Chipmakers Extend Skid as AI Jitters Persist

Carol Massar (0:02)

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This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Massar and Tim Stenovec.

Tim Stenovec (0:32)

All right. So, Kevin Warsh, he's the chair of the Federal Reserve. He didn't do much to dispel market expectations that the Fed will hold interest rates steady when it meets at the end of the month.

Carol Massar (0:41)

No, he did not.

Tim Stenovec (0:42)

There was the moderate discussion.

Friday morning Bangkok time. Yeah. At the International Monetary Funds Annual Meetings, the Fed chair made no remarks on monetary policy or his outlook for the US economy apart from re-irritating the Fed will deliver price stability. I want to get more on this and also the inflationary outlook. Michael McKee is with us. He's international economics and policy correspondent for Bloomberg TV and radio. Did you stay up late to watch that?

Mike McKee (1:06)

I actually did not. I left that to the people who were in Bangkok.

Tim Stenovec (1:10)

I'm glad you didn't stay up.

Mike McKee (1:11)

I got cut.

Tim Stenovec (1:12)

Had you stayed up for it.

Mike McKee (1:14)

Yeah, I would have been very bored.

Jason Leopold (1:15)

You would have been.

Mike McKee (1:16)

One of those, this movie didn't entertain me. Okay.

Tim Stenovec (1:20)

The Rotten Tomatoes score would not have been.

Mike McKee (1:22)

Would not have been very high.

Tim Stenovec (1:23)

Okay. That said, was there anything that we could take away from his comments about his view that we didn't know?

Mike McKee (1:31)

No. What you could take away, well, thanks. I'll see you next week.

What you could take away is that he seems to be quite serious about the idea of not giving any kind of forward guidance. Now, he said, we are not in that business anymore. And my question is, who's we? Because a couple of members of the Open Market Committee were pretty forward in saying that they're not going to raise rates in October and they're going to maybe, John Williams saying, just do one more.

Tim Stenovec (2:02)

Thank you, Mike. Can I ask you?

Jason Leopold (2:03)

Thank you for saying that.

Carol Massar (2:04)

I was curious about, we talked with Enda Curran earlier about this too.

Tim Stenovec (2:06)

And we raised that point with Enda.

Carol Massar (2:08)

Well, and I'm curious what you have to say because you remind us that certain members of the FOMC or of the Fed, whether it's John Williams of the New York Fed, the president of the New York Fed, always an important voice. Certain voices, obviously the Fed chair is important, but certain you really listen to. Is that still in place?

You know what I mean? Has any of that changed under Kevin Warsh?

Mike McKee (2:27)

I don't think it's really changed yet. And you've got the vice chairman of the Federal Reserve Board, Philip Jefferson, and John Williams, who's the New York Fed president, but he's vice chairman of the Open Market Committee that sets interest rates. So if they're telling you that we don't think we need to do it in October, that's probably where they're going to go, the chairman notwithstanding. But also neither one, well, neither position, put it that way, historically has dissented from the chair. And so if you know where those two people are, you kind of know where the chair is.

Kevin Warsh is not denying what they said. He's just not commenting on what they said.

Tim Stenovec (3:13)

This week, Mike, we got a couple of inflation prints that were a little hot.

And we spoke to you earlier this week about fuel prices and energy prices flowing through, some of the tariff stuff finally flowing through. Just last hour, we get this red headline that Brent futures rise, excuse me, to $110 a barrel for the first time since May 20th. What does this mean for an environment where we are seeing higher prices as a result of higher energy prices?

Mike McKee (3:44)

Well, it means that you are not going to see prices for gasoline or diesel go down anytime soon.

Bloomberg New Energy Finance, our energy analysts, say that we are going to be paying an extended amount for gasoline even if the war were settled in November. We will be paying an extended amount well into 2027 But unless the numbers hold at this level, $110 for rent, you are not going to see an inflation effect because we are already there. It's the change in the level that matters. So it's hard to say that that's going to push inflation necessarily higher in that sense. But what you did put your finger on is the fact that the higher costs that especially trucking companies, farmers are paying for diesel and things like that, fertilizer, are starting to spread into the overall price level. And that showed up in a number of the service industry categories in CPI and PPI. And that's what worries people about where inflation is going.