Every year, the Federal Reserve Bank of Kansas City hosts an economic symposium in Jackson Hole, Wyoming. It’s a chance for central bankers and other policymakers to talk about issues facing the global economy, debate academic literature, and provide further guidance on the future path of monetary policy. This week’s symposium marked a step change for the Fed, with Chair Jerome Powell announcing that the “time has come” for rate cuts after years of hikes. So what makes him confident that inflation’s been tamed? And what are the key pressure points to watch out for in the US economy now? On this episode, recorded in Jackson Hole shortly after Powell delivered his speech, we speak with Bloomberg TV’s Tom Keene and Mike McKee — both veteran Jackson Hole attendees — about what we just learned.

Read more:
Powell Says ‘Time Has Come’ for Fed to Cut Interest Rates
Full Text of Jerome Powell's Jackson Hole Speech

Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots

See omnystudio.com/listener for privacy information.

Synthetic risk transfers, in which banks purchase insurance-like protection on some of their loans, is a growing market on Wall Street, with billions worth of deals made in the US last year. But of course, anything with the words "synthetic" and "risk transfer" is probably going to remind people of the 2008 financial crisis, when securitizations of loans blew up and infected the banking system. So what exactly are these new trades? Why do banks want to do them and what are investors getting in return for taking on this risk? In this episode, we speak with Michael Shemi, North America structured credit leader at Guy Carpenter, about what these deals are, how they're structured, and what they say about bank capital and the wider financial system.

Mentioned in this episode:
One of the Hottest Trades on Wall Street, An Etymological Study
JPMorgan’s Risk Swap Ends Up at a Familiar Place: Rival Banks
‘Blind’ Bets on Bank Risk Transfers Have Never Been So Popular

Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots

See omnystudio.com/listener for privacy information.

Political prediction markets — where traders can make bets on election outcomes — have been around for years. But in this cycle in particular, we've seen an explosion of interest, with people constantly checking the odds on sites like Polymarket and PredictIt to assess the state of the US presidential race. But how accurate are these markets? How do people make money on them? What do they tell us beyond what traditional polling or modeling already indicates? On this episode, we speak with Nate Silver and Maria Konnikova, the co-hosts of the new podcast Risky Business. Silver is, of course, a famed election modeler, and both are serious poker players with good instincts for gambling and odds. We discuss how these markets work and what the markets and models are saying right now about the current US campaign.
Read More at Bloomberg.com:
https://bloom.bg/46Q66tS
https://bloom.bg/3X54rNP

Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots

See omnystudio.com/listener for privacy information.

The Federal Reserve appears to be ready to pivot into rate cutting mode. Inflation has come down significantly, and the unemployment rate has been trending upward for most of the year. In fact, in the most recent Non-Farm Payrolls report, the headline unemployment rate of 4.3% triggered the so-called "Sahm Rule," which has been a historically reliable signal that the US is already in a recession. So are we in a recession? Could the rule be wrong this time due the unique features of this economic cycle? How should the Fed weigh the risks that we see in front of us? On this episode of Lots More, we speak with the rule's creator, Clauda Sahm, Bloomberg Opinion contributor and the chief economist at New Century Advisors. She explains why the signal this time could be misleading, but also why — regardless of whether we're in a recession or not — the Fed must be on guard for a weakening labor market.

Read More:
My Recession Rule Was Meant to Be Broken
What’s the Sahm Rule? Is It Warning of a Recession?

Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots

See omnystudio.com/listener for privacy information.

The past few years have thrown up a number of potential weaknesses in the American economy. There've been disruptions to supply chains stemming from the global pandemic. There are concerns about the availability of strategically important items like semiconductors and vaccines. Meanwhile, Russia's invasion of Ukraine roiled global commodity markets and the ongoing conflict in the Middle East has created even more complications for shipping. So how is the US thinking about economic security and what have we learned? In this episode, we speak with Daleep Singh, Deputy National Security Advisor for International Economics and Deputy Director of the National Economic Council in the Biden Administration. We talk about how the government identifies areas of potential shortages and chokepoints, and what it does to try to get ahead of them.

Mentioned in this Episode:
Introducing the Chokepoint Economy, When Shortages Start to Matter

Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots

See omnystudio.com/listener for privacy information.

When it comes to financing the US government's borrowing needs, the Treasury Department has some discretion in how it's done. It can sell 30-year Treasuries. It can sell 10-year Treasuries. It can sell a lot of three-month T-bills. Every quarter, it's always going to be some kind of mix. And in theory, the decisions about where on the curve it issues debt can have effects on the market and the economy, since different instruments have different liquidity and risk profiles. Recently, the Treasury has come under criticism for issuing a lot of short-dated debt. Some economists have dubbed it "Activist Treasury Issuance," with the allegation that Janet Yellen & Co. are purposely trying to counteract the impact of the Federal Reserve's quantitative tightening by issuing less debt at the long end of the curve. So is there anything to these criticisms? And how exactly does the Treasury go about making these decisions anyway? On this episode, we speak to a dissenting voice who argues that the Treasury has approached the task using the same methods it has always employed. Amar Reganti is a fixed-income strategist at Wellington Management and Hartford Funds, who earlier in his career spent four years at Treasury in the Office of Debt Management. He walks us through the Treasury's general issuance approach, why the funding mix changes over time, why it's been issuing more at the short end in recent quarters, and the overall strategy the government will use to fund what the Congressional Budget Office estimates will be another $20 trillion worth of borrowing over the next decade. 

Read More at Bloomberg.com:

Mnuchin Says It's Time to Kill the Treasury Bond He Created
The Trillion Dollar Legal Memo: FOIA Files

Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots

See omnystudio.com/listener for privacy information.

Hasbro has been making toys for decades, including many classic favorites like G.I. Joe and My Little Pony. But in recent years, it's also been going big on digital games. An app version of the classic board game Monopoly — called Monopoly GO! — has become one of the top mobile games of all time and grossed billions in revenue since it launched last year. Hasbro also owns Wizards of the Coast, the publisher of Magic: The Gathering, Dungeons & Dragons, and the best-selling video game Baldur's Gate 3. So why is gaming such a big growth market for a traditional toymaker? Where is the market heading? And how does a big company judge the success of "freemium" apps like Monopoly GO!? On this episode, we speak to Hasbro CEO Chris Cocks about the business of gaming.

Read More at Bloomberg.com:

Hasbro Stock Rises on Digital Gaming Strength
Hasbro Names Microsoft’s John Hight to Lead Wizards Gaming Division 

Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots

See omnystudio.com/listener for privacy information.

There's a lot of hype around generative AI and many people have interfaced with ChatGPT, Claude, or Gemini at this point. It's fun to ask these large language models to come up with a song parody or to write a story, but most casual users of the technology probably aren't worried about things like copyrights, the sensitivity of what they're inputting into the platform, or even the accuracy of the answers being spit out. It's just fun to play around with the technology. For large companies, however, there's a lot at stake. And concerns over data privacy and output errors are even more pressing if you're a big regulated bank. In this episode we speak with Goldman Sachs Chief Information Officer, Marco Argenti, about how the bank is balancing risks and opportunities in AI. Argenti, who previously worked at Amazon Web Services, talks about the development of Goldman's own internal AI tools, what the new tech means for Goldman engineers and other jobs, what makes a good prompt, and much more.

See omnystudio.com/listener for privacy information.

The S&P 500 has plunged more than 5% over the past couple of trading days. The Nasdaq 100 is down 7%. The Nikkei fell an astonishing 13% on Monday and then triggered a circuitbreaker as it climbed up 10% on Tuesday. Meanwhile, measures of equity market volatility like the VIX have soared to their highest levels since the pandemic crisis of 2020. So what’s behind all these dramatic moves? There’s a long list of culprits, with market participants blaming everything from the Federal Reserve being behind the curve, to the deteriorating labor market and softer-than-expected payrolls data on Friday, as well as the unwinding of the yen carry trade, the bursting of the AI bubble, and the reversal of short-volatility trades. In this emergency episode of Lots More, we speak to Charlie McElligott, cross-asset macro strategist at Nomura, about what caused the selloff and how long it might last.

Read More: 
$6.4 Trillion Stock Wipeout Has Traders Fearing ‘Great Unwind’ Is Just Starting
Risky Borrowers Discover Doors Are Closing in Bond, Loan Markets

Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots

See omnystudio.com/listener for privacy information.

The Nasdaq is now in correction territory and the S&P 500 is down more than 2% so far this month. Analysts are blaming any number of things for the selloff, including a slowdown in the economy, the Federal Reserve being behind the curve on rate cuts, hedge funds rotating out of positions, and waning enthusiasm for AI. But Matt King, the former Citigroup strategist who's now founded his own research shop called Satori Insights, argues there's something else going on. He believes that the world's central banks have only really just begun to drain liquidity from the system, and that the market is still sensitive to the push and pull of their big balance sheets. In this episode, he explains how central banks have pulled the plug on risk assets, why stocks are faltering now, plus his general approach to analyzing markets.

For more on what Joe and Tracy talked about in this episode:
https://bloom.bg/3A2c6TV
https://bloom.bg/4dpfVkz

See omnystudio.com/listener for privacy information.