WHOLE, WE SHOULD WANT THE
DOLLAR IN MARKET FORCES, AND
WE SHOULD WANT A STRONG
DOLLAR, NOT A WEAK ONE.
>> YEAH. YOU WOULD THINK.
LET ME ASK YOU ABOUT THE
FEDERAL RESERVE.
RISING INFLATION COULD
INCREASE THE FED RATES FOUR OR
FIVE TIMES NOW.
FIVE TIMES IS PRETTY
AGGRESSIVE OUT THERE.
WHAT'S YOUR EXPECTATION.
>> I THINK FIVE TIMES SOUNDS
UNLIKELY.
>> I AGREE WITH YOU.
>> IT'S CLEAR FOUR, PERHAPS,
BUT I THINK THE FED IS
WATCHING INFLATION RISE, BUT I
DON'T THINK ANYBODY EXPECTS
INFLATION TO SUDDENLY SNAP OUT
WAY BEYOND 2%.
SO I THINK CHAIRMAN POWELL AND
HIS COLLEAGUES ARE IN A
GRADUAL ADJUSTMENT MODE, AND
THAT SEEMS LIKE A GOOD PLACE
TO BE.
>> IS THERE INFLATION,
THOUGH?
THAT'S ONE OF THE BIGGEST
QUESTIONS WE'RE HAVING ON THE
STREET IS THE PCE HAS
CONSISTENTLY COME AROUND 1.5,
WE'LL GET AN OUTLIER HERE AND
THERE.
OTHERWISE, CPI IS NOT REALLY
TRUDGES ABOVE TWO.
SO I DON'T KNOW WHERE THERE IS
INFLATION.
I HAVEN'T SEEN IT COME
ANYWHERE.
>> WELL, I THINK WE WILL CROSS
2% IN CORE PCE LATER THIS
YEAR.
BUT I AGREE WITH YOU I DON'T
SEE INFLATION BREAKING OUT.
SO I'M NOT ONE OF THESE PEOPLE
WORRIED ABOUT A SUDDEN SNAP IN
FED POLICY OR INDEED IN
LONG-TERM RATES, WHICH WOULD
BE THE SUM OF INFLATION ON THE
REAL RATE.
>> GLENN, YOUR THOUGHTS ON
THIS DEAL WITH SOUTH KOREA.
IT EASES THE EXCHANGE AND
STEEL MOTIVES FROM STEEL
EXPORTS FROM SOUTH KOREA.
THERE'S A PROVISION AS WELL
THAT NEITHER COUNTRY DEVALUES
THE CURRENCY FOR A TRADE
ADVANTAGE.
WHAT DO YOU THINK OF THIS NEW
DEAL WITH SOUTH KOREA THIS
MORNING.
>> I DON'T THINK IT'S A BAD
DEAL.
I THINK THAT THERE WAS A LOT
OF UNCERTAINTY GOING INTO IT
BECAUSE PEOPLE DIDN'T KNOW
WHAT THE ADMINISTRATION WAS
TRYING TO ACCOMPLISH.
BUT I THINK IT DID MAKE SOME
MARGINAL IMPROVEMENTS FOR THE
UNITED STATES.
I DON'T THINK WE WERE EVEN
SELLING CARS QUITE OUR QUOTA
BEFORE, SO I'M NOT SURE WHAT
THE EXPECTED GAIN WOULD BE.
WHAT I WOULD URGE THE
ADMINISTRATION TO DO IS BE
CLEAR ABOUT WHAT THE GOALS ARE
WHEN YOU GO IN FOR TRADES SO
THAT YOU DON'T CREATE SO MUCH
UNCERTAINTY.
>> YEAH, I DON'T AGREE WITH
THAT AT ALL. AGAIN, WE'RE
MOVING BACK TOWARD MANAGED
TRADE.
WE DID THIS WITH JAPAN IN THE
1980S.
WHAT WE DID WAS EXPEND
PROTECTIONS FOR U.S. TRUCK
MAKERS INSTEAD OF FORCING
SOUTH KOREA TO LOWER THEIR
TARIFFS.
THERE'S NO HELP HERE FOR OUR
AGRICULTURAL MARKET.
I MEAN, GLENN, THIS ISN'T
EXPENDING MARKET
OPPORTUNITIES.
THIS IS MANAGED TRADE.
HOW IS THIS A GOOD DEAL?
>> WELL, I THINK IT IS A GOOD
DEAL FOR THE SECTORS
INVOLVED.
I DON'T THINK IT'S THE BEST
DEAL THAT COULD BE DONE.
I SHARE YOUR VIEWS THAT WE
SHOULD MOVE TOWARD MORE
OPENNESS.
BUT GIVEN WHERE THIS
ADMINISTRATION STARTED, I'M
ACTUALLY PLEASANTLY
SURPRISED.
>> OH, SO THIS IS GOOD FROM A
LOW BAR.
THAT'S WHAT YOU'RE REALLY
SAYING.
>> WELL, I DIDN'T QUITE SAY IT
THAT WAY.
>> OKAY.
>> IF YOU'RE WORRIED ABOUT
PROTECTION POLICIES FROM THIS
WHITE HOUSE, LIKE, A LITTLE
BIT OF GIVE IS A LOT IN OUR
WORLD.
>> GLENN, I'M WONDERING IF
THIS HAS ANYTHING TO DO WITH
SOUTH KOREA AND EVERYTHING TO
DO WITH THE NAFTA NEGOTIATIONS
THAT ARE GOING ON THAT WE
BASICALLY STRONG ARMED
SOUTH KOREA INTO PROTECTION
FOR CERTAIN INDUSTRIES SO THAT
THEY COULD PRONOUNCE A WIN AND
THEN GO TO THE NAFTA PARTNERS
AND SAY, HEY, LOOK, IF YOU
DON'T DO WHAT WE WANT, WE'RE
GOING TO DO WHAT WE DID TO
SOUTH KOREA.
WE'RE GOING TO DO IT TO YOU.
>> THAT'S POSSIBLE.
THE KOREA ISSUE IS COMPLICATED
BECAUSE IT'S NOT JUST THE
TRADE NEGOTIATION.
IT'S THE OBVIOUS ELEPHANT IN
THE ROOM OF NORTH KOREA.
SO IT'S REALLY HARD TO SEE HOW
THEY'RE CONNECTED.
>> WELL, AT SOME POINT IT'S,
LIKE, ANY DAY NOW.
NAFTA'S OFF THE TABLE.
LET'S FACE IT.
THEY HAD ELECTIONS IN MEXICO,
AND THEN WE HAVE HAD MIDTERM
ELECTIONS HERE.
SO BY THE TIME YOU'RE ACTUALLY
GOING TO GET BACK TO THE
NEGOTIATING TABLE ON NAFTA IS
WELL AFTER NOVEMBER.
SO I DON'T KNOW THAT WE'LL
HEAR ANY HEADLINES IN TERMS OF
NAFTA.
THERE'S THAT UNCERTAINTY OUT
THERE.
LET ME ASK YOU ABOUT THE
ATLANTA FED, GLENN.
BECAUSE THE PRESIDENT OF THE
FED TOLD THE JOURNAL THE HE
DIDN'T LIKE THE LAST
$1.3 TRILLION SPENDING BILL
COULD PUT PRESSURE ON THE
MONETARY POLICY.
WHAT'S YOUR TAKE ON THE
$1.3 TRILLION SPENDING BILL
AND ITS IMPACT.
>> WELL, I THINK THE SPENDING
BILL WAS UNWISE.
IT REALLY IS A CONTINUATION OF
CONGRESS' UNWILLINGNESS TO
GRASP THE FISCAL SITUATION
WE'RE IN.
WHETHER IT CHANGES MONITORY
POLICY, THOUGH, I THINK IT
WOULD BE A LITTLE BIT MORE
QUESTIONING.
I THINK THE FED WILL
CONTINUALLY GRADUALLY INCREASE
RATES.
THE ONLY REASON IT WOULD
CHANGE MONITORY POLICY IS IF
SUDDENLY INFLATION SNAPPED OUT