Warsh's Jackson Hole Debut; Harvard's Rogoff Says US Needs 'Shock' To Fix Debt

**SPEAKER_1** (0:02)
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**Tom Keene** (0:12)
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**Scarlet Fu** (0:55)
Good noon, everyone. It is Friday, which means this is Bloomberg Money. We cover personal finance, retirement, and wealth management. I'm Scarlett Foo. Tom Keene is out in Jackson Hole, Wyoming, where Federal Reserve Chair Kevin Warsh delivered his first speech as the US Central Banker. So let's head straight out to Tom out in Wyoming.
Tom, I know you've been out there sitting in the cold for a while. Did Warsh silence the critics and provide clarity?

**Tom Keene** (1:22)
A little bit. The tone here is a more restrictive Fed. We'll talk to Enda Curran about that. I have to say that in terms of Bloomberg Money, this is the land of Bloomberg Money, Scarlett. It's about personal finance, retirement, wealth management. I'm the youngest person in Jackson Hall. Everybody else is 80 years old and retired, so it's perfect for Bloomberg Money this morning. Coming up, Scarlett, Kenneth Rogoff, Harvard University.

**Scarlet Fu** (1:48)
All right. Looking forward to that conversation. Also later in the hour, Nela Richardson, Chief Economist at ADP, will be here with us to talk about Bloomberg Money's dual mandate, how we make money and how we save and spend money. So first, let's get a check on where things stand in the markets and how the markets have responded to that speech from Kevin Warsh. We saw the short end of the bond market react immediately, price down, yield up, up eight basis points right now. This is the tenor most sensitive to Fed policy, traders pricing at higher odds of a rate hike in September.
We saw the 10-year yield make some big moves, but right now, not doing a whole lot. The dollar moving higher with short-term race and oil prices down about three-quarters of 1 percent. But here's the big mover of the morning. You could see the two-year yield shooting up after the text of Warsh's speech was released at 10 a.m. Eastern time. That was a 10 basis point move from trough to peak. Warsh making clear that recent CPI and PPI data were not entirely encouraging. All right, let's move on to equities here.
Stocks getting a little bit of a lift initially, but have now settled down into mixed territory. What gets my attention is the VIX, slightly elevated, but still in the 14 and a half range below 15
All right, let's go back to Tom and Jackson Cole. He is with one of our reporters there in Wyoming, Enda Curran. Tom.

**Tom Keene** (3:09)
Scott, thanks so much. I needed that data check, Scarlett, because I spent the last 30 minutes in the Pioneer Grill just getting breakfast done, the way it can only be done at Jackson Hole. There's been a lot of feedback. You see the two-year yield move higher here and there has been an international response. We are so fortunate at Bloomberg to have driving all of our Federal Reserve coverage and to Curran who spent the pandemic holed up in Hong Kong. He knows international economics better than anyone here at Bloomberg. How did the international community, how would you guess they did or they will respond to the worst speech?

**Enda Curran** (3:43)
I think the speech is being well received, Tom. It's been seen as clear on some critical points, the Chairman's views on inflation, which is that he's obviously concerned. He made that clear. The Chairman made clear that if they don't see prices going back to the target at speed, they're going to have work to do. That's code for obviously raising interest rates. And he made clear the tool, the near term tool they have to control inflation is short term interest rates. So it was a hawkish message. Of course, it sets it up for how he now delivers on that.

**Tom Keene** (4:08)
Just as an aside, when New Zealand raises rates, do they raise rates to get out in front of a raising rates, Chairman Warsh?

**Enda Curran** (4:16)
Sometimes it depends on the cycle. Sometimes central banks try to get ahead of the Fed. You could argue this time around maybe the Fed has been accused of being behind the curve because other central banks have hiked during the past year since we've had the energy crisis, for example. But the Fed is not there yet, but certainly nudging towards that direction.