Rob Kaplan

And so I think the market is likely to be disappointed with the Fed forecast in June for how much they're going to do. That doesn't mean they won't do more. It means they want to retain their operating flexibility. And again, I've said this, you want to be, in this period, a risk manager, not necessarily a prognosticator.

And so I think the market is likely to be disappointed with the Fed forecast in June for how much they're going to do. That doesn't mean they won't do more. It means they want to retain their operating flexibility. And again, I've said this, you want to be, in this period, a risk manager, not necessarily a prognosticator.

So you look at all of it. You look at the soft data. You look at the hard data. And I know from experience, sometimes weakness in the soft data doesn't always translate into what happens with the hard data. And also, you've got governments in the midst of making decisions that can change sentiment. The one piece of soft data that I would rank above many of the others is is inflation expectations.

So you look at all of it. You look at the soft data. You look at the hard data. And I know from experience, sometimes weakness in the soft data doesn't always translate into what happens with the hard data. And also, you've got governments in the midst of making decisions that can change sentiment. The one piece of soft data that I would rank above many of the others is is inflation expectations.

The Fed is very focused not only on bringing inflation down to two, but making sure that inflation expectations remain anchored so that people still believe the 2% goal is credible.

The Fed is very focused not only on bringing inflation down to two, but making sure that inflation expectations remain anchored so that people still believe the 2% goal is credible.

that if inflation expectations start to inch up, then maybe businesses start to preemptively raise price. Consumers start to buy thinking prices are going up. We just saw that recently, but where consumers increase their purchases, we think, because they thought prices are going up. That means inflationary expectations are moving up. You do not want that at the Fed. You want them to be anchored

that if inflation expectations start to inch up, then maybe businesses start to preemptively raise price. Consumers start to buy thinking prices are going up. We just saw that recently, but where consumers increase their purchases, we think, because they thought prices are going up. That means inflationary expectations are moving up. You do not want that at the Fed. You want them to be anchored

because if they become unanchored and behavior changes as a result of it, it's harder to get to the 2% target. So they're going to be watching that very carefully. So if you see Jay Powell or other Fed speakers sound more hawkish, I would be too. Even if I were thinking I want to look for a way to cut, I would talk hawkish because I want to keep these inflation expectations anchored.

because if they become unanchored and behavior changes as a result of it, it's harder to get to the 2% target. So they're going to be watching that very carefully. So if you see Jay Powell or other Fed speakers sound more hawkish, I would be too. Even if I were thinking I want to look for a way to cut, I would talk hawkish because I want to keep these inflation expectations anchored.

They're moving up and they're moving in the wrong direction. And it does reflect behavior on the ground. Businesses are preempting. There's a new word in the dictionary. It's called surcharge. And I always heard the word, but it's on bills now. There's a surcharge and it's for either current or anticipated tariffs. And consumers are starting to get in their mind that prices are moving up.

They're moving up and they're moving in the wrong direction. And it does reflect behavior on the ground. Businesses are preempting. There's a new word in the dictionary. It's called surcharge. And I always heard the word, but it's on bills now. There's a surcharge and it's for either current or anticipated tariffs. And consumers are starting to get in their mind that prices are moving up.

You want to anchor that. And the best way right now the Fed can do that is jawboning. So people shouldn't misinterpret it. Gee, Jay Powell sounded very hawkish. That means they're not going to do X, Y, or Z. No, to me, it means he wants to keep their options open and he wants to anchor inflation.

You want to anchor that. And the best way right now the Fed can do that is jawboning. So people shouldn't misinterpret it. Gee, Jay Powell sounded very hawkish. That means they're not going to do X, Y, or Z. No, to me, it means he wants to keep their options open and he wants to anchor inflation.

I talk to investors around the world too.

I talk to investors around the world too.

So for businesses, by and large, they'll adjust. But what's hard for them is something that happens abruptly. So if there's a well-telegraphed change, they have time to adjust to it. The auto companies are a good example. In a couple of years, over a year or two, they can make adjustments. They can make investments. They can change locations.

So for businesses, by and large, they'll adjust. But what's hard for them is something that happens abruptly. So if there's a well-telegraphed change, they have time to adjust to it. The auto companies are a good example. In a couple of years, over a year or two, they can make adjustments. They can make investments. They can change locations.

But if it happens abruptly, which this has, a lot of businesses I talk to have a number of things they're working on to adjust. But what they're saying to me is, I just can't do it overnight. Might take me six months, 12 months. I can inch away different things.

But if it happens abruptly, which this has, a lot of businesses I talk to have a number of things they're working on to adjust. But what they're saying to me is, I just can't do it overnight. Might take me six months, 12 months. I can inch away different things.