00:00I'll ask you about the substance of the news conference, the shock from the Middle East and whether it threatens
00:04to upend the outlook for this economy.
00:07Yeah, I mean, look, the conclusion here on the on the substance really pivoted on that moment.
00:13I would argue, though, that the pivot was was less about the conversation about whether he was staying on and
00:19that part of the conversation.
00:21And really his answer to the question that occurred right before that, that was the question about, hey, aren't you
00:26more worried about the employment outlook?
00:29And he definitively said no to that and then pivoted to the challenge on inflation.
00:35And from my reckoning in the meeting, that was the point at which the meeting turned hawkish because the majority
00:43of the discussion around the meeting is around inflation,
00:46whether it was the tariff inflation not coming down as much as expected, the unknown impact of energy prices on
00:53future inflation.
00:53So you have this kind of backdrop of forces that are pushing up inflation and disappointing the expectations for inflation
01:01to decline in the backdrop of stable unemployment rates.
01:06And so that really, I think, pivoted the market reaction to, oh, this Fed is much more hawkish.
01:13The front end flattening, the equity markets responding.
01:17And that was the moment in the meeting where this this moved from what had started out as a kind
01:23of dovish statement interpretation,
01:25holding the Waller descent to the side for a second into a definitively hawkish press conference.
01:30Demand destruction to me is tangible when you see a given fancy plane ticket go up 60 percent or a
01:38gallon of gas.
01:38What does BlackRock say about demand destruction?
01:43Well, it's interesting because the last question in the press conference, the premise was, if you remember it,
01:51how high do energy prices have to go before you'll consider hiking rates?
01:56And that just misses this whole point about demand destruction, because the scenario where this goes on longer
02:03and is more disruptive to oil prices is a scenario where you shift the focus from inflation,
02:09which is today's and really the last couple of weeks story, to a growth story.
02:15And it's not how high do oil prices go before you hike, but how high and for how long do
02:20oil prices get before you cut?
02:22And I think that's the swing there.
02:25I think that's the swing there.
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