Fed Holds Rates Steady, Jay Powell Speaks

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https://www.youtube.com/watch?v=NQqU0Lik024

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[01:33] Bloomberg's the FED decides, starts right now.
[01:35] This is a special edition of Bloomberg Surveillance with Tom Kean, Jonathan Perell, and Lisa Abram.
[01:39] Bloomberg Surveillance.
[01:42] The FED designs from New York City on TV and radio.
[01:45] The FED decision about 28 minutes away.
[01:48] The last Fed decision of 2023.
[01:51] The pivot for this market is inside TK.
[01:54] We're pricing in a ton of rate cuts in this market for 2024.
[01:57] Will we get any kind of endorsement from this Fed chair in the next 60 minutes?
[01:59] Enraging debate around what we're going to go through in the next couple hours over where we are.
[02:09] next couple hours over where are we a year from now with the clarity that we have of looking back when we were one year ago thinking this December meeting would be like this.
[02:15] we nailed that same uncertainty day massive uncertainty about the past ATK never mind 12 months.
[02:22] where are in two hours from now where are we 2 hours from now three-part story.
[02:27] we'll get a statement we'll get projections and ler them we get the news conference and a lot of people have got the same question.
[02:31] we've had a move of 10% on the S&P 500 we've had a monster rally in the bond market do we get some push back from chairman pal a little bit later.
[02:39] we were hearing from Andrew Hollen horse that he has to be kind of awkward here he has to push back to some degree and yet he has a sense that disinflation does open the door to rate Cuts so here's the question you really raised this earlier.
[02:51] how does he address the fact that Chris Waller was talking up the potential of rate cuts and then pair that with a statement of economic projections and their own rate cut projections and when they'll start next year.
[03:02] never mind Governor Waller that's easy he's on the committee let's talk about Tom CH Yellen Vice chair Biden in the last couple of days we in on what.
[03:10] the last couple of days we in on what the fed maybe and maybe shouldn't do.
[03:13] the fed maybe and maybe shouldn't do this is a joke at 7 a.m. it's not a joke.
[03:15] this is a joke at 7 a.m. it's not a joke here at 133 20 minutes away John you're right and the key thing there.
[03:19] historically the key thing there is vice chairman Biden and and to see what what he does but the the the answer is there.
[03:23] he does but the the the answer is there is some political pressure some overview.
[03:28] and i' also point out there's intern National pressure all the people we talked to today says a massive devaluation in Argentina off the radar.
[03:33] devaluation in Argentina off the radar Sri Lanka off the radar my answer is global slowdown is on the radar we joked about President Biden here's the quote.
[03:42] we're in a Sweet Spot following that jobs number this is the line from Friday Lisa a sweet spot that's needed for stable growth and lower inflation not encouraging the FED to raise interest rates.
[03:51] rates that's what uh we heard from Cher Yellen as you pull our secretary uh treasury secretary and she spoke earlier today and she was talking about about how she is going to let the FED do their thing and that she has confidence.
[04:01] thing and that she has confidence they're going to do things well but that you could cut rates just as a de facto uh step should inflation come down.
[04:09] because if you didn't there would be a de facto tightening in financial.
[04:12] de facto tightening in financial conditions even with the disinflation so.
[04:15] conditions even with the disinflation so she's going to the Chris Waller school.
[04:17] she's going to the Chris Waller school of thought at a time when there is the.
[04:20] of thought at a time when there is the pace of inflation coming in but prices.
[04:23] pace of inflation coming in but prices are still rising and this is what is.
[04:24] are still rising and this is what is such a difficult and awkward thing to.
[04:26] such a difficult and awkward thing to talk about that's the tricky dance for.
[04:28] talk about that's the tricky dance for many of these policy makers let's with.
[04:29] many of these policy makers let's with the scores this afternoon on the S&P 500.
[04:32] the scores this afternoon on the S&P 500 coming off the back of a three day.
[04:33] coming off the back of a three day winning streak on the S&P equities right.
[04:36] winning streak on the S&P equities right now just about unchange struggling to.
[04:38] now just about unchange struggling to make it day four and the bond market.
[04:40] make it day four and the bond market yields are lower by three or four basis.
[04:42] yields are lower by three or four basis points here brammo.
[04:44] points here brammo 4623 this is the state of play coming up.
[04:46] 4623 this is the state of play coming up in the leadup to the Fed rate decision.
[04:49] in the leadup to the Fed rate decision JP Morgan's priia misra and Deutsche.
[04:50] JP Morgan's priia misra and Deutsche Banks Matt lazetti will be joining us at.
[04:53] Banks Matt lazetti will be joining us at 2m we do get what that rate decision is.
[04:56] 2m we do get what that rate decision is they will be on hold but the key will be.
[04:58] they will be on hold but the key will be the statement of economic Pro ejections.
[05:00] the statement of economic Pro ejections and any language changes we'll get.
[05:01] and any language changes we'll get immediate reaction from kpmg's Diane.
[05:03] immediate reaction from kpmg's Diane Swan P Jim's Greg Peters Bank of.
[05:05] Swan P Jim's Greg Peters Bank of America's Michael gapen and Sak Jen's.
[05:08] America's Michael gapen and Sak Jen's subadra japa will get the press.
[05:10] subadra japa will get the press conference breaking it all down chair.
[05:12] conference breaking it all down chair Powell's every word will be a former New.
[05:14] Powell's every word will be a former New York fed President Bill Dudley and black
[05:16] York fed President Bill Dudley and black rocks Jeff Rosenberg as we try to
[05:19] rocks Jeff Rosenberg as we try to understand how the Market's going to
[05:20] understand how the Market's going to take what he says it's going to be
[05:22] take what he says it's going to be interesting to see let's get right to it
[05:23] interesting to see let's get right to it now we begin strong with preum Miser of
[05:25] now we begin strong with preum Miser of fixed income portfolio manager JP Morgan
[05:28] fixed income portfolio manager JP Morgan Asset Management you know PRI I got
[05:30] Asset Management you know PRI I got eight ways to go here but what I got is
[05:32] eight ways to go here but what I got is eight different outcomes of this meeting
[05:35] eight different outcomes of this meeting today you have a shocking outcome of
[05:38] today you have a shocking outcome of substantially lower interest rates of a
[05:41] substantially lower interest rates of a 10e yield driving down well into the
[05:43] 10e yield driving down well into the lower 3% range is that fed induced or
[05:47] lower 3% range is that fed induced or growth slowdown
[05:49] growth slowdown induced I think it's a combination of
[05:52] induced I think it's a combination of both um you know interest rates move
[05:54] both um you know interest rates move based on fundamentals of the economy and
[05:57] based on fundamentals of the economy and the FED response function and that
[05:59] the FED response function and that reaction function is what you're going
[06:00] reaction function is what you're going to get from the FED today I mean I think
[06:02] to get from the FED today I mean I think you know the Market's going to look
[06:04] you know the Market's going to look through the economic projections because
[06:06] through the economic projections because the FED like all of us looks at the data
[06:08] the FED like all of us looks at the data and has to revise as the data comes in
[06:10] and has to revise as the data comes in but if the FED reaction function today
[06:12] but if the FED reaction function today suggests that they see that as inflation
[06:15] suggests that they see that as inflation comes down they need to cut rates and I
[06:17] comes down they need to cut rates and I do think they're going to suggest that
[06:18] do think they're going to suggest that you know I think the the debate is is it
[06:20] you know I think the the debate is is it 50 basis points of cuts or 75 in a soft
[06:23] 50 basis points of cuts or 75 in a soft Landing scenario if they're cutting 75
[06:25] Landing scenario if they're cutting 75 or 50 basis points how much do they cut
[06:28] or 50 basis points how much do they cut in a hard Landing are we talking
[06:30] in a hard Landing are we talking 200 300 basis points I mean my view is
[06:33] 200 300 basis points I mean my view is that with real rates this High the lags
[06:35] that with real rates this High the lags are kicking in and the economy is
[06:36] are kicking in and the economy is slowing down Global uh growth is anyway
[06:38] slowing down Global uh growth is anyway slowing down so in the hard Landing Camp
[06:41] slowing down so in the hard Landing Camp I do think longin rates have a lot of
[06:43] I do think longin rates have a lot of room to decline even in the soft Landing
[06:45] room to decline even in the soft Landing case The fed's Cutting rates the um fed
[06:48] case The fed's Cutting rates the um fed catch up hiking 75 basis points getting
[06:51] catch up hiking 75 basis points getting rates up to five you know getting real
[06:53] rates up to five you know getting real rates High into restrictive territory
[06:55] rates High into restrictive territory tightening Financial conditions that's
[06:57] tightening Financial conditions that's behind us the Market's forward looking
[06:59] behind us the Market's forward looking and now it's all about when do the cuts
[07:01] and now it's all about when do the cuts start and how much in totality are they
[07:03] start and how much in totality are they going to cut priia as Lisa suggested
[07:05] going to cut priia as Lisa suggested this is a really delicate dance how does
[07:07] this is a really delicate dance how does the chairman signal in the news
[07:08] the chairman signal in the news conference the work's not done when the
[07:10] conference the work's not done when the Dot Plot might imply two or three rate
[07:12] Dot Plot might imply two or three rate Cuts in
[07:14] Cuts in 2024 sure so I think 2:00 is going to be
[07:16] 2024 sure so I think 2:00 is going to be really tricky because they have the statements and the Dot Plot and I think it's going to be hard for them to sound hawkish at 2 at 2:30 I think chapal will have his chance I think should take a bit of a Victory lap you know remember inflation was transitory well it's looking like it's coming down um and so you can actually address and acknowledge that it's coming down but stop short of saying mission accomplished and then talk about rate Cuts in a normalization sense as opposed to let the market run away with rates are going back to zero start the talk of maybe you have to recalibrate policy and get you know rates normalize rates as inflation comes down to keep real rates constant I think that's how he's going to try it's a very delicate Balancing Act I think that's where the press conference going to be important so so I would look at the 2:00 reaction and then the 230 reaction might be a little different because I think he might try and say not so fast we're not ready to start cutting all the way down you know it requires a lot of things to go right so I think he's going to try and finesse it but it's it's a challenge for the FED today PRI we've been hearing
[08:16] for the FED today PRI we've been hearing from some of the FED speakers they're concerned about anecdotal evidence.
[08:18] they're concerned about anecdotal evidence showing a faster slowdown than what we currently see.
[08:22] do you expect that to be reflected at all in the statement of economic projections where growth's been upgraded unemployment expectations have been downgraded?
[08:32] I think it's hard for the FED to show that especially when you're looking at average numbers like the unemployment rate which is going up because participation is going up for example.
[08:41] so I think it might be harder but I am curious to see how much they move the unemployment rate um you know next year.
[08:48] if they do have I mean if you look at the underlying labor market data I know Friday was a strong payroll report but you look at the underlying.
[08:56] you strip out the the the strikers or the government jobs it's really coming from two sectors.
[09:01] there is there is slowdown in the labor market but I I think it's hard for the FED to finesse that.
[09:05] I think all they want to say is we'll be mindful we'll be you know we'll watch data and respond accordingly.
[09:14] but I don't know you can see that very clearly in the statement of economic projections.
[09:18] in the statement of economic projections Beyond just the unemployment rate
[09:20] Beyond just the unemployment rate perhaps a 4.2 or 4.3 is where they can
[09:23] perhaps a 4.2 or 4.3 is where they can get it up to I think anything higher
[09:25] get it up to I think anything higher would be an odd move by the FED because
[09:28] would be an odd move by the FED because we don't really see it clearly in the
[09:30] we don't really see it clearly in the aggregate data it's the cracks are
[09:33] aggregate data it's the cracks are developing and I think he CH po can hint
[09:35] developing and I think he CH po can hint at it at the press conference rather
[09:37] at it at the press conference rather than show up clearly in the forecast
[09:39] than show up clearly in the forecast where's the asymmetry and Market
[09:41] where's the asymmetry and Market positioning right now heading into this
[09:43] positioning right now heading into this meeting in other words where's the
[09:44] meeting in other words where's the biggest response potentially going to
[09:45] biggest response potentially going to come from with a surprise either uh with
[09:48] come from with a surprise either uh with a more hawkish or dovish type of tone so
[09:52] a more hawkish or dovish type of tone so I actually think a more doish Stone will
[09:54] I actually think a more doish Stone will have a bigger reaction I think a lot of
[09:56] have a bigger reaction I think a lot of people missed buying the tenure at 5%
[09:59] people missed buying the tenure at 5% and then they've been waiting we've been
[10:01] and then they've been waiting we've been waiting you know when you get back up
[10:03] waiting you know when you get back up we'd like to come in and buy there's a
[10:05] we'd like to come in and buy there's a sense of a for more move you know just
[10:07] sense of a for more move you know just buy everything rally going into year end
[10:11] buy everything rally going into year end um so I think if the FED suggests that
[10:13] um so I think if the FED suggests that in soft Landing they can cut three times
[10:16] in soft Landing they can cut three times 75 basis points or 100 basis points next
[10:19] 75 basis points or 100 basis points next year the Market's pricing in 100 well.
[10:21] year the Market's pricing in 100 well you should price in some probability of.
[10:23] you should price in some probability of a hard Landing so I think you'll get a.
[10:25] a hard Landing so I think you'll get a much more reaction to lower rates in a.
[10:28] much more reaction to lower rates in a doish fed commentary either nervousness.
[10:31] doish fed commentary either nervousness about growth or this idea that they can.
[10:33] about growth or this idea that they can cut a lot more rates if you get a.
[10:34] cut a lot more rates if you get a hawkish Fed I think the market almost is.
[10:36] hawkish Fed I think the market almost is going to disbelieve the FED because the.
[10:38] going to disbelieve the FED because the FED can change its mind it's done that.
[10:40] FED can change its mind it's done that before it's responsive to data so I.
[10:43] before it's responsive to data so I think that's where the asymmetry is it's.
[10:44] think that's where the asymmetry is it's so so true Priya stick with us stay.
[10:46] so so true Priya stick with us stay close PR Miser there of JP Morgan with.
[10:48] close PR Miser there of JP Morgan with less than 20 minutes to go until that.
[10:50] less than 20 minutes to go until that fed decision what Priya said there Lisa.
[10:52] fed decision what Priya said there Lisa is so important sequencing matters here.
[10:54] is so important sequencing matters here so at the top of the hour in about 20.
[10:56] so at the top of the hour in about 20 minutes time you get the statement and.
[10:58] minutes time you get the statement and the projections 30 minutes later you get.
[11:00] the projections 30 minutes later you get the news conference and I would say it's.
[11:02] the news conference and I would say it's kind of like getting earnings you get.
[11:03] kind of like getting earnings you get the earnings and then you get the.
[11:04] the earnings and then you get the earnings cool do you really want to make.
[11:06] earnings cool do you really want to make a move on the earnings before you've.
[11:07] a move on the earnings before you've heard the call and we have a real.
[11:08] heard the call and we have a real potential here to be whips sored by.
[11:10] potential here to be whips sored by chairman pal 30 minutes after the.
[11:12] chairman pal 30 minutes after the decision drops she was saying basically.
[11:13] decision drops she was saying basically that's the base case right now that.
[11:15] that's the base case right now that we're going to get whipsaw because it's.
[11:16] we're going to get whipsaw because it's going to sound doish and then he's going.
[11:18] going to sound doish and then he's going to come out J Powell and have to be.
[11:19] to come out J Powell and have to be hawkish that is the expectation and then
[11:21] hawkish that is the expectation and then it'll be a wash you know I'm going to go
[11:23] it'll be a wash you know I'm going to go all e get on you over at bbo Capital Mar
[11:25] all e get on you over at bbo Capital Mar it's the most interesting number here
[11:26] it's the most interesting number here into this fed meeting and through the
[11:28] conversation press conference is a 10-year yield we have come so far so
[11:30] 10-year yield we have come so far so fast John I got a
[11:33] fast John I got a 4.54 upper range on the 10 year and
[11:34] 4.54 upper range on the 10 year and where it gets interesting is
[11:37] where it gets interesting is 4.06% so if we come in 10 basis points
[11:40] 4.06% so if we come in 10 basis points lower yield that's demonstrative in this
[11:43] lower yield that's demonstrative in this at this moment today what's interest in
[11:46] at this moment today what's interest in TK as well is where the 10 year was the
[11:47] TK as well is where the 10 year was the last time they met yeah it's really it's
[11:49] last time they met yeah it's really it's technically elegant 70 basis points
[11:51] technically elegant 70 basis points higher the conversation continues
[11:54] higher the conversation continues Deutsche bank's Matt lazetti with JP
[11:56] Deutsche bank's Matt lazetti with JP Morgans PRI misra your Equity Market on
[11:58] Morgans PRI misra your Equity Market on the S&P 500 is totally unchanged the FED
[12:00] the S&P 500 is totally unchanged the FED decides the decision just around a
[12:04] decides the decision just around a [Music]
[12:06] the decision just around a [Music]
[12:27] corner.
[12:52] Josh, that's me. Max, what's up? How are you?
[12:56] I have been writing about Wall Street for almost 15 years, and what that means is I write about feuds and rage and rises and falls and comebacks and every now and then I also write about a couple of villains.
[13:10] Thank you so much. And now I am about to do something new and very, very scary.
[13:17] We are making a show, and it's based on Bloomberg Business Week Magazine.
[13:22] So what is this show about? It's a show about money, power, culture, pop business.
[13:26] We're going to complicate.
[13:28] business we're going toiz complicated and Prof found people about their ideas
[13:30] and Prof found people about their ideas their careers their lives their risks
[13:33] their careers their lives their risks their failures their imagination it's so
[13:35] their failures their imagination it's so incredibly liberating not to care what
[13:37] incredibly liberating not to care what other people think I was giving my tools
[13:39] other people think I was giving my tools to other communities I wanted to bring
[13:41] to other communities I wanted to bring those tools home tune in like please
[13:43] those tools home tune in like please like really actually tune in I I
[13:45] like really actually tune in I I desperately need
[13:47] desperately need [Music]
[13:50] [Music] Ms I think that it's hard to put your
[13:52] Ms I think that it's hard to put your head around any narrative let's just be
[13:54] head around any narrative let's just be honest we've had sort of a shift in are
[13:56] honest we've had sort of a shift in are we in some sort of styf flation fears
[13:58] we in some sort of styf flation fears moment and people were talking about
[13:59] moment and people were talking about that all day
[14:08] yesterday it's a Fed pivot party and
[14:11] yesterday it's a Fed pivot party and we're all invited there will be a pivot
[14:13] we're all invited there will be a pivot eventual pivot you know towards easing
[14:16] eventual pivot you know towards easing Traders right now are pushing this dream
[14:18] Traders right now are pushing this dream of four rate Cuts next year markets have
[14:21] of four rate Cuts next year markets have been celebrating this idea that there's
[14:23] been celebrating this idea that there's disinflation in the pipeline and
[14:25] disinflation in the pipeline and inflation's come down faster than than
[14:27] inflation's come down faster than than many thought things are at least
[14:29] Many thought things are at least directionally on track for the soft landing.
[14:33] The market has been overly optimistic on when the FED has cutting.
[14:35] Is running too far ahead of JP on team they will definitely fight back push back push back hard on cuts next year.
[14:41] On where the market is where it's gotten a little bit ahead of itself.
[14:44] We still need to respect the fact that the last mile of the inflation journey is often the most difficult.
[14:50] They have to keep some vestige of this tightening bias.
[14:53] I don't think that that's a message that's going to be believed by markets.
[14:55] The markets is like man we don't believe you.
[14:57] It's up to Powell how much he's going to push against that markup pricing.
[15:00] Live from New York City this afternoon, good afternoon.
[15:04] Good afternoon alongside Tom Keane and Lisa Rabits, I'm Jonathan Pho.
[15:09] That fed decision 15 minutes away.
[15:11] The scores look like this on the S&P 500, totally unchanged on the session.
[15:16] But since the last time this fed met, we've rallied hard by about 10% on the S&P and more on the NASDAQ.
[15:22] Check out the bond market, switch up the board, twoe 10 year.
[15:27] Think about where the two-year was the morning the last time the FED met, 5.08%.
[15:32] morning the last time the FED met 5.08% that morning before that fed decision
[15:34] that morning before that fed decision the 10year that morning TK
[15:37] the 10year that morning TK 492 is where we opened on the 10 year
[15:40] 492 is where we opened on the 10 year that morning and here is where we are
[15:41] that morning and here is where we are right now 466 96 on a 2 year down six
[15:45] right now 466 96 on a 2 year down six basis points today on a 10e 416 down
[15:49] basis points today on a 10e 416 down four basis points this afternoon I'm
[15:51] four basis points this afternoon I'm watching the 10 year just B chance today
[15:53] watching the 10 year just B chance today I think it's technically very eloquent
[15:54] I think it's technically very eloquent and really drives to a lower you know I
[15:57] and really drives to a lower you know I just want to say with the work that are
[15:58] just want to say with the work that are team does to put together the only
[16:00] team does to put together the only reason I do this show is all those
[16:02] reason I do this show is all those different voices at the beginning of the
[16:03] different voices at the beginning of the B block of fed de the only reason you
[16:06] B block of fed de the only reason you it's it's the only reason I'm here I
[16:07] it's it's the only reason I'm here I mean it's hilarious all the different
[16:09] mean it's hilarious all the different opinions the language the opine how many
[16:12] opinions the language the opine how many of his questions today is he going to
[16:14] of his questions today is he going to read off a piece of paper almost pre
[16:17] read off a piece of paper almost pre well he should know what's coming based
[16:18] well he should know what's coming based on that that captures the consensus
[16:19] on that that captures the consensus almost perfectly this is about push back
[16:21] almost perfectly this is about push back how much push back we get in this news
[16:23] how much push back we get in this news conference a little bit later if any at
[16:25] conference a little bit later if any at all I want to finish on Foreign Exchange
[16:27] all I want to finish on Foreign Exchange Lisa important the tug of war set to
[16:28] Lisa important the tug of war set to take place we're talking about the FED
[16:30] take place we're talking about the FED in isolation you need to talk about the
[16:31] in isolation you need to talk about the Federal Reserve versus the ECB versus
[16:34] Federal Reserve versus the ECB versus the Boe and think about the FX Market.
[16:37] The Boe and think about the FX Market the dollar Index stable just about.
[16:39] The dollar Index stable just about unchange the Euro going nowhere Lisa.
[16:42] 10786 the other side of the trade gets interesting in the next 48 hours.
[16:44] All I can say is why would to your point anyone trade right now on this trade.
[16:46] Uh this currency pair ahead of the FED meeting and then the ECB meeting.
[16:48] Tomorrow at a time when they're largely expected to cut rates first.
[16:50] 12 minutes away we got got to get to Matt LZ he's going to get to his Deutsche Bank clients and uh Representatives across all of the Deutsche Bank World.
[16:53] He's their chief US Economist a preiser of this as as well Matt lazetti.
[16:55] I I really got to go to the real economy because if you're claimed yeah there'll be a Slowdown but it's out there somewhere.
[16:58] You nailed that this year let us reframe the importance of slowing economic growth to Chairman Powell here in 10 minutes.
[16:59] How does slowing American GDP filter into today's event.
[17:01] Yeah I think the the bigger story for pal and the FED has been how quickly.
[17:35] for pal and the FED has been how quickly inflation is coming down and certainly
[17:37] inflation is coming down and certainly whether or not they can cut rates purely
[17:38] whether or not they can cut rates purely on an inflation story and and that's
[17:40] on an inflation story and and that's what governor Waller was getting at two
[17:41] what governor Waller was getting at two weeks ago within his comments is what's
[17:43] weeks ago within his comments is what's Driven the market dynamics uh over the
[17:46] Driven the market dynamics uh over the past two weeks to to price these
[17:47] past two weeks to to price these substantial rate Cuts so I think from
[17:49] substantial rate Cuts so I think from from the fed well from pal will continue
[17:51] from the fed well from pal will continue to hear that they do want to see some
[17:52] to hear that they do want to see some slowing in the economy they do want to
[17:54] slowing in the economy they do want to see a labor market that continues to
[17:55] see a labor market that continues to come into better balance but I think
[17:57] come into better balance but I think first and foremost most most important
[17:58] first and foremost most most important development has been inflation coming
[18:00] development has been inflation coming down faster than anticipated from the
[18:01] down faster than anticipated from the fed's perspective and the scope that
[18:03] fed's perspective and the scope that that gives them to cut rates next year
[18:04] that gives them to cut rates next year does the job economy exist in today's
[18:08] does the job economy exist in today's analysis yeah no I I think the labor
[18:10] analysis yeah no I I think the labor market is the fact that that is coming
[18:12] market is the fact that that is coming to um better balance very quickly over
[18:15] to um better balance very quickly over the past six months or so is is really
[18:17] the past six months or so is is really important in that assessment um but I
[18:19] important in that assessment um but I think given where we are on the
[18:20] think given where we are on the unemployment rate the quits rate job
[18:21] unemployment rate the quits rate job openings coming down the labor market is
[18:24] openings coming down the labor market is not an additional reason for the FED to
[18:25] not an additional reason for the FED to sound hawkish at the moment I think that
[18:27] sound hawkish at the moment I think that they can be B kind of transition away
[18:29] they can be B kind of transition away from the labor market and the concern
[18:30] from the labor market and the concern around that the concern around that it's
[18:32] around that the concern around that it's too tight and driving inflation and then
[18:34] too tight and driving inflation and then pivot towards uh focusing on the
[18:36] pivot towards uh focusing on the inflation data which just undeniably is
[18:38] inflation data which just undeniably is showing a lot of progress over the past
[18:39] showing a lot of progress over the past six months the FED has two mandates
[18:41] six months the FED has two mandates right one of them is to bring down
[18:42] right one of them is to bring down inflation and then there's also this uh
[18:44] inflation and then there's also this uh question of making sure they avoid some
[18:47] question of making sure they avoid some sort of hard Landing going too far where
[18:50] sort of hard Landing going too far where is that balance of risks right now given
[18:52] is that balance of risks right now given the fact we have seen disinflation but
[18:54] the fact we have seen disinflation but there's still a lot of questions about
[18:55] there's still a lot of questions about how sticky that
[18:57] how sticky that is yeah no doubt uh you know over the
[18:59] is yeah no doubt uh you know over the past 18 months the the FED has leaned
[19:01] past 18 months the the FED has leaned heavily towards um doing too much
[19:04] heavily towards um doing too much potentially uh in terms of tightening
[19:06] potentially uh in terms of tightening because the risk where that inflation
[19:08] because the risk where that inflation becomes sticky becomes embedded and it's
[19:09] becomes sticky becomes embedded and it's more difficult for them to get down over
[19:11] more difficult for them to get down over time I think what we've seen
[19:12] time I think what we've seen particularly over the past three or six
[19:13] particularly over the past three or six months is a pivot towards and a
[19:15] months is a pivot towards and a transition towards uh concerns on on the
[19:17] transition towards uh concerns on on the growth in labor market front and that'll
[19:19] growth in labor market front and that'll continue it's quite natural that that
[19:20] continue it's quite natural that that continues uh as inflation comes down you
[19:23] continues uh as inflation comes down you become a little bit more worried about
[19:24] become a little bit more worried about the growth uh side of the Dual mandate
[19:26] the growth uh side of the Dual mandate the labor market side of the Dual
[19:27] the labor market side of the Dual mandate and I think we'll continue to
[19:29] mandate and I think we'll continue to hear that from chair pal today that they
[19:30] hear that from chair pal today that they are concerned about upside inflation
[19:32] are concerned about upside inflation risks but that that balance of risks
[19:34] risks but that that balance of risks from their perspective is is coming into
[19:35] from their perspective is is coming into better balance that said we've been
[19:37] better balance that said we've been talking a lot about the easing and talking a lot about the easing and financial conditions over the past month.
[19:40] financial conditions over the past month and how this goes exactly counter to and how this goes exactly counter to some of the goals how much do you think.
[19:42] and how this goes exactly counter to some of the goals how much do you think that J Powell needs to push back on that.
[19:45] some of the goals how much do you think that J Powell needs to push back on that to keep the gains that they've made with to keep the gains that they've made with respect to Bringing inflation down.
[19:49] to keep the gains that they've made with respect to Bringing inflation down I I think for the FED Financial conditions are completely context dependent.
[19:53] think for the FED Financial conditions are completely context dependent so if they were not achieving progress on inflation if the labor market was still extraordinarily tight.
[19:58] they were not achieving progress on inflation if the labor market was still extraordinarily tight if we were still seeing growth that was well above the F uh the potential growth rate.
[20:04] uh the potential growth rate that the FED would want to lean back on that and kind of push back on the financial conditions tightening that that we've seen.
[20:07] FED would want to lean back on that and kind of push back on the financial conditions tightening that that we've seen but in the context of seeing a lot of progress on on inflation being a little bit concerned about downsize risks to growth in the labor market.
[20:15] little bit concerned about downsize risks to growth in the labor market I think the FED is is a lot less prone to push back on that.
[20:19] think the FED is is a lot less prone to push back on that I think what you'll hear from chair Pal's what we've heard from his colleagues is that Financial conditions even though they've eased a lot over the past 6 weeks do remain tighter than they were earlier this year.
[20:27] lot over the past 6 weeks do remain tighter than they were earlier this year and I think just the the underlying reality is they don't need them to be as tight as long as they're getting progress on the inflation front.
[20:33] tight as long as they're getting progress on the inflation front let's break some rules let's put some numbers on it and some dates as well Matt LTI
[20:39] on it and some dates as well Matt LTI when do you think they start cutting and
[20:40] when do you think they start cutting and by how
[20:41] by how much so we have had for for a long time
[20:44] much so we have had for for a long time uh an expectation that they start
[20:45] uh an expectation that they start cutting rates in June and that they cut
[20:47] cutting rates in June and that they cut rates by 175 basis points next year you
[20:50] rates by 175 basis points next year you know certainly that was I think a lot
[20:51] know certainly that was I think a lot more aggressive than Market was pricing
[20:53] more aggressive than Market was pricing you know certainly 6 weeks ago 3 or four
[20:55] you know certainly 6 weeks ago 3 or four weeks ago the market has has come far
[20:57] weeks ago the market has has come far more line with that that expectation I
[21:00] more line with that that expectation I think critically for today you know
[21:02] think critically for today you know chair poow will probably uh somewhat
[21:04] chair poow will probably uh somewhat push back on the market pricing perhaps
[21:05] push back on the market pricing perhaps say that it's premature to talk about
[21:07] say that it's premature to talk about rate Cuts but unless he does that
[21:09] rate Cuts but unless he does that explicitly and explicitly rules out that
[21:11] explicitly and explicitly rules out that rate cuts are are not going to happen
[21:12] rate cuts are are not going to happen early next year I think the market is
[21:14] early next year I think the market is going to look through that the the
[21:15] going to look through that the the market will look through the underlying
[21:16] market will look through the underlying Trends which is that inflation's coming
[21:18] Trends which is that inflation's coming down the FED is transitioning for
[21:20] down the FED is transitioning for forward in a way which rate Cuts
[21:22] forward in a way which rate Cuts probably become more likely and I think
[21:24] probably become more likely and I think it's going to be really hard for him to
[21:25] it's going to be really hard for him to push back on on market pricing and the
[21:27] push back on on market pricing and the underlying Dynamics uh in markets at the
[21:29] underlying Dynamics uh in markets at the moment PR misra still with us from JP
[21:31] moment PR misra still with us from JP Morgan prya let's get to you you sit on
[21:33] Morgan prya let's get to you you sit on the buy side when you hear those kind of
[21:34] the buy side when you hear those kind of calls 175 basis points of cuts next year
[21:38] calls 175 basis points of cuts next year starting in June what do you
[21:40] starting in June what do you think I hear a lot of optimism that
[21:42] think I hear a lot of optimism that these rate Cuts will actually allow the
[21:45] these rate Cuts will actually allow the soft Landing to continue but I think
[21:47] soft Landing to continue but I think what it somewhat misses is if the
[21:48] what it somewhat misses is if the economy is slowing down the lags work
[21:51] economy is slowing down the lags work both ways so even if the FED does start
[21:53] both ways so even if the FED does start to cut rates Financial conditions may
[21:55] to cut rates Financial conditions may ease but does that actually help the
[21:57] ease but does that actually help the economy that quickly it might take a
[21:59] economy that quickly it might take a while so I think um you know I think
[22:01] while so I think um you know I think owning duration makes sense here you
[22:03] owning duration makes sense here you know I think the curve is a little bit
[22:05] know I think the curve is a little bit more tricky do your credit work or
[22:08] more tricky do your credit work or understand exactly what companies you're
[22:09] understand exactly what companies you're buying or what balance sheets or
[22:11] buying or what balance sheets or business models because even if the FED
[22:13] business models because even if the FED starts to cut I think it's it's too
[22:15] starts to cut I think it's it's too optimistic to think that that can
[22:17] optimistic to think that that can engineer a soft Landing if the economy
[22:20] engineer a soft Landing if the economy is slowing and you have nonlinear uh you
[22:23] is slowing and you have nonlinear uh you know increase in the unemployment rate
[22:24] know increase in the unemployment rate it takes a lot of rate cuts it takes
[22:27] it takes a lot of rate cuts it takes rates into accommodative territory for
[22:29] rates into accommodative territory for that to actually turn growth around so I
[22:32] that to actually turn growth around so I think we may be in for another volatile
[22:34] think we may be in for another volatile year next year as I think the econ we we
[22:37] year next year as I think the econ we we par through the economic data as well as
[22:39] par through the economic data as well as how the FED responds and when do they
[22:41] how the FED responds and when do they transition from normalization rate cuts
[22:44] transition from normalization rate cuts to actually accommodative rate Cuts I
[22:45] to actually accommodative rate Cuts I think that's going to be a tricky one
[22:47] think that's going to be a tricky one for the FED because they have to realize
[22:49] for the FED because they have to realize well we have to actually cut a lot more
[22:50] well we have to actually cut a lot more than just normalize but to be clear here
[22:52] than just normalize but to be clear here Priya the big shift in the last 6 months
[22:56] Priya the big shift in the last 6 months is to move from some level LEL of
[22:58] is to move from some level LEL of restriction to now a shocking
[23:01] restriction to now a shocking accommodation
[23:03] accommodation right I think in real rate terms it's
[23:06] right I think in real rate terms it's harder to see that because inflation's
[23:09] harder to see that because inflation's come down a lot so if you think about
[23:10] come down a lot so if you think about the real rate framework of how the FED I
[23:13] the real rate framework of how the FED I think operates um you know policy went
[23:16] think operates um you know policy went from very restrictive to slightly
[23:18] from very restrictive to slightly restrictive because uh you know you
[23:20] restrictive because uh you know you you've had that big decline in in
[23:21] you've had that big decline in in inflation and the FED hasn't you know
[23:23] inflation and the FED hasn't you know nominal rates have declined but a lot of
[23:25] nominal rates have declined but a lot of that has been inflation so I think some
[23:27] that has been inflation so I think some of these rate cuts that are getting
[23:29] of these rate cuts that are getting priced in are all inflation induced I
[23:32] priced in are all inflation induced I think for it to be accommodative you
[23:33] think for it to be accommodative you have to have real rates decline 10 year
[23:36] have to have real rates decline 10 year real rates are still at 2% I think
[23:37] real rates are still at 2% I think that's still well within restrictive
[23:40] that's still well within restrictive territory Matt before we let you go I
[23:42] territory Matt before we let you go I know that you did work at the treasury
[23:43] know that you did work at the treasury Department and I'd love you to weigh in
[23:45] Department and I'd love you to weigh in on the awkward cut of dance between the
[23:48] on the awkward cut of dance between the discussion from the treasury Department
[23:50] discussion from the treasury Department head and the head of the Federal Reserve
[23:53] head and the head of the Federal Reserve how much Credence do you put into what
[23:55] how much Credence do you put into what we heard from Yellen about the potential
[23:57] we heard from Yellen about the potential of just sequential rate Cuts in response
[23:59] of just sequential rate Cuts in response to
[24:00] to disinflation and this optimism of a soft
[24:02] disinflation and this optimism of a soft landing and pair that with the likely
[24:04] landing and pair that with the likely agreement with fed share
[24:07] agreement with fed share Powell yeah I think you know the
[24:09] Powell yeah I think you know the comments that we hear from secretary
[24:10] comments that we hear from secretary Yellen in some ways are are very much in
[24:12] Yellen in some ways are are very much in line with what we heard from Governor
[24:13] line with what we heard from Governor Waller which is that as inflation comes
[24:15] Waller which is that as inflation comes down uh in order to ensure that policy
[24:17] down uh in order to ensure that policy doesn't become too tight over time the
[24:19] doesn't become too tight over time the fed you know certainly could could cut
[24:20] fed you know certainly could could cut rates it's a separate question about how
[24:22] rates it's a separate question about how do you how do you message that when do
[24:24] do you how do you message that when do you message that uh and how do you kind
[24:26] you message that uh and how do you kind of um deal with the risk balance about
[24:28] of um deal with the risk balance about how worried they might be about
[24:29] how worried they might be about inflation picking back up again at this
[24:32] inflation picking back up again at this meeting today I think it's too early for
[24:33] meeting today I think it's too early for chair pal to completely Embrace that
[24:36] chair pal to completely Embrace that that story I think he will want to say
[24:37] that story I think he will want to say that it's still premature to really have
[24:39] that it's still premature to really have these discussions you know the dotplot
[24:41] these discussions you know the dotplot will show rate Cuts but you know
[24:43] will show rate Cuts but you know expectations that that's not going to
[24:44] expectations that that's not going to happen for for some time but I do think
[24:46] happen for for some time but I do think that conversation within the FED can can
[24:48] that conversation within the FED can can kind of transition relatively quickly I
[24:49] kind of transition relatively quickly I think by q1 if they continue get uh
[24:52] think by q1 if they continue get uh positive inflation data they could begin
[24:54] positive inflation data they could begin to more actively talk about what
[24:56] to more actively talk about what conditions do they need to see to cut
[24:57] conditions do they need to see to cut rates that might be quicker than what
[24:59] rates that might be quicker than what many people think I think PR was happy
[25:00] many people think I think PR was happy she didn't get that question and Matt
[25:02] she didn't get that question and Matt LTI did hey Matt it's going to catch up
[25:03] LTI did hey Matt it's going to catch up and now you've got to run Matt Lati over
[25:05] and now you've got to run Matt Lati over at Deutsche Bank we are about four and a
[25:07] at Deutsche Bank we are about four and a half minutes away from that fed decision
[25:08] half minutes away from that fed decision the state of play looks like this
[25:10] the state of play looks like this equities going absolutely nowhere
[25:12] equities going absolutely nowhere looking for changes in the statement
[25:13] looking for changes in the statement changes to the projections and looking
[25:15] changes to the projections and looking for the tone in the news conference with
[25:17] for the tone in the news conference with chairman pal priia I want to talk about
[25:19] chairman pal priia I want to talk about how one-sided things have become in the
[25:22] how one-sided things have become in the last four five 6 weeks all of a sudden
[25:25] last four five 6 weeks all of a sudden 99.9% of the people we SP speak to are
[25:28] 99.9% of the people we SP speak to are on the same page they're looking for
[25:30] on the same page they're looking for rate Cuts in 2024 we can have
[25:32] rate Cuts in 2024 we can have disagreement about the start time the
[25:34] disagreement about the start time the amount they do end up cutting but
[25:36] amount they do end up cutting but ultimately they're all on the same page
[25:38] ultimately they're all on the same page Priya 6 weeks ago it was a very
[25:40] Priya 6 weeks ago it was a very different story do you find that
[25:43] different story do you find that unsettling I you know I think end of
[25:45] unsettling I you know I think end of Cycles are always tricky because the
[25:47] Cycles are always tricky because the data doesn't point to one clear
[25:49] data doesn't point to one clear Direction and we're all we're all used
[25:51] Direction and we're all we're all used to a forward guidance fed and there is
[25:53] to a forward guidance fed and there is no forward guidance here and I would
[25:54] no forward guidance here and I would discount any forward guidance you get
[25:56] discount any forward guidance you get from them so it is yeah I think that
[25:57] from them so it is yeah I think that narrative shifted very quickly remember
[25:59] narrative shifted very quickly remember nobody wanted to buy treasuries to now
[26:02] nobody wanted to buy treasuries to now everyone sort of falling over themselves
[26:04] everyone sort of falling over themselves to buy treasuries even with the move it
[26:06] to buy treasuries even with the move it is disquieting but I think it tells you
[26:08] is disquieting but I think it tells you that price action can be driven by
[26:11] that price action can be driven by positioning often and so we have to be
[26:13] positioning often and so we have to be careful but I think you take a step back
[26:15] careful but I think you take a step back is monetary policy restrictive yes is
[26:17] is monetary policy restrictive yes is the economy slowing down yes inflation
[26:19] the economy slowing down yes inflation is declining I think that's a good
[26:21] is declining I think that's a good environment for fixed income all the
[26:22] environment for fixed income all the money sitting out in cash is going to
[26:25] money sitting out in cash is going to start to come out and look for Value
[26:27] start to come out and look for Value that's right where I wanted to go is
[26:28] that's right where I wanted to go is your stunning call of price up and yield
[26:30] your stunning call of price up and yield down down down is it that wall of 6
[26:33] down down down is it that wall of 6 trillion
[26:34] trillion cash there is some of that yes because I
[26:37] cash there is some of that yes because I think you know that money has felt it's
[26:39] think you know that money has felt it's been good to sit in cash you earn 5% as
[26:42] been good to sit in cash you earn 5% as the FED starts to cut rates what about
[26:44] the FED starts to cut rates what about their reinvestment risk and if the fed's
[26:46] their reinvestment risk and if the fed's cutting 50 basis points or you know they
[26:50] cutting 50 basis points or you know they the market should price in the total
[26:51] the market should price in the total amount of cuts if we talking 200 300
[26:53] amount of cuts if we talking 200 300 Base PS of cuts that cash is not going
[26:55] Base PS of cuts that cash is not going to look that attractive and that's why I
[26:57] to look that attractive and that's why I think you're seeing people now thinking
[27:00] think you're seeing people now thinking about where do I move out you know and
[27:02] about where do I move out you know and you start looking at
[27:03] you start looking at valuations I would say you know high
[27:06] valuations I would say you know high quality fixed income now is a very
[27:09] quality fixed income now is a very strong competitor to all risk assets
[27:11] strong competitor to all risk assets yeah and you get liquidity you get high
[27:13] yeah and you get liquidity you get high quality and you get positive real rates
[27:15] quality and you get positive real rates 2% real rates in treasuries I think
[27:17] 2% real rates in treasuries I think that's attractive and I think that's one
[27:19] that's attractive and I think that's one of our big calls for why you know the
[27:22] of our big calls for why you know the next year 24 is going to be a good year
[27:24] next year 24 is going to be a good year for fixed income as the FED starts to
[27:26] for fixed income as the FED starts to Cut Rate so that's why I think the Nar
[27:27] Cut Rate so that's why I think the Nar around fed easing and I think the Dot
[27:30] around fed easing and I think the Dot Plot will confirm that is key to why
[27:33] Plot will confirm that is key to why money starts to move out of the front
[27:34] money starts to move out of the front end into uh bond funds Pria let's wrap
[27:37] end into uh bond funds Pria let's wrap it up two minutes to go until the
[27:39] it up two minutes to go until the decision you're going to run away back
[27:40] decision you're going to run away back to the Bloomberg terminal in just a
[27:42] to the Bloomberg terminal in just a moment when all this drops what are you
[27:43] moment when all this drops what are you looking for
[27:45] looking for first I'll be looking for number of uh
[27:48] first I'll be looking for number of uh you mean from the FED right I I'll be
[27:50] you mean from the FED right I I'll be looking for number of rate cuts that
[27:51] looking for number of rate cuts that they're looking for next year and the
[27:54] they're looking for next year and the inflation uh what is their forecast for
[27:56] inflation uh what is their forecast for inflation and growth so so sort of to uh
[27:59] inflation and growth so so sort of to uh get their response function I meant the
[28:00] get their response function I meant the FED not the barard but you can go there
[28:02] FED not the barard but you can go there too prer thank you PR misra JP Morgan
[28:05] too prer thank you PR misra JP Morgan appreciate it I I knew where you were
[28:07] appreciate it I I knew where you were going TK that's for sure we are about 90
[28:09] going TK that's for sure we are about 90 seconds away from that fed decision
[28:11] seconds away from that fed decision Equity is going almost absolutely
[28:13] Equity is going almost absolutely nowhere TK this is an interesting one
[28:15] nowhere TK this is an interesting one for chairman pal precisely right this is
[28:18] for chairman pal precisely right this is interesting he's really boxed in here
[28:20] interesting he's really boxed in here talk about degrees of freedom which is
[28:21] talk about degrees of freedom which is fancy for what's his choice set what is
[28:23] fancy for what's his choice set what is his optionality forward NADA this time
[28:26] his optionality forward NADA this time around he is friend TR in tight what I'm
[28:29] around he is friend TR in tight what I'm curious about is the statement of
[28:30] curious about is the statement of economic projections at the previous one
[28:32] economic projections at the previous one they expected the year next year to end
[28:34] they expected the year next year to end at 2.6% for core pce UBS did a study
[28:38] at 2.6% for core pce UBS did a study derived from PPI and CPI that we got
[28:40] derived from PPI and CPI that we got this week and found that the six-month
[28:42] this week and found that the six-month annualized rate of that core pce was
[28:46] annualized rate of that core pce was 1.9% so do they downgrade their
[28:48] 1.9% so do they downgrade their expectations of where inflation is and
[28:51] expectations of where inflation is and then how do they then pair that with a
[28:52] then how do they then pair that with a GDP call and an unemployment call do
[28:55] GDP call and an unemployment call do they then make those also more Rosie
[28:57] they then make those also more Rosie it's just you know that's really we got
[28:59] it's just you know that's really we got to get to the announcement all when I
[29:00] to get to the announcement all when I hear the word expectations all my radar
[29:02] hear the word expectations all my radar goes up they don't expect they react to
[29:04] goes up they don't expect they react to the data they React to what we're going
[29:06] the data they React to what we're going to see in 20 seconds Jen and then
[29:08] to see in 20 seconds Jen and then chairman Pal's got to try and clean it
[29:09] chairman Pal's got to try and clean it all up in about 30 minutes time and 20
[29:11] all up in about 30 minutes time and 20 seconds 20 seconds away from the FED
[29:14] seconds 20 seconds away from the FED decision the scores looked like this
[29:15] decision the scores looked like this going into it the equity Market just
[29:16] going into it the equity Market just about positive by 0.1% on the S&P 500 up
[29:20] about positive by 0.1% on the S&P 500 up 0.1% on the NASDAQ in the bond market
[29:23] 0.1% on the NASDAQ in the bond market your 2year yield shaping up as follows
[29:25] your 2year yield shaping up as follows the 2-year 466 the 10year 415 with your
[29:29] the 2-year 466 the 10year 415 with your fed decision here's Mike
[29:32] fed decision here's Mike mcke doves fly at the FED as official
[29:35] mcke doves fly at the FED as official signal they are done raising rates
[29:38] signal they are done raising rates instead raising the number of rate Cuts
[29:40] instead raising the number of rate Cuts they see next year officials left the
[29:43] they see next year officials left the overnite rate unchanged at 5 and a qu to
[29:45] overnite rate unchanged at 5 and a qu to 5 a half% but they essentially confirm
[29:49] 5 a half% but they essentially confirm that's it the money quote from the
[29:50] that's it the money quote from the statement gets a one-word addition in
[29:54] statement gets a one-word addition in determining the extent of any additional
[29:56] determining the extent of any additional policy affirming that may be appropriate
[29:59] policy affirming that may be appropriate to return inflation to 2% The Dot Plot
[30:02] to return inflation to 2% The Dot Plot meanwhile sees 75 basis points of cuts
[30:04] meanwhile sees 75 basis points of cuts next year one more move than they saw in
[30:07] next year one more move than they saw in September the dispersion is wide however
[30:10] September the dispersion is wide however with eight seeing fewer than those three
[30:13] with eight seeing fewer than those three Cuts five seeing more than three in 2025
[30:18] Cuts five seeing more than three in 2025 they see an additional four rate Cuts
[30:20] they see an additional four rate Cuts one down from September and two more in
[30:23] one down from September and two more in 2026 the longer run neutral rate remains
[30:26] 2026 the longer run neutral rate remains at 2 and half% their move comes as they
[30:29] at 2 and half% their move comes as they significantly lower their median
[30:31] significantly lower their median headline inflation forecast this year to
[30:35] headline inflation forecast this year to 2.8% as the statement notes inflation
[30:38] 2.8% as the statement notes inflation has eased over the past year but remains
[30:41] has eased over the past year but remains elevated in the median forecast it falls
[30:44] elevated in the median forecast it falls further in 2024 to 2.4% 2.1% in 2025 and
[30:50] further in 2024 to 2.4% 2.1% in 2025 and 2% finally in
[30:52] 2% finally in 2026 core pcee inflation 3.2% this year
[30:56] 2026 core pcee inflation 3.2% this year down from from September's forecast of
[30:59] down from from September's forecast of 3.7% it keeps falling hitting 2% also in
[31:04] 3.7% it keeps falling hitting 2% also in 2026 the statement says quote growth of
[31:07] 2026 the statement says quote growth of economic activity has slowed from its
[31:10] economic activity has slowed from its strong Pace in the third quarter but
[31:12] strong Pace in the third quarter but they still revised their median forecast
[31:14] they still revised their median forecast for GDP growth this year significantly
[31:16] for GDP growth this year significantly to 2.6% from 2.1% in September it falls
[31:20] to 2.6% from 2.1% in September it falls to just
[31:22] to just 1.4% next year potential growth in the
[31:25] 1.4% next year potential growth in the longer run is seen at 1
[31:27] longer run is seen at 1 .8% no change in their unemployment
[31:30] .8% no change in their unemployment forecast of 3.8% this year which implies
[31:34] forecast of 3.8% this year which implies the jobless rate moves up in December
[31:37] the jobless rate moves up in December because it's
[31:38] because it's 3.7% right now the next 3 years the
[31:42] 3.7% right now the next 3 years the median unemployment rate will come in at
[31:45] median unemployment rate will come in at 4.1% the decision guys again unanimous m
[31:49] 4.1% the decision guys again unanimous m m thank you sir let's make it very
[31:50] m thank you sir let's make it very simple the 2024 dot implying three Cuts
[31:54] simple the 2024 dot implying three Cuts next year from this Federal Reserve it
[31:56] next year from this Federal Reserve it doesn't meet the market but it closes
[31:57] doesn't meet the market but it closes the Gap and endorses the direction of
[31:59] the Gap and endorses the direction of travel over the last four to six weeks
[32:01] travel over the last four to six weeks in the bond market this is what's
[32:03] in the bond market this is what's falling right now yields and falling
[32:05] falling right now yields and falling hard we're down 19 call it 20 basis
[32:07] hard we're down 19 call it 20 basis points lower at the front end of the
[32:08] points lower at the front end of the curve on a 2-year four 53 on a 10year
[32:12] curve on a 2-year four 53 on a 10year down 13 at
[32:14] down 13 at 4.07% once you figure out where the bond
[32:16] 4.07% once you figure out where the bond market is take a guess where the FX
[32:18] market is take a guess where the FX Market is the dollar looks a little
[32:20] Market is the dollar looks a little something like this against the Euro at
[32:22] something like this against the Euro at the moment weaker the Euro stronger
[32:25] the moment weaker the Euro stronger 10845 and if you're looking at equities
[32:27] 10845 and if you're looking at equities we endorse a move higher up by a half of
[32:29] we endorse a move higher up by a half of 1% this morning on the S&P 500 up again
[32:32] 1% this morning on the S&P 500 up again this afternoon on the NASDAQ by 4/10 of
[32:34] this afternoon on the NASDAQ by 4/10 of 1% Lisa the rally moves on we could end
[32:38] 1% Lisa the rally moves on we could end up getting a sub 4% tenure yield by the
[32:41] up getting a sub 4% tenure yield by the end of this trading session as the uh as
[32:43] end of this trading session as the uh as people parse through this to me the fact
[32:45] people parse through this to me the fact that this is unequivocally doish that
[32:47] that this is unequivocally doish that they Endor the fed's idea that the
[32:49] they Endor the fed's idea that the Market's idea of rate cuts and then some
[32:52] Market's idea of rate cuts and then some really speaks to a question of is there
[32:54] really speaks to a question of is there going to be cleanup act on on i1 or or
[32:57] going to be cleanup act on on i1 or or is this going to be fed chair Powell
[32:58] is this going to be fed chair Powell saying we're just responding to the data
[33:00] saying we're just responding to the data in front of us and it looks pretty good
[33:01] in front of us and it looks pretty good well we talk about Tom the risk the
[33:03] well we talk about Tom the risk the potential of being whips sored by
[33:04] potential of being whips sored by chairman pal at about 27 minutes time
[33:07] chairman pal at about 27 minutes time the early take and we'll see if it
[33:08] the early take and we'll see if it sticks the early take is this ultimately
[33:11] sticks the early take is this ultimately you're looking for three Cuts next year
[33:13] you're looking for three Cuts next year our four five cuts no longer sounds that
[33:15] our four five cuts no longer sounds that ridiculous now you come closer and
[33:17] ridiculous now you come closer and closer to where we were before no
[33:19] closer to where we were before no hedging here I was going back and forth
[33:21] hedging here I was going back and forth with a professor at the University of
[33:22] with a professor at the University of Cambridge and two standard deviations
[33:24] Cambridge and two standard deviations down on 10e yield John we almost came to
[33:27] down on 10e yield John we almost came to it we came very very close at to it
[33:31] it we came very very close at to it 4.08% 4.07 and 46 we'll have to see what
[33:34] 4.08% 4.07 and 46 we'll have to see what plays out with the press conference but
[33:36] plays out with the press conference but this is frankly more than we expected we
[33:39] this is frankly more than we expected we also expect wonderful conversation at
[33:41] also expect wonderful conversation at this moment with Diane Swank she's Chief
[33:43] this moment with Diane Swank she's Chief Economist at KPMG Diane you know the
[33:46] Economist at KPMG Diane you know the interest uh space is the litmus paper of
[33:49] interest uh space is the litmus paper of our economic and our fed system are we
[33:52] our economic and our fed system are we seeing a constructive reduction in
[33:55] seeing a constructive reduction in yields or does this signal slower
[33:58] yields or does this signal slower economic
[34:01] growth well I think what we're seeing is
[34:03] growth well I think what we're seeing is that the bond market is leaning into the
[34:06] that the bond market is leaning into the concept of the fact that inflation has
[34:08] concept of the fact that inflation has plummeted so rapidly I think this is a
[34:11] plummeted so rapidly I think this is a full inflation story there's no question
[34:13] full inflation story there's no question that the FED is as showed its cards here
[34:16] that the FED is as showed its cards here they're very excited about the fact that
[34:17] they're very excited about the fact that inflation has come down at its fastest
[34:20] inflation has come down at its fastest Pace outside of World War II the Korean
[34:23] Pace outside of World War II the Korean War and the voar recessions that is
[34:26] War and the voar recessions that is really stunning given we've not seen a
[34:28] really stunning given we've not seen a major increase in unemployment with that
[34:31] major increase in unemployment with that and they're feeling good about it and I
[34:32] and they're feeling good about it and I think you're going to see some of that
[34:34] think you're going to see some of that Euphoria from chairman Powell as well
[34:37] Euphoria from chairman Powell as well it's more than we expected the I it is
[34:40] it's more than we expected the I it is important to remember that remember last
[34:42] important to remember that remember last time they had a rate hike po before the
[34:45] time they had a rate hike po before the end of the year so just by removing One
[34:47] end of the year so just by removing One Rate hike out of it that puts one more
[34:50] Rate hike out of it that puts one more cut into 2024 as well and I think that
[34:53] cut into 2024 as well and I think that sort of nuance is Lost in Translation
[34:56] sort of nuance is Lost in Translation but it is part of the story as well is
[34:58] but it is part of the story as well is they're not really backing off higher
[35:00] they're not really backing off higher for a period of time the next question
[35:03] for a period of time the next question is higher for how long I think we might
[35:06] is higher for how long I think we might be close to higher for long enough some
[35:09] be close to higher for long enough some big moves in this bond market right now
[35:10] big moves in this bond market right now we're down 17 basis points on a front
[35:12] we're down 17 basis points on a front end on a 2-year at 456 on a 10year down
[35:15] end on a 2-year at 456 on a 10year down 11 to 4.09% alongside down Swan complet
[35:18] 11 to 4.09% alongside down Swan complet to say great Peters of P Jim jumps in
[35:21] to say great Peters of P Jim jumps in front of the camera Greg let's talk
[35:22] front of the camera Greg let's talk about it in about 24 minutes time
[35:24] about it in about 24 minutes time chairman pal has an opportunity to
[35:25] chairman pal has an opportunity to clarify some of this do you think he
[35:27] clarify some of this do you think he needs
[35:28] needs to well well I'm not sure there's much
[35:31] to well well I'm not sure there's much he can do at this point I I mean the
[35:33] he can do at this point I I mean the market just absolutely loved loved this
[35:36] market just absolutely loved loved this result uh I thought the market was
[35:38] result uh I thought the market was already leaning a little too much uh
[35:41] already leaning a little too much uh evidently that wasn't the case we
[35:42] evidently that wasn't the case we weren't leaning enough so uh you know
[35:45] weren't leaning enough so uh you know doves fly and Bulls run after this and
[35:48] doves fly and Bulls run after this and um I think it's really hard for uh pal
[35:51] um I think it's really hard for uh pal to put that Genie back in the bottle
[35:53] to put that Genie back in the bottle does that give you a sense uh doves
[35:55] does that give you a sense uh doves flying and uh bulls running the idea of
[35:58] flying and uh bulls running the idea of fomo and just how much that's taken over
[36:00] fomo and just how much that's taken over the market after so many people missed
[36:03] the market after so many people missed out in 5% tenure
[36:05] out in 5% tenure yields I think that's just a artifact of
[36:08] yields I think that's just a artifact of the current market right I mean the
[36:10] the current market right I mean the markets are much more volatile uh they
[36:13] markets are much more volatile uh they they move much more powerfully I think
[36:15] they move much more powerfully I think that's just the construct right with
[36:17] that's just the construct right with ctas and alos and other sorts of things
[36:20] ctas and alos and other sorts of things and I think this is the world that we
[36:22] and I think this is the world that we live in honestly so I don't think this
[36:24] live in honestly so I don't think this is a unique feature anymore I think this
[36:26] is a unique feature anymore I think this is quite common place uh Dian Swan I did
[36:29] is quite common place uh Dian Swan I did the nominal GDP math here on the
[36:31] the nominal GDP math here on the inflation guesstimate and the growth
[36:33] inflation guesstimate and the growth guesstimate and boy it sure looks to me
[36:34] guesstimate and boy it sure looks to me like a 4% nominal GDP even south of that
[36:39] like a 4% nominal GDP even south of that modeled out over the next 24 months how
[36:43] modeled out over the next 24 months how do our viewers and listeners react to
[36:45] do our viewers and listeners react to that if our animal spirit post pandemic
[36:48] that if our animal spirit post pandemic diminishes down sub
[36:52] 4% we know what's interesting about it
[36:55] 4% we know what's interesting about it is that also the the part that we didn't
[36:57] is that also the the part that we didn't talk about in the scps is that the fed's
[37:00] talk about in the scps is that the fed's long-term estimates of what the neutral
[37:03] long-term estimates of what the neutral rate on the FED funds rate if you look
[37:04] rate on the FED funds rate if you look at their ranges that has actually
[37:06] at their ranges that has actually continued to move up and so I think what
[37:09] continued to move up and so I think what you're seeing here is that an economy
[37:11] you're seeing here is that an economy that the FED expects to cool below
[37:13] that the FED expects to cool below potential unemployment to come up a
[37:15] potential unemployment to come up a little bit although we might not the
[37:18] little bit although we might not the consumer really taken everything the
[37:20] consumer really taken everything the feds tried to deal them and you know
[37:22] feds tried to deal them and you know taken it with stride and kept on going
[37:25] taken it with stride and kept on going and I think that that aing some upside
[37:27] and I think that that aing some upside risk to the economic growth side of this
[37:30] risk to the economic growth side of this situation but it's really interesting
[37:32] situation but it's really interesting that the fed's terminal rates now look
[37:34] that the fed's terminal rates now look like they're starting to move up even
[37:36] like they're starting to move up even more than they were last time and that
[37:38] more than they were last time and that seems to have gotten Lost in Translation
[37:40] seems to have gotten Lost in Translation that's not what the Market's focused on
[37:42] that's not what the Market's focused on right now but I think the FED is looking
[37:43] right now but I think the FED is looking at an economy that's more resilient and
[37:46] at an economy that's more resilient and that will take off more rapidly as rates
[37:48] that will take off more rapidly as rates come down does that cohere with what you
[37:50] come down does that cohere with what you think that basically we're talking about
[37:52] think that basically we're talking about a higher new neutral rate as we uh have
[37:55] a higher new neutral rate as we uh have no Landing or a very very soft
[37:58] no Landing or a very very soft one exactly I think we are at a higher
[38:01] one exactly I think we are at a higher non-inflationary rate and I think that's
[38:04] non-inflationary rate and I think that's something you you see it just in the
[38:06] something you you see it just in the slowness with which the FED puts out its
[38:09] slowness with which the FED puts out its cuts and not getting back the the sent
[38:12] cuts and not getting back the the sent on rates is not as rapid as the asent on
[38:14] on rates is not as rapid as the asent on rates and the need you know you see it
[38:16] rates and the need you know you see it in their long-term forecast even as all
[38:18] in their long-term forecast even as all this good news has come in it's come in
[38:21] this good news has come in it's come in and it's really shifted the the
[38:23] and it's really shifted the the narrative in terms of you know we were
[38:25] narrative in terms of you know we were trying so hard hard to get up to an
[38:28] trying so hard hard to get up to an inflation Target for so long the FED
[38:30] inflation Target for so long the FED does still believe that we're in a world
[38:33] does still believe that we're in a world and it sort of was illustrated by the
[38:35] and it sort of was illustrated by the volatility in the bond market we were
[38:37] volatility in the bond market we were just talking about that we're in a world
[38:39] just talking about that we're in a world that's more susceptible to external
[38:40] that's more susceptible to external shocks than it one once was we've also
[38:43] shocks than it one once was we've also gotten incredibly good news on oil
[38:45] gotten incredibly good news on oil prices coming down helping to spill over
[38:47] prices coming down helping to spill over into inflation all of that's great it
[38:50] into inflation all of that's great it doesn't mean that we're going into the
[38:52] doesn't mean that we're going into the world of subpar growth of you know
[38:55] world of subpar growth of you know inability to inflation up that we left
[38:58] inability to inflation up that we left in the 2010s we have healed balance
[39:01] in the 2010s we have healed balance sheets except for the federal government
[39:03] sheets except for the federal government quite significantly since then and I
[39:06] quite significantly since then and I think that's where the paradigm shift is
[39:08] think that's where the paradigm shift is Diane let's go through the projections
[39:10] Diane let's go through the projections together the median for 2024 GDP 1.4%
[39:14] together the median for 2024 GDP 1.4% unemployment 4.1 core PC 2.4 fed funds
[39:19] unemployment 4.1 core PC 2.4 fed funds 4.6 D not so long ago you and I used to
[39:22] 4.6 D not so long ago you and I used to talk about this being aspirational how
[39:25] talk about this being aspirational how realistic is it now
[39:28] it now seems entirely possible and you
[39:30] it now seems entirely possible and you know what more things than than I can
[39:33] know what more things than than I can List have surprised me about this
[39:35] List have surprised me about this economy and this is not where we thought
[39:37] economy and this is not where we thought we'd be but how glorious it is that
[39:39] we'd be but how glorious it is that we're here it's not been easy it's not
[39:41] we're here it's not been easy it's not as if interest rate SE sectors aren't
[39:43] as if interest rate SE sectors aren't feeling pain they are the housing market
[39:46] feeling pain they are the housing market is still stuck in a mortgage winter even
[39:48] is still stuck in a mortgage winter even though rates are coming down this will
[39:50] though rates are coming down this will help out unlock some demand but prices
[39:52] help out unlock some demand but prices are still too high and the supply of
[39:54] are still too high and the supply of homes is still too much in a shortage
[39:56] homes is still too much in a shortage especially in the single family home
[39:58] especially in the single family home market so we know there's still strains
[40:00] market so we know there's still strains in this economy but the good news is we
[40:03] in this economy but the good news is we didn't have to get here without the kind
[40:06] didn't have to get here without the kind of pain that you know I think back on
[40:08] of pain that you know I think back on that speech 8 minutes 34 seconds August
[40:11] that speech 8 minutes 34 seconds August 2022 it was like a bucket of ice you
[40:13] 2022 it was like a bucket of ice you know when the chairman chairman Paul
[40:16] know when the chairman chairman Paul really believed we would have to go
[40:17] really believed we would have to go through a recession in order to rid
[40:20] through a recession in order to rid ourselves of this inflation and that's
[40:22] ourselves of this inflation and that's just not been the case much more of it
[40:24] just not been the case much more of it was Supply chains un
[40:26] was Supply chains un uncurling and the problems that we had
[40:29] uncurling and the problems that we had there along with some time to let demand
[40:32] there along with some time to let demand the production pick up with demand and I
[40:34] the production pick up with demand and I think that's important otherwise known
[40:36] think that's important otherwise known as transitory just not called transitory
[40:38] as transitory just not called transitory Greg can you buy into this uh this sense
[40:41] Greg can you buy into this uh this sense said transitory over a much longer
[40:43] said transitory over a much longer period of time Peters can you weigh in a
[40:45] period of time Peters can you weigh in a little bit on whether you think this is
[40:47] little bit on whether you think this is plausible or whether you would lean
[40:49] plausible or whether you would lean against this right now or whether you
[40:50] against this right now or whether you would actually even sell and wait for
[40:52] would actually even sell and wait for for a better buying
[40:54] for a better buying moment I mean I do think the markets are
[40:57] moment I mean I do think the markets are really pushing uh the limits here
[41:00] really pushing uh the limits here there's so much good news being priced
[41:02] there's so much good news being priced in whether it's inflation whether it's
[41:04] in whether it's inflation whether it's growth you know the yield curve is still
[41:07] growth you know the yield curve is still inverted right and so like how do you
[41:09] inverted right and so like how do you reconcile the fact that investors are
[41:12] reconcile the fact that investors are feeling really good about the growth
[41:13] feeling really good about the growth Outlook inflation's coming down and
[41:16] Outlook inflation's coming down and curves inverted and um so I think
[41:18] curves inverted and um so I think there's still some repricing ahead I
[41:21] there's still some repricing ahead I think there's still quite bumpy uh
[41:24] think there's still quite bumpy uh elements uh in the road ahead uh and so
[41:27] elements uh in the road ahead uh and so yeah I'm I'm I'm kind of thinking the
[41:29] yeah I'm I'm I'm kind of thinking the market is really taking this to the
[41:31] market is really taking this to the brink here and I'm and uh I would be
[41:33] brink here and I'm and uh I would be inclined to go the other way Greg I'm
[41:36] inclined to go the other way Greg I'm looking at money market funds 5% and all
[41:38] looking at money market funds 5% and all the other stuff we blather about each
[41:40] the other stuff we blather about each and every day and I know we get
[41:42] and every day and I know we get convexity in the stock market do we get
[41:44] convexity in the stock market do we get convexity in the bond market when I got
[41:46] convexity in the bond market when I got a 10-year real yield popping into
[41:48] a 10-year real yield popping into 1.91 I got the 10year yield on plus
[41:51] 1.91 I got the 10year yield on plus excuse me minus two standard deviations
[41:53] excuse me minus two standard deviations right down on
[41:55] right down on 4.06% can there be such a thing as
[41:57] 4.06% can there be such a thing as momentum in the bond market price up
[42:00] momentum in the bond market price up yield
[42:01] yield down yeah I think you're seeing it Tom I
[42:04] down yeah I think you're seeing it Tom I mean if you look at the total return in
[42:06] mean if you look at the total return in the bond market over the past month or
[42:09] the bond market over the past month or so it's been you know quite astounding
[42:11] so it's been you know quite astounding right you know anywhere from five to you
[42:13] right you know anywhere from five to you know 8% that's real money right uh uh
[42:16] know 8% that's real money right uh uh and so you've seen it and so there has
[42:19] and so you've seen it and so there has been some quote unquote positive
[42:21] been some quote unquote positive convexity just given the low level of
[42:24] convexity just given the low level of prices right but but uh you know the
[42:26] prices right but but uh you know the real question is not what happened but
[42:29] real question is not what happened but where are we going um and so you know
[42:32] where are we going um and so you know once again I worry about uh you know the
[42:34] once again I worry about uh you know the current market really squeezing a lot of
[42:36] current market really squeezing a lot of the toal return out of the market way
[42:39] the toal return out of the market way too soon well look at the move this
[42:40] too soon well look at the move this afternoon a monster move we're down
[42:42] afternoon a monster move we're down almost 20 basis points at the front end
[42:43] almost 20 basis points at the front end of the curve andow me to share a quote
[42:45] of the curve andow me to share a quote with you it would be premature to
[42:47] with you it would be premature to conclude with confidence that we've
[42:48] conclude with confidence that we've achieved a sufficiently restrictive
[42:50] achieved a sufficiently restrictive stance or to speculate on when policy
[42:51] stance or to speculate on when policy might ease chairman pal not even two
[42:54] might ease chairman pal not even two weeks ago on December 1st Diane swung in
[42:57] weeks ago on December 1st Diane swung in 15 16 17 minutes time when we hear from
[43:00] 15 16 17 minutes time when we hear from the chairman again why would the message
[43:02] the chairman again why would the message be any
[43:04] be any different I think he's still going to be
[43:07] different I think he's still going to be cautious in his messaging but you know
[43:09] cautious in his messaging but you know you saw a little bit of the lightness in
[43:11] you saw a little bit of the lightness in his step and we saw the bond market
[43:12] his step and we saw the bond market rally November 1st even though we had
[43:15] rally November 1st even though we had what was a hawkish set of um uh you know
[43:18] what was a hawkish set of um uh you know in September a hawkish Outlook by
[43:21] in September a hawkish Outlook by November 1 you saw the market unwind
[43:24] November 1 you saw the market unwind significantly since then because of how
[43:27] significantly since then because of how euphoric and a little bit um excited
[43:30] euphoric and a little bit um excited that chair Powell was in that press
[43:32] that chair Powell was in that press conference and so I think it's going to
[43:34] conference and so I think it's going to be hard for him to walk back a lot at
[43:36] be hard for him to walk back a lot at this point in time I think it would do
[43:38] this point in time I think it would do him good to be cautious and to be a
[43:41] him good to be cautious and to be a little bit you know contingent on you
[43:43] little bit you know contingent on you know we're we're excited but here's the
[43:45] know we're we're excited but here's the risks but I think it's going to be hard
[43:47] risks but I think it's going to be hard given they signed off on this statement
[43:49] given they signed off on this statement and they signed off on this forecast and
[43:51] and they signed off on this forecast and this is a doish is about as doish as we
[43:54] this is a doish is about as doish as we could have expected I this is is more
[43:56] could have expected I this is is more than I expected in terms of doess and I
[43:58] than I expected in terms of doess and I think it's hard for him to walk it back
[44:00] think it's hard for him to walk it back and I don't think he would be walking it
[44:02] and I don't think he would be walking it back all that much given the fact that
[44:05] back all that much given the fact that they all signed off on it which is the
[44:07] they all signed off on it which is the reason why you're saying he's not going
[44:08] reason why you're saying he's not going to add to it but he's not going to push
[44:10] to add to it but he's not going to push back too much which is the reason why it
[44:12] back too much which is the reason why it it's good point that you're seeing an 18
[44:13] it's good point that you're seeing an 18 basis point drop in the two-year yield
[44:16] basis point drop in the two-year yield as time goes on 5.5
[44:18] as time goes on 5.5 4.54% Greg you said you'd push back
[44:21] 4.54% Greg you said you'd push back against this the Market's really taking
[44:22] against this the Market's really taking this to the brink what makes you feel
[44:24] this to the brink what makes you feel that way and what could you hear from
[44:26] that way and what could you hear from chair Powell that could change your
[44:28] chair Powell that could change your mind well so I'm not sure I'm going to
[44:30] mind well so I'm not sure I'm going to hear much from chair Powell you know as
[44:32] hear much from chair Powell you know as I mentioned I think uh uh the Genie's
[44:34] I mentioned I think uh uh the Genie's out of the bottle I think it's hard to
[44:36] out of the bottle I think it's hard to walk this back I think at some level uh
[44:40] walk this back I think at some level uh he is quite pleased and rightfully so
[44:42] he is quite pleased and rightfully so right they've seen a tremendous amount
[44:44] right they've seen a tremendous amount of disinflation come through uh during
[44:46] of disinflation come through uh during the course of this year and that's
[44:48] the course of this year and that's something to be proud of but I guess
[44:49] something to be proud of but I guess just from a market pricing fixed income
[44:51] just from a market pricing fixed income perspective you know do we really want
[44:53] perspective you know do we really want to be in an environment where we're
[44:55] to be in an environment where we're we're taking down yield so aggressively
[44:57] we're taking down yield so aggressively where we're basically have to see uh uh
[45:01] where we're basically have to see uh uh these rate Cuts come through uh and then
[45:04] these rate Cuts come through uh and then some in order to achieve C return so you
[45:07] some in order to achieve C return so you know to me it's just a balance about
[45:09] know to me it's just a balance about risk reward and what's embedded in the
[45:11] risk reward and what's embedded in the price and I think quite frankly there's
[45:13] price and I think quite frankly there's a lot of good news uh embedded in the
[45:16] a lot of good news uh embedded in the price and that's always uh something
[45:18] price and that's always uh something that you should uh you know take a step
[45:21] that you should uh you know take a step back a ton of good news priced in over
[45:23] back a ton of good news priced in over the last month Greg Peters Dian swung
[45:25] the last month Greg Peters Dian swung two of the very best going into this
[45:26] two of the very best going into this Federal Reserve news conference with
[45:28] Federal Reserve news conference with chairman pal in about 14 minutes time
[45:30] chairman pal in about 14 minutes time thanks to both of you let's talk about
[45:32] thanks to both of you let's talk about these moves no big changes to that
[45:34] these moves no big changes to that statement no change in the decision but
[45:36] statement no change in the decision but some monster changes to the projections
[45:39] some monster changes to the projections take 2024 for instance fed funds median
[45:42] take 2024 for instance fed funds median dot now
[45:43] dot now 4.6% back in September that was 5.1 this
[45:47] 4.6% back in September that was 5.1 this is a Fed it's a median dot implying that
[45:49] is a Fed it's a median dot implying that maybe three cuts are in our future from
[45:51] maybe three cuts are in our future from this Federal Reserve the market may be
[45:53] this Federal Reserve the market may be 50 basis points lower than that but
[45:55] 50 basis points lower than that but ultimately so we've closed the Gap and
[45:57] ultimately so we've closed the Gap and we've endorsed the direction of travel
[45:59] we've endorsed the direction of travel over the last 6 weeks which is why
[46:00] over the last 6 weeks which is why you've got this monster move again on a
[46:02] you've got this monster move again on a 2-year by 19 basis points of 453 so if
[46:04] 2-year by 19 basis points of 453 so if you don't stop the direction if you
[46:06] you don't stop the direction if you don't stop the momentum what happens you
[46:08] don't stop the momentum what happens you do more the same day you Lisa it's now
[46:10] do more the same day you Lisa it's now what's happening which is what PRI misra
[46:12] what's happening which is what PRI misra said that this was the asymmetry and
[46:14] said that this was the asymmetry and this is what Greg Peters uh as well as
[46:16] this is what Greg Peters uh as well as Diane Swank both said which is it was
[46:18] Diane Swank both said which is it was more than they expected and certainly
[46:19] more than they expected and certainly more than the market expected and the
[46:21] more than the market expected and the market is cheering basically this
[46:24] market is cheering basically this message is that chair Powell cannot walk
[46:26] message is that chair Powell cannot walk this back the rest of the FED members
[46:28] this back the rest of the FED members put this in so he either leans in he
[46:30] put this in so he either leans in he either gives an explanation of weakening
[46:32] either gives an explanation of weakening in the economy that isn't seen in the in
[46:34] in the economy that isn't seen in the in the projections or he kind of
[46:36] the projections or he kind of equivocates and and basically is you
[46:39] equivocates and and basically is you know circling around with his tail and
[46:41] know circling around with his tail and no D Rance macro super modest do you
[46:43] no D Rance macro super modest do you want the quote complete Vindication of a
[46:45] want the quote complete Vindication of a March cut 95 is a good analog surgical
[46:49] March cut 95 is a good analog surgical cuts are coming buckle up risk appetite
[46:51] cuts are coming buckle up risk appetite has room to run well did he nail it he
[46:53] has room to run well did he nail it he nailed it for sure check out the scores
[46:55] nailed it for sure check out the scores going into into the news conference on
[46:56] going into into the news conference on the S&P 50000 fourth day of gains on the
[46:59] the S&P 50000 fourth day of gains on the cards unless chairman pal messes that up
[47:01] cards unless chairman pal messes that up for you on the S&P 500 up by 6% on the
[47:04] for you on the S&P 500 up by 6% on the S&P into the bond market I know we've
[47:06] S&P into the bond market I know we've seen some big moves in fixed income but
[47:09] seen some big moves in fixed income but these are big moves again we down 20
[47:10] these are big moves again we down 20 basis points on a 2-year 453 53 we've
[47:14] basis points on a 2-year 453 53 we've seen big moves coming into today's
[47:16] seen big moves coming into today's decision we're down large again we're
[47:17] decision we're down large again we're down 12 on a 10e at
[47:19] down 12 on a 10e at 4.08% let's continue the conversation
[47:21] 4.08% let's continue the conversation with Bank of America's Michael gapen
[47:23] with Bank of America's Michael gapen sadra Jappa of sojen sadra first to you
[47:26] sadra Jappa of sojen sadra first to you you've had some time to chew over this
[47:28] you've had some time to chew over this one what's your take on
[47:29] one what's your take on it yeah definitely the the the doish in
[47:33] it yeah definitely the the the doish in the dots caught me by surprise um but I
[47:36] the dots caught me by surprise um but I think it seems like they're looking at
[47:39] think it seems like they're looking at inflation starting to come down maybe
[47:41] inflation starting to come down maybe they looking at 3mon and six-month
[47:43] they looking at 3mon and six-month moving averages and doing exactly what
[47:45] moving averages and doing exactly what they did uh a couple of years back when
[47:48] they did uh a couple of years back when uh you know they were looking at 3 month
[47:49] uh you know they were looking at 3 month and six- Monon moving averages which
[47:51] and six- Monon moving averages which were running a lot harder than the
[47:52] were running a lot harder than the market and uh and so they had to come in
[47:55] market and uh and so they had to come in and start start hiking so I think you're
[47:57] and start start hiking so I think you're looking at a very similar scenario here
[47:59] looking at a very similar scenario here where uh they're willing it seems to
[48:02] where uh they're willing it seems to adjust policy um given the data that we
[48:05] adjust policy um given the data that we have right now on inflation Michael Gap
[48:08] have right now on inflation Michael Gap and thrilled to have you with us
[48:10] and thrilled to have you with us particularly with the reach of the Bank
[48:11] particularly with the reach of the Bank of America across all of America the
[48:15] of America across all of America the consumer the pulse of our 70%
[48:18] consumer the pulse of our 70% consumption do you buy this idea of the
[48:21] consumption do you buy this idea of the massive potential GDP slowdown of the
[48:24] massive potential GDP slowdown of the next two years sub 2% real
[48:27] next two years sub 2% real GDP inflation that's quiescent nominal
[48:30] GDP inflation that's quiescent nominal GDP that's 4% if we're lucky is that the
[48:33] GDP that's 4% if we're lucky is that the evidence that the Bank of America
[48:36] evidence that the Bank of America sees on balance yes um so the our BFA uh
[48:41] sees on balance yes um so the our BFA uh card data has been showing resiliency in
[48:44] card data has been showing resiliency in consumer spending and pretty good
[48:45] consumer spending and pretty good holiday spend so our view is the
[48:48] holiday spend so our view is the Slowdown if we get one is going to come
[48:50] Slowdown if we get one is going to come in your non-consumer related components
[48:52] in your non-consumer related components business spending the the fiscal drag
[48:54] business spending the the fiscal drag and so forth uh so it we think it's
[48:57] and so forth uh so it we think it's possible we think the narrative around
[48:58] possible we think the narrative around the idea that you don't need as much
[49:00] the idea that you don't need as much labor market pain to bring inflation
[49:02] labor market pain to bring inflation down the the data is kind of confirming
[49:05] down the the data is kind of confirming that and it it's it matches with what
[49:06] that and it it's it matches with what we're seeing from from our card data and
[49:09] we're seeing from from our card data and and around the health of the consumer so
[49:11] and around the health of the consumer so yes the economic activity should
[49:13] yes the economic activity should moderate even personal consumption
[49:15] moderate even personal consumption spending should slow but we've gotten a
[49:17] spending should slow but we've gotten a lot of evidence here now over the past
[49:19] lot of evidence here now over the past few months that maybe we don't need to
[49:21] few months that maybe we don't need to crimp demand as much to return inflation
[49:23] crimp demand as much to return inflation to 2% and we can allow some of these
[49:26] to 2% and we can allow some of these supply side factors whether it's supply
[49:28] supply side factors whether it's supply chain or the rebound in the labor force
[49:30] chain or the rebound in the labor force to to help us out Michael could this
[49:32] to to help us out Michael could this riping rally go against that could it
[49:34] riping rally go against that could it make it more difficult to achieve the
[49:36] make it more difficult to achieve the actual end of the soft Landing by
[49:39] actual end of the soft Landing by rejuvenating certain demand and
[49:41] rejuvenating certain demand and rejuvenating Animal
[49:43] rejuvenating Animal Spirits I possibly but I I think you
[49:46] Spirits I possibly but I I think you know from a the FED kind of modulates
[49:48] know from a the FED kind of modulates Demand right that they don't really
[49:50] Demand right that they don't really control the supply side as much and so I
[49:53] control the supply side as much and so I think what the balance here is to say
[49:56] think what the balance here is to say okay maybe maybe demand picks up a
[49:58] okay maybe maybe demand picks up a little bit but that's probably more
[49:59] little bit but that's probably more about the timing of the cuts and the
[50:01] about the timing of the cuts and the pace of the cuts and that end terminal
[50:03] pace of the cuts and that end terminal rate rather than the direction of travel
[50:06] rate rather than the direction of travel so yes there's a risk that things would
[50:07] so yes there's a risk that things would ease too quickly the fed prejudges this
[50:10] ease too quickly the fed prejudges this and they have to come back later and
[50:11] and they have to come back later and backtrack that's going to be around the
[50:13] backtrack that's going to be around the the wait and see and how much confidence
[50:15] the wait and see and how much confidence that that they have in order to start a
[50:17] that that they have in order to start a cutting cycle but I think that's more
[50:19] cutting cycle but I think that's more about the timing and the pace of cuts
[50:21] about the timing and the pace of cuts than it is about having to backtrack
[50:23] than it is about having to backtrack subadra you and many other people were
[50:25] subadra you and many other people were expecting hawkish push back that was
[50:26] expecting hawkish push back that was actually the consensus belief coming
[50:28] actually the consensus belief coming into this meeting does anything about
[50:31] into this meeting does anything about this statement make you rethink how you
[50:34] this statement make you rethink how you would respond to this that basically
[50:35] would respond to this that basically load the boat fomo is on let's
[50:38] load the boat fomo is on let's go yeah I know definitely I mean I think
[50:40] go yeah I know definitely I mean I think the fomo trades already happened right
[50:42] the fomo trades already happened right we've had 10 years uh decline from 5%
[50:45] we've had 10 years uh decline from 5% all the way down to now close to 4% in a
[50:48] all the way down to now close to 4% in a very short amount of time um so you know
[50:51] very short amount of time um so you know I think I I would have to agree with
[50:53] I think I I would have to agree with this the statement you read from Neil
[50:55] this the statement you read from Neil data earlier which is maybe the market
[50:57] data earlier which is maybe the market is looking towards a much more of a an
[51:00] is looking towards a much more of a an adjustment in policy as we go along uh
[51:03] adjustment in policy as we go along uh mot sou prandi uh from the FED I mean
[51:06] mot sou prandi uh from the FED I mean that's not our view we still think that
[51:09] that's not our view we still think that the FED is going to keep policy on hold
[51:11] the FED is going to keep policy on hold at least till till May till they see a
[51:13] at least till till May till they see a very clear signal that inflation is
[51:16] very clear signal that inflation is trending towards their 2% Target and we
[51:19] trending towards their 2% Target and we think that the economy broadly speaking
[51:20] think that the economy broadly speaking should hold up up up until that point
[51:23] should hold up up up until that point because it's I mean once we get to that
[51:25] because it's I mean once we get to that point I think the FED can very quickly
[51:27] point I think the FED can very quickly cut rates in a very short amount of time
[51:29] cut rates in a very short amount of time if there is a meaningful slowdown the
[51:31] if there is a meaningful slowdown the risk is that if they deliver these cuts
[51:32] risk is that if they deliver these cuts too soon then you could see perhaps a
[51:37] too soon then you could see perhaps a Resurgence of the sort of services side
[51:39] Resurgence of the sort of services side inflation that we've been experiencing
[51:41] inflation that we've been experiencing over the last couple of years John I'm
[51:43] over the last couple of years John I'm going to predict that everybody's going
[51:44] going to predict that everybody's going to go in and they're going to blow up
[51:46] to go in and they're going to blow up their call they're going to blow up
[51:47] their call they're going to blow up their year end Outlook I hear all this
[51:49] their year end Outlook I hear all this good talk I think Michael gapen is
[51:51] good talk I think Michael gapen is absolutely dead on you think it gets
[51:52] absolutely dead on you think it gets more bullish than it already is it's not
[51:54] more bullish than it already is it's not that it's bu this is this is really
[51:56] that it's bu this is this is really really important this goes back to Diane
[51:57] really important this goes back to Diane Swank Gino Martin Adams and others this
[52:00] Swank Gino Martin Adams and others this to me is far more a real economy
[52:02] to me is far more a real economy analysis redounding back to these
[52:04] analysis redounding back to these Dynamics in the last two minutes John I
[52:07] Dynamics in the last two minutes John I got a 407 retest of the 10-year yield
[52:10] got a 407 retest of the 10-year yield down 13 beefs if that Poppy breaks
[52:12] down 13 beefs if that Poppy breaks through
[52:13] through 4.06 that is a massive signal that
[52:18] 4.06 that is a massive signal that everybody has to rip up the script this
[52:20] everybody has to rip up the script this afternoon we joked earli this morning
[52:22] afternoon we joked earli this morning that if the party started at the end of
[52:23] that if the party started at the end of October Governor Waller brought the Kea
[52:25] October Governor Waller brought the Kea in the last couple of weeks it's not him
[52:27] in the last couple of weeks it's not him I don't think we need to talk about I
[52:29] I don't think we need to talk about I think we need to be talking about New
[52:30] think we need to be talking about New York fed President John Williams Mike I
[52:33] York fed President John Williams Mike I remember when President Williams a
[52:34] remember when President Williams a number of months ago engaged a
[52:36] number of months ago engaged a conversation about reducing interest
[52:37] conversation about reducing interest rates as inflation continue to fall just
[52:40] rates as inflation continue to fall just to keep real rates stable and to ensure
[52:43] to keep real rates stable and to ensure that things didn't become tighter over
[52:45] that things didn't become tighter over time is it too early too premature for
[52:47] time is it too early too premature for chairman power to engage in that type of
[52:49] chairman power to engage in that type of conversation in this news
[52:51] conversation in this news conference I don't I mean that so maybe
[52:54] conference I don't I mean that so maybe I'm a bit of a cont AR in here because
[52:56] I'm a bit of a cont AR in here because we you know we thought the median dot
[52:57] we you know we thought the median dot would come in at 46 we expected a shift
[52:59] would come in at 46 we expected a shift in communication so what I'm hearing
[53:02] in communication so what I'm hearing today so far is in line with what I
[53:04] today so far is in line with what I thought so I do think it would be a
[53:06] thought so I do think it would be a proper first step to get out of a a
[53:08] proper first step to get out of a a hawkish bias and a hiking bias and then
[53:11] hawkish bias and a hiking bias and then start getting into a world of you know
[53:13] start getting into a world of you know talking at least about a more balanced
[53:15] talking at least about a more balanced reaction function not ruling out hikes
[53:18] reaction function not ruling out hikes but also talking about conditions under
[53:20] but also talking about conditions under under which you might ease you have to
[53:22] under which you might ease you have to start moving in that direction inflation
[53:24] start moving in that direction inflation at least at the moment is decelerating
[53:27] at least at the moment is decelerating fast enough where it's not crazy to
[53:29] fast enough where it's not crazy to think you could cut in March if you're a
[53:31] think you could cut in March if you're a Committee Member based on inflation
[53:33] Committee Member based on inflation alone so there's not a lot of time to
[53:35] alone so there's not a lot of time to prepare between now and then so it's
[53:37] prepare between now and then so it's something I think you do need to
[53:38] something I think you do need to entertain subadra I'm curious your view
[53:41] entertain subadra I'm curious your view on something we were hearing from Dian
[53:42] on something we were hearing from Dian Swan that this sort of soft Landing
[53:45] Swan that this sort of soft Landing implies actually a higher long-term
[53:47] implies actually a higher long-term neutral rate that essentially there is
[53:49] neutral rate that essentially there is more strength in this economy that can
[53:51] more strength in this economy that can handle rates at a higher level are you
[53:53] handle rates at a higher level are you seeing that Within some of these
[53:55] seeing that Within some of these projections and kind of adjusting your
[53:58] projections and kind of adjusting your expectation just for that base of where
[54:00] expectation just for that base of where the fed's going to ultimately cut
[54:02] the fed's going to ultimately cut to yeah that's and we I completely agree
[54:06] to yeah that's and we I completely agree with that I mean our view is that the
[54:08] with that I mean our view is that the FED will cut rates by 150 basis points
[54:11] FED will cut rates by 150 basis points next year and there will be more Cuts in
[54:14] next year and there will be more Cuts in 2025 uh with the FED funds rate getting
[54:18] 2025 uh with the FED funds rate getting a little bit north of 3% so that's you
[54:20] a little bit north of 3% so that's you know pretty much getting down to where
[54:23] know pretty much getting down to where they have their long run neutral rate 2
[54:25] they have their long run neutral rate 2 and a half per. so that sort of
[54:28] and a half per. so that sort of trajectory makes sense the question
[54:30] trajectory makes sense the question really is what does the curve do under
[54:32] really is what does the curve do under the circumstances and that's really
[54:34] the circumstances and that's really where I feel like there's the story of
[54:36] where I feel like there's the story of the rebuild and term Premia is still
[54:38] the rebuild and term Premia is still very much in in play because the demand
[54:40] very much in in play because the demand Dynamics are still very skewed we still
[54:42] Dynamics are still very skewed we still have a decent amount of supply and I
[54:44] have a decent amount of supply and I think that that could lead to a
[54:45] think that that could lead to a meaningful steepening of the curve while
[54:48] meaningful steepening of the curve while that while the cutting happens so BR to
[54:50] that while the cutting happens so BR to the heritage of derivatives at sck gen
[54:54] the heritage of derivatives at sck gen where I I I have no idea where this
[54:56] where I I I have no idea where this happens but if we have a what is it Lisa
[54:59] happens but if we have a what is it Lisa the money market fund now 5 point what
[55:01] the money market fund now 5 point what well 5
[55:04] well 5 5.3 at what point s s if we bring the
[55:08] 5.3 at what point s s if we bring the money market fund down does a wall of
[55:11] money market fund down does a wall of money try to find a new warm
[55:14] money try to find a new warm place yeah that's that's the risk right
[55:16] place yeah that's that's the risk right we have almost six trillion in Money
[55:18] we have almost six trillion in Money Market funds that money if the returns
[55:21] Market funds that money if the returns are not attractive are going to try to
[55:23] are not attractive are going to try to migrate towards other parts of of the
[55:26] migrate towards other parts of of the yield curve or give me a level I mean is
[55:30] yield curve or give me a level I mean is s this is so important is this going to
[55:32] s this is so important is this going to happen at 4.8% do we got to wait wait
[55:35] happen at 4.8% do we got to wait wait wait for 3.8% when is the money market
[55:37] wait for 3.8% when is the money market game
[55:39] game over well when the curve dis inverts
[55:41] over well when the curve dis inverts perhaps um at the current time twoyear
[55:44] perhaps um at the current time twoyear yields is still higher than than where
[55:47] yields is still higher than than where 10year yields are and so you're going to
[55:49] 10year yields are and so you're going to see money continue to flow into into the
[55:52] see money continue to flow into into the very front end of the yield curve at
[55:54] very front end of the yield curve at some point I think it I think that uh
[55:56] some point I think it I think that uh when the market when when Cuts have been
[55:59] when the market when when Cuts have been uh sufficient Cuts have been delivered
[56:01] uh sufficient Cuts have been delivered and it's been stimulative I think that
[56:02] and it's been stimulative I think that the that you're going to see that money
[56:04] the that you're going to see that money migrate towards uh risky assets or other
[56:07] migrate towards uh risky assets or other high yielding assets uh but at at the
[56:10] high yielding assets uh but at at the current time you know with the Curve
[56:11] current time you know with the Curve inverted I think that the front end
[56:13] inverted I think that the front end still looks quite attractive to us on a
[56:15] still looks quite attractive to us on a duration adjusted basis Let's Play
[56:17] duration adjusted basis Let's Play Questions for chairman po the news
[56:18] Questions for chairman po the news conference about three minutes away
[56:19] conference about three minutes away Michael gapen what would you ask
[56:23] Michael gapen what would you ask today uh I mean I would ask kind of what
[56:25] today uh I mean I would ask kind of what you one question would be what you're
[56:27] you one question would be what you're referencing essentially what is what's
[56:30] referencing essentially what is what's the purpose of the cutting cycle to get
[56:31] the purpose of the cutting cycle to get policy easy to to track a a real rate of
[56:35] policy easy to to track a a real rate of interest that you think is appropriate
[56:37] interest that you think is appropriate if so what what's that rate the second I
[56:40] if so what what's that rate the second I would ask him is policy really
[56:42] would ask him is policy really restrictive what what evidence outside
[56:44] restrictive what what evidence outside of housing do you have to suggest that
[56:47] of housing do you have to suggest that that policy is currently restrictive so
[56:49] that policy is currently restrictive so that'd be a bit of a counterfactual to
[56:52] that'd be a bit of a counterfactual to to his View and and otherwise the third
[56:54] to his View and and otherwise the third question I'd ask is is you know is it is
[56:55] question I'd ask is is you know is it is it feasible just to make it clear Is it
[56:57] it feasible just to make it clear Is it feasible to cut on the inflation data
[56:59] feasible to cut on the inflation data alone or do you need to see weakness in
[57:02] alone or do you need to see weakness in activity in the labor market those are
[57:04] activity in the labor market those are three I would Pro you don't get three
[57:05] three I would Pro you don't get three Mike you're lucky if you get two if you
[57:06] Mike you're lucky if you get two if you might M you're lucky if you get one
[57:08] might M you're lucky if you get one Sandra give us the final word what would
[57:10] Sandra give us the final word what would you ask
[57:11] you ask today I'd be curious to see if the FED
[57:13] today I'd be curious to see if the FED would be inclined to deliver sort of you
[57:17] would be inclined to deliver sort of you know adjustments in policy like they did
[57:19] know adjustments in policy like they did back in the 90s because that's something
[57:21] back in the 90s because that's something that the market is looking towards is
[57:22] that the market is looking towards is perhaps they they adjust the stay on
[57:25] perhaps they they adjust the stay on hold and then they cut some more if
[57:27] hold and then they cut some more if needed uh so it's not sort of your
[57:29] needed uh so it's not sort of your conventional cycle I think to me that's
[57:31] conventional cycle I think to me that's a very underpriced risk in the market as
[57:33] a very underpriced risk in the market as a 90s style rate cut cycle sabadra
[57:37] a 90s style rate cut cycle sabadra japper Michael gapen to the two of you
[57:39] japper Michael gapen to the two of you thank you just brilliant as always
[57:41] thank you just brilliant as always Michael gapen over at Bank of America
[57:42] Michael gapen over at Bank of America back in the seat and good to see
[57:44] back in the seat and good to see absolutely n it looking for three cuts
[57:46] absolutely n it looking for three cuts to go into that median dot in 2024 and
[57:48] to go into that median dot in 2024 and least I think he's right to talk about
[57:50] least I think he's right to talk about not just dates but thresholds what is
[57:53] not just dates but thresholds what is the bar where is the bar for when you
[57:55] the bar where is the bar for when you start to deliver those cuts what are you
[57:56] start to deliver those cuts what are you looking for and now you've priced that
[57:58] looking for and now you've priced that implied that in your projections have
[57:59] implied that in your projections have they got to engage in that conversation
[58:01] they got to engage in that conversation over the next hour yeah is lower
[58:02] over the next hour yeah is lower inflation enough right just by de facto
[58:05] inflation enough right just by de facto or do they have to see some other uh
[58:06] or do they have to see some other uh sort of weakness and what are the
[58:08] sort of weakness and what are the parameters what are the levels these are
[58:10] parameters what are the levels these are important questions I also just think
[58:12] important questions I also just think that right now what's he going to say
[58:15] that right now what's he going to say other than just read it and we've got
[58:17] other than just read it and we've got some sort of uh you know new sense that
[58:19] some sort of uh you know new sense that we are disinf lating and it's a positive
[58:21] we are disinf lating and it's a positive thing and we'll be vigilant and watch it
[58:24] thing and we'll be vigilant and watch it and go with where we think it's
[58:26] and go with where we think it's approprate as I heard from our guests
[58:27] approprate as I heard from our guests they did not expect this I did not
[58:29] they did not expect this I did not expect this this is a sea change shift
[58:33] expect this this is a sea change shift back to the regime pre pandemic and John
[58:36] back to the regime pre pandemic and John you nailed it bringing up John Williams
[58:38] you nailed it bringing up John Williams and the idea months ago of a shocking
[58:41] and the idea months ago of a shocking reset to the arstar
[58:44] reset to the arstar before the pandemic and today is a
[58:48] before the pandemic and today is a massive shift a sea change moment in
[58:51] massive shift a sea change moment in terms of getting beyond the pandemic I
[58:53] terms of getting beyond the pandemic I went over this quote a little bit early
[58:55] went over this quote a little bit early this morning and as we take the pictures
[58:57] this morning and as we take the pictures and wait to see chairman poell into that
[58:59] and wait to see chairman poell into that room in Washington DC I want to reflect
[59:01] room in Washington DC I want to reflect on the quote of chairman Pals not even
[59:04] on the quote of chairman Pals not even two weeks ago it would be premature to
[59:06] two weeks ago it would be premature to conclude with confidence that we have
[59:08] conclude with confidence that we have achieved a sufficiently restrictive
[59:09] achieved a sufficiently restrictive stance or to speculate on when policy
[59:12] stance or to speculate on when policy might ease Lisa you wonder what changed
[59:15] might ease Lisa you wonder what changed in the last two weeks Omar Sharie of
[59:17] in the last two weeks Omar Sharie of inflation insights actually put out that
[59:19] inflation insights actually put out that quote just moments ago and it says it
[59:21] quote just moments ago and it says it turns out it wasn't premature at all and
[59:23] turns out it wasn't premature at all and so if that's the case what has shifted
[59:25] so if that's the case what has shifted was it the CPI and the PPI data can he
[59:28] was it the CPI and the PPI data can he say there just has been enough
[59:29] say there just has been enough cumulative data to suggest that this is
[59:32] cumulative data to suggest that this is a trend and not necessarily A oneoff
[59:34] a trend and not necessarily A oneoff watching for chairman Paul here on
[59:35] watching for chairman Paul here on Bloomberg Radio and you know I I would
[59:37] Bloomberg Radio and you know I I would say Lisa that what's so important here
[59:39] say Lisa that what's so important here is the massive Street short cover of
[59:42] is the massive Street short cover of many different asset classes of people
[59:44] many different asset classes of people that got this wrong we have as we speak
[59:47] that got this wrong we have as we speak in the this this press conference many
[59:50] in the this this press conference many two standard deviation moves that's not
[59:52] two standard deviation moves that's not expected you think we're still covering
[59:54] expected you think we're still covering those shorts after the move we've seen
[59:55] those shorts after the move we've seen over the last month I this is a resort
[59:57] over the last month I this is a resort precisely right John somebody's stepping
[59:59] precisely right John somebody's stepping the chairman of the Federal Reserve
[01:00:00] the chairman of the Federal Reserve let's take a
[01:00:03] listen good
[01:00:06] listen good afternoon my colleagues and I remain
[01:00:08] afternoon my colleagues and I remain squarely focused on our dual mandate to
[01:00:10] squarely focused on our dual mandate to promote maximum employment and stable
[01:00:13] promote maximum employment and stable prices for the American
[01:00:15] prices for the American people as we approach the end of the
[01:00:17] people as we approach the end of the year it's natural to look back on the
[01:00:19] year it's natural to look back on the progress that has been made toward our
[01:00:21] progress that has been made toward our dual mandate
[01:00:23] dual mandate objectives inflation has eased from its
[01:00:25] objectives inflation has eased from its highs and this has come without a
[01:00:27] highs and this has come without a significant increase in unemployment
[01:00:30] significant increase in unemployment that's very good
[01:00:31] that's very good news but inflation is still too high
[01:00:34] news but inflation is still too high ongoing progress in bringing it down is
[01:00:36] ongoing progress in bringing it down is not assured and the path forward is
[01:00:40] not assured and the path forward is uncertain as we look ahead to next year
[01:00:43] uncertain as we look ahead to next year I want to assure the American people
[01:00:44] I want to assure the American people that we're fully committed to returning
[01:00:46] that we're fully committed to returning inflation to our 2%
[01:00:48] inflation to our 2% goal restoring price stability is
[01:00:51] goal restoring price stability is essential to achieve a sustained period
[01:00:53] essential to achieve a sustained period of strong labor market market conditions
[01:00:55] of strong labor market market conditions that benefit
[01:00:57] that benefit all since early last year the fomc has
[01:01:00] all since early last year the fomc has significantly tightened The Stance of
[01:01:02] significantly tightened The Stance of monetary policy we've raised our policy
[01:01:04] monetary policy we've raised our policy interest rate by 5 and a quar percentage
[01:01:06] interest rate by 5 and a quar percentage points and have continued to reduce our
[01:01:08] points and have continued to reduce our Securities Holdings at a Brisk
[01:01:11] Securities Holdings at a Brisk Pace our actions have moved our policy
[01:01:14] Pace our actions have moved our policy rate well into restrictive territory
[01:01:16] rate well into restrictive territory meaning that tight policy is putting
[01:01:18] meaning that tight policy is putting downward pressure on economic activity
[01:01:20] downward pressure on economic activity and inflation and the full effects of
[01:01:22] and inflation and the full effects of our tightening likely have not yet been
[01:01:25] our tightening likely have not yet been felt today we decided to leave our
[01:01:28] felt today we decided to leave our policy interest rate unchanged and to
[01:01:30] policy interest rate unchanged and to continue to reduce our Securities
[01:01:32] continue to reduce our Securities Holdings given how far we have come
[01:01:34] Holdings given how far we have come along with the uncertainties and risks
[01:01:36] along with the uncertainties and risks that we Face the committee is proceeding
[01:01:39] that we Face the committee is proceeding carefully we will make decisions about
[01:01:41] carefully we will make decisions about the extent of any additional policy
[01:01:43] the extent of any additional policy firming and how long policy will remain
[01:01:46] firming and how long policy will remain restrictive based on the totality of the
[01:01:48] restrictive based on the totality of the incoming data the evolving Outlook and
[01:01:51] incoming data the evolving Outlook and the balance of
[01:01:52] the balance of risks I will have more more to say about
[01:01:55] risks I will have more more to say about monetary policy after briefly reviewing
[01:01:57] monetary policy after briefly reviewing economic
[01:01:59] economic developments recent indicators suggest
[01:02:01] developments recent indicators suggest that growth of economic activity has
[01:02:03] that growth of economic activity has slowed substantially from the outsized
[01:02:05] slowed substantially from the outsized pace seen in the third
[01:02:07] pace seen in the third quarter even so GDP is on track to
[01:02:10] quarter even so GDP is on track to expand around 2 and a half% for the year
[01:02:12] expand around 2 and a half% for the year as a whole bolstered by strong consumer
[01:02:15] as a whole bolstered by strong consumer demand as well as improving Supply
[01:02:18] demand as well as improving Supply conditions after picking somewhat over
[01:02:20] conditions after picking somewhat over the up somewh over the summer activity
[01:02:22] the up somewh over the summer activity in the housing sector has flattened out
[01:02:25] in the housing sector has flattened out and remains well below the levels of a
[01:02:26] and remains well below the levels of a year ago largely reflecting higher
[01:02:29] year ago largely reflecting higher mortgage
[01:02:30] mortgage rates higher interest rates also appear
[01:02:33] rates higher interest rates also appear to be weighing on business fixed
[01:02:35] to be weighing on business fixed investment in our summary of economic
[01:02:37] investment in our summary of economic projections committee participants
[01:02:39] projections committee participants revised up their assessments of GDP
[01:02:41] revised up their assessments of GDP growth this year but expect growth to
[01:02:44] growth this year but expect growth to cool with the median projection falling
[01:02:46] cool with the median projection falling to 1.4% next
[01:02:49] to 1.4% next year the labor market remains tight but
[01:02:51] year the labor market remains tight but supply and demand conditions continue to
[01:02:53] supply and demand conditions continue to come into a better
[01:02:55] come into a better balance over the past 3 months payroll
[01:02:57] balance over the past 3 months payroll job gains averaged 204,000 jobs per
[01:03:01] job gains averaged 204,000 jobs per month a strong Pace that is nevertheless
[01:03:04] month a strong Pace that is nevertheless below that seen earlier in the
[01:03:06] below that seen earlier in the year the unemployment rate remains low
[01:03:08] year the unemployment rate remains low at
[01:03:10] at 3.7% strong job creation has been
[01:03:13] 3.7% strong job creation has been accompanied by an increase in the supply
[01:03:15] accompanied by an increase in the supply of workers the labor force participation
[01:03:17] of workers the labor force participation rate has moved up since last year
[01:03:20] rate has moved up since last year particularly for individuals aged 25 to
[01:03:23] particularly for individuals aged 25 to 54 years and immigration has returned to
[01:03:26] 54 years and immigration has returned to pre-pandemic
[01:03:28] pre-pandemic levels nominal wage growth appears to be
[01:03:30] levels nominal wage growth appears to be easing and job vacancies have
[01:03:33] easing and job vacancies have declined although the jobs to workers
[01:03:36] declined although the jobs to workers Gap has narrowed labor demand still
[01:03:39] Gap has narrowed labor demand still exceeds the supply of available
[01:03:41] exceeds the supply of available workers fomc participants expect the
[01:03:44] workers fomc participants expect the rebalancing in the labor market to
[01:03:46] rebalancing in the labor market to continue easing upward pressures on
[01:03:50] continue easing upward pressures on inflation the median unemployment rate
[01:03:52] inflation the median unemployment rate projection in the SCP Rises somewhat
[01:03:54] projection in the SCP Rises somewhat from 3.8% at the end of this year to
[01:03:58] from 3.8% at the end of this year to 4.1% at the end of next
[01:04:00] 4.1% at the end of next year inflation has eased over the past
[01:04:03] year inflation has eased over the past year but remains above our longer run
[01:04:05] year but remains above our longer run goal of
[01:04:05] goal of 2% based on the Consumer Price Index and
[01:04:08] 2% based on the Consumer Price Index and other data we estimate that total pce
[01:04:11] other data we estimate that total pce Prices rose 2.6% over the 12 months
[01:04:14] Prices rose 2.6% over the 12 months ending in November and that excluding
[01:04:17] ending in November and that excluding the volatile food and energy categories
[01:04:19] the volatile food and energy categories core PC Prices rose
[01:04:22] core PC Prices rose 3.1% the lower inflation readings over
[01:04:25] 3.1% the lower inflation readings over the past several months are welcome but
[01:04:27] the past several months are welcome but we will need to see further evidence to
[01:04:29] we will need to see further evidence to build confidence that inflation is
[01:04:30] build confidence that inflation is moving down sustainably toward our
[01:04:33] moving down sustainably toward our goal longer term inflation expectations
[01:04:35] goal longer term inflation expectations appear to remain well anchored as
[01:04:38] appear to remain well anchored as reflected in a broad range of surveys of
[01:04:40] reflected in a broad range of surveys of households businesses and forecasters as
[01:04:43] households businesses and forecasters as well as measures from financial
[01:04:46] well as measures from financial markets as is evident from the SCP we
[01:04:49] markets as is evident from the SCP we anticipate that the process of getting
[01:04:50] anticipate that the process of getting inflation all the way to 2% will take
[01:04:52] inflation all the way to 2% will take some time the median projection in the
[01:04:55] some time the median projection in the SCP is 2.8% this year Falls to 2.4% next
[01:04:59] SCP is 2.8% this year Falls to 2.4% next year and reaches 2% in
[01:05:02] year and reaches 2% in 2026 the fed's monetary policy actions
[01:05:05] 2026 the fed's monetary policy actions are Guided by our mandate to promote
[01:05:07] are Guided by our mandate to promote maximum employment and stable prices for
[01:05:10] maximum employment and stable prices for the American people my colleagues and I
[01:05:13] the American people my colleagues and I are acutely aware that high inflation
[01:05:15] are acutely aware that high inflation imposes significant hardship as it
[01:05:17] imposes significant hardship as it erodes purchasing power especially for
[01:05:19] erodes purchasing power especially for those least able to meet the higher
[01:05:21] those least able to meet the higher costs of Essentials like food housing
[01:05:24] costs of Essentials like food housing and
[01:05:25] and transportation we're highly highly
[01:05:27] transportation we're highly highly attentive to the risks that high
[01:05:28] attentive to the risks that high inflation poses to both sides of our
[01:05:30] inflation poses to both sides of our mandate and we are strongly committed to
[01:05:33] mandate and we are strongly committed to returning inflation to our 2%
[01:05:37] objective as I noted earlier since early
[01:05:39] objective as I noted earlier since early last year we have raised our policy rate
[01:05:42] last year we have raised our policy rate by 5 and a quar percentage points and we
[01:05:45] by 5 and a quar percentage points and we have decreased our Securities Holdings
[01:05:46] have decreased our Securities Holdings by more than a trillion
[01:05:49] by more than a trillion dollars our restrictive stance of
[01:05:51] dollars our restrictive stance of monetary policy is putting downward
[01:05:53] monetary policy is putting downward pressure on economic activity and
[01:05:55] pressure on economic activity and inflation the committee decided at
[01:05:57] inflation the committee decided at today's meeting to maintain the target
[01:05:59] today's meeting to maintain the target range for the federal funds rate at 5
[01:06:01] range for the federal funds rate at 5 and a qu to 5 a half% and to continue
[01:06:04] and a qu to 5 a half% and to continue the process of significantly reducing
[01:06:06] the process of significantly reducing our Securities
[01:06:08] our Securities Holdings while while we believe that our
[01:06:10] Holdings while while we believe that our policy rate is likely at or near its
[01:06:12] policy rate is likely at or near its peak for this tightening cycle the
[01:06:15] peak for this tightening cycle the economy has surprised forecasters in
[01:06:16] economy has surprised forecasters in many ways since the pandemic and ongoing
[01:06:19] many ways since the pandemic and ongoing progress sorry ongoing progress toward
[01:06:21] progress sorry ongoing progress toward our 2% inflation objective is not a
[01:06:24] our 2% inflation objective is not a ured we are prepared to tighten policy
[01:06:27] ured we are prepared to tighten policy further if appropriate we're committed
[01:06:29] further if appropriate we're committed to achieving a stance of monetary policy
[01:06:32] to achieving a stance of monetary policy that is sufficiently restrictive to
[01:06:33] that is sufficiently restrictive to bring inflation sustainably down to 2%
[01:06:35] bring inflation sustainably down to 2% over time and to keeping policy
[01:06:37] over time and to keeping policy restrictive until we're confident that
[01:06:40] restrictive until we're confident that inflation is on a path to that
[01:06:43] inflation is on a path to that objective in our SCP uh fomc
[01:06:46] objective in our SCP uh fomc participants wrote down their individual
[01:06:48] participants wrote down their individual assessments of an appropriate path for
[01:06:50] assessments of an appropriate path for the federal funds rate based on what
[01:06:52] the federal funds rate based on what each participant judges to to be the
[01:06:54] each participant judges to to be the most likely scenario going
[01:06:56] most likely scenario going forward while participants do not view
[01:06:58] forward while participants do not view it as likely to be appropriate to raise
[01:07:00] it as likely to be appropriate to raise interest rates further neither do they
[01:07:02] interest rates further neither do they want to take the possibility off the
[01:07:05] want to take the possibility off the table if the economy evolves as
[01:07:07] table if the economy evolves as projected the median participant
[01:07:09] projected the median participant projects that the appropriate level of
[01:07:10] projects that the appropriate level of the federal funds rate will be 4.6% at
[01:07:13] the federal funds rate will be 4.6% at the end of 2024 3.6% at the end of 2025
[01:07:18] the end of 2024 3.6% at the end of 2025 and 2.9% at the end of
[01:07:21] and 2.9% at the end of 2026 still above the median longer term
[01:07:24] 2026 still above the median longer term rate these projections are not a
[01:07:26] rate these projections are not a committee decision or plan if the
[01:07:28] committee decision or plan if the economy does not evolve as projected the
[01:07:31] economy does not evolve as projected the path of policy will adjust as
[01:07:33] path of policy will adjust as appropriate to Foster our maximum
[01:07:34] appropriate to Foster our maximum employment and price stability
[01:07:37] employment and price stability goals in light of the uncertainties and
[01:07:39] goals in light of the uncertainties and risks and how far we have come the
[01:07:41] risks and how far we have come the committee is proceeding carefully we
[01:07:43] committee is proceeding carefully we will continue to make our decisions
[01:07:44] will continue to make our decisions meeting by meeting based on the totality
[01:07:47] meeting by meeting based on the totality of the incoming data and their
[01:07:49] of the incoming data and their implications for the outlook for
[01:07:50] implications for the outlook for economic activity and inflation as well
[01:07:53] economic activity and inflation as well as the balance of
[01:07:54] as the balance of risks in determining the extent of any
[01:07:57] risks in determining the extent of any additional policy firming that may be
[01:07:59] additional policy firming that may be appropriate to return inflation to 2%
[01:08:01] appropriate to return inflation to 2% over time the committee will take into
[01:08:03] over time the committee will take into account the cumulative tightening of
[01:08:04] account the cumulative tightening of monetary policy the lags with which
[01:08:07] monetary policy the lags with which monetary policy affects economic
[01:08:08] monetary policy affects economic activity and inflation and economic and
[01:08:11] activity and inflation and economic and financial
[01:08:12] financial developments we remain committed to
[01:08:14] developments we remain committed to Bringing inflation back down to our 2%
[01:08:17] Bringing inflation back down to our 2% goal and to keeping longer term
[01:08:19] goal and to keeping longer term inflation expectations well anchored
[01:08:23] inflation expectations well anchored restoring price ility is essential to
[01:08:25] restoring price ility is essential to set the stage for achieving maximum
[01:08:27] set the stage for achieving maximum employment and stable prices over the
[01:08:29] employment and stable prices over the longer run to conclude we understand
[01:08:33] longer run to conclude we understand that our actions affect communities
[01:08:34] that our actions affect communities families and businesses across the
[01:08:36] families and businesses across the country everything we do is in service
[01:08:38] country everything we do is in service to our public Mission we at the FED will
[01:08:41] to our public Mission we at the FED will do everything we can to achieve our
[01:08:43] do everything we can to achieve our maximum employment and price stability
[01:08:45] maximum employment and price stability goals thank you I look forward to your
[01:08:49] goals thank you I look forward to your [Music]
[01:08:51] [Music] questions thank you Chris rugaber and uh
[01:08:54] questions thank you Chris rugaber and uh Associated Press I wanted to ask how
[01:08:56] Associated Press I wanted to ask how should we interpret the addition of the
[01:08:58] should we interpret the addition of the word any uh before additional firming in
[01:09:01] word any uh before additional firming in the statement I mean does that mean that
[01:09:03] the statement I mean does that mean that you're pretty much done with rate hikes
[01:09:05] you're pretty much done with rate hikes and the committee has shifted away from
[01:09:07] and the committee has shifted away from a tightening bias and toward a more
[01:09:08] a tightening bias and toward a more neutral stance thank
[01:09:12] you
[01:09:14] you so um specifically on on any um we do
[01:09:18] so um specifically on on any um we do say that in determining the extent of
[01:09:19] say that in determining the extent of any additional policy firming that may
[01:09:21] any additional policy firming that may be appropriate so any additional policy
[01:09:23] be appropriate so any additional policy firming that sentence so we added the
[01:09:25] firming that sentence so we added the word Annie as an acknowledgement that we
[01:09:27] word Annie as an acknowledgement that we believe that we are likely at or near
[01:09:29] believe that we are likely at or near the uh the peak rate for this cycle um
[01:09:34] the uh the peak rate for this cycle um participants didn't write down
[01:09:35] participants didn't write down additional hikes that we believe are
[01:09:37] additional hikes that we believe are likely uh so uh that's what we wrote
[01:09:40] likely uh so uh that's what we wrote down um but participants also uh didn't
[01:09:43] down um but participants also uh didn't want to take the possibility of further
[01:09:45] want to take the possibility of further hikes off the table so that's really
[01:09:46] hikes off the table so that's really what we were
[01:09:50] thinking Mr chairman um oh the
[01:09:53] thinking Mr chairman um oh the microphone sorry
[01:09:54] microphone sorry uh Steve Leeman CNBC happy holidays Mr
[01:09:57] uh Steve Leeman CNBC happy holidays Mr chairman um fed Governor Chris Waller
[01:10:00] chairman um fed Governor Chris Waller said that if inflation continues to fall
[01:10:02] said that if inflation continues to fall then the FED uh in the next several
[01:10:05] then the FED uh in the next several months could be cutting interest rates I
[01:10:07] months could be cutting interest rates I wonder if you could comment on whether
[01:10:09] wonder if you could comment on whether you agree with uh fed Governor Waller on
[01:10:11] you agree with uh fed Governor Waller on that that the FED would become more
[01:10:13] that that the FED would become more restrictive if it didn't cut rates of
[01:10:14] restrictive if it didn't cut rates of inflation fell thank you
[01:10:16] inflation fell thank you sir so of course I I don't comment on uh
[01:10:19] sir so of course I I don't comment on uh on any other officials even those who
[01:10:21] on any other officials even those who who work at the FED um but I but I'll
[01:10:24] who work at the FED um but I but I'll I'll try to answer your your question
[01:10:25] I'll try to answer your your question more broadly um so the way the way we're
[01:10:28] more broadly um so the way the way we're looking at it is is really this uh when
[01:10:31] looking at it is is really this uh when we when we started out right we said uh
[01:10:33] we when we started out right we said uh the first question is how fast to move
[01:10:36] the first question is how fast to move and we moved very fast the second
[01:10:37] and we moved very fast the second question uh is um you know really uh how
[01:10:41] question uh is um you know really uh how high to raise the policy rate and that's
[01:10:43] high to raise the policy rate and that's really the question that we're still on
[01:10:45] really the question that we're still on here uh we're we're very focused on that
[01:10:47] here uh we're we're very focused on that as I as I mentioned U people generally
[01:10:50] as I as I mentioned U people generally think that we're at or near that uh and
[01:10:53] think that we're at or near that uh and and think it's not likely that we will
[01:10:55] and think it's not likely that we will will hike although they don't take that
[01:10:57] will hike although they don't take that possibility off the table so that's when
[01:10:59] possibility off the table so that's when when you get to that question and that's
[01:11:01] when you get to that question and that's your answer uh there's a natural
[01:11:04] your answer uh there's a natural naturally it begins to be the next
[01:11:06] naturally it begins to be the next question which is when it will become
[01:11:08] question which is when it will become appropriate to begin dialing back the
[01:11:10] appropriate to begin dialing back the amount of policy restraint that's in
[01:11:12] amount of policy restraint that's in place so that's really the next question
[01:11:14] place so that's really the next question and that's what people are thinking
[01:11:15] and that's what people are thinking about and and and talking about and I I
[01:11:18] about and and and talking about and I I would just say this um we are seeing uh
[01:11:21] would just say this um we are seeing uh you know strong growth that is that is
[01:11:24] you know strong growth that is that is appears to be moderating we're seeing a
[01:11:25] appears to be moderating we're seeing a labor market that is coming back into
[01:11:27] labor market that is coming back into balance by so many measures and we're
[01:11:29] balance by so many measures and we're seeing inflation making real progress
[01:11:31] seeing inflation making real progress these are the things we've been wanting
[01:11:32] these are the things we've been wanting to see we can't know uh we still have a
[01:11:35] to see we can't know uh we still have a ways to go no one is declaring victory
[01:11:37] ways to go no one is declaring victory that would be premature and we can't be
[01:11:39] that would be premature and we can't be guaranteed to this progress so we're
[01:11:41] guaranteed to this progress so we're we're moving carefully and making that
[01:11:43] we're moving carefully and making that assessment of whether we need to do more
[01:11:45] assessment of whether we need to do more or not um and
[01:11:47] or not um and uh that that's really the question that
[01:11:50] uh that that's really the question that we're on but of course this the other
[01:11:52] we're on but of course this the other question the question of of when will it
[01:11:54] question the question of of when will it be become appropriate to begin dialing
[01:11:56] be become appropriate to begin dialing back the amount of policy restraint in
[01:11:58] back the amount of policy restraint in place that that begins to come into view
[01:12:02] place that that begins to come into view uh and is clearly a discuss topic of
[01:12:04] uh and is clearly a discuss topic of discussion out in the world and and also
[01:12:05] discussion out in the world and and also a discussion for us uh at our meeting
[01:12:08] a discussion for us uh at our meeting today can you give some color as to the
[01:12:11] today can you give some color as to the nature of that discussion today thank
[01:12:12] nature of that discussion today thank you sure so it it it comes up in this
[01:12:16] you sure so it it it comes up in this way today um Everybody wrote down an SCP
[01:12:19] way today um Everybody wrote down an SCP forecast so many people mentioned what
[01:12:22] forecast so many people mentioned what their what their rate for forecast was
[01:12:25] their what their rate for forecast was uh and uh there was no no back and forth
[01:12:28] uh and uh there was no no back and forth no attempt to sort of reach agreement
[01:12:30] no attempt to sort of reach agreement like this is what I wrote down this is
[01:12:31] like this is what I wrote down this is what I think that kind of thing uh and
[01:12:35] what I think that kind of thing uh and preliminary kind of a discussion like
[01:12:36] preliminary kind of a discussion like that not everybody did that but many
[01:12:38] that not everybody did that but many people did and then and I would say
[01:12:40] people did and then and I would say there's a general expectation that this
[01:12:42] there's a general expectation that this will be this will be a topic for us
[01:12:44] will be this will be a topic for us looking ahead that that's really what
[01:12:46] looking ahead that that's really what happened in today's meeting I can't do
[01:12:47] happened in today's meeting I can't do the headcount for you in real time but
[01:12:49] the headcount for you in real time but that's generally what happened today go
[01:12:52] that's generally what happened today go to Rachel
[01:12:56] hi chair Powell Rachel seagull from The
[01:12:57] hi chair Powell Rachel seagull from The Washington Post thanks for taking our
[01:12:59] Washington Post thanks for taking our questions at this point can you
[01:13:01] questions at this point can you confidently say that the economy has
[01:13:03] confidently say that the economy has avoided a recession and isn't heading
[01:13:06] avoided a recession and isn't heading for one now and if the answer is no I'm
[01:13:08] for one now and if the answer is no I'm curious about what you'd still be
[01:13:09] curious about what you'd still be looking
[01:13:12] for I I think you can say that there's
[01:13:15] for I I think you can say that there's little basis for thinking that the
[01:13:16] little basis for thinking that the economy is in a recession
[01:13:18] economy is in a recession now um I would say that I think there's
[01:13:23] now um I would say that I think there's there's always a
[01:13:24] there's always a probability uh that that there will be a
[01:13:27] probability uh that that there will be a recession in the next year and it's a
[01:13:28] recession in the next year and it's a meaningful Pro probability no matter
[01:13:30] meaningful Pro probability no matter what the economy is doing so it's always
[01:13:31] what the economy is doing so it's always a real possibility the question is is is
[01:13:34] a real possibility the question is is is it so so it's a possibility here I have
[01:13:37] it so so it's a possibility here I have always felt since the beginning uh that
[01:13:41] always felt since the beginning uh that there was a possibility because of the
[01:13:44] there was a possibility because of the unusual situation that the economy could
[01:13:47] unusual situation that the economy could cool off uh in a way that enabled
[01:13:51] cool off uh in a way that enabled inflation to come down without the kind
[01:13:53] inflation to come down without the kind of large job losses that have often been
[01:13:55] of large job losses that have often been associated with high inflation and
[01:13:57] associated with high inflation and tightening Cycles so far that's what
[01:14:00] tightening Cycles so far that's what we're seeing that's what many
[01:14:01] we're seeing that's what many forecasters on and off the committee are
[01:14:03] forecasters on and off the committee are seeing this result is not guaranteed it
[01:14:05] seeing this result is not guaranteed it is it is uh far too early to declare
[01:14:08] is it is uh far too early to declare Victory um and there are certainly risks
[01:14:11] Victory um and there are certainly risks it's certainly possible that that uh
[01:14:13] it's certainly possible that that uh that the economy will behave in an
[01:14:15] that the economy will behave in an unexpected way it has done that
[01:14:16] unexpected way it has done that repeatedly through the post in the
[01:14:18] repeatedly through the post in the post-pandemic period nonetheless where
[01:14:21] post-pandemic period nonetheless where we are is is we see
[01:14:24] we are is is we see the things that I that I mentioned I'm
[01:14:26] the things that I that I mentioned I'm curious if you're looking back on the
[01:14:28] curious if you're looking back on the past year you talked about navigating by
[01:14:30] past year you talked about navigating by the stars under Cloudy Skies can you
[01:14:32] the stars under Cloudy Skies can you talk about some of the ways in which the
[01:14:33] talk about some of the ways in which the economy surprised you most this year
[01:14:35] economy surprised you most this year where you thought it would behave in one
[01:14:37] where you thought it would behave in one way and had to Pivot to respond thanks
[01:14:39] way and had to Pivot to respond thanks so I think
[01:14:40] so I think um forecasters generally if you go back
[01:14:43] um forecasters generally if you go back a year were very broadly forecasting a
[01:14:47] a year were very broadly forecasting a recession for this year for
[01:14:50] recession for this year for 2023 and not only did that not happen
[01:14:53] 2023 and not only did that not happen that includes fed forecasters and really
[01:14:55] that includes fed forecasters and really essentially all forecasters a very high
[01:14:57] essentially all forecasters a very high proportion of forecasters were very weak
[01:14:59] proportion of forecasters were very weak growth or a recession not only did that
[01:15:02] growth or a recession not only did that not happen we actually had a very strong
[01:15:03] not happen we actually had a very strong Year and that was a combination of of
[01:15:06] Year and that was a combination of of strong demand but also real gains on the
[01:15:09] strong demand but also real gains on the supply site so this was the year when
[01:15:11] supply site so this was the year when labor force parti participation picked
[01:15:14] labor force parti participation picked up where immigration picked up where the
[01:15:17] up where immigration picked up where the um distortions to supply and demand from
[01:15:20] um distortions to supply and demand from the pandemic you know the shortages and
[01:15:22] the pandemic you know the shortages and and the bottleneck
[01:15:24] and the bottleneck really began to unwind so we had
[01:15:25] really began to unwind so we had significant supply side gains with
[01:15:28] significant supply side gains with strong demand and we got what looks like
[01:15:29] strong demand and we got what looks like a 2 and 1 half% plus or a little more
[01:15:31] a 2 and 1 half% plus or a little more than that growth year at a time when
[01:15:34] than that growth year at a time when potential growth this year might even
[01:15:36] potential growth this year might even have been higher than that just because
[01:15:37] have been higher than that just because of the the healing on the supply side so
[01:15:39] of the the healing on the supply side so that was a surprise to just about
[01:15:42] that was a surprise to just about everybody I think the inflation forecast
[01:15:44] everybody I think the inflation forecast is roughly roughly what people wrote
[01:15:46] is roughly roughly what people wrote down a year ago but in a very different
[01:15:48] down a year ago but in a very different setting and I would say the labor market
[01:15:50] setting and I would say the labor market because of the stronger growth has also
[01:15:52] because of the stronger growth has also been um significantly better if you look
[01:15:55] been um significantly better if you look back at the SCP from a year ago there
[01:15:57] back at the SCP from a year ago there was a significant increase in in
[01:15:58] was a significant increase in in unemployment it didn't really happen
[01:16:00] unemployment it didn't really happen we're still at 3.7% so we've seen um you
[01:16:04] we're still at 3.7% so we've seen um you know strong growth uh still a tight
[01:16:07] know strong growth uh still a tight labor market but one that's coming back
[01:16:09] labor market but one that's coming back into balance with the with support from
[01:16:11] into balance with the with support from the supply side a greater supply of
[01:16:13] the supply side a greater supply of labor it's a you know that's that's what
[01:16:16] labor it's a you know that's that's what we see in that I think that combination
[01:16:18] we see in that I think that combination was was not anticipated
[01:16:21] was was not anticipated broadly Howard
[01:16:25] uh thanks Howard Schneider with uh
[01:16:26] uh thanks Howard Schneider with uh Reuters and thanks for taking the
[01:16:28] Reuters and thanks for taking the questions I I wonder if you could uh
[01:16:30] questions I I wonder if you could uh give a little more color detail on what
[01:16:32] give a little more color detail on what what motivates the lower rates next year
[01:16:34] what motivates the lower rates next year um whether it's a coincidence for
[01:16:36] um whether it's a coincidence for example that the spread between uh PC
[01:16:39] example that the spread between uh PC inflation core inflation and the federal
[01:16:41] inflation core inflation and the federal funds rate stays constant over the year
[01:16:44] funds rate stays constant over the year are you simply calibrating against the
[01:16:45] are you simply calibrating against the fall in in prices in the price level
[01:16:48] fall in in prices in the price level that you're in the rate of inflation
[01:16:50] that you're in the rate of inflation that you're expecting uh as opposed to
[01:16:52] that you're expecting uh as opposed to supporting the econom
[01:16:55] not nothing quite that mechanical is
[01:16:57] not nothing quite that mechanical is happening the the SCP really is is a
[01:16:59] happening the the SCP really is is a Bottoms Up built from the bottom up
[01:17:01] Bottoms Up built from the bottom up right so I think people are looking at
[01:17:03] right so I think people are looking at what's happening in the economy and I
[01:17:05] what's happening in the economy and I think if you look at the big difference
[01:17:06] think if you look at the big difference from September in the SCP the
[01:17:10] from September in the SCP the expectations for inflation this year
[01:17:12] expectations for inflation this year both headline and core have come down
[01:17:14] both headline and core have come down you know really significantly in three
[01:17:16] you know really significantly in three months that's a big piece of of this at
[01:17:19] months that's a big piece of of this at the same time um growth is turned out to
[01:17:22] the same time um growth is turned out to be very strong in the third quarter is
[01:17:24] be very strong in the third quarter is slowing we believe as as appropriate and
[01:17:26] slowing we believe as as appropriate and we've got we've had several labor market
[01:17:29] we've got we've had several labor market reports which suggest again significant
[01:17:32] reports which suggest again significant progress toward greater balance across a
[01:17:33] progress toward greater balance across a very a broad range of indicators you're
[01:17:36] very a broad range of indicators you're seeing the so many of the indicators
[01:17:38] seeing the so many of the indicators coming back to normal not all of them
[01:17:40] coming back to normal not all of them but so I think that people look at that
[01:17:42] but so I think that people look at that and they write down their they basically
[01:17:44] and they write down their they basically each individual writes down a forecast
[01:17:47] each individual writes down a forecast and a rate forecast that goes with that
[01:17:48] and a rate forecast that goes with that forecast we tabulate them and and
[01:17:50] forecast we tabulate them and and publish it uh and so so it's not it
[01:17:53] publish it uh and so so it's not it isn't you ask about um real rates I take
[01:17:57] isn't you ask about um real rates I take it you know that's that is that is
[01:17:58] it you know that's that is that is something that we're very conscious of
[01:18:00] something that we're very conscious of and aware of and and monitor and it's
[01:18:03] and aware of and and monitor and it's certainly a big part of it's a part of
[01:18:05] certainly a big part of it's a part of how we think about things but really
[01:18:06] how we think about things but really it's broader Financial conditions that
[01:18:08] it's broader Financial conditions that matter and and as you well know it's
[01:18:10] matter and and as you well know it's it's so hard to know exactly you know
[01:18:12] it's so hard to know exactly you know what the what the real rate is or
[01:18:14] what the what the real rate is or exactly how tight policy is at any given
[01:18:16] exactly how tight policy is at any given time
[01:18:17] time so you you couldn't follow that like it
[01:18:20] so you you couldn't follow that like it was a rule and think that you would get
[01:18:22] was a rule and think that you would get the right answer answer all the time but
[01:18:23] the right answer answer all the time but it's certainly Something That We're
[01:18:24] it's certainly Something That We're focused on and indeed if you look at the
[01:18:26] focused on and indeed if you look at the projections I think the expectation
[01:18:28] projections I think the expectation would be that the real rate is declining
[01:18:30] would be that the real rate is declining as we as we move forward it sounds like
[01:18:33] as we as we move forward it sounds like the discussion over that I could follow
[01:18:34] the discussion over that I could follow up has has already kind of begun I'm
[01:18:37] up has has already kind of begun I'm wondering U just related to to Steve's
[01:18:39] wondering U just related to to Steve's question how the how the tactics of this
[01:18:41] question how the how the tactics of this play out given the slowing of inflation
[01:18:44] play out given the slowing of inflation and the fact that the deeper you get
[01:18:46] and the fact that the deeper you get into 2024 the closer you get to a
[01:18:48] into 2024 the closer you get to a presidential election do you want to
[01:18:50] presidential election do you want to frontload this in other words yeah and
[01:18:53] frontload this in other words yeah and know we we're we don't think about
[01:18:55] know we we're we don't think about political events we don't think about
[01:18:57] political events we don't think about politics we think about what's the right
[01:18:58] politics we think about what's the right thing to do for the economy the minute
[01:19:00] thing to do for the economy the minute we start thinking about those
[01:19:02] we start thinking about those things you know we just can't do that we
[01:19:04] things you know we just can't do that we have to think what's the right thing we
[01:19:05] have to think what's the right thing we we'll do the things that we think are
[01:19:07] we'll do the things that we think are right for the economy at the time we
[01:19:10] right for the economy at the time we when we think is the right time that
[01:19:12] when we think is the right time that that's what we'll always do so I
[01:19:14] that's what we'll always do so I mentioned we're moving carefully one of
[01:19:15] mentioned we're moving carefully one of the things we're moving carefully about
[01:19:17] the things we're moving carefully about is that decision over that assessment
[01:19:19] is that decision over that assessment really over whether whether we've done
[01:19:21] really over whether whether we've done enough really uh and you see that people
[01:19:24] enough really uh and you see that people are not riding down rate hikes that's
[01:19:26] are not riding down rate hikes that's that's us thinking that we have done
[01:19:29] that's us thinking that we have done enough but not not feeling that really
[01:19:31] enough but not not feeling that really strongly confidently and not wanting to
[01:19:33] strongly confidently and not wanting to take the possibility of a rate hike off
[01:19:35] take the possibility of a rate hike off the table nonetheless it's not the B
[01:19:36] the table nonetheless it's not the B base case anymore obviously as it was
[01:19:39] base case anymore obviously as it was you know 60 90 days ago so that's that's
[01:19:41] you know 60 90 days ago so that's that's how we're that's how we're approaching
[01:19:43] how we're that's how we're approaching things and and you know as I mentioned
[01:19:45] things and and you know as I mentioned um we wrote down this SCP and it talks
[01:19:48] um we wrote down this SCP and it talks about uh it people have individual
[01:19:51] about uh it people have individual assessments of when it will be
[01:19:52] assessments of when it will be appropriate to um you know to uh start
[01:19:55] appropriate to um you know to uh start to dial back on on the tight policy we
[01:19:57] to dial back on on the tight policy we have in place and that's a discussion
[01:19:59] have in place and that's a discussion we'll be having going forward but uh
[01:20:02] we'll be having going forward but uh that's another assessment that we're
[01:20:03] that's another assessment that we're going to make very carefully U so as
[01:20:07] going to make very carefully U so as time goes
[01:20:08] time goes forward
[01:20:14] Nick Nick timos of the Wall Street
[01:20:16] Nick Nick timos of the Wall Street Journal chair poell you've argued over
[01:20:18] Journal chair poell you've argued over the last year that policy tiing started
[01:20:21] the last year that policy tiing started before you actually lift it off because
[01:20:23] before you actually lift it off because the market anticipated your moves and
[01:20:25] the market anticipated your moves and tightened on your behalf the market is
[01:20:27] tightened on your behalf the market is now easing policy on your behalf by
[01:20:29] now easing policy on your behalf by anticipating a funds rate by next
[01:20:31] anticipating a funds rate by next September that's a full point below the
[01:20:33] September that's a full point below the current level with cuts beginning around
[01:20:35] current level with cuts beginning around March is this something that you are
[01:20:38] March is this something that you are broadly comfortable
[01:20:41] broadly comfortable with um so this this last year has been
[01:20:44] with um so this this last year has been remarkable for the uh the sort of seesaw
[01:20:47] remarkable for the uh the sort of seesaw thing back and forth we've had over the
[01:20:49] thing back and forth we've had over the course of the year of markets moving
[01:20:51] course of the year of markets moving away and moving back and that kind of
[01:20:52] away and moving back and that kind of thing so and and what I would just say
[01:20:55] thing so and and what I would just say is is that we we focus on what we have
[01:20:58] is is that we we focus on what we have to do and how we need to use our tools
[01:21:00] to do and how we need to use our tools to achieve our goals and that's what we
[01:21:03] to achieve our goals and that's what we really focus on and people are going to
[01:21:05] really focus on and people are going to have different forecasts about the
[01:21:07] have different forecasts about the economy and they're going to those are
[01:21:10] economy and they're going to those are going to show up in market conditions or
[01:21:12] going to show up in market conditions or or they won't you know but in any case
[01:21:14] or they won't you know but in any case we have to do what we think is right and
[01:21:17] we have to do what we think is right and you know in in the long run it's
[01:21:20] you know in in the long run it's important that Financial conditions
[01:21:21] important that Financial conditions become aligned are aligned with what
[01:21:23] become aligned are aligned with what we're trying to accomplish and in the in
[01:21:25] we're trying to accomplish and in the in the long run they will be of course
[01:21:27] the long run they will be of course because we will do what it takes to get
[01:21:30] because we will do what it takes to get to our goals and ultimately that will
[01:21:31] to our goals and ultimately that will mean that Financial conditions will will
[01:21:33] mean that Financial conditions will will come along but in the meantime there can
[01:21:36] come along but in the meantime there can be back and forth and you know I I'm
[01:21:38] be back and forth and you know I I'm just focused on what's the right thing
[01:21:40] just focused on what's the right thing for us to do and my colleagues are
[01:21:41] for us to do and my colleagues are focused on that too the markets seem to
[01:21:43] focused on that too the markets seem to think inflation is coming down
[01:21:46] think inflation is coming down incredibly uh do you believe we're at
[01:21:48] incredibly uh do you believe we're at the point where inflation is coming down
[01:21:50] the point where inflation is coming down credibly I listen I I walk the progress
[01:21:53] credibly I listen I I walk the progress I think it's it's um it's really good to
[01:21:55] I think it's it's um it's really good to see the progress that we're making uh I
[01:21:58] see the progress that we're making uh I think if you look at the 12mon meas look
[01:22:00] think if you look at the 12mon meas look at the 6mon measures you see very low
[01:22:02] at the 6mon measures you see very low low numbers if you look at 12 month
[01:22:04] low numbers if you look at 12 month measures you're still well above 2%
[01:22:06] measures you're still well above 2% you're actually above 3% on core um
[01:22:08] you're actually above 3% on core um through through November pce um but
[01:22:12] through through November pce um but isn't to say I'm not you know calling
[01:22:14] isn't to say I'm not you know calling into question the progress it's great we
[01:22:15] into question the progress it's great we just need to see more we need to see you
[01:22:17] just need to see more we need to see you know continued further further progress
[01:22:20] know continued further further progress toward getting back to 2% that's that's
[01:22:21] toward getting back to 2% that's that's what we need to see so um you know our
[01:22:25] what we need to see so um you know our it's our job to restore price stability
[01:22:28] it's our job to restore price stability and that it's one of our two jobs along
[01:22:30] and that it's one of our two jobs along with maximum employment and they're
[01:22:31] with maximum employment and they're equal so we're very focused on on you
[01:22:35] equal so we're very focused on on you know doing that as I mentioned we're
[01:22:37] know doing that as I mentioned we're moving carefully at this point um we're
[01:22:39] moving carefully at this point um we're pleased with the progress but uh but we
[01:22:42] pleased with the progress but uh but we see the need for for further progress
[01:22:45] see the need for for further progress and I think I I think it's it's fair to
[01:22:47] and I think I I think it's it's fair to say uh there is a lot of uncertainty
[01:22:49] say uh there is a lot of uncertainty about going forward we've seen the
[01:22:51] about going forward we've seen the economy moving surprising Direction so
[01:22:53] economy moving surprising Direction so we're just going to need to see more
[01:22:55] we're just going to need to see more further
[01:22:56] further progress
[01:23:01] Gina Gina smik New York Times thanks for
[01:23:04] Gina Gina smik New York Times thanks for taking our questions um in the SCP from
[01:23:06] taking our questions um in the SCP from today growth is notably below potential
[01:23:09] today growth is notably below potential in 2024 if growth were to surprise us
[01:23:11] in 2024 if growth were to surprise us again in the way that it has for years
[01:23:13] again in the way that it has for years now by being stronger than expected next
[01:23:16] now by being stronger than expected next year would it still be possible to cut
[01:23:17] year would it still be possible to cut rates or put another way is below Trend
[01:23:20] rates or put another way is below Trend growth necessary to cut rates or would
[01:23:22] growth necessary to cut rates or would continue progress on inflation alone be
[01:23:24] continue progress on inflation alone be sufficient so we'll we'll look at the
[01:23:26] sufficient so we'll we'll look at the totality of the data growth is one thing
[01:23:29] totality of the data growth is one thing um uh so is inflation so is labor market
[01:23:32] um uh so is inflation so is labor market data so we we look at the total as we as
[01:23:34] data so we we look at the total as we as we make decisions about policy changes
[01:23:37] we make decisions about policy changes going forward we're looking at all those
[01:23:38] going forward we're looking at all those things and particularly about the as
[01:23:40] things and particularly about the as they affect the Outlook it's all it's
[01:23:41] they affect the Outlook it's all it's ultimately all about the Outlook and the
[01:23:44] ultimately all about the Outlook and the balance of risks as well so that's
[01:23:46] balance of risks as well so that's that's what we' be looking for um if we
[01:23:48] that's what we' be looking for um if we have stronger growth you know that'll be
[01:23:50] have stronger growth you know that'll be good for people that'll be good for the
[01:23:52] good for people that'll be good for the labor market it might actually mean that
[01:23:54] labor market it might actually mean that it takes a little longer to get
[01:23:56] it takes a little longer to get inflation down to 2% we will get it down
[01:23:58] inflation down to 2% we will get it down to 2% but um you know if if we see
[01:24:01] to 2% but um you know if if we see stronger growth we we'll we will set
[01:24:03] stronger growth we we'll we will set policy according to what we actually see
[01:24:06] policy according to what we actually see and and so that's how I would answer I
[01:24:10] and and so that's how I would answer I guess the qu I guess the question I'm
[01:24:12] guess the qu I guess the question I'm asking if you don't mind a quick
[01:24:13] asking if you don't mind a quick followup I guess the question I'm asking
[01:24:15] followup I guess the question I'm asking is is above Trend growth itself a
[01:24:18] is is above Trend growth itself a problem it's only a problem and so it's
[01:24:20] problem it's only a problem and so it's not itself a problem it it's only a
[01:24:23] not itself a problem it it's only a problem in so far as it makes it more
[01:24:24] problem in so far as it makes it more difficult for us to achieve our goals um
[01:24:27] difficult for us to achieve our goals um and if you know if you have if you have
[01:24:29] and if you know if you have if you have growth that's robust what that will mean
[01:24:33] growth that's robust what that will mean is probably will keep the labor market
[01:24:34] is probably will keep the labor market very strong it probably will will place
[01:24:36] very strong it probably will will place some upward pressure on inflation that
[01:24:39] some upward pressure on inflation that could mean that it takes longer to get
[01:24:41] could mean that it takes longer to get to 2% inflation that could mean we need
[01:24:43] to 2% inflation that could mean we need to keep rates higher for longer it could
[01:24:46] to keep rates higher for longer it could even mean ultimately that we would need
[01:24:48] even mean ultimately that we would need to hike again um it just is it's the way
[01:24:51] to hike again um it just is it's the way the way our policy work
[01:24:54] Works
[01:24:57] Works Neil hi chair pal Neil Irwin with axios
[01:25:00] Neil hi chair pal Neil Irwin with axios um how do you interpret the state of the
[01:25:02] um how do you interpret the state of the labor market right now and in particular
[01:25:04] labor market right now and in particular you've referred even today to evidence
[01:25:06] you've referred even today to evidence that it's coming into better balance uh
[01:25:08] that it's coming into better balance uh what would you need to see to conclude
[01:25:09] what would you need to see to conclude that it has reached that
[01:25:11] that it has reached that balance so on on the better balance side
[01:25:14] balance so on on the better balance side just a lot of things it's um you see you
[01:25:17] just a lot of things it's um you see you see job growth um still strong but
[01:25:20] see job growth um still strong but moving back down to more sustainable
[01:25:22] moving back down to more sustainable levels given population growth and labor
[01:25:24] levels given population growth and labor force
[01:25:25] force participation um the things that are not
[01:25:28] participation um the things that are not quite but let me go on with that list uh
[01:25:31] quite but let me go on with that list uh you know claims are low if you look at
[01:25:33] you know claims are low if you look at surveys of businesses that they're
[01:25:36] surveys of businesses that they're they're sort of the era of uh this
[01:25:39] they're sort of the era of uh this frantic labor shortage are behind us and
[01:25:42] frantic labor shortage are behind us and they're seeing a shortage of Labor is
[01:25:44] they're seeing a shortage of Labor is being significantly alleviated if you
[01:25:46] being significantly alleviated if you look at at shortages of workers um
[01:25:49] look at at shortages of workers um whereas they thought job ability job job
[01:25:52] whereas they thought job ability job job availability was the highest that had
[01:25:54] availability was the highest that had ever been or close to it that's nowed
[01:25:56] ever been or close to it that's nowed down to more normal levels by so many
[01:25:58] down to more normal levels by so many measures participation unemployment so
[01:26:01] measures participation unemployment so many measures the unemployment job
[01:26:03] many measures the unemployment job openings uh uh quits all of those things
[01:26:07] openings uh uh quits all of those things so wages are still running a bit above
[01:26:10] so wages are still running a bit above what would be consistent with 2%
[01:26:12] what would be consistent with 2% inflation over a long period of time
[01:26:14] inflation over a long period of time they've been gradually cooling off but
[01:26:15] they've been gradually cooling off but if wages are running around 4% that's
[01:26:18] if wages are running around 4% that's still a bit above I would say um and I
[01:26:22] still a bit above I would say um and I guess there they're just a couple of
[01:26:23] guess there they're just a couple of other uh the unemployment rate is is
[01:26:25] other uh the unemployment rate is is very very low um and these are but but I
[01:26:29] very very low um and these are but but I would just say overall the development
[01:26:31] would just say overall the development of the labor market has been very
[01:26:33] of the labor market has been very positive it's been a good time to for
[01:26:36] positive it's been a good time to for workers to find jobs and get solid wage
[01:26:40] workers to find jobs and get solid wage increases okay
[01:26:43] increases okay Claire CL Jones Financial Times um you
[01:26:48] Claire CL Jones Financial Times um you I'd say the mood among economists at the
[01:26:49] I'd say the mood among economists at the moment seems to be one of cautious
[01:26:51] moment seems to be one of cautious optimism which is somewh corroborated by
[01:26:53] optimism which is somewh corroborated by your forecast by this sense that we all
[01:26:55] your forecast by this sense that we all going to have a soft Landing yeah then
[01:26:58] going to have a soft Landing yeah then we when we hear from the general public
[01:27:01] we when we hear from the general public there's a lot of Discord about economic
[01:27:03] there's a lot of Discord about economic conditions what do you think explains
[01:27:05] conditions what do you think explains this disconnect and does it matter for
[01:27:07] this disconnect and does it matter for policy
[01:27:10] makers um it may be a common the theme
[01:27:15] makers um it may be a common the theme is that while inflation is coming down
[01:27:19] is that while inflation is coming down and that's very good news the price
[01:27:21] and that's very good news the price level is not coming down prices of some
[01:27:23] level is not coming down prices of some some goods and services are coming down
[01:27:25] some goods and services are coming down but overall in in the aggregate the
[01:27:27] but overall in in the aggregate the price level is not so people are still
[01:27:29] price level is not so people are still living with high prices and uh that's
[01:27:34] living with high prices and uh that's that's not that is something that people
[01:27:36] that's not that is something that people don't like and you know what's what will
[01:27:39] don't like and you know what's what will happen with that is wages are now um
[01:27:43] happen with that is wages are now um real wages are now positive so that
[01:27:45] real wages are now positive so that wages are now moving up more than
[01:27:46] wages are now moving up more than inflation as inflation comes down and so
[01:27:49] inflation as inflation comes down and so that I that might help uh improve the
[01:27:52] that I that might help uh improve the mood of people but we do see those we
[01:27:55] mood of people but we do see those we see those um public opinion surveys the
[01:27:57] see those um public opinion surveys the thing that we can do is to do our jobs
[01:28:01] thing that we can do is to do our jobs which is to use our tools to Foster
[01:28:05] which is to use our tools to Foster price stability which has such great
[01:28:07] price stability which has such great benefits over such long periods of time
[01:28:09] benefits over such long periods of time and which is the thing that really
[01:28:10] and which is the thing that really enables us to work for and Achieve uh an
[01:28:15] enables us to work for and Achieve uh an extended period of high employment which
[01:28:17] extended period of high employment which is so beneficial for you know families
[01:28:19] is so beneficial for you know families and and companies around the country
[01:28:26] Victoria um hi Victoria Guido with
[01:28:28] Victoria um hi Victoria Guido with Politico I wanted to ask um you know on
[01:28:31] Politico I wanted to ask um you know on on the flip side of if things start to
[01:28:34] on the flip side of if things start to deteriorate rapidly if we do fall into a
[01:28:36] deteriorate rapidly if we do fall into a recession if we do start to see
[01:28:37] recession if we do start to see unemployment rise at sort of the levels
[01:28:40] unemployment rise at sort of the levels of inflation that we're seeing now how
[01:28:41] of inflation that we're seeing now how would you all think about that in terms
[01:28:43] would you all think about that in terms of rate Cuts would that be a sign that
[01:28:45] of rate Cuts would that be a sign that you've you've done your job demand
[01:28:47] you've you've done your job demand wise sorry if if if the economy uh
[01:28:51] wise sorry if if if the economy uh starts to looks like it's starting to
[01:28:53] starts to looks like it's starting to fall into recession if if the jobless
[01:28:55] fall into recession if if the jobless rate starts to
[01:28:57] rate starts to rise that's not something we're hoping
[01:28:59] rise that's not something we're hoping to see obviously we're hoping to to see
[01:29:02] to see obviously we're hoping to to see something very different which is
[01:29:05] something very different which is continuation of what we have seen which
[01:29:07] continuation of what we have seen which is uh the labor market coming into
[01:29:10] is uh the labor market coming into better balance without a significant
[01:29:12] better balance without a significant increase in unemployment inflation
[01:29:14] increase in unemployment inflation coming down without a significant
[01:29:16] coming down without a significant increase in unemployment and growth
[01:29:18] increase in unemployment and growth moderating without a significant
[01:29:20] moderating without a significant increase in unemployment that that's
[01:29:21] increase in unemployment that that's what we're we're trying very much to
[01:29:23] what we're we're trying very much to achieve and uh not something we're
[01:29:25] achieve and uh not something we're looking to see but but would you take
[01:29:27] looking to see but but would you take that as a signal that you should cut
[01:29:29] that as a signal that you should cut rates I you know I obviously what we'll
[01:29:32] rates I you know I obviously what we'll do is we'll look at the totality of the
[01:29:34] do is we'll look at the totality of the data as I've mentioned a couple times
[01:29:35] data as I've mentioned a couple times and certainly the labor data would be
[01:29:38] and certainly the labor data would be important in that and you know if you
[01:29:42] important in that and you know if you you can you can describe a situation
[01:29:43] you can you can describe a situation like that where if if there were the
[01:29:45] like that where if if there were the beginning of a recession or something
[01:29:46] beginning of a recession or something like that then yes that would certainly
[01:29:48] like that then yes that would certainly weigh heavily in that
[01:29:50] weigh heavily in that decision Michael
[01:29:54] mck Michael mcke from Bloomberg
[01:29:56] mck Michael mcke from Bloomberg television and radio um Mr chairman you
[01:29:59] television and radio um Mr chairman you were by your own admission behind the
[01:30:01] were by your own admission behind the curve in starting to raise rates to
[01:30:03] curve in starting to raise rates to fight inflation and you said earlier
[01:30:05] fight inflation and you said earlier again the full effects of our tightening
[01:30:07] again the full effects of our tightening cycle have not yet been felt uh how will
[01:30:10] cycle have not yet been felt uh how will you decide when to cut rates and how
[01:30:13] you decide when to cut rates and how will you ensure you're not behind the
[01:30:15] will you ensure you're not behind the curve
[01:30:19] there so we're we're we're aware of the
[01:30:23] there so we're we're we're aware of the risk that we would uh hang on too long
[01:30:28] risk that we would uh hang on too long you know we we know that that's a risk
[01:30:29] you know we we know that that's a risk and we're very focused on not making
[01:30:33] and we're very focused on not making that mistake and uh we do regard the two
[01:30:36] that mistake and uh we do regard the two you know we've come back into a better
[01:30:38] you know we've come back into a better balance between the risk of overdoing it
[01:30:40] balance between the risk of overdoing it and the risk of underdoing it not only
[01:30:42] and the risk of underdoing it not only that we were able to focus hard on the
[01:30:45] that we were able to focus hard on the on the price stability mandate and we're
[01:30:47] on the price stability mandate and we're getting back to the point where which is
[01:30:49] getting back to the point where which is what you do when you're very far from
[01:30:51] what you do when you're very far from from one of them one of the two mandates
[01:30:53] from one of them one of the two mandates you're getting now back to the point
[01:30:54] you're getting now back to the point where both mandates are are important
[01:30:56] where both mandates are are important and they're they're more in Balance too
[01:30:58] and they're they're more in Balance too so I think we'll be we'll be very much
[01:31:01] so I think we'll be we'll be very much keeping that in mind as as we make
[01:31:02] keeping that in mind as as we make policy going forward and the things
[01:31:04] policy going forward and the things we'll be looking at I've already
[01:31:05] we'll be looking at I've already described you know we're we're obviously
[01:31:08] described you know we're we're obviously looking hard at at what's happening with
[01:31:10] looking hard at at what's happening with demand and what we see we see the same
[01:31:13] demand and what we see we see the same thing other people see which is a strong
[01:31:15] thing other people see which is a strong economy which really put up quite a
[01:31:17] economy which really put up quite a performance in 2023 we see good evidence
[01:31:21] performance in 2023 we see good evidence and good reason to believe that growth
[01:31:25] and good reason to believe that growth will come in lower next year and you see
[01:31:28] will come in lower next year and you see what the forecasts are I think the
[01:31:29] what the forecasts are I think the median growth median participant wrote
[01:31:32] median growth median participant wrote down 1.4% growth but you know we'll have
[01:31:34] down 1.4% growth but you know we'll have to see uh it's very hard to predict um
[01:31:37] to see uh it's very hard to predict um we'll also be looking to see progress on
[01:31:39] we'll also be looking to see progress on inflation and and you know the labor
[01:31:40] inflation and and you know the labor market remaining strong but but ideally
[01:31:42] market remaining strong but but ideally with without seeing the kind of large
[01:31:45] with without seeing the kind of large increase in unemployment that happens
[01:31:48] increase in unemployment that happens sometimes follow up when you begin in
[01:31:51] sometimes follow up when you begin in The Cutting cycle will it be essentially
[01:31:54] The Cutting cycle will it be essentially run the same way you do it now with uh
[01:31:56] run the same way you do it now with uh raising rates where you uh basically do
[01:31:59] raising rates where you uh basically do trial and error cut and see what happens
[01:32:02] trial and error cut and see what happens or will you tie it to some particular
[01:32:04] or will you tie it to some particular measure of
[01:32:07] measure of progress we haven't typically tried to
[01:32:09] progress we haven't typically tried to articulate uh with one exception a
[01:32:11] articulate uh with one exception a really specific Target levels which was
[01:32:14] really specific Target levels which was if you some of you will remember the
[01:32:15] if you some of you will remember the thresholds that we used in I guess
[01:32:18] thresholds that we used in I guess 2013 I don't the answer is um these are
[01:32:22] 2013 I don't the answer is um these are things that we have that we haven't you
[01:32:23] things that we have that we haven't you know really worked out yet um we're sort
[01:32:26] know really worked out yet um we're sort of just at the beginning of of that
[01:32:28] of just at the beginning of of that discussion
[01:32:30] discussion Edward thank you Mr chairman uh Edward
[01:32:32] Edward thank you Mr chairman uh Edward Lawrence of the fox business so um If
[01:32:34] Lawrence of the fox business so um If the Fed Cuts rates as the Dot Plot is is
[01:32:36] the Fed Cuts rates as the Dot Plot is is showing about 75 basis points does that
[01:32:39] showing about 75 basis points does that signal or that there's a belief of
[01:32:41] signal or that there's a belief of weakness next year in the
[01:32:45] weakness next year in the economy it wouldn't if if that were
[01:32:48] economy it wouldn't if if that were first of all that let me just say that
[01:32:49] first of all that let me just say that isn't a plan that's that's just cumula
[01:32:51] isn't a plan that's that's just cumula what people wrote down so that's not
[01:32:53] what people wrote down so that's not something you know this but allow me to
[01:32:55] something you know this but allow me to say it again we don't debate or discuss
[01:32:58] say it again we don't debate or discuss what the right you know whose SCP is
[01:33:01] what the right you know whose SCP is right we just say what they are and we
[01:33:02] right we just say what they are and we tabulate them and publish them so and
[01:33:03] tabulate them and publish them so and it's you know it's important for people
[01:33:05] it's you know it's important for people to know that but um it it wouldn't need
[01:33:08] to know that but um it it wouldn't need to be a sign of it could just be a sign
[01:33:10] to be a sign of it could just be a sign that the econom is normalizing and it
[01:33:12] that the econom is normalizing and it doesn't need the the tight policy it
[01:33:14] doesn't need the the tight policy it depends on the economy can evolve in
[01:33:15] depends on the economy can evolve in many different ways right so um but but
[01:33:19] many different ways right so um but but it could be more what I just described
[01:33:21] it could be more what I just described and you focused on core inflation we've
[01:33:23] and you focused on core inflation we've heard from in other meetings um how
[01:33:25] heard from in other meetings um how sticky is core inflation right
[01:33:28] sticky is core inflation right now well that's what we're finding out
[01:33:31] now well that's what we're finding out and we've you know we've seen real
[01:33:32] and we've you know we've seen real progress in in core inflation it has
[01:33:35] progress in in core inflation it has been sticky and famously the service
[01:33:37] been sticky and famously the service sector is is thought to be stickier but
[01:33:39] sector is is thought to be stickier but we've actually seen reasonable progress
[01:33:41] we've actually seen reasonable progress in non-housing Services uh which was the
[01:33:44] in non-housing Services uh which was the area where where you would expect to see
[01:33:46] area where where you would expect to see less progress we are seeing some
[01:33:48] less progress we are seeing some progress there though in fact all three
[01:33:49] progress there though in fact all three of the categories of core are now contri
[01:33:51] of the categories of core are now contri contributing Goods Housing Services non-
[01:33:54] contributing Goods Housing Services non- Housing Services they're all
[01:33:55] Housing Services they're all contributing in different at different
[01:33:57] contributing in different at different levels you know meeting by meeting or
[01:33:59] levels you know meeting by meeting or rather report by report so yeah okay
[01:34:03] rather report by report so yeah okay let's go to
[01:34:06] Karina Karina Sara Bloomberg News um
[01:34:09] Karina Karina Sara Bloomberg News um thanks for taking our questions um I
[01:34:11] thanks for taking our questions um I just wanted to ask a little bit about um
[01:34:14] just wanted to ask a little bit about um you know we had some pretty uh positive
[01:34:17] you know we had some pretty uh positive data this you know this morning and
[01:34:19] data this you know this morning and yesterday um I'm assuming those were not
[01:34:22] yesterday um I'm assuming those were not incorporated into the forecasts we see
[01:34:24] incorporated into the forecasts we see today um but I just wanted to ask you
[01:34:26] today um but I just wanted to ask you know how that kind of adds um to your
[01:34:29] know how that kind of adds um to your thinking um you know on the inflation
[01:34:32] thinking um you know on the inflation Outlook all right so we got we got CPI
[01:34:35] Outlook all right so we got we got CPI the morning of the first day and we got
[01:34:37] the morning of the first day and we got PPI the next day which informs the you
[01:34:40] PPI the next day which informs the you know the trans translation in into pce
[01:34:43] know the trans translation in into pce so it's very very late in the game you
[01:34:45] so it's very very late in the game you know to to but nonetheless um
[01:34:49] know to to but nonetheless um participants are allowed to encourage to
[01:34:52] participants are allowed to encourage to update their sep forecasts until
[01:34:56] update their sep forecasts until probably midm morning today after that
[01:34:59] probably midm morning today after that it's so staff has to has to accumulate
[01:35:01] it's so staff has to has to accumulate all of that and create the the documents
[01:35:03] all of that and create the the documents that you see so until about mid morning
[01:35:06] that you see so until about mid morning A little maybe later late morning uh
[01:35:09] A little maybe later late morning uh it's okay to update and I believe some
[01:35:10] it's okay to update and I believe some people did update their forecasts based
[01:35:12] people did update their forecasts based on what we saw
[01:35:13] on what we saw today okay and you see I mean how are
[01:35:16] today okay and you see I mean how are you when you think about you know
[01:35:18] you when you think about you know starting to think about the r Cuts next
[01:35:20] starting to think about the r Cuts next year or whenever they come um how do you
[01:35:24] year or whenever they come um how do you you know how do you think about the
[01:35:26] you know how do you think about the economy we're in now kind of post
[01:35:27] economy we're in now kind of post pandemic do you think that there's been
[01:35:29] pandemic do you think that there's been significant structural shifts and is
[01:35:31] significant structural shifts and is that going to change how you look at a
[01:35:34] that going to change how you look at a rate cut
[01:35:37] path the question of whether there have
[01:35:39] path the question of whether there have been fundamental structural shifts is is
[01:35:41] been fundamental structural shifts is is a really hard to know the answer and a
[01:35:43] a really hard to know the answer and a very interesting one right now the the
[01:35:45] very interesting one right now the the one that would
[01:35:47] one that would affect one that comes to mind though is
[01:35:50] affect one that comes to mind though is just the question of where the neutral
[01:35:51] just the question of where the neutral rate of interest is and so for example
[01:35:54] rate of interest is and so for example if it's risen and and I'm not saying
[01:35:56] if it's risen and and I'm not saying that it has but if it were to have risen
[01:35:58] that it has but if it were to have risen that would mean that that that interest
[01:36:00] that would mean that that that interest rates would need to be a little bit
[01:36:01] rates would need to be a little bit higher to convey the same level of
[01:36:03] higher to convey the same level of restriction the thing is we're not
[01:36:05] restriction the thing is we're not really going to know that you know
[01:36:07] really going to know that you know people will be writing papers about that
[01:36:08] people will be writing papers about that 10 years from now and still fighting
[01:36:10] 10 years from now and still fighting about it so it's just that it's going to
[01:36:12] about it so it's just that it's going to be uncertain so we're going to be making
[01:36:14] be uncertain so we're going to be making policy in this you know difficult
[01:36:16] policy in this you know difficult uncertain really unprecedented
[01:36:18] uncertain really unprecedented environment um some someone once said
[01:36:22] environment um some someone once said that you know the you know the natural
[01:36:23] that you know the you know the natural rate of interest by its works and that's
[01:36:27] rate of interest by its works and that's really right but that's very difficult
[01:36:28] really right but that's very difficult because policy operates with a lag so
[01:36:31] because policy operates with a lag so it's one of the reasons why we slowed
[01:36:33] it's one of the reasons why we slowed down this year we started slowing down
[01:36:34] down this year we started slowing down at this meeting last year uh reducing
[01:36:37] at this meeting last year uh reducing the pace at which we were adding uh
[01:36:40] the pace at which we were adding uh restriction and uh over the course of
[01:36:42] restriction and uh over the course of this year we really slowed down a lot to
[01:36:44] this year we really slowed down a lot to give those lags time to work in terms of
[01:36:47] give those lags time to work in terms of demand has demand shifted more away from
[01:36:50] demand has demand shifted more away from Services into Goods there's you can make
[01:36:52] Services into Goods there's you can make a case for that that the the shift back
[01:36:54] a case for that that the the shift back into Services has not been complete and
[01:36:57] into Services has not been complete and it doesn't look like it's ongoing but I
[01:36:59] it doesn't look like it's ongoing but I don't know if that's right maybe people
[01:37:00] don't know if that's right maybe people just bought so much stuff that they
[01:37:02] just bought so much stuff that they temporarily don't want any more stuff
[01:37:04] temporarily don't want any more stuff they haven't got any place to put
[01:37:06] they haven't got any place to put it go to
[01:37:10] it go to Jennifer thank you chair pal Jennifer
[01:37:12] Jennifer thank you chair pal Jennifer sha bger with Yahoo finance you said
[01:37:14] sha bger with Yahoo finance you said back in July that you needed to start
[01:37:16] back in July that you needed to start cutting rates before getting to 2%
[01:37:19] cutting rates before getting to 2% inflation as you mentioned pce inflation
[01:37:21] inflation as you mentioned pce inflation is now running at 3 and 1/2 on core on a
[01:37:24] is now running at 3 and 1/2 on core on a six-month annual basis core pce is
[01:37:27] six-month annual basis core pce is running at 22% though when you look at
[01:37:29] running at 22% though when you look at Super core and shelter they are of
[01:37:31] Super core and shelter they are of course stickier so when looking in the
[01:37:34] course stickier so when looking in the different components of the data how
[01:37:36] different components of the data how much closer do you have to get to 2%
[01:37:39] much closer do you have to get to 2% before you consider cutting
[01:37:43] before you consider cutting rates I mean the reason you wouldn't
[01:37:45] rates I mean the reason you wouldn't wait to get to 2% to cut rates is that
[01:37:47] wait to get to 2% to cut rates is that policy would be it would be too late I
[01:37:51] policy would be it would be too late I mean you you'd want to
[01:37:53] mean you you'd want to be reducing restriction on the economy
[01:37:56] be reducing restriction on the economy well before 2% because before you or
[01:37:58] well before 2% because before you or before you get to 2% so you don't
[01:38:00] before you get to 2% so you don't overshoot if we think think of
[01:38:02] overshoot if we think think of restrictive policy as Weighing on
[01:38:04] restrictive policy as Weighing on economic activity um you
[01:38:07] economic activity um you know it takes it takes a while for
[01:38:11] know it takes it takes a while for policy to get into the economy affect
[01:38:12] policy to get into the economy affect economic activity and affect inflation
[01:38:15] economic activity and affect inflation so I I can't give you a precise answer
[01:38:17] so I I can't give you a precise answer but if you look at what's in the in the
[01:38:20] but if you look at what's in the in the SCP and you know I think you'll see a
[01:38:23] SCP and you know I think you'll see a reasonable estimate of the time lags and
[01:38:25] reasonable estimate of the time lags and things like that that it would take do
[01:38:27] things like that that it would take do you think below 3% would be
[01:38:29] you think below 3% would be reasonable I wouldn't want to I wouldn't
[01:38:31] reasonable I wouldn't want to I wouldn't want to identify any one precise uh
[01:38:34] want to identify any one precise uh point because I I would be able to look
[01:38:37] point because I I would be able to look back then and probably find out that it
[01:38:39] back then and probably find out that it turned out not to be right but we'll be
[01:38:41] turned out not to be right but we'll be looking at it and and uh looking at the
[01:38:43] looking at it and and uh looking at the broad collection of
[01:38:49] factors hi CHP G young with market news
[01:38:52] factors hi CHP G young with market news um wanted to go back to the stickiness
[01:38:54] um wanted to go back to the stickiness of inflation question um over the past
[01:38:57] of inflation question um over the past couple of years a lot of central Bankers
[01:38:59] couple of years a lot of central Bankers have talked about the more difficult
[01:39:01] have talked about the more difficult Last Mile of getting inflation back down
[01:39:03] Last Mile of getting inflation back down to 2% yet it's also been surprising how
[01:39:07] to 2% yet it's also been surprising how fast inflation has come down this year
[01:39:09] fast inflation has come down this year um I'm curious do you think something
[01:39:12] um I'm curious do you think something has changed in our understanding of
[01:39:14] has changed in our understanding of inflation um or do you subscribe to this
[01:39:17] inflation um or do you subscribe to this notion still or is it something
[01:39:18] notion still or is it something different about the US economy thank you
[01:39:22] different about the US economy thank you I I think
[01:39:25] I I think um I I think this you know we we felt
[01:39:29] um I I think this you know we we felt since the beginning that it would be a
[01:39:31] since the beginning that it would be a combination of two factors the first
[01:39:34] combination of two factors the first factor is just the unwinding of of what
[01:39:36] factor is just the unwinding of of what happened in the pandemic the distortions
[01:39:37] happened in the pandemic the distortions to supply and demand and the second
[01:39:40] to supply and demand and the second thing would be our policy which was
[01:39:42] thing would be our policy which was weighing on aggregate demand and
[01:39:44] weighing on aggregate demand and actually making it easier for the supply
[01:39:45] actually making it easier for the supply side to recover because of lower demand
[01:39:47] side to recover because of lower demand we thought those two things were going
[01:39:49] we thought those two things were going to be necessary sorry say your say the
[01:39:51] to be necessary sorry say your say the last part of your question
[01:39:53] last part of your question again if there was something different
[01:39:55] again if there was something different about the US economy yeah so it's it's
[01:39:58] about the US economy yeah so it's it's not the it may or may not be about
[01:40:00] not the it may or may not be about different the US economy being different
[01:40:02] different the US economy being different I think that this inflation was not the
[01:40:06] I think that this inflation was not the classic demand
[01:40:08] classic demand overload pot boiling over kind of
[01:40:11] overload pot boiling over kind of inflation that we think about it was a
[01:40:13] inflation that we think about it was a combination of very strong demand
[01:40:16] combination of very strong demand without question and unusual supply side
[01:40:18] without question and unusual supply side restrictions both on the good side but
[01:40:20] restrictions both on the good side but also on the labor side because we had a
[01:40:22] also on the labor side because we had a we had a participation shock so this is
[01:40:24] we had a participation shock so this is just very unusual and you know we had
[01:40:27] just very unusual and you know we had the view my colleagues and I broadly had
[01:40:29] the view my colleagues and I broadly had the view that we could get a lot of you
[01:40:31] the view that we could get a lot of you know you had essentially a vertical
[01:40:33] know you had essentially a vertical supply curve because you you ran into
[01:40:36] supply curve because you you ran into the limits of of capacity at very low
[01:40:39] the limits of of capacity at very low levels because there weren't workers and
[01:40:41] levels because there weren't workers and because people couldn't the the supply
[01:40:42] because people couldn't the the supply chains were all broken so we we had the
[01:40:45] chains were all broken so we we had the view that you could come straight down
[01:40:46] view that you could come straight down that vertical supply curve to the extent
[01:40:48] that vertical supply curve to the extent demand lowered reduced and
[01:40:51] demand lowered reduced and you know something like that has
[01:40:52] you know something like that has happened it happened so far the question
[01:40:55] happened it happened so far the question is you know it once once that part of it
[01:40:59] is you know it once once that part of it runs out and we think it has a ways to
[01:41:00] runs out and we think it has a ways to run we definitely think that the that
[01:41:02] run we definitely think that the that the um uh the sort of supply chain and
[01:41:05] the um uh the sort of supply chain and shortages side has some some ways to run
[01:41:09] shortages side has some some ways to run does labor force participation have much
[01:41:11] does labor force participation have much more to run it might immigration could
[01:41:13] more to run it might immigration could help but it may be that some point you
[01:41:15] help but it may be that some point you at some point you will run out of supply
[01:41:17] at some point you will run out of supply side help and then it gets down to
[01:41:18] side help and then it gets down to demand and it gets harder that very
[01:41:21] demand and it gets harder that very possible but to say with certainty that
[01:41:24] possible but to say with certainty that the last mile is going to be different I
[01:41:26] the last mile is going to be different I I'm be reluctant to you know to to
[01:41:29] I'm be reluctant to you know to to suggest that we have any certainty
[01:41:31] suggest that we have any certainty around that we just don't know I mean
[01:41:32] around that we just don't know I mean inflation keeps coming down the labor
[01:41:34] inflation keeps coming down the labor market keeps getting back into balance
[01:41:37] market keeps getting back into balance and in you know it's um so far so good
[01:41:40] and in you know it's um so far so good although we we we kind of assume that
[01:41:43] although we we we kind of assume that that it will get harder from here but so
[01:41:44] that it will get harder from here but so far it
[01:41:45] far it hasn't we'll go to Megan for the last
[01:41:49] hasn't we'll go to Megan for the last question hi chair thanks for taking our
[01:41:51] question hi chair thanks for taking our questions Megan cassella with baren I
[01:41:54] questions Megan cassella with baren I want to ask about the balance sheet
[01:41:55] want to ask about the balance sheet given the fed's focus now on proceeding
[01:41:57] given the fed's focus now on proceeding carefully and considering rate cuts and
[01:42:00] carefully and considering rate cuts and um can you talk us through what the
[01:42:01] um can you talk us through what the latest thinking is and has there been
[01:42:03] latest thinking is and has there been any consideration of altering the pace
[01:42:05] any consideration of altering the pace of quantitative tightening at
[01:42:08] all we're um we're not talking about
[01:42:11] all we're um we're not talking about alter altering the pace of QT right now
[01:42:14] alter altering the pace of QT right now um just to get that out of the way so
[01:42:16] um just to get that out of the way so balance sheet uh seems to be working
[01:42:20] balance sheet uh seems to be working pretty much as expected um what we've
[01:42:22] pretty much as expected um what we've been seeing is uh you know that we're
[01:42:25] been seeing is uh you know that we're allowing runoff each month that's adding
[01:42:27] allowing runoff each month that's adding up I think we're down we're close to 1.2
[01:42:30] up I think we're down we're close to 1.2 trillion now that's showing up uh the um
[01:42:35] trillion now that's showing up uh the um reverse repo facility has been coming
[01:42:37] reverse repo facility has been coming down quickly and reserves have been
[01:42:40] down quickly and reserves have been either moving up or as a result or
[01:42:43] either moving up or as a result or holding steady at a certain point uh you
[01:42:46] holding steady at a certain point uh you know there won't be any more to come out
[01:42:47] know there won't be any more to come out of or there'll be a level that where the
[01:42:50] of or there'll be a level that where the reverse facility um levels out and at
[01:42:54] reverse facility um levels out and at that point reserves will start to come
[01:42:55] that point reserves will start to come down we you know we still have you
[01:42:58] down we you know we still have you know you know that we intend to
[01:43:03] know you know that we intend to um reduce our Securities holders until
[01:43:05] um reduce our Securities holders until we judge that the quantity of Reserve
[01:43:07] we judge that the quantity of Reserve balances has reached a level somewhat
[01:43:09] balances has reached a level somewhat above that consistent with ample
[01:43:11] above that consistent with ample reserves um and and we also intend to
[01:43:14] reserves um and and we also intend to slow and then stop the decline in size
[01:43:17] slow and then stop the decline in size of the balance sheet when Reserve
[01:43:18] of the balance sheet when Reserve balances are somewhat above the level
[01:43:21] balances are somewhat above the level judge to be consistent with ample
[01:43:22] judge to be consistent with ample reserves we're not at those levels we
[01:43:24] reserves we're not at those levels we you know with with reserves close to
[01:43:26] you know with with reserves close to three and a half trillion um we're not
[01:43:29] three and a half trillion um we're not we don't think we're at those reserves
[01:43:30] we don't think we're at those reserves there isn't a lot of evidence of that
[01:43:31] there isn't a lot of evidence of that we're watching it carefully and you know
[01:43:34] we're watching it carefully and you know uh so so far so far it's working pretty
[01:43:37] uh so so far so far it's working pretty much as expected we think do you
[01:43:39] much as expected we think do you adjusting that thinking At All by the
[01:43:41] adjusting that thinking At All by the time you're you're considering or moving
[01:43:43] time you're you're considering or moving forward with rate Cuts is that time to
[01:43:45] forward with rate Cuts is that time to rethink or are you still going to follow
[01:43:47] rethink or are you still going to follow um that
[01:43:49] um that thinking
[01:43:52] thinking um so I think they're they're on
[01:43:55] um so I think they're they're on independent track so you're you're
[01:43:57] independent track so you're you're asking though the question I guess
[01:43:58] asking though the question I guess you're implying the question of can can
[01:44:01] you're implying the question of can can you uh continue with
[01:44:04] you uh continue with QT at at such time QT which is a
[01:44:07] QT at at such time QT which is a tightening action at such time as uh
[01:44:10] tightening action at such time as uh policy still tight and the answer is it
[01:44:13] policy still tight and the answer is it depends on the reason you know if you're
[01:44:15] depends on the reason you know if you're if you're uh if you're cutting rates
[01:44:16] if you're uh if you're cutting rates because you're going back to normal
[01:44:18] because you're going back to normal that's one thing if you're cutting them
[01:44:20] that's one thing if you're cutting them because the econom is really weak so I
[01:44:22] because the econom is really weak so I you can imagine you have to know what
[01:44:24] you can imagine you have to know what the reason is to know whether it would
[01:44:25] the reason is to know whether it would be appropriate to do those two things at
[01:44:27] be appropriate to do those two things at the same
[01:44:28] the same time thanks very
[01:44:30] time thanks very much chairman pal wrapping up 2023 and
[01:44:34] much chairman pal wrapping up 2023 and unleashing a monster rally from New York
[01:44:36] unleashing a monster rally from New York City this afternoon good afternoon good
[01:44:38] City this afternoon good afternoon good afternoon alongside Tom Keane and Lisa
[01:44:41] afternoon alongside Tom Keane and Lisa britz I'm Jonathan phoh here are the
[01:44:43] britz I'm Jonathan phoh here are the scores in the equity market right now on
[01:44:44] scores in the equity market right now on the S&P 500 up by more than 1% on the
[01:44:47] the S&P 500 up by more than 1% on the NASDAQ up by
[01:44:49] NASDAQ up by 1.1% the words of Emily Roland of John
[01:44:51] 1.1% the words of Emily Roland of John hanock investment it's a pivot party and
[01:44:54] hanock investment it's a pivot party and everybody's invited chairman pal just
[01:44:56] everybody's invited chairman pal just turned up the music in the bond market
[01:44:58] turned up the music in the bond market 2E 10 year 30e look a little something
[01:45:01] 2E 10 year 30e look a little something like this we're down 26 basis points on
[01:45:04] like this we're down 26 basis points on a 2-year to 447 on a 10e we're down 16
[01:45:08] a 2-year to 447 on a 10e we're down 16 to
[01:45:09] to 4.04% we all had a big question coming
[01:45:11] 4.04% we all had a big question coming into this news conference with chairman
[01:45:13] into this news conference with chairman pal push back against these big moves in
[01:45:15] pal push back against these big moves in this bond market these big moves in this
[01:45:17] this bond market these big moves in this stock market he said we still have a
[01:45:19] stock market he said we still have a ways to go nobody is declaring victory
[01:45:21] ways to go nobody is declaring victory that would be premature then just
[01:45:23] that would be premature then just seconds later he said this the question
[01:45:26] seconds later he said this the question of when will it be become appropriate to
[01:45:29] of when will it be become appropriate to begin dialing back the amount of policy
[01:45:31] begin dialing back the amount of policy restraint in place that that begins to
[01:45:33] restraint in place that that begins to come into view uh and is clearly a
[01:45:36] come into view uh and is clearly a discuss topic of discussion out in the
[01:45:38] discuss topic of discussion out in the world and and also a discussion for us
[01:45:40] world and and also a discussion for us uh at our meeting today we discussed the
[01:45:43] uh at our meeting today we discussed the timing of ruts at today's meeting Lisa
[01:45:46] timing of ruts at today's meeting Lisa Ritz that was not the push back some
[01:45:48] Ritz that was not the push back some people were looking for if this was push
[01:45:50] people were looking for if this was push back he might as well have screamed we
[01:45:52] back he might as well have screamed we did it and popped champagne right if
[01:45:54] did it and popped champagne right if you're talking about a party he
[01:45:56] you're talking about a party he basically endorsed The View that we have
[01:45:58] basically endorsed The View that we have of the market what I'm looking at right
[01:46:00] of the market what I'm looking at right now is the expectation of a 140 basis
[01:46:02] now is the expectation of a 140 basis points of rate Cuts being priced into
[01:46:05] points of rate Cuts being priced into fed funds futures for next year this is
[01:46:07] fed funds futures for next year this is basically an endorsement of that by fed
[01:46:10] basically an endorsement of that by fed chare Powell who had ample opportunities
[01:46:11] chare Powell who had ample opportunities to push back and did not to me as beond
[01:46:14] to push back and did not to me as beond to the real economy this is truly an
[01:46:16] to the real economy this is truly an historic meeting I did not expect that I
[01:46:17] historic meeting I did not expect that I went back to March of 2020 let's call it
[01:46:20] went back to March of 2020 let's call it the pandemic meeting certainly with that
[01:46:23] the pandemic meeting certainly with that impact but I think you've got to go back
[01:46:24] impact but I think you've got to go back 25 years what was unspoken there is
[01:46:27] 25 years what was unspoken there is Everybody Plays the FED parlor game and
[01:46:29] Everybody Plays the FED parlor game and this and that and the other is this is a
[01:46:31] this and that and the other is this is a resounding vote in the American real
[01:46:34] resounding vote in the American real economy and in the productivity of the
[01:46:37] economy and in the productivity of the country that's that's going to all be in
[01:46:39] country that's that's going to all be in the research over the next 48 hours it's
[01:46:40] the research over the next 48 hours it's seduced by engineering that soft Landing
[01:46:42] seduced by engineering that soft Landing to me it's Immaculate productivity
[01:46:44] to me it's Immaculate productivity really Le that really leaning into that
[01:46:46] really Le that really leaning into that in a big way yeah this is I I can't I
[01:46:49] in a big way yeah this is I I can't I got goosebumps right now folks I can't
[01:46:52] got goosebumps right now folks I can't emphasize how unique this meeting is I I
[01:46:55] emphasize how unique this meeting is I I don't have no idea how lag guard and
[01:46:58] don't have no idea how lag guard and Dudley respond to this I have no idea
[01:47:01] Dudley respond to this I have no idea what Christine lagard does tomorrow I
[01:47:03] what Christine lagard does tomorrow I like your phrasing seduced by the idea
[01:47:05] like your phrasing seduced by the idea that they could potentially get a soft
[01:47:07] that they could potentially get a soft landing and the response to the question
[01:47:09] landing and the response to the question about the easing of financial conditions
[01:47:11] about the easing of financial conditions and whether that worked against their
[01:47:12] and whether that worked against their goal was not sat was not particularly uh
[01:47:17] goal was not sat was not particularly uh not I don't want to say satisfactory but
[01:47:19] not I don't want to say satisfactory but didn't really give me a sense of what
[01:47:20] didn't really give me a sense of what the answer actually was right because
[01:47:22] the answer actually was right because we're looking at a situation where
[01:47:24] we're looking at a situation where people are just all in endorsing bonds
[01:47:27] people are just all in endorsing bonds endorsing stocks endorsing the soft
[01:47:29] endorsing stocks endorsing the soft landing and it is very rare it is a
[01:47:32] landing and it is very rare it is a unicorn and so how much does it start to
[01:47:34] unicorn and so how much does it start to push things in the opposite direction
[01:47:35] push things in the opposite direction joh I'm going to frameous I wrote to
[01:47:37] joh I'm going to frameous I wrote to Muhammad alerian I think it was out on
[01:47:38] Muhammad alerian I think it was out on Twitter like 20 minutes before and I
[01:47:40] Twitter like 20 minutes before and I said two standard deviations is
[01:47:43] said two standard deviations is 4.06% that's right where we went I did
[01:47:45] 4.06% that's right where we went I did not expect that we blew through that and
[01:47:47] not expect that we blew through that and almost hit the brammo uh line which is 3
[01:47:50] almost hit the brammo uh line which is 3 99xx we didn't get there we did not get
[01:47:53] 99xx we didn't get there we did not get to the land of brma but we we were
[01:47:54] to the land of brma but we we were really quite close you have to remember
[01:47:56] really quite close you have to remember Tom at the end of October when people
[01:47:58] Tom at the end of October when people put together their year ahead outlooks
[01:48:00] put together their year ahead outlooks for the end of
[01:48:01] for the end of 2024 targets like
[01:48:03] 2024 targets like 5200 was 20% upside from where we were
[01:48:07] 5200 was 20% upside from where we were and now you wonder TK is it bullish
[01:48:09] and now you wonder TK is it bullish enough and that's going to make people
[01:48:10] enough and that's going to make people really really uncomfortable as we start
[01:48:12] really really uncomfortable as we start to bring forward a ton of gains into
[01:48:15] to bring forward a ton of gains into year end I'll be quick here we got some
[01:48:17] year end I'll be quick here we got some two two special guests for you right now
[01:48:19] two two special guests for you right now in radio and television but John what I
[01:48:21] in radio and television but John what I saw there is what I'm going to call
[01:48:23] saw there is what I'm going to call non-log convexity which is a curve to
[01:48:26] non-log convexity which is a curve to the Russell 2000 which is an
[01:48:29] the Russell 2000 which is an acceleration of money in and I just
[01:48:32] acceleration of money in and I just wonder to year end how traditional money
[01:48:35] wonder to year end how traditional money reacts and if you get what Greg Peters
[01:48:37] reacts and if you get what Greg Peters talked about which is some legit
[01:48:39] talked about which is some legit convexity here what's the bet I think
[01:48:41] convexity here what's the bet I think the BET right now Tom is that growth
[01:48:43] the BET right now Tom is that growth doesn't get hit hard this fed's going to
[01:48:45] doesn't get hit hard this fed's going to C based on what we've just been told by
[01:48:46] C based on what we've just been told by chairman po rather what we weren't told
[01:48:48] chairman po rather what we weren't told and what's implied already in market
[01:48:50] and what's implied already in market pricing but Lisa what would upset the
[01:48:52] pricing but Lisa what would upset the BET what would upset the BET right now
[01:48:54] BET what would upset the BET right now is you've get a real downturn in the
[01:48:56] is you've get a real downturn in the economy that's not part of this story
[01:48:58] economy that's not part of this story that's been priced in at the moment and
[01:49:00] that's been priced in at the moment and there's dissonance when the FED
[01:49:01] there's dissonance when the FED statement is saying that there is a
[01:49:03] statement is saying that there is a lagging effect a lagging impact of Fed
[01:49:06] lagging effect a lagging impact of Fed rate hikes that hasn't yet been played
[01:49:08] rate hikes that hasn't yet been played out if that's the case where is that in
[01:49:10] out if that's the case where is that in the statement of economic projection we
[01:49:12] the statement of economic projection we have a terrific lineup for you and we
[01:49:14] have a terrific lineup for you and we start strong here after this historic
[01:49:16] start strong here after this historic press conference with William Dudley
[01:49:18] press conference with William Dudley he's a former New York fed president and
[01:49:20] he's a former New York fed president and a student at California Berkeley years
[01:49:22] a student at California Berkeley years ago of our monetary history and of
[01:49:24] ago of our monetary history and of course Bloomberg economics senior
[01:49:26] course Bloomberg economics senior adviser as I said bill I got goosebumps
[01:49:29] adviser as I said bill I got goosebumps it just seems to be a massive statement
[01:49:33] it just seems to be a massive statement that even if we have nominal GDP of 4%
[01:49:37] that even if we have nominal GDP of 4% we have Immaculate productivity and
[01:49:39] we have Immaculate productivity and we'll somehow get through this do we
[01:49:42] we'll somehow get through this do we sustain this Market reaction this belief
[01:49:45] sustain this Market reaction this belief in America or do we are we in set for
[01:49:49] in America or do we are we in set for some tyght anic
[01:49:52] some tyght anic disappointment well I think that Pal's
[01:49:54] disappointment well I think that Pal's press confer made clear that he's really
[01:49:56] press confer made clear that he's really pleased by how the economy's perform the
[01:49:58] pleased by how the economy's perform the fact that you could get inflation down
[01:50:00] fact that you could get inflation down without the unemployment rate going up
[01:50:02] without the unemployment rate going up if you had some moderation in wages he
[01:50:04] if you had some moderation in wages he thinks everything is going really really
[01:50:06] thinks everything is going really really well and I think that's true the
[01:50:07] well and I think that's true the question is whether it's going to
[01:50:09] question is whether it's going to continue or not and there are definitely
[01:50:10] continue or not and there are definitely things that can go wrong one thing that
[01:50:12] things that can go wrong one thing that can go wrong is the Fed keeps monetary
[01:50:14] can go wrong is the Fed keeps monetary policy too tight for too long and we
[01:50:16] policy too tight for too long and we have weaker economy another thing they
[01:50:18] have weaker economy another thing they can go wrong is fed can ease policy
[01:50:20] can go wrong is fed can ease policy prematurely or the market itself can
[01:50:23] prematurely or the market itself can ease Financial conditions prematurely
[01:50:25] ease Financial conditions prematurely which will stimulate the economy and
[01:50:27] which will stimulate the economy and make it so that the FED can't cut rates
[01:50:28] make it so that the FED can't cut rates as Qui at all as quickly as the market
[01:50:30] as Qui at all as quickly as the market expects I think the Market's getting a
[01:50:32] expects I think the Market's getting a little ahead of itself here uh in in the
[01:50:34] little ahead of itself here uh in in the sense of taking the fed's optimism and
[01:50:37] sense of taking the fed's optimism and translating that into very large
[01:50:39] translating that into very large reductions in short-term rates in 2024
[01:50:42] reductions in short-term rates in 2024 but what do you think happened to the
[01:50:43] but what do you think happened to the chairman pal of only two weeks
[01:50:45] chairman pal of only two weeks ago I just think that they're very happy
[01:50:47] ago I just think that they're very happy with how the economies were formed I
[01:50:49] with how the economies were formed I mean basically they've had decent growth
[01:50:52] mean basically they've had decent growth uh unemployment rate stable and
[01:50:53] uh unemployment rate stable and inflation's come down a lot and that's
[01:50:56] inflation's come down a lot and that's basically you know as good as it can get
[01:50:59] basically you know as good as it can get and that's really what summarized in the
[01:51:01] and that's really what summarized in the summary of economic projection now
[01:51:02] summary of economic projection now summary of economic projection shows a
[01:51:05] summary of economic projection shows a very modest increase in the unemployment
[01:51:06] very modest increase in the unemployment rate from here and essentially a soft
[01:51:08] rate from here and essentially a soft Landing kind of forecast now soft
[01:51:10] Landing kind of forecast now soft Landings are really difficult to pull
[01:51:12] Landings are really difficult to pull off and they're particularly difficult
[01:51:13] off and they're particularly difficult to pull off when you've been very late
[01:51:15] to pull off when you've been very late to typ monitoring policy and what's
[01:51:17] to typ monitoring policy and what's allowed this to happen is that there
[01:51:19] allowed this to happen is that there were supplied disruptions there was
[01:51:21] were supplied disruptions there was reduction in labor Supply both those
[01:51:23] reduction in labor Supply both those things have reversed and that's made the
[01:51:25] things have reversed and that's made the fence job a lot easier Bill the prospect
[01:51:27] fence job a lot easier Bill the prospect of getting sticky inflation into next
[01:51:29] of getting sticky inflation into next year getting stuck at three it's amazing
[01:51:31] year getting stuck at three it's amazing because six months ago bill we were told
[01:51:33] because six months ago bill we were told that the last mile was difficult it was
[01:51:35] that the last mile was difficult it was hard then secretary Anon starts sounding
[01:51:37] hard then secretary Anon starts sounding like the Fed chair again saying it's not
[01:51:39] like the Fed chair again saying it's not that hard you hear it from chairman pal
[01:51:41] that hard you hear it from chairman pal didn't get any indication it would be
[01:51:43] didn't get any indication it would be particularly difficult into next year do
[01:51:45] particularly difficult into next year do you think that is The Prudent approach
[01:51:47] you think that is The Prudent approach to what 2024 could look like I think
[01:51:50] to what 2024 could look like I think think he's tell telling you what he
[01:51:51] think he's tell telling you what he really thinks I think he's very happy
[01:51:53] really thinks I think he's very happy with how things have performed and he he
[01:51:55] with how things have performed and he he didn't say it would necessarily continue
[01:51:57] didn't say it would necessarily continue but he also said that he was hopeful
[01:51:59] but he also said that he was hopeful that these Trends would continue into
[01:52:01] that these Trends would continue into 2024 my own view is that the FED is
[01:52:04] 2024 my own view is that the FED is going to be cutting rates in 20124 we're
[01:52:06] going to be cutting rates in 20124 we're clearly done in terms of rate hikes uh
[01:52:09] clearly done in terms of rate hikes uh you know the the possibility of another
[01:52:11] you know the the possibility of another rate hike is really low at this point uh
[01:52:13] rate hike is really low at this point uh the question is really just timing of
[01:52:15] the question is really just timing of rate Cuts uh and magnitude and that's
[01:52:17] rate Cuts uh and magnitude and that's going to basically be driven by the
[01:52:19] going to basically be driven by the strength of the economy pressure on
[01:52:22] strength of the economy pressure on resources and what actually happens to
[01:52:24] resources and what actually happens to Services inflation at this point Bill do
[01:52:26] Services inflation at this point Bill do you think that J Powell did a good job
[01:52:29] you think that J Powell did a good job do you think that it was right for him
[01:52:30] do you think that it was right for him to say what he thinks and not push back
[01:52:32] to say what he thinks and not push back at all against the market uh
[01:52:35] at all against the market uh party I always think it's good to say
[01:52:37] party I always think it's good to say what you really think but you know I
[01:52:39] what you really think but you know I think the problem with doing so is it's
[01:52:41] think the problem with doing so is it's basically added fuel to the fire uh you
[01:52:44] basically added fuel to the fire uh you Paul talks about the long legs of
[01:52:46] Paul talks about the long legs of monetary policy but Financial conditions
[01:52:47] monetary policy but Financial conditions are much much more accommodative than
[01:52:49] are much much more accommodative than were just a few months ago and if you
[01:52:51] were just a few months ago and if you look at the fed's own assessment of
[01:52:53] look at the fed's own assessment of financial conditions back at the end of
[01:52:55] financial conditions back at the end of October the impulse from Financial
[01:52:56] October the impulse from Financial conditions to the Economy based on the
[01:52:58] conditions to the Economy based on the FED zone model was pretty neutral so
[01:53:00] FED zone model was pretty neutral so Financial conditions now are actually
[01:53:02] Financial conditions now are actually adding uh impulse of to towards the
[01:53:05] adding uh impulse of to towards the economic growth going forward I I look
[01:53:07] economic growth going forward I I look bill at where we are and it's clearly
[01:53:09] bill at where we are and it's clearly beyond the pandemic we've had a number
[01:53:11] beyond the pandemic we've had a number of conversations across a long
[01:53:13] of conversations across a long surveillance day about how goods are
[01:53:15] surveillance day about how goods are goods and we've got some deflation and
[01:53:17] goods and we've got some deflation and service sector inflation's coming down
[01:53:20] service sector inflation's coming down is this economy beyond the pandemic if
[01:53:22] is this economy beyond the pandemic if you were to talk to Mary Daly in San
[01:53:24] you were to talk to Mary Daly in San Francisco to John Williams at the New
[01:53:27] Francisco to John Williams at the New York fed can we say our economy is
[01:53:30] York fed can we say our economy is beyond the
[01:53:32] beyond the pandemic uh I think I think mostly in
[01:53:35] pandemic uh I think I think mostly in the sense that the conditions today are
[01:53:37] the sense that the conditions today are very similar to where we were in
[01:53:38] very similar to where we were in February 2020 when we had a very tight
[01:53:41] February 2020 when we had a very tight labor market the difference is wages are
[01:53:43] labor market the difference is wages are a bit higher inflation's a bit higher
[01:53:45] a bit higher inflation's a bit higher and monetary policy is considerably
[01:53:47] and monetary policy is considerably tighter but it does feel more like
[01:53:49] tighter but it does feel more like February 2020 than it does but between
[01:53:52] February 2020 than it does but between any period after that bill sit tight I
[01:53:54] any period after that bill sit tight I want to bring in my M down in Washington
[01:53:56] want to bring in my M down in Washington DC Michael mck you were in that news
[01:53:59] DC Michael mck you were in that news conference were you surprised by the
[01:54:00] conference were you surprised by the approach from chairman
[01:54:02] approach from chairman pal well I wasn't surprised by the
[01:54:04] pal well I wasn't surprised by the approach once we'd heard the from the
[01:54:06] approach once we'd heard the from the fed and in their statement and what we
[01:54:09] fed and in their statement and what we saw in the Dot Plot uh but it is a
[01:54:11] saw in the Dot Plot uh but it is a rather dramatic change from what he said
[01:54:13] rather dramatic change from what he said just 12 days ago about it not being time
[01:54:16] just 12 days ago about it not being time to talk uh about rate Cuts obviously
[01:54:19] to talk uh about rate Cuts obviously they did today uh they're feeling much
[01:54:21] they did today uh they're feeling much better about the overall state of the
[01:54:24] better about the overall state of the economy as one analyst put it today if
[01:54:27] economy as one analyst put it today if uh good inflation report is JP's idea of
[01:54:31] uh good inflation report is JP's idea of a good time then his party has turned
[01:54:33] a good time then his party has turned into a rager because inflation is coming
[01:54:36] into a rager because inflation is coming down very quickly and then the next
[01:54:39] down very quickly and then the next question becomes as I asked him when do
[01:54:41] question becomes as I asked him when do you cut and that's the part they're not
[01:54:43] you cut and that's the part they're not ready to get into yet or describe and so
[01:54:46] ready to get into yet or describe and so we're probably still in for a few months
[01:54:48] we're probably still in for a few months of the markets watching the data and
[01:54:51] of the markets watching the data and trying to guess when the FED is going to
[01:54:54] trying to guess when the FED is going to respond Michael within all the blur of
[01:54:56] respond Michael within all the blur of the data and all the guesstimates
[01:54:58] the data and all the guesstimates forward did they frame out a subpar GDP
[01:55:02] forward did they frame out a subpar GDP either real or nominal did they frame
[01:55:04] either real or nominal did they frame out subpar
[01:55:06] out subpar growth well basically that's what Paul
[01:55:09] growth well basically that's what Paul said we're going to get because the
[01:55:11] said we're going to get because the direction of the economy is slower and
[01:55:14] direction of the economy is slower and the uh lagged effects of their rate
[01:55:16] the uh lagged effects of their rate increases have not yet completely been
[01:55:19] increases have not yet completely been felt but that the economy will start
[01:55:22] felt but that the economy will start picking up again and growing to
[01:55:24] picking up again and growing to potential and he also admitted the
[01:55:25] potential and he also admitted the possibility of a surprise there that the
[01:55:27] possibility of a surprise there that the economy grows faster than expected is
[01:55:30] economy grows faster than expected is also very real so I think they're uh at
[01:55:33] also very real so I think they're uh at this point working on the models that
[01:55:35] this point working on the models that they have but admitting that they have
[01:55:37] they have but admitting that they have been wrong before and we could see
[01:55:39] been wrong before and we could see faster growth but the interesting thing
[01:55:41] faster growth but the interesting thing was uh other than a sort of perfunctory
[01:55:43] was uh other than a sort of perfunctory caution he wasn't suggesting that we are
[01:55:46] caution he wasn't suggesting that we are now that they would go back necessarily
[01:55:48] now that they would go back necessarily to rate in increases M mck thank you sir
[01:55:51] to rate in increases M mck thank you sir great job today as always the reaction
[01:55:54] great job today as always the reaction pouring in this afternoon this line from
[01:55:56] pouring in this afternoon this line from Steve Chevron over at Federated initial
[01:55:59] Steve Chevron over at Federated initial take is he wants to come he always saw
[01:56:01] take is he wants to come he always saw inflation as transitory rmma your
[01:56:03] inflation as transitory rmma your favorite it's come down on the supply
[01:56:05] favorite it's come down on the supply side he smells a soft landing and wants
[01:56:07] side he smells a soft landing and wants the cut to stick the landing he had no
[01:56:08] the cut to stick the landing he had no interest in pushing back against Market
[01:56:10] interest in pushing back against Market expectations right or wrong it's bullish
[01:56:13] expectations right or wrong it's bullish for now that's a take away from Chevron
[01:56:15] for now that's a take away from Chevron this afternoon that's exactly where I
[01:56:16] this afternoon that's exactly where I wanted to go and I wanted to get Bill
[01:56:17] wanted to go and I wanted to get Bill Dudley's opinion about whether we did
[01:56:19] Dudley's opinion about whether we did get basically confirmation of transitory
[01:56:22] get basically confirmation of transitory do you think when we look back the FED
[01:56:25] do you think when we look back the FED won't have been wrong when it came to
[01:56:26] won't have been wrong when it came to transitory inflation they just were
[01:56:30] transitory inflation they just were premature uh I think that most of the
[01:56:32] premature uh I think that most of the inflation pressure we had which was
[01:56:34] inflation pressure we had which was transitory but not all of it I mean I
[01:56:36] transitory but not all of it I mean I think some of the services inflation is
[01:56:38] think some of the services inflation is is due to the tightness of the labor
[01:56:39] is due to the tightness of the labor market I think what's really interesting
[01:56:41] market I think what's really interesting about Paul's press conference today is
[01:56:43] about Paul's press conference today is he talked also about the risk of being
[01:56:45] he talked also about the risk of being too late to cut so he actually admitted
[01:56:47] too late to cut so he actually admitted the possibility that if we stay tight
[01:56:48] the possibility that if we stay tight for too long we could actually have a
[01:56:50] for too long we could actually have a economy that's too weak relative to what
[01:56:52] economy that's too weak relative to what we desire and that's that's something
[01:56:53] we desire and that's that's something new from Jer Paul that's a very
[01:56:56] new from Jer Paul that's a very important point the exposedness of it if
[01:56:59] important point the exposedness of it if you will uh Dr Dudley they've got to
[01:57:01] you will uh Dr Dudley they've got to wait wait wait after the fact so let's
[01:57:03] wait wait wait after the fact so let's take something coarse like the
[01:57:05] take something coarse like the unemployment rate how many months do
[01:57:08] unemployment rate how many months do they have to wait until they get real
[01:57:11] they have to wait until they get real confidence that the labor economy has
[01:57:13] confidence that the labor economy has caught up with our Immaculate
[01:57:16] caught up with our Immaculate disinflation I think they're going to be
[01:57:17] disinflation I think they're going to be looking at what happens to the
[01:57:19] looking at what happens to the unemployment rate the tightness of the
[01:57:20] unemployment rate the tightness of the labor market and what the consequences
[01:57:22] labor market and what the consequences of that are for wages Paul did admit
[01:57:25] of that are for wages Paul did admit that wage inflation is still a little
[01:57:26] that wage inflation is still a little bit too high to be consistent with 2%
[01:57:28] bit too high to be consistent with 2% inflation but boy the FED is pretty
[01:57:30] inflation but boy the FED is pretty close to where they want to be in in in
[01:57:32] close to where they want to be in in in their in their Outlook at this point
[01:57:35] their in their Outlook at this point Bill you've been on the committee before
[01:57:37] Bill you've been on the committee before you can look at this from the outside
[01:57:38] you can look at this from the outside now it's a tricky game this one to get
[01:57:41] now it's a tricky game this one to get into someone's head and I think maybe
[01:57:42] into someone's head and I think maybe one we shouldn't play but I think on
[01:57:44] one we shouldn't play but I think on this occasion we should two weeks ago I
[01:57:46] this occasion we should two weeks ago I heard from a very different fed chairman
[01:57:49] heard from a very different fed chairman and I'm trying to work out what happened
[01:57:50] and I'm trying to work out what happened today whether that was just a man who
[01:57:52] today whether that was just a man who was representing his own views and this
[01:57:54] was representing his own views and this was a man who was representing the
[01:57:55] was a man who was representing the committee's view or whether like we've
[01:57:57] committee's view or whether like we've indicated he's being seduced by this
[01:57:59] indicated he's being seduced by this idea of nailing a soft landing and the
[01:58:02] idea of nailing a soft landing and the guy was trying to act like vulka was
[01:58:04] guy was trying to act like vulka was never really vula what is it what do you
[01:58:06] never really vula what is it what do you make of who chairman pal is and what he
[01:58:08] make of who chairman pal is and what he ultimately thinks about
[01:58:10] ultimately thinks about things well the fact that he's worried
[01:58:12] things well the fact that he's worried about keeping mod policy too tight for
[01:58:14] about keeping mod policy too tight for too long tells you that he's not
[01:58:16] too long tells you that he's not thinking like Paul valkery so there is a
[01:58:19] thinking like Paul valkery so there is a and a risk to fit cutting rates
[01:58:21] and a risk to fit cutting rates prematurely but I think what he's coming
[01:58:23] prematurely but I think what he's coming across is the fact that he's just really
[01:58:25] across is the fact that he's just really really happy with how things have
[01:58:27] really happy with how things have evolved and that you know optimism is
[01:58:30] evolved and that you know optimism is showing through as it has show shown
[01:58:32] showing through as it has show shown through from time to time in press past
[01:58:34] through from time to time in press past press conferences right bill it's maybe
[01:58:36] press conferences right bill it's maybe not your remit but it's certainly the
[01:58:37] not your remit but it's certainly the New York fed's remit they're going to
[01:58:39] New York fed's remit they're going to keep keep track of flows off of
[01:58:42] keep keep track of flows off of declining interest rates what is the
[01:58:45] declining interest rates what is the stability or instability That You
[01:58:47] stability or instability That You observe in $6 trillion cash let's say
[01:58:50] observe in $6 trillion cash let's say most of it loaded in Money Market funds
[01:58:52] most of it loaded in Money Market funds is that yield comes down is our system
[01:58:54] is that yield comes down is our system going to be able to handle it yeah I
[01:58:57] going to be able to handle it yeah I don't think there's going to be any
[01:58:58] don't think there's going to be any problem I mean you know the Federal
[01:58:59] problem I mean you know the Federal Reserve sets the short-term interest
[01:59:01] Reserve sets the short-term interest rates and then money market rates trade
[01:59:03] rates and then money market rates trade off that if if money market rates you
[01:59:05] off that if if money market rates you know firm up a little bit then money
[01:59:07] know firm up a little bit then money will flow back into the money market
[01:59:08] will flow back into the money market mutual funds I'm not worried about that
[01:59:10] mutual funds I'm not worried about that at all at this point bill just to wrap
[01:59:12] at all at this point bill just to wrap it all together do you think that the
[01:59:14] it all together do you think that the chance of a hard Landing has gone down
[01:59:16] chance of a hard Landing has gone down materially over the past month or do you
[01:59:19] materially over the past month or do you think that it's about the same or even
[01:59:20] think that it's about the same or even has gone up I think it's gone down
[01:59:23] has gone up I think it's gone down maturely over the last six months I mean
[01:59:25] maturely over the last six months I mean over the last month I don't think things
[01:59:26] over the last month I don't think things have changed very much but definitely
[01:59:28] have changed very much but definitely the prospects of a soft Landing are the
[01:59:30] the prospects of a soft Landing are the best they've been uh in you know last
[01:59:33] best they've been uh in you know last year or two something changed in the
[01:59:35] year or two something changed in the last two weeks for chairman pal that's
[01:59:37] last two weeks for chairman pal that's for sure Bill good to catch up Bill
[01:59:39] for sure Bill good to catch up Bill Dudley there of Bloomberg opinion former
[01:59:41] Dudley there of Bloomberg opinion former New York fed president let's recap the
[01:59:44] New York fed president let's recap the price action some W moves across the
[01:59:46] price action some W moves across the board in the equity market and in bonds
[01:59:48] board in the equity market and in bonds since the of November the end of October
[01:59:51] since the of November the end of October this afternoon at 1% on the S&P the Gams
[01:59:53] this afternoon at 1% on the S&P the Gams fade a touch but big Gams nonetheless on
[01:59:55] fade a touch but big Gams nonetheless on the NASDAQ up by 0.9% how about the
[01:59:58] the NASDAQ up by 0.9% how about the Russell the small caps up by
[02:00:00] Russell the small caps up by 2.7% we are talking about gains of more
[02:00:03] 2.7% we are talking about gains of more than 10% since early November on the S&P
[02:00:07] than 10% since early November on the S&P 500 a year in a month in a bond market 2
[02:00:11] 500 a year in a month in a bond market 2 year 10 year 30 year 2 year
[02:00:14] year 10 year 30 year 2 year 447 when the FED met in November the
[02:00:17] 447 when the FED met in November the morning of that meeting on the second
[02:00:18] morning of that meeting on the second day of that meeting 492 on a 2-year
[02:00:21] day of that meeting 492 on a 2-year right now
[02:00:24] right now 44725 what a turnaround TK close to 5%
[02:00:27] 44725 what a turnaround TK close to 5% and all the way back down again there's
[02:00:29] and all the way back down again there's always looking at I mean it's something
[02:00:31] always looking at I mean it's something as idiosyncratic as a Turkish Lear is on
[02:00:33] as idiosyncratic as a Turkish Lear is on a bid today for the first time since the
[02:00:35] a bid today for the first time since the time began but yeah you can look across
[02:00:37] time began but yeah you can look across all of the equities bonds currencies
[02:00:39] all of the equities bonds currencies Commodities and see the effect of this
[02:00:41] Commodities and see the effect of this John I want to go on one week I want to
[02:00:43] John I want to go on one week I want to go on two weeks every strategist out
[02:00:46] go on two weeks every strategist out there has to republish and readjust and
[02:00:50] there has to republish and readjust and let me tell you you got your outlook to
[02:00:52] let me tell you you got your outlook to bed December 5 yeah let's go in this
[02:00:55] bed December 5 yeah let's go in this weekend we're rewriting it I mean is
[02:00:56] weekend we're rewriting it I mean is this is that dramatic I have to correct
[02:00:58] this is that dramatic I have to correct what I said I was quoting the 10 year
[02:01:00] what I said I was quoting the 10 year the 10 year was a 492 the 2year back in
[02:01:03] the 10 year was a 492 the 2year back in early November was 35% these are massive
[02:01:05] early November was 35% these are massive changes back down to 447 on a 2year on a
[02:01:08] changes back down to 447 on a 2year on a 10e just above 4% BR in the FX Market I
[02:01:11] 10e just above 4% BR in the FX Market I think we've got to talk about this the
[02:01:13] think we've got to talk about this the tug of war that we're going to see play
[02:01:14] tug of war that we're going to see play out now off the back of what we've just
[02:01:16] out now off the back of what we've just heard and into tomorrow with the ECB the
[02:01:19] heard and into tomorrow with the ECB the Euro at the moment looks like this 10868
[02:01:22] Euro at the moment looks like this 10868 that currency pair positive by 0.7%
[02:01:25] that currency pair positive by 0.7% given the moves we've seen in the bond
[02:01:26] given the moves we've seen in the bond market that dollar is a whole lot weaker
[02:01:29] market that dollar is a whole lot weaker where does this leave president lagard
[02:01:30] where does this leave president lagard in tomorrow's meeting hold my beer I
[02:01:32] in tomorrow's meeting hold my beer I mean essentially is this what she's
[02:01:34] mean essentially is this what she's going to say is okay I'll take that and
[02:01:36] going to say is okay I'll take that and I'll Raise You by saying I think we
[02:01:38] I'll Raise You by saying I think we should raise we should cut rates in
[02:01:39] should raise we should cut rates in March this is going to be a bigger
[02:01:41] March this is going to be a bigger question did the whole world experienced
[02:01:44] question did the whole world experienced pandemic era inflation that has largely
[02:01:46] pandemic era inflation that has largely subsided and that was ultimately
[02:01:49] subsided and that was ultimately transitory or is there something else at
[02:01:51] transitory or is there something else at play jel did not want to embrace the
[02:01:53] play jel did not want to embrace the question about financial conditions
[02:01:54] question about financial conditions loosening and what that means are we
[02:01:56] loosening and what that means are we going to hear the same thing from uh
[02:01:58] going to hear the same thing from uh from Christine lagard there was a moment
[02:02:00] from Christine lagard there was a moment in that news conference just a moment
[02:02:02] in that news conference just a moment where he reflected on how wrong so many
[02:02:04] where he reflected on how wrong so many people have been in 2023 and I think
[02:02:06] people have been in 2023 and I think before we go home for Christmas the
[02:02:08] before we go home for Christmas the holidays and look ahead to 2024 Tom we
[02:02:11] holidays and look ahead to 2024 Tom we need to reflect with some humility about
[02:02:13] need to reflect with some humility about what went wrong in 2023 last year 12
[02:02:16] what went wrong in 2023 last year 12 months ago looking out 12 months we were
[02:02:18] months ago looking out 12 months we were talking about the prospect of recession
[02:02:20] talking about the prospect of recession of much higher unemployment we called
[02:02:22] of much higher unemployment we called the fed's forecast aspirational TK we
[02:02:25] the fed's forecast aspirational TK we had bank failures some of the biggest
[02:02:27] had bank failures some of the biggest bank failures we've seen in decades not
[02:02:29] bank failures we've seen in decades not just in this country but around the
[02:02:30] just in this country but around the world and yet a couple of quarters later
[02:02:33] world and yet a couple of quarters later we had GDP north of that's the key point
[02:02:37] we had GDP north of that's the key point so when we talk about ning a soft
[02:02:38] so when we talk about ning a soft Landing getting all these rate cuts the
[02:02:40] Landing getting all these rate cuts the FED is talking about with the economic
[02:02:42] FED is talking about with the economic weakness I think we've got to remember
[02:02:44] weakness I think we've got to remember this has been a very ve very difficult
[02:02:47] this has been a very ve very difficult economy to forecast and the next 12
[02:02:49] economy to forecast and the next 12 months might be equ tricky we're repc
[02:02:51] months might be equ tricky we're repc the show together for tomorrow folks
[02:02:53] the show together for tomorrow folks this is so profound our team's going to
[02:02:54] this is so profound our team's going to work all evening to give you the best
[02:02:56] work all evening to give you the best tomorrow morning that we can and and Amy
[02:02:59] tomorrow morning that we can and and Amy said to me who do we talk to and you
[02:03:01] said to me who do we talk to and you know the usual names you mentioned Bob
[02:03:02] know the usual names you mentioned Bob Michael JP Morgan I think to see a bank
[02:03:05] Michael JP Morgan I think to see a bank like JP Morgan recast uh their view
[02:03:08] like JP Morgan recast uh their view forward but I look to yurian Timmer at
[02:03:11] forward but I look to yurian Timmer at Fidelity with Decades of experience of
[02:03:13] Fidelity with Decades of experience of real economy analysis and this is a the
[02:03:16] real economy analysis and this is a the lagard distinction if we 4% nominal
[02:03:20] lagard distinction if we 4% nominal what's the character of that American 4%
[02:03:23] what's the character of that American 4% growth versus whatever number you have
[02:03:25] growth versus whatever number you have in Europe they don't have the
[02:03:28] in Europe they don't have the technological pop that we have can we
[02:03:31] technological pop that we have can we introduce some politics into this did
[02:03:33] introduce some politics into this did you speak with Vice chair Biden this
[02:03:35] you speak with Vice chair Biden this gets really really difficult going into
[02:03:37] gets really really difficult going into next year okay let's say we get 75 basis
[02:03:40] next year okay let's say we get 75 basis points of cuts where are they landing
[02:03:42] points of cuts where are they landing and is the political calendar shape
[02:03:44] and is the political calendar shape where you think that comes Lisa given
[02:03:46] where you think that comes Lisa given that we're going to have campaign in
[02:03:48] that we're going to have campaign in full flow full flow going through next
[02:03:50] full flow full flow going through next year are you telling me they're going to
[02:03:52] year are you telling me they're going to wait until June we had Matt LTI at
[02:03:54] wait until June we had Matt LTI at Deutsche Bank on the program a little
[02:03:55] Deutsche Bank on the program a little bit earlier Lisa and he said they start
[02:03:57] bit earlier Lisa and he said they start in June and they go 175 basis points
[02:03:59] in June and they go 175 basis points they start in June and go 175 into the
[02:04:02] they start in June and go 175 into the election right now there is a 74% chance
[02:04:05] election right now there is a 74% chance of a rate cut at the March meeting for
[02:04:07] of a rate cut at the March meeting for the Federal Reserve that is what I'm
[02:04:09] the Federal Reserve that is what I'm looking at in terms of what people are
[02:04:11] looking at in terms of what people are expecting If the Fed is currently
[02:04:12] expecting If the Fed is currently talking about cutting rates why would
[02:04:14] talking about cutting rates why would they wait until June from politics for
[02:04:17] they wait until June from politics for politics they could be accused of itical
[02:04:19] politics they could be accused of itical interference either way uh deciding on
[02:04:21] interference either way uh deciding on when they move TK that's the question
[02:04:23] when they move TK that's the question why wa well there's the why wait but
[02:04:25] why wa well there's the why wait but there's also look at the further data
[02:04:27] there's also look at the further data and again I'm skewed towards a study of
[02:04:29] and again I'm skewed towards a study of the real economy we finished drawing
[02:04:31] the real economy we finished drawing here at Jeffrey Rosenberg with his
[02:04:32] here at Jeffrey Rosenberg with his portfolio manager Black Rock systematic
[02:04:35] portfolio manager Black Rock systematic multi strategy fund he will be
[02:04:37] multi strategy fund he will be systematically reviewing everything
[02:04:39] systematically reviewing everything after this historic meeting Jeff you
[02:04:42] after this historic meeting Jeff you know we at gunpoint at Carnegie melon
[02:04:44] know we at gunpoint at Carnegie melon you were required to read both volumes
[02:04:46] you were required to read both volumes of Alan Meltzer and get out the 60s the
[02:04:49] of Alan Meltzer and get out the 60s the 70s in fed meeting and what Dr Meltzer
[02:04:52] 70s in fed meeting and what Dr Meltzer would say is it is at the end of the day
[02:04:54] would say is it is at the end of the day about the real economy what did Jerome
[02:04:57] about the real economy what did Jerome Powell today say about the American
[02:05:00] Powell today say about the American economy with this stunning statement the
[02:05:03] economy with this stunning statement the dots in the
[02:05:05] dots in the Q&A yeah it was overall a
[02:05:08] Q&A yeah it was overall a validation of uh the transitory View and
[02:05:11] validation of uh the transitory View and you know what was a little bit feared
[02:05:13] you know what was a little bit feared going into the press conference was
[02:05:15] going into the press conference was whether he would push back uh he got the
[02:05:17] whether he would push back uh he got the softball from Nick timos on financial
[02:05:20] softball from Nick timos on financial conditions now be nice and and clearly
[02:05:24] conditions now be nice and and clearly you know chose not to hit it out of the
[02:05:26] you know chose not to hit it out of the park in terms of pushing back on on
[02:05:28] park in terms of pushing back on on financial conditions and that was a
[02:05:30] financial conditions and that was a green light to continue the initial
[02:05:32] green light to continue the initial reaction from what we got uh in the
[02:05:35] reaction from what we got uh in the statement of economic projections and
[02:05:37] statement of economic projections and the dots and the 75 basis points in the
[02:05:39] the dots and the 75 basis points in the dots is clearly the surprise so you know
[02:05:42] dots is clearly the surprise so you know this is a green light for investors I
[02:05:44] this is a green light for investors I think Nick's question and this question
[02:05:46] think Nick's question and this question of financial conditions Bill Dudley
[02:05:47] of financial conditions Bill Dudley mentioned it a minute ago this is the
[02:05:49] mentioned it a minute ago this is the problem is that this can go on for a
[02:05:51] problem is that this can go on for a while and it can get overdone in terms
[02:05:55] while and it can get overdone in terms of how much easing the market does
[02:05:58] of how much easing the market does before the FED but the message today is
[02:06:00] before the FED but the message today is the Fed is very happy with what they've
[02:06:02] the Fed is very happy with what they've seen what changed uh you know clearly
[02:06:05] seen what changed uh you know clearly it's the validation on the inflation
[02:06:07] it's the validation on the inflation story and they're very pleased that
[02:06:09] story and they're very pleased that after getting it wrong for so long they
[02:06:12] after getting it wrong for so long they really getting the validation in getting
[02:06:14] really getting the validation in getting it right so Jeff what' you do stay on
[02:06:17] it right so Jeff what' you do stay on the bll hold on tightly don't let go
[02:06:19] the bll hold on tightly don't let go what' you do I I mean the short term is
[02:06:22] what' you do I I mean the short term is is you can't really fight this until
[02:06:24] is you can't really fight this until there's some kind of fundamental data
[02:06:27] there's some kind of fundamental data from the economy side that pushes back
[02:06:29] from the economy side that pushes back and and there hasn't been it's all been
[02:06:31] and and there hasn't been it's all been coming up soft Landing inflation
[02:06:34] coming up soft Landing inflation declines yesterday you can squint at
[02:06:37] declines yesterday you can squint at core core nobody seems to look at core
[02:06:39] core core nobody seems to look at core core anymore he mentioned it very
[02:06:40] core anymore he mentioned it very briefly it actually popped up uh so
[02:06:43] briefly it actually popped up uh so there are some you know vulnerabilities
[02:06:45] there are some you know vulnerabilities but the message and the concern no one's
[02:06:47] but the message and the concern no one's looking at the vulnerability they're
[02:06:49] looking at the vulnerability they're looking at the validation and so with
[02:06:51] looking at the validation and so with that validation this bullish sentiment
[02:06:53] that validation this bullish sentiment can go on for a while until we get a new
[02:06:55] can go on for a while until we get a new round of economic data and and until
[02:06:58] round of economic data and and until then I think I think the message is is
[02:07:00] then I think I think the message is is pretty clear that uh the FED is is more
[02:07:03] pretty clear that uh the FED is is more than willing to see an easing in
[02:07:04] than willing to see an easing in financial conditions won't step uh in
[02:07:07] financial conditions won't step uh in the way of that Kathy Jones of uh Schwab
[02:07:09] the way of that Kathy Jones of uh Schwab Charles Schwab put this out on X or
[02:07:12] Charles Schwab put this out on X or Twitter with that I have to revise my
[02:07:14] Twitter with that I have to revise my 2024 Outlook happy to do it are you
[02:07:17] 2024 Outlook happy to do it are you revising your 20 for Outlook after this
[02:07:20] revising your 20 for Outlook after this meeting you know I I I've done this for
[02:07:23] meeting you know I I I've done this for so long that I don't do the whole you
[02:07:25] so long that I don't do the whole you know Christmas in July outlooks in
[02:07:28] know Christmas in July outlooks in October kind of thing because you end up
[02:07:30] October kind of thing because you end up with this problem so no I don't have to
[02:07:32] with this problem so no I don't have to revise it because I just I just haven't
[02:07:34] revise it because I just I just haven't put it out yet uh so that's that's a a
[02:07:39] put it out yet uh so that's that's a a good plan bold
[02:07:41] good plan bold strategy you know I look Jeff at where
[02:07:44] strategy you know I look Jeff at where we are and I just looked up one of the
[02:07:45] we are and I just looked up one of the Black Rock money market funds 5 . 2491
[02:07:50] Black Rock money market funds 5 . 2491 per. where's all that money going I mean
[02:07:53] per. where's all that money going I mean this is right up your wheelhouse where's
[02:07:55] this is right up your wheelhouse where's all that money going when that yield
[02:07:57] all that money going when that yield comes
[02:07:58] comes down you you know you asked this
[02:08:00] down you you know you asked this question in the pre segment to one of
[02:08:02] question in the pre segment to one of the guests and I was listening in and
[02:08:04] the guests and I was listening in and you know this is the change this is the
[02:08:06] you know this is the change this is the turning point because last year it was
[02:08:09] turning point because last year it was all about you're rewarded for staying in
[02:08:12] all about you're rewarded for staying in Cash When the cash rates are going up
[02:08:14] Cash When the cash rates are going up when the cash rates start going down now
[02:08:17] when the cash rates start going down now your rate of return starts going down in
[02:08:19] your rate of return starts going down in in cash so it is the signal to start
[02:08:21] in cash so it is the signal to start moving out of cash into into more term
[02:08:25] moving out of cash into into more term rates in fixed income to lock in rates
[02:08:27] rates in fixed income to lock in rates at their highest yields if you're going
[02:08:28] at their highest yields if you're going into a cutting cycle to move back into
[02:08:31] into a cutting cycle to move back into risk as we talked about earlier the the
[02:08:34] risk as we talked about earlier the the lack of hard Landing the over
[02:08:37] lack of hard Landing the over forecasting of recession fears the
[02:08:39] forecasting of recession fears the legacy of the damage of 2022 that's kept
[02:08:42] legacy of the damage of 2022 that's kept people happily in cash all of that
[02:08:45] people happily in cash all of that dissipates and and and I think that's
[02:08:47] dissipates and and and I think that's what I was referring to before you got
[02:08:49] what I was referring to before you got to be careful as as to how big that
[02:08:52] to be careful as as to how big that easing in financial conditions can
[02:08:54] easing in financial conditions can become and how that can undo some of
[02:08:57] become and how that can undo some of what the FED thinks is the right stance
[02:08:59] what the FED thinks is the right stance but that being said this is a turning
[02:09:01] but that being said this is a turning point and I think you do start to see
[02:09:03] point and I think you do start to see that money move out of money markets
[02:09:05] that money move out of money markets into risk your assets into more term
[02:09:07] into risk your assets into more term rates to lock in higher rates as the
[02:09:10] rates to lock in higher rates as the cash rates start to come down you're
[02:09:11] cash rates start to come down you're penalized now in 2024 for holding cash
[02:09:15] penalized now in 2024 for holding cash because the rates and the pro the the
[02:09:17] because the rates and the pro the the prospect of the rates is is to go lower
[02:09:19] prospect of the rates is is to go lower Jeff what would you advocate for you're
[02:09:21] Jeff what would you advocate for you're sitting in cash you've missed the rally
[02:09:22] sitting in cash you've missed the rally of the last month you see yields droing
[02:09:24] of the last month you see yields droing you get nervous reinvestment risk is not
[02:09:26] you get nervous reinvestment risk is not just something to worry about it's real
[02:09:27] just something to worry about it's real you see the moves in a single day of
[02:09:29] you see the moves in a single day of more than 20 basis points what are you
[02:09:30] more than 20 basis points what are you advocating
[02:09:32] advocating for well I I think there's lots of
[02:09:35] for well I I think there's lots of different ways to step out of cash into
[02:09:37] different ways to step out of cash into it depends on the on the risk
[02:09:39] it depends on the on the risk perspective but in fixed income you know
[02:09:41] perspective but in fixed income you know that movement into the front end of the
[02:09:43] that movement into the front end of the curve you can step out a little bit more
[02:09:45] curve you can step out a little bit more into the belly it's going to lock in not
[02:09:48] into the belly it's going to lock in not only only some yield levels but you'll
[02:09:50] only only some yield levels but you'll pick up a bit more price appreciation
[02:09:52] pick up a bit more price appreciation and a total return context in a falling
[02:09:54] and a total return context in a falling rate environment I think you can go
[02:09:56] rate environment I think you can go further the soft Landing the lack of
[02:09:58] further the soft Landing the lack of economic recession it bolsters yield and
[02:10:02] economic recession it bolsters yield and yield pickup in terms of uh income and
[02:10:05] yield pickup in terms of uh income and credit risk that credit risk it's priced
[02:10:08] credit risk that credit risk it's priced in but it's not going to collapse and so
[02:10:11] in but it's not going to collapse and so if you avoid the recession investors can
[02:10:14] if you avoid the recession investors can can step out on the risk spectrum and
[02:10:16] can step out on the risk spectrum and fixed income increase yield level
[02:10:18] fixed income increase yield level relative to cash lock those in and as
[02:10:21] relative to cash lock those in and as long as that recession Outlook is
[02:10:23] long as that recession Outlook is avoided and that's not a guarantee but
[02:10:25] avoided and that's not a guarantee but that seems again with what the data is
[02:10:26] that seems again with what the data is showing to be the more likely scenario
[02:10:29] showing to be the more likely scenario uh you know you'll lock in those yields
[02:10:31] uh you know you'll lock in those yields and and achieve a higher return than
[02:10:33] and and achieve a higher return than what you're going to get out of sitting
[02:10:35] what you're going to get out of sitting cash I want to just point out that we're
[02:10:37] cash I want to just point out that we're down now about a percentage point in
[02:10:39] down now about a percentage point in less than a month on 10-year Benchmark
[02:10:41] less than a month on 10-year Benchmark yields this is full faith and credit the
[02:10:43] yields this is full faith and credit the most liquid Market in the world and
[02:10:45] most liquid Market in the world and we're seeing fluctuations that we have
[02:10:47] we're seeing fluctuations that we have never seen before for does that raise
[02:10:49] never seen before for does that raise any concerns for you that we are seeing
[02:10:51] any concerns for you that we are seeing such incredible volatility in just uh
[02:10:54] such incredible volatility in just uh the Market's
[02:10:56] the Market's psychology on not that much different in
[02:10:59] psychology on not that much different in terms of news as you pointed out
[02:11:01] terms of news as you pointed out earlier yeah it's a really good point
[02:11:03] earlier yeah it's a really good point when when thinking about what the fixed
[02:11:06] when when thinking about what the fixed income Market looks like from a
[02:11:08] income Market looks like from a portfolio context we just have to get
[02:11:11] portfolio context we just have to get more used to this higher level of
[02:11:13] more used to this higher level of volatility you know the a index The
[02:11:14] volatility you know the a index The Benchmark for fixed income used to be a
[02:11:17] Benchmark for fixed income used to be a 3 to four % volatility instrument today
[02:11:20] 3 to four % volatility instrument today it's about double that so so when you're
[02:11:22] it's about double that so so when you're balancing out portfolios there's just a
[02:11:24] balancing out portfolios there's just a higher level of risk you can mitigate
[02:11:26] higher level of risk you can mitigate that by being shorter in terms of
[02:11:28] that by being shorter in terms of duration some of the more attractiveness
[02:11:30] duration some of the more attractiveness in the front end of the curve is you've
[02:11:31] in the front end of the curve is you've got still the highest yields and with
[02:11:33] got still the highest yields and with the lower duration less volatility but a
[02:11:36] the lower duration less volatility but a bit less price appreciation too so
[02:11:38] bit less price appreciation too so there's a little bit of a trade-off
[02:11:39] there's a little bit of a trade-off there but it is to Lisa's point you got
[02:11:41] there but it is to Lisa's point you got to expect this isn't the old fixed
[02:11:43] to expect this isn't the old fixed income Market it's a newer fixed income
[02:11:45] income Market it's a newer fixed income Market it means higher volatility better
[02:11:48] Market it means higher volatility better yield still in the front end until we
[02:11:49] yield still in the front end until we normalize Jeff one final question toron
[02:11:51] normalize Jeff one final question toron slock and Apollo had out a stunning
[02:11:53] slock and Apollo had out a stunning chart today of the spike in bankruptcies
[02:11:56] chart today of the spike in bankruptcies within all this and I mean from a
[02:11:57] within all this and I mean from a political economic standpoint the
[02:12:00] political economic standpoint the history of this meeting the shock of
[02:12:02] history of this meeting the shock of this meeting is this a meeting that just
[02:12:04] this meeting is this a meeting that just benefits the halves of America half this
[02:12:07] benefits the halves of America half this country is flat on their back and the
[02:12:09] country is flat on their back and the others are live and larg the Dows up 460
[02:12:12] others are live and larg the Dows up 460 points is this just about almost the
[02:12:15] points is this just about almost the financialization and advantage of the
[02:12:17] financialization and advantage of the elite in
[02:12:19] elite in America so I love Torsten love love his
[02:12:21] America so I love Torsten love love his work you know what he's highlighting now
[02:12:23] work you know what he's highlighting now and he's done this for a while um is
[02:12:26] and he's done this for a while um is there's a distributional aspect of our
[02:12:28] there's a distributional aspect of our economy that gets lost in these
[02:12:30] economy that gets lost in these aggregate statistics and so there is an
[02:12:33] aggregate statistics and so there is an impact of rising interest rates there is
[02:12:35] impact of rising interest rates there is an impact of the significant tightening
[02:12:38] an impact of the significant tightening in interest rate policy but you don't
[02:12:40] in interest rate policy but you don't see it as much in the aggregate you see
[02:12:41] see it as much in the aggregate you see it when you disaggregate and that that
[02:12:43] it when you disaggregate and that that distributional side so the bottom end of
[02:12:46] distributional side so the bottom end of consumers the bottom end and of credit
[02:12:49] consumers the bottom end and of credit uh is more vulnerable and you're
[02:12:51] uh is more vulnerable and you're starting to see that but it's still a
[02:12:53] starting to see that but it's still a distributional story it's what you would
[02:12:56] distributional story it's what you would expect to see in the tales and it is
[02:12:58] expect to see in the tales and it is showing the effect of that but that
[02:12:59] showing the effect of that but that doesn't necessarily mean that story is
[02:13:02] doesn't necessarily mean that story is ex exacerbated extrapolated into the
[02:13:06] ex exacerbated extrapolated into the aggregate view it's part of the story
[02:13:08] aggregate view it's part of the story it's an important part credit Cycles
[02:13:10] it's an important part credit Cycles begin from the bottom and so you got to
[02:13:12] begin from the bottom and so you got to watch that but the Counterpoint is that
[02:13:15] watch that but the Counterpoint is that the rest of the distribution has created
[02:13:18] the rest of the distribution has created Creed a lot of immunity if you will not
[02:13:20] Creed a lot of immunity if you will not permanent immunity but a lot of
[02:13:22] permanent immunity but a lot of reservoirs to buffer the increases in
[02:13:26] reservoirs to buffer the increases in interest rates on the consumer side
[02:13:28] interest rates on the consumer side that's from savings on the corporate
[02:13:29] that's from savings on the corporate side that's from fixing uh maturities
[02:13:32] side that's from fixing uh maturities and terming out interest rates and the
[02:13:34] and terming out interest rates and the reason is we had such a prolonged period
[02:13:37] reason is we had such a prolonged period of zero interest rates so that the shock
[02:13:39] of zero interest rates so that the shock of interest rates isn't as much of a
[02:13:41] of interest rates isn't as much of a shock as it appears it can be and we
[02:13:43] shock as it appears it can be and we have to watch it and you're certainly
[02:13:45] have to watch it and you're certainly seeing it as Ton's highlighting you know
[02:13:47] seeing it as Ton's highlighting you know in some of the tales but it's not really
[02:13:48] in some of the tales but it's not really the the aggregate story yet Jeff I've
[02:13:50] the the aggregate story yet Jeff I've got a few seconds pick a month for the
[02:13:53] got a few seconds pick a month for the First Rate cut I know you're not going
[02:13:54] First Rate cut I know you're not going to give us an Outlook but just pick a
[02:13:56] to give us an Outlook but just pick a month Jeff uh I'm going to give I'm
[02:13:58] month Jeff uh I'm going to give I'm going to give you uh I'm going to give
[02:14:00] going to give you uh I'm going to give you June June uh you know sometime in
[02:14:03] you June June uh you know sometime in the summer uh I think the March and I
[02:14:05] the summer uh I think the March and I know Neil maybe a little bit early uh
[02:14:08] know Neil maybe a little bit early uh what's the rush uh they still want to
[02:14:10] what's the rush uh they still want to make sure uh they've they've nailed the
[02:14:12] make sure uh they've they've nailed the inflation store got to leave it there
[02:14:13] inflation store got to leave it there Jeff good to catch up buddy always is
[02:14:15] Jeff good to catch up buddy always is Jeff Rosenberg there of Black Rock the
[02:14:17] Jeff Rosenberg there of Black Rock the Federal Reserve chair does not want to
[02:14:18] Federal Reserve chair does not want to declare Victory let me tell you this
[02:14:20] declare Victory let me tell you this Market already has in the equity market
[02:14:22] Market already has in the equity market right now on the S&P 500 approaching a
[02:14:24] right now on the S&P 500 approaching a close we look at something like this up
[02:14:26] close we look at something like this up 1.2% on &p the NASDAQ up 1% the Russell
[02:14:30] 1.2% on &p the NASDAQ up 1% the Russell up three and a half and liser in the
[02:14:32] up three and a half and liser in the bond market a monster rally so maybe the
[02:14:34] bond market a monster rally so maybe the Fed chair J pal didn't want to declare
[02:14:35] Fed chair J pal didn't want to declare Victory but President Biden does and
[02:14:37] Victory but President Biden does and we'll hear lots about it and he's
[02:14:39] we'll hear lots about it and he's putting out on Twitter about prices
[02:14:41] putting out on Twitter about prices coming down this is going to get
[02:14:42] coming down this is going to get political very quickly people try to
[02:14:44] political very quickly people try to message around an economy where the
[02:14:46] message around an economy where the story has not been told yet yeah we're
[02:14:48] story has not been told yet yeah we're going to just have a killer show
[02:14:50] going to just have a killer show tomorrow I I've been taken by surprise
[02:14:52] tomorrow I I've been taken by surprise with this I knew it'd be like okay but
[02:14:54] with this I knew it'd be like okay but this is stunning absolutely amazing
[02:14:57] this is stunning absolutely amazing coming up on the close look out for this
[02:14:59] coming up on the close look out for this more reaction to the FED with Stanford's
[02:15:01] more reaction to the FED with Stanford's professor of Economics John Taylor
[02:15:03] professor of Economics John Taylor former fed Governor Betsy Jew from New
[02:15:05] former fed Governor Betsy Jew from New York City this afternoon that is it for
[02:15:07] York City this afternoon that is it for us thank you for our audience worldwide
[02:15:10] us thank you for our audience worldwide I reflect on the words of Emily Roland
[02:15:12] I reflect on the words of Emily Roland of John hanock investment it's a pivot
[02:15:14] of John hanock investment it's a pivot party and everyone's invited and what a
[02:15:16] party and everyone's invited and what a party it is right now from New York City
[02:15:19] party it is right now from New York City this is
[02:15:22] [Music]
[02:15:38] [Music] Bloomberg

Full Transcript

https://www.youtube.com/watch?v=NQqU0Lik024
Translation: zh-TW

[00:05] 每個月僅在彭博社播出。
[00:08] 這個新興島嶼是一個閃光點。
[00:10] 彭博社，這個新興島嶼是美國和中國之間的熱點，台灣的
[00:12] 點在美國和中國之間，台灣的總統大選正吸引全球
[00:14] 總統大選正吸引全球關注，台灣是個房間裡的大象，在拜登峰會之後，我們
[00:16] 關注，台灣是個房間裡的大象，在拜登峰會之後，我們
[00:18] 進行了一些非常強硬的對話，競賽為了
[00:20] 進行了一些非常強硬的對話，競賽為了潛在的戰爭情景，隨著選民前往
[00:23] 潛在的戰爭情景，隨著選民在1月前往投票站，彭博社對
[00:25] 投票站，彭博社對候選人、議題進行了仔細觀察
[00:27] 仔細觀察了候選人、議題、利害關係以及這對世界的意義
[00:29] 利害關係以及這對世界的意義，萬一你錯過了，請收看台灣
[00:32] 萬一你錯過了，請收看台灣決定，今晚9:30的特別報導
[00:40] [音樂]
[00:58] [音樂] 一切
[01:21] 為什麼是商業界最響亮的名字之一？
[01:23] 為什麼是商業界最響亮的名字之一選擇彭博社？
[01:23] 這是一個很棒的問題。
[01:24] 很棒的問題，很棒的問題，很棒的問題。
[01:26] 問題，很棒的問題，很棒的問題，很棒的問題。
[01:26] 我整晚收到的最好的問題。
[01:28] 彭博社頂級專家，很棒的問題。
[01:31] 現場來自紐約市，為我們全球的觀眾。
[01:33] 彭博社的『聯準會決策』，現在開始。
[01:35] 這是彭博社『焦點新聞』的特別報導，由湯姆·基恩、喬納森·佩雷爾和麗莎·阿布拉姆主持。
[01:39] 彭博社『焦點新聞』。
[01:42] 聯準會的決策來自紐約市的電視和廣播。
[01:45] 聯準會的決策還有大約 28 分鐘。
[01:48] 這是 2023 年最後一次聯準會的決策。
[01:51] 這個市場的轉折點就在 TK。
[01:54] 我們預計 2024 年這個市場將有大量降息。
[01:57] 在接下來的 60 分鐘內，我們會得到這位聯準會主席的任何認可嗎？
[01:59] 關於我們接下來幾個小時將經歷什麼，以及我們目前的狀況，引發了激烈的辯論。
[02:09] 接下來幾個小時，我們一年後會在哪裡，回顧一年前，我們認為這次十二月的會議會是這樣，我們有這樣的清晰度。
[02:15] 我們經歷了同樣的不確定性，巨大的不確定性，關於過去的ATK，更不用說12個月了。
[02:22] 我們在兩個小時後會在哪裡，我們在兩個小時後會在哪裡，一個三部分的故事情節。
[02:27] 我們會得到一份聲明，我們會得到預測，然後他們會得到新聞發布會，很多人都有同樣的問題。
[02:31] 標準普爾500指數上漲了10%，我們在債券市場上出現了巨大的反彈，我們是否會從鮑威爾主席那裡得到一些一點點的回擊，稍後。
[02:39] 我們聽說安德魯·霍倫馬說，他必須在這裡有點尷尬，他必須在一定程度上進行反擊，然而他感覺到通貨緊縮確實為降息打開了大門，所以這就是你之前真正提出的問題。
[02:51] 他如何處理克里斯·沃勒談論降息的可能性，然後將其與經濟預測聲明以及他們自己的降息預測以及何時開始的聲明結合起來的問題？
[03:02] 別管沃勒州長了，那很容易，他在委員會裡，讓我們談談湯姆·陳·耶倫，副主席拜登，在過去的幾天裡，我們在什麼上面。
[03:10] 在過去幾天，我們在討論聯準會可能做或不做的決定。
[03:13] 聯準會可能做或不做的決定，這在早上七點是個笑話，但這不是笑話。
[03:15] 這在早上七點是個笑話，但這不是笑話，在這裡，距離133還有20分鐘，約翰，你是對的，而且關鍵點在那裡。
[03:19] 歷史上，關鍵點是副主席拜登，看看他會做什麼，但答案就在那裡。
[03:23] 他會做，但答案是存在一些政治壓力，一些概覽。
[03:28] 我還要指出，存在國際壓力，我們今天與所有交談過的人都說阿根廷的大規模貶值已經不在考慮範圍內了。
[03:33] 阿根廷的貶值不在考慮範圍內，斯里蘭卡也不在考慮範圍內，我的答案是全球經濟放緩正在考慮範圍內，我們開玩笑說拜登總統，這是引述。
[03:42] 我們正處於繼就業數據之後的甜蜜點，這是週五的說法，麗莎，一個對穩定增長和降低通膨所必需的甜蜜點，而不是鼓勵聯準會升息。
[03:51] 利率，這就是我們從財政部長葉倫那裡聽到的，她今天早些時候發表了講話，她談到她將讓聯準會做他們的事情，並且她有信心。
[04:01] 他們會做得很好，但如果通膨下降，你可以像事實上採取一個措施一樣降息。
[04:09] 因為如果你不這麼做，金融上就會出現事實上的緊縮。
[04:12] 事實上，儘管通膨正在消退，但金融條件卻在收緊。
[04:15] 儘管通膨正在消退，但她正走向克里斯·沃勒的學派。
[04:17] 她正走向克里斯·沃勒的學派，當時正值...
[04:20] 學派，當時通膨正在來臨，但物價...
[04:23] 通膨正在來臨，但物價仍在上漲，這就是...
[04:24] 仍在上漲，這是一件非常困難和尷尬的事情。
[04:26] 談論的事情，這對許多決策者來說是一場棘手的舞蹈。
[04:28] 談論，這對許多決策者來說是一場棘手的舞蹈，讓我們來看看...
[04:29] 許多決策者，讓我們來看看今天下午標準普爾 500 指數的表現。
[04:32] 標準普爾 500 指數今天下午的表現，此前是三天的...
[04:33] 三連勝之後，標準普爾股票市場...
[04:36] 標準普爾股票市場現在幾乎持平，正在努力爭取...
[04:38] 第四天，而債券市場...
[04:40] 使其成為第四天，而債券市場的收益率則下降了三到四個基點。
[04:42] 收益率在此下降了三到四個基點，布拉莫。
[04:44] 基點，布拉莫 4623，這是即將發生的情況。
[04:46] 4623，這是聯準會利率決策前夕的現況。
[04:49] 在聯準會利率決策前夕，摩根大通的 Priia Misra 和德意志銀行...
[04:50] 摩根大通的 Priia Misra 和德意志銀行的 Matt Lazetti 將加入我們。
[04:53] 銀行，Matt Lazetti 將在下午 2 點加入我們，我們將知道利率決策是什麼。
[04:56] 下午 2 點，我們將知道利率決策是什麼，他們將會按兵不動，但關鍵將是...
[04:58] 他們將會按兵不動，但關鍵將是經濟預測聲明。
[05:00] 經濟預測聲明以及任何語言上的變動，我們將會得到...
[05:01] 任何語言上的變動，我們將立即得到來自畢馬威的 Diane 的反應。
[05:03] 立即得到來自畢馬威的 Diane、P. Jim 的 Greg Peters、美國銀行的...
[05:05] Diane、P. Jim 的 Greg Peters、美國銀行的 Michael Gapen 和 Sak Jen 的...
[05:08] 美國銀行的 Michael Gapen 和 Sak Jen 的 Subadra Japa 將會獲得新聞發布會的...
[05:10] Subadra Japa 將會獲得新聞發布會的詳細分析，主席...
[05:12] 新聞發布會的詳細分析，鮑威爾主席的每一個字都將是前任紐約...
[05:14] 鮑威爾的一字一句都將是前紐約聯邦儲備銀行總裁比爾·達德利和黑人
[05:16] 約克聯邦儲備銀行總裁比爾·達德利和黑石集團的傑夫·羅森堡，我們試圖
[05:19] 羅森堡，我們試圖了解市場將如何
[05:20] 理解他所說的話，這將會很有
[05:22] 趣，讓我們直接開始吧。
[05:23] 很有趣，讓我們直接開始吧。現在我們強勢開始，與固定收益投資組合經理、摩根大通資產管理公司（J.P. Morgan Asset Management）的普瑞姆·米澤（Pryum Miser）一起。
[05:25] 現在我們強勢開始，與固定收益投資組合經理、摩根大通資產管理公司（J.P. Morgan Asset Management）的普瑞姆·米澤（Pryum Miser）一起。
[05:28] 固定收益投資組合經理、摩根大通資產管理公司（J.P. Morgan Asset Management）的普瑞姆·米澤（Pryum Miser）一起。你知道嗎，普瑞姆，我有
[05:30] 資產管理公司。你知道嗎，普瑞姆，我有八種方法可以處理，但我得到的是
[05:32] 八種方法可以處理，但我得到的是這次會議的八種不同結果。
[05:35] 八種不同結果。今天，你將看到一個令人震驚的結果，
[05:38] 今天，你將看到一個令人震驚的結果，即利率大幅下降，
[05:41] 十年期國債收益率大幅下降，遠低於
[05:43] 3%的低區間。這是由聯準會引起的，還是
[05:47] 由經濟增長放緩引起的？
[05:49] 經濟增長放緩引起的？我認為這是兩者的結合。
[05:52] 兩者的結合。嗯，你知道，利率的變動
[05:54] 基於經濟基本面和
[05:57] 聯準會的反應函數，而
[05:59] 那個反應函數是你將從聯準會今天那裡得到的。
[06:00] 反應函數是你將從聯準會今天那裡得到的。我的意思是，我認為
[06:02] 我的意思是，我認為你知道，市場將會關注
[06:04] 你知道，市場將會關注經濟預測，因為
[06:06] 聯準會和我們所有人一樣，都會關注數據，
[06:08] 並且必須隨著數據的到來而進行修正。
[06:10] 但是，如果聯準會今天的反應函數
[06:12] 但是，如果聯準會今天的反應函數表明他們將其視為通貨膨脹
[06:15] 這表明他們認為隨著通膨下降，他們需要降息，而我
[06:17] 隨著通膨下降，他們需要降息，我認為他們會這樣建議
[06:18] 我認為他們會這樣建議，你知道我認為爭論在於
[06:20] 你知道我認為爭論在於，是降息 50 個基點還是 75 個基點，在軟著陸情景下
[06:23] 50 個基點的降息或 75 個基點，在軟著陸情景下，如果他們降息 75 個基點
[06:25] 著陸情景下，如果他們降息 75 個基點或 50 個基點，他們會降息多少
[06:28] 或 50 個基點，在硬著陸情況下，我們說的是
[06:30] 在硬著陸情況下，我們說的是 200 到 300 個基點，我的看法是
[06:33] 200 到 300 個基點，我的看法是，在實際利率如此高的情況下，滯後效應
[06:35] 在實際利率如此高的情況下，滯後效應正在顯現，經濟正在
[06:36] 正在顯現，經濟正在放緩，全球增長反正
[06:38] 正在放緩，所以處於硬著陸陣營
[06:41] 正在放緩，所以處於硬著陸陣營，我確實認為長期利率有很大的
[06:43] 我確實認為長期利率有很大的下降空間，即使在軟著陸情況下
[06:45] 下降空間，即使在軟著陸情況下，聯準會也在降息，嗯，聯準會
[06:48] 情況下，聯準會正在降息，嗯，聯準會追趕加息 75 個基點，達到
[06:51] 追趕加息 75 個基點，將利率提高到 5，你知道，將實際利率
[06:53] 提高到 5，你知道，將實際利率提高到限制性區域
[06:55] 提高到限制性區域，收緊金融條件，這
[06:57] 收緊金融條件，這已經過去了，市場是向前看的
[06:59] 已經過去了，市場是向前看的，現在一切都關於何時開始降息
[07:01] 現在一切都關於何時開始降息，以及他們總共會降息多少
[07:03] 開始，以及他們總共會降息多少，Priya，正如 Lisa 所建議的
[07:05] 會降息，Priya，正如 Lisa 所建議的，這是一個非常微妙的舞蹈，如何
[07:07] 這是一個非常微妙的舞蹈，主席如何在新聞中發出信號
[07:08] 主席在新聞發布會上發出信號，工作還沒完成，當
[07:10] 發布會上，工作還沒完成，當點狀圖可能暗示 2024 年降息兩到三次
[07:12] 點狀圖可能暗示 2024 年降息兩到三次
[07:14] 2024 年降息，當然，所以我想 2:00 將會是
[07:16] 2024 確定，所以我想凌晨 2 點會非常棘手，因為他們有聲明和點狀圖，我認為他們很難在下午 2 點 30 分時表現出鷹派。我認為查普爾將有機會，我認為他應該稍微慶祝一下勝利。您知道，請記住，通膨是暫時的，嗯，現在看起來它正在下降，所以您可以實際處理並承認它正在下降，但不要說任務完成，然後談論降息正常化，而不是讓市場失控，利率回到零。開始談論也許你必須重新調整政策，並讓利率正常化，因為通膨下降，以保持實際利率恆定。我認為這就是他將要嘗試的方式，這是一個非常微妙的平衡。我認為這就是新聞發布會將很重要的原因。所以，我會關注下午 2 點的反應，然後下午 2 點 30 分的反應可能會有點不同，因為我認為他可能會試圖說，別急，我們還沒準備好開始大幅降息。您知道，這需要很多事情順利進行。所以我認為他會試圖巧妙地處理它，但這對今天的聯準會來說是一個挑戰。PRI，我們一直在聽
[08:16] 對於聯準會來說，今天PRI，我們聽了一些聯準會發言人說，他們擔心軼事證據。
[08:18] 他們擔心軼事證據顯示的放緩速度比我們目前看到的更快。
[08:22] 你認為這會在經濟預測聲明中有所體現嗎？其中增長預期已上調，失業預期已下調？
[08:32] 我認為聯準會很難顯示這一點，特別是當你看到失業率這樣的平均數字時，失業率正在上升，因為參與率也在上升，例如。
[08:41] 所以我想這可能會更難，但我很好奇明年他們會如何調整失業率，你知道的。
[08:48] 如果他們確實有，我的意思是，如果你看看潛在的勞動力市場數據，我知道週五的非農就業報告很強勁，但你看看潛在的數據。
[08:56] 你剔除罷工者或政府工作，它實際上來自兩個行業。
[09:01] 勞動力市場確實出現了放緩，但我認為聯準會很難巧妙地處理這個問題。
[09:05] 我認為他們只想說，我們會注意的，你知道的，我們會關注數據並做出相應的回應。
[09:14] 但我不知道，你可以在經濟預測聲明中非常清楚地看到這一點。
[09:18] 在經濟預測的聲明中，除了失業率之外
[09:20] 除了失業率之外，也許是 4.2 或 4.3 是他們可以
[09:23] 也許是 4.2 或 4.3 是他們可以將其提高到，我認為任何更高的數字
[09:25] 將其提高到，我認為任何更高的數字都會是聯準會一個奇怪的舉動，因為
[09:28] 都會是聯準會一個奇怪的舉動，因為我們並沒有在
[09:30] 總體數據中真正清楚地看到它，裂痕正在
[09:33] 總體數據中，裂痕正在發展，我認為他可以暗示
[09:35] 發展，我認為他可以在記者會上暗示這一點，而不是
[09:37] 在預測中清楚地顯示出來
[09:39] 而不是在預測中清楚地顯示出來，不對稱性和市場
[09:41] 現在的定位在哪裡，即將進入這次
[09:43] 現在的定位，即將進入這次會議，換句話說，在哪裡
[09:44] 會議，換句話說，最大的反應潛在地將來自哪裡
[09:45] 最大的反應潛在地將來自哪裡，無論是意外地出現
[09:48] 出現更為鷹派或鴿派的語氣，所以
[09:52] 更為鷹派或鴿派的語氣，所以我實際上認為更為鴿派的語氣將會
[09:54] 我實際上認為更為鴿派的語氣將會引起更大的反應，我認為很多人
[09:56] 引起更大的反應，我認為很多人錯過了在 5% 買入十年期國債
[09:59] 很多人錯過了在 5% 買入十年期國債，然後他們一直在等待，我們一直在
[10:01] 然後他們一直在等待，我們一直在等待，你知道當你回到
[10:03] 等待，你知道當你回到我們想進場買入的時候，有一種
[10:05] 有一種進場買入的感覺，你知道，就是為了更多的行動
[10:07] 為了更多的行動，你知道，就是買入所有東西，在年底前反彈
[10:11] 買入所有東西，在年底前反彈，嗯，所以我想，如果聯準會暗示
[10:13] 嗯，所以我想，如果聯準會暗示在軟著陸的情況下，他們可以降息三次
[10:16] 在軟著陸的情況下，他們可以降息 75 個基點或 100 個基點，接下來
[10:19] 明年75個基點或100個基點，市場定價為100，嗯。
[10:21] 年，市場定價為100，嗯，你應該考慮某種可能性。
[10:23] 你應該考慮某種硬著陸的可能性，所以我想你會得到一個。
[10:25] 硬著陸，所以我想你會得到一個對較低利率的更大反應，在一個。
[10:28] 對較低利率的更大反應，在一個鴿派的聯準會評論中，無論是對經濟增長的擔憂，
[10:31] 還是這種他們可以大幅降息的想法。
[10:33] 大幅降息的想法，如果你得到一個鷹派的聯準會。
[10:34] 大幅降息，如果你得到一個鷹派的聯準會，我認為市場幾乎會。
[10:36] 鷹派的聯準會，我認為市場幾乎會不相信聯準會，因為聯準會。
[10:38] 不相信聯準會，因為聯準會可以改變主意，它以前就這樣做過。
[10:40] 它對數據很敏感，所以我想這就是不對稱性的所在。
[10:43] 這就是不對稱性的所在，這太真實了。
[10:44] Priya，請繼續關注我們，保持緊密聯繫。
[10:46] JP Morgan的PR Miser，距離聯準會決策還有不到20分鐘。
[10:48] 距離上次聯準會決策還有不到20分鐘。
[10:50] 聯準會決策，Priya剛才說的Lisa非常重要。
[10:52] 順序很重要。
[10:54] 所以在一小時的開頭，大約20分鐘後，你會得到聲明和預測。
[10:56] 你會得到聲明和預測，30分鐘後你會得到新聞發布會。
[10:58] 30分鐘後你會得到新聞發布會，我會說這有點像收到財報。
[11:00] 你會收到財報，然後你會收到財報。
[11:02] 你真的想在聽完電話會議之前就根據財報做出決定嗎？
[11:03] 我們有可能被主席鮑爾在決策公佈30分鐘後擺一道。
[11:04] 她基本上說，這就是我們現在的基本情況，我們將會被擺一道，因為它聽起來很鴿派。
[11:06] 然後鮑爾出來，不得不。
[11:07] 然後鮑爾出來，不得不。
[11:08] 我們有可能被主席鮑爾在決策公佈30分鐘後擺一道。
[11:10] 主席鮑爾在決策公佈30分鐘後擺一道。
[11:12] 決策公佈後30分鐘，她基本上說。
[11:13] 這就是我們現在的基本情況，我們將會被擺一道。
[11:15] 我們將會被擺一道，因為它聽起來很鴿派。
[11:16] 它聽起來很鴿派，然後他會出來。
[11:18] 然後他會出來，鮑爾，不得不。
[11:19] 傑鮑威爾將出來，而且必須採取強硬立場，這是預期，然後
[11:21] 強硬立場，這是預期，然後就會打平，你知道我要去
[11:23] 就會打平，你知道我要去 bbo Capital Mar 的 e 上找你
[11:25] bbo Capital Mar 的 e 上找你，這是這裡最有趣的數字
[11:26] 這是這裡最有趣的數字，進入這次聯準會會議並通過
[11:28] 談話記者會是十年期公債殖利率，我們已經走了這麼遠，這麼
[11:30] 十年期公債殖利率，我們已經走了這麼遠，這麼快，約翰，我得到了一個
[11:33] 快，約翰，我得到了一個十年期公債殖利率的 4.54 上限，而且
[11:34] 十年期公債殖利率的 4.54 上限，而有趣的地方在於
[11:37] 有趣的地方在於 4.06%，所以如果我們來到低 10 個基點
[11:40] 4.06%，所以如果我們來到低 10 個基點的較低殖利率，這就證明了
[11:43] 較低殖利率，這就證明了在這一刻，今天有趣的是
[11:46] 在這一刻，今天有趣的是 TK，也是十年期公債殖利率上次他們開會時的
[11:47] TK，也是十年期公債殖利率上次他們開會時的，是的，這真的很
[11:49] 上次他們開會的，是的，這真的很技術上優雅，70 個基點
[11:51] 技術上優雅，高出 70 個基點，對話仍在繼續
[11:54] 高出，對話仍在繼續，德意志銀行 Matt lazetti 與 JP
[11:56] 德意志銀行 Matt lazetti 與 JP Morgans PRI misra，你的股票市場在
[11:58] Morgans PRI misra，你的股票市場在標準普爾 500 指數上完全沒有變化，聯準會
[12:00] 標準普爾 500 指數完全沒有變化，聯準會決定，決定就在
[12:04] 決定，決定就在 [音樂]
[12:06] 決定就在 [音樂]
[12:27] 角落。
[12:52] 喬許，這是我。麥斯，怎麼了？你好嗎？
[12:56] 我寫華爾街的報導將近15年了，這意味著我寫關於紛爭、憤怒、起起落落和東山再起，偶爾也會寫一些反派人物。
[13:10] 非常感謝。現在我要做一件新的、非常非常可怕的事情。
[13:17] 我們正在製作一個節目，它是基於彭博商業週刊雜誌。
[13:22] 那麼這個節目是關於什麼的？這是一個關於金錢、權力、文化、流行商業的節目。
[13:26] 我們要讓它變得複雜。
[13:28] 商業，我們將要變得複雜，教授發現人們關於他們的想法
[13:30] 而教授發現人們關於他們的想法、他們的職業、他們的生活、他們的風險
[13:33] 他們的職業、他們的生活、他們的風險、他們的失敗、他們的想像力，這是如此
[13:35] 他們的失敗、他們的想像力，這是一種令人難以置信的解放，不必在意
[13:37] 令人難以置信的解放，不必在意別人怎麼想，我正在將我的工具
[13:39] 別人怎麼想，我正在將我的工具提供給其他社群，我想帶
[13:41] 到其他社群，我想把那些工具帶回家，請收聽，拜託
[13:43] 那些工具回家，請收聽，拜託，真的，實際上請收聽，我我
[13:45] 實際上請收聽，我我迫切需要
[13:47] 迫切需要 [音樂]
[13:50] [音樂] 女士，我認為很難將你的
[13:52] 女士，我認為很難理解任何敘事，讓我們坦誠相見
[13:54] 理解任何敘事，讓我們坦誠相見，我們經歷了一種轉變，在我們
[13:56] 坦誠相見，我們經歷了一種轉變，我們是否處於某種滯脹恐懼之中
[13:58] 我們是否處於某種滯脹恐懼的時刻，人們一直在談論
[13:59] 時刻，人們整天都在談論
[14:08] 昨天，這是一場聯準會轉向派對，而
[14:11] 昨天，這是一場聯準會轉向派對，我們都被邀請了，將會有一個轉向
[14:13] 我們都被邀請了，將會有一個轉向，最終的轉向，你知道，朝向寬鬆
[14:16] 最終的轉向，你知道，朝向寬鬆，交易員們現在正在推動這個夢想
[14:18] 交易員們現在正在推動這個夢想，明年將有四次降息，市場已經
[14:21] 明年將有四次降息，市場一直在慶祝這個想法，即存在
[14:23] 存在通膨下降的跡象，而且
[14:25] 通膨下降的跡象，而且通貨膨脹下降的速度比比
[14:27] 許多人認為的要快，事情至少是
[14:29] 許多人認為事情至少在軟著陸方面方向正確。
[14:33] 市場對聯準會何時降息過於樂觀。
[14:35] 跑得太前面了，團隊肯定會強硬反擊，明年將大幅削減。
[14:41] 關於市場的走向，它有點超前了。
[14:44] 我們仍然需要認識到，通膨之路的最後一哩路通常是最困難的。
[14:50] 他們必須保留一些緊縮偏見的痕跡。
[14:53] 我不認為市場會相信這個訊息。
[14:55] 市場就像是，我們不相信你。
[14:57] 這取決於鮑爾在多大程度上反對這種漲價定價。
[15:00] 今天下午從紐約市現場直播，午安。
[15:04] 午安，與湯姆·基恩和麗莎·拉比茨一起，我是喬納森·福。
[15:09] 聯準會的決定還有 15 分鐘。
[15:11] 標準普爾 500 指數的表現如下，盤中完全沒有變化。
[15:16] 但自從上次聯準會開會以來，標準普爾 500 指數已大幅上漲約 10%，那斯達克指數漲幅更大。
[15:22] 看看債券市場，換一下看板，兩年期和十年期。
[15:27] 想想上次聯準會開會當天早上，兩年期債券的利率是多少，5.08%。
[15:32] 早上，聯準會上次開會時是 5.08%，在那天早上，在那次聯準會的決定之前。
[15:34] 在那天早上，在那次聯準會的決定之前，十年期國債在那天早上 TK。
[15:37] 十年期國債在那天早上 TK，492 是我們開盤的十年期國債價位。
[15:40] 492 是我們開盤的十年期國債價位在那天早上，而這裡是我們現在的價位。
[15:41] 在那天早上，而這裡是我們現在的價位，466.96，兩年期國債下跌六個基點。
[15:45] 現在是 466.96，兩年期國債下跌六個基點，今天十年期國債下跌 416 個基點。
[15:49] 四個基點，今天下午我正在關注十年期國債。
[15:51] 今天下午四個基點，我正在關注十年期國債，只是有機會。
[15:53] 今天我正在關注十年期國債，只是有機會，我認為從技術上看它非常有說服力。
[15:54] 我認為它從技術上看非常有說服力，而且確實會導致更低的水平，你知道我
[15:57] 而且確實會導致更低的水平，你知道我只想說，對於我們團隊所做的工作
[15:58] 只想說，對於我們團隊所做的工作，為了匯集唯一
[16:00] 團隊所做的工作，我做這個節目的唯一原因就是所有那些
[16:02] 原因我做這個節目就是所有那些在 B 區塊開始時的不同聲音
[16:03] 在 B 區塊開始時的不同聲音，聯準會的，你唯一的理由
[16:06] B 區塊的聯準會，你唯一的理由，這是我在這裡的唯一理由。
[16:07] 這是我在這裡的唯一理由，我的意思是，所有不同的觀點都太搞笑了。
[16:09] 我的意思是，所有不同的觀點、語言、意見都太搞笑了，有多少
[16:12] 觀點、語言、意見，他今天有多少問題
[16:14] 他今天有多少問題會照著紙念，幾乎是預先
[16:17] 照著紙念，幾乎是預先，嗯，他應該知道會發生什麼，基於
[16:18] 嗯，他應該知道會發生什麼，基於那個，那個幾乎完美地捕捉了共識。
[16:19] 那個，那個幾乎完美地捕捉了共識，這是關於反擊。
[16:21] 幾乎完美地，這是關於反擊，我們在這次新聞發布會上會得到多少反擊。
[16:23] 我們在這次新聞發布會上會得到多少反擊，稍後如果有的話，一點點。
[16:25] 一點點，如果有的話，我想結束在外匯市場。
[16:27] 一點點，我想結束在外匯市場，麗莎，重要的拔河比賽即將開始。
[16:28] 麗莎，重要的拔河比賽即將開始，我們正在談論聯準會。
[16:30] 舉行，我們正在談論孤立的聯準會，你需要談論
[16:31] 孤立地，你需要談論聯邦儲備委員會對比歐洲央行對比
[16:34] 聯邦儲備委員會對比歐洲央行對比英國央行，並思考外匯市場。
[16:37] 英國央行並思考外匯市場，美元指數穩定，差不多。
[16:39] 美元指數穩定，差不多，歐元沒有變動，毫無進展，麗莎。
[16:42] 10786，交易的另一方在接下來的48小時內變得有趣。
[16:44] 我只能說，按照你的觀點，為什麼現在有人會進行這項交易。
[16:46] 呃，這個貨幣對在聯準會會議之前，然後是歐洲央行會議。
[16:48] 明天，在他們很大可能首先降息的時候。
[16:50] 還有12分鐘，我們得聯繫Matt LZ，他將聯繫他的德意志銀行客戶和德意志銀行世界的代表們。
[16:53] 他是他們首席美國經濟學家，也是Matt Lazetti的評價者。
[16:55] 我真的必須關注實體經濟，因為如果你聲稱會有放緩，但它就在那裡。
[16:58] 你今年說對了，讓我們在10分鐘內重新闡述經濟增長放緩對鮑威爾主席的重要性。
[16:59] 美國GDP放緩如何影響今天的事件。
[17:01] 是的，我認為對鮑威爾和聯準會來說，更大的故事是多麼迅速。
[17:35] 對於鮑威爾和聯準會來說，關鍵在於通膨下降的速度有多快，而且當然
[17:37] 通膨正在下降，而且當然他們是否能夠純粹基於通膨的說法來降息
[17:38] 是否能夠純粹基於通膨的說法來降息，而這正是
[17:40] 關於通膨的說法，而這正是華勒州長在兩週前評論中所指出的
[17:41] 華勒州長在兩週前評論中所指出的，是什麼
[17:43] 幾週前在他的評論中，是什麼推動了市場動態，呃，在過去的
[17:46] 推動了市場動態，呃，在過去的兩週裡，為了定價這些
[17:47] 過去兩週，為了定價這些大幅的降息，所以我想從
[17:49] 大幅的降息，所以我想從聯準會，嗯，從鮑威爾那裡，我們將繼續
[17:51] 從聯準會，嗯，從鮑威爾那裡，我們將繼續聽到他們確實希望看到一些
[17:52] 聽到他們確實希望看到經濟放緩，他們確實希望看到
[17:54] 經濟放緩，他們確實希望看到勞動市場持續
[17:55] 看到勞動市場持續達到更好的平衡，但我想
[17:57] 達到更好的平衡，但我想首先，最最重要的是
[17:58] 首先，最最重要的是，發展一直是通膨正在
[18:00] 發展一直是通膨下降的速度比預期的快，從
[18:01] 預期的快，從聯準會的角度來看，以及範圍
[18:03] 聯準會的角度來看，以及範圍，這使得他們明年可以降息
[18:04] 使得他們明年可以降息，今天的就業經濟是否存在於
[18:08] 今天的分析中，是的，不，我認為勞動
[18:10] 分析，是的，不，我認為勞動市場是，事實是，它正在
[18:12] 市場是，事實是，它正在非常迅速地達到，嗯，更好的平衡，在過去的
[18:15] 嗯，更好的平衡，在過去的六個月左右，非常迅速地，是，是 realmente
[18:17] 過去的六個月左右，在該評估中，是，是 realmente 重要，嗯，但是
[18:19] 重要，嗯，但是我想考慮到我們在
[18:20] 考慮到我們在失業率、辭職率、職位空缺方面的情況
[18:21] 失業率、辭職率、職位空缺正在下降，勞動市場
[18:24] 職位空缺正在下降，勞動市場不是聯準會的額外理由
[18:25] 不是聯準會目前發出鷹派聲音的額外理由，我認為
[18:27] 目前發出鷹派聲音，我認為他們可以，嗯，有點轉向
[18:29] 他們可以，嗯，有點轉向勞動市場，以及擔憂
[18:30] 來自勞動市場，以及圍繞它的擔憂，圍繞它的擔憂是
[18:32] 圍繞它的擔憂是，它太緊繃並推動了通膨，然後
[18:34] 太緊繃並推動了通膨，然後轉向，呃，關注
[18:36] 轉向，嗯，關注通膨數據，這數據無可否認地
[18:38] 通膨數據，這數據無可否認地顯示過去一段時間以來取得了很大進展
[18:39] 顯示過去六個月取得了很大進展，聯準會（FED）有兩項任務
[18:41] 六個月，聯準會（FED）有兩項任務，對吧？其中一項是降低
[18:42] 對，其中一項是降低通膨，然後還有這個，呃
[18:44] 通膨，然後還有這個，呃，確保他們避免某些問題
[18:47] 問題，確保他們避免某種硬著陸，走得太遠，在哪裡
[18:50] 某種硬著陸，走得太遠，現在的風險平衡在哪裡，鑑於
[18:52] 現在的風險平衡在哪裡，鑑於我們已經看到通膨下降，但是
[18:54] 我們已經看到通膨下降，但是仍然有很多關於
[18:55] 仍然有很多關於它有多頑固的問題
[18:57] 它有多頑固，是的，毫無疑問，呃，你知道，在過去
[18:59] 是的，毫無疑問，呃，你知道，在過去 18 個月裡，聯準會（FED）一直傾向於
[19:01] 過去 18 個月，聯準會（FED）一直傾向於，嗯，做得太多
[19:04] 可能，呃，在緊縮方面做得太多
[19:06] 可能，呃，在緊縮方面，因為通膨風險
[19:08] 因為通膨風險變得頑固、根深蒂固，而且
[19:09] 變得更難讓他們隨著時間推移而下降
[19:11] 隨著時間推移而下降，我認為我們所看到的
[19:12] 時間，我認為我們所看到的，尤其是在過去三到六個月裡
[19:13] 尤其是在過去三到六個月裡，是轉向和
[19:15] 個月，是轉向和過渡到，呃，對...的擔憂
[19:17] 過渡到，呃，對增長和勞動力市場方面的擔憂，這將
[19:19] 增長和勞動力市場方面，這將繼續下去，這是很自然的
[19:20] 繼續下去，這是很自然的，隨著通膨下降，你會
[19:23] 繼續下去，呃，隨著通膨下降，你會對...有點擔心
[19:24] 對雙重任務中的增長，呃，方面有點擔心
[19:26] 雙重任務中的增長，呃，方面，雙重任務中的勞動力市場方面
[19:27] 雙重任務中的勞動力市場方面，我認為我們將繼續
[19:29] 任務，我認為我們將繼續從鮑爾主席今天那裡聽到，他們
[19:30] 從鮑爾主席今天那裡聽到，他們擔心通膨上漲
[19:32] 擔心通膨上漲風險，但是那個風險平衡
[19:34] 風險，但是從他們的角度來看，那個風險平衡正在進入
[19:35] 從他們的角度來看，正在進入更好的平衡，話雖如此，我們一直
[19:37] 更好的平衡，話雖如此，我們過去一個月一直在談論寬鬆以及寬鬆和金融條件。
[19:40] 過去一個月的金融狀況，以及這與目標背道而馳的程度，你認為有多少。
[19:42] 以及這與目標背道而馳的程度，你認為 J Powell 需要在多大程度上反擊。
[19:45] 一些目標，你認為 J Powell 需要在多大程度上反擊，以保持他們在降低通膨方面取得的進展。
[19:49] 以保持他們在降低通膨方面取得的進展，我認為對聯準會而言，金融狀況完全取決於背景。
[19:53] 認為對聯準會而言，金融狀況完全取決於背景，因此如果他們沒有在通膨方面取得進展，如果勞動市場仍然非常緊張。
[19:58] 他們沒有在通膨方面取得進展，如果勞動市場仍然非常緊張，如果我們仍然看到經濟成長遠高於聯準會的潛在成長率。
[20:04] 聯準會希望回歸並在一定程度上反擊我們所看到的金融狀況收緊。
[20:07] 聯準會希望回歸並在一定程度上反擊我們所看到的金融狀況收緊，但在看到通膨取得許多進展的背景下，對勞動市場成長的下行風險略感擔憂。
[20:15] 對勞動市場成長的下行風險略感擔憂，我認為聯準會不太可能對此做出反擊。
[20:19] 認為聯準會不太可能對此做出反擊，我認為你會從主席鮑爾那裡聽到，我們從他的同事那裡聽到的，是金融狀況，儘管在過去六週內已經大大寬鬆，但仍然比今年早些時候更為緊張。
[20:27] 在過去六週內已經大大寬鬆，但仍然比今年早些時候更為緊張，我認為潛在的現實是，只要他們在通膨方面取得進展，他們就不需要它們像現在這樣緊張。
[20:33] 緊張，只要他們在通膨方面取得進展，讓我們打破一些規則，讓我們給它一些數字和日期，馬特 LTI。

Full Transcript (Bilingual)

https://www.youtube.com/watch?v=NQqU0Lik024
Translation: zh-TW

[00:05] episode every month only on Bloomberg
每個月僅在彭博社播出。

[00:08] the island emerging is a flash
這個新興島嶼是一個閃光點。

[00:10] Bloomberg the island emerging is a flash point between the US and China taiwan's
彭博社，這個新興島嶼是美國和中國之間的熱點，台灣的

[00:12] point between the US and China taiwan's presidential election is drawing Global
點在美國和中國之間，台灣的總統大選正吸引全球

[00:14] presidential election is drawing Global attention Taiwan is an elephant in the
總統大選正吸引全球關注，台灣是個房間裡的大象，在拜登峰會之後，我們

[00:16] attention Taiwan is an elephant in the room after the Biden issu ging Summit we
關注，台灣是個房間裡的大象，在拜登峰會之後，我們

[00:18] had some pretty tough talk Racing for
進行了一些非常強硬的對話，競賽為了

[00:20] had some pretty tough talk Racing for potential War scenario as voters head to
進行了一些非常強硬的對話，競賽為了潛在的戰爭情景，隨著選民前往

[00:23] potential War scenario as voters head to the polls in January Bloomberg takes a
潛在的戰爭情景，隨著選民在1月前往投票站，彭博社對

[00:25] the polls in January Bloomberg takes a close look at the candidates the issues
投票站，彭博社對候選人、議題進行了仔細觀察

[00:27] close look at the candidates the issues at stake and what it means for the world
仔細觀察了候選人、議題、利害關係以及這對世界的意義

[00:29] at stake and what it means for the world in case you missed it watch Taiwan
利害關係以及這對世界的意義，萬一你錯過了，請收看台灣

[00:32] in case you missed it watch Taiwan decides a Special Report tonight at 9:30
萬一你錯過了，請收看台灣決定，今晚9:30的特別報導

[00:40] [Music]
[音樂]

[00:58] [Music] everything
[音樂] 一切

[01:21] Why of the biggest names in business?
為什麼是商業界最響亮的名字之一？

[01:23] Why of the biggest names in business choose Bloomberg?
為什麼是商業界最響亮的名字之一選擇彭博社？

[01:23] That is a great question.
這是一個很棒的問題。

[01:24] Great question, great question, great question.
很棒的問題，很棒的問題，很棒的問題。

[01:26] Question, great question, great question, great question.
問題，很棒的問題，很棒的問題，很棒的問題。

[01:26] Best question I get all night.
我整晚收到的最好的問題。

[01:28] Bloomberg top expert, great questions.
彭博社頂級專家，很棒的問題。

[01:31] Live from New York City for our audience worldwide.
現場來自紐約市，為我們全球的觀眾。

[01:33] Bloomberg's the FED decides, starts right now.
彭博社的『聯準會決策』，現在開始。

[01:35] This is a special edition of Bloomberg Surveillance with Tom Kean, Jonathan Perell, and Lisa Abram.
這是彭博社『焦點新聞』的特別報導，由湯姆·基恩、喬納森·佩雷爾和麗莎·阿布拉姆主持。

[01:39] Bloomberg Surveillance.
彭博社『焦點新聞』。

[01:42] The FED designs from New York City on TV and radio.
聯準會的決策來自紐約市的電視和廣播。

[01:45] The FED decision about 28 minutes away.
聯準會的決策還有大約 28 分鐘。

[01:48] The last Fed decision of 2023.
這是 2023 年最後一次聯準會的決策。

[01:51] The pivot for this market is inside TK.
這個市場的轉折點就在 TK。

[01:54] We're pricing in a ton of rate cuts in this market for 2024.
我們預計 2024 年這個市場將有大量降息。

[01:57] Will we get any kind of endorsement from this Fed chair in the next 60 minutes?
在接下來的 60 分鐘內，我們會得到這位聯準會主席的任何認可嗎？

[01:59] Enraging debate around what we're going to go through in the next couple hours over where we are.
關於我們接下來幾個小時將經歷什麼，以及我們目前的狀況，引發了激烈的辯論。

[02:09] next couple hours over where are we a year from now with the clarity that we have of looking back when we were one year ago thinking this December meeting would be like this.
接下來幾個小時，我們一年後會在哪裡，回顧一年前，我們認為這次十二月的會議會是這樣，我們有這樣的清晰度。

[02:15] we nailed that same uncertainty day massive uncertainty about the past ATK never mind 12 months.
我們經歷了同樣的不確定性，巨大的不確定性，關於過去的ATK，更不用說12個月了。

[02:22] where are in two hours from now where are we 2 hours from now three-part story.
我們在兩個小時後會在哪裡，我們在兩個小時後會在哪裡，一個三部分的故事情節。

[02:27] we'll get a statement we'll get projections and ler them we get the news conference and a lot of people have got the same question.
我們會得到一份聲明，我們會得到預測，然後他們會得到新聞發布會，很多人都有同樣的問題。

[02:31] we've had a move of 10% on the S&P 500 we've had a monster rally in the bond market do we get some push back from chairman pal a little bit later.
標準普爾500指數上漲了10%，我們在債券市場上出現了巨大的反彈，我們是否會從鮑威爾主席那裡得到一些一點點的回擊，稍後。

[02:39] we were hearing from Andrew Hollen horse that he has to be kind of awkward here he has to push back to some degree and yet he has a sense that disinflation does open the door to rate Cuts so here's the question you really raised this earlier.
我們聽說安德魯·霍倫馬說，他必須在這裡有點尷尬，他必須在一定程度上進行反擊，然而他感覺到通貨緊縮確實為降息打開了大門，所以這就是你之前真正提出的問題。

[02:51] how does he address the fact that Chris Waller was talking up the potential of rate cuts and then pair that with a statement of economic projections and their own rate cut projections and when they'll start next year.
他如何處理克里斯·沃勒談論降息的可能性，然後將其與經濟預測聲明以及他們自己的降息預測以及何時開始的聲明結合起來的問題？

[03:02] never mind Governor Waller that's easy he's on the committee let's talk about Tom CH Yellen Vice chair Biden in the last couple of days we in on what.
別管沃勒州長了，那很容易，他在委員會裡，讓我們談談湯姆·陳·耶倫，副主席拜登，在過去的幾天裡，我們在什麼上面。

[03:10] the last couple of days we in on what the fed maybe and maybe shouldn't do.
在過去幾天，我們在討論聯準會可能做或不做的決定。

[03:13] the fed maybe and maybe shouldn't do this is a joke at 7 a.m. it's not a joke.
聯準會可能做或不做的決定，這在早上七點是個笑話，但這不是笑話。

[03:15] this is a joke at 7 a.m. it's not a joke here at 133 20 minutes away John you're right and the key thing there.
這在早上七點是個笑話，但這不是笑話，在這裡，距離133還有20分鐘，約翰，你是對的，而且關鍵點在那裡。

[03:19] historically the key thing there is vice chairman Biden and and to see what what he does but the the the answer is there.
歷史上，關鍵點是副主席拜登，看看他會做什麼，但答案就在那裡。

[03:23] he does but the the the answer is there is some political pressure some overview.
他會做，但答案是存在一些政治壓力，一些概覽。

[03:28] and i' also point out there's intern National pressure all the people we talked to today says a massive devaluation in Argentina off the radar.
我還要指出，存在國際壓力，我們今天與所有交談過的人都說阿根廷的大規模貶值已經不在考慮範圍內了。

[03:33] devaluation in Argentina off the radar Sri Lanka off the radar my answer is global slowdown is on the radar we joked about President Biden here's the quote.
阿根廷的貶值不在考慮範圍內，斯里蘭卡也不在考慮範圍內，我的答案是全球經濟放緩正在考慮範圍內，我們開玩笑說拜登總統，這是引述。

[03:42] we're in a Sweet Spot following that jobs number this is the line from Friday Lisa a sweet spot that's needed for stable growth and lower inflation not encouraging the FED to raise interest rates.
我們正處於繼就業數據之後的甜蜜點，這是週五的說法，麗莎，一個對穩定增長和降低通膨所必需的甜蜜點，而不是鼓勵聯準會升息。

[03:51] rates that's what uh we heard from Cher Yellen as you pull our secretary uh treasury secretary and she spoke earlier today and she was talking about about how she is going to let the FED do their thing and that she has confidence.
利率，這就是我們從財政部長葉倫那裡聽到的，她今天早些時候發表了講話，她談到她將讓聯準會做他們的事情，並且她有信心。

[04:01] thing and that she has confidence they're going to do things well but that you could cut rates just as a de facto uh step should inflation come down.
他們會做得很好，但如果通膨下降，你可以像事實上採取一個措施一樣降息。

[04:09] because if you didn't there would be a de facto tightening in financial.
因為如果你不這麼做，金融上就會出現事實上的緊縮。

[04:12] de facto tightening in financial conditions even with the disinflation so.
事實上，儘管通膨正在消退，但金融條件卻在收緊。

[04:15] conditions even with the disinflation so she's going to the Chris Waller school.
儘管通膨正在消退，但她正走向克里斯·沃勒的學派。

[04:17] she's going to the Chris Waller school of thought at a time when there is the.
她正走向克里斯·沃勒的學派，當時正值...

[04:20] of thought at a time when there is the pace of inflation coming in but prices.
學派，當時通膨正在來臨，但物價...

[04:23] pace of inflation coming in but prices are still rising and this is what is.
通膨正在來臨，但物價仍在上漲，這就是...

[04:24] are still rising and this is what is such a difficult and awkward thing to.
仍在上漲，這是一件非常困難和尷尬的事情。

[04:26] such a difficult and awkward thing to talk about that's the tricky dance for.
談論的事情，這對許多決策者來說是一場棘手的舞蹈。

[04:28] talk about that's the tricky dance for many of these policy makers let's with.
談論，這對許多決策者來說是一場棘手的舞蹈，讓我們來看看...

[04:29] many of these policy makers let's with the scores this afternoon on the S&P 500.
許多決策者，讓我們來看看今天下午標準普爾 500 指數的表現。

[04:32] the scores this afternoon on the S&P 500 coming off the back of a three day.
標準普爾 500 指數今天下午的表現，此前是三天的...

[04:33] coming off the back of a three day winning streak on the S&P equities right.
三連勝之後，標準普爾股票市場...

[04:36] winning streak on the S&P equities right now just about unchange struggling to.
標準普爾股票市場現在幾乎持平，正在努力爭取...

[04:38] now just about unchange struggling to make it day four and the bond market.
第四天，而債券市場...

[04:40] make it day four and the bond market yields are lower by three or four basis.
使其成為第四天，而債券市場的收益率則下降了三到四個基點。

[04:42] yields are lower by three or four basis points here brammo.
收益率在此下降了三到四個基點，布拉莫。

[04:44] points here brammo 4623 this is the state of play coming up.
基點，布拉莫 4623，這是即將發生的情況。

[04:46] 4623 this is the state of play coming up in the leadup to the Fed rate decision.
4623，這是聯準會利率決策前夕的現況。

[04:49] in the leadup to the Fed rate decision JP Morgan's priia misra and Deutsche.
在聯準會利率決策前夕，摩根大通的 Priia Misra 和德意志銀行...

[04:50] JP Morgan's priia misra and Deutsche Banks Matt lazetti will be joining us at.
摩根大通的 Priia Misra 和德意志銀行的 Matt Lazetti 將加入我們。