OPAL SHARES AT $10.02 RIGHT NOW
>>> THE FEDERAL RESERVE KICKING
OFF TWO DAY POLICY MEETING THIS
MORNING.
IT IS EXPECTED TO END IN A 75
BASIS POINT RATE HIKE TOMORROW
AFTERNOON.
THE ANNOUNCEMENT ON THAT WILL BE
2:00 P.M. EASTERN.
WALL STREET HAS BEEN EXPECTED AT
LEAST 75 BASIS POINT HIKE SINCE
THE FED RAISED INTEREST RATES IN
JUNE.
THE MARKET IS SHOWING A 25%
CHANCE, ALBEIT A SMALL ONE BUT
STILL, THAT THE FED COULD GO
EVEN HIGHER BOOSTING RATES
HISTORIC FULL PERCENTAGE POINT.
WELL, WHAT IS POWELL GOING TO
SAY AND IN THIS HOUR WHEN HE
FACES REPORTERS, WHAT DO WE NEED
TO HEAR?
JOINING ME NOW IS THE GLOBAL
FIXED INCOME HEAD ANDY BRENNER
WHO SAYS HE EXPECTS HIS COMPANY
TO TAKE A HAWK ON STAGE TOMORROW
AND HAS TO GET INFLATION DOWN
AND BARREN SENIOR REPORTER LIZ.
SHE WAS EXPECTED TO SEE THE
PINNACLE OF THE FEDS HAWKISH
PAIR TOMORROW.
ACTUALLY IT’S LISA.
I SAW LIZA.
I KNOW IT’S LISA I READ YOUR
STUFF ALL THE TIME.
ANDY, WHAT ARE YOU EXPECTING?
ANY CHANCE OF A 1% HIKE?
>> NO CHANCE AT ALL, LIZ.
IT’S GOT TO BE 75, IT’LL BE A
HAWKISH 75.
MANY OUT THERE THAT THINK HE’LL
BE DEVILISH.
IN THE CITY COMMENTARY BANK THIS
MORNING.
I DON’T SEE IT.
HE HAS A LIMITED OPPORTUNITY AND
WINDOW TO RAISE RATES BEFORE THE
COUNTRY STARTS TO INCREASE THE
RECESSION FEARS.
HE REALLY SHOULD HAVE BEEN
RAISING RATES LAST YEAR BUT
THAT’S -- WE MISSED THAT SO WE
CAN’T GO BACK THERE.
IF HE DOESN’T GET AGGRESSIVE
NOW, THE WINDOW WILL CLOSE AND
SAME THING GOES FOR THE ECB.
THEY BOTH HAVE TO GET AGGRESSIVE
AS SOON AS THEY CAN, GET IT OUT
THERE WHILE THEY CAN, AND
HOPEFULLY MOVE TEN YEARS FROM
275, 280 WHERE WE ARE NOW BACK
TO 3 AND 3 AND A QUARTER.
>> TEN YEARS IS GOING IN THE
WRONG DIRECTION. FOLKS LOOK AT IT RIGHT NOW.
FOLKS LOOK AT IT RIGHT NOW.
I’M LOOKING AT A PRINT OF 2.79%,
2.75% HERE AND TWO YEAR AT 3.05%
AND WE HAVE INVERSION.
LISA, WHAT ARE YOU EXPECTED AND
WHEN DID YOU EXPECT THE FED TO
TURN DUBBISH?
>> THANKS, LIZ.
I THINK ANDY IS RIGHT ABOUT THE
75 BASIS POINTS TOMORROW AND NOT
SURPRISED WITH THE FULL POINT.
THAT’S IN PART BECAUSE SOME OF
THE DATA POINTS HAVE MOVED IN
THE RIGHT DIRECTION.
FIRST AND FOREMOST INFLATION
EXPECTENATIONEXPECTATIONS ARE IN
THE HIKES FOR THE REMAINDER OF
THE YEAR AND GOING TO HAVE TO
GET MORE AGGRESSIVE.
JEROME POWELL TOLD US IT’S NOT A
COMMON THING.
THIS WILL BE THE LAST ONE, LAST
HIKE OF THE MAGNITUDE BEFORE THE
INCREMENT START GETTING SMALLER
THROUGH THE REST OF THE YEAR.
I THINK THE BIG QUESTION FOR
INVESTORS IS WHEN THE FEDS START
TO CUT RATES.
A LOT OF PEOPLE ARE STARTING TO
EXPECT THE FED TO CUT IN EARLY
2023.
IT LOOKS LIKE THAT IS PROBABLY
TOO SOON.
>> YEAH.
MIGHT BE.
I WANT TO SHOW LISA’S PIECE FROM
THIS MORNING IN BARREN.
YOUD" THE HEAD OF GLOBAL POLICY
WHO SAYS, THIS MAKES PERFECT
SENSE REQUESTERRING WHAT
HAPPENED WITH WAL-MART LAST
NIGHT, THE MARKETS ARE
UNDERAPPRECIATING THAT INFLATION
IS MUCH HIGHER THAN AT ANY TIME
IN THE MODERN FED ERA.
THE LABOR MARKET SURE IS MUCH
TIGHTER THAN NORMAL, BUT TO THAT
POINT, ANDY, AND LISA’S POINT
SHE HIGHLIGHTS HERE, WHERE DO WE
SEE THE REAL DANGER STILL AHEAD?
WE WANT TO PREPARE OUR INVESTOR
AUDIENCE.
>> LIZ, THE BIGGEST THING THE
FED CAN DO IS OVERTIGHTEN AND AS
MUCH AS I THINK THEY’RE GOING TO
BE HAWKISH TOMORROW BECAUSE
THEY’RE WINDOW IS LIMITED, IF
THEY SEND THE ECONOMY INTO A
SPIRAL OF A RECESSION, A BAD
RECESSION, THAT’S NOT GOING TO
BE GOOD.
ON THE OTHER HAND, YOU KNOW,
RIGHT NOW WE SEE INFLATION
COMING DOWN QUITE DRAMATICALLY
FROM 9 TO 5 AND THAT’S STILL 5%
WITH TEN YEARS AT 280 AS YOU
JUST POINTED OUT.
I DON’T KNOW HOW THE FED GETS
FROM 5 TO 2 AND NOR DO I THINK
2% IS THE RIGHT NUMBER.
THERE’S SO MUCH THAT’S CHANGED
WITH COVID AND SUPPLY CHAIN AND
CHINA IS NO LONGER THE DEFLATION
ELEMENT OF U.S. INFLATION.
I DON’T THINK 2% IS THE RIGHT
LEVEL AND THE FED IS IN A REAL
TOUGH SPOT AND IF YOU HAVE 2%
NEGATIVE GDP AND HOW CAN THEY
KEEP RAISING RATES.
>> OKAY, WE’RE TIGHT HERE.
WE GOT TO RUN, LISA SO I WANT A
SHORT ANSWER.
ANDY SAID JANET YELLEN IS
SUPPOSED TO HAVE A NEWS
CONFERENCE AFTER THE GDP REPORT
ON THURSDAY.
WHAT ARE YOU EXPECTING HERE AND
HOW SERIOUS COULD THIS BE?
>> E WE DON’T KNOW.
SOME COMMENTS ARE EXPECTING A
SMALL AMOUNT OF GROWTH IN THE
QUARTER AND THAT LINE IS
PREDICTING ANOTHER NEGATIVE
PRINT TO THE QUARTER.
SOME OF THE DATA RELEASES THIS
WEEK WILL GIVE US MORE INSIGHT
INTO THE FUTURE PATH OF THE
POLICY.
>> ANDREW, LISA, GREAT TO HAVE
YOU BOTH.
READ LISA’S PIECES IN BARREN.
THEY’RE WHERE HE WILL CENT.
2:00 P.M. EARN WITH THE FED RATE
DECISION AND HEY, WHAT THEY
DECIDED AND FOLLOWED BOYER BY JE
POWELL’S NEWS CONFERENCE
CARRYING INTO THE 3:00 P.M.
EASTERN HOUR AND THE JUICEY
PARTS COME.
THE QUESTIONS FROM THE PRESS, WE
WILL HAVE COMPLETE POSTGAME
REACTION AND ANALYSIS TICK BY
TICK FOR THE MARKETS HERE ON THE