23 Burst results for "Bill Dudley"
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"The fed's credibility and her concerns over it. Alison, thanks so much for being with us. I think really to start, we should start with your monetary policy religion of inflation targeting, you're worried that it's being undermined. Yeah, so I think like most economists might age, you know, we kind of taught that we had figured out monetary policy, inflation is largely a function of expectations. So really best practice was the fed set in inflation target. Everyone believed it, it became self fulfilling and boom we had this very long period of low stable inflation and everyone seemed happy. So what went wrong? Well, what went wrong is, well, you could argue that maybe what first went wrong is that inflation was below target for nearly a decade. And then inflation came back and despite all the tough talk, we're getting from the fed and their commitment to their target. Inflation is still high. I mean, it's coming down, but not nearly by as much as it needs to. Is it time for economists to rethink exactly their theory of inflation at the bottom way out of my skis here? I've taken an economics course or two, but that's it, all right? But I thought that Milton Friedman said it's always a monetary phenomenon. They certainly pumped enough into the money supply, didn't they to get inflation up and yet it didn't. Yeah, I mean, I think we've been rethinking that one for a while. And in part, I think Bill Dudley house was an opinion column about this that paying interest on reserves made inflation rate less sensitive to the money supply. But really the religion among monetary economists has been that it's all about expectations. And that you can sort of play mind games with markets and get the inflation that you wanted. And you know, I think most people will be disturbed to know, you know, how little we really understand about inflation and where it comes from. And you know, we seem to get proved wrong every couple of decades again. And maybe a little understand about expectations as well. I mean, there was a time that was all about guidance. Was it now? We're going to give you forward guidance. And then the fed said, I'm not sure we want to give you guidance anymore. How did that work out? Yeah, I mean, I think it also hasn't worked. I mean, one reason people say that the federalists slow to act on inflation is it was sticking to its guidance. I think the concern with Ford guidance is, oh, you'll commit to something and then you won't follow through and that will ruin guidance. Well, the fed, I think, was quite hungry to prove that they did. And that might have been one reason they were a little slow to respond to inflation, which is further undermined its credibility on everything. So what are the fed's options now? I mean, what's likely to happen here? You have four scenarios you lay out in your column. Well, it seems that the market is pricing in the fed just to do another couple hikes. And I guess the hope is that with an up tough talk that the hikes that they've done will more or less maybe a couple more will be enough and either we'll have a soft landing or maybe even we'll have a mild recession. I'm starting to get concerned the labor market just seems so robust that what we're actually going to get is we're going to inflation will fall maybe three, 4% something manageable and the labor market will still be pretty healthy. And at that point the fed sort of in a bind, like are they going to really take the economy into a recession just to meet a target that most people don't even know exists. I mean, in theory it's perfectly fine to have a three or 4% inflation rate where we're going to do it to two just to sort of I guess it go with this policy. I think that's going to be a tough sell to a lot of people, particularly if you lose your job over that. Well, it's an interesting point. First of all, where did the 2% number come from? Did I hear bank in New Zealand or something? It came from? Yeah. New Zealand started with it. And it sort of just became the norm. And I think it was a good number. I mean, I think we forget, but the time people were sort of nervous about inflation at all. Like some people still argue we should have zero inflation, which is, you know, wrong because inflation could be signed of a growing healthy economy. So I think 2%, it was about what inflation was already at that time. And it also was like, here's some inflation, it's healthy, but it's not too much. So I think it sounded attractive to people for a long time, and everyone else was doing it. So it's just sort of became the norm. So what's the problem with three or four is the concern that you just can't hold it at three or four if you put it at three or put it at four. You just can't keep it at that. It'll go above. Well, I mean, a lot of economists argue that, you know, it doesn't really matter what the target is, so long as it's not super big. So long as you are consistent with it. Like, you know, there's advantages to three. There's advantages to four. There's advantages to two. There's drawbacks to each. But all of them are perfectly fine. What matters is that it's credible and that you pick something and you stick with it. But is it an option for the fed, essentially say, okay, we were wrong about getting back to 2%, but we were right about getting back to 3%. So our credibility is restored. No, because then he said, they're saying we're going to get to two. If they don't get to two, then they can say, eh, three was good enough. I mean, what does that mean? I mean, how credible is that target? The whole reason for being supposed to work is someone says 2%, you set your wage contracts like that, you set your prices like that. If the fed keeps switching targets, then really the target has no meaning. So you think they're stuck with the 2%. And they either make it or they don't make it
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"Reserve is essentially trying to push monetary policy to a saying that they're confident that they're restrictive territory. They probably don't know how restrictive, but they're confident that they're in restrictive territory. As long as if they're in a restrictive territory, and that will slow the economy and bring inflation down. Now, if it turns out that our star was much higher, and a 5% novel fell off laundry wasn't enough to push Madrid into restrictive territory. It kind of went slow in the Federal Reserve would ultimately have to do more. So the uncertainty about our star is translates to uncertainty about how tight this modular policy have to be. How high does the federal fund rate have to go and how long does the Federal Reserve have to keep it there? That dovetails perfectly into flavor market report that really shifted the narrative for at least the bond market. But this really raises a question of whether it was material enough to shift your view of how high our star has to be, how high the terminal rate needs to go. Well, I think at this point, the fed's game plan is to go to what they think is restrictive and then keep it there as long as it takes. I think if they are faced with stronger data, I think it's more likely that they extend the timing of how long monetary policy restrictive as opposed to keep raising the rate higher and higher. Now obviously, if the communist states really strong, then they're going to revise up their forecast of what interest rate peak is necessary to slow the economy. But I don't think we're there yet. But do you think that quarter is still where they're headed? And then they're going to hang out there for a while. If the economy stays strong after you get to 5 to 5 and a quarter, then you could see them move even further I remember when we used to talk about the improbability of a soft landing, the improbability of getting this to land and some sort of nice way. And now that's the base case. Do you push back or do you think that it looks more and more likely that we could get some sort of immaculate disinflation or a soft landing? I think it's still unlikely. I mean, I think it's true that we're not going to go into recession any time soon. The economy just says too much for momentum. If you look at the Lana fed now, a GDP now forecast that revised it up by over a percentage point just in the last week. So they're looking for 2.1% growth first quarter before it was less than 1%. Just died in the back of last week's data. So I think the economy has quite a bit of momentum. I do think the recession is likely in the medium term because the fed has to push up the employee by meaningful amount to generate that slack in the layer market. And every time the fed has pushed the unemployment rate up by more than half a percentage point, we've always ended up in recession. I just don't see that this time is going to be any different. Do you think that when we look back from historical perspective, can write the book a zero rate policies as having ended without any sort of financial accident that was material? All the things that we did to fix the financial system fund, the great financial crisis that helped a lot. I mean, the banking system is much better shape, much more capital, much more liquidity, stress test, mismanagement. So I think the financial system is stronger now. And that's why the Federal Reserve is in some way in control of the process. Once the fed that cheese is objective, it can cut rates. And so if the economy turns out to be weaker than the fed wants at some .6 months, 12 months down the road, the Federal Reserve can cure that pretty quickly because they're going to be at 5% in terms of rates. There's going to be plenty of room for the fed to stimulate the economy. Bill Dudley, former president of the New York fed and current Bloomberg opinion columnist with Bloomberg's Lisa abramo and Tom Kane. And coming up Uber
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"Of your actions. You've talked about how you could see a peak fed funds rate north of 5%. The market is coming to your view. You are out front that way. Right now, in the market, we have nearly 4.7% terminal rate for next year. Where have you changed your view on where you think the fed has to go in order to bring in inflation and honestly address some of the flaws of the previous thinking? I don't think it's so much that the peak in rates has to be higher. I think the fact is the fed has to hold that peak for a longer period of time. I think the fed's strategy here is not to just keep hiking regardless of what's happening in terms of the real economy. But I think they want to go to a restrictive policy. And then they want to hold it there until they see clear signs that's actually bringing inflation down. And generating more slack in the U.S. labor market. Hi, Bill. Wonderful to catch up. Great read. As always, and good to have you on the program with us this morning, Bill daddy, the former New York fed president. And now, of course, Bloomberg opinion columnist amongst other things. At least it's a tough one, isn't it? He's not the only one saying this. But if they do that, they come out issue with me a culprit. Say we got it wrong. Can you imagine how many more senator warrants around there as the economy starts to roll over? And I think if you focus too much on the Federal Reserve, you're not focusing enough on some of the fiscal errors that were made over the last couple of years as well. Agreed in terms of additional rounds of stimulus that may not have gone to exactly the efforts that perhaps really helped ignite the economy, but just simply gave people money to spend at a time when the economy wasn't open. Lots of discussions that might be superseded by someone looking to blame someone, right? So this is why I asked, what is the economic benefit coming out and saying, we were wrong and we're going to be wrong again because we have to create some sort of stability here. This is The Rock and the hard place and the reason why policymakers do not usually come out and say we're heading toward a recession and it's our fault. I understand the argument that it enhances credibility. And to trust the process, you've also got to believe that the people in control understand when they've made a mistake so they don't repeat them. It makes perfect sense to me. But I just think that it's more two way that you also invite a lot of criticism about the path forward. The one argument and this is something Bill Dudley has said in the past is if there is more credibility, perhaps the market will move more intent and with what the fed is saying, and then you might get a more accurate
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"This week from New York City this morning, good morning. The ISM manufacturing data out a little bit later, some PMIs. ISM services, jolts, jobless claims, then onto Friday payrolls and onto next week, U.S. CPI futures right now, a third of 1% lower on a S&P on the NASDAQ 100 down a quarter of 1%, some brilliant columns and on Bloomberg opinion today. This just then from Muhammad, Al Arian, here's the first line, July and illustration of the adage that the market is not the economy. You think in a big way, there seems to be the takeaway. And then this from Bill Dudley, a little bit earlier this morning, the former New York fed president, investors have lately become strangely optimistic that the Federal Reserve won't have to tighten monetary policy much further. He goes on to say this wishful thinking is both unfounded and can a productive. I'm sorry, John, I'm speechless after a headline. I just saw John, you got to help me translate this folks. We've got to get to. I haven't seen it. John, it's just out of your PepsiCo. To take 8 and a half percent stake in Celsius for 550 million, isn't that a crypto company? That's a fitness drink make itself, apparently. Celsius? I've never had it. It's a competitor of Tang. It's a matter of Tang. They could have bought ten because I'm loaded. Did we count for $550 million deals here, so? I don't think we do. I just saw it and thought it crypto. I'm like, okay. Okay. Anyways, we'll have much more on that from our crack corporate team. We wanted to cover it. You thought it was crypto. You know, they'll no doubt do a better job than I just did there. I just went down in flames there. I'll probably get hate mail. Why don't you track me down with you? That's why. That's a group effort. We were trying to get grandma involved. Premises, no, no, no. Steven whining always says yes, yes, yes. He's chief investment strategist in chief economist city global wealth, but far more he links profit into our economy truly like no one I've ever met. Steven, you are the guy I want to talk to. Link in the earnings surprise in a 6 week bull market with chairman Powell's economy. Take the profit and tell me what it means about our economy. Well, the one thing I just heard from the comments earlier about July or the stock market isn't the economy. A month is not a quarter, or it's not a year. We had a quarter passed where there was still lingering strength. You'll see employment gained in the month. And we're decelerating from a high level of production and employment gains. So the fact that profits are up 6 and a half percent over the past year. Shouldn't be so much of surprise. There is a bit of a squeeze going down on costs sort of lower the value chain or going up more than the top line and we're going to have a weaker period of profits in the year ahead, but if you were worried about the period we're just in. You know, I wouldn't get too excited about that being sort of the terrible period. That's all over with now. Now, when it comes to chairman Powell, I think again, the one thing that I would take away, that's a little more positive and was a reason for investors to perhaps not really jump out of the window was the fact that there's some recognition is not going down the way they expect. If you take a look at total home sales in the U.S., new and existing home sales were down 26% in sales from the peak. If you combine these figures, there's plenty of signs that there's interest rate impact leading edge knocking the economy down now. In your note, Steven, we hear what we earn from others, which is avoid the cyclicals in such. Tell me how technology in the retail bed is the journal rights up today. How the technology bet is the non cyclical play. It's what you want to be in given where we are right now. Well, there are some technology cyclicals, and then there are some others. I would put advertising spending and the cyclical category, personal computers, to home electronics, this sort of thing. Tech services, cybersecurity, enterprise software, these things much, much less cyclical. I would look at it and say, look, we have had a sizable drop in long-term interest rates already. Now, again, what are we talking about three and a half down to two and three quarters or so. But the signs are there that we're going to have a low level peak in long-term interest rates. And probably for the bulk of the secular technology area, we're probably going to have a fairly high level trough. So a lot of the risk, the idea that just commodity prices can go up forever. The economy can have an inflationary boom. We're just going to fight that. I think those are the areas that we would be think that are a little bit more vulnerable now. So again, a little bit of drift here towards high quality growth, which we can understand, but I don't think it's really that moment where we can
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"I think what the fed wanted to do with a very aggressive public relations campaign, all of the regional fed presidents out talking all the board members out talking was to have the public be convinced they were on this and they could tame it quickly. And there's no evidence in the inflation expectations data that people are buying it. And that makes it harder because if they, if they don't believe it, they do the things you should worry about, negotiate for higher wages, mark up the prices that they charge and the fed that has a more difficult problem as a result. Doug, you, of course, are an economist, not a politician. So I asked this from an economist point of view. Does it make any sense that you're talking about some sort of reconciliation bill right now? Some form of the build back better, even trimmed down to a $1 trillion. Does it make sense to even talk about that right now? As a matter of macro stabilization policy, no. Any talk about that is about other objectives that the Democrats might have in Congress, but one policy error generated this inflation in part, and that was the American rescue plan. The economy has grown at 6 and a half percent. There was no reason to do a big macro stimulus. They did it, and we got inflation. To raise a $1 trillion in taxes at a time when most people are worried about rising recession probabilities, makes no sense whatsoever. And finally, Doug, this probably is not the biggest problem we have given everything you just described, but does the fed have a problem with raising interest rates and what's going on in the bond market in terms of the bonds that holds already. I mean, I saw one account actually from Bill Dudley, former president of the New York fed saying, as of the fourth quarter this year, they're going to start losing money and it'll go well into next year as the value of those bonds comes down. Does the fed have a problem even a political problem potentially with Congress if it loses a lot of money because it quantitative easing. They may have a political problem, but I don't think they have a policy problem. I mean, they are focused on the Main Street economy, the real economy. They pay attention to financial markets as conveying information about that real economy, and they pay no attention to their own fund financial condition. That's not important in the larger scheme of things. When they're making money and they're handing it back to the treasury, it makes their life easier. Because Congress has that money to spend, but their first and foremost job is to pursue the dual mandate and at the moment, getting sustained high employment means getting inflation under control. And that's what they're going to focus on. The great to have you here today. Thank you so much. That's Douglas holt, and he is president of the American action forum. Coming up, if inflation is the problem, could trade
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"Of us to understand today's price challenges But we'll clean energy be cheaper really I mean because if it would be cheaper wouldn't we have done it without the government encouraging us to do it Well there's a lot of issues with clean energy I mean first of all you know we've seen these incredible developments in technology that have made it cheaper over time We've seen that as solar and wind power become more widespread costs have come down so that is certainly an important part of the issue The second thing though is that if we are able to produce clean energy then we can be less reliant on these global markets for oil where the prices are set globally and in large part set by countries like Russia They are run by add arcs Autocracy And so that's a key part of why we don't have a lot of control over our prices in energy So I think that is removing towards clean energy being able to be more self reliant It will be an important piece of the price story in the future One of the major drivers as I understand of inflation are some of the problems we have with supply chains Things that were certainly brought to light to some extent by COVID but probably were there beforehand A lot of people are talking businesses and otherwise talking about redoing our supply chains But as we redo those supply chains isn't it inherent that the price is going to go up Isn't that inflationary It may be the right thing to do but it's not going to be as cheap as it was Well so that is a great question because what we've seen right now is that fragility in our global supply chains has made us incredibly vulnerable It's made our economy not as resilient as we need it to be It's meant that people can't get some goods that they very much need And that is leading to higher prices So if we had more resilient supply chains if we had less concentration in our market so there was more options to buy things from different producers when someone's supply chain got a little mucked up That would ease some of the price pressures that we would see today Or maybe we'd not be in the same kind of situation So I think that having a variety of producers and having more resilient supply chains maybe more local supply chains these can all help stabilize prices looking down the road Certainly this kind of crisis is very uncomfortable for consumers to face so I think the cost today I've been quite high And finally I want to double back on the question of the jobs numbers which are really driving us today You're an economist of course Bill Dudley another economist was on Bloomberg earlier this week And he said as a practical matter you can not get inflation down to where you need it without driving up unemployment rates You just can't be done despite the fact there are some projections on it Do you agree with that Listen one of the president's goals from day one has been to make sure that we get the economy to full employment He has said so many times that his school is to grow the economy from the bottom up and middle out Make sure that those jobs are delivering for the American worker and for American families So he is committed to continuing this recovery to the best of his ability And making sure that at the same time the fed does its job and focuses on reducing cost facing families but that is that is the question But we certainly are seeing at this point in time that this strong labor market is delivering for families into the extent that they are folks who are able to go out there and get a job if they want one to need one Okay Heather it's always such a treat to have you with this really appreciate your time That's doctor Heather Boucher of the council of economic advisers at The White House Coming up Larry Fink chairman.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"Decade high Vinny del gide's Bloomberg radio The S&P 500 Index rallied 93 points today It was a losing week down 6 in a row The S&P up to date by 2.4% the Dow up 466 up one and a half percent NASDAQ up 434 up 3.8% Global news 24 hours a day on air and on Bloomberg quicktake powered by more than 2700 journalists and analysts in more than 120 countries I'm Charlie palette This is Bloomberg This is Bloomberg best Bloomberg radio is everywhere I always accurate and precise Bluebirds really one of the places that's reporting facts Your communication capabilities are wonderful for our business I'm at Baxter And I'm do these Pellegrini on this weekend edition of Bloomberg best Cleveland's fed president says she's open to a bigger interest rate hike I don't want to rule anything out when we get to that point in the second half of the year We may have to if we don't have inflation moving down we may have to speed up Former New York fed president Bill Dudley says the fed could land in hot water If you keep under a promising what you're going to what's required And then I think there is a risk to the fed's credibility down the road And Mike novogratz keeps the faith in crypto Listen I just went around the country and I am wildly convicted that there is infrastructure being put in place to bring lots of capital into the space Bloomberg best Bloomberg's best stories of the week powered by 2700 journalists and analysts in more than a 120 countries around the world And there's really kind of a rising sense that because of how strong inflation is there's a disconnect between economic reality and what the fed is doing about it That's one of the things that we had a chance to ask Bill Dudley about Doubly his former head of the Federal Reserve bank of New York And here he is with Bloomberg's Tom.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"Now not Apple anymore It belongs to you They say I know I'm repeating what you said because you stepped on my toes Apple though down about 5% here on the day to continue to drift lower now down at around one 47 here DISH Network is the biggest decliner in the S&P 500 on the day They held an Analyst Day yesterday where they kind of laid out their 5G plans and some analysts well they were a little confused by it They said the company has a lot of big ambitions but they were a little short on details of how they're going to achieve those ambitions So a little bit of skepticism there Meanwhile Electronic Arts which had kind of a flop of a quarter despite that those shares are higher by about 10% even getting an upgrade over at Moffett nathanson Remember that battlefield game flopped last year They haven't released any new titles so far in 2022 but here's the thing They got gap revenue Gap net income excuse me And they have positive free cash flow 391 million So it's a relatively stable company with relatively decent cash flow And they've got a good pipeline of games that a lot of analysts are betting that once they sort of get through this whatever the speed bump is they're over right now Things will sort itself out and after the bell guys We're keep an eye a lot of big earnings the biggest of them all Disney are going to be reporting those shares down about 2% right now I'm going to get into the weeds a bit but if you have a terminal new type in C RP go at the moment crypto it is ugly And we are having a moment of well whether it's systemic risk or not we are worried about what has been basically a grand experiment a DeFi darling Now in a doldrums this is of course terror USD UST and experiment basically an algorithmic stablecoin that has lost its peg now at one point down 6 tenths of a percent rather than the $1 it was meant to be out as training about 30 cents even on the dollar And this is of course an asset that isn't backed by cash but it's backed by code and suddenly the unwinding the spreading the big named VCs that were in this Really looking messy right now And the question is where does crypto rebuild from this Stablecoin not looking so stable Hey Roman hey Roman did you hear that Saudi Arabia ramco is now the world's most valuable stock Are they Just want to make sure you're listening Hey listen we all did certainly take note of the CPI print this morning coming in pretty hot No doubt about it Bloomberg opinion columnist He's also an adviser Senior adviser to Bloomberg economics former head of the New York fed he knows what he's talking about Bill Dudley catching up with their surveillance team earlier today And he's really worried about fed credibility and the fed not being clear in its communication Here's what he had to say Well I think the problem is that the Federal Reserve has not been forceful enough in stating not just what their goal is 2% inflation but the means to achieve that goal a chair poll and his press conference last week didn't really want to talk about why trade policy might actually not just have to go to neutral It might have to go to tight And I think a tape monitor policy is what's going to be required to give inflation under control All right of course that's Bill Dudley Former head of the New York fed and he's a senior adviser to our team here at Bloomberg economics also Bloomberg opinion columnist I mean that inflation print I mean I put it on Twitter peak inflation question mark I mean we just don't know at this point And the fed I think safe to say missed the mark early on And there's a lot of writing about whether you do There's a question We had a whole report today that actually showed that it wasn't at its peak In fact a core inflation is drifting higher Well you talk to some of our Bloomberg economics team and they're saying yeah it is kind of at peak but maybe we'll watch those next three months I mean in all seriousness though I was actually a little shocked about the report this morning I mean I think like you and like most people I thought we would get some sort of definitive proof that we were at a peak of some sort But when you see some of those numbers continuing to go up and again really essential stuff too And the feed through of what that has to other products as well You wonder whether we could see a couple more months The only thing I would say is some things are going down right We saw used cars going down a peril going down Household furnishings go down education medical care commodities So some of the things that were strained during the pandemic are starting to come down But commodities oils just gone back up again which I guess is a worry and that's again going to be perhaps a pressure on those airline tickets mainly being bought by one Taylor rigs But I'm interested in also the pain trade is for me as food 1981 we haven't seen inflation in food in that respect And yes if you dine out a little bit less oh we all cry tier But when you can't afford the groceries on the shelves that becomes a real problem Yeah today's big take is a great story about Midland Texas It's the area of the country that has the highest inflation at 10% $6 a gallon for a gallon of milk And the food bank there is just lines and lines of cars It reminds me of what we saw at the height of the pandemic when we saw unemployment so high The difference now unemployment is low below 3.5% there but prices are so high Right if you're retired on a fixed income this is really tricky and they talk about people just buying eggs and I think with a beans at the supermarket because it's all they can afford We've got lots more to come And of course we're going to break down some big earnings including Disney after the close We'll be back in less than I've said that earlier Did you You think I listened to you All right we're going to be back in less than an hour's time Why is this simultaneous lasted this long Good thing That's a good thing we have therapists helping us out here All right cross platform on radio TV and YouTube will be back for beyond the bell We really do love each other right here on Bloomberg.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"From Bloomberg's European headquarters here in London I'm Caroline Hepburn with this Bloomberg radio business flash So yesterday we saw the S&P 500 full 1% than NASDAQ down by 2.2% after the fed minutes which looked and unveiled effectively what the fed path is for the balance sheet a shrinking of the balance sheet $9 trillion worth of balance sheet by about a $1 trillion per year That has hit of course risk assets that concerns about whether it will hurt growth whether it will mean more volatility to have the balance sheet run off Futures this morning are in the red for the S&P 500 but actually ticking higher for the NASDAQ now 50 futures also gaining half of 1% remember we get the ECB account for the last meeting two later today as her bonds then two 56 for ten years down by four basis points As a result of the fed's plan to kind of prune the balance sheet back you did see a flattening of the yield curves more towards steepening and the twos tens turning positive Also some interesting comments from Bill Dudley calling for the fed to effectively force in equity correction to get inflation under control to be effective it will have to inflict more losses on stock and bond investors than it has done so far Those were Dudley's words oil rebounds after a big slump yesterday print crude at a 102 55 and WTI crude futures at $97 63 both up by about 1.4% this morning Bloomberg dollar spot index also is down around a tenth of 1% Those are the markets your Bloomberg radio business slash is the anger is.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"Thinks it's all of Europe already That is his mindset I'm a tremendous work awesome as always So looking forward to catching up with you in a couple of hours time around the open and balance we talk about some of those oil execs Big oil going in front of a House subcommittee a little bit later this morning I believe at about ten 30 Eastern Time We also need to catch up with the former New York fed president Bill Dudley Tom keen of course the Bloomberg opinion columnist He's going to join us in about 5 minutes on his latest piece One of his most forceful pieces There's been a set of them and Johnny doesn't miss any words of the ramifications of any set of 25 or 50 basis point rises a dovetails nicely with what we heard from loud brainers yesterday They've got to get restrictive bramo and at this level clearly they're not And given where financial conditions are clearly the idea of Bill Dudley is that they've got a lot of work to do I'm thinking about what mister kroner said over at Citi just earlier that if real rates turn positive that's a game changer And you really were pressing him on this and rightly So all of a sudden cash becomes more appealing Is that what the fed has to do Do they have to get real rates to zero They certainly seem to be indicating that that's been the response in markets The vix with a little lift again this morning Tom just a little bit of a lift a breakthrough 23 There are 30s the pain level and we got to an 18 end that we come back 18 19 John to 23 and it shows a doubt futures negative two 13 and you know I look at the job John the Dow 34,303 is it's that kind of day And the vixen percentages Yeah it's a kind of day I mean the vix is 23 People watch this program.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"This is Bloomberg best on Bloomberg radio This is Bloomberg best I'm Ed Baxter And I'm Denise Pellegrini Do you some people think the fed needs to get more hawkish And one of them is former fed bank of New York president Bill Dudley for sure And here's how he puts it with Bloomberg's Tom Keane Lisa brambles and Jonathan farrow I'm sure it doesn't make people there happy but the reality is I gotta call it like I see it And what I see right now is a Federal Reserve that has a very benign forecast relative to what's actually happening on inflation If you look at their forecast that they published at the December sea meeting they have inflation melting away to 2.1% in 2024 even though they don't take monetary policy to a tight setting The end of 2024 the federal fund rates 2.1% below what they think is neutral So how does the inflation magically disappear if the federals are not all too tight That's the question I want to raise in this piece Bill Dudley Alan Greenspan in 1998 at least talking about the measurement and measured in the idea of a graduation a step by step approach Alan blinder in an essay in 2005 said the Greenspan standard is suspect Are we going back to Arthur berms burns in the pipe smoke where we're going to lose quarter point measured and start to see some real jumps I think they're going to go fairly slow at first but because they think that the inflation pressures that we're seeing right now are going to subside as we go through the first half of the year But the real new information is the tightness of the labor market and the fact that that tightness of the labor market is resulting in higher wages wages above what's consistent with 2% inflation So I think even if the initial impulse of inflation turns out to be transitory it now have a problem because the labor market is sufficiently tight that wages are going to continue to accelerate Bill you reiterate your call for three to 4% as the potential and a rate for the fed funds I'm struck by the fact that you include the idea of an end rate for inflation at two and a half to 3% which is actually a commonplace suggestion What happens to risk markets if the fed funds rate gets to three or 4% Do you think that this economy can sustain that Well I think that's the fundamental question In 2004 2006 the economy sustained the fed taking the federal funds rate from 1% to 5 and a quarter in 2016 to 19 the college didn't do so well with the fed taking the federal fund rate to up a little bit over 2% So I think that's the fundamental question How does a market reactive heighten I think that right now this idea though that the fed is a small amount of tightening is going to cause markets to go down precipitously and that's going to cause the fed to stop I don't think that's the most likely outcome If you think the inflation subsiding at two and a half to 3% would result in what could be a crippling fed funds rate that are you saying that we need an inflation rate below two and a half percent to have an economy that is sustainable over the next decade I don't think a three to 4% federal fundraiser is crippling it in any way It's only an unusually high relative to the last ten years It's actually a pretty low relative to the last 30 or 40 years So I think the economy can do just fine with a federal fundraising that range I think what markets are really pricing is the fact that the fed is actually going to have to move to monetary policy setting at some point The fed has turned more hawkish in the very near term So a lot more heights are being priced in in 2022 But the terminal fid fund rate the market's expecting is still very low only around 2% or so Bill what's important here and I think to summarize the message you think for inflation to come lower the fed needs to engineer kind of financial conditions Bill I'm trying to understand from your standpoint when you think that tightness begins Where do you think it is One and a half 2% two and a half When does it start to become restrictive and where we can sit here and say the fed is now tightening I think it's when the market starts to price in more tightening than what they've priced in at this point in time I mean if the fed just delivers what's priced in today I don't think markets react very much because it's already priced in So the Federal Reserve essentially has to go farther than what the market anticipates for the markets to react I think what will happen is the first finals will go out further privacy biennials in the two and a half 3% range And as once we have higher ten year treasury note yields that will start to weigh on the stock market a little bit more and other risk assets like say cryptocurrencies for example But what you just said though the original piece of this is that you think when that happens the fed doesn't back off It's not the old playbook Well the fed has to do its job at the end of the day I mean if you try to defer the fight against inflation all you do is get more inflation So it's not like trying to be a nice guy get through it for a better place We sort of saw that mistake in the early 1970s So I think the Federal Reserve at the end of the day will do its job I think it's a slow I think to realize right now the consequences of the tight labor market which save engineered at this point Which moves quicker the Taylor rule coming down with all its moving parts or does the fed move up at a greater speed Well I don't think the Taylor role is really that relevant to what the fed is doing right now I mean listen to cheer Paul He talks about the importance of financial conditions And I think the key issue the financial conditions today are extremely accommodative The slow the economy down the fed needs to make financial conditions less accommodative How do they do that They raised short term rates they raise short term rates more and faster than what markets expect Though how does balance sheet reduction play into this as well From your standpoint Well it's interesting that there seems to be a growing sentiment that the balance sheet reduction is going to happen sooner than last time Not just in time but also in terms of the level of interest rates where the fed is going to start the balance sheet finalization process Mary Daley last week talked about getting going after a couple rate hikes I find that a little bit surprising given that the fed officials have also said that they want the federal fund rate to be the primary tool of monetary policy Well if you want the federal fund rate to be the primary tool of monetary policy you need to get the federal fund rate up So it can actually react to adverse shocks in the economy so you can push it back down I think the case for being a little bit more patient with the balance sheet is still pretty strong What's your sense of how much they should raise rates this year I think they should go faster than what's priced into the market I mean obviously it's going to depend a bit on how the economy revolves They need to do at least four or 5 rate heights this year And when strike me at all if we get into an every meeting kind of cycle at some point But what went wrong for this Federal Reserve Let's finish there Well I think there are essentially four mistakes that were made Number one the way the.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"This is Bloomberg best on Bloomberg radio This is Bloomberg best I'm at Baxter and I'm Denise Pellegrini Do you some people think the fed needs to get more hawkish And one of them is former fed bank of New York president Bill Dudley for sure And here's how he puts it with Bloomberg's Tom Keane Lisa bramlett and Jonathan farrow I'm sure it doesn't make people there happy but the reality is I gotta call it like I see it and what I see right now is a Federal Reserve that has a very benign forecast relative to what's actually happening on inflation If you look at their forecasts that they published at the December sea meeting they have inflation melting away to 2.1% in 2024 even though they don't take monetary policy to a tight setting The end of 2024 the federal fund rates 2.1% below what they think is neutral So how does the inflation magically disappear if the Federal Reserve is that not all too tight That's the question I want to raise in this piece Bill Dudley Alan Greenspan in 1998 at least talking about the measurement and measured in the idea of a graduation of step by step approach Alan blinder in an essay in 2005 said the Greenspan standard is suspect Are we going back to Arthur berms burns in the pipe smoke where we're going to lose quarter point measured and start to see some real jumps I think they're going to go fairly slow at first but because they think that the inflation pressures that we're seeing right now are going to subside as we go through the first half of the year But the real new information is the tightness of the labor market and the fact that that tightness of the labor market is resulting in higher wages wages above what's consistent with 2% inflation So I think even if the initial impulse of inflation turns out to be transitory it now have a problem because the labor market is sufficiently tight that wages are going to continue to accelerate Bill you reiterate your call for three to 4% as the potential and a rate for the fed funds I'm struck by the fact that you include the idea of an end rate for inflation at two and a half to 3% which is actually a commonplace suggestion What happens to risk markets if the fed funds rate gets to three or 4% Do you think that this economy can sustain that Well I think that's the fundamental question In 2004 2006 the economy sustained the fed taking the federal fund rate from 1% to 5 and a quarter in 2016 to 19 the college didn't do so well with the fed taking the federal funds rate to up a little bit over 2% So I think that's the fundamental question How does auto markets react if that tightening I think that right now this idea though that the fed is a small amount of titanium is going to cause markets to go down precipitously and that's going to cause the fed to stop I don't think that's the most likely outcome If you think the inflation subsiding at two and a half to 3% would result in what could be a crippling fed funds rate that are you saying that we need an inflation rate below two and a half percent to have an economy that is sustainable over the next decade I don't think a three to 4% federal fundraiser is crippling it in any way It's only an unusually high relative to the left ten years It's actually a pretty low relative to the last 30 or 40 years So I think the economy can do just fine with the federal funds rate in that range I think what markets are really pricing is the fact that the fed is actually going to have to move to a policy study at some point The fed has turned more hawkish in the very near term So a lot more heights are being priced in in 2022 But the terminal fiddle fund rate that the market is expecting is still very low only around 2% or so But what's important here and I think to summarize the message you think for inflation to come lower the fed needs to engineer kind of financial conditions Bill I'm trying to understand from your standpoint when you think that tightness begins Where do you think it is One and a half 2% two and a half When does it start to become restrictive and where we can sit here and say the fed is now Titanic I think it's when the markets start to price in more tightening than what they've created at this point in time I mean it's the fed just delivers what's priced in today I don't think markets react very much because it's already priced in So the Federal Reserve essentially has to go farther than what the market anticipates from the markets to react I think what will happen is the first finals will go out further privacy biennials in the two and a half 3% range And as once we have higher tenure treasury note yields that will start to weigh in the stock market a little bit more and other risk assets like say cryptocurrencies for example But what you just said dog with the original piece of this is that you think when that happens the fed doesn't back up It's not the old playbook Well the fed has to do its job at the end of the day I mean if you try to defer the fight against inflation all you do is get more inflation So it's not like trying to be a nice guy gets you to a better place We sort of saw that mistake in the early 1970s So I think the Federal Reserve at the end of the day.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"I'm Ed Baxter And I'm Denise Pellegrini Do you some people think the fed needs to get more hawkish And one of them is former fed bank of New York president Bill Dudley for sure And here's how he puts it with Bloomberg's Tom Keane Lisa Abramovich and Jonathan farrow I'm sure it doesn't make people there happy but the reality is I got to call it like I see it And what I see right now is the Federal Reserve that has a very benign forecast relative to what's actually happening on inflation If you look at their forecasts that they published at the December sea meeting they have inflation melting away to 2.1% in 2024 even though they don't take monetary policy to a tight setting The end of 2024 the federal fund rates 2.1% below what they think is neutral So how does the inflation magically disappear if the Federal Reserve is acting in policy type That's the question I want to raise in this piece Bill Dudley Alan Greenspan in 1998 at least talking about the measurement and measured in the idea of a graduation of step by step approach Alan blinder in an essay in 2005 said the Greenspan standard is suspect Are we going back to Arthur berms burns in the pipe smoke where we're going to lose quarter point measured and start to see some real jumps I think they're going to go fairly slow at first but because they think that the inflation pressures that we're seeing right now are going to subside as we go through the first half of the year But the real new information is the tightness of the labor market and the fact that that tightness of the labor market is resulting in higher wages wages above what's consistent with 2% inflation So I think even if the initial impulse of inflation turns out to be transitory it now have a problem because the labor market is sufficiently tight that wages are going to continue to accelerate Bill you reiterate your call for three to 4% as the potential and rate for the fed funds I'm struck by the fact that you include the idea of an end rate for inflation at two and a half to 3% which is actually a commonplace suggestion What happens to risk markets if the fed funds rate gets to three or 4% Do you think that this economy can sustain that Well I think that's the fundamental question In 2004 2006 the economy sustained the fed taking the federal fund rate from 1% to 5 and a quarter In 2016 to 19 the colleague did do so well with the fed taking the federal funds rate to up a little bit over 2% So I think that's the fundamental question How does auto markets react if that lightning I think that right now this idea though that the fed is a small amount of titanium is going to cause markets to go down precipitously and that's going to cause the fed to stop I don't think that's the most likely outcome If you think the inflation subsiding at two and a half to 3% would result in what could be a crippling fed funds rate that are you saying that we need an inflation rate below two and a half percent to have an economy that is sustainable over the next decade I don't think a three to 4% federal fundraiser is crippling it in any way It's only an unusually high relative to the last ten years It's actually a pretty low relative to the last 30 or 40 years So I think the economy can do just fine with the federal funds rate in that range I think what markets are really pricing is the fact that the fed is actually going to have to move to a policy study at some point The fed has turned more hawkish in the very near term So a lot more heights are being priced in in 2022 But the terminal fiddle fund rate that the market is expecting is still very low only around 2% or so But what's important here and I think to summarize the message you think for inflation to come lower the fed needs to engineer kind of financial conditions Bill I'm trying to understand from your standpoint when you think that tightness begins Where do you think it is One and a half 2% two and a half When does it start to become restrictive and where we can sit here and say the fed is now tightening I think it's when the markets start to price in more tightening than what they've breaks in at this point in time I mean it's the fed just delivers what's priced in today I don't think markets react very much because it's already priced in So the Federal Reserve essentially has to go further than what the market anticipates to the markets to react I think what will happen is the first bond yield will go out further Pricey biennials in the two and a half 3% range And as once we have higher tenure treasury note yields that will start to weigh in the stock market a little bit more And other risk assets like say cryptocurrencies for example But what you just said Doug the original piece of this is that you think when that happens the fed doesn't back off It's not the old playbook Well the fed has to do its job at the end of the day I mean if you try to defer the fight against inflation all you do is get more inflation So it's not like trying to be a nice guy get through to a better place We sort of saw that mistake in the early 1970s So I think the Federal Reserve at the end of the day will do its job I think it's a slow I think to realize right now the consequences of the tight labor market which save engineered at this point Which moves quicker the Taylor rule coming down with all its moving parts Ernest the fed move up at a greater speed Well I don't think the Taylor rule is really that relevant to what the fed is doing right now I mean listen to cheer Paul and he talks about the importance of financial conditions And I think that that's the key issue The financial conditions today are extremely accommodative The slow the economy down the fit needs to make financial conditions less accommodative How do they do that They raised short term rates they raise short term rates more and faster than what markets expect Though how does balance sheet reduction play into this as well From your standpoint Well it's interesting that there seems to be a growing sentiment that the balance sheet reduction is going to happen sooner than last time Not just in time but also in terms of the level of interest rates where the fed is going to start the balance sheet finalization.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"This is Bloomberg best on Bloomberg radio This is Bloomberg best I'm at Baxter And I'm Denise Pellegrini Denis some people think the fed needs to get more hawkish And one of them is former fed bank of New York president Bill Dudley for sure And here's how he puts it with Bloomberg's Tom Keane Lisa bravos and Jonathan farrow I'm sure it doesn't make people there happy but the reality is I got to call it like I see it And what I see right now is a Federal Reserve that have a very benign forecast relative to what's actually happening on inflation If you look at their forecast that they published at the December sea meeting they have inflation melting away to 2.1% in 2024 even though they don't take monetary policy to a tight setting The end of 2024 the federal fund rates 2.1% below what they think is neutral So how does the inflation magically disappear if the feathers are not as much awesome tight That's the question I want to raise in this piece Bill Dudley Alan Greenspan in 1998 at least talking about the measurement and measured in the idea of a graduation of step by step approach Alan blinder in an essay in 2005 said the Greenspan standard is suspect Are we going back to Arthur berms burns in the pipe smoke where we're going to lose quarter point measured and start to see some real jumps I think they're going to go fairly slow at first but because they think that the inflation pressures that we're seeing right now are going to subside as we go through the first half of the year But new information is the tightness of the labor market and the fact that that tightness of the labor market is resulting in higher wages wages above what's consistent with 2% inflation So I think even if the initial impulse of inflation turns out to be transitory it now have a problem because the labor market is sufficiently tight that wages are going to continue to accelerate Bill you reiterate your call for three to 4% as the potential and rate for the fed funds I'm struck by the fact that you include the idea of an end rate for inflation at two and a half to 3% which is actually a commonplace suggestion What happens to risk markets if the fed funds rate gets to three or 4% Do you think that this economy can sustain that Well I think that's the fundamental question In 2004 2006 the economy is sustained the fed taking the federal funds rate from 1% to 5 and a quarter in 2016 to 19 the colleague didn't do so well with the fed taking the federal funds rate to up a little bit over 2% So I think that's the fundamental question How does markets react to that tightening I think that right now this idea though that the fed is a small amount of Titan is going to cause markets to go down precipitously and that's going to cause the fed to stop I don't think that's the most likely outcome If you think that inflation subsiding at two and a half to 3% would result in what could be a crippling fed funds rate that are you saying that we need an inflation rate below two and a half percent to have an economy that is sustainable over the next decade I don't think a three to 4% federal fundraiser is crippling it in any way It's only an unusually high relative to the last ten years It's actually a pretty low relative to the last 30 or 40 years So I think the economy can do just fine with the federal funds rate in that range I think what markets are really pricing is the fact that the fed is actually going to have to move to a policy setting at some point The fed has turned more hawkish in the very near term So a lot more hikes are being priced in in 2022 But the terminal federal funds rate that the market is expecting is still very low only around 2% or so But what's important here and I think to summarize the message you think for inflation to come lower the fed needs to engineer kind of financial conditions Bill I'm trying to understand from your standpoint when you think that tightness begins Where do you think it is One and a half 2% two and a half When is it start to become restrictive and where we can sit here and say the fed is now tightening I think it's when the market starts to price in more tightening than what they've breaks in at this point in time I mean it's the fed just delivers what's priced in today I don't think markets react very much because it's already priced in So the Federal Reserve essentially has to go farther than what the market anticipates from the markets to react I think what will happen is the first bond yield will go up further We'll probably see volumes in the two and a half 3% range And as once we have higher tenure treasury note yields that will start the way in the stock market a little bit more And risk assets like say cryptocurrencies for example But what you just said though the original piece of this is that you think when that happens the fed doesn't back off It's not the old playbook Well the fed has to do its job at the end of the day I mean if you try to defer the fight against inflation all you do is get more inflation So it's not like you know trying to be a nice guy gets you to a better place We sort of saw that mistake in the early 1970s So I think the Federal Reserve at the end of the day will do its job I think it's a slow I think to realize right now the consequences of the tight labor market which they engineered at this point Which moves quicker the Taylor rule coming down with all its moving parts or does the fed move up at a greater speed Well I don't think the Taylor rule is really that relevant to what the fed is doing right now I mean listen to your poll He talks about the importance of financial conditions And I think the key issue the financial conditions today are extremely accommodative The slow the economy down the fed needs to make financial conditions less a college How do they do that They raise short term rates They raise short term rates more and faster than what markets expect Though how does balance sheet reduction play into this as well From your standpoint Well it's interesting that there seems to be a growing sentiment that the balance sheet reduction is going to happen sooner than last time Not just in time but also in terms of the level of interest rates where the fed is going to start the balance sheet finalization process Mary daily last week talked about getting going after a couple rate hikes I find that a little bit surprising given that the fed officials have also said that they want the federal fund rate to be the primary tool of monetary policy Well if you want the federal fund rate to be the primary tool of monetary policy you need to get the federal funds rate up So it can actually react to adverse shocks in the economy so you can push it back down If I think the case for being a little bit more patient with the balance sheet is still pretty strong What's your sense of how much they should raise rates this year I think they should go faster than what's priced into the market I mean obviously it's going to depend a bit on how the economy falls They need to do at least four or 5 rate hikes this year And when you strike me at all if we get into an every meeting kind of cycle at some point But what went wrong for this Federal Reserve Let's finish there Well I think there are essentially four mistakes that were made Number one the way the operationalized the.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"Fighter reversal of fortune in the equity market today it's being chalked up to dip buyers returning after the S&P 500 was down about 2% of the session low We ended off a little more than a tenth of 1% on the date Now through the session there was this persistent concern about the risk that equities would sustain as a result of elevated interest rates particularly where high valuation stocks are concerned and I'm speaking here of technology shares in particular at one point we had the NASDAQ composite dipping below that 200 day moving average a huge negative but at the end of the day the NASDAQ composite turned positive we actually picked up about a tenth of 1% on the day Session began with Goldman Sachs raising the alarm bells about the possibility of four rate hikes this year at a time when markets are only pricing in three We also heard from the former president of the New York fed Bill Dudley who suggested the fed is behind the curve and policymakers need to get a little bit more hawkish The ten year treasury at one point in yield terms was as high as 1.80% Right now in late New York trading 1.76% brought a healthcare stocks pushed higher today and that helped the overall recovery The Dow weaker by half of 1% the S&P 500 down as I mentioned a little more than a tenth of 1% I'm Doug Kushner That is your Bloomberg business fledge You're listening to Bloomberg sound on with Joe Matthew on Bloomberg radio And so the U.S. and Russia vowed to keep talking and they will have an opportunity to do so of course we've got two more sessions this week not one on one quite like this but we'll have the big NATO meeting on Wednesday and then another session in Vienna on Thursday as we try to figure out what's going.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"How would you tack I think we've gotten past the taper tantrum issue because we went ahead and went ahead with the taper here But we could move faster We kept optionality on this that we could speed up the taper If it's appropriate we have a hot CPI report here As you know I've advocated a faster pace a 2010 pace That's 20 per month less on treasury purchases and ten less on mortgage backed security purchases The reason I propose that is that we would be done tapering at the end of the first quarter next year And that would give us a little bit earlier moment that we could assess where the data is and decide what to do on rate policy So I think that's something to consider I mean some might say well that's you know that's faster than they like I don't know But we did retain the optionality on this Jim bullard thank you so much for joining us It would be great to get your sense of Bill Dudley's comments about the end value The end terminal rate that we are expecting for policy given how high inflation has gone A lot of people think it's not going to get beyond 2% He said three to 4% Do you think that that is a realistic end policy rate Yeah that's not my base case right now I've got rates only rising to where they were pre-pandemic and I think it's good to keep in mind here that the pre-pandemic economy was not a zero interest rate economy So whenever you think we're back to the pre-pandemic levels of output which we already are and the pre-pandemic level of labor labor market performance then that should be the moment that you're back at the pre-pandemic level of interest rates We don't really have that kind of plan in place right now but maybe that's something to think about I think this rate policy and tacking harshly now could pay a great dividend for the committee in the year ahead or the 18 months I had because it means that we would have to do less later on and you'd smooth this whole process out some I think the scenario that Bill Dudley was describing was one where we get behind the data too far and then we have to move more aggressively later And that was a stop go type policy that didn't work very well in the 1970s So I think it's makes sense to try to move a little bit more hawkish here and try to manage that inflation risk Again if at all if at all dissipates next year we'll be fine in that situation then we can push out rate increases out into the future But how high can rates go given the economy is and how quickly right I mean the idea of front loading rate hikes makes sense to avoid a sort of gloom and doom scenario that Bill Dudley was laying out 4% rates perhaps setting the economy into recession But how high could we currently handle given the trillions of dollars of debt that we've incurred Well I mean I think the good news is you probably don't have to go to that high of a level to get a normal sense of interest rates In 2018 2019 one and a half to 2% was kind of a common level and that seemed to work pretty well for that pre-pandemic economy There was some adjustments some trade issues going on then and other things But I kind of take it as good news that we wouldn't have to go to that high of a level to remove the accommodation and remove the upward pressure that we're putting on inflation with our current policy You've been listening to James bullard president of the St. Louis fed with Bloomberg's Michael McKee and Lisa Brahma wits And coming up will ask former Richmond Federal Reserve president Jeffrey.
Bloomberg Radio New York
"bill dudley" Discussed on Bloomberg Radio New York
"Well you know I've heard since I've been at the Minneapolis fed since 2016 Year after year after year I heard one thing from businesses Historic worker shortage historic worker shortage And you know what happened They found more workers to hire And the unemployment rate fell down to three and a half percent even though people said that was impossible Labor force participation continued to climb employment to population ratio continue to climb So I don't have a ton of sympathy when I hear businesses say they can't find workers I know we're in a unique situation right now trying to come out of this pandemic We still have four to 5 million people who ought to be working who I believe will be working if we give them the chance But we have to get control of the virus In this discussion Kathleen we've spent almost no time talking about COVID Let's not lose sight of the fact that 700,000 Americans are dead A lot of people are still afraid of the virus That is the biggest issue facing our economy and the global economy Well I think there certainly has been a lot of improvement there too and more improvement expected despite the uncertainty over variants But let's look at something Bill Dudley former president New York fed said today he thinks that the fed by starting the taper so slowly and not being able to finish by June puts it in a position where it may have to speed up the taper Let's listen The tape isn't gonna be completed by until June of next year on the current trajectory That's a very slow path of removal of accommodation given the economic information that we're seeing So I think by locking themselves in this way I think they've doubled down on being late He went on to say the inflation rate may excuse me the fed funds rate may end up a lot higher than markets expecting 1.75% He said it may end up at three to 4% Is that a possibility Is that a risk Well you know I can't predict the future any better than Bill Dudley can And we'll see what the economy requires And the Federal Reserve will adjust monetary policy to achieve our dual mandate as we've all committed to doing And so is the federal fundraising end up at 2% or 3% I don't know And either those Bill Dudley will have to see how things actually unfold One thing about this pandemic every time it seems like we've got clarity there are new wrinkles that get introduced and new surprises that come Is the next 6 months going to unfold exactly like Bill Dudley thinks or exactly like I think I doubt it We're going to get a lot more information on both the demand side and the supply side over the next two to three quarters That'll give us a lot more clarity on where the economy is headed and where monetary policy should be I want another quick question from you though on broad based and inclusive employment You know you mentioned that people are still to work et cetera that employment goal versus this inflation where everybody has You said you're watching it very closely How do you swear that equation How do you view that tradeoff Well we've said that we're going to take a balanced approach If those two are intention So up until the pandemic had enough until this current environment there was no tension There was still slack in the labor market and we were undershooting our inflation target which meant it was easy to say we need to take an accommodative stance Now there appears to be intention because there are still 5 million Americans or so out of work and we're seeing these higher prices So that's why we have to read the data very carefully and not just take a snapshot of where we think it is right now but where the economy is going to be over the next one two years to try to adjust policy on that arc Any chance you're going to be on board with one or two rate hikes in 2022 that's what the bond market's pricing And now at least after they see the inflation numbers bond markets have been very volatile The inflation jitters are hitting them too What about the possibility of more rate high switch you up until now have said probably not until 2024 You know again I just got to watch the data We're going to get a lot more data on the labor market and on inflation over the next one two three quarters While we're ongoing while our taper is ongoing that's going to provide us a lot more information about where the underlying dynamics are rather than some of these short term movements Okay Let me ask you about something very near term tomorrow the tenth racism in the economy event sponsored by the Minneapolis fed along with the Boston fed and the Atlanta fed Racism in the economy looking at financial services What's on the table Well we want to as we've talked about the fed has a maximum employment mandate As many Americans as possible participating we've had this series this ten part series looking at racism keeping people out of fully participating in the economy and really achieving maximum employment This installment is looking at financial services There are people who don't have access to banks who don't have bank accounts who have to turn to payday lenders How do we break down these barriers so that people can be linked to the financial system be able to take advantage of the products and services that make the economy function more equitably and be able to fully contribute to the economy So we're bringing on board experts from nonprofits from academia from the industry to try to shine a light on what are the barriers What needs to change How do we make the financial sector more inclusive No when you look back against these past 9 conferences one what surprised you most about this whole broad issue of racism in the economy How much is there if we were just willing to open our eyes People point things out to me now and it was there the whole time if we had just been looking for it And there are these structural barriers affect people who are excluded but it actually affects the whole economy You know when businesses are saying we can't find workers my gosh it's a worker shortage And then I go to another meeting in a low income community where people don't have jobs We need to break down those barriers because it'll actually be in businesses interest in the economy's interest overall if we can put everybody back to work And so it's there for the taking if we are willing to be honest about what we're seeing and make the changes that we need to make Some people say well you know this is great for the fed and look at this but there's not really much the Federal Reserve can actually do in terms of policy or taking steps Do you see something Do you see things particularly when it comes to financial services wealth jobs that the fed could do can do to make a difference Well one example is the community reinvestment act the fed under governor brainerd leadership has taken a lead and to reform the community reinvestment act and modernize it working with other regulators and how banks apply that into their communities that they serve That's one example Another just is understanding maximum employment and a year ago the Federal Reserve adopted a new framework for how we approach monetary policy and we said we're going to take a much broader view of what maximum employment means Just looking at that headline unemployment rate that gave us a misleading signal That gave us the wrong signal in the last expansion and there were a lot more workers out there who it turns out wanted to work And if we understand that better we're going to do a better job achieving our dual mandate Again which is better for the economy as a whole Well thank you very much People can find their link to the conference.
Politics, Policy, Power and Law
Bill Dudley: The Fed shouldn’t enable Donald Trump
"Former New York fed president bill Dudley got a chance to set the record straight today on the Bloomberg opinion column he authored contending the fed shouldn't enable Donald Trump he said in that column that the central bank should refuse to play along with an economic disaster in the making Republicans said they were outraged definitely would suggest the fed should play politics today he spoke to our Tom Kean and Jonathan Ferrell on Bloomberg surveillance we do have to reflect on off at the road around about a month ago I don't think on the quote with you since clarified and I want you to clarify once again it was the conclusion of the original that I think a lot of people's backs up and it said the following if the goal of mine a few policies to achieve the best long term economic outcome than fed officials should consider how the decisions will affect the political outcome it's twenty twenty when I got published how much push back did you get your full McCauley look I think there was a misunderstanding about what I was really trying to say what were you trying to say well the basic that main point the piece was to try to point out the fact that the president trump was trying this or have it both ways on trade he's pursuing a trade policy with China that pose risks for the economy at the same time as saying if the economy performs badly it's it's. the fed slow and my view is that the fed needs to make it very clear that the major risk to the economy is trade policy because creating uncertainty about investment and trade and supply lines and things of that sort and the fed needs to make it clear that that much your policy can only do so much about that I think the fed has made it more clear over the last few weeks I think if you look at chairman Powell's press conference he talked about trade and certainly a lot he talked about how the trade in certain is not some of the fed can easily address and that's the kind of push back that I thought was desirable I think a lot of people would be sympathetic with that view and that was the part of the pet that I think a lot of people were sympathetic with what they want with the mention of twenty twenty what is twenty twelve like I was I was trying to be provocative and what do they what they said the person to be very precise about it one could make if you accept the notion that the feds lofty goals are temps of maxim sustainable price and price stability over long term and one also accept the premise that this trade war might not be good for the the economic outlook then logic would say there's a question about should the fed take this should the fed take this into consideration at the end of the day I made very clear in the second piece that I wrote I don't think the fed should actually take this into consideration in setting policy if the fed were to do that they would become politicized and people would basically react by reducing the independence taking away the independence of the fed so you think the fed's already become politicized well it has become politicized because of the presence of tax on the fence so there's an academic piece that was good came out of the last I don't know twenty four of seventy two hours I saw it I just this morning and and they basically did a study of the effect of the present the fact the fact of the president's treats tweets on on the federal funds market and what they found was that the tweets actually were causing people to reduce their expectations about the federal funds rate so the fence already politicized in the sense that people are not sure now yeah if the fed is easing because that's the appropriate policy path or because of pressure from the trip president but that politicization. it's not coming from the fed is coming from the president but that is a really important point but also not politicize ation that pace I came from you and anyone this conversation now she's talk about in your face we came to say a former New York fed president should not comment on the current New York fed president but by mentioning twenty twenty can you appreciate how you've compromised your former colleagues and the optics around the next decision like I think that I think they're gonna behave in a a political way is there to do what they think is appropriate for the county and if I were sitting in their shoes I would do the exactly the same thing former New York fed president bill Dudley speaking today to Bloomberg's Tom Kean and Jonathan Ferrell and joining us now is Bloomberg news federal reserve reporter Chris Khandan Chris you heard Mister Dudley's explanation has he effectively put this controversy to rest high above the well it may continue to fade a bit but I think we can fairly call that a very tortured said of explanations about what bill Dudley said in what he has since claimed that he said and wrote they don't quite really match up in I think in the end it's clear that he has not made life for his former colleagues including take Powell easier he's made it more difficult well this is this really a triggered of some tough questions not only from Republicans but from Democrats absolutely and across I must say across the financial markets a lot of economists who watch the fed closely many who who used to work at the fed were fairly aghast at the initial call on it it really just invited hammering of the fed from certain corners on on Capitol Hill some folks that are going to take advantage of that and hammer the fed it it it as Jonathan very rightly pointed out in that interview the bill's own words politicized or or. give the appearance that the fed might act in a political manner when making a monetary policy decisions in may be justified in that and that's that's really it a poisonous idea for policy makers in this new study that was just published on Monday by the national bureau of economic research shows that market participants believe that the fed is under political pressure and will succumb to political pressure by the president so they think it's there that that's a very interesting study and quite frankly that surprised me I'd like to I I need to read more deeply into that but it does they claim to show a combined ten basis points off the expected fed funds futures contracts that's really I'd like to know how persistent that effect may be and we are the on the N. economics and fifteenth we do our own surveys of for instance economists these are not that's not the same body of people that are studied in that paper so they're not market participants but they are economists PhD Scott that following the fed and we asked them in several of our recent surveys over past months whether they think trump's criticisms would have any effect on monetary policy decision making and overwhelming the
NPR's Business Story of the Day
Fed Eyes Another Interest Rate Cut To Prop Up The Slowing Economy
"This message comes from NPR sponsor. Get around with get around your idol car can actually earn you money. Just share it on the APP and Rinse it out when you're not using ED visit dot com slash share now to start sharing get around it's go time the Federal Reserve is expected to try to pump a little more air into the tires of the US economy today. Those tires have been showing some signs of a slow leak and central bankers are hoping to avoid an economic flat. The Fed's widely expected to cut interest rates for only the second time since the great recession but it's not clear. That's the boost. The economy needs right now. Here's NPR's Scott horsely the Fed ed will announce his decision on interest rates this afternoon and economists Kathy boss genetic of Oxford economic says financial markets will be both watching and listening watching for the anticipated it'd quarter point rate cut and also listening for what Fed Chairman drome Powell has to say about it just has to be very clear that we are going to do whatever it takes aches to sustain the expansion POWs been trying to send that message. He told an audience in Switzerland this month. The Fed is not predicting a recession but he acknowledged the economy could stall near the ongoing tariff war rattles enough business people to the point where they stop spending uncertainty around trade policy is causing some companies to hold back now now on investment and so our obligation is to use tools to support the economy and that's what we'll continue to pal and his colleagues also pointed to trade uncertain in deep back in July when they cut interest rates for the first time in more than a decade the stock market wasn't satisfied in part because bowel seemed to suggest the time that might be the last rate cut for awhile boss. Johnson says t's hoping for not only an additional rate cut today but a signal about more cuts in the future it will be clear. It's not one and done and but he has to be careful that it's not too in done. He needs to leave the door open. Clearly to feature Rico's boss genetic is actually predicting two more rate cuts in October and December remember but even with that extra push from the Fed. She thinks economic growth will slow next year to just one point six percent the trade war isn't the only economic speed bump. You've also got slowing growth in other countries. The dwindling affects the two thousand seventeen tax cut and after the weekend attack in Saudi Arabia uncertainty about oil prices nervous about a slowing economy president trump has been browbeating the Fed to cut interest rates more aggressively to zero or even lower others including former New York Fed President Bill Dudley have argued the Central Bank should stand pat and let trump feel the political fallout from the trade war. He started POW. L. Has repeatedly insisted the Fed will not be swayed by political pressure from either side political factors play absolutely no role in our process and my colleagues and I would not tolerate any attempt to include them. The stock market is counting on a rate cut today and would likely suffer a selloff pal and his colleagues don't don't deliver but Matthew Zeti of deutchebanks says it's not clear lower interest rates will do much to help the nation struggling factories we see the driving force of the slowdown certainly in manufacturing trade uncertainty and cutting the Fed funds rate is not going to be able to fully alleviate that uncertainty factories awesome and others have cut back on investment not because it's too expensive to borrow money but because they're not sure they can sell their products in that environment is Eddie says cutting interest rates can only do so much what would help is an end to the trade war and in recent days there have been signs of a possible thaw in U. S. China trade relations still boss Austrian success. She's not convinced a truce is imminent right now. That's all talk you know we have seen that before. We've seen encouraging talk and then both the markets it's and business leaders and consumers. Everyone ends up being disappointed because not only is there no trade truce. It actually ends up being ratcheted higher. The president has already ordered another tariff increase on Chinese imports in mid October if no agreement is reached before that Scott Horsely N._p._R. News
Masters in Business
Kudlow blasts Dudley over 'utter nonsense' advice on Fed policy
"The US China trade war was recently the focus of a Bloomberg opinion piece from former New York fed bank president bill Dudley he argued fed rate cuts would risk enabling further escalation by president trump of the trade war Dudley also said fed officials should state explicitly that they won't bail out an administration that keeps making bad choices on trade policy well today on Bloomberg radio White House economic adviser Larry Kudlow struck back bill Dudley one over the cliff what bill Dudley statement suggested is that the federal reserve should adopt a monetary policy geared towards defeating president trump and twenty twenty now that is the most politicized statement I have ever heard and the current that a reserve board disavowed it walked away from it that's Larry
Bloomberg Businessweek
US-China trade conflict
"The US China trade war was recently the focus of a Bloomberg opinion piece from former New York fed bank president bill Dudley he argued fed rate cuts would risk enabling further escalation by president trump of the trade war Dudley also said fed officials should state explicitly that they won't bail out an administration that keeps making bad choices on trade policy well today on Bloomberg radio White House economic adviser Larry Kudlow struck back bill Dudley one over the cliff what bill Dudley statement suggested is that the federal reserve should adopt a monetary policy geared towards defeating president trump and twenty twenty now that is the most politicized statement I have ever heard and the current that reserve board I disavow it walked away from it that's Larry
Politics, Policy, Power and Law
Bullish US jobs data help 10-year Treasury yield back over 2%
"We have got the down the S. and P. and nasdaq down thirteen to drop their of four tenths of one percent the Dow is down sixty four have been down roughly two hundred now down by two tenths of one percent and nasdaq is down thirty eight points jobs Friday nasdaq down five tenths of one percent stocks retreating from records treasuries tumbled and the dollar jumped after that strong monthly jobs report cloud that the case for federal reserve rate cuts bill Dudley is former head of New York federal reserve now a senior research scholar of Princeton and he was interviewed this morning about the jobs report and the fed on Bloomberg markets can be an interesting debate and obviously we have three more weeks of data before the fed me so I think it's still very much up in the air with us it's going to do with the July
Dow, President and San Francisco discussed on
"In the us the government is said to issue a record amount of depth this week after last week's rally in short term treasuries details in this report from bloomberg's susanna palmer the treasury will probably auction about two hundred ninety four billion dollars worth of bills and notes this week that would be its largest slate of supply ever us is ramping up sales of short term debt has financing needs are growing in part to the tax overhaul well there's evidence of weakening demand for us auctions and analysis of trading data is unclear about whether that signals further losses in treasuries susanna palmer bloomberg daybreak susannah thank you over the weekend were to merge the san francisco federal reserve president john williams is the favourite has exceeded bill dudley is head of the new york fed now the central bank is facing a backlash over the possible pick of a white male for the post with critics saying the fed has a lack of diversity and key positions facebook are down about one of the hamper senator early trading amid heavy volume as the social media giant faces continued fallout from its ongoing data crisis sp futures this worrying of thirty three points that's a rise of one point three percent the dow futures up two hundred seventy seven at one point two percent you're listening to bloomberg daybreak six oh seven wall street time for news from around the world we say good morning to bloomberg's michael barr thank you john porn stormy daniels says she had sex with donald trump in two thousand six daniels whose real name is stephanie clifford said in an interview broadcast last night on cbs is sixty minutes that she was threatened to keep silent during an encounter with an unknown man in las vegas i was in a parking lot going to a fitness class with my infant daughter taking the seats facing backwards in the backseat diaper bag you know getting all this stuff out and a guy walked up on me and said to me trump along forget the story and then he leaned around and looked at my daughter and said it's a beautiful little girl it'd be a shame if something how mature mom and then he was gone daniel says she is not a victim and the sex was entirely consensual president trump will likely announce the expulsion of dozens of diplomats.