FED, Paul Donovan, United States discussed on Bloomberg Surveillance
Eighteen ninety nine Paul Donovan, always holistic, always brilliant from UBS, John just gonna bring you the numbers. First quarter EPS fifty five cents the estimates seventy-two cents big miss production missing estimates as well. And just to bring you the pre market price action for Exxon ex m look at the market the stock is lower by about two percents. I'm looking at upstream liquids production. That's the actual development of the product of by five percent driven by the Permian everything. John right now Permian per VM. He used to be romantic stuff battle. Now, it's it all looks pretty boring from the surface level now lead with Permian comments on this statement, as well exa let's bring him on a shower UBS global wealth management chief economist as we count down to the pay report in the United States twenty eight minutes away and morning, Chipotle. What are you looking for devoting? Well, I think it's going to be a reasonable number. It'll probably be above trend growth. Let's say the world economy is operating at trend growth in the first call US is doing better than other parts of the world. So you probably get a number around about two and a call to give or take something along those lines polo want to talk about inventories and do a little bit of GDP clinic care for the people that don't follow this closely as you might inventories. What me through what inventories are? And why the fluctuation industry in inventories as the year progresses is so important GDP figure? Also inventories is basically the stuff you've got in your warehouse, or it's the stuff you've tucked away in the Bank room of your salt itself in case people to buy it in the future. Now, the thing about inventories is that the ups and downs of how much inventory, you've got Kohl's recessions, but they make recessions worse. I'm typically since the war about seventy percent of the dropping GDP intercession is caused by inventory loss. And somebody present the recovery is caused by people filling their warehouses and filling their Bank rooms again now. Well, that means is that a lot of the volatility there traditionally has been called by imagery. Well, it's really interesting is in the last eight years, and it's just in the last eight years technology has taken a big leap forward. And we're all now a lot more. Efficient in how we manage inventory. Well, that means only think is the economic cycle is likely to be less volatile in the future interest voided. We. Politicians coming up with policies dumb question, by this brilliant discussion. How do you inventory services? Well, inventory of services comes in because this company's still hold starts. I mean, you know, however, brilliant and economist is they still need a computer, they still sometimes need a desk, or at least somewhere. So they're all physical things involved in the third sector industry about the retail side. Do you think about restaurants sector stuff with you? It can be so click. I don't want you to come in Deutsche Bank. That would be totally inappropriate. But what is the urgency to quote, unquote, clear the EU commercial banking system. Well, I think economists have said for long time, the problem one of the problems with the euro as monetary union is that we don't have a functioning banking union, and well that means is in in the United States. Now, you can transfer money very easily across the boundaries. You can write a check on a Bank branch in New York and expect to be able to pay it in San Francisco, for example. Well, you call them do that in Europe. If I check on mine French Bank. I can't go along to a German shopkeeper and say here you go. Please take this in exchange for good services. They wouldn't do it. So you don't have a proper banking union. I think the consolidation of the European banking system from lots and lots of small banks at a country level into one more integrated system is a big part of it the British that this in the eighteen twenties. The Americans did this in the nineteen twenties. It's down to Europe thought doing this in the twenty twenties. Great history as well pulled on look at central Bank action. I'm going to suggest John Farrell. Correct me if I'm wrong that at some point some fed officials gonna stand up, and it's going to be a single sensitive speech about moving away from stability, Paul Donovan are we awaiting jump condition when we get said single sentence spoken somewhere. Well, I think one of the interesting things. Sam with the fed recently when you you sit there and look in detail the fedspeak is coming. So she's always a really fun way of spending a weekend. What you find is that there's now a broad spectrum that I've seen for two three years or more that we've got the doll that we've always had people like cash Caray who whatever the question is the answer is covered. But we've also now started to see people say, well, maybe we should be raising rates this year, and if not this year, maybe next year, so you'll start and see this broadening the views coming from the fed potentially adds a little bit more volatility to market interpretations of the fed over time. And also, of course, we're struggling a little bit because the fed is not an economist. But a lawyer we don't necessarily have the same economic intellectual leadership from Powell that we did from Yellen banenky? And. Greenspan volker. I'm so perhaps there's a little bit more confusion about where you look to for the economic intellectual leadership at the fed. That was the most diplomatic put down of champion pound on the FOMC heard for quite a Donovan, do you think? Eight. Sandwich. Impound this done a good job. No, I wouldn't say that necessarily. And I thought I think Pennells about central banker. I mean, he's he's a regulator. I mean, that's that's more of his background. He isn't an economist. I think therefore the, you know, the fed is on a pretty reasonable job over all of. Continuing to tighten policy because of course, the quantitative policy side is still type thing at the moment and will continue to for the foreseeable future and moving monetary policy in an appropriate way. I mean, look here we are in a relatively long economic expansion trend growth, the best labor market in years. You've go to give the fed credit for that. And I think the the FOMC as a collective entity on the championship of Powell has done a good job. All I'm saying is if I'm looking for guidance on where the economy is going chairman, Hal, perhaps wouldn't be my first port of call in the way that Yellen wall turbine pulled on finish. CBS global wealth management. Chief economist interesting discussion on inventories as wild salmon. And about twenty minutes time, we'll be interested to see how great contribution from inventories is to better cheapie number was expected several months ago out that the next fed meeting in all this news flowing next week may one next way I caught up with this special program from you next week. I believe so I really it's been so crazy around here. I haven't talked to scarlet food. But I assume we're news conference every meeting that we do. Wonder if champion Patrick wrecks having a news druggy? Does it effortlessly why can't any other central banker? He struggles because he's got big my Applebaum there. Michael Mckee there Craig Torres. Sank that the press corps, and Franklin honest good, no thing. Selected people ask really really really squirmy questions including the Bloomberg reporters in Frankfurt. I think are very Franky tough on dragging as well. I look forward to Michael Mckee in may one. And the news for New York City Hase Manco,.