WEBVTT - Lots More on What We Just Learned at Jackson Hole 0:00:03.160 --> 0:00:08.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:10.240 --> 0:00:14.239 It's good about Gaddis and Grand Teton's fishing. Our guest 0:00:14.280 --> 0:00:18.200 today Tracy Alloy Catcher of the Fish. 0:00:19.000 --> 0:00:21.200 Let me tell you, Tom, I have strong opinions on 0:00:21.280 --> 0:00:22.720 euro nymphing, which we. 0:00:22.680 --> 0:00:24.320 Can talk about. 0:00:24.600 --> 0:00:25.080 Impressive. 0:00:25.200 --> 0:00:29.280 I had never heard that term until Tracy and I 0:00:29.360 --> 0:00:32.360 went fishing, but that eu nymphing is a thing, so 0:00:32.560 --> 0:00:33.040 google it. 0:00:33.080 --> 0:00:39.040 Folks, also finfluencers, people who are on Instagram impressively catching 0:00:39.080 --> 0:00:41.360 fish but also cheating in the way they're doing it. 0:00:43.280 --> 0:00:44.880 Did you have you done any fly fishing? 0:00:44.880 --> 0:00:45.240 Tom? 0:00:45.320 --> 0:00:49.000 Very little. We had a close friend, close family friend 0:00:49.040 --> 0:00:51.720 who has had a research for Eastman Kodak. Really important 0:00:51.840 --> 0:00:54.640 in the chemistry of developing all the films that we 0:00:54.680 --> 0:00:58.560 know and use was Jack Penny. Basically he worked so 0:00:58.600 --> 0:01:01.520 he could fly fish, and I would sit there and watch. 0:01:01.560 --> 0:01:04.440 Mister everyone has to work for something that sounds and 0:01:04.680 --> 0:01:05.480 make the flies. 0:01:06.080 --> 0:01:07.480 That's about as close as I got. 0:01:10.319 --> 0:01:17.360 I did a deadlift one two Jimmy Okay, gony uh barges. 0:01:17.520 --> 0:01:19.679 This isn't after school special, except. 0:01:19.280 --> 0:01:21.839 I've decided I'm going to base my entire personality going 0:01:21.840 --> 0:01:25.080 forward on campaigning for a strategic pork reserve in the US. 0:01:25.200 --> 0:01:26.920 Where's the best with in pasta? 0:01:27.080 --> 0:01:29.679 These are the important question is that robots taking over 0:01:29.680 --> 0:01:30.040 the world. 0:01:30.120 --> 0:01:30.280 No. 0:01:30.360 --> 0:01:33.240 I think that like in a couple of years, the 0:01:33.319 --> 0:01:35.520 AI will do a really good job of making the 0:01:35.520 --> 0:01:39.000 Odd lotch podcast, And people say, I don't really need 0:01:39.040 --> 0:01:40.680 to listen to Joe and Tracy anymore. 0:01:40.880 --> 0:01:41.800 We do have. 0:01:43.200 --> 0:01:47.080 The perfect welcome to lots More when we catch up 0:01:47.080 --> 0:01:48.600 with friends about what's going on. 0:01:48.760 --> 0:01:51.920 Right now, because even when Odd Lots is over, there's 0:01:52.040 --> 0:01:53.280 always lots more. 0:01:53.720 --> 0:01:59.160 And we really do have the perfect guest. Can we 0:01:59.160 --> 0:02:00.000 talk a little monitory? 0:02:00.640 --> 0:02:03.720 Yeah, let's do it. Okay, So one thing I'm curious 0:02:03.760 --> 0:02:06.520 to hear your opinion on Tom You've been at multiple 0:02:06.680 --> 0:02:10.320 Jackson Hole economic symposiums at this point. What's the vibe 0:02:10.480 --> 0:02:13.480 of this year, especially compared to you know, two years 0:02:13.520 --> 0:02:17.440 ago Powell basically stood up and said, like it might 0:02:17.520 --> 0:02:20.760 be painful to bring down inflation. Then last year they 0:02:20.760 --> 0:02:23.800 were very much talking about progress on inflation and maybe 0:02:23.840 --> 0:02:27.160 complications from the real world economy. And then fast forward 0:02:27.200 --> 0:02:29.200 to today and it's all about the labor market. 0:02:29.400 --> 0:02:32.800 I was in Davos a million years ago. I was 0:02:32.840 --> 0:02:37.800 standing with three Nobel Prize winners, and they're blah blah blah, 0:02:37.800 --> 0:02:40.640 blah blah. And one of their wives said after me, 0:02:41.360 --> 0:02:44.160 this is in the heart of the crisis. She said, Tom, 0:02:44.400 --> 0:02:47.440 they're just bewildered. And I think there's a lot of 0:02:47.480 --> 0:02:53.519 bewilderment here about the future of America, witnessing the Milwaukee 0:02:53.639 --> 0:02:57.200 and Chicago and that what we got today, which I 0:02:57.280 --> 0:02:59.360 was blown away by the speech. I literally will go 0:02:59.440 --> 0:03:02.640 back and read, trust me, I never do that is 0:03:02.800 --> 0:03:08.040 this was a real statement by Powell about the bewilderment 0:03:08.120 --> 0:03:10.400 that's out there, and clearly was it this Jackson hole 0:03:10.480 --> 0:03:10.839 this year. 0:03:11.480 --> 0:03:14.000 One of the things just on the like sort of 0:03:14.240 --> 0:03:18.480 pure macro front that struck me is right up top 0:03:18.600 --> 0:03:21.239 saying we're not going to tolerate any more labor market weakness. 0:03:21.280 --> 0:03:21.919 And I found that. 0:03:21.960 --> 0:03:24.160 Really striking, and you saw it in the market reaction. 0:03:24.480 --> 0:03:26.480 By the way, we're talking with Tom Kane of Bloomberg 0:03:26.600 --> 0:03:30.640 TV is just the Tom Kane just in case, I 0:03:30.639 --> 0:03:35.240 guess we haven't formally introduced me. But you know, clearly 0:03:35.600 --> 0:03:38.320 everyone sort of expected right that this speech would be 0:03:38.400 --> 0:03:41.440 used to announce something about the September rate cut cycle. 0:03:41.560 --> 0:03:44.160 But there's still been in the chat the FED Chad 0:03:44.200 --> 0:03:47.000 over the last couple of weeks. Still this seeming like 0:03:47.480 --> 0:03:51.160 not total sure. Maybe this sort of willingness to say, 0:03:51.200 --> 0:03:54.080 like we could rise into the high four percent unemployment 0:03:54.120 --> 0:03:56.480 and that's still be sort of consistent with what we're 0:03:56.520 --> 0:03:59.520 going for. And I sort of feel like the market 0:03:59.560 --> 0:04:02.120 reaction and was to like, know, we're done with letting 0:04:02.280 --> 0:04:05.160 the labor market weakness. And he added another line, it's 0:04:05.160 --> 0:04:09.080 not just normalization. By some measures, the labor market is 0:04:09.120 --> 0:04:11.560 worse than pre COVID and you see that in things 0:04:11.600 --> 0:04:13.440 like the hiring rate. So I found that to be 0:04:13.440 --> 0:04:14.120 pretty powerful. 0:04:14.240 --> 0:04:16.800 Yeah, as we talked about as we walked over here 0:04:16.839 --> 0:04:20.760 to hear luxurious about, I mean, it's incredible. You know, 0:04:20.880 --> 0:04:24.600 the view is stunning. And you know, I think that 0:04:24.680 --> 0:04:27.039 the unemployment right chart, I think Kolby Smith had it 0:04:27.040 --> 0:04:30.159 in the FT. It's curve linear, it's what we call convex. 0:04:30.160 --> 0:04:33.880 We're showing an accelerative tendency. And I asked any number 0:04:33.880 --> 0:04:37.479 of guests today, I said, Okay, where's the number that hurts. 0:04:38.200 --> 0:04:40.680 I don't think it's four point nine percent or even 0:04:40.760 --> 0:04:43.960 five five point one percent. I think it's much more 0:04:44.160 --> 0:04:48.200 towards four seven. What that four seven is a big 0:04:48.279 --> 0:04:49.640 number for a lot of America. 0:04:50.480 --> 0:04:54.360 Joe, do you remember Tom Keane used to write some 0:04:54.640 --> 0:04:58.120 commentary pieces for Bloomberg dot com and I used to 0:04:58.240 --> 0:05:00.960 edit that. Oh yeah, and there's one that always sticks 0:05:01.040 --> 0:05:04.720 in my mind. You mentioned convexity just then, Tom, and 0:05:04.839 --> 0:05:06.880 I remember you had one. It might have been about 0:05:06.880 --> 0:05:09.359 the yield curve, but I think the headline was just 0:05:09.680 --> 0:05:11.880 slope flatters. 0:05:11.040 --> 0:05:11.680 Slow batters. 0:05:11.920 --> 0:05:14.120 This is a Tom King, This is a Tom King 0:05:14.279 --> 0:05:15.200 signature line. 0:05:15.279 --> 0:05:19.479 Well, it is a signature line, but it's really really important, 0:05:19.520 --> 0:05:21.680 and I'll go through it right now because it's great 0:05:21.720 --> 0:05:24.159 that you have the time of odd lots interviews instead 0:05:24.200 --> 0:05:27.400 of you got thirty seconds. We're going, Okay, here's the 0:05:27.440 --> 0:05:31.359 way it works. The core financial equation is FV equals 0:05:31.440 --> 0:05:34.800 PV one plus ard of the t that's a discrete 0:05:35.320 --> 0:05:38.200 or in a continuous function, f V the future value 0:05:38.520 --> 0:05:42.120 equals a present value times e to the rt ease 0:05:42.160 --> 0:05:46.039 in the exponential function. And the answer across that that 0:05:46.200 --> 0:05:49.640 is so so important is what you do in the 0:05:49.680 --> 0:05:51.760 phrase that we all learned in school. As you go 0:05:51.800 --> 0:05:54.080 to logs, you go to logs and The way you 0:05:54.080 --> 0:05:55.800 do it on a chart is you have a semilog 0:05:55.920 --> 0:05:59.599 chart with a log y axis, and that gives you 0:05:59.640 --> 0:06:02.839 the first derivative is the slope. So if you go 0:06:02.960 --> 0:06:05.760 to log on any given financial series is a rule 0:06:05.800 --> 0:06:08.680 of thumb, you can look at the slope. You can 0:06:08.720 --> 0:06:11.960 say it matters. And here's what Chairman Powell would say, 0:06:12.200 --> 0:06:15.080 he would say, and then the change of the slope 0:06:15.839 --> 0:06:19.440 really matters. And that's the confidence you got today that 0:06:19.640 --> 0:06:20.480 move the markets. 0:06:21.120 --> 0:06:24.280 And this is of course you know when we talk 0:06:24.440 --> 0:06:27.120 We talked to claudiasam recently and everyone's talked about the 0:06:27.160 --> 0:06:31.000 same rule and they get really hung up on like well, like, oh, 0:06:31.080 --> 0:06:32.560 you know the exact the. 0:06:32.520 --> 0:06:34.000 Exact measurement, exact point. 0:06:34.040 --> 0:06:37.120 Well really, and that's fine, and maybe that's a good guy. 0:06:37.160 --> 0:06:42.760 But the real embedded wisdom or insight is that before 0:06:42.800 --> 0:06:45.080 you have a big increase in the unemployment rate, you 0:06:45.120 --> 0:06:47.400 have a small increase. Or to put it in another way, 0:06:47.760 --> 0:06:50.000 historic history tells us that every time you have a 0:06:50.080 --> 0:06:52.800 modest rise in the unemployment rate, it leads to a 0:06:52.880 --> 0:06:53.960 large it's exponential. 0:06:54.080 --> 0:06:56.480 Yeah. But the key thing here is the financial media 0:06:57.080 --> 0:07:00.279 loves point estimates. What's going to be for one point 0:07:00.320 --> 0:07:03.960 two percent, and you two have been really historic in 0:07:04.040 --> 0:07:08.039 developing a conversation about the rate of change or the 0:07:08.120 --> 0:07:10.280 rate of change or the radia change. The word we 0:07:10.400 --> 0:07:13.320 use is dynamics, the dynamics of the moment, and I 0:07:13.360 --> 0:07:16.440 thought Paul today was just great on the dynamics of 0:07:16.480 --> 0:07:16.880 the moment. 0:07:17.240 --> 0:07:20.000 So speaking of the dynamics of the moment, one thing 0:07:20.040 --> 0:07:23.560 that has clearly changed is like the emphasis of what 0:07:23.640 --> 0:07:26.400 the market and investors are looking at has is shifting 0:07:26.440 --> 0:07:29.280 in real time from inflation to the labor market data. 0:07:29.840 --> 0:07:33.720 And one thing I'm wondering is the FED has emphasized 0:07:33.840 --> 0:07:38.040 its data dependency so much at this point that it 0:07:38.120 --> 0:07:41.880 feels like suddenly that job's number becomes even more important 0:07:41.880 --> 0:07:44.720 than ever. And part of me is wondering what happens 0:07:44.800 --> 0:07:47.600 if we get a stronger than expected jobs number between 0:07:47.600 --> 0:07:49.320 now and September seventeenth. 0:07:49.400 --> 0:07:51.080 That's out there. And Adam Posen, who we had on 0:07:51.160 --> 0:07:54.520 today at the Peterson Institute, his FT essay two days ago, 0:07:54.560 --> 0:07:57.920 I think was blistering on that where this embedded idea 0:07:58.160 --> 0:08:02.600 that we're in a dissinflationary mode. One report, two reports 0:08:02.640 --> 0:08:05.920 can upset the apple. Yeah, and no one's predicting that 0:08:05.960 --> 0:08:08.280 you guys know the standard e or like anyone else. 0:08:08.320 --> 0:08:13.160 But the answer to the certitude of disinflation now is 0:08:13.160 --> 0:08:14.400 probably suspect. 0:08:14.640 --> 0:08:16.920 I mean, and of course that's what sort of royaled 0:08:16.960 --> 0:08:19.160 the market and Q one of this year, which is 0:08:19.200 --> 0:08:22.000 there was a similar feeling of certitude and then we 0:08:22.040 --> 0:08:25.280 did get those how to then expected inflation. You know, 0:08:25.320 --> 0:08:26.920 I think one of the things and we talked about 0:08:26.920 --> 0:08:29.120 this on TV just a few minutes ago, that I've 0:08:29.160 --> 0:08:31.320 been wondering to think about, and something we talk a 0:08:31.320 --> 0:08:35.360 lot about the business memory that price increases are a 0:08:35.400 --> 0:08:37.480 thing you can do. Is I think it'd be a 0:08:37.520 --> 0:08:40.000 really interesting question maybe for like the next decade, the 0:08:40.120 --> 0:08:42.920 memory of twenty twenty two that actually sometimes you can 0:08:43.040 --> 0:08:45.960 raise prices, you know, you don't lose market share per se, 0:08:46.440 --> 0:08:49.720 Whether that will keep a sort of like floor on 0:08:49.920 --> 0:08:52.959 the rate of inflation for a while. That's sort of 0:08:53.040 --> 0:08:55.640 because that sort of like muscle memory of price increases 0:08:55.960 --> 0:08:58.000 is still there. I think an interesting question. 0:08:58.040 --> 0:09:01.000 It's a political moment right now. The least, what I 0:09:01.040 --> 0:09:04.040 will say, my study of this, and this goes back 0:09:04.080 --> 0:09:07.880 to England, to Clement Attlee England. It's really hard to 0:09:07.920 --> 0:09:11.200 lower prices. Yeah, you sit there, you sit there with 0:09:11.240 --> 0:09:14.079 a dozen eggs, and you go, let's bring the price down. 0:09:14.640 --> 0:09:19.080 Let's not you know, you mentioned political moment just then, 0:09:19.160 --> 0:09:21.199 and I feel like this is the other thing that 0:09:21.360 --> 0:09:24.079 maybe is shifting a little bit, because, you know, maybe 0:09:24.120 --> 0:09:26.080 six weeks ago, there was a lot of talk about 0:09:26.120 --> 0:09:30.080 how the FED can't cut in September because it will 0:09:30.080 --> 0:09:34.400 be seen to be politically motivated. That conversation, for the 0:09:34.440 --> 0:09:37.719 most part, seems to have gone away. It feels like. 0:09:38.320 --> 0:09:40.840 I thought his voice changed in the last press conference. 0:09:41.440 --> 0:09:44.640 You listen for that. His voice changed, And I thought 0:09:44.679 --> 0:09:52.160 the last paragraph today beautifully captured their humility and somewhat indirectly, 0:09:52.240 --> 0:09:54.480 the statement they're just not going to get involved in 0:09:54.480 --> 0:09:55.200 the politics. 0:09:55.679 --> 0:09:58.080 Tom, here's the really important question. Are you coming with 0:09:58.160 --> 0:09:59.960 us to the million dollar Cowboy bar tonight? 0:10:00.280 --> 0:10:02.440 No, I have to jet back. Paul Sweeny says, they've 0:10:02.440 --> 0:10:03.640 got to be there Monday morning. 0:10:03.760 --> 0:10:06.839 His private jet is on the right now, and so 0:10:06.960 --> 0:10:07.599 we should. 0:10:07.360 --> 0:10:10.040 Paint a picture of this. We really if we have time. Yeah, 0:10:10.120 --> 0:10:13.000 you fly to Jackson hoy And on the confidence building 0:10:13.120 --> 0:10:15.439 plane Amazon. It was like right out of the movie 0:10:15.480 --> 0:10:18.520 Airplane to comedy both and the guy was the pilot 0:10:18.600 --> 0:10:20.840 was great about it. We've got two captains. We've got 0:10:20.880 --> 0:10:24.040 more gold bars on shoulders than any airplane I've ever 0:10:24.080 --> 0:10:27.880 been on. And they're co certifying each other to land 0:10:27.920 --> 0:10:32.360 at six thousand feet like they're doing like their required certification. 0:10:32.640 --> 0:10:35.560 That was a confidence builder. So you come in and 0:10:35.600 --> 0:10:38.120 you're coming in from north to south. You land, it's 0:10:38.120 --> 0:10:42.439 this lovely little airport and you turn, you go by yeah, 0:10:42.520 --> 0:10:44.640 super short running with the brakes, come on fast, yes, 0:10:44.920 --> 0:10:48.880 And you turn and you'll go by the wall of Jackson, Wyoming, 0:10:49.720 --> 0:10:52.880 lear jets, Gulf streams and the rest. It looks like Davos. 0:10:52.920 --> 0:10:56.280 It looks like Zurich, you know, in a smaller scale. 0:10:56.360 --> 0:10:58.280 At some point, we're going to do an episode about 0:10:58.280 --> 0:11:01.360 the economics of Jackson, Wyoming because it's fascinating and yeah, 0:11:01.360 --> 0:11:01.920 it's wild. 0:11:02.040 --> 0:11:02.280 Yeah. 0:11:02.840 --> 0:11:05.920 There's a really good book called Billionaire Wilderness that I 0:11:06.000 --> 0:11:08.640 recommend to everyone listening to this podcast. It's sort of 0:11:08.640 --> 0:11:13.239 a mix of economics and anthropology and this guy studying 0:11:13.360 --> 0:11:16.720 like the billionaires who are building massive houses in Jackson 0:11:17.120 --> 0:11:19.800 and then the maids and the cooks and the drivers 0:11:20.120 --> 0:11:36.880 that work for them, and it was very interesting. I'm 0:11:36.880 --> 0:11:37.920 looking forward to the rodeo. 0:11:38.160 --> 0:11:39.280 So you already went to the rodeo. 0:11:39.320 --> 0:11:42.560 Ones. We went to the rodeo on Wednesday night. There 0:11:42.600 --> 0:11:43.640 is never enough rodeo. 0:11:43.840 --> 0:11:48.640 Yeah, for those who are listening and not watching, which 0:11:48.679 --> 0:11:52.040 is everyone, because there's not a video. Mike McKee is 0:11:52.480 --> 0:11:57.240 truly our most Western. He's in a full cowboy hat, 0:11:57.320 --> 0:11:59.199 western shirt. It's very natural because. 0:11:59.000 --> 0:12:01.880 You're in his natural You're. 0:12:01.000 --> 0:12:03.760 Not one of the just you know, billionaires hair playing 0:12:03.840 --> 0:12:04.280 dress up. 0:12:04.480 --> 0:12:07.800 No, I wish I were a billionaire, but no, I 0:12:07.840 --> 0:12:10.280 grew up in Colorado, so this is natural and normal. 0:12:10.920 --> 0:12:13.640 Is it true that you travel with a hat box 0:12:13.880 --> 0:12:14.560 for your hats? 0:12:14.760 --> 0:12:16.800 It is not true. I wear that on the plane. 0:12:17.040 --> 0:12:18.880 Someone told me once that you had a hat box. 0:12:19.320 --> 0:12:23.920 No, well, I have a hat box that I'd never use, 0:12:24.120 --> 0:12:25.760 which it could use if I wanted to bring out 0:12:25.800 --> 0:12:26.560 multiple hats. 0:12:27.000 --> 0:12:29.200 No, it would be a little much. So what did 0:12:29.200 --> 0:12:29.960 you think of the speech? 0:12:30.640 --> 0:12:32.120 I thought it was a little more direct that I 0:12:32.160 --> 0:12:37.040 anticipated in his flat out statement it's time to adjust policy. 0:12:37.559 --> 0:12:40.400 But beyond that, it was pretty much as expected. And 0:12:40.400 --> 0:12:43.960 then he didn't say by how much. He did drop 0:12:44.000 --> 0:12:46.800 the idea of we've got to wait for more data. 0:12:47.000 --> 0:12:52.080 So markets are reacting to that because they anticipated that 0:12:52.160 --> 0:12:53.680 he would be a little more cautious. 0:12:54.040 --> 0:12:57.320 You mentioned he didn't provide much guidance on the pace 0:12:57.480 --> 0:12:59.920 of rate cuts. I'm kind of wondering at this point 0:13:00.080 --> 0:13:02.680 if it even really matters if the market's already pricing 0:13:02.679 --> 0:13:06.520 in one hundred bits of easing, doesn't matter if that's 0:13:06.600 --> 0:13:09.680 like two fifty bases point cuts or if it's three 0:13:09.840 --> 0:13:13.400 twenty five bases point cuts, or like it's more there 0:13:13.440 --> 0:13:14.600 already pretty yeah. 0:13:14.520 --> 0:13:17.480 It's more in the optics. If you do fifty, then 0:13:17.520 --> 0:13:20.520 maybe people think there's something wrong. And if you do 0:13:20.559 --> 0:13:23.199 fifty off the top, the markets are going to kind 0:13:23.240 --> 0:13:25.160 of expect you to do it again and then look 0:13:25.200 --> 0:13:27.520 back at the rate increase cycle and say, well, they 0:13:27.559 --> 0:13:29.480 did twenty five, then they did fifty, then they did 0:13:29.480 --> 0:13:32.760 seventy five. And they don't want to create that impression, 0:13:32.760 --> 0:13:34.720 and they don't feel they need to that the economy 0:13:34.800 --> 0:13:37.199 is strong enough, in good enough shape that they can 0:13:37.200 --> 0:13:39.800 bring down rates gradually. And when you talk to the 0:13:39.800 --> 0:13:42.560 Fed bank presidents, they say all the CEOs in their 0:13:42.640 --> 0:13:46.480 regions all want a predictable path for interest rates so 0:13:46.520 --> 0:13:47.880 they can plan going. 0:13:47.720 --> 0:13:50.280 Forward say more about that. Actually, you know, we talked 0:13:50.280 --> 0:13:53.400 a lot about what hiking cycles have historically looked like, 0:13:53.559 --> 0:13:56.520 what do cutting cycles is that I hadn't thought about 0:13:56.559 --> 0:13:59.240 this idea that if you start off with fifty then 0:13:59.240 --> 0:14:02.200 people might ex inspect the next move to be fifty 0:14:02.240 --> 0:14:05.600 at all, which is again, you know, I know there's 0:14:05.600 --> 0:14:07.240 still a lot of data to come, but is that 0:14:07.400 --> 0:14:09.880 sort of like the norm where if you start off 0:14:09.920 --> 0:14:12.080 with that, then people expect that pace to continue. 0:14:12.320 --> 0:14:14.800 Well, there's no real norm. There's not a lot of 0:14:15.280 --> 0:14:18.040 historical record because we haven't had that many recessions that 0:14:18.120 --> 0:14:21.320 you could say this is a particular pattern. But what 0:14:21.360 --> 0:14:24.320 we have seen is basically twenty five basis points at 0:14:24.320 --> 0:14:26.600 a time, and that once they start, they do at 0:14:26.720 --> 0:14:30.080 least three before they stop. And that's about the only 0:14:30.160 --> 0:14:34.640 historical record we have because every recession and the following 0:14:34.680 --> 0:14:38.360 economy are different, Yeah, and so they're reacting in different ways. 0:14:38.480 --> 0:14:41.440 The only time they really cut by fifty basis points 0:14:41.520 --> 0:14:43.840 or more is when there's a crisis, and there's no 0:14:43.920 --> 0:14:47.080 crisis now, so there's no reason to think they would 0:14:47.200 --> 0:14:47.480 do that. 0:14:48.120 --> 0:14:50.360 So, Mike, you're one of the journalists who is actually 0:14:50.480 --> 0:14:53.520 in the room of the symposium, And for those who 0:14:53.560 --> 0:14:56.040 don't know how Jackson Hall works, there is a limited 0:14:56.120 --> 0:14:58.920 number of journalists that are allowed in the room where 0:14:58.960 --> 0:15:03.680 the policy and central bankers are all speaking. What is 0:15:03.720 --> 0:15:07.480 that like and what's the I guess scuttle But between 0:15:07.560 --> 0:15:10.400 all the presentations, what are people gossiping about? Or what's 0:15:10.400 --> 0:15:11.120 on everyone's mind? 0:15:11.240 --> 0:15:11.520 Reason? 0:15:11.560 --> 0:15:13.240 I only get to hang out in the lobby. Yeah, 0:15:13.320 --> 0:15:14.840 give us a little insight. 0:15:14.600 --> 0:15:16.240 You know, get I get asked that all the time. 0:15:16.240 --> 0:15:19.280 And what are people talking about there? Well, during the 0:15:19.320 --> 0:15:21.880 coffee breaks and before the sessions, they're talking about their kids, 0:15:21.920 --> 0:15:25.200 they're talking about their vacations. They're normal people like everybody else. 0:15:25.720 --> 0:15:29.640 There is some talk of about the papers that are presented, 0:15:30.040 --> 0:15:32.640 and once they've been presented, you know, you people go 0:15:32.720 --> 0:15:35.960 back and chat about them in the room. It's an 0:15:35.960 --> 0:15:39.880 academic conference if you're at all familiar with that. People 0:15:39.960 --> 0:15:44.160 listening out there, somebody gets up and presents econometrics DNSE 0:15:44.280 --> 0:15:48.360 paper on economic theory, a discussing comes up and tells 0:15:48.400 --> 0:15:50.360 what they think about it, and then the audience can 0:15:50.480 --> 0:15:55.000 ask questions or offer comments. There's not a sense of 0:15:55.640 --> 0:15:58.040 we're trying to figure out a problem here, and we're 0:15:58.040 --> 0:16:00.520 going to come up with a solution. It's just presentation 0:16:00.560 --> 0:16:03.600 of papers so that these central bankers can learn something 0:16:03.640 --> 0:16:05.120 about economic theory. 0:16:05.400 --> 0:16:08.240 And the theme for this year's conference is, you know, basically, 0:16:08.320 --> 0:16:12.160 how does monetary policy transmission actually work? And I think 0:16:12.240 --> 0:16:15.360 even though we did sort of get this, you know, 0:16:15.440 --> 0:16:19.480 qualiti declaration of victory from Powell this morning, you know, 0:16:19.520 --> 0:16:22.000 there's this mix, and he said a big chunk of 0:16:22.040 --> 0:16:24.600 it was the fact that although it took longer than 0:16:24.640 --> 0:16:28.320 expected pandemic related distortions plus the war, it took longer 0:16:28.320 --> 0:16:32.640 to adjust than expected, and the role that monetary policy 0:16:33.040 --> 0:16:36.880 played in reducing aggregate demand. But like that mix, no 0:16:36.880 --> 0:16:37.800 one really knows. 0:16:38.080 --> 0:16:42.160 Nobody really knows that every recession is different. This time 0:16:42.280 --> 0:16:45.800 we had some really unusual situations that are being addressed, 0:16:46.240 --> 0:16:49.160 many of them by the papers that are being presented here. Normally, 0:16:49.200 --> 0:16:51.600 when lu FED is raising or lowering interest rates, they 0:16:51.600 --> 0:16:54.880 affect the housing market a lot because it's interest rates sensitive. 0:16:54.880 --> 0:16:59.080 But this time everybody had refinanced interest rates at about 0:16:59.080 --> 0:17:01.720 two to three percent, so when the Fed raised rates, 0:17:01.800 --> 0:17:05.080 nobody wanted to move, and so that killed off the 0:17:05.119 --> 0:17:07.879 housing market for a couple of years, and that's just 0:17:07.960 --> 0:17:11.359 kind of a really weird situation for them. Also, the 0:17:11.480 --> 0:17:14.520 lags we talk about long and variable lags when monetary 0:17:14.560 --> 0:17:19.320 policy hits. Because of Bloomberg and other people who provide 0:17:19.400 --> 0:17:22.520 data instantly to everyone, we all know what the FED knows, 0:17:22.920 --> 0:17:25.719 So there's a feeling that lags might be shorter and 0:17:25.760 --> 0:17:29.000 work on the economy in a different timeframe. So there's 0:17:29.040 --> 0:17:32.160 a lot of things that have been exposed by this 0:17:32.359 --> 0:17:35.240 cycle here that the FED is going to try to understand. 0:17:35.480 --> 0:17:38.480 But speaking of lags and also the housing market, is 0:17:38.560 --> 0:17:41.359 kind of interesting that even with the recent decline in 0:17:41.480 --> 0:17:45.199 mortgage rates, activity hasn't really picked up. And I kind 0:17:45.240 --> 0:17:48.040 of wonder, like that's another There are so many instances 0:17:48.160 --> 0:17:50.720 of the business cycle of the past few years not 0:17:50.800 --> 0:17:53.679 behaving the way you would expect it to. This feels 0:17:53.760 --> 0:17:55.560 kind of like the latest one, like another one to 0:17:55.560 --> 0:17:56.399 add onto the pile. 0:17:56.760 --> 0:17:58.760 It is a bit bizarre. Talking to the FED bank 0:17:58.800 --> 0:18:03.320 presidents about their regions, they have told me that they 0:18:03.440 --> 0:18:06.840 see mortgage activities starting to pick up, especially they're talking 0:18:06.840 --> 0:18:08.720 to bankers who are making loans and things like that. 0:18:08.920 --> 0:18:11.879 It's not roaring yet, but it is starting to come back. 0:18:12.560 --> 0:18:15.920 People have there's pent up demand to move that young 0:18:15.960 --> 0:18:18.840 people with families want bigger houses. But to the people 0:18:18.840 --> 0:18:21.160 who own the bigger houses have retired and moved out 0:18:21.440 --> 0:18:23.600 because they can get a lower mortgage, they're not going 0:18:23.640 --> 0:18:26.640 to get that, so they anticipate that the market will 0:18:26.640 --> 0:18:30.120 get back into something of an equilibrium once rates get 0:18:30.119 --> 0:18:33.520 low enough. Now that's the key question. What psychological rate 0:18:33.560 --> 0:18:36.320 after hearing all your neighbors brag about their two and 0:18:36.359 --> 0:18:39.320 a half percent mortgage, what psychological rate do you have 0:18:39.400 --> 0:18:42.440 to get to before people really go out and start 0:18:42.560 --> 0:18:44.160 taking out mortgage applications. 0:18:44.440 --> 0:18:47.960 Okay, here's my other question. We're all at this lodge together. 0:18:48.320 --> 0:18:50.560 One of the cool things about this event is everyone 0:18:50.640 --> 0:18:53.199 is just kind of obviously some are locked away in 0:18:53.240 --> 0:18:57.000 the room, but after the presentations, everyone comes out to 0:18:57.080 --> 0:19:00.400 the bar. They go outside and admire the view. When 0:19:00.440 --> 0:19:04.239 you inevitably run into Powell, what question are you going 0:19:04.280 --> 0:19:04.800 to ask him? 0:19:05.200 --> 0:19:06.960 Well, I've already run into him, and I asked him 0:19:06.960 --> 0:19:08.800 if I if he had been in Salt Lake City 0:19:08.800 --> 0:19:10.840 because I saw somebody at the airport that looked like 0:19:10.920 --> 0:19:14.919 and he said no. But we don't talk policy in 0:19:14.960 --> 0:19:17.919 these informal situations. It's a chance to get to know 0:19:17.960 --> 0:19:21.080 people on a more personal basis, and we know a 0:19:21.080 --> 0:19:22.679 little bit about their family, they know a little bit 0:19:22.680 --> 0:19:24.720 about ours, so we chat like that, and it makes 0:19:24.760 --> 0:19:27.400 it easier to do your job going forward because there's 0:19:27.440 --> 0:19:30.320 more trust between the interviewer and interviewee. 0:19:30.560 --> 0:19:33.760 Do we know whether Powell has seen dead and Co 0:19:34.080 --> 0:19:34.720 at the sphere? 0:19:35.359 --> 0:19:38.959 That's Joe asking, is the question, Okay, if I can 0:19:39.000 --> 0:19:41.560 give a new answer to I'll say that's the question. 0:19:41.680 --> 0:19:45.440 I'll ask him. I don't think so, but it is possible, 0:19:45.520 --> 0:19:46.679 and I didn't see him. 0:19:46.680 --> 0:19:48.480 How many times have you did you go to see 0:19:48.520 --> 0:19:49.359