Than to me, my friend, all righty looks like NASDAQ Market is selling off right before the live stream actually starts. So Jerome Pal, who is the head of the Federal Reserve is going to be speaking today. Let's see it. Okay, why don't we get started? Of course this is a a moment many of us have been waiting for.

This is the our Policy panel in the Annual Research Conference and the theme for this policy panel is a theme that is going to resonate with with all of us. of course, monetary policy challenges in global Economy. Now we, as we all know, in recent years, the global Econom has going through. NASDAQ Market is dropping episode much every country everywhere.

Few exceptions. I've seen inflation rates that they had not seen in many decades U Can You guys hear Okay, accompanied by a number of additional shocks as well war on the European Continent, an energy crisis, Rising trade, geopolitical tensions, and of course, uh, in response to this surge in inflation Cal Banks in many many Uh places have uh tightened monetary policy also to an unprecedented degree in in a long, long time um, including in the US but in in many other places as well. Now the good news is inflation is on the downward path in in many places, even though it remains still quite high and above desired levels. and um, many central banks now appear to be near or at the peak of the aring Cycles so they are communicated.

uh about that. So while we're not home yet, is an important time important time to to take stock and this panel will aim to shed some light on the tradeoffs and the challenges that policy makers face today. Um, as the monetary policy response been sufficient, has it been effective, What can we say about spillovers and more broadly is Uh the Central Bank toolkit Uh fit for the task at the current juncture. Now to help us think about some of these very complicated issues, we have a really phenomenal panel today.

We cannot think of a set of people would be more qualified to share their views on on these questions. so I'm going to introduce them briefly in the order in which they will speak. We'll start with first with: Jay Powell. We're very fortunate to have Jay with us.

Jay is chair of the chairman of the Federal Reserve System since 2018. Arguably many would say the most powerful policy maker in the world, Uh is served as a member of the Board of Governors since 2012. Prior to the Federal Reserve board, Jay worked in Investment Banking. He also served as under Secretary of Treasury for domestic Finance in George W Bush Uh each Bush Administration Um Amir Yon Uh has been governor of the Bank of Israel since 2018.

That is for almost as long as Jay CH tenure as a chairman of the FED Before that, Amir was professor of Banking and Finance at the Wharton School of Business at the University of Pennsylvania and he's a world renowned expert in macroeconomics, monetary Economics, Finance, and Uh Financial Economics. and we're particularly delighted to have air with us today. Um Gita Gut Uh requires no introductions I think, especially in these walls. but she is the first Deputy Managing Director of the International Monetary Fund previously had my job as Chief Economist and head of the research department and prior to joining the IMF, she was the John Swra Professor of International Studies and of Economics at Harvard Universities Uh with Uh, a worldclass record of research on exchange rates, trade and Investment, the National Financial Crisis, Monetary Policy, Debt Emerging Market Crisis Uh, a very, very long and distinguished list.

And then uh, Last but obviously not least, Uh Ken Rogov Ken is Uh, the motivation for this year's annual Research Conference in his honor, and we're very happy to have him today and tomorrow, and currently the Morit Boas professor at Harvard University also a former Chief Economist at the IMF in 20012 2003. Another turbulent time. Uh Uh for the Global Economy Ken has written several extremely influential books and of course, many, many research articles on debt and Financial crisis. He has written what remains to this day: Reference: Uh Textbook: Uh, Graduate Textbook Inal M with Ken Rogov in 1996 Um is known for with Mor OBS in 1996 is known for his pioneering work on exchange rates Central Bank Independence Sovereign Debt Financial Crisis among Uh, many other topics and Ken as long ranked among the most cited economists I I checked quickly and I think is Repc ranking which is something uh us for academics or former academics, we we check carefully very often I think his Repc ranking is number 11 which is totally astonishing and his uh Google Scholar count is you know, off the charts astronomical.

um and for those of you who don't know um I have to all mention this Ken is also International chess grandmas Now we will start Uh with short interventions from each of the panelists for about 10 12 minutes followed by uh, a quick discussion between them and then we will open uh uh for discussion with the audience. There are mics in the aisles if you're at the point which we reached that stage in the panel. If you want to ask a question, please line up behind uh the mics and then you will have a chance to do that. I will only ask that uh since our time is counted that you keep your questions brief and you also keep them focused on the topic of the panel which is monetary policy challenges for the global Uh economy.

Now with this, let's start with Jay um I believe Jay will talk about the nature of the inflation process in the US and the appropriateness of the monetary policy response. It's up to you Jay thank you very much Pier Olivier It's uh, it's great to be here. particularly in honor of Ken whom we're we're proud to count as a member of the FED family. Um, so my assigned topic is uh, Us Monetary Policy in the current Global Inflation episode.

So I'll begin by briefly addressing the US Outlook and then I'll turn to three broader questions raised by the historic events of the Pandemic era. So to begin: US Inflation has come down over the past year, but remains well above our 2% Target My colleagues and I are ratified by this progress, but we expect that the process of getting inflation sustainably down to 2% has a long way to go. The labor market remains tight, although improvements in labor Supply and a gradual easing in demand continue to move it into better balance. GDP Growth in the Third Quarter was quite strong, but like most forecasters, we expect gross growth to moderate in coming quarters.

of course, pal, by refusing to treat climate change like my goodness. Thank you very much, thank you very much. How do they always let these people in? Just close the door, Close the door. Oh, do you guys hear that? Was it just me that heard that they closed the stream? These protesters.

What Do they think? they're going to do? Nothing? Nothing. Nothing. Oh my goodness. They just dropped the F bomb and now why ruin it is no good for nothing.

They have nothing better to do. Oh my goodness, dude. how do they let these people in Like we all know that Jerome Pal, right? They said it. He's one one of the most powerful people when it comes down to monetary policy.

How is it that they even allow these people in the same room? Like you're telling me that I can just go in there and throw a tomato at one of the most powerful individuals not just in the United States but possibly in the world Insane. Like, how do they even allow that I Don't get that mean I'm no one compared to Jerome Pal. but if you try to come to my office we have our doors locked right? Oh my gosh is this thing really over I Still can't get over what that guy said. Wow yeah, close the effing door.

I Love it. I'm going to give it a couple of minutes. Maybe they'll return back, take some time to maybe drag those nobody's out of the building I Don't know what the Market's going to try to do. Oh man.

I couldn't tell you what I would do Jerome Pal saying yeah for was so passive aggressive I really don't think it was him that said it though. And the crazy part is is I was filming him uh to post it on my Instagram and I'm pretty sure it was just seconds after that it all happened. It was him. Was it? For those that are just tuning on in uh Jerome Pal just started to speak uh in? this annual press conference and some protesters walked in about um, what was it global warming or something about the environment and then they closed down the live stream so they came with their you know, whatever um Banner how they always do and just try to protest I don't know what they did um, but it doesn't look like it's helping the market.

so right now Market looks a little uncertain NASDAQ Market pulling on back I I Was just sending out the update to my Lpp team, making them aware that on the F minute time frame it's very easy to see we are testing yesterday's lows, right? So I decided to lock and profit on Sqqq. um and I walked away with $1,560 on the day and there it goes. Issues are important: I left myself with my but as I mentioned, we'll try to keep the questions on the topic for today. There we go.

All right, we're going back to schedule Glal E. Okay, but if you guys want to tune on into tomorrow's live trading session or the next time the Market's open second link in the description down below. Let's see if they bring back Jerome Pal. Yeah yeah.

drone Pal's like I ain't speaking up here again now I Don't hold on. Let me check. Let me check. We might have to go too.

This guy's trying to whisper. he has a microphone. Wow what a mess. Look at all those people.

How do they walk in how they're in? Washington DC Oh, they're bringing him back here. We go. All right guys. Hope that we earn your thumbs up.

Don't forget to subscribe. and I Hope that you guys enjoy this. Okay, where was I Inflation was coming down. The labor market remains tight, although improvements uh in labor Supply and a gradual easing in demand continue to move it into better balance.

GP Growth in the third quarter was quite strong, but like most forecasters, we do expect growth to moderate in coming quarters. Of course, that remains to be seen, and we are attentive to the risk that stronger growth could undermine further progress in restoring balance to the labor market and in bringing inflation down, which could warrant a response. For monetary policy, the Fomc is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time. We are not confident that we've achieved such a stance.

We know that ongoing progress toward our 2% goal is a few head fakes along the way. If it becomes appropriate to tighten policy further, we will not hesitate to do so. We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data and the risk of overtightening. we're making decisions, meeting by meeting based on the totality of the incoming data and their implications for the outlook for economic activity, inflation, and inflation as as well as the balance of risks as we determine the extent of additional policy firming that may be appropriate to return inflation to 2% over time, and we'll keep added until the job is done.

So with that, let me turn to the three questions uh, that I posed that have Arisen from the recing but still elevated inflation we're experiencing today. The first question is with the benefit of two and a half years to look back what we can say about the initial causes and ongoing policy: Implement Implement Implications of the current inflation after running below our 2% Target over the first year of the Pandemic Core Pce inflation Rose Sharply in March 21 economic forecasters generally did not see this coming as shown by the February 21 Survey of Professional Forecasters, which showed core Pce running ad or below Target over the subsequent three years. So the real-time policy questions for policy makers were what caused the high inflation and how policy should react. And at the outset, many forecasters and analysts, including Fomc participants viewed the sudden upturn in inflation as mostly a function of pandemic related shifts in the composition of demand A disruption of Supply chains and a sharp decline in labor Supply The resulting supply and demand imbalances led to large increases in the prices of a range of items most directly affected by the pandemic.

especially. Goods In this view, as the pandemic abated, our dam and flexible economy was likely to adapt fairly quickly. Supply disruptions and shortages would diminish labor Supply would rebound aided by the arrival of vaccines and the reopening of schools. elevated demand for goods would shift back to Services Inflation would ease reasonably quickly without the need for significant policy response.

Indeed, although monthly core PC inflation spiked in March and April of 21 beginning in May, it declined for five consecutive months, providing some support for this view. But of course, in the fourth quarter of 21, the data clearly changed amid waves of new Coid 19 variants, with only gradual process in restoring Global Supply chains and relatively few workers rejoining the labor force. That lack of progress combined with very strong demand from households contributed to a tight economy and a historically tight labor market and more persistent High Inflation The committee signaled a change in our policy approach and fincial conditions began to tighten. Of course, a new shock arrived in February of 22 when Russia invaded Ukraine driving up prices of energy and other commodity prices.

By the time we lifted off in March, it was clear that bringing down inflation would depend both on the unwinding of the unprecedented pandemic related demand and supply distortions and on our tightening of monetary policy which would slow the growth of aggregate demand. Allow Supply time to catch up to today. These two processes are are working together to bring inflation down. The Fomc has raised the Federal Funds rate target by 5 and a Qu percentage points Cong and we've reduced our Securities Holdings by more than a trillion dollars.

Monetary policy is in restrictive territory and putting downward pressure on demand and inflation. The unwinding of pandemic related supply and demand distortions is playing an important role in the decline in inflation. For example, wage growth has steadily Fallen since mid 2022 by most measures, despite continued robust job gains reflecting a Resurgence in labor Supply Thanks both to higher labor force participation and the return of immigration to pre-pandemic levels. While the broader Supply recovery continues, it's not clear how much more will be achieved by additional supply side improvements going forward.

It may be that a greater share of the progress in reducing inflation will have to come from tight monetary policy restraining the growth growth of aggregate demand. Turning then to my second question, for many years, it has generally been thought that monetary policy should limit its response to or look through Supply shocks to the extent that they are expected to be temporary and idiosyncratic. Many argue as well that in the future Supply disruptions are likely to be more frequent or more persistent than in the decades just before the pandemic. A second question then is what we've learned about this standard.

Looking through approach. the idea that the response to the inflationary effects of Supply shocks should be attenuated arises in part from the trade-off presented by those shocks. Supply Shocks tend to move prices and employment in opposite directions, whereas monetary policy pushes each in the same direction. Therefore, the response of monetary policy to higher prices stemming from an adverse Supply shock should be attenuated because it would otherwise amplify The Unwanted decline in employment.

In addition, Supply Shocks have most frequently, most frequently come from the volatile food and energy categories, and they've passed through quickly. While food and energy prices critically affect the budgets of households and businesses, the policy tools of central banks work more slowly than commodity markets move, so responding aggressively to quickly passing price increases could exacerbate macroeconomic volatility without supporting price stability. Our experience since 2020 highlights some limits of this thinking. To begin with, it can be challenging to disentangle supply shocks from demand shocks in real time, and also to determine how long either will persist, particularly in the extraordinary circumstances of the past 3 years.

Supply Shocks that have a persistent effect on potential output could call for restrictive policy to better align aggregate demand with the suppressed level of aggregate supply. The sequence of shocks to Global Supply chains experienced from 2020 to 22 suppressed output for a considerable time and actually may have persistently altered. Global Supply Dynamics Such a sequence calls on policy makers to use policy restraint to limit inflationary effects. Policy restraint, in this case is also good risk management.

Supply shocks that drive inflation high enough for long enough can affect the longer term inflation expectations of households and businesses. Monetary policy must forthrightly address any risks of a potential de anchoring of inflation expectations as well anchored expectations help bring inflation back to our Target. The sharp policy tightening during 2022 likely contributed to keeping inflation expectations well anchored. My third question then is the level where interest rates will settle once the effects of the Pandemic are truly behind us.

by 2019, the general level of nominal interest rates had declined steadily over several decades. As the Pandemic arrived, many advanced economies had below Target inflation and low or mildly negative rates. Raising difficult questions about the efficacy of interest rate policy when constrained by the effect of Lower Bound or the Elb as we call it. Over two decades, an extensive literature had identified a number of possible changes to the widely used inflation targeting regime, including negative policy rates, nominal income targeting, and various forms of makeup strategies under which persistent shortfalls in inflation would be followed by a period of inflation running mod moderately above 2% Today, inflation and policy rates are elevated, and the effect of Lower Bound is not currently relevant for our policy decisions, but it's far too soon to say whether the monetary policy challenges of the Elb will ultimately turn out to be a thing of the past.

The prolonged proximity of interest rates to the Elb was at the heart of the Monetary Policy review and the changes we made to our framework in 2020. We will begin our next 5-year review in the latter half of 2024 and announce the results about a year later. Among the questions we will consider is the degree to which the structural features of the economy that led to low interest rates in the pre Pandemic period will persist with time. We will continue to learn from the experience of the past few years and what implications it may hold for monetary policy.

These are just just three of the many questions raised by these Ch challenging times and of course we're very far from a complete understanding of the answers. Again, it's great to be here today and I look forward to our conversation. Thank you, thank you thank you very much! Jay And I think we're really off to a excellent start with with your remarks. Let me now.

great start. turn to Amir Um Amir Um Israel Is a small open economy, faces very specific challenges like the Us and many other countries. It's seen an increase in inflation in recent years and Bank of Israel has been uh acting on it. In addition, like other small open economies, it faces potential speed overs from monetary policy decisions taken else.

NASDAQ Market Picking up with a potential impact on on currency and and capital flows and we'd love to hear views. So Amia Floor is yours all right? First, it's a pleasure to be here in a conference in honor of Ken ROV We all cherish and follow his distinguished contribution in Academia and and practice Bank of Israel Um. Sharp Turn as we are all aware: Uh Israel is currently at a war following the October 7th human brutal attack by the terrorist organization of Hamas. This is crucial time for Israel security and we thank all those who support us.

Our hearts are with the innocent victims of the war and our hope is for it to end with a safe return of hostages and with peace and security. And now I'm going to turn out I Want to turn now to address the issues and questions presented. Uh For this session, an important question is to what ENT can a small open economy like Israel or for that matter, any Soe conduct its monetary policy independently Reed follow the steps of the major economies. Another question is what are the spillovers from the policy taken by the major Econ economies to small open economies and how do those impact local conditions? The answer to these questions depends on the development of the economy, its specific areas of exposure to the global.

So for those that are unaware, uh, there's four individuals um that are speaking about their own versions of monetary policy. Uh, they're pretty much giving speeches. Um, they call it questions, but it almost just sounds like a speech and Jerome Pal has already gone. Um unless Jerome Pal After all four individuals give their introduction speech, uh begins to answer some questions I Can't really imagine um what these people might say to influence our markets too too much.

Um, obviously it is important, especially if something very conflicting is said. um, but our guy Jerome pal said what he needed to say can from the comment I just don't know if it's going to be worth our time to watch this live stream from these other individuals that have a lot less influence to our Market Do you get what I mean um I can provide you guys the link So if you guys want to watch this stream yourself, I'm going to provide it for you. um I Always again encourage you to try to stay as informed as possible. Uh, but I know for myself I mean I took my trade on Tqqq I called it out for the Lpp team Um, it was very oversold.

I Like the reversal I actually cut losses on my Um secondary trade on Sqqq and then I added back to it once we got more confirmation. Uh, it was much easier to see on the 5 minute time frame once we actually began to show signs of progress of higher highs and higher lows. Um, and then right before this speech, we saw the NASDAQ Market really begin to sell off. which meant that Sqqq really began to take off.

Uh and then I ended up blocking in profit. So I walked away with 15,500 on the day and I left myself with my one lucky share. I Just opened a position on Tqqq just in case we do see a break of pattern right? the the overall NASDAQ Market has been more bullish than it has been bearish, right? Uh, but it looks like we might be finally breaking below this EMA line. So I have no intention of being aggressive with my Tqqq trade.

I can quickly cut losses on it just so you could see. Um I just wanted to see just in case there was a chance for this thing to. Rally I was going to buy a few thousand shares and try to make a couple of bucks and then sell close to the moving average. but again, I'm not not in Need for this thing to go up.

I Just I Saw the potential opportunity for me and it was testing the EMA. We'll see if we show signs of progress and if it begins to make lower lows and lower highs then I Again, my job's not to be perfect I'm never going to be perfect I make mistakes. But that's the beautiful thing about trading is that it's not about making mistakes, but how quickly you identify them right? Uh, and it's always so much easier. at least in my experience.

This is why we share it with our learn, plan, profit team and feel free to share your thoughts. But it's always so much easier to manage and mitigate risk. When your position size isn't too too big, right? it allows you to stay effective, doesn't overwhelm you with emotion. Um, and that's why I only purchased 1,000 shares as you could see here for Tqqq, keeping it light, keeping it tight.

You know there's definitely potential for this thing to recover as the Market's been Relentless for the uh past week and a half, but we'll see right, there's no reason to over complicate it. Um, I'm going to keep it simple and then we can go from there. So alrighty. uh, is there any last minute questions that I could answer for you guys? eight times the volume when he gets closer to the mic.

Great T Trade today! Ricky Thank you thank you! Like this video up people! I Appreciate that. Thank you guys again for your time! Um I do want to remind you that uh I think it's they're observing it tomorrow but I don't believe the stock market is closed in observance to Veterans Day because I think they're actually celebrating it on Saturday I Just looked it up and according to the NASDAQ uh holiday calendar um tomorrow for Veterans Day it's not recorded as the stock market being closed. so I'll be live I'll be live right at Market open. So if you like what you sell today where you can see my entries and my exits, this is something that I do every single day you get to see again.

It's not just good trades, you get to see bad trades I make mistakes all the time. But the really cool thing about that is like you know when do you get to see someone enter and exit a trade? You know good and bad and you get to see this every single day, especially as you're just getting started right? Um, so if you'd like to experience it again, I Trade Live every single day right at Market Open and I do it with one team and one team only and that is my learn plan profit team. So if you want to check that out, you don't have to. but if you would, it's the second link in the description down below.

It's a onetime payment, lifetime access, and again I work with them every single day and I like to keep things simple. So I appreciate your time, hope that we're in a thumbs up. Don't forget to subscribe! Uh, next week is the CPI data report which is a very significant report. It's an inflation report that will determine if the Federal Reserve raises rates again or if they remain doish right and continue to pause.

So I'd be more than happy to welcome you to that live stream and all you have to do is subscribe. So hope that eared your thumbs up And like always, let's make sure that we end the year on a green note.