00:00Priya, I'm going to start with you since you're sitting to my left here.
00:02You know, when you think about the data that we got this week,
00:05the data that we have up ahead of us, which was just neatly laid out by Stewart,
00:09I mean, what do you think is the more urgent question in this economy right now?
00:14Is it what's going on with inflation or how the job market is transpiring?
00:18So I think the job market has been, you know, pretty stable.
00:22I think we had this sort of downshift late last year.
00:24It's stabilized.
00:25So I think we're in a low-hire, low-fire job market.
00:28I mean, I'm more concerned, I think the Fed is more concerned on the inflation front
00:31because we are just emerging from the tariff supply shock when we had the energy supply shock.
00:36And if that continues, I think the market's sort of priced for a reopening of the Strait of Hormuz.
00:41If that doesn't open up, then at what point does real consumption start to slow down?
00:46You know, consumers have been very resilient.
00:48But what does the Fed do if consumption starts to slow down at the same time when inflation is picking
00:53up?
00:53What I've been watching for in the data is how much of this is supply shock, supply factor-related inflation?
00:59How much of it is demand side?
01:01And that's what I've been watching in the data this week.
01:03Next week, our wage is starting to pick up.
01:05Because when we compare to we all have PTSD from 2022, is this similar?
01:102022, there was a demand shock.
01:12Remember the whole, like, sort of revenge travel?
01:14You know, people had to come out and spend.
01:16They had savings.
01:17The savings rate is falling.
01:19So we're not yet seeing any signs of demand-led inflation.
01:23If that starts to pick up, I think then the Fed might be even talking about hikes.
01:27But right now we're seeing a supply shock-induced inflation.
01:30The starting point is not great because we've run above their 2% target for a while.
01:34And I think that's why the Fed wants to say, well, we're taking the easing bias off.
01:38Let's be neutral and let's be patient.
01:40I think they'll want to see these, you know, essentially under the hood on inflation.
01:44So it sounds like you're not necessarily talking about hikes just yet.
01:47We're not.
01:48I think the bar to hike is still high.
01:50I think they move to a neutral bias and then just stay there, watch, you know, watch the data.
01:55You know, is the market tightening conditions for the Fed?
01:58If you look at the 10-year, that's risen.
02:00So there has been, the bond market's done some of that work.
02:02I think it allows the Fed to actually, you know, stay back.
02:05Inflation expectations have been well anchored as well.
02:08So I think they just stay on pause and sort of watch the data here.
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