tv Whatd You Miss Bloomberg January 10, 2022 4:30pm-5:00pm EST
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caroline: breaking news, jerome powell testifying before the senate tomorrow. the labor market is strong, remarks or in his prepared text ahead of the testimony where he says that the fed must take a forward looking views that will use the economy. he will tackle in on higher inflation, they do not want to get it to become entrenched. really, once again, the federal reserve focusing in on inflation.
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perhaps noting a strong labor market where we see inflation there too? >> you cannot avoid that. members of congress or to point out that the fed has an inflation problem because there is an inflation problem. elected officials got to run for reelection. he says that the fed is committed to meeting both of his mandates, maximum employment and price stability. jesus he will use tools to support the -- he says he will use tools to support the economy and prevent inflation from becoming entrenched. the rest of his comments are pretty standard for a nomination hearing. he takes some credit for what has happened with the economy since the pandemic began. congress did a lot physically and the fed used all of this pool to bring the economy out of it -- fiscally and the fed use all of its goals to bring
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economy out of it. there are new challenges like cryptocurrency and cyber threats. a little bit all over the place, nothing specific about what the fed is going to do. that will come up during the questioning. romaine: another question about the fed, the news of the richard clarida do is go to step down about two weeks earlier than he was planning to. his tenure was up at the end of january? >> he is supposed to leave january 31st. i think today's announcement may have been time to take some of the pressure off of jerome powell in his confirmation hearing. elizabeth warren noting that she was still very upset about the trading scandal that involved
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the fed and had complaints that jerome powell and others had not provided necessary documentation for congressional oversight. she wanted full records released and with clarida, to finally admit that he did trade before the fed did its emergency monetary policy in 2020, this could take some of the pressure by putting him off at the fed. taking care of that problem. romaine: thank you for helping us break that news. the fed is in focus today, who better to join us that one of the most respected of economists out there, the former vice chair of the federal reserve. he is a professor at princeton university. i want to start with jerome powell's testimony tomorrow. at least the prepared we have so far.
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he focuses on the idea that the fed is ready to prevent higher inflation and that is not necessarily a surprise. he talks about cautioning this idea that the post-pandemic economy is would look a lot different than the previous expansion. how do you thread the needle of camping. inflation without completely destroying -- thread the needle without completely tamping down inflation without completely destroying the economy? >> tightening, that comes out of the end of tapering, tricking the balance sheet. -- shrinking the balance sheet. hour be shocked the fed does not -- i will be shocked if the fed does not just go up in 25 basis points increments and watches
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what happens. what this surge, what if anything, this surge in omicron infection does to the american consumer. sonali: not just about the pace of rate hikes, but as you are talking about, shrinking the balance sheet. how sensitive are assets into that event? >> people have various opinions on that. if you talk to a market trader, you will get a more juicy view. and they think that these things are the beginning of the an end of the world -- beginning of the end of the world. it only has modest effects on interest rates. that is what they are supposed to look at. not zero, it is worth doing. you could say it is important to do. i do not see -- i do not see it
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as a cataclysmic tightening of the strength of the balance sheet. if they shrink it fast as they did last time they started shrinking, it did not go very far. caroline: the other breaking news is richard clarida, he is stepping down earlier than expected. talk about walking the fine tight rope of overseeing regulations at the same time as a u.s. economy. >> there has always been a dual role. and there are a lot of financial regulators in the united states -- there are a lot of financial regulators in the united states. the fed has been the bigshot on the regulatory role. i say that, i hope the sec is not listening -- fcc is not
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listening. the fed has got the a hundred pound gorilla -- 800 pound gorilla. you have to delegate that more to the vice chair for regulation which until recently, was rated coral -- randy coral. i imagine he will continue to do that. the important thing to see for the elizabeth warrens of the world, when it came to regulation, jerome powell was not alan. alan did not want anything. he was not going to delegate the regulatory authority to me. we disagreed a lot. he was the chairman. he was a real laissez-faire economist. jerome powell is nothing like
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that. jerome powell is what i sometimes call a bush republican. and conservative, but not a wild eyed conservative, not a laissez-faire conservative, understanding that you have to put some shackles on financial businesses sometimes. otherwise they will do crazy things. romaine: there is some criticism that he has left randy to do what he wanted and a certain cohort in washington did not feel that he was strong enough. you mentioned elizabeth warren as opposition. her dangerous comments from a few months ago. i am curious that if we do get a stronger pfister and we do get the three vacancies -- a stronger vice chair and the
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three vacancies, we might see the people are more stringent in their approach to financial markets. with that because powell to push back -- would that cause powell to push back? >> he tends to defer quite a bit. that is not to say that there is not an issue that will come up sometimes, where he will disagree vehemently. as you know, he voted against powell in the majority on any number of regulatory issues with ricoh appointments to the fed -- with three new appointments to the fed. powell may find himself on the minority side. he may choose an issue to speak upon and make it known that he does not like it. i would not expect that to be a
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common event. i do not think we should rule it out. sonali: going back to some of the trading restrictions that may start to occur among officials at the fed, what kind of rules do you see moving forward, or kind of questions do you expect tomorrow coming out of politicians? >> i do not know what the politicians will ask, but the question will come up, there are all kinds of rules and that is what jerome powell wants to do. as you said before, i once sat in that seat. i can contest, i never treated anything while i sat in that job. i thought it was a dangerous thing to do. not that i had that much money, whatever i had invested, i kept it during that period. that is probably a little bit too strict, people sometimes serve for six-eight years.
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they can never change their portfolio. i certainly be more restrictive -- i certainly would be more restrictive. it just looks bad. it raises questions at the federal reserve. it is something that fiduciary organizations do not need. romaine: it is always great. he is a professor at princeton university. a great voice to have your on this day and we have another great voice coming up in a minute. we examined the fed's will mandate while addressing inequality. we have a chief economist over arlington and worked at the federal reserve, she will be here in just a moment. this is bloomberg. ♪
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>> rate hikes. >> all of these changes on rate hikes. >> the death rate hike is additionally -- the march rate hike is a go. >> all in the space of 12 months is a considerable change to the monetary stands. >> the fed is having to hurry up because it was late starting. >> the difference this time is the role of the balance sheet, the shrieking of the balance sheet. >> transferring to q2. >> the fed cannot escape the issue. >> it is all about the other
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mandate. inflation. >> they have a significant inflation problem on their hands. >> they are going to hike pretty aggressively. caroline: rate hikes, what justifies it? inflation? the labor market? the key center point of discussion, i am pleased to say that we will come in someone who looks at the cutting edge, kim kimbrough. you know well about the balancing act of a federal reserve as a regulator and someone looking at job holders on the daily. is the job market strong enough to withhold a rate hike? >> i think the job market has never been stronger, it is never a better time to look for a job. look across a number of
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different measures, they help us gauge the strength of the labor market. it is a strong market. it is recovered extraordinarily quickly when you compare it to other recessions. even before the financial crisis, we are recovering at a breakneck speed. i would say yes, the labor market can withstand rate hikes, but not everybody is weathering the storm in the same boat. i think some boats are in yachts and some of us are in dinghies. how are the people who are not set up? romaine: i am curious about the unevenness of this recovery. the idea that last year and even in 2020, we heard a lot from powell talking about the idea that economic recovery had to be all-inclusive in a way that we did not necessarily see out of the pastor session? -- past recession?
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there has been more attention on fighting inflation rather than meeting some of the soft goals that he have set -- he had set in the labor market. is that a mischaracterization? >> the fed needed to show that they were taking inflation seriously. they have done that. everybody is looking towards march to see what happens. from where i sat, it is clear to me that we have not yet achieved the goal that the is set for itself last year in terms of achieving that inclusive labor market. when you look at unemployment rates for african-americans and hispanics, they still are at levels that would be considered semi-crisis if we were talking about white americans. we are not all experiencing the same rate of unemployment. i do think that the labor market is strong, i also think it is going to take a long time to pull everybody back in so that
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they are playing on the level playing field. the fed knows that. it has taken a long time for the charts they are showing to converge. the longer and stronger that the market is, the better it is to pull african-american upon employment--unemployment down. i believe that the fed is aware of it. they have a tight rope balancing act to achieve and they are signaling that they are taking inflation seriously. do i think that they are going to disregard the inclusive goal that they have set for themselves? no, it is to recent. -- too recent. sonali: is congress going to step in at a greater rate? >> we have fiscal policy going hand in hand, try to achieve the goals we have fiscal policy. pretty targeted, working very effectively. a broader, pointer tool.
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-- blunter tool. i cannot opine on it but i will tell you that from the fed's perspective, raising rates is going to make it a little bit of a steeper hill to climb if they want to achieve that inclusive workforce. they are not going to see the same rate of top opening -- job openings that we see right now. job openings on linkedin have doubled in the past year. they keep doubling, will they keep doubling, i am not sure? caroline: what about omicron as well? this is the cloud that we confront in the here and the now that has companies, lululemon saying that they have issues
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with labor and wage inflation. is not something you can give us a tell on in terms of the data you are saying in this instance? >> we have looked to see omicron in our data, i think it is too early to tell. i do suspect based on what was done in the past that we are learning to live with it more effectively. with each successive wave of the pandemic combo have done a little bit better in terms of not getting knocked down as far. i would imagine with omicron we will recover more quickly than we do with delta. my guess is that we are going to see a play out in the gin where he data that comes out in a month -- january data comes out in a month. in our data, we are not seeing it. it is not showing a huge downturn. caroline: i want to get your
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thoughts on the data that we got out of the labor turnover survey. a record amount of americans leaving their jobs. romaine: some people say it is a bad thing, what is your general read on it? >> i think a flexible labor market is a healthy one. if people are quitting, they think that they can turn to something else and better. when we surveyed linkedin members, what they tell us is when they are changing jobs, they're changing because they want better compensation and benefits or a new opportunity. companies are starting to wake up to that, that the game is to retain talent and not let it move around. there are elevated rates of transition we have seen of people changing jobs on our platform. showing up in the quick data that we have seen. i think that will start to stabilize this year.
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our members so tell us about 20% are looking to change in the next six months. there is still a set of people that want to make a change and a large set of people who want to make a change within their company. i think that is more hopeful for employers. i think we could see that data be elevated but it will not persist indefinitely. caroline: fascinating take. thank you, chief economist and she worked with the new york fed. our final thoughts, this is bloomberg. ♪
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whether the economic conditions are actually right to continue on with what most people think are going to be a rate hike. caroline: jerome powell seems the labor market is strong. linkedin is vouching for that strength in the labor market. let everybody is being looked after, i wonder if that will be brought up tomorrow, to what extent do you have the support and inclusiveness of the labor market as well? sonali: maybe look for a new job now and move now as rates start to rise. romaine: we talked about what jay powell and what this new fitness went to look like, new voting members and you have the fee can see that -- the vacancy that needs to be filled. this will be a different fed than what we had prior to the pandemic. caroline: richard clarida.
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