YouSaid · the spoken record

Nick Timiraos

lines on the record: 74
first: 2024-08-01
most recent: 2024-08-01
sittings or episodes: 1
sources: podcast

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“Eased now because of what you're seeing more concerns of softness. Is it going to come from abroad, from import prices, stronger dollar, harder to see that oil prices, they don't seem to be knocking on upside risk territory? Maybe you could point to freight and supply chains. But because I think it's harder to make an argument where are the upside risks to inflation and you can now point to more downside risks on growth and hiring. I think that's why the hurdle to cut in September, you know, the market has figured out that there's a very low bar there and pal didn't say anything to raise that bar yesterday, even if he wasn't as dovish as some of the people I talked to who probably”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“Where are upside risks going to come from? Domestically, you could point to the labor market, you could point to housing, you could point to financial conditions. But on all of those right now, in particular the labor market, I mean, yes, this is a strong labor market, but the ECI yesterday on Wednesday showed that private sector wages slowing. It's government and union, private sector union that's seeing the bigger wage gains. And those could well be lagged, right? Those were the less flexible, more rigid contracts. They are catching up to what non-union private sector workers were able to negotiate for in 21 and 22. So where are the upside risks? If you look in the June minutes, you saw people pointing to financial conditions. Financial conditions really haven't.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“Which was pretty good. So you might even think that the May and June numbers were strong enough to make them more resilient. The first cut might be, might be more resilient to some kind of unfavorable inflation number. I mean, stepping back, I think the challenge right now for the Hawks is you have to ask the question, you have to answer the question.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, I ask myself that question before and after yesterday what would it take for them now to not cut in September? It just seems very hard. I'm sure you could come up with, you know, let's say we get two surprising labor market reports that show, you know, really strong payrolls and the unemployment rate going down the June minutes told us that the staff still expects the unemployment rate to decline this year or to be lower than it is now. So maybe you get, you know, we didn't see it in the ECI. So before the ECI would have said hot ECI, hot payrolls, bad inflation numbers, maybe that could be enough to stay their hand. You know, again, Ayed totality of the data as saying it's not going to be about the inflation numbers alone. It's about all the data that we get. It's also about the inflation data that we've just gotten.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“And really, what do you do if you get the weakness that you're saying now you don't want to see? One final point on that. You know, Chris Waller's speech, I thought it was interesting because he did this scenario analysis at the end of the speech, but it was only for scenarios where the labor market is doing fine, right? He basically said if inflation's really good, if it's like it was in May and June, I'm completely paraphrasing what he said. But if it's like it was in May and June, then we can cut if it's really not good, then we don't have to cut. And if it's sort of in the middle, then well, we'll just have to play it by ear. But those all assumed, you know, 4%-ish unemployment claims not making some break higher. So we don't really know how they would.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“He gave a very quick answer to that question. They called on the next person and then he sort of went back and I thought he unlocked the door. He kept it closed, but he was like, well, you can't rule anything out. So they're in a mode here where the market may begin to test them if we see weaker data, especially on employment. We just don't know whether, you know, we've spent a good part of this year, first figuring out the reaction function around cutting if just on the basis of better inflation. Then we spent some time figuring out the reaction function for, well, what if inflation actually isn't good enough? How long are you holding? And now it does feel like the market is going to be pushing to understand the reaction function better around not when you cut, but what's the pace?”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“Of course, you're going to go in September, but there's an employment report out tomorrow. What if the unemployment rate goes up to 4-2 or 4.3, no matter what happens with payrolls, there are people who think the Fed's not going to want to see that? And so does that put a 50 on the table? I thought Powell yesterday, you did get a question about whether you would start with a half percentage point cut. And he immediately closed the door and almost turned the bolt, you know, locking that door closed. No, that is not what we're thinking. They still have in mind some kind of mid-cycle adjustment like what they did in 2019, where they cut rates a few times. I think it was three times in 95, 96. They did three cuts after having done a pretty aggressive series of rate increases. You know, maybe it's not three this time. Maybe it's more, but it's not, he doesn't have a 50. But then.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“In December 22 to 25 and the January, February meeting of 23, and then the day of the revisions, everything just kind of went in their face and they had to put a 50 back on the table before Silicon Valley Bank blew up. So there's some PTSD, and I think some, not all members of the committee, are just very concerned. Why rush this?”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“So I don't know. I mean, I want to do reporting, of course, on what led to these decisions yesterday. Why not say it more strongly in the statement? Because you've done that in the past. One possibility is they're just trying to avoid getting locked into something. If you look at what happened to the European Central Bank in June, they very strongly signaled that first cut. And then the data that came out before it, you know, it didn't go in the direction that you would have wanted to right before a cut. They didn't cut anyway, but I could see some folks maybe not just wanting to give themselves an out. You know, this is a committee that by and large has been, they've felt burned. They certainly felt burned by what happened in the first quarter. They felt burned by what happened in the first quarter last year where they stepped down from 50 basis point hikes.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“In January 2022, where in the statement it said the committee expects it will soon be appropriate to raise the target range for the federal funds rates. That is almost as close to a promise as, you know, I mean, the market definitely interpreted that as a promise and the market was pricing thing things way in advance. Why do you think Powell instead is reluctant to give that much forward guidance? They just want to have that optionality of, you know what, we want to do the option to do zero rate cuts. And I forget who asked the question, but he said we see anywhere from zero to three rate cuts. And even though the market is kind of looking past that.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“That would make it a promise, right? So if for some reason the world changes and they don't do it in September, they won't actually be reneging on any sort of explicit signal, they said, but at the end of the day, does it really matter? He made it very clear that the market has it priced. And then, you know, as we discussed earlier, I think it's possible some of the other things he said during the press conference, the fact that they had a discussion about whether it made sense to cut in July that probably animated some of the instincts of, all right, this seems like a fed that, you know, is maybe not as much on its front foot as Bill Dougley and Alan Blinder wanted because they didn't cut it this meeting. But, you know, this is also a Fed chair who is trying to stick a soft landing and who recognizes that the runways, you know, not super wide, even though there are times this year it's gotten wider.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“Got a question, and if it's a question where he has a prepared answer, something he wants to make sure he hits the right points, you see him turn to the tab. So the September question was called and the September tab was turned to, and he read, you know, we didn't have to wonder if he was ad libing. He's reading off the page what he's prepared to say about September. I thought it was just interesting. I don't know what it means, that that was the way they decided to socialize this or to do it was we're not going to put it in the statement. We're not going to even have it in the rehearsed prepared opening statement at 2.30. We're going to do it in the Q&A, but we're going to read off of a piece of paper what we're thinking about September. And it was pretty clear signal, I thought, that he was basically saying, you know, he got as close to saying September without saying anything.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“And you get to the monetary policy paragraph of the opening statement. It's usually on like the seventh paragraph, the third page of the transcript, the Federal Reserve posts. And that's where I thought, okay, this is where they're going to say something because they didn't say anything in the 2 p.m. statement. And there was basically no change there. And I said, okay, that's interesting. He's just not going to say anything. And then Jana Smileig from The New York Times had the first question. And she asked the question that was probably on everybody's mind. It was a good question about September. What are you thinking? And Powell brings a, I don't know if it's a folder or a binder. It's a printed materials into the room at the press conference. And there are tabs along the top or along the side. And you can see him turn sometimes.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“From hiking or from a neutral bias to a cutting bias, they would, you know, at the next meeting or whatever, maybe we'll see something more like that in the minutes. We didn't get it. And so some people thought that was hawkish. And then that's the 2 p.m. communications. Then at 2.30, you get the chair's opening statement. And what I like to do, if I'm not updating a news story or trying to figure out what my question is going to be, I like to read as he's reading that statement, I read along the last statement because he's pretty much reading the same statement, the SCP meetings. He's also explaining the SEP. So yesterday he wasn't doing that. And you can see there were very few changes. There were some.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“And really, it was a non change that was seen as hawkish, was in the third paragraph, the forward guidance, the gain greater confidence sentence. Some people had been looking for a stronger hint. You could have added the word, you know, won't be appropriate to cut rates until we've gave some greater confidence, the addition of the word some, somewhat. That would have been a more traditional sort of fed breadcrumb that they would pass, you know, and past periods where they're about to make a change.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“I mean, you're right that financial conditions are what this is all about. And so the Fed has to pay attention to what the market is expecting. And if they then do something different, they don't ratify those expectations. The change is going to be reflected in financial conditions. So yes, I think the fact that I thought it was going to be hard to say very little probably wasn't going to change that pricing, right? And yet I thought the changes, you know, there were some debate between 2 and 230 over, well, how do we read this statement? Some people thought it was dovish, some people thought it was hawkish. It's all about what you were expecting going in, of course. And so you look at the changes. I think there were seven changes. And pretty much all those changes were in the dovish direction. The only change.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“No cut. It wants to go in a certain direction. So it's going to lean towards that 100 and that in the context, if the market is indicating 70% chance there's going to be a cut and Powell doesn't say something that that kind of indicates the Federal Reserve's blessing of current market pricing. Totally off base or do you think there's something to what I just said?”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“And I know you don't want to report too much on what the market is pricing in because the market can definitely get ahead of itself and it has gotten ahead of itself for pretty much this entire hiking cycle in terms of pricing too many cuts at the Federal Reserve ended up not doing. But the Federal Reserve does pay attention to what the market is pricing because that is a lot of how, you know, as I learned from you and others that if the two-year rate goes down because it's pricing in a lot more Fed cuts, that is a lot more easing than if the Federal Reserve actually was going to change the overnight rate. And that matters more than is it going to be in July or September. So do you, so I have a theory that I want to propose to you that the market is always wants to reach certainty of, oh, there's a 60% chance cut, 40% chance.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“Not really my place to, you know, I try not to form an opinion on that. I mean, it doesn't really help me in my work. To be honest, I think he's sounded pretty much. Consistent over his, he's spoken a lot since the June meeting. So you have a June press conference. You have Powell at Centra. You have the two days of testimony. Then you have the Rubenstein event. And every time he spoke, he seemed optimistic, setting more progress. All of those had marginally dovish read-throughs. And in between each public communication, you had more data coming in that also sort of supported this idea that, you know, we're not talking about a no landing anymore. We're talking about either a soft landing or more weakness. And so that also kind of allowed him, you know, to sort of continue in that direction of sounding, you know, at least more optimistic on inflation or seeing a stronger foundation for a cut because of what's happened.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“In the GDP report last week. And so I think what you're getting now is the market is trying to be forward-looking. And even though, you know, consumption was good, the things that have been weak, you know, manufacturing housing didn't get that much weaker in the first half of the year. You're now seeing more signs say where are upside risks coming from. It's harder to point to those now, certainly than three months ago, and you do see whether it's claims that Jolts numbers this week, the ECI numbers this week, you just see a labor market that doesn't look to be hot at all. You know, it's solid, sure. And so, you know, maybe that, again, I would defer to your other guests about why the market react the way they did, but Powell sounded Dovish yesterday to a lot of the people that I spoke with after the meeting.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“Is I guess that'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 in January. Powell didn't really seem to lose his resolve there. And then yesterday he said he thinks you are seeing more evidence that policy is restrictive. That said, you know, because a lot of the questions sort of said, I think the questions came more from the standpoint of why aren't you cutting? Why didn't you cut today? What are you waiting for? There was a little bit of, you know, defensiveness is probably too subjective of the term for me to use, but he would point to private final sales and GDP numbers. There was nothing bad.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“Well, thanks for having me, Jack. You know, 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 felt like almost every answer or 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 actually 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 want to see any material. I think it was material cooling or 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 want to see more cooling. I don't want to see more material cooling. So we don't really know exactly where that threshold.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“Double cut, a 50 basis point cut in September, then no cut at all. So I'm really glad that you are here to explain why do you think market interpretation is so dovish, what were kind of the dog whistles, if you will, of that maybe I missed.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT
“Had no context whatsoever. I wasn't aware of the economic data. 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 cut. I hadn't been paying attention to Waller giving a speech that was literally called getting closer, i.e. getting closer to cutting. I had no context whatsoever. And he just dropped me in yesterday's meeting or listening to yesterday's meeting. I wouldn't have thought that the market would perceive that as a terribly dovish meeting and 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 virtual certainty now according to CME, the market is pricing that it's more likely that the Federal Reserve doesn't.”
2024-08-01 · Forward Guidance · Following The "Fed Breadcrumbs" | Nick Timiraos on “Not Hot At All” Labor Market, Interest Rate Cuts, and Fed’s Collision Course With 2024 Election · IDENTIFIED FROM THE TRANSCRIPT