Moderately above 2 inflation, moderately is what it says in the statement but does not define exactly what moderately means. There are two centers to this action, Robert Kaplan wants to see the statement to the way it was pretty wants to statement to read the economy or stance will remain the same until the economy has weathered the storm and the economic storm we have here. Well cash on the other side dissented because he wants more dovish language in this. On implement rates, statistics are very interesting here. They have reduced now the planet rates rates and estimation of this year to 7. 6 by the end of 2020 grid that is down from 9. 3 from their june projection and then also 5. 5 from on a plummet rates in 2021, 4. 6 and 2022 and 4 in 2023. The real gdp prediction cut in half for the losses they are paired they are now saying its a loss of 3. 7 at the end of this year with a bounce back of 4 next year. The inflation, fed estimates that pce inflation is 1. 2 this year up from 1. 7 or up to 1. 7 and then back to 2 in 2023. 1. 2 is what they believe the pce inflation of this. Basically everybody is at zero through 2022. This is the voting members and where they fall on the line. One person in 2023 is above zero and for people above zero or im sorry, 2022 and 1 above for people in 2023 but still buying 80 billion in treasury and 40 billion from us in mortgagebacked securities. A very dovish statement here with two dissenters and rates remain the same for at least 2023. Back to you, charles. Charles wow, thank you. That thickens the plot. Here to help us figure it all out former dallas fed advisor daniel booth. Their chief economy or Asset Management ceo phil. Lots of angles to discuss here. Daniel, your thoughts on what we just heard and what you think will we will be hearing about half an hour. You see the big smile on my face woefully Charles Baird im going Robert Kaplan go. You need to understand the fed has hit its 2 for pce inflation targets 11 times since january 2012. Its ridiculous for it to say that it will let inflation run hot but doesnt use the hit 2 target in the first place with a false inflation rate. Good for kaplan for pointing it out and is he dissented because the fed is looking for cover in order to continue printing on until kingdom come passes us by. I applaud what he did. I understand everything that came out of the statement and no big surprises there or big surprise from cash carry but am i smiling for Robert Kaplan. Charles of course, cash kari is a dove and then of course the rest of the fed what you make of the statement and how does this set up this q a we will hear shortly . I have said for a while symmetry actually means the same thing as average so this big change is not a big change but it is codified in a more specific way and of course it means lower for longer. We look at the summary of Economic Projections and they are saying we will not get off until 2023 which means we have till about 2023 when we can expect a rate hike unless something unexcited happens. I would submit to you that there are forces at play that once we are in the post vaccine part of the economy and if we were to manage the entire weight we are dealing with this crisis with more ppe wearing, better tracing, testing we would see a rebound in growth because we have such a massive increase in savings and we have money supplies borrowed at 22 yearoveryear which is more than triple what we saw during the Global Financial crisis and so, if we were to have the whole inflation and i would be a very good thing for the economy and very good thing for the deficit and would allow the fed to raise rates sooner. This is not the baseline the most people are projecting but we have not had deficit finance savings of this kind since postworld war ii. Its a very unique situation. We have a massive retraining. Charles okay. Constance went out and im not sure if you can hear but will go back to her. Phil, about the modeling here, edward pointed out that back in june the fed thought are on a plummet rate would finish the year and 9. 3 and they are at 7. 6 because were already at 8. 4 so this economy has certainly outperformed with all the experts thought it would but it feels like jay powell has other things he is trying to achieve with Interest Rate policies beyond the dual mandate of inflation and employment. Exactly right. Right now ive got to be honest with you. Im disappointed in what i heard britt i dont think they are being honest with i think they are being dishonest. The numbers have increased significantly and put your productions out there i think to constances point if you get a vaccine thats a game changer and all bets are off. Add the senate positions itself to say they will do all they can for on a plummet for all folks for a very low rate and to do that they got to run higher than 2 for extended period of time. Theyd never done that. A lot of companies are guessing what will happen and that is a way weve never seen before. To your point, the economy is much stronger right now than anyone thought we would be at this point. 3. 4 gdp was unthinkable a few months back and for that reason i think the fed could raise rates sooner than people expect and its not 2023 and maybe as soon as 2022. Charles so let me go back to you, danielle. Its always about balancing risk and that is the big objective and the company or the question is as you may say is about doing too little versus too much but you know, the message to me seems loud and clear that they will let this economy run hot for a certain period of time because again, powell told us in the past when we thought that employment equals inflation or that prices would automatically go up because of higher wages but that is no longer the case and that whole theory has gone out the window but to me, it feels like hes the biggest, strongest socalled social Justice Warrior out there. He wants to see unemployment rates for every segment of the population may be under 4 , even 3 . Dont risks come with that . Risk do, that. I dont envy j powells position today when he hits the podium because he will have to thread a needle. Americans who are working are doing very well, Charles Baird theyve been able to move out of the suburbs and housing has going gangbusters because the fed owns more than a third of the Mortgage Market and weve seen over 100 billion in cash out refinancing since the pandemic hit. Thats been a huge boost to consumption. Again, for those who are working but by the same token hes also looking for stimulus spending because theres an 82 coat movement between quantitative easing growing the feds Balance Sheet and the s p 500. J powell knows that is the one tool in his toolkit that will work to keep the stock market going and yet in order to get that hes got to somehow convince congress to pass stimulus legislation so hes got tons of treasury that he can go out into the market and hoover up and effectively monetize that new deficit spending. Again, very unable available position with them was 30 million Americans Still collecting unemployment but the headline Economic Data is impossible to deny, charles. Charles it is. The data is amazing and some of it is amazingly great and some of it is disheartening, really disheartening. We go back to dc because we got more on [inaudible] interesting how we have this debate about who is more dovish with the dissenters. Neil kashkari in his defense he said that he wanted to pervert the committee in the case that it expects to maintain the outright target range with core inflation until it has reached 2 on a sustained basis. Already in the statement it does save the statement was made to make that they will make accommodative stands on Monetary Policy until these outcomes are achieved so im interested what the group has to say about the nuances in the language and does not make a big deal about who is more dovish and who isnt more dovish. Charles i want to come back right now. We were just talking about some of the positives and you know, constance, there are negatives. There is the question of inflation at some point but also people were saying weve got in this economy things like zombie businesses that are soaking up billions of dollars in capital, stalling creative disruption and ultimately doing more harm than good. Those are the kind of things that you dont necessarily see on the service betrays a longterm structural problem for the economy. Is that one of the issues we are dealing with their . I would say a few things, we are seeing a rise in a Zombie Companies but seen a big rise in business and business formation at levels that we have not seen for years. This is far above what we saw during the Global Financial crisis and far above what weve seen for the average of the last several years. We are also seeing business exits and this turn something economists would be very happy about is it speaks to the Creative Destruction that needs to happen. When you have a giant shock like covid which has a shift in demand to different factors in the economy and so while this is painful for many this is a healthy thing that we are seeing occur and so even though we do have the risk as daniel pointed out, and you pointed out of having a Zombie Company i think we are saying that overshadowed by this business formation data and the amount of turn we are seeing in response to the economic situation. I would say that to those that are unemployed we definitely need to keep the firewall around the covid impacted parts of the economy so that that doesnt spill over to the rest of the economy and that parts of the economy are flourishing have the opportunity to lift up the entire economy. Charles i want to hit on you with that. I want you to handicap the congress and the school, any more fiscal agent what the scenario would look like because as each day goes by it feels like we will not get it. I make the point to many people and i interviewed these congressional folks all the time in february we had over a million more jobs and we had people who were unemployed and right now we have 7 million more people unemployed then there are jobs and yet they are not moving on this. J powell was looking at that and he looks like hes got to be a night to come in and save the date even as they are threatening to move the Congress Move the needle to congress buried what is this possible additional stimulus . Im less concerned about the personal level but lets assume we can get 300 or 400 to each person as a supplement and that gets us through this. I want to see movement on ppp structure and will this be faults they are or what we do about liability to reduce that and thats a major problem right now and any additional money for small business. We need so amount of money to get to the next three, four months. Its critical because were in the end type if we could get another some stimulus for those two specific areas, liability coverage and powell could hold us up for a time but i hope he does not get so much hubris to think he can run this economy hot for too long a time and then rein it in because hes got that on wielding power. Im on worried about the other side of running hot for too long and the unintended consequent is could be the potential of loss of the default currency is something that greatly worries me about getting too far ahead of ourselves. Charles we will hear more talk about the no longer be in the world of currency in the World Reserve currency and things like that but danielle, one of the issues and i understand if the fed does not want to talk about it too loudly but it seems they are really concerned at their inability to create traditional inflation that this inflation or deflation is something that phil talked about runaway inflation and what happens with the [inaudible] that comes with what if they can no longer control that . Charles, you hit on a very important points. One of the reasons the fed right now is trying to talk up inflation narrative as much as it is and to phils point if we push this to part you could flip the switch when they impossibly see stacked inflation and rising Interest Rates with slow growth and that would be the worst of all possible outcomes. To your point, charles. We have rental inflation that is decreased from eight 3. 4 rate to a 2. 8 rate and that is the biggest input into the inflation metrics that the fed follows and if we start to see the cost of housing come down in the fed will be talking about it and i am sure there were discussions, multiple discussions about this inflationary pressures associated with 106 to 7,000 Companies Closing permanently which we heard today from yelp. Its the persistence of the on appointment and whitecollar permanent on opponent is moving up and dell technology, citigroup in the last 48 hours. The bigger bogeyman, charles and this is what you are talking about, the think the fed bears more than inflation itself is what they want talk about in which you will not hear jake powell talk about today and that is the dissimulation area pressures that are threatening the economy right now. Charles constance, lets talk about this q a session because the last couple of times weve had these meetings and the market was like pretty optimistic and started to tremble when the fed did not give any specifics. When the Federal Reserve says this they are studying how they may curve or raids or looking at but not committed to negative it rates wall street doesnt want to hear that. What specifics can we expect today that we may have not heard yet . I would say wall street would prefer for them to look into it in a studio and a rigorous way rather than to wing it. On balance, maybe he is not the answer wall street thinks it wants to hear but seems better than the alternative but going back to this inflation issue and im glad danielle brought up the good point that we are worried about disinflation and that there are shocks to the economy that could cause that to be the greater risk right now. When we look out past the situation where we had better treatment and vaccine now we are looking at demand which is very different than cost push inflation. If we had some sustained demands around inflation for a time i think that would be positive for the economy and it would likely spark greater Capital Investment and would be reduce our debt to gdp ratio and allow us to grow our way out of this problem in this significant way. We dont want that to get out of hand and so if it is that question can the fed put the genie back in the bottle and slowly tighten liquidity conditions into that inflation so that the gdp does not get out of the bottle. If they can prevent the deflation and we can get to the other side it is a nuanced question of how they manage all of their tools as we exit the situation. Charles great point. Phil, any time fed hints at going the other way the market begins to stumble but lets face it, wall street, they are big babies. The more you give them the more they want and the more accommodation you talk about and the more they want to implement it and so to reverse the process which everyone agrees must have been done at some point becomes a market event, negative market event almost every time. It does breed that is why is these soft landings are so challenging and im concerned about the bond market because the bond market with the lowest and that our lifetime seems to be an endless paradise for people high diving to make a lot of money. You will have a tough time drawing down the reserves of the fed and raise rates as they get hotter here and that will be very difficult soft lining and the market will not like it and not the bond market so for that reason you got to be careful that the fed will not they got to be careful in the statement to say we will run for an extended period of time, 2023, 2024 with low rates and the market will not like that and you will see bond market because of it simply because [inaudible conversations] charles as we can see right now im sorry to jump on you, phil but you are cutting in and out on my end. Bottom line is we are Building Momentum and this is what happens everything will time into the q a session of the thing. Wall street is getting amped up and we want to say thank you very much. Brilliant, brilliant test there. Phil, constance and danielle. When we come back we will look at the other side of this and we will look at we will look at the wall street side of this, oh we will not go to break. In fact, lets go straight to our market panel for a moment if we can because we got some of the greatest triggers to help us out here and by the way, before that ive got to tell you, its awkward to do this but i want to tell you about my book because it is perfect for this situation. I wrote it with a lot of information about the fed and called unstoppable prosperity and i love for you to pick up a copy. If you are in the market or want to get in the market unstoppable prosperity. Com, it is my mission to help you make money in the stock market. I got three guys right now and it is their mission to do this for their clients every single day and of course moments away from hearing from Federal Reserve chairman Jerome Powell and so before we do lets bring in cary from the Capital Management foundation and michael lee as well as hal lambert. Let me start with you, gary. I know you are no fan of the Federal Reserve but at the same token you are an active player in the stock market and you have benefited greatly from what the fed does. Do you ever feel in this awkward position where you think you got doing something dangerous and will hurt us in the long run but making bigtime money on it right now . As a technician i go with the flow but keep in my file manager what this man is doing to the market and the ultimate destruction of the market when all is said and done. You talk for the last 20 minutes about how the fed allows and how the fed or they do not allow anything. Not one man printing 7 trillion out of thin air. Remember, that is all debt enabling 260 trillion around the globe of debt that will come home to roost one day. We will let this thing run out. Ive been telling you on the s