Videos

 

Bill Dudley, Former Federal Reserve Bank of New York President

1. A Fed Soft Landing Is Highly Unlikely, Dudley Says
   • Profile
     • Federal Reserve Chair Jerome Powell says the central bank can achieve a “soft landing,” slowing growth and curbing inflation without precipitating a recession.
     • Bill Dudley, Bloomberg Opinion columnist and former Federal Reserve Bank of New York President, disagrees. He speaks on “Balance of Power.”
   • Videos
     • Video #1
       Channel:- Bloomberg Markets and Finance
       Date Published:- 2022-March-29th
       Date Added:- 2022-April-1st
       Link

Mohamed El-Erian

1. Allianz’s El-Erian comments on Fed moves, Biden, and oil
   • Profile
     • Allianz Chief Economic Advisor Mohamed El-Erian says that the Fed is having to “choose between one of two mistakes.”
     • El-Erian also said the Biden administration’s decision to release emergency U.S. crude “helps” fears of double-digit inflation, “but it doesn’t remove them”.
     • He speaks to Francine Lacqua and Dani Burger during Daybreak Europe.
   • Videos
     • Video #1
       Channel:- Bloomberg Markets and Finance
       Date Published:- 2022-April-1st
       Date Added:- 2022-April-1st
       Link
2. The bond market is showing volatility we have to respect, says Mohamed El-Erian
   • Profile
     • Mohamed El-Erian, Allianz and Gramercy advisor and president of Queens College, Cambridge, joins CNBC’s ‘Squawk Box’ to discuss markets, the Federal Reserve and more ahead of the open.
   • Videos
     • Video #1
       Channel:- CNBC Television
       Date Published:- 2022-March-28th
       Date Added:- 2022-April-1st
       Link

 

CNBC

1. Investors need to be cautious, Fed is not their friend: Fieldpoint’s Cameron Dawson
   • Profile
     • Greg Branch, managing partner at Veritas Financial Group, and Cameron Dawson, chief market strategist at Fieldpoint Private Securities, join CNBC’s ‘Squawk Box’ to discuss markets ahead of the open.
   • Videos
     • Video #1
       Channel:- CNBC Television
       Date Published:- 2022-March-28th
       Date Added:- 2022-April-1st
       Link
   • Participants
     • Greg Branch, managing partner at Veritas Financial Group
     • Cameron Dawson, chief market strategist at Fieldpoint Private Securities

 

Story

Bill Dudley, Former Federal Reserve Bank of New York President

A Fed Soft Landing Is Highly Unlikely, Dudley Says

Link

Bill Dudley, a Bloomberg Opinion columnist and senior adviser to Bloomberg Economics, is a senior research scholar at Princeton University’s Center for Economic Policy Studies. He served as president of the Federal Reserve Bank of New York from 2009 to 2018, and as vice chairman of the Federal Open Market Committee. He was previously chief U.S. economist at Goldman Sachs.

U.S. Federal Reserve Chair Jerome Powell has made two ambitious assertions about the central bank’s management of the economy. In his latest news conference, he said that the Fed’s new, more inflation-tolerant monetary policy framework bears no responsibility for the recent sharp surge in consumer prices. Then, the following week, he cited three historical examples — the tightening cycles of 1964, 1984 and 1993 — as evidence that the Fed can achieve a “soft landing,” slowing growth and curbing inflation without precipitating a recession.

I disagree with both. The Fed’s application of its framework has left it behind the curve in controlling inflation. This, in turn, has made a hard landing virtually inevitable.

Under the monetary policy framework, introduced in August 2020, the Fed is supposed to target average annual inflation of 2%, which means allowing for occasional overshoots to make up for previous shortfalls. Yet in the current recovery, the central bank translated this into a more specific commitment. It would not start to remove monetary stimulus until three conditions had been met: inflation had reached 2%; inflation was expected to persist for some time; and employment had reached the maximum level consistent with the 2% inflation target.

This was a mistake. As I wrote last June:

This means monetary policy will remain loose until overheating begins – and cooling things off will require the Fed to increase interest rates much faster and further than it would if it started raising rates sooner. […] The delay in lifting off, for example, is likely to push the unemployment rate considerably below the level consistent with stable inflation, increasing the odds that the Fed will need to tighten sufficiently to push the unemployment rate back up by more than 0.5 percentage point. Over the past 75 years, every time the unemployment rate has moved up this much, a full-blown recession has occurred.

This scenario is playing out now.

The labor market is “extremely tight” (Powell’s words), inflation is running far above the Fed’s objective and the central bank is only beginning to remove extraordinary monetary accommodation.

Powell blames bad luck — surprises such as snarled supply chains that officials could not have anticipated. To some extent, he might be right, but the Fed nonetheless bears responsibility for being so slow to recognize the inflation risks and begin to tighten policy.

So can the Fed correct its mistake and engineer a soft landing? Powell is correct that the central bank tightened monetary policy significantly in 1965, 1984, and 1994 without precipitating a recession. In none of those episodes, though, did the Fed tighten sufficiently to push up the unemployment rate.

1. 1. 1964: The federal funds rates rose from 3.4% in October 1964 to 5.8% in November 1966, while the unemployment rate declined from 5.1% to 3.6%.
   2. 1984: The federal funds rate rose from 9.6% in February to 11.6% in August, while the unemployment rate declined from 7.8% to 7.5%.
   3. 1993: The federal funds rate rose from 3% in December 1993 to 6% in April 1995, while the unemployment declined from 6.5% to 5.8%.

The Fed’s most benign tightening cycles didn’t increase unemployment

The current situation is very different. Consider the starting points: The unemployment rate is much lower (at 3.8%), and inflation is far above the Fed’s 2% target. To create sufficient economic slack to restrain inflation, the Fed will have to tighten enough to push the unemployment rate higher.

Which leads us to the key point: The Fed has never achieved a soft landing when it has had to push up unemployment significantly. This is memorialized in the Sahm Rule, which holds that a recession is inevitable when the 3-month moving average of the unemployment rate increases by 0.5 percentage point or more. Worse, full-blown recessions have always been accompanied by much larger increases: specifically, over the past 75 years, no less than 2 percentage points.

The Fed needs to adjust how it puts its monetary policy framework into practice. It shouldn’t be completely reactive, waiting passively until inflation exceeds the target and the labor market is extremely tight. Such extreme “patience” forces it to slam on the brakes, increasing the likelihood of an early recession. Also, officials need to be more forthright about the road ahead: Getting inflation down will be costly, in terms of jobs and economic growth.

Video Comments

Bill Dudley, Bloomberg Opinion columnist and former Federal Reserve Bank of New York President

A Fed Soft Landing Is Highly Unlikely, Dudley Says

1. Devon Alec Healy
   • Bill Dudley doesn’t acknowledge the fact that the way we calculate the unemployment rate was changed dramatically in the post-financial crisis era in order to make the numbers look better.
   • The real unemployment rate is much higher and is not really contributing to inflation.
   • How can the unemployment rate be at an all-time low when the labor force participation rate is only 62% off a high in the late 1990s of 67%?
   • Because the unemployment rate has been strongly manipulated for political purposes it’s virtually meaningless now.

Mohamed El-Erian

Allianz’s El-Erian comments on Fed moves, Biden, and oil

1. Internetjim1235
   • Is it just me or is this guy and Roubini the only people that can talk straight and know what odd actually going on?
2. Dennis Morris
   • Allianz Chief Economic Advisor Mohamed El-Erian and Bloomberg´s Francine Lacqua, two highly intelligent people who care deeply for the future of our global economy.
   • Indeed, two people who care deeply, period.
   • And such a gorgeous setting for the interview!
3. FLPanhandle Life
   • If raising rates .5% 2 times kills the market you didn`t have a very healthy market to begin with.  The market was pumped by stimulus, Qe (money printing), and fed buying MBS . If you take that away it crashes,regardless of the prime rate. Raising rates just makes it happen faster.
     • dachanist
       • Lol, April fools the market was on life support the whole time.
     • Endless Ripple
       • US had a 100 percent debt to GDP. It means every dollar in the US is borrowed from outside the country. In a way, it’s the poorest country in the world
4. Harry Chu
   • Mohamed El-Erian continues to scapegoat Chair Powell while omitting the fact that fiscal policy enacted by the US Administration and Congress has and continues to add to the inflationary pressures.