Surveillance: Trade Dispute Creating Uncertainty, Kaplan Says

and Center. The main story this morning talks in Washington, high level between the Chinese and the United States, and a conversation, according to our team down in Washington about a currency pack to Ibrahim rack Barry joining us here in New York City's global head of f X analysis, a currency packed. We talked about this earlier in the year. We have no detail on what it would entail, no detail on whether both sides would agree, and no detail

whatsoever and what the enforcement mechanism might be. Abraham, I'm sure you've given this thought before today, because it's been a story through much of the last twelve months. What are your thoughts on it now? So, I think that the prince able things to keep in mind is that the currency issues are actually pretty easy to resolve between the U S and China because their interests are fairly fairly aligned. The US doesn't want a stronger dollar, The Chinese don't want a weaker and men b at at

this time. They don't want to encourage even more capital outlaws. So overall, I think this issue will be dealt with. It won't be very far reaching. I think we have the template. The template is what the US agreed with Korea. What's part of the U s m C A agreement in in essence, which is effectively more transparency around FS interventions and some commitment not to quote unquote manipulate X. So I don't think it's a big deal. It's relatively

easy to resolve. The timing is just the Chinese are expecting to get something out of it, and I'm not quite sure we're there this week. The agreement in and of itself feels very superficial if this is what they agree on. Ultimately, the good news that I think for investors is that, according to our reporting, if we can secure some kind of packed around this, it would be phase one on the road to perhaps phase two and three, which is securing a deal around the tougher things and

avoiding the terrified of next week. Abraham, We've been here before. We've been here so many times. This market is being whip sword by headline after headline, what is your advice to your clients right now? So we we think overall this is still a This is still a pretty cautious and challenging global environment. We're right at the cusp of what's consistent data wise with the soft landing, but it doesn't take much to steep us into the hard landing scenario.

So you're definitely better off having exposure to hard lending hedges. So in fect space that will certainly be two more yen upside. For instance, down the line, the dollar is not a bad place to be either, but it is still a pretty diffuse environment, so you don't want to

fully commit to a hard lending environment. I want to translate the currency chat yen upside means stronger yen stronger yet yes, stronger, yeah, I mean, I mean Japan pay is a huge pivot point here, frankly, like Turkey does in the Middle East, but Japan, in the Eastern Asia, in the Pacific Rim do they want a strong yend. No they don't. And in fact, I should be very clear, we are at at a pretty pivotal moment this month.

We have a BOJ meeting coming up later this month where they're likely to at least have some action, and we have an important five yearly review from the government pension fund which again will probably try and stem the appreciation pressure. But my point here is in the general context we're in, that's probably not enough to to put to put a cap on on the n in particularly

if things get worse. I think that's going to be just because the time and you and I meant talked earlier about how quiet the market's pen the eurostasis now seems critical. What is the news flow that will make euro move a demonstrable set of figures where I can make money? Is it le Guard or is it something else? I don't see how there. I think it should be

something else. Now, we we have argued that you were actually able to make money on euro because it kept on drifting lower over the last twelve months, and particularly euro dollar has been quite inefficiently. But now what yes, and and now we think what would be the big driver isn't act that we see real recession risk in Germany and if that spreads to the rest of Europe, that I think would be a serious potential further downside

for for Europe. But for what we actually think we will see the continued drift rather than an acceleration of the trend. Well, Abraham, let's explore your baseline, your base case. You believe we can engineer a soft landing. Care is that still your base case? It is, but only only really just this is a low conviction call, exactly. We we we are in very mixed circumstances. So we we weighed up both of those scenarios, and right now we're you know, we're really in the middle of the road

between the two. We think that there's a soft landing because we're actually still seeing some positive signs out of China in terms of the data, credit markets, which historically have been a good indicated also still looking quite okay, and in fact, the US still has some positive signs. How dependent is that low conviction baseline call of yours to engineer a soft landing? How dependent is that call on what happens between the Chinese and the United States

over the next couple of months. Quite quite dependent. So within that is an expectation that we will not see my further escalation from here. We should all be clear ahead of the U S election, the US is extremely unlikely to roll back tariffs so we don't think we'll see a deal that resolves a lot of the issues, but we are at a point where we think there's only really tactical changes to the US China dynamic for the next few months, So that gives you a fighting

chance to keep the software. We wanna get a final question to you, because no doubt, through much of this program will be dedicating it to what's happening with the trade talks down in Washington, d C. That will no doubt be the number one story for many people through the training week as well. Yeah, Abraham, a thing we go back to on this program is that typically for investors were always overly focused on the shark closest to the boat, and we need to be thinking about what's

happening out swhere. Do you think we are underestimating events around the periphery of the main story at the moment that perhaps needs a little bit more attention, And if so, where is that attention where should it be? So we think there are a couple of other important storys around. We already touched on Japan, including ahead of those g

P i F reviews later this month. The big story in G ten of X for US is also the candies where we see a lot of sensitivity to weaker global environment, but also central banks that seemed to be a little bit behind the curve. So exactly so weaker, weaker Swedish crona and at least no further upside on the on the Norwegian side as well. And then of course the other big topic, including an f X land is Brexit. Abraham, thanks so much. It has just been a crazy day. Thank you, thank you so much. We're

focused on trade, We're focused on the markets. We welcome all of you coast to coast and worldwide. But right now the interview of my day on Turkey. This is Stephen Cook, his book faced on absolutely extraordinary on the Path from the Arab Spring. He joins us now with

the Counseil on Foreign Relations from our studios. And while she did, Steve Stephen good more warning, um I I look at the events and let's bring it forward from new questions coming off of Mr Aradjan's lengthy speech uh in Anchora, what is next for Mr ra to Wan? Who does he have to sell the message to next? Well, really, the only people that he has to sell the message to is the Turkish public. Uh and the real risk for aer to one is that this incursion ends up

being a more serious and protracted military conflict. UH. The Turks have now entered an area that had been controlled by this Syrian Kurdish fighting force known as the People's Protection Units. There's fighters aren't likely to take on Turkey directly, but engaged in more of a guerilla warfare. So for the moment, are One is riding high. He gave a very tough speech UH in Anchora not long ago. But if this operation unfolds and UH and and keeps Turkey in in Syria for a long period of time, he

may run into some political problems. Stated. Can you explore where the EU stands on all of this? There was a threat from the Turkish president today to open the doors to the three point six million Syrian refugees. Who speaks for the EU at the moment, who's dealing with this? Well, this is a very important issue, and the and the presence of so many refugees in Turkey for which the

European Union has been paying Turkey to keep them. There has been a point of leverage with President Air Juan every time the European Union or individual European states have grown critical of Airduan's domestic behavior. Uh, and he certainly has proven himself to be an authoritarian like many others in the region. Uh. He has threatened to open the doors. So uh, there's going to be a UN Security Council meeting today. THEU is going to meet and discuss this.

He is warning them not to take a strong stance against Stephen Cooking. I'm so glad to bring this up. But John, Yes, exactly the right question. I, as the ignorant American, was close about the unique Germanic Turkish access. I began with sabelt Ka Kelly, the actress in Game of Thrones and her charity work in her Germany for the Turkish community. Let's go right there. How does Chancellor

Miracle adapt and adjust to what President Trump has wrought? Well, this is something that the Europeans have been trying to deal with since the beginning of the Trump presidency. The decision to stand aside as the Turks rolled into Syria is one of those impulsive decisions that I think no one has really quite gotten used to. And the problem that is that it presents to the Europeans is that the resulting instability has an impact on European politics. UH

Syrian refugees have been a flashpoint in European politics. There were Neo Nazis in Europe well before the conflict in Syria began in March two thousand eleven, but the presence of so many Syrian refugees who have traveled through Turkey on the way to Europe, particularly in Germany, has UH encouraged and provided fuel for the extreme right in Europe to make political gains. Stephen, there are so many different angles to explore around this story, the response from Europe,

but also the response here in the United States. A real divide in the Republican Party now between the executive branch and senators, including Senator Lindsay Graham, an ally of the President, close out of the President introducing a bipartisan bill to sanction Turkey. Stephen, how do you see the US response evolving in the coming months and the separation,

the division between the White House and Congress. It really is rather extraordinary that it has taken a Turkish and cruision and to herd them Syria to get the Democrats and the Republicans together, which I think demonstrates the depth of anger on Capitol Hill towards Turkey, once well regarded by almost everyone on Capitol Hill is a strategic partner of the United States, but this action has fueled concerns that UM, it will take the pressure off the Islamic State,

which is regrouping and rebuilding, and will once again threaten the region in American interests in perhaps the United States. Uh. All that said, UH, it doesn't strike me that there's much that the Congress can view to prevent UH further Turkish action or the American or the Trump administration's tacit support for what the Turks are doing. Stephen Cooke too quickly here from your book False Dawn, Chapter two, Bread Freedom, Social Justice, Where will be the bread for the disrupted

on the Turkish Syrian border? Where will that come from? Well, that is an extremely important question, and already aid groups have pointed out that much of this population is dependent upon international non governmental organizations and their work is being disrupted by UH this Turkish incursion. So people who are already quite vulnerable and once again finding themselves in an even more difficult situation. Stephen, we appreciate its on this morning,

Stephen Cook of the Council and farm Relations. Cinia Fellow for Middle East and Africa Studies. Tell me a really original, unique situation that could end really quite badly. Now I'll get lots of talk about on trade with an esteemed equity guest, the mechanical engineer from Pennsylvania knows how to

use a slide rule. David Pearl where this was epic Partner's David, I want to go to the ramcode deal just out what did they say, John, They're gonna now they're gonna announce a perspectus to give the green light for the world's biggest But we're only green lighting. It's not an I p O. It's a stub diliquefy am I right, David defined price. Ah right, It's just a way to monetize their holding because they're really not selling much the public. You're not any real ownership. But then

you just described Silicon Valley. I mean Silicon Valley will put out what six eight of an equity A Ramco is putting out one to whatever within all you've seen in the last ninety days is a Silicon Valley Unicorn parade. Is it over? I do think it is over right now because the market is seeing a concern about companies continually losing money. These are companies that bleed free cash flow. They have to continue they have exactly, they have to go to market continually to stay in business. And the

markets are getting a little leery of this. You're seeing that in numerous recent I p o s and bond offers. So we've got a bit of detail here, Tom, so let's go through it. The people involved in the deal. It's, according to our reporting here at Bloomberg, looking to sell two p of a RAM, which could raise forty billion. Now you can do the math on that. I'm just wondering how ambitious it is to sell two per at

forty billion dollars, David. They've they've continually trying to value this company at two trillion, and I'm not sure the market wants to deal with that valuation. That that that

it's the entire issue. So the smaller amount that they sell, the more likely they can keep the price higher because there isn't that much of a market looking at the rest of the energy stocks around COOS, that's such a premium if you do this, do you get the sense that this is a very original IPO and there could be some favors coult In here to support the valuation

of this issue. Well, again, the the beauty of UM doing a traditional i p O is the placement and so finding some strong buyers and keeping the share size as small as you can will help. Can we back up and long ago and far away? In my ute, an i p O was what David eight percent of a company? Secent of a company. Maybe there's a little private stub off. I mean, John, we flipped this on its head. What you just said there I would have

told you twenty years ago was impossible. Well, in fact, the usually the reason you would go public is because you're raising capital to grow. That's not the case in the one at all. This is about monetization of you know, the owners. And that's that's why I struggle with the valuation of this company because you know what the intent and the objective is of the Kingdom. They quite clearly see a top for this business if they want to

sell it down. And if you're an investor looking at it knowing that that's what the Kingdom sees, why would you be a buyer of that story? Well, all I can say is it is a well run company. On the positive side, it is. It is for dividend for income. It will generate cash. But but again the valuation I can't really speak to because right now the comparables are much much lower that That is Ambre Horden's really smart interview yesterday Rochelle Oil John. She started with the dividend

Shell has basically done nothing. I mean X on mobile tenures trailing three point one percent per year, you get a big US dividends? Shall you get John? Is six percent dividend? I mean shall should be on the real you and change almost six and a half percent? Is your is your dividend? Are we going to get the dividend for Mariam Coo? Would you suggest? I know, not there like yeah, I really doubt it's going to be

that high. But the dividend is definitely one of the ways that they will be paying investors and themselves, So it makes sense to have a dividend, but it's not going to be as high as David. I want to talk about what's happening with the trade story as well, and on a single name issue, because I think this this week has really taken it from a global macro story from top down to a single name story with the likes of Activision, Blizzard, the likes of the NBA

as well. These names the Walt Disney Company because of ESPN getting caught up in two completely different value systems. If you want to operate in the United States and you want to operate in China, to satisfy the consumers in the United States and simultaneously satisfy the state in China is becoming increasingly difficult. As a stock selector, a stock picker. How are you thinking about that at the moment, David?

This is this is an incredibly complex area. We could talk about this for a while and I will tell you the question is if you run a company, who are you responsible to if it's creating value for your shareholders and owners or is it the stakeholders, including society at large, the customers. It's almost undoable right now because of the issues you just said that there's no way

for a company to satisfy all their stakeholders. But as an investor, their duty is to create value for shareholders, and so they have to make an economic decision that's best for the company, no matter what the politics, and that is going to be very difficult in this environment and many of these companies flick the switch on that in the last couple of months and said that the

shareholders no longer the number one priority. That was some news that came out led by the likes of JP Mork and I believe David, Do you believe that in the first place? And if that is to be true, if we're meant to take account of all the stakeholders in our business now as a business leader, how complex will it be to navigate two completely different markets the United States and China. Oh, it's going to be a much harder world to invest stint and to run a company in. I mean as a as a as a

shareholder and investor. I'm going to make an economic decision on whether the company is doing the right thing for us as owners. But that does include to some degree these um, you know, stakeholder issues and you know, ethical political issues, epic partners, foundational sharp ratio, risk free rate. Where's the risk free rate right now? To three decimal points?

It's pretty low. And actually this is this has been one of the scary things that has happened since QUEI started in and has almost restarted this year, that many companies back to the unicorns who probably shouldn't exist, can still raise money. And you know this is still concerning as a free cash flow investor because the law of economics is the competitor who is more profitable eventually wins. But now the person who can lose the most money

can disrupt the profitable companies. Quickly walk through an example. You don't even have to mention the name of a company you got wrong. Where you looked at the free cashow it looked legitimate, and three or five years later you guys said, man, we mess that up. How do you get there? Yeah, it's usually because of some change in the market or competition. Um, we're pretty good about the profitability of the company's note issue. No, But as

a disruptor, let's put it this way. Walt Disney was one of the most profitable companies, has been a great stock. Netflix disrupted the industry. It can lose. It's losing three and a half billion dollars this year and we'll lose more next year. Keeps reading your mind and has spent more money on content than even Disney had. Uh, and

yet will never make money. But it is affecting Disney, and Disney now will have to invest a lot of money, basically hurt shareholder value to compete and they will, uh, they'll probably be successful as a matter of fact in the long term, but they've hurt shareholder value in the short Does ample change if they've got to get into content Paul Sweeney suggest that won't be nearly as profitable as the Apple combine. Oh, yeah, absolutely. I think Apple.

Apple does want to transition to recurring revenue services, including content, but this is an area they don't have any competitive advantage, and to begin with, they're going to spend a lot of money, and once again, it does hurt shareholder value. In fact, that was one of the issues we had

with Apple as a long term hold. Just to clear hit David, just to clean this up, because I think it's really really important if we do describe this era as the era of easy money, and some people might push aggressively back on that, but if this era came to a close and this very unique era of exceptionally easy money, and did you saying that some of these business models that have been established to the likes of the Walt Disney Company and others are getting involved in

are ultimately unsustainable at this price level. That unsustainable business models well, for Walt Disney, they have the capital to survive this. It's just hurting near term profits and mid term profit Netflix. But for the disrupts like Netflix, this would be a disaster. Uh. They literally have to go to market at least once to twice a year to stay in business, and they have successfully done that, but

that could come to an end. We're out of time doing the interesting stuff, Thank you, partners are in particularly untrade and the ramifications of China. It's the story. John and I are watching. What a session it was overnight, the market dropping on a report from the South China Morning Post suggesting that deputy level talks had gone poorly. The Chinese delegation may leave early. Then the market rallied

on reports they will stay through Friday. Then we rolled over, then bounced back as Bloomberg report of the US may roll out a currency pack as part of a deal that could also suspend a planned tariff increase next week. The talks at a high level haven't even started yet. Equity futures all over the place right now. We are negative around about five points on the SMP five hundred, down a round about a tenth of one percent for

the fetes view on all of this. I'm really pleased to say that we can now catch up with the Dallas FAT President Robert Kaplan alongside our colleague bloom Bugs Michael McKee. Thank you very much. We would like to welcome Rob Kaplan to Bloomberg Radio and Television worldwide. Thank you for joining us this morning. Thanks for being in Texas.

As we noted just minutes ago, you released an essay on the economy and Monetary policy in which you say, at this juncture, having adjusted the policy rate twice this year, it is my intention to take some time to carefully monitor economic developments. It sounds like you're not convinced that you need to cut rates on OCT I'll withhold judgment

until right before the meeting. I was supportive of the July cut, also was an advocate of the September cut, And the reason I was in favor of those cuts is I feel that decelerating global growth weakness and manufacturing weakness and business investment, there's a risk at those that those weaknesses may intensify and spread to other parts of the U. S economy, and I felt it was appropriate for us to take some action. Now that we've acted twice.

I'm gonna withhold judgment here and take We've got about twenty days to the next meeting. I planned to take most of it to make a judgment. Well, you also say in your essay, I believe that moves in US market determined rates are consistent with concerns about economic weakness spreading more broadly to other parts of the US economy. Now market rates, particularly Fed funds futures, have priced in a rate cut. Do you have to ratify what the

markets are thinking. No, the market rates are referring to our particularly particularly looking at the treasury curve, and and since the fall of two thousand eighteen, over the last year, the tenure treasury has gone from three and a quarter yield to high one fifties today, is about a hundred and sixty five basis point rally. It's a substantial rally. In that same time, the Fed funds rate has only moved down about fifty basis points at least since the

beginning of this year. So we've had a substantial financial move in market determined rates. I think some of it is global liquidity, but some of it is increased pessimism about future growth, mainly due to trade tensions and and no, I don't. I don't think the Fed has to chase uh that move, but I think it did tell me that substantial move tell me that the setting of the FED funds rate was probably too tight in July and September.

It may still be too tight, but that's a judgment I want to make as as we go through the next few weeks. Given the investors are so certain of a rate cut, do you risk maybe a reductive the taper tantrum if you don't ratify with it. So I think the one thing you've heard me say before, market expectations can change on a dime. UH. And I don't think my job is to satisfy the markets. It is to figure out whether we've got the right policy setting,

particularly a setting that fosters you can I'm a growth also. UH. Other part of my job, by the way, is to call out it's not just monetary policy that has been a cause of this slowdown, and monetary more than monetary. Monetary policy is going to be needed if we're going to grow faster. And I'm talking about growing the workforce, UH, improving UH trade UH and de escalating trade tensions and also other moves on education, skills trained, and other things

that would increase our ability to grow. The minutes of your September meeting show a discussion about whether to put something in the statement or publicly suggest when you would end this cutting cycle. Do we get something like that? Uh, I'm not necessarily sure that that's appropriate. I think when you start hearing people like me and others say I'm agnostic about whether we move from here, that would tell you that if nothing changes, we're gonna stay where we are.

But but uh, I think we're We've got so much uncertainty and so much policy uncertainty. I think it would be wise for us not to over telegraph where we are in the in the cycle. I have said though, that I thought that this, uh, this cutting we're doing should be limited, restrained, and modest, and not the start of a full fledged cutting cycle. I still believe that well in your SAU note, as the Chairman did just a few days ago, that growth is being affected by

slowing economies elsewhere and trade tensions in particular. So I have to ask a question I get asked all the time by people on Wall Street, what is the FED get out of cutting rates? Because We're not suffering from an aggregate demand shortfall here, how do you help? So? I do think when rates are this low UH fed funds cuts, maybe the marginal additional effect might be less than it would be if rates were higher credit conditions were tighter. But that doesn't mean that cutting the Fed

Funds rate doesn't have an impact. It does. There's still a substantial number of borrowers that borrow based on the short term rate UH. And in addition, I've been concerned about the shape of the yield curve, particularly if the Fed Funds rate is above the tenure Treasury UH and there's a substantial gap it, it has a tendency to make it harder to bar short and lend long. And I think that if it was prolonged, would eventually cause

a tightening and financial conditions. So sometimes when you're cutting rates, there is a short term positive economic effect, but there's also you have to look over the horizon, particularly UH as to whether you think there's some distortion in the curve that I think suggests our policy settings too tight. Well, you're not concerned about running out of ammunition when we do face it down town, I'm I'm, I'm worried about that argument, but I'd rather use ammunition when it matters most.

And I've said a number of times, if we wait and withhold our ammunition and wait to see a broader slowing in the economy, I we wait for this slowing to reach the consumer, and then we have a more severe slowing, we will have waited too long, and that all the ammunition we have I don't think will be enough to arrest that slowing. I think moving modestly now gives us the best chance to avoid a more severe slowing.

And that's why I want to use the ammunition now, even though yes, it means we'll have a little less ammunition for later. We're speaking with Robert Capitlan, the president of the Dallas Fed, on Blueberg Television and Radio worldwide. Dallas Fed specialty is trade. So given the fact that everybody is talking about that as the source of our problems, can you quantify what it means? Is it a headwind? Is it an anchor? If they reach some kind of deal,

does the economy turn around? If they don't, does it tank? So here's the here's the confusing or vexcine thing about trade. If you just took the amount of goods we're talking about UH and and save visa v s in China and other countries, and multiplied the potential tariff on those goods, you'd say the impact on GDP growth in the the United

States should be very modest. Here's there's a second order effect, though, we believe at the Dallas FT is far more substantial, and that's the impact of trade uncertainty on business investment UH and and on manufacturing. And what do I mean by that? UH. A lot of these trade relationships, particularly as I've mentioned before with Mexico, our our logistics supply chain relationships that are critical to the country U S.

M c A isn't yet ratified. But the uncertainty we've had first good part of this year about trade with Mexico we think took the wind out of business investment. And this trade dispute with China, which we think is

very appropriate. UH. Intellectual property rights, technology transfer mean more to us probably than the size of the trade deaf sit UH strategically, but the uncertainty about that relationship and UH and news of new events that occur every week or two that change the view on this, we we find are causing businesses to say let's just time out, let's just put business investment on hold. I'm not going to cancel it, but let's put on hold for this year,

maybe all of next year. And that's why you're seeing business decon direct investments so weak. Now, that's not a huge part of g d P business direct investment, but if that slows, it can start to seep in to other parts of the economy. So it's the second and maybe the third order effects from trade uncertainty and trade tensions that I think have a more significant effect on the economy, which is harder to measure. It's time when businesses are planning for you suggest they're gonna stay on hold.

So what we're seeing now, the kind of growth one point seven to is what we get. Our forecast for this year, at least for the second half of the year is one point seven Uh. Maybe it will be in that neighborhood for I'm not sure what we see that will make it better than say one or three quarters to two percent. Uh. And yeah, most businesses I talked to right now are want to stay nimble and they realize that there could be new policy pronouncements any time.

And with that amount of uncertainty. They're not cutting back their business, but they're putting new projects on hold. And the other thing they're doing is watching very carefully if there's a broader slowing, and if there's a broader slowing they see saying the consumer, I think they're at least on their toes that they will take further action, and that would cause even a further slowing. So I think we're in a fragile period in here, which is why I'm glad the FED has taken some action in July

and September. But I think this could go either way. We can avert a more severe slowdown, but I think the jury is out right now. In the minutes, UH, you've got a report on what happened with REPO, because it's been just a day or two before you met UH, and yet you didn't discuss what to do. The chairman this week said you've reached some decisions that you're going to move forward. So did you have a conference call or something in between and make decisions and set things up.

So I'm not going to disclose things that haven't been publicly disclosed, other than to say UH, at the time of the f o MC meeting in September, we announced these daily repo facilities, and just for people who are listening, what that basically does is helped distribute a repo across the system, i e. If big banks aren't lending their reserves and overnight in the overnight funding markets, a standing repo facility or an over daily repo facility has the

purpose of getting rid of those frictions. So we've been doing that every day. We are having more deliberations. I don't want to foreshadow those, but we'll be making some announcements in the very near future, not just about REPO, but also about increasing the size of our balance sheet in a way that improves the reserve levels UH, especially in light of increase US Treasury issuance, tax payments, and

other frictions that we're seeing. So I think that we believe and I believe there's a need to do both REPO and increase the size of the balance sheet to some extent in order to raise the reserve levels. And and UH and and we've lost reserve since early September, mainly because of tax payments and because the Treasury issuance. We need to restore some of what we've lost. J Pal said you're not allowed to finish your interviews without saying,

but it's not que it's not quee uh. And he's right to say that, and it's and it's it's correct that that's not the case because we're just buying bills. If we do this, whatever we announce will just be buying bills, whereas QI historically has been buying securities out along the curve in order to lower those term rates in order to incentivize maybe mortgage lending and risk taking.

This will be just related to bills and primarily targeted the overnight funding markets and making sure we can appropriately set the FED funds rate in the target range. Probert Camplin, thank you very much for joining us this morning. Thanks from the Dallas Fed. We'll send it back to you. I my great work. As always splinder set it sitting down with the Dallas FED President, Mr Robert Camplin. Thanks

for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane Before the podcast, you can always catch us worldwide. I'm Bloomberg Radio eight