MARIA: WELCOME BACK,
PRESIDENT TRUMP TOUTING MANY
ECONOMIC ACCOMPLISHMENTS AS
DEMOCRATS DICTATE OUT FIRST
PRESIDENTIAL DEBATE THIS WEEK,
FIRST THE S&P 500 DOW ON TRACK
FOR BEST JUNES IN DECADES,
THEY ARE BOTH UP BETTER THAN
6% THE MONTH OF JUNE TAKING A
LOOK AT LOW UNEMPLOYMENT AS
WELL, 30 YEAR MORNING RATES
FALL TON LOWEST LEVELS SINCE
2016 UNEMPLOYMENT RATE 51-YEAR
LOW.
JOINING ME RIGHT NOW IN
EXCLUSIVE INTERVIEW WITH
FEDERAL RESERVE BANK OF DALLAS
PRESIDENT ROBERT KAPLAN
MR. PRESIDENT ALWAYS PLEASURE
TO SEE YOU THANKS SO MUCH FOR
JOINING US.
>> WE'VE GOT GOOD METRICS IN
TERMS OF THE ECONOMY YOU
MOTHER MOST EXPECT ECONOMY TO
SLOW ACCORDING APPARENTLY TO
FEDERAL RESERVE HOW COULD YOU
CHARACTERIZE THINGS RIGHT NOW
WHAT ARE YOU EXPECTING FOR
2019 SIR.
>> IF I APPEARED ON THIS SHOW
AT APRIL 30th I WOULD HAVE
SAID I WAS EXPECTING GROWTH
U.S. ECONOMY FOR THIS YEAR 2
AND QUARTER, 2 1/2 PIERS IF
WRONG PROBABLY BE ON THE LOW
SIDE.
I EXPECTED GROWTH FROM 19 --
FROM 2018 TO 2019 TO SLOW
BECAUSE OF FISCAL STIMULUS BUT
PRETTY GOOD MOMENTUM HEADING
THROUGH THE MONTH OF APRIL.
THEN MAY 1 THROUGH MAY AND
JUNE, HEIGHTENED TRADE
TENSIONS WITH CHINA THEN THE
ISSUES WITH MEXICO AND
THREATENED TARIFFS THERE, WHAT
I NOTICED FROM MY CONTACTS AND
ALL OUR SURVEYS AT DALLAS FED
IT IS COMPANIES STARTED
PULLING BACKS A BIT ON CAPEX
TO DEGREE UNCERTAINTY WAS
ENOUGH TO CAUSE THEM TO TAKE A
WAIT-AND-SEE ATTITUDE SO AS I
SIT HERE TODAY OUR ESTIMATES
DALLAS FED FOR GDP GROWTH THIS
YEAR IS NOW 2%, THE BIG CHANGE
IS REALLY IN THE LAST 8 WEEKS,
HAS BEEN DUE THIENTD TRADE
SANCTIONS FEEDING INTO THAT,
DECELERATING RATES GLOBALLY
GROWTH THE WORLD VERY RELIANT
ON TRADE TWO THINGS THE
UNCERTAINTIES ASSOCIATED WITH
IT HAVE MADE GROWTH MORE SLUG
JOOISH OKAY.
SO GROWTH MORE SLUGGISH WE
JUST GOT 3. % NUMBER FIRST
QUARTER DOES THAT WARRANT
INTEREST RATES TO GO LOWER?
YOU KNOW, THERE IS ALL OF THIS
CONVERSATION, THE FED IS GOING
TO BE AN CUT RATES MAYBE THREE
TIMES 2019 I SAY WHOA, WE WERE
JUST TALKING ABOUT THREE RATE
HIKES SEVEN MONTHS AGO.
>> YOU KNOW I WROTE AN ESSAY
EARLIER THIS WEEK WHERE
BASICALLY SAID THAT I THINK IT
IS TOO SOON FOR ME AT LEAST
TOO SOON TO MAKE A JUDGMENT
ABOUT CHANGING THE STANCE OF
MONETARY POLICY THE REASON IS,
THIS UNCERTAINTY AND THIS
DECELERATION HAPPENEDLAST FOUR
TO EIGHT WEEKS G20 COMING UP
WE HAVE QUOTA WHOLE MONTH
BEFORE NEXT FTHE OMC MEETING
THE END OF JULY I THINK WOULD
BE WISE TO TAKE A LITTLE MORE
TIME, AND SEE WHETHER IT MAKES
SENSE TO CHANGE THE STANCE,
THE OTHER THING I WOULD
EMPHASIZE WE'RE NOT
RESTRICTIVE RIGHT NOW AT FED
IN MY VIEW ABOUT IN
NEIGHBORHOOD OF A NEUTRAL
STANCE NOT COM
STANCE NOT ACM
STANCE NOT ACCOMMODATIVE IN
CUTTING RATES WOULD BECOME
ACCOMMODATIVE IS IT
APPROPRIATE IN THIS ECONOMY TO
BECOME ACCOMMODATIVE FOR ME I
WOULD NEED TO SEE EVIDENCE, OF
A MORE MATERIAL DID HE
TIERATION IN OUTLOOK LOOKING
FOR IT DON'T WANT TO CUT A
RATES TO DO FINE-TUNING WOULD
RATHER BE JUSTIFYING POLICY IF
I THOUGHT MATERIAL
DETERIORATION I WANT A LITTLE
MORE TIME TO SEE HOW EVENTS
UNTO LD.
>> LET'S TALK ABOUT WHERE
RATES ARE RIGHT NOW BECAUSE
YOU KNOW, WE HAD A REPORT OUT
YESTERDAY, THAT GOLDMAN SACHS
ALLIED FINANCIAL BEATING THE
FED TO RATE CUT, CUTTING THEIR
OWN RATES SAY THEY ARE GOING
TO BE CUTTING RATE ON MARKETS
HIGH YIELD SAVINGS ACCOUNT TO
2.15 DOWN FROM 2 1/4 PERCENT
GOLDMAN SACHS TELLING
CUSTOMERS YESTERDAY 10 YEAR
WHAT ARE RATES TELLING US
TODAY.
>> THE RATES FOR ME ARE -- ARE
SAYING A ELECTRIFY THING
SAYING A FIECTRIFY THING
SAYING A FI
SAYING A ELECTRIFY A ELECTRIFY
THINGS THE CURVE SHIFTED DOWN
JUST IN THE LAST FOUR TO EIGHT
WEEKS, AND WHAT THAT SHIFT
DOWN TELLS ME THAT THERE IS A
LOT OF GLOBAL UNCERTAINTY
THERE IS FEARS ABOUT SLUGGISH
OUTLOOK FOR GROWTH NOT ONLY IN
UNITED STATES BUT GLOBALLY THE
THEY ARE THING I THINK CURVE
RESTING MAYBE XPDZ OF THE FED
THERE IS A A LITTLE BIT OF
ECHO CHAMBER EFFECT ALSO,
WHERE IT PEOPLE MAY BE MAKING
JUDGMENTS ABOUT WHAT THE FED
MIGHT DO.
AND SO -- THE REASON YOU MAY
SEE SOME OF THESE LOWERING OF
THE DEPOSIT RATES IS THE THREE
MONTH TREASURY HAS MOVED DOWN,
IT IS STILL -- AND IT WAS
UPWARDLY SLOPING THREE MONTHS
TO 10 YEARS EIGHT WEEKS AGO
TODAY IT IS ACTUALLY INVERTED
SEEING SLUGGISH NECESSITIES IN
TWO YEAR FIVE YEAR 10 YEAR BUT
I THINK IT IS THE QUESTION IS
BASICALLY IS THIS
DETERIORATION IN THE GROWTH
OUTLOOK GOING TO PERSIST?
AND I WANT TO MAKE SURE THAT I
AM NOT CONTRIBUTING TO
MOVEMENT IN THE CURVE I WANT
TO LET THE ECONOMIC EVENTS
SPEAK FOR THEM AND THAT IS WHY
FOR THE MOMENT, I AM
WITHHOLDING JUDGMENT ABOUT
RIGHT MOVE FOR US TO MAKE IS
THE END OF JULY.
>> WHAT METRICS ARE YOU
LOOKING AT CLOSEST, OBVIOUSLY,
WE'RE NOT SEEING A LOT OF
INFLATION JUST GOT PCE INDEX
UP 1.6% EXACTLY WHERE
EVERYBODY WAS EXPECTING YOU
MENTIONED THE GLOBAL STORY AND
THIS IS IMPORTANT BECAUSE
TRAYS IS THE UNDERLYING ISSUE
HERE, HOW SIGNIFICANT IS
SLOWDOWN HAVE YOU SEEN, IN THE
GLOBAL ECONOMY, AND WHAT IS
THE MOST IMPORTANT METRIC THAT
YOU ARE LOOKING AT TO FURTHER
DECIDE?
>> WELL, SO I AM GOING TO LOOK
AT I AM GOING TO LACK AT THE
NEXT PURCHASING MANAGER
INDICES DONE BY VARIOUS REERJ
FEDS YOU MAY NOTICE NEW YORK
PHILLY OR I OWN DALLAS INDEX
WERE SLUGGISH IN RECENT
READINGS BUT I AM BEING A
LITTLE CAUTIOUS ABOUT THAT
BECAUSE SOME OF THOSE
SENTIMENT READINGS WERE TAKEN
BEFORE MEXICO ISSUE GOT
RESOLVED I AM INTERESTED IN
NEXT ONE I WANT TO SEE NEXT
JOBS' REPORT I WANT TO LOOK AT
ALL OTHER INDICATORS WHAT IS
GOING ON IN THE ECONOMY AND
FOR ME, AS A FORMER
BUSINESSPERSON, I EXTENSIVELY
TALK TO BUSINESS NOT ONLY 11
DISTRICT BUT THROUGH THE
COUNTRY VARIES INDUSTRIES WE
COULD SOUTHWEST OF THOSE
BUSINESSES ALSO I WANT TO HEAR
WHAT BUSINESSES ARE SAYING
WHAT RIGHT NOW WHAT THEY ARE
TELLING ME LISTEN WE ARE VERY
WORRIED ABOUT TRADE
UNCERTAINTIES WORRIED ABOUT
GLOBAL O GROWTH ER
UNCERTAINTIES BUT SAYING COST
AND VAIMENT OF CAPITAL IS NOT
ONE OF THOSE THINGS WE ARE
WORRIED ABOUT WE'VE GOT VERY
AVAILABLE CAPITAL VERY LOW
COST, WE ARE WORRIED ABOUT
MORE FUNDAMENTAL ISSUES AWAY
FROM MONETARY POLICY I WANT TO
CONTINUE TO HAVE CONVERSATIONS
WITH THOSE CONTACTS.
>> BANKS PASSED THE STRESS
TES
RIGHT.
>> ONE OF THE BRIGHT STOCKS
BANKS 10 YEARS AGO MUCH BETTER
SHAPE NOT PERFECT BUT IN
BETTER SHAPE SO IT MEANS
ESPECIALLY IN A DOWNTURN GOING
TO BE MORE RESILIENT.