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Speaker 1: Bloomberg Audio Studios.

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Speaker 2: Podcasts.

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Speaker 3: Radio.

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Speaker 4: News.

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Speaker 2: This is a breaking news update from Bloomberg.

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Speaker 5: Instant reaction and analysis from our 3,000 journalists and analysts

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Speaker 5: around the world.

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Speaker 3: The FOMC decided to maintain the target rate for the

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Speaker 3: federal funds rate at 3.75% to 4% in support of

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Speaker 3: the Federal Reserve's dual mandate. The committee believes that the

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Speaker 3: accumulation of more information will help it determine the policy

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Speaker 3: stance appropriate to ensure a timely return of inflation to

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Speaker 3: the 2% goal. The committee will deliver price stability.

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Speaker 4: I'm going to speak on behalf of a lot of

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Speaker 4: people on trading desks around the world. I think at

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Speaker 4: one point in that news conference, everybody started looking out

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Speaker 4: the window to see what was happening elsewhere. Because there

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Speaker 4: was a moment in that news conference where we stopped

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Speaker 4: learning anything about anything. Equity markets this afternoon shaping up

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Speaker 4: as follows. On the S & P 500, up a

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Speaker 4: third of 1%. On the Nasdaq, up by 0.4%. In

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Speaker 4: the bond market, twos, tens, and thirties. Yields shaping up

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Speaker 4: as follows this afternoon. Twos down three basis points at 470.

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Speaker 4: Tens up four. Thirties up five. There appears to be

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Speaker 4: a disconnect between the rhetoric and the policy from the

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Speaker 4: Fed chair, Kevin Walsh.

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Speaker 3: Domestic spending has been resilient. Productivity growth is strong. In

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Speaker 3: capital investment, robust. Job gains have kept pace with the workforce,

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Speaker 3: and the unemployment rate has changed little, but inflation remains elevated.

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Speaker 2: Inflation is too high. The economy is strong.

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Speaker 4: Yet the Fed decided to hold the opening statement more

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Speaker 4: consistent with a Fed chair that just hiked interest rates,

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Speaker 4: never mind keeping them unchanged.

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Speaker 1: So what had changed? And the one thing that he

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Speaker 1: did open the door to was the potential that market

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Speaker 1: volatility started to give the sense that maybe something else

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Speaker 1: was going on that they needed to monitor. He said

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Speaker 1: that this interval of time is information rich information. He

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Speaker 1: also said that, you know, you might be worried about

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Speaker 1: the same old things, but this is actually a new regime.

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Speaker 2: It may look like.

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Speaker 1: It's just one rate hike that they've executed since he

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Speaker 1: started there, but it's actually monetary medicine, a package that

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Speaker 1: the Fed started five months ago.

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Speaker 4: He came really, really close, stopped just short, but came

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Speaker 4: really close to saying the market's doing some of the

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Speaker 4: work for us.

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Speaker 2: Disclose.

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Speaker 1: That was the only explanation from what he said that

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Speaker 1: actually gives any justification whatsoever for why with that rhetoric

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Speaker 1: and that assessment of the economy, they did not hike.

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Speaker 6: I am fascinated what we'll learn in the next year

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Speaker 6: and 10 years about some of these really qualified people

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Speaker 6: around the table at the Eccles building. what they think

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Speaker 6: of this approach. I think that's what we haven't heard yet.

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Speaker 6: It's only been five months, John. But I think conventional

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Speaker 6: analysis fails, given what we heard there on protocol and

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Speaker 6: on new monetary medicine.

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Speaker 2: Tom, the issue and the risk this Fed chair always ran.

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Speaker 4: If you're on board with ending forward guidance and the

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Speaker 4: hyper-communication that we were getting from the institution over the

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Speaker 4: last 10 years, that's one thing. Getting the rest of

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Speaker 4: the committee to come with you is another.

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Speaker 2: The outcome of this meeting this afternoon.

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Speaker 4: is that they've reinforced the guidance we're going to get

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Speaker 4: from select individuals over the next several weeks. In fact,

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Speaker 4: the first thing I've done as this news conference wraps

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Speaker 4: up is find out when Williams speaks next, November 6th,

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Speaker 4: for anyone who's interested. It's going to be participating on

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Speaker 4: a moderated discussion. All that's happened here is that we've

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Speaker 4: just found out that when you hear from Williams and Jefferson...

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Speaker 4: when that guidance about October or whatever the month might

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Speaker 4: be comes in, even if it predates the data, that's

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Speaker 4: what the policy is going to be. Because a lot

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Speaker 4: of people on Wall Street concluded the data said go.

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Speaker 4: The data said hike. The rhetoric from the Fed chair

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Speaker 4: said the same thing.

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Speaker 2: He's miles from that.

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Speaker 4: And what you hear from Williams and Jefferson is that

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Speaker 4: we can take a month to skip. And everything you

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Speaker 4: heard in that news conference about having a time-rich conversation, Brammo,

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Speaker 4: about the next month or so. Was everything Jefferson and

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Speaker 4: Williams told you before the data even came out a

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Speaker 4: few weeks ago?

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Speaker 1: Yeah, the reaction function is even less clear right now,

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Speaker 1: I think. If this is a data-dependent Fed, what data

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Speaker 1: are they looking for? This is an informational-rich Fed.

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Speaker 2: Era, interval. Is it the election?

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Speaker 1: Is it oil prices?

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Speaker 2: Is it CPI, which we just got?

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Speaker 1: Is it GDP? Is it finger in the wind, let's

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Speaker 1: look out the window?

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Speaker 2: Ultimately, we're not sure.

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Speaker 1: This is part of the issue that I think a

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Speaker 1: lot of people are having. And frankly, I think almost

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Speaker 1: at this point, people would welcome the fact that we

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Speaker 1: might get one or two fewer rate deciding decisions. Because

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Speaker 1: if this is what it's going to be, it doesn't

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Speaker 1: add clarity.

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Speaker 6: John, I think conventional analysis here doesn't work. This guy

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Speaker 6: is on another planet. From modern monetary theory.

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Speaker 4: TK, don't wait two years. If we have to do

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Speaker 4: this every single meeting, what's the point? Just bring it

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Speaker 4: down to six now. To your point, Lisa, I think

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Speaker 4: most people would be on board with that.

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Speaker 2: Do it tomorrow. Wait two years. Make it happen tomorrow.

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Speaker 1: The market reaction, I think, is notable. And you are

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Speaker 1: seeing a steepening in the yield curve and the dollar

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Speaker 1: getting weaker. And you start to wonder, OK, well, what's

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Speaker 1: the market saying? Maybe, A, that regardless of how firm

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Speaker 1: their 2 percent target is, this is a Fed that's

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Speaker 1: going to wait a little bit longer. And a real

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Speaker 1: question around the opportunities for them to actually make a

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Speaker 1: move if they have fewer meetings to possibly move in.

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Speaker 6: There's a critical distinction here. There's a lot of people

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Speaker 6: that agree with him that, you know, John, I call

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Speaker 6: it the parlor game. I hate it. He wants to

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Speaker 6: get away from the parlor game. He wants to get

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Speaker 6: away from the dots, fewer meetings. Who had ham and

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Speaker 6: cheese sandwiches at the day one meeting? The usual thing.

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Speaker 4: Sure. Fine.

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Speaker 6: Okay, that's great. But he wants to walk away from

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Speaker 6: modern culture. monetary analysis and the foundation of that. A

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Speaker 6: guy like Michael Ferroli at JP Morgan, I don't know

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Speaker 6: what he does with new monetary medicine and protocol from

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Speaker 6: the 50s.

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Speaker 4: I'm thinking about who might be happy with this decision.

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Speaker 4: If I'm Dario at Anthropic, I'm probably pretty happy with

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Speaker 4: this decision and that news conference. I'd be pretty thrilled

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Speaker 4: with how that went. Essentially, an IPO coming up in

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Speaker 4: a few weeks. Yeah.

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Speaker 1: I mean, essentially, if you have someone who is concerned

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Speaker 1: about any kind of market disruption in credit spreads.

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Speaker 5: Tied to AI.

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Speaker 2: Probably feeling pretty good.

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Speaker 1: That probably is a positive.

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Speaker 4: Got Priya Misra at J.P. Morgan with us around the table.

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Speaker 4: Priya sat through that. Priya, well done.

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Speaker 2: It's good to see you. That was fun. It was

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Speaker 2: a difficult one, wasn't it? What did you learn?

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Speaker 7: You know, I think Chair Warsh was trying to walk

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Speaker 7: this fine line of saying that they're already committed to

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Speaker 7: inflation and yet they didn't hike. I think he was

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Speaker 7: trying to communicate this hawkish hold, but it's hard. But

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Speaker 7: I would take a step back. There's the policy and

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Speaker 7: then there's the communication. The policy, you saw the market

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Speaker 7: reaction right after. I don't think the market was saying

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Speaker 7: that the Fed's behind the curve on inflation.

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Speaker 2: They've hiked.

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Speaker 7: They're likely to hike some more. I think the market

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Speaker 7: was okay with policy. What I was hoping to get

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Speaker 7: from Chairwash, which we didn't really get, was explain the decision.

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Speaker 7: He could have talked about inflation breadth. He could have said,

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Speaker 7: we're not data point dependent. You know, the inflation trend

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Speaker 7: is heading lower. He really didn't talk about the data.

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Speaker 7: So we didn't get much on the decision. I was

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Speaker 7: hoping to hear something more on, is this risk management,

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Speaker 7: removal of the risk management cuts, or is this risk

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Speaker 7: management hikes, or are we recalibrating the neutral rate? We

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Speaker 7: didn't really get that. And then something on financial conditions.

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Speaker 7: I think we got a little bit on that. I

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Speaker 7: think the Fed did get a little spooked with the

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Speaker 7: move in interest rates. I mean, we talk about Halloween costumes.

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Speaker 7: My point a month ago was the tenure should be

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Speaker 7: the Halloween costume. My kids refused to even walk with me.

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Speaker 2: Now it's not the tenure.

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Speaker 7: It's my latest as AI, Dr. Jekyll and Mr.

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Speaker 6: Hyde.

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Speaker 7: But, you know, it's not the Fed. So at least

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Speaker 7: I think today is not like July. I think it

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Speaker 7: wasn't a complete miscommunication. He did leave a lot more questions.

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Speaker 7: We're going to have to listen to every other Fed official,

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Speaker 7: wait for meetings. I personally like more meetings because I

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Speaker 7: think the decision speaks more than what he's going to

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Speaker 7: tell us at the press conference. But we'll have.

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Speaker 2: Not to be too snarky, you want more of those meetings? So,

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Speaker 2: you know... They're the meetings you get it.

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Speaker 7: The policy decision was useful. The dots are useful. We

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Speaker 7: might go, you know, the dots might go away.

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Speaker 3: But the.

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Speaker 7: Yes, his communication, I think, did not tell us much

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Speaker 7: about the reaction function.

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Speaker 1: If you want to dress like the 10-year, I'll walk

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Speaker 1: with you, because I think that that's actually quite scary

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Speaker 1: for a lot of different officials right now. What do

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Speaker 1: you make of this commentary that he made about what

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Speaker 1: happened in markets, that financial conditions seem to have tightened?

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Speaker 1: And This sort of nod to that as the one

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Speaker 1: thing that could have justified remaining on hold.

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Speaker 6: Right.

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Speaker 7: I think so monetary policy works into the economy through

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Speaker 7: financial conditions. So the fact that he said the financial

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Speaker 7: conditions have tightened and that's kind of what they expected.

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Speaker 7: I think it's telling you that that's how monetary policy works.

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Speaker 7: So all this idea that the AI trade is not

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Speaker 7: interest sensitive, I think he's pushing back against it. That's

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Speaker 7: the area he was a little explicit in. And so

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Speaker 7: when we talk about he's buying time for what, it's

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Speaker 7: not just the labor market and inflation. It's going to

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Speaker 7: be financial conditions. If the air is coming out of

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Speaker 7: the AI trade, well, interest rates might come down, but

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Speaker 7: financial conditions might tighten. And then the market's doing the

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Speaker 7: work for the Fed. I don't think he wanted to

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Speaker 7: say it because when he said it in July, that

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Speaker 7: was a problem. It looked like the market might bully

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Speaker 7: the Fed. But I do think that this Fed chair looks,

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Speaker 7: and it's not just chairwash.

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Speaker 2: I think the rest of.

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Speaker 7: The Fed, I mean, we heard from Williams and Jefferson.

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Speaker 7: I think they looked at the market and said, this

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Speaker 7: is doing the work. So we can actually then, the

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Speaker 7: urgency goes down for us to hike.

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Speaker 6: He talked about protocol. And he's written before about McChesney Martin,

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Speaker 6: 1951 and the accord. To me, he's almost wistful to

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Speaker 6: go back to another time. I felt like I was

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Speaker 6: watching Tobey Maguire and Reese Witherspoon in Pleasantville. We're back

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Speaker 6: to the 50s, like back before Burns, back before the 60s,

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Speaker 6: back to a simpler time. He's yearning to go back there.

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Speaker 6: How does that dovetail with a cacophony of responsibilities we

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Speaker 6: have in monetary policy linked into fiscal policy?

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Speaker 7: It's very hard. Now, I see the point about going back,

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Speaker 7: because if you look at big productivity increases, we might.

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Speaker 6: Be— But we're not the same economy we were in

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Speaker 6: the 50s. Our news flow alone— I mean, John has personally

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Speaker 6: moved British pound at least six times on this show.

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Speaker 6: I mean, the speed of news flow today, he's not

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Speaker 6: allowed to go back to that. wistful thinking.

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Speaker 7: I think which is where I wish we could get

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Speaker 7: a better sense of the reaction function because then the

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Speaker 7: market will react to data points. And it doesn't just

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Speaker 7: have to be inflation and the labor market. It could

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Speaker 7: be the earnings of some large hyperscale or it could

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Speaker 7: be to the issue equity or debt. But let the

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Speaker 7: market react to all this information if we have a

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Speaker 7: sense of the reaction function. We are getting a better

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Speaker 7: sense today than we were, I'd say, in July.

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Speaker 2: I'll give you that.

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Speaker 6: I'll give you it better than July.

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Speaker 7: We're just piecing it together and we're realizing there's not

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Speaker 7: just the chair wash reaction function. There's every other of

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Speaker 7: the 19 members reaction function that we need to. So

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Speaker 7: maybe AI can help us get some.

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Speaker 6: I got a question to fit into John Farrow here. John,

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Speaker 6: you've stood on the lawn of the ECB. I talk

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Speaker 6: about this stuff. You've actually done it. How does the

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Speaker 6: Bank of England, the ECB, how do they react to

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Speaker 6: what I just witnessed?

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Speaker 2: The lack of guidance? The lack of analysis?

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Speaker 6: Some people would say the MBA happy talk speak I

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Speaker 6: just heard.

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Speaker 4: Tom, without criticizing too many people, I think people have

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Speaker 4: had experience of that at the ECB for the last

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Speaker 4: several years.

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Speaker 6: Okay.

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Speaker 2: Same situation.

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Speaker 4: There are some people in this market who don't believe

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Speaker 4: the person leading that institution was cut out for that

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Speaker 4: job to begin with and haven't received the kind of

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Speaker 4: guidance they want from that institution either. So I think

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Speaker 4: the ECB might have a little bit in common with

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Speaker 4: what we've seen from the Federal Reserve under this leadership.

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Speaker 4: The problem with this leadership right now is that he

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Speaker 4: wants to make a change at the top of this

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Speaker 4: institution into how they communicate, but he's trapped in the

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Speaker 4: post-GFC communication architecture. So he has to deliver a news conference.

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Speaker 4: Clearly he doesn't want to. Clearly he doesn't have much

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Speaker 4: to say. And I think he's trying to be collegial.

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Speaker 4: It's difficult to be that way when others aren't on

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Speaker 4: board with what you're trying to do. And the speeches

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Speaker 4: over the last few weeks from Williams and Jefferson, I think,

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Speaker 4: are probably the most important development of the.

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Speaker 2: Last month, aside from what happened with financial markets.

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Speaker 4: It doesn't matter what the Fed chair says about anything

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Speaker 4: in this news conference. It doesn't matter that he doesn't

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Speaker 4: provide guidance. Because the only guidance you need is from

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Speaker 4: the core of the committee. And the core of the

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Speaker 4: committee told you precisely what would happen at this meeting.

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Speaker 2: They kept rates unchanged.

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Speaker 4: The core of this committee told you precisely what the

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Speaker 4: chair ended up saying, which is we have time. We

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Speaker 4: want to take more time to find out and get

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Speaker 4: more information about what's happening here. So for a Fed

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Speaker 4: chair that's trying to move away from the old Fed,

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Speaker 4: my conclusion watching this play out this afternoon is that

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Speaker 4: this new Fed sounds a whole lot like the old Fed.

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Speaker 2: They're talking a good game about inflation.

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Speaker 4: They obviously want to anchor inflation expectations, but they're willing

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Speaker 4: to tolerate above target and messy prints like the one

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Speaker 4: we just got because they're not willing to act.

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Speaker 2: That's the only conclusion you can have.

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Speaker 4: Colby tried. We used to work with Colby. She's fantastic.

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Speaker 4: It's the first question out of the gate. Why aren't

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Speaker 4: you hiking today? The economy's strong. Why aren't you doing anything?

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Speaker 4: That question was asked 50 different ways. He didn't answer

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Speaker 4: it once. And if they're not going to make a

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Speaker 4: move after the data we just got, And I'm not

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Speaker 4: advocating for a move from the institution, by the way.

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Speaker 4: That's not what I'm doing here. I'm basing this on

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Speaker 4: their own rhetoric. There is a massive spread between how

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Speaker 4: the Fed chair is speaking and what they're doing. And

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Speaker 4: this just sounded like a typical Fed chair trying to

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Speaker 4: wanker inflation expectations with above target inflation and not willing

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Speaker 4: to do anything about it.

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Speaker 6: But Priya, within the mix, at least to jump in

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Speaker 6: here because you're reading different stuff than I am. Within

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Speaker 6: the mix, is there any talk about where these presidents

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Speaker 6: and these governors will revolt against this chairman? Is that

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Speaker 6: discussed or analyzed in any way?

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Speaker 7: So not revolt, but I would say we're paying attention

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Speaker 7: to every dot and every voter, non-voter, because that's important. Now,

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Speaker 7: this is coming down to counting votes, a little bit

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Speaker 7: like the Supreme Court, where, you know, it's not a concern.

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Speaker 7: And I will say the Fed came into the new

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Speaker 7: chairworshes regime divided. So there was already this question of

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Speaker 7: is this a supply shock? Is it leaking into demand?

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Speaker 7: Is it just AI or is it broadening out? I

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Speaker 7: think there are big questions there. So we're going to

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Speaker 7: be listening to really every Fed official getting a sense

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Speaker 7: of what do they think about how much the market's

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Speaker 7: doing the work for them, even if they're not explicitly

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Speaker 7: saying it. How much of that was behind what Williams

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Speaker 7: and Jefferson said? But I'll go back to we think

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Speaker 7: this is still a supply shock. There were questions on

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Speaker 7: whether they should have hiked in September. If this is

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Speaker 7: a supply shock, normal conventional economic theory would say, Look

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Speaker 7: through it. I think this was risk management. They're worried

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Speaker 7: that it'll spread through. It's just not clear from Chair

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Speaker 7: Walsh that the committee broadly is there. I think that's

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Speaker 7: where Jefferson and Williams and I would say Waller are there.

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Speaker 7: So just watching, not just what they say about the

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Speaker 7: next meeting, and, you know, it's the totality of whether

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Speaker 7: they hiked this meeting or not actually doesn't matter unless

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Speaker 7: if you're trading October Fed Fund futures, but it's the

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Speaker 7: totality of hikes. We're still pricing in three hikes, which

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Speaker 7: is more than... the most hawkish Fed official has been

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Speaker 7: till now.

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Speaker 2: Do you know why I'm so upset? Mike McKee didn't

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Speaker 2: get to speak at the news conference. What was that about?

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Speaker 4: Mike McKee joins us now for more. Mike, what happened

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Speaker 4: in there? What happened in the press, sir?

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Speaker 8: Well, I didn't get called on. That's one thing that happened,

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Speaker 8: and I don't have any explanation for that other than

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Speaker 8: they put us in the very back row.

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Speaker 2: I think, John, that you said it best.

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Speaker 8: You've said it very, very well about what's going on

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Speaker 8: with Chairman Warsh and this Fed. He wants to change

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Speaker 8: the communication style. But he doesn't know how and he's

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Speaker 8: leaving people with a vague impression of what the Fed

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Speaker 8: is thinking and it's not helping anybody on Wall Street

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Speaker 8: figure out what to do. When you listen to what

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Speaker 8: he said today, they want more time to look out

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Speaker 8: the window.

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Speaker 2: What are they going to see out the window?

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Speaker 8: There is one more CPI between this meeting and the

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Speaker 8: December meeting. They get PCE tomorrow. They know what that

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Speaker 8: number is already. But that's the only inflation measure, that

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Speaker 8: one CPI. So if you're worried about inflation and you

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Speaker 8: get one more number and you know oil prices are

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Speaker 8: going up and you know that the war is still

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Speaker 8: going on, I don't think you're going to learn a

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Speaker 8: whole lot by looking out the window. And so it

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Speaker 8: leaves open the question of Where does the Fed think

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Speaker 8: it needs to intervene and why?

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Speaker 3: And that's a question that he did not answer.

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Speaker 8: Good question on whether we've migrated from supply shock to

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Speaker 8: demand shock. If it's a demand shock, and certainly he

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Speaker 8: was at pains to say the economy is really picking up.

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Speaker 8: then obviously the Fed has more work to do in

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Speaker 8: a different way. And we didn't get anything on that

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Speaker 8: right now. One thing I would add is I've gotten

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Speaker 8: several messages from people on Wall Street about this change

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Speaker 8: in the meeting frequency. If it starts next fall, what

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Speaker 8: meeting are they going to skip? It would seem logical

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Speaker 8: to skip the October meeting because you've got SEPs if

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Speaker 8: they still have those in September and December. But how

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Speaker 8: does the market know? How do they know how to

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Speaker 8: price futures at this point if they don't know when

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Speaker 8: one of those meetings won't produce anything? So a lot

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Speaker 8: of questions come out of this that he didn't even

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Speaker 8: come close to answering.

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Speaker 4: Very few answers. Mike McKee, wonderful job as always down

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Speaker 4: in Washington. Mike, appreciate it, sir. Jeff Rosenberg of BlackRock

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Speaker 4: joins us now for more. Jeff, you sat through that too.

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Speaker 4: For someone in this market, what was material to you?

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Speaker 5: Yeah, Jonathan, listening to the conversation, I'll highlight three things

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Speaker 5: in kind of reverse order.

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Speaker 2: I think we've talked about a lot of them.

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Speaker 5: You know, the answer for why they didn't do anything

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Speaker 5: this meeting, he got the question a couple of times

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Speaker 5: and he kind of answered it. They're waiting for more data.

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Speaker 4: Fine.

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Speaker 5: A lot less discussion on oil than I would have

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Speaker 5: thought of for the second point. But he did say

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Speaker 5: oil's up and we need to take note of that.

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Speaker 5: And I think that's also, to Mike McKee's comments a

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Speaker 5: minute ago, that's also what they're going to be looking for.

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Speaker 5: They talked a lot about it in prior meetings, again,

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Speaker 5: less this time. But the third point I'd highlight is

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Speaker 5: I think the most important thing that we took out

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Speaker 5: of this discussion and the Q & A was a

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Speaker 5: lot more discussion on financial conditions. He kind of opened

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Speaker 5: with the financial conditions, unwilling and unable. to call them tight,

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Speaker 5: but noticing the tightening and linking it back to AI

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Speaker 5: with this really important marker that AI, interest rates matter

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Speaker 5: to AI. He talked about the rollover and the correlation

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Speaker 5: between oil and interest rates. He never sort of finished

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Speaker 5: the conversation because he said he's not a Wall Street newsletter.

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Speaker 5: But if he were to finish it, what happened was

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Speaker 5: that the rates stopped looking at oil and they started

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Speaker 5: looking at the AI trade, and he paid attention to that.

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Speaker 5: So we're going to pay more attention to that, and

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Speaker 5: I think that's probably the most important takeaway. And a

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Speaker 5: little bit of the steepening of the curve that you

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Speaker 5: see there in the market, I think that's a little

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Speaker 5: bit of a dovish hint because they're going to be

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Speaker 5: really focused on whether they're overly tightening financial conditions if

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Speaker 5: there is indeed this much of a reaction to an

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Speaker 5: increase in interest rates to the AI pricing in financial markets.

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Speaker 1: So, Jeff, is the Fed put alive and well right

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Speaker 1: now for risk assets?

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Speaker 5: Oh, our favorite topic. You know, I don't know if

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Speaker 5: I could say it's alive and well. I mean, I

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Speaker 5: think what we got a hint of and what I

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Speaker 5: was just answering and a little bit what you see

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Speaker 5: in the steepening is he's sensitive to it.

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Speaker 2: He's sensitive to looking at AI.

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Speaker 5: You know, we also got another piece of information that

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Speaker 5: we hadn't maybe heard before when he answered the Korean reporter. with,

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Speaker 5: I'm really more focused on your markets than you may

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Speaker 5: imagine me to be. That's really important because he understands

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Speaker 5: just how important the AI driver is to growth. Even

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Speaker 5: though he's talking about it broadening out, this is really

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Speaker 5: an important piece. So if you see some wobbles there,

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Speaker 5: I think maybe not the Fed put in that it

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Speaker 5: can work, but certainly what we saw this month was

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Speaker 5: the market sort of sniffing out that AI is a

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Speaker 5: macro event as much as it is a micro event.

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Speaker 5: And if there is a undermining of it, it's going

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Speaker 5: to be a macro event that is primarily disinflationary. It's

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Speaker 5: supporting growth on the consumption side. It's supporting it on

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Speaker 5: the investment side. He made that point. So he well

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Speaker 5: aware of it. So that's where you get the interest

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Speaker 5: rate sensitivity. And it's really a validation we saw in

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Speaker 5: the last couple of weeks.

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Speaker 6: Jeff Rosenberg, for all of us in the game, you

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Speaker 6: were at Carnegie Mellon. You had the privilege of Alan Meltzer.

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Speaker 6: his 1,400-page history of the Federal Reserve. What would Alan

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Speaker 6: Meltzer think of what we observed this afternoon?

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Speaker 5: Well, you know, someone said it earlier, I think it

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Speaker 5: was Mike McKee, about how he wants to change the Fed,

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Speaker 5: but he's locked into the old communication. I would say

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Speaker 5: he's locked in, but he's also trying to change the

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Speaker 5: communications as much as he can. We're seeing the changes

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Speaker 5: in the press conference. You only get one question. He

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Speaker 5: picks which one, if you ask to, shortening it from

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Speaker 5: about an hour to about 30 minutes, the statement being revised.

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Speaker 5: Meltzer would see that in the context of the history

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Speaker 5: of the Fed as, yes, trying to go back to

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Speaker 5: the earlier interaction you had with Priya about, you know,

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Speaker 5: can you go back to those halcyon days? The thing

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Speaker 5: I would add to that conversation is, The big change

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Speaker 5: is the role of financial conditions and consumption because consumption

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Speaker 5: is so powered by the wealth effect. That linkage you

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Speaker 5: didn't have in the halcyon days. It was much more manufacturing,

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Speaker 5: much higher savings rate, much less consumption out of debt

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Speaker 5: financed means, so much less interest rate sensitivity and financial

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Speaker 5: condition sensitivity. So that aspect, and that's what we heard,

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Speaker 5: the transmission mechanism is through financial conditions. That's the primary

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Speaker 5: way in which the Fed's policy setting affects the economy.

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Speaker 5: So I think we learned a lot about that, even

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Speaker 5: though not much was changing to Jonathan's comments earlier. Inside

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Speaker 5: some of this conversation, I think we did hear some

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Speaker 5: interesting data points.

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Speaker 2: Jeff, diplomatic. Appreciate it. Thank you, sir. Jeffrey Rosenberg there

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Speaker 2: of BlackRock.