26 Burst results for "James Bullard"
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"Of the year. So a couple of fed officials are opening the door to a return to 50 basis point hikes. It's in Lewis fed president James bullard, sees a protracted fight against inflation while Cleveland's fed leader Loretta master says the data warrants aggressive action. But this juncture, the incoming data have not changed my view that we will need to bring the fed funds rate above 5%. And hold it there for some time. Indeed, at our meeting two weeks ago, setting aside what financial market participants participants expected us to do, I saw a compelling economic case for a 50 basis point increase, which would have brought the top of the target range to 5%. Well, that's the fed speak. Let's get the king of the bond market. Is Stephen major global head of fixed income research at HSBC. Good morning, mister major. Welcome to Dubai. We caught up with your ten days ago. Master and bollard opened the door to 50 basis points. Is this a crack in the dam at the fed? It seems too soon to be seeing you again. It was virtually last time. They should be quite pleased with themselves. Because if their objective was to shift the forwards or to move the market at least to their way of thinking, they've done it. So it's kind of job done. The markets pricing what they wanted to see in December. Back in December, you had the dot blocks. You had complete visibility. I doubt the march dock block's going to be hugely different. So they should be quite happy that it's a job well done. It took them a while because the bond market was going the other way for the first four or 5 weeks of the year actually since last October, but they've pushed it back to where they wanted. How much more room for correction do you see in the bond market? Because you talked about the sell off. It's more of a correction than itself. But do you think that there's more downside here before kind of stabilizes? Well, to me, it's a correction. So it's a correction in a longer term decline in the bond yields. That's going to reestablish others might think this is just a part of the bear market as yields go higher and higher. So that's quite interesting. Because you've got a healthy tension between big views here. And the bond markets kind of stuck in the middle of that. In answer to your question, the way the market is setting up at the moment is for a kind of tabletop mountain. So you get to a peak, and then you have a plateau. So it isn't actually a peak. It's a plateau. It stays there for a long time. But it comes down the other side quite sharp as well. If you just imagine that actual tabletop mountain in South Africa, my understanding is, it's quite steep on both sides. And it's very flat at the top. But of course, it looks flat from a long way away. But when you're there, it's quite bumpy. So that's sort of where it's like. We're in the bumpy bit. But as you said, we're going to go into glide path at 40,000 feet or there, but now you've often talked about inflection points and you've talked about the speed. You're very interested in the speed. So we hit this mountain top, let's say, to the mid 5s, you're still rooted in the case that the market will return to around one, 2% and being disingenuous to your core. But how quick look how quickly turn you need something to turn this around and that's long, variable lags, isn't it? We need to see something really substantial on the downside in the economy. We have got it. You're getting to the essence of the debate manners, because for me, it's a leap of a leap of faith. I can not tell you the trigger point the day, the event. And you see, the rational thinking economists and those at the fed, they need to see it in the data. And that's how they work. They've got to have confirmation that they're in risk management mode. They have to be very careful. And they will be late. There will be too late, right? Now, we in the market have to be preemptive. Now, I know that we've got the long variable lag from the previous tightening. The real rate went up a lot, the curve is inverted. Some of the forward looking indicators are pointing to the downside. And so it's a leap of faith, but you have to go with it because rates are going to hit a peak. They'll stay there for a while and granted it looks like it's going to be a bit longer than we originally thought. But they're coming down again. And for a bond investor, if it's so obvious that the money market is attractive, you put all your money at 5%. So that's all very well. But what happens when it turns? You would have missed it. And that's the opportunity cost of going for the optics of the high money market yield, which is very, very appealing, intuitively, but it's not particularly robust for many investment point of view. Let me take you to the credit markets because they're still clearly open, especially so in Europe. There's a preference for quality. What happens to some of the junk issuers though? Yeah. Well, credits in a great spot because I know the spreads have come in. But because of the lift in the rates market. So the higher government yields, you've got the all in yield in credit that still good. So you can still get 5 to 7% return without taking too much risk. I put a nice wide range on it. It depends. But I'm particularly thinking about Asian credits and European credits, financials we've been calling out as being interesting. There's a number of various ways. That's a nice return on your portfolio. If you can just get away from the fact that the spot inflation is high, I stress spot today's inflation. If you can get away from that, the point is you should be looking in 5 to 7%. Because that's a decent rate of return. A humble person would accept. I'm one of the
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"Of the year, especially at yearend, but I mean, still, if you're looking for the month at the S&P 500, still higher coming off of the back of October, where the S&P 500 had closed that month up about 8%, but still, even with some of the fed speak that we heard today with James bullard. He was talking about how the markets are underestimating the odds of higher fed rates, and then on the other side. So this is interesting about him is he was pushing out not only next year, but 2024 that rates stay out. Yes, he was reiterating this view that the fed should raise rates to at least 5%. And then we did hear from John Williams as well who said further tightening is needed to cool inflation, but a lot of what they were saying isn't necessarily different than what they have been saying and something that I thought was interesting at least when I've been speaking with my sources. They were pointing out about how bullard had said the strength as far as just looking at what's happening in the labor market and also with potentially those signs, hopes for peak inflation, it could give fed officials room to pursue a disinflationary strategy and with the backdrop of say the M live survey that came out recently for Bloomberg there was the biggest concern among the respondents was that next year could be the big risk being stagflation. So when you hear those comments from blurred about, hey, this could help us pursue a disinflationary strategy that to them is actually a positive sign and then also Williams had reiterated that basically he thinks that inflation could fall between three to three and a half percent next year. So even though you'd think that some of the comments that they said today could be perceived as a negative, there were actually some positives in there that the market might be overlooking. I also, I always go to the dots function on the terminal and I note the letters MH next to James bullard, most hawkish, so take that for what it's worth. He's been really out there front and center, right? When it comes to stationary concerns, which is why his voice, it feels like, is so important. There is a lot speaking of important voices this week. We've got Jay Powell on Wednesday, giving a speech to brookings. He's supposed to take, I think, questions as well. We've got a jobs report coming. We've got a lot of interesting data points important ones this week. Which could perhaps even support the idea that there is a real hesitation to hop in the market right now. A lot of people were kind of expecting that once the midterms were over, that's when you would see the bed and traditionally you have. This time you have it. And this time is literally different. And I feel like I'm jinxing the market by saying that. But you are seeing a real complacency in a real hesitation because of all the game changers that are happening. No one on Friday or on Thursday would have said over the weekend protests in China are going to break out. I don't think anyone could have called that to the extent that you're seeing at least. I don't think anyone could have called this idea of what's going on in the oil market that OPEC plus some reports are suggesting now that a cut might be on the agenda, even though hikes were reported just two weeks earlier. The target is shifting so quickly and I think that's really feeding complacency and a lot of people closing out their positions for the year. You're creating quite a reversal in the dollar today too. When I got in this morning, it was weak. Now it's up about half a percent according to the Bloomberg dollar index. Is that just your typical risk off move? Do you think because we have seen a lot of dollar weakness in the last month or so, is this a turning Todd you think or just a risk off day? Well, I would say zoom out because if you actually look in the overnight session when all these kind of China headlines where we're really coming out Fast & Furious and the entire global market was dropping, the dollar was actually dropping too. And I think that's really interesting. And I think that was a little bit right now. It's up now. And I think if you actually look at it next to the ten year yield, it is a mirror chart. So it tells you that the dollar isn't actually following your traditional haven biz, which I think Mike was getting to. But instead it's following those interest rate differentials. The idea that the fed is still in charge as the yield goes up, the dollar does too. I'm just going to say, listening to surveillance this morning, there was a guest star maybe surveillance in another show. Somebody saying, the bond market's getting ready to rally. Somebody saying the stock market's getting ready to rally, which those two typically don't just run in tandem. No, they don't. And another key just from a technical perspective, there's been back in August, the S&P 500 got really close to its 200 day moving average. Right now, that it's downward sloping, so it keeps continuing to fall, but it's around 40 54. And we had gotten pretty close to that, but right now, even if somehow there's a rally in the S&P 500 does break above that, what I'm whenever I'm talking to technicians, they're actually looking at 43 25 because that was the intraday high on August 16th, basically during that counter trend rally over the summer. That's where it peaked out. So they feel like if we're going to break that 200 day, it really needs to break further above that. All right, I'm just watching January 13th. That's when JPMorgan points comes out with earnings. So that's my next vocal. Just met in pretty Gupta. Thank you so much. All right, let's get a check on world of national
AP News Radio
Fed official suggests substantial rate hikes may be needed
"Stock started the day in a sour note after indications the Federal Reserve may need to raise interest rates much higher than had been expected The fed has been raising rates aggressively trying to tame inflation by applying the brakes to the economy and now James bullard who leads the Federal Reserve bank of St. Louis is suggesting its short term rate may have to go as high as 5 6 or 7% to really put a dent in these stubborn inflationary conditions The fed has already raised the rate to around 4% economic reports are showing inflation starting to ease somewhat but consumer spending and a very strong jobs market are keeping it hot The fed is likely to get more aggressive making borrowing more costly and further heightening the risk of recession I'm Jackie Quinn
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"Hong Kong as well as in Singapore, it is 6 30 p.m. on the eastern seaboard of the United States. I'm Rashad salaman. And I'm Brian Curtis, trading gets underway in 30 minutes in Australia and then 90 minutes in places like Tokyo and Seoul. We have three hours before we open up in Hong Kong and the China markets very, very tough sledding in the Hong Kong China markets yesterday. On a day when a lot of other markets globally had risen. So we'll see what happens today at the moment futures down in Asia pretty much right across the board. Markets with Doug prisoner coming up shortly, but for now, some of the top stories of the hour. Minneapolis, fed president Neil kashgar is saying that the Federal Reserve could potentially pause its interest rate hikes at some point next year if it sees evidence of cooling inflation. Here he is. I want to see us have confidence that that core inflation has peaked. And then headed back down in the right direction. You know, financial markets are suggesting that inflation should fall rapidly next year and the year after, I certainly hope that they're right, but I have not yet seen evidence that that mechanism is in play. Meantime, some news president James bullard sharing a similar view saying that he's expecting the fed to end its front loading of aggressive interest rate increases by early 2023. Wanting to keep policy sufficiently restrictive with small adjustments as inflation cooled down bullet adding that the feds November meeting result has been more or less priced into the markets for a 75 basis point hike, though he preferred to wait until the meeting to decide his preference for the size of the move. While Tesla's earnings were out, they did beat on the bottom line, but reported third quarter revenue that was short, they had it at $21.5 billion analysts projecting 22.1 billion. Tesla cited higher costs related to slower than expected ramp up in output at its new factories in Austin and Berlin. Despite production bottlenecks, Tesla said that it did see some easing of component shortages in the quarter. The automaker also said it sticking to its long held plan to increase vehicle deliveries by 50% on average annually over multiple years. And it expects to begin delivering its new semi truck in December. Tesla shares at the moment are down just about 4.8% in late trading. IBM reporting sales that rose 6 and a half percent to just over $14 billion in the third quarter, analysts were looking at a figure of around about 13 and a half billion. Bloomberg's Ana Rana telling us what sticks out. The consulting growth is really strong. Software growth is really strong. Red Hat is really strong. So I would say this is really reassuring for all enterprise tech spending companies that we haven't seen a slowdown yet. I think it's going to come, but so far so good for enterprise tech spending. IBM saying that it is expecting full year revenue growth to exceed the company's previous mid single digit guidance while free cash flow will hit an estimated $10 billion. The CEO, there's Arvind Krishna. He's betting that a big blues future growth on lucrative market for cloud computing and artificial intelligence, mainframe sales, helping IBM's infrastructure unit generated a 15% increase in revenue the fastest growing division in the quarter, IBM shares up about 3% in late trading. All right, it is 33 minutes past the hour. Let's get to markets with Doug Cruz, and I know this isn't your main story, but wow, China stocks listed in the U.S. down within 7%. Yeah, what do you make of that? You think it's a well Congress story? I think it's no improvement on the COVID dynamic zero. That's part of it. But just a general disappointment in the policies out of the party Congress and also in Hong Kong, the policies yesterday from the chief executive. And when you get to delay on the economic data, you have to read into that a little bit, right? And suspect that maybe we're going to get to some very weak readings on, not only the GDP, but industrial production and retail sales. Yep. Okay. Well, stateside, I think it's fair to say you talked about mister kashkari or messieurs kashkari and bullard, the fed amplifying its hawkish message today and now markets expecting a peak in the fed funds policy rate closer to 5%. Today we had a big spike in yields across the curve the two year up 13 basis points, where now at four 55, the highest yield we have seen for the two years since 2007. So with those higher rates, you're going to see a strong dollar, not big surprise on that front. The Bloomberg dollar spot index was up about 6 tenths of 1%, and Wells Fargo today was saying the dollar has plenty more room to gain in the coming months. The yen, on the other hand, a lot weaker, we were down four tenths of 1% in New York trading. Right now around one 49 85, so the market is on high alert for possible Japanese government intervention to support the currency. Other big story, crude oil rallying today that came on weekly drop in U.S. energy stockpiles, not only of domestic crude but gasoline as well, New York crewed up 3.3%, we settled at 85 55, talked about the earnings flow. You mentioned Tesla and IBM, we also heard from Alcoa after the bell a quarterly loss, these results came or are coming 5 weeks after the company warned of a very tough quarter due to lower metal prices and higher cost for raw materials and right now Alcoa shares down 9% in the late U.S. session more on Marcus in about 15 minutes. All right, time 25 minutes to the top of the hour
Squawk Pod
"james bullard" Discussed on Squawk Pod
"Just assuming that there's going to be an issue with something. And now you just assuming that I've got some reactionary take on every single thing we talk about. Is he from London? Does he like London? Does he want to go? I love London too. I haven't talked to Adam about it. I spill it out. Spell it out. What do you say? Message him on Instagram right now. All right. And ask him about his plans. It may not be perfect. I would be perfectly willing to our schedule be a lot better. We were scheduled to be great in London. We could go over there for a while. I will not go on the eye. I've been on it once. And I did it again. Right in the middle. Right in the middle and I couldn't wait for it to be over. I was absolutely. I had something genetic. It's so slow. It moves and that's the problem. When you're going over around the top and you go each one, it's like, I'm never going to make it. I'm going to and then you know they got the things with the mirrors underneath. Let's see, is there an explosive? No, there's nothing here. Maybe it's over here. I just the whole thing scared me. It's also Sorkin. It's also Leto. Unbelievable place. What about zoli? I love it. And I could live the only problem it's 98, it's more expensive and sausalito than 98% of the rest of the country. Have you been? You've been to the trident? I have been. It's beautiful. It's beautiful. You ever heard of Chet baker? You know what happened there, right? You got in a horrible fight, lost his teeth, couldn't play trumpet for like 5 years after a horrible fight. I had dinner at the Triton. I love sausage. Into town from south. Maybe not great, but beautiful. Over
AP News Radio
US inflation reached a new 40-year high in June of 9.1%
"Today's consumer price index report finds U.S. inflation reached 9.1% in June a 40 year high The latest figures from the bureau of labor statistics finds inflation rose 9.1% last month from a year ago The biggest 12 month increase since 1981 That's up 1.3% from May and a bigger jump than many economists had forecast U.S. job growth has been strong but high prices for gas food and housing are outpacing incomes putting a crunch on family budgets and hurting consumer confidence Federal Reserve president James bullard tells the AP that to cool inflation another large increase in the key interest rate is likely If the meeting was today I would support the 75 basis point move There are some indicators the economy is already slowing consumers have started to pull back on spending In factory output slipped in May one good bit of news gas prices have fallen from the eye watering $5 a gallon reached in mid June to
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"Live from our nation's capital in Washington, D.C., good morning, good morning to you all together with Tom Keene. I'm Jonathan farrow, bramo. Out of the building, Lisa back with us next week, a special hours extension for us both Tom on Bloomberg TV and on Bloomberg radio going into the open and bell. 30 minutes away. The opening bell we're going to focus on the markets here and of course to really better equity market over the last number of days, but what we need to focus on is the gift in Washington of a Shakespearean drama in London earlier this morning. Isn't that what we're calling kids? Yes. How many Shakespearean dramas have we seen? It was much of the fourth Richard the 7th. I can't remember which one it was. I used the cliff notes, but the answer is that was historic what we saw. The prime minister resigning and we'll catch up with francine LaCroix in Westminster in about 20 minutes or so. We need to talk about the interview we just had with her Boucher of The White House and pushed forward to Brian deese Tom at the national economic council will catch up with him in about 30 minutes time. They're talking points and we were trying to get doctor Boucher off the talking points of this is the plan. This is what we're going to do with a nation that said, wait a minute, you had a plan, but you haven't done it to give the president in any president credibility. We're talking 200, 300,000 jobs still being formed out of this once in a lifetime pandemic. For that reason, many people on Wall Street expect this Federal Reserve to keep on hiking. We begin with the big issue questioning a hawkish fed. The market is really pushing the fed right now. The fed is telling us that they want to go to 3.8% by sometime in early 2023. The fed may need to slow down its rate hikes sooner than later. The two year yield is over a hundred basis points below that level right now. This doesn't make any sense whatsoever. How much longer is this rate hiking cycle going to last? The bond market saying that probably would peak at some point in December. We know that the fed are going to be commission now. Is 75 basis points baked in the cake already for the July fed meeting. Absolutely. But the market's more forward looking. At three and a half, I think it's going to be hard for them. We've already seen that type of price dynamic. The market is readjusted their expectations quite significantly. The market comprised peak hawkishness well ahead of central banks. The latest set of minutes suggesting they would have to raise rates even faster, perhaps by another 50 to 75 officials zero in gear on searching prices and the potential for entrenched inflation. Mike McKee. Read to those minutes, Tom Keane does not make the key to him just right now. Hey Mike. I'll give time the cliff's notes version. Guys, the mistake that economists and investors are making is quoting the fed minutes in current time and trying to apply those to the future. There isn't much that you can say that is that has held steady since then. If you were going to take one comment out of the fed minutes, it would be this. Participants concurred that the economic outlook warranted moving to a restrictive stance of policy and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist. In other words, we're going to get it done. We're going to bring down inflation. We'll do what it takes, but they have told us that. The economy has changed since then. So I look at this quote, which people like to attribute to John Maynard Keynes, no evidence he actually said it, but it's a good quote. When the facts change, I change my mind. And the fed is faced with that right now. We've got a lot of data that has already come in suggesting the economy is we can suggesting the economy is fine. And now we have some more data coming up that are going to be really decisive for the fed, including the June jobs report, the June CPI report, the job report, of course, on Friday, retail sales, and then the fed meeting is the 27th of July. And they're going to have to sort out whether or not they need to continue being aggressive. Watch that CPI number for a clue there. And don't anticipate that the markets are going to stay where they are. They're going to move around an awful lot. Given the slew of economic data that we're going to see, it comes down to fed speak. Who should we listen to or listen for in the coming days and weeks to get a nuance of what the fed's thinking? Boy, did you tea that one up Tom? Today, we get the St. Louis boys. We get Chris Waller, the governor, who came from the St. Louis fed and Jim bullard, who is the president of the St. Louis fed. They've been the ones who've been out front in noting changes in the economic bullard says regime. And they're the ones who you might want to watch for clues to where the rest of the committee may go. Of course, if anything comes out of Jay Powell, you got to pay attention to that. Michael mckie, thanks so much. Greatly appreciate it. What he just said, John, it's absolutely critical here to bullard in the regime change. I read a point of a regime just to be really clear. Credit to Jim bullard of assembly was fat. I was very critical at Jim bollard going through the pandemic at least the very beginning of things as that started to unfold. I thought, a conversation he had going into that was almost tone deaf. This time around, he has really led the way Tom. On front loading on the problem that we had in store, he pushed to try and remove QE a little bit earlier. That didn't happen. He's a man we've still got. Listen, this is interesting because Heather Boucher was just where this new school of social research sort of an urban inequality analyst. He's a hard nosed Indiana PhD and he's much more in touch with a fabric of America than the wonkiness around
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"In Taiwan and Singapore I'm do these Pellegrini here on Bloomberg daybreak Asia Lower open for those markets already trading Japan's nikkei is down just about 6 tenths of a percent off session lows though in Australia The ASX 200 down 9 tenths of a percent and in South Korea the Cosby down 9 tenths of a percent as well Earlier in U.S. markets we had a spike in yields especially on the ten year and that got a lot of attention in markets and on our M live blog as well Also today is the day the fed started that balance sheet reduction which is of course another form of tightening And we had a lower close for U.S. stocks energy shares though finished higher and crude oil also gained although reverses happening now with crude oil And Jamie Dimon head of JPMorgan Chase talking about a coming economic hurricane saying he doesn't know if it'll be a hurricane sandy or a hurricane Andrew but he says once coming in it could be Some fed comments front and center as well dove buried daily at the San Francisco fed and hawk James bullard of St. Louis both backing a 50 point basis hike this month Facebook shares falling about 2% that's meta shares That's what we call it now onward Sheryl Sandberg is leaning out the COO of meta is stepping down she'll stay on the board though And in Asia we did think that the stronger dollar might help the nikkei but as I mentioned it's trading lower this hour We check markets for you every 15 minutes here on Bloomberg day vacation And now for a look at what's happening around the globe this hour let's go to San Francisco at our red Baxter All right thank you Denise USS China's conducting more cyberattacks than all the globes countries combined The Biden administration official.
CNBC's Fast Money
"james bullard" Discussed on CNBC's Fast Money
"Really likely to me is the final shoe to drop. And if you do have a Microsoft that's meant to be like, okay, we've all said it deserves that premium multiple. They have that recurring revenue. Apple is moving more and more to recurring revenue. So you're going to reward those sorts of revenues. If they are to guide down in the next week or two for Q two or something like that, it's lights out. I mean, I just think that that's the kind of final shooting drop and you finally will see an S&P that's down 20% and how we come out of that is not the. It's going to take some time because we are used to the fed coming in and saving the day in those periods and they're just telling us that they can't do that. Not for at least this next 6 to 9 months. Maybe unless things really slow down and they do a dovish pivot guy and then how do we set up for that? I mean, I don't know if the market is set up for that for a quick change in the fed, which they could very well do. We just had some comments from St. Louis fed president James bullard who has been a proponent of 50 basis points in a single hike for a very long time. But he said something to the effect of, I can't rule out a 75 basis point hike in the next meeting. It's not the base case, but he can't rule it out. And the fact that he couldn't rule it out and that is even a little glimmering in his eye right now guy is interesting. He's been pretty steadfast since November. It's maybe even before that in terms of his hawkish view. So I say good for him number one. Number two, to answer the question about if the fed were to pivot and be more dovish for whatever reason if whether a market sell off or some economic data that comes in really soft, I think that actually be bullish knee jerk for the market. I think it would be really embarrassed long term. I think they've put themselves in a position now where they have to fight inflation. I think that's bearish. And if they were forever reason acquiesce to the whims of the market, I think longer term, that would be bearish for the market. That's just a setup that I see right now. We'll see if a place out, by the way, I know we all know this, but the market's pricing and rate cuts second half of 2023. So there's some people out there that think that's happening anyway. Right. I mean, the market's also pricing in a recession. Many people are pricing the recession in 2023 as well. Let's get some more details on what St. Louis said, president James bullard said, talk to the man who actually interviewed bullard, Steve Lee Smith. Hey there. Interesting headlines. Hey, yeah. For sure. And just everybody knows this was a council on foreign relations event that I was moderating, which is why we didn't bring you all live on CNBC here as we normally might do. But I think Melissa, I'm struck by how kind of cool board is about all this. He says we need to do 50s at almost every meeting, bring the raid up to neutral and see how things are going. Might do a 75, but it's not as base case. He wouldn't rule that out. But how cool he is about the impact on the economy. I must have asked him 8 different ways to Sunday about whether all of this would cause a recession. He says quite the opposite. He believes that the unemployment rate will continue to decline, he believes that the economy will continue to grow above potentially. He thinks some of the clearing from inflation will happen naturally and the most important thing for the fed to do is to get a hold of what he calls inflation expectations and he thinks that you can still have a hot economy and not have a recession and have the fed going up very quickly to neutral. He used the 1994 example when the fed raised 300 basis points in a very short period of time and about a year and launched one of the best what he called one of the best periods of macroeconomic performance. In the history of the country. So what is his base case in terms of the rate hike path which is the backdrop for him seeing still above trend growth? Do you know what a funicular is? Melissa? Yes. Yes, I do actually. That's his base case. Like this. Yeah. It's really steep. So he wants to get the three and a half by the end of the year, so that's three, 325 basis points, 3.25 percentage points in addition to balance sheet, reduction. That's above where the average fed person is by about, I don't know, call it a hundred basis points dependent upon where you put the average. So he has another four quarter point hikes built in to his scenarios. He may not get that from the fed or from other committee members and let's be clear that he has been pushing this and he's moved the committee with him, but not as far as he's been willing to go. He thinks we need to get to nucha thinks the fed is behind the curve. And by the way, he also points this out, which I'm sure a lot of your members of your panel are aware of. A lot of the tightening is already in. You know, you're looking at a two 52 year two 80 on the ten year. So it's there. He thinks that the fed, the fed doesn't have as far to go in terms of pushing the market as it has to actually raise the funds rate to meet what market has already priced in. Yeah, Karen, I think you had a question for Steve. Yes, I do. Hi, Steve. Thanks for being on. So I think we'll see on this panel probably agree the fed should have continued in their path in 2018 that sort of bowing to the market was maybe a mistake..
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"Didn't believe Jay Powell did we had James bullard the president from the St. Louis fed speaking to Bloomberg today and reinforcing much of what the chair had to say What you have to do is move the policy rate up discreetly a fair amount not to be too disruptive but I think 50 basis point moves are definitely be in the mix And then get to a level that we can be neutral And then from there we can decide if we want to be restrictive and put further downward pressure on inflation But right now we're putting upward pressure on inflation It's the wrong place to be given where inflation is So John that makes sense to me at least you'll want to keep pouring gas on the fire when the fire is going pretty well This is the thing I didn't quite understand from J pile yesterday or for mister borough this time is why do you go to neutral Why don't you go to restrictive given where we are with inflation right now Well I think what Powell said yesterday what was arguably new Was he did specifically say he's prepared to go to more than neutral He is prepared to be restrictive In terms of why you don't still joke the English tell about the Irish that when you ask for the way in us for directions in Ireland the replays well if I wouldn't start from here If you start I love Ireland Yeah You start if you start from where we are now with real rates For two year money like -5 -6% The fed funds real rate If you're starting that low you really can not get to neutral all in one go without creating an almighty financial accident You can go very fast you can go as fast as you dare But we can't go there we can't pass go and pick up $200 and you have to you get those fastest you can but you don't go there straight away So talk about the bond market getting the message yesterday It was the ten year yield was up something like 9 basis points today It's another 8 basis points but it sure moving a lot Yes it is it's fascinating how pennies drop at specific points So the big moments for the bond market since the pandemic have been the FOMC minutes in January if you remember that the first week of the year when there was a reference to maybe we'll need to do QT maybe we will at least discuss shrinking the balance sheet which nobody had really thought was an option and which now is so happening next meeting And the other one was yesterday pals Powell's speech There are just certain moments when the penny drops And bonds move very dramatically I think that helps to explain why stocks are doing so perversely well is that this is a time when there is such a sudden ecstasy from bonds that the only place to put it in the short term that's liquidity makes sense is stocks That this is their benefiting from a direct substitution effect Well I'm glad you raised that because it was going to be one of my questions stocks again are up today And this S&P and NASDAQ typically as I understand it if rates are going up stocks go down because the discount factor affects it But this doesn't seem to be following that rule No And that's what I'm trying to trying to get at is that there are counterweights You can have one or the other So if you don't have one then you have more of the other Is one of the points and then the other is the other way in which the two asset classes affect each other is the higher the interest rate than the less valuation you should be putting on the stock I think the former the notion that people really don't want to be in bonds So they better move to stocks is trumping the latter So that's the point I was trying to get to Is what we're seeing is we may not love stocks but we really hate bonds Yes I've spent quite a few years pushing back at the teenage narrative There is no alternative staying it's another way of saying look just think what might happen if bond yields do go up a lot But what's happening just recently does rather suggest that Tina is still working very well at least at least for now You just really don't want to be in bonds Therefore there's no alternative to stocks What does this do for inflation expectations If we see a reaction to that talk about the break evens A scary We are very close to taking out 3% On the ten year break-even which would be the first time in a very long time and that's the phrase is that you want expectations to be anchored and they're unlikely to be anchored I think they're coming away from their anchor I think it's quite important in this situation stocks plainly are more of a hedge against inflation than bonds bonds aren't in the inflation as you can see inflation at all That it's one thing to say they're a good bet to beat bonds It's another to say this is.
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"And expert data driven commentary on breaking news It is 9 20 in the city time to check in with Bloomberg opinion were joined by penny Connors Marcus ashworth Who was with us to talk about that red hot inflation print out of the U.S. and whether it's setting the stage then for rate hikes From the fed as early as March That's what's been signaled by St. Louis fed president James bullard at least Marcus What is your view Do we get march kick-off I think we do now It's only 18 9% whatever that means but the point is it's basically priced in There's always going to be a little bit of wire just in case something might change Could be on the con could be a variety of other things asteroids for outer space We don't know which might change the economic outlook But the moment everything is strong like bull on the economy and inflation Now you could see things improving over time one with energy prices dropping which did actually fall That was the one sort of surprising in the report that energy price is actually dip But there's plenty of strength in shelter which is the most important thing for that wage price spiral that center backs worry about as you get rents rising and staying high people then need to demand for higher pay rises et cetera and that feeds on itself But that wasn't super strong but it would clearly was raised So a bunch of stuff is starting to seep out It's mostly still good prices which are people who have got them on not services but that's when the switchback people will start to get a bit more worried about sticking inflation So 7% headline it wasn't as high as some people had feared There was enough in the report to take both sides of it But the key thing is that the fed has done all the hard yards here on pricing in and getting able to expect without actually doing anything yet I know there's still adding but still the market is believing that they're on top of it And that's what it's all about While Marcus just let me indulge me allow me to ask myself question how does raising interest rates address inflation if it's a supply side issue It's all about those expectations is about your belief that you're going to need to be paid more because things are going to carry on rising And the fact that secondhand car prices have gone up again again again at some point that's going to mean we're down likewise with energy prices There's nothing much perhaps the same as we can do about that But what it can do is give confidence throughout the bond markets that they will be doing something about it and therefore that they are very tough going down the line Now at the moment it's interesting that really the market is any really pricing as we say up to about 2% interest rates and the U.S. now we know a negative except inflation 7% is still massively negative real rates That in theory should have no impact on inflation And possibly it won't but the point is this will pass through and the rest of it's more that our tightening conditions and we'll see how the well the economy can actually take free money being taken away from that And things haven't stopped be priced with actually some form of cost per And you think everything that you're looking at at the moment and the beige book came out suggested the business confidence is still relatively strong but it's kind of ebbing off a little bit towards the end of the year last year But your confident are you at this stage that the U.S. economy can stomach for hikes And maybe as well a roll off of the balance sheet I'm not confident but I can see why everyone else is if that makes any sense I think the fed will probably hike two possibly three times this year But it's going to have to be very careful if as it says as you say in quantitative tightening as inducing balance sheet are you liquidity in the system at the same time as raising the cost of money Those two things together could be more powerful than the economy can take We just don't know yet And I believe how probably is more aware of this than the market is giving credit for and will easily ease off if the market wants to very clearly signal by the yield curve flattening to a level where it may even invert I think that will stop the fed and its tracks Or secondly of course if there's any obvious signs of economy wilting I think the fed will be less hawkish than they have talked a great game in the market is completely swallowed it Good to them Marcus ashworth always excellent Thank you very much Indeed possibly two possibly three hikes This year is the call from opinion columnist Marcus ashworth Watch that yield curve and the.
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"To keep running Among the hot topics this weekend as we watch headlines about the Federal Reserve coming And we caught up with James bullard to ask him about it He's president of the St. Louis fed And he tells Bloomberg's Michael McKee and Lisa Brahma with inflation looks high and sticky The inflation rate is quite high The core PC inflation rate the committee's favorite measure is about 3.6% That's the highest it's been in 30 years Well above our 2% target and that number already throws out food and energy So you're taming the data a little bit What do you look at that kind of measure but it's quite high It does not have the reputation of moving down very easily So I think it behooves the committee to attack and a more hawkish direction In the next couple of meetings so that we're managing the risk of inflation appropriately If inflation just happens to go away we're in great shape for that We're set up for that But if inflation doesn't go away as quickly as many aren't currently anticipating then it's going to be up to the committee to keep inflation under control going forward Well when you say tack in a more hawkish direction are you talking about speeding up the taper even with the risk of a taper tantrum Are you talking about changing forward guidance 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.
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"More hawkish like James bullard from St. Louis It behooves the committee to attack in a more hawkish direction but we could move faster We kept optionality on this that we could speed up the taper if it's appropriate Here to put it all in the investor's perspective our John Graham CEO of CPP investments managing over half a $1 trillion for assets for that candidate's largest pension fund and Catherine Keating She's CEO of BNY Mellon wealth management Welcome to both you So I can start with you inflation I think was the big story of this week How did it affect investors views of the marketplace So I think the new inflation news this week in a recent days has been that we see some signs that we may be seeing some peaking We see it in inventories starting to build in certain sectors of the economy We see it in some of the port log jams starting to ease a little bit and we see it in emerging markets starting to tighten which is a deflationary force that will affect the global economy But I think for markets and for investors the question really is where do we see inflation a year from now Markets always look ahead And a lot can happen in a year Think about last November Think about last Thanksgiving how different it was than what we're expecting this year with vaccinations and travel And so a year from now what do we think We would use the word not transitory but transitioning Transitioning from the higher inflation that we have right now 5 and 6% But also transitioning from the very low inflation we had in the decade after the global financial crisis which was less than 2% to something more in between three or four And what we need to remember is that markets have behaved very well with inflation in that range for most of our careers as investors Yeah no question They have performed well So John do you agree with that analysis we were transitioning not to 6% but to three or 4% And if so what does it mean for your investors in particular You need to worry about all those pensioners out there waiting to have their checks when they need them I think we would have actually very similar view and I think probably every day this week we talked about inflation and the word that kept coming up was transitory And my question is what this transitory mean is not that helpful a word without a time horizon put on it And I like the word transition 6 months ago we probably thought it was shorter It would be a shorter horizon than it's turned out to be We didn't anticipate all these COVID related shocks to the.
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"By 2700 journalists and analysts in more than a 120 countries around the world Inflation and how hot it's likely to keep running Among the hot topics this weekend as we watch headlines about the Federal Reserve come in And we caught up with James bullard to ask him about it He's president of the St. Louis fed And he tells Bloomberg's Michael McKee and Lisa Brahma with inflation looks high and sticky The inflation rate is quite high The core PC inflation rate that committee's favorite measure is about 3.6% That's the highest it's been in 30 years Well above our 2% target and that number already throws out food and energy So you're taming the data a little bit What do you look at that kind of measure but it's quite high It does not have the reputation of moving down very easily So I think it behooves the committee to attack in a more hawkish direction in the next couple of meetings so that we're managing the risk of inflation appropriately If inflation just happens to go away we're in great shape for that We're set up for that But if inflation doesn't go away as quickly as many aren't currently anticipating then it's going to be up to the committee to keep inflation under control going forward Well when you say tack in a more hawkish direction are you talking about speeding up the taper even with the risk of a taper tantrum Are you talking about changing forward guidance How would you tack I think we've gotten past the taper tantrum issue because we went ahead and went ahead with.
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"St. Louis fed president James bullard says that the Central Bank should speed up its tapering plants urging more hawkish policy to offset inflation He spoke with Bloomberg's Michael McKee earlier The inflation rate is quite high The core PC inflation rate that committee's favorite measures about 3.6% That's the highest it's been in 30 years Well above our 2% target and that number already throws out food and energy So you're taming the data a little bit What do you look at that kind of measure But it's quite high It does not have the reputation of moving down very easily So I think it behooves the committee to tack in a more hawkish direction in the next couple of meetings so that we're managing the risk of inflation appropriately If a patient just happens to go away we're in great shape for that We're set up for that But if inflation doesn't go away as quickly as many aren't currently anticipating then it's going to be up to the committee to keep inflation under control going forward Well when you say tack in a more hawkish direction are you talking about speeding up the taper even with the risk of a taper tantrum Are you talking about changing forward guidance 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 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'd like I don't know But we did retain the optionality on this Let's talk the traders all want to know Jim and that's the very short term If you're thinking we should attack in a more hawkish direction would that speed up the rate of rate increases There's right now in the markets two rate increases for 2022 and almost a third Do you think that's realistic You know I'm a green with the markets right now because I've got two hikes penciled in for 2022 That's dependent on the data could evolve going forward depending on how the data come in So I think there are other ways we could tack in a hawkish direction I think we could play up the idea that maybe we don't have to wait all the way to the end of the tapir in order to raise the policy rate I mean historically when we've done this before we have not wanted to be raising the policy rate while we're still tapering But you could argue that the tapers all priced in and what's going to happen over the next 8 months is just follow through on something that's already priced in And so that would sort of relieve any constraint that the committee might feel about when the appropriate time was to commence with liftoff Another consideration I think I put on the table and have put on the table is that we could allow runoff of the balance sheet at the end of the taper instead of waiting on the decision for a while So I think that that would be a way to have a somewhat more hawkish policy than otherwise We can debate how big an impact that would have but you could allow the balance sheet to be running down Sooner than is currently priced into the market St. Louis fair president James bullard speaking to our very own Michael McKee you caught me mid action on the Bloomberg terminal We're global communicators.
Bloomberg Radio New York
"james bullard" Discussed on Bloomberg Radio New York
"Move faster We kept optionality on this that we could speed up the taper if it's appropriate All right that of course is James bullard President of the St. Louis fed earlier with our surveillance team on Bloomberg TV and Bloomberg radio but guys you know depending on the fed person who's making the argument you know you got Neil kashkari who's much more dovish when it comes to fed policy And what do I say about Twitter that we shouldn't be paying attention to hyperventilation on Twitter when it comes to inflation Yeah Are you hyperventilating about inflation on Twitter No I'm not I don't hyperventilate about anything I mean even Richmond fed president park and said something similar But I mean to bullets point and I mean this is something that's really starting to be speculated a lot in this market is that the fed is behind the curve and that at some point when they do really try to sort of move forward with normalization They're going to have to speed it up Right but the concern is if they speed it up too quickly or if this indeed is transitory and they raise rates too quickly or tighten in some way too quickly then that could kill growth and we could see the end unemployment not continue to go down at the rate that it's been going down Do you think these questions are being asked of pal and brainerd in those interviews I do Do you think we're going to hear is actually going to be chosen as the new fed chair in four days Lay your bats And what is four days What does that mean guys I bet it's just after the market closed on Friday That's going home It means just stand by Always You do bring up a good point Tim and Carol all tos back over to you that the timing of all of this pushes you out to 2022 is pretty miserable says over at TV securities How do you get a rate hike when all of that slowing inflation in slow and growth is all going to hit potentially next year All I know is we could debate this forever in terms of fed policy what I care about is what the rest of the retailers have to say and whether or not going to get my toys and things under the Christmas tree That's all I'm going to already behind I am already behind it now Be allowed a gift cards coming out All right we gotta do it That's gonna do it Our market wrap on this Tuesday beyond the bell I'm Bloomberg radio Bloomberg TV and YouTube will catch a same time same place tomorrow Thank you This is Bloomberg business week With Carol masser and Bloomberg great takes Tim's ten of it on Bloomberg radio You know it is kind of you know pick your voice just with our team over on TV Romain Caroline and Taylor I mean the fed different individuals have different views It's good to see it though that they're having that debate Hopefully internally I'm.
Biz Talk Radio
"james bullard" Discussed on Biz Talk Radio
"Of the Fed presidents I spoke about one early this morning. Shannon was just telling me about Bullard. Uh, James Bullard from the ST Louis Fed. Saying that, you know. So here we are. We're looking at Um You know, a short fall a dramatic shortfall. Obviously, we've got we've got spending at 6.9 Trillion, and we've got income revenue of 3.8. Um, that means we've got to print trillions of dollars worth of bonds of dead in order to have the money to pay our bills and it this goes back to what I have been saying. So if I'm wrong about this, which is sounded like I am because some of them are saying Uh, there's two are saying that we could see tapering this year start to taper. I said a month ago, and I'm going to stick to it. And so they do something different, But so they just taper but My my opinion is that they're going to cut. They're going to raise rates. Even if it's um 12.5 basis points. We're going to raise rates something and try to avoid tapering As long as they possibly can to try to put it off. Um And I say that because Janet Yellen Could care. I mean, right, she's she's saying, Okay, we raise rates slightly. That won't dramatically hurt us. You know if we raise rates by 12.5 basis points We're probably going to be adding about, uh, $100 billion. Maybe not that much. Maybe 75 billion to our service of our day. If we taper Um, we really got a problem because now we got to find somebody to buy 30 trillion $30 billion of our debt. And that's not going to be so easy because nobody is buying our debt, and I'm saying nobody. I'm talking about governments. China is not buying Japan's not buying. The Netherlands isn't buying nobody's buying. So we get China. Japan are, um, number number two or number three debt holder, the Federal Reserve being number one. So, um We? She has to be pressuring. Your own power. And I say that with a great deal of certainty, because I can't be wrong. She's raped. I would hope that at least if they're not smart enough to do something about the debt, they're smart enough to panic. About The cash flow. And if that is the case she's got to be. And I got to believe it is the case. They've got to be pressuring, Uh, pal, that you can't stop. You're it. You're our largest buyer day. You so you can't stop. That's my thought. But if they raise rates, I would be very happy. But I would like to see both go on like to see, you know, cut 30 billion of debt a month. That we're buying and raise rates by I'm not even asking for a quarter ammonia, asking for an eighth of a 1%. Uh, rates and nobody's going to care about that The markets are going to care. There will be a knee jerk reaction in the markets, so they realize it's only an eighth of 1%. And it doesn't necessarily mean that it is a trajectory that's going to continue for any length of time. Although I kind of think would be because inflation as 5.2% Is really at I don't know 10, 10 and 10.7, at least by now, Um, they got to start raising rates. Even Bullard was talking about inflation running hotter than what? They wanted it to go. Did he say that? Yeah. Again. Yeah. And you know it is And do you heard the I didn't? I was on the era when we didn't hear it. But did he say anything? Alluding to that It wasn't temporary inflation, or did he? Did He dismiss that at all? Or just didn't bring it up? He didn't use the word transitory or say it was temporary. He did say that he expects it to linger into next year. So all right, so That's his way of not saying that's not temporary, like, Yeah, you know, um And I'm hearing company after company I read, uh from company financials. Last night. That It's a It's, uh, CS 30 who I added to my buy list this morning, but I read their financials last night or, uh, I already reviewed their financials. This was something else that I get. Um, I'm able to get And indicating that they are somewhat concerned about not only wage inflation, which is, uh, you know, a big big issue. But they're saying product inflation. So if any of you know the company I'm talking about CS 30, you know that they deal in a number of different commodities. And food, kinds of things. Um, that would not be considered commodities, but, um, are food products, uh, to make their food products and they're saying that the cost the law can't raw materials for lack of better, um, but the raw materials that they're dealing with every day. Are going up to a mathematically so they say that there Inflation, both wages and and raw materials. Is here to stay, and they are, in fact passing on all of it along to the consumer so that that connects the dots perfectly to know when we start to talk about While if inflation is going up, What do we do about that Well traditionally to hedge to inflation has been equities. And that's the perfect way. The explanation you gave just totally connects the dots between how we combat inflation. Hands. I put them on the vilest. So, um, because number one, they're staple. Good, solid, stable and you're going to see Um more hedging. I believe in things like consumer staples. Commodities..
The Breakdown with NLW
"james bullard" Discussed on The Breakdown with NLW
"What if powell were to signal a taper. What would it actually be. It would likely be around bond purchases. I not anything having to do with interest rates but there are some on the fed that think that delta or not. that's exactly what we should be doing. Fed dallas president. Robert kaplan said that he thinks the fed should announce a taper of bond buying in september with implementation in october saint. Louis james bullard said that we should start the taper in the fall and in q. One of twenty twenty two. Kansas city's george just said started this year. what's more blurred argued that the economy can handle it quote. Someone wall street seem to think. The numbers are rolling over on delta. I don't really know if we can say that yet but it will peak at some point. The main message here is the economy has learned to adapt to the pandemic. He also pointed to what he called an incipient housing bubble as a concern quote. There is some worry that we are doing more damage than helping with the asset purchases. Because there's an incipient housing bubble in the us your pricing low income people out of the market. I'm not sure that is what we want to do. We got into a lot of trouble in the mid two thousand by being too complacent about housing prices. So this was all this speculation. But powell gave his speech at ten. Am today virtually. And what did he actually say. Well it was basically exactly what the new consensus thought. Let's go through some quotes. And then what. They actually mean quote at the epilepsies recent july meeting. I was of the view as were most participants that if the economy evolved broadly as anticipated it be appropriate to start reducing the pace of asset purchases this year the intervening month has brought more progress in the form of a strong employment report for july but also the further spread of the delta variant. We will be carefully assessing incoming data and the evolving risks. So what does this actually mean. We were going to indicate that we were going to start to taper but now we're focused on delta as a reason that we might need to stay the course or at least be more cautious back to powell if a central bank titans policy in response to factors that. Turn out to be temporary. The main policy effects are likely to arrive. After the need has passed the ill-timed policy move unnecessarily slows hiring and other economic activity and pushes inflation lower than desired today with substantial slack remaining in the labor market and the pandemic continuing such a mistake could be particularly harmful. We know that extended periods of unemployment commune lasting harm to workers and to the productive capacity of the economy. What does that actually mean. Well the non cynical read is that the fed is really truly obsessed and focused on the questions of the labor market and employment way more than questions of inflation. A cynical read is. Hey listen we learned our lesson from the taper tantrum. When y'all freaked out before the last time around back to powell the timing and pace of the coming reduction and asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff for which we have articulated at different and substantially more stringent tests even after our asset purchases and are elevated holdings of longer term securities will continue to support accommodative financial conditions. What does it mean. Even tapering won't really be a hawkish turn and tapering in the form of reduced bond purchases has implications for how fast they'll raise rates and finally one more big one around inflation quote. We've said that we will continue to hold the target range for the federal funds rate at its current level until the economy reaches conditions consistent with maximum employment and inflation has reached two percent and is on track to moderately exceed two percent. For some time. We have much ground to cover.
CoinDesk Podcast Network
"james bullard" Discussed on CoinDesk Podcast Network
"What if powell were to signal a taper. What would it actually be. It would likely be around bond purchases. I not anything having to do with interest rates but there are some on the fed that think that delta or not. that's exactly what we should be doing. Fed dallas president. Robert kaplan said that he thinks the fed should announce a taper of bond buying in september with implementation in october saint. Louis james bullard said that we should start the taper in the fall and end in q. One of twenty twenty two. Kansas city's esther george just said started this year. what's more blurred argued that the economy can handle it quote. Someone wall street seem to think. The numbers are rolling over on delta. I don't really know if we can say that yet but it will peak at some point. The main message here is the economy has learned to adapt to the pandemic. He also pointed to what he called an incipient housing bubble as a concern quote. There is some worry that we are doing more damage than helping with the asset purchases. Because there's an incipient housing bubble in the us your pricing low income people out of the market. I'm not sure that is what we want to do. We got into a lot of trouble in the mid two thousand by being too complacent about housing prices. So this was all this speculation. But powell gave his speech at ten. Am today virtually. And what did he actually say. Well it was basically exactly what the new consensus thought. Let's go through some quotes. And then what. They actually mean quote at the epilepsies recent july meeting. I was of the view as were most participants that if the economy evolved broadly as anticipated it be appropriate to start reducing the pace of asset purchases this year the intervening month has brought more progress in the form of a strong employment report for july but also the further spread of the delta variant. We will be carefully assessing incoming data and the evolving risks. So what does this actually mean. We were going to indicate that we were going to start to taper but now we're focused on delta as a reason that we might need to stay the course or at least be more cautious back to powell if a central bank titans policy in response to factors that. Turn out to be temporary. The main policy effects are likely to arrive. After the need has passed the ill-timed policy move unnecessarily slows hiring and other economic activity and pushes inflation lower than desired today with substantial slack remaining in the labor market and the pandemic continuing such a mistake could be particularly harmful. We know that extended periods of unemployment commune lasting harm to workers into the productive capacity of the economy. What does that actually mean. Well the non cynical read is that the fed is really truly obsessed and focused on the questions of the labor market and employment way more than questions of inflation. A cynical read is. Hey listen we learned our lesson from the taper tantrum. When y'all freaked out before the last time around back to powell the timing and pace of the coming reduction and asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff for which we have articulated at different and substantially more stringent tests even after our asset purchases and are elevated holdings of longer term securities will continue to support accommodative financial conditions. What does it mean. Even tapering won't really be a hawkish turn and tapering in the form of reduced bond purchases has implications for how fast they'll raise rates and finally one more big one around inflation quote. We've said that we will continue to hold the target range for the federal funds rate at its current level until the economy reaches conditions consistent with maximum employment and inflation has reached two percent and is on track to moderately exceed two percent. For some time. We have much ground to cover to reach. Maximum employment and time will tell whether we have reached two percent inflation on the sustainable basis. The unemployment rate has declined to five point. Four percent oppose pandemic low. But it's still much too high and the reported rate understates. The amount of labor market slack long-term unemployment remains elevated and the recovery and labor force. Participation has lagged well behind the rest of the labor market. It's worth noting that since the nineteen nineties inflation and many advanced economies has run somewhat below two percent even in good times the pattern of low inflation likely reflects sustained disinflationary forces including technology globalization and perhaps demographic factors as well as a stronger and more successful commitment by central banks to maintain price stability in the united states. Unemployment ran below four percent for about two years before the pandemic while inflation ran at or below two percent wages did move up across the spectrum a welcome development but not enough to lift price inflation consistently to two percent while the underlying global disinflationary factors are likely to evolve over time. There is little reason to think that they have suddenly reversed or abated. It seems more likely that they will continue to weigh on inflation. As the pandemic passes into history. So what does this actually mean. Well we frequently discussed on the show. The arguments about inflation or disinflation being the dominant economic modality of our time. The inflation argument rests on the idea that structurally the debts the us and other governments carry will force them to either default on those debts or inflate them away. The disinflation ideas focused on long-term structural forces such as technology demographics etc. The drive prices down over time. We spend so much time examining the day to day month to month. Language of powell. That many haven't really examined his larger belief set. It seems pretty clear that he is firmly in that structural disinflation camp. What does that mean. It means in the short term. Nothing is changing the cheap money party continues unabated at least for now moreover it means that there are multiple reasons both from the focus on unemployment and the long-term disinflation belief. That seemed to point pretty clearly to this being just business as usual regardless of the pandemic status so for those of us buying assets denominated in usd. Let the good times roll. Hope you're headed off to a great weekend guys. I appreciate you listening as always until tomorrow be safe and take care of each other piece..
Atlanta's News & Talk with Mark Arum
Dow Has Worst Week Since October, Prospective Interest-Rate Hikes
"Stocks Take a big hit today, the Dow dropping more than 500 points trading volatile this last few days, investors spooked by the Federal Reserve forecast. A pair of interest rate hikes in 2023 2 that today, the feds James Bullard in ST Louis actually suggested the first rate hike could come as soon as
Bloomberg Surveillance
Trump's Trade War Inflicts Pain On Manufacturing States
"Right now Diane swore joins us grant for here in the American economy Diane I'm gonna go to your charm which is the middle west of this nation and right now that is in the heartland of a trade war give us the local update from Chicago what we would hear from Charles Evans what we would hear from James Bullard of Saint Louis and all their good economists what is the tone of a trade war so we'll media in our nation's middle west well we are seen the trade war is to is taking a toll on manufacturing activity there's no question about it and Jack General Motors strike added insult to injury to that trade war to manufacturers particularly in Michigan and Indiana so that really was sort of a very hard situation that said Kelly avances already come out and said listen we've made a half percent cut and I'm optimistic that you know that's enough for now and I want to wait and see said okay interesting this services ambiguity because they have put some stenosis system and what we're gonna see later today is some of that stimulus paying off in terms of strong home sales we have we think we've got enough home sales the curious out through the end of the year next year's another issue but this is the first positive quarter for the housing market in seven quarters just a quick program note I'm pleased to sail speak at length with Mister Evans of Chicago in the early November at the council on foreign relations really looking forward to a lengthy conversation on this moment Diane swanky say we've got existing home sales out there do we have fiscal space in America I'm looking to trillion dollar deficits this is in swanky economic say we have fiscal space well this is one of those hard issues we have fiscal space to make one term investments when interest rates are so low that pay off in terms of infrastructure investment we have less system maneuverability should we had a recession and what we really need is the automatic stabilizers to kick in much sooner and not wait for things to get so bad that we noticed them that Congress then has to enact things to extend things like unemployment insurance and out and in fact we have fewer automatic stabilizers says things that kick in when we do have a recession than we did during the last recession and I think that's really important to acknowledge one of the things people are talking about is using something we call the psalm role which one see an employment rate goes up by a certain percent we know we actually are in a recession and instead of waiting for it to be declared there actually be an automatic sort of movement to be able to get longer term unemployment insurance in this
Bloomberg Best
Stocks slide after bond market warns again of recession
"Stocks remain stuck in the spin cycle Thursday as worries about a possible recession collided with hopes that the strongest part of the U. S. economy shoppers spending in stores and online can keep going the major stock indexes spend most of the day wavering between gains and losses the broader market turned higher late in the day with the S. and P. five hundred Dow Jones industrials closing up for the day Walmart was a standout gaining six percent after reporting earnings and sales above estimates July retail sales also beat estimates so there were some positive signs amid gloom over the trade conflict with China and growing talk of a possible recession federal reserve bank of St Louis president James Bullard doesn't see a need for central bankers to hold an emergency session to review policy despite fluctuations in financial
Bloomberg Daybreak: Europe
Fed Chair Powell Weighs Whether Cut Will Be Needed as Risks Loom
"Fed jerome powell reiterated that the case for lower rates is growing but he wouldn't commit to when or by how much speaking to the council of foreign relations the fed chair and cited downside risks caused in part by trade concerns that may require a quote more accommodative policy cross-currents reemerged with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy that was fed chair jay powell meanwhile louis chief james bullard thinks the move should be next month but he pushed back against a fifty basis point cut speaking to bloomberg t._v. and radio bullard said he favors a quarter point reduction as insurance given below target inflation and slowing growth today fifty basis points would be overdone i would i don't think the situation really calls for that but i would be willing to twenty-five sitting here today i hate to judge meetings things can change by the time you get that was louis fed president
Bloomberg Best
Saint Louis, President And Kathleen Hayes discussed on Bloomberg Best
"Federal reserve bank of saint louis president james bullard says an insurance cut of twenty five basis points to interest rates would be enough to protect against a sharper than expected slowdown in economic growth bullard spoke exclusively to bloomberg's kathleen hayes and explained why he dissented from the fed's decision to keep interest rates level at the last meeting of the policy-setting federal open market committee for the first time was twenty thirteen descended on fed policy decision it was the first ascent in the era of fed chair jay powell i think a lot of people are wondering why now speech on june thirty said a rate cut might be warranted inflation expectations continue to fall if you know if it looked like the weakness could be even bigger from the trade center than thought but why did you say what you really have to draw a line in the sand and say we can't wait gotta cut twenty five basis points today well inflation's running below target which is surprising given that the economy has surprised the upside over the last two years really growth has been higher than most people had expected labor markets have been very strong unemployment at a fifty year low and still we're looking at inflation running below target by preferred measure inflation expectations deteriorating growth still okay looking backward but looking forward looks like a slowdown with some downside risk you've got an inverted yield curve seemed to me like this is a good chance to make us insurance rate cut and try to recenter inflation and inflation expectations back at the two percent
Bloomberg Surveillance
China ready for further U.S. trade talks, ambassador says
"Front, the American Chamber of commerce in China says about a third of its members are considering delaying investments in the country as trade tensions intensify. Meantime, China's ambassador to the US telling Fox News today that the door is still open for trade talks with the US. We had Saint Louis fed president James Bullard on the show earlier today. And he said, there still could be progress on trade by baseline assumption continues to be that a trade deal will be struck. I think it would be good for both sides, the darkest hour, always occurs, right before the dawn, and I'm not surprised that there are fireworks, right at the point where you'd be trying to strike a deal, Bullard also said, the US China trade tension and the tariffs could hurt the US economy enough to justify a rate hike. But that would take six months at the higher tariff levels for that to
ON with Mario Lopez
Rex Tillerson warns of "growing crisis of integrity and ethics"
"Eight thirty am and byron ninety minutes away from the start of the country day the last day of the week it's a bright and jerry day today we'd rain yesterday was almost a red headline on bloomberg let's give you cook clash of the mortgage you could go bid twelve hundred ninety two by the way ubs say it is a painful moment for gold but you must keep the faith fourteen hundred bucks is their target in the next six months three to six months they expect the dollar to retreat from its highs wrote it over sap futures flat at the moment but there was a nice little bit of a turn of green on us stops at yesterday the question this morning is do you focus more on the geopolitics of the trump kim jong un possible possible meaning question marks ryan dot org focused on the data and the earnings on us markets that's the question i word headlines deborah mob is standing by deborah president trump says north korea hasn't directly raised concerns about his proposed summit with kim jong un and that's after pyongyang threatened through its state run news agency to pull out of the meeting anything we haven't heard anything we will see what happens korea says it feels the repugnance towards national security adviser john bolton and has rejected a socalled libya model in which it quickly surrenders its nuclear weapons former secretary of state rex tillerson has taken a veiled shot at president trump warning that a growing crisis of ethics and integrity has put american democracy at risk he criticized the salt on facts that he said would lead to a loss of freedom and added that only societies able to pursue the truth and challenge alternate realities could be truly free trump fired tillerson by tweet in mid march to conceal the truth or we as people become accepting of alternative realities that are no longer grounded in facts than we as american citizens are on a pathway to relinquishing our freedom saint louis bad president james bullard says policymakers have no business blogging strategy weeks or months in advance because they don't know how.