WEBVTT - Trump Picks Kevin Warsh as Fed Chair 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:28.080 us live on YouTube right now. 0:00:28.520 --> 0:00:30.840 With a blistering note, I want to make clear here 0:00:31.280 --> 0:00:33.720 he was my market Economist of the Year two three 0:00:33.800 --> 0:00:39.440 years ago for congenital optimism when everybody was gloomy. Neil 0:00:39.520 --> 0:00:44.560 Dudda with a blistering note this morning, and Kevin Wash, 0:00:44.600 --> 0:00:48.600 mister Dudda is economist Renaissance Macro. Neil come on the 0:00:48.680 --> 0:00:53.080 first sentence, President Trump has picked everyone's least favorite candidate. 0:00:53.720 --> 0:00:58.720 Discuss Was it something I said? 0:00:58.720 --> 0:01:03.000 I don't think I stuttered that. You know, look, well 0:01:03.040 --> 0:01:05.200 he is everyone's least favorite candidate. I mean, I mean 0:01:05.200 --> 0:01:08.240 to me, look, the main criticism I have of Kevin 0:01:08.280 --> 0:01:15.720 Walsh is lack of judgment. Okay, because the performance his 0:01:15.840 --> 0:01:20.119 performance during the financial crisis was not a pretty particularly 0:01:20.160 --> 0:01:24.280 good one, and I think you could say arguably that 0:01:24.360 --> 0:01:27.600 it is disqualifying. I mean to be that concerned about 0:01:27.600 --> 0:01:30.119 inflation at a time when the unemployment rate was rising 0:01:30.240 --> 0:01:35.000 very rapidly, you know it kind of strange fradulity. So 0:01:36.480 --> 0:01:42.000 and in the years since, everyone makes bad calls, Okay, 0:01:42.280 --> 0:01:45.480 I mean I've been market treat economist for a while. 0:01:45.600 --> 0:01:46.559 I've made bad calls. 0:01:46.680 --> 0:01:49.640 Everyone makes bad calls. The issue is when you make 0:01:49.880 --> 0:01:52.320 bad calls and you're always wrong in the same direction 0:01:52.840 --> 0:01:55.400 that to me was open minded. 0:01:55.480 --> 0:01:57.920 This I can't just say enough how I agree with that. 0:01:58.040 --> 0:02:00.600 Not for mister Walsh, folks, but part of the game 0:02:00.680 --> 0:02:03.560 is to be wrong and learn from it. You call 0:02:03.720 --> 0:02:07.400 him a cookie cutter Republican coming off of Bush the younger, 0:02:08.000 --> 0:02:11.200 the idea that he's a sweetheart of Wall Street, and 0:02:11.240 --> 0:02:16.320 you say it's time you equate it here to say 0:02:16.480 --> 0:02:20.880 worsh would make sense if Mitt Romney was president Donald 0:02:20.919 --> 0:02:26.560 Trump is not. Mitt Romney discuss the card carrying Republican 0:02:27.120 --> 0:02:32.040 dealing with President Trump on a meeting to meeting basis, Well, think. 0:02:31.880 --> 0:02:35.640 About some of the I mean, President Trump, I think, 0:02:35.840 --> 0:02:39.840 relative to the median Republican official, at least in my lifetime, 0:02:39.960 --> 0:02:43.280 has much better monetary policy instincts. I mean, remember there 0:02:43.360 --> 0:02:46.440 was a time when people like Paul Ryan and Mitt 0:02:46.520 --> 0:02:49.520 Romney were talking about changing the Fed's mandate to just 0:02:49.639 --> 0:02:53.400 purely a price stability one. It's people like Kevin Warsh 0:02:53.480 --> 0:02:58.480 that love that, right. So you know, President Trump, by contrast, 0:02:59.639 --> 0:03:02.359 in many cases, got the nomination by bucking a lot 0:03:02.360 --> 0:03:06.640 of the traditional Republican orthodoxies right on trade, on immigration, 0:03:06.880 --> 0:03:08.680 on social insurance. 0:03:08.960 --> 0:03:09.600 On the FED. 0:03:11.639 --> 0:03:14.000 And so I think that's what makes this so perplexing 0:03:14.160 --> 0:03:17.200 for you know, the so called greatest jobs president that 0:03:17.320 --> 0:03:22.400 God ever invented. He's picked someone that's, you know, frankly, 0:03:22.520 --> 0:03:24.680 based on his record, a threat to working people. 0:03:25.320 --> 0:03:25.880 Okay, So. 0:03:27.720 --> 0:03:31.120 A member of the sort of MAGA movement, Kevin Warsh 0:03:31.200 --> 0:03:34.480 is not okay. And that's why I say, I mean, 0:03:34.480 --> 0:03:37.120 remember there's also he has a track record too, right, 0:03:37.120 --> 0:03:41.280 I mean he's been he's critiqued previous administrations for not 0:03:41.320 --> 0:03:45.320 pursuing free trade deals. Now he's being nominated by someone 0:03:46.120 --> 0:03:50.400 that's trying to you know, rip up the sort of 0:03:50.600 --> 0:03:53.680 global trading system and trying to kind of move it 0:03:53.720 --> 0:03:58.080 towards the US's favor, America's favor. So that's why I say, like, 0:03:58.320 --> 0:04:01.040 if you think that this is sort of a populist pick, 0:04:01.160 --> 0:04:05.440 if you think this is uh, you know, someone that's 0:04:05.480 --> 0:04:08.640 a member of the sort of president's base. I'm not 0:04:08.640 --> 0:04:09.520 so sure about that. 0:04:09.600 --> 0:04:12.760 Right, Hey, Neil, given this nomination, what do you think 0:04:13.440 --> 0:04:14.200 FED Chairman J. 0:04:14.400 --> 0:04:15.280 Powell will do. 0:04:17.360 --> 0:04:17.560 Well? 0:04:17.560 --> 0:04:23.920 As I say, I mean Kevin Worsh's newfound dubbishness. I mean, 0:04:23.960 --> 0:04:26.159 all of a sudden, now that he's in the sort 0:04:26.160 --> 0:04:29.000 of public interview process for this job, all of a 0:04:29.040 --> 0:04:30.680 sudden he likes right cuts. 0:04:31.320 --> 0:04:32.800 Okay, So that. 0:04:33.000 --> 0:04:37.320 Suspicion, I think is going to peak the interest or 0:04:37.360 --> 0:04:39.520 that that about face from Worsh is going to peak 0:04:39.560 --> 0:04:41.719 the interest of not just your own Powell, but a 0:04:41.720 --> 0:04:43.760 lot of the people around the table at the form C. 0:04:45.760 --> 0:04:49.000 So if your Powell, I don't know, maybe you want 0:04:49.040 --> 0:04:50.279 to stick around a little bit longer. 0:04:50.320 --> 0:04:53.400 See what's interesting interesting? Good morning everyone, Neil dought it 0:04:53.440 --> 0:04:55.960 with Jay Hebfield on deck. Claudia Sun coming up later. 0:04:56.240 --> 0:05:00.360 This is a special edition of Bloomberg Surveillance Across a Erica. 0:05:00.440 --> 0:05:03.840 Kevin Walsh point nominated, I should say, by the President 0:05:03.880 --> 0:05:07.039 of the United States to replace your own Powell. Of course, 0:05:07.080 --> 0:05:10.880 confirmation by banking is necessary, you know, I want to 0:05:10.960 --> 0:05:15.400 polarize here the vector of Stephen Myron and Michael McKee 0:05:15.480 --> 0:05:19.080 speaking with the governor Myron this afternoon, who's looking for 0:05:19.160 --> 0:05:23.920 a hugely accommodative fed with the natural restrictiveness of Kevin 0:05:24.240 --> 0:05:27.400 at Walsh. I mean, basically, Myron and worsh are polar 0:05:27.520 --> 0:05:32.680 opposites that I can see in terms of tone discuss that. 0:05:32.760 --> 0:05:39.440 Does a president understand this is not a Myron replacement? Yeah, 0:05:39.480 --> 0:05:40.240 I'm not so sure. 0:05:40.279 --> 0:05:43.240 I mean I think look, I mean, the president is 0:05:43.279 --> 0:05:45.880 trying to find someone that kind of that sort of 0:05:45.920 --> 0:05:49.600 believes in this notion of a golden age, you know, 0:05:49.720 --> 0:05:51.760 of strong productivity. 0:05:51.160 --> 0:05:51.880 Growth. 0:05:53.279 --> 0:05:59.120 Lower nehru, I guess, and maybe he's found his person in, 0:05:59.520 --> 0:06:04.640 you know, maybe he's found his person in in Kevin Warsh. 0:06:05.040 --> 0:06:09.560 You know, Steve Myron has been making similar arguments. But again, 0:06:09.600 --> 0:06:11.520 I mean look at the you know, look Tom, I 0:06:11.520 --> 0:06:15.839 mean Myron. Has Byron been successful and swaying the committee 0:06:15.839 --> 0:06:16.640 to his point of view? 0:06:16.800 --> 0:06:20.320 Yeah? This kid comes out of Albany, he ends up 0:06:20.360 --> 0:06:24.159 at Stanford under the guys of Michael Boskin and John Taylor. 0:06:24.480 --> 0:06:27.240 He's got a shingle out Neil Dudd at the Hoover Institution. 0:06:27.839 --> 0:06:33.400 This screams to me restrictive GOP economics. Am I wrong 0:06:33.440 --> 0:06:36.360 on that? Jay, Yeah, Fields over your nodding, you know, 0:06:36.480 --> 0:06:37.359 am I wrong on that? 0:06:37.600 --> 0:06:37.800 Nice? 0:06:37.880 --> 0:06:39.640 I mean, look, look, I mean this is someone that 0:06:41.440 --> 0:06:45.480 he clearly overweights the inflation side of the Fed's mandate 0:06:46.120 --> 0:06:50.560 relative to employment. Okay, I mean I don't. I don't 0:06:50.560 --> 0:06:53.320 think that that's a pretty particularly controversial thing to say. 0:06:53.320 --> 0:06:55.240 One thing I would say, though, is that you've heard 0:06:55.240 --> 0:06:57.880 a lot of folks in the administration talk about how 0:06:57.880 --> 0:06:59.960 they want the new FED chairman to kind of pull 0:07:00.040 --> 0:07:03.920 and Alan Greenspan right, And so the idea here is 0:07:03.960 --> 0:07:07.680 that in the nineties time, as you know, Alan Greenspan 0:07:07.760 --> 0:07:10.120 resisted the temptation to raise interest rates in the mid 0:07:10.240 --> 0:07:15.960 nineties because you know, productivity was strong and you know, 0:07:16.400 --> 0:07:20.920 inflation was was slowing right now, if you actually go 0:07:21.000 --> 0:07:23.400 back at the time, I mean that was coming off 0:07:23.800 --> 0:07:26.440 of a period where inflation had already been slong. So 0:07:26.480 --> 0:07:29.440 that was sort of the opportunistic disinflationary years, right. 0:07:29.480 --> 0:07:30.400 And if you look at that. 0:07:30.440 --> 0:07:34.000 Time during the nineties, what was green Span really doing. 0:07:34.080 --> 0:07:37.520 He was really just following a tailor rule. So the 0:07:37.600 --> 0:07:41.560 reason why they didn't hike in the mid nineties is 0:07:41.600 --> 0:07:43.720 because the data were more or less telling them not 0:07:43.760 --> 0:07:45.640 to hike in the mid nineties. I mean, yes, it 0:07:45.680 --> 0:07:47.800 is true the unemployment or it was declining, but inflation 0:07:47.960 --> 0:07:51.800 was also rapidly fallen. And the combination of those two 0:07:51.840 --> 0:07:57.120 things is why interest rates didn't go up the policy 0:07:57.200 --> 0:07:59.920 rate that is. But you know, rarely is it meant. 0:08:00.120 --> 0:08:02.360 And you know, when you talk about pull at green Span, 0:08:02.480 --> 0:08:05.320 look think about what happened in the late nineties. There 0:08:05.320 --> 0:08:09.280 was an aggressive hiking cycle about a year after the 0:08:09.400 --> 0:08:14.800 LTM LTCM blow up. And why was that happening. That 0:08:15.000 --> 0:08:18.640 was happening because the labor markets were red hot, right, 0:08:18.720 --> 0:08:22.520 So again I mean we were having it maybe a 0:08:22.560 --> 0:08:25.040 golden age then too, right, I mean strong activity growth. 0:08:25.040 --> 0:08:29.080 But because the labor markets were on fire, Alan Greenspan 0:08:29.280 --> 0:08:33.439 rapidly increased interest rates. So this notion of like pulling 0:08:33.480 --> 0:08:36.520 Alan Greenspan, I think it's a bit of a it's 0:08:36.559 --> 0:08:37.960 a bit of a choose your own adventure. 0:08:38.679 --> 0:08:41.200 Yeah, Neil, how. 0:08:40.960 --> 0:08:43.880 Controversial, if at all? Do you think this confirmation process 0:08:44.040 --> 0:08:47.319 will be for mister Warsh. 0:08:47.360 --> 0:08:48.640 I mean, you know, it's hard to know. 0:08:48.720 --> 0:08:51.320 I mean, I think there's obviously a lot of things 0:08:51.360 --> 0:08:53.880 going on in the background, right, I mean, Senator Tillis 0:08:53.960 --> 0:08:56.920 has basically said that he'd slow down the nomination process 0:08:56.960 --> 0:09:00.520 so long as this this investigation into the head and 0:09:00.679 --> 0:09:04.440 you know, Jerome Powell remains open. We'll see if he 0:09:04.520 --> 0:09:07.160 means that, but that could presumably slow the process down 0:09:07.160 --> 0:09:09.600 a little bit. But as you know, guys, I mean 0:09:09.640 --> 0:09:15.559 these these this role has become less sort of bipartisan, 0:09:15.640 --> 0:09:20.959 right Like in my career it was sort of every 0:09:21.080 --> 0:09:23.800 you know, every every person that's been up the Jet 0:09:24.200 --> 0:09:26.480 Yankee has had a thinner and thinner margin in the 0:09:26.480 --> 0:09:27.800 Senate when they've gotten confirmed. 0:09:27.880 --> 0:09:29.199 You know, I got to get the Jay Hatfield. But 0:09:29.280 --> 0:09:31.040 let me frame this out. We're gonna go to Hatfield. 0:09:31.040 --> 0:09:34.000 I'm gonna ask them the same questions, folks, Neil dot 0:09:34.280 --> 0:09:37.479 right now. And you've been phenomenal about the labor fragility 0:09:37.520 --> 0:09:41.520 of America. What is your real GDP forward the chairman 0:09:41.600 --> 0:09:45.160 worship is going to deal with and the inflation overlay 0:09:45.200 --> 0:09:49.040 that's gonna upset him to get the nominal GDP. How 0:09:49.040 --> 0:09:51.160 do you frame that out through the rest of the year. 0:09:53.800 --> 0:09:55.280 Well, I mean, for me, Tom, you know, I have 0:09:55.320 --> 0:09:58.040 a very much a state of labor market driven view, 0:09:58.440 --> 0:10:03.480 and you know, aggregate hours are barely rising and wage 0:10:03.480 --> 0:10:06.280 growth is slowing, so you know, I think we're basically 0:10:06.400 --> 0:10:10.000 in on track for you know, essentially a four percent 0:10:10.080 --> 0:10:12.920 nomenal growth environment, maybe even a little bit lower than that. 0:10:12.960 --> 0:10:14.679 I mean, if you look at wages and salaries over 0:10:14.679 --> 0:10:18.040 the last couple of quarters. Quite so, really you have 0:10:18.080 --> 0:10:19.800 to you have to tell a tale for why the 0:10:19.840 --> 0:10:23.400 labor markets are going to strengthen. And it's hard to 0:10:23.440 --> 0:10:25.880 do that right now because you look at what consumers 0:10:25.880 --> 0:10:27.120 are saying about the jobs market. 0:10:27.320 --> 0:10:29.160 Okay, We've got to leave it there, folks, and I'm 0:10:29.160 --> 0:10:31.840 going to not mince words. We protect the copyright of 0:10:31.880 --> 0:10:34.280 all of our guests. This morning. Neil Dotta with a 0:10:34.320 --> 0:10:38.760 fiery note out at Renaissance Macro. But bonus Neil Dutta 0:10:38.880 --> 0:10:42.160 out on LinkedIn and Twitter. Look for mister Dotta particularly 0:10:42.200 --> 0:10:45.800 on LinkedIn today with fiery thoughts his note, as you mentioned, 0:10:45.800 --> 0:10:48.640 Paul is just really on fire. Neil Dotta, Thank you 0:10:48.679 --> 0:10:54.040 so much. Stay with us. More from Bloomberg Surveillance coming 0:10:54.120 --> 0:10:55.120 up after this. 0:11:02.360 --> 0:11:05.960 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:11:06.040 --> 0:11:09.160 weekday afternoons from seven to ten am Eastern Listen on 0:11:09.280 --> 0:11:12.920 Applecarplay and Android Auto with the Bloomberg Business app or 0:11:13.080 --> 0:11:14.560 watch us live on YouTube. 0:11:14.800 --> 0:11:17.080 Chris Waller goes to the heart of the matter, which 0:11:17.120 --> 0:11:20.800 Claudia some has lived, which is the jargon of their 0:11:20.840 --> 0:11:26.559 world outreach meetings. I can't emphasize enough how hard our 0:11:26.600 --> 0:11:30.560 public officials work. They go to every rotary breakfast yep. 0:11:31.000 --> 0:11:33.600 I can't say enough, folks, how they're on the road 0:11:34.000 --> 0:11:36.960 and not in the office with their Bloomberg terminal. Claudia 0:11:37.080 --> 0:11:41.280 Some Governor. Waller says, there are multiple outreach meetings of 0:11:41.440 --> 0:11:45.720 planned layoffs, and I'm going to editorialize firings. Do you 0:11:45.800 --> 0:11:50.840 see that trend? Doctor, some of layoffs like Amazon like ups. 0:11:52.360 --> 0:11:56.080 So we have certainly seen layoff announcements pick up that 0:11:56.160 --> 0:11:58.560 this is not new right. We saw several of them 0:11:58.720 --> 0:12:02.120 last year, and say theer announcements at this point, we 0:12:02.160 --> 0:12:08.600 haven't seen them translate into jobless claims, broader measures, aggregate 0:12:08.640 --> 0:12:11.120 measures of layoff. So I think there's every reason to 0:12:11.160 --> 0:12:14.360 be concerned about the labor market. There's some signs of stabilization. 0:12:14.440 --> 0:12:17.480 But I think Waller is appropriate to point out when 0:12:17.520 --> 0:12:18.680 are not out of the woods yet. 0:12:18.880 --> 0:12:22.439 Stanford Economics, everybody's got a different flavor associated with the 0:12:22.480 --> 0:12:27.440 Hoover institution. What kind of inflation a hawk? What kind 0:12:27.520 --> 0:12:33.240 of economist or lawyer comfortable with a restrictive policy? Is 0:12:33.320 --> 0:12:40.480 Kevin Worsh? What, Claudius sam flavor is he? So? 0:12:41.480 --> 0:12:45.040 I mean I was at the FED when Kevin Worsh 0:12:45.120 --> 0:12:48.479 was a governor. I've watched him in action as a policymaker. 0:12:48.480 --> 0:12:51.280 I've certainly followed his comments since then. I mean there's 0:12:51.280 --> 0:12:53.679 a lot about his track record and his recent comments 0:12:53.720 --> 0:12:56.000 about what we see in the economy and what's appropriate 0:12:56.080 --> 0:13:00.160 for interest rates. All that said, I think the conversation 0:13:00.240 --> 0:13:03.040 about Kevin Warsh and again today he got the nomination. 0:13:04.280 --> 0:13:06.560 He's not the FED chair yet, he needs to go 0:13:06.640 --> 0:13:09.920 before the Senate and I think the hearing, his confirmation hearing, 0:13:09.960 --> 0:13:13.920 should be a pretty difficult one because right now, the 0:13:13.960 --> 0:13:17.320 big conversation is about the independence of the FED. Will 0:13:17.320 --> 0:13:20.679 it be free from political influence and setting interest rates? 0:13:21.280 --> 0:13:24.240 And there are some comments from Kevin Worsh. I think 0:13:24.240 --> 0:13:26.280 he needs to be asked about and that goes before 0:13:26.320 --> 0:13:27.800 all his views on the economy. 0:13:28.920 --> 0:13:32.360 So, Claudia, what do you think the FED should be 0:13:32.400 --> 0:13:35.200 thinking about right now? Again, it's got that dual mandate here, 0:13:35.600 --> 0:13:37.840 and we're getting more and more data. 0:13:37.880 --> 0:13:38.839 As we speak here. 0:13:39.040 --> 0:13:40.920 What do you think the focus should be or is 0:13:40.960 --> 0:13:41.840 for the FED right now? 0:13:43.720 --> 0:13:46.920 Well, the Fed, the Fed's focus should be its dual mandate. 0:13:47.160 --> 0:13:51.600 It should be about maintaining maximum employment and getting inflation 0:13:51.760 --> 0:13:54.240 back to the two percent target using the tools that 0:13:54.320 --> 0:13:57.079 it has. I mean, this is where you know, the 0:13:57.720 --> 0:14:00.120 unemployment rate is below four and a half percent, the 0:14:00.160 --> 0:14:03.840 inflation rate is around three percent, much lower than it was, 0:14:04.600 --> 0:14:06.560 you know, just a few years ago. But you know 0:14:07.320 --> 0:14:09.280 it's not it's not all the way back to target. 0:14:09.720 --> 0:14:12.439 So I think there, you know, their job is not done. 0:14:13.320 --> 0:14:15.719 But I don't see this as a moment where we 0:14:15.800 --> 0:14:18.600 need to have, as Kevin worsh has talked about, a 0:14:18.640 --> 0:14:22.720 regime change, come in and knock heads right there. There's 0:14:22.840 --> 0:14:25.440 work to be done the like. There needs to be 0:14:25.520 --> 0:14:28.880 a continuity, a continued focus on the two sides of 0:14:28.880 --> 0:14:32.240 the mandate and and if we have a disruption of that, 0:14:32.240 --> 0:14:35.200 that could be you know, really problematic in general. 0:14:35.320 --> 0:14:37.360 Paul, was that, Claudia, sam shade? 0:14:37.640 --> 0:14:40.840 Is that maybe a little bit shade there, Claudia, how 0:14:40.840 --> 0:14:43.960 do you think mister Walsh will work with, interact with, 0:14:45.520 --> 0:14:48.000 deal with the other members of the FED here. 0:14:48.160 --> 0:14:54.920 What if he is confirmed, he's the public comments that 0:14:55.000 --> 0:14:57.600 he's made in recent months suggest that he's going to 0:14:57.640 --> 0:15:00.680 come in on a pretty combative footing. I mean he's 0:15:00.720 --> 0:15:03.600 used words like knock some heads. He's been very critical 0:15:04.040 --> 0:15:06.120 of the FED. I mean, he went so far as 0:15:06.200 --> 0:15:09.200 to accuse the FED of its rate cuts in twenty 0:15:09.240 --> 0:15:12.600 twenty four as the unemployment rate was rising, that that 0:15:12.680 --> 0:15:16.920 was political, right, That's a really serious accusation to make. 0:15:17.560 --> 0:15:20.040 The FED was reacting to a labor market that looked 0:15:20.120 --> 0:15:23.000 like it might be unraveling. So I think he's going 0:15:23.040 --> 0:15:25.440 to come in. You know, the FED works by consensus. 0:15:25.440 --> 0:15:28.040 He's by his own remarks. I think he's going to 0:15:28.080 --> 0:15:31.480 have a tough time building consensus, but he is capable 0:15:31.520 --> 0:15:33.560 of doing that. It's just it's a it's going to 0:15:33.560 --> 0:15:35.640 be a could be a rocky transition. 0:15:35.920 --> 0:15:37.840 Claudia sam with us. We're thrilled to have her here 0:15:37.840 --> 0:15:39.480 in the nine o'clock or do we have Paul yet 0:15:39.520 --> 0:15:41.120 when we're going to get a press conference? I have 0:15:41.240 --> 0:15:42.720 not seen for the President of the United States, we 0:15:42.720 --> 0:15:45.760 don't have it yet. But again, for those joining a 0:15:45.920 --> 0:15:50.000 nominee as chairman of the Federal Reserve System, Kevin Walsh. 0:15:50.040 --> 0:15:52.680 This morning, we've heard from Christopher Waller and his descent. 0:15:52.760 --> 0:15:56.160 I'm sure we'll hear from others through the day. I 0:15:56.200 --> 0:15:58.800 want to emphasize here and again, folks, this comes down 0:15:58.800 --> 0:16:04.920 to the pedigree. Claudia Sam Michigan, PhD. Absolutely definitive and 0:16:05.040 --> 0:16:10.480 trying to understand the court to the corter gyrations of recession, 0:16:10.880 --> 0:16:14.040 or Richard Clareda, the vice chairman, and all of his 0:16:14.200 --> 0:16:18.280 work at Columbia where he literally herded cats at Columbia 0:16:18.360 --> 0:16:20.960 for years, and his work with a strange thing called 0:16:21.040 --> 0:16:27.760 dynamic stochastic general equilibrium theory. Doctor some lawyer Powell. I 0:16:27.800 --> 0:16:29.800 guess we really didn't know what he was going to 0:16:29.880 --> 0:16:33.120 do other than he was a finance guy. What was 0:16:33.160 --> 0:16:36.760 the song last summer looking for a finance guy? Six five? 0:16:36.960 --> 0:16:39.880 He was blue eyed in six' Five, Claudiusam do you 0:16:39.920 --> 0:16:43.520 have any real understanding Of Attorney worsh's. 0:16:43.920 --> 0:16:52.280 Economics worsh has said in interviews in recent. Months last, 0:16:52.400 --> 0:16:56.320 year he's very critical of the models that THE fed, 0:16:56.440 --> 0:17:01.160 uses has called them. Outdated has you, know really push 0:17:01.240 --> 0:17:03.240 the idea that we need a new? THINKING i, mean 0:17:03.280 --> 0:17:04.800 one of the. Things you, Know powell came in he 0:17:04.960 --> 0:17:08.680 was not a diet in the world monetary policy. Theorist, 0:17:08.920 --> 0:17:11.120 yeah but he came in as a governor and then 0:17:11.240 --> 0:17:15.399 continue on his chair as really listening to the experts around, 0:17:15.440 --> 0:17:20.320 him building his, understanding relying on their, expertise being very data. 0:17:20.400 --> 0:17:22.200 Driven you, know this. 0:17:22.119 --> 0:17:24.760 Is the heart of the. Matter, doctor some you worked 0:17:24.760 --> 0:17:28.080 With warsh at THE. Fed do you suggest he will 0:17:28.440 --> 0:17:32.159 mimic the pattern Of Governor powell or is there going 0:17:32.200 --> 0:17:34.639 to be a different approach here where he does not 0:17:35.000 --> 0:17:36.359 listen TO fed. 0:17:36.480 --> 0:17:43.639 PhDs i'm reacting to comments that he made just within 0:17:43.720 --> 0:17:46.679 the last. Year now you, know it's over a decade 0:17:46.680 --> 0:17:48.480 ago when he was a. GOVERNOR i, think you, know 0:17:48.520 --> 0:17:50.440 we really need to listen to what he's been saying. 0:17:50.480 --> 0:17:54.359 Recently and he's been extremely critical of THE fed, models 0:17:54.400 --> 0:17:57.879 extremely critical of the staff and the CURRENT fed. Officials 0:17:58.480 --> 0:18:02.160 so you, KNOW i think he'll be different Than, powell 0:18:02.240 --> 0:18:04.440 and it could be different in a way that's disruptive 0:18:04.480 --> 0:18:04.800 and not. 0:18:04.920 --> 0:18:08.080 Productive, Claudia i'm looking at a note From Ben emmons 0:18:08.119 --> 0:18:11.119 At Highline Asset management in which he, says Quote worsh 0:18:11.160 --> 0:18:14.159 has made it explicitly clear in Is Hoover Institutional interview 0:18:14.160 --> 0:18:16.320 In may of twenty twenty, five that THE fed is 0:18:16.359 --> 0:18:20.159 responsible for interest, rates administration is responsible for the, budget 0:18:20.200 --> 0:18:22.560 and that this should be the basis for a NEW 0:18:22.920 --> 0:18:26.720 Fed treasury. Accord how radical are out of consensus is. 0:18:26.680 --> 0:18:31.720 That it's extremely radical and out of. Consensus my biggest 0:18:31.760 --> 0:18:33.719 concern with Worsh AND i think this is something that 0:18:33.840 --> 0:18:36.000 he should be asked about by The. Senate, right let 0:18:36.080 --> 0:18:38.399 him explain more his thinking on. IT i don't want to, 0:18:38.440 --> 0:18:41.600 prejudge BUT i mean he's talked about that there needs 0:18:41.640 --> 0:18:45.159 to be a coordination use those, words a coordination between 0:18:45.160 --> 0:18:47.760 The White house And treasury on the balance. Sheet we 0:18:47.840 --> 0:18:50.680 need to remember The fed's balance sheet is an instrument 0:18:50.680 --> 0:18:54.000 of monetary. Policy THE fed has used it to influence 0:18:54.080 --> 0:18:58.440 long term interest. Rates short term political interests Of White 0:18:58.480 --> 0:19:02.480 house have no business in that. Conversation revisit a decade. 0:19:02.480 --> 0:19:05.119 AGO i MEAN i was at a you, KNOW i 0:19:05.160 --> 0:19:08.040 read only important papers at, bars of, course so you, 0:19:08.080 --> 0:19:10.320 know like fifteen years, AGO i met this Great greek 0:19:10.359 --> 0:19:14.919 restaurant In midtown reading forty eight pages Of. Geidner you 0:19:14.960 --> 0:19:18.200 know the world was blowing. Up or That claudia take 0:19:18.280 --> 0:19:23.000 us back To Governor walsh and the basic idea that 0:19:23.119 --> 0:19:26.600 he said we shouldn't Ease And i'm saying this in 0:19:26.640 --> 0:19:29.600 a very general. STATEMENT i want you to tell, us 0:19:30.200 --> 0:19:34.040 was he against accommodation in the heat of the battle 0:19:34.080 --> 0:19:34.280 of the. 0:19:34.320 --> 0:19:43.920 Crisis governor warsh participated in helping stabilize financial markets right 0:19:44.040 --> 0:19:47.600 in the global financial. Crisis he, was you, know worked 0:19:47.720 --> 0:19:51.399 very closely With chairman Bernank, on you, know trying to 0:19:51.400 --> 0:19:54.720 figure out how to stabilize financial. Markets he worked on 0:19:54.760 --> 0:19:58.679 the first you, know the first asset, purchases quantitative. Easing 0:19:59.480 --> 0:20:02.720 as it moved moved into the unemployment rate is near 0:20:02.800 --> 0:20:07.000 ten percent and the economy is really, Weakening warshwood got 0:20:07.119 --> 0:20:10.600 very concerned about inflation and was very critical of The 0:20:10.640 --> 0:20:15.359 fed using asset purchases to support the. Economy it doesn't 0:20:15.359 --> 0:20:18.920 make any. Sense inflation was not a, problem then unemployment 0:20:19.040 --> 0:20:21.199 was the. Problem and in the many years after that 0:20:21.320 --> 0:20:23.840 he hasn't revisited that and said it was a. Mistake 0:20:24.480 --> 0:20:27.280 so that's WHERE i think his credibility on the labor 0:20:27.320 --> 0:20:29.159 market is really, then. 0:20:29.080 --> 0:20:31.679 And, Paul i'm going to interject here the wonderful and 0:20:31.760 --> 0:20:35.720 late and dearly Missed Charles plosser also was worried about, 0:20:35.800 --> 0:20:38.639 inflation and he came out and SAID i was. WRONG i, 0:20:38.640 --> 0:20:41.639 mean this was a raging. Debate McKee lived this but 0:20:41.760 --> 0:20:44.200 at the. Time but this is a really important, distinction 0:20:44.359 --> 0:20:47.080 folks that maybe will be in the, Question, paul get 0:20:47.080 --> 0:20:48.160 one more in here with Doctor. 0:20:48.200 --> 0:20:52.120 Sam doctor some how contentious are? You are you anticipating 0:20:52.240 --> 0:20:57.760 a contentious confirmation process for this? Nominee, YES i. 0:20:57.680 --> 0:20:58.560 Am AND i think that's. 0:20:58.600 --> 0:21:02.120 APPROPRIATE i, mean given moment THE fed is, in these 0:21:02.160 --> 0:21:05.920 are not normal times and it's the sentence, job right 0:21:05.960 --> 0:21:08.120 like they are supposed to vet the, candidate make sure 0:21:08.119 --> 0:21:10.840 they have the. Expertise and this time, around it is 0:21:10.920 --> 0:21:15.280 so important that there are very clear lines drawn between 0:21:15.359 --> 0:21:17.600 The White house and THE, fed and that THE fed 0:21:17.720 --> 0:21:21.520 chair can really back up that they're going to continue 0:21:21.520 --> 0:21:25.320 that independence because it matters for All. Americans it matters 0:21:25.320 --> 0:21:28.440 for financial markets and. Stability SO i think it should 0:21:28.440 --> 0:21:29.919 be a tough, hearing but that's that's the. 0:21:29.920 --> 0:21:30.480 Way it should. 0:21:30.480 --> 0:21:34.000 Be, claudia thank you so, much really really appreciate your 0:21:34.000 --> 0:21:36.040 commitment to what we. Do we look forward to seeing 0:21:36.040 --> 0:21:39.200 you jobs day if that's on the date. Calendar. Doctor 0:21:39.320 --> 0:21:43.760 some driving The American Economic conversation in our public service 0:21:44.160 --> 0:21:48.680 to The fed as. Well stay with us more From 0:21:48.760 --> 0:21:51.199 Bloomberg surveillance coming up after. 0:21:51.280 --> 0:22:01.760 This you're listening to the Bloom Work surveillance. Podcast catch 0:22:01.840 --> 0:22:04.880 Us live weekday afternoons from seven to ten Am Eastern 0:22:05.040 --> 0:22:08.639 listen On Apple karplay And Android otto with The Bloomberg business, 0:22:08.720 --> 0:22:10.400 app or watch us live on. 0:22:10.440 --> 0:22:14.000 YouTube heavy dose of economics, today but far more a 0:22:14.000 --> 0:22:18.720 heavy dose of what these momentous announcements mean to your 0:22:18.760 --> 0:22:23.080 portfolios of currencies. Commodities did you sell all the gold? 0:22:23.160 --> 0:22:25.639 YESTERDAY i don't, know, BOY i tried to ouload the. 0:22:25.680 --> 0:22:26.200 Boat, yeah. 0:22:26.240 --> 0:22:27.520 Exactly the kids are on the. 0:22:27.560 --> 0:22:29.960 PHONE i couldn't get to the. Phone how about the 0:22:30.000 --> 0:22:33.560 stock market with futures negative? Nineteen and of Course John 0:22:33.600 --> 0:22:37.240 stolfus is just young enough to remember the panic Of 0:22:37.440 --> 0:22:41.000 Alan greenspan taking over in nineteen eighty. Seven it was 0:22:41.040 --> 0:22:43.680 a swall matter at the end of nineteen eighty. Seven 0:22:44.160 --> 0:22:47.560