Surveillance: Fed Special

I'm Jonathan Ferrow picking up from the news conference after Chairman Poun and the committee hiked interest rates by twenty five basis points a rate hike, but they considered a pause, and he was keen to communicate they don't see rate cuts this year as well. Here's the price section for you on the sm P five hundred, down about a half of one percent. It was higher about thirty minutes or so ago. We turned lower likewise with a nat stack,

we're now down about a tenth of one percent. Also in the bondom market, though this moves sticks the two year year old down by twenty basis points three ninety seven, let's call it. Let's round that up. For you on a ten year were down about twelve basis points too. Let's call it three fifty, just about sub three fifty at three forty eight sixty six taken look at the euro against the dollar. Euro dollar looks like this one away seventy six fast into about one percent. That is

a stronger euro, that is a weaker dollar. Lisa, what's really interesting about this meeting is that at the same time Chairman Power well speak in the Treasury Secretary was as well, and arguably in the last hour, you could make the argument that the most important headline came from the Treasury Secretary and not the FED chair. One FED Chair j Power was boring. I mean, let's be honest, that was a boring press conference. He didn't really say

anything other than we're not sure. We adjusted our projections and really towed the line. But Janet Yellen said she is not considering a broad increase in deposit insurance, despite all of the discussions around some sort of blanket deposit insurance. This is spooking the market, and you can see that mediate response in market. So at what point is this counterprogramming Drone Power comes out and he's saying everything's fine, we have complete confidence in the stability of financial system.

And she's here kind of raising questions about what the backstop is going to be for some of these regional banks. So we asked the question through the last hour, in fact the last couple of days. Can you take the financial instability of the last two weeks and work out how it equates to interest rates at the Federal Reserve. That's clearly something the Fed Chair and the Committee are trying to do. Take a listen to what the Fed

Chair had to say. For purposes of our monetary policy tool, we're looking at what's happening among the banks and asking is there going to be some tightening and credit conditions, And then we're thinking about that as effectively doing the same thing that rate hikes do, so in a way that's substitutes for rate hikes. So the key is we have to have policies. Need got to be tight enough to bring inflation down to two percent over time. It doesn't all have to come from rate hikes. It can

come from you from tighter credit conditions. This underpends a massive difference between the communication from this FED Chair today and what you've heard from President of the Guard in the last week. The experiences in this banking system in America right now very different to the experience in Europe.

There is a real belief on the committee at the Federal Reserve, communicated by the FED share that they believe, like many people do have spoken to us in the last couple of weeks, that the financial instability will lead to tie to credit conditions and that could be a substitute for the tightening through right hikes that this FED could deliver. He specified it's hard to know exactly how much, and he couldn't come up with a model like some others have come up with to try to pin that down.

But they're trying to game it out anyway. I mean, you were noting that and basically there has been a market shift in the expectations. Again, a lot of this really hinges on the stability of the financial system, and so I do wonder why A he didn't really discuss deposit insurance and how important that was to the banking system, especially as b Jenny Yellen went out there and was like, yay,

and that's not that's not really going to happen. Do you think that's clearly because he wanted Treasury Secretary Jenny Yellen to take care of this herself. Knew that she was speaking at the same time. You know, I'm not going to speculate. I mean, I can speculate, but it's not really going to help. It's not going to help anyone.

I'm just wondering what the communication here is in terms of Paul see especially because you need the political world to do something like that at a time when it's unclear that they can get really much done and we're still talking about not getting a budget passed. So I mean, I just wonder how that's going to be the fly on the ointment for this whole messaging procedure at a time when he was successful, it was boring. He didn't really make any weaves. And that is an absolute rip

roaring hall. Yah. That's a big achievement considering how ten so difficult this moment was for this Federal Reserve. If you are just tuning in, welcome to the program. At twenty five basis point hike from the Federal Reserve. We had a statement, we had some projections. We've just had a folly minute news conference or something like that. In the statement, they'd previously said at the last couple of meetings that the committee anticipates ongoing increases in the Fed

funds rate that's been replaced. Now, the committee anticipates that some additional policy firming may be appropriate. He was asked about what that means policy firming. He said, the important words to Lisa or a summon May, summon May, that there might be some and it may happen. I guess you can read into that whatever you want to read into that. Ultimately, they're trying to stay open mind it about the whole thing. Ultimately, they're saying, we have no clue.

I mean, look at the projections that are all over the place going out to twenty twenty four and twenty twenty five. When you look at the dots, they're saying, we don't know. We're watching things the way that you're watching things, and we're not going to rock the boat, but we still do see inflation being an issue. Basically, they've been listening to all of our commentators and representing all of their views in a perfect way to not rock the boat. My question is, just are we going

to step away from this? Saying Janet Yellen kind of did it for him. So we worked through the projection materials for twenty twenty three. The median dots five point one percent. The previous set of projections, which I believe was back in December also five point one percent, So

no real change there. But last when I were looking at the central tendency and the range of estimates on the committee as well, the range of estimates on the committee for twenty twenty three, Lisa anywhere from four nine to five nine for twenty four. I think you picked up on the longer dots as well, three four to five six. I mean, we don't get real descent at the Federal Reserve. It's rare that you hear from any one. It's often the regional Fed presidents when you do get some,

if not always. But you can see based on the projections and the ranges there that there was a pretty wide range of views about where they think rates are going. Okay, get this, I can't get over this. Twenty twenty five, someone has their DAT at five point six percent and someone else has their DAT at two point three seven percent, So try to square that. I mean, basically you have it two and a half to three percentage point gap

between those two. We don't understand where we're heading. I just wonder whether they're going to really be guiding or where they're going to be following the market, and the market gave him an opening and they took it. Just an extra line on financial stability and what the FETE chair had to say in the news conference. Remember that line from Senator Warren in the last couple of days. Was it on Face the Nation on Sunday where she said this chairman he said all he wants is looser

financial regulation. He said, I plan to support strongest supervision and regulation. Have we put that to bed now? Ultimately that's the direction of travel, That's what the fete's going to be pushing for. He never came out and said all I want is loser financial conditions and less regulations that does That's not probably an accurate depiction of what he said. There's still our questions emerging when they knew what they knew, how quickly they're they're sort of keyed

off when there is some sort of risk. There's still our questions. He's just going to point to the investigation, but you know, people are still looking for a lot of answers up front. At the top of the news conference, we're prepared to use all tools to keep the bank system safe. Went on to say there's ample liquidity it's available, and that DEPOSITUS savings are safe as well. Now that one's interesting to what degree, to what extent, to what amount?

We know the FDIC limit two hundred and fifty thousand, We thought maybe that's going to get changed, inevitable. We were just trying to work out what the number might be. The Treasury Secretary's comments in the last hour and maybe muddy in the water a little bit, a little bit, I mean, this was one of the proposals on the table was some sort of broad increase in deposit insurance. She's saying, we're not considering a broad increase in deposit insurance.

How much their hands tied when you look at Senator Schumer as well as Kevin McCarry, the both sides of the aisle, not really having much political will to have anything that could be skewed as a bailout in some of the political propaganda. I mean, that's really the concern, and anything that they do could be skewed as that. So there's not really the emphasis on doing something that you know, perhaps some of these officials like the sea. Let's get down to DC and catch up with MH. Marie.

Your latest rate on the latest comments from the Treasury Secretary. Well, it goes again some of our reporting, but we should note that it is within the Treasury Department's per view to do due diligence, to look at potentially if they were have to do this again to expand the FDIC, something that obviously we know midside banks are asking for. But Janet Yell and the Treasures Actor didn't mince words.

She said that at this moment not something that we have looked at, so potentially it hasn't gotten to her desk, or potentially it's not in a place where they'd be making decision on it. But our reporting is that the Treasury Department was doing this due diligence, not something to invoke risk, but just something that they wanted to make sure they could have the research and intelligence done if they well have to take that step a Marie, thanks

for that. Dan in Washington on the lightest two things happening at the same time, we've been following the chairman news conference. Dan in Washington as well. Mike McKay's been inside that news conference. Mike, let's talk about it. Great exchange with you in the FED chair about thirty minutes ago what would your tank away? Well, I think there

a couple takeaways from this. One is that the FED is leave the banking system aside, still concerned about inflation, still worried that they are not tight enough, and prepared to go higher with the FED funds rate to bring inflation down, and he reiterated that they're going to leave rates at the higher level until they get some progress on inflation. So the banking situation doesn't seem to have

affected the course of monetary policy. The interesting thing on the banks, though, is that Powell was ready to say that Silica Valley Bank was very badly managed, they did the wrong things, and that while there's an investigation into what the FED did wrong, this was basically a couple of bad banks as opposed to a systemic problem. I'm not sure that message is going to get received as he specifically tried to get it out there, but he

was trying to reassure people. As far as the FDIC limits and the bank deposit limits, Congress has to approve that, and it really doesn't have anything to do with the Fed. The Fed can do an emergence, can vote for an emergency exception, as they did with these two banks, but Treasury has to agree, and the FDIC has to agree. It's really a Treasury FDIC proposal that then has to

go through Congress. So I think what Paul was trying to do was reassure Americans that their deposits are safe because nobody's going to really let them lose a lot of money. But he can't make any promises because it's not his business. It's not his job, and we are seeing some of those banks fall further after the comments from Janet Yellen. Despite some of the assurances from FED cher J. Powell, Mike Steve Chavon wrote in saying I'm wrong,

It's not a boring meeting. It was actually really interesting. He said, I think this meeting marks the passing of the torch from inflation and duration risks to recession and credit risks. Did you take that away too, that the tone had shifted in terms of the greater likelihood of a hard landing and the greater likelihood of some sort of credit event. If there was a shift, I think it was more towards uncertainty. I don't think it was

anything to do with the recession or pull back. The FED still thinks inflation is the biggest issue, and the FED still wants to stay on its policy path. Is a little bit more of a willingness to say, if things go south, we would be willing to look at monetary policy actions. But several times he repeated rate cuts are not in the cards right now. They're going to

have to wait and see. They don't know what the bank of problems are going to mean in terms of credit tightening, but some of that credit tightening from the banks maybe exactly what they're looking for so they don't have to raise rates as high. But no, I don't think the Fed at this point has switched gears at all, acknowledging more uncertainty, but not suggesting they're anywhere near a hard landing or that they're anywhere near closer knowing how

the landing is going to come about. And Mike wonderful work as always, Mike McKay just one of the best. My terminal always lights up when Mike cost the question in a news conference. Always great question, might now say, if you missed it, has Mike nailing it in a news conference. Participants don't see rate cuts this year, They just don't. Are you saying that what you see and

the five point one percent. Basically, consensus is based on being it will be sufficiently restrictive or is it leavened by the idea of you don't know what's going to happen?

In other words, what should people think about in terms of how the Fed thinks about how far it is from the terminal for purposes of our monetary policy tool, we're looking at what's happening among the banks and asking is there going to be some tightening and credit conditions, And then we're thinking about that as effectively doing the same thing that rate hikes does so in a way

that substitutes for rate hikes. Joining us not to discuss bolt Down Lee, former New York Fed President and currently of course Blinberg opinion columnists built even at some time to process out of that what you make of it, I think it was pretty logical what happened. Basically, the FIT is saying that one uncertainty has gone up a lot, We're not sure how long the banking system stress is going to last and how severe it's going to be. Number two, that that stress is going to restrain the economy,

and that substitutes a little bit for rate hikes. So we're not gonna have to do as much as we thought we were gonna have to do earlier. But I think the real key is something that Mike mckeed talked about.

Uncertainty has gone up. Certainty has gone up a lot, and I think it's sort of interesting that markets are not really fully focused on that because the risk of a hard landing is it is higher now because the FED isn't going to really know what's the appropriate policy to do until they get a lot more information, and it's going to take time for that information to be received, and it's not gonna be very easy to assess how are these banking was going to affect credit conditions and

how much is that are going to affect economic growth. So I think that we're actually in a worst place today than we were a few weeks ago because they're just you know, there's two forces. One force is keeping inflation high and other forces slowing the economy down, and we don't know which one is going to dominate or for how long. So I think the risk of a

hard landing has definitely gone up. Bill The easy way to dismiss any conversation around the FED is just to say that data dependent, Hey, that's so much they're going to be data dependent. But Bill, at this point, I'm wondering what date they are they dependent on for the next decision. Well, I think the problem is that the data on the effects of credit tightening on the economy

taken a while to actually be realized. You know, you know, we have two sort of open questions about the banking system. Number one, how broad is it going to be? How many banks are going to be affect? Number two, how much are banks that are affected actually going to tighten their credit standards? The problem is not a credit problem. The problem was actually taking on too much interest rate risk. So it's not obvious to me that tightening credit standards

is really the logical response. And number three, how long is this going to go on? So I think that there's a lot of uncertain to hear about how much of a breaking effect the banking system was there going to be on the economy. The fact that the Fed basically has one more rate hike and then it keeps RATETI throughout the year suggest that at this point they don't think that this is going to exert a lot

of downward momentum on the economy. What's interesting today. Is the market reaction to the FEDS, the press, the press conference, in the statement and the summary of economic projections was to be a slight, ever so slightly surprised by the rate hike because it wasn't fully priced in. But it actually is pricing in more rate reduction in the rest of twenty twenty three and into twenty four than they

were earlier. And I think that was a little bit surprising, frankly to give and the fact that Paul was very clear we don't expect to cut rates in twenty twenty three. Does that open up a question about the credibility of the FED? I think it opens up a question that people are just very uncertain about what the banking system wills mean for economic activity, and then how does that

actually translate to the FED. I think, you know, people are worried about the downside risk from the banking sector. Steve Shivna, Federated. I keep going back to this because I think it's a really salient point. This meeting marks the passing of the torch from inflation into ration risks, he wrote, to recession and credit risks. Arguably what we have seen is not a credit crunch. However, often liquidity crunches can lead to credit crunches, as we've seen in

the past. Bill, do you agree that this really is a tipping point as represented to some of the changes in the statement. I think it really depends on how broad and how long. I mean. You know, we've had other examples where there have been all sorts of market turbulence and no recession resulted. At most obvious example that was the nineteen eighty seven stock market crash, where people were talking about making analogies back to the Great Depression,

and the economy can't go into recession at all. So I think the real issue here is how many banks are affected and how strongly do they react. When I look around at the US banking system today, I see only a handful of banks that have actually been affected, and they only account for a few percentage points of total banking assets. So I personally think that if this thing is stabilized right here, the effects on the real

economy are going to be pretty modest. So to be clear, then, built that's an important point, because we're only two weeks into this. If it doesn't spill over and carry on bleeding, are we going to go back to what we were talking about two three weeks ago. In another two weeks, we very well can I mean, I don't think I

don't think we'll have the clarity in two weeks. But you know, six weeks from now, the next FL and C meeting, you know, maybe we're back in the situation where the banks that were under pressure have either remedied themselves or been acquired, and the rest of the banking system is fine, and the economy is still too strong, and the labor market is still too tight, and inflation

is still too high. I mean, the reality is the FED actually hasn't accomplished much yet in terms of generating more slack in the labor market or actually bringing services inflation down. And that's important to recognize. So when the FED chest says we're not thinking about kind of interest rates this year, I guess you're saying we should really take him seriously because you don't think that's going to

happen at all. Well, there's a lot of you know, there's a lot of there's a wide band around that possible outcome. But I think what he's saying is that job number one for the FED is to get inflation down to two percent and they think that's going to be a long drawn out process, not something that's going to happen very very quickly. I thought it was interesting in the summary of economic projections, if you look at their forecasts, the forecast virtually unchanged from the December meeting.

So essentially what they did was economy is stronger than we thought, inflation is higher than we thought. Oh, but we have had some banking systems. What should we do to our forecast. Well, let's leave it basically unchanged, because that's a set, and they're doing that because they just

don't know which is those two forces predominates. John mentioned that you could drive a truck through some of the economic projections if you take a look at the dots and how far apart the highest and the lowest are. I was really struck by twenty twenty five dots and just the range of estimates from five point six percent to two and a half percent. I'm wondering if you've ever seen anything like this before where there is so

little of a compass directing all FED members. But even if they're on the same page right now, I think they're on the same page in terms of if you told them what the economic forecast was they would break down interest rate path that was pretty similar. I think they're what they probably disagree on is how is the economy actually going to evolve? How quickly is inflation going to come down? What's going to happen to economic growth? Are we're going to have a hard landing or soft landing?

And so there's probably just a lot of uncertainty about how the actual economy is going to involve, and that uncertainty about the economic forecast I think has gone up. So you know, the mortal forecast contained in the Summary of Economic Projections has not changed very much at all, but the distribution that probably built distribution is wide, not dramatically, in part because of the banking laws. Final question, Bill, next decision is my third? Is that enough time to

get the incoming information you think they need. We'll see. I mean, you know, I think it's going to be either banking system stabilizes pretty quickly in the next few weeks or we just have you know, creeping problems. You know, the problem that in the banking system is when the first weakest, the weakest bank gets into difficulty, that raises the stress on everybody else because everyone else gets more skittish.

You know, all the people that are using the banks are much more skittish today than they were before the Silicon Valley Bank failed. And so it doesn't take as much bad news today to generate the same response as a couple of weeks ago. I built this was wonderful as always both doubtly that the former New York Fed President currently, amongst other things a Blimberg opinion columnists wait and get on the decision from the Federal Reserve at

least of what a moment. Quite clearly they take away for me after that news conference, after that conversation just there, when we talk about being dated dependent, what are we really dependent on between now and that next mat sync in early May? How many more banks fail? It's CPI is whether we get some kinds of real credit tightening. Right it's all backward looking and right now the president is moving so quickly. And that was very clear and very present, which is the reason why people seem to

still be responding to what Janet Ellen is saying. She's still testifying in front of the Senate, and I do want to just give you a sense of what else she did say. It seemed like she softened her tone just a touch, which is the walk back that some people were expecting. She said, not time yet to say if FDIC insurance cap is appropriate. So you know, basically hedging and hying. And you saw her vival in some

of the shares of these banks. So right now people are tracking her comments, probably more than any fallout from the FED. But this, to me was interesting. She said, the supposits left Silicon Valley Bank at a pace that was never seen before. And this comes at a time where there is a new threat of and people blame Twitter, people, media,

people blamed everything. But you can withdraw money at the top of a phone, and that has changed the scenario and the protocol for banks that really rely on these deposits in a way that the larger complex of the banking world does not. I've always said, when these officials testify, they should have a Blimberg terminal, just a life fate of where markets are heard when they speak, just to sort of like, you know, also correct them. I think maybe she does right. Maybe she was like, all right,

I have back. Maybe Jeff Rosenberg joined us now from Black Rock. Jeff, I think people are asking the question, was the hike today the final hike. Well, I think Powell was very clear to try to indicate not only is this not the final hike, but that to Mike McKee's question, that there's a real disconnect between what the FETE is telling the market in terms of their forecasts and their expectations, and what the market is pricing in in terms of cuts at the at the May meeting,

as soon as the May meeting. So I think this meeting, you know, is really about dealing with the present crisis in the banking sector, and that unknown is really you know, that's going to determine where we are in May. But but you know, Powell said something very important about why they changed the statement. They changed the statement it was much more dubbish because of the banking crisis. And then he went on to say why the SEP forecast were

relatively unchanged, and that was due to offsetting factors. The offsetting factors here is that if we didn't have this banking crisis, then this would have been a more hawkish result and it would have been a terminal rate that probably went higher. He said that explicitly, our path was probably going to be higher than what we had projected in the December sep So, going back to what Bill Dudley said, I just want to add that, you know, the uncertainty grows on both sides. It's the tail risks

that are increasing. And while most people are looking at the market and saying, oh, we're really worried about this banking crisis and the hard landing, uncertainty cuts both ways. And so the other way to think about the uncertainty here is that the FED didn't do what it otherwise would have done, given the fundamentals of the inflation data. That got very little attention at all to the question about twelve times, and it's a feature and not above.

The focus in this meeting is distracted, perhaps rightly so, or perhaps as we'll see if this crisis fades, that it distracted from the fundamental issue, and that by not having tighten more, they raised the risk on the other side of a more persistent inflation outlook. So I think when we talk about uncertainty going up, which I agree with,

it's a two sided uncertainty. Jeff, I'm really glad that you brought this up, But I want to build on that this idea that perhaps people are traumatically under pricing longer term inflation as a result of not an artificial but an interrupted rate hiking cycle that would have looked different based on the data from your vantage point. Is that the risk that is most underpriced in markets right now? I think it is. It's a very asymmetric outcome. Right now.

The market is pricing for the bank scenario. It's pricing for the last twenty or thirty years of FED policy behavior. Financial sector stress leads to a FED that pauses and that cuts. That's what we've seen from the Federal Reserve, and if the crisis is big enough, we'll see that again. But that's a big if. And as Powell stated very clearly, trying to estimate the impact is guesswork, you know, So these numbers that are being thrown around those are guesses.

Is it twenty five, is it one hundred and fifty? No one knows. When you look at the market reaction the two year yield chart and you pull that back a little bit longer, it looks like a lot for the markets pricing. They're giving a lot of impact to future monetary policy and very soon to be cuts as a result of this event. But the extent, I think was the word he was using is highly uncertain. And what we also have to talk about not only is

the extent, but the marginal impact. Powell talked about financial condition indicase, and they mostly don't measure this. And so if you look at bank lending standards, if you look at tightening conditions that incorporate that you're going to use the Survey of Lending Standards and that has been showing a tightening condition for a very long time. Certainly this

event marginally increases it. But the question is really to what extent, and this ends up like uk LDI, then this will be a lot less of an extent, and therefore the market is overpricing the amount of cuts that they should be taking out of the market expectation market to one side, Jeff, I'm with you. It is a guessing game. But I believe the FET's taken a stamp at it because if we got an EP two weeks ago, I think that rate that dog goes from five one

to five sixty. I think most people thought that was what was going to happen. So Jeff, with that in mind, hasn't effect just told us that they think it probably a quat to about fifty basis points. Yeah, I think it's I think he even said, you know, one maybe some more. He was kind of anchoring to twenty five or fifty. And I think you can infer from the counterfactual on the SEP that that is kind of the implicit projection. But it's again it's it's it's highly uncertain,

you know. And then you know, John, you just asked the question around, you know, what are we going to learn between now and then, you know, if this crisis subsides, if the interventions are successful, and think about that, you know, globally, um, you know, then it will be about the data and we'll go back to what about the data and the evolution and are we seeing that disinflationary trend that the market is also expecting to see, or to some of

the comments today and what would have been the most recent reflection of inflation data that you're not seeing that and that will re emerges the focus. Jeff. That's what's going to make the next month or so pretty difficult to trade because, Jeff, if you think about it, I believe right now this market is likely to ignore the incoming economic data, whether it's inflation or payrolls, and focus

on what we hear from the banking sector. So, Jeff, with that in mind, where you talk about those two uncertainties, it sounds like the inflation risk is just going to get packed and maybe built throughout the rest of this summer until we get some clarity on what financial stability really looks like. Now, Jeff, you've got to put money to work against that backdrop, knowing that maybe this market might be less sensitive to incoming information traditional data points, CPI,

pay ros, etc. How would you manage that? Yeah, you're absolutely right, Gentalthan. I mean, the banking sector crisis will happen faster. It's evolution will happen faster than the incoming inflation data. That's good in the sense that you know,

if it's stabilizes, it will become stable. Very clear. We're gonna get resolution on some of the other outstanding banks that global issues seem to becoming resolved, So you can get to that resolution quickly, or you can get to a contagion effect and they need to ramp up, you know, broader intervention policy that will reconcile relatively quickly. We just

don't know in what direction. In the interim, you know, higher uncertainty really means that it's very risky, very tough to make a definitive statement in terms of portfolio positioning. Our stance has been and it remains pretty defensive with respect to the hard landing outcomes, and defensive with regards to how much duration risk you want to take here, given the inversion of the yield curve, you know you can find some decent yield without taking a lot of

duration risk in the front end of the curve. Just real quick, Jeff, what would it take for you to become less defensive, perhaps a little more aggressive, to feel a little bit more conviction. Well, I think two things right. It's about reconciling both of those uncertainties in a positive manner, the first obviously being the banking sector crisis and the degree to which it's spilled over into too much or overtightening. Effectively, when you look at the bond market pricing in cuts

by May, they're saying the Fed's too tight. It's going to have to reconcile that by cutting, and the banking system crisis has accelerated the degree of tightening. I think if you saw that reconcile to the positive sense where there was relief in terms of the hard landing scenario.

That's going to reduce the recession risk. And then if you also at the same time start to get back to some positive developments on inflation, you further remove the threat that we were talking and worried about, say two weeks ago, that the FED had to go longer, faster, narrowing the runway for that soft landing that he got

the question for it. I think if you see those two developments, you know, then I think it's going to be a much clearer environment for reducing the tail risk of recession and pricing that in you can start to add some more risk economic exposure down and quality credit exposure into the portfolio. If you saw those two things happen, y Jeff, wonderful to catch up with you, sir, as always, Jeff Rosenberg there of black Rock on the latest fat decision. I think a lot of people walk away from this

thinking Chamanpow handled that well. History is going to be the ultimate judge. If this financial stability issue gets worse than the twenty five basis point high, looks terrible. If it goes away and inflation stays elevated, it looks like it's the right thing to do, and that's why so difficult to be a policymaker confronting decisions like this one. Today. What I heard from him was basically, you guys can have your views, I'll have mine. None of us know.

We don't anticipate cutting rates. The market says, yeah, you're going to cut rates by almost a percentage point by the beginning of by the end of January. He says, look, you guys, do what you want. We'll play it by ear. We've got the backs of banks. It was successful. It was not that interesting. He didn't, which was good. Stay the banks going into the clothes. That's what you need to watch. First Republic down seventeen percent and rolling over

coming up of the clothes. Remain boss. That's going to lead the coverage. Morgan Stanley's Seth Carpenter, hr Denny Off ther Denny Research. The bank's rolling over Secretary Yellen Waying, Gin Shechem and Powe goes twenty five from New York. This is Bloomberg