Stifel's Piegza: Could Be Discussing US Recession Again (Audio)

first time ever. This as the Federal Reserve signals that the US is growing modestly and traders scratch their heads over where central banks around the world are going. Next, we'll be speaking with Lindsay Piegza, chief economist at Stifle Nicholas, about the Beige Book and about the Federal Reserve in the US economy. But right now, let's go to Charlie pelevin the Bloomberg Boose Room for Bloomberg Business Flag and

I think of pim Fox. Thank you, Kathleen Hayes. That on smp R higher Naz tak Laura, and this update is brought to you this Wednesday by sector spider e T S. Why by a single stock when you can invest in the entire sector of visits sector s P, d R S dot Com or call one sector e T F. Philip Hammond has been appointed the UK's Chancellor of the Exchequer, tasked with the job of protecting the

economy from the fall out of Brexit. A meeting you Prime Minister Theresa May's pledge to tackle quote burning injustice in society. He must now decide how best to stimulate the UK economy, which is already at risk of sliding into recession, while quelling voters frustration following six years of George Osborne's austarity driven policies. Federal Reserve out with its paige Book report and it says the U s economy expanded at a modest pay since mid May, amid slight

price pressures and some softening in consumer spending. The rally and US shares faltering today, equities fluctuating at all time highs as crew plunges amid an unexpected rise in fuel stockpiles. Treasuries have halted a two day slide. Laura Rosener is Senior economists of b MP poda ba. We're getting more

easing and more concern externally. It's just increasing demand for assets that actually are yielding something positive and so that's fueling demand for US Treasury securities and and driving them much lower. So no, it's not really fundamentals which are are driving US treasury yields. And right now with you have gold up seven tenths of one percent, SMP five hundred index unchanged, and now we'll look at the other stories making news. Thank you, Charlie from the Bloomberg Newsroom.

I'm Eric Shatzker. Hillary Clinton is talking unity today while on the road in Illinois, one day after Bernie Sanders officially endorsed her. Clinton spoke at the Old State House in Springfield. There is too much and hate in our country, too little trust and common ground. An analysis by the New York City Council finds that Donald Trump's proposals to deport illegal immigrants and temporarily banned Muslims could hurt the

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Mr Cameron thanked his political supporters, his children, and offered a special thank you to his wife, Samantha, you have kept me vaguely saying and as well as being an amazing wife, mother and businesswoman, you have done something every week in that building behind me to celebrate the best voluntary service in our country. You came home. Secretary Theresa May has taken over from Cameron as the new Prime Minister. Cameron Sterling is calling on protesters to protest the right way,

protest in peace. He's the fifteen year old son of Alton Sterling, a black man who was shot and killed by white police officers outside of convenience store in Baton Rouge, Louisiana last week. There are extensive subway delays across the city. Officials say of power outage at a rail control center has caused major backups on the one, two, three, four, five, and six lines. Global News twenty four hours a day, powered by more than journalists and analysts in more than

one twenty countries. I'm Eric Shasker, this is Bloomberg, Charlie, and we thank you and again recapping a move higher for the down Jones industrial average up by two tenths of one percent, s and P up by less than half a point. Little change there. Nazdek is down two tenths of one percent. I'm Charlie Pelican. That's a Bloomberg business flash. He's taking stock the FED in Focus on

Bloomberg Radio. The FED in Focus reports from the twelve Federal Reserve districts indicate that economic activity continued to expand at a modest pace across MO regions from mid May through the end of June. Here to tell us more, Lindsay Pieza, chief economist at a Stifle Nicholas, joining us from Chicago, and she can be followed on Twitter at Lindsay PA. All Right, Lindsay, so, tell us a little bit about your reaction to the Beige Book. Well, it's

pretty much in line with expectations. The Beige Book has consistently painted a much rosier picture of the US economy than the data would otherwise suggest. Remember, at the start of the year, with a very flow start out of the Gage, the Beige Book continued to emphasize that economic activity expanded at a moderate pace, a very similar tone that we continue to hear in this morning's report. Well, actually, what I really see in this Beige Book is the

word modest amid slight price pressures. To me, this is a very very cautious view of how the economy is growing. That doesn't seem to me there's anything that suggests, oh my gosh, we're seeing a big spurt of growth here. Well, I think the idea is more stability, the economy continue to grow to modest or moderate pace. What I'm really looking for is an acknowledgement that the U S economy

is still on very fragile footing. Now, of course they did mention that manufacturing activity was mixed, consumer spending showing some signs of softening. But what's so interesting is that they talked about the labor market remaining stable, and of course, as we know, May employment virtually non existent, followed by a very large uptick in June, the exact opposite of what I would describe as stable. Lindsey, take away all

the politics, takeaway Brexit, all of the extraneous events. If you were just to read this Beige Book and then add into that the release of the previous f O m C minutes, can you tell me what your position would be about raising interest rates, Well, I think right now it's a matter of so so economic growth, and it really depends where your bar of expectation falls. For me, I'm looking for strong, solid, robust growth in order for the Fed to feel comfortable to give us that second

rate increase. But for many sitting at these low low levels for years now, so so we're modest is good enough, and some of the Fed will certainly push for a second rate increase within the confines of It's hard to uh, you know, sort of all out at times, isn't it. But I think we had a trivick story on the Bloomberg today pointing out that, uh, in terms of the odds of the December interest rate increase, they're back up to which is almost where they were before the Briggsit vote.

It still doesn't indicate that people are betting on a rate hike this year, at least not traders, because our economists more and more, I think, once again, who are seeing the December hike? Uh? Your your your view? Will they hick at all this year? Lindsay? And is it

better if they do or they don't? I think at this point the Fed is going to remain on the sidelines through and most likely the better part of I think right now it's very fragile out in the economy, and I think the Fed really learned their lesson from lifting off in December based on expectations of further improvement, which we're still waiting for now six months later, and so I think a good portion of the committee is going to err on the side of caution, waiting for

realized improvement rather than expecting improvement down the line. It's all us about your thoughts having to do with the Bank of England. Will they cut rates? I think there's a need for additional stimulus. There's a significant amount of uncertainty, there's a significant amount of volatility out in the marketplace, and I think additional support from the Bank of England will at the very least begin to calm some of those, uh, those uncertainties in the marketplace. So I do expect another

rate cut, additional stimulus out in the marketplace. Okay, of course, that's were almost evenly divided among economists between tomorrow, July fourteen, Thursday or three weeks from now, and as you and you point out, they probably will move pretty quickly. But you also to comment on the negative bond heals the thirty year bonds selling at a record low two point

one seven percent Germany's tenure bune now with a negative yield. Uh, if you're a central banker, do you just say, well, we've bought up so much sovereign debt that there's nothing left to buy and they'll take any kind of yield they can get, or would you be concerned? I think it's a little from column Ay and a little from column by. Certainly central banks have gone around buying up all substantial amount, I should say, of debt, but at

this point it's also a concern. It's a flight to quality trade as investors are looking out in the marketplace and we're experiencing three four five standard deviation events, particularly surrounding the Brexit, and there's a rush to be safe haven, be that German bonds, be that the yend, be that the dollar or gold. And I suspect that we will continue to see these capital flows into these safe havens

during this time of uncertainty. If these capital flows into these safe havens continue on the institutional and corporate level, then what is an individual supposed to make of all this? Well, I think individuals are very concerned at this point, and I do suspect that we're going to see a lot of individuals hoarding cash, pulling their money out of the marketplace, with a big question mark of where we headed from here.

Now again, the big books got officials. They're telling us the economy is on relatively moderate footing, but there is a big concern that we could be discussing the R word recession sometime in the near future. And of course, the fact that the yield curve gets ever flatter as the yields continue to drop on long term treasuries and long term deating around the world. Typically that is has been in the past a signal that that our word

recession could be coming. It's a little bit more complicated these days, though, Lindsay p St thank you so very much for joining us chief economist as Stiffil Nicholas and co. We're gonna be continuing our look at the markets later in the show, will be be speaking with Jack Ablin

from BMO Private Bank in Chicago. This is Bloomberg Fed in Focus is brought to by Willoughby since eighteen ninety eight, New York City's boutique camera store for precision craft at Hazzle Blot and like at Cameras, plus a full selection of go pro action adventure cameras. Willoughby's corner of Fifth Avenue and thirty first Street