May 24, 2013|
The First Look - Michael Regan, Bloomberg News
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
All right here you go here's the headline inflation. Is not high enough at least that's the opinion of mr. James Bullard he is a fed president we're joined now by Michael Regan from Bloomberg News Michael good morning. I so I was kind of surprised to see those comments by James Bullard he wants to see higher rates of inflation. Before. The Federal Reserve will stop buying bonds. I don't understand that logic helped me. At that. Well inflation a very tricky thing to the economy you know I always think -- it is you know adding garlic here tomato -- and -- that's -- too much it's too much and it -- it not enough and it's too bland. And it actually get deflation and falling prices that's that's like putting Drina when he hit your spot the spot so. So as far as -- concern right now -- dated inflation rate at about 1% a year is is just not high enough he'd like to see a little closer to the Fed's target around 2%. So you know it is it's actually get him a lot of the other fed members are are mainly focused on the job growth and you know as as the employment picture seems to be perking up a little bit. You know that's what's causing a lot of people think well maybe it will separate the brakes on the stimulus but. Bill Bullard is pretty important voice in the Fed is saying there has taken another step and saying let's look at inflation to mean. Either the two things that the Fed is most concerned about inflation in the job market so. You know Bullard at this point is saying let's let's not get ahead of ourselves but you know the -- that you know we're not at risk of deflation before we really -- -- -- but the foot on the breaks. She used to be this big fear of tapering well Michael in and you know -- -- -- this might -- a technical question -- but. The beat their fear of tapering is that interest rates are gonna go up a little bit but if interest rates go up. That means we have to pay a little bit more to borrow money but it also means we get more money. Paid to us in the form of interest on our certificates of deposit and are floating rate bond funds and our money market accounts so why is there such fear of tapering. Well you know. Obviously that the big grow in the room is housing market it's really been propped up. Recently after the crash few years ago by these low interest rates you know as as the treasury reached a downward trades pretty much followed lockstep. The treasury rates and -- these record low mortgage rates of Billy what's kept the housing market. Although not really robust and vibrant at least you know moving in the right direction of -- the last couple years so. You know any setback in the housing market you know you would have a lot of reports tax. You know on on basically people's network you know that the value of their home. And that's sort of things so it's it's a very tricky situation you you're actually right that. You know in this country you're either receiver are lower rates so that -- the sabres the sabres have really been. Put at a disadvantage or the last few years with the deposit rates said -- next to nothing CD rated very very well. So obviously those people would love to see some higher rates that the bankers themselves. To -- -- to private deceased. Aren't sure they would do -- Bob May be able to attract more deposits in the right circle -- I I just think there's there's. The hero all of these debates about all. You know the stock market is being propped up by quantitative easing -- just not term by an. You know if interest rates if I can go to the bank and bank and buy -- CD three or 4%. Which I could in the 1990s. Stock markets still did really well when you could -- 5% CDs. Right right well. Yeah I mean yeah that is -- -- long the argument you know by a lot of people that you know treasury rate at less than 2% if you if you look at the dividend rate on the SP 500 it's it's a -- that it's about -- you know two point 1% so. It's really into the stock markets and the only place for an investor to Chase Field you know and some really moving out of some of those lower yielding instruments have been getting into the stock market. At some point you know the question is what was the economy's sort of -- -- support of of quantitative easing you know -- -- -- it -- it shocking that. At the patient with the paddles and NC can. -- wanna tone and and that's really add to the point we're -- now we're we're you know it is the patient basically ready to get up off the table more ground and you know it's it's very much open a debate about whether tapering. What happened one of the Fed officials had have been. Really. Suggesting that they're very flexible back. Date they could that paper little bit at that to start and then you know even. Increased purchases later -- that the paper as a very negative effect so. It's sort of really the turning point right now and as far as what's gonna happen happen next and it really could go either way I mean a couple bad economic points to really take to tapering off the off the table and you know even lead to discussions with the increasing the size -- purchases. But at the moment it seems like most are leaning towards you know. If not most met many on the -- at least are leaning towards you know. Talking about tapering more than expanding the purchases that moment. All right -- Michael thank you very much for your time we appreciate. It he great fear of interest rates going apple I just I think it's unwarranted you know interest rates we've talked about the -- interest rates are artificially low. Right now so -- legal up to 5% remember in the 1990s when the stock market was make and 20% a year 95 through 20099. You you can go to the bank and by 56% CD in the stock market still did. So why do we have to have 0% interest it's not I guess what I'm trying to communicate everybody is that. These low low interest rates I'm not sure are bolstering the stock market has pushed people out on the -- for -- it has. But there's still record amounts of money sitting in ball on spending -- as. I write it in my opinion in my opinion. We we asked the question. Which was you know deep did you discuss personal finances your spouse part America have you ever lied to your spouse about money what kind of response are we getting. Six plus seven yes I have lied I have but several handguns rifles an ammo with out telling her she would flip we have separate. Accounts. Six on seven Dave get used to vacuuming the house on Saturday he asks him what marriage is coming -- -- to 18 annual -- that he is bankruptcy and didn't tell. Me that's. That's that's pretty bad. 68680. Is our text number you can find us on FaceBook we -- the financial exchange on FaceBook like this there and you have a chance to win our 25 dollar grocery cart. And I believe that's it Shaw's. Like us on FaceBook will be right.