July 31, 2024 • 5 mins
PIMCO Global Economic Advisor Rich Clarida discusses Federal Reserve decision-making. He speaks with Tom Keene, Lisa Abramowicz, and Jonathan Ferro on Bloomberg Television.
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Episode Transcript
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Speaker 1 (00:00):
With us around the type on places side. The film
of fed Vice chat which of cloud is with us?
Still with Us? Is about Michael Jpmulgan Acid Management.
Speaker 2 (00:06):
Rich.
Speaker 1 (00:06):
It's good to see you, sir. Let's start with you.
You listen to Mike. You saw the changes in the statement.
What do you make of what we just had?
Speaker 3 (00:12):
Well, I'm a bit surprised, actually, I mean not with
the adjectives. They needed to change some adjectives up, but
I was a bit surprised about the reference to the
attuned and attentive to the balanced outlook. I mean, that's
certainly correct. The chair has been making that point, but
I think it is relevant that they included it in
the statement. He will, certainly, I think, reinforce it in
(00:32):
the press conference, and I think I do think it
does tee up Jackson Hole. There'll be some more information
before then.
Speaker 2 (00:38):
I look at it, and this show is the best
one we've ever done. We've got Dudley with his important
Bloomberg opinion piece a couple number of days ago, and
I want to go to you on what you own,
which is the high ground on the x anty X
post debate. You've got the Economist magazine article you did
a year or whatever ago. You got your January twenty
twenty two context and consequence of speech on an ex
(01:00):
anti aspirational FED, I don't hear that here they're waiting.
They're waiting, They're waiting, they are waiting.
Speaker 3 (01:08):
I think they are getting greater confidence. But I think
the key point not to toot my own horn is
my view all on It's okay. I think I've said
so on this show is that the pal FED really
the goal is to get inflation to two points something
and then they would start thinking about the next step,
which would be easy, not running an easy policy, but
removing restrictions. So I do think this is what we're seeing,
(01:31):
and if we do get the cut in Septembers, I
think we and markets expect it will be because they
expect inflation x antes to continue to fall.
Speaker 2 (01:39):
But are we anywhere near that? I'm sorry, this is
an ex post FED. Going back to Arthur Burns, there
is data dependent as I've ever seen.
Speaker 3 (01:45):
Yeah, they are data dependent, but I think that they
attenuated and focused on the statement today emphasized both sides
of the mandate. So I do think they're looking at
just the labor market as well as the inflation data.
Speaker 4 (01:58):
Well, what's your take on this? It seems like it's
less dubbish, a little bit more balanced than you initially thought.
Do you think this just is trying to move as
incrementally as possible.
Speaker 5 (02:07):
I think they preserve full optionality heading into Jackson Hall.
I also think that central bankers are mindful of what
happened to the ECB earlier this year, where you could
have made the same argument, if you're going to go
next month, why not go this month? And then of
course you saw what happened. So I don't see too
much different than what we expected, other than they just
(02:29):
decided to maintain the full optionality. We'll see what happens
as we roll into September. We're still very much expecting
twenty five basis points in September.
Speaker 1 (02:37):
No, doctor if renmac just writes in publishes with language
like this, it means the Fed will have to make
a more pronounced shift in language in September. I'm surprised
stocks are holding up well on this statement. Perhaps equities
are looking ahead to the news conference. The news conference
starts in about twenty four minutes time. It goes on
to say the FED is waiting for additional data. Can
they even articulate why inflation might reaccelerate from Hick pick
(03:00):
up on that question, Bob, can you articulate the risk
surround inflation? Why might it reaccelerate from here?
Speaker 5 (03:05):
Corporate profitability still looks great. We talked about S and
P five hundred earnings. They're coming in ahead of expectations.
You look at the guidance companies are giving you. They're
up twelve percent next quarter. So we're not in a recession.
We're slowing down in some parts of it. We'll see.
(03:26):
You know, I can't find really the argument what's going
to cause inflation to reaccelerate, to be honest, Well, Rich,
we were.
Speaker 4 (03:33):
Talking about how this was definitely going to be unanimous,
and I wonder how much of wrangling of cats there
is in the room and whether this is basically a
representation of that that there's some members who believe that
inflation has been killed, it is nowhere in sight that
labor is important. And then you have others who say, well,
you know, wait for the year over year, cops. Is
that kind of what we're seeing here?
Speaker 3 (03:55):
I think it could be an element. You know, we've
had some members of the committee, and I know most
of these folks, but it's different committee than the one
I was on, and many of them do emphasize both
sides of the dual mandate, so I'm sure that reflects
a number of folks views. I do think though, this
is a committee that certainly got burned earlier in this
year because the inflation data went the wrong way into
(04:17):
their credit. They became very data dependent, as Tom indicated,
I think that they put it this way. I think
they think they're going to go in September. There is
a range of data where they wouldn't, but I think
it's a pretty small range, and I think that's really
the balance of trying to strike. And I think we'll
hear that in the press conference.
Speaker 4 (04:34):
We were speaking earlier with James Bullard formally Saint Louis
FED and he was talking about how he always raised
the question at meetings that if you wanted to cut rates,
most certainly at the next meeting, why not cut him now.
Bob was sort of discussing that earlier, and it sets
up the sort of difficult period of time where every
data point could potentially upset the apple cart if it
(04:56):
doesn't comply. Do you think that they are in that
zone right now.
Speaker 3 (05:02):
I don't really. I mean, I've certainly during my time
on the committee we found ourselves there a couple of times,
so it can happen. I think the data we have gotten,
you know, the Chair did a lot of communication before blackout,
and the data since then has reinforced that view. So
I think there's a pretty wide range of data where
they'll feel comfortable going in September. So I don't think
(05:23):
they're in that danger zone.
Speaker 1 (05:24):
Can you confirm that Jim actually said those things to
the FMC mas.
Speaker 3 (05:27):
Well, of course I would never reveal what was said
in the FMC ME except what I say, all the
brilliant things I said
Speaker 1 (05:33):
So alongside form of FET Vice chair Rich Clouder,
With us around the type on places side. The film
of fed Vice chat which of cloud is with us?
Still with Us? Is about Michael Jpmulgan Acid Management.
Speaker 2 (00:06):
Rich.
Speaker 1 (00:06):
It's good to see you, sir. Let's start with you.
You listen to Mike. You saw the changes in the statement.
What do you make of what we just had?
Speaker 3 (00:12):
Well, I'm a bit surprised, actually, I mean not with
the adjectives. They needed to change some adjectives up, but
I was a bit surprised about the reference to the
attuned and attentive to the balanced outlook. I mean, that's
certainly correct. The chair has been making that point, but
I think it is relevant that they included it in
the statement. He will, certainly, I think, reinforce it in
(00:32):
the press conference, and I think I do think it
does tee up Jackson Hole. There'll be some more information
before then.
Speaker 2 (00:38):
I look at it, and this show is the best
one we've ever done. We've got Dudley with his important
Bloomberg opinion piece a couple number of days ago, and
I want to go to you on what you own,
which is the high ground on the x anty X
post debate. You've got the Economist magazine article you did
a year or whatever ago. You got your January twenty
twenty two context and consequence of speech on an ex
(01:00):
anti aspirational FED, I don't hear that here they're waiting.
They're waiting, They're waiting, they are waiting.
Speaker 3 (01:08):
I think they are getting greater confidence. But I think
the key point not to toot my own horn is
my view all on It's okay. I think I've said
so on this show is that the pal FED really
the goal is to get inflation to two points something
and then they would start thinking about the next step,
which would be easy, not running an easy policy, but
removing restrictions. So I do think this is what we're seeing,
(01:31):
and if we do get the cut in Septembers, I
think we and markets expect it will be because they
expect inflation x antes to continue to fall.
Speaker 2 (01:39):
But are we anywhere near that? I'm sorry, this is
an ex post FED. Going back to Arthur Burns, there
is data dependent as I've ever seen.
Speaker 3 (01:45):
Yeah, they are data dependent, but I think that they
attenuated and focused on the statement today emphasized both sides
of the mandate. So I do think they're looking at
just the labor market as well as the inflation data.
Speaker 4 (01:58):
Well, what's your take on this? It seems like it's
less dubbish, a little bit more balanced than you initially thought.
Do you think this just is trying to move as
incrementally as possible.
Speaker 5 (02:07):
I think they preserve full optionality heading into Jackson Hall.
I also think that central bankers are mindful of what
happened to the ECB earlier this year, where you could
have made the same argument, if you're going to go
next month, why not go this month? And then of
course you saw what happened. So I don't see too
much different than what we expected, other than they just
(02:29):
decided to maintain the full optionality. We'll see what happens
as we roll into September. We're still very much expecting
twenty five basis points in September.
Speaker 1 (02:37):
No, doctor if renmac just writes in publishes with language
like this, it means the Fed will have to make
a more pronounced shift in language in September. I'm surprised
stocks are holding up well on this statement. Perhaps equities
are looking ahead to the news conference. The news conference
starts in about twenty four minutes time. It goes on
to say the FED is waiting for additional data. Can
they even articulate why inflation might reaccelerate from Hick pick
(03:00):
up on that question, Bob, can you articulate the risk
surround inflation? Why might it reaccelerate from here?
Speaker 5 (03:05):
Corporate profitability still looks great. We talked about S and
P five hundred earnings. They're coming in ahead of expectations.
You look at the guidance companies are giving you. They're
up twelve percent next quarter. So we're not in a recession.
We're slowing down in some parts of it. We'll see.
(03:26):
You know, I can't find really the argument what's going
to cause inflation to reaccelerate, to be honest, Well, Rich,
we were.
Speaker 4 (03:33):
Talking about how this was definitely going to be unanimous,
and I wonder how much of wrangling of cats there
is in the room and whether this is basically a
representation of that that there's some members who believe that
inflation has been killed, it is nowhere in sight that
labor is important. And then you have others who say, well,
you know, wait for the year over year, cops. Is
that kind of what we're seeing here?
Speaker 3 (03:55):
I think it could be an element. You know, we've
had some members of the committee, and I know most
of these folks, but it's different committee than the one
I was on, and many of them do emphasize both
sides of the dual mandate, so I'm sure that reflects
a number of folks views. I do think though, this
is a committee that certainly got burned earlier in this
year because the inflation data went the wrong way into
(04:17):
their credit. They became very data dependent, as Tom indicated,
I think that they put it this way. I think
they think they're going to go in September. There is
a range of data where they wouldn't, but I think
it's a pretty small range, and I think that's really
the balance of trying to strike. And I think we'll
hear that in the press conference.
Speaker 4 (04:34):
We were speaking earlier with James Bullard formally Saint Louis
FED and he was talking about how he always raised
the question at meetings that if you wanted to cut rates,
most certainly at the next meeting, why not cut him now.
Bob was sort of discussing that earlier, and it sets
up the sort of difficult period of time where every
data point could potentially upset the apple cart if it
(04:56):
doesn't comply. Do you think that they are in that
zone right now.
Speaker 3 (05:02):
I don't really. I mean, I've certainly during my time
on the committee we found ourselves there a couple of times,
so it can happen. I think the data we have gotten,
you know, the Chair did a lot of communication before blackout,
and the data since then has reinforced that view. So
I think there's a pretty wide range of data where
they'll feel comfortable going in September. So I don't think
(05:23):
they're in that danger zone.
Speaker 1 (05:24):
Can you confirm that Jim actually said those things to
the FMC mas.
Speaker 3 (05:27):
Well, of course I would never reveal what was said
in the FMC ME except what I say, all the
brilliant things I said
Speaker 1 (05:33):
So alongside form of FET Vice chair Rich Clouder,
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