I dont think the feds job is to make sure there is never a recession. Viviana speaking of Central Banks, their independence often perplexes political leaders. Not just the white house. I would like the central bank not only to work on controlling inflation, but thinking about growth as well. Viviana the outgoing and incoming heads of the imf had plenty to say to bloomberg about global trade. We need to have fair trade. We need to have reciprocated benefits in trade. We are talking about trade, peace, not trade war. Viviana a u. S. Election looming in 2020. Key figures in the political conversation buckle up for a wild ride. The economy is outperforming expectations. Economic policies from the president are working. I think our capitalism has to be more inclusive. We believe in Free Expression and we believe in political speech. Viviana it is all straight ahead on this special edition of bloomberg best. Hello and welcome. I am viviana hurtado. On this special edition of bloomberg best, we look back in 2019 in the americas. We will revisit some of the years most interesting interviews with newsmakers, policymakers, and leading figures in business, finance and politics. Lets begin with conversations about markets and the Global Economy. We start with Goldman Sachs ceo David Solomon in an interview with jonathan ferro. He set the scene for 2019. The Global Economy is in ok shape. The economy is. Our economist are talking about 3. 5 Global Growth. In the u. S. , 2. 25 . If you look at just the economy itself, i think we are doing just fine. The growth trajectory has maybe slowed but the economy is chugging along pretty well. There is a lot going on in the world at a high level. Particularly around big picture macro issues, whether it is the shutdown in the u. S. The trade negotiation between the u. S. And china, brexit just to name a few. Markets are watching these. It is a lot for markets to digest. I think that is actually the big thing people are focused on. How these issues will progress and what impact they will have on the Economic Activity we are seeing. You have made some waves in davos. The headline everyone is running around with is David Solomon says a 50 chance of recession in 2020. What does that mean, a 50 chance . Context lets put that in context. Our economists wrote a report where they were talking about the chance of recession in the u. S. They thought in 2019, a 15 chance. In 2020, a 50 chance. It is hard to put in context what that means. I think the u. S. Economy is in good shape. I think it is chugging along. I think there is a possibility as we get into the later part of 2020 and we see continuing tightening as the fed continues to manage Monetary Policy we can see an economic slowdown. It is just as well possible this run could continue and we could see Economic Growth continuing into 2021. It is hard to predict in advance but i think thats an indication we are closer to the end of the cycle rather than the beginning. China is slowing. It is slowing to 6 . That is not so bad. That is what they say. Ok, 5 . The cities are still growing nicely. China is experiencing the same two type of economies were one where one is growing in one is slowing down. Maybe populism, unrest issues in the future, thats another story. Japan is growing at 1 . Southeast asia is growing quite nicely. Supply chains are moving into the Southeast Asia region. You have europe, which compared to where we were in january or march of 2018, we were much more pessimistic. I was worried about europe. That does not mean europe will be in a recession in 2019 but it will not be maybe it is a 1 growth. Probably closer to 0 . In the u. S. , we have the sugarhigh from the tax reforms. We all anticipated the economy will slow down after the sugar high. And that is what is happening. Where is the u. S. Economy this year . 2. 5 , 2. 7 . Not so bad. Consumer confidence is still good. I would almost call this a goldilocks moment where it is not so bad, not so good. Central bank behaviors are probably more on the dovish side from where they were in the fourth quarter. I would say its a time for investors to be a little more relaxed. I dont think we will go much higher than we are today. You mean in stock prices . We will be fine. What i worry about is rising populism. We are witnessing shorterterm behaviors by governments. I talk a bit about longterm behaviors. It gets harder and harder when you see governments who are becoming more and more shortterm. Are you worried about a u. S. Recession in the next year or two . I have not been. I was somewhat alone in the fourth quarter. I dont know why there was a huge drumbeat. We did not see it with our companies. Our 200 companies in that part of the business. No ceo thought we were going into a recession. They remain confident . They remain confident. It is not as good as it was a year ago. It has a good footing at a lower growth level. When i talk about Consumer Spending at bank of america through august 12, 1. 9 trillion was spent by our consumers on debit, credit cards, checks written, bills paid, ach payments. 1. 9 trillion. That is up 5. 9 yeartodate through august 12 versus year to date for august 12 of 2018. 2018 was up about 8. 5 . 8. 5 growth and almost 6 growth. That means consumers are spending money across the board, whether it is experiences, going out to dinner, traveling. The nice thing is they are getting a lift from gas prices coming down which provides a benefit to spend. That means it is going somewhere else in the economy. What happened to the bond market this week . We have the 30year that set a new record low. Yield adverting on the 2s and 10s. What caused this . Brian largely outside the United States and concerns around trade and manufacturing. You look around the world. There has not been a lot of great news lately. Whether it is the brexit situation. Europe is slowing down and the Europe Central Bank saying we need to slow down. China is slowing down. The impact of the trade war across the region. The need for companies to restructure supply chains to avoid the tariffs, which means they are spending money to move things. Not really spending money to produce new products and capabilities. More importantly the debate about the debate. The old saying we have nothing to fear but fear itself. We have nothing to fear about a recession except a fear of recession. Viviana still ahead on the year in conversation, more debate about the state of the u. S. Economy. This from two of the most influential figures in washington. I think the country has come around to the president s narrative. We have to be thinking more than trickle down. Viviana fed actions inspire plenty of reaction. Up next, a look back at the turbulent year in Monetary Policy. We are at a sort of equilibrium right now. I would like to do more. Viviana this is bloomberg. Viviana this is bloomberg best. Viviana hurtado. We are revisiting the years top interviews on Bloomberg Television in the americas. In 2018, the fed raised rates four times. Investors entered 2019 anticipating further hikes. Chairman Jerome Powell faced pressure from wall street and from the white house. Both called to reverse the tightening trend. Powell insisted the central bank would remain independent and data dependent. His problem, the data was not telling a consistent story. We are in a place where we can be patient and flexible and wait and see what does evolve. For the meantime, we are waiting and watching. For my own personal view is as longest it stays quiescent, we will probably be on hold. If the economy keeps growing, more pressure on resources. It will probably start the trip back up again. My best judgment is the fed is probably not done yet. How far do they go . At one point do you risk an accident . That is why i think they are being patient right now. They dont want to inadvertently cause a recession with inflation this low. The data we are seeing is not currently sending a signal which suggests moving either direction for me, which is why we are being patient. The chairman is doing a very good job. I think it is a difficult job. But as you look forward, it does not look like there will be a lot of policy activity into 2020. Right now that economy is chugging along pretty well. Policy is going to be relatively stable. We do think our policy stance is appropriate right now. We dont see a strong case for moving any direction. When does the damage from a trade war, people are not looking for anything to and quickly. If there is a deal made, when would it become severe enough . When would it tell you it is time to start looking at a possible rate cut . We just have to keep assessing, evaluating what we are learning from the data in terms of those effects, but also the broader set of developments. I dont think any specific point. It is just assessing where we are in terms of our goals to get inflation back to 2 . Making sure we can sustain the economic expansion as long as possible. We have to assess and evaluate. Point,ou think at this the markets are ahead of themselves and thinking you have got to do a rate move one way or another. They are betting on a rate cut. I am not in the position right now where i think a move in one direction or the other is more likely. There are a lot of risks out there. If they come to fruition might have the economy weaken. If that happens, our rate cut mate might be appropriate. There are a lot of sources of uncertainty. The economy, might get a lot stronger which could suggest we might want to do a rate hike. Right now, there is still uncertainty. So it is hard to say what the next move will likely be. I am not in a case where if you ask me how the scales are, i dont feel like for me it is more to the cut than to the hike. I think we are pretty much in balance. Many participants believe a cut would be appropriate in the scenario they see is most likely. As of a week from now, this will become the longest expansion in u. S. History. We had very strong growth in the first quarter. North of 3 . We could see moderation and growth this year but the baseline outlook is good. Sustained growth, a strong labor market and inflation are the objectives. Why are we speaking about cutting Interest Rates . In this environment, especially in the last few weeks there have an elevated uncertainty about the outlook. The economy is hitting some cost currents. Crosscurrents. There has been a marking down in Global Growth prospects. There is uncertainty about international trade. There is evidence that is weighing on sentiment a bit. We are monitoring that closely and we will act as appropriate to sustain expansion. Labor markets have been strong. Unemployment at a 50 year low. And still we are looking at inflation running below target by a preferred measure. Inflation expectations are deteriorating. Growth still ok looking backwards, but looking forward it looks like a slowdown with downside risk. You have an inverted yield curve. It seems like this is a good chance to make insurance rate cuts and try to recenter inflation and Inflation Expectations back at the 2 target. You have the g20 meeting in osaka. President trump and president xi are talking. Could you have just waited to see what happens there . What if there is a positive surprise . Would that have changed your view . Would it be more prudent to say you have to go now . I think the idea of recentering inflation and Inflation Expectations is not that dependent on what happens in osaka. Most are downplaying what will come out of that anyway. By not cutting, now we are putting high probability on the july meeting. Generally speaking i dont like that as a tactic, to say we are not going to do something, and dont worry we will go next time. I dont like that as a tactic. If you think conditions are right today, you should go today. That is one of the reasons i dissented. The fed has no basis to cut rates based on the data. If you say to me, should they cut rates . The answers going to be i think they have to because they have set the market up so if they didnt cut rates today we would have a tantrum. I think they have got themselves pretty well boxed in. We decided to lower the target for the federal funds rate by. 25 the outlook for the economy remains favorable. This action is designed to support that outlook. Were thinking of it as essentially in the nature of a midcycle adjustment policy. The fed can stimulate. Should it do so . Is it the feds job properly i get the feeling you dont think it should. I dont think it should. I dont think the feds job is to make sure there is never a recession. Where rates are right now relative to the Unemployment Rate and inflation suggests we are at an equilibrium. I would be happy to leave rates here absence some weakness or some strengthening, some kind of upside risk to cause me to think rates should be somewhere else. The biggest concern is when you talk to business leaders, nobody i talk to says the cost of capital is inhibiting investment. That has been the drag on the economy. Not the consumer. The consumer has been the hero of the american economy. If that is true, that Business Investment is not held best the cost of capital, thus reducing Interest Rates will have no effect. What is holding it back . Uncertainty around policy, particularly trade policy. Is there anything for the fed to do this moment . Are you feeling pressured to be the savior of the economy because youre the only game in town . I think we have to act as appropriate when we see the economy having a shock. I dont see that right now. I dont think we need to act right now. The economy does turn down, a more extensive sequence of rate cuts could be appropriate. We dont see that. It is not what we expect, but we will follow that path of a became appropriate. If it became appropriate. You dissented on a half a point cut and of a quarterpoint cut. Do you still think the next time around that we need half a point cut . Generally speaking i would like to do more but i dont want to prejudge the meeting. Lets get to the meeting and make the decision there. The policy adjustments since last year are providing and will continue to provide meaningful support to the economy. We believe Monetary Policy is in a good place. We made some adjustments in the policy rate. We think they will give significant support to the economy. We have a favorable outlook for the year. Lets talk about the outlook and the balance of risk around the outlooks right now. How would you describe the balance of risks . For most of the year at the balance of risks has probably been tilted to the downside. Not so much because of the u. S. , but we are part of the Global Economy. We have a global slowdown. We are in a good place. The composition has been a little different to be inspected. We expected exports to be stronger. We did not inspect consumption expect consumption to be quite. It is weaker than we would have forecast. Consumption has picked up and been quite strong and we expect it to continue. Do you think it would have been that way without the feds rate cuts . You dissented on all three of them. One challenges thinking about what the side effects are with low Interest Rates. There are two side effects i particularly worry about. One is how much room we have if we get an actual slowdown as opposed to a concern about a slowdown. In that case we dont have that much room before shortterm Interest Rates would hit zero. The second concern is right now the stock market is doing quite well. Other Financial Markets in some areas have been quite a bill and. The question is, is this the stage of the cycle you want to have a little more push the Financial Markets . I would argue im not so certain that is necessary. Developments emerge that cause material reassessment of the outlook and we will respond accordingly. Policy is not a preset course. Viviana much more to come as we revisit the top interviews from bloombergs coverage of the americas in 2019. Later on, a candid conversation with bill gross. This year he retired. The bond king sharing the story he has never told before. We are not the best witness when it comes to trying to figure out whether something is affecting you. Viviana straight ahead, an exclusive interview with mexicos president. His centralbank goals should go beyond simply stimulate growth. Stimulating growth. This is bloomberg. Viviana you are watching a special edition of bloomberg best. We are highlighting conversations from the year 2019 on the business, finance and politics in the americas. I am viviana hurtado. Hi, john traveled to mexico city and conducted an exclusive interview with mexican president lopez obrador. Interest rates have been too high. He explained how he would like the nations central bank to adjust its policy. I would like the central bank not only to work on controlling inflation, but for it to be thinking about growth as well. Can you give us more about growth . We are talking about with the what the central bank is doing. They are more cautious about inflation. This is not a bad thing. No, this is not the wrong thing to do. I am not saying that. But its important to lower the rates to encourage growth. This is an issue i am leaving for the Central Banks to decide. Because we trust we are not just going to be able to grow, but also to develop. Not only growth, but development, because growth, that is what we want to change. And to create new paradigms. Growth is creating wealth, but not necessarily distributing wealth. Development is growing and distributing wealth. Our administration, our government, what it is now doing is better than before, is distributing income. Although growth is scarce, little growth, there is a better distribution of wealth. That is, there is more wellbeing. Viviana the year in conversation in the americas continues. Coming up, a new era begins at the imf. The outgoing and incoming directors shared exclusive insights with bloomberg. Central banks must cooperate on t