EXPENSIVE TO FINANCE THOSE
ITEMS.
IT'S ALL ABOUT WHAT THE CONSUMER
DOES, JOHN, BUT WHAT DO YOU
THINK HAPPENED?
>> WELL, IN TERMS OF THE
CONSUMER, YOU KNOW, IT'S STILL A
PRETTY STRONG ENVIRONMENT.
THE UNEMPLOYMENT RATE AS I
THE UNEMPLOYMENT RATE IS I
THE UNEMPLOYMENT RATE IS AT ITS
LOWEST LEVEL SINCE 1969.
WE HAVE SEEN GAINS IN STOCKS AND
HOME PRICES, INCOMES ARE RISING,
CONFIDENCE IS HIGH SO I DON'T
THINK THE BLIP WE HAVE SEEN IN
THE LAST COUPLE -- WEEK OR TWO
IS REALLY ENOUGH TO KNOCK
CONSUMERS OFF THEIR GAME RIGHT
NOW.
NEIL: I'M WONDERING IF AN UPTICK
IN RATES IF IT WERE TO CONTINUE,
THAT'S I GUESS WHAT THE
PRESIDENT IS MOST CONCERNED UNAB
PRESIDENT IS MOST CONCERNED UNAT
PRESIDENT IS MOST CONCERNED UNAD
PRESIDENT IS MOST CONCERNED UNA,
THE MARKET MIGHT DO THAT WITHOUT
THE FEDERAL RESERVE DOING A
THING, RIGHT?
>> ABSOLUTELY.
YOU KNOW, FROM THE FED'S
PERSPECTIVE, NOTHING HAS REALLY
CHANGED IN THE LAST FEW WEEKS.
LET'S NOT FORGET THE FED STARTED
RAISING INTEREST RATES ALL THE
WAY BACK IN 2015, SO THEIR
INCREASES ARE NOTHING NEW AT
ALL.
THEY ANNOUNCED THAT THEY WERE
WINDING DOWN THEIR PORTFOLIO OF
MORTGAGE AND TREASURY BONDS MORE
THAN A YEAR AGO, SO THERE'S
NOTHING NEW AT ALL THERE,
EITHER.
I THINK ONE OF THE THINGS THAT'S
BEEN GOING ON IN THE MARKET IS
THAT INVESTORS STARTED TO
REALIZE HEY, THIS ECONOMY IS
DOING PRETTY WELL, INFLATION HAS
GOTTEN BACK TO NORMAL,
UNEMPLOYMENT IS BACK AT THESE
HISTORIC LOWS, MAYBE THE FED IS
GOING TO PUSH RATES UP A LITTLE
BIT HIGHER THAN WE ALREADY
THOUGHT, AND SO THE MARKET IS
CATCHING UP TO WHAT THE FED HAS
BEEN TELEGRAPHING FOR YEARS,
REALLY.
NEIL: THE PRESIDENT SINGLING OUT
THE FEDERAL RESERVE, YOU KNOW,
FOR GETTING CUTE WITH RATES,
LOCO, YOU HEARD ALL OF THAT.
WHAT DID YOU MAKE OF IT?
>> WELL, IT REMINDED ME A LITTLE
OF AN ONION HEADLINE I READ BACK
IN THE CRISIS YEARS, THAT
SATIRICAL ONLINE NEWS SITE WHERE
THEY WERE TALKING ABOUT BUSH
CALLS FOR PANIC.
IT'S USUALLY AT A MOMENT LIKE
THIS, YOU USUALLY HAVE THE
PRESIDENT SAYING EVERYONE SHOULD
JUST CALM DOWN, THE ECONOMY IS
IN GOOD SHAPE.
IT'S KIND OF IRONIC THE
PRESIDENT IS SAYING OH, HEY,
THERE'S A REAL BIG PROBLEM WITH
THE FED RIGHT HERE.
YOU KNOW, I THINK THAT THE
PRESIDENT IS POINTING A LOT OF
ATTENTION AT THE FED, BUT HE'S
NOT REALLY IN MUCH OF A POSITION
TO DO ANYTHING.
HE CAN'T FIRE THE CHAIRMAN OF
THE FED WITHOUT CAUSE, AND HE'S
ACTUALLY APPOINTED A NUMBER OF
PEOPLE --
NEIL: I WAS GOING TO ASK YOU
ABOUT THAT.
NO
I KNOW THERE'S HISTORY FOR
PRESIDENTS NOT UPPING THE FED
CHAIR.
I AM CURIOUS, THOUGH, WHAT YOU
MAKE OF THE ARGUMENT THE
PRESIDENT HAS THAT, YOU KNOW, HE
CAN FIRE HIM BUT HE'S NOT GOING
TO DO THAT MIDTERM.
CAN HE?
>> NO.
HE'S NOT IN A POSITION TO FIRE
HIM UNLESS THERE IS CAUSE, SOME
GROSS ACT OF NEGLIGENCE.
SO HE'S NOT IN A POSITION TO DO
THAT.
POWELL IS IN THE VERY EARLY
STAGES OF A FOUR-YEAR TERM, SO
HE'S NOT IN A POSITION TO NOT
REAPPOINT HIM, EITHER, AND
WHAT'S SO INTERESTING IS THAT
THE PRESIDENT HAS APPOINTED A
LOT OF OTHER PEOPLE TO THE FED
WHO LOOK LIKE THEY ARE GOING TO
BE PRETTY LOYAL TO POWELL.
I THINK THE FED IS GOING TO KEEP
DOING WHAT IT THINKS IT SHOULD
DO BASED ON THE INFLATION
BACKDROP AND THE ECONOMIC
BACKDROP, AND THAT PROBABLY
MEANS SOME MORE INTEREST RATE
INCREASES.
THE OTHER THING I WOULD SAY IS
WHAT I FIND KIND OF PUZZLING
ABOUT WHAT'S GOING ON RIGHT NOW
IS THAT THE INFLATION NUMBERS,
WE JUST SAW MORE OF THEM TODAY,
HAVE SOFTENED A LITTLE BIT IN
THE LAST COUPLE OF MONTHS, SO
THE FED HAS LESS REASON TO BE
RAISING INTEREST RATES RIGHT NOW
THAN IT DID, YOU KNOW, MAYBE A
MONTH OR TWO AGO.
THE INFLATION BACKDROP HAS
IMPROVED A LITTLE BIT.
SO IT'S KIND OF FUNNY TO ME THAT
THE BOND MARKET IS GETTING
WORRIED ABOUT THE FED AT A TIME
WHEN THE FED IS PROBABLY A
LITTLE LESS WORRIED ABOUT THE
INFLATION ENVIRONMENT THAN IT
MIGHT HAVE BEEN A MONTH AGO.
NEIL: JOHN, YOU KNOW HOW PEOPLE
WILL READ THAT.
IF THE FED DOES SLOW ITS
INTEREST RATE HIKING, PEOPLE
WILL INTERPRET IT WAS COWED BY
THE PRESIDENT.
YOU CAN RAISE REASONS ENOUGH
THAT YOU JUST DID THAT IT
WOULDN'T BE FOR THAT REASON, BUT
THAT'S WHAT I MEAN BY PUTTING
JEROME POWELL, YOU KNOW, IN A
CAN'T-WIN SITUATION.
YOU KNOW?
>> YEAH.
YOU KNOW, WHAT POWELL IS GOING
TO SAY AND WHAT HE HAS SAID IS
HE'S JUST GOING TO MAKE THE BEST
CALL THAT HE CAN, LIKE AN UMPIRE
AT A BASEBALL GAME, AND HE'S NOT
GOING TO PAY ATTENTION TO THE
POLITICS.
YOU KNOW, THE FED IS GOING TO
RAISE INTEREST RATES AGAIN IN
DECEMBER IN ALL LIKELIHOOD.
I DON'T THINK WE ARE GOING TO
KNOW UNTIL SOMETIME EARLY NEXT
YEAR, PROBABLY AROUND MARCH, IF