FED, Carl Riccadonna, President Trump discussed on Bloomberg Businessweek
Little, Mr. market. Call them to the principal. Right or Madame market exchange that minorities came out more specifically addressed the volatility in going into that December meeting the s&p was down about twelve percent. And they raised rates anyways and promised more where that came from and no change the balance cheap policy in the market said enough. And I think that the fact that it's hard to sort it all out, I guess a lot of people say in the end, it makes perfectly good sense for the fed to stop now for a while and watch and see what happens stressed their data dependence. I'm still struck by what Charlie Evans president Chicago fed told me week before last he said all these great things about the economy, and I really pushed him on. Well, how much how much of a role did the stock market play? Oh, well, he just listed that whole long list of things for them to pause. But when but he did say he would not be surprised to see rates higher at the end of the year than they are. Now, I think that to me says a lot that there is a consensus view is, of course, even Esther George who's a very hawkish fed Bank president from Kansas City fine with a pause for now. But they're betting they're probably betting to trade yoga's past government shutdown all that gets resolved. And at some point you can step back from all that. And then I think they figure that this predominance has strengthened the economy research itself, I think the big question. So when we see manufacturing slowing down as it has not just. In the US. But in other countries when you see that you just kind of wonder how quickly the economy will shrug all this off once it is going again. But then again, are we supposed to see a job a good jobs report on Friday? We should see good jobs report on Friday. I think as we think about the trajectory of twenty nine thousand nine it is very much the mirror image of two thousand eighteen twenty eighteen started off very strong. And then things kind of faltered in the back half of the year twenty nineteenth going to be the mirror image. So the opposite of that. We're going to see kind of a tough slog in the first half of the year. So maybe the shutdown takes a little bit of a toll on economic confidence and whatnot which we saw in the consumer confidence numbers. It was all forward expectations at tier rated present conditions held up just fine. But we're looking at this probably a little bit of a wobble in corporate profits and earnings in the first half of the year. Maybe that impacts sentiment in hiring an investment and all those things. But by the time, we get to mid year and realize we're not heading into recession that was. Just a soft patch, and we'll get through it the second half of the year. I think could look much more vigorous and mind, you were still below four percent on the unemployment rate. So if we're looking at the back half of the year, the economy's growing north to two percent, the unemployment rate is potentially into the low three percent territory that's an environment where the fed should continue. I think the question the way is all on the economy. Now, Carl laid out the case for we're gonna have a stronger, second half labor market gets even stronger, at least as strong or stays solid. But if we don't get there. That's when I think the that's when the fed has to really consider if they've done enough, right and Narayana Lakota who's a former Minneapolis Bank fed president. And I'm pretty well respected monetary economists had his bed yesterday. Our Bloomberg view saying the fed should actually be looking at the possibility you haven't he says, they haven't met their mother employment target. I don't get that. But I understand when he says they didn't meet their inflation target yet. But even that I would say I would probably personally disagree with him on. Well, we don't know yet. We don't know enough about where the economy is going to go to you guys and listening to your Carl or seems pretty optimistic outlook, and I'm thinking, wait a minute. Wasn't it just a few months ago? People were talking about recession in two thousand twenty like, so how does that fit in do you? Do you see at some point twenty twenty twenty twenty one? There will be a recession in the future. Well, yeah, I'm going to be not the immediate. But a lot of things in the future. I just don't know. Exactly. So it's all about the time. I think author still very low of a recession in twenty one thousand nine hundred twenty timeframe is long even twenty twenty as long as we have our eye on the ball and realized that tax policy fiscal policy is fading. The economy's moving towards two percent and don't set monetary policy for an economy growing at three percent chance Yankee said recently. No, he doesn't he he thinks recessions don't don't die of a natural death or expansions excuse me. They get murdered. And the idea is the fed makes a mistake. That's one thing that could help pushes into recession. That's why this is so critical say it was such a tricky time right for fed policy. Kathleen Hayes, thank you so much global economics and policy editor check her out at daybreak Asia tonight at six PM and Carl Riccadonna our chief economist Bloomberg economic all right? Let's get some world and national headlines after that we're going.