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00:00Great, see? How would you answer that question? I mean, look, the feds got a lot to be thankful for this Thanksgiving. They've got a relatively strong economy. If you look around the globe, the U.S. is still doing fairly well. They've got a resilient labor market that could be seen as a problem. But we've gotten some good news on leading indicators of inflation, some cooling in core goods prices, indications consumers are going to be a bit more price sensitive this holiday season. And then some looks like some market indicators of rent showing some cooling. So all of this now that the Fed is focused more on lags and policy, have more meaning than they did a few months ago when the Fed was just tightening at full tilt. So now that they're kind of reading the tea leaves and looking at nuances, there are some good news and there are some elements of good news in those tea leaves and they can be thankful for that. Julia, you bring up lags. And at the press conference after the November meeting, Jerome Powell kind of cast some doubt on to how much we really should talk about those lags. And he ultimately came out way more hawkish than the statement seemed at first. And that's why I'm really interested in these minutes to see if he was kind of speaking for himself or really the FOMC as a whole. How much unity do you think there is on the committee right now? And ultimately, does that matter? Or is it just what Paul says goes? Oh, no. I mean, Powell is negotiating and navigating a consensus on this committee. And I think that the fact that we saw such a strong change in language in the statement is an indication of that broad support for the decision to slow the pace. And so, you know, I think there was a re crafting of the message from, you know what? By any means necessary, whatever it takes to cool inflation, too. Okay. Now we're seeing that we our tools are effective. We're going to keep going with strong resolve to get the job done. But we're also just not going to be looking at lagging indicators. We're going to recognize as there are some lags in policy. I think from the commentary we've heard from a variety of policymakers since then, there is broad support for that decision. And it's not just a dovish decision to slow the pace. There is still a clear resolve to go higher and stay higher for longer. And so, you know, I think it's not easily it doesn't fit neatly into a dovish, hawkish category. Nevertheless, I listened to Jay Powell speak and I listened to Lael Brainard speak, and they do seem to be on different pages at the moment with respect to doves versus hawks. Brainard Sound significantly more dovish to Kelly's point about kind of the unity around the Thanksgiving table. Are you surprised at how the senior team at the Fed maybe as speaking slightly differently? You know, I'm not. I think, you know, if we think about look, Chair Powell and Vice Chair Brainerd have been in the trenches together through a variety of crises for a number of years. And yes, I think that the kind of weight, the risks a bit differently. But I think some of the financial instability, some of the incredible volatility we were seeing in global markets between the September and November FOMC meetings. I think both of them were concerned about that. They are the keeper of the global reserve currency. Chair Powell has always been about looking to financial markets as the leading signals of their policy. So I think he was concerned, too. He as the chair, remember the vice chairs job is to go out and message things that the chair and because he is creating the consensus, he doesn't want to be opining strongly one way or another. So I think that kind of good cop, bad cop wasn't intentional coordinated communication strategy. You know, Brainerd went out and, you know, flagged concern about financial stability that won the day in the sense that they provided forward guidance in stepping down the pace more than we expected, while also reminding us that the job isn't done. And they have every bit of, you know, strong commitment to get the job done. So I think that strategy was coordinated between the two of them. Well, so it raises a question, Julia, of if the Fed will do what it says it will do. How much is just mentioning messaging to financial markets to tighten financial conditions with strong language versus actually seeing through strong action? Yeah. I mean, look, I think there's very little that could dissuade them from a 50 basis point rate hike in December. I think that seems like the strong consensus move on the committee. So there's not likely to be a data point that's going to deviate one way or another that takes us another leg considerably higher on the funds rate. And then by February 1st, when we get the next decision, more than likely we'll get another at least 25 to 50 basis point rate hike. But they are, you know, by slowing down, the data can turn rapidly. It hasn't yet in the U.S., but it can and they can therefore respond to that. Julia, we've got financial markets, equity markets rallying. You've got mortgage rates coming down. How much more complicated does that make the Fed's job? Yeah, I mean, you know, there's gonna be ebbs and flows and financial conditions and, you know, we're now in the territory where the economy is weakening. And if you believe there are legs and policy, which I do, they do, then you're going to see more weakness ahead in hiring, in consumer spending, in profits. So we're now at the stage where it's not just about the Fed. It's also going to be about the flow of information that we get from companies and from the data. And that should continue to slow. So the ability of markets to really take off from here and, you know, ease in sort of this significant rally are going to be hampered by that weakness in the economy and the U.S. economy and the global economy. We are in a tighter money world, and that has ramifications for companies and profitability and consumers willingness to spend. Well, on that point, Julia, Black Friday is just around the corner. Thanksgiving is tomorrow. So the holiday shopping season arguably is already upon us. What is your real read on the health of the U.S. consumer as we enter this period and the new year? Right. So consumers are still spending. They haven't hunkered down in a corner. They're not in a panic, partly because they still have jobs. But we do see, you know, higher in the indications of a greater degree of caution. So retailers themselves are telling us that consumers are more picky. They're a little bit done with all the good spending. They're more interested in spending on services and they're more budget constrained by the high inflation we've seen. You know, the labor market is strong, but it's not strong enough that wages have been beating inflation. So consumers are having to make tougher choices about the holiday season and how to allocate their limited resources. There's still a lot of pent up savings. There's still a lot of liquidity in bank accounts. But that's a temporary factor that consumers are spending that down. It's not unlimited. So consumers are starting to recognize these constraints and make decisions in a more constrained environment. And most retailers expect it to be a sort of subdued holiday season, not a disaster, but a but a more promotional holiday season and a in a lower real rate of spending.

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MacroPolicy's Coronado Says Powell is Looking For Guidance

Julia Coronado, MacroPolicy Perspectives Founder & President, joined Kailey Leinz and Guy Johnson on "Bloomberg Markets: Americas" on Wednesday morning. Coronado said Jerome Powell is looking to the markets for guidance for future Fed decisions. (Source: Bloomberg)

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