WEBVTT - Bloomberg Surveillance: Labor Market Stays Solid 0:00:05.120 --> 0:00:07.119 This is the Bloomberg Surveillance Podcast. 0:00:07.160 --> 0:00:11.039 I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz. 0:00:11.280 --> 0:00:15.760 Join us each day for insight from the best and economics, geopolitics, 0:00:15.760 --> 0:00:20.720 finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 0:00:20.960 --> 0:00:25.400 Spotify and anywhere you get your podcasts, and always on 0:00:25.520 --> 0:00:29.840 Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. 0:00:30.120 --> 0:00:33.480 Randy Kreisner, former FED comfnor, now professor of economics at 0:00:33.479 --> 0:00:36.239 the University of Chicago, let's talk about it. Randy, your 0:00:36.240 --> 0:00:37.440 first reaction to this one. 0:00:39.040 --> 0:00:40.760 So, as we were saying before, I think the FED 0:00:40.800 --> 0:00:44.200 focuses a lot on wage growth, and we've seen wage 0:00:44.240 --> 0:00:47.239 growth above expectations. I think it's really clear that the 0:00:47.240 --> 0:00:49.839 Fed is going to be waiting a while before it 0:00:49.840 --> 0:00:54.760 starts cutting rates because the labor market is still quite strong, 0:00:55.000 --> 0:00:58.920 the wage growth is still quite strong, and we just 0:00:59.080 --> 0:01:02.080 the key thing that then feed into services as well 0:01:02.120 --> 0:01:05.280 as manufacturing inflation, not. 0:01:05.319 --> 0:01:08.080 The simple arithmetic of a real way, but almost as 0:01:08.160 --> 0:01:10.400 a cultural and societal note. 0:01:10.800 --> 0:01:12.880 Do you see here wage. 0:01:12.640 --> 0:01:16.720 Growth being beneficial across America and that people will have 0:01:16.840 --> 0:01:20.000 more inflation adjusted cash in their pockets. 0:01:21.520 --> 0:01:23.959 Oh, it's super great to have real wage growth. Finally, 0:01:24.080 --> 0:01:27.160 I mean we had even though nominal wages were growing 0:01:27.280 --> 0:01:30.119 very rapidly, they weren't growing as fast as inflation, and 0:01:30.240 --> 0:01:34.280 so people were feeling left behind. And they were left 0:01:34.280 --> 0:01:36.480 behind because they wanted to put food on the table 0:01:36.520 --> 0:01:39.200 for their families, and the food was a heck of 0:01:39.200 --> 0:01:42.880 a lot more expensive than it was before. Now they 0:01:42.959 --> 0:01:45.959 started to earn a bit more than inflation, which is 0:01:46.000 --> 0:01:46.640 great for them. 0:01:47.000 --> 0:01:48.800 But I think what that's going to mean over. 0:01:48.680 --> 0:01:50.960 Time is that, well, when it was great to be 0:01:51.040 --> 0:01:55.440 hiring people, when labor was relatively cheap in real terms, 0:01:55.920 --> 0:01:58.560 Now I think you're going to start to see a 0:01:58.600 --> 0:02:00.760 little bit of softening the labor market because it's just 0:02:00.800 --> 0:02:01.240 not going. 0:02:01.080 --> 0:02:03.440 To be as. 0:02:04.280 --> 0:02:07.960 Worthwhile for firms to be hiring when workers are more 0:02:08.160 --> 0:02:09.519 we're relatively more expensive. 0:02:09.840 --> 0:02:12.400 Randy, Why is it that we've seen so many downward 0:02:12.440 --> 0:02:14.960 revisions of the prior months. Does that mean that we 0:02:15.000 --> 0:02:18.639 can expect a significant downward revision of this upside surprise 0:02:19.080 --> 0:02:21.320 come the data that we get in February. 0:02:22.639 --> 0:02:24.919 Well, this gets back to what Tom was talking about before. 0:02:25.040 --> 0:02:28.079 The Saner deviation has gotten wider, so there's a lot 0:02:28.120 --> 0:02:30.079 more noise that's in there. I don't think you can 0:02:30.280 --> 0:02:33.240 take something specific out that it's always going to be 0:02:33.280 --> 0:02:35.440 downwardly revised. I think we just know that they're going 0:02:35.480 --> 0:02:37.440 to be some substantial revisions. 0:02:37.639 --> 0:02:40.440 Hey, Randy, appreciate the update. Some revisions some forecast as 0:02:40.440 --> 0:02:42.840 well for rake cuts maybe after this one, for anyone 0:02:42.880 --> 0:02:45.040 penciling in March. I think there's a rethink following that, 0:02:45.400 --> 0:02:47.440 especially if we get another one of these for this 0:02:47.480 --> 0:02:54.280 month next month. Really place to say that joining us 0:02:54.280 --> 0:02:56.480 now is built down to late Bloomberg opinion columnist and 0:02:56.560 --> 0:02:59.480 former New York FED president. But you've had the benefit 0:02:59.480 --> 0:03:02.040 of about set seventeen minutes to go over some of this. 0:03:02.320 --> 0:03:03.440 What's your reaction to it? 0:03:04.840 --> 0:03:06.839 I think it just reinforces the notion that the FED 0:03:06.919 --> 0:03:08.800 is not going to be in a rush to cut rates. 0:03:09.040 --> 0:03:10.760 So the last couple of weeks there's been a sort 0:03:10.760 --> 0:03:12.839 of change of view that the FED great cuts might 0:03:13.200 --> 0:03:16.040 materialize a little bit more slowly with less force. 0:03:16.120 --> 0:03:18.840 And I think that this just reinforces that Kami's still 0:03:18.880 --> 0:03:19.680 doing pretty well. 0:03:20.160 --> 0:03:21.440 It looks like we're going to have growth in the 0:03:21.560 --> 0:03:25.960 fourth quarter of two percent plus financial conditions have eased 0:03:25.960 --> 0:03:28.880 a lot over the last couple of months, So I 0:03:28.919 --> 0:03:31.280 think that risks are that the Fed's going to keep 0:03:31.320 --> 0:03:32.240 rates higher for longer. 0:03:32.560 --> 0:03:36.520 Bill an unfair question. Why is the economy doing well? 0:03:36.680 --> 0:03:40.760 Is productivity? Is it a follow on a pandemic stimulus? 0:03:41.040 --> 0:03:42.960 What's the why of what we saw in Q three? 0:03:43.000 --> 0:03:45.240 What Atlanta GDP says about. 0:03:45.120 --> 0:03:48.680 Q four, and maybe a few people optimistic about the 0:03:48.680 --> 0:03:51.720 first half of two thousand and four twenty twenty four. 0:03:52.680 --> 0:03:54.480 Well, I think the biggest thing is that there were 0:03:54.560 --> 0:03:57.960 such large fiscal transfers that occurred during the pandemic that 0:03:58.000 --> 0:04:01.520 households and businesses are actually in pretty good financial shape 0:04:01.640 --> 0:04:04.480 for this late and economic cycle, and so people have 0:04:04.560 --> 0:04:06.120 the ability to continue to spend. 0:04:06.880 --> 0:04:09.240 This is unusual. I Typically what happens is people get. 0:04:09.120 --> 0:04:12.360 Over their skis, they're overextended, FED tightens and that actually 0:04:12.400 --> 0:04:15.040 bites quite a bit on economic activity. This time, I 0:04:15.040 --> 0:04:18.080 don't think people are as overextended, and so the FED 0:04:18.160 --> 0:04:21.359 rate hikes have it had less restraint on the economy. 0:04:21.839 --> 0:04:23.919 Given that Bill, and especially since you said the Fed's 0:04:23.920 --> 0:04:25.359 not going to be in a rush to cut rates, 0:04:25.680 --> 0:04:27.720 do you think that the market is still pricing in 0:04:27.720 --> 0:04:30.040 too great of a chance of March rate cuts. If 0:04:30.040 --> 0:04:33.560 they're talking about a fifty percent chance right now, Yeah. 0:04:33.400 --> 0:04:35.440 I do, I do. I think, I mean, I think 0:04:35.480 --> 0:04:36.320 May is more likely. 0:04:36.320 --> 0:04:38.159 I mean, if the Fed wants to cut rates, I mean, 0:04:38.279 --> 0:04:40.600 they've made it pretty clear that they knew that as 0:04:40.680 --> 0:04:44.000 inflation falls Maitrey, policy is being tightened, and so that 0:04:44.320 --> 0:04:47.280 they need to follow inflation down. But to do that, 0:04:47.320 --> 0:04:49.320 they also have to get some signs that the economy 0:04:49.400 --> 0:04:51.839 is slowing sufficiently so that there's enough slack in the 0:04:51.839 --> 0:04:53.760 economy to bring inflation all the way down to two 0:04:53.800 --> 0:04:56.640 percent and keep it there. You know, the wage trend, 0:04:56.760 --> 0:04:59.800 obviously is something that's going to concern them. If wages 0:04:59.800 --> 0:05:02.920 are rising faster than four percent a year, that's probably 0:05:02.920 --> 0:05:05.760 not considering percent inflation in the medium term. 0:05:06.279 --> 0:05:08.600 Given that, and given the fact that we are seeing 0:05:09.000 --> 0:05:11.480 the rate cuts being priced into the market more than 0:05:11.520 --> 0:05:13.680 you think is warranted by the Federal Reserve, how. 0:05:13.640 --> 0:05:15.000 Much do you think it set them back? 0:05:15.240 --> 0:05:17.880 The Fed officials that the markets did rally as much 0:05:17.920 --> 0:05:19.920 as they did into year end, how much do you 0:05:19.920 --> 0:05:21.200 think that I'm going to ask you the same question 0:05:21.240 --> 0:05:22.640 I asked Alan Ruskin, how many. How much do you 0:05:22.680 --> 0:05:25.080 think that turbo charged the US economy. 0:05:26.360 --> 0:05:28.760 I don't think it turbo charged US economy that much. 0:05:28.800 --> 0:05:31.479 I mean, the easier financial conditions just haven't been in 0:05:31.520 --> 0:05:32.440 place for that long. 0:05:32.440 --> 0:05:34.000 It's really only been a couple of months. 0:05:34.279 --> 0:05:36.360 But I do think the FED is a little frustrated 0:05:36.400 --> 0:05:38.679 by the fact that the market always must be more 0:05:39.200 --> 0:05:42.120 dubbish than the FED wants, because that makes the Fed's 0:05:42.160 --> 0:05:45.200 job more or more difficult. Because as the market rallies, 0:05:45.240 --> 0:05:48.160 that eases financial conditions, that adds impetus to the economy, 0:05:48.480 --> 0:05:50.760 which means that then that there's more for the FED to. 0:05:50.720 --> 0:05:52.840 Do rather than less. So I think they're a little 0:05:52.839 --> 0:05:53.560 bit frustrated. 0:05:53.880 --> 0:05:56.440 Powell was asked about this in his press last Breast conference, 0:05:56.440 --> 0:05:58.200 and he basically said yes, at the end of the day, 0:05:58.200 --> 0:05:59.880 though that you know, these things have to come to. 0:06:00.560 --> 0:06:03.320 What the FED does ultimately determines where the FED markets 0:06:03.320 --> 0:06:05.160 are going to end up. And so the FED does 0:06:05.240 --> 0:06:07.120 hold the whipping and they'll get their way. 0:06:07.320 --> 0:06:08.760 And I think the way they get their way is 0:06:08.760 --> 0:06:10.640 they'll just be slower than what the market expects. 0:06:10.800 --> 0:06:14.120 Bill Dudley, I've got to do an acclaimed surveillance audible, 0:06:14.400 --> 0:06:16.680 and look at the celebration by you and the New 0:06:16.760 --> 0:06:21.679 York Fed over doctor Masellam joining the Saint Louis FED. 0:06:21.839 --> 0:06:24.320 Bullard was always with great respect. 0:06:23.960 --> 0:06:28.120 To the gentleman from Indiana University, an outlier. His doc 0:06:28.240 --> 0:06:31.440 plot was always unique. What kind of dot plot are 0:06:31.440 --> 0:06:35.560 we going to generate with Alberto Mussolam taking over at 0:06:35.600 --> 0:06:37.119 the venerable Saint Louis FED. 0:06:38.600 --> 0:06:40.680 I don't have a really strong view that Alberto it's 0:06:40.680 --> 0:06:42.840 going to, you know, be dubbish or hawkish. 0:06:42.880 --> 0:06:44.440 I think he's going to take the information as he 0:06:44.520 --> 0:06:47.560 sees it and respond accordingly. I think what he brings 0:06:47.600 --> 0:06:49.400 to the Federal Reserve though, is the fact that he 0:06:49.800 --> 0:06:51.719 not only is he a really good economist, but he 0:06:51.760 --> 0:06:55.599 also understands markets really deeply. Uh So, that combination of 0:06:55.640 --> 0:06:58.880 macroeconomic knowledge and also market experience. I think it's you know, 0:06:58.960 --> 0:07:02.159 pretty rare in the Federal Reserve system. So he brings 0:07:02.400 --> 0:07:04.560 really a good, great tool set to the FED. 0:07:05.720 --> 0:07:08.240 I look Bill Dudley also, just within the crush of 0:07:08.240 --> 0:07:10.480 the jobs report, we have to look at your really 0:07:10.520 --> 0:07:15.000 spirited essay, not the fragility of our banking system, but 0:07:15.160 --> 0:07:19.640 just the idea of where we're going in twenty twenty 0:07:19.640 --> 0:07:23.640 four and shoring up the supervision of our banks. Are 0:07:23.640 --> 0:07:27.040 you optimistic we could get that important job done. 0:07:28.160 --> 0:07:28.320 Well. 0:07:28.320 --> 0:07:30.440 I think that is pretty clear based on events that 0:07:30.480 --> 0:07:34.679 happened last last March, that their supervision needs to do better. 0:07:34.920 --> 0:07:37.320 They need to be more forceful in forcing banks to 0:07:37.400 --> 0:07:41.520 remedy problems more quickly. But one way I think that 0:07:41.560 --> 0:07:43.400 to do that, though, is to actually release some of 0:07:43.440 --> 0:07:45.200 these supervisory findings. 0:07:44.760 --> 0:07:46.080 That currently are secret. 0:07:46.800 --> 0:07:50.120 If you knew that the supervirus advisory finers were going 0:07:50.160 --> 0:07:52.000 to come out with a lag of say sponsors, so 0:07:52.480 --> 0:07:55.840 that creates huge incentives on bank managements and banks boards 0:07:55.840 --> 0:07:58.520 to get going to remedy the problems. Right now, a 0:07:58.560 --> 0:08:01.400 lot of these problems are not known people in the marketplace, 0:08:02.080 --> 0:08:04.440 and I think that makes it easier for the banks 0:08:04.440 --> 0:08:08.040 to sort of delay and not proceed as quickly as 0:08:08.040 --> 0:08:10.120 they need to do to remedy their problems. 0:08:10.240 --> 0:08:13.400 Bill, fantastic column they came out from you earlier this week. 0:08:13.440 --> 0:08:13.960 Appreciate it. 0:08:14.000 --> 0:08:14.160 Bill. 0:08:14.200 --> 0:08:16.360 I just wanted to squeeze one further question in if 0:08:16.400 --> 0:08:18.760 I can, But we've been ahead of the curve big 0:08:18.800 --> 0:08:20.880 time on how far this FED would have to go. 0:08:21.360 --> 0:08:22.840 Do you think there is still a risk that they 0:08:22.880 --> 0:08:24.920 have to move again, that another height could be in 0:08:24.920 --> 0:08:25.480 our future. 0:08:27.280 --> 0:08:28.680 I think it's pretty unlikely. 0:08:28.880 --> 0:08:31.720 I think that the bard to raising rates again would be, 0:08:32.160 --> 0:08:34.520 you know, they have to totally reevaluate. 0:08:33.880 --> 0:08:34.800 Their whole framework. 0:08:35.080 --> 0:08:37.720 I think more likely the story is that if things 0:08:37.720 --> 0:08:40.439 turn out to be stronger, they'll just keep rates higher. 0:08:40.200 --> 0:08:42.520 For longer before they actually start to reduce stream. So 0:08:42.559 --> 0:08:44.600 I think the barer raising rates again is pretty high 0:08:44.600 --> 0:08:45.120 at this point. 0:08:45.160 --> 0:08:47.600 Bill Dudley, thank you, sir, appreciate it, and Happy New Year. 0:08:47.720 --> 0:08:50.200 The brilliant built out Lee former New York Fed President 0:09:00.000 --> 0:09:03.360 Annam Ruskin's world. The dollar is stronger, the euro is weaker. 0:09:03.360 --> 0:09:06.200 We've broken one O nine. Want to wait ninety six? 0:09:06.240 --> 0:09:08.760 Anam Ruskin at Deutsche Bank joined us. Now, Ana, good morning, 0:09:08.800 --> 0:09:11.200 Happy New Year morning, let's get straight into it. What 0:09:11.240 --> 0:09:12.160 do you think of that one? 0:09:12.760 --> 0:09:17.280 Yeah, well, certainly good news as far as growth is concerned. 0:09:17.320 --> 0:09:19.920 A little bit more worrying as far as the underlying 0:09:20.080 --> 0:09:24.680 inflation picture, with wage inflation in particular. I think one 0:09:24.679 --> 0:09:27.800 thing the market should take into consideration is that the 0:09:27.880 --> 0:09:33.040 state of the economy in December was reflecting tightening financial 0:09:33.080 --> 0:09:37.480 conditions from months earlier, probably more reflective of a bond 0:09:37.520 --> 0:09:41.400 market at said tenure to five percent healed than a 0:09:41.440 --> 0:09:44.880 four percent held. So there's a lot of stimulation that's 0:09:44.920 --> 0:09:47.480 still going to come through that's going to be supportive 0:09:47.520 --> 0:09:51.079 for the employment reports coming forward. In Q one and 0:09:51.160 --> 0:09:51.760 Q two. 0:09:51.960 --> 0:09:56.480 We're misguessing GDP third quarter was a shock five maybe 0:09:56.480 --> 0:09:59.760 now revised under four point x percent. We're hearing that 0:09:59.800 --> 0:10:04.040 for quarter maybe the same, We're diminished, but still the same. 0:10:04.800 --> 0:10:07.360 Are we just miss guessing the strength of the American 0:10:07.400 --> 0:10:10.920 economy office jobs report? Is it just simply better than 0:10:10.960 --> 0:10:11.839 we expect? 0:10:12.480 --> 0:10:15.360 I think it's been simply better than we've expected for 0:10:15.440 --> 0:10:17.120 more than a year. I mean, you just look at 0:10:17.160 --> 0:10:21.240 the employment report misses. There are very very few downside 0:10:21.280 --> 0:10:24.840 misses in terms of the forecasting. So there's a pattern 0:10:24.920 --> 0:10:29.240 here of underestimating the strength of the US economy. I 0:10:29.240 --> 0:10:32.920 don't think that this is that different. Really, the now 0:10:33.040 --> 0:10:35.959 cast Q four GDP numbers are close to two and 0:10:36.000 --> 0:10:39.000 a half percent. Certainly, when we're looking at the data, 0:10:39.080 --> 0:10:43.000 we're anticipating that if there's going to be genuine weakness, 0:10:43.080 --> 0:10:45.720 it's got to start showing up in the first half 0:10:45.840 --> 0:10:49.720 of this year, and that's the highest probability in terms 0:10:49.720 --> 0:10:50.560 of negative growth. 0:10:50.640 --> 0:10:53.440 Are we misjudging two week a dollar that seems to 0:10:53.440 --> 0:10:55.400 be the zeitgeist. Now, I know you're pushing. 0:10:55.120 --> 0:10:58.600 Against that, but yeah, yeah, no, I think that's certainly 0:10:58.640 --> 0:11:00.560 true in terms of the short term. Think what we're 0:11:00.600 --> 0:11:04.120 seeing for twenty twenty four so far is this pushback 0:11:04.200 --> 0:11:07.840 in terms of rate cuts for the first half of 0:11:07.880 --> 0:11:10.400 these year, second half of the year as well, and 0:11:10.600 --> 0:11:13.320 the dollar is just a reflection of that, and we're 0:11:13.320 --> 0:11:14.720 seeing some pretty big moves. 0:11:14.760 --> 0:11:14.960 Now. 0:11:15.080 --> 0:11:19.120 I think the biggest question mark is really over dollar yen. 0:11:19.240 --> 0:11:21.880 A lot of people have anticipated in that this is 0:11:21.920 --> 0:11:25.160 the year of the yen. I don't think going to 0:11:25.160 --> 0:11:26.560 be the year of the yen, at least in the 0:11:26.559 --> 0:11:27.640 first half of the year. 0:11:27.760 --> 0:11:29.840 Well, we can talk more about beg of Japan policy 0:11:29.880 --> 0:11:34.280 another time. I am curious though, with respect to rate cuts, 0:11:34.640 --> 0:11:36.680 you were forecasting quite a few in the back half 0:11:36.679 --> 0:11:39.520 of the year, not necessarily starting in March. If this 0:11:39.559 --> 0:11:41.360 continues you said, we have to see weakness in the 0:11:41.360 --> 0:11:43.679 first half of the year, when do you revise your 0:11:43.720 --> 0:11:46.240 call and maybe don't call for as many rate cuts 0:11:46.400 --> 0:11:48.880 and actually get incredibly bullish on the dollar versus the 0:11:48.880 --> 0:11:50.760 euro and a whole host of other currencies. 0:11:50.920 --> 0:11:54.840 Yeah, so, I mean there'd be something that in my colleagues, 0:11:55.240 --> 0:12:00.480 Matt Lazette in particular, would revise in terms of any 0:12:00.520 --> 0:12:05.680 sort of reconsideration. I think if you had the first 0:12:05.800 --> 0:12:10.640 quarter generally put up some solid numbers, these kinds of numbers, 0:12:10.880 --> 0:12:13.240 you'd really have to question whether the economy is slowing 0:12:13.280 --> 0:12:17.560 down materially at all. And I think the Fed's bias 0:12:17.640 --> 0:12:20.160 has still been in the very short term. They could 0:12:20.160 --> 0:12:23.600 store high grates that could still come back on the table. 0:12:23.679 --> 0:12:26.840 I think, you know, that's leaping ahead a long way, 0:12:26.920 --> 0:12:32.480 but certainly taking back rate cuts is a relatively easy core. 0:12:32.720 --> 0:12:34.880 As for what John said in terms of March, I 0:12:34.920 --> 0:12:38.439 think looks you know, that two thirds probability of a 0:12:38.520 --> 0:12:42.920 rate cut that we had effectively before this data looks exaggerated. 0:12:42.960 --> 0:12:44.920 To see you mentioned some of the big moves were saying, 0:12:45.040 --> 0:12:47.679 I just wonder whether we're learning more about market positioning 0:12:47.720 --> 0:12:49.920 than we are the US economy. Which one is it. 0:12:51.040 --> 0:12:54.560 I think a lot of what we saw in November 0:12:54.600 --> 0:12:57.720 and December looked like a real squeeze of positioning in 0:12:57.800 --> 0:13:01.559 an exaggerated move in relatively thin mind. People obviously wanted 0:13:01.559 --> 0:13:05.120 to judge and jump on a what is seen as 0:13:05.120 --> 0:13:08.679 a sea change, you know, move from rates no longer 0:13:08.720 --> 0:13:12.200 going up, and I think that made sense. But then 0:13:12.280 --> 0:13:15.160 the market just got ahead of itself and now we're 0:13:15.240 --> 0:13:15.760 in retreat. 0:13:15.920 --> 0:13:17.640 It can I ask you, and particularly off the back 0:13:17.679 --> 0:13:19.400 of data like this, I think it's worth asking. I 0:13:19.400 --> 0:13:22.160 have no idea where we're going, get absolutely no idea, 0:13:22.240 --> 0:13:24.840 But I think the overwhelming consensus is not just cuts. 0:13:25.200 --> 0:13:27.439 Even the people who don't think you get cuts anytime soon, 0:13:27.480 --> 0:13:30.280 they think this FED is absolutely done. Is there a 0:13:30.360 --> 0:13:32.640 chance they need to hike interest rates again? Based on 0:13:32.679 --> 0:13:33.480 information like this? 0:13:35.000 --> 0:13:38.600 I would say that if you were flatlining consistently and 0:13:38.640 --> 0:13:42.960 you still had wage inflation running at these kinds of levels, 0:13:43.400 --> 0:13:46.560 then the FED would have to think in terms of 0:13:46.600 --> 0:13:48.800 whether they could get inflation all the way down to 0:13:48.880 --> 0:13:51.800 two percent in a reasonable timeframe. But I think we're 0:13:51.880 --> 0:13:54.439 quite a long way away from that sort of reconsideration 0:13:54.480 --> 0:13:57.640 of rate hikes. But it's not totally without you know, 0:13:57.679 --> 0:13:59.120 out of the realms of possibility. 0:13:59.200 --> 0:14:01.120 Well, what John said that I want to pick up 0:14:01.120 --> 0:14:03.079 on this idea that are we learning more about market 0:14:03.080 --> 0:14:06.040 positioning than the economy, especially at a time where every 0:14:06.160 --> 0:14:10.320 month the previous month's data gets revised so significantly, and 0:14:10.360 --> 0:14:14.000 you have seen that sort of gap increase over time. 0:14:14.480 --> 0:14:17.559 Does that make you less confident in these numbers? Do 0:14:17.559 --> 0:14:19.320 you sort of not look at these numbers as much 0:14:19.360 --> 0:14:21.360 as you do the three month rolling average that looks 0:14:21.400 --> 0:14:23.560 perhaps less rosy than this one. 0:14:24.040 --> 0:14:25.880 Yeah, I think you've got to take a very holistic 0:14:25.960 --> 0:14:28.840 view of all the data as such. So it's not 0:14:28.840 --> 0:14:31.560 obviously not just the employment reporter that I would still 0:14:31.600 --> 0:14:35.280 say it's the number one release. Absolutely, look at the 0:14:35.400 --> 0:14:38.480 two month, three month, four month moving averages, Look at 0:14:38.520 --> 0:14:41.440 things like the diffusion index, which has shown that the 0:14:41.520 --> 0:14:45.480 breadth of employment growth is narrowed over time. I would 0:14:45.560 --> 0:14:50.280 still say the labor market is slowing. That all the 0:14:50.600 --> 0:14:53.400 underlying dynamics that we've seen in things like the quick 0:14:53.480 --> 0:14:56.880 rate for example, the opening's data to some degree as well, 0:14:57.320 --> 0:15:03.359 does suggest that the breadth of employment is weakening. 0:15:03.800 --> 0:15:05.920 Just real quick here. Do you think that the accommodation 0:15:06.040 --> 0:15:09.000 that we saw in the market that actually effectively gave 0:15:09.240 --> 0:15:11.360 a rate cut to the market over the past couple 0:15:11.360 --> 0:15:13.720 of months, Do you think that that turbo charged the economy. 0:15:13.760 --> 0:15:15.240 On the margins, I think. 0:15:15.040 --> 0:15:17.560 It's gained to turbo charge the economy, and I would 0:15:17.560 --> 0:15:19.800 say it's much more than one rate cut. You know, 0:15:19.840 --> 0:15:22.920 if you have one hundred basis point reduction in the 0:15:23.000 --> 0:15:25.280 ten uere heel, that's going to equate to one hundred 0:15:25.280 --> 0:15:28.160 and fifty basis points at the outside two hundred basis 0:15:28.200 --> 0:15:31.560 points of Fed funds rate cuts. So there's a lot 0:15:31.560 --> 0:15:34.680 of potential stimulus that's going to kick in and obviously 0:15:34.720 --> 0:15:37.600 spilt over to other financial conditions as well. So the 0:15:37.600 --> 0:15:40.760 equity market is going to keep that wealth effect on 0:15:40.800 --> 0:15:44.000 the consumer side buzzing as well. So there's a lot 0:15:44.040 --> 0:15:44.800 of stimulus there. 0:15:44.880 --> 0:15:47.080 What a start to twenty twenty four. And thank you, thanks, 0:15:47.080 --> 0:15:53.520 pretty good to see you. Anam Roskin of Deutsche Bank. 0:15:53.520 --> 0:15:56.840 Tifferiting wild In to give common sense to a job 0:15:56.920 --> 0:15:59.040 report today. This was green on the screen right now, 0:15:59.200 --> 0:16:03.000 markets of reverse nicely to a more constructed tone off 0:16:03.040 --> 0:16:05.600 of five days of challenges here, three days whatever it 0:16:05.640 --> 0:16:11.440 is of twenty twenty four. Tiffany Allen Ruskin was on 0:16:11.520 --> 0:16:14.720 from Deutsche Bank and he said, you know what, job 0:16:14.840 --> 0:16:19.000 formation is a good thing. Why are we upset if 0:16:19.040 --> 0:16:23.280 we're creating two hundred x x thousand jobs, it just 0:16:23.760 --> 0:16:24.840 doesn't make sense to me. 0:16:26.600 --> 0:16:28.680 No, I agree with you, and thanks for having me on. 0:16:28.720 --> 0:16:31.760 I mean, today's report was a pretty solid report, you know, 0:16:31.800 --> 0:16:34.920 two hundred and sixteen thousand perils per month, and I 0:16:34.920 --> 0:16:36.800 think we're kind of close to that in terms of 0:16:36.800 --> 0:16:38.720 the average for this year. I mean, that's that's a 0:16:38.840 --> 0:16:42.280 very good outcome for the US economy, you know. I 0:16:42.600 --> 0:16:44.920 think what is a little bit more concerning for the 0:16:44.960 --> 0:16:47.040 FED and for monetary policy, though, is that if you 0:16:47.080 --> 0:16:51.000 look at average hourly earnings or wage inflation, you know, 0:16:51.040 --> 0:16:54.480 that does appear, you know, at higher levels, higher than 0:16:55.120 --> 0:16:57.720 levels that would be consistent with their two percent inflation target. 0:16:57.720 --> 0:16:59.280 It doesn't really appear to be moderating. 0:16:59.400 --> 0:17:02.720 So I've been pauling your travels. I mean, the bottom 0:17:02.760 --> 0:17:05.240 line is we're seeing a buoyant America. 0:17:05.320 --> 0:17:05.719 I get it. 0:17:05.880 --> 0:17:08.640 Bankruptcies are terrible, and there's a lot of worry out 0:17:08.640 --> 0:17:11.000 there and restriction and the real rate in that. 0:17:11.600 --> 0:17:15.560 But the answer is it's pretty good GDP. It's pretty full. 0:17:15.600 --> 0:17:16.199 This report. 0:17:16.240 --> 0:17:18.719 It seems like pretty good GDP. I mean, it's so, 0:17:19.160 --> 0:17:21.840 I guess, Tiffany, the issue is when you look out 0:17:21.880 --> 0:17:24.480 at twenty twenty four, how do you think this economy 0:17:24.520 --> 0:17:25.360 is going to unfold? 0:17:25.400 --> 0:17:25.600 Here? 0:17:25.640 --> 0:17:28.480 I mean, I think the consensus building in that, you know, 0:17:28.520 --> 0:17:31.240 the last ten weeks of last year was what soft 0:17:31.320 --> 0:17:33.000 landing looks like? The smart bet here? 0:17:33.280 --> 0:17:34.320 Does that ring true to you? 0:17:35.680 --> 0:17:38.280 Yeah, I mean, I definitely think the odds of a 0:17:38.320 --> 0:17:41.520 soft landing have increased more recently, you know, just because 0:17:41.560 --> 0:17:44.840 you've seen the subtle reserve that is, I guess now 0:17:44.880 --> 0:17:49.120 more clearly communicating you know that that cuts could come 0:17:49.640 --> 0:17:52.880 because inflation has moderated so much, you know, and one 0:17:52.920 --> 0:17:54.679 of the I think the main reasons why the markets 0:17:54.680 --> 0:17:57.040 were so you know, we're more worried about a hard 0:17:57.119 --> 0:17:59.760 landing risk was because you had a central bank that 0:17:59.800 --> 0:18:03.000 was very focused on inflation, you know, and there was 0:18:03.040 --> 0:18:07.120 potentially maybe willing to, you know, to sacrifice the economy 0:18:07.160 --> 0:18:09.199 in order to get inflation down. So now that that 0:18:09.280 --> 0:18:11.560 rhetoric has changed, I definitely think the soft landing odds 0:18:11.560 --> 0:18:13.680 have gone up, you know. But nevertheless, we're not out 0:18:13.680 --> 0:18:16.280 of the woods yet. You know, the Fed still has 0:18:16.320 --> 0:18:18.520 to balance the fact that the economy is strong. You 0:18:18.560 --> 0:18:21.520 could get inflation that reaccelerates you know, obviously again some 0:18:21.560 --> 0:18:24.919 of the downside risks that monetary policy lags, you know, 0:18:25.000 --> 0:18:27.960 start to kick in more meaningfully next year. 0:18:28.840 --> 0:18:31.919 I mean, it feels like for a lot of folks 0:18:32.119 --> 0:18:34.679 the inflation rate is coming down, but the reality is, 0:18:34.680 --> 0:18:37.200 for I guess, if we talked to the folks out there, 0:18:37.480 --> 0:18:39.560 I'm paying a lot more for a lot of things 0:18:39.600 --> 0:18:41.879 than I did two or three years ago, and that 0:18:42.040 --> 0:18:45.080 still hurts. But I mean, I guess the issue is 0:18:45.160 --> 0:18:47.400 the inflation rate is in fact coming down, so that's 0:18:47.480 --> 0:18:49.680 all the FED can really work towards. 0:18:49.720 --> 0:18:53.200 I guess, yeah, And I mean I think I think 0:18:53.200 --> 0:18:54.920 that's the issue. You know, that's kind of the issue 0:18:54.960 --> 0:18:58.439 with why wage inflation is still so appears to be 0:18:58.480 --> 0:19:02.280 so sticky here, although price inflation is coming down, and 0:19:02.320 --> 0:19:05.800 the reason is because you know, wages haven't fully caught 0:19:05.880 --> 0:19:08.560 up the wage level, you know, with the price level 0:19:08.560 --> 0:19:10.840 adjustment that we've see. So although prices are high, you know, 0:19:10.880 --> 0:19:13.679