Fed Will Begin Tapering Slowly Next Month: Valliere

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Aug. 9 (Bloomberg) -- Potomac Research Group's Greg Valliere comments on President Barack Obama's news conference, the outlook for Federal Reserve monetary policy and the upcoming budget debate. He speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Great to see you.

Congress is in recess.

The president has his vacation.

Do think this time away will help smooth over the toxic atmosphere?

No.

i think it is unlikely.

I thought the president hard and the battle lines in his news conference today.

He made it clear there is not going to be a deal to delay obama care.

He made it clear the republicans are out of bounds in talking about shutting down the government.

No, it is going to be a really confrontational fall.

Given that it is bloomberg, let's start with fed related news.

The president did again point out he is looking at a range of outstanding candidates to serve as the next fed chairman.

He explained what he defended larry summers, who was the mentioned as a possible candidate.

What you read into the defense of larry summers?

Summers is still in the mix.

The president resents the criticism of summers.

Sommers and him have been through the wars together.

The other thing is, the president made it clear that it is not necessarily generate yellen and larry summers.

There could be for people under consideration.

The president said the next fed chairman needs to keep an eye on inflation and promote growth.

He did note that inflation is not a challenge.

If the next fed chair is focused on reducing unemployment, while your clients telling you they need to do starting a day one?

Continue the policies of ben bernanke.

The tapering will begin in september.

I think they will taper slowly.

Maybe by the year from today, it'll be over.

Then the focus will shift to the feds forward guidance from when we get that first hike in the funds rate.

It is at least two years away.

The present address concerns about possible government shutdown in the fall.

You mentioned that.

He said he believes common sense will prevail.

We are talking washington.

Common sense didn't prevail when they regarded the sequester.

If the president overly optimistic?

Common sense is in short supply here.

My impression is that most republicans, the elders and leaders of the party are very leery of the government shutdown on october 1. they feel would backfire on republicans.

That is a hollow threat.

The bigger threat is the debt ceiling fight it will occur between thanksgiving and christmas.

How nasty is that going to be?

It is going to retire -- require more austerity.

The house will say either we get another year of sequester, or we get another package of spending cuts.

The house will have to see more fiscal restraint in order to get the debt ceiling raised.

The immigration reform debate came up.

The president said he is certain the copperheads a bill in the senate would pass the house if majority republicans bring it up for a vote.

Republicans say bring up a series of narrow bills instead.

What are the political implications for that?

The big political application in the last month has been the dramatic plunge in marco rubio's polling numbers.

Rubio has dropped half in new hampshire among republicans.

The message to him is the base , the public and base is not want immigration reform.

The president may be mistaken.

I'm not sure that the conservative house is compared to pass immigration reform.

Mr.

obama talked with the cancellation of his september summit.

That action was taken in large part because russia gave that asylum to edward snowden.

Housetrained a relation to the twin washington and moscow?

I do not think it is the end of the world.

John kerry and the secretary of state that with his counterpart in washington.

They seem to get along just fine.

The president feels he has to accuse putin of being homophobic.

He has to make an issue over snowden.

Beyond that, this is not a serious lecture.

For a few more months, things could be rocky.

It is not the end of the world.

A real quick point, the president took the olympics off the table.

He will not have u.s. fail to participate.

That was a big deal.

20 seconds left.

This text has been automatically generated. It may not be 100% accurate.

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