Professor Schiller, Jay Powell, FED discussed on Bloomberg Best


This is Bloomberg best JIMBO cell, and I'm Ed Baxter. Stocks got off to their worst new year. Start in years, and then came roaring back on Friday after powerful jobs numbers and comments from fed chairman Jay Powell, saying he's listening carefully to the markets. So Jim Bloomberg's David Westin at Alix steel spoke with Robert Schiller Nobel prize winning columnist and economics professor at Yale. What did you make of what Jay Powell said was it about face more or less about the extent to which the fed would listen to the markets? I think. Yes. L is among the most carefully chosen words. I is that I know very reasonable, man. And the idea that that would swing markets is a sign of over excitement of some sort. He said the most eminently reasonable thing that we are going to wait and see will adjust the reason the Justice they've made where small and in line with expectations. There's nothing there. I think it was driving the market in lar- long-term narrative that is not the capsulated by anything that Powell has said, but professor Schiller was there. One part of what he said, which was differ, forty just said a month before and that had to do with the so-called autopilot on the rolling off of the balance sheet as we're the size of the money supply liquidity. The marketplace wasn't that a change when he said, you know, what we will take a look at that as well. Didn't sound like we're on autopilot anymore. Getting sundays. I think that going back to Janet. Yeah. And there was always reasonable statement that we will adjust as things change. So wording is not my department. But I think that there is a general sense of crisis developing and that is what's on people's nine naked remember things like the financial crisis almost ten years ago. Right. So that is definitely a severe backlash. I mean, you definitely had PTSD right? If you were trading in two thousand eight so with that do are we going to expect more volatility more whippy action? Well, that set us up for this year, if the market's responding so sensibly motionlessly, very benign statement from the Dow. We're talking college. And this is something that economists have difficulty forecast, we're now very good, and you must know forecasting the market. We can forecast volatility volatility has been much higher just a couple of years ago. That volatility was so low. And now it's high again. And so what what do we do? What can we forecast but volatility, and I think that the the past crises we had two big market drops in the twentieth century one at the beginning of the two thousand and one after the financial crisis. Those are memories that are rebounding in people's minds right now, we tend to think of the last crisis and wonder if it will repeat itself. That doesn't mean that I can predict any such it depends on feedback. Nearly liens of people looking at these stories and listening gudgeon each other's reactions. But professor Schiller when you go back to those two earlier crises there were underlying reasons there were if not bubbles something that was pretty close to a bubble in both instances once in the tech area and the other in housing, do you see those sorts of situations in the economy right now. Well, we've seen big increases in housing prices. And in stock prices are. S logic. Case Schiller index has shown one of the biggest booms in history. In fact, I recently ruined one of my editor op, Ed it's the third largest housing, boom. Since twenty twelve is the third largest housing boom since eighteen ninety. Well, there's some ambiguity about exactly that. But that's more or less, correct statement. And and the stock market boom since two thousand nine has been also quite dramatic this up for an atmosphere that wonders if substantially speculative and that kind of wondering Jenner generating all of this market turmoil right now that was Nobel prize winning economist and economics professor at.

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