CHARLES: THIS MORNING LAST FED
PRESIDENT ROBERT KAPLAN SAYING
HE IS ALL FOR A PAUSE WITH
INTEREST RATE HIKES AS LEAST FOR
THE FIRST COUPLE OF QUARTERS AND
HE ALSO SAID THAT HE IS OPEN TO
DISCUSSING THE PACE, SORT OF ALL
I CAN PACE OF THE FED PULLING
$50 BILLION EVERY SINGLE MONTH
OUT OF THE ECONOMY TO
AUTOMATICALLY RUN OFF ITS
BALANCE SHEET.
SO IS THIS THE WAY THE FED IS
SORT OF OFFERING NOW MAYBE AN
OLIVE BRANCH, TRYING TO PULL
THINGS BACK AFTER WHAT MANY NOW
CONSIDER DISASTEROUS FOMC
MEETING?
WITH ME NOMI PRINS, AUTHOR OF,
COLLUSION, ONE OF MY FAVORITE
FED EXPERTS.
NOMI, AFTER THE FED MEETING AND
VIOLENT REACTION TO IT STOCKS
GOT CRUSHED.
NEW YORK FED CHIEF JOHN WILLIAMS
CAME OUT TO TRY TO COME THINGS
DOWN FOR LITTLE BIT.
IT WORKED FOR ABOUT AN HOUR.
THE MARKET FELL APART AGAIN.
DO YOU THINK THIS MOVE THIS
MORNING BY ROBERT KAPLAN IS SOME
SORT OF ACKNOWLEDGEMENT THEY
MISCOMMUNICATED OR THEY
THEMSELVES HAVE MISREAD THE
ECONOMIC TEA LEAVES?
>> I THINK IT IS AND ONE OF THE
THINGS WE ALWAYS SEE WITH THE
FED, WHEN THEY'RE CHANGING THE
LANGUAGE OR THE DYNAMICS OF
THEIR LANGUAGE WE THEN TO DO IT
WITH DIFFERENT FED HEADS SAYING
THINGS FROM THEIR RESPECTIVE
AREAS.
THAT IS KIND OF WHAT WE'RE
SEEING RIGHT NOW WITH ROBERT
KAPLAN COMING OUT ON THE BACK OF
WHAT JOHN WILLIAMS SAID.
EVEN JEROME POWELL AFTER THEY
HIKED RATES LAST MONTH, DID KIND
OF WALK BACK THIS IDEA OF WHERE
THE NORMALIZATION RATE WOULD BE.
EVEN THOUGH THEY WENT AHEAD AND
THEY HIKED RATES, THEY KIND OF
ALSO, EVEN STARTED TO WALK IT
BACK.
THE REALITY, IS THAT VOLATILITY
HAPPENED INTO THAT RATE HIKE,
AFTER THAT RATE HIKE.
WE'RE STILL SEEING THAT.
CHARLES: SEE HERE'S THE THING,
WE DON'T HAVE THE SWORD OF
DAMOCLES OVER OUR HEAD.
WE HAVE THE DOT PLOT SWINGING
OVER OUR HEADS.
THE INSISTENCE THIS THEY HIKE
RATES COUPLE MORE TIMES AND NOT
DEVIATING FROM THE QUANTITATIVE
TIGHTENING.
IS THIS SOMETHING THEY SHOULD
TAKE A SERIOUS LOOK AT?
>> I THINK THEY SHOULD BECAUSE
WHAT'S HAPPENING IS, THE WHOLE
ENTIRE QUANTITATIVE EASING, ALL
OF THE RATE LOWERING TO BEGIN
WITH DID GIVE MARKET AS LOT OF
STIMULUS.
SO WHEN YOU TAKE IT BACK WITHOUT
RECOGNIZING THINGS HAVE CHANGED,
THERE IS UNCERTAINTY, THERE ARE
ECONOMIC SLOWDOWNS IN OTHER
PARTS OF THE WORLD YOU THEN TEND
TO HAVE THESE MASSIVE VIOLENT
SHIFTS.
WE SAW THAT WHEN THE FED FIRST
RAISED RATES IN DECEMBER 2015, A
LITTLE PREMATURELY.
2016 OPENED WITH THE MARKETS
FALLING OUT OF BED.
WE'RE SEEING THAT AGAIN.
THEY DO NEED TO TAKE A LOOK AT
MORE OF THE DATA.
CHARLES: LET'S TALK ABOUT
MOTIVATION A LOT OF SPECULATION
THAT PRESIDENT TRUMP'S,
DISAPPOINTMENT WITH JAY POWELL,
THE TWEETING, THE COMMENTS, OVER
AND OVER AGAIN, PUT JAY POWELL
IN A POSITION WHERE HE HAD TO
MAKE A DECISION BASED ON WHAT
SOME CONSIDER POLITICS AND MAYBE
HIS OWN EGO RATHER THAN WHAT THE
ECONOMIC DATA WAS.
IT IS SCARY TO THINK THAT COULD
BE THE DEAL BUT DO YOU THINK
THAT PLAYED A ROLE IN THAT
DECISION?
>> I REALLY THINK IT DID BECAUSE
AGAIN, WE'RE LOOKING AT,
WEAKENING IN GLOBAL ECONOMIES,
UNCERTAINTY, VOLATILITY
THROUGHOUT THE MARKET SYSTEM AND
I THINK HE WAS UP AGAINST THIS
WALL OF SHOWING THAT THE FED
COULD REMAIN INDEPENDENT OF WHAT
THE PRESIDENT WAS SAYING OVER
POTENTIALLY LOOKING AT THE
BY-PRODUCTS OF THAT RATE HIKE AT
THAT TIME.
I THINK LOOKING AT THE DATA
WOULD NOT HAVE PRESENTED THE
EXACT DECISION THAT WAS MADE.
HOWEVER, IF YOU ADD IN HIS
DESIRE TO SHOW THAT THE FED
COULD OR WOULD REMAIN
INDEPENDENT, THAT'S WHY WE GOT
THAT FINAL RATE HIKE FOR 2018.
CHARLES: JAY POWELL WOULD NOT BE
"PUNK'D" BY PRESIDENT TRUMP, BUT
JANET YELLEN WOULD NOT BE PUNKED
BY WALL STREET IN 2015 THE BOTH
TIMES, NEXT SEVERAL WEEKS OF THE
MARKET WAS ALMOST CAT CHRISIC,
STRAIGHT DOWN -- CATACLYSMIC.
ISM WAS NOT GOOD AS WE THOUGHT
BUT STILL EXPANSION, BUT
PARTICULARLY MANUFACTURING FED
DATA FROM SEVERAL DISTRICTS THEY
HAVE FLASHED YELLOW IF NOT RED
FLAGS.
WHEN WILL THE FED TAKE TIME TO
ARTICULATE TO THE INVESTING
PUBLIC MAYBE THEY HAVE CHANGED
THEIR MINDS?
KAPLAN, THAT IS A GOOD START IN
MY MIND.
HE IS NOT A VOTING MEMBER OF THE
FOMC.
I THINK THERE IS SENSE OF
URGENCY THEY DO IT.
CAN THEY USE TOMORROW'S JOBS
REPORT AS AN OPPORTUNITY?
>> THEY COULD LOOK AT IT AS AN
OPPORTUNITY.
JEROME POWELL ULTIMATELY NEEDS
TO BE ONE SAYING WE ARE ACTIVE
LIE LOOKING AT DATA.
HE HAS SAID THIS YEAR HE WANTS
TO BE MORE COMMUNICATIVE RATHER
THAN LESS RELATIVE TO OTHER FED
CHAIR PEOPLE.
THIS WOULD BE AN OPPORTUNITY TO
SAY IF THINGS ARE ACTUALLY
SLOWING DOWN WE'LL TAKE A LOOK
AT THE DATA.
IF YOU WANT TO SAY YOU'RE AN
INDEPENDENT BODY, THE BEST WAY