker 10: and I think the Fed is balancing that well. But 497 00:28:19,640 --> 00:28:23,000 Speaker 10: it is something that should be communicated because otherwise, just 498 00:28:23,040 --> 00:28:24,520 Speaker 10: if you look at the data on hand and you 499 00:28:24,560 --> 00:28:26,560 Speaker 10: think of the data driven FED, it's like, well, why 500 00:28:26,600 --> 00:28:28,879 Speaker 10: aren't you starting to cut or even talking about cutting? 501 00:28:28,880 --> 00:28:30,560 Speaker 10: Like they're really not just going to pause today, They're 502 00:28:30,600 --> 00:28:34,159 Speaker 10: going to push that pause pretty hard through probably much 503 00:28:34,200 --> 00:28:35,120 Speaker 10: of the rest of this year. 504 00:28:35,359 --> 00:28:37,000 Speaker 6: It sounds like you think Chair Powell is going to 505 00:28:37,040 --> 00:28:39,240 Speaker 6: be hawkish today. We just got to know from Andrew Holland, 506 00:28:39,240 --> 00:28:41,160 Speaker 6: Horse of City, and he said there's three reasons for 507 00:28:41,200 --> 00:28:44,200 Speaker 6: Powell to be dubbish. One three months of softer core inflation. 508 00:28:44,320 --> 00:28:49,840 Speaker 6: Two rising jobless claims, continuing jobless claims and softer housing data. 509 00:28:50,320 --> 00:28:52,000 Speaker 3: Do you think his rhetoric is. 510 00:28:51,960 --> 00:28:54,560 Speaker 6: Going to lean hawkish when a lot of people think 511 00:28:54,720 --> 00:28:56,760 Speaker 6: he should actually come out and sound a bit dubbish? 512 00:28:59,640 --> 00:29:01,760 Speaker 10: Yeah, I mean it's I think a lot of it 513 00:29:01,800 --> 00:29:04,920 Speaker 10: comes down to how to me. One big question to 514 00:29:05,000 --> 00:29:07,440 Speaker 10: listen to how today is to explain, you know that 515 00:29:07,480 --> 00:29:10,360 Speaker 10: inflation data in the last four months that's been unexpectedly soft. 516 00:29:10,600 --> 00:29:12,480 Speaker 11: What's that about, right, Because. 517 00:29:12,320 --> 00:29:14,840 Speaker 10: If it comes a hawkish tone to me would be saying, oh, well, 518 00:29:14,880 --> 00:29:16,880 Speaker 10: the terriff inflation is still coming. 519 00:29:16,920 --> 00:29:19,360 Speaker 11: We just it's timing. We just need to wait, it's coming. 520 00:29:19,800 --> 00:29:21,800 Speaker 10: But you know there's you can look at that data 521 00:29:21,840 --> 00:29:23,680 Speaker 10: and see some nuance not just from what you think 522 00:29:23,720 --> 00:29:26,200 Speaker 10: are teriff effects, but just inflation in general, where it's like, man, 523 00:29:26,280 --> 00:29:29,400 Speaker 10: the demands a little softer. Maybe this isn't pushing through 524 00:29:29,720 --> 00:29:31,719 Speaker 10: like anything that he would say today that would kind 525 00:29:31,760 --> 00:29:34,600 Speaker 10: of soften or push against all of these upside risk 526 00:29:34,640 --> 00:29:36,400 Speaker 10: to inflation to me would. 527 00:29:36,320 --> 00:29:39,000 Speaker 11: I think be pretty balanced. But you know, we'll just 528 00:29:39,040 --> 00:29:40,080 Speaker 11: have to see where he says. 529 00:29:40,160 --> 00:29:42,760 Speaker 10: And one difficult thing today with listening to Howe is 530 00:29:42,840 --> 00:29:45,520 Speaker 10: understanding that you know he is speaking for the FEC. 531 00:29:45,680 --> 00:29:46,760 Speaker 11: That's what he does, is fed shair. 532 00:29:46,840 --> 00:29:49,720 Speaker 10: He has his interpretation of it as well, and he 533 00:29:49,880 --> 00:29:52,719 Speaker 10: probably will be in something of a live debate with 534 00:29:52,960 --> 00:29:56,040 Speaker 10: the dot plot and the summary projection, so it's kind 535 00:29:56,040 --> 00:29:58,000 Speaker 10: of tough to parse it on days where we get 536 00:29:58,040 --> 00:29:58,920 Speaker 10: like these forecasts. 537 00:29:58,920 --> 00:30:01,360 Speaker 11: In addition to him speaking. 538 00:30:01,160 --> 00:30:03,920 Speaker 1: I love that a live debate with him basically arguing 539 00:30:03,960 --> 00:30:06,240 Speaker 1: the side of everyone on the committee and trying to 540 00:30:06,280 --> 00:30:09,080 Speaker 1: sort of come out somewhere in the middle. I'm struck 541 00:30:09,120 --> 00:30:11,360 Speaker 1: by what's keep some people keep on saying, which is 542 00:30:11,640 --> 00:30:13,600 Speaker 1: a number of members of this committee are fighting the 543 00:30:13,680 --> 00:30:16,480 Speaker 1: last war. They are so scarred from the use of 544 00:30:16,520 --> 00:30:21,120 Speaker 1: transitory and failing to curtail inflation a couple of years ago, 545 00:30:21,400 --> 00:30:24,480 Speaker 1: that they are more willing to look through any weakness 546 00:30:24,480 --> 00:30:27,600 Speaker 1: in the labor market in order to prioritize inflation. Do 547 00:30:27,640 --> 00:30:29,960 Speaker 1: you expect that to be the same today, which is 548 00:30:29,960 --> 00:30:32,080 Speaker 1: the reason why people are expecting more of. 549 00:30:32,080 --> 00:30:32,920 Speaker 3: A hawkish tone. 550 00:30:34,560 --> 00:30:38,240 Speaker 10: I think we'll continue to see the focus of the 551 00:30:38,240 --> 00:30:42,280 Speaker 10: informc on the inflation risks, on inflation going higher. Again, 552 00:30:42,440 --> 00:30:45,760 Speaker 10: the claims data today didn't reinforce any kind of an emergency, 553 00:30:45,800 --> 00:30:48,040 Speaker 10: and we aren't four point two percent unemployment right like, 554 00:30:48,080 --> 00:30:50,360 Speaker 10: we aren't a full employment economy, so. 555 00:30:50,320 --> 00:30:51,280 Speaker 11: We're starting from a good place. 556 00:30:51,320 --> 00:30:54,640 Speaker 10: Inflation still somewhat elevated, and just everything we've gone in 557 00:30:54,680 --> 00:30:56,840 Speaker 10: terms of the data, and then, like you said, kind 558 00:30:56,880 --> 00:30:59,960 Speaker 10: of fighting the last war, the inflation risk just loomed 559 00:31:00,120 --> 00:31:04,840 Speaker 10: really large. But as we're just seeing how they're interpreting 560 00:31:04,920 --> 00:31:09,040 Speaker 10: the data, how they're questioning their own assumptions about you know, 561 00:31:09,040 --> 00:31:11,160 Speaker 10: inflation could really get out of hand. I think that's 562 00:31:11,200 --> 00:31:14,160 Speaker 10: the piece, you know, that would be really important to understand. 563 00:31:14,160 --> 00:31:17,640 Speaker 10: If if they're focused on the current threats to the 564 00:31:17,680 --> 00:31:19,880 Speaker 10: economy as opposed to the threats we had four years ago. 565 00:31:20,200 --> 00:31:22,680 Speaker 1: Claudia Sam of New Central Advisors, thank you so much 566 00:31:22,680 --> 00:31:25,600 Speaker 1: for being with us. Really appreciate your insights. 567 00:31:26,320 --> 00:31:29,880 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 568 00:31:29,880 --> 00:31:33,480 Speaker 2: in markets, economics, angiopolitics. 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