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Moderately above 2 inflation, moderately is what it says in the statement but does not define exactly what moderately means. There are two centers to this action, Robert Kaplan wants to see the statement to the way it was pretty wants to statement to read the economy or stance will remain the same until the economy has weathered the storm and the economic storm we have here. Well cash on the other side dissented because he wants more dovish language in this. On implement rates, statistics are very interesting here. They have reduced now the planet rates rates and estimation of this year to 7. 6 by the end of 2020 grid that is down from 9. 3 from their june projection and then also 5. 5 from on a plummet rates in 2021, 4. 6 and 2022 and 4 in 2023. The real gdp prediction cut in half for the losses they are paired they are now saying its a loss of 3. 7 at the end of this year with a bounce back of 4 next year. The inflation, fed estimates that pce inflation is 1. 2 this year up from 1. 7 or up to 1. 7 and then back to 2 in 2023. 1. 2 is what they believe the pce inflation of this. Basically everybody is at zero through 2022. This is the voting members and where they fall on the line. One person in 2023 is above zero and for people above zero or im sorry, 2022 and 1 above for people in 2023 but still buying 80 billion in treasury and 40 billion from us in mortgagebacked securities. A very dovish statement here with two dissenters and rates remain the same for at least 2023. Back to you, charles. Charles wow, thank you. That thickens the plot. Here to help us figure it all out former dallas fed advisor daniel booth. Their chief economy or Asset Management ceo phil. Lots of angles to discuss here. Daniel, your thoughts on what we just heard and what you think will we will be hearing about half an hour. You see the big smile on my face woefully Charles Baird im going Robert Kaplan go. You need to understand the fed has hit its 2 for pce inflation targets 11 times since january 2012. Its ridiculous for it to say that it will let inflation run hot but doesnt use the hit 2 target in the first place with a false inflation rate. Good for kaplan for pointing it out and is he dissented because the fed is looking for cover in order to continue printing on until kingdom come passes us by. I applaud what he did. I understand everything that came out of the statement and no big surprises there or big surprise from cash carry but am i smiling for Robert Kaplan. Charles of course, cash kari is a dove and then of course the rest of the fed what you make of the statement and how does this set up this q a we will hear shortly . I have said for a while symmetry actually means the same thing as average so this big change is not a big change but it is codified in a more specific way and of course it means lower for longer. We look at the summary of Economic Projections and they are saying we will not get off until 2023 which means we have till about 2023 when we can expect a rate hike unless something unexcited happens. I would submit to you that there are forces at play that once we are in the post vaccine part of the economy and if we were to manage the entire weight we are dealing with this crisis with more ppe wearing, better tracing, testing we would see a rebound in growth because we have such a massive increase in savings and we have money supplies borrowed at 22 yearoveryear which is more than triple what we saw during the Global Financial crisis and so, if we were to have the whole inflation and i would be a very good thing for the economy and very good thing for the deficit and would allow the fed to raise rates sooner. This is not the baseline the most people are projecting but we have not had deficit finance savings of this kind since postworld war ii. Its a very unique situation. We have a massive retraining. Charles okay. Constance went out and im not sure if you can hear but will go back to her. Phil, about the modeling here, edward pointed out that back in june the fed thought are on a plummet rate would finish the year and 9. 3 and they are at 7. 6 because were already at 8. 4 so this economy has certainly outperformed with all the experts thought it would but it feels like jay powell has other things he is trying to achieve with Interest Rate policies beyond the dual mandate of inflation and employment. Exactly right. Right now ive got to be honest with you. Im disappointed in what i heard britt i dont think they are being honest with i think they are being dishonest. The numbers have increased significantly and put your productions out there i think to constances point if you get a vaccine thats a game changer and all bets are off. Add the senate positions itself to say they will do all they can for on a plummet for all folks for a very low rate and to do that they got to run higher than 2 for extended period of time. Theyd never done that. A lot of companies are guessing what will happen and that is a way weve never seen before. To your point, the economy is much stronger right now than anyone thought we would be at this point. 3. 4 gdp was unthinkable a few months back and for that reason i think the fed could raise rates sooner than people expect and its not 2023 and maybe as soon as 2022. Charles so let me go back to you, danielle. Its always about balancing risk and that is the big objective and the company or the question is as you may say is about doing too little versus too much but you know, the message to me seems loud and clear that they will let this economy run hot for a certain period of time because again, powell told us in the past when we thought that employment equals inflation or that prices would automatically go up because of higher wages but that is no longer the case and that whole theory has gone out the window but to me, it feels like hes the biggest, strongest socalled social Justice Warrior out there. He wants to see unemployment rates for every segment of the population may be under 4 , even 3 . Dont risks come with that . Risk do, that. I dont envy j powells position today when he hits the podium because he will have to thread a needle. Americans who are working are doing very well, Charles Baird theyve been able to move out of the suburbs and housing has going gangbusters because the fed owns more than a third of the Mortgage Market and weve seen over 100 billion in cash out refinancing since the pandemic hit. Thats been a huge boost to consumption. Again, for those who are working but by the same token hes also looking for stimulus spending because theres an 82 coat movement between quantitative easing growing the feds Balance Sheet and the s p 500. J powell knows that is the one tool in his toolkit that will work to keep the stock market going and yet in order to get that hes got to somehow convince congress to pass stimulus legislation so hes got tons of treasury that he can go out into the market and hoover up and effectively monetize that new deficit spending. Again, very unable available position with them was 30 million Americans Still collecting unemployment but the headline Economic Data is impossible to deny, charles. Charles it is. The data is amazing and some of it is amazingly great and some of it is disheartening, really disheartening. We go back to dc because we got more on [inaudible] interesting how we have this debate about who is more dovish with the dissenters. Neil kashkari in his defense he said that he wanted to pervert the committee in the case that it expects to maintain the outright target range with core inflation until it has reached 2 on a sustained basis. Already in the statement it does save the statement was made to make that they will make accommodative stands on Monetary Policy until these outcomes are achieved so im interested what the group has to say about the nuances in the language and does not make a big deal about who is more dovish and who isnt more dovish. Charles i want to come back right now. We were just talking about some of the positives and you know, constance, there are negatives. There is the question of inflation at some point but also people were saying weve got in this economy things like zombie businesses that are soaking up billions of dollars in capital, stalling creative disruption and ultimately doing more harm than good. Those are the kind of things that you dont necessarily see on the service betrays a longterm structural problem for the economy. Is that one of the issues we are dealing with their . I would say a few things, we are seeing a rise in a Zombie Companies but seen a big rise in business and business formation at levels that we have not seen for years. This is far above what we saw during the Global Financial crisis and far above what weve seen for the average of the last several years. We are also seeing business exits and this turn something economists would be very happy about is it speaks to the Creative Destruction that needs to happen. When you have a giant shock like covid which has a shift in demand to different factors in the economy and so while this is painful for many this is a healthy thing that we are seeing occur and so even though we do have the risk as daniel pointed out, and you pointed out of having a Zombie Company i think we are saying that overshadowed by this business formation data and the amount of turn we are seeing in response to the economic situation. I would say that to those that are unemployed we definitely need to keep the firewall around the covid impacted parts of the economy so that that doesnt spill over to the rest of the economy and that parts of the economy are flourishing have the opportunity to lift up the entire economy. Charles i want to hit on you with that. I want you to handicap the congress and the school, any more fiscal agent what the scenario would look like because as each day goes by it feels like we will not get it. I make the point to many people and i interviewed these congressional folks all the time in february we had over a million more jobs and we had people who were unemployed and right now we have 7 million more people unemployed then there are jobs and yet they are not moving on this. J powell was looking at that and he looks like hes got to be a night to come in and save the date even as they are threatening to move the Congress Move the needle to congress buried what is this possible additional stimulus . Im less concerned about the personal level but lets assume we can get 300 or 400 to each person as a supplement and that gets us through this. I want to see movement on ppp structure and will this be faults they are or what we do about liability to reduce that and thats a major problem right now and any additional money for small business. We need so amount of money to get to the next three, four months. Its critical because were in the end type if we could get another some stimulus for those two specific areas, liability coverage and powell could hold us up for a time but i hope he does not get so much hubris to think he can run this economy hot for too long a time and then rein it in because hes got that on wielding power. Im on worried about the other side of running hot for too long and the unintended consequent is could be the potential of loss of the default currency is something that greatly worries me about getting too far ahead of ourselves. Charles we will hear more talk about the no longer be in the world of currency in the World Reserve currency and things like that but danielle, one of the issues and i understand if the fed does not want to talk about it too loudly but it seems they are really concerned at their inability to create traditional inflation that this inflation or deflation is something that phil talked about runaway inflation and what happens with the [inaudible] that comes with what if they can no longer control that . Charles, you hit on a very important points. One of the reasons the fed right now is trying to talk up inflation narrative as much as it is and to phils point if we push this to part you could flip the switch when they impossibly see stacked inflation and rising Interest Rates with slow growth and that would be the worst of all possible outcomes. To your point, charles. We have rental inflation that is decreased from eight 3. 4 rate to a 2. 8 rate and that is the biggest input into the inflation metrics that the fed follows and if we start to see the cost of housing come down in the fed will be talking about it and i am sure there were discussions, multiple discussions about this inflationary pressures associated with 106 to 7,000 Companies Closing permanently which we heard today from yelp. Its the persistence of the on appointment and whitecollar permanent on opponent is moving up and dell technology, citigroup in the last 48 hours. The bigger bogeyman, charles and this is what you are talking about, the think the fed bears more than inflation itself is what they want talk about in which you will not hear jake powell talk about today and that is the dissimulation area pressures that are threatening the economy right now. Charles constance, lets talk about this q a session because the last couple of times weve had these meetings and the market was like pretty optimistic and started to tremble when the fed did not give any specifics. When the Federal Reserve says this they are studying how they may curve or raids or looking at but not committed to negative it rates wall street doesnt want to hear that. What specifics can we expect today that we may have not heard yet . I would say wall street would prefer for them to look into it in a studio and a rigorous way rather than to wing it. On balance, maybe he is not the answer wall street thinks it wants to hear but seems better than the alternative but going back to this inflation issue and im glad danielle brought up the good point that we are worried about disinflation and that there are shocks to the economy that could cause that to be the greater risk right now. When we look out past the situation where we had better treatment and vaccine now we are looking at demand which is very different than cost push inflation. If we had some sustained demands around inflation for a time i think that would be positive for the economy and it would likely spark greater Capital Investment and would be reduce our debt to gdp ratio and allow us to grow our way out of this problem in this significant way. We dont want that to get out of hand and so if it is that question can the fed put the genie back in the bottle and slowly tighten liquidity conditions into that inflation so that the gdp does not get out of the bottle. If they can prevent the deflation and we can get to the other side it is a nuanced question of how they manage all of their tools as we exit the situation. Charles great point. Phil, any time fed hints at going the other way the market begins to stumble but lets face it, wall street, they are big babies. The more you give them the more they want and the more accommodation you talk about and the more they want to implement it and so to reverse the process which everyone agrees must have been done at some point becomes a market event, negative market event almost every time. It does breed that is why is these soft landings are so challenging and im concerned about the bond market because the bond market with the lowest and that our lifetime seems to be an endless paradise for people high diving to make a lot of money. You will have a tough time drawing down the reserves of the fed and raise rates as they get hotter here and that will be very difficult soft lining and the market will not like it and not the bond market so for that reason you got to be careful that the fed will not they got to be careful in the statement to say we will run for an extended period of time, 2023, 2024 with low rates and the market will not like that and you will see bond market because of it simply because [inaudible conversations] charles as we can see right now im sorry to jump on you, phil but you are cutting in and out on my end. Bottom line is we are Building Momentum and this is what happens everything will time into the q a session of the thing. Wall street is getting amped up and we want to say thank you very much. Brilliant, brilliant test there. Phil, constance and danielle. When we come back we will look at the other side of this and we will look at we will look at the wall street side of this, oh we will not go to break. In fact, lets go straight to our market panel for a moment if we can because we got some of the greatest triggers to help us out here and by the way, before that ive got to tell you, its awkward to do this but i want to tell you about my book because it is perfect for this situation. I wrote it with a lot of information about the fed and called unstoppable prosperity and i love for you to pick up a copy. If you are in the market or want to get in the market unstoppable prosperity. Com, it is my mission to help you make money in the stock market. I got three guys right now and it is their mission to do this for their clients every single day and of course moments away from hearing from Federal Reserve chairman Jerome Powell and so before we do lets bring in cary from the Capital Management foundation and michael lee as well as hal lambert. Let me start with you, gary. I know you are no fan of the Federal Reserve but at the same token you are an active player in the stock market and you have benefited greatly from what the fed does. Do you ever feel in this awkward position where you think you got doing something dangerous and will hurt us in the long run but making bigtime money on it right now . As a technician i go with the flow but keep in my file manager what this man is doing to the market and the ultimate destruction of the market when all is said and done. You talk for the last 20 minutes about how the fed allows and how the fed or they do not allow anything. Not one man printing 7 trillion out of thin air. Remember, that is all debt enabling 260 trillion around the globe of debt that will come home to roost one day. We will let this thing run out. Ive been telling you on the show several times we thought we have eight melts up going on right now and weve had a little correction and maybe it is over and maybe there is more to go but when you see it snowflake come out as an 80 billiondollar market cap even though they have 400 million in sales and lost 300 million on it, that is indicative of what this man is creating. Hes telling all the savors of this country to go take a flying leap and we will pay you nothing and keep that money with the lenders and the bank. Go ahead and buy snowflake and make money and that is how you do it. I think and the long run we are in big trouble because of that. Hes made market addicted to just him. When i say i mean that, just him. When i hear that they are fighting about being dovish it means 0 Interest Rates until 2023 and printing 7 billion and having unlimited amounts Going Forward is not dovish enough . Charles well, my friend you are well known for the easy money. You also talk about a melts up in this hot ipo. There is an blitz right folks. Seventeen Companies Hitting the market raising 8. 5 billion and of course this happened on trading and gary told you about it, snowflake grid was valued at 33 billion and has been as high as 80 billion since trading. I will bring in lawrence seven eddie. It is making people excited about what is in the queue. Yeah, and now it is the size of two twitters, evaluation more than doubling to just about 80 billion at one point britt look at that, charles. Biggest Software Issue this year in the year that has seen the most ipos since the tech boom back in 2,000 but let me give you the details but priced at 120 open at 245 a share, huge bump. Last week the range was 75 85 to 272. Is this a red flag or justified . If you are betting on the latter, here is probably why. First snowflake is disrupting the cloud as it provides Cloud Database warehousing for 3,000 companies. Second, investors are hungry for growth outside of the popular thing stop at a low rate environment. Third, its got salesforce and Value Investor Warren Buffett so it is oddly considered a value in the growth stock like amazon in its early days it is prioritizing topline growth over profitability and looking to expand its customer base. This is unbelievable. Revenue retention rate of one of 58 and that is why investors both institutional and retail are craving that sort of growth but it is not just today but we are seeing that this year. Especially in the past couple of months. Youre looking at day one pops for other reasons ipos in some of these committees are also unprofitable, big commerce you might not have heard of that and they power shop website, and see no cloud banking and look at them up between 100 and 200 on day one. Snowflake today one of six ipos, jay frog also went off in their shares soaring big time and retail investors, regular mom and pops, are these prices too expensive . Do i want to get in here . Good question. We will see 17 new ipos this week, next week even more. Good rx, weve got a lot going on. The market is hungry right now. Charles lauren, to set the record straight and of course i played a big c. Look at me . I know. Charles, oh, i forgot im talking to charles as i said it. [laughter] charles thats right. Big c. Jay frog im not in but i think i keep missing him, michigan jay frog great ipo market was one of the things people are very excited about and i want to come back to our market guest and bring in hal lambert. How, there is always this lauren referenced the great markets are flying high during the. Com era and everyone makes those references in the market before the ipos so how do you interpret this . Is a good news . Red flag . Gary said the markets are melting up but i would not sate the market is melting up but really specific parts of the market which are really just the tech space because if you look at the market as a whole smallcap values negative on the year, banks are down on the year, obviously Energy Companies are down on the year so there is a lot of sectors in the market that are negative and its the big tech tech as a whole where you are seeing multiple expansion in a huge weight because of what is happening with the fed. The fed is causing multiple expansions we can probably continue to see multiple expansion on the overall market as well as i think we will see earnings grow really accelerate in 2021. That is what the market is banking on here and that is why people are going in. If people want to add in and not necessarily jump into tech which you could compare to 1999, 2,000 when he had the big move up and talk and Everything Else stayed back but guess what happened after 2,000 . Value really outperformed in 2001, 2,002, 2003 so it turn and you could see that again but i think even right now you could walk out, look at the airlines but they are moving out. If you want to plan a reopen of the country and reopening of business you will look at hotels, airlines, restaurants and those things are starting to move and that is what the market is protecting. Charles michael, to that point, today in the s p 500 only two sectors are down. The big growth sectors, technology and communication services. A fitting else is taking off and you know, it skews the overall average because of just how much it is weighted by these prices but it might present other opportunities but when investors turn off Financial Media and all they care about is how overvalued the market is and its 2,000 all over again could they be ready to miss other opportunities . Charles, its important to remember the market is either extremely undervalued or extremely overvalued. We are never at a fair evaluation. S p 500 is around 15 or 16 and if you look at the chart we are either way below that for 80 of time or way above it for an extended period of time. I think we will be above that longterm pe for a very extended period of time. I dont think the fed raising rates in 2023 but i think the deficit is ballooning in the next thing for the fed is yields are controlled and i dont think rates will go up in our lifetime and at some point the dollar will not become the reserve currency but i will be dead by then so that is for my kids to worry about. [laughter] in terms of looking at other parts of the market, at t, exxon mobil these are two stable classics companies that have not cut dividends yet through all their turmoil and carnage that they have seen and those five plus yields are pretty safe and or someone looking to hide out the wants to make a decent return will buy those and stick them away. I think they are starting to get movement in the small caps and maybe tech and the gas has run out and next year will be the greatest year of our Earnings Growth in the history of the s p 500 with easy money and expanding and improving economy and what i think will end up happening is next year or the year after we will have 25 earns growth year on a low off easy comparable in the market will go nowhere and earnings will catch up for the price but it doesnt happen the other way around. Charles we always appreciate names and like beatendown names like exxon mobil. We got a minute before jay powell starts to speak. What you think the market needs to hear from them and michael just talked about the yield curve controls and it feels like it seems like something specific investors believe the party will go on indefinitely. Look, the market already knows that by chain powell will continue to go on and they will use the word and go blah blah blah, easy money, blah blah blah, we have tools and that is the bottom line at this juncture and thats why they have markets that do what they do but i want to echo one thing i thought hal was brilliant on this. I am watching airlines and hotels setting up and this is not the strength in the market but looks like they are coming on right now and i have a key nine on these areas and if we ever get some sort of break on a vaccine of something to that effect i think this goes topside in a very big way so hal has nailed that one. Charles youve all been fantastic. People should realize that these names dont move the broad market but can make huge impacts to your own individual folio. Is jay powell there yet . He is coming up but lets go to jay powell. Good afternoon. As of at the Federal Reserve we are strongly committed to achieving the Monetary Policy goals the congress has given us. Maximum employment and price stability. Since the beginning of the pandemic we have taken forceful actions to provide some relief and stability and to ensure that the recovery will be as strong as possible and to limit lasting damage to the economy. Today my colleagues on the federal open Market Committee and i made some important changes to our policy statement, including an update to our guidance for the likely path of our policy Interest Rate. Guided by our new statements on longer run goals and Monetary Policy strategy that we announced a few weeks ago these changes clarify our strong commitment over a longer time. Before describing todays policy actions let me briefly review recent economic developments. Economic activity has picked up from its depressed secondquarter level when much of the economy was shut down to stop the spread of the virus. With the reopening of many businesses and factories and fewer people were throwing withdrawing from social interactions, Household Spending looked to her have recovered three quarters of its earlier decline. Nonetheless, spending on service has been typically require people to gather closely, including travel and hospitality, is still quite weak. The recovery and Household Spending also likely owes to federal stimulus payments and expanded on up limit benefits which provided substantial and timely support to household incomes. Activity in the housing sector has returned to its level at the beginning of the year and we are starting to signs of improvement in business investment. The recovery has progressed more quickly than generally expected and forecasts from f1 see participants for Economic Growth this year have been revised up since our june summary of Economic Projections. Even so, overall activity remains well below its level before the pandemic and the path ahead remains highly uncertain. In the labor market roughly half of the 22 million jobs that were lost in march and april have been regained as many people return to work. The end up limit rates to decline over past four months but remains elevated at 8. 4 as of august. Although we welcome this progress we will not lose sight of that millions of americans who remain out of work. Looking ahead participants project the out of limit rate to continue to decline in the median projection is 7. 6 at the end of this year, 5. 5 next year and 4 by 2023. The economic downturn has not fallen equally on all americans and those least able to shoulder the burden have been hardest hit. In particular, high level of joblessness has been especially severe for lower wage workers in the Service Doctor for women and for africanamericans and hispanics. The economics location has abandoned many lives and created great uncertainty about the future and the pandemic has also left a significant imprint on inflation and for some goods including food supply constraints have led to higher prices and adding to the burden for those struggling with lost income. More broadly however, weaker demand especially in sectors that have been most effected by the pandemic has held down Consumer Prices and overall inflation is running well below our 2 longer run objective. The meeting inflation protection from f1 see participants rises from 1. 2 this year to 1. 7 next year and reaches 2 in 2023. As the economy began its recovery, covid19 cases, hospitalizations and deaths also rose. The re imposition of some social distancing restrictions, as well as more cautious behavior by many individuals, has succeeded in slowing the spread of the virus and as we have emphasized throughout the pandemic the outlook for the economy is extraordinarily uncertain and will depend in large part on our success in keeping the virus in check. All of us that have a role to play in our nations response to the pandemic. Following the advice of Public Health professionals to keep appropriate social distances and to wear masks and public will help get the economy back to full strength. A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities. The path forward will also depend on the policy actions taken across all parts of the government to provide relief and support the recovery for as long as needed. The Federal Reserves response to this crisis has been guided by our mandate to promote maximum employment and stable prices for the American People along with our responsibilities to promote the stability of the Financial System. We remain committed to using our full range of tools to support the economy in this challenging time. The changes we made in todays policy statement reflect our strategy to achieve our dual mandate goals by seeking to eliminate shortfalls from maximum employment in achieving affliction that averages 2 over time as we articulated in her statement on longer run goals and Monetary Policy strategy. We view maximum implement is a broadbased and inclusive goal and did not see a high level of employment as posing a policy concern unless a company by signs of unwanted increases in inflation or the emergence of other risks that could impede the attainment of our goals. We believe that achieving inflation that averages 2 over time helps ensure that longerterm Inflation Expectations remain well anchored at our longer run to present objective. In turn, well anchored Inflation Expectations and enhance our ability to meet both arms limit and inflation objectives, particularly in the new normal in which Interest Rates are closer to their effective lower bound even in good times. Hence, as we say in her statement, with inflation running persistently below 2 we will aim to achieve inflation moderately above 2 for some time so that inflation averages 2 over time and long return afflictions well anchored at 2 . We expect to maintain and accommodate a stance of Monetary Policy until these outcomes, including maximum employment, are achieved. With the guard to Interest Rates we now indicate that we expect it will be appropriate to maintain the current zeroone quarter of the target range for the federal funds rate until labor Market Conditions have reached levels consistent with the committees assessment of maximum employment and inflation has risen to 2 and is on track to monitor really exceed 2 for some time. In addition, over coming months we will continue to increase our holdings of treasury securities and agency mortgagebacked securities at least at the current pace. These asset personages are intended to sustain smooth market functioning and help foster accommodative financial conditions thereby supporting the flow of credit to households and businesses. We believe the strong policy guidance we are providing today will serve the economy well by promoting our goals through the many possible paths of recovery may take. Of course, as you noted in our policy statement we would adjust the stance of monetary as appropriate if risks emerge that keep the attainment of our goals. The Federal Reserve has also been taking broad and forceful actions to more directly support the flow of credit in the economy for households and for businesses large and small and for state and local governments. Preserving the flow of credit is essential for mitigating the damage or promoting a robust recovery. Many of our programs rely on emergency lending powers that require the support of the Treasury Department and are available only in very unusual circumstances such as those we find ourselves in today. These programs serve as a backstop to keep credit markets and appeared to have restored the flow of credit from private lenders through normal channels. We have deployed these lending powers to an unprecedented extent enabled in large part by financial backing and support from congress and the treasury. When the time comes after the crisis has passed, we will put these emergency tools back in the toolbox. As i have emphasized before, these are lending powers, not spending powers. The fed cannot grant money to particular beneficiaries. We can only create programs that were or facilities with broadbased eligibility to make loans to solvent entities with the expectation its loans will be repaid. Many borrowers are benefiting from these programs as is the overall economy but for many others getting a loan might be difficult to repay may not be the answer. In these cases, direct physical support may be needed. Elected officials have the power to tax and spend and to make decisions about where we as a society should direct our collective resources. Fiscal policy actions that had been taken thus far have made [inaudible] even so, the current economic downturn is the most severe in our lifetime and it will take a while to get back to levels of Economic Activity and unemployment that prevailed at the beginning of this year. It may take continued support for both monetary and fiscal policy to achieve that. We understand our actions affect communities, families and businesses across the country. Everything we do is in service to our public mission. We are committed to using our full range of tools to support the economy and to help assure that there recovery from this fiscal difficult time will be as her best as possible. Finally, i would like to take a moment to recognize the passing of our friend and colleague thomas laubach. His outstanding analysis and advice have been indispensable to the fomc and have played a key role in the policy decisions that will define this era of the Federal Reserve. He will be remembered for his intellect but also for his kindness, his equanimity and dedication to achieving our mission on behalf of the American People. We will miss him. Thank you and i will now be glad to take your questions. Thank you. Nick. Good afternoon, chair powell. Wall street journal. You have been very clear about the committees intention on rates not even thinking about raising rates and todays showing low rates even in on the plummet falls to 4 in inflation rises to 2 . My question is about purchases. Does the guidance today apply to the Current Asset purchase . Are there any macroeconomic conditions under which you would favor increasing the monthly pay of treasury and mbs purchases . And under what conditions with the decrease in the monthly pay for purchases be appropriate . Thank you. So, we stay in our postmeeting statement that we will continue to increase our Securities Holdings at least at the current pace overcoming months to sustain smooth market functioning and help foster conditions with that latter part is updating our guidance to reflect what ive said in these press conferences for some time and what other Central Banks have acknowledged which is the purchases are fostering accommodative financial positions as well put that amounts to roughly 80 billion a month of treasuries and 40 billion net per month for mds. We do think these purchases have been effective in restoring early Market Conditions and have sported the flow of credit to household businesses including by fostering more financial conditions which, of course, we think is a good thing. So, in terms of Going Forward i would just say this, there are various ways and margins we can adjust our tools Going Forward and will continue to monitor developments and we are prepared to adjust our plans as appropriate. If i could followup. The question i have is why give guidance on policy tool but not give guidance on the other policy tool when the fed has talked about those two policy tools working together . We think our policy stance is appropriate today and are prepared to adjust it Going Forward as we see appropriate. Today we believe that particularly this very strong Forward Guidance, very powerful Forward Guidance we have announced today will provide strong support for the economy, effectively we are saying that rates will remain highly accommodative until the economy as far along in its recovery and that should be a powerful statement in supporting Economic Activity. We are now buying 120 billion securities per month across the Treasury Curve and that is also adding to accommodation and we do have the flexibility to adjust that tool and other tools as well and as for right now we think that policy setting is appropriate to support the expansion. We said from the beginning that we would first try to provide some support and stability in relief in the first phase of the crisis, the acute phase, and then support the expansion when it came while it is here and it is well along and so that is why we changed our guidance today and we do have the flex ability to do more when we think it is appropriate. Thank you. Tina. Hello. New york times. Im assuming in the wellrun statement that you unveiled with your speech last month and i am wondering if you could walk us through how you think about Financial Stability as a factor in guiding increases . Would just ability concerns on their own be enough to merit changes in the fed funds rate or do they have to come in conjunction with the inflation or some sort of dramatic drop in on up limit rate . If you could give us an outline of your thinking there, please. What we said in our statement on the longer run goals and Monetary Policy strategy was that Committee Policies decisions look at the assessment of risks, including risks for the Financial System that could impede the attainment of the committees goals. So, that is what we said about Financial Stability. To date we said that we would be prepared to adjust the stance of Monetary Policy, as appropriate if risks emerge that could impede the attainment of our goals. You asked specifically that Financial Stability that one thing i would say is Monetary Policy should not be the first line of defense and is not the first line on stability but and we look to more appropriate tools as a firstline of of defense and those would be regulation supervision high capital, high liquidity stress testing and all of those things macro credential tools and all of those things are really the first line of defense on Financial Stability and we always leave open the idea that we will not ignore those kinds of risks and other kinds of risks more broadly that could impede the attainment of our goals in setting Monetary Policy. That is really how we think about it and but principally other tools are the front line, as i mentioned. But just to followup quick quickly,. [inaudible question] what we said, again, what we said in the longer run, in our cyst statement is that you know policy decisions reflect the balance of risks, including risks to the Financial System that could impede the attainment of these goals. The test would be does the majority of the committee feel that Monetary Policy is triggering that and that would be the test and you know, it is not something weve done. We do monitor Financial Stability concerns, of course, intensely and regularly. We try to use our other tools on them but we do keep them in mind as we think about Monetary Policy. Thank you. Thank you. Steve. Mr. Chairman, i wonder if you could help me understand how the projections of the committee line up with the of the committee. You have now altered the projections to your statement to any inflation above 2 but when i look at the sep i dont see the committee, in a single year or in the next four years that you are ever above 2 . In fact, with each year you are below it until 2023 which the first time that we hit 2 so are you confident, is this just the committee not confident that im not sure whether its a 2 goal but now if they cant hit the goal above 2 . Not at all. You also dont see people, by and large, lifting off or raising Interest Rates above zero. I guess there are four exceptions out of a committee of 17 during the forecast times we dont reach to present but we get close to it in the forecast. We reached 2 , i guess in the median is 2 at the end of 2023. You know, you know what the guidance says and it says we expect the current setting of our rates will we expect them to be appropriate. Or until such time as we reach 2 inflation that we feel the labor Market Conditions are consistent with our assessment of maximum employment and on track to achieve moderate inflation moderately above so that is a test. I dont think theres conflict between those two because you know, the way they are set up in the projections dont show the out years. You ask about confidence but i would say that this very strong, very powerful guidance shows both our confidence and our determination and shows our confidence that we cant reach this goal in our determination to do so. Im sorry but im being simplistic about this. If the committee was confident that it could reach its new goal of inflation of 2 , why wouldnt one of those years show inflation being above 2 . Because we think looking at everything we know about inflation dynamics in the United States and around the world over recent decades, we expect it will take some time. We expect that the economy will recover quickly now but that that pace will slow as people go back to work and will still have an area of the economy, big area of the economy that struggles. There will be stuck in the economy in the economy will be below maximum employment and that will ten to wear and put downward pressure on inflation so we think once we get closer to maximum employment we think inflation will come back generally and that is what happened during the last long expansion. Its a slow process but there is a process there and inflation does move up over time. We do expect that will continue today and we expect our guidance is powerful and will help that outcome. We think that effectively seen policy will remain highly accommodative until the economy is very far along in its recovery should provide strong support for the economy and get us there sooner rather than later. Thank you. Thank you. Rachel siegel. Hello, chair powell. Thank you for taking my question. I wanted to ask if you anticipate a slowing in the pace of the recovery . If there is not another stimulus package and specifically if there is a particular holes in the economy that could be helped by more aid from congress . You. Sure. First, if you look at the summary of Economic Projections that my colleagues and i filed for this meeting what you will see is an expectation at the recovery will continue and that it will continue at a reasonable pace through 2021, 22 and 23. We do expect that pace will slow just because you would expect that the pace would be fastest right at the beginning of the, right at the beginning of the recovery because you had such sharp decline and a thirdquarter should be the fastest gains and then after that the pace should slow down to a more normal pace. We do expect that. In terms of fiscal policy you ask about fiscal policy. So, you know, one thing, i guess i would start by saying that the initial response from fiscal authorities authorities was rapid and forceful and pretty effective and we are seeing the results of that in today in income Household Spending data, labor market data, Construction Data in the data for business equipment spending and the fact businesses are staying in business and the pace of default and things like that is slowed. There has been a really positive effect. That said, my sense is more fiscal support is likely to be needed. Course, the details are for congress and not for the fed but i would just say there are still roughly 11 Million People still out of work due to the pandemic and a good part of those people working in industries that are likely to struggle and those people may need Additional Support if they try to find their way through what will be a difficult time for them. Weve also struggling Small Businesses especially those in the business of facing directly to the public and we have state and local governments dealing with a drop in revenue at the same time spending has gone up, much related to the pandemic and economic effects. Again, i would say the fiscal support has been central in the Good Progress we have seen it now and finally i will note that just about all, overwhelming majority of private forecasters who project and ongoing recovery are assuming there will be a substantial, additional fiscal support. Thank you. Charles chairman powell taking questions. I want to go back and real quick, it seems to me the theme right now is a defiant jay powell. He says we have clarified this. He says we have been very strong, powerful guidance and also, a redefinition of maximum employment. Hes used the term at least five times and i think it means a lot lower than 4 . He is talking about hispanic, africanamericans and other folks getting much lower unemployment rates and keeping rates where they are now until that happens. He certainly is and you used a good word, he is being defiant. What we found at a 3. 5 unemployment rate, a half century low, was that it was low enough to start bringing workers off the sidelines and theres going to be an even greater need to do that this time around because there has been undue harm done to minorities and to women in the current cycle. So i certainly see where hes coming from. The narrative starts to fall apart, though, when he is defiant about the fact that inflation as far as they can see, as far as projections go out to 2023, is never going to hit this 2 target so right now, hes kind of speaking out of both sides of his mouth. Its a good thing hes in a virtual setting, charles. Charles okay. He is very defiant. Gary, i want to ask you, all of the other major indices are now pulling back from their highs. The dow off 100 points from the high point. What is jay powell not saying that is starting to worry the market . I dont think the markets really reacting to it. Look, the nasdaq and tech right now is in the corrective position right now and theres probably more to go. I think the economically sensitive areas are doing better and thats why you see the dow doing better than the nasdaq today. Look, my biggest worry is he thinks hes god. To think that somebody could tinni tinker with what inflation is going to do down the road or keep rates at 0 for three years, give me a break with that. I got to tell you, nobody is asking the one question i would be asking if i was in there. So, mr. Powell, if the market drops 10 , will you just print another 10 trillion . What number would you go to, what number is not high enough for you and nobodys asking that question. Again, thats the big worry. He can never, ever roll back what hes doing now. If he just said im going to stop printing money, the dow would be down 1,000 points and thats what i mean by the markets being addicted. I just wish he backs away. Nobody can be hired because he keeps rates at zero. Thats going to be about the real economy and people, employers and employees, not him tinkering with printing money and buying bonds with that money. Charles hes already said, to your point, this is a twoprong approach. First he has to support, stabilize, then give relief. Now they are helping to support the expansion. He says we are in that moment, we will be in that moment for a very long time. Lets go back to the question and answer period. Maybe someone will ask gary ks question. So that should tell you about that. Oh, in terms of, okay, in terms of, so what does moderate means. It means not large. It means not very high above 2 . It means moderate. I think thats a fairly well understood word. In terms of for a time, what it means is not permanently and not for a sustained period. We are resisting the urge to try to create some sort of a rule or formula here and i think the public will understand pretty well what we want. Its actually pretty straightforward. We want to achieve inflation that averages 2 over time and if we do that, Inflation Expectations will be right at 2 and that will help us achieve 2 inflation over time, and avoid the situation where the central bank loses its ability to support the economy. Thank you. Thanks for taking the question. James palidi with the the request financithe financial times. Do you consider todays enhanced Forward Guidance an actual accommodation to this economy from a monetary perspective and sort of deliver further support for the economy or is it just a tweak to your existing policy stance . And in terms of fiscal support, do you assume in your own projections, not just private forecasts, that additional fiscal support will be forthcoming, or do you expect weaker growth or larger contraction rather this year if no fiscal support is forthcoming . So in terms of the effects, i think what we have done is more or less aligned with the consensus statement today. So its in line with what might have been expected. As i mentioned, i think over time it will provide very powerful support for this economy as we move forward, in a sense its consistent with expectations so im not looking for a big reaction right now, but i think over time, again, guidance that we expect to retain the current stance until the economy is has moved very far toward our goals is a strong and powerful thing. And i think that will be supportive of the economy over time. In terms of additional fiscal support, i guess your question is what would happen. So people have different assessments and different participants in the fomc made different assessment ons on the own. Broadly there is an expectation among private forecasters and fomc participants there will be some further fiscal action and there does seem to be an appetite on the part of the relevant players to doing something. The question is how much and when. So i would just say that if its very hard to say, so far the economy has proven resilient to the lapsing of the cares act unemployment, enhanced unemployment benefits, but there is certainly a risk, though, that those who are unemployed have saved, appear to have saved some of those benefits and they will now spend them. Liz youre watching Federal Reserve chair Jerome Powell face reporters and make a historic announcement. No rate hikes for close to four years. Stocks initially shot higher on the prospect of cheap borrowing but the nasdaq has turned negative and hit situation lows. Lets listen back in to the q a. Things that will scar and damage the economy. Thats a downside risk. So i think the real question is when and how much and what will be the contents. You know, no one has any certainty around that. But broadly speaking, if we dont get that, then there would certainly be

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