24 Burst results for "Richmond Fed"
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"Well, I tried not to get too wound up in any particular data read, particularly a January data read, large seasonality factors, all that sort of stuff. But I do think what we're now in a position to do is to react to multiple months of data as they come in. We may or may not choose to take rates up further if inflation continues to persist, but we'll have to see what happens. All right, that's Richmond fed president Thomas barkin there. Now, Michael, what other insights could you glean from your conversation with him? Well, he's basically saying that the fed is going to be data dependent, which of course we all know. Which means that their horizon is shorter. They're looking between meetings. What's changed rather than where we think will be at the end of the year. They're all predicting that we're going to see inflation come down further, there are differences in opinion in terms of how fast that's going to be. The question is in the meantime, what are they going to do? And they're looking at each meeting as a decision point based on the data that they have brought in, whereas many in the markets have been looking out farther into 2023 and saying we're going to see a slowdown or we're going to see a recession. We're going to see inflation come down and so basically markets had been rallying on the thought that the fed wouldn't have to do much more and we'd have lower interest rates. Now, the market seemed to be catching up with the fed and the idea that this is going to take longer than expected. And they're going to raise rates faster, and farther than expected. Now, the benchmark lending rate is not the only arrow in the fed's quiver. There's also other quantitative easing measures they can take, a tremendous balance sheet. What else can we maybe expect to see from the fed, maybe not at the March meeting, but later this year? Well, that would depend on what happens in Washington. The fed's going to keep the balance sheet reduction going at the rate it has been 60 billion a month. And there's no reason for them to change it at this point. There have been concerns in the markets that it might be disruptive to the markets, and it might lead to some liquidity issues in various markets. And we're not really seeing that yet. So they can keep going. The issue becomes, if we get a debt ceiling problem, if we violate the debt ceiling, then do the market seize up and does the fed have to start expanding its balance sheet again to try to get us out of the hole. That's going to be something that's going to worry the markets as we get closer to that X state which the congressional budget office said this week was maybe between July and September. And so you'll probably see some repricing as we get closer to that date depending on the news out of Capitol Hill. Now another thing the markets and the fed are really focused on and that is housing. And it's impact on the economy. So we're getting a report on existing home sales next week. We just had some pretty encouraging data from home builders. They see things may be turning around. We've seen interest rates fluctuate a little bit, maybe giving a little boost. How important is housing right now, and could we be poised for a turnaround in the spring? Well, housing is an important part of the overall U.S. economy, smaller than it used to be, but it is also the most sensitive. So as the fed raises rates, we've seen a real falloff in housing activity Now, mortgage rates are kind of holding in. The question is, do they start to come down a little bit? They've fluctuated some, and pent up demand get people to buy anyway. That seems to be happening a little bit. We're not at an inflection point yet, but we do seem to be getting close to the bottom in housing. And we're starting to see more activity home housing starts were weaker than expected in the month of January. But they may rebound as we get into the spring because the builders have a lot of backlogs. They're still trying to work off. And one thing we don't know is, is there a problem building because they can't find enough workers? We know there's a shortage of construction workers out there. And that just feeds into the whole stronger economy thing. So a lot is tied up in the housing market, not to mention its contributions to inflation. Oh boy, and three jobs essentially for every home that goes up. But if you can't find qualified workers, those homes are not going to go up. Yeah, that's been a real problem with new home construction and sales. All right, so let's circle back to the next meeting of the fed, it's in March, just a few weeks away, and there's a lot of growing talk right now about not a 25 basis point hike, but a 50 basis point hike. And we heard from mester just this past week. Are there any other hawkish comments you've heard from feds that would indicate that we're looking at a much bigger hike here? And that would really disrupt things. Well, so far, it's only been a little bit of speculation in the sense that mister said she would have raised rates 50 basis points. At the last meeting, she did not say what she would do at the next meeting. And others have sort of made the case that, yes, we do need to do more, but you go back to their last dot plot that came out in December. And at that point, they said we were going to go over 5% to 5.1%. And there was almost a majority for going above 5.1% to 5.5 and so it is very possible that the data that are coming in stronger than expected will push them in that direction. And if you were going to go higher, we're at four 7 5 now. If you wanted to go to 5.5, then you might as well do a 50 basis point move. So it becomes a more realistic possibility. Now we have another CPI report. Another PPI report, another jobs report, all those before the next fed meeting. So a lot could change in the way that all these numbers changed from December to January. A lot could change between January and February. So we'll have to see which gets us back to the old fed thing about were data dependent and we're going meeting by meeting. All right, well, about 5 weeks away and Michael McKee Bloomberg's global economic and policy editor thank you once again for all your insight. Coming up
Bloomberg Markets
Fresh update on "richmond fed" discussed on Bloomberg Markets
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Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"I tried not to get too wound up in any particular data read, particularly a January data read, large seasonality factors, all that sort of stuff. But I do think what we're now in a position to do is to react to multiple months of data as they come in. We may or may not choose to take rates up further if inflation continues to persist, but we'll have to see what happens. All right, that's Richmond fed president Thomas barkin there. Now, Michael, what other insights could you glean from your conversation with him? Well, he's basically saying that the fed is going to be data dependent, which of course we all know, which means that their horizon is shorter. They're looking between meetings, what's changed rather than where we think will be at the end of the year. They're all predicting that we're going to see inflation come down further, there are differences in opinion in terms of how fast that's going to be. The question is, in the meantime, what are they going to do? And they're looking at each meeting as a decision point based on the data that they have brought in, whereas many in the markets have been looking out farther into 2023 and saying we're going to see a slowdown or we're going to see a recession. We're going to see inflation come down and so basically markets had been rallying on the thought that the fed wouldn't have to do much more and we'd have lower interest rates. Now, the market seemed to be catching up with the fed and the idea that this is going to take longer than expected. And they're going to raise rates faster. And farther than expected. Now, the benchmark lending rate is not the only arrow in the fed's quiver. There's also other quantitative easing measures they can take, a tremendous balance sheet. What else can we maybe expect to see from the fed, maybe not at the March meeting, but later this year? Well, that would depend on what happens in Washington. The fed's going to keep the balance sheet reduction going at the rate it has been 60 billion a month. And there's no reason for them to change it at this point. There have been concerns of the markets that it might be disruptive to the markets. And it might lead to some liquidity issues in various markets. And we're not really seeing that yet. So they can keep going. The issue becomes, if we get a debt ceiling problem, if we violate the debt ceiling, then do the market seize up and does the fed have to start expanding its balance sheet again to try to get us out of the hole. That's going to be something that's going to worry the markets as we get closer to that X state which the congressional budget office said this week was maybe between July and September and so you'll probably see some repricing as we get closer to that date depending on the news out of Capitol Hill. Now another thing the markets and the fed are really focused on and that is housing. And it's impact on the economy. So we're getting a report on existing home sales next week. We just had some pretty encouraging data from home builders. They see things may be turning around. We've seen interest rates fluctuate a little bit, maybe giving a little boost. How important is housing right now, and could we be poised for a turnaround in the spring Well, housing is an important part of the overall U.S. economy, smaller than it used to be. But it is also the most interesting sensitive. So as the fed raises rates, we've seen a real falloff in housing activity. Now, mortgage rates are kind of holding in. The question is, do they start to come down a little bit? They fluctuated some, and pent up demand get people to buy anyway. That seems to be happening a little bit. We're not at an inflection point yet, but we do seem to be getting close to the bottom in housing. And we're starting to see more activity home housing starts were weaker than expected in the month of January. But they may rebound as we get into the spring because the builders have a lot of backlogs. They're still trying to work off. And one thing we don't know is, is there a problem building because they can't find enough workers? We know there's a shortage of construction workers out there. And that just feeds into the whole stronger economy thing. So a lot is tied up in the housing market, not to mention its contributions to inflation. Oh boy, and three jobs essentially for every home that goes up. But if you can't find qualified workers, those homes are not going to go up. Yeah, that's been a real problem with new home construction and sales. All right, so let's circle back to the next meeting of the fed, it's in March, just a few weeks away, and there's a lot of growing talk right now about not a 25 basis point hike, but a 50 basis point hike. And we heard from mister just this past week, are there any other hawkish comments you've heard from feds that would indicate that we're looking at a much bigger hike here? And that would really disrupt things. Well, so far, it's only been a little bit of speculation in the sense that mister said she would have raised rates 50 basis points. At the last meeting, she did not say what she would do at the next meeting. And others have sort of made the case that, yes, we do need to do more, but you go back to their last dot plot that came out in December. And at that point, they said we were going to go over 5% to 5.1%. And there was almost a majority for going above 5.1% to 5.5 and so it is very possible that the data that are coming in stronger than expected will push them in that direction. And if you were going to go higher, we're at four 7 5 now. If you wanted to go to 5.5, then you might as well do a 50 basis point move. So it becomes a more realistic possibility. Now we have another CPI report. Another PPI report, another jobs report, all those before the next fed meeting. So a lot could change in the way that all these numbers changed from December to January. A lot could change between January and February. So we'll have to see which gets us back to the old fed thing about were data dependent and we're going meeting by meeting. All right, well, about 5 weeks away and Michael McKee, Bloomberg's global economic and policy editor, thank you once again for all your insight
Bloomberg Surveillance
Fresh update on "richmond fed" discussed on Bloomberg Surveillance
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Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"Just registered lengthy. And it has a great title. Yeah. But he talks about the R starred industrial complex with respect to Williams and Lara Bach and arrest. But this is a raging debate that Ken rogoff brought up yesterday in distinction from Olivier Blanchard where blind chard says to use a Greenspan phrase our start can be more quiescent and constructive in rogue off and Caspian are pushing against that and saying, we migrate to a higher level our start discussed. Yeah I love the title of Bruce's piece today when you wish upon our star. It made me read it. Our star, of course, is the concept of the neutral interest rate and the fed wants to get to a neutral interest rate and the debate is over where neutral is. And Bruce is making the point this morning as others have that with the economy growing very slowly and inflation so low over the last decade that our star, the neutral rate, moved way down to close to zero. And the argument is that the fed is making policy based on an R star of zero when it's actually because now the economy is coming back stronger, it has moved up and law back in Williams work has been suspended. They suspended it during the pandemic and haven't restarted. So there's not enough. The Red Sox did the same thing. There's not a new estimate there, but the Richmond fed puts one out that has our start now at about one and a quarter percent. So then you add inflation into that. And you get an idea of roughly where you want to be. We'll have much talker and they sort of coming up claims tomorrow. Are you here tomorrow Mike? I'm here tomorrow. And I'm here to have a claims. Paul, we'll have a claims TikTok. You can't have claims without me right now. For me with that. Michael McKee, thank you so much running all of our economic coverage is what I need you to do a data check here because there's some market movement futures negative 25. They deteriorate off what we saw with bang up at retail fed adjusted down 6 tenths of a percent vix, level of 18.93. It's in the bond space as they say that's interesting. The two year yield really exploded higher 4.64%, three basis point move ten year yield 3.78%. And what it means is we dis inverted a little bit for those of you who have global Wall Street moving from a shocking negative 91
Bloomberg Daybreak
Fresh update on "richmond fed" discussed on Bloomberg Daybreak
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Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"Yeah, exactly. I know you talked about this a little bit yesterday. But what are some of the smaller cap stocks that you look at to determine where we're heading with tech? Yeah, I'm obsessed with this new AI trend, actually. For me, I started really with the chip stocks that were kind of the canary in the coal mine for big tech circa 2021. I think and now it's these AI stocks. I don't know how long it's going to last though, so don't quote me on it. I just want to say sound. So I do want to sound C three rates. A big bear. One of them, which is Disney flashbacks there, but forever. Yeah, so you're going to see a couple of those that rally in the kind of take the text dorm with it, but those kind of trends don't last very long. They're temporary. All right, I'm going to leave it on that note. Thank you so much. Our Gupta there with a look at the trade on this Tuesday. All right, we want to get to what I consider a must listen to. It's an interview done by our Michael McKee, I was glued somebody to interrupt me while I had my earbuds and like leave me alone. I'm listening to Mike. He caught up with the president of the Federal Reserve bank of Richmond. We're talking about Thomas barkin, who spoke exclusively with our Bloomberg news international economics and policy correspondent Michael McGee earlier on Bloomberg TV and radio. So let's get to it, Mike's here in our Bloomberg interactive broker studio. I want to talk about that. But the backdrop was you guys were just coming off of the CPI print. So first of all, what was notable about that print? It was notable because it was kind of a reverse of what we had seen the last couple of months in the pace of inflation accelerated in both the headline and the core. 5 tenths originally the headline was reported as down a tenth and then seasonal adjustments were tweaked and was up only a tenth in December, but still an acceleration and the same thing with the core. The one bit of good news is that the core services ex housing, the Jay Powell, indicator. That came in a little bit lower. So there is some progress still being made on inflation, but as everybody at the fed has said, it's not going to be a straight line. So that core metric came in a little bit lower, but to what extent is that going to determine where the fed goes? And are we kind of massaging the data a little bit too much to get a preferred result there. Well, that is a question that people have asked. And they're not really massaging the data to get a preferred result there. Massaging the data to get a clear picture of what's going on. The problem with housing is the way it's calculated in the CPI. It's about a year behind in what is actually happening with prices. And so they try to take out the housing component to see what's going on with inflation right now. So whether it makes a difference to them, it's not going to one month isn't going to make a difference. A trend is going to make the difference. Mike, what about this not being the preferred inflation measure for Jay Powell? Is that a significant? Well, it's, I don't know if it's preferred. He brings it up. He talks about it and everybody says, oh, that's J Powell's favorite indicator. Remember when Alan Greenspan was chairman and then he'd say, I'd sit in my bathtub and I'd read about scrap metal. And everybody had to know about scrap metal prices because that was Greenspan's favorite. Favorite indicator. They look at a million different things. And I don't think it's any one thing. Is that a no? It matters in the sense that it gives you that broader picture of what's going on. All right, so let's talk about your interview with Tom barkin of the Richmond fed. It really was a killer interview. Really well done. What jumped out for you with that conversation? Or what did you want to get from him? Well, I think what we heard from him is what I more or less expected in the sense that the fed is not going to look at any one indicator and change its mind about its policies. We saw incredible volatility in the markets right after that number came out. Traders couldn't figure out is it good? Is it bad? Is it good is it bad? And the fed is kind of standing back and going, we don't have to decide right now because we're not trading. So we're going to look at this in a longer time frame. We've got more inflation reports. We've got GDP reports and retail sales reports so we got another jobs report before our next meeting on March 22nd. And so they're keeping their options open, which keeps traders on the edge because as barkin said, if the inflation proved sticky, then we may have to raise rates more than we thought. But he also added, if inflation goes down faster than we thought, then we would have to raise rates or we could look at going the other direction. But everybody didn't hear that second part. Right. It's in bets for candy nuts. We don't often at Christmas. I like to say that a lot. Here's a little bit of Mike's conversation with the Richmond fed president Tom barkin. Listen up, everybody. We may or may not choose to take rates up further if inflation continues to persist. But we'll have to see what happens. If inflation settles, maybe we don't go quite as far. But if inflation persists at levels well above our target, maybe we'll have to do more. So a lot of what I heard Mike and you should correct me here is some of the hemming and hawing that we heard from Jay Powell as well after the last decision from the fed, like a hawkish decision, but dovish statements. Do you see the fed moving in that direction in the future? Well, it's kind of a, it depends on what you're talking about, they're trying to accomplish in this sense. The fed wants to be hawkish because it wants the markets to think it's hawkish. But it wants to be a flexible to react to the data as it comes in. And if they say that, then the markets think, oh, they're dovish. There's this black and white dichotomy that people think of. And it's kind of hard because they have different jobs as che pals that I used to do the finance thing. It's a great job, but it's not my job. And that's the tension here. Although in the last couple of weeks, markets
Bloomberg Daybreak Europe
Fresh update on "richmond fed" discussed on Bloomberg Daybreak Europe
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Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"To say that we're joined by the Richmond fed president Tom barkin alongside the brilliant Bloomberg's mark the key, you're happy with that introduction, Mike. I think that worked for you. Tom great to catch up. Thanks for being with us. Yeah, thanks for having me here. So we get some fed speak. 60 minutes after the inflation report. So let's start there. Your response to that CPI print we got a little bit earlier. It's about as expected. Inflation is normalizing, but it's coming down slowly. And I just think there's going to be a lot more inertia a lot more persistence to inflation than maybe we'd all want. Part of that is still COVID factors, excess money and people's pockets. Supply chain issues in places like cabinets and switch gears. Part of his business factors, there are businesses out there still trying to recover lost margin. But I think the biggest thing is that after the experience of the last couple of years, businesses have now understood that pricing is a lever again. And as I talked to the folks in my district, I'm hearing people still out there pushing price and trying to see trying to test for the levels of inelasticity really are. So one thing we've heard from fed officials, including the chairman, is that the disinflationary process has started. Is that something you agree with? Do you see much evidence of that and where do you find that evidence? Well, if you look at the 12 month numbers, you can see they peaked several months ago and they're coming down steadily. But that's one part of the puzzle is inflation coming down. The other part is actually hitting our target. And so it's going to take a while to get to there. To the latest data that have come in, not just today's CPI, but the jobs report, et cetera, change your view of how far the fed will have to go beyond perhaps what was in the SEP for December. And does it change your view of inflation dynamics? Well, I try not to get too wound up in any particular data read, particularly a January data read, large seasonality factors, all that sort of stuff. But I do think what we're now in a position to do is to react to multiple months of data as they come in. We may or may not choose to take rates up further if inflation continues to persist, but we'll have to see what happens. Well, based on what you're seeing right now in terms of the path of inflation. The dot plot said 5.13% in December. You think that's enough? I think we'll see. We're going to get a PC at the end of the month, another CPI before the next meeting. And then I think as the meetings go on this year, we'll see what happens to inflation. If inflation settles, maybe we don't go quite as far. But if inflation persists at levels well above our target, maybe we'll have to do more. Do you think that maybe you and the markets are on a different time frame, you're going meeting a meeting and they're looking out at towards the end of 2023, saying you should be cutting rates by then. I'm not sure I understand markets. You guys are much better than I am. I'm very focused on what's happening in the demand in the economy. I'm very focused on what's happening to inflation. And I think the way to think about my view on rates is we're inflation to persist. We might have to do more. If inflation doesn't persist, maybe not. Had a financial conditions factor into that call into that view. How do you think about financial conditions? Well, there's lots of definitions of financial conditions. What would you define it? I think that as we raise rates, the market and all markets respond to how we're doing things in the path that we forecast. There are people who are out there saying financial conditions are back where they were a year ago. And I said, I don't know. It looks like rates are higher than they are a year ago. Certainly if you're trying to get a mortgage, that's what you'd think. And so the financial markets make their forecasts and lending conditions whatever work off of that. I think you can try to manage it. But I'm in the world of trying to define your response function, try to live to your response function. And I think markets will catch up to what you're doing. If we can dig a little bit deeper, we've had a decent equity market rally here today. Credit spreads, and I think something like 200 basis points tighter than the wides of last year. Do you see that as complicating your ability to tighten financial conditions and bring inflation back towards target? Is it something that's on your mind a lot? I think trying to manage markets at least for me is a fool's errand. And so I'm in the world of trying to manage what we can control. If demand stays hot, if inflation comes in elevated, have rates move more. There are lots of other scenarios of what happens to the economy. And we'll respond to those. Well, one of the questions that people are asking is, does it make it harder? As the market pushing back against you and do you see inflation maybe stickier because of that. And is it a question of you have to raise rates higher or leave them in place longer and wait for the cumulative weight of tightening to hit? Well, I think there's a very good case for leaving rates higher for a longer period of time to allow that tightening to hit. I do think the lesson of the 70s was very clear, which is don't give up too early. And anything I've read and I've talked to lots of other people who seem to have understood that market and they say, you know, if you go back to the Arthur burns years, it was raised rates, economy, weekends, lower rates, inflation comes back stronger. Raise rates, economy weakens more lower rates. That doesn't seem like a path
Bloomberg Daybreak Europe
Fresh update on "richmond fed" discussed on Bloomberg Daybreak Europe
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Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"Look, his Brian Curtis. Yeah, it's quite curious. We had the fed talking tough again, really just about every speaker talking about how the rates of fed funds rates going to go significantly higher. And also looking at the heavy police presence in Chinese cities, really putting a dampener on the protests there. And yet, well, maybe partially because of that, we're seeing business get back to usual. And at the moment, that means big gains in equity markets. That's what we've seen during the month of November and back to that today. Thanks and index up 2.3% the Hanks and tech index rallying 3.1%. And the CSI 300 in China up 1.1%. As Paul mentioned, some of the other games are muted, although the straits times index is up nearly three quarters of 1% in New Zealand trading up more than 1%. And a few other markets, like the cost speed, is trading up about a third of 1%. We did have some policy moves in China that very much in support by investors. One is to try to rescue the property market. And part of that is just to make it easier for developers to raise funds and to use those funds in some of the ways that they would desire like paying down debt or even making additional purchases. And so that's weighing in. We've seen some of the property developers in China, rally as much as 10%. If you take the index of them as a whole, much more muted, but still a day of big gains. Stalling in here, one 38 76 that always been a little weaker this morning right now down about a quarter of 1%. The Aussie rebounding from yesterday's selling 66.64 U.S. stock back over to you. All right, Brian, thanks. Well, you mentioned fed speak yes, the big event this week will happen on Wednesday stateside. That's when we'll hear from fed chair Jay Powell. Today, several indications that the fed may not be pivoting from its tough stance on rate hikes any time soon, the day began with a commentary from New York fed president John Williams, he said there's still more work to do to get inflation down, and he thinks rates are set to me somewhat higher than he forecast just a couple of months ago. We also heard much later in the day from the head of the Richmond fed Tom barkin. Now our foot is off the gas. I think we're now on the break, real rates are positive across the curve. And when you're driving, you have your foot in the brake, you just drive a little more deliberately, maybe you pump the brakes. You just take a little more caution. And so I'm very supportive of a path that is slower, probably longer and potentially higher than where we were before that. That's Tom barkin there, the head of the Richmond fed in an exclusive conversation with a Bloomberg TV. Earlier in the day, we also heard from the head of the St. Louis fed Jim bullard, he was saying that markets are underpricing the chance of higher rates and he said the fed should raise to at least 5%. The fed funds rate that would be kind of the terminal rate as it were. Then on top of that, ahead of the Cleveland fed, Loretta mester was telling the Financial Times the fed wasn't near a pause in its rate hike campaign. By the way, that next meeting Paul is on December 13th, and a closely watched meeting it will be. Turmoil at Apple's key manufacturing hub of Zhang Zhou is likely to result in an iPhone production shortfall. But all the deficits going to be close to 6 million iPhone pro units, Apple shares fell 2.6 after that news, and that marked the biggest one day drop in more than two weeks. We heard earlier from Wedbush's Dan Ives. It's been a gut punch in the most important quarter of the most important period for cooking Cupertino, going into holidays. The clock struck midnight, finally apple is seeing what's really the hurt in terms of production in China. We think it could be 6 to 8 million units. The situation remains fluid at the zhengzhou plant, much will depend on how quickly Foxconn can get workers back to assembly lines after violent protests against COVID restrictions. If lockdowns continue in the weeks ahead, production could be further sit back. All right, here we are at 5 minutes past the hours we update global news
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"I'm David west and while Congress is back in town because they need to do some work in order to keep the government going. We have a deadline of midnight on Friday and they have a continuing resolution now that they're studying and deciding whether to pass. To give us his perspective on where we are, keeping the government going, welcome. Democratic senator sherrod Brown of Ohio. He's chair of the Senate banking housing and urban affairs committee. So senator, thank you so much for being with us. I want to talk about that banking partner in a minute. But first, where are we with the continuing resolution? We have language, is it going to get done? Yeah, it's going to get done. I spoke with senator Schumer. I'm actually from the Washington airport when I arrived today. I talked about a number of things this will get done. There are a few sort of far right members of Congress that mostly want to spend their time trying to embarrass the president of the United States and put a royal the waters, but responsible people in both parties, my Senate colleague from Ohio or Republicans, Democrat and the overwhelming majority of us want to get this done. And it's bad for the country to shut the government down. It's bad for the employees. It's bad for the economy. So we'll get it done by Friday. So we'll get it done. You'll get it done. Let me ask when you pass it. Is it going to include the permitting provisions that were put in there in part because of the instance of Joe Manchin, your colleague from West Virginia? I don't know for sure I assume it will. I assume there may be a little further compromise there. But it sounds, it sounds to me like that. I wouldn't bet the farm that it will be in. I think the chances are it will, but I think either way we're going to we will to government will not shut down and we will pass the continuing resolution. It's our job to run the government day by day, week by week. And we have that responsibility. So, senator, I want to come back to your job as chair of the Senate banking housing and urban affairs committee. We all watched you here on Bloomberg last week as you presided over that hearing with the CEOs of 7 major banks. And I remember at the beginning you gave a little lecture there about how powerful those banks are, the assets they had, the backing they had from the federal government and given the pressure being put on regular ordinary working Americans this year, they're going to need those banks. Did you get out of the banks what you wanted? Yeah, well, to a point. I mean, you never fully, but this is the second annual hearing we've done. We will do this every year as long as I share this committee. We started it in the I believe the spring of last year. It's really to bring them in front of us to hold them accountable because we know that big banks have wield immense power over this economy. We know that the banks are getting more and more profitable as the economy is not growing nearly at the rate the banks are. We know the banks, we bailed this government, this country bailed the banks out a decade plus ago, yet individual consumers don't get bailed out. So they do have a special place. But our goal always is to hold them accountable. And as a result, we've seen some things improve over the last year, a number of these banks now are charging lower a few cases, no fees for overdrafts and other things. So we watch them the chairman of the Richmond fed said to me, several years ago, watch me watch what I'm doing and make sure you let me know that you're watching. And that's really the way that this committee and the Congress should on behalf of the American people look at look at the banks and the bank CEOs. As you communicate with these bank CEOs, either directly in those hearings or behind the scenes, do you have a wish list? Well, I have a wish list that only this committee used to be referred to as the Senate banking committee sort of colloquially. When I became chair, we talked about the whole name. Banking housing and urban affairs we did hearings for the first time on housing that had been done in years hearings for years on the issue of housing. And we know how far behind we are for where we want to get to. On housing. And so I guess I don't have high on the wish list, not the only one, but high on the wish list is that banks went to help help us with starter homes with people getting starter homes. There was a really good I believe front page Sunday piece in New York Times this week about how we're just not taking care of those first time home buyers that want to get into the market and buy the starter home and there for a whole host of reasons. It's not happening. And I'm really hopeful that the banks will work with us to make sure we can get people into starter homes so they can build wealth and can provide for their children better at all the things that accrual of wealth does for a family. Senator, one of the challenges for these bankers is environmental social and governance because they seem to be getting caught between some states who are saying, don't you pay attention to that or we won't give you our money. Our pension plan money and some pension plans saying you better pay attention to it. Is there anything you and Congress should do or could do to help them? Yeah, I'm a bit incredulous when I hear my colleagues just attack them because some of these banks actually believe some of these CEOs believe in racial diversity, relieve an opportunity, believe in giving more women a chance for management positions, giving more African Americans and Asians and Latinos, an opportunity to advance in the banks and help those people in the communities. And I'm also even maybe equally incredulous that there are still sitting if it actually is not in ideologically to my left on the committee who continue to deny climate change that deny the existence and the threat of climate and they beat these banks up because these banks are putting effort in looking more closely whom they lend to and who are socially responsible and who are destroying the environment who is improving the environment. So I support those efforts. I think most banks CEOs want to do that. And I think those politicians that are climate deniers are those politicians that think the world should be run by people entirely. People that look like me are just wrong. It's a senator, you mentioned, as long as your chair of that committee, you'll have those meetings with the banks every 6 months or so. There is a midterm election coming up, you will have noticed, you may well preside. On the other hand, there's some risk that it could switch. Give us a sense of what's at stake with respect to the banking housing and urban affairs committee, whether we have you as chair or your Republican counterpart. Well, just look at the contrast. And the former chair might crapo has become a friend. I serve with them for many years and admire and respect him. But he looks at the world very differently. There were, they never brought the CEOs at the banks in. They never did hearings on housing. They didn't do hearings on lending and diversity and climate and all those issues. They rarely discussed consumer protections. The banking committee was really all about how to make the banks more profitable, not about the economy overall, not about consumers, not about the communities and so I think that's the contrast and I would I'm not doing a commercial here for the Democrats to win the Senate but I think what the real contrast in this election is is the Republicans for the Senate nominated a bunch of people that have never run for office before. And don't really have a don't really have an understanding of sort of the public interest. And I think when I look at people like to Ryan in Ohio or I look at Warnock and Georgia or Cortes mass on Nevada, I've seen the kind of work they do to emphasize housing and emphasize consumers. So let's talk about Timur and just for one last question here because he's a Democrat. He's been serving the house. He like you really fashion as well. I think a bit as a populist, really representing the regular working man and woman in Ohio. At the same time, given where
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"It's 5 30 on Wall Street good morning. I'm Nathan Hager. And I'm Karen Moscow we are just about four hours away from the open of U.S. trading. Let's get you up to date in the news you need to know what this shower, U.S. stocks begin the session trading at a one month low as fed fears continue to persist in the markets. Amanda agati as chief investment officer at PNC asset management group. So to the extent that the fed stays the course here, I think that the market can live with it in air quotes relative to some of the fears that are looming larger out there. I think the market's already priced for the past that's ahead. So the extent that the dot plot changes meaningfully and the terminal rate moves meaningfully higher from where we are today. That's going to be a challenge for markets for sure. PNC asset management chief investment officer Amanda agati says she's not making any meaningful changes right now to her portfolio. Well, three regional fed chiefs yesterday reiterated chair Jay Powell's intention to bring down inflation, including Richmond fed president Thomas barkin. He vowed the fed would not flinch in its efforts to cool prices, but cautioned it may get bumpy. The pace of when we get back to our target, which is 2% is uncertain. But as a result, our commitment to bring inflation down, which hopefully you welcome. That leads to worries about a recession. Richmond, fed president Thomas barkin spoke in West Virginia yesterday. Mueller sees Nathan Euro area inflation accelerated to another all time high as the European Central Bank considers a jumbo interest rate hike when it meets next week. Consumer prices jump to 9.1% from a year ago. To Wall Street now Karen Goldman Sachs and Morgan Stanley are both removing pandemic hurdles to fully return staff to offices, Bloomberg's Charlie pellet has more on Goldman's aggressive push. Beginning next week, employees outside of New York can be back in the office regardless of vaccination status with no requirement to participate in regular testing or wear face
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"To Bloomberg daybreak Europe live from London. Let's get you a check on the markets We are seeing markets moving a little bit further north this morning after the selloff we've had in recent days, the MSCI specific index three tenths of 1% higher Euro stocks 50 futures as well as we head towards the start of cash equities trading in half an hour's time there, 7 tenths of 1% higher on Wall Street has to be many features are half a percent higher as well. We are seeing bond yields moving a little bit lower this morning across Europe, the German ten year yield now two basis points are one spot 49 is right there in Italy the ten year BTP three basis points are three spot 79 this morning as the Euro is a tenth of 1% higher trading above parity now against the dollar at one zero zero 26. So those are the markets these are our top stories, Gazprom says that it will halt gas supplies to the French utility NG because of a disagreement over payments. The Russian company accuses energy of not paying in full for July deliveries. European Commission president Ursula von der leyen, meanwhile says that the EU has met its winter gas storage goal two months early with reserves. Now averaging 80%. At European level, we have agreed that all member states to do jointly save 15% of energy between August now and March 23. The second pillar is we need to diversify away from Russian fossil fuels to reliable like minded sources mainly also to fill our storages. And here's good news. We have reached now an average in the European Union of starch filling of 80%. That was the European Commission president Ursula von der leyen. Meanwhile, Gazprom plans to shut the Nord stream pipeline to Germany for three days of maintenance beginning today. Bloomberg has learned UK treasury officials have estimated that gas producers and electricity generators may make excess profits of as much as 170 billion pounds over the next two years. The assessment is set to be delivered to the new prime minister who takes office next week and is likely to fuel calls for expanding the windfall tax. While staying with inflation, Federal Reserve officials stress their commitment to tackling high prices while remaining vague on how big their policy move will be next month, three regional fed presidents are all saying that curbing sawing inflation is their top priority. Thomas barkin of the Richmond fed sees it as more important than growth. We're committed to getting inflation under control and there's a path to get there. A recession is obviously a risk in the process. I'll just say for context, nobody ever canceled the business cycle. So when you say there's a risk of recession, it doesn't have to be like a 2008 recession. Richmond fed president Thomas barkin speaking there to the Huntington regional Chamber of Commerce, fed officials lifted rates by 75 basis points at their last two meetings in Powell has said that another unusually large increase of this size could be on the table when they meet in September. China's economy continues to falter according to the latest factory activity figures, the official manufacturing PMI rose to 49.4 from 49 in July contracting for a second month in a row, the royal second largest economy has faced a range of sharks from drought and power cuts to COVID outbreaks and lockdowns. And now The White House says that Mikhail Gorbachev, who has died at the age of 91, dramatically reduced the potential for a third World War. The former leader of the Soviet Union is widely credited with bringing an end to the Cold War without bloodshed. Speaking before his death, Russian historian and politician Vladimir said that Gorbachev's vision change global politics forever. In the world, must say thank you, mister Gorbachev for freedom for independence for new policy for democracy for liberal political system. That was the Russian historian and politician of Vladimir, of course, the tributes being paid to Gorbachev in all of the newspapers by political leaders. It was such a remarkable time Gorbachev figure of my childhood and yet we're in such a different place now with Vladimir Putin waging war in Europe. And unbelievable contrast, but it really fascinating to read some of the tributes being paid to him and also to remind ourselves of the significant part that he paid in European history as well. That's our top stories this morning. Let's get a look next at some of the events we're watching out for later on. We've got Liang garands back in studio with us Liam. What have you picked out for us? Hi, Steven. So at 10 a.m. UK time we'll have the latest CPI reading for the Euro errand will be watching that closely for you. Also at 10 a.m. we'll have the CPI reading from Italy. Then at three 30 p.m., the EIA releases its weekly crude oil inventory report today as we've been discussing in you've been reporting Russia's Gazprom is set to halt gas flows through the keynote stream pipeline and that will be for three days of maintenance and later Cleveland Fred president Loretta mester speaks at an event in Ohio and her colleague the Atlanta fed president Raphael bostic is also speaking at an event, but he'll be in Georgia. And finally here in the UK, it is a day of industrial action across a whole range of sectors, royal mail staff on strike for a second day. That's an arrow overpay. Meanwhile, journalists reach newspaper group which does own the mirror and the express will also down tools today and the GMB union says the queen's bins will not be emptied this week as refuge collectors in Windsor and maidenhead are also a striking overpay. So lots happening on that front and I hope the queen is okay with their bins not been emptied. I think she probably has enough space to not be sitting next to them. I would hope so. I would hope so, Steven. Obviously, and Garret thank you very much for that look ahead. Okay, now let's go to a Bloomberg exclusive. UK gas and electricity producers could be in line for a 170 billion pounds in excess profits over the next two years. This, according to the treasury sums, is something that officials will be presenting to the incoming prime minister and shows the potential for expanding the windfall tax, joining us now to discuss is Bloomberg's Lizzie Burton. So, this Bloomberg scoop it really, it highlights perhaps the internal raglans within government, Liz truss is the one tip to become the prime minister next week. She's talked about tax cuts though, not growing, Rishi sunak's windfall tax. This is a big one from Bloomberg's Alex Wickham and Todd Gillespie. It puts pressure on whoever is the next prime minister to increase the existing windfall tax on oil and gas production and then extend it to power generators as well. Remember, trust has repeatedly ruled out windfall taxes because she says that they send the wrong message to investors and the guy who's tipped to be her Chancellor quasi Quartet has also said that he's against them on principle. And then while both trust and rich assume I have said that they would do more to help the poorest household through the cost of living crisis, neither of them has said how much by. But by these figures, if the current rate of the windfall tax 25% were extended, it would mean that tens of billions of pounds in revenue could be generated to help people with their energy bills this winter, which of course, as we know, are set to rock it to triple the level they were last year. I wonder whether this is what nadeem zahari the Chancellor was talking about in that interview with our Caroline Hyde when he said he was working on additional measures to help households so that the next p.m. could hit the ground running, although he wasn't that specific, perhaps this was one of the suggestions, but then again he does back trust. So you have to wonder whether he would hit her with a windfall tax plan. There is yes more gloomy forecast though for the rest of the economy Goldman Sachs now saying that if natural gas prices remain high, inflation could reach 22%, BRC days are pretty grim as well when it comes to price rises. Yeah, I mean, it's gloomier than the 13% the Bank of England has currently forecast gloomier than the 18% city had
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"And I'm Paul Allen in Sydney where we are expecting the ASX to open lower when trading gets underway at the top of the hour futures currently weaker by 8 tenths of 1% Nike futures weaker by about 1% and this is after we saw equity markets in the U.S. posting their third consecutive day of declines. Not that the fed particularly cares we heard from Neil kashkari yesterday, saying he was happy to see some selling going on in the stock market. We've heard from three other fed speakers as well on the 24 hours since we'll talk a little bit more about what they had to say in a moment, but Richmond fed president Thomas Bach and summing up the sentiment nicely saying the fed's going to do whatever it takes to get to that 2% inflation target. We saw some better than expected numbers for U.S. consumer confidence and job openings as well, so there's plenty of room for the fed to tighten going ahead, although perhaps we're yet to see some of the impact of the tightening that's taken place already as suggested by one of our guests earlier. Let's take a look at what else is going on. We've got the oil price easing off a little, stress on a little was still about $90 a barrel 91 94 for a barrel of West Texas right now. We've got natural gas prices just ease off slightly as well and again emphasis on the slightly we did get news from the EU today saying that it will intervene in energy markets if necessary mechanism not in place for it to do that yet, but the sentiment is clearly there. The EU though has reached guest storage goals two months ahead of schedule, so these two factors combine to push natural gas prices just a little lower. We've got the U.S. ten year last traded at three ten to two year three 44, the yen sil week against the greenback one 38 74 as is the yuan the offshore offshore yuan continuing to depreciate against the dollar 6 92 32 and as always the onshore fixing going to be very closely watched later on as are China's PMIs for the month of August 3rd you have later on as well. Manufacturing PMI likely to improve but still a negative territory while more manufacturing PMI likely to see a bit of easing in August as well. That is your market update. I skipped died Chris now for a chick of a global news duck. Hey Paul
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"In on the Asian trading session with Bloomberg's Brian Curtis Brian. Yes, Juliet the rallies. They just don't last. That's one of the issues. So we're seeing most of the rallies that we thought we might get in Asia today come apart a little bit here. Right now, the nikkei is down slightly and you've got the Taiwan market opening down about 6 tenths of 1%. And we've had a little bit of weakness in Seoul all morning, the cost speed trading down 1.8%, a pardon me turning down 9 tenths of 1% here at the moment. So modest gains in Singapore is straight times index. It's just opened up about four tenths of a percent and we have the ASX in Sydney up about two tenths of a percent, but it's one of the issues you just need a little tough talk from a fed president like we got from Richmond fed president Thomas barkin saying the fed should raise rates as fast as it can without causing undue harm to the economy and to financial markets. So I don't know what that means, but presumably he's kind of in that camp where, as long as they can get away with it, they'd like to do 75 basis points. So it puts a little bit of a chill on markets. We'll get hanxi index futures trading in about 15 minutes right now, China futures are up. A tenth of 1%. Not too much happening in the bond market. We've got the yield on the tenure at three 27, oil one O 7 97 a barrel. Thanks, Brian. Well, there's certainly no shortage of market commentators warning of high risk of a recession here in the U.S.. One is nouriel roubini, the CEO of roubini macro associates. He told us earlier, he's expecting a recession by the end of the year. If you look at the
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"30 on Wall Street good morning I'm John Tucker I'm Nathan Hager we're about four hours away from the open of U.S. trading Let's get you up to date on the news you need to know at this hour the post fed rate hike rally appears over U.S. futures are sliding following yesterday's gains which halted a 5 day 10% route in the S&P Jay Powell and the fed lifted rate 75 basis points of the biggest increase since 1994 Former Richmond fed president Jeffrey lacker says policymakers now face the real reality of a recession They dropped a critical sentence indicating they're not certain they can do this soft landing That's an indication that they think they're running the risk of a recession Former Richmond fed president Jeffrey lacker says rates need to go up to 6% to have any chance of restraining inflation At Guggenheim chief investment officer Scott miner says the market is obsessed with inflation Every time we get another bad piece of news on inflation which is higher than expectation then we're forcing the fed to ratchet up their pace or the degree of tightening that they're doing Guggenheim chief investment officer Scott miner says there are cracks appearing in the credit world and the worst is probably not over The Swiss national bank unexpectedly raised interest rates John for the first time since 2007 policymakers opted to join the global bandwagon of monetary tightening lifting the rate by 50 basis points the policy rate to zero or negative 0.25% And we'll hear from the Bank of England at about 90 minutes from now economists forecasted the BOE will deliver a 5th straight rate hike In corporate news it's a big day for Twitter and Elon Musk Let's get more live from Bloomberg's we need a young good morning granita Good morning Nathan Elon Musk is addressing Twitter.
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"This is your Bloomberg real estate report I'm do these Pellegrini Some big changes could be coming to the housing market And you might notice them very soon There's no godly reason why the housing market needs more stimulus at this point Former Richmond fed president Jeffrey lacker says that's as the fed raises interest rates and rising mortgage rates will put a drag on home buying He says and the rising cost of borrowing will also slow other aspects of the housing market If I restraining demand So they're going to throttle action in the housing market Sales will decline you'll see housing construction fall off And then more broadly don't dampen investment spending perhaps But they have been consumer spending more broadly But all this doesn't mean home prices are likely to start falling much Because inventory is still so low especially for those single-family homes so many people want And that's your Bloomberg real estate report I'm Denise Pellegrini Wake up and text text and eat Text and catch the bus Text and miss your stop Text and be late to work Sorry link Text and work Text and pretend to work Text and X surprised when someone calls you out for not working Who me Text and meet up with a friend you haven't seen in forever Hi Oh hey Text and complain that they're on their phone the whole time Text and listen to them complain that you're on your phone the whole time Text and whatever But when you get behind the wheel give.
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"The headlines this past week about inflation Yeah Denise and this is triggered an outpouring of opinions about how fast and how far the fed should move And former Richmond fed president Jeffrey lacquer among those with some pretty strong opinions about it Yeah and he tells Bloomberg's guy Johnson and critic Gupta the fed needs to move it fast There's a very strong argument for a 50 basis point move at the March meeting If they move just a quarter of a point it would beg this question They're clearly late They've delayed last year starting off on the tightening process They've got a long way to go That's very clear It would raise the question of why And moreover it would cement this perception of them as somewhat addicted to gradualism I think gradualism is what bit them last year and is what led to them delaying so long So yeah 50 basis points is a strong argument in my view Well Jeff I think there's a thought here that the longer it takes to actually hold on to inflation or rein it in the more hikes are going to be required How long will it take for the fed to get a handle on this problem Take a qualified but very substantial rate increases are clearly in store The fed has to raise interest rates in order to restrain the growth of demand They have to significantly restrain demand And if they don't do that inflation will continue to roar that's the mechanics of how things work of how monetary restraint functions And so they've got to get ahead of things So I think they've got to send signal that substantial rate increases are coming I think you saw chairman Powell try to do that at the January press conference And I think they'll continue to do that Do you think the message has not been strong enough Financial markets have a history of underestimating persistence of inflation We saw that in the last episode of an inflation surge in the late 60s and throughout the 70s when inflation surged So I discount that I think what really matters for inflation isn't what financial markets think is going to happen but more what people on the ground see what businesses see Are they able to pass on cost increases Are they able to pass on higher payroll costs higher input costs And if they see demand showing up and their costs are going up they're going to act and pass that on when the financial markets expect it or not Jeff I think there's a big fear in the markets right now and arguably among economists and strategists as well But somewhere along the line the fed is going to make a policy mistake But let's say just for the P devil's advocate here that they don't that they get this one right they're able to successfully kind of pull us out of essentially these emergency measures that the pandemic had brought on Well historically recessions happen every four or 5 years So does this set the precedent for future recessions and how the fed handles it I hope that they learn a lesson from this that in essence they made a big mistake last year by not by essentially learning the wrong lesson from the last expansion I think they're going to be a little more hesitant To pull out all the guns and blaze away with asset purchases and keeping rates low and camping down the yield curve Next time I think they're going to be a little more cautious about the possibility of a surge in inflation coming out of a dip and if they get away without causing a recession this time I think there'll be a little chastened Jeff what impact do you think given the nature of the inflation that we're seeing at the moment will rate hikes have And what impact do you think rolling off the balance sheet will have I'm just wondering what you think about the cause of the inflation we're looking at at the moment is And what the best levers to pull to deal with it are I think the balance sheet is just a marginal impact I think it's more valuable this is symbolic Tool for communicating their stance and approach to policy I'd like to see them said of course for relatively soon and rapidly rolling off the balance sheet and in particular rolling off the MBS holdings as rapidly as it can perhaps even shifting them into treasuries because there's no there's no doubt that the reason why the housing market needs more stimulus at this point So I think rate hikes are the main attraction here And as I said they act by restraining demand So they're going to throttle action in the housing market Sales will decline you'll see housing construction fall off And then more broadly don't dampen investment spending perhaps but they haven't been consumer spending more broadly And thought of it that way you can see why very substantial hikes are going to be needed in order to have a significant fight on demand growth And that was former Richmond fed president Jeffrey lacquer with Bloomberg's guy Johnson and Gupta And coming up even love is getting more expensive as.
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"Inflation Yeah then he said and this is triggered an outpouring of opinions about how fast and how far the fed should move And former Richmond fed president Jeffrey lacquer among those with some pretty strong opinions about it Yeah and he tells Bloomberg's guy Johnson and critic Gupta the fed needs to move it fast There's a very strong argument for a 50 basis point move at the March meeting If they move just a quarter of a point it would beg this question They're clearly late They've delayed last year starting off on the tightening process They've got a long way to go That's very clear It would raise the question of why And moreover it would cement this perception of them as somewhat addicted to gradualism I think gradualism is what bit them last year and is what led to them delaying so long So yeah 50 basis points is a strong argument in my view Well Jeff I think there's a thought here that the longer it takes to actually hold on to inflation or rein it in the more hikes are going to be required How long will it take for the fed to get a handle on this problem Turn to qualify But very substantial rate increases are clearly in store The fed has to raise interest rates in order to restrain the growth of demand They have to significantly restrain demand And if they don't do that inflation will continue to roar that's the mechanics of how things work of how monetary restraint functions And so they've got to get ahead of things So I think they've got to send the signal that substantial rate increases are coming I think you saw chairman Powell try to do that at the January press conference and I think they'll continue to do that Do you think the message has not been strong enough Financial markets have a history of underestimating persistence of inflation We saw that in the last episode of an inflation surge in the late 60s and throughout the 70s when inflation surged So I discount that I think what really matters for inflation isn't what financial markets think is going to happen But what people on the ground see what businesses see are they able to pass on cost increases Are they able to pass on higher payroll costs higher input costs And if they see demand showing up and their costs are going up they're going to act and pass that on whether financial markets expect it or not Jeff I think there's a big fear in the markets right now And arguably among economists and strategists as well that somewhere along the line the fed is going to make a policy mistake But let's say just for the P devil's advocate here that they don't that they get this one right they're able to successfully kind of pull us out of essentially these emergency measures that the pandemic had brought on Well historically recessions happen every four or 5 years So does this set the precedent for future recessions and how the fed handles it I hope that they learn a lesson from this that in essence they made a big mistake last year by not by essentially learning the wrong lesson from the last expansion I think they're going to be a little more hesitant To pull out all the guns and blaze away with asset purchases and keeping rates low and camping down the yield curve Next time I think they're going to be a little more cautious about the possibility of a surge in inflation coming out of a dip and if they get away without causing a recession this time I think there'll be a little chastened Jeff what impact do you think given the nature of the inflation that we're seeing at the moment will rate hikes have And what impact do you think rolling off the balance sheet will have I'm just wondering what you think about the cause of the inflation we're looking at at the moment is And what the best levers to pull to deal with it are I think the balance sheet is just a marginal impact I think it's more valuable this is symbolic Tool for communicating their stance and approach to policy I'd like to see them said of course for relatively soon and rapidly rolling off the balance sheet and in particular rolling off the MBS holdings as rapidly as they can perhaps even shifting them into treasuries because there's no there's no godly reason why the housing market needs more stimulus at this point So I think rate hikes are the main attraction here And as I said they act by restraining demand So they're going to throttle action in the housing market Sales will decline you'll see housing construction fall off And then more broadly don't dampen investment spending perhaps But they have been consumer spending more broadly And thought of it that way you can see why very substantial hikes are going to be needed in order to have a significant fight on demand growth And that was former Richmond fed president Jeffrey lacquer with Bloomberg's guy Johnson and critic Gupta.
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"Inflation Yeah Denise and this is triggered an outpouring of opinions about how fast and how far the fed should move And former Richmond fed president Jeffrey lacquer among those with some pretty strong opinions about it Yeah and he tells Bloomberg's guy Johnson and critic Gupta the fed needs to move it fast There's a very strong argument for a 50 basis point move at the March meeting If they move just a quarter of a point it would beg this question They're clearly late They've delayed last year starting off on the tightening process They've got a long way to go That's very clear It would raise the question of why And moreover it would cement this perception of them as somewhat addicted to gradualism I think gradualism is what bit them last year and is what led to them delaying so long So yeah 50 basis points is a strong argument in my view Well Jeff I think there's a thought here that the longer it takes to actually hold on to inflation or rein it in the more hikes are going to be required How long will it take for the fed to get a handle on this problem Take a qualify But very substantial rate increases are clearly in store The fed has to raise interest rates in order to restrain the growth of demand They have to significantly restrain demand And if they don't do that inflation will continue to roar that's the mechanics of how things work of how monetary restraint functions And so they've got to get ahead of things So I think they've got to send signal that substantial rate increases are coming I think you saw chairman Powell try to do that at the January press conference and I think they'll continue to do that Do you think the message has not been strong enough Financial markets have a history of underestimating persistence of inflation We saw that in the last episode of an inflation surge in the late 60s and throughout the 70s when inflation surged So I discount that I think what really matters for inflation isn't what financial markets think is going to happen but more what people on the ground see what businesses see Are they able to pass on cost increases Are they able to pass on higher payroll costs higher input costs And if they see demand showing up and their costs are going up they're going to act and pass that on with the financial markets expected or not Jeff I think there's a big fear in the markets right now and arguably among economists and strategists as well that somewhere along the line the fed is going to make a policy mistake But let's say just for the P devil's advocate here that they don't that they get this one right they're able to successfully kind of pull us out of essentially these emergency measures that the pandemic had brought on Well historically recessions happen every four or 5 years So does this set the precedent for future recessions and how the fed handles it I hope that they learn a lesson from this that in essence they made a big mistake last year by not by essentially learning the wrong lesson from the last expansion I think they're going to be a little more hesitant To pull out all the guns and blaze away with asset purchases and keeping rates low and camping down the yield curve Next time I think they're going to be a little more cautious about the possibility of a surge in inflation coming out of a dip and if they get away without causing a recession this time I think there'll be a little chastened Jeff what impact do you think given the nature of the inflation that we're seeing at the moment will rate hikes have And what impact do you think rolling off the balance sheet will have I'm just wondering what you think about the cause of the inflation we're looking at at the moment is And what the best levers to pull to deal with it are I think the balance sheet is just a marginal impact I think it's more valuable this is symbolic Tool for communicating their stance and approach to policy I'd like to see them said of course for relatively soon and rapidly rolling off the balance sheet and in particular rolling off the MBS holdings as rapidly as they can perhaps even shifting them into treasuries because there's no there's no godly reason why the housing market needs more stimulus at this point So I think rate hikes are the main attraction here And as I said they act by restraining demand So they're going to throttle action in the housing market Sales will decline you'll see housing construction Fall off And then more broadly don't dampen investment spending perhaps But they haven't been consumer spending more broadly And thought of it that way you can see why very substantial hikes are going to be needed in order to have a significant fight on demand growth And that was former Richmond fed president Jeffrey lacquer with Bloomberg's guy Johnson and Gupta And coming up even love is getting more expensive as.
Bloomberg Radio New York
"richmond fed" Discussed on Bloomberg Radio New York
"We're expecting after all the headlines this past week about inflation Yeah Denise and this is triggered an outpouring of opinions about how fast and how far the fed should move And former Richmond fed president Jeffrey lacquer among those with some pretty strong opinions about it Yeah and he tells Bloomberg's guy Johnson and critic Gupta the fed needs to move it fast There's a very strong argument for a 50 basis point move at the March meeting If they move just a quarter of a point it would beg this question They're clearly late They've delayed last year starting off on the tightening process They've got a long way to go That's very clear It would raise the question of why And moreover it would cement this perception of them as somewhat addicted to gradualism I think gradualism is what fit them last year and is what led to them delaying so long So yeah 50 basis points is a strong argument in my view Well Jeff I think there's a thought here that the longer it takes to actually hold on to inflation or rein it in the more hikes are going to be required How long will it take for the fed to get a handle on this problem Turn to qualify But very substantial rate increases are clearly in store The fed has to raise interest rates in order to restrain the growth of demand They have to significantly restrain demand And if they don't do that inflation will continue to roar that's the mechanics of how things work of how monetary restraint functions and so they've got to get ahead of things So I think they've got to send signal that substantial rate increases are coming I think you saw chairman Powell try to do that at the January press conference And I think they'll continue to do that Do you think the message has not been strong enough Financial markets have a history of underestimating persistence of inflation You saw that in the last episode of an inflation surge in the late 60s and throughout the 70s when inflation surged So I discount that I think what really matters for inflation isn't what financial markets think is going to happen But more what people on the ground see what businesses see are they able to pass on cost increases Are they able to pass on higher payroll costs higher input costs And if they see demand showing up and their costs are going up they're going to act and pass that on with their financial markets expected or not Jeff I think there's a big fear in the markets right now and arguably among economists and strategists as well But somewhere along the line the fed is going to make a policy mistake But let's say just for to be devil's advocate here that they don't that they get this one right they're able to successfully kind of pull us out of essentially these emergency measures that the pandemic had brought on Well historically recessions happen every four or 5 years So does this set the precedent for future recessions and how the fed handles it I hope that they learn a lesson from this that in essence they made a big mistake last year by not by essentially learning the wrong lesson from the last expansion I think they're going to be a little more hesitant To pull out all the guns and blaze away with asset purchases and keeping rates low and camping down the yield curve Next time I think they're going to be a little more cautious about the possibility of a surge in inflation coming out of a dip and if they get away without causing a recession this time I think there'll be a little chastened Jeff what impact do you think given the nature of the inflation that we're seeing at the moment will rate hikes have And what impact do you think rolling off the balance sheet will have I'm just wondering what you think about the cause of the inflation we're looking at at the moment is And what the best levers to pull to deal with it are I think the balance sheet is just a marginal impact I think it's more valuable this is symbolic Tool for communicating their stance and approach to policy I'd like to see them said of course for relatively soon and rapidly rolling off the balance sheet and in particular rolling off the MBS holdings As rapidly as the Ken perhaps even shifting them into treasuries because there's no there's no godly reason why the housing market needs more stimulus at this point So I think rate hikes are the main attraction here And as I said they act by restraining demand So they're going to throttle action in the housing market sales will decline you'll see housing construction fall off And then more broadly dampen investment spending perhaps but they have been consumer spending more broadly And thought of it that way you can see why very substantial hikes are going to be needed in order to have a significant bite on demand growth And that was former Richmond fed president Jeffrey lacquer with Bloomberg's guy Johnson and critic Gupta And coming up Even the love is getting more expensive as we head into Valentine's Day You're listening to Bloomberg best.
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Stocks eke out gains after a mixed set of earnings reports
"Story a strong corporate earnings season so far as providing some optimism for markets amid a background of growth concerns but eighty percent of companies on the S. and P. five hundred have topped profit expectations with that's fun Microsoft Boeing and PayPal among the big beats still some key negative surprises may keep investors wary Texas Instruments Ford and eBay all cut their forecasts say the trade tensions and slowing sales bellwether caterpillar also blamed heightened economic uncertainty for slowing customer purchases it's free and it shouldn't be a new portfolio manager tribeca investment policy towards us from our Sydney studio let's get straight to the need of this issue the corporate results should be a bit of a barometer on economic strengths what the some of the initial conclusions that you've drawn I thank you absolutely dry eighties about barometer of what's happening especially that outlook is a great barometer of what's going to happen in terms of economic news to follow we think it's actually been pretty good to ends as soon as most of the full cost has been reasonably optimistic for the US economy some of them we could area of course I has generally has to do with the trade area and but in general the reporting season has been pretty strong and the US economy is doing pretty well John bay it's good to see you as always what's the reader to the U. S. consumer because we know that the US economic recovery is really being driven by the consumer at this point and we had seen a few sort of nascent concerns around that area yeah look I think in terms of the kind she might be doing pretty well if we look at some of the housing related sector reported in the last couple days they actually have reported very strong numbers and also you the outlook statement has indicated to actual pickup further pickup in the housing style as well as activity so it is to our cities that to lower rates ease filtering through the economy and in general because you Mr track tracking pretty well what about the exposure to certain scenes in the U. S. equity story we have a team to be for our clients we can pull this up on the terminal TTV go is the key code S. and P. girls versus value the market in the middle of a changeover in leadership which side of the fence are you on look AT the it's it's been a big discussion point loss month we saw shop rotation from the growth into value then we saw that faded only run the she earlier on this month but certainly from the earning season with better earnings outlook ends potential trade partial trade deal potential brexit deal may take longer the mock is certainly turning more optimistic on some of the value bad says sorry at this juncture you certainly want to stop fading into that trait by some of the body company so who has demonstrated the green shoots if you like in terms of earnings so all this optimism the better than expected earnings the better than expected Richmond fed manufacturing indicator number that we had this week as well is that going to be enough to convince the federal reserve that it should hold instead of cutting rates this month as widely expected look I think is certainly the more it's the optimism we can see the less Charles over a hot now of course the equity market won't lie kids they still high probability of account to both certainly based on the data base on the so far reporting season sentiment is pretty strong and certainly if we are going to have some sort of partial deal that you know you said that there's a much higher probability of them holding than a cot what about political risk the most read stories on the terminal as it stands includes quite a few articles around the potential of impeachment and some of the noise as some would call it in the U. S. political process is that something you're looking at the could cloud the outlook a set one become material enough certainly with the cat cloud the outlook at this point what the equity market so if I have demonstrated says that you know and we have brushing aside some of those noise until this tangible evidence all for something taking place it is certainly is a political uncertainty equity markets still quite fragile at this point but some of those risks are yet to be priced into the equity
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Fed Studying a Possible Shift in Inflation Strategy, Clarida Says
"Fed vice chairman Richard Curtis says the central bank is looking at a possible shift to its information strategy under the alternative approach the central bank will commit to making up for Polish deviations from its two percent inflation target and throw them treating was Mrs I'm moving on as it does now meanwhile Richmond fed chief Thomas barking cool the recent rate cuts insurance and save the economy