Fed, President Biden And Ukraine discussed on Bloomberg Radio New York Show


Holiday trading week in the United States But that didn't mean we wanted for news As President Biden finally told us who he wants to be running the fed I'm nominating Jerome Powell for a second term as chair of the Federal Reserve And I'm nominating lael brainard to take the position as vice chair of the Federal Reserve And then the president said he wants to help us all out at the gas pump by releasing some petroleum reserves Although initial reaction was probably not exactly what he wanted And then with the threat of a further Russian invasion of Ukraine described by Richard Haas of the council on foreign relations The Russians are building up to an extraordinary degree opposite in Ukraine Whether this is simply a show of force in order to muscle Ukraine to persuade the government there say not to move closer to the west or whether this is the prelude to an intervention in which they would take over enormous parts of the country conceivably even the capital I don't rule anything out at this point And then the day after Thanksgiving we got the news we had dreaded There's a new variant of COVID This one first detected in South Africa and named omo cron And governments around the world reacted with the United States announcing new travel restrictions effective Monday Here is European Commission president Ursula von der Lion The European Commission has proposed to member states to activate the emergency brake on travel from countries in Southern Africa and other countries affected to limit the spread of the new variant And markets reacted immediately The S&P fell the most since February and a holiday shortened session pushing the index lower for the week The Dow meanwhile extended its losing streak to three weeks And the safe haven trades picked up with the ten year yield falling to just under 1.47% Crude oil also dropped falling 13% on the day Certainly overall a global route on fears that a new coronavirus variant could spark fresh outbreaks So we thought we'd take this shortened week this holiday week to reflect a little more broadly for investors on what the phenomena are that we're facing And there's no one better to do that than Jillian Ted She is the editor at large for the U.S. as well as head of the editorial board at the Financial Times She's also author of a very important book called anthro vision Julian it's great to have you back with us Thank you for joining us Let's apply some of your anthropology record as well as your financial acumen to what we saw this week with the reappointment of Jay Powell and the appointment of Leo brainerd his vice chair And one of the things I'm curious about is one of the biggest issues we have in this country right now is inflation And yet in the appointment we didn't hear President Biden say much about that at all Is the friend really should it be that independent from what's going on in the country Well the reason you didn't hear President Biden say by much fun inflation is because the Federal Reserve right now is in an absolutely nightmarishly difficult position Now the immediate reason for that is that it has these twin goals of low employment and keeping inflation under control as well But it's very likely that in the coming months we're going to see inflation spiral out of control while employment still isn't anywhere near what the fed wants So there's a big cognitive dissonance there about what on earth are Federal Reserve going to do about that Plus of course the fact that you've got asset price inflation that's been going up and up and up and up And yet somehow the fed only looks at consumer price inflation was just doesn't make much sense in terms of how people live their lives But the other big issue is that the Federal Reserve has sort of convinced us in recent years there's almost like this sort of high priest of the American economy where it has these seemingly magical powers and this continuity to keep the show on the road No matter what happens in politics and the fed leaders are there for a lot longer than many other politicians And it's critics aura of terms And yet the reality is that if you look at what's happening right now there's not a lot that they can actually do about inflation because it's been driven to a large degree by supply chain problems by the fact you just had this massive fiscal boost So the fed's simultaneously trying to convince us that it has control over inflation but the reality is it probably doesn't And on top of that you have the fact that fed with tens of change in the economy and the financial system by moving the price of money by minute degrees or changing how it buys bonds But in reality what's really driving sentiment is what it says It's verbal intervention You might even call it voodoo So there's a lot of cognitive dissonance in the way that we see the fed at the moment And I think for that reason it's going to have a tough time in the months ahead Well I wonder Jillian how much of the fed's power is really derived from its credibility And the fact that we believe in it We trust it for one reason or another Do we really trust in institution to have that much power if they don't listen to us at some general level and specifically isn't the appointment process that we just saw this week with president isn't it that one limited way to have some influence over the fed Absolutely and it was fascinating this week as you've seen Congress pushing for much greater say on the part of the progressives in terms of who gets appointed But the reality is that there's a lot of almost mystical magic around the fed It's been like the priests in medieval Catholic Church who spoke Latin and the congregation didn't but the congregation relied on the police to provide the blessings I mostly don't actually understand what the fed is doing or what it says most of the time And of

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