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Speaker 3: You and Nuclear Watchdog Saying in Richmond.
Speaker 1: Facilities in Iran have taken direct military strikes.
Speaker 3: Joining us now is I'm so pleased to.
Speaker 1: Say the IAEA Director General, Raphael Grossi, Director General, You've
Speaker 1: had a very busy couple of weeks.
Speaker 3: Thank you so much for making time for us.
Speaker 1: I wanted to start with what damage has been done
Speaker 1: and what remains operational in Iran.
Speaker 4: Well, thank you very much. A pleasure to be with you.
Speaker 5: There has been a number of There have been a
Speaker 5: number of attacks since the beginning of the operation. First
Speaker 5: of all, a very important facility in Athans was badly
Speaker 5: hit with a full enrichment operating hall being destroyed completely
Speaker 5: above ground means that it means then the electrical substation
Speaker 5: and power infrastructure in this big facility also being taken
Speaker 5: out with a direct impact on a very important underground
Speaker 5: enrichment facility which is which is also there because of
Speaker 5: the sudden loss of power that caused of course immediate
Speaker 5: damage to these very delicate systems that the ultra centrifugues
Speaker 5: that produce the enriched uranium are.
Speaker 4: So this is one thing.
Speaker 5: Is Soahan, another very important nuclear compound which was repeatedly
Speaker 5: hit with a few buildings being affected. The one that
Speaker 5: has not sustained a similar degree of damage seems to
Speaker 5: be so far a very important facility which is also
Speaker 5: has the most important and sensitive parts secuted underground deep
Speaker 5: in the mountains, which is the facility at four door today.
Speaker 6: So you mentioned Isfahan, So if I could just jump in,
Speaker 6: is the four hundred and nine kilogram stockpile of highly
Speaker 6: urined uranium still safely underground and that site.
Speaker 5: Well, to say safely, I'm not so sure what could
Speaker 5: be could be the case.
Speaker 4: Let me say, let me say one thing.
Speaker 5: Which is very very important. It is it is in principle,
Speaker 5: it is there. It is stored there, as you can imagine,
Speaker 5: at a time of war. At a time of war,
Speaker 5: all nuclear sites are closed, so are in inspecters who
Speaker 5: are still i must say still in Iran, although they
Speaker 5: are in a protected place as you can imagine, but
Speaker 5: they are not inspecting no inspection, normal activity can take place.
Speaker 5: We assume we have not seen anything that would suggest
Speaker 5: that the stockpile has been moved, but of course this
Speaker 5: might need to be reconfirmed as soon as we have access.
Speaker 5: One has to say that Iran is aware of the
Speaker 5: fact that this stockpile needs to be there under iaa
Speaker 5: constant supervision.
Speaker 6: Well, even before hostilities began, Iran had told you they
Speaker 6: would implement special measures to protect its enriched uranium stockpile.
Speaker 6: What specifically are those special measures and how are they
Speaker 6: impacting your team that's on the ground.
Speaker 7: We don't know.
Speaker 5: We have been informed, as you rightly say, and I
Speaker 5: was also totally one of my last personal meetings with
Speaker 5: a foreign minister, doctor Abbas ACTI, that in case something happened,
Speaker 5: Iran would take measures to protect its material, equipment and
Speaker 5: so forth. But we haven't been informed of anything in detail.
Speaker 5: We have reminded, and I have personally reminded in a
Speaker 5: letter to Foreign Minister or ACGLY that there are obligations
Speaker 5: that need to be observed and that of course we
Speaker 5: would be available in case they want to share with us,
Speaker 5: as they should, what they are planning to do. If
Speaker 5: they are planning to do anything, we don't know what
Speaker 5: these protective additional measures could be.
Speaker 3: Even before the hostilities. We know.
Speaker 6: Your inspectors also reported that there was no systemic weapons programmed.
Speaker 6: Does that mean that no smoking gun existed to justify
Speaker 6: what we're seeing right now with preemptive invasion, Well, I.
Speaker 5: Don't know the metric of a smoking gun. How you
Speaker 5: would define that.
Speaker 3: To making a nuclear weapons?
Speaker 4: I have said, let me get to that.
Speaker 5: I have said that no country in the world is
Speaker 5: enriching uranium at this level of sixty percent, which is
Speaker 5: technically almost equivalent of ninety percent, which is needed to
Speaker 5: have a nuclear weapon.
Speaker 4: At the same time, we are inspectors.
Speaker 5: We are not political analysts or national political officials, so
Speaker 5: we have to have concrete proof in order to say
Speaker 5: that there is an active program to make a nuclear
Speaker 5: weapon which we have not seen. That doesn't mean that
Speaker 5: doesn't mean that they are in a territory which is
Speaker 5: of concern, and this is the reason why there is
Speaker 5: international concern. Why I had a very i would say
Speaker 5: serious report that I presented, as you may know, to
Speaker 5: the Board of Governors of the EYE a few days ago.
Speaker 5: I should also mention that in my conversations with my
Speaker 5: Iranian counter counterparts, they have always reminded that there is
Speaker 5: a fatua from the leader saying that no nuclear weapon
Speaker 5: would be compatible with Islam and things like that. But
Speaker 5: at the same time I have told them that many
Speaker 5: high officials have said that Iran has all the pieces
Speaker 5: of the puzzle, so to speak. So there has been
Speaker 5: a lot of ambiguity, and this is never good.
Speaker 1: Director General, There's a real question about what type of
Speaker 1: nuclear risk there is should there be some sort of
Speaker 1: explosion at some of these facilities. I know you've been
Speaker 1: directing a number of studies on this.
Speaker 3: What if you detected so far?
Speaker 1: And how concerned are you that a direct strike on
Speaker 1: Photo in particular could release nuclear material into the environment.
Speaker 5: Well, there could be, of course a release. We are
Speaker 5: following as good and as much as we can every
Speaker 5: military activity and assessing.
Speaker 4: The radiological impact of those.
Speaker 5: For example, I informed that in Natans, this facility that
Speaker 5: sustained the most I would say serious damage. There has
Speaker 5: been some contamination, but it is contained inside the perimeter
Speaker 5: if you want, of the facility, so there is no
Speaker 5: immediate danger for the population. Then if you move to
Speaker 5: a higher amount of material like for example, these highly
Speaker 5: enriched uranium and more, because there is not only let's
Speaker 5: not forget, there's not only the sixty percent, there's the
Speaker 5: five percent stop pile, there's the twenty percent stockpile. There's
Speaker 5: a lot of nuclear material around in the country. And
Speaker 5: of course a direct impact would have a radiological sequences
Speaker 5: which would be commensurate with the attack. So this is
Speaker 5: why I must I unfortunately cannot be as precise as
Speaker 5: I would like to, because it would depend if only
Speaker 5: a part of it is affected or more. But certainly,
Speaker 5: certainly the possibility of a radiological impact environmental impact exists.
Speaker 5: And as you also know, there are other facilities, including
Speaker 5: a nuclear power plant in Iran, which of course should
Speaker 5: never be touched because this could be another level of.
Speaker 4: Concern and environmental damage. So this is where this is
Speaker 4: what we see at.
Speaker 3: The moment, Director General.
Speaker 1: This is one reason why some people have speculated that
Speaker 1: there has been hesitance by Israelis as well as by
Speaker 1: the United States truly dropping some of the bunker bombers
Speaker 1: and other types of military equipment to try to destroy
Speaker 1: some of this weaponry. Do you think that this is
Speaker 1: actually a real risk, the sort of release potentially of
Speaker 1: radiological material into the environment that you think people are
Speaker 1: taking seriously. Have you had conversations with the US or Israel.
Speaker 5: Well, we have reminded everyone not that we need to
Speaker 5: be honest, because I think in the United States, you
Speaker 5: are the leading country in nuclear science and technology in
Speaker 5: the world. So I think there is complete awareness. And
Speaker 5: also in Israel and in Iran, and in the region
Speaker 5: and in Europe. I'm talking to and I would say
Speaker 5: in the Gulf States, I'm getting lots of calls from
Speaker 5: high officials, ministers, prime ministers. They are all very, very
Speaker 5: concerned about this probability. And I think, of course, I'm
Speaker 5: a diplomat, I'm not private to military decision making. But
Speaker 5: I want to believe and I think this should be
Speaker 5: the case that the potential radiological consequences of any military
Speaker 5: action is well taken into into account. But it's important
Speaker 5: is to return to the diplomatic to the diplomatic table
Speaker 5: as soon as possible, because what it's a state is very.
Speaker 3: Serious given the hostilities.
Speaker 6: Can you just walk us through the gap that exists
Speaker 6: from your inspectors and how potentially what the i a
Speaker 6: e a does every single day is being degraded.
Speaker 5: Well, obviously, I think nothing will be like in the past.
Speaker 5: We have crossed the line in the sense that there
Speaker 5: is a there is a war. There is a military
Speaker 5: conflict which has been triggered rightly or wrongly, on the
Speaker 5: assumption of certain nuclear.
Speaker 4: Activities taking place in Iran.
Speaker 5: And all these facilities which are or where the facilities
Speaker 5: that the i a e a. Inspectors were looking at
Speaker 5: day by day, some of them have been destroyed, some
Speaker 5: of them have been affected, and we do not know
Speaker 5: what the future holds in terms of what may happen
Speaker 5: over the next few days.
Speaker 4: So there will, of course there will be a reshuffle.
Speaker 5: We will continue inspecting and carrying out our activities, but
Speaker 5: that will be and I think we have to be
Speaker 5: realistic about this. That will be a function of the
Speaker 5: political and military evolution. Iran has said, and you mentioned
Speaker 5: this just now in our conversation. Iran has said that
Speaker 5: they might take additional measures. There are people in Iran saying,
Speaker 5: for example, which I hope will not be the case,
Speaker 5: that Iran should leave the Treaty on the Non Proliferation
Speaker 5: of Nuclear Weapons and expelled the IAEA, as it was
Speaker 5: the case in North Korea, as you remember a few
Speaker 5: years ago. So here, I think is a big political
Speaker 5: scenario unfolding which will hold a lot of events that
Speaker 5: we will have to take into consideration for international peace
Speaker 5: and security in the region and in the world.
Speaker 1: Quite obviously, IAEA Director General Raphael Grossi, thank you so
Speaker 1: much for spending time with us amid this conflict that
Speaker 1: I know you are closely following. Here's the latest markets
Speaker 1: awaiting the FED rate decision out later today. The consensus
Speaker 1: widely expecting the FED to hold rate steady, but updated
Speaker 1: economic forecast, which might be the most interesting part.
Speaker 3: Former Saint Louis.
Speaker 1: FED President Jim Bullard joins us now for more. Jim,
Speaker 1: so glad that you could join us.
Speaker 3: Thank you.
Speaker 1: I want to start with why would they say anything
Speaker 1: today at all? Can they avoid I guess his better question,
Speaker 1: can they avoid saying anything at a time where there
Speaker 1: is so much uncertainty?
Speaker 7: Yeah?
Speaker 8: Well, the FEDS certainly not taking the headlines today with
Speaker 8: the war in the Middle East, so that might play
Speaker 8: to their benefit. I don't think they would have said
Speaker 8: too much anyway. I do think there is the SEP
Speaker 8: coming out, and this will be the first SEP post
Speaker 8: April seconds, and so I think it will be a
Speaker 8: more stagflationary SVP, and I think markets are already anticipating that,
Speaker 8: but there is some room there for surprise depending on
Speaker 8: where that goes. And so I think during the Chairs
Speaker 8: press conference, he'll want to be talking about the SEP.
Speaker 1: Well, yeah, the idea of whether they do downgrade growth
Speaker 1: and increase their expectations for inflation at the same time,
Speaker 1: how do they respond with the dot plot, how do
Speaker 1: they respond with the reaction function?
Speaker 3: And that's really the ultimate question.
Speaker 1: Do they place the emphasis on inflation or do they
Speaker 1: place the emphasis on the slowing growth and potential hits
Speaker 1: the labor market. Do you have a sense, Jim, of
Speaker 1: whether the Fed this FED is more focused on inflation
Speaker 1: than growth or if their focus is shifting just a
Speaker 1: little more with some of the weakening data that we've
Speaker 1: seen over the past couple of weeks.
Speaker 8: Well, that's why this will be moderately interesting. I think
Speaker 8: you've also got comments from many members of the committee,
Speaker 8: But I think that if it was me, I'd be
Speaker 8: talking about slower growth due to the trade war, because
Speaker 8: that's what happened in twenty eighteen twenty nineteen, and I'd
Speaker 8: play down the inflation effects because I didn't really see
Speaker 8: too much in that earlier trade war. In fact, course,
Speaker 8: PC inflation actually declined in the first half of twenty nineteen,
Speaker 8: and by the time you got to the summer of
Speaker 8: twenty nineteen, that economy.
Speaker 7: Was slower and the FED lowered the policy rate.
Speaker 8: So I think the baseline would be here to get
Speaker 8: to September and make a judgment there about how they
Speaker 8: want to play this for the rest of twenty twenty five.
Speaker 6: Well, Jim, given your analysis and given the actual hard
Speaker 6: day that we have seen with inflation coming down in
Speaker 6: the past four prints, why wouldn't the FED be cutting
Speaker 6: today or do you think they would if they weren't
Speaker 6: so concerned about the uncertainty from policymakers in Washington.
Speaker 8: Yeah, I mean, I think one thing is just to
Speaker 8: get past this deadline, the ninety day deadline on trade deals,
Speaker 8: and see what comes out of that whether that would
Speaker 8: be extended or whether there would just be deal set
Speaker 8: or preliminary deal set. I think that would provide a
Speaker 8: lot of information to the committee. Also, the data on
Speaker 8: the economy has been reasonably good. Looks like second quarter
Speaker 8: GDP now is I just checked it three and a
Speaker 8: half percent, So that'll off set a week first quarter
Speaker 8: and keep the first half on average around two percent
Speaker 8: or a little below two percent growth. So you're okay
Speaker 8: on that. A lot of the other indicators are pretty good.
Speaker 8: Core PC inflation or dallas FTRIM mean about two and
Speaker 8: a half a half percent on an annual basis is still
Speaker 8: a little bit high, and so I think the committees
Speaker 8: probably got about the right stance here.
Speaker 7: But they can decide to do something a little bit.
Speaker 8: Later in the year, or if the data do come
Speaker 8: in in an adverse way, they can push things off
Speaker 8: to twenty twenty six.
Speaker 6: There's another point of consternation as well at this meeting,
Speaker 6: and of course that's the hostilities going on between Israel
Speaker 6: and Iran and the concern that there's going to be
Speaker 6: prolonged elevated oil prices.
Speaker 3: How does the FED deal with this?
Speaker 8: Yeah, Well, price shocks are always always vexing. From the
Speaker 8: FED point of view, I think the response so far
Speaker 8: has been muted. Considering that this is open warfare between
Speaker 8: Israel and Iran.
Speaker 7: I think Iran militarily.
Speaker 8: Speaking, doesn't look like they're in a very good position here.
Speaker 8: So possibly we get some kind of resolution one way
Speaker 8: or another, and markets are.
Speaker 7: Waiting to see where that's going to come out. But
Speaker 7: it certainly does.
Speaker 8: Affect headline inflation, does affect what people actually pay at
Speaker 8: the pump and in the US and so and around
Speaker 8: the world, and so that's definitely.
Speaker 7: A factor, Jim.
Speaker 1: As we look ahead, a lot of people are saying
Speaker 1: that this is increasingly a lame duck FED chair and
Speaker 1: that after he is gone, there's going to be someone
Speaker 1: new in his seat who will be a lot more dubvish.
Speaker 1: How realistic do you think that that actually is?
Speaker 8: Well, one share at a time, and it's really the
Speaker 8: committee that makes policy. It's not really any one person.
Speaker 8: Certainly Chair PubL guides the committee, but.
Speaker 7: It's having been on it.
Speaker 8: There's many people with their own staffs and their own analysis,
Speaker 8: and they've got their own ideas about where policy should go.
Speaker 7: I do think that the committee's.
Speaker 8: Smarter than any one person on the committee, and it
Speaker 8: really pays off to have a lot of different viewpoints
Speaker 8: as you're trying to make reason judgments where to take
Speaker 8: monetary policy for the United States.
Speaker 3: Jim, do you.
Speaker 1: Think that most of the committee members agree with you
Speaker 1: that they should be taking the slowing growth more into
Speaker 1: consideration than the inflationary potential shock given the fact that
Speaker 1: they haven't really seen it yet, or do you think
Speaker 1: that they are focusing on what some people have said
Speaker 1: is fighting the last war, which is inflation that got
Speaker 1: maybe a little away from them.
Speaker 8: Yeah, it's a little bit. I think about half the committee.
Speaker 8: It's once burned twice shy. I think they really don't
Speaker 8: want to let anything occur that would send inflation expectations
Speaker 8: meaningfully higher. You do have these survey based expectations. Those
Speaker 8: seem to have a big political element to them, and
Speaker 8: so I think you have to discard them right now.
Speaker 8: The tips market five year tips inflation compensation about two
Speaker 8: thirty two today trading right in that area. So that
Speaker 8: sounds pretty good for a five year outlook on inflation.
Speaker 8: And if you think some of that's a little bit
Speaker 8: of risk premium, so market is pretty confident as the
Speaker 8: FED will hit the inflation target over the five year horizon,
Speaker 8: which is really about the best you can do as
Speaker 8: far as the FED.
Speaker 1: Former Saint Louis FED President jimbull Ard, thank you so
Speaker 1: much for being with us.
Speaker 3: Recovery of black Rock. Writing this.
Speaker 1: The Federal keep rates on hold and highlight elevated uncertainty.
Speaker 3: No surprise there.
Speaker 1: All eyes will be on the statement of economic projections.
Speaker 1: Gargee joins us. Now for more gargy. How focused are
Speaker 1: you on the FED? How focused are you on the geopolitics?
Speaker 1: How do you sort of weigh the two?
Speaker 9: Absolutely, good morning, great to be here. Usually, you know,
Speaker 9: the saying goes the marketing can only focus on one
Speaker 9: thing at a time, and we've had many one things
Speaker 9: this year. Obviously oil prices, the impact of geopolitics, what
Speaker 9: that might do to headline inflation to consumer, that's top
Speaker 9: of mind, but I wouldn't. I mean, obviously this is
Speaker 9: an SEP FED meeting. I think that's also going to
Speaker 9: be important. In particular whether they're going to hint at
Speaker 9: two more rate cuts or just one more I think
Speaker 9: that is relevant.
Speaker 3: And at the same.
Speaker 9: Time, how they handled all this additional uncertainty to your
Speaker 9: drinking blood game. I think all of that is going
Speaker 9: to weigh on them. So I think both are going
Speaker 9: to be important. But obviously the market is the most
Speaker 9: important thing right now for both the humans involved, as
Speaker 9: well as oil prices and broader risks off in the markets,
Speaker 9: even for a short term. Is certainly the geopolitics in
Speaker 9: the Middle East.
Speaker 3: And just to be clear, the drinking game is with water.
Speaker 1: We all should be hydrated, So clearly that is where
Speaker 1: we're going online. But there is this question going forward
Speaker 1: about how much this economy needs that kind of support
Speaker 1: versus has some sort of threat, not necessarily of overheating,
Speaker 1: but facing a real sticky inflation that could.
Speaker 3: Be really punitive.
Speaker 1: I'm just wondering from your perspective, and the message from
Speaker 1: markets aren't equity is telling us that actually there is
Speaker 1: no problem, even though the economic data might suggest otherwise.
Speaker 9: So time and again we've seen that when there is
Speaker 9: geopolitical uncertainty in the markets, yes, we see that spike
Speaker 9: and oil prices. Historically this has been a great time
Speaker 9: to be diversified into products like gold, because that has
Speaker 9: been an excellent diversifier. But historically what we've seen is
Speaker 9: that the three month forward or even the one month
Speaker 9: forward on high quality parts of equity markets. They have
Speaker 9: looked through geopolitical uncertainty. However, I think as we go
Speaker 9: into two and two thirty pm today, let's take a
Speaker 9: look back of what we've gotten since the May sixth,
Speaker 9: May seventh FOMC last meeting. Inflation has been you know,
Speaker 9: there have been no impacts of tariffs yet yesterday, I
Speaker 9: think the most important thing was around the weakness of
Speaker 9: retail sales and global ip that is softening, and I
Speaker 9: think that is important and perhaps had some lot of
Speaker 9: an impact on price action in markets yesterday, and I
Speaker 9: think the FED recognizes that and more importantly at eight
Speaker 9: thirty today, initial jobless claims and the continuing claims that
Speaker 9: have ever so slightly gotten worse. I think those are
Speaker 9: the important things that we should all be looking forward to.
Speaker 9: But at the same time, like we've seen before, the
Speaker 9: market does tend to sort of look through neo term
Speaker 9: shifts in volatility, and I think the macro picture for
Speaker 9: now is still not too weak, so equities or especially
Speaker 9: quality equities and AI equities are probably going to be okay.
Speaker 3: But gardy is that a mistake?
Speaker 6: For all we know the president right now is still
Speaker 6: weighing his options, and one of those options is a strike.
Speaker 9: You know, one of those options is a strike. The
Speaker 9: market always responds in probabilities, not binary outcomes, So let's
Speaker 9: think about the probability of that. Yes, that's the headlines
Speaker 9: right now, with the surrender headlines from yesterday, for the
Speaker 9: US to get involved, for retaliatory retaliatory strikes to come through.
Speaker 9: I think that's going to be a big thing for
Speaker 9: the markets. Absolutely. And that's again why I would suggest
Speaker 9: that if you're listening to this right now, if you're
Speaker 9: an investor, having diversifying stuff in your portfolio, having diversifying
Speaker 9: asset classes like international equities, having some bonds in the
Speaker 9: front end of the curve and the belly of the curve,
Speaker 9: having things like gold and having inflation protection is really important.
Speaker 6: How much have you been advocating for more gold and
Speaker 6: our portfolio since Trump took office.
Speaker 9: I won't say it's to do with Trump. I think
Speaker 9: that we were talking about gold even if you think
Speaker 9: back to last year, just as another way in which
Speaker 9: you can diversify against people moving away other countries moving
Speaker 9: away from the US dollar. It's certainly a geopolitical risk,
Speaker 9: and by the way, we've been faced with geopolitical risk
Speaker 9: much before November twenty twenty four. This was something that
Speaker 9: has the geopolitical fragmentation we're seeing wars in the up Pakistan, Israel,
Speaker 9: Gaza and now of course with Iran. That's been going
Speaker 9: on for some time. So we've been talking about that,
Speaker 9: and I think it's a balast and a portfolio that
Speaker 9: investors need.
Speaker 1: I'm going to put you on the spot, so I
Speaker 1: apologize in advance. But a lot of people have been
Speaker 1: talking about stock selection, and they've been talking about the
Speaker 1: importance of going away from indexes.
Speaker 3: And moving into companies.
Speaker 1: We're not focusing necessarily on big existential risk, but you're
Speaker 1: focusing on AI adoption, or you're focusing on the fact
Speaker 1: that people are eating more.
Speaker 3: Breadsticks at this particular company.
Speaker 1: How much is that challenging some of the ETF landscape
Speaker 1: and the indexing landscape.
Speaker 3: They got a lot of popularity at.
Speaker 1: A time where there was a much more beta type
Speaker 1: a trend rather than this sort of alpha aspect of
Speaker 1: the conversations we have today.
Speaker 9: Absolutely not a challenge at all. Actually, when we think
Speaker 9: about where black Rock has been able to garner the
Speaker 9: most amount of flows. It is investors more and more
Speaker 9: adopting active ETFs. Exactly. The trend that you're portraying is
Speaker 9: playing out in the markets where activetfs such as BAI
Speaker 9: that focuses on AI in an active manner because obviously
Speaker 9: you can't just set it and forget about it. Things
Speaker 9: like bink, which is flexible fixed income where you're focusing
Speaker 9: on harnessing income in the markets, those have been so
Speaker 9: popular that pickers investors are recognizing the need to be
Speaker 9: dynamic as well as quite nimble in this environment. Having
Speaker 9: said that, for many investors who are just entering the
Speaker 9: markets that need to understand the market is theirs to own.
Speaker 9: Perhaps owning just a simple index is a very good
Speaker 9: first step to be in the markets. And frankly, when
Speaker 9: we look at the flows, there's a tremendous amount of
Speaker 9: inflows to products like bitcoin for example, ibit one of
Speaker 9: the it's obviously an index product, but something that has
Speaker 9: gonered huge amount of inflows, yurtel date and products like
Speaker 9: the very front end of the fixed income markets with ASGOV.
Speaker 9: So there is a place for both, but absolutely no
Speaker 9: doubt investors are focusing on more and more bespoke ways
Speaker 9: to access the market with active fixed income and active
Speaker 9: equity ETF.
Speaker 1: Bitcoin ETF in tandem with the gold ETF.
Speaker 3: I just wonder, how do you have bitcoin?
Speaker 1: That's the underlying to an ETF that people we can get.
Speaker 3: In that gargiechattery and flat round. Thank you so much.
Speaker 1: Joining us now is Claudius Sum of New Century Advisors. Claudia,
Speaker 1: great to see you, Thank you so much for being
Speaker 1: with us. I want to start with this idea that
Speaker 1: the weight and see FED doesn't have to tell us anything.
Speaker 1: A lot of people would argue and push back and say, actually,
Speaker 1: they have to give us a sense of what their
Speaker 1: scenario analysis looks like at a time or potentially that
Speaker 1: it could increase their chance of stagflation. What's your sense
Speaker 1: of what their scenario analysis looks like. What's their response
Speaker 1: mechanism to that?
Speaker 8: Right?
Speaker 10: I think that'll be a really important part of the
Speaker 10: press conference today is to have how talk through the
Speaker 10: risks the scenarios that the FED is considering. Unfortunately, their tools,
Speaker 10: like the Summary of Economic Projections, the way it's put
Speaker 10: together right now, doesn't do a great job of getting
Speaker 10: you know, scenarios across, but it is so clear that
Speaker 10: the FED is in risk management mode, right, this is
Speaker 10: about where inflation could go, how it could persist, and
Speaker 10: that you know, this is this is kind of an
Speaker 10: insurance pause, right. They want to avoid those risk outcomes.
Speaker 10: And so then it is a big part of explaining
Speaker 10: why why is it you're on hold? Inflation's coming down,
Speaker 10: you know, why aren't you cutting now? So I think
Speaker 10: they really do need to kind of spell that out
Speaker 10: and give us a sense of what they're looking for
Speaker 10: in the data as it's coming in.
Speaker 6: What potential damage could they do if they are too
Speaker 6: late and they should be cutting because inflation's coming down.
Speaker 10: Well, it's it's unnecessary weakness on the economy. I mean,
Speaker 10: if you look at interest rate sensitive sectors like the
Speaker 10: housing market, the higher rates they are having an effect, right,
Speaker 10: They're having a on people who are out there trying
Speaker 10: to buy homes, builders who are trying to you know,
Speaker 10: construct new housing.
Speaker 11: So you know, if like that, that is a pain.
Speaker 10: It may be necessary to keep inflation under control, to
Speaker 10: keep inflation expectations under control, but there is a cost, right,
Speaker 10: and I think the Fed is balancing that well. But
Speaker 10: it is something that should be communicated because otherwise, just
Speaker 10: if you look at the data on hand and you
Speaker 10: think of the data driven FED, it's like, well, why
Speaker 10: aren't you starting to cut or even talking about cutting?
Speaker 10: Like they're really not just going to pause today, They're
Speaker 10: going to push that pause pretty hard through probably much
Speaker 10: of the rest of this year.
Speaker 6: It sounds like you think Chair Powell is going to
Speaker 6: be hawkish today. We just got to know from Andrew Holland,
Speaker 6: Horse of City, and he said there's three reasons for
Speaker 6: Powell to be dubbish. One three months of softer core inflation.
Speaker 6: Two rising jobless claims, continuing jobless claims and softer housing data.
Speaker 3: Do you think his rhetoric is.
Speaker 6: Going to lean hawkish when a lot of people think
Speaker 6: he should actually come out and sound a bit dubbish?
Speaker 10: Yeah, I mean it's I think a lot of it
Speaker 10: comes down to how to me. One big question to
Speaker 10: listen to how today is to explain, you know that
Speaker 10: inflation data in the last four months that's been unexpectedly soft.
Speaker 11: What's that about, right, Because.
Speaker 10: If it comes a hawkish tone to me would be saying, oh, well,
Speaker 10: the terriff inflation is still coming.
Speaker 11: We just it's timing. We just need to wait, it's coming.
Speaker 10: But you know there's you can look at that data
Speaker 10: and see some nuance not just from what you think
Speaker 10: are teriff effects, but just inflation in general, where it's like, man,
Speaker 10: the demands a little softer. Maybe this isn't pushing through
Speaker 10: like anything that he would say today that would kind
Speaker 10: of soften or push against all of these upside risk
Speaker 10: to inflation to me would.
Speaker 11: I think be pretty balanced. But you know, we'll just
Speaker 11: have to see where he says.
Speaker 10: And one difficult thing today with listening to Howe is
Speaker 10: understanding that you know he is speaking for the FEC.
Speaker 11: That's what he does, is fed shair.
Speaker 10: He has his interpretation of it as well, and he
Speaker 10: probably will be in something of a live debate with
Speaker 10: the dot plot and the summary projection, so it's kind
Speaker 10: of tough to parse it on days where we get
Speaker 10: like these forecasts.
Speaker 11: In addition to him speaking.
Speaker 1: I love that a live debate with him basically arguing
Speaker 1: the side of everyone on the committee and trying to
Speaker 1: sort of come out somewhere in the middle. I'm struck
Speaker 1: by what's keep some people keep on saying, which is
Speaker 1: a number of members of this committee are fighting the
Speaker 1: last war. They are so scarred from the use of
Speaker 1: transitory and failing to curtail inflation a couple of years ago,
Speaker 1: that they are more willing to look through any weakness
Speaker 1: in the labor market in order to prioritize inflation. Do
Speaker 1: you expect that to be the same today, which is
Speaker 1: the reason why people are expecting more of.
Speaker 3: A hawkish tone.
Speaker 10: I think we'll continue to see the focus of the
Speaker 10: informc on the inflation risks, on inflation going higher. Again,
Speaker 10: the claims data today didn't reinforce any kind of an emergency,
Speaker 10: and we aren't four point two percent unemployment right like,
Speaker 10: we aren't a full employment economy, so.
Speaker 11: We're starting from a good place.
Speaker 10: Inflation still somewhat elevated, and just everything we've gone in
Speaker 10: terms of the data, and then, like you said, kind
Speaker 10: of fighting the last war, the inflation risk just loomed
Speaker 10: really large. But as we're just seeing how they're interpreting
Speaker 10: the data, how they're questioning their own assumptions about you know,
Speaker 10: inflation could really get out of hand. I think that's
Speaker 10: the piece, you know, that would be really important to understand.
Speaker 10: If if they're focused on the current threats to the
Speaker 10: economy as opposed to the threats we had four years ago.
Speaker 1: Claudia Sam of New Central Advisors, thank you so much
Speaker 1: for being with us. Really appreciate your insights.
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