00:00He doesn't want to dawdle around, does he?
00:02I mean, I think priority one, two, and three this week is reinforce the Fed's credibility.
00:08You don't want any questions about any political bias.
00:11So that's goal number one for Kevin Warsh this week, I think, which he should be able to execute beautifully.
00:17I think beyond that, if he does a press conference, I expect he will, but it's not a given.
00:23If he does a press conference, then that'll be his opportunity to lay out the priorities.
00:28What is he going to focus on first?
00:30I would imagine he wants to review all the economic models, the processes.
00:34He's going to review communication.
00:35He's already been very vocal about having less communication.
00:39Think more, speak less.
00:40It has been for years.
00:42Yes, yes.
00:42It's not a new thing.
00:43The balance sheet will wait.
00:45Yeah.
00:45So, Rebecca, obviously he's got some level of pressure from the president from the White House to lower rates, but
00:52the data's not there.
00:55He's got a committee he has to deal with.
00:57Yep.
00:57But I would think the messaging this week is as much for the rest of us, i.e. the market,
01:03maybe even more so for the president.
01:05Yeah, I mean, he's got a difficult needle to thread here, right?
01:09Keep the president on his side, ideally, but build credibility and trust with his colleagues at the FOMC.
01:16I mean, and to your point on the data, I mean, right now, core PCE for May is tracking at
01:21around 3.3 percent year on year.
01:24If that's the number that comes in or something like that, there's no way they can cut rates anytime soon.
01:29And even if the Strait of Hormuz does open soon, which we all hope it does, and oil prices retreat
01:37further, you still have a strong economy, now probably stronger.
01:41You have inflation coming through the A.I. channel as well as other channels.
01:46And so it seems like the market pricing and the possibility of a hike makes a lot more sense.
01:51So that is going to be a challenge for Chairman Warsh, for sure.
01:54How about the U.S. dollar here?
01:55We kind of came into the year.
01:57I guess the consensus on the street was for a weaker dollar.
02:00And then the war with Iran starts, and we had that flight to quality like we typically see.
02:05Now what?
02:06Well, the dollar, until the news over the weekend, was down against only two major currencies, the Norwegian crown and
02:16the Australian dollar, both big commodity exporters.
02:19It was stronger against everything else, primarily on rate expectations, higher interest rates following higher energy prices and broader inflation
02:27pressures.
02:28Now that that is off the table, you have seen yields, as you guys just mentioned, down a little bit.
02:34You are seeing the dollar down a little bit today.
02:37And the question, again, it goes back to the Fed.
02:40Do we have a hawkish bias in the press conference this week or not?
02:44I think the rate expectations will continue to be pretty important for the dollar going ahead.
02:49And again, it's not just the U.S., right?
02:50Two sides to every currency trade.
02:52We expect a Bank of Japan hike this week.
02:54The ECB, the European Central Bank, just raised rates.
02:58So it's not clear how much stronger the dollar gets.
03:02Out of Florida and Johns Hopkins, I mean, there was this idea that if you end a war, even as
03:07Kaplan says, a middle war, the idea is you get a disinflationary tendency.
03:12So not Rebecca Patterson now at CFR.
03:15Yep.
03:15But if you're on Wall Street right now in what's clearly a boom investment banking environment, do you just assume
03:24disinflation?
03:25I wouldn't assume anything right now.
03:28Look, we have we have some tweets and some headlines suggesting that we have a step forward towards peace.
03:36But the deal isn't supposed to be signed till Friday.
03:40And even then, it's not clear yet if it sticks.
03:44It's not clear what the terms are going to be.
03:46I mean, Iran wants and needs funding.
03:49I think they could still pressure to have some sort of fee service fee to go through the straight.
03:55Not a toll.
03:56A service fee.
03:56Right.
03:56And, Paul, this is really Rick Wilson just out on Twitter with just a scathing quick note.
04:01Like, where are the details?
04:03Yeah.
04:03When do we get the details?
04:05I don't have an answer.
04:06And we might not for 60 days, 90 days.
04:08Oh, we can't.
04:09Come on.
04:09We can't.
04:10Right?
04:10The markets will flip right around if we do that.
04:13Well, they may do that.
04:14Right.
04:14And that's the point.
04:15Oil has come down.
04:16Stocks are up.
04:18Does it last?
04:18Do you want to chase it here?
04:20I mean, if we have peace, and it's certainly in both sides' interest to have peace.
04:25Iran desperately needs money.
04:27It needs to rebuild.
04:27The U.S. does not want oil at a four-handle or 30-year-olds at a five-handle going
04:32into midterms.
04:34Gold.
04:35Yeah.
04:35It seems like just a cup of coffee goes, Tom, and say we were at $5,000 an ounce.
04:40We've seen a pullback here at 4,300 a year.
04:42Yeah.
04:43I mean, you had a lot of speculative money going to gold at the beginning of the year.
04:46We had a little bit of a parabolic move.
04:48So that was part of it.
04:49But the other part of it is we did have two big central banks, Russia and Turkey, selling.
04:56Russia sold for four months in a row.
04:58Turkey was the biggest seller of gold in March.
05:00But those are the outliers.
05:02Central banks in general are continuing to buy.
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