Shall We Call This a Pivot?

Real Vision: Finance & Investing

Real Vision

Business News, News, Investing, Business

4.1 • 1.1K Ratings

🗓️ 30 November 2022

⏱️ 32 minutes

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Summary

U.S. equity indexes surged into positive territory as Federal Reserve Chair Jerome Powell spoke on Wednesday on his acknowledgement that the “time for moderating” interest-rate increases “may come as soon as December.” The market seized on the step-down from 75 basis points to 50 rather than Powell’s codicils: the rate peak is likely “somewhat higher” than the Fed’s September forecast, and there’s a long way to go to restore price stability. In addition to more restrictive monetary policy, Powell noted the critical importance of labor market balance among the macro conditions the Fed wants to see before it’ll say inflation is whipped. Dave Lauer, the CEO of Urvin Finance, joins Ash Bennington for today’s Daily Briefing to talk about the market’s reaction to Powell’s speech, recent economic data, and the implications of a “sustained period of below-trend growth” that gets us back to price stability. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0	Is this the Fed's pivot? Welcome to the Real Vision Daily Briefing. It's Wednesday, November
0:12.3	30, 2022. I'm Ash Bennington. I'm joined today by Dave Lauer, CEO of Urban Finance. Before
0:19.5	we get started, a quick reminder, our live chat function on the Real Vision site is temporarily
0:24.0	disabled. So please drop your questions in the comments section on the RV website in the live
0:28.8	chat on YouTube or tweet us at our Twitter handle at Real Vision. Dave, monumentous day, we should
0:34.9	just jump in and give a little bit of a summary, I guess. Obviously, it's a big day in markets.
0:39.6	Chair Powell signaling rate hikes that the rate of slowdown of hikes can begin as soon as December,
0:47.2	that's December 13 to 14. That's when the next Fed meeting is US equity markets are zooming.
0:52.8	Let's take a quick look here. It looks like the Nasdaq bouncing around still a little bit here at
0:56.6	the close, but 11,465 still moving on my screen. It's up nearly four and a half percent on the day.
1:03.7	S&P 500 over 478 right now, up about three percent on the day, Dow Jones industrial average up,
1:12.0	about two percent. So, Dave, how do you contextualize this? How do you think about this?
1:16.8	Obviously, Fed signaling that the rate of increase may be slowing down. Give us some context,
1:22.5	tell us how you think about this big picture. Sure, Ashton, and thanks for having me on.
1:26.8	I think that markets are having a really clear reaction to the press conference and the
1:35.2	discussion. Clearly, they think that the Fed is going to moderate its rate increases,
1:44.3	and they're rallying based on that. You see the dollar selling off, at least I checked against
1:49.3	your own and CAD. So, it's clear they think things are about to slow down.
1:56.2	The market seems very optimistic right now in all sorts of ways. It's almost flat on the year,
2:02.8	and it's been a hell of a year from the S&P's perspective, at least. So, the question really is
2:08.7	going to be, how does the Fed interpret inflation numbers going forward, going into the spring?
2:16.5	Do they react to the data? Does the data start to show a significant deflation or
	...

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