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This is a joy.

This is a joy.

This is something Paul's demanded that we get from macro policy perspectives. Constant Hunter in here with Julia Cornado and Taviam Paul in this day is just you know, I just think that killer Julia does this shift Powell's discussion of the character of our disinflation.

This is something Paul's demanded that we get from macro policy perspectives. Constant Hunter in here with Julia Cornado and Taviam Paul in this day is just you know, I just think that killer Julia does this shift Powell's discussion of the character of our disinflation.

This stunning report.

This stunning report.

I think it's an important report. I think Chair Powell is likely to express some optimism that progress has resumed after a disappointing first quarter and that the plan to lower rates is on track. We think that they'll come out with a two cut baseline. This report sort of solidifies that we think that Chair Powell sort of has that control over the median and the message, and that he can sort of credibly express optimism, say that we saw some broad based progress in today's report after a d since April. So if we get a few more prints like that, then they can begin a process. The FED is now having to deal with the decision of do we start early so that we can go slow, or do we wait till weakness arrives, which is the track record of central banks right wait till weakness arrives and then cut quickly. This is a new approach or a relatively untested left roach.

I think it's an important report. I think Chair Powell is likely to express some optimism that progress has resumed after a disappointing first quarter and that the plan to lower rates is on track. We think that they'll come out with a two cut baseline. This report sort of solidifies that we think that Chair Powell sort of has that control over the median and the message, and that he can sort of credibly express optimism, say that we saw some broad based progress in today's report after a d since April. So if we get a few more prints like that, then they can begin a process. The FED is now having to deal with the decision of do we start early so that we can go slow, or do we wait till weakness arrives, which is the track record of central banks right wait till weakness arrives and then cut quickly. This is a new approach or a relatively untested left roach.

Because she knows I'm going to go mental, yes, put surveillance.

Because she knows I'm going to go mental, yes, put surveillance.

There's a lot of folks out there that says this FED is already behind the curve, that they should be cutting already. Do you, guys, how do you think about that?

There's a lot of folks out there that says this FED is already behind the curve, that they should be cutting already. Do you, guys, how do you think about that?

I think that that is a valid perspective, But of course they also have there's people who are saying that there's going to be no landing, that the FED isn't going to cut it all this year. So I think I understand the perspective of the FED of deciding to wait, given the prints that we had in the beginning of the year, and given the fact that we're seeing anomalies in the CPI data that we didn't see prior to the pandemic. And so I think from their perspective, you know, caution is the better part of valor. On the other hand, as Julia said, historically they are late, and so I think.

I think that that is a valid perspective, But of course they also have there's people who are saying that there's going to be no landing, that the FED isn't going to cut it all this year. So I think I understand the perspective of the FED of deciding to wait, given the prints that we had in the beginning of the year, and given the fact that we're seeing anomalies in the CPI data that we didn't see prior to the pandemic. And so I think from their perspective, you know, caution is the better part of valor. On the other hand, as Julia said, historically they are late, and so I think.

That they do run that risk.

That they do run that risk.

Fortunately, the jobs print last week was stronger than expected. But our big concern if they're late is that labor market starts to weaken and once you see that it's too late because it is at best a coincident indicator.

Fortunately, the jobs print last week was stronger than expected. But our big concern if they're late is that labor market starts to weaken and once you see that it's too late because it is at best a coincident indicator.

Right, And Julie, I mean Joe Wisenthal from a Bloomberg Onlins podcast just moments ago, said, you know, raising some concerns about the labor market here that we you know, four percent, You get paid attention to that kind of number. So how do you feel about labor?

Right, And Julie, I mean Joe Wisenthal from a Bloomberg Onlins podcast just moments ago, said, you know, raising some concerns about the labor market here that we you know, four percent, You get paid attention to that kind of number. So how do you feel about labor?

Yeah, no, I think that the the May employment report was truly mixed, right. We the payroll number is strong, it was broad based, but the household survey is showing rising slack. You have to take that message at face value. The fact that we have gone from a low of three point four to four point zero. It's still a low unemployment Rate's still a healthy job market, but you know, it is not a more balanced than it was before. There are risks on both sides now. And as Constance said, if you keep restrictive policy in place for too long.

Yeah, no, I think that the the May employment report was truly mixed, right. We the payroll number is strong, it was broad based, but the household survey is showing rising slack. You have to take that message at face value. The fact that we have gone from a low of three point four to four point zero. It's still a low unemployment Rate's still a healthy job market, but you know, it is not a more balanced than it was before. There are risks on both sides now. And as Constance said, if you keep restrictive policy in place for too long.

Then you're going to lose that resilience.

Then you're going to lose that resilience.

So even actually Governor Waller said this earlier this year. He said, you know, the low hanging fruit of bringing down job openings, you know, without a rise in unemployment is probably behind us. To really see a decline in labor demand from here, you're going to get that alongside a rise in unemployment.

So even actually Governor Waller said this earlier this year. He said, you know, the low hanging fruit of bringing down job openings, you know, without a rise in unemployment is probably behind us. To really see a decline in labor demand from here, you're going to get that alongside a rise in unemployment.

Yeah, we're going to come back.

Yeah, we're going to come back.

But it's just a joy to have Constance Hunter and Julia Cornetta with us.

But it's just a joy to have Constance Hunter and Julia Cornetta with us.

But I got one fundamental question. Are we more than ever John.

But I got one fundamental question. Are we more than ever John.

Edwards in Louisiana as you were studying in Texas? Are we more than ever? Two Americas? And the idea idea of aggregate analysis that the echos building is just quaint.

Edwards in Louisiana as you were studying in Texas? Are we more than ever? Two Americas? And the idea idea of aggregate analysis that the echos building is just quaint.

You know, I think there are always lots of Americas?

You know, I think there are always lots of Americas?

But is there more now? Is it more polarized now in.

But is there more now? Is it more polarized now in.

Terms of politically, Absolutely, we're in a very ecomorize economically.

Terms of politically, Absolutely, we're in a very ecomorize economically.

No, I would say, Tom, Actually the good news is.

No, I would say, Tom, Actually the good news is.

That we're less polarized economically in a sense that the lower wage workers have the best labor market they've seen in generations this cycle, and it hasn't cracked yet. Really, the weakness we see in the labor market is at the top. It's the professional service sector jobs that are experiencing the weakness. So no, I would say, actually, we've seen a narrowing and wage inequality this cycle that we haven't seen in thirty years.

That we're less polarized economically in a sense that the lower wage workers have the best labor market they've seen in generations this cycle, and it hasn't cracked yet. Really, the weakness we see in the labor market is at the top. It's the professional service sector jobs that are experiencing the weakness. So no, I would say, actually, we've seen a narrowing and wage inequality this cycle that we haven't seen in thirty years.

It's just a bang up day here folks, if Jim Bullard with us, the former president of Saint Louis, FED and here for a half hour Julia cordontto with us in Constance hunder a micro policy perspectives to get us towards the FED meeting this after noon, most importantly at ten o'clock, Paul Sweeney will drive forward with Alex Steele. I mean you got you got something to talk about it after this.

It's just a bang up day here folks, if Jim Bullard with us, the former president of Saint Louis, FED and here for a half hour Julia cordontto with us in Constance hunder a micro policy perspectives to get us towards the FED meeting this after noon, most importantly at ten o'clock, Paul Sweeney will drive forward with Alex Steele. I mean you got you got something to talk about it after this.

Inflation report, got got get a very interesting inflation report, very something very important for the FED to take into consideration here as we hear from the FED. And you're gonna have full coverage this afternoon, right tom starting.

Inflation report, got got get a very interesting inflation report, very something very important for the FED to take into consideration here as we hear from the FED. And you're gonna have full coverage this afternoon, right tom starting.

Can I go? Can I go? Odd?

Can I go? Can I go? Odd?

Sure?

Sure?

Mexican paeso weakness.

Mexican paeso weakness.

I don't know where to go.

I don't know where to go.

There is just stunning. We have Juliet Cornado in the room. You think we should go all Mexican pa.

There is just stunning. We have Juliet Cornado in the room. You think we should go all Mexican pa.

I want to do that.

I want to do that.

Yeah. And there it is politics for you, yes, exactly.

Yeah. And there it is politics for you, yes, exactly.

And the bond market action we saw in France yesterday, you know, on just a rumor, there's a lot of uncertainty.

And the bond market action we saw in France yesterday, you know, on just a rumor, there's a lot of uncertainty.

What a joy to have us here for a half hour Julia Cornado and Constance hunder of micro policy perspectives Constant. You know, I love Neil Daddy. He doesn't mince words. May I quote Paul It does not take a rocket scientist to figure out what needs.

What a joy to have us here for a half hour Julia Cornado and Constance hunder of micro policy perspectives Constant. You know, I love Neil Daddy. He doesn't mince words. May I quote Paul It does not take a rocket scientist to figure out what needs.

To be done.

To be done.

Yeah, and he's like, let's go. So FED needs to get on with it. Constance, what are they waiting for? I mean, I get at their ex post. You know, with an act, we all know this. Can we really.

Yeah, and he's like, let's go. So FED needs to get on with it. Constance, what are they waiting for? I mean, I get at their ex post. You know, with an act, we all know this. Can we really.

Hope for a new regime where they get on with it?

Hope for a new regime where they get on with it?

I mean, one thing that is going to hold them back is that shelter print. Now that was isolated to New York rents which went up and played an oversized part.

I mean, one thing that is going to hold them back is that shelter print. Now that was isolated to New York rents which went up and played an oversized part.

No, no, no, no, how much did two blocks in New Jersey play point?

No, no, no, no, how much did two blocks in New Jersey play point?

Yes?

Yes?

Was are you telling me national inflation was Paul Sweeney's housing fault?

Was are you telling me national inflation was Paul Sweeney's housing fault?

I think it was Paul Sweeney's fault in particular.

I think it was Paul Sweeney's fault in particular.

Yeah, yeah, he used to blame.

Yeah, yeah, he used to blame.

You should get all the hate mail, you know, But seriously, they're gonna need to see that shelter number come down a bit. And you know, but I don't disagree. Look that September has to be firmly on the table. The markets believe it's firmly on the table, and even fed that's a little bit behind, should be able to move in September.

You should get all the hate mail, you know, But seriously, they're gonna need to see that shelter number come down a bit. And you know, but I don't disagree. Look that September has to be firmly on the table. The markets believe it's firmly on the table, and even fed that's a little bit behind, should be able to move in September.

Jey, how do you.

Jey, how do you.

Think about the US consumer here, Because we're getting inflation's coming down, but it's still at that high reset level of nineteen percent versus twenty nineteen. How's the US consumer doing today?

Think about the US consumer here, Because we're getting inflation's coming down, but it's still at that high reset level of nineteen percent versus twenty nineteen. How's the US consumer doing today?

Look, I'll reframe it this way. We should thank the US consumer because one thing we keep hearing in earnings reports and in the FEDS Beage book is that consumers are priced sensitive. Again when we look at things like goods prices broad based deflation, consumers want deals and they're getting them on cars, on furniture, and on apparel this month, so airfares on airfares, airfares plunged, So consumers are back to that norm that they had before the pandemic of to part with my money, you're going to have to offer me value, and that is helping restore healthy inflation dynamics. So they might still be grumpy from what we've all been through, and we also, as Tom had alluded, to see a lot of polarization in those sentiment numbers, but you know the reality is that consumers have taken control back that pricing power that companies enjoyed during the pandemic has evaporated and now.

Look, I'll reframe it this way. We should thank the US consumer because one thing we keep hearing in earnings reports and in the FEDS Beage book is that consumers are priced sensitive. Again when we look at things like goods prices broad based deflation, consumers want deals and they're getting them on cars, on furniture, and on apparel this month, so airfares on airfares, airfares plunged, So consumers are back to that norm that they had before the pandemic of to part with my money, you're going to have to offer me value, and that is helping restore healthy inflation dynamics. So they might still be grumpy from what we've all been through, and we also, as Tom had alluded, to see a lot of polarization in those sentiment numbers, but you know the reality is that consumers have taken control back that pricing power that companies enjoyed during the pandemic has evaporated and now.

They need to deliver values. So some of those margins are going to get pressed.

They need to deliver values. So some of those margins are going to get pressed.

We had a GDP number first quarter. Where are we one point three, one point four percent? Whatever Atlanta GDP balloons out four percent?

We had a GDP number first quarter. Where are we one point three, one point four percent? Whatever Atlanta GDP balloons out four percent?

I think, bring it back. Now we're running what's the run rate? To both of you? What's do you? I mean, do you guys argue about this? What's the run rate? Unreal GDP? Are you that far apart the two of you?

I think, bring it back. Now we're running what's the run rate? To both of you? What's do you? I mean, do you guys argue about this? What's the run rate? Unreal GDP? Are you that far apart the two of you?

I don't know.

I don't know.

I think so.

I think so.

I think we're at both at about two point four two point five. I mean, you have to look at GDI when you look at this, and last last quarter was really trade in inventories, right, and so the question is how much are those inventories going to be rebuilt? That's a very tricky thing to forecast. And then obviously we have this strong dollar which is hurting trade in some respects, but we also see tailwinds from the global economy that we haven't seen for four years that could slightly help our trade numbers.

I think we're at both at about two point four two point five. I mean, you have to look at GDI when you look at this, and last last quarter was really trade in inventories, right, and so the question is how much are those inventories going to be rebuilt? That's a very tricky thing to forecast. And then obviously we have this strong dollar which is hurting trade in some respects, but we also see tailwinds from the global economy that we haven't seen for four years that could slightly help our trade numbers.

I mean, it comes down to domestic final sales. What's twelve months for mean, Julie, you were a BMP peribot years ago, making headlines on this, what's domestic final sales look like one year out? Don't give me this gloom stuff.

I mean, it comes down to domestic final sales. What's twelve months for mean, Julie, you were a BMP peribot years ago, making headlines on this, what's domestic final sales look like one year out? Don't give me this gloom stuff.

No, it's not gloomy.

No, it's not gloomy.

I think we're both very constructive on a better productivity cycle, not just because of AI. AI hasn't even begun to enter the room yet. This is about a healthier labor market. We've entered the stock market room, but not necessarily the productivity numbers.

I think we're both very constructive on a better productivity cycle, not just because of AI. AI hasn't even begun to enter the room yet. This is about a healthier labor market. We've entered the stock market room, but not necessarily the productivity numbers.

It is a bit.

It is a bit.

We've had a strong investment cycle, We've had a good labor market, good matching of employers and employees, and it's we're not deleveraging. Last cycle was all about deleveraging and global fragility and financial fragilities. And we have strong balance sheets and a healthy, broad based economy. So I think we are pretty constructive. That we've got a better productivity trend. We've got immigration, at least for now. That's going to be a big policy differentiator in.

We've had a strong investment cycle, We've had a good labor market, good matching of employers and employees, and it's we're not deleveraging. Last cycle was all about deleveraging and global fragility and financial fragilities. And we have strong balance sheets and a healthy, broad based economy. So I think we are pretty constructive. That we've got a better productivity trend. We've got immigration, at least for now. That's going to be a big policy differentiator in.

Twenty twenty five. But for now, the.

Twenty twenty five. But for now, the.

US economy looks like it can run, you know, above two percent UH and not generate inflation.

US economy looks like it can run, you know, above two percent UH and not generate inflation.

Apple's up nine since the gloom of the AI presence.

Apple's up nine since the gloom of the AI presence.

Actually that's true.

Actually that's true.

Nine This is just the a I bump that everybody was looking for and they got.

Nine This is just the a I bump that everybody was looking for and they got.

I probably did too expensive.

I probably did too expensive.

But here we go up higher again.

But here we go up higher again.

So there you go.

So there you go.

Very good, very good file.

Very good, very good file.

Actually good for now I need to start trimming that position.

Actually good for now I need to start trimming that position.

Just loading and up by the momentum constance. What do you what would you like to hear from the FED chairman today versus maybe what do you think we will hear from the FED chairman?

Just loading and up by the momentum constance. What do you what would you like to hear from the FED chairman today versus maybe what do you think we will hear from the FED chairman?

Yeah, that's that's a great question. I mean, I'd like to hear him say that they as long as inflation is making progress towards two percent, that it will be appropriate for them to take away some policy tightness. And let's remember where where is our star. Let's say it's higher, Let's say it's three and a half, right and a half. Let's say it's there. They can start cutting and still be restrictive. And so I'd like that message of we can start cutting and policy will still be restrictive.

Yeah, that's that's a great question. I mean, I'd like to hear him say that they as long as inflation is making progress towards two percent, that it will be appropriate for them to take away some policy tightness. And let's remember where where is our star. Let's say it's higher, Let's say it's three and a half, right and a half. Let's say it's there. They can start cutting and still be restrictive. And so I'd like that message of we can start cutting and policy will still be restrictive.

Okay, So economic historian from the University of Texas, is there any heritage that we do that besides a green spanning and measured after after the fact, I don't observe. I mean Richard Timberlake at Georgia or mcteera Dallas Fed years ago.

Okay, So economic historian from the University of Texas, is there any heritage that we do that besides a green spanning and measured after after the fact, I don't observe. I mean Richard Timberlake at Georgia or mcteera Dallas Fed years ago.

No, there's no history. The history.

No, there's no history. The history.

The history of what you you just noted is green span is the mid nineties, mid and late nineties where they kind of ebbed and flowed the FED funds right, it went up, it went down, it went up, it went down and without recession, and it was about fine tuning and keeping the experience.

The history of what you you just noted is green span is the mid nineties, mid and late nineties where they kind of ebbed and flowed the FED funds right, it went up, it went down, it went up, it went down and without recession, and it was about fine tuning and keeping the experience.

Does he have to address that today? Is the garden company? He addressed it.

Does he have to address that today? Is the garden company? He addressed it.

The Bloomberg reporters in the room and ask him that bad question because they need to have a strategy.

The Bloomberg reporters in the room and ask him that bad question because they need to have a strategy.

That's the one they've been rich.

That's the one they've been rich.

Take a memo corn out one to tell what was saying.

Take a memo corn out one to tell what was saying.

Well, and you brought up McTeer and he was the one arguing for the productivity revolution. He was the one arguing saying, we're going to be getting productivity and we need to we need to make sure that we don't raise rates into this stronger GDP because if you recall in the second half of the nineties, GDP started to gain momentum after those three rates while inflation fell.

Well, and you brought up McTeer and he was the one arguing for the productivity revolution. He was the one arguing saying, we're going to be getting productivity and we need to we need to make sure that we don't raise rates into this stronger GDP because if you recall in the second half of the nineties, GDP started to gain momentum after those three rates while inflation fell.

The nineties late nineties were very good to me, they weren't so Julia, you know, I'm trying to explain to my kids are in the workforce now that this is a more normalized rate environment. That's your stuff we live through before. Is that kind of where we are now we're back to normal? I guess I hope. So.

The nineties late nineties were very good to me, they weren't so Julia, you know, I'm trying to explain to my kids are in the workforce now that this is a more normalized rate environment. That's your stuff we live through before. Is that kind of where we are now we're back to normal? I guess I hope. So.

I mean, I think we've got or in a positive real rate environment. It looks like the economy can handle that. So I agree, our star is probably higher. That's where we wanted to end up, right, That's what the whole idea of the last strategy review at the FED was about engineering a somewhat higher run rate on inflation and gaining some policy space. And I think signs are that we're that's exactly where we're heading. That will give them better trade offs. I know, I know I'm going to say this, and people's heads aren't going to explode. We've got a better mix of fiscal and monetary policy.

I mean, I think we've got or in a positive real rate environment. It looks like the economy can handle that. So I agree, our star is probably higher. That's where we wanted to end up, right, That's what the whole idea of the last strategy review at the FED was about engineering a somewhat higher run rate on inflation and gaining some policy space. And I think signs are that we're that's exactly where we're heading. That will give them better trade offs. I know, I know I'm going to say this, and people's heads aren't going to explode. We've got a better mix of fiscal and monetary policy.

Now.

Now.

Of course, six percent deficits are not sustainable forever, but you know what we have had.

Of course, six percent deficits are not sustainable forever, but you know what we have had.

Is better state in local government, better fiscal participation. The FED isn't carrying all the water for the economy.

Is better state in local government, better fiscal participation. The FED isn't carrying all the water for the economy.

You guys aren't allowed to travel together for safety, but and you guys talked about how you adjust your FED calls seriously to the end of the year. Did you make a switch this morning when you publish for Macro Policy Perspectives and you know switch this morning.

You guys aren't allowed to travel together for safety, but and you guys talked about how you adjust your FED calls seriously to the end of the year. Did you make a switch this morning when you publish for Macro Policy Perspectives and you know switch this morning.

I think what we've been flagging for our clients is that, you know, the outcome of today's meeting and the tone and the tenor is going to depend on this morning's data. It is an important data point and if we get what we were below consensus on inflation, it came in at our actually even a little bit below our forecast, but that that would lean towards a more positive, constructive message that we're going to start in September.

I think what we've been flagging for our clients is that, you know, the outcome of today's meeting and the tone and the tenor is going to depend on this morning's data. It is an important data point and if we get what we were below consensus on inflation, it came in at our actually even a little bit below our forecast, but that that would lean towards a more positive, constructive message that we're going to start in September.

So I think that that's where we're at.

So I think that that's where we're at.

The data has ratified that orientation, and now it's up to Share Powell to deliver the message.

The data has ratified that orientation, and now it's up to Share Powell to deliver the message.

And Ian Lingen is a third of a way to a stunning call in the ten year yield YEP four point two eight percent. I'm not saying it's going to drive lower, but that's what Demo Capital Markets is saying YEP exactly.

And Ian Lingen is a third of a way to a stunning call in the ten year yield YEP four point two eight percent. I'm not saying it's going to drive lower, but that's what Demo Capital Markets is saying YEP exactly.

So where's constance? Where are you guys thinking about GDP this year, next year? How is this economy going to be growing?

So where's constance? Where are you guys thinking about GDP this year, next year? How is this economy going to be growing?

Yeah, So we had originally been thinking we would have a soft patch this year because higher rates would begin to take a bite out of growth. And now we're thinking that if the FED can act and that in time, that that may be able to be avoided. And part of the reason that's going to be avoided is this productivity story that Julia was talking about earlier, right, and all of the aspects of that that are.

Yeah, So we had originally been thinking we would have a soft patch this year because higher rates would begin to take a bite out of growth. And now we're thinking that if the FED can act and that in time, that that may be able to be avoided. And part of the reason that's going to be avoided is this productivity story that Julia was talking about earlier, right, and all of the aspects of that that are.

Playing out in the ECONO.

Playing out in the ECONO.

So we're looking for a little softer than last year and then a little bit of a pickup probably in the second half of twenty twenty five as lower rates continue and feed into growth.

So we're looking for a little softer than last year and then a little bit of a pickup probably in the second half of twenty twenty five as lower rates continue and feed into growth.

Wa too optimistic constant Juliet cornerdo micro policy perspectives?

Wa too optimistic constant Juliet cornerdo micro policy perspectives?

Can we do this again?

Can we do this again?

Is yeah?

Is yeah?

Thank you, Thank you so much

Thank you, Thank you so much