00:03:08 · S1, Jon Ferro, Lisa Abramowicz
[00:03:08] S1: The outcome of this meeting this afternoon. [00:03:10] S3: is that they've reinforced the guidance we're going to get from select individuals over the next several weeks. In fact, the first thing I've done as this news conference wraps up is find out when Williams speaks next, November 6th, for anyone who's interested. It's going to be participating on a moderated discussion. All that's happened here is that we've just found out that when you hear from Williams and Jefferson... when that guidance about October or whatever the month might be comes in, even if it predates the data, that's what the policy is going to be. Because a lot of people on Wall Street concluded the data said go. The data said hike. The rhetoric from the Fed chair said the same thing. [00:03:42] S1: He's miles from that. [00:03:43] S3: And what you hear from Williams and Jefferson is that we can take a month to skip. And everything you heard in that news conference about having a time-rich conversation, Brammo, about the next month or so. Was everything Jefferson and Williams told you before the data even came out a few weeks ago? [00:03:57] S0: Yeah, the reaction function is even less clear right now, I think. If this is a data-dependent Fed, what data are they looking for? This is an informational-rich Fed. [00:04:06] S1: Era, interval. Is it the election? [00:04:08] S0: Is it oil prices? [00:04:10] S1: Is it CPI, which we just got? [00:04:11] S0: Is it GDP? Is it finger in the wind, let's look out the window? [00:04:14] S1: Ultimately, we're not sure.
00:04:14 · S1, Lisa Abramowicz, Tom Keene, Jon Ferro
[00:04:14] S1: Ultimately, we're not sure. [00:04:16] S0: This is part of the issue that I think a lot of people are having. And frankly, I think almost at this point, people would welcome the fact that we might get one or two fewer rate deciding decisions. Because if this is what it's going to be, it doesn't add clarity. [00:04:29] S5: Jon, I think conventional analysis here doesn't work. This guy is on another planet. From modern monetary theory. [00:04:36] S3: TK, don't wait two years. If we have to do this every single meeting, what's the point? Just bring it down to six now. To your point, Lisa, I think most people would be on board with that. [00:04:44] S1: Do it tomorrow. Wait two years. Make it happen tomorrow. [00:04:48] S0: The market reaction, I think, is notable. And you are seeing a steepening in the yield curve and the dollar getting weaker. And you start to wonder, OK, well, what's the market saying? Maybe, A, that regardless of how firm their 2 percent target is, this is a Fed that's going to wait a little bit longer. And a real question around the opportunities for them to actually make a move if they have fewer meetings to possibly move in. [00:05:08] S5: There's a critical distinction here. There's a lot of people that agree with him that, you know, Jon, I call it the parlor game. I hate it. He wants to get away from the parlor game. He wants to get away from the dots, fewer meetings. Who had ham and cheese sandwiches at the day one meeting? The usual thing. [00:05:23] S3: Sure. Fine.
00:05:23 · Jon Ferro, Tom Keene, Lisa Abramowicz, Jeff Rosenberg, S1, Priya Misra
[00:05:23] S3: Sure. Fine. [00:05:24] S5: Okay, that's great. But he wants to walk away from modern culture. monetary analysis and the foundation of that. A guy like Michael Feroli at JP Morgan, I don't know what he does with new monetary medicine and protocol from the 50s. [00:05:40] S3: I'm thinking about who might be happy with this decision. If I'm Dario at Anthropic, I'm probably pretty happy with this decision and that news conference. I'd be pretty thrilled with how that went. Essentially, an IPO coming up in a few weeks. Yeah. [00:05:51] S0: I mean, essentially, if you have someone who is concerned about any kind of market disruption in credit spreads. [00:05:56] S4: Tied to AI. [00:05:57] S1: Probably feeling pretty good. [00:05:58] S0: That probably is a positive. [00:06:00] S3: Got Priya Misra at J.P. Morgan with us around the table. Priya sat through that. Priya, well done. [00:06:03] S1: It's good to see you. That was fun. It was a difficult one, wasn't it? What did you learn? [00:06:07] S6: You know, I think Chair Warsh was trying to walk this fine line of saying that they're already committed to inflation and yet they didn't hike. I think he was trying to communicate this hawkish hold, but it's hard. But I would take a step back. There's the policy and then there's the communication. The policy, you saw the market reaction right after. I don't think the market was saying that the Fed's behind the curve on inflation. [00:06:29] S1: They've hiked.
00:06:29 · S1, Priya Misra, Tom Keene
[00:06:29] S1: They've hiked. [00:06:30] S6: They're likely to hike some more. I think the market was okay with policy. What I was hoping to get from Warsh, which we didn't really get, was explain the decision. He could have talked about inflation breadth. He could have said, we're not data point dependent. You know, the inflation trend is heading lower. He really didn't talk about the data. So we didn't get much on the decision. I was hoping to hear something more on, is this risk management, removal of the risk management cuts, or is this risk management hikes, or are we recalibrating the neutral rate? We didn't really get that. And then something on financial conditions. I think we got a little bit on that. I think the Fed did get a little spooked with the move in interest rates. I mean, we talk about Halloween costumes. My point a month ago was the tenure should be the Halloween costume. My kids refused to even walk with me. [00:07:15] S1: Now it's not the tenure. [00:07:17] S6: It's my latest as AI, Dr. Jekyll and Mr. [00:07:20] S5: Hyde. [00:07:21] S6: But, you know, it's not the Fed. So at least I think today is not like July. I think it wasn't a complete miscommunication. He did leave a lot more questions. We're going to have to listen to every other Fed official, wait for meetings. I personally like more meetings because I think the decision speaks more than what he's going to tell us at the press conference. But we'll have. [00:07:39] S1: Not to be too snarky, you want more of those meetings? So, you know... They're the meetings you get it.
00:07:39 · S1, Priya Misra, S2, Lisa Abramowicz, Tom Keene
[00:07:39] S1: Not to be too snarky, you want more of those meetings? So, you know... They're the meetings you get it. [00:07:44] S6: The policy decision was useful. The dots are useful. We might go, you know, the dots might go away. [00:07:49] S2: But the. [00:07:50] S6: Yes, his communication, I think, did not tell us much about the reaction function. [00:07:53] S0: If you want to dress like the 10-year, I'll walk with you, because I think that that's actually quite scary for a lot of different officials right now. What do you make of this commentary that he made about what happened in markets, that financial conditions seem to have tightened? And This sort of nod to that as the one thing that could have justified remaining on hold. [00:08:11] S5: Right.
00:08:11 · Tom Keene, Priya Misra, S1
[00:08:11] S5: Right. [00:08:12] S6: I think so monetary policy works into the economy through financial conditions. So the fact that he said the financial conditions have tightened and that's kind of what they expected. I think it's telling you that that's how monetary policy works. So all this idea that the AI trade is not interest sensitive, I think he's pushing back against it. That's the area he was a little explicit in. And so when we talk about he's buying time for what, it's not just the labor market and inflation. It's going to be financial conditions. If the air is coming out of the AI trade, well, interest rates might come down, but financial conditions might tighten. And then the market's doing the work for the Fed. I don't think he wanted to say it because when he said it in July, that was a problem. It looked like the market might bully the Fed. But I do think that this Fed chair looks, and it's not just chairwash. [00:08:58] S1: I think the rest of. [00:08:59] S6: The Fed, I mean, we heard from Williams and Jefferson. I think they looked at the market and said, this is doing the work. So we can actually then, the urgency goes down for us to hike.