Fed Leaves Rates Unchanged, Chair Powell Speaks (Live Coverage)

if he can double down in September um what would it look like to do a 50 basis point cut in September all right we'll see if that question gets asked Lindsay thank you so much as always for join us on Fay Lindsay Owens executive director of the groundwork collaborative and former senior Economic Policy adviser to Senator Elizabeth Warren who again is encouraging chairman pal to cut we're going to find out roughly 30 from 30 minutes from now whether that yeah the building would shake that would be like one of the old Greenspan surprises in the old days here the markets are certainly expecting good news here Kaye with the S&P has been up consistently about 1 and a half% the NASDAQ up over 2% uh you hate to think of what might happen if investors do not hear what they want yeah and again the FED doesn't like to take the market by surprise usually so how will chairman poell walk that line today if he's signaling a cut is to come how does he make sure not too much easing of financial conditions happens as a result he's certainly going to be facing some very difficult questions in that press conference of course our very own Michael mck will be in the room for that as we are really just counting down the minutes here now to the fed's decision yep leave you in good hands of course with Tom John and Lisa and we'll meet you back here at 5:00 p.m. Washington time for the late edition of balance and power we'll be joined by Libby canet Pimco for her take on everything that is about to happen so stay with us here with a special edition of Bloomberg surveillance ahead the FED decides Tom Keane Jonathan phoh and Lisa abitz here on Bloomberg ber TV and radio earning season is here we're skating into another earning season the expectation for earnings going forward are quite High Bloomberg is first to break the numbers Adobe earnings Crossing earnings out of broadcom JP Morgan we get City group we get Wells Fargo there is something for everybody with the smartest insights now banks have earnings power there's a resilience in the bigger cap companies we're not talking about a collapse in earnings for technology we will have full and instant analysis continuing coverage on Bloomberg context changes everything live from New York City for our audience worldwide the countdown to the FED decision starts right now this is a special edition of Bloomberg surveillance with Tom Kean Jonathan Perell and Lisa Bloomberg surveillance the B decides from New York City this afternoon good afternoon good afternoon for our audience worldwide that decision 27 minutes away Lisa a decision followed by chairman pound news conference 30 minutes like the key issue is going to be how do they message how much closer they're getting to September do they talk about strength and resilience or do they recognize weakness as a feature that they want to lean into with the labor market my message 30 minutes away is simple not that I thought it'd be a snoozefest John but yeah I was interested fine things have changed and changed dramatically in the last 24 hours the yield Market is is screaming the importance of this meeting five consecutive days this Bond Market has rallied and over the last 24 hours the last last couple of weeks we've had warning after warning from prominent economists saying that the Federal Reserve should reduce interest rates not in September at least of the call is for this meeting although even those economists say that if the Federal Reserve were to lower rates today it would spook markets and cause a pretty big riskof kind of move that would be problematic I've missed this honestly I'm just looking out and I wonder how do they cater to these people by saying we're definitely going in September and this is a reason why we still want to wait until then I'm away from The Parlor game dramatically here to me it's the markets talking and I'm looking at the 10-year real yield very elegantly off the setup I have I'm sorry as you mentioned John five days in a row low lower yields and the key question is and we've got a guest qualified here to lean on it is is are we breaking out of the range finally to a new Vector of disinflation the lowest 10e yield since March we're down about two basis points on a session this afternoon Lisa you missed the grunting is that what you missed yeah yeah yeah I sound effects there's a lot of things real sound effect we're doing a 4our meeting here you know show today there's a lot to talk about here to get to September I agree a baby step towards September is the bulk of what many people expect a little bit later on this afternoon let's give you a check on the markets beyond the bond market equities with a real lift on the S&P 500 advancing here by more than one full percentage point the dollar Just a Touch stronger here bro the Euro negative by 10th of 1% one8 we have a stacked line lineup coming up just shortly we do have Bob Michael of JP Morgan the world is coming around his View and after that we're going to be speaking with Matt LTI of Deutsche Bank and Kathy Jones of Charles swab taking us up to that Fed rate decision at 2m Eastern then get this immediate reaction from former fed Vice chair Rich Clara who has his own language to insert into uh the document that we're expecting to get from the FED I don't know if they're going to go with it Diane Swan of KPMG and Michael gapen of Bank of America and finally following that news conference this will be key how he really guides the market heading into September and whether a 50 basis point rate cut is on the table as some people are saying uh we're going to be hearing from former New York fed President Bill Dudley and black rocks Jeff Rosenberg job Bill Dudley really changed in the conversation in the last week or so in a column on Bloomberg opinion TK making a call he said I've changed my mind the FED needs to make a move so you you need to see a pivot like that and it's not expost he's doing it in real time as the data comes in and the huge theme today is this this Latin idea Michael knows a and exposed after the fact we're going to wait wait wait wait what are we going to do wait after September Bob Michael at JP Morgan Asset Management with us around the table Bob it's going to see you happy to be here good afternoon let's get into this fed statement drops in about 25 minutes what kind of changes are you in a team expecting well I think there have to be a couple changes I think when you look at the first paragraph and they talked about modest Improvement toward their 2% inflation Target I think you can say considerable progress to the 2% inflation Target they have to open the door to a September rate cut um I'm in the market by the way so I'm part of the market you talk about I'm just telling you if they cut rates today I would be spooked and I think they should have set us up to cut rates today but at the last meeting said don't do it now get us ready and then I think they have to focus on inflation and employment they talked about being in better balance now inflation is kind of where they want it employment I don't know it seems to be leaking along the way so I think they should probably drop in better bounce and just say pretty well balanced if he performs at the press conference in a bob Michael manner does that put a bid to bonds where we see yields Drive ever lower I think so I I think you just have to appreciate no one likes yields at this level we look at the FED funds rate it's 5 and 38 we want to buy the 10year at 5 and 38 to 6% we could do that in 1994 1995 but that ain't now and the fact that we're at these levels and everyone's fighting it and there's still 6 trillion in cash sitting there because they feel cozy at money market yields of five to five and a half per percent tells me there's still an awful lot of money to come into this Market plus everyone who's already in the market that took some profits let's say Jay Powell doesn't want to Spook the market doesn't cut but let's say he wants to Dove it up let's say that he wants to really give a message that they are going to be accommodative could he open the door to a 50 basis point rate cut in September he he could he won't because the other side of the coin is while we're talking about the employment Market is starting to leak a little bit we're at 2.8% real GDP you look at S&P 500 companies close to half of them have reported and three4 of them have beat the earnings estimate so there is a large part of the US economy that's doing pretty well right now I don't think it calls for 50 you said that you would be spooked If the Fed would cut rates today would you be spooked if they indicated a greater concern about an employment Market that you say is leaky I I think that would be a welcome acknowledgment of what we've seen in the labor market data um whether it's the unemployment rate now up 7/10 of a percent from the low or when we look at the jolts data and the hiring rate has dropped and the quits rate has dropped so there's some softening going on there they've got unemployment year end at 4% what's your underlying assumption your base case for the labor market by the time we get to September by the time we gets a year rent I I think the unemployment rate goes a bit higher I I think you have to appreciate the policies that are in place today are restrictive we're at 5 and 38% um fed funds rate so that's brought growth and inflation down a lot you can't just leave them there and by the way away just bringing rates down 25 basis points I don't know why the FED is getting so wound up about that they're just going from very restrictive to very restrictive minus a teeny bit they're still in restrictive space I asked the unemployment question because I'm trying to work out whether this is truly a fertile environment for risk assets or not and whether it will be by the time we get to September October November December if we're leaking oil now where's the engine what does the vehicle look like by the end of the year it is it's a it's a Maserati driven by the fomc with fed in the driver's seat and and this is should I be comfortable with that I don't know you can you can look at that however you like I tried to pick an Italian car for you I know you appreciate that but listen um this is 95 again where things look pretty shaky but they took pressure off of businesses and households and started to bring the FED funds right down we're in a soft Landing 4.1% unemployment isn't 5.1% unemployment it it's leaking the wrong way and they probably want to start pulling that down right now or at least stabilizing things where they are you can start doing that with series of 25 basis point rate Cuts they have that power at every single meeting for quite a while that's some of the calls we've been hearing about what have you adjusted how much you think the fed's going to have to cut rates to deal with the Leaky engine in the Maserati that JN is driving to the fed's decision later next year I don't think as much as the market thinks I think we're probably looking at I don't know 75 to 125 basis points I don't think this is two to 300 basis points which is what they've done in the past because I don't see recession I actually see that there's still a lot of money slashing around from the fiscal programs it's still being tapped by state and local governments they're spending it they're hiring and that's created economic activity I got an email in here Alex in Washington he was listening to vice president Harris handle Bob Michael Finance investment in economics and it was uh not that good I said well maybe secretary Diamond will help how political is this meeting um anytime you talk to a Fed official they just bristle at the thought of politics behind it I think they've got a lot of balls up in the air they're at an interesting inflection point if they had set the market up last meeting they could have cut rates this meeting they've got to get their messaging right for September I think politics are the last way the bank of England runs John no and you know if this was the bank of England we'd be talking about whether we'll get descend in 20 minutes and that question's barely come up has it at least over the last few weeks no but we also might be talking about a Liz trust moment and how they respond to different political moments so they don't have the privilege of acting recklessly as one person I know tends to often say States I don't know TK brought up the politics we can talk about a letter from Senator Warren and Company from the Senators to Chairman pow a little bit earlier this afternoon saying maybe you should get a move on and cut interest rates Bob Michael JP Morgan is going to be sticking with us coming up in just a moment we'll catch up with Kathy Jones of Charles swab alongside Matt LTI of Deutsche Bank your Federal Reserve decision is around about 18 minutes away and after that a news conference with chairman pal 30 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and Technology meet when a lot of time and people say Vivan it's not possible I say try it it's possible latitude Encore presentation this weekend only on Bloomberg welcome to the world of decentralized Finance with a surge in Bitcoin you have crypto stocks also surging Bloomberg's covering all things crypto the people this is a political attack and we must hold our elected officials accountable the transactions really a record-breaking moment Bitcoin is the exit strategy and the technology awareness is going to grow and these things grow the overall industry and crypto as an asset class is here to stay Bloomberg crypto Tuesdays only Leon [Music] Bloomberg we don't think we the FED is ready to cut see a July rate cut I think would make me basically fall off my chair I think the FED does cut in September September September September there's this growing dichotomy between fed officials a lot of the kind of debate and discussion those that are increasingly concerned about weakness emerging weakness in the labor market and those that are more focused on reinstating price stability I'm in the weight the FED can take its time we just hope they don't cut too soon if should they cut in September we don't think they can go very far because of the underlying inflationary pressures I I don't think the inflation dragons been fully slave yet I certainly think the FED has an argument to cut in July you know labor Market's feeling a little squishy here the FED is late they need to be cutting it's so obvious that you need to move in September then why what are you waiting for mission accomplished you achieved your goals let's get going let's get going that's the Wall Street chorus making move in July that July decision is 15 minutes away but most people on Wall Street look for that move in September before that decision going into it the scores look like this on the S&P 500 a lift this afternoon up by 1.4% the NASDAQ ripping up by 2.4% last time the FED met in the middle of June the Russ saw the small caps are up something like 10% over the same period the 2-year yield switch up the board it's down about 50 basis points the 2-year is down to 436 46 the 10e is down for a fifth consecutive session at 41123 and if you get to Foreign Exchange we can talk about dollar Yen Lisa Dolly Yen's an interesting one gapping lower this is a stronger Japanese yen to 150 off the back of a boj decision a little bit earlier will the Federal Reserve give them a helping hand in the next couple of hours that's the key how much is this half boj half cross your fingers and hope that the the Federal Reserve is going to be doish what we got from the bank of Japan was a 25 basis point are actually uh it was raising rates to 0.25% which is the highest going back to 2008 and having their bond purchases this was unexpected moving in the opposite direction that did some of the lifting now for the N now over to you CH chair Powell and I wonder if they're staying up late over there we know that chairman pal has W gear on fed decision day for the last six fed decisions this started with some work that Alan Ruskin did over at Deutsche Bank I'm going to go through each date of the last six Federal Reserve decisions and tell you what the two-year yield did on that day June 12th down eight basis points May 1 down seven March 20th down 8 the end of January down 12 the December meeting we were down 30 basis points the November meeting of last year we were down 14 the 2-year has rallied every single fed meeting Lisa over the last six is this meeting going to be any different well if you ask me Al duta they should go right now and it should be a similar type of rally you rais a question though have we already baked in the likelihood that they are going to pre-commit to September is there almost buy the rumor sell the news when they actually come out and do give some sense of that given how far the rally has already gone I think it's fair to wonder whether this would be the one where you get some sort of break let's get to the guest panel we've got Bob Michael and JP Morgan alongside us around the table for the next 40 minutes or so going into that news conference joining us now as Matt LTI of Deutsche Bank and Kathy Jones of Charles swab Kathy I want to come to you first and just get your thoughts on the changes You're Expecting or not in the statement that drops in about 12 minutes time well it would be watching for uh comments around um that well that big comment about you know we do not at this time see the the case for lowering rates if that changes that they say yes they are prepared they are seeing uh the case for changing rates that would be really significant then there's the description of the economy and the labor market in particular and inflation um are we going to go from inflation remains out ated to Simply inflation is is zeroing in on our Target so if they remove the remains elevated that would be pretty good signal that the fat is feeling comfortable about that a little bit more complicated how they describe the labor market since it has been growing at a pretty healthy Pace a pretty solid Pace I think last time they described it as strong and yet the unemployment rate has been going up so I'll be interested to see how they do that so um going to be very interesting to see how they word this one uh I think there may be some pretty significant changes to the wording so the FED can lay the groundwork for raid cut Matt lazetti are we seeing a disinflationary trend clearly in the market yields lower it's pretty elegant to be honest and is that based off real and nominal GDP that's coming down so so I I think it is but it's certainly based on the fact that inflation has has decelerated I think the most important data point that we've gotten uh since the June FMC meeting was shelter inflation coming down rent and oar at long last finally confirming what we've seen from the P private sector data I think I think for the fed you know the one reason to to wait to September uh is they want to get confirmation in that downshift in in rent and oar inflation especially after being you know burnt a few times on the inflation front I think that there's probably some scarring effects to that um you know that said the labor market uh is showing some weakening as chair Palace said it's had considerable cooling taking place and so we think the FED waits till September but once they start with rate Cuts they then every meeting for the first few meetings Fed chair likes to be a dove John was pointing that out by how many times you see the two-year yield rally after a Fed conference for the past five do you think that this time he asked me this question I answered I'd love to hear your answer do you think this time could be different given the fact this Market's already done a lot of work yeah I think incrementally he will sound doish so he's going to sound more doish than he did at the June fomc meeting probably both from an inflation perspective and from a labor market perspective will that sound doish enough from a market perspective you know the market is pricing more than 25 basis points for September there is talks about moving by by 50 basis points or so it's not clear at all to me that that he sounds doish relative to that perspective so we are pricing a lot it's going to be hard for him to kind of move uh kind of move in that direction relative to the market pricing I would actually take your kind of comment back in time we've done a lot of research if you go back to the late 1980s the tenear yield basically the entire decline in the 10 year yield since that period has happened within short windows around the fomc meeting so there's this very longstanding uh regularity with which yields decline around FMC meetings Matt LTI I'm looking at the clock I know you've got to run it's got to catch up with you sir Matt LTI at Deutsche Bank as we get closer to that Federal Reserve decision about 9 minutes away and this Federal Reserve seemingly becomes more confident about the outlook for inflation are they becoming increasingly uncomfortable with the outlook for the labor market this quote comes from Neil datter of runmc businesses are not desperate to find workers and workers are not desperate to leave their jobs recruiting intensity tends to fall before firms resort to letting go of workers Kathy when you hear that do you hear by the 10-year bond in America well the 10 years's already discounted a lot already I mean where the yield is now has discounted several rate cuts and lower inflation having said that I wouldn't be shy about buying 10year yields here I prefer probably closer to a um average duration closer to five or six but I wouldn't hesitate to to um to buy 10 years right here I do think there's still some downside in terms of yields maybe down to the 380 area before this uh this whole cycle plays out but wouldn't say it's the optimal place to buy treasuries you know John started the show by talking about Bob Michaels Direction and yield here Bob I want to go there Ian lingan at bimo Capital markets as well I hear so few people modeling out a sub 4% yield and you get there on the ambiguity of fed this fed that and the other is a legitimate slowdown as I said to Matt lazetti in Real GDP your Bruce casman published a global disinflation is that because of a global slowdown and all of a sudden we're to 395 tenure absolutely you're also seeing it in commodity prices exct they're starting to drift lower so there's a Slowdown certainly in China also Europe and it seems to be coming to the US I would also argue that I can present a range of measures we're already at the fed's 2% inflation Target let's pick one of their own measures the New York fed multivariant core inflation measure 2.06% that's within rounding error of 2.0% if you look at the three-month annualized rates of core pce and core CPI they're at 2.3 and 2.1% so we're already there well and Lisa I I don't mean to interrupt but I have to do this because John forces me to quote copper off the London medical exchange Copper's down 11% with that commodity shortfall we've seen nobody's talking about that one thing that's not down is uh sort of the riskier credit aspect and we've seen actually what's not down is small caps and Cathy I'm curious whether perhaps this Market has overpriced the soft Landing that yes we're getting inflation down already as Bob was pointing out to the to the fed's Target and yet the weakness has yet to fully come yeah I I think the tightness in credit spreads at the lower end of the credit spectrum is a concern we're seeing bankruptcies are up among small businesses we're seeing consumers having trouble with delinquencies on auto loans credit cards etc those are usually leading indicators of a turn in the credit cycle now this one's been a little unusual and that credit spreads continue to grind lower but at some point um I think going down the risk spectrum is more of a concern uh then has played out in the market to date so I would not be dipping down into those areas just uh on hopes that this is absolutely a soft Landing right now we're not calling for a recession but you know the risk Rises as you go forward and you don't have a lot of risk premium left in those markets to cushion you if we do get a recession Bob I'd love your take on this not just whether we're going to have a recession or not or whether this is a soft Landing but rather is this Market being overzealous in parsing out some sort of perfect scenario where credit can continue to do incredibly well even in the riskier territories even as you have slowing growth no that that's a soft Landing that's what soft Landings are made of it's great for markets the FED has done the impossible I give them credit I think it'd be interesting to hear from Kathy what our clients are doing I suspect that they're not waiting for rates to come down they're already putting money into Municipal Bond and US trash treasury ladders so that money starting to come in anyway the FED is going to be one of of these lagging movers yet again you came very close to calling US Treasury us trash and I it made me wonder very very close it was your tredy there trying to make some news here TK I do wonder what that looks like in 25 had a lot of people talking about additional supply for the next 12 months the supply story reasserting itself in the bond market what do you say back to clients to bring up that one I I think decisions that get made on Treasury Supply are the worse things for investors to worry about it it's ridiculous it doesn't move yields around at all they price based on inflation and growth expectations you look at where we are now I can make the argument there aren't enough treasuries out in the market the Market's now scrambling to buy them 100 plus basis points through the FED funds rate I think the other thing that gets forgotten here is that the treasury is issuing to fund programs that the government is spending on and that spending goes to hire people create economic activity and generate taxes on businesses and households I think that's what you see when the treasury is telling you actually they're pulling back the amount of issuance in some of the coming auctions Kathy I'd love you to weigh in here do you care about auctions I mean I care about auctions I'm one of those people who focuses an absolutely the wrong thing but Kathy one of the reasons nothing changes the reasons why is especially now after the bank of Japan is making a move and not absorbing as much there's a question not of whether people can buy but whether they are more price sensitive do you think that's of relevance uh no I have to agree with Bob on this one I have looked at the relationship between auctions and yields for years and years and years over various time frames and not found a correlation and I think he points out very um importantly that the demand has grown along with the supply now you know never say never maybe Japan will exit you know their current policy much more quickly than we anticipate and Japanese households will switch back uh but there's still such a huge gap between US Treasury yields and treasury yields in other developed markets that I think for a price sensitive or a yield sensitive investor there is a very long way to go here so um I would agree with Bob I'm just not focused on the auctions or on the supply Story Kathy before you go and we've got about two minutes left before that decision Bob did ask a question of you and what your clients are doing are they starting to get that itch starting to worry about so-called reinvestment risk and distributing deploying some Capital out along the curve Beyond just say the front end yeah we've seen that and it's been something we've been suggesting for a long time because we do see reinvestment risk when the cycle turn so yes we have seen a fair number of CLI clients you know heed that warning and particularly using not just treasuries and not just municipal bonds although the valuations there if you're in a high tax bracket can be pretty compelling on an after tax basis but also in investment grade corporate bonds and other types of higher credit quality bonds where the yield curves not inverted and you can actually hold on to some of these yields for you know five to seven years Kathy this was great it's good to see you as always Kathy Jones there of Charles swab alongside Bob Michael of JP Morgan Asset Management Bob's going to stick with us through this decision on the other side we'll hear from the former fed Vice chair Richard Clara he'll be with us around this table in the studio 60 seconds away the scores going into it look like this let's start with eies and then we'll turn to bonds eies are positive by 1.5% on the S&P there's a strong rally in the NASDAQ the NASDAQ 100 up by 2.5% before today through the close of yesterday we were poised for the biggest monthly loss of the year so far on the NASDAQ and the biggest monthly gain of 2024 so far on the Russell the Russell 2000 up by another eight or 91 of 1% switch up the board and get to the bond market the two-year we talked about it the two-year has red Lisa at every single fed meeting over the last six on fed decision day is it going to be different this time Matt LTI I'm going to put this in his mouth rather than mine was talking about how this could be just because we've already baked in more than a full rate cut in September and more than two full rate cuts by the end of this year how much more can they deliver that said he has shown a willingness to really give a sense to what kind of weakness we see with your fed decision is Mike mck there is no change to interest rate there are a number of small changes to the statement but this is not a CU in September announcement the fed's forward guidance remains unchanged quote the committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2% there's also no change in the over overall assessment that economic activity has continued to expand at a solid Pace all of the adjustments are basically to adjectives job gains have moderated the statement says instead of remain strong unemployment has moved up but remains low inflation has eased over the past year but remains somewhat elevated and in recent months there has been some further progress toward the 2% inflation goal if there is a hint about the future it's this instead of saying risks to employment and inflation have moved into better balance the statement now says the committee is attentive to the risks on both sides of its dual mandate the decision was unanimous and that's basically it if there is going to be a hint about a September move it's going to be up to Chairman Paul it's a two-part story might be key this was the first part the second part starts at about 29 minutes with that news conference in chairman pal let's get to the equity Market we stay positive on the S&P 500 up by about 1.5% on the NASDAQ 100 up by 2.5 in the bond market yields look a little something like this we're down about two basis points on a 10 year the move at the front end of the curve it's a small one but notable up by about two basis points on a 2-year at 43832 I just want to get to those changes that Mike mcke identified if you go back to the second paragraph of the June statement the last line of that paragraph read as follows the economic Outlook is uncertain and the committee remains highly attentive to inflation risk if you go to the second paragraph and the last line of the statement that just dropped the economic Outlook is uncertain and the committee is attentive to the risk to both sides of its dual mandate and Lisa this is the story of The Duel mandate and the risk around it coming into balance that looks like the way they formalized it this time around in the statement and I just wonder how much the chairman Builds on that in the news conference in 28 minutes I want to pick up on your point that the bond market isn't moving that much there's only an increase of about two basis points on the front end and that is why exactly that they recognize the risk that the labor market is one that they have to care about this sets up Jackson hle for him to come out and change the framework and then for September to be that First Rate cut no one's changing that view based on this particular statement the balance of risk has shifted and you start to appear see it appear just a little bit incrementally in the statement the decision rates unchanged we're looking for a move still in September to Lisa's point we still have a news conference in front of us and Jackson Hall the annual get together at Jackson Hall Wyoming about a month away with us around table I'm pleased to say the former fed Vice chair Richard clar is with us still with us is Bob Michael of JP Morgan Asset Management Rich it's good to see you sir let's start with you you listen to Mike you saw the changes in the statement what' you make of what we just heard 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 the attuned and attentive to the balanced uh uh Outlook I mean that's certainly correct the chair's been making uh that that point but I think it is relevant that they included it uh in the statement he will certainly I think reinforce it uh in the Press uh conference and I does think I do think it does te up Jackson Hole there'll be some more information before then I look at and this show is the best one we've ever done we've got Dudley with this 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 exante exost debate You've Got The Economist magazine article you did a year whatever ago you got your January 2022 context and consequences speech you want an anti aspirational fed I don't hear that here they're waiting they're waiting they're waiting they are waiting I think they are they are getting greater confidence but I think the key Point not not to toot my own horn is my view all along it's okay it's surveillance you can do that long and I think I've said so on this show is that the pal fed really the goal was to get inflation to 2 point something and then they would start thinking about the next step which would be easing not running an easy policy but removing restrictions so I do think this is what we're seeing seeing and if we do get the cut in September as I think we and markets expect it will be because they expect inflation xanes to continue to fall but are we anywhere near that I'm I'm sorry this is an expost fed going back to Arthur Burns they're as data dependent as I've ever seen 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 Bob what's your take on this it seems like it's less doish a little bit more balanced than you initially thought do you think this just is uh trying to move as incrementally as possible I think they preserved full optionality heading into Jackson Hole 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 I I don't see too much different than what we expected other than they just decided to m M the full optionality we'll see what happens as we roll into September we're still very much expecting 25 basis points in September and now do of renmar 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 24 minutes time he goes on to say the FED is waiting for additional data can they even articulate why inflation might re Accelerate from here can we pick up on that that question Bob can you articulate the risk around inflation why might it re Accelerate from here corporate profitability still looks great we talked about S&P 500 earnings they're coming in ahead of expectations you look at the guidance companies are giving you they're up 12% next quarter so we're not in a recession we're slowing down in some parts of it um we'll see I you know I I can't find really the argument what's going to cause inflation to re accelerate to be honest well Rich we were 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 we 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 a different committee than the one I was on and many of them do emphasize both sides of the Dual uh mandate so um I'm sure that reflects a number of folks views I I do think though this is a committee that that that certainly got burned earlier in this year because the inflation data went the wrong way and to their credit they became very data dependent as Tom uh indicated um I I think that they put it this way I think they think they're going to go in September uh 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 they're trying to strike and I think we'll hear that in the press conference we were speak we were speaking earlier uh with James Bullard formerly St 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 doesn't comply do you think that they are in that zone right now I don't really I mean I certainly during my time on the committee we found ourselves there a couple of of times so it can happen um I think the the data we have gotten you know the chair did a lot of uh communication before a blackout and the data since then has reinforced that that view so I think there's a pretty wide range of data while they'll feel comfortable going uh in in September so I don't think they're in that Danger on can you confirm that Jim actually said those things to the FC meeting well of course I I would never reveal what was said in an FC except what I say all the all the brilliant things I said so D Swan joins us now from KPMG alongside former fed Vice chair Rich Clara AB Michael of JP Morgan Dian I want to get into this statement that came out about eight minutes ago what do you make of it the incremental changes and were you looking for something bigger I wasn't looking for anything bigger and I think one of the key issues here is we saw po talk about in his Congressional testimony when pushed on the duel mandate he said listen this is the thing that keeps me up awake awake at night the number one thing that keeps me awake at night is that overshooting the overtightening so that is in there and that is what opens the door a crack not wide open which is what we expected for September and I do think they do think they're going to move in September and I agree wholeheartedly with Rich on this I think the other issue is there's sort of this Tale of Two economies we're seeing emerge out there the one that's in the household survey that's close to but not yet triggered the S rule which is what got Bill Dudley up in arms and how weak employment has been in the household survey and the establishment survey the GDP data other jobs data that suggests the economy is still on solid footing and right now the FED has been opting into more of that establishment survey where payrolls have held up although that they're not quite as strong as they've been we're going to get probably some good public sector hiring in the jobs numbers on Friday again which will help boy those overall numbers adding to some weakness in the private sector but I think that's important is that the FED is looking at this and they're weighing which is the right stuff and you know really getting to Rich's Point too there isn't just one piece of data that the market keeps looking for that could tip the apple cart the FED is looking at the totality of the data and that last line really gets to that point the totality of the data will allow them to go in September and they don't want to make the same mistake the ECB made move and then have to freeze and be in a Purgatory their credibility is at stake they want to make sure inflation is coming down but I agree with which they'll still cut before inflation reaches its 2% Target anticipating that the economy by lifting off that restriction the economy will get there we have Swank and claror with this Bob Michael maybe a question for you on the economics of the moment are we slaves to measure we have measured for decades we're being very measured where maybe other central banks aren't are we just just so afraid to move and we're over careful over cautious because once we move we've got to move in a measured Vector I feel like we're back to the Greenspan fed where every word is so carefully thought out it makes you want to overanalyze it and no one can give an inch if the wrong word is in there then the fom gets concerned about the market pricing in hundreds of basis points of rate cuts and risk assets being up 10% okay go please go but we're talking about and Rich touched on it we're in I think very restrictive range 25 basis points you're not in a loose monetary world with money flooding all over the place you're still restrictive you've got to start that Journey somewhere this is too important Lawrence Meer Washington University is monograph a term at the FED he tore green span apart that it was a dictator ship are we getting to the point now no one can desent and everyone's measured because we're measured and appropriate no I think no one has descended because two years ago inflation was too damn high and they all agreed they wanted to get it lower it'll get more interesting as we get close but what I want to say to invoke the Olympics uh now this is a Fed that really wants to stick the landing you know they won't say this word but their their projection and what we're seeing in Bloomberg consensus and elsewhere is a soft landing and and they want to stick it and uh you know the data is now solid it's moving in the right direction and so you know getting back to the greens span fed there was a soft Landing or so in in those years alen Blinder has written they're they're not you know Common but we do see them I think towards in 2019 I think the pal fed got a soft Landing we don't see it in the data because we got the pandemic the economy looked pretty good in January of 2020 so they're trying to stick the soft Landing forget about sticking the landing let's just throw them in the S the water's fine'll be okay you better okay there's another there's another analogy Matt hornbach puts this out earlier and I'd love your thoughts on this Diane basically the Olympic motto to carry on with this reads faster higher stronger together could have been used to talk about central banks globally all together now it it might be at more upper boat slower lower weaker together Diane how much is that looming over this fed meeting the idea not of synchronized swimming or synchronized rate Cuts but this idea of trying to sort of get take an edge off for the rest of the world that really does seem to be dealing a little bit more with some negative growth I don't think that's the fed's main concern and I'm sure Rich will back me up on that I remember seeing uh Ben Baki actually go after another Central Banker who said you guys need to change your policy to help us out and he said that's not our problem basically at a Jackson hall meeting so that is not the fed's primary concern that said a strong dollar helps us out down the road in keeping Goods prices lower so that helps the FED out I think what's more important here in terms of the Olympic analogies is that the road to gold is often paved with tears and obstacles and I think people forget that um and I I'm thinking of Simone biles here I'm sorry she's my hero and heroin at this point in time but I'm thinking about you know soft Landings people forget that the 1994 95 situation it looks great on paper I lived it I remember it rich you lived it too it was ugly at the time chairman Greenspan's reappointment as his third term as Fed chair was held up for four months in 1996 because he nearly crashed the economy in 1995 and people were so angry at him for not um easing sooner and it was his own colleagues including Janet y on the FED that got him to experiment with productivity growth and intense foreign competition that bringing down inflation and allowing the unemployment rate to fall instead of using monetary policy to do it that is really important to remember is that soft Landings are not easy they look good on paper but getting there can be a hard path Diane where does the confidence come where does it come from that unemployment stabilizes at these levels and doesn't carry on shif in higher into year end what underpins that well I think I I don't know if unemployment is going to stay there or not it often moves up slow slowly and then moves up rapidly alls I know is that even Claudia s who wants the FED to cut right now has argued her own rule might not be applicable in the post-pandemic economy because of all the changes we've seen we've seen much of the rise in unemployment has come from more people seeking jobs and increase in the participation rate particularly among Prim AG workers we've seen an influx of foreign workers foreign born workers accounting for over 70% of the growth in civilian labor force since February of 2020 that's helped to boy the unemployment rate as opposed to a surge in layoffs that doesn't mean there aren't stresses in the labor market that doesn't mean there aren't still problems but at the end of the day what is it that people complain most about they can complain most about the high level of prices still and that's something that the FED also has to keep in front of its mind and I think that's where we're at at the end of the day we don't don't want to lose this and not hit that soft Landing but it's a rocky road to get there I think we're still going to make it given the fact that we saw the positive of consumers pushed back in the second quarter on price hikes and retailers and producers capitulated they rolled back prices on goods and we saw a rebound in growth doubling the pace of the first quarter driven in large part by a rebound in consumer spending that's the goldilock scenario towards a soft Landing there's this issue Bob we're looking at market pricing and right now it seems like this is consensus that they are going to land the soft Landing even though it is sort of a rarity or a white elephant do you think that the market has overpriced that soft Landing or even underpriced it because the internal skepticism just keeps on Roaring no I think the markets are right on track with the soft landing and if it in fact happens the fed can bring down rates a fair amount and the markets will continue to appreciate um I think what's different this time is the fed and investors have a lot more real-time information I was around in 9495 I was around in 81 and you didn't have that information and now you have it it's real time it's live you can see what's going on businesses have it households have it and it maybe it gives policy policy makers a false sense of comfort but they have that sense of comfort which really kind of leavs the market kind of in the way uh sort of in the same boat that the FED is in and I wonder Rich you know if you were on still on the FED how much the FED looks at the market to kind of gauge progress sort of follows them if you will because they are gauging real-time data and if anything this is the collective will and I love the war stories from the mid1 1950s from everybody but I wonder if you know if that's something that they could they could really kind of sink their teeth into oh sure well I mean I'll just speak for for myself but uh you're you're looking at the market uh hopefully to try to extract signal there's always noise you have to be honest with yourself um but it's particularly relevant for things like the growth Outlook and the inflation uh Outlook uh you need to know what is being expected that's a key input to monetary policy our our expectations I I gave one of my speeches at the Fed was on this point of avoiding the Hall of mirror Problems by looking at market prices so I'm not saying it's it's easy but I don't think there's an alternative want to cross back over to Diane Diane I know' got to go in a second just a quick final word a question for chairman pal in this news conference Diane what would it be well this is on Communications I think it's going to be very hard for the FED to communicate we already seeing financial markets are trying to front run the Fed on a larger cut in September how do they calibrate their Communications to deal with what may be more measured Cuts interesting Dian thank you as always Dian Swank there of KPMG if you are just joining us welcome to the program the FED decision came out about 20 minutes ago unchanged on interest rates and the statement largely unchanged as well just some incremental changes so the focus on the news conference now which starts at about 10 minutes time with us joining us now I'm pleased to say is Mike aen of Bank of America Michael going into this news conference very incremental changes in that statement were you expecting more than what they delivered no I I I I wasn't I I think with the strong growth numbers we received the right place for them to make adjustments is exactly where where they did reflected a little bit in cooling labor market uh conditions reflect a little bit more progress on inflation kind of pin down and nail down that balance of risks argument because that's what the chair had said uh in front of Congress so I think this was the right incremental move I think the FED feels that it's in a sweet spot right now that the data is moving in its direction so it's getting closer it just needs a little bit more and then and then that confidence that nebulous confidence may be there so this is what we were expecting we weren't expecting a big lean in either direction from the statement the market as you know Mike has been looking for September and a baby step towards that you and a team have been looking for December what separates you at the moment Michael the data that backs up your view what separates you from the rest of the street at the moment well I'd say we have we have less concern about downside risk to the economy we certainly are watching for it and and looking out for that we may be wrong on on this few but the economy grew at a pretty solid Pace in the second quarter and yes things are moderating and and cooling but I still think that there's a lot of resilience to both the economy and and labor markets and and we'll see maybe there's a little unevenness in this inflation story but certainly September a September cut has moved a lot closer to our our our Baseline so yeah we're still in in December but we've got two employment reports and two inflation reports between now and now and then uh you know further progress in in those two variables a little bit weaker employment kind of repeats of what we just saw in June inflation that could easily put a cut on the table uh in September so September can happen but it may not so I think that's how I'd frame it right now Michael let's just put a bow on this what does further progress look like to you in the two labor market reports and the two inflation reads that we get until the next uh meeting well I think the the labor market report is is maybe a little more asymmetric you know a strong report is probably not going to prevent them from cutting but obviously a a weak one could uh so if they feel the labor market is softening more than they expect um they could go in that regard otherwise I think to your earlier question of what's going to cause inflation to rise I can't see it I I agree but I don't think what they can rule out right now is that inflation settles in at a level that feels a little uncomfortable for them so I think on the margin a little more evidence that no we're not going to get stuck with say core pce in the high twos it does look like it's moving lower so one or two more reports that give them confidence about that then I think it's probably enough speaking of discomfort we know a topic they're uncomfortable with and that's politics and if it comes up in this news conference we know what chairman Pal's going to do he's going to ignore it but there was a letter sent to him by Senator Warren and Company and TK there's a quote in this letter the immediate press release read as follows the failure to cut rates would indicate that the fed is giving into bullying and is putting political considerations ahead of its dual mandate to promote maximum employment and stable prices so you've got the Republicans saying if you cut rates is political and you've got the Democrats saying if you don't cut rates it's political sort of stuck in a rock in a hard place between the both and what's important here John it's so so important is that Richard clar is one of the people that bought history back to economics with his work at Colombia I sat at the FED with you in that magnificent library of first editions in Elizabeth with Warren reached down and said take the book off the shelf and I took torson Vin the theory of the Leisure Class off the shelf and you and I were talking about it this is a few years back that's what Senator Warren's talking about is the Gilded Age are we in a Gilded Age where the elites are talking only to the fancy people and indirectly doing monetary policy only for the fancy people well no and in in one word I I I think you know the FED has the Dual mandate inflation was too high they're focused on both sides I think uh the econom is in in a place where it can certainly uh adjust and and wait another two months until the cuts uh commence so I I I would push back on that Mike aen would you push back just how relevant is the US election and US politics well the way I would frame this and I I think Rich would agree um I was formerly on staff at at the board and I learned quickly that no matter what you do or don't do somebody's going to be upset and one side will complain or the other will complain so I think you learn quickly the best thing to do is to do what you think is right uh so I I would I would put it at that so they have competing opinions here that the right thing to do is to do what they feels right Micha I'll finish with the same question I finished with Diane swung questions for the chairman if Michael mck's listening going into this news conference what's the number one question for you well the the chairry said that they could ease if there's unexpected weakness in the labor market which is actual data that comes in below their expectation but what about preemptive using on the risk of Labor Market weakening I think that might get it the gap between market pricing and what the FED thinks that will deliver Mike gapen thank you sir Michael gapen there of Bank of America the news conference about 5 minutes away but there is a question here about what kind of interest rate cut it would be when we get one if we get one in September is it a riskmanagement decision is it a midcycle adjustment the beginning of something much bigger than that do you think they have to frame frame it at this point do you think they have to characterize what it might be I think they do and I think they'd like it to be part of the normalization process that they've achieved their targets on both sides of their dual mandate and they could start to bring down what is a restrictive policy Michael gapen echoed what you your speech of January 2022 it's about ex anti aspiration how I don't want you to voice for the chairman I know that's inappropriate but how does he voice the aspiration of getting out front here in 6 s minutes well I think he'll stick to the Mandate and he'll stick to documenting the progress and and again uh he won't use the word soft Landing uh although that's I think what they're trying to uh what they're trying to achieve and I think Governor Waller's done a very effective job in his many speeches in making uh the point that they they have they have time because the data is holding up quite well you know it was a very bold call a couple years ago for Waller to say we can disinflate without this huge pain in the labor market I think they were prepared to take it if it was required it hasn't happened and so now I think they're even more focused on the soft uh landing and I do think they do want to avoid a premature Declaration of of mission U accomplished because even if underlying inflation's right going to Target there's always noise in the data and two or three months of noise in the wrong side is a bit uncomfortable Rich there's this feeling baked into to markets that fed share J Powell is much more doish than the statement might suggest are you expecting that tone to kind of come out in the news conference interesting you know we heard a lot from chair poell uh at Sentra on Capitol Hill uh sitting down at the economic Club of of DC I've gone through and looked at that I would actually expect him to stick pretty close to that which which was very balanced uh not declaring Victory but acknowledging progress emphasizing as the statement does today uh that they are attuned and attentive to both sides of the Dual uh mandate you know so there are sometimes where I think the press conference is really the chair using a lot of this is what I think I think we'll hear a lot of this is what we think today I think the committee's pretty pretty tight uh tightly aligned on where they are Bob what are you listening for today um I I actually think he will come out a bit more doish I think that's the way he's rolled the last several meetings he's surprised Us by deviating from the script and indicating that yeah you know he could see rate cuts um on the horizon um I Can't Take My Eyes Off of the last sentence in the second uh paragraph where the committee is attentive to the risk of both sides of its dual mandate I got what I wanted at least which is acknowledgment of risks in the labor market the more I look at that the more it's clear to me that they're going in September if I were Mike mcke a lot of people try to press the FED on what their neutral long-term rate is I would ask him at what level is the Fed funds rate no longer restrictive do you think they can answer that rich well I I think they won't answer that I think I think they they have a and this is one where there are probably 19 different opinions on on the committee one thing I'll say a little bit is right now as I look at my Bloomberg screen or I did 25 minutes ago uh September was more than 100% priced and and and even I wouldn't say it's it's 100% there are data there's data we could get between now and then that where they might not go so that's why I skew a little bit to being a little bit more balanced than maybe doish but you know we'll find out I'm pleased you brought up CRA Portugal because I think it's really important to reflect on the comments from chairman pal back in central Portugal at the ecb's annual get together chairman power was talking about the strength of the labor market and the strength of the labor market being a reason for them to wait that they have time they can wait and see a few more months of data Maybe and it's his character ization again in this news conference of the labor market that I think matters off the back of that incremental change in the statement that you're all picking up on around the table that last line of the second paragraph you've seen this incrementally in the FED speeches over the last few weeks least of the last month they're placing greater emphasis on the other side of the Mandate in a way that it wasn't even part of the conversation a year or so ago think about where we've come from two years ago Jackson Hall August 2022 pain pain to get inflation down the focus was getting inflation down and you can start to hear the focus shifting to the labor market let's take a listen to the chairman of the Federal Reserve chairman Jay pal good afternoon my colleagues and I remain squarely focused on achieving our dual mandate goals of Maximum employment and stable prices for the benefit of the American people our economy has made considerable progress toward both goals over the past two years the labor market has come into better balance and the unemployment rate remains low inflation has e substantially from a peak of 7% to 2.5% we are strongly committed to returning inflation to our 2% goal in support of a strong economy that benefits everyone today the fomc decided to leave our policy interest rate unchanged and to continue to reduce our Securities Holdings we are maintaining our restrictive stance of monetary policy in order to keep demand in line with Supply and reduce inflationary pressures we are attentive to risks on both sides of our dual mandate and I will have more to say about monetary policy after briefly reviewing economic developments recent indicators suggest that economic activity has continued to expand at a solid Pace GDP growth moderated to 2.1% in the first half of the Year down from 3.1% last year private domestic final purchases or pdfp which excludes inventory investment government spending and n exports and usually sends a clearer signal of underlying demand grew at a 2.6% pace over that same period the first half growth of consumer spending has slowed from last year's robust Pace but remains solid investment in equipment and in tangibles has picked up from its anemic Pace last year in the housing sector investment stalled in the second quarter after a strong rise in the first improving Supply conditions have supported resilient demand and the strong performance of the US economy over the past year in the labor market supply and demand conditions have come into better balance payroll job gains averaged 177,000 jobs per month in the second quarter a solid Pace but below that scen in the first quarter the unemployment rate has moved up but remains low at 4.1% strong job creation over the past couple of years has been accompanied by an increase in the supply of workers reflecting increases in participation among individual individuals aged 25 to 54 years and a strong pace of immigration nominal wage growth has eased over the past year and the jobs to workers Gap has narrowed overall a broad set of indicators suggests that conditions in the labor market have returned to about where they stood on the eve of the pandemic strong but not overheated inflation has eased notably over the past 2 years but remains somewhat above our longer run goal of 2% total pce Prices rose 2.5% over the 12 months ending in June excluding the volatile food and energy categories core pce prices Rose 2.6% longer term inflation expectations appear to remain well anchored as reflected in a broad range of surveys of households and businesses and forecasters as well as measures from financial markets my colleagues and I are acutely aware that high inflation imposes significant hardship as it erodes purchasing power especially for those least able to meet the higher costs of Essentials like food housing and transportation our monetary policy actions are Guided by our dual mandate to promote maximum employment and stable prices for the American people in support of these goals the committee decided at today's meeting to maintain the target range for the federal funds rate at 5 and a qu to 5 a half% and to continue reducing our Securities Holdings as the labor market has cooled and inflation has declined the risks to achieving our employment and inflation goals continue to move into better balance indeed we're attentive to the risks to both sides of our dual mandate we have stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2% the second quarter's inflation readings have added to our confidence and more good data would further strengthen that confidence we will continue to make our decisions meeting by meeting we know that reducing policy restraint too soon or too much could result in a reversal of the progress we have seen on inflation at the same time reducing policy restraint too late or too little could unduly weaken economic activity and employment in considering any adjustments to the target range for the federal funds rate the committee will carefully assess incoming data the evolving Outlook and the balance of risks as the economy evolves monetary policy will adjust in order to best promote our maximum employment and price stability goals if the economy remains solid and inflation persists we can maintain the T current target range for the federal funds rate as long as appropriate if the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated we are prepared to respond Bond policy is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate the FED has been assigned two goals for monetary policy maximum employment and stable prices we remain committed to Bringing inflation back down to our 2% goal and to keeping longer term inflation expectations well anchored restoring price stability is essential to achieving maximum employment and stable prices over the longer run our success in delivering on these goals matters to all Americans we understand that our actions affect communities families and businesses across the country everything we do is in service to our public Mission we at the FED will do everything we can to achieve our maximum employment and price stability goals thank you I look forward to your questions Gina uh Gina smik from The New York Times thanks for taking our question markets pretty much entirely expect a rate cut in September at this stage um I wonder if you think that's a reasonable expectation and if so why not just make the move today thank you so um on September let me say this we we have made no decisions about future meetings and that includes a September meeting the broad sense of the committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate uh in that we will be data dependent but not data point dependent so it will not be a question of responding specifically to one or two data releases the question will be whether the totality of the data the evolving Outlook and the balance of risks are consistent with Rising confidence on inflation and maintaining a solid labor market if that test is met a reduction in our policy rate could be on the table as soon as the next meeting in September so you asked why not today uh and I would just say again that the broad sense of the committee is that we're getting closer to the point at which it will be appropriate to reduce our policy rate but that we're not quite at that point yet Howard so um just to to follow up on that a bit if inflation behaves as you expect between now and September would you regard a cut in September as sort of the Baseline scenario right now so I guess I would I would think about it this way um uh I'll give an example of uh of cases in which it would be appropriate to cut and maybe that it wouldn't be appropriate to cut so if we were to see um for example inflation moving down uhu quickly uh or more or less in line with expectations growth remains let's say uh reasonably strong uh and and the labor market remains you know consistent with its current condition then I I would think that that a a rate cut could be on the table at the September meeting uh if if inflation were to prove you know stickier and we were to see higher readings from inflation disappointing readings we would weigh that along with the other things you know I think it's going to be not just any one thing it's going to be the inflation data it's going to be the the uh uh employment data it's going to be the balance of risks as we see it it's going to be the totality of all of that that help us make this decision and just to follow up on that specifically in what ways right now given all you've seen over the last few months in particular on on shelter on Services Etc in what ways are you not confident right now that inflation is on the way back to 2% I I think it's just a question of seeing more good data we have seen the last couple of readings have have certainly added to confidence and we've seen progress across all three categories of uh of core pce inflation that's Goods non-housing services and Housing Services so it's really just um you know we had a quarter of of poor inflation data at the beginning of the year then we saw some more good inflation data we had 7 months at the end of last year you know we we just want to see more and and gain confidence and as I said we have we have we did gain confidence and more good data would cause us to to gain more confidence Kobe thank you Kobe Smith with the financial times the March SCP pointed to three Cuts in 2024 with core inflation at 2.6% and the unemployment rate at 4% since we're now at that level in terms of inflation and already beyond what was projected for the labor market I'm just wondering if that rate path is back to being the best guidepost for policy rather than let's say the shallower one laid out in the June SCP you know so I would just say um really the path ahead is going to depend on the way the economy uh evolves and I I can't really give you any any better forward guidance on it than that we we didn't of course do an SCP at this meeting we will do another one at the September meeting uh I would just say I can I I can imagine a scenario in which there would be everywhere from zero cuts to several Cuts depending on the way the economy evolves and I wouldn't want to lay out a baseline path for you there today uh I've said what I what I can say about September and about about today though Nick timos of the Wall Street Journal chair pal you've said before that you wouldn't wait until inflation got to 2% to cut rates because of how inflation is lagged does that apply for the labor market too if the labor market uh is back in equilibrium why is restrictive policy and potentially very restrictive policy given the High real funds rate warranted right now so this this is the very reason that we're thinking about about um you know that we've said in our in our statement that we're going back to looking at both mandates and that we think the risks are coming back into balance we think what the data broadly show in the labor market is an ongoing gradual normalization of labor market conditions and that's what we want to see you know we've seen that over a period of a couple of years and a move really from overheated conditions to more normal conditions we are watching the labor labor market conditions quite closely and that's what we're seeing if we if we start to see something that looks to be more than that then we're well positioned to respond that's that's part of what we're thinking and and when you talk about uh seeing something that's more than whatever softness or slowdown you expect uh in the past you've said that stronger growth uh wouldn't wouldn't override better news on inflation I wonder how that cuts the other way if you're seeing more softness in the labor market than what you would expect does that uh change the calculus on what you're looking for out of the inflation numbers to uh recalibrate policy so we we have growth isn't one of our three we have two mandates as you know uh the labor market maximum employment is one and stable prices is another so we weigh we you know we weigh those two things equally under the law when we were far away from our inflation mandate we had to focus on that now we're back back to a closer to even focus so we'll be looking at the at labor market conditions and asking whether we're getting what we're seeing and as I said we're prepared to respond if we see it that it's that it's not what we wanted to see which was you know a gradual normalization of conditions if we see more than that and it wouldn't be any one statistic although of course the the unemployment rate is generally thought to be you know a single a good single statistic but we'd be looking at wages we'd be looking at participation we' looking at all the things surveys quits uh hires all of those things to determine the overall status of the labor market but we're looking at at it now I would say again I I think you're back to conditions that are close to 2019 conditions and that was not an inflationary economy brought ly similar labor markets then I think inflation was actually core inflation was actually running below 2% so we don't think I don't now think of the labor market in its current state as a likely source of significant inflationary pressures so I would I I would not like to see material further Cooling in the labor market and that's part of what's behind our thinking the other part of course is that we have made real progress on inflation and we're we're we've got growing confidence there that we are not quite there yet but we we're getting more confident that we're on a s that we're on a sustainable path down to 2% so those things two things are working together and we're we're factoring those both into our policy Chris uh Chris rug gabber at Associated Press um you mentioned not wanting to see any further Cooling in the job market um why not or would you consider preemptive cuts to prevent uh if you saw risks of an unexpected cooling is that something you cut ahead of time for it so I I I wouldn't say I wouldn't want to see any other cooling it would be more of material difference if we we'd be looking at this and if we see something that looks like a more significant downturn that that's that would be something that we would we we you know we would have the uh intention of responding to um so in terms of uh I I don't think of it that way I think of it as you know we're we're actually in a good place here we're balancing these two risks of you know go to too soon and you undermine progress on on inflation wait too long or or or don't go fast enough and and you put at risk the recovery and so we have to balance those two things that's the nature of having two mandates and I think we this is how we balance them it's a rough balance but you know it does feel like that again the labor market feels like it's in a place where it's it's just a process of ongoing normalization 4.1% unemployment is still historically low um and and you know we'll just have to see what the data show us and just to follow quickly uh wanted to see what you thought of the recent jolts report which did show hiring gross hiring has come down even below 2019 levels uh layoffs remain low so it painted a picture of a very static labor market uh is that sustainable in your view or something that is worrying thank you so I think all of the data points continue to point to kind of the direction we would want to see so that was taken as as you know there was a decline in openings uh that was good today's uh ECI reading was a little softer than expected so that's that's a good reading it it shows that wage increases are still at a strong level but that that level continues to come down to more sustainable levels over time that's exactly the pattern that we want to be seeing so I think the data they we've been seeing in the labor market are broadly consistent with that normalization process again we we're closely monitoring to see whether it starts to show signs that it's more than that Steve Steve leasman CNBC Mr chairman um back in March you talked about cutting rates as a process and in June you talked about the idea that well one rate cut wouldn't do anything so I wonder if you can um sort of follow on Kobe's question uh talk about are you weighing the economy right now in terms of its ability to withstand multiple rate Cuts talk us to the process that you're thinking or is it just one rate cutter are you in the process now thinking that rates need to be normalized here thank you yeah I can't really say that honestly you know we're we um we've seen you know significant movement in the labor market and you know we're very mindful of this question of of is it just normalization or is it more we think it's just more normalization but won't we want to be in a position to to support the labor market at the same time we're seeing progress on inflation so you know we actually got to this we raised rates uh a year ago at the July meeting and if you look at the situation in the economy a year ago um unemployment sorry inflation was over was over 4% it was a completely different economy now we've made a lot of progress and the labor market has I think you know unemployment was in the 3es mid- threes so it's a different economy and I think it's time it's coming to be time to adjust that so that we support this continued process the thing we're trying to do is you know that we have um we we've had this really significant decline in inflation and unemployment has remained low and this is a really unusual and historically uh historically unusual and such a welcome outcome for the people we serve what we're thinking about all the time is how do we keep this going and this is this is part of that we we think we we don't need to be 100% focused on inflation because of the progress we've made uh 12 month headline at 2 and A2 core at 2.6 you know it's way down from where it was the job is not done on inflation but nonetheless we can afford to begin to dial back the Restriction in our policy rate and I think we're just as part of a process in terms of of what that looks like I mean I think most rate you know you would you would think in a base case that policy rates would move down from here but I I don't want to try to give specific uh you know forward guidance about when that might be because the Pace at which it might happen because I think that's really going to depend on the economy and that's highly uncertain Rachel hi chair pal Rachel seagull from The Washington Post thanks for taking our questions on inflation do the past few months of good Reports look like what we saw last year where you really had a lot of momentum with a few bumps in between would you characterize that kind of momentum as back on track at this point in the year actually what we're seeing now is a little better than what we saw last year last year as we pointed out late in the year a whole lot of the progress we saw last year was from Goods prices which were going down at an unsustainable rate disinf lating at at an unsustainable rate this is a broader disinflation this has Goods prices coming down but it's also we're also now seeing progress in the other two big categories non-housing services and housing services so you know so the thing is we've only you've got one quarter of that we had seven months of of low inflation you got one quarter of this I would say the quality of this is is higher and it's good but but so far it's only a quarter so I I think um you know we need to see more to know that we're you know that to have more confidence that we're on on a good path down to 2% but as I mentioned our our confidence is growing because we we've been getting good data and things like the ECI report uh and frankly the softening in the labor market uh conditions uh you know give you more confidence that the economy's not overheating it doesn't look like an overheating economy and um it looks like an economy that's nor izing and if we were to think about the first couple of months of the year is there any sense now that they were these blips that could have actually allowed for earlier rate Cuts as were some of the projections going into 2024 the thing about if if that's if what it is is seasonality and it could just be very very hard to you know to to do appropriate seasonal adjustments if that's what it is then that actually implies that that other months we're Under reporting too low inflation if you smooth it out it's a zero sum game and that's why we look at 12 months we look at 12 months because that that takes all that out all those effects out 12 month now is 2 and a half% headline 2.6% core this is so much better than where we were even a year ago it's a lot better now the job is not done I want to stress that and we're committed to getting job inflation sustainably down to 2% but we need to take note of that progress and we need to weigh the risks to the labor market and the risks to our inflation Target now more equally than we did a year ago Michael M Michael mcke from Bloomberg radio and television I'd like to ask you about the balance of risks as the American people see it at this point is the risk greater to leave interest rates where they are given the damage that higher interest rates due to the economy in slowing demand and raising prices uh or is it more important for the American people that you keep rates where they are to bring inflation down I I you know I think that we've been given an assignment by con Congress this is how we serve the American people is by achieving maximum employment and price stability right and so in our you know quasi constitutional document the statement on longer run goals and monetary policy strategy we look at the two goals and if one of them is farther away than the other the the two variables inflation and employment if one is farther away from its goal than the other then you con you concentrate on the one that's farther away and you take account of the time time to reach the goal so for the for the last couple of years the best service we could do to the American people was to focus on inflation but as inflation has come down and I think the the upside risks to inflation have decreased as the labor market has cooled off um now and now um and labor market is softened you know probably the inflation inflation is probably a little farther from its Target than is the employment but I think the downside risks to to the to to the employment mandate are are real now so we have to weigh all that and if you think about where that takes this is we have a restrictive policy rate it's clearly restrictive it's been the rate we've had in place for a full year and it and the time is coming as other central banks around the world are are facing the same question the time is coming at which it will begin to be appropriate to dial back that level of restrictions restrictions so that we may address both mandates well you have uh event risk basically with the jobs report on Friday and another one before you meet again uh are you certain that you won't fall behind the curve and lead to unnecessary Unemployment uh if you wait until September certainty is not a word that we have in our in our business um so you know we get we get a lot of data between now and September and it isn't going to be one data read or or even two it's going to be the totality of the data all of the data and not just and and then how is that affecting the Outlook and how's it affecting the balance of risks that's going to be the assessment that we do of course we'll we'll all look carefully at the employment report but so much other data coming in and so much happening between now and and the September meeting and we'll you know we'll make a judgment Edward uh thank you Mr chairman Edward Lawrence and Fox Business I do want to dig deeper on what Michael and and what Nick were asking um there's a a shift in the statement to balance between the focus between inflation and jobs looking at the job sides we seen wage data show sort of an Abrupt slowing we've uh we're hearing on earnings calls from companies like Intel abrupt layoffs in the jobs report from the BLS government jobs has been a leading Creator could the government jobs as a sector hiring mask underlying weakness in the jobs report well you know we'll look at everything um we've seen some some uh tendency to have a narrowing base of job creation in some months going back but then we've had some months where we job was broader and and also the you know the headline number of jobs has come down so uh you know we would but you you look at the whole thing and and uh I think you do look at private demand uh extra carefully to your point about about government so we'll just be looking at at all those things so as a follow then uh so could the FED then be behind the curve because you said some of the reports last meeting you said the reports could be noisy or overstated um was there a discussion of of what kind of discussion was there for a cut today and could the FED be behind the curve yeah so um look the objective is to balance the two risks right it's the risk of going too soon and the risk of going too late we've been you know we we uh we had seven months of good inflation data at the end of last year we said we wanted to see more we said we pointed out that too much of this was coming from goods and sure enough the first quarter wasn't wasn't great inflation did and now we've got another quarter a quarter that is good and you know we're balancing the risk of going too soon against the risk of going too late that's what we're doing there's no guarantee in this it's a very difficult judgment call but this is this is how we're making it um so but in terms of today your question about today um we did have a um you know we had uh you know a nice a nice conversation about about this issue today the overall sense of the committee as I mentioned is that we're getting closer to the point at which it'll be appropriate to begin to dial back restriction but we're not quite at that point yet we want to see more good data uh the decision was unanimous all 19 participants supported it um and but you know there was a real discussion back and forth uh of what the case would be for for moving at this meeting uh you know a strong majority supported moving not moving at this meeting that was the strong sense of the committee but it's a conversation that we had today certainly Courtney uh Courtney Brown from axios thank you for taking our questions um when the Fed was raising rates there was a lot of conversation about long and variable lags I wonder if that applies on the way down to how are you in the committee thinking about that yes it does and I and I think the lags have kind of showed up here in the last six months by the way you you really do now see the Restriction whereas I mean even a few months ago people were questioning how restrictive policy was look at the labor market now you can see and look at look at inflation sorry rate sensitive um in sensitive spending you really do see now that policy is restrictive I wouldn't say it's extremely restrictive but it's certainly effectively restrictive yes there there the lag should should be should be on the way down it should take some time to get into to get into the full economy affect financial conditions and that affects economic activity hiring and that kind of thing and ultimate inflation doesn't it's not instantaneous although it's faster than it used to be because markets move now in anticipation of our moves so are you worried then that if monetary policy acts with long and variable lags even when you're lowering interest rates it might be too late for the FED to help save off any kind of slowdown in the labor market or broader economy we have to worry about that I mean we you're just to make it clear you know it's it's a very difficult challenging judgment uh and we didn't want want to go too soon we don't and we want don't want to go too late and but that's this is how we've made that judgment I feel good about where we are we're certainly very well positioned to respond to weakness with the policy rate at 5.3% we certainly have a lot of room to respond if we were to see weakness that's not what we're seeing though what we're seeing look at the look at the first half growth numbers look at pdfp at 2.6% for the first half it's not signaling a weak economy it's also not s signaling an overheating economy um labor market admittedly the unemployment rate has moved up 7/10 and we're seeing you know we're seeing normalization there but um you know wage wage increases are still at a high level unemployment is still at a low level layoffs are very low uh initial claims have moved up but they're pretty stable and and they're historically not high at all so the the total scope of the data suggest a normalizing labor market uh and again we are carefully watching to to see that that that that continues to be the case Victoria hi Victoria Guido with Politico um on the labor market I was wondering how worried are you all about unemployment rising to the point where it triggers the S Rule and would that potentially affect how quickly you cut rates we um so I would just say the question really is is one of Are We worried about a sharper downturn in the labor market so and the answer is we're watching really carefully for that we're we're aware of that rule which is really a you know a a I would call it a statistical uh statistical thing that has happened uh through history um a statistical regularity is what I'd call it uh it's not like an economic rule where it's telling you something must happen so again what do we see what are our eyes telling us we look at we look at all the things we're seeing and what it looks like is a normalizing labor market again and job creation at a pretty decent level wages moving up at a at a strong level but coming down gradually uh job vacancies have come down but they're still high by historical standards so again I've been through some of the data already but what we think we're seeing is is uh a normalizing labor market uh and we're watching carefully to see if it's if it turns out to be more it starts to show signs that it's more than that then we're we're well positioned to respond is there reason to think that the labor market might behave different this time than it has historically I I think you know history doesn't repeat itself it it Rhymes I that statement is very true about the economy you never assume it's going to be just the same an example would be is there a trend increase in the level of vacancies there are many many examples so it's never exactly the same also let's remember that this pandemic era has been one in which so many you know apparent rules have been flouted like the uh inverted yield curve for starters um so many many received W pieces of received wisdom just haven't worked and it's because this the situation really is unusual or unique in that so much of this inflation came from the shutdown in the economy and the resulting Supply uh problems in the face of admittedly very strong demand so the whole the whole situation is is not the same as many of the other prior inflation out uh or downturns that we've seen or business cycles that we've seen so we're having to learn you know we're having to um you know to be very careful about the judgments that we make I would say so we don't assume that that these regularities will will just repeat themselves automatically a thank you chair P Mara Mo with Bloomberg there seems to be quite a difference between what the anecdotal data are telling us such as the very recent uh downbeat pige book and the hard data do you take those anecdotes seriously that is that the economy and labor market are cooling much more rapidly than what's shown in the data so I do take that seriously and it the B book is great what's even greater is hearing the uh Reserve Bank presidents come in and talk about their conversations with um with businesses and Business Leaders and workers and people in non-private sector in their districts but it's I'll tell you it's a pretty you know this the picture is is not one of a slowing or you know a really bad economy it's one of their their spots of weakness and their regions where growth is stronger than other regions but overall it's you know again look look at the aggregate data aggregate data is you know particularly pdfp private private domestic final purchases is 2.6% and that's a good indicator of private uh of private demand so we listen to all that and it does it does um uh I think it's important to listen to anecdotal data and not just look at the aggregate data especially U you know it's very hard GDP data can be volatile um quarter to quarter uh so it's just hard to measure economic activity there a lot of it's just difficult to do so I I look at both and but I wouldn't say that the UN that the that the anecdotal data is uniformly downbeat it's more mixed thank you jolen Kent with CBS News uh Cher H thanks for taking our questions today you have consistently said that the FED does not consider politics and making decisions with a possible September rate cut on the table it would be less than 2 months before the election and former president Trump reportedly said that cutting rates so close to the election is something the Central Bank knows they shouldn't be doing what's your response and do you believe it's possible to really remain a political with a September rate cut I absolutely do and I think it's first of all we haven't made any decisions I I would say it this way haven't made any decision about any future meeting I don't know what the data will reveal or how that will affect the appropriate path of our policy I really don't know I do know how we will make that assessment that's what I do know so if you take a step back the current situation again is inflation has come down much closer to our goal and that's happened while unemployment has remain low we're we're very tightly focused on using our tools to try to Foster that State of Affairs continuing that's at each of our meetings and all of our decision our focus is strictly on that and really on nothing else doing our part whatever that part may be um you know we're we're using our best thinking we're doing our best to uh understand the economy we we follow academics we follow the many commentators who bless us with their commentary um but we don't change anything in our approach to address other factors like the political calendar Congress has We Believe ordered us to conduct our business in nonpolitical way at all times not just some of the time I'll say this too we never use our tools to support or oppose a political party a politician or any political outcome the bottom line is if we do our very best to do our part and we stick to our part that will benefit all Americans if we get it right the economy will be stronger we'll have price stability people will find jobs wages will rise in real terms everyone will benefit so that's what we believe and that's how we will always act this is my fourth presidential election at the FED I can tell you this is how we think about it this is what we do so it's it anything that we do before during or after the election will will be based on the data the Outlook and the balance of risks and not on anything else just a quick followup um do your economic forecasts and models take into account the two very different economic plans of these two president IAL candidates Harrison Trump and if so how no we do not do that we absolutely do not do that we don't we don't know who's going to win we don't know what they're going to do we we don't act as though we know and we just can't do that you know we we basically we have our forecast we're not we we can run Sim simulations of different potential policies but we would never try to make policy decisions based on the outcome of an election that hasn't happened yet we would just that would just be a line we would never cross you know we're a non-political agency we don't we don't want to be involved in any in politics in in any way so we wouldn't do that Nicholas thank you chair poell Nicholas jinsky from Baron's magazine um there hasn't been a dissenting vote on an interest rate decision in some time if the data do evolve as you expect if you do have more confidence by the September meeting do you get the sense that there will be a unanimous vote on an interest rate move um in September or B basically are there meaningful differences in uh committee members assessments of how much more confidence is needed so there there's all there always um meaningful differences there are and and you know we we talk a lot before during and after the meeting we do have a very robust discussion of these things you're right that in in most cases um people if they feel heard and they feel that they've that their you know their position has been given serious consideration for most people most of the time that's going to be enough there are descents that's fine you know no one has a veto you you know no single person has a veto so it just is a question of who will vote for and against we we've had we've had um uh you know dissents we we had we we haven't had so many during the pandemic era and it just may be that you know we've we've felt more united because we felt you know under a lot of pressure to get things right but before the pandemic we had plenty of desense and I you know descents happen it's part of the process there's nothing wrong with descents and uh if it happens it happens Jean hello Jean young with m& market news um is a 50 basis point cut as a first cut at all likely or even on the table thank you you know I don't want to say I would be really specific about what we're going to do but that's that's not what that's not something we're thinking about about right now Jennifer of course I haven't made any decisions at all as of today thank you chair Bell Jennifer Shan bger with Yahoo finance not to get ahead of the minutes but you said there was a real discussion today for moving at this meeting I'm curious if you could provide some more color on the nature of the discussion today at the meeting about a possible rate cut as early as September well so you know the way the meeting is set up um the first day there's a discussion of financial stability because it's every other meeting we have that and then we have an opportunity to comment on that then we have an economic go around and then this morning we have the monetary policy go around and I think in people's economic go around and in their monetary policy go around people Express their views uh about this and and you know there's a range of views people as you will know from the speeches that they give people have different ways of thinking about the economy and so um in the minutes we'll we'll lay this out in much a much better way than I can do off the cuff but there there's a range of perspectives and you know but I do think that you know we are you know we're a consensus-driven organization people come together this was a unanimous a unanimous decision and at the end everyone and everyone supported the outcome not just the voters but everyone so I I you know I would also say some people examine the possibility you know the the case for moving at this meeting um but overwhelmingly the sense of the committee was not at this meeting but as soon as the next meeting depending on how the data come in but there is a growing sense of confidence that you could move at the next meeting as soon inflation comes well assuming that the totality of the data supports such an outcome no no question that that that's that is the case that um as as I mentioned um uh you know we we we think that the time is is is it's it's approaching and if we do get the data that we that we hope we get then um you know a reduction in our policy rate could be on the table at the September meeting Nancy hi chair pile Nancy Marshall gender with Marketplace um former New York President Bill Dudley wrote an oped in Bloomberg earlier this month which you probably saw in which he said quote it might already be too late to fend off a recession by cutting rates dawling now unnecessarily increases the risk is he wrong so this is the Judgment that we have to make and we're we're well aware of of the Judgment we're you know we're as I as I've said we have to weigh the risk of going too soon against the risk of going too late if we go too soon we can you know uh we had a lot of advice you know to go ahead and cut uh after the seven good months of last year we didn't we said we needed to see more then we saw some higher inflation we've seen one quarter of good inflation and we've seen the labor market move quite a bit uh and as I mentioned I I don't think it needs to uh you know cool off anymore for us to get uh the inflation results that are related to the labor market not all inflation is of course so I think it's a it's a difficult judgment to make and and what you see is the Judgment of the committee is that that time is Drawing Near that time could could be in September um if uh you know if the data support that and have the chances of a hard Landing increased so I I don't know whether they've increased I think they're low I I think this is uh you don't see any reason to think that this economy is either overheating or sharply weakening that's just not in the data right now what's in the data right now is an economy that's growing at a at a solid Pace a labor market that has cooled off um but nonetheless inflation sorry unemployment is is low you know the data overall show a strong labor market um and um you know so that's that's really what you see it's it's not it's neither an overheating economy nor is it a sharply weakening weakening economy it's it's kind of what you would want to see but of course it's the job is never done you know we're we're we're watching to see um you know what which way the economy heads and I think if we if we are are to respond to weakness we're certainly you know well equipped to do that uh but that's not what we're seeing what we're seeing is strong economic activity and you know a good labor market and inflation coming down Greg thank you so much um in the in the minutes of the June meeting that came out a few weeks ago there was a discussion about Communications and some fed officials said maybe the FED wasn't as clear enough about its reaction function and and when I talk to the commentators who bless you with their comments they say that they really don't have a sense of what is going to judge maybe not the first cut but the pace of the cuts going forward they don't have a good sense of that is there anything you can say like how will we judge that um yeah I mean um I I think the reality is that that forecasters and this isn't just the fed by any means forecasters have been continually surprised by for example the strength of the economy last year so I think we had to be pretty humble about about giving forward guidance about this that and the other thing we we need to be pretty careful about that and you know when you're saying you're going to be data driven of course it's always what the data how they affect the Outlook and the balance of risks but um it's nobody has has great vision deep into the future in terms of a reaction function that's a that's a longtime you know discussion that that people have had forever um I think people have understood for a long time actually that we were very focused on bringing down inflation nobody was really confused about that um the data have you know again you've seen significant Improvement in inflation just for the last quarter markets move around on that on the data really not so much it's not really what we're going to it's more just that the data keep coming in and markets are very very responsive to that data right now good jeck for the last question thank you Mr chairman uh I'm going to change gears on you just a little bit from all of the rate talk and whatnot um with uh fed now being in the books uh for a little over a year there hasn't been a whole lot of talk about Central Bank digital currency and wondering if you could give us an update on where things are with that is that considered a de issue now is it still something that's being discussed uh within the committee and what's happening with that it's not something that comes up at all with the in the fomc so um more broadly digital finances is an area that's having that has really significant implications for for payments generally instant payments and you know it's something that's going to really change the way it's going to make more efficient and hopefully safer and all those things the way payments are made around the world and so we are we have people who are researching that and trying to keep up to speed because we play an important role in the payments sector both as a you know as a convenor and as an operator too um in terms of a cbdc there's really nothing new going on there's not much going on at all um we're not we don't have the authority to uh issue a CB you know a retail cbdc that's available to the public we're not seeking that Authority um so what we're doing is keeping up with uh keeping up with developments there pretty much every major Central Bank in the world is is at least doing it doing that some of them are actually seriously looking at implementing a cbdc we're really not we're really just evaluating you know the the story and what's happening out there um so you know I think it's a it's work that we need to be doing that which could be very beneficial down the road but we don't have on on a cbdc we we don't have any plan to we would need to go to Congress and we have no plan to do that we're not no one here has decided that we think it's a good idea yet thank you that wraps up the July Federal Reserve news conference with chairman pal if you are just tuning in welcome to the program let's wrap that up for you this Market got the dovish it wanted to hear the equity Market's positive by close to 2% on the S&P 500 on the NASDAQ 100 up by 3.3 we're moving closer to cutting interest rates September could well be on the table push that through the bond market a fifth consecutive day of gains for the 10 year treasury yields lower we're down by four basis points on a 10-e it's a break of 4.1% so we've all got the same question just how low is the bar for a rate cut in September this is what the chairman had to say the question will be whether the totality of the data the evolving Outlook and the balance of risks are consistent with Rising confidence on inflation and maintaining a solid labor market if that test is met a reduction in our policy rate could be on the table as soon as the next meeting in September so let's talk about the calendar the next meeting September 18th the date are in between August 2nd this coming Friday payrolls August 14 a CPI report September 6th the jobs report on the 11th another CPI report going into a Federal Reserve decision week and most people assuming after that Lisa we're like this far away from that interest rate cut especially at a time where there was a different type of language in this communication we are not dated dependent they are or they are data dependent they're not data point dependent they want to draw a distinction that one data point isn't going to throw them off materially they repeated the totality of the data as well as how they just need to see the same kind of good data that they've already been seeing time continuum to me was critical I thought Steve Leeman's question was great about measured he alluded to this they're slaves to measure John it's others to it I just don't know what else to say you know I'll talk to Dudley about it here this to have clar and Dudley with us today is Fant just lights out and I really for those of you on global Wall Street what's coming up here with Dr Dudley is is required listening there was a fantastic line that came from evera krishnaa I want to share this quote with you he thinks they've laid the foundations for a rate cut September I think a lot of people observing that news conference would agree but this quotes interesting we think in practice it's not very dayto Point dependent and view the cautious evolution of the statement as intended to carry Hawks along and avoid descents as was indeed the case today expect a clearer signal a month from now at Jackson Hall I'm thinking about the minutes as well I just wonder how well set the stage is for the doves to dance and sing very loudly in these minutes that come out in a number of weeks time I was very happy that the reporter asked him to elaborate on the fact that at this particular meeting they did discuss the possibility of cutting rates that there were a few members but not the vast majority here is the question how loud was that voice and what did they have to give to those people to get on board with them in terms of this decision bring and Dr Dudley moments ago the 10year yield broke down to a 4892 it's a new low yield can you imagine John what our shows are going to be like with a 399 tenure I I I I can't get there I where are we going to be in September where's the unemployment rate going to be in September that's the big question I have going into the payrolls report this Friday Bill Dudley got a shout out in this news conference Bill Dudley joins us now the former New York fed president and Bloomberg opinion columnist as well bill I want to go to your column that you wrote in the last week week or so it was quoted in this news conference I'm sure you heard it what did you think of the Chairman's response to it I thought it was a fair response I mean this is my opinion and and fed is reaching a slightly different opinion I mean we're at we're at a you know point where the risks are pretty closely balanced and so the question is do you go a little earlier or do you go a little later I think you know the reason why I thought it made more sense to go is that if the Market's already pricing in September with a high degree of certainty what are you really waiting for at this point why why why take the additional risk of you know the economy deteriorating further so you know end of the day it's probably not going to make a big deal bit bit a lot of difference but I think you know given the fact that the market expects the FED to cut once that decision is mostly made and I think you heard today it was mostly made then why are you waiting uh Bill Dudley your essay heard around the world the single sentence the FED doesn't want to be Fooled Again you've held court at Princeton where the late wonderful Daniel Conan uh held Court here's conman with Traverse decision makers know they are prone to regret and the anticipation of that painful emotion plays a part in many decisions how is Regret aversion playing in to this massive data dependency expost ballet what may be happening here is the fact that they got fooled on inflation you know early this year where the data came in bad makes them you know overly cautious that they're going to make this that they could they could make the same mistake again by going early you know think it's you know Economist talk about recency bias you put too much weight on the most recent experience so this may be a case where they're not putting enough weight on the on the fact that you know things are slowing and inflation's coming down and maybe now is the time to act I think it was interesting he got a question about the Som roll uh you know that the fact when the unemployment rate climbs above 0.5% on a three-month moving average basis you always have recession he said he's aware of it but clearly the FED doesn't put a lot of weight on that risk do you feel like we're getting closer to the moment where we will see real descent on a committee that's being cobbled together and you can kind of feel the strains in some of the uh communic Cas now I think what happened to you know today was basically the the dov's got a pretty dobish statement and a pretty dobish press conference and so you know they're sort of on board and the Hawks got more patience and so when you arrive at the September meeting assuming the Outlook doesn't change in a material way and that's basically what Paul was saying it's not about a single data point the Outlook has to change in a fundamental way for the FED not to go in September at that point you you have something to basically you know give to both the doves and the Hawks the doves you know thank you for being patient the Hawks we waited uh so let's go together uh unanimously at the September meeting so I think it's you know I think it's a good good possibility that you'll see an unanimous vote at September for 25 basis point uh rut bill you brought up the Sam rule the chairman also brought up the yield curve in this news conference as well and highlighted the false positives we're getting from traditional indicators just to reflect back on that piece that you wrote for Bloomberg opinion can you walk us through why you do think actually the S Ru does matter that maybe we should have a little bit more of a focus on these traditional indicators still and not completely ignore them well if I can start with the yield curve the reason why I don't think the yield curve is necessarily a good predictor is the yield curve is inverted because people think monetary policy is tight uh so it's not that yield curve shape that causes the economy to weak it weaken it's the presumption that monetary policy is restrictive that causes the the economy to weaken most of the time when the yeld Cur is inverted monetary policy is tight and so yield curve is a good predictor um the S Ru I think is a little bit different it's basically saying once the labor market deterioration goes beyond a certain point it becomes self-reinforcing essentially what I think happens is business PE households hear about the labor market weakening they pull back on their consumer spending uh that causes uh businesses to pull back in terms of investment and hiring and that leads to further weakness in consumption and then further rises in the unemployment rate it's a pretty amazing statistical regularity that's that either Rises less than a half a percent or next stop is a full-blown recession there's nothing in between the smallest increase in the unemployment rate trough to Peak uh uh is is either between 0.5 and 1.9 percentage points there's nothing in the middle which I think is pretty interesting statistically now he did recognize that as a statistical just a statistical result there's nothing sort of there's no economic law behind it but the track record is 13 and0 uh so you know think about the odds of flipping a coin 13 times and coming up heads every time after a while you're s going to believe that the next flip is going to generate the same result Bill take us back to First principles why can't they just cut and say one andone and we'll observe versus our addiction to measured well I think what will happen is once they start start to cut they'll probably keep going uh you know once they start to do the first Ray cut they basically decide that monitor policy that we've accomplished our permission in terms of inflation and unemployment policy is restricted so we know now have to go back to neutral neutral is not 25 basis points away so if you have a rate cut in September it's probably G to be followed by rate cuts at least one or two more rate Cuts later this year well it seems like this was a setup for Jackson Hole we've been talking about that and it seems like there will be some sort of policy regime shift that we will observe in August what do you think it will be I don't think that Paul really needs to say much more than what he said today frankly I mean I think the changes in the statement and the press conference today basically tell you that September is going to happen unless the economic Outlook changes materially now that's possible you could get a whole string of bad inflation numbers or the economy could come in hot but I think in you know in the next six weeks or seven weeks is the Outlook going to change materially I doubt it so I think regardless of what happens in in Jackson H I think the fed's going to cut in September I think you know this Paul will sort check in at at the Jackson Hall and basically you know probably confirm that we're still on track uh for this this result for Ray cut in September but I don't I don't think it's you know I don't think he has to use it for that well although it's not just about September it's not just about whether they're going to move again one more time this year it's about what the destination is it's about the pace it's about what the goal is in terms of Just The View of where the economy is Bill do you expect there to be any discussion about the terminal rate about what it means to be neutral at a time or this is a very different economy than pre- pandemic well I would assume that once you get inflation you know you're highly confident inflation is going back to 2% and you think the labor Market's inbalanced then you presumably you want to go back to a neutral monetary policy and the question is what's neutral and that comes down to that whole question of what is the level of rstar the the the the neutral Federal fund rate I think at neutral is clearly you know lower than where we are today but is it a 100 basis points lower or 200 basis points lower that that remains to be seen so the fed's gon to be sort of feeling its way now obviously if we fall into recession then the whole whole story changes because in a recession environment the FED doesn't want to go to a neutral monitary policy they want to go to a stimulative monitary policy so if we actually if the if it turns out with the benefit of hindsight that the FED is late and we have a mild recession then the fed's going to cut rates much more dramatically Bill I've never said this I've got Dudley Krugman and Blinder on the same page never did I think I'd say that the money paragraph from your good friend alen Blinder any s any such early cut should be accompanied by a warning not to expect a steady stream of rate Cuts he alludes to the ECB do we need some ECB religion at the Eckles building now I think that the FED will probably cut more than one because that once you start to cut you're busy saying I think it's time to remove monitary restraint and monitary restraint is not going to be removed with just one 125 base Point rate cut Bill great to get your thoughts appreciate it B Dy there the former New York feder president weing in on this Federal Reserve decision as you got a lot of people talking over the last week about the need to move in July at the meeting that's just passed I want to bring you a headline comes from the New York Times and it reads as follows Iran supreme leader ordering a retaliatory attack on Israel the New York Times citing three Irani officials briefed on the order this is what I can tell you about crude crude has been rallying all day and the price of crude looks like this at a moment Brent crude by four percentage points TK you would of to say overtaken by events the last thing this fed needs over the next month or so is an energy price shock I'm so glad you brought this up JN we let off the show this morning with Ethan Broner our Tel Aviv uh news uh news bureau chief encyclopedic on the region and he says the position here now is unprecedented and he may clear there's going to be immediate news following both from the north to Lebanon and the news that you just have from Tyron as well as we get those updates we'll bring them to you I just want to reset if you are joining us we've just had a Federal Reserve decision in the last couple of hours interest rates unchanged incremental changes to the statement there was a sense that in September the Federal Reserve chair would set us up for a r cut in September he took a baby step towards doing so and the market picked up on things accordingly big rally across equities on the NASDAQ on the S&P on a Russell it looks like this right now fad just a touch but we're still higher by 1.4% on the S&P bear in mind the NASDAQ was poised for the worst month of the year and at one point in the last couple of hours was on course for its best day of 2024 that Fades we're back down to about 2.7% higher on the session on the NASDAQ we referenced this stat a little bit earlier on today a few times we are now on course for the seventh consecutive fed decision day rally on a 2-year Bond Lisa that yield is lower by six basis points how much is this just that Drome Powell tends to skew doish and how much is this that the market still has a probability or a possibility baked into the into what the yield is that the FED could maybe surprise in a hawkish manner either way this is a market that likes to hear fed Sher Powell speak and today was no different Mike mcke was in the room with the Federal Reserve chair down in Washington DC he joins us from the nation's capital now M you've just got outside walk us through your biggest takeaway from that news conference this afternoon I think what you walk away with is uh what Bill Dudley was talking about if the economy doesn't do something weird change positions change directions then the FED is going to be cutting in September but there are a lot of potential twists and turns between now and then Friday is event risk with the jobs report and of course you just mentioned the situation with Iran I don't think the Fed was taking those things into consideration today as reasons not to move today but they uh they do have to worry about them and uh and what might happen so they will at this point uh be on a cutting course unless something significantly changes and I think that was the message that PO wanted to deliver and I think Bill put it well when he talked about how the statement was skewed to the doves a little bit and uh the news conference maybe to the Hawks and that both sides get something out of it Mike you've been doing this for a few years back to mcchesney Martin we almost printed a 406 10 year moments ago can the bond market tell the FED what to do probably not uh and one of the things that you have to keep in mind is that we have all this international news going on and the bond us bond market is the Haven market so a certain amount of what's going on today is probably in reaction to Israel and uh Iran and a certain amount of it is the politics going on in this country and then on top of that what the FED is considering and what the economic data are showing but I suspect today's less about the fed and the data than it is about other things because the market had pretty much priced for a September rate cut they didn't get any surprises out of the FED today Mike you're referring of course to the news uh that John broke about Iranian supreme leader ordering an attack on Israel for uh the two assassinations that Israel carried out right now we're seeing crude markedly higher particularly Brent crude might I wonder how this relates to what Fed chair Powell has been talking about that this is actually better inflation data today than it was say late last year or earlier this year simply because it is not being driven by Goods it is being driven by the employment Market it is being driven by Services how much do you believe based on those comments this is a Fed that is willing to look through good side inflation and focus much more on something else well I think they are especially if oil prices go up only temporarily the problem is if oil prices go up for quite some time then that feeds through into the real economy particularly on the services side you you know see search charges by delivery companies Airline fairs might go up that sort of thing so they're going to have to keep an eye on that but their General Instinct would be to look past any kind of energy price change that uh comes about that they think might be temporary and at this point uh we have been waiting for a major shift in Energy prices uh since October 7th when the first attack on Israel came so we haven't seen it yet let's see whether this holds or not and then the FED would have to take it into account if it's still going up 5% rally in crew today M great work as always sir appreciate it we'll catch up with you a little bit later this week's not over still got some work to do the FED decision behind us tomorrow we'll get jobless claims on Friday we'll get a payrolls report and we'll be catching up with Jeff Rosenberg of Black Rock we can do that now Jeff at 8:31 on Friday will this decision today to do nothing will that look like the right one well you know it might look like the right one but I think the point you're also getting to is that Friday and we'll see on Friday as well is going to be much more consequential but I think the important point about how it's going to be more consequential is what we've heard from everybody so far and what we heard from the chairman uh and in the statement is this is very much setting the table for September and the bond market had already priced that outcome and so what you look at into Friday and the payroll is you're setting up the bond market perhaps broader markets for a very asymmetric outcome if the data is much much stronger then you're going to have some disappointment if the data comes in along lines of what uh uh chairman Powell was talking about in terms of gradual normalization or even you know a little bit weaker than that the market will continue to price in this path of of a cut in September mber a cut in December and even more into 2025 so I think Friday the risk is really on the upside that you get a surprisingly strong payroll report and that has to call into question whether or not policy is really as tight as it is and that's really the issue everyone's kind of saying hey this is right the fed's got it right the fed's saying we've got the soft Landing we want to secure the benefits of soft Landing but he kept report repeating pdfp at 2.6% you look at the GDP number that just came out you look at Atlanta fed GDP now forecast for third quarter we are well above in growth terms anything associated with long-term sustainable growth and so yes we've seen some signs of of restrictiveness but how much of that restrict that's where the asymmet toally Against the Grain totally against the grain and I think you know you are most of the people coming on this show right now if they're going against the Federal Reserve they're saying it's because they think this is too tight not restrictive enough you're making the point here Jeff that maybe they're not as tight as they think they are now that really goes against the grain Jeff is that the point you're trying to make that is the point exactly that I just made no one's really talking about it because the fed's not talking about it but the data is what your question was about what happens on Friday and how does that make this moment look well if the data comes in continually stronger uh then we're going to have to start to talk about that now I'm not saying that that's where we're going where we have been and what we tend to do is to extrapolate where we just have been so we're extrapolating out the benefits of the gradual slowdown in labor markets the normalization ECI is another great data point there's nothing in the crystal ball that says that that won't happen but your question was what if it does then you start to think about these things and my point is everyone is so one-sided on this point that the asymmetry to the Market reaction is much greater to the upside surprise and strength on Friday than it is to coming in in line or even being uh weaker so let's put a call around that Jeff are you basically selling two-year notes right now trying to lock in because you think that this could be the highs given that they are not recognizing the risk of an upside surprise to the jobs report no I wouldn't say I go that far but what I would say is it tempers some of the enthusiasm for adding to two years at this point when it's all in the price and even more so relative to what the FED is is saying that you're going to get so the the the bar is a little bit higher to what do I do with this information in my portfolio when you look at well you know the bond Market's really quite uh priced a lot of that in so it makes it a little bit more tricky than just saying ah the fed's going to cut rates and I should back up the truck and buy a whole bunch of duration well a lot of that trade has happened in the last month so if you're just talking about maintenance cuts and the degree of Maintenance cuts that are required it's what you were talking about with Bill Dudley a minute ago we don't really know where that neutral is so how do we know where neutral is you know it when you see it meaning you know it when you see it in the data so if the economy doesn't slow and that unemployment rate doesn't continue to rise and it says you're not so restrictive as you think you are and I I think you know we just kind of have a a pile up on one side of the debate here when the data is still saying uh uh 2.6% P pdfp he said it twice during the during the the the press conference he also said the other thing that has been supportive of restrictiveness uh interest rate sensitive sectors and the slowdown in the labor market but it's a more balanced view around this debate around how restrictive we are than where the market is kind of lining up and that sets up an asymmetry to the outcomes Jeff you're a great student of history and if we have the headlines that John phoh was talking about there of tyon and Israel and for that matter up to Lebanon as well how far out the full faith and credit curve does politics does war do our fears play in is it short term is it out to the two-year pinch or is it out even further to the 10year note so I'm going to frame that in that question or the my answer to that question in terms of how does the kind of flight to Quality uh resp response in the bond market play out in in this environment I've said this on the show maybe a couple of times we've written about it that flight to Quality during the QE zero interest rate policy environment was a curve flattener if you're very close to zero rates in the front end and you're looking for portfolio protection you buy it in the long end today we're in a very different environment 5 and a quarter to 5 and a half there's plenty of room for the front end to go down and so it's more of that preg GFC kind of bond market reaction where flight equality is a steepener and it's in the front end of the curve so I think you see the most powerful reaction it's hard to disentangle the high frequency between the news that Jonathan broke and and the and the and the result of the press conference but you do see a little bit of a steepener move into the market again hard to disentangle the two but I think when you take a step back flight to Quality now is the steepener trade and your better yield response is going to be more in the front end in this kind of environment what's interesting to me today Jeff is what's not rallying on the heels of some of those headlines especially in light of the feds doish tilt yes but they did not cut rates it's that the dollar is not catching a bit it's weakening pretty dramatically you're seeing the bank of Japan very happy today they're getting what they wanted uh in terms of a little bit more Yen strength how much is this sort of the new narrative that in a flight to safety type of moment If the Fed is going to cut rates and not recognize that upside risk you will see persistent dollar weakness heading into next year it's a tricky one Lisa because you know on the one hand you've got kind of interest rate differentials driving some of those dollar moves clearly with the with the Yen um a balanced against the other side of of flight to Quality which is which is the pure riskof trade uh is usually dollar strength you go for the the the the the strongest uh institutional protection in ter in terms of wealth and so uh I think I think initially the move is much more about interest rate differentials and that's why you're not seeing so much of the move on the dollar I think it's too soon to say whether or not you're going to see a bid to the dollar from geopolitical risk um but I think if it was a a a larger issue that that that spreads um you're going to think more traditionally that's going to be dollar strength you got to jump John and gold up $41 got a big rally in the bond market too and equities as well Jeff just final question before I go there's people watching listening to this program right now they just want to know can I buy the S&P 500 and take a vacation is there anything to worry about between now and September well you know you never want to say take a vacation you know buying equities you you you've got some risk but but you take the totality of what the chairman went over and this is a lot of good news I mean this is a chairman basically saying without saying it we've achieved the soft Landing that's a great outcome for uh the equity Market it's a great outcome for the economy it's a great out outcome uh more more broadly so I I think that's the takeaway and generally that's going to be pretty supportive I think the other thing just to mention obviously you know you're not really buying the S&P 500 it's not the economy it's a collection of stocks that has a very high weight to a secular technology theme and that secular technology theme is playing out again today following Microsoft's earnings and you're seeing a bid back to semis so you've got like the micro story there a lot as well as the policy story and we got to keep that in mind when we're looking at this high frequency data and if you're buying the S&P 500 with a very high historical share uh to Tech it's really also buying into that Tech story as much as it is about the macro economy just trying to take a vacation Jeff appreciate it Jeff Rosenburg there Black Rock Jeff thank you deeply thoughtful stuff govern into payrolls on Friday we should share with you the numbers that we're looking for on Friday just another Peak sneak peek of the payrolls survey here at Bloomberg the Medan estimate is 175 on Friday the previous number 206 unemployment coming into Focus much more for many of you I know so here's the estimate for unemployment 4.1% in line with the previous number previous month of 4.1% Lisa and the reason why it matters that unemployment rate possibly more than anything else is because if it gets to 4.2% it triggers a somal bill Dudley talking about why that's important at that point historically it becomes a self-reinforcing mechanism of weakness the difference is you and I are taking vacation like 18 hours Arrow's taking 18 days that's the difference here actually I'm missing Friday cuz I'm going to be on vacation thank you you're missing job it's on American it had to do with kids schedules as a manager here at BL blame it on the kids as a manager here at are you going to blame it on the kids I track everyone's vacation absolutely correct you've both taken much more than I have okay please just for the you have a bar chart of it just for I do at home it's a spreadsheet I load up the Bloomberg terminal and a monor your vacation at the same time that's such productivity missed this haven't we appreciate it it's good to see you TK yeah please thank you sir Lisa thank you thank you are you going to bless us with some of uh your criticism of the Federal Reserve tomorrow yes I'm going to have commentary that blesses them that's the line of the press conference that really is coming up on the close don't miss there Stuart Kaiser of City David Kirkpatrick of tonomy and a former fed Governor Betsy Jew because we round out the month of July from New York City this is Bloomberg [Music] [Music] [Music] [Applause] Bloomberg Power Players is back this September as the top names in tennis take the court over in Queens we're convening the best of the Sports World right here in New York we'll host some of the most influential voices in the business and identify what happens next for players and fans in this multi-billion dollar Global industry Bloomberg Power Players September 5th register now at Bloomberg live.com Power [Music] Players how do we reach down to the 18 to 35 year old Market how do we bring these kids these influences this this new generation of people interested in the game of golf there 738 million people in the world who are interested in the game of golf don't play the game of golf but interested there's about 60 million golfers so we have another 670 odd million people we can go figure out how to get them interested not just in live but in the game of golf and so we sit down and you talk about this internally with your production team you talk about with your Bing people when you look at our audience Base today that we have like about just around 50% of our ticket sales are 45 years and old and younger following the PGA Tour it's the oldest aging demographic in scor at 67 and a half so in a matter of year and a half basically we've pulled that 67 half down to 45 because of our product because of the entertainment side there's there are places around the world 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rate hiking cycle that began almost years ago a rate hiking cycle that if you believe what J pal had to say today might officially be over yeah but for now it's higher for longer I wonder if he could have just wrapped up the press conference by saying wait for Jackson Hall oh maybe there we go that's how you're going to lay the groundwork uh for September just to check in on the markets here you had the S&P already grinding its way higher today but you can really see uh a tick higher as the statement came out particularly when pal talked about September we had a little bit of a dip though uh into the close uh also the two-year yield guys just that's a perfect example uh of what we're looking at there you go he says the word September and yields go down for the day down by about six basis points I feel like this chart tells the story absolutely kind interesting too to see just how many times that September narrative kept coming up again and how many times he was willing to lean into it and not shy away from it obviously making it clear nothing's been decided as he always likes to say but sounded to me like maybe some decisions might actually be on the table maximum optionality right that's been the Mantra this whole time well we know fed ch J Powell hinted that rate Cuts could be on the table this fall perhaps September but only the data really boost their confidence take a listen the question will be whether the totality of the data the evolving Outlook and the balance of risks are consistent with Rising confidence on inflation and maintaining a solid labor market if that test is met a reduction in our policy rate could be on the table as soon as the next meeting in September for us a market analysis what the impact of all this is on equities if at all let's welcome steuart Kaiser he is head of equity trading strategy over at city and steuart I know before the fomc decision and press conference your take on this was that markets at least in equities are really much more focused on earnings did this idea of a rate cut in September changed that idea um you know I don't think it really changed our base case you know this morning we were really rallying on you know the Microsoft earnings from last night and some related earnings there you know the fomc I was actually kind of surprised I mean the state was a little probably more hawkish than the market might have expected and Equity Futures didn't react as much which which did surprise me um you know I think once we got into the press conference and it became you know clear that the Fed was sort of paring what we've seen from the data right which is a solid labor market easing inflation and kind of a cut minded fomc the market did respond positively to that but you know if I were to rank out the big Catalyst this week I would probably put earnings and payrolls a little bit ahead of the FED um in terms of the impact on markets and I think that's kind of largely what you saw this afternoon um in totality when you talk about uh Stuart the idea of what this Market is pricing in with regards to rate cuts and this idea here that the FED at least right now seems to be leaning into this idea that the data is pointing them in that direction will that take precedence whether it's at September November or in the December meeting yeah it R it really does matter especially to the extent that they're actually cutting rates into a solid economy and you know our view coming into the year was you don't need Ray Cuts but if you are getting Ray Cuts it's the why that matters and if they do two or three cuts and your price for about two and a half Cuts in the fourth quarter and that happens against let's say payroll data that's still 150 to 200k I think the markets will respond exceptionally positively to that um if they end up cutting but it's in response to a weaker labor market you know to me that's a much much different discussion and I do think you have to worry about Equity risk in that case so yeah look I do think Insurance Cuts in the back half or in the fourth quarter this year would be extremely positive for the markets but you know the real question is going to be are they cutting into a strong labor market or are they cutting because they're really worried about a deteriorating labor market in the next few months yeah which sets us up for Friday and it was very apparent in Pal's presser that the jobs data is that critical metric for a September uh cut what are the options Market what's the options Market in the S&P telling you for Friday now yeah I mean you're you're pricing you know something like a 1% move on Friday which is a pretty large implied move ahead of a payrolls print you know that said you also get apple and Amazon after the close on Thursday so I think that that 1 to 1.2% move has kind of been fluctuating throughout the day I think that's capturing payrolls as as well as those kind of key earnings Prints but look our our Baseline view for equities this year is you run long Equity risk unless and until the US Labor Market comes under significant pressure it does seem like the FED is also kind of navigating in that direction too with with kind of payrolls as the number one thing they're focused on so doesn't surprise me to see a lot of risk priced into payrolls because you know we do see it as as kind of the key risk indicator for markets you know consensus about 175k our us economists are actually a bit below that and I do think if you printed something sub 150k it would definitely get the Market's attention in terms of you know kind of a broader slowing in US Labor markets Stuart you say that earnings matter for the big cap tech stocks uh clearly the jobs report matters for the equity Market as well do earnings matter for the Russell 2000 or is it still a rotation that continues because of the the macro Trends yeah look you know I do earnings obviously matter for small cap it's just it's a little tough because you know only about 700 stocks in the Russell actually have positive earnings so you know like the the day today what is EPS on the Russell probably matters a little bit less than are we continuing to get soft Landing data um but you know so I think earnings matter more for S&P and NASDAQ right now you know sort of you know tick by tick day by day what our companies reporting but look the Russell is a more growth sensitive uh Equity asset and it's going to respond to that growth data because it is translating through to you know what is the earnings profile and what is the credit risk of those small cap stocks um honestly one of the things we've been really focused on with investors is owning small cap but doing it through that smaller kind of six to 700 stocks within the S excuse me within the Russell 2000s that actually produce positive profitability are those correlations still there steuart I mean when you lay out that scenario that sounds to me a little bit more idiosyncratic rather than something that is broadly defined yeah look I I think I think coming in earning season folks were looking at at least at large cap Tech earnings is a little more idiosyncratic um but the problem problem or the challenge is within that Tech ecosystem there's a lot of feedback right you know the capex that's getting spent by let's say a Google or a Microsoft or a meta that capex is then getting kind of consumed by Nvidia and the semi stocks so as much as you do have some idiosyncratic stories you also have I think this very strong interlinkage amongst those large cap tech stocks which is why the Google report last week which kind of hinted at maybe some weaker capex became so disruptive you know at the at the Russell level yeah I think there's a lot more ideosyncratic risk down there um but it's just also not as well covered right there's not as as much consensus coverage of those names there's a little bit less Focus I think on on on stock by stock or Company by company what are they doing from an earnings perspective all right steuart got to leave it there steuart kais our head of equity trading strategy over at city on the heels of a Fed meeting where the forward guidance left on change the adjectives did change and the financial markets largely unmoved as we push ahead now to a whole slate of earnings coming after the Bell guys that includes meta Etsy Qualcomm carvana uh and MGM and quite a few others yep and we got eBay as well I think meta is going to be quite interesting right it's like as an investor on meta do you want to see them spend more on capex probably not but if you're looking at growth and nice hyperscaler capex you want that growth in the market maybe you then do want them to spend and come on the advertising business is doing well they've got the Summer Olympics they've also got the election and the election is only heating up so uh the outlook for advertising seems pretty solid all right looking at the seventh consecutive fed day now where we've seen the short end of the treasury curve move lower and a huge rally going on in the equity space strongest day right now for the S&P since February this is Bloomberg the closing bell Bloomberg's comprehensive crossplatform coverage of the US market close starts right now and right now we are 2 minutes away from the end of the trading day romae bosk alongside Alex seel here to help take you through the closing bell a global simoc cast it's starts right now with Scarlet Fu alongside Us in the television Studio Carol master and Tim stovic in the radio Booth as we welcome our audiences across all of our platforms including our partnership with YouTube a day where we're looking at an S&P having its best day since February of this year the NASDAQ 100 Carol having its best day since February of last year I don't know about you guys but I lost count of how many times Fed chair J Powell said September and I feel like that specificity was so important and I thought at some point like Earth Wind and Fire was just going to like I love that you think that way cue the song cue the song okay though to be fair he did say we've made no decisions about future meetings and it includes September will be data dependent but not data point dependent I didn't hear September in that part yeah I'm just going to say yeah no I mean they're setting it Ian I think the question is are they dragging their feet or are they taking baby steps and how you kind of look at that I saw notes from a lot of economists referring to either one of those well I mean he needs to create room for optionality and he certainly gets that with Jackson hle in late August so you wonder how much they're going to say September and Jackson Hall as well it'll be interesting to see whether he uses that platform it's kind of interesting we heard from Bill Dudley uh during the FED special he kind of talked about this idea here that if the FED does indeed cut that First Rate cut he thinks they have to keep going they can't do like what you're seeing over there in the ECB is sort of do one and then wait that that is if this is going to be an easing cycle in his words it needs to be an actual cycle and he said several right like he said the word several so it just depends on what the word several actually means is that seven or is that more like three or four that next meeting of course September 17th 18th apologies earthwind and fire that it did not schedule it for the 21st we get the closing Bells here in New York on this uh fed day Wednesday here with a lot of earnings set across the y Dow Jones Industrial Average up 100 points or 2/10 of a percent the S&P 500 up about 1.6% while the nasc composite Higher by 2.6% and the Russell 2000 also in the green by about a half a percent Carol all right folks let's get to Qualcomm earnings uh great read on certainly the smartphone market so let's get to it uh let's get to the Outlook fourth quarter Revenue 9.5 billion to 10.3 billion so kicking it up the estimate on the street is 9.7 billion fourth quarter adjusted EPS $245 a share to 265 the estimate is 245 so again upping both the top and bottom line uh go backwards third quarter adjusted Revenue 9.39 billion that's a beat versus the estimate of 921 billion uh on the street and third quarter justed EPS $2.33 a share that's 9 pennies better than what the street was expecting and that stock you're seeing up 2 3% here in the aftermarket yeah certainly waiting for some commentary the company has not updated its Financial results on the website yet so we don't have the press release but it does see fourth quarter Revenue 9.5 to 10.3 billion estim was for 9.7 billion shares up by 5.3% and just quick mention here with nvidia's move today was the biggest gainer in the NASDAQ 100 on that positive note out of Morgan Stanley it added $329 billion in value today that is the most in Market history 329 billion yeah I was looking something yeah I was looking at the Philadelphia semiconductor index earlier today and up uh the most going back to uh late 2022 everything in there other than skyworks and eneris were in the green and solidly in the green too yeah well batch of semiconductor asml getting a boost right there's some exemptions maybe when it comes to some of the chip equipment makers ADM um U Advanced AMD rather advanced devices right also their report upbeat in terms of their forecast so there was a lot of news I felt like Intel making some big news yesterday with layoff so yeah and it'll be interesting too we get Intel reporting tomorrow too so maybe some of that uh gloom and doom or these doubts here about some of these chip companies uhu maybe they'll start to ratify some of those valuations in fact we're getting more earnings right now uh out of arm Holdings too of course a big one there with that company providing guidance saying that Revenue uh for the quarter going to come in at about 780 to $830 million so uh basically a preview here of that second quarter uh and the revenue in the most recent quarter the past first quarter fiscal first quarter a beat there as well 939 million Street was looking for 9006 yeah uh that's a pretty incredible number also just go back to Qualcomm for a moment uh they're taking a look at that fourth quarter revenue on the high end of 10.3 billion that beats estimates uh also taking a look at the individual segments right you have qct uh which is basically what they make for their phone chips that's coming in quite strong on the high end of about 8.7 uh billion for the fourth quarter so these are solid numbers when it comes uh to guidance their licensing Revenue also on the highend coming at 1.55 billion on the highend for the fourth quarter you know a lot of it will depend on what they say also in the conference call about their outlook for the following fiscal year because that's when Apple's new generation of iPhones come in and the refresh cycle that's supposed to take place there they're going to provide a really important read on demand from Apple is this new phone is this the one that folds no no not AI stuff no you looking forward to that one you want the you got to wait a few years I'm over folding there are Samsung does have a folding phone out Apple not yet yeah wonderful if that happens if that happens if it happens but it will be AI capable right we're also going to look we're going to look for some commentary out of qualcom in terms of China specifically also AI certainly that's an aspect for them but this is you know we've seen in terms of some of the phone market uh and the handset Market some weakness so we're looking you know for more commentary about kind of demand later in this year and what it says about maybe the strength or the comeback if you will but you are seeing qualcom now guys up about 7% here in the aftermarket this is building on a more than 20% gain here in 2024 yeah they did update at investor relations website so I am able to look through the press release Cristiano Aman said that third quarter results reflect strong execution of our growth and diversification strategy with qct quarterly revenues and EBT margins the high end of guidance we're excited about the launch of Snapdragon series X solutions for PCs uh and personalized AI experiences it represents a significant milestone in our transaction transformation from a Communications company to a leading intelligent Computing company I am curious to see how they articulate their longer term future particularly given all the reporting we've done at Bloomberg about Apple trying to uh basically distance itself from Qualcomm with its own chips and things and obviously that's been pushed back according to mark kman but at some point this is something uh that Qualcomm is going to have to confront head on I just want to hit on uh arm Holdings just for a moment here so just a reminder their first quarter results came in about 40 cents a share that beat their revenue also beat uh their second quarter forecast and it looks pretty solid on an adjusted earnings basis uh the high-end just met uh in terms of Revenue they see on the high end of 830 million uh you look at the operating expenses though that uh could be higher than estimated coming in at $500 million uh versus $72.95 per. okay we just got earnings out of meta so let's take a look at second quarter numbers here uh meta platform second quarter family vaps Revenue that's the biggest part of its business $ 38.7 billion better than what an had expected the platform's uh second quarter reality Labs a small part of its business 353 million missing the average analy estimate of 3769 million as for the second quarter Revenue overall 39.0 7 beating the consensus estimate of 3834 and the outlook for this quarter Revenue 38.5 billion to 41 billion analysts were looking for 39.6 billion and capex for the full year uh 37 billion to 40 billion it had previous seen 35 billion to 40 billion an we're looking for somewhere in the middle of the lower end of that range 375 billion dollar so like all the other big tech companies Carol uh increasing its spending here well and this is going to be potentially worrisome right when they talked about it last time we saw certainly the stock take a hit so giving some clarification around it but it's not like they're raining it in the street was looking for it to maybe Pull It in even more if you look at uh the top end they're saying it could go to as much as for the fiscal year up to $40 billion the estimate on the street was below that by about $2.5 billion do so we're looking at meta platforms though up 8% here uh in the aftermarket also talking about fiscal year total expenses 96 to 99 billion a bit of a uh a gap there uh the street estimate is 97.73% knew that they had there he said we had a strong quarter meta AI is on track to be the most used AI assistant in the world by the end of the year we've released the first Frontier level open source AI model we continue to see good traction with our Rayban meta AI glasses and we're driving good growth across our apps so he does mention the apps there but he mentions the Rayband the rayb bands before the apps there I mean that's like a tiny part of their business but maybe that's where he sees the growth of the company maybe that's where he does see the growth and of course that feeds the conspiracy theories about those tan lines that we were talking about last as well to we talk about capex how that capex spend basically staying in line with estimates for 2024 a ramp up in 2025 but I thought it was also interesting too I was looking at some of the ad numbers here uh and AD Impressions coming in uh growth of about 10% which was slightly below what the street was looking for and a huge uh drop from uh the prior quarter a year ago when we had about 34% growth though that was probably a bit of an outlier I just want to highlight for a second the reality Labs thing so reality Labs is saying operating loss it losses will continue uh for 2024 their operating loss for the second quarter came in at $4.49 billion just to contrast the fact that that area of their segment right their virtual reality is losing billions of dollars it will continue to lose billions of dollars this year yet capex will still be on that high end of $40 billion how do you reconcile that as a shareholder is it maybe because the but the the earning the quarter that I just reported on maybe because there are some beats there and so maybe they think that they can manage the expectations it's pretty kind of mind-blowing because I would have anticipated that the stock would have traded lower on all of those costs right now meta is up about 5% here you've got Qualcomm up about 4.7% in the aftermarkets arm holding down 7% Etsy also out and it's gaining about 2.9% in the aftermarket so a big drop of earnings all right guys that's a wrap across platform radio tv YouTube Bloomberg Originals uh we will see you again same time same place tomorrow and our coverage contines news here on Bloomberg television keeping a closer eye on meta those results just coming out 22% Revenue growth in the most recent quarter on the back of advertising but a bid focus of course on costs the company basically saying that its capex spend in line with estimates for 2024 a bit of an increase expected for 2025 M deep Singh joining us right now who covers this company for us over at Bloomberg intelligence M deep what was the most important thing in this release to you ad pricing I mean the fact that ad pricing grew 10% it's a very positive sign that they are applying all those AI chips to good effect in terms of getting more money from the advertisers and add Impressions going down actually may not be a bad thing because prior to this quarter they were increasing ad loads to drive up the ad impressions well guess what they don't have to show more ads but the ads that they're showing are getting more money from the advertisers which is why the ad pricing went up so actually the quality of the beat was much better than what I anticipated and you know capex numbers not going up is also a positive because that was a big risk how long can they keep spending and will investors be patient here so it's like the arpo goes up for the advertisements exactly yeah um so in terms of a breakdown on that ad growth I mean what are you curious about in terms of uh the reals business which is kind of a clone of Tik Tok versus threads which is a Twitter clone right now doesn't even have advertising yeah I mean reals is almost 50% of their engagement right now so look at how uh quickly they have trans transformed the entire business I mean in Instagram core Blue app all the video content has come about in the last 2 three years that's where they made that big push and reals is almost 50% of the engagement time a lot of the ad Impressions they were showing on reals weren't monetizing that well I think this print shows they're actually monetizing their video ads probably better than YouTube at this point because YouTube Remember didn't have a very good quarter so this quarter actually uh kind of shows that uh meta is doing better in terms of AD monetization so the whole reality lab's operating loss just kind of we're cool with that well when you print numbers like this I think you get a pass because even though you are losing that's another level they can uh pull you know if if investors were to you know ask them to be more kind of efficient with their spend guess what they could pull that lever but they don't have to given operating margin expansion and the Tailwind we saw with that pricing this quarter yeah they've earned it through their ads growth Mand deep thank you as always Mand deep say of Bloomberg intelligence giving us the instant analysis to meta's results and of course meta share is currently gaining right now in after hours trade let's bring in another voice David Kirkpatrick is founder of tonomy Media and of course uh the author of the Facebook effect David I'm so good to speak with you and let me just uh get your thoughts first up on uh the capex and um in particular when it comes to the reality Labs the reality business and how that money that part of the business is still losing losing money um how much is meta still spending on the metaverse despite it losing money versus AI the CAPIC number that gives kind of covers everything doesn't it right but if they're losing 4 billion on reality Labs uh which I just heard somebody say um they're they're spending way way you know some 95% of that is is a capital expenditure that's just not generating uh profits or Revenue so you know they they have a strange view of the future but I do think given their extraordinary ad growth and as Mand just so very eloquently uh laid out and and the potential they have to continue making so much money from advertising they really can continue to invest both in Ai and in their sort of whimsical metaverse experiment without really suffering very much well of course not I mean when you're generating 4 billion dollar basically a quarter which is basically the Run rate now in revenue for this company on the Topline double digit growth for a mature company double- digit growth for a company that I don't know two years ago in 2022 everyone thought the party was over and that's when they were doing all that big spend on the metaverse which you know David investors push back on it letting it be known to Mark Zuckerberg they didn't like it he folded at some point and investors embraced it at least for right now investors seem comfortable with these numbers he didn't totally fold it either I mean he's still spending an awful a lot of money on the metaverse but because of the extraordinary business performance that continues and you know I think it's more controversial right now whether the AI investments will pay off as as you often discuss you know this this is an ex a hugely confusing moment in the development of the technology economy and I think every one of these companies is somewhat nervously competing with one another attempting to outspend each other for a very un certain long-term goal well D David that's kind of the point I wanted to make so Google their revenue comes in at $84 billion in the second quarter and they get dinged and then you have Facebook that comes in and their revenue uh beats but it comes in 39 billion and then they get rewarded but they're exposed to ad sales and AD sales had it's a global growth factor versus Google and data centers and Cloud which feels more like a structural shift I just don't get it well I think majority of Google's revenue is still advertising so I I don't see it as that cont contradictory I think it's weird the way that both alphabet and Microsoft stock dropped after they beat estimates in the last few days so you know investors are strange I don't think we can always figure out where their heads are at but look the fact is that meta is an extraordinarily well-positioned extraordinarily well-run company from a purely Financial point of view as you know I have my serious critiques of them in other respects but there's no question that the company is just roaring ahead with the is still the best targeting that any company has with this extraordinary 4 billion user uh you know customer base that's never we never seen anything like this before it's so easy to take for granted these companies but they are moving into some areas that are World altering with very effective business models yeah a fifth straight quarter of double digigit uh percentage increase for quarterly Revenue one thing that people bring up a lot David is um llama right Mark Zuber Mark Zuckerberg doesn't have to partner with an open AI because they've got their own large language model that they're training um it's open source right now so my understanding is they're not collecting any licensing fee on it at the moment um you worry that this could be a source of uh problems for meta down the road maybe its ability to keep Bad actors at bay walk us through your thinking here I I don't think it's from from a financial point of view I would not criticize it uh in in fact I think it's generated a lot of enthusiasm um in the marketplace and among developers so open source AI has tremendous virtues from the standpoint of a business the problem with open- Source AI is that people who are bad have more access to taking that code and using it in any kind of malevolent way they would choose because they have access to the source code that's why open source is open and and many of the other AI companies have chosen not to go that route because of their concern in part at least that that could be a risk now it's in keeping with Zuckerberg and meta's long-standing approach to all Technologies which is pretty much throw them out there and if something goes wrong figure it out later that's just you know moving fast and breaking things is still their corporate Mantra even if they prefer not to talk about it using those words what's sort of The Next Step here right now David because we talk about the idea this is still effectively an ad company despite all the talk about the metaverse and rayb bands and all these other things but clearly Zuckerberg has shown that he has Ambitions to try to broaden this company out beyond that do you think AI rayb bands metaverse whether this all gets folded into one in some form or another is that going to be the future or do you think this could be a head fake oh gee Roma if I knew the answer to whether AI was going to be the answer the successful profit generating tool for these companies I would be but you know nobody knows but I think their bet is as good as anybody's and I I will say this I am very negative on the metaverse name change 4 billion loss Etc on the other hand if you look long term they might be able to find some interesting intersections between their extraordinary AI Investments and llama success and whatever the metaverse thing turns into so and they have had continued to express great confidence that there's we're going to be able to have sort of phys you know virtual presence look like we're actually in the same room who knows what AI will be able to do to improve that so I don't bet against them from a technology development point of view all right David we appreciate it maybe that's what will happen when we take the clothes on the road we can all be in different islands and do the clothes maybe in the metaverse all right David kpatrick thanks a lot founder of techonomy Media all right we got a lot of earnings for you that are continuing to come out I'm taking a look uh at M GM overall net revenue coming in stronger than estimated at 4.33 billion you had adjusted earnings also coming in at 86 uh cents a share and I do got I do have to say their MGM China net revenue was up 37% Year onye and that was also a beat so was the Las Vegas Strip Resorts coming in about 2.21 billion despite the fact the stock is down by about 3% all right let's take a look at carvana those shares had been oscillating between gains and losses now up about 9% here and after hours trading Revenue coming in as a beat in the most recent quarter 3.4 billion Street was looking for 3.2 iida as well as iida margin also a beat here in the most recent quarter and the company providing guidance for the full 2024 year adjusted eida of 1 billion to 1.2 billion even the lower end of that range is more than 100 million above the average of Street estimates a big part of the reason why you're seeing the shares higher we should also point out that unit sales of vehicles in the most recent quarter also coming in well above estimates all right let's take a look at eBay it is moving up in the after hours trade trading uh in terms of second quarter numbers it was a beat on the revenue line on adjusted EPS active buyers unchanged from the same time year ago but slightly higher than what analyst were looking for the third quarter Revenue Outlook of 2 a half to $2 2.56 billion it's a range and the midpoint is just a hair below the consensus estimate of 2.54 billion nonetheless uh you see that the stock is maintaining its gain in Afters trading and by the way eBay maintains its quarterly dividend at 27 cents a share all right taking a look at Etsy here uh on Revenue Etsy actually beat uh estimates it was up by 3% year on-ear at 647.1 million uh it's Marketplace Revenue was also at about over 470 million that was also a bead earnings uh coming in a little lighter though gross merchandise sales that's the one to look at that's down by about 2% at 2.95 billion it was down 2% on a year onye basis I should point out also the CFO Rachel Glazer has announced her retirement she will remain in her role until the successor is appointed this according to the company release all right we're going to stick with earnings for you we're going to break down all of them we got Qualcomm eBay carvana we'll delve deeper next this is the cloth on Bloomberg [Music] [Music] [Music] morning this is Bloomberg Daybreak Europe Prim to Mackenzie in London these are the stories that set your agenda taking you from the US markets close to the overnight session in Asia we'll walk you through what you need to know to Kickstart the European trading Day live from our European headquarters we bring you the day's Top Market moving stories unmatched expert analysis and on the ground reporting from across the continent tune in every weekday at 6:00 a.m. London time only on Bloomberg [Music] television doj or other authorities could face bigger CH next was going to keep world this is a as the economic picture the intersections of Hollywood silic Valley and Beyond this is Bloomberg news now news when you want it at the touch of a button another volatile day on Wall Street we're seeing big moves all eyes on Capitol Hill as Democrats and Republicans today's job numbers casting doubt on the fed's next move inflation remains front and center and that's news when you want to with Bloomberg News now get a 247 on the Bloomberg business app bloomberg.com and anywhere you get your podcasts Bloomberg News Now context changes everything jobs day and Bloomberg has the report under surveillance do you think the jewry is still out on the strength of the labor market well part of the problem is that July is usually a very bad month for jobless claims accuracy this Friday Jonathan Lisa anarie and Mike will bring you crucial data and expert analysis at Terminal speed we see the jobless numbers climb just bit by bit by bit is this a welcome cooling or an unwelcome deterioration the juai jobs report Friday on Bloomberg [Music] a wave of earnings coming out after the closing bell let's get you a Roundup of some of those notable movers want to bring in Bloomberg's Bailey lip shots Isabelle Lee and Alexander semova Bailey let's start with you on Qualcomm yeah Alex who says you have to be focused on AI to have fun in the chip space Qualcomm up more than 6% postmarket beating expectations driven by a lot of demand for smartphones stock was up more than 8% on on the day given that kind of rush back into semiconductor names want to call out their strong third or quarter Revenue guidance expecting between 9.5 and 10.3 billion above the mid point what Wall Street was looking for at 9.7 billion also saying profit will be between $245 and $2.65 a share Street had been penciling in 245 so well above what Wall Street was looking for another big print though from the uh semiconductor space in the wake of AMD going to be interesting to see if this follows through tomorrow Isabelle what's going on with retail I'm looking at eBay we have the company reporting adjusted EPS from continuing operations that beat estimate you see a stock Higher by around 1.7% the number came in at $118 so that's higher year-over-year and higher than the $113 estimates it also a beat across the board net revenue came in higher ased active buyers we also have gross merchandise volume coming in higher than expected so the reason why I think we're not seeing a bigger pop is really the third quarter Revenue estimate so the company reported a $2.5 billion to 20256 billion so that's a range and the estimat is Right smack in between around $2 two billion 2.54 billion all the numbers are confusing me but it's just within the range as for quarterly dividends eBay maintained that its regularly quarterly cash dividend is at 27 cents per share and the dividend declaration date is July 31 stock is still up at around 1.6% but year to date it's up 26% what do you got Alex hey Isabella I'm looking at used car retailer carvana yes that is the maker of those massive car vending machines the stock is up about 11% here that is after the company reported revenue and vehicle sales that beat Wall Street estimates also reporting a surprise profit net income in the period was $48 million that handily topped analyst estimates for a loss of $16 million carvana of course has been on a tear since late last year after a turnaround in its business where it cut costs and reduced some of its debt it was battered back in 2022 during the postco route as higher interest rates shunned some buyers out of the used car market but since then it has returned to being a profitable leader in the industry in fact analyst at bti called uh carvana's margins industry leading it has reported gains uh after six of its last eight earnings reports including the last two where it Rose more than 30% each time the stock was up about 152% this year going into this report still though not a love a lot of love from Wall Street the stock has six buy ratings 14 holds and three sells it's going to be interesting to see how this move holds up tomorrow guys well who needs a buyer rating when you got 150% rally in 6 months our thanks here to Alexandra Sova Isabelle Lee as well as Billy lipshultz a nice round up with some of the earnings here in after hours trading we should point out carvana at least among the uh the mid to large caps the biggest mover in after hours trading up 10% and I'm still astonished at just how much this stock is rebounded I know it's nowhere near its old Highs but when you consider it dropped 99% and the fact that it's rallied you know almost 200% off massive roller coaster ride I know that you were recently in the market for a car did you go to a vending machine to get a car yeah I was a little disappointed there was no vending machine I bought a new car so I don't know maybe they don't do that with a new car new car they just you know Jack you for as much money as they can and then push you out the door but um I have to say it was kind of interesting to see to the lack of inventory on the lot and I I don't know if this is just indicative of that particular dealership but it was still pretty sparse not quite as bad as what you saw if you went to a dealership in 2021 or 2020 but it was certainly still sparse you know where you could probably get a car uh Tesla probably get a Tesla they're not going to have any inventory issues on that one I mean you can make an argument that it's the EVS that are at the dealers if well that was the other thing too you didn't see a whole lot of e or even hybrids other things I a lot of ice vehicles um were available if you want them no the hybrids are hard to find but you can also go to like um Herz or Avis selling off their used EVS as well they're still like almost 30 grand I know I mean at fast you get like maybe 19 used1 for for used Tesla yeah but that's actually enticing some people I mean considering some of those were like 50 60 Grand brand new suppose yeah all right coming up but we're going to dive a little bit deeper into those earnings out of meta stick with us this is Bloomberg [Music] [Music] even [Music] from the Beating Heart of global Finance economics and politics and wherever newsmakers are moving markets Bloomberg brings you conversations that allow for deep discussions and important insights what do you think the future is for inflation is this New Normal our markets too optimistic how do you worry about the things that are outside your control how does the current fighting completely stop and franceen laa and this is a pulse every weekday at 9:00 a.m. only on Bloomberg [Music] results coming out out of meta platforms here better than expected sales in the most recent quarter that ad business still the Juggernaut that it's always been some concerns though about capex spending capex fending that's going to hold at least in 2024 at current levels 2025 though the company's saying it will continue to go up as it pushes deeper into the AI space Kurt Wagner joining us right now who follows this company for us here at Bloomberg News and Kurt uh let's start off first with the uh the capex side of this because I think a lot of people were ringing their hands coming into this report I think they got some good news that the spend at least for right now isn't going any higher than where it's been though they did kind of intimate here that 2025 it will go up yeah I think the story with meta right now is just simply the balance between investing in this long-term AI stuff both with llms and other uh you know chat Bots things like that and and also the metaverse and staying focused on you know the core money-making business right which is the advertising business for Facebook and Instagram and so I think that is the tension as you point out they've said Hey in 2025 we are going to increase that spin it shouldn't really be a surprise to people Mark Zuckerberg has been saying this publicly um pretty much every time he goes out and speaks these days but I think you know getting that confirmation from the company knowing that they are going to continue to invest billions of dollars in this space is giving some people some CS but you know they narrowed the range that they're going to spend on capex for