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Speaker 1: Let's get to Kevin Nicholson, our guest Global Fixed Income

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Speaker 1: CEE i O at Riverfront Investment Group. So, Kevin, a

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Speaker 1: big week this week with Jackson Hole. And one of

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Speaker 1: the things that we've seen actually over the past couple

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Speaker 1: of months is we've seen markets week before a FED

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Speaker 1: meeting and then recover afterwards. And this is kind of

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Speaker 1: coincided with this drop in gasoline prices and and oil

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Speaker 1: and commodities, and we've seen yields drop. What are you

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Speaker 1: expecting in this process of the meeting this week and

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Speaker 1: then the aftermath. I think that the meeting this week

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Speaker 1: is going to see the FED and Chairman Power reiterate

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Speaker 1: his hark Is stance. I think that he's going to

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Speaker 1: come across a lot more hawkish in jackson Hole than

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Speaker 1: he has after some of the FED meetings because the

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Speaker 1: market has taken his words and turn them around into

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Speaker 1: devish comments and that and that's what has led to

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Speaker 1: these rallies after each of and meetings. And I don't

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Speaker 1: think that you're going to get that this time around

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Speaker 1: because the FED can't afford to let financial conditions get

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Speaker 1: any looser than they have become because they're effectively undoing

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Speaker 1: everything that the FED has UH done with their rate

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Speaker 1: hikes over the last few months. So is Kevin. I mean,

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Speaker 1: what we've seen in abandoned equity markets is a repricing here.

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Speaker 1: So are those whole kish comments now priced in? I

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Speaker 1: think that some of them are priced in? UM. I

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Speaker 1: think that it's really going to depend on the data

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Speaker 1: that comes out coming going forward. But I do think

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Speaker 1: that you have seen a lot of the hawk is

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Speaker 1: comments be priced in because we've had significant moves over

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Speaker 1: the last you know, a couple of trading days. We're

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Speaker 1: now back UH in a tight trading range on the SMP,

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Speaker 1: which I think is going to be an important range.

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Speaker 1: I mean, we've broken through that forty one fifty UH

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Speaker 1: support level, and I think the next thing that we're

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Speaker 1: going to be looking for is around forty nine UM.

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Speaker 1: That will be about I think that's going to go

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Speaker 1: back to right around the twenty three retracement of this

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Speaker 1: rally that we have seen over the last month. Kevin,

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Speaker 1: you mentioned that the FED wouldn't be comfortable with how

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Speaker 1: much financial conditions have ease, but I think we can

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Speaker 1: argue that there are pockets that are still actually UM

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Speaker 1: exerting some tightness. One is the dollar. The dollar is

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Speaker 1: so much stronger now than it was when the FED

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Speaker 1: was getting started. FED interest rates are higher, uh, and

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Speaker 1: oil is is high. I mean, it may have come

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Speaker 1: down from one twenty to ninety, but it's a lot

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Speaker 1: higher than where it was back in the early part

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Speaker 1: of the year. So there are certain conditions that are

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Speaker 1: still exerting tightness on the economy. I wouldn't disagree with you,

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Speaker 1: But you also have to think of what wages have done.

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Speaker 1: I mean, when you look at the Atlanta bed waste tracker,

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Speaker 1: it's up at six point seven and as we know,

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Speaker 1: is if workers are things, but it's less than inflation.

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Speaker 1: Isn't that all that? Yeah, it is less than inflation,

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Speaker 1: and that's an important part to to focus on. But

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Speaker 1: the problem is that if workers are getting a wage increases,

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Speaker 1: typically in the US, they spend it, and unfortunately they're

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Speaker 1: not looking at wages on a real level. They're gonna

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Speaker 1: look at them at the nominal and they're gonna say, hey,

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Speaker 1: I'm you know, I'm getting wage increases of over six percent.

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Speaker 1: That's going to increase demand out there, and so that's

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Speaker 1: what's going to make the financial conditions looser. Is that

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Speaker 1: if demand keeps increasing, you know, that's going to cause

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Speaker 1: a problem because let's remember, the FED can only control

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Speaker 1: the the demand side of the supplied demand curves. So

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Speaker 1: the thing is they are perhaps in uncharted wards I

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Speaker 1: mean obviously. And then we have you know, QT being

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Speaker 1: upped next month. That's gonna be acting also as a

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Speaker 1: as a tightening mechanism. Yes, I mean it should be

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Speaker 1: acting as a tightening mechanism. Um. And you know, and

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Speaker 1: I hope that it does, because you know, at eight

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Speaker 1: and a half percent headline inflation, the FED still has

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Speaker 1: a long way to go. And and I think that

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Speaker 1: the market has just been too debbish in thinking that

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Speaker 1: the FED is gonna pause, and I don't I don't

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Speaker 1: agree with that stand. I think that the FED is

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Speaker 1: going to continue to have to hike. Do you think

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Speaker 1: that the FED chair is out of step with the rest?

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Speaker 1: And is there a danger there? Well? I think that there. Um,

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Speaker 1: I think that there may be a little bit of

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Speaker 1: a danger. But I think that at this juncture, the

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Speaker 1: FED as a group, that f O m C Committee,

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Speaker 1: they're going to come out of Jackson Hole, I hope,

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Speaker 1: more unified than what we've been hearing over the last

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Speaker 1: few weeks, you can tell that there is definitely a

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Speaker 1: more hawkish camp and a less hawkish camp inside of

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Speaker 1: the FED. And I think that Jackson Hole is going

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Speaker 1: to kind of collesse all of that and get them

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Speaker 1: all on the same foot. Man, you came to play today.

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Speaker 1: That's great. You had your fighting gloves on and everything. Kevin,

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Speaker 1: thank you very much for joining us here on Bloomberg Daybreak, Asia,

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Speaker 1: Kevin Nicholson, Riverfront Investment Group. This is Bloomberg