 Now, guest host, so I'm very pleased to say he's joining us in the studio this morning. Mark Bailey from FIG Securities. Mark, good morning. Nice and bright and early, isn't it? That's right. On a Monday morning. Yes. Thank you so much for joining us. Now, let's talk about Fairchair Janet Yellen, because I guess she had a pretty tough task of sort of speaking to market, so we're looking for a bit more clarity from her. Just take us through some of the key takeaways, I guess, for you from those comments. Yeah, I mean, the bulk of her comments were, as expected, on monetary policy framework, you know, past, present and future. There wasn't actually a lot of interest in there for the markets, you know, probably more for the nerds amongst us in terms of some of the strategies that they may employ if necessary going down the line if we do head towards another financial crisis. In terms of those market comments, she pretty much stuck to the script that has been consistent. You know, she said that the U.S. economy is slowly recovering. We've seen modest improvement in consumer spending, and that has led to further strengthening of the labour market, which we've consistently seen her talk about. She said, look, there are weaknesses. You know, business investment remains subdued as does exports, and they're worried about the currency as well. There wasn't really any kind of indication in terms of, you know, September, is it live, any further clarity down that path. But what she did say, she said, look, recent data has strengthened the case for a rise in rates, and that probably initially spooked the markets, but then after that, they kind of seemed to calm down, and there wasn't really a lot of reaction at that statement time, around about 10 o'clock, New York time, midnight, Friday, our time. And it was only when Stanley Fisher did his interview on CNBC that he put his interpretation on Yellen's remark, so he did see a bigger reaction in terms of the markets. And he was asked the question of whether the market should be on the edge of their seats with regards to a September hike and maybe another hike further down the line in 2016. In response to that, not only did he say yes to both of those, that he thought that was likely, but he also said that Yellen's statement was consistent with those comments as well. And that's what kind of really spooked the market, and you saw the US dollar rally, you saw Treasuries sell off, you saw Equity sell off, which is what you talked about. So it actually wasn't Yellen's statement that caused the market to get nervous, it was actually Stanley Fisher, the Fed's vice chair's interpretation of her comments, which is kind of slightly strange, and that was an hour and a half basically after she'd started her speech. So that was what had really kind of moved the markets on Friday in the direction that we've seen. That's so interesting, isn't it? Just if we have a look at some of those remarks, in fact, he was actually also talking about the election. And Stanley Fisher, as Mark mentioned there in a television interview, saying that we're reasonably close to full employment and inflation rate has been growing, a rate hike this year is possible, as you've been discussing there. He also, waiting on the upcoming election, saying that it could affect things in the economy as well. Yeah, his comments on the election were that whilst it does cause uncertainty, he was very clear that the Fed is apolitical, and then he was pushed saying, well, would the Fed hike to kind of prove that it was apolitical? And he said, look, everything is still data-dependent, and Yellen was also stressed that, as she has consistently stressed over the last several years. And in terms of the election, I think it's another cause of uncertainty, and it wasn't the election per se that would cause them to either hike or not hike. It was that feedback of uncertainty into the economic data that came out as to whether they would be able to hike or not, given if there was the election. If it was more close in terms of Trump getting more support and then became more uncertainty, then maybe they would hold off hiking. I mean, it seems like the Fed up until now has sort of found any excuse not to increase rates. Brexit, of course, was one of them, and that didn't seem to stop the world from spinning. Do you think that the election would stop them from raising rates prior to November? Oh, I think so. If it did come through in the data, if you did see a pullback maybe in consumer spending and you still see that weakness in business investment, if that continued, and part of that reason was the election because it was becoming close in terms of who was going to win that. And I think the market outcome, if Trump was to be elected, would be a pretty negative reaction. But if that into that election period, we do see those polls tighten and become a much closer race, and then potentially you might see the Fed holding off. But again, I think you're going to get to September. I mean, as we've talked about before, the non-farm payrolls on Friday, Fisher said that's a key data point and we're currently looking for around about 180,000 in terms of those non-farm payroll figures. If that was below, then that would be a possible excuse for them not to hike. If it was a stellar number, then that was obviously reinforced. But as you say, time and time again, the Fed has positioned the market for a potential hike. It's kind of got there and hasn't pulled that right-hike trigger. And I think that's the right way to position the market, as I've said before in the program, because if you position the market not expecting to hike and then you do hike, then you would cause all kinds of panic, yeah, exactly. So they've played it exactly right in terms of how they're trying to position the market. And each time they've got there, they just don't feel the economy has been strong enough. Having said that, this time, there's been a lot more of the regional Fed presidents that have been a bit more vocal in terms of saying, look, now is the time to see that gradual increase. And you've seen economists out of bulk, they're saying probably September or never in terms of whether they hike again. And if you kind of think about last year, maybe they should have hiked in June, it was probably better conditions than September and then they got to December and basically had to do something. So maybe September will be the key point for them in this year. Well, let's actually take a look and see how the market has shifted their pricing for a September move. Trade is actually seeing now a 42% chance of a hike in September. We're etching ever closer to that 50% mark versus 32% before the speech. And then if we look out to December, trade is now seeing a 60% chance of a hike in December versus 52% before the speech. So we did certainly see the market moving off the back of those comments, those upbeat comments. But I guess most officials in the end really need or want to see this improvement in overall GDP growth. And obviously they still need to see that improvement in inflation. So in light of that, do you think that a December move at this point looks more likely? I mean, what's your expectation? I think so. And in terms of the GDP data that you saw on Friday, that was revised down slightly to 1.1 from 1.2 in line with expectations. The revised consumer confidence survey was revised down and that was actually slightly weaker than expectations. So again, there's still that mix of data and it's always easy to argue both sides with the data by choosing which ones you pick. But I think generally over the last few weeks we have seen a bit of strengthening in terms of the data. And that obviously increases the chance of a hike in September and by December. I'm still thinking that it's probably 2017 before we get that hike, probably March. But equally, you know, it depends on the data. You're kind of carrying out in as Janet Yellen has done time and time again in terms of when they will actually pull that trigger. You know, I just think that they are going to be very, very cognizant in terms of the strength of the US dollar. And if they do hike in September, then maybe the kind of currency traders will start to think, well, maybe December's live as well as Stanley Fisher has said and you'll start to see a fairly severe appreciation in the US dollar. Obviously on the flip side, a weakness in the Aussie, which probably helps the RBA out. But in terms of the Fed's thinking, I think you'll get to September. I don't think the economic data will be sufficiently strong and positive that they will be definite that they should move and I think they'll probably delay that until December at the earliest. What about if they do delay until next year? What's that going to do to their credibility? Surely it's going to put a dent in it further. Well, there's a lot of people that are talking about their credibility as being short. You know, in terms of, if you think about back at the start of the year where they had the dot plots where they were expecting four interest rate hikes and, you know, we've got to, you know, September and there hasn't been one yet. So, but again, you know, they've always said it's data dependent and you can't just, and again, Yellen did stress in her speech that the course is not preset of interest rate hikes. It will be gradual and, you know, I think that they've done a pretty good job in terms of how they've positioned that market for potential hikes and it's better to position the market that way than the reverse and in terms of their credibility, I think they've just responded to the data which hasn't been there sufficiently strong for them to look for that hike. So I think they've done a pretty good job in terms of the market and, you know, people will always criticize them and say, yes, they've lost confidence in the markets and that is a key, especially in these unprecedented times for more, the global central banks more broadly in terms of their credibility with investors that they can control the situation and try and stimulate some kind of growth because once investors start to lose faith, as we saw a few times with the ECB, then the markets do get very nervous and very volatile. Now, one of the other parts of the speech I just want to quickly ask you about before we go to a break there, but the topic was around designing resilient monetary policy frameworks for the future. So not surprisingly, it was about the longer-term issues, I guess, in the framework surrounding monetary policy. Last week, we saw paper being released by San Francisco-fed President John Williams, I think, and that was around increasing the inflation target. I think she also touched on that in her speech. She was saying that they weren't considering a move at this stage, but it is clear it is an area that does require further research. That's right. So she mentioned the 2% inflation target and whether that needed to be raised. She also mentioned, well, maybe the Fed should become, you know, actually target a specific price level or a specific nominal GDP level. And as you rightly say, she did go and say, look, none of these are actively being considered at the moment, but in terms of down the line, you know, there will be more research done on those. And again, you know, because we, you know, the globe and the global economy is changing, you know, maybe the old measures of inflation and of GDP are becoming less relevant in today's society, especially with a lot of the, you know, kind of the technology that's coming through into the economy and whether that is actually capturing, you know, normal GDP growth in terms of the manufacturing and the service sector, you know, in terms of the price index as well, is that the best measure of inflation? Is it capturing all the different nuances in terms of the internet? And there's been a lot of papers written on those topics. And, you know, in terms of going forward, I think, you know, the Fed seemed to be pretty happy and comfortable that she had the toolkit to withstand a fairly severe recession. And she still said, look, monetary policy, i.e. interest rates are still going to be the key driver for the Fed's monetary policy going forward. It did keep the door open for maybe further asset purchases, if necessary, you know, very similar to what has happened previously. So, you know, and that was the bulk of the speech, which was pretty tedious for probably the non-interest rates global economic watchers. But it was pretty interesting in terms of, you know, the different paths that the Fed has kind of examined for how to manage the economy going forward. Absolutely. And given in light of, you know, the whole world at the moment, the efficacy, I guess, of monetary policy, very interesting comments, I suppose. Now, jobs started this Friday. It's going to be exceptionally crucial. We'll be talking a little bit more about that throughout the program. Just stay with us, though. Coming up, Fed Chair Janet Ilham wasn't the only highlight there at Jackson Hole Bank of Japan, Governor Karoda, saying that he won't hesitate to boost monetary policy. We'll have all of those details coming up.