1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:13,080 --> 00:00:15,840 Speaker 2: These always go on maybe one or two questions too long, 3 00:00:15,880 --> 00:00:16,239 Speaker 2: don't they. 4 00:00:16,239 --> 00:00:17,360 Speaker 3: That wraps up the first. 5 00:00:17,120 --> 00:00:20,200 Speaker 2: News conference with Chairman Power for twenty twenty five. If 6 00:00:20,239 --> 00:00:22,520 Speaker 2: you are just joining us, welcome to the program. A 7 00:00:22,560 --> 00:00:25,279 Speaker 2: two part story here, one part the statement, the second 8 00:00:25,320 --> 00:00:28,200 Speaker 2: part the news conference. The statement push stocks down and 9 00:00:28,240 --> 00:00:31,200 Speaker 2: bonyards a little bit higher. In the news conference, equities 10 00:00:31,240 --> 00:00:33,839 Speaker 2: came off the lows and bonyards came off the highs. 11 00:00:33,840 --> 00:00:37,120 Speaker 2: In the statement, the Federal Reserve repeated that inflation remained 12 00:00:37,159 --> 00:00:40,159 Speaker 2: somewhat elevated, but removed this reference to this line of 13 00:00:40,240 --> 00:00:43,040 Speaker 2: it having made any progress towards their two percent goals. 14 00:00:43,080 --> 00:00:45,640 Speaker 3: So that sounded somewhat hawkish, didn't it. 15 00:00:45,680 --> 00:00:49,000 Speaker 2: So ultimately, inevitably the Federal Reserve chair was asked about this, 16 00:00:49,040 --> 00:00:50,960 Speaker 2: and this is what he had to say in Oppressor 17 00:00:51,120 --> 00:00:51,840 Speaker 2: just moments ago. 18 00:00:52,440 --> 00:00:54,760 Speaker 4: If you just look at the first paragraph, we did 19 00:00:54,800 --> 00:00:56,960 Speaker 4: a little bit of language clean up there. We took 20 00:00:57,000 --> 00:00:59,760 Speaker 4: out a reference to since earlier in the year is 21 00:01:00,000 --> 00:01:03,480 Speaker 4: related to the labor market, and we just chose to 22 00:01:03,720 --> 00:01:04,720 Speaker 4: shorten that sentence. 23 00:01:05,080 --> 00:01:05,360 Speaker 3: Again. 24 00:01:05,400 --> 00:01:07,920 Speaker 4: I mean, if you look at the sort of intermeding 25 00:01:08,080 --> 00:01:11,440 Speaker 4: data was good, and there was another inflation reading I 26 00:01:11,480 --> 00:01:14,039 Speaker 4: guess just before the December meeting. So we've got two 27 00:01:14,080 --> 00:01:15,920 Speaker 4: good readings in a row that are consistent with two 28 00:01:15,920 --> 00:01:18,920 Speaker 4: percent inflation. Again, we're not going to over interpret two 29 00:01:18,959 --> 00:01:21,560 Speaker 4: good or too bad readings. But this was not meant 30 00:01:21,600 --> 00:01:23,600 Speaker 4: to send a signal other than this. 31 00:01:24,160 --> 00:01:26,000 Speaker 2: Sole So we talked about it for the best part 32 00:01:26,000 --> 00:01:27,880 Speaker 2: of thirty minutes. We thought it was a hawkish till 33 00:01:27,920 --> 00:01:30,000 Speaker 2: and the statement. The chairman came out and said that 34 00:01:30,040 --> 00:01:32,040 Speaker 2: line was not meant to send any signal. 35 00:01:32,240 --> 00:01:34,160 Speaker 5: It was just language cleanup. 36 00:01:34,200 --> 00:01:36,120 Speaker 1: If you look at the first sentence, when you take 37 00:01:36,160 --> 00:01:38,600 Speaker 1: your sharpie, you go like this, and then you go 38 00:01:38,720 --> 00:01:41,920 Speaker 1: like this. I mean, look, this was someone who talked 39 00:01:41,959 --> 00:01:44,200 Speaker 1: in circles quite a bit. It was sort of saying something, 40 00:01:44,240 --> 00:01:46,199 Speaker 1: but what are these? These are words, We don't know anything. 41 00:01:46,200 --> 00:01:48,200 Speaker 1: I don't want to start speculating because he really to 42 00:01:48,720 --> 00:01:52,360 Speaker 1: that and we can't really have any model. So he 43 00:01:52,480 --> 00:01:54,800 Speaker 1: basically came out and did exactly what he wanted to do, 44 00:01:54,840 --> 00:01:55,400 Speaker 1: which was. 45 00:01:55,400 --> 00:01:57,120 Speaker 3: Say nothing on the labor market. Downside. 46 00:01:57,200 --> 00:01:59,400 Speaker 2: Risk of the labor market appeared to have abates it. 47 00:01:59,480 --> 00:02:01,640 Speaker 2: This is a cha from where they were maybe back 48 00:02:01,640 --> 00:02:05,120 Speaker 2: in September. There was this labor market scare tek in 49 00:02:05,160 --> 00:02:07,880 Speaker 2: the summer, which this fed responded to with one hundred 50 00:02:07,880 --> 00:02:10,800 Speaker 2: basis points of carts to insulate the economy from seeing 51 00:02:10,800 --> 00:02:13,480 Speaker 2: getting further weakness, something that the chairman said at Jackson Hole 52 00:02:13,520 --> 00:02:15,480 Speaker 2: he didn't want to see t Ken. It feels like 53 00:02:15,520 --> 00:02:17,720 Speaker 2: they're a lot more comfortable with the situation. 54 00:02:17,800 --> 00:02:19,520 Speaker 6: I totally agree when you heard that from our guests 55 00:02:19,560 --> 00:02:23,000 Speaker 6: in the previous pre press conference. Prestatement as well. And 56 00:02:23,040 --> 00:02:25,680 Speaker 6: it does get to John wnder Claim's breakout the basic 57 00:02:25,720 --> 00:02:28,400 Speaker 6: you know stuff we cover each and every day, and 58 00:02:28,440 --> 00:02:30,639 Speaker 6: it goes to get the march the idea of how 59 00:02:30,680 --> 00:02:32,800 Speaker 6: many meetings do we have, how many inflation reports do 60 00:02:32,840 --> 00:02:35,000 Speaker 6: we have? How many jobs reports? I think the most 61 00:02:35,000 --> 00:02:37,799 Speaker 6: amazing thing about this is you and I could focus here. 62 00:02:37,800 --> 00:02:40,280 Speaker 6: I mean, we're twenty minutes in with Man City, twenty 63 00:02:40,320 --> 00:02:42,720 Speaker 6: three minutes in with Man City, and they haven't got 64 00:02:42,720 --> 00:02:44,000 Speaker 6: it done versus Club Brush. 65 00:02:44,160 --> 00:02:47,520 Speaker 3: I mean, no, no, this is just no, just I 66 00:02:47,560 --> 00:02:50,080 Speaker 3: was joking about it. You're actually watching it. No, it's important, 67 00:02:50,520 --> 00:02:50,720 Speaker 3: you know. 68 00:02:50,840 --> 00:02:53,840 Speaker 6: I mean, there's what eighteen nineteen champions games going on 69 00:02:54,120 --> 00:02:56,000 Speaker 6: that's more exciting than the press conferences. 70 00:02:56,000 --> 00:02:58,000 Speaker 2: Definitely, Roth of woll Th Research is not watching the 71 00:02:58,040 --> 00:03:01,360 Speaker 2: European football right now. Is excite hit on that nearest 72 00:03:01,360 --> 00:03:03,440 Speaker 2: conference we all just had in the last sixty minutes. 73 00:03:03,440 --> 00:03:04,360 Speaker 3: Stephanie's going to see you. 74 00:03:04,400 --> 00:03:04,920 Speaker 7: Good to see you. 75 00:03:04,960 --> 00:03:05,720 Speaker 3: What did you make of that? 76 00:03:06,320 --> 00:03:07,800 Speaker 8: He didn't say all that much, and he then he 77 00:03:07,800 --> 00:03:09,680 Speaker 8: did a little bit of reversal from the hawkish part 78 00:03:09,720 --> 00:03:11,640 Speaker 8: of the statement. It was January clean up, like you 79 00:03:11,720 --> 00:03:14,480 Speaker 8: just mentioned, and then some of the key things was 80 00:03:14,560 --> 00:03:17,480 Speaker 8: meaningfully above long term neutral, and then he made some 81 00:03:17,480 --> 00:03:21,520 Speaker 8: conflicting statements about yes, rates are above neutral, but then 82 00:03:21,560 --> 00:03:23,440 Speaker 8: financial conditions are a little bit easy. So he kind 83 00:03:23,440 --> 00:03:25,000 Speaker 8: of settle a little bit of a lot. 84 00:03:25,680 --> 00:03:28,320 Speaker 1: That's exactly what I've been trying to wrap my head around. 85 00:03:28,520 --> 00:03:31,679 Speaker 1: Meaningfully above neutral, but we can move slowly and we 86 00:03:31,720 --> 00:03:32,639 Speaker 1: don't have to move at all. 87 00:03:32,680 --> 00:03:35,520 Speaker 5: We could just observe we are looking. 88 00:03:35,280 --> 00:03:38,760 Speaker 1: At restrictive rates but also accommodative conditions. 89 00:03:39,360 --> 00:03:41,440 Speaker 5: Was this successful? Yeah? 90 00:03:41,440 --> 00:03:43,080 Speaker 8: I think he wanted to get in and out without 91 00:03:43,120 --> 00:03:44,800 Speaker 8: moving markets all that much, and yeah it was a 92 00:03:44,800 --> 00:03:47,200 Speaker 8: bit of a ride, but that's kind of what he accomplished. 93 00:03:47,520 --> 00:03:49,680 Speaker 6: I want to note Meta and Microsoft leg up here 94 00:03:49,720 --> 00:03:51,720 Speaker 6: as we get to those earnings as well. Somewhere in 95 00:03:51,760 --> 00:03:54,080 Speaker 6: there was some stuff in yourro Off language where he 96 00:03:54,160 --> 00:03:57,720 Speaker 6: talked about a central a limit, you know, a Gaussian curve, 97 00:03:57,800 --> 00:04:00,680 Speaker 6: a bell curve in that My basic is, this is 98 00:04:00,720 --> 00:04:03,720 Speaker 6: not a bell curve society. There's a log normal risk here. 99 00:04:03,960 --> 00:04:06,720 Speaker 6: What's the risk for you, Stephanie Roth In terms of 100 00:04:06,760 --> 00:04:10,720 Speaker 6: the Fed parlor game forward? What's the thing they really 101 00:04:10,760 --> 00:04:12,600 Speaker 6: need to focus on to stagger to march? 102 00:04:13,160 --> 00:04:14,880 Speaker 8: The most important thing that we're going to be watching 103 00:04:14,920 --> 00:04:17,640 Speaker 8: for is what happens from labor supply perspective, because there's 104 00:04:17,640 --> 00:04:20,200 Speaker 8: going to be three and a half million people potentially 105 00:04:20,279 --> 00:04:22,320 Speaker 8: losing their visa status over the next two years, and 106 00:04:22,320 --> 00:04:24,760 Speaker 8: that could tighten the labor market, and it could happen 107 00:04:24,880 --> 00:04:26,880 Speaker 8: kind of slowly and gradually, and maybe we won't really 108 00:04:26,960 --> 00:04:28,760 Speaker 8: realize it until the second half of this year, and 109 00:04:28,760 --> 00:04:29,839 Speaker 8: then you realize, wow. 110 00:04:29,720 --> 00:04:30,200 Speaker 7: The uneployed. 111 00:04:30,240 --> 00:04:33,040 Speaker 6: Right, will the president focus on the labor mandate or 112 00:04:33,080 --> 00:04:35,599 Speaker 6: will the president focus on inflation? Or is he just 113 00:04:35,640 --> 00:04:38,800 Speaker 6: going to focus on I'm a real estate transactional guy 114 00:04:39,000 --> 00:04:40,159 Speaker 6: and I need low rates. 115 00:04:40,800 --> 00:04:45,200 Speaker 8: Probably the latter, but the other things are going to 116 00:04:45,200 --> 00:04:47,760 Speaker 8: be important too, Right, So if we have the immigration 117 00:04:47,880 --> 00:04:50,479 Speaker 8: thing slowly happening in the background, and we don't really 118 00:04:50,520 --> 00:04:52,839 Speaker 8: notice it until the labor market's kind of quite a 119 00:04:52,839 --> 00:04:53,200 Speaker 8: bit tight. 120 00:04:53,440 --> 00:04:54,960 Speaker 7: So we just we just changed our FED call. 121 00:04:55,000 --> 00:04:57,000 Speaker 8: We were calling for previously for two cuts, now we're 122 00:04:57,040 --> 00:04:59,240 Speaker 8: calling for one in May, and then I think after 123 00:04:59,240 --> 00:05:00,560 Speaker 8: that they're going to be done for a while. They're 124 00:05:00,560 --> 00:05:02,040 Speaker 8: gonna have to wait and see how things play out. 125 00:05:02,160 --> 00:05:05,880 Speaker 2: Just out of interest, why mightna We're gonna probably have 126 00:05:05,920 --> 00:05:07,600 Speaker 2: some bad data for the next couple of months from 127 00:05:07,600 --> 00:05:08,760 Speaker 2: an inflation perspective. 128 00:05:09,080 --> 00:05:11,560 Speaker 8: We still have the Q one seasonal problems from inflation, 129 00:05:11,640 --> 00:05:13,240 Speaker 8: so we're gonna have to get through that, and then 130 00:05:13,240 --> 00:05:16,440 Speaker 8: in May you can have some better data because you'll 131 00:05:16,440 --> 00:05:18,360 Speaker 8: start to see a little bit of that inflation coming out. 132 00:05:18,480 --> 00:05:21,159 Speaker 1: Do you feel like there's clarity and meaningfully restrictive. I 133 00:05:21,160 --> 00:05:22,640 Speaker 1: want to go back to that for one second. I'm 134 00:05:22,640 --> 00:05:23,680 Speaker 1: still trying to wrap my head around. 135 00:05:24,720 --> 00:05:25,760 Speaker 3: Well, I'm with you. 136 00:05:26,560 --> 00:05:29,039 Speaker 1: I kind of feel like it's important here because that 137 00:05:29,160 --> 00:05:31,360 Speaker 1: was one of the key questions. That was what Bob 138 00:05:31,400 --> 00:05:34,720 Speaker 1: Michael was talking about, and that is the question how 139 00:05:34,800 --> 00:05:35,400 Speaker 1: much do you. 140 00:05:35,320 --> 00:05:37,760 Speaker 5: Have to reduce it? And then you kind of was like, 141 00:05:38,520 --> 00:05:39,159 Speaker 5: we're above it. 142 00:05:39,200 --> 00:05:42,560 Speaker 1: And maybe we'll reduce it. Is it a problem, just 143 00:05:42,600 --> 00:05:45,120 Speaker 1: going back to this Mohammedalarian point, Is it a problem 144 00:05:45,480 --> 00:05:47,560 Speaker 1: that this is a FED that doesn't seem to have 145 00:05:47,600 --> 00:05:50,479 Speaker 1: a clear message or a clear direction at a time 146 00:05:50,760 --> 00:05:53,240 Speaker 1: when people view this as one of the biggest potential 147 00:05:53,360 --> 00:05:56,120 Speaker 1: upsets to the market and to some of the stability 148 00:05:56,120 --> 00:05:57,839 Speaker 1: that we're seeing in terms of the self landing. 149 00:05:59,040 --> 00:06:01,920 Speaker 8: I mean, so the channel, they don't they don't have 150 00:06:01,960 --> 00:06:03,719 Speaker 8: a firm view on policy, and they don't even seem 151 00:06:03,760 --> 00:06:05,200 Speaker 8: to agree to some extent, nor do they want to 152 00:06:05,200 --> 00:06:07,200 Speaker 8: come out and say it from a policy in terms 153 00:06:07,200 --> 00:06:09,719 Speaker 8: of how they're assessing fiscal right. So it's going to 154 00:06:09,839 --> 00:06:11,920 Speaker 8: very much depend on inflation expectations. 155 00:06:11,920 --> 00:06:12,640 Speaker 7: Are they anchored? 156 00:06:13,000 --> 00:06:17,120 Speaker 8: And Powell mentioned the Teal book from September twenty eighteen, 157 00:06:17,160 --> 00:06:18,640 Speaker 8: and I think that's exactly how they're going to look 158 00:06:18,640 --> 00:06:21,680 Speaker 8: at it. If we see inflation expectations remain anchored, the 159 00:06:21,720 --> 00:06:24,480 Speaker 8: Fed could wait for a while and then next year 160 00:06:24,480 --> 00:06:26,680 Speaker 8: we're probably going to see slower growth as a result, 161 00:06:26,680 --> 00:06:28,960 Speaker 8: and that's when they might have an opportunity to cut again. 162 00:06:29,200 --> 00:06:32,039 Speaker 1: When you talk about inflation expectations in near term and 163 00:06:32,120 --> 00:06:34,360 Speaker 1: long term, what are we talking about Are we talking 164 00:06:34,400 --> 00:06:37,480 Speaker 1: about the University of Michigan sentiment survey that is hugely 165 00:06:37,520 --> 00:06:41,239 Speaker 1: politically affected. Are we talking about the consumer Conference board? 166 00:06:41,520 --> 00:06:44,400 Speaker 1: Are we talking about five year five year forward break events? 167 00:06:44,440 --> 00:06:44,600 Speaker 7: Right? 168 00:06:44,640 --> 00:06:47,600 Speaker 5: What is the gauge that is important to this federal Reserve? 169 00:06:47,760 --> 00:06:50,719 Speaker 8: I would say probably you missed and probably inflation break evens. 170 00:06:50,720 --> 00:06:52,520 Speaker 8: The combination, even though we all know you miss isn't 171 00:06:52,520 --> 00:06:53,239 Speaker 8: that grade of a measure. 172 00:06:53,240 --> 00:06:55,720 Speaker 7: But we all seem to watch it anyway. I don't 173 00:06:55,720 --> 00:06:56,280 Speaker 7: know why, but. 174 00:06:56,279 --> 00:06:58,960 Speaker 3: We watch it because they do. That's fair and pound 175 00:06:59,000 --> 00:07:00,640 Speaker 3: on this Federal Reserve. Respect on the two edge. 176 00:07:00,640 --> 00:07:02,599 Speaker 2: You remember that jump by right hind back in the day, 177 00:07:02,839 --> 00:07:05,400 Speaker 2: you Mitch apparently, Yeah, and. 178 00:07:05,360 --> 00:07:07,960 Speaker 8: It notoriously comes out with the reading and then the 179 00:07:07,960 --> 00:07:10,280 Speaker 8: final reading ends up getting revised back down from an 180 00:07:10,280 --> 00:07:11,120 Speaker 8: inflation perspective. 181 00:07:11,160 --> 00:07:12,080 Speaker 7: Where are we in June? 182 00:07:12,120 --> 00:07:13,840 Speaker 6: I mean you mentioned March and May and the meetings, 183 00:07:13,880 --> 00:07:16,120 Speaker 6: But within the conversation we have with four or five 184 00:07:16,160 --> 00:07:20,000 Speaker 6: worthies today, the question is what real GDP does out 185 00:07:20,040 --> 00:07:23,080 Speaker 6: to June? I mean, you know, the facts change, Are 186 00:07:23,120 --> 00:07:24,560 Speaker 6: the facts going to change? Or are we going to 187 00:07:24,640 --> 00:07:28,520 Speaker 6: continue with this growth economy helping part of America not 188 00:07:28,640 --> 00:07:29,640 Speaker 6: all of America. 189 00:07:29,920 --> 00:07:31,880 Speaker 7: We're probably going to be in this growth economy. 190 00:07:32,240 --> 00:07:35,480 Speaker 8: The one thing from from a sort of lower income 191 00:07:35,560 --> 00:07:40,400 Speaker 8: perspective is animal spirits may support the broad based the 192 00:07:40,680 --> 00:07:43,880 Speaker 8: broad based consumer. We might actually start to see good 193 00:07:43,880 --> 00:07:46,280 Speaker 8: spending pick up, which could help kind of the bulk 194 00:07:46,360 --> 00:07:48,440 Speaker 8: of the economy because they're getting ahead of tariffs. 195 00:07:49,040 --> 00:07:51,480 Speaker 6: Yeah, and John, I mean I got Microsoft legging up 196 00:07:51,480 --> 00:07:53,480 Speaker 6: here now or it was before the meeting. I mean, 197 00:07:53,520 --> 00:07:55,560 Speaker 6: we're going into earnings in one part of America. 198 00:07:55,680 --> 00:07:55,920 Speaker 2: John. 199 00:07:56,320 --> 00:07:58,520 Speaker 6: They don't give a damn what Jerome poll says. They're 200 00:07:58,560 --> 00:08:00,920 Speaker 6: just looking at free cash flow. Microsoft. 201 00:08:00,920 --> 00:08:02,760 Speaker 2: On the rest, I'm miss working with you on a 202 00:08:02,800 --> 00:08:04,840 Speaker 2: daily basis for a whole host of reasons. But just 203 00:08:04,840 --> 00:08:06,200 Speaker 2: then I had no idea if you're coming to me 204 00:08:06,240 --> 00:08:07,480 Speaker 2: because Man City had scored. 205 00:08:07,680 --> 00:08:11,760 Speaker 3: If they'd scored, I. 206 00:08:11,720 --> 00:08:14,119 Speaker 6: Wasn't sure what to brak is in my ear saying, 207 00:08:14,160 --> 00:08:17,240 Speaker 6: don't you dare? I don't even know how to pronounce it. 208 00:08:17,480 --> 00:08:19,800 Speaker 6: Zagreb one ac milan zero. 209 00:08:20,000 --> 00:08:23,320 Speaker 3: Is that that's true? Is that just happened? You're okay? Okay, 210 00:08:23,400 --> 00:08:24,200 Speaker 3: Well I'm not okay. 211 00:08:24,240 --> 00:08:29,600 Speaker 2: Now's continue by talking about financial market and central bank decisions. 212 00:08:29,640 --> 00:08:32,520 Speaker 2: Lisa mentioned the Bank of Canada a little bit earlier, 213 00:08:32,840 --> 00:08:35,120 Speaker 2: Luke Howard writes and and said thank you, by the way. 214 00:08:35,360 --> 00:08:37,720 Speaker 5: Yeah, well it's important, Luke, I got you back. 215 00:08:37,800 --> 00:08:40,320 Speaker 2: Tiff Maclin and a Bank of Canada. They did decide 216 00:08:40,320 --> 00:08:42,360 Speaker 2: to reduce interest rates. They did decide to say, you 217 00:08:42,440 --> 00:08:44,800 Speaker 2: know what, we can't offer guidance because of Tariff's Why 218 00:08:44,880 --> 00:08:47,640 Speaker 2: is it any different for Chairman Powell and this feeder reserve. 219 00:08:48,080 --> 00:08:50,320 Speaker 8: We have an economy that's running well above trend. We 220 00:08:50,320 --> 00:08:52,160 Speaker 8: were going to see a GDP print that's close to 221 00:08:52,200 --> 00:08:53,280 Speaker 8: three percent this week. 222 00:08:53,440 --> 00:08:53,600 Speaker 6: Right. 223 00:08:53,640 --> 00:08:55,920 Speaker 8: The ecomomy's fine, there's no rush, and that's what he said. 224 00:08:56,000 --> 00:08:57,439 Speaker 8: There's no They're not in a hurry. 225 00:08:57,600 --> 00:09:01,199 Speaker 6: This is the single most important observation fed the sides today. 226 00:09:01,400 --> 00:09:04,679 Speaker 6: America is totally different than when I witnessed in Toronto 227 00:09:04,960 --> 00:09:07,360 Speaker 6: a number of months ago. We are separate in our 228 00:09:07,400 --> 00:09:10,319 Speaker 6: exceptionalism and it was in spades when I. 229 00:09:10,280 --> 00:09:12,079 Speaker 2: Was up in case just because of the strength of 230 00:09:12,080 --> 00:09:14,360 Speaker 2: the economy. Somo, do you think it's it's a tech overlay. 231 00:09:14,480 --> 00:09:16,240 Speaker 2: This is about the President of the United States and 232 00:09:16,280 --> 00:09:17,720 Speaker 2: that worried about what it's. 233 00:09:17,360 --> 00:09:18,959 Speaker 6: A little bit. I'll go with that overlay, but it's 234 00:09:18,960 --> 00:09:22,760 Speaker 6: most about Clarita's colleague Ned Phelps, and our dynamism is 235 00:09:22,800 --> 00:09:26,160 Speaker 6: tangible again with Microsoft kicking it off here with Meta 236 00:09:26,240 --> 00:09:28,560 Speaker 6: in a bit, Lisa, you feel the same way. 237 00:09:30,200 --> 00:09:33,880 Speaker 1: I guess the US has a much more robust economy. 238 00:09:34,000 --> 00:09:36,600 Speaker 1: It also is essential bank to the world in many 239 00:09:36,600 --> 00:09:37,280 Speaker 1: different ways. 240 00:09:37,480 --> 00:09:41,520 Speaker 5: It also is not being subject to a president. 241 00:09:41,679 --> 00:09:44,079 Speaker 1: It is part of a country with a president. It's 242 00:09:44,200 --> 00:09:47,800 Speaker 1: very different for say Canada that is facing off with that. 243 00:09:48,559 --> 00:09:50,640 Speaker 1: I was a little lost in thought there, and the 244 00:09:50,720 --> 00:09:52,440 Speaker 1: reason why is because. 245 00:09:52,240 --> 00:09:53,440 Speaker 3: You're watching a football take and. 246 00:09:56,920 --> 00:09:59,960 Speaker 1: I'm trying to wrap my head around whether it's appropriate 247 00:10:00,320 --> 00:10:03,400 Speaker 1: for this fed to be sort of directionless right now, 248 00:10:03,559 --> 00:10:06,080 Speaker 1: or whether it's inappropriate. You know, I don't know whether 249 00:10:06,160 --> 00:10:08,640 Speaker 1: it is appropriate because it is an uncertain time, and 250 00:10:08,679 --> 00:10:11,960 Speaker 1: I don't know if it's inappropriate because they have to 251 00:10:12,000 --> 00:10:14,280 Speaker 1: give some sort of sense of what the reaction function 252 00:10:14,480 --> 00:10:17,320 Speaker 1: is and the scenario analysis and they. 253 00:10:17,200 --> 00:10:19,240 Speaker 5: Could have a more clear view. I don't have an 254 00:10:19,280 --> 00:10:19,960 Speaker 5: answer on that. 255 00:10:20,080 --> 00:10:22,480 Speaker 6: Seventy year off how x post are they? That's all 256 00:10:22,480 --> 00:10:25,560 Speaker 6: there is to it to me. They're massively exposed waiting 257 00:10:25,640 --> 00:10:26,200 Speaker 6: for data. 258 00:10:26,320 --> 00:10:28,440 Speaker 8: Yeah, I think that's been the case over the past 259 00:10:28,520 --> 00:10:31,600 Speaker 8: couple of years. Is they've been very much data point dependent, 260 00:10:31,600 --> 00:10:32,240 Speaker 8: which they say. 261 00:10:32,080 --> 00:10:33,480 Speaker 7: They don't want to be, but they have been. 262 00:10:33,520 --> 00:10:34,040 Speaker 3: But they are. 263 00:10:34,320 --> 00:10:35,920 Speaker 8: They are, and they have been, and that's going to 264 00:10:35,960 --> 00:10:37,640 Speaker 8: be the case for much of this year. They're going 265 00:10:37,679 --> 00:10:40,600 Speaker 8: to react to see how fiscal policy ends up playing out, 266 00:10:41,400 --> 00:10:44,200 Speaker 8: and they're in a weight and see mode, which is 267 00:10:44,360 --> 00:10:46,880 Speaker 8: confusing for investors. But at least at this point, the 268 00:10:46,920 --> 00:10:49,200 Speaker 8: E commy's doing just fine. Inflation has settled down, so 269 00:10:49,240 --> 00:10:50,640 Speaker 8: it's not really that big of a problem. 270 00:10:50,720 --> 00:10:53,120 Speaker 2: This found like a clean up for December. That's what 271 00:10:53,160 --> 00:10:55,520 Speaker 2: it found like to me, a cleanup for December. This 272 00:10:55,600 --> 00:10:59,439 Speaker 2: isn't about policy changes, This isn't about expected policy changes. 273 00:10:59,480 --> 00:11:01,840 Speaker 2: This is about you on the labor market and inflation, 274 00:11:02,000 --> 00:11:04,600 Speaker 2: and that's why we've not got interest rates today. Back 275 00:11:04,640 --> 00:11:07,000 Speaker 2: in December, chem and Powell made a hash of that, 276 00:11:07,280 --> 00:11:08,319 Speaker 2: and I think he made a hash of it, and 277 00:11:08,520 --> 00:11:10,160 Speaker 2: I do have some sympathy that it was because of 278 00:11:10,160 --> 00:11:13,640 Speaker 2: what happened with the forecasts and how some officials incorporated 279 00:11:13,679 --> 00:11:16,800 Speaker 2: some policy uncertainty TK and ultimately they changed. 280 00:11:16,559 --> 00:11:21,640 Speaker 6: The better because I don't Lisa reads the minutes, but 281 00:11:22,080 --> 00:11:24,200 Speaker 6: when Colby, I think it was her follow on question, 282 00:11:24,280 --> 00:11:26,000 Speaker 6: and you played it there when Colby Smith at the 283 00:11:26,040 --> 00:11:29,160 Speaker 6: Times he's hit some mumbo jump about we cleaned up 284 00:11:29,160 --> 00:11:30,040 Speaker 6: the language. 285 00:11:30,679 --> 00:11:35,360 Speaker 3: What God's does read that, it's hard not to read that. 286 00:11:35,440 --> 00:11:37,120 Speaker 2: It's hard to read that, and just walk away with 287 00:11:37,160 --> 00:11:39,480 Speaker 2: this idea that, yeah, that doesn't mean anything. I mean, 288 00:11:39,520 --> 00:11:41,520 Speaker 2: I take signal from that, whether he says there's no 289 00:11:41,600 --> 00:11:44,120 Speaker 2: signal in it or not, I take signal from that. 290 00:11:44,160 --> 00:11:46,240 Speaker 1: Change, which is the reason why the market hasn't given 291 00:11:46,320 --> 00:11:49,520 Speaker 1: back the entirety of the move. You're right, though, again, 292 00:11:49,840 --> 00:11:52,480 Speaker 1: how do we interpret the fact that don't see what 293 00:11:52,559 --> 00:11:54,680 Speaker 1: your eyes see, don't read what your eyes read. 294 00:11:54,960 --> 00:11:56,800 Speaker 5: There is no meaning in words. 295 00:11:56,480 --> 00:11:59,880 Speaker 1: That are very deliberately crafted to give meaning and to 296 00:12:00,160 --> 00:12:02,240 Speaker 1: really gives some indication to the markets. Which is the 297 00:12:02,280 --> 00:12:05,720 Speaker 1: reason why I'm grappling with the idea of a rudderless market, 298 00:12:05,880 --> 00:12:08,559 Speaker 1: a rudderless fed, I should say, and whether that is 299 00:12:08,960 --> 00:12:12,920 Speaker 1: okay inappropriate or whether it is potentially inappropriate at a 300 00:12:13,000 --> 00:12:15,320 Speaker 1: time when a lot of people are worried about a 301 00:12:15,320 --> 00:12:17,000 Speaker 1: potential FED policy. 302 00:12:17,120 --> 00:12:19,680 Speaker 2: Er, Stephanie, it's going to see you as always, thanks 303 00:12:19,679 --> 00:12:22,280 Speaker 2: for dropping by Stephanie Rothmare of Wolf Research. Then that's 304 00:12:22,320 --> 00:12:24,959 Speaker 2: like just moments ago turning positive slightly negative now in 305 00:12:25,000 --> 00:12:27,480 Speaker 2: the s and P. Five hundred, erasing the losses of 306 00:12:27,559 --> 00:12:30,040 Speaker 2: this afternoon. Mike McKee was in the news conference. He's 307 00:12:30,080 --> 00:12:31,680 Speaker 2: back out now he can share some of his thoughts 308 00:12:31,720 --> 00:12:33,760 Speaker 2: with us. Mike, share with us how that went from 309 00:12:33,800 --> 00:12:36,199 Speaker 2: your side, from your perspective in the room. 310 00:12:37,320 --> 00:12:39,840 Speaker 9: Well, I would disagree with you a little bit, John, 311 00:12:39,880 --> 00:12:42,520 Speaker 9: and say that this wasn't probably an effort to send 312 00:12:42,559 --> 00:12:46,120 Speaker 9: some sort of signal or even necessarily a cleanup as such. 313 00:12:46,440 --> 00:12:49,760 Speaker 9: I think the FED is sort of at sea. They 314 00:12:49,800 --> 00:12:52,160 Speaker 9: don't know what is going to happen, and since the 315 00:12:52,200 --> 00:12:56,960 Speaker 9: economy is performing well, unemployment is low, inflation is not 316 00:12:57,200 --> 00:12:59,679 Speaker 9: going back up, it has stalled out a little bit, 317 00:13:00,080 --> 00:13:02,920 Speaker 9: they feel they can wait. They don't need to do 318 00:13:03,160 --> 00:13:07,079 Speaker 9: anything else at this point. I asked him specifically whether 319 00:13:07,120 --> 00:13:09,920 Speaker 9: they had a forecast they could rely on, and he 320 00:13:10,000 --> 00:13:13,080 Speaker 9: said no. He was also asked is March a live meeting, 321 00:13:13,120 --> 00:13:15,000 Speaker 9: and he said, it's a live meeting. 322 00:13:14,720 --> 00:13:15,880 Speaker 3: But we don't have any idea. 323 00:13:15,880 --> 00:13:18,360 Speaker 9: We're going to look to the data, et cetera. So 324 00:13:18,400 --> 00:13:20,960 Speaker 9: I think right now what you've got is FED that's 325 00:13:21,080 --> 00:13:23,560 Speaker 9: just trying to stay out of the way as long 326 00:13:23,600 --> 00:13:26,480 Speaker 9: as they can and they can as long as the 327 00:13:26,559 --> 00:13:29,520 Speaker 9: data continue to show the economy's doing okay. 328 00:13:29,600 --> 00:13:31,680 Speaker 1: Mike, do you expect that in March it's going to 329 00:13:31,679 --> 00:13:33,640 Speaker 1: be a more complicated staying out of the way at 330 00:13:33,640 --> 00:13:35,840 Speaker 1: a time where you have to reflect a number of 331 00:13:35,920 --> 00:13:39,719 Speaker 1: views that might not be in the same vein as J. 332 00:13:39,920 --> 00:13:40,280 Speaker 5: Powell. 333 00:13:40,320 --> 00:13:42,400 Speaker 1: That seemed to be what the problem was in December, 334 00:13:42,400 --> 00:13:46,120 Speaker 1: reflecting that some members did think about what policies could 335 00:13:46,160 --> 00:13:46,920 Speaker 1: be going forward. 336 00:13:48,320 --> 00:13:51,200 Speaker 9: Well, I think it'll probably be more confusing, But how 337 00:13:51,240 --> 00:13:54,680 Speaker 9: confusing will depend on the president and what is happening. 338 00:13:54,720 --> 00:13:59,319 Speaker 9: If he has imposed tariffs, if those tariffs invite retaliation, 339 00:13:59,800 --> 00:14:02,720 Speaker 9: how long the tariffs will last, how high the tariffs 340 00:14:02,720 --> 00:14:06,080 Speaker 9: will be, will probably present different economic models to the 341 00:14:06,160 --> 00:14:09,439 Speaker 9: various voters on the Open Market Committee, and there may 342 00:14:09,480 --> 00:14:13,000 Speaker 9: be some disagreement. I suppose they'll come together on whether 343 00:14:13,040 --> 00:14:16,440 Speaker 9: they need to cut rates or not to overcome some 344 00:14:16,600 --> 00:14:20,800 Speaker 9: of the issues that that would raise. But they're going 345 00:14:20,880 --> 00:14:23,280 Speaker 9: to have to wait and see exactly. 346 00:14:22,840 --> 00:14:23,480 Speaker 3: What this does. 347 00:14:23,520 --> 00:14:26,160 Speaker 9: Now by March, you probably won't have much of an 348 00:14:26,200 --> 00:14:28,920 Speaker 9: economic effect, so they will have to game out what 349 00:14:29,000 --> 00:14:33,120 Speaker 9: they think will happen from whatever tariff announcements come out. 350 00:14:33,320 --> 00:14:36,720 Speaker 2: As the defender of chief of that great institution behind you, Mike, 351 00:14:36,720 --> 00:14:39,000 Speaker 2: I had no doubt you disagree with me, Michael mckaytha. 352 00:14:39,360 --> 00:14:41,840 Speaker 2: Everybody on the Federals might thank you. If they're trying 353 00:14:41,880 --> 00:14:43,680 Speaker 2: to stay out the way this time, it's because they 354 00:14:43,760 --> 00:14:46,120 Speaker 2: got in the way back in December. And I think 355 00:14:46,120 --> 00:14:48,040 Speaker 2: a lot of paper would take that perspective as well. 356 00:14:48,280 --> 00:14:51,520 Speaker 1: This was I trying to walk back the idea of 357 00:14:52,200 --> 00:14:56,400 Speaker 1: talking about speculation around policies. It seems as there is 358 00:14:56,440 --> 00:14:59,840 Speaker 1: a divide and there is a curious question around whether 359 00:14:59,840 --> 00:15:01,960 Speaker 1: it this is something built ugly raised. They're going to 360 00:15:02,000 --> 00:15:05,080 Speaker 1: start to go towards the staff assumption and really reflect 361 00:15:05,080 --> 00:15:09,080 Speaker 1: the staff economic forecasts and not necessarily desparate fed members. 362 00:15:09,120 --> 00:15:11,680 Speaker 1: It might clear the air a little bit in terms 363 00:15:11,720 --> 00:15:13,560 Speaker 1: of having some of these awkward moments. 364 00:15:13,600 --> 00:15:16,240 Speaker 6: I go back to just Stephanie Roth. I think nailed 365 00:15:16,240 --> 00:15:18,120 Speaker 6: it on the mandate. It's a job market. 366 00:15:18,240 --> 00:15:18,400 Speaker 7: You know. 367 00:15:18,520 --> 00:15:21,760 Speaker 6: Guess what Thursday claims matter. You can need afford having average. 368 00:15:22,040 --> 00:15:25,440 Speaker 6: Thursday claims it hasn't broken yet, and when until the 369 00:15:25,560 --> 00:15:27,840 Speaker 6: job market breaks? And I feel bad about this because 370 00:15:28,320 --> 00:15:31,120 Speaker 6: again off Craig tour is reporting a good portion of 371 00:15:31,160 --> 00:15:33,520 Speaker 6: America the job market's already broken. 372 00:15:34,320 --> 00:15:34,840 Speaker 3: It's tough. 373 00:15:35,040 --> 00:15:37,040 Speaker 2: I can't believe it's actually one nail. And I've got 374 00:15:37,200 --> 00:15:39,800 Speaker 2: mail wound up about the football. Jeff Rosenberg and black 375 00:15:39,880 --> 00:15:41,640 Speaker 2: Rocks joins us now to talk about the markets and 376 00:15:41,640 --> 00:15:44,280 Speaker 2: not the European football. Jeff, Welcome to the program sir. 377 00:15:44,400 --> 00:15:46,800 Speaker 2: Lots of debate about what was intended and what wasn't 378 00:15:46,840 --> 00:15:49,600 Speaker 2: intended in that statement throughout that news conference. What was 379 00:15:49,600 --> 00:15:51,400 Speaker 2: your big takeaway this afternoon? 380 00:15:52,280 --> 00:15:54,080 Speaker 10: So a couple of takeaways, but I think the big 381 00:15:54,120 --> 00:15:58,600 Speaker 10: takeaway is clearly a reiteration of the end of the 382 00:15:58,680 --> 00:16:03,680 Speaker 10: December FMC signaling that this is a FED that's not 383 00:16:03,920 --> 00:16:06,680 Speaker 10: in a hurry to take any further actions. And and 384 00:16:06,720 --> 00:16:09,040 Speaker 10: so you kind of bookmark where we are. This is 385 00:16:09,080 --> 00:16:11,440 Speaker 10: the pause, this is the articulation of the pause. 386 00:16:11,960 --> 00:16:12,040 Speaker 8: Uh. 387 00:16:12,120 --> 00:16:14,440 Speaker 10: And he outlined those those reasons, and I think that's 388 00:16:14,680 --> 00:16:17,720 Speaker 10: kind of overriding the main story. It's not a huge 389 00:16:17,760 --> 00:16:20,360 Speaker 10: story because that was pretty much well. 390 00:16:20,720 --> 00:16:21,280 Speaker 3: In the market. 391 00:16:21,360 --> 00:16:23,760 Speaker 10: You're not seeing a big market reaction. Second thing I 392 00:16:23,800 --> 00:16:26,360 Speaker 10: would take away, Lisa, you highlighted it. You know, there's 393 00:16:26,400 --> 00:16:29,640 Speaker 10: some contradictions here, uh, and they were kind of highlighted 394 00:16:29,640 --> 00:16:31,920 Speaker 10: in the press conference and we've had those contradictions for 395 00:16:31,960 --> 00:16:35,840 Speaker 10: a while. You know, meaningfully restrictive yet financial conditions are easy, 396 00:16:36,440 --> 00:16:39,520 Speaker 10: meaningfully restrictive, yet we're not in a hurry. And I 397 00:16:39,560 --> 00:16:42,800 Speaker 10: agree with you, Lisa, and have said for for a while, this, 398 00:16:42,800 --> 00:16:46,000 Speaker 10: this failure to kind of take into account the role 399 00:16:46,040 --> 00:16:49,640 Speaker 10: of financial conditions in the setting of policy, kind of 400 00:16:49,680 --> 00:16:53,240 Speaker 10: like moving that more to the background, is a real 401 00:16:53,840 --> 00:16:56,800 Speaker 10: issue here for the conduct of monetary policy, and it 402 00:16:57,040 --> 00:16:58,720 Speaker 10: and it remains in that and that kind of that 403 00:16:58,840 --> 00:17:00,960 Speaker 10: kind of came up. And then the third point I'd 404 00:17:01,160 --> 00:17:03,840 Speaker 10: kind of highlighted, Jhonath, this is where you just left off, 405 00:17:04,080 --> 00:17:06,760 Speaker 10: is you know, just how is the FED going to 406 00:17:06,880 --> 00:17:12,800 Speaker 10: manage through this environment of heightened policy uncertainty? And he 407 00:17:12,960 --> 00:17:15,760 Speaker 10: kind of addressed it and then didn't want to address 408 00:17:15,800 --> 00:17:19,280 Speaker 10: it because there's no real good answers for that because 409 00:17:19,600 --> 00:17:24,359 Speaker 10: the policy is being made and the outcomes are not known, 410 00:17:24,440 --> 00:17:27,720 Speaker 10: so they're gonna have to be reactive to that. There's 411 00:17:27,720 --> 00:17:32,440 Speaker 10: no forecast ability. There's a range of outcomes that he 412 00:17:32,560 --> 00:17:37,720 Speaker 10: talked about, it's not elevated relative to COVID or GFC. 413 00:17:37,840 --> 00:17:40,320 Speaker 10: So he got that question to kind of, you know, 414 00:17:40,480 --> 00:17:44,600 Speaker 10: tamp down some of the concerns around it being elevated, 415 00:17:44,640 --> 00:17:48,960 Speaker 10: but it's an elevated degree of uncertainty centered around policy uncertainty. 416 00:17:49,160 --> 00:17:52,199 Speaker 1: Jeff I was musing over whether it was appropriate for 417 00:17:52,240 --> 00:17:55,199 Speaker 1: a federal reserve to basically not have a clear message 418 00:17:55,200 --> 00:17:59,359 Speaker 1: at a time where there are very clear economic conditions 419 00:17:59,359 --> 00:18:00,440 Speaker 1: and potential. 420 00:18:00,000 --> 00:18:01,040 Speaker 5: Policies down the pike. 421 00:18:01,640 --> 00:18:03,920 Speaker 1: I'm going to ask you this in a slightly different 422 00:18:03,960 --> 00:18:05,720 Speaker 1: way as a market participant. 423 00:18:05,880 --> 00:18:06,880 Speaker 5: Does it introduce a. 424 00:18:06,840 --> 00:18:11,000 Speaker 1: Greater degree of liability tied to FED decisions not having 425 00:18:11,000 --> 00:18:15,080 Speaker 1: a good understanding understanding of exactly how they are going 426 00:18:15,119 --> 00:18:18,359 Speaker 1: to proceed given certain potential developments. 427 00:18:19,640 --> 00:18:23,399 Speaker 10: Yeah, it's what we call the reaction function, and we're 428 00:18:23,520 --> 00:18:27,680 Speaker 10: very much focused on thinking a couple of steps ahead 429 00:18:27,840 --> 00:18:30,600 Speaker 10: of how is the FED going to react to data? 430 00:18:30,600 --> 00:18:32,480 Speaker 10: How is the FED going to react to uncertainty, because 431 00:18:32,480 --> 00:18:34,840 Speaker 10: that's how we're going to price in the bond markets. 432 00:18:34,880 --> 00:18:37,840 Speaker 10: You know, we moved a long way away from forecast 433 00:18:37,960 --> 00:18:41,840 Speaker 10: dependency and a forecast dependent FED towards a data dependent 434 00:18:41,920 --> 00:18:45,919 Speaker 10: FED and now a policy dependent FED, and so that 435 00:18:46,000 --> 00:18:49,560 Speaker 10: makes it a bit challenging, but again kind of in 436 00:18:49,600 --> 00:18:52,600 Speaker 10: the context of putting it into a historical context, not 437 00:18:52,800 --> 00:18:57,840 Speaker 10: more challenging than it has been in the past. The FED, 438 00:18:58,240 --> 00:19:01,120 Speaker 10: you know, gives us some guidance. I think he reiterated 439 00:19:01,119 --> 00:19:04,199 Speaker 10: that guidance here. You see it in the pricing. The 440 00:19:04,359 --> 00:19:08,480 Speaker 10: disconnect between market expectations and the FED rhetoric is actually 441 00:19:08,720 --> 00:19:12,600 Speaker 10: the lowest it's been and that kind of narrows the 442 00:19:12,720 --> 00:19:15,199 Speaker 10: range of outcomes here. So it's a little bit in 443 00:19:15,200 --> 00:19:18,800 Speaker 10: some sense less uncertainty around the disconnect between bond market 444 00:19:18,840 --> 00:19:20,160 Speaker 10: pricing and what the FED is signaling. 445 00:19:20,240 --> 00:19:23,320 Speaker 6: And Jeff the technology of America, you're hardwired with it 446 00:19:23,320 --> 00:19:26,680 Speaker 6: with your heritage to Carnegie Mellon. We saw the technology 447 00:19:26,720 --> 00:19:30,679 Speaker 6: bro line up at the inauguration front and center as well. 448 00:19:31,000 --> 00:19:35,399 Speaker 6: How do you overlay this technology boom that we're in 449 00:19:35,480 --> 00:19:37,880 Speaker 6: right now? I'm looking at the Nasdaq back thirty years 450 00:19:37,880 --> 00:19:42,080 Speaker 6: It's unreal, And he answered, Jeffers, how do you overlay 451 00:19:42,119 --> 00:19:46,640 Speaker 6: this technology boom into your rate space and into what 452 00:19:46,680 --> 00:19:49,000 Speaker 6: the FED will do? It's a bolt on which I 453 00:19:49,320 --> 00:19:51,000 Speaker 6: just can't get a handle on. 454 00:19:52,080 --> 00:19:54,160 Speaker 10: Yeah, it's a great question. It came up a little 455 00:19:54,200 --> 00:19:57,560 Speaker 10: bit in the press conference today as well, and so 456 00:19:57,880 --> 00:19:59,880 Speaker 10: you know, one way and it's not the only way, 457 00:20:00,000 --> 00:20:01,719 Speaker 10: because what we're talking about here and when we talk 458 00:20:01,760 --> 00:20:05,320 Speaker 10: about the megaforces of AI, you know are so profound 459 00:20:05,359 --> 00:20:08,000 Speaker 10: through so many parts of our economy, But a very 460 00:20:08,040 --> 00:20:10,639 Speaker 10: simple way of thinking about it in the macro lens 461 00:20:11,280 --> 00:20:14,560 Speaker 10: is the wealth creation that we've seen in terms of 462 00:20:14,600 --> 00:20:18,879 Speaker 10: the equity market, equity market performance, the way in which 463 00:20:18,920 --> 00:20:25,160 Speaker 10: that translates into financial conditions, into wealth effects, into confidence effects, 464 00:20:25,280 --> 00:20:26,879 Speaker 10: and ultimately into consumption. 465 00:20:27,040 --> 00:20:27,600 Speaker 3: I think it's a. 466 00:20:27,560 --> 00:20:32,040 Speaker 10: Big reason for why the disconnect between looking at the 467 00:20:32,080 --> 00:20:37,480 Speaker 10: degree of policy restrictiveness, meaningfully restrictive takes the lens of 468 00:20:37,880 --> 00:20:41,440 Speaker 10: what is the interest rate relative to inflation? How does 469 00:20:41,480 --> 00:20:45,960 Speaker 10: that look historically, But it ignores the impact of the 470 00:20:46,000 --> 00:20:49,239 Speaker 10: wealth effect that we're seeing in consumer confidence effects from that, 471 00:20:49,440 --> 00:20:53,240 Speaker 10: which have a large element of the AI mega trends, 472 00:20:53,280 --> 00:20:56,920 Speaker 10: the AI boom, the incredible experiment in profits and revenues 473 00:20:56,960 --> 00:21:01,520 Speaker 10: that we're seeing flow through into people's feelings of wealth, 474 00:21:01,560 --> 00:21:05,400 Speaker 10: and we know that consumers and consumption is very much 475 00:21:05,520 --> 00:21:07,880 Speaker 10: driven by that aspect. And so I think that's been 476 00:21:08,160 --> 00:21:14,120 Speaker 10: kind of an underappreciated element to why despite meaningfully restrictive policy, 477 00:21:14,119 --> 00:21:17,560 Speaker 10: we haven't seen it in the data in the economic performal. 478 00:21:17,560 --> 00:21:19,760 Speaker 6: This is critical. We had green span of red chapter 479 00:21:19,840 --> 00:21:22,400 Speaker 6: twenty two and said, you know what, the stock market matters. 480 00:21:22,720 --> 00:21:25,439 Speaker 6: I believe we have a president who says the stock 481 00:21:25,480 --> 00:21:28,520 Speaker 6: market matters. Do you see evidence that this fed in 482 00:21:28,640 --> 00:21:32,120 Speaker 6: Chairman Powell care about that wealth effect. 483 00:21:33,240 --> 00:21:36,040 Speaker 10: They most certainly care about the wealth effect. 484 00:21:36,160 --> 00:21:36,719 Speaker 3: Understand it. 485 00:21:36,880 --> 00:21:39,520 Speaker 10: He answered that question when he got the question about 486 00:21:39,520 --> 00:21:44,119 Speaker 10: the earlier moves in the stock market on Monday, and 487 00:21:44,160 --> 00:21:49,280 Speaker 10: he talked about the persistency of the impact on financial conditions. 488 00:21:49,280 --> 00:21:52,040 Speaker 10: So there is the answer, right, They're not gonna worry 489 00:21:52,040 --> 00:21:55,080 Speaker 10: about one two days worth of selloffs. They're gonna look 490 00:21:55,080 --> 00:21:58,720 Speaker 10: at financial conditions and the wealth component, the stock market 491 00:21:58,760 --> 00:22:01,880 Speaker 10: component of that, the only thing that goes into financial conditions. 492 00:22:01,920 --> 00:22:04,399 Speaker 10: He was clear to highlight that the increase in interest 493 00:22:04,480 --> 00:22:07,320 Speaker 10: rates in the long end has been tightening financial conditions, 494 00:22:07,359 --> 00:22:10,840 Speaker 10: the impact on housing. But they're well aware of the impact. 495 00:22:10,440 --> 00:22:13,240 Speaker 3: Of wealth effect. But it's not a small move. 496 00:22:13,520 --> 00:22:15,720 Speaker 10: It's not an isolated move in one part of the 497 00:22:15,720 --> 00:22:18,520 Speaker 10: equity market. It has to be broad based, it has 498 00:22:18,600 --> 00:22:21,280 Speaker 10: to be persistent, and that's what we've seen in the 499 00:22:21,320 --> 00:22:25,359 Speaker 10: past of when you can flip the script on is 500 00:22:25,400 --> 00:22:29,280 Speaker 10: the economy driving markets or is the market driving the economy? 501 00:22:29,280 --> 00:22:32,080 Speaker 10: When the market has a big enough decline and it 502 00:22:32,280 --> 00:22:35,440 Speaker 10: impacts the wealth and confidence, then it's markets that then 503 00:22:35,560 --> 00:22:38,520 Speaker 10: lead the economy, and the FED will be having to 504 00:22:38,680 --> 00:22:41,240 Speaker 10: take that into account in their setting a policy. 505 00:22:41,359 --> 00:22:43,600 Speaker 1: All right, Fed, Chaer Rosenberg, I want to talk to 506 00:22:43,600 --> 00:22:46,359 Speaker 1: you about getting several steps ahead then of the Federal 507 00:22:46,400 --> 00:22:48,560 Speaker 1: Reserve as you figure out how to position. 508 00:22:48,800 --> 00:22:49,840 Speaker 5: What are you looking at? 509 00:22:49,880 --> 00:22:52,800 Speaker 1: What is your scenario analysis when the policies come down 510 00:22:52,800 --> 00:22:56,480 Speaker 1: the pike to understand whether they're going to be potentially inflationary, 511 00:22:56,520 --> 00:22:59,119 Speaker 1: whether they're going to be disinflationary, whether they can boost 512 00:22:59,160 --> 00:22:59,920 Speaker 1: growth or slow. 513 00:23:01,200 --> 00:23:04,840 Speaker 10: Yeah, it's about this kind of reaction function, and it's 514 00:23:04,880 --> 00:23:08,760 Speaker 10: a little bit about the assessment of the asymmetry to 515 00:23:08,840 --> 00:23:12,720 Speaker 10: the reaction function. You know, will they tolerate a little 516 00:23:12,720 --> 00:23:17,399 Speaker 10: bit of missing on the two percent inflation trajectory relative 517 00:23:17,520 --> 00:23:21,680 Speaker 10: to an outturn in labor market tightening? And so far, 518 00:23:22,040 --> 00:23:25,280 Speaker 10: I think that we've seen the Fed given the willingness 519 00:23:25,280 --> 00:23:27,760 Speaker 10: to cut interest rates. He got the question around you 520 00:23:27,800 --> 00:23:29,800 Speaker 10: have to wait till you hit two percent. No, we 521 00:23:29,800 --> 00:23:32,479 Speaker 10: already know the answers to that. They started cutting before 522 00:23:32,520 --> 00:23:34,480 Speaker 10: they got to two percent, So we know that the 523 00:23:34,520 --> 00:23:37,840 Speaker 10: Fed at least in the recent experience has been more 524 00:23:37,960 --> 00:23:43,560 Speaker 10: concerned about labor market tightening, the concern about over tightening. 525 00:23:43,600 --> 00:23:47,040 Speaker 10: The classical FED did it in terms of the create 526 00:23:47,200 --> 00:23:50,320 Speaker 10: causing the recession. That creates a little bit of asymmetry 527 00:23:50,359 --> 00:23:53,320 Speaker 10: of willingness to accept not getting to two percent, so 528 00:23:53,359 --> 00:23:56,560 Speaker 10: that your reaction, the Fed's reaction, my expectation around the 529 00:23:56,560 --> 00:23:59,639 Speaker 10: Fed's reaction to a weakening and labor markets might be 530 00:24:00,160 --> 00:24:03,919 Speaker 10: more to cut than the opposite of let's say the 531 00:24:03,920 --> 00:24:07,920 Speaker 10: inflation figures they start to, you know, instead of sticky, 532 00:24:07,960 --> 00:24:10,240 Speaker 10: it's sticky in a little bit upward. Is the FED 533 00:24:10,280 --> 00:24:11,800 Speaker 10: going to raise interest rates into that? 534 00:24:11,880 --> 00:24:12,440 Speaker 5: I think it's a. 535 00:24:12,480 --> 00:24:16,000 Speaker 10: Much higher bar. That asymmetry is kind of helpful to 536 00:24:16,119 --> 00:24:20,520 Speaker 10: positioning and fixed income in the FED centric kind of 537 00:24:21,280 --> 00:24:24,800 Speaker 10: maturity spectrum, kind of the short end of the intermediate 538 00:24:24,880 --> 00:24:26,400 Speaker 10: end of the curve that are going to be more 539 00:24:26,480 --> 00:24:29,400 Speaker 10: responsive to what the Fed's doing. And I think that's 540 00:24:29,440 --> 00:24:32,480 Speaker 10: the place where you have a little bit better assessment 541 00:24:32,600 --> 00:24:34,920 Speaker 10: because of this asymmetry between growth and inflation. 542 00:24:35,280 --> 00:24:37,960 Speaker 2: JEF always great to get your views, Appreciate them this afternoon. 543 00:24:37,960 --> 00:24:40,399 Speaker 2: Thank you, sir, Jeff Rosenberg. There a black rock on 544 00:24:40,400 --> 00:24:42,640 Speaker 2: the latest FED decision of course, it wasn't just about 545 00:24:42,640 --> 00:24:44,520 Speaker 2: the FED today, and Tom brought up the tech plays. 546 00:24:44,560 --> 00:24:47,439 Speaker 2: So we're here from Meta, Microsoft and Tesla of the 547 00:24:47,480 --> 00:24:49,000 Speaker 2: next few hours, and I want to bring you a 548 00:24:49,080 --> 00:24:53,280 Speaker 2: number from Deutsche Bank, Amazon, Microsoft, downflimat METSA expected to 549 00:24:53,320 --> 00:24:57,600 Speaker 2: surpass two hundred billion dollars in AI capex over the 550 00:24:57,600 --> 00:25:00,119 Speaker 2: course of the past year. That is real money. We've 551 00:25:00,119 --> 00:25:02,200 Speaker 2: talked a lot about the Federal Reserve's role in this economy. 552 00:25:02,240 --> 00:25:05,440 Speaker 2: Those tech players have a huge role in this economy. 553 00:25:05,160 --> 00:25:07,719 Speaker 1: On every level, and arguably some people could say that 554 00:25:07,960 --> 00:25:11,320 Speaker 1: chat GPT single handedly save the US from a technical corcession, 555 00:25:11,359 --> 00:25:13,439 Speaker 1: if not an outright de session, based on some of 556 00:25:13,440 --> 00:25:16,680 Speaker 1: the investments that have been made. You're right to focus 557 00:25:16,880 --> 00:25:19,920 Speaker 1: on big tech earnings because what this FED news conference 558 00:25:20,040 --> 00:25:21,800 Speaker 1: just showed us is that you're not going to learn 559 00:25:21,800 --> 00:25:24,560 Speaker 1: anything there, but you will learn from what you hear 560 00:25:24,880 --> 00:25:26,800 Speaker 1: from some of these executives in terms of how much 561 00:25:26,840 --> 00:25:29,200 Speaker 1: more they're going to keep investing and where they see 562 00:25:29,440 --> 00:25:30,840 Speaker 1: the gravitational str quickly. 563 00:25:30,840 --> 00:25:33,359 Speaker 6: Here there's a parallel to nineteen ninety five. I remember 564 00:25:33,359 --> 00:25:35,280 Speaker 6: the first time I heard the word Google. I was 565 00:25:35,320 --> 00:25:40,680 Speaker 6: like really, and uh yeah, sure, I didn't pony it up. 566 00:25:40,760 --> 00:25:43,480 Speaker 6: But the bottom line is John, as you're right, this 567 00:25:43,680 --> 00:25:46,760 Speaker 6: Capex overwhelms everything, and we're going to see that here 568 00:25:47,000 --> 00:25:48,960 Speaker 6: as we begin the tech derby with Microsoft. 569 00:25:49,000 --> 00:25:50,720 Speaker 2: We'll see if they can justify it, give them what 570 00:25:50,760 --> 00:25:52,600 Speaker 2: we found out on Monday. If that is in date, 571 00:25:53,000 --> 00:25:55,439 Speaker 2: the real tale coming up on the close, they'll follow 572 00:25:55,600 --> 00:25:58,080 Speaker 2: through with the Federal Reserve decision and go into the 573 00:25:58,119 --> 00:26:00,359 Speaker 2: close and pick up on a text story. Now doubt 574 00:26:00,480 --> 00:26:02,120 Speaker 2: we're going to catch up with Bessie Duke, the former 575 00:26:02,160 --> 00:26:04,320 Speaker 2: Federal Reserve governor, in just a moment. Like from New 576 00:26:04,359 --> 00:26:06,440 Speaker 2: York City this afternoon. Good afternoon to you all. Thank 577 00:26:06,480 --> 00:26:09,919 Speaker 2: you for choosing Bloomberg TV and Radio. This was the 578 00:26:09,960 --> 00:26:10,640 Speaker 2: FED Decides