00:00Turning to the Fed, Kansas City President Jeffrey Schmidt giving his reason for the reason why he dissented in favor of no rate cuts at the October Fed meeting.
00:09Bloomberg's Michael McKee joins us now with some more insight. Mike, what's his rationale?
00:14Well, Jeff Schmidt is putting out his reasoning behind his dissent, which was kind of unusual to not cut during the month of October meeting.
00:23The Fed's blackout period ending last night. And Schmidt is saying basically he disagrees with the way the Fed is looking at the balance of risks.
00:31He says in his statement, I do not think a 25 basis point reduction in the policy rate will do much to address stresses in the labor market that more likely than not arise from structural changes in technology and demographics.
00:44However, a cut could have longer lasting effects on inflation if the Fed's commitment to its 2 percent inflation objective comes into question.
00:54And while Jay Powell dodged my question about market valuation, Schmidt takes a bit of a sideways swipe at it today, adding in his statement that financial market conditions appear to be easy across many metrics.
01:07Equity markets are near record highs. Corporate bond spreads are very narrow and high yield bond issuance is high.
01:14None of this suggests that financial conditions are particularly tight or that the stance of policy is restrictive.
01:21So you could probably put Schmidt down for objecting to a December cut as well.
01:26And I point out that, as I mentioned, the blackout period is over.
01:30Lori Logan speaks at 930 this morning and we have Beth Hammock and Rafael Bostic speaking at noon today.
01:36So this is the chance to get on the record if you are one of the people who disagrees with the way the Fed is going.
01:43And, Mike, we have heard from Beth Hammock before that she does seem more concerned about inflation than other members on the Federal Reserve.
01:49Do you get the sense that anyone else on the Fed agrees with Jeff Schmidt and does think that the balance of risk signals they need to be more aware of inflation than perhaps structural labor market issues?
02:00Well, there were people on the Open Market Committee who did suggest that they thought that going much further with cutting rates would be a mistake.
02:09Alberto Mussolm of St. Louis and the folks from the Minneapolis and Dallas feds both had suggested that that might be the case.
02:21So it will be interesting to hear from Lori Logan this morning.
02:24And we don't have Neil Kashkari on the calendar yet, but we'll see if he comes out with something.
02:31We know that Mussolm is going to speak next week.
02:33Thank you so much, Michael McKee.
02:35Great insights, especially given the fact that we've been talking about how, in general, the Fed doesn't care about markets unless they're going down.
02:42It does seem like Jeff Schmidt cares about markets.
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