Lots More on What Just Happened With the Fed at Jackson Hole

SPEAKER_1 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Tracy Alloway (0:07)

How many Jackson Holes have you actually been to now?

Michael McKee (0:10)

It's a little hard to say, but my first one was 1997 I've missed a few here and there as breaking news has happened, and I've had to be somewhere else. So somewhere around 25 to 30

Tracy Alloway (0:21)

So Joe, if we keep doing this for another 40 years, we'll notch up as many Jackson Holes as Mike has been to maybe.

Joe Weisenthal (0:28)

If he does it another 40 years, we can never catch up.

Tracy Alloway (0:31)

If Mike stops now and we keep doing it until we're 80, it will work out.

Joe Weisenthal (0:39)

I did a deadlift.

Tracy Alloway (0:40)

I am both the most popular trader and most successful trader at Citadel.

Joe Weisenthal (0:44)

Fed is going viral.

Tracy Alloway (0:46)

Barges.

Joe Weisenthal (0:47)

This is an after school special, except.

Tracy Alloway (0:48)

I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the US.

SPEAKER_1 (0:54)

Black Gold.

Tracy Alloway (0:55)

These are the important questions. Is it robots taking over the world?

Joe Weisenthal (0:58)

No, I think that in a couple of years, the AI will do a really good job of making the Odd Lots podcast. One day that person will have the mandate of heaven.

Tracy Alloway (1:08)

How do I get more popular and successful?

Joe Weisenthal (1:10)

We do have the perfect guest. Welcome to Lots More where we catch up with friends about what's going on right now.

Tracy Alloway (1:18)

Because even when Odd Lots is over, there's always lots more.

Joe Weisenthal (1:22)

And we really do have the perfect guest. We are, of course, talking to the one and only Mike McKee of Bloomberg TV. A little surprising speech today, huh?

Michael McKee (1:35)

Yeah, I was wrong, as were the majority of analysts who thought that Jay Powell would want to leave his options open for September. Because as we've been repeating over and over again, there's another jobs report, there's another CPI report before the next meeting. And so, what happens if we see a reversion to the mean? We had a weak jobs report. What if the next one comes in strong? We had inflation going through CPI at a low level. Does that pick up a lot? In which case, you don't want to cut rates? So it was a bit of a surprise that he said, basically opened the door to a rate cut, because now it's really hard to close that door.

Joe Weisenthal (2:14)

Tracy, have you read Anna Wong's take yet?

Tracy Alloway (2:16)

I have not.

Joe Weisenthal (2:16)

So she has a new piece out on the terminal, which you should read, but she argues that it's not so dovish if you use the 2024 speech as the benchmark, which is true for sure. That was a more dovish speech. But what I think the vibe is that maybe the three of us have, it's certainly dovish in the context of a lot of people suddenly like, let's look at the inflation side again.

Tracy Alloway (2:35)

Well, this is exactly it. So, Mike, I think you had the same experience as us, which is a lot of the people from the Fed that you've been talking to over the past couple of days, they sounded more hawkish than they did, you know, perhaps like, just three or four weeks ago.

Michael McKee (2:49)

Yeah, and I have to think that, or I have to caution myself to look at this as perhaps as a statistician would say a selection error, because we happen to hit people who were more hawkish. Obviously, the chairman basically validated Chris Waller's forecast that they've decided that inflation is going to go up, but it's going to go up slowly, it'll take a while to get into the economy, and sector by sector it'll be a one-time price rise and not a continuing price increase.

Joe Weisenthal (3:20)

Setting aside the actual technical and economic details of the speech itself, were you surprised that there wasn't something more, I don't know if valedictory is the word, but you know it's the last speech of the chairman, it comes at a time when we're all talking about the sort of threats to Federal Reserve independence. Were you surprised it was such a policy speech and not any sort of nods to some of these bigger things?

Michael McKee (3:44)

I was not surprised by that. Powell is very cephalafacing. He's not somebody who likes to toot his own horn. And we kind of knew going in that he didn't want to make a big deal of this being his last Jackson Hole as chair. The Fed independence thing was a bit of a surprise because it has been such a big issue. But I think given the message he wanted to send to the markets about the policy going forward, plus he had the whole section on the new framework he had to discuss, I think they felt it was just going to be too long, too much, and that would come up in many other fora to talk about.