Episode summary
Bloomberg Money: 'Fed Needs Clear Inflation Target and Messaging' | Bloomberg Surveillance
Bloomberg Surveillance
· · 40 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Richard Clarida, Lori Calvasina, Hannah Elliot
Summary
Richard Clarida argued that the Fed’s credibility depends on being explicit about what it is targeting. He said an inflation-targeting central bank needs a clear measure, a clear reaction function, and less overreliance on forward guidance, while leaving room for the framework to evolve. He also said the bond market is reacting to more than the Fed alone, but that Treasury yields still reflect expectations for the policy path.
The conversation widened into a broader critique of the current economy. Clarida described a K-shaped backdrop in which homeowners and stock owners have benefited from higher asset prices while renters and households without financial assets have had a tougher six years. Lori Calvasina said investors remain prepared for volatility, with her base case calling for higher equity prices over the next 12 months but with at least one 5% to 10% drawdown along the way.
Other segments covered practical personal finance. Suzanne Woolly said adult children moving back home can cost about $1,500 a month on average, and that families need to set rent, privacy, and exit expectations early. Bloomberg News also flagged Apple’s supply constraints, saying memory-chip shortages are weighing on its outlook even as demand remains strong.
Key takeaways
- Clarida said the Fed must be clear about its inflation target and reaction function, even if the framework can evolve.
- Clarida argued that bond yields reflect inflation, global growth, and Middle East risks, not just the Fed’s policy rate.
- Calvasina’s base case is for a higher S&P 500 over the next 12 months, but with 5% to 10% pullbacks along the way.
- Calvasina said retail investors are not panicking, while institutional positioning has eased from more crowded levels.
- Woolly said a grown child moving home can cost about $1,500 a month and can threaten retirement savings if boundaries are not set.
Notable quotes
“an inflation targeting central bank needs to be clear about what it is it's it's targeting”
“the Fed is a very important part of 10-year Treasury yield. It's not the only thing that drives yield”
“we've been in an economy for some time, but especially in the last six years when stocks have gone up, house prices have gone up”
“our base case has been we're going to be higher over the next 12 months, but it's not going to be in a linear fashion”
“Financial planners talk about an average of $1,500 a month, which comes out to about $18,000 a year”
How the episode opens
Bloomberg Audio Studios podcasts radio news.
Bloomberg Money. This is the Bloomberg Money podcast. I'm Tom Keane with Scarlett Fu.
Join us each week for a smart look at the forces shaping your financial life on personal finance, on retirement, and wealth management. We will explore how people are earning, investing, and building wealth. We are live Fridays at noon Eastern on Bloomberg television.
Subscribe to the podcast wherever you listen and as always on the Bloomberg terminal and the Bloomberg business app. And we hit it out of the park today. Gur is here for Bloomberg this weekend.
It's wonderful to see David Gur of Bloomberg this weekend. Allison Shreger here with an important story. And this is a real pleasure.
Hannah Elliot. What you do is you go to Baylor and if you do Baylor, you do autos. Hannah Elliot or is this working with Matt Miller on an esteemed auto podcast?
Let's get it started. I walk by Elucid. Elucid
$200,000 or something. I I Are they selling Are we going to buy fancy overpriced EVs with our wealth management? — Apparently not. The sale The sales say no. The sales say Americans don't want EVs unfortunately for companies like Lucid and Tesla and Rivian that are struggling and also for our domestic automakers that are actually pulling back on a lot of EVs they had planned.
Money question Scarlet probably has this. I'm going to steal it from her. Should the Chinese be let into America to sell us cheap EVs? — You know what? I'm not an economist. Um Jim Farley at Ford thinks that EVs from China will be here in the next 5 years or so. A lot of people, Keith Nton, our esteemed automotive reporter, came on the podcast yesterday, agrees it's only a matter of time.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed inflation target
- fed messaging
- us equity strategy
- economy outlook
- markets outlook
Companies and tickers mentioned
- RY
- Royal Bank of Canada
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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