1 00:00:03,160 --> 00:00:08,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:10,240 --> 00:00:14,239 Speaker 2: It's good about Gaddis and Grand Teton's fishing. Our guest 3 00:00:14,280 --> 00:00:18,200 Speaker 2: today Tracy Alloy Catcher of the Fish. 4 00:00:19,000 --> 00:00:21,200 Speaker 1: Let me tell you, Tom, I have strong opinions on 5 00:00:21,280 --> 00:00:22,720 Speaker 1: euro nymphing, which we. 6 00:00:22,680 --> 00:00:24,320 Speaker 3: Can talk about. 7 00:00:24,600 --> 00:00:25,080 Speaker 2: Impressive. 8 00:00:25,200 --> 00:00:29,280 Speaker 3: I had never heard that term until Tracy and I 9 00:00:29,360 --> 00:00:32,360 Speaker 3: went fishing, but that eu nymphing is a thing, so 10 00:00:32,560 --> 00:00:33,040 Speaker 3: google it. 11 00:00:33,080 --> 00:00:39,040 Speaker 1: Folks, also finfluencers, people who are on Instagram impressively catching 12 00:00:39,080 --> 00:00:41,360 Speaker 1: fish but also cheating in the way they're doing it. 13 00:00:43,280 --> 00:00:44,880 Speaker 3: Did you have you done any fly fishing? 14 00:00:44,880 --> 00:00:45,240 Speaker 4: Tom? 15 00:00:45,320 --> 00:00:49,000 Speaker 2: Very little. We had a close friend, close family friend 16 00:00:49,040 --> 00:00:51,720 Speaker 2: who has had a research for Eastman Kodak. Really important 17 00:00:51,840 --> 00:00:54,640 Speaker 2: in the chemistry of developing all the films that we 18 00:00:54,680 --> 00:00:58,560 Speaker 2: know and use was Jack Penny. Basically he worked so 19 00:00:58,600 --> 00:01:01,520 Speaker 2: he could fly fish, and I would sit there and watch. 20 00:01:01,560 --> 00:01:04,440 Speaker 1: Mister everyone has to work for something that sounds and 21 00:01:04,680 --> 00:01:05,480 Speaker 1: make the flies. 22 00:01:06,080 --> 00:01:07,480 Speaker 2: That's about as close as I got. 23 00:01:10,319 --> 00:01:17,360 Speaker 3: I did a deadlift one two Jimmy Okay, gony uh barges. 24 00:01:17,520 --> 00:01:19,679 Speaker 3: This isn't after school special, except. 25 00:01:19,280 --> 00:01:21,839 Speaker 1: I've decided I'm going to base my entire personality going 26 00:01:21,840 --> 00:01:25,080 Speaker 1: forward on campaigning for a strategic pork reserve in the US. 27 00:01:25,200 --> 00:01:26,920 Speaker 3: Where's the best with in pasta? 28 00:01:27,080 --> 00:01:29,679 Speaker 1: These are the important question is that robots taking over 29 00:01:29,680 --> 00:01:30,040 Speaker 1: the world. 30 00:01:30,120 --> 00:01:30,280 Speaker 2: No. 31 00:01:30,360 --> 00:01:33,240 Speaker 5: I think that like in a couple of years, the 32 00:01:33,319 --> 00:01:35,520 Speaker 5: AI will do a really good job of making the 33 00:01:35,520 --> 00:01:39,000 Speaker 5: Odd lotch podcast, And people say, I don't really need 34 00:01:39,040 --> 00:01:40,680 Speaker 5: to listen to Joe and Tracy anymore. 35 00:01:40,880 --> 00:01:41,800 Speaker 4: We do have. 36 00:01:43,200 --> 00:01:47,080 Speaker 3: The perfect welcome to lots More when we catch up 37 00:01:47,080 --> 00:01:48,600 Speaker 3: with friends about what's going on. 38 00:01:48,760 --> 00:01:51,920 Speaker 1: Right now, because even when Odd Lots is over, there's 39 00:01:52,040 --> 00:01:53,280 Speaker 1: always lots more. 40 00:01:53,720 --> 00:01:59,160 Speaker 3: And we really do have the perfect guest. Can we 41 00:01:59,160 --> 00:02:00,000 Speaker 3: talk a little monitory? 42 00:02:00,640 --> 00:02:03,720 Speaker 1: Yeah, let's do it. Okay, So one thing I'm curious 43 00:02:03,760 --> 00:02:06,520 Speaker 1: to hear your opinion on Tom You've been at multiple 44 00:02:06,680 --> 00:02:10,320 Speaker 1: Jackson Hole economic symposiums at this point. What's the vibe 45 00:02:10,480 --> 00:02:13,480 Speaker 1: of this year, especially compared to you know, two years 46 00:02:13,520 --> 00:02:17,440 Speaker 1: ago Powell basically stood up and said, like it might 47 00:02:17,520 --> 00:02:20,760 Speaker 1: be painful to bring down inflation. Then last year they 48 00:02:20,760 --> 00:02:23,800 Speaker 1: were very much talking about progress on inflation and maybe 49 00:02:23,840 --> 00:02:27,160 Speaker 1: complications from the real world economy. And then fast forward 50 00:02:27,200 --> 00:02:29,200 Speaker 1: to today and it's all about the labor market. 51 00:02:29,400 --> 00:02:32,800 Speaker 2: I was in Davos a million years ago. I was 52 00:02:32,840 --> 00:02:37,800 Speaker 2: standing with three Nobel Prize winners, and they're blah blah blah, 53 00:02:37,800 --> 00:02:40,640 Speaker 2: blah blah. And one of their wives said after me, 54 00:02:41,360 --> 00:02:44,160 Speaker 2: this is in the heart of the crisis. She said, Tom, 55 00:02:44,400 --> 00:02:47,440 Speaker 2: they're just bewildered. And I think there's a lot of 56 00:02:47,480 --> 00:02:53,519 Speaker 2: bewilderment here about the future of America, witnessing the Milwaukee 57 00:02:53,639 --> 00:02:57,200 Speaker 2: and Chicago and that what we got today, which I 58 00:02:57,280 --> 00:02:59,360 Speaker 2: was blown away by the speech. I literally will go 59 00:02:59,440 --> 00:03:02,640 Speaker 2: back and read, trust me, I never do that is 60 00:03:02,800 --> 00:03:08,040 Speaker 2: this was a real statement by Powell about the bewilderment 61 00:03:08,120 --> 00:03:10,400 Speaker 2: that's out there, and clearly was it this Jackson hole 62 00:03:10,480 --> 00:03:10,839 Speaker 2: this year. 63 00:03:11,480 --> 00:03:14,000 Speaker 3: One of the things just on the like sort of 64 00:03:14,240 --> 00:03:18,480 Speaker 3: pure macro front that struck me is right up top 65 00:03:18,600 --> 00:03:21,239 Speaker 3: saying we're not going to tolerate any more labor market weakness. 66 00:03:21,280 --> 00:03:21,919 Speaker 4: And I found that. 67 00:03:21,960 --> 00:03:24,160 Speaker 3: Really striking, and you saw it in the market reaction. 68 00:03:24,480 --> 00:03:26,480 Speaker 3: By the way, we're talking with Tom Kane of Bloomberg 69 00:03:26,600 --> 00:03:30,640 Speaker 3: TV is just the Tom Kane just in case, I 70 00:03:30,639 --> 00:03:35,240 Speaker 3: guess we haven't formally introduced me. But you know, clearly 71 00:03:35,600 --> 00:03:38,320 Speaker 3: everyone sort of expected right that this speech would be 72 00:03:38,400 --> 00:03:41,440 Speaker 3: used to announce something about the September rate cut cycle. 73 00:03:41,560 --> 00:03:44,160 Speaker 3: But there's still been in the chat the FED Chad 74 00:03:44,200 --> 00:03:47,000 Speaker 3: over the last couple of weeks. Still this seeming like 75 00:03:47,480 --> 00:03:51,160 Speaker 3: not total sure. Maybe this sort of willingness to say, 76 00:03:51,200 --> 00:03:54,080 Speaker 3: like we could rise into the high four percent unemployment 77 00:03:54,120 --> 00:03:56,480 Speaker 3: and that's still be sort of consistent with what we're 78 00:03:56,520 --> 00:03:59,520 Speaker 3: going for. And I sort of feel like the market 79 00:03:59,560 --> 00:04:02,120 Speaker 3: reaction and was to like, know, we're done with letting 80 00:04:02,280 --> 00:04:05,160 Speaker 3: the labor market weakness. And he added another line, it's 81 00:04:05,160 --> 00:04:09,080 Speaker 3: not just normalization. By some measures, the labor market is 82 00:04:09,120 --> 00:04:11,560 Speaker 3: worse than pre COVID and you see that in things 83 00:04:11,600 --> 00:04:13,440 Speaker 3: like the hiring rate. So I found that to be 84 00:04:13,440 --> 00:04:14,120 Speaker 3: pretty powerful. 85 00:04:14,240 --> 00:04:16,800 Speaker 2: Yeah, as we talked about as we walked over here 86 00:04:16,839 --> 00:04:20,760 Speaker 2: to hear luxurious about, I mean, it's incredible. You know, 87 00:04:20,880 --> 00:04:24,600 Speaker 2: the view is stunning. And you know, I think that 88 00:04:24,680 --> 00:04:27,039 Speaker 2: the unemployment right chart, I think Kolby Smith had it 89 00:04:27,040 --> 00:04:30,159 Speaker 2: in the FT. It's curve linear, it's what we call convex. 90 00:04:30,160 --> 00:04:33,880 Speaker 2: We're showing an accelerative tendency. And I asked any number 91 00:04:33,880 --> 00:04:37,479 Speaker 2: of guests today, I said, Okay, where's the number that hurts. 92 00:04:38,200 --> 00:04:40,680 Speaker 2: I don't think it's four point nine percent or even 93 00:04:40,760 --> 00:04:43,960 Speaker 2: five five point one percent. I think it's much more 94 00:04:44,160 --> 00:04:48,200 Speaker 2: towards four seven. What that four seven is a big 95 00:04:48,279 --> 00:04:49,640 Speaker 2: number for a lot of America. 96 00:04:50,480 --> 00:04:54,360 Speaker 1: Joe, do you remember Tom Keane used to write some 97 00:04:54,640 --> 00:04:58,120 Speaker 1: commentary pieces for Bloomberg dot com and I used to 98 00:04:58,240 --> 00:05:00,960 Speaker 1: edit that. Oh yeah, and there's one that always sticks 99 00:05:01,040 --> 00:05:04,720 Speaker 1: in my mind. You mentioned convexity just then, Tom, and 100 00:05:04,839 --> 00:05:06,880 Speaker 1: I remember you had one. It might have been about 101 00:05:06,880 --> 00:05:09,359 Speaker 1: the yield curve, but I think the headline was just 102 00:05:09,680 --> 00:05:11,880 Speaker 1: slope flatters. 103 00:05:11,040 --> 00:05:11,680 Speaker 2: Slow batters. 104 00:05:11,920 --> 00:05:14,120 Speaker 3: This is a Tom King, This is a Tom King 105 00:05:14,279 --> 00:05:15,200 Speaker 3: signature line. 106 00:05:15,279 --> 00:05:19,479 Speaker 2: Well, it is a signature line, but it's really really important, 107 00:05:19,520 --> 00:05:21,680 Speaker 2: and I'll go through it right now because it's great 108 00:05:21,720 --> 00:05:24,159 Speaker 2: that you have the time of odd lots interviews instead 109 00:05:24,200 --> 00:05:27,400 Speaker 2: of you got thirty seconds. We're going, Okay, here's the 110 00:05:27,440 --> 00:05:31,359 Speaker 2: way it works. The core financial equation is FV equals 111 00:05:31,440 --> 00:05:34,800 Speaker 2: PV one plus ard of the t that's a discrete 112 00:05:35,320 --> 00:05:38,200 Speaker 2: or in a continuous function, f V the future value 113 00:05:38,520 --> 00:05:42,120 Speaker 2: equals a present value times e to the rt ease 114 00:05:42,160 --> 00:05:46,039 Speaker 2: in the exponential function. And the answer across that that 115 00:05:46,200 --> 00:05:49,640 Speaker 2: is so so important is what you do in the 116 00:05:49,680 --> 00:05:51,760 Speaker 2: phrase that we all learned in school. As you go 117 00:05:51,800 --> 00:05:54,080 Speaker 2: to logs, you go to logs and The way you 118 00:05:54,080 --> 00:05:55,800 Speaker 2: do it on a chart is you have a semilog 119 00:05:55,920 --> 00:05:59,599 Speaker 2: chart with a log y axis, and that gives you 120 00:05:59,640 --> 00:06:02,839 Speaker 2: the first derivative is the slope. So if you go 121 00:06:02,960 --> 00:06:05,760 Speaker 2: to log on any given financial series is a rule 122 00:06:05,800 --> 00:06:08,680 Speaker 2: of thumb, you can look at the slope. You can 123 00:06:08,720 --> 00:06:11,960 Speaker 2: say it matters. And here's what Chairman Powell would say, 124 00:06:12,200 --> 00:06:15,080 Speaker 2: he would say, and then the change of the slope 125 00:06:15,839 --> 00:06:19,440 Speaker 2: really matters. And that's the confidence you got today that 126 00:06:19,640 --> 00:06:20,480 Speaker 2: move the markets. 127 00:06:21,120 --> 00:06:24,280 Speaker 3: And this is of course you know when we talk 128 00:06:24,440 --> 00:06:27,120 Speaker 3: We talked to claudiasam recently and everyone's talked about the 129 00:06:27,160 --> 00:06:31,000 Speaker 3: same rule and they get really hung up on like well, like, oh, 130 00:06:31,080 --> 00:06:32,560 Speaker 3: you know the exact the. 131 00:06:32,520 --> 00:06:34,000 Speaker 4: Exact measurement, exact point. 132 00:06:34,040 --> 00:06:37,120 Speaker 3: Well really, and that's fine, and maybe that's a good guy. 133 00:06:37,160 --> 00:06:42,760 Speaker 3: But the real embedded wisdom or insight is that before 134 00:06:42,800 --> 00:06:45,080 Speaker 3: you have a big increase in the unemployment rate, you 135 00:06:45,120 --> 00:06:47,400 Speaker 3: have a small increase. Or to put it in another way, 136 00:06:47,760 --> 00:06:50,000 Speaker 3: historic history tells us that every time you have a 137 00:06:50,080 --> 00:06:52,800 Speaker 3: modest rise in the unemployment rate, it leads to a 138 00:06:52,880 --> 00:06:53,960 Speaker 3: large it's exponential. 139 00:06:54,080 --> 00:06:56,480 Speaker 2: Yeah. But the key thing here is the financial media 140 00:06:57,080 --> 00:07:00,279 Speaker 2: loves point estimates. What's going to be for one point 141 00:07:00,320 --> 00:07:03,960 Speaker 2: two percent, and you two have been really historic in 142 00:07:04,040 --> 00:07:08,039 Speaker 2: developing a conversation about the rate of change or the 143 00:07:08,120 --> 00:07:10,280 Speaker 2: rate of change or the radia change. The word we 144 00:07:10,400 --> 00:07:13,320 Speaker 2: use is dynamics, the dynamics of the moment, and I 145 00:07:13,360 --> 00:07:16,440 Speaker 2: thought Paul today was just great on the dynamics of 146 00:07:16,480 --> 00:07:16,880 Speaker 2: the moment. 147 00:07:17,240 --> 00:07:20,000 Speaker 1: So speaking of the dynamics of the moment, one thing 148 00:07:20,040 --> 00:07:23,560 Speaker 1: that has clearly changed is like the emphasis of what 149 00:07:23,640 --> 00:07:26,400 Speaker 1: the market and investors are looking at has is shifting 150 00:07:26,440 --> 00:07:29,280 Speaker 1: in real time from inflation to the labor market data. 151 00:07:29,840 --> 00:07:33,720 Speaker 1: And one thing I'm wondering is the FED has emphasized 152 00:07:33,840 --> 00:07:38,040 Speaker 1: its data dependency so much at this point that it 153 00:07:38,120 --> 00:07:41,880 Speaker 1: feels like suddenly that job's number becomes even more important 154 00:07:41,880 --> 00:07:44,720 Speaker 1: than ever. And part of me is wondering what happens 155 00:07:44,800 --> 00:07:47,600 Speaker 1: if we get a stronger than expected jobs number between 156 00:07:47,600 --> 00:07:49,320 Speaker 1: now and September seventeenth. 157 00:07:49,400 --> 00:07:51,080 Speaker 2: That's out there. And Adam Posen, who we had on 158 00:07:51,160 --> 00:07:54,520 Speaker 2: today at the Peterson Institute, his FT essay two days ago, 159 00:07:54,560 --> 00:07:57,920 Speaker 2: I think was blistering on that where this embedded idea 160 00:07:58,160 --> 00:08:02,600 Speaker 2: that we're in a dissinflationary mode. One report, two reports 161 00:08:02,640 --> 00:08:05,920 Speaker 2: can upset the apple. Yeah, and no one's predicting that 162 00:08:05,960 --> 00:08:08,280 Speaker 2: you guys know the standard e or like anyone else. 163 00:08:08,320 --> 00:08:13,160 Speaker 2: But the answer to the certitude of disinflation now is 164 00:08:13,160 --> 00:08:14,400 Speaker 2: probably suspect. 165 00:08:14,640 --> 00:08:16,920 Speaker 3: I mean, and of course that's what sort of royaled 166 00:08:16,960 --> 00:08:19,160 Speaker 3: the market and Q one of this year, which is 167 00:08:19,200 --> 00:08:22,000 Speaker 3: there was a similar feeling of certitude and then we 168 00:08:22,040 --> 00:08:25,280 Speaker 3: did get those how to then expected inflation. You know, 169 00:08:25,320 --> 00:08:26,920 Speaker 3: I think one of the things and we talked about 170 00:08:26,920 --> 00:08:29,120 Speaker 3: this on TV just a few minutes ago, that I've 171 00:08:29,160 --> 00:08:31,320 Speaker 3: been wondering to think about, and something we talk a 172 00:08:31,320 --> 00:08:35,360 Speaker 3: lot about the business memory that price increases are a 173 00:08:35,400 --> 00:08:37,480 Speaker 3: thing you can do. Is I think it'd be a 174 00:08:37,520 --> 00:08:40,000 Speaker 3: really interesting question maybe for like the next decade, the 175 00:08:40,120 --> 00:08:42,920 Speaker 3: memory of twenty twenty two that actually sometimes you can 176 00:08:43,040 --> 00:08:45,960 Speaker 3: raise prices, you know, you don't lose market share per se, 177 00:08:46,440 --> 00:08:49,720 Speaker 3: Whether that will keep a sort of like floor on 178 00:08:49,920 --> 00:08:52,959 Speaker 3: the rate of inflation for a while. That's sort of 179 00:08:53,040 --> 00:08:55,640 Speaker 3: because that sort of like muscle memory of price increases 180 00:08:55,960 --> 00:08:58,000 Speaker 3: is still there. I think an interesting question. 181 00:08:58,040 --> 00:09:01,000 Speaker 2: It's a political moment right now. The least, what I 182 00:09:01,040 --> 00:09:04,040 Speaker 2: will say, my study of this, and this goes back 183 00:09:04,080 --> 00:09:07,880 Speaker 2: to England, to Clement Attlee England. It's really hard to 184 00:09:07,920 --> 00:09:11,200 Speaker 2: lower prices. Yeah, you sit there, you sit there with 185 00:09:11,240 --> 00:09:14,079 Speaker 2: a dozen eggs, and you go, let's bring the price down. 186 00:09:14,640 --> 00:09:19,080 Speaker 1: Let's not you know, you mentioned political moment just then, 187 00:09:19,160 --> 00:09:21,199 Speaker 1: and I feel like this is the other thing that 188 00:09:21,360 --> 00:09:24,079 Speaker 1: maybe is shifting a little bit, because, you know, maybe 189 00:09:24,120 --> 00:09:26,080 Speaker 1: six weeks ago, there was a lot of talk about 190 00:09:26,120 --> 00:09:30,080 Speaker 1: how the FED can't cut in September because it will 191 00:09:30,080 --> 00:09:34,400 Speaker 1: be seen to be politically motivated. That conversation, for the 192 00:09:34,440 --> 00:09:37,719 Speaker 1: most part, seems to have gone away. It feels like. 193 00:09:38,320 --> 00:09:40,840 Speaker 2: I thought his voice changed in the last press conference. 194 00:09:41,440 --> 00:09:44,640 Speaker 2: You listen for that. His voice changed, And I thought 195 00:09:44,679 --> 00:09:52,160 Speaker 2: the last paragraph today beautifully captured their humility and somewhat indirectly, 196 00:09:52,240 --> 00:09:54,480 Speaker 2: the statement they're just not going to get involved in 197 00:09:54,480 --> 00:09:55,200 Speaker 2: the politics. 198 00:09:55,679 --> 00:09:58,080 Speaker 1: Tom, here's the really important question. Are you coming with 199 00:09:58,160 --> 00:09:59,960 Speaker 1: us to the million dollar Cowboy bar tonight? 200 00:10:00,280 --> 00:10:02,440 Speaker 2: No, I have to jet back. Paul Sweeny says, they've 201 00:10:02,440 --> 00:10:03,640 Speaker 2: got to be there Monday morning. 202 00:10:03,760 --> 00:10:06,839 Speaker 3: His private jet is on the right now, and so 203 00:10:06,960 --> 00:10:07,599 Speaker 3: we should. 204 00:10:07,360 --> 00:10:10,040 Speaker 2: Paint a picture of this. We really if we have time. Yeah, 205 00:10:10,120 --> 00:10:13,000 Speaker 2: you fly to Jackson hoy And on the confidence building 206 00:10:13,120 --> 00:10:15,439 Speaker 2: plane Amazon. It was like right out of the movie 207 00:10:15,480 --> 00:10:18,520 Speaker 2: Airplane to comedy both and the guy was the pilot 208 00:10:18,600 --> 00:10:20,840 Speaker 2: was great about it. We've got two captains. We've got 209 00:10:20,880 --> 00:10:24,040 Speaker 2: more gold bars on shoulders than any airplane I've ever 210 00:10:24,080 --> 00:10:27,880 Speaker 2: been on. And they're co certifying each other to land 211 00:10:27,920 --> 00:10:32,360 Speaker 2: at six thousand feet like they're doing like their required certification. 212 00:10:32,640 --> 00:10:35,560 Speaker 2: That was a confidence builder. So you come in and 213 00:10:35,600 --> 00:10:38,120 Speaker 2: you're coming in from north to south. You land, it's 214 00:10:38,120 --> 00:10:42,439 Speaker 2: this lovely little airport and you turn, you go by yeah, 215 00:10:42,520 --> 00:10:44,640 Speaker 2: super short running with the brakes, come on fast, yes, 216 00:10:44,920 --> 00:10:48,880 Speaker 2: And you turn and you'll go by the wall of Jackson, Wyoming, 217 00:10:49,720 --> 00:10:52,880 Speaker 2: lear jets, Gulf streams and the rest. It looks like Davos. 218 00:10:52,920 --> 00:10:56,280 Speaker 2: It looks like Zurich, you know, in a smaller scale. 219 00:10:56,360 --> 00:10:58,280 Speaker 3: At some point, we're going to do an episode about 220 00:10:58,280 --> 00:11:01,360 Speaker 3: the economics of Jackson, Wyoming because it's fascinating and yeah, 221 00:11:01,360 --> 00:11:01,920 Speaker 3: it's wild. 222 00:11:02,040 --> 00:11:02,280 Speaker 2: Yeah. 223 00:11:02,840 --> 00:11:05,920 Speaker 1: There's a really good book called Billionaire Wilderness that I 224 00:11:06,000 --> 00:11:08,640 Speaker 1: recommend to everyone listening to this podcast. It's sort of 225 00:11:08,640 --> 00:11:13,239 Speaker 1: a mix of economics and anthropology and this guy studying 226 00:11:13,360 --> 00:11:16,720 Speaker 1: like the billionaires who are building massive houses in Jackson 227 00:11:17,120 --> 00:11:19,800 Speaker 1: and then the maids and the cooks and the drivers 228 00:11:20,120 --> 00:11:36,880 Speaker 1: that work for them, and it was very interesting. I'm 229 00:11:36,880 --> 00:11:37,920 Speaker 1: looking forward to the rodeo. 230 00:11:38,160 --> 00:11:39,280 Speaker 3: So you already went to the rodeo. 231 00:11:39,320 --> 00:11:42,560 Speaker 4: Ones. We went to the rodeo on Wednesday night. There 232 00:11:42,600 --> 00:11:43,640 Speaker 4: is never enough rodeo. 233 00:11:43,840 --> 00:11:48,640 Speaker 3: Yeah, for those who are listening and not watching, which 234 00:11:48,679 --> 00:11:52,040 Speaker 3: is everyone, because there's not a video. Mike McKee is 235 00:11:52,480 --> 00:11:57,240 Speaker 3: truly our most Western. He's in a full cowboy hat, 236 00:11:57,320 --> 00:11:59,199 Speaker 3: western shirt. It's very natural because. 237 00:11:59,000 --> 00:12:01,880 Speaker 1: You're in his natural You're. 238 00:12:01,000 --> 00:12:03,760 Speaker 3: Not one of the just you know, billionaires hair playing 239 00:12:03,840 --> 00:12:04,280 Speaker 3: dress up. 240 00:12:04,480 --> 00:12:07,800 Speaker 4: No, I wish I were a billionaire, but no, I 241 00:12:07,840 --> 00:12:10,280 Speaker 4: grew up in Colorado, so this is natural and normal. 242 00:12:10,920 --> 00:12:13,640 Speaker 1: Is it true that you travel with a hat box 243 00:12:13,880 --> 00:12:14,560 Speaker 1: for your hats? 244 00:12:14,760 --> 00:12:16,800 Speaker 4: It is not true. I wear that on the plane. 245 00:12:17,040 --> 00:12:18,880 Speaker 1: Someone told me once that you had a hat box. 246 00:12:19,320 --> 00:12:23,920 Speaker 4: No, well, I have a hat box that I'd never use, 247 00:12:24,120 --> 00:12:25,760 Speaker 4: which it could use if I wanted to bring out 248 00:12:25,800 --> 00:12:26,560 Speaker 4: multiple hats. 249 00:12:27,000 --> 00:12:29,200 Speaker 3: No, it would be a little much. So what did 250 00:12:29,200 --> 00:12:29,960 Speaker 3: you think of the speech? 251 00:12:30,640 --> 00:12:32,120 Speaker 4: I thought it was a little more direct that I 252 00:12:32,160 --> 00:12:37,040 Speaker 4: anticipated in his flat out statement it's time to adjust policy. 253 00:12:37,559 --> 00:12:40,400 Speaker 4: But beyond that, it was pretty much as expected. And 254 00:12:40,400 --> 00:12:43,960 Speaker 4: then he didn't say by how much. He did drop 255 00:12:44,000 --> 00:12:46,800 Speaker 4: the idea of we've got to wait for more data. 256 00:12:47,000 --> 00:12:52,080 Speaker 4: So markets are reacting to that because they anticipated that 257 00:12:52,160 --> 00:12:53,680 Speaker 4: he would be a little more cautious. 258 00:12:54,040 --> 00:12:57,320 Speaker 1: You mentioned he didn't provide much guidance on the pace 259 00:12:57,480 --> 00:12:59,920 Speaker 1: of rate cuts. I'm kind of wondering at this point 260 00:13:00,080 --> 00:13:02,680 Speaker 1: if it even really matters if the market's already pricing 261 00:13:02,679 --> 00:13:06,520 Speaker 1: in one hundred bits of easing, doesn't matter if that's 262 00:13:06,600 --> 00:13:09,680 Speaker 1: like two fifty bases point cuts or if it's three 263 00:13:09,840 --> 00:13:13,400 Speaker 1: twenty five bases point cuts, or like it's more there 264 00:13:13,440 --> 00:13:14,600 Speaker 1: already pretty yeah. 265 00:13:14,520 --> 00:13:17,480 Speaker 4: It's more in the optics. If you do fifty, then 266 00:13:17,520 --> 00:13:20,520 Speaker 4: maybe people think there's something wrong. And if you do 267 00:13:20,559 --> 00:13:23,199 Speaker 4: fifty off the top, the markets are going to kind 268 00:13:23,240 --> 00:13:25,160 Speaker 4: of expect you to do it again and then look 269 00:13:25,200 --> 00:13:27,520 Speaker 4: back at the rate increase cycle and say, well, they 270 00:13:27,559 --> 00:13:29,480 Speaker 4: did twenty five, then they did fifty, then they did 271 00:13:29,480 --> 00:13:32,760 Speaker 4: seventy five. And they don't want to create that impression, 272 00:13:32,760 --> 00:13:34,720 Speaker 4: and they don't feel they need to that the economy 273 00:13:34,800 --> 00:13:37,199 Speaker 4: is strong enough, in good enough shape that they can 274 00:13:37,200 --> 00:13:39,800 Speaker 4: bring down rates gradually. And when you talk to the 275 00:13:39,800 --> 00:13:42,560 Speaker 4: Fed bank presidents, they say all the CEOs in their 276 00:13:42,640 --> 00:13:46,480 Speaker 4: regions all want a predictable path for interest rates so 277 00:13:46,520 --> 00:13:47,880 Speaker 4: they can plan going. 278 00:13:47,720 --> 00:13:50,280 Speaker 3: Forward say more about that. Actually, you know, we talked 279 00:13:50,280 --> 00:13:53,400 Speaker 3: a lot about what hiking cycles have historically looked like, 280 00:13:53,559 --> 00:13:56,520 Speaker 3: what do cutting cycles is that I hadn't thought about 281 00:13:56,559 --> 00:13:59,240 Speaker 3: this idea that if you start off with fifty then 282 00:13:59,240 --> 00:14:02,200 Speaker 3: people might ex inspect the next move to be fifty 283 00:14:02,240 --> 00:14:05,600 Speaker 3: at all, which is again, you know, I know there's 284 00:14:05,600 --> 00:14:07,240 Speaker 3: still a lot of data to come, but is that 285 00:14:07,400 --> 00:14:09,880 Speaker 3: sort of like the norm where if you start off 286 00:14:09,920 --> 00:14:12,080 Speaker 3: with that, then people expect that pace to continue. 287 00:14:12,320 --> 00:14:14,800 Speaker 4: Well, there's no real norm. There's not a lot of 288 00:14:15,280 --> 00:14:18,040 Speaker 4: historical record because we haven't had that many recessions that 289 00:14:18,120 --> 00:14:21,320 Speaker 4: you could say this is a particular pattern. But what 290 00:14:21,360 --> 00:14:24,320 Speaker 4: we have seen is basically twenty five basis points at 291 00:14:24,320 --> 00:14:26,600 Speaker 4: a time, and that once they start, they do at 292 00:14:26,720 --> 00:14:30,080 Speaker 4: least three before they stop. And that's about the only 293 00:14:30,160 --> 00:14:34,640 Speaker 4: historical record we have because every recession and the following 294 00:14:34,680 --> 00:14:38,360 Speaker 4: economy are different, Yeah, and so they're reacting in different ways. 295 00:14:38,480 --> 00:14:41,440 Speaker 4: The only time they really cut by fifty basis points 296 00:14:41,520 --> 00:14:43,840 Speaker 4: or more is when there's a crisis, and there's no 297 00:14:43,920 --> 00:14:47,080 Speaker 4: crisis now, so there's no reason to think they would 298 00:14:47,200 --> 00:14:47,480 Speaker 4: do that. 299 00:14:48,120 --> 00:14:50,360 Speaker 1: So, Mike, you're one of the journalists who is actually 300 00:14:50,480 --> 00:14:53,520 Speaker 1: in the room of the symposium, And for those who 301 00:14:53,560 --> 00:14:56,040 Speaker 1: don't know how Jackson Hall works, there is a limited 302 00:14:56,120 --> 00:14:58,920 Speaker 1: number of journalists that are allowed in the room where 303 00:14:58,960 --> 00:15:03,680 Speaker 1: the policy and central bankers are all speaking. What is 304 00:15:03,720 --> 00:15:07,480 Speaker 1: that like and what's the I guess scuttle But between 305 00:15:07,560 --> 00:15:10,400 Speaker 1: all the presentations, what are people gossiping about? Or what's 306 00:15:10,400 --> 00:15:11,120 Speaker 1: on everyone's mind? 307 00:15:11,240 --> 00:15:11,520 Speaker 2: Reason? 308 00:15:11,560 --> 00:15:13,240 Speaker 3: I only get to hang out in the lobby. Yeah, 309 00:15:13,320 --> 00:15:14,840 Speaker 3: give us a little insight. 310 00:15:14,600 --> 00:15:16,240 Speaker 4: You know, get I get asked that all the time. 311 00:15:16,240 --> 00:15:19,280 Speaker 4: And what are people talking about there? Well, during the 312 00:15:19,320 --> 00:15:21,880 Speaker 4: coffee breaks and before the sessions, they're talking about their kids, 313 00:15:21,920 --> 00:15:25,200 Speaker 4: they're talking about their vacations. They're normal people like everybody else. 314 00:15:25,720 --> 00:15:29,640 Speaker 4: There is some talk of about the papers that are presented, 315 00:15:30,040 --> 00:15:32,640 Speaker 4: and once they've been presented, you know, you people go 316 00:15:32,720 --> 00:15:35,960 Speaker 4: back and chat about them in the room. It's an 317 00:15:35,960 --> 00:15:39,880 Speaker 4: academic conference if you're at all familiar with that. People 318 00:15:39,960 --> 00:15:44,160 Speaker 4: listening out there, somebody gets up and presents econometrics DNSE 319 00:15:44,280 --> 00:15:48,360 Speaker 4: paper on economic theory, a discussing comes up and tells 320 00:15:48,400 --> 00:15:50,360 Speaker 4: what they think about it, and then the audience can 321 00:15:50,480 --> 00:15:55,000 Speaker 4: ask questions or offer comments. There's not a sense of 322 00:15:55,640 --> 00:15:58,040 Speaker 4: we're trying to figure out a problem here, and we're 323 00:15:58,040 --> 00:16:00,520 Speaker 4: going to come up with a solution. It's just presentation 324 00:16:00,560 --> 00:16:03,600 Speaker 4: of papers so that these central bankers can learn something 325 00:16:03,640 --> 00:16:05,120 Speaker 4: about economic theory. 326 00:16:05,400 --> 00:16:08,240 Speaker 3: And the theme for this year's conference is, you know, basically, 327 00:16:08,320 --> 00:16:12,160 Speaker 3: how does monetary policy transmission actually work? And I think 328 00:16:12,240 --> 00:16:15,360 Speaker 3: even though we did sort of get this, you know, 329 00:16:15,440 --> 00:16:19,480 Speaker 3: qualiti declaration of victory from Powell this morning, you know, 330 00:16:19,520 --> 00:16:22,000 Speaker 3: there's this mix, and he said a big chunk of 331 00:16:22,040 --> 00:16:24,600 Speaker 3: it was the fact that although it took longer than 332 00:16:24,640 --> 00:16:28,320 Speaker 3: expected pandemic related distortions plus the war, it took longer 333 00:16:28,320 --> 00:16:32,640 Speaker 3: to adjust than expected, and the role that monetary policy 334 00:16:33,040 --> 00:16:36,880 Speaker 3: played in reducing aggregate demand. But like that mix, no 335 00:16:36,880 --> 00:16:37,800 Speaker 3: one really knows. 336 00:16:38,080 --> 00:16:42,160 Speaker 4: Nobody really knows that every recession is different. This time 337 00:16:42,280 --> 00:16:45,800 Speaker 4: we had some really unusual situations that are being addressed, 338 00:16:46,240 --> 00:16:49,160 Speaker 4: many of them by the papers that are being presented here. Normally, 339 00:16:49,200 --> 00:16:51,600 Speaker 4: when lu FED is raising or lowering interest rates, they 340 00:16:51,600 --> 00:16:54,880 Speaker 4: affect the housing market a lot because it's interest rates sensitive. 341 00:16:54,880 --> 00:16:59,080 Speaker 4: But this time everybody had refinanced interest rates at about 342 00:16:59,080 --> 00:17:01,720 Speaker 4: two to three percent, so when the Fed raised rates, 343 00:17:01,800 --> 00:17:05,080 Speaker 4: nobody wanted to move, and so that killed off the 344 00:17:05,119 --> 00:17:07,879 Speaker 4: housing market for a couple of years, and that's just 345 00:17:07,960 --> 00:17:11,359 Speaker 4: kind of a really weird situation for them. Also, the 346 00:17:11,480 --> 00:17:14,520 Speaker 4: lags we talk about long and variable lags when monetary 347 00:17:14,560 --> 00:17:19,320 Speaker 4: policy hits. Because of Bloomberg and other people who provide 348 00:17:19,400 --> 00:17:22,520 Speaker 4: data instantly to everyone, we all know what the FED knows, 349 00:17:22,920 --> 00:17:25,719 Speaker 4: So there's a feeling that lags might be shorter and 350 00:17:25,760 --> 00:17:29,000 Speaker 4: work on the economy in a different timeframe. So there's 351 00:17:29,040 --> 00:17:32,160 Speaker 4: a lot of things that have been exposed by this 352 00:17:32,359 --> 00:17:35,240 Speaker 4: cycle here that the FED is going to try to understand. 353 00:17:35,480 --> 00:17:38,480 Speaker 1: But speaking of lags and also the housing market, is 354 00:17:38,560 --> 00:17:41,359 Speaker 1: kind of interesting that even with the recent decline in 355 00:17:41,480 --> 00:17:45,199 Speaker 1: mortgage rates, activity hasn't really picked up. And I kind 356 00:17:45,240 --> 00:17:48,040 Speaker 1: of wonder, like that's another There are so many instances 357 00:17:48,160 --> 00:17:50,720 Speaker 1: of the business cycle of the past few years not 358 00:17:50,800 --> 00:17:53,679 Speaker 1: behaving the way you would expect it to. This feels 359 00:17:53,760 --> 00:17:55,560 Speaker 1: kind of like the latest one, like another one to 360 00:17:55,560 --> 00:17:56,399 Speaker 1: add onto the pile. 361 00:17:56,760 --> 00:17:58,760 Speaker 4: It is a bit bizarre. Talking to the FED bank 362 00:17:58,800 --> 00:18:03,320 Speaker 4: presidents about their regions, they have told me that they 363 00:18:03,440 --> 00:18:06,840 Speaker 4: see mortgage activities starting to pick up, especially they're talking 364 00:18:06,840 --> 00:18:08,720 Speaker 4: to bankers who are making loans and things like that. 365 00:18:08,920 --> 00:18:11,879 Speaker 4: It's not roaring yet, but it is starting to come back. 366 00:18:12,560 --> 00:18:15,920 Speaker 4: People have there's pent up demand to move that young 367 00:18:15,960 --> 00:18:18,840 Speaker 4: people with families want bigger houses. But to the people 368 00:18:18,840 --> 00:18:21,160 Speaker 4: who own the bigger houses have retired and moved out 369 00:18:21,440 --> 00:18:23,600 Speaker 4: because they can get a lower mortgage, they're not going 370 00:18:23,640 --> 00:18:26,640 Speaker 4: to get that, so they anticipate that the market will 371 00:18:26,640 --> 00:18:30,120 Speaker 4: get back into something of an equilibrium once rates get 372 00:18:30,119 --> 00:18:33,520 Speaker 4: low enough. Now that's the key question. What psychological rate 373 00:18:33,560 --> 00:18:36,320 Speaker 4: after hearing all your neighbors brag about their two and 374 00:18:36,359 --> 00:18:39,320 Speaker 4: a half percent mortgage, what psychological rate do you have 375 00:18:39,400 --> 00:18:42,440 Speaker 4: to get to before people really go out and start 376 00:18:42,560 --> 00:18:44,160 Speaker 4: taking out mortgage applications. 377 00:18:44,440 --> 00:18:47,960 Speaker 1: Okay, here's my other question. We're all at this lodge together. 378 00:18:48,320 --> 00:18:50,560 Speaker 1: One of the cool things about this event is everyone 379 00:18:50,640 --> 00:18:53,199 Speaker 1: is just kind of obviously some are locked away in 380 00:18:53,240 --> 00:18:57,000 Speaker 1: the room, but after the presentations, everyone comes out to 381 00:18:57,080 --> 00:19:00,400 Speaker 1: the bar. They go outside and admire the view. When 382 00:19:00,440 --> 00:19:04,239 Speaker 1: you inevitably run into Powell, what question are you going 383 00:19:04,280 --> 00:19:04,800 Speaker 1: to ask him? 384 00:19:05,200 --> 00:19:06,960 Speaker 4: Well, I've already run into him, and I asked him 385 00:19:06,960 --> 00:19:08,800 Speaker 4: if I if he had been in Salt Lake City 386 00:19:08,800 --> 00:19:10,840 Speaker 4: because I saw somebody at the airport that looked like 387 00:19:10,920 --> 00:19:14,919 Speaker 4: and he said no. But we don't talk policy in 388 00:19:14,960 --> 00:19:17,919 Speaker 4: these informal situations. It's a chance to get to know 389 00:19:17,960 --> 00:19:21,080 Speaker 4: people on a more personal basis, and we know a 390 00:19:21,080 --> 00:19:22,679 Speaker 4: little bit about their family, they know a little bit 391 00:19:22,680 --> 00:19:24,720 Speaker 4: about ours, so we chat like that, and it makes 392 00:19:24,760 --> 00:19:27,400 Speaker 4: it easier to do your job going forward because there's 393 00:19:27,440 --> 00:19:30,320 Speaker 4: more trust between the interviewer and interviewee. 394 00:19:30,560 --> 00:19:33,760 Speaker 3: Do we know whether Powell has seen dead and Co 395 00:19:34,080 --> 00:19:34,720 Speaker 3: at the sphere? 396 00:19:35,359 --> 00:19:38,959 Speaker 4: That's Joe asking, is the question, Okay, if I can 397 00:19:39,000 --> 00:19:41,560 Speaker 4: give a new answer to I'll say that's the question. 398 00:19:41,680 --> 00:19:45,440 Speaker 4: I'll ask him. I don't think so, but it is possible, 399 00:19:45,520 --> 00:19:46,679 Speaker 4: and I didn't see him. 400 00:19:46,680 --> 00:19:48,480 Speaker 3: How many times have you did you go to see 401 00:19:48,520 --> 00:19:49,359 Speaker 3: four four? 402 00:19:49,440 --> 00:19:50,000 Speaker 4: I went once. 403 00:19:50,000 --> 00:19:51,480 Speaker 3: I would have gone more if I'd had the time. 404 00:19:51,480 --> 00:19:53,440 Speaker 4: I thought it was incredible. It was I mean, the 405 00:19:53,480 --> 00:19:56,200 Speaker 4: sphere is definitely a bucket list item, and you could 406 00:19:56,240 --> 00:19:58,840 Speaker 4: see the dead there, then that's even better. 407 00:20:03,400 --> 00:20:06,480 Speaker 3: Lots More is produced by Carmen Rodriguez and dash Ol Bennett, 408 00:20:06,520 --> 00:20:08,680 Speaker 3: with help from Moses Onam and kil Brooks. 409 00:20:09,080 --> 00:20:12,240 Speaker 1: Our sound engineer is Blake Maples. Sage Bauman is the 410 00:20:12,280 --> 00:20:13,679 Speaker 1: head of Bloomberg Podcasts. 411 00:20:14,119 --> 00:20:17,480 Speaker 3: Please rate, review, and subscribe to Odd, Lots and Lots 412 00:20:17,520 --> 00:20:20,399 Speaker 3: More on your favorite podcast platforms. 413 00:20:20,160 --> 00:20:22,920 Speaker 1: And remember that Bloomberg subscribers can listen to all our 414 00:20:22,960 --> 00:20:27,600 Speaker 1: podcasts ad free by connecting through Apple Podcasts. Thanks for listening.