Also in this playlist...
This transcript is automatically generated
-- 149 right now 111000 to nine DA.
Looks at the markets bouncing back -- again a very volatile day on the heels of what fed chief Ben Bernanke had to say He again saying He had no plans.
To help boost the economy -- wanna bring in ward McCarthy Jeffries chief economist and former senior economist at a Federal Reserve Bank of Richmond.
What do you think I mean do you think it's what He didn't say what He did say other markets overreacting what's happening.
Well I think they were unreal realistic expectations about what He might say today.
Up for example there are a number of people who are thinking the Fed was going to -- -- QE3.
And that simply wasn't going to happen.
I think what He didn't do is tell us that the Fed has a plan and not in a panic mode and as the year progresses they will continue to follow that plan.
He RD ORD told us what those tools were in prior public appearances and I think the next step is going to be that the Fed extends the average maturity.
Of -- securities holdings because it wants the flattening yield growth and bring down longer term rates.
You think Charles -- -- Richard Fisher is gonna go along what that I mean he's had.
He's got more dissent now it seems in the ranks that he's ever had and I'm wondering if that's part of the reason that the one day meeting for next month is now a two day meeting.
Well I feel there is a lot of dissension in the ranks right now in basically that dissension reflex.
The underlying assumptions about what type of business cycle we're in right now.
People like Charles -- and Richard Fisher for example.
It appeared to assume that higher than normal business cycle and therefore we should start growing rapidly.
Bernanke and his allies think -- recognized but I think it's a more.
Accurate assessment and that is that this business cycle has a lot of problems that we have not have for a while and therefore it's gonna take -- to grow out of it.
Yes so yes this dissension but I don't think it's gonna stop chairman Bernanke from doing what He thinks needs to be done.
And that's a good point and you know ward in you know a lot of people -- to I mean they look into -- Ben Bernanke says it's sort of like to look at for jet -- mind tricks.
They're big bucks the market -- not but from what the bond market telling us about inflation or deflation because there's so many combat pressures in the bond market.
With a lot of government spending and we saw the banks needing actually -- Pick up and buy treasuries for their capital cushions to back up the flood of deposits coming in from the eurozone says some washing up so the guys at JPMorgan telling me.
There look at -- Lotta banks are looking to -- even more -- not enough treasuries in a market that's what's keeping prices stable and the yields coming down which means -- -- costs for consumers across the country right.
Quote the shorter term rates are reacting to the Fed's expectation that they're -- generation rates again until the middle of 2013.
Longer term rates have also been -- -- been very volatile but have been moving -- lower.
Primarily because the market does expect that the Fed's going to stop buying longer term securities to bring lot longer term rates down.
Primarily because this recoveries if not up to.
The stand is that the Fed wants.
Ward I agree that any speculation or thoughts that chairman vernacular is going on.
A tip his hand -- QE3 we're simply unrealistic and I I take is -- positive sign that He reiterated his stance however the GDP number.
What it was was that its anemic growth and and and the chairman did say that degree there's just not sufficient gross growth to make a dent.
In this unemployment situation and he's almost calling on Washington.
To start instituting policies and to help and He specifically -- the housing market which I think.
Is where we lost so many jobs.
Pump is the market not looking at at it at that is the bad news that that the chairman is saying I need your help here because there's only so much to do with rates but what are your thoughts on just the GDP announcement and and his call to Washington.
Well the GDP numbers were -- you know pretty much as as expected.
The good news in domestic consumers spend a little bit more.
And that we have good reason to expect that the third quarter will grow faster than the second quarter.
-- far as Washington is concerned one of the messages that the chairman sent today was that.
It was a very gentle admonishment to the political class that their behavior it's been childish.
And that there it they've been handling.
The fiscal situation in an inept fashion.
So hopefully they will heed this.
Far as the housing market is concerned that is one of the things that makes this business cycle different from others that we've had for the past several decades.
And they has been a lot of chatter on and off in Washington about.
Taking some kind of dramatic steps in order to provide more support for the housing sectors so.
But right now no one has proposed the plan that was what physically feasible and also politically feasible.
-- before I let -- go in July we did see a bump up in consumer prices up about one point 7% that excludes.
Of food and energy -- to the multiple pieces of the report that signals to me that may that we do.
Potentially have -- an inflationary environment ahead of us do you think that he's worried about -- -- now.
Well he's always worried about inflation but frankly when you look at the inflation numbers the -- numbers and the headline numbers are going to be headed.
In different directions.
In in the months ahead the headline numbers will start easing off primarily because we've seen.
A decline in commodity prices which are what caused inflation to accelerate in the first place.
Record numbers primarily are being driven by kind of a perverse relationship.
That is that rents are rising.
And that is in incorporated in some of the core inflation numbers and the reason rents are rising -- that the housing market so weak.
So at some point that's going to be a public relations problem for the chairman and for the Fed general.
But I don't think it's going to prevent them from providing more stimulus if they think the economy needs it.
Great point about about the rental market I didn't think about thank you very much ward McCarthy Jeffries chief financial economist at great to have you on a day.
Like today we heard from the Fed Chairman.
Filter by section