Federal Reserve, Danielle, Danielle De Martino Booth discussed on Bloomberg Markets


Bloomberg radio. I'm John Tucker that is your Bloomberg business flash. Matt and Paul. All right, JT, thank you so much We appreciate it. Well, this week we're gonna get some economic data, particularly some inflation data. We have CPI tomorrow, PPI, Wednesday, and we also have a Federal Reserve, which is adamant in fighting inflation. So a lot of moving parts here that are going to play into what we may hear from the Federal Reserve next week. And when we talk Federal Reserve and interest rates and policy, we need to go to Danielle de martino booth, CEO and chief strategist for quill intelligence, former adviser at the Federal Reserve bank of Dallas. Danielle, thanks so much for joining us here. Again, a lot of inflation data. We're going to get today, what do you think the Federal Reserve is really going to be focusing on? Well, I think that they're going to go ahead and fade what they see in the headline CPI. I think that that has been so well broadcast across so many different channels that they're going to, they're going to have really have their eye more on the stickiness of the core. And whether that is as expected kicks up to 6.1%. My buddy, ivy Zelman, who's been a longtime veteran. The housing industry, she sees housing shelter both OER and rent. She sees that peaking at 7% in the fall. Year over year. That's a good 150 basis point above what it was. Yeah, ivy's the best. I used to work with ivy back in the day on the housing biz. So if you're the Federal Reserve, I mean, 75 basis points as we get to next week. But I guess that's baked in. Is it more just kind of the body language we get about whether we pause and see if this stuff actually works, or whether we just keep moving higher? Well, I think what we're going to be focused on are the things that are less in the fed's control. And that would be what are food prices going to do. I was seeing a report on the terminal last night that really, really hot blazing temperatures out west. That's affecting how much we're paying for produce. I think a lot of it's going to depend on how sticky rents are. Rents have begun to peak out. But even in a shorter lag world, which I argue. And I think that's one of the things that people should be paying close attention to. The effect of lag has been compressed, monetary policies working faster. But that being said, if Fannie Mae figures, it figures it takes 5 quarters to see shelter inflation move its way through the CPI, we still got high housing inflation for several more quarters. So I've got a listener writing in Danielle and asks, is if we get a 5% print, is that high enough to get the fed to continue hiking into a weakening environment or what CPI print matters in terms of the actual numbers. Look, until the job is done, I mean, how much more explicit can Jay Powell be? I don't think, I don't think board is going to be acceptable. So until we're until we're back headed back down towards 2%, which I guess we all interpret as three is headed towards two, right? Yeah, well, I mean, that's kind of what the European Central Bank alluded to with communications last week is that three might be the new two. But in order for us to get there, most of the work that's been done shows that you have to have an appreciably bigger bump up in your unemployment rate and I think that's where the focus is and it's intriguing that only lael brainard so far vice chair has said there are risks if we begin to slow the economy too much. You had to pay pretty close attention to what her comments were last week, but that's what she said. Otherwise everybody's just a bunch of former doves who are now bulls in Chinatown. So Danielle, I mean, aside from the fact that we've already had two quarters of negative GDP, what is your recession outlook? And maybe what are some of the parameters that kind of kick in to recession or maybe keep us out of it or maybe make it deep versus not deep? How do you think about that? Right now, I think about the recession in terms of it being long. And what people don't appreciate is that the national bureau of research economic economic research, they time recessions based on the level of GDP. S&P Global came out on Friday, they reduced their third quarter GDP estimate to .6%. I'm getting wonky here, but that means that it's not sufficient to offset the negative .8% they're anticipating we see for the final print for the second quarter. What that means is on a level, the NBER could come out and surprise investors who are like, woohoo. It's a happy we're seeing positive growth. The MB ER could come out and say, you know what? We're still in recession and surprise people because it gauged off of the level. That's what the arbiters, that's how that's how they do it. I want to finally ask you about political pressure. How much do you think Danielle the fed is going to feel if we start to get unemployment at four and a half, 5, 5, and a half percent, or I should say when we start to get unemployment around 5%. And how will that affect this independent body? Well, I think that the winds will shift violently from we're concerned about inflation to, oh my gosh, our constituents are losing their jobs. So it won't take the beltway crowds very long to go from point a to point B we saw knew that a Goldman that they're pursuing layoffs just this morning. That being said, this J Powell sounds like a different person and until something breaks in credit. And I don't mean just bankruptcies rising or defaults increasing. But until something fundamental breaks that threaten systemic risk, I see this J Powell was pushing forward. All right, Danielle, thank you so much for joining us once again. We always appreciate getting your perspective Danielle di martino booth. She's the CEO and chief strategist at quill intelligent and she's a former adviser to Federal Reserve bank of Dallas and she brings up that Goldman Sachs and his Goldman Sachs repairs for layoffs as soon as next week. That's according to The New York Times. Wasn't it just like a cup of coffee ago that we were talking about how much we have to pay these people to keep them? Yeah, well, I mean, you still have to pay them a lot, but it does look like at least according to The New York Times job cuts are going to affect employees across the company. Layoffs likely to be at the lower

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