Rebecca Patterson Talks Warsh, Fed Rate Decision Preview

Bloomberg Audio Studios, podcasts, radio news news flow.

Here with the President landing for the G seven meeting, we're going to go to Tyler kendabut dash to Rebecca Patterson right now to be kind senior fellow at the Council on Foreign Relations, her work at Bridgewater, bestsemmer at JP Morgan over the years, thrilled she could join. I guess I got to do the FED meeting. To me, it could be dramatic. If he's going to change things. He doesn't want to dawdle around, does he?

I mean, I think priority one, two and three this week is reinforce the Fed's credibility. You don't want any questions about any political bias. So that's goal number one for Kevin Warsh this week, I think, which he should be able to execute beautifully. I think beyond that, if he does a press conference, I expect you will, but it's not a given. If he does a press conference, then that'll be his opportunity to lay out the priorities.

What is he going to focus on? First?

I would imagine he wants to review all the economic models, the processes.

He's going to review communication.

He's already been very vocal about having less communication, think more less.

It has been for years.

Yes, a new thing, the balance sheet will wait.

Yeah, so, Rebecca, obviously he's got some level of pressure from the President, from the White House to lower rates. But wait, the data is not there. He's got a committee he has to deal with.

Yep.

Wait.

I would think the messaging this week is as much for the rest of US i e. The market, maybe even more so for the President.

Yeah.

I mean, he's got a difficult needle to thread here, right, Keep the President on his side ideally, but build credibility and trust with his colleagues at the FOMC, I mean, And to your point on the data, I mean, right now, core PCE for May is tracking at around three point three percent year on year. If that's the number that comes in or something like that, there's no way they

About US dollar here, we kind of came into the year, I guess the consensus on the street was for a weeker dollar, and then the war with Iran starts and we had that flight to quality like we typically see.

Now what Well, the dollar until the news over the weekend was down or sorry, it was down against only two major currencies, the Norwegian crown and the Australian dollar, both big commodity exporters.

It was stronger against everything else.

Primarily on rate expectations, higher interest rates following higher energy prices and broader inflations. Now that that is off the table, you have seen yields, as you guys just mentioned, down a little bit. You are seeing the dollar down a little bit today. And the question again it goes back to the Fed. Do we have a hawkish bias in the press conference this week or not?

I think the raid expectations.

Will continue to be pretty important for the dollar going ahead. And again it's not just the US, right two sides to every currency trade. We expect a Bank of Japan hike this week, the ECB, the Euthpean Central Bank.

Just raised rates. So it's it's not clear how much stronger the dollar gets.

Out of Florida. And Johns Hopkins, I mean, there was this idea that if you end a war, even as Caplin says, a middle war, the idea is you get a disinflationary tendency. So not Rebecca Patterson now at CFR. But if you're on Wall Street right now, in what's clearly a boom investment banking environment, do you just assume disinflation?

I wouldn't assume anything right now. Look, we have we have some tweets and some headlines suggesting that we have a step forward towards peace, but the deal isn't supposed to be signed till Friday, and even then it's not clear yet if it sticks, it's not clear what the terms are going to be. I mean, Iran wants and needs funding. I think they could still pressure to have some sort of fee, service fee to go through the straight not at all a service fee.

And Paul, this is really Rick Wilson just down on Twitter with just a scathing quick note like where are the details?

Yeah?

When do we get the details?

I don't have an answer, and we might not for sixty days. Right.

The markets will flip right around if we do that.

Well, they may do that, right, and that's the point. Oil has come down, stocks are up. Does it last? Do you want to chase it here? I mean, if we have peace and it's certainly in both sides interest to have peace. Iran desperately needs money, it needs to rebuild. US does not want oil at a four handle or thirty year year olds at a five handle going into midterms.

Gold, well, it seems like just a cup of coffee. Ghost tom And said, we're at five thousand dollars and now so we've seen a pullback hereda forty three hundred.

Yeah.

Yeah, I mean you had a lot of speculative money going to gold at the beginning of the year. We had a little bit of a parabolic move, So that was part of it. But the other part of it is we did have two big central banks, Russia and Turkey selling Russia sold for four months in a row. Turkey was the biggest seller of gold in March. But those are the outliers. Central banks in general are continuing to buy.

Bloomberg surveillance across the Snaetion boy and for San Antonio. Three am at a diner a re order tried to get over the hangover. Joining us now with Rebecca Patterson and studio is Anri Horden, who was doing a seminar in Houston. Can you get me tickets to Santonio? I'll take it over. How did you get from Houston to San Antonio?

Our friend drove me.

Friend.

Yeah, so a friend saw that I was in Houston.

Also saw I was at.

Game three with the Presidents that I'm going to game five. Why didn't you come?

And I made a game time, game time decision Saturday morning and I was like, you know what, Like, I'm so cool?

Are you sitting with Prince Harry?

I was not sitting with Prince Harry. Oh yeah, you texted me.

I saw him. I saw Spike Lee.

I was sitting more by Patrick Ewing, which was pretty amazing, and did a block your view?

He did not block my view. He was actually behind me.

So I will say San Antonio was the sixth borough on Saturday night. It was how to be fifty percent maybe seventy five percent New York Knick fans, and the first quarter or two obviously we were behind, but we've been there before and it was a little a little intense, and then Jalen Brunston does what he does. This team works together so well and they clinched it.

It was incredible.

You have to call him my Jalen. Missus Keen is called Jalen this week, Jalen. I gotta ask what was in the arena the energy that was not captured for America on TV.

I think what was not captured was the moment you realize they were about to become champions after fifty three years.

There was literally.

Tears from New Yorkers and their faces, grown men just absolutely crying. One guy next to me was a New Yorker, stayed for the whole thing, moved to San Antonio in nineteen ninety four, so he was technically there supporting the Spurs, but even he was emotional and he said, this is pretty bittersweet.

For me, for our fans.

On radio, I just have to highlight the outfits that are in this studio.

Here.

Rebecca Patterson, New York k Knick, orange head to toe, fantastic, Amory Horden comes in the whole thing going and the Tom's got the blink I mean.

I didn't know Tom either. You were a Celtics fan.

Well, we're all Nick fans today.

Yes, I said that.

I just sold it out, writes the paycheck. One more question for Rebecca Patterson. Here the spirit of this to me, the single miscall a New York city in the gloom was a census of twenty twenty where everybody, including the smart people, said, oh we added six hundred thousand in the MSA here, I mean, it's his bet against New York that's always been there.

You know what, I think there is a human emotion that you always want to go after whoever's on top. And that could be a company, it could be a person, it could be a city. So it's easy to go after New York. But look, New York's back. People are working five days a week in the office. Real estate prices are coming back.

God.

I mean last week, if you tried to get around the city in a cab or even on the subway.

It was packed.

Yeah, Rebecca, thank you so much. Rebecca Patterson with us writing for the Council Foreign Relations. A terrific podcast with Sebastian Albi