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the data is next week joining us to discuss I'm pleased to say always a pleasure Muhammad Al Aaron of Queen's College Cambridge Mohammed let's start there with the FED in a few weeks time our rate hikes on ice and can CPI next week change it so CPI next week can definitely change it not September but can change the next rate hike at the end of October beginning of November John there are bigger issues here I think the discussion is going from whether they will hike or not towards the overall impact of the level of interest rates that's also now more more discussion of how how high not how high how long are they going to stay there and underneath all that John are some really really challenging technical issues about monetary policy everything from our Star to you know what all the real lags in play this is a very complicated time for the fed and Marcus should not jump to conclusion too easily as to what's going to happen Beyond September speaking to those complications Muhammad some contradictions in the economic data this week alone and maybe you can help us jobless claims are the lows we haven't seen since February the ism was pretty punched she the Facebook screen slowed down I've been asking all week Mohammed I'm sure you've heard me ask it how much weight should I put on each data point that's coming out at the moment what's giving me a clearer story of what you think is happening so I think the consistent story John is that services are strong and they are strong and employment they are strong in wages they're strong enough and that is a very important thing to focus on beyond that you have massive ambiguities beyond that you have also the dependence on the rest of the world which is in a very different place from the US so I think the key issues get Services right and if you get Services right you can explain much of what's going to happen going forward but there are other issues that are going to become more important as we go deeper into 2024.
what do you think those issues are Muhammad what's number one for you so it's the supply side John um and the way it plays out whether it's labor negotiations whether it's the price of oil staying so high when Chinese demand is under pressure whether it's what's happening to Apple in terms of jail politics and what does does what that does to supply chains and what does that to demand chains you know there's a lot of aspects but supplies the number one we've transitioned from a world of insufficient aggregate demand to a world of insufficient aggregate supply and that's going to play out for not just one year but for a number of years we talked about crude earlier this week being at highs we haven't seen all year back to November 90 on brand Muhammad if we just looked at that one commodity I'd be with you I'd say that's just a supply story The Saudis Russia pulling back but iron horse in a mix as well at multi-month ties we just talked about the contradictions in the U.S state so let's talk about the contradictions in the global story we're told slowdown in Europe we can see it slow down in China we see it and then I see Commodities where they are Muhammad and I'm trying to reconcile those two things and those two things competing with each other for you so once you go beyond the supply story it becomes very specific you can explain a lot on the supply side you didn't mention food but food prices have picked up again um so there was a lot to be explained by the supply side but then if you go to individual Commodities you will have other factors playing in John I mean for me there were three big surprises in the first eight months of the year to positive one negative the negative we know is China the positive we know is the us but also Europe was better than many expected going forward China doesn't recover Europe doesn't maintain a positive surprise it's all about the US when it comes to Global growth well let's take that story push it through effects you know what we've got stronger dollar eight weeks of it eight consecutive weeks of dollar strength is that because the US is just so great right now or the rest of the world Muhammad is so bad it's both it's U.S exceptionalism and absolute and relative terms that results in weight differentials that result in flows of foreign direct investment being even more concentrated in the US it is about all is all about relative and absolute U.S exceptionalism well Europe's in a dark place going into the ECP next week Mohammed can you speak to me about the inflation growth mix you'd expect to see from Europe over the coming quarters yeah It's Tricky John I mean if you're worried about stagflation it's Europe and it's the UK where the threat is highest and it's a really tough situation for the ECB if the ECB wasn't a single mandate Central Bank they probably wouldn't hike I've put a 55 probability that they end up by hiking but it's that close strong as to whether they should hike again split right down the middle there are things that fed officials can say right now the ECB officials cannot say we're in a good place my McKee caught up with John William to the New York fed take a listen right now I think you know things are moving in the right direction we've got policy in a good place but we're going to need to continue to be data dependent watch watch the developments and and assess what we need to do Mike McKay are we in a good place uh we are in a good place If the Fed could design where it wanted to be with its policies this would probably be it they don't know exactly what's going to happen but right now they've got low unemployment and inflation that's going down John Williams in terms of the September meeting put the nail in place Lori Logan from the Dallas fed hammered at home last night giving a speech and she's the most hawkish member pretty much of the Open Market Committee at this point saying another skip could be appropriate but caveats that with skipping does not imply stopping so I think what you're looking at here is definitely uh pretty much everyone in favor of skipping in September maybe Mester and Bowman we got the Sorting Hat out now that we're heading into to the final week before the FED meeting and the quiet period and you can see on the left hand side and in the center there's a majority who've said we can skip this time not everybody thinks they should skip in November but you go on to the calendar and you see what's up next week besides CPI there's a lot of data coming in that could weigh on them but I think Muhammad said something very smart the CPI is probably going to affect what people think of the November meeting rather than the September meeting in part because economists are pretty good at forecasting CPI but in part because so many fed officials have already set the market up to get through the September meeting without a move but watch retail sales and of course the big question next week is going to be whether the UAW goes on strike that would have a significant impact on the economy probably short-lived but we'll have to see and that is the big wild card for next week along John with the hurricane that may or may not come I've seen some of that that does not look good Mike McKee thank you sir looking ahead to next week Muhammad Mike talked about it you mentioned it in the last five minutes these labor debates unions the Detroit three and UAW I've asked this question this week Alaska review Mohammed do you think that's the dying gambas of a hot labor market or maybe the story that's going to stay with us for a while okay we'll stay with us for a while this is an indication that labor has more bargaining power it has taken decades but labor has restored some of its bargaining power and you see this not just in the U.S you see it elsewhere as well and that's another supply side issue John can I just say something um Mike McKee's interview with John Williams was excellent his mention of what Lori Logan said was really good but the quote that really hit me from her last night was when she came to talk about what approach she needed on monetary policy and she said something like we need a very calibrated approach as opposed to quote throwing buckets of cold water on it and I think that that is critical going forward is what does calibration mean we're no longer in the phase of catch up where you made a mistake you called it transitory and you have to rush now it's really back to old-fashioned calibrated monetary policy and that gets a lot more complicated let's get away from the last month or so looking ahead to the next month Muhammad let's talk about the complications of maybe the next several years there was a headline from our reporting on the G20 of a draft at their final communique and it read as follows the G20 sees a challenge to long-term growth from what they called cascading crises and right in that moment Muhammad I read the headline and a thought of your book coming out brownspan salarian a plan to fix a fractured World Perma crisis Muhammad can you breathe some life into that conversation what is it that you and Gordon Brown and Michael Spence see that maybe speaks to what the G20 are talking about this weekend so that book originated from Zoom calls the three of us had weekly Zoom calls and after a while when talking about going from crisis to crisis over a number of decades we ask ourselves why and basically it comes down to three issues John we haven't figured out a way to grow in a high sustainable inclusive manner so it's about growth models domestic economic policy management has been lacking that's a second issue and global global coordination is at the lowest level that the three of us could remember for a very long time so we asked the question the other way is if you want to get out of this notion of cascading crises or Perma crises what do you do and we we wrote down on basically a plan to fix all three looking forward to getting my hands on the book Mohammed should we finish with an easy question jet spills Monday Night Football I had to zoom in and see the tie the Jets tie this morning Muhammad what are you looking for from the team this season I'm hoping for a good season but I tell you our first six games including Mike Mickey's Broncos um are quite tough so fingers and toes crossed and as I'm wearing the tie us the Jets fans as long as suffering Jet fans judge fans will do whatever it takes and whatever we can to support our team you were slightly critical about taking on Aaron Rodgers you still feel the same way look John it's done so we're fully behind the team now Muhammad thank you sir good luck for the rest of the season we'll catch up with you soon no doubt Muhammad al-airian on a bunch of issues looking ahead to next week
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