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[CC may contain inaccuracies] When you listened to Powell today when
you saw the dots is it is it clearer

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than ever that Jay Powell has finally
embraced the idea that without slowing

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the economy to the point of recession
pushing up unemployment and giving up

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all hope of a soft landing is necessary.
That's what he has to do.

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That's what they have to do now to
finally bring down inflation.

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Think that's the core of it.
I don't think he would say that he's

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completely given up the idea that we can
get out of this with something that's

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soft ish.
And if you look at the projections they

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said the flow rate is going to be four
four point four percent.

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I think that's still much too sanguine.
I think it's probably gonna go beyond 5

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percent.
So I think they're being a little

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cautious.
NIKKEI own been making their forecasts.

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So I do think there is likely to be more
pain.

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Is it necessary.
Not 100 percent but it's getting close

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to that.
Well let's look at the dots Randi

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because what's interesting isn't just
that they moved the rate that they

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expect to get to next year to four point
six from three point eight.

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Just three months ago that was their
expectation.

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Look at the dots.
You've got six along the top up almost

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at five and then you've got six along
the bottom who are closer to four point

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four.
Then you've got the media guys in the

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middle.
And lately we have found that it's been

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the more hawkish dots the more hawkish
people on the FOMC who have led as we

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went everywhere forward.
So you're in the camp.

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You're in that five fed a five percent
federal funds rate.

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Camp.
Why.

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And is it do you think that everyone is
going to end up there next year or even

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high school.
You know I think the most likely be in

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sort of you know four and a half to five
percent.

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I don't know if they're actually gonna
get to 5 percent.

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Really depends what happens with that
with inflation in particular core

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inflation.
One of the challenges is that the

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biggest piece of core inflation is
so-called shelter services and that's

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mostly through owner equivalent rent.
So that means rents play a very big role

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when you strip out food and energy
prices and rents are going to be slow to

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slow down.
A lot of places are still catching up on

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rents.
Some markets there had been prohibitions

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on increasing rents and they're just
being relaxed now.

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So you're going to continue to see a lot
of pressure in core PCG.

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And so I think that's going to drive the
Fed to continue to to raise rates and

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then keep rates up.
I think they want to keep rates above

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these core PCI for quite some time and
that's why they're going to be in a four

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and a half 5 percent range for 2023.
Randi when you are listening to Chair

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Power today.
Did you notice any change in messaging

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because was what was interesting to me
even when our Marcus reporter was

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talking about how investors are finally
realizing that this is for real that

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this hawkish pivot will stay.
So has anything changed and what should

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investors be on the lookout for next.
So I think you're exactly right.

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His message has been incredibly
consistent.

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I think for the last you know since as
the previous FOMC meeting.

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But the markets seem to not pay any
attention to it on your program and

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other programs talking about this.
You got to take this guy seriously.

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And it's you know he's not going to just
give in.

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He's not going to pivot.
And then since they won't take him

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seriously he said OK I'm ripping up my
speech in Jackson Hole I'm gonna make a

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short speech.
This is one thing over and over again.

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We're gonna keep at it till we're done.
And he basically said the same thing

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today in the dot plots were revised to
be consistent with that.

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When it comes to recession risks they
really stop short of saying that the US

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will fall into a recession.
But when you take a look at the labor

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market outlook at the zero point six
percentage point expectation for the

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deterioration of the labor market we've
never seen that happen without a

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recession before.
So are we being too optimistic to think

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that a soft landing is really still on
the table.

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As I said I think it's highly unlikely.
I mean it's not impossible but but

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highly unlikely.
There are a lot of shocks that could

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come in.
Unfortunately a lot of what will happen

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in the global economy will be decided by
Mr.

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Putin.
And and and obviously that's a real wild

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card.
It's very hard to predict predict what's

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going to happen there.
But I think I agree.

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As I mentioned I think the unemployment
rate is likely to go even higher.

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You'll probably get two to a five handle
now by previous recessions.

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That wouldn't be so bad.
But of course it's never good to have

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the unemployment rate going up.
But the alternative is even worse

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getting into a late 1970s early 1980s
situation.

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Remember the last time inflation was
this high.

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Volcker had interest rates in double
digit levels.

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You know if we can get away with 4 or 5
percent that's not going to be so bad

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compared to what happened 40 years ago.
You know Jay Powell said that there

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there was a contingent of
people members of the FOMC who were

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pushing for a 100 basis point hike
today.

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So we clearly had that hawkishness that
does you don't normally see in the final

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rate hike.
The next meeting is going to be very

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critical.
Two meetings left this year and it's

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going to be right before right around
the mid-term elections.

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How could they do.
It would have been better to do 100

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today.
So you could pull back to 50 just ahead

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of the election.
Can they do something that aggressive 75

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even.
And certainly I guess they'll consider

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100.
He knows right ahead of an election.

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Wouldn't that just have political
ramifications or repercussions that

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might be bad for the Fed.
I think it's better that they are trying

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to smooth rather than having surprised
people with 100 basis points now because

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people could do better.
Oh my goodness.

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Things are a heck of a lot worse than we
thought.

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I mean obviously they're still working
it out.

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As you were discussing a lot of
volatility in the markets today as

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they're trying to sort of suss out you
know what the inflation risks are what

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the recession risks are.
That's going to take a while to to work

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out.
Obviously the the meeting that would be

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just before the midterm election will be
a politically fraught.

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But I think better that they just keep a
consistent path the consistent message.

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They've now laid a very clear foundation
for being around 75 basis points for for

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the next next meeting.
So it's not going to come as an extreme

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surprise.
And I think it's better that they didn't

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cause too much tumult today because that
would have just gotten a lot of focus on

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them.
They don't want the focus to be on them.