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00:00Let's get Willem Buiter in on his perspective on what's happening with the June data.
00:06So September, are you betting on September as well, Willem?
00:10Oh yes, it seems almost inevitable unless there are very unexpected and unlikely developments
00:18on the inflation front.
00:22Inflation would have to rise materially, I think, to avoid the first cut at last for
00:29the US.
00:30I think we may, in fact, get more than one cut this year, I think two or three are quite
00:39possible.
00:40Right.
00:41Willem, I'm just going to play devil's advocate here, and I know it was about two years ago
00:47when the yield curve inverted in the US.
00:50We've averted any incident up until now, so there's no concerns as such in that sense.
00:56But are you still worried, because we seem to have gotten beyond it two years ago when
01:00the yield curve didn't work.
01:02Concerns were very valid on the street.
01:04Do they still remain?
01:05Are you still worried that we could dip into a recession, something could go wrong somewhere,
01:09a black swan event still on the cards?
01:13I don't think that the yield curve is an informative or useful guide to the likely future behavior
01:21of the economy.
01:23I know that the inverted yield curve is supposed to signal a likely slowdown, a recession,
01:29but I think there's very little evidence to support that, and not at all for the current
01:36inflation correction, which has continued with a vigorous growth rate and a strong labor
01:44market.
01:45So there's no sign at all of a hard landing in the US.
01:52Wilhelm, just one more question.
01:54I know you look at the economy and not the markets, but if you have a view here, the
02:00risk assets haven't quite responded as positively as people would have thought to the inflation
02:06data dipping.
02:07Is it a case of it being priced in already, or is there something else?
02:13I think risk assets have been detached from reality for quite a long time now, really
02:23from since the great recession of 2008-9.
02:33I think they're very generously valued, and I would not expect the kind of detached from
02:41reality of things they've seen here, having these massively high price-earnings ratios,
02:48I don't expect that to continue much longer.
02:54I see necessary and avoidable correction in risk markets long overdue.
03:01Wilhelm, Wilhelm Buiter, thank you so much for joining in today and giving us your assessment
03:07of the data that came out yesterday.
03:08I really appreciate your time.
03:11Thank you.