Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election
Episode publishedPodcast: Forward GuidanceForward Guidance
Transcript preview
Preview only
Jack: Forward guidance is brought to you by Van Eck, a global leader in asset management since 1955. You'll be hearing more about a Van Eck ETF later on. But for now, let's get into today's interview. Interview. Very happy to say that I am joined by Nick Timurros, chief economics correspondent from The Wall Street Journal.
We're recording the morning of Thursday, August 1st. Yesterday, on Wednesday, the Federal Reserve had its, federal open market committee meeting. It had its statement. It had the Powell presser. Nick, of course, was there front and center asking Jay Powell a question.
Sometimes I've done this where I've interviewed Nick or other journalists the day before. I actually I'm really excited about what we're doing now where, you know, it's a it's kind of a a a after the meeting, and I get to hear Nick's analysis, what it was like being in the room, the sense. You know, I was watching it probably a lot of people listening to Synodu now listen to Powell, but it's definitely is is a a different sense to to be in in the room. Nick, I I should just say, of course, is also the author of a $1,000,000,000,000 triage, a fantastic book about what the Federal Reserve and, C
I hadn't been listening to the board of governors or other regional presidents whispering about how not whispering. Saying in speeches about how it might be time to to cut. You know, I I hadn't been paying attention to Waller giving a a speech that was literally called getting closer, I. E. Getting closer to cutting.
I had no context whatsoever, and you just dropped me in yesterday's meeting or, you know, listening to yesterday's meeting. I wouldn't have thought that the market would foresee that as a terribly dovish meeting. I wouldn't have thought that the market would, assume that a September, interest rate cut, which is the next meeting, was a virtual certainty. Going into the meeting, it was priced as a virtual certainty. And going out of the meeting, it was priced as even more of a virtual certainty.
Now according to CME, the market is pricing that it's more likely that the Federal Reserve does a double cut, a 50 basis point cut in September than no cut at all. So I'm really glad that you are are here to explain, why do you think market interpret that is is so dovish? What were kind of, you know, the the the dog whistles, if you will, of that that maybe I missed?
Nick: Well, thanks for having me, Jack. You know, I I would listen to your program to understand what the market was thinking. But what I would say in terms of what we heard yesterday was, you know, almost it felt like almost every answer or every every answer to the questions, he pointed to something that was dovish. So let's take inflation as an example. He said the recent inflation news was better than what we saw when inflation got a lot better at the end of last year because the recent disinflation has been more broadly based.
I asked him about the labor market and he said he didn't wanna see any material, I think it was material cooling or any any more material increase in, softness than what we've seen. There was a follow-up question where he said, well, it wasn't that I don't wanna see more cooling. I don't wanna see more material cooling. So we don't really know exactly where that threshold is. I guess it's one of those things where you know when you see it, but, nevertheless, that was dovish.
When it came to how tight policy is, you know, back in May when a lot of people were beginning to have their confidence shaken about whether policy was really as restrictive as everybody thought it was back
Keep exploring with a free account.
A free account preserves the short preview. Upgrade to Pro for the full transcript and episode chat.