On the podcast, they discuss the Fed decision with experts from JP Morgan and the Atlanta Federal Reserve. They delve into concerns about the labor market and market disruption. They also explore anticipation for the Fed's decision day and economic impact of central bank bias. Additionally, they touch on cultural acceptance, CEO styles, and pricey leather jackets.
Expectations for the Fed meeting focus on economic confidence amidst minor challenges like unemployment and inflation adjustments.
Discussion on credit market dynamics, highlighting concerns of a potential crisis and the rise of non-bank lending opportunities post-pandemic.
Deep dives
Market Insights and Federal Reserve Expectations
Bob Michael, the CIO and head of Global Fixed Income Currency at JP Morgan Asset Management, discusses the Federal Reserve meeting and expectations. He emphasizes a desire for a two-hour, minimal disruption meeting focused on economic confidence despite minor speed bumps like increased unemployment or inflation. Michael speculates on potential Fed stance adjustments, particularly regarding inflation dynamics and interest rates.
Consumer Resilience and Financial Conditions
Bob Michael delves into consumer and financial market resiliency, highlighting indicators like equity price spikes, tightened credit spreads, and elevated consumer service spending. He references potential Fed rate cuts, attributing them to inflation rates hovering around 2% to 3%. Michael also addresses the ample liquidity injected post-COVID, impacting various market sectors and consumer behavior.
Credit Market Dynamics and Crisis Concerns
The discussion shifts to credit market dynamics and concerns of a looming crisis. Bob Michael dissects factors like creditor protections in high-yield borrowing and risks in mortgage securities within CLOs. Despite frothy conditions, historical comparisons suggest potential credit market stability. Private credit markets' growth acts as a cushion to public credit sectors, potentially mitigating systemic stresses.
Private Credit and Market Impacts of Non-Bank Lending
The conversation extends to private credit and the rise of non-bank lending post-pandemic. Bob Michael reflects on the significant opportunities in core lending rates sitting between 9 to 15%, bolstered by widened credit spreads. He acknowledges the sector's independence from traditional bank lending practices, signaling a substantial market shift towards non-bank financial options and heightened lending activity.
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Surveillance hosted by Tom Keene and Paul SweeneyMarch 20th, 2024 Featuring:
Bob Michele, Managing director and CIO at JP Morgan Asset Management, on today's Fed decision
Dennis Lockhart, former President of Atlanta Federal Reserve, on previewing today's Fed decision
Frances Donald, Chief Global Economist at Manulife Investment Management, on what she expects to see from the Fed and concern about the labor market
Bloomberg's Lisa Mateo with her Newspaper Headlines