September 18, 2025 • 38 mins
Chuck Zodda and Mike Armstrong break down the Fed's rate cut decision and claim of two more possibly coming this year. Powell and the rest of the Fed have no clue how the economy will look next year. US initial jobless claims drop by most in almost four years. How to handle a job market that's worse than it looks. American Express unveils refreshed Platinum card with $895 annual fee.
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Speaker 1 (00:00):
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(01:06):
Zada and Mike Armstrong.
Speaker 2 (01:09):
It's the day after the September FED meeting. Chuck, Mike
Nentucker here to break down what happened for you. If
you want the quick and easy summary, The Federal Reserve
cut interest rates the short term FED funds rate by
a quarter percent. They made no changes to their plans
for the FED balance sheet, and there was only one
(01:31):
descent that we saw on that quarter percent cut. The
one descent was from Stephen Moran, who was just appointed
to the Federal Reserve Board of Governors, and he dissented
in a more dovish direction, wanting to cut by a
half percent. Interestingly, no descents to the upside. I wondered,
you know, prior to the FED meeting, could we maybe
(01:54):
see bi directional descents where you have one or two
descents to the downside and maybe one or two saying hey,
let's not cut interest rates right now. You didn't see
that directly, I say directly, because we'll talk about what
we got from the summary or the uh, yeah, the
summary of economic projections in just a bit. But ultimately, Mike,
(02:15):
the actual action taken by the Fed completely in line
with expectations from the market and not unexpected in any way,
shape or form.
Speaker 3 (02:24):
Yeah, look at confirmed what everyone had been anticipating, a
twenty five BIB cut, but a lot less drama in
the vote itself and press conference afterward than I think
some probably in the media had been hoping for. There
were like you said, there is one descent, And how
are we pronouncing his name because I've heard it pronounce
Miran Myron.
Speaker 2 (02:45):
I guess it doesn't matter, but I'd like to get
his name right. I've been going with Miran, but it
might be different. Okay, well we'll look at quite a few. Yeah, yeah,
I've heard. I've heard a number of pronunciations. But I mean,
I remember before Scott Besson came in, it was Bessent,
it was yeah, yeah, you know, Yeah, I don't know.
So we can't all have nice simple names like Zoda
(03:08):
and I have.
Speaker 3 (03:09):
To say your name is Zoda to get my phone
to actually call the right person when I do it.
Speaker 2 (03:13):
So I appreciate your phone.
Speaker 3 (03:15):
The drama, the fireworks that people were alluding to ahead
of this, right, you've had a few different pieces of this.
You've had the President calling for three hundred basis points
worth of cuts. You have a brand new member of
the FED who is taking a leave of absence from
his role at the Council of Economic Advisors. But that
(03:35):
is a first time something like that's been done since
I think the nineteen thirties on the FED, right, this
is usually they are independent members who resigned from their
other jobs. Myron, hasn't you have the attempted firing of
Lisa Cook where a judge blocked it at the last
minute so that she could actually vote in this matter.
(03:57):
And then beyond all of that, you have in slightly
unbattled Jay Powell here, who has been heavily criticized by
the President for his lack of action so far on
the on interest rates, for his oversight of a construction project,
and you know what seems like the President's just general
distrust and dislike of the sitting FED chair. And you know, honestly,
(04:22):
to I guess Jay Powell's credit, he was able to
really bring everybody in and say, hey, we need to
act together on this, and they really did without any
of those fireworks that could have been there. So I
don't know that there's much else to read into other
than yeah, the other members of the FED really wanted
to show a I guess a united front that hey,
(04:46):
this is where we think the direction should be. To
your point, a lot less clarity wants to start looking
at those economic projections, which came out yesterday and come
out once per quarter or four times a year.
Speaker 2 (04:57):
So let's look at those, and then and after I
want to talk about Powell's press conference, because I thought
his press conference was one of the more interesting ones
that I've seen in a few different respects. But let's
talk first about the Summary of Economic Projections. Sure, so
four times a year, the FED meets eight times a year,
and in half of those meetings they put out the
(05:18):
STEP and it's basically, hey, where do you think they
ask each member on the Fed, and it's it's all
done anonymously, so no one knows, you know, who exactly
is saying this or that, But they say, where do
you think GDP is going to be? Where do you
think headline and core piece of ear going to be?
Where do you think the Fed funds rate is going
to be? And where do you think the unemployment rate's
going to be? And they do this the one that
(05:40):
we got this week or this this round was you
get twenty five, twenty six twenty seven twenty eight, so
you know, four years of projections and then longer run.
I don't really care about the twenty seven and twenty
eight ones because who knows. Let's be honest, do we
have any idea where the economy is going to be
in twenty twenty eight? No, like you could have. You know,
(06:00):
Yellowstone erupted into super volcano and the whole world changes,
and so I don't really care about the twenty twenty
eight projections or even the longer run ones. What I
do find interesting are the twenty five and the twenty
six ones. And let me give kind of the base
summary that we have here. For twenty twenty five, they
guided up growth from one point four to one point
(06:21):
six percent. Okay, good, so they think growth is gonna
be stronger than they thought three months ago. For twenty six,
same thing, they guided that growth would be one point
eight versus one point six percent. Okay, these are good things.
Headline PCE for this year, they still think it's gonna
come in at three percent versus two point I'm sorry,
versus three percent last time, So no change there. They
(06:43):
do think headline pc is gonna be a little hotter
next year. So two point six versus two four. So
growth is gonna be stronger next year, but inflation's gonna
be a little bit higher as well. Okay, core PC
they still think is gonna be three to one this year,
same as the last time. For next year, they think
it's gonna be two six versus two four. So again
saying even core inflation gonna remain a bit more elevated
(07:06):
than they thought in March. By the way, they thought
it would be two to two for next year. So
up all, you know, four tenths of a percent since
their March estimate. FED funds rate they think at the
end of this year it's now gonna be three six
versus three to nine in the previous meeting, and for
twenty six it's gonna be three to four versus three six.
So let's this is the first place where we start
(07:27):
to get some real meat here that you can talk about.
They're now bringing in one additional cut this year than
they previously were, So previously they were guiding towards two cuts.
They're now guiding towards three by the end of the year.
Kind of matches what the market was expecting. That's firmed
up a little bit in the last couple of weeks,
and the place where there's divergence from the market, the
market was expecting three cuts next year. FED basically is
(07:49):
guiding towards only one. That's a divergence there, and that's why,
in my opinion, you see kind of the intermediate from
the belly out on the yield curve from basically like
the two year on up through the thirty year bonds
have been selling off since the FED meeting is because
they're not guiding as dubvishly longer term. So I think
(08:12):
that that kind of messures with what you're seeing there.
Unemployment rate. They think this year is still gonna finish
at four to five. Next year, they think we'll finish
at four to four versus four or five previously. So
you take this and you say, okay, what does this mean.
They think the economy is going to be doing GDP
is gonna be up so hotter, growth, inflation is gonna
be higher than they projected. So that tells you higher
nominal growth, not just higher you know, real growth. But
(08:36):
they're gonna cut more than expected and unemployment's gonna be lower.
So pretty much it's the FED saying yeah, We're willing
to let things run a little hot, but we're not
gonna confirm three cuts next year because that would be
too hot. Is the message that I think they're sending.
Speaker 3 (08:52):
I tend to agree.
Speaker 1 (08:53):
Yep.
Speaker 2 (08:53):
It's kind of a messy step this time around, like
nothing's quite pointing in a clear direction. Now, there are
a couple of interesting things, because the numbers that I
just gave you were the basically the median of the
people that the FED asks on this. But you do
also get what's called the dot plot, which shows you where,
(09:14):
specifically for the FED funds rate, where members are saying, hey,
this is my marks to you know where I think
the FED funds rate is going to be in these times.
It's still done anonymously, so you don't know who is who.
But you do get a couple of interesting things here
the first week. I know who one of them is.
I think we have a pretty good idea who whose
dot is at the bottom, and that's Steve Morons or
(09:37):
Steve Myrons. And that's because he's saying there's one dot
saying FED funds rate should be two point nine percent
by the end of this year, which is an additional
one and a quarter percent in cuts from where we
are today. Given that he was the only one to
dissent at fifty bases points, I think we have a
pretty good idea that that's him. The one that's really
(09:58):
interesting to me, hike, there's one dot saying a quarter
percent hike from where we are today. So someone in
the FED, in the Board of Governors, or a Federal
Reserve Branch president, because those are the people that get
you know, surveyed for the dot plot.
Speaker 3 (10:16):
And remember here that this does not necessarily mean that
they voted yesterday, no, because.
Speaker 2 (10:21):
It could be a non voting president. Remember the presidents
rotate through so it could be a non voting member,
and so it doesn't necessarily matter. But there's someone on
the FED board or a FED president who said, yep,
I got a quarter percentage point in rate hikes by
year end. That's kind of interesting to me. Yeah, So
(10:45):
that's what we've got on kind of the summary of
economic projections. Let's take a quick break. When we come back.
I want to talk a little bit about j. Powell's
press conference, because really interesting one for me, and I
don't want to spoil it. So let's just take a
quick break we'll talk about why I thought this was
one of Powell's most interesting press conferences. Right after this.
Speaker 1 (11:07):
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(11:29):
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Speaker 4 (11:33):
The Committee decided to lower the target Marange for the
Federal friends rate by a quarter percentage point in the
near term. Risks to inflation are tilted to the upside
and risks to employment to the downside, a challenging situation
when our goals are intentioned like this. Our framework calls
for us to balance both sides of our dual mandate,
with downside risks to employment having increased, the balance of
(11:53):
risks has shifted.
Speaker 2 (11:58):
All right, So we've covered the summary of economic projections
from the Fed. Now, Mike, it's time to dig into J.
Powell's press conference. And I take two different kinds of
notes when I'm listening to this. Uh. The first, I
try to directly transcribe what Powell is saying, or at
least like as closely as I can to get, you know,
(12:20):
the gist of it. And that makes up ninety five
percent of the notes that I take, just because I
want to be able to, you know, say, Okay, here's
what he said. And I'm basically looking at, you know,
the market while this is happening, just so that I
can see how the market is reacting specifically to what
he's saying, like what is moving the market in different directions.
(12:41):
The other piece that I do, and this is maybe
five to ten percent of the notes I take, is
my own interjections as to, oh, gee, here's why I
found this interesting. And I had one of these yesterday
and it's this is direct from my my notepad. Here
(13:01):
says not a direct quote. They have no idea what's
gonna happen with the economy next year either. Yeah, at
least we're on the same boat. I have never seen J.
Powell so confused in a press conference. And I don't
mean confused like oh, like you know, I don't understand,
you know, what's going on, like where I am. What
I mean is I truly think that Powell and the
(13:25):
rest of the Fed have absolutely no idea what's gonna
happen to the economy next year? And it's because it's
at this hinge point. It's at this pivot point right now, where, hey,
if the labor market continues to worsen, yeah, there's some
real problems and they're gonna have to cut rates, you know,
significantly further. If it turns out that this labor market
stuff is just an aberration and a short term dip
(13:46):
that you know, gets resolved. I think Jay's sitting there saying,
pretty glad I'm off the job in a few months,
because I might have to be dealing with higher inflation
next year in the event that this economy starts to
really get cranking. Yeah.
Speaker 3 (14:03):
I did also get the sense, and I wasn't watching
it live, I was in a few meetings. I did
get the sense that there was a general struggle to
describe I guess the trade offs right now between their
dual mandate which one they should be more concerned about.
Speaker 1 (14:21):
And I just.
Speaker 3 (14:24):
I struggle to believe that they are going to be
If inflation ends up being the bigger concern, I'm very
concerned about their ability to react to it. If it's
an unemployment I think they've got a pretty good playbook.
I know, I think I know exactly what they're going
to do. But man, if the inflation comes back, I
don't think that anybody there has a real solid sense
of how they're going to successfully combat it and convince
(14:46):
the general public that they've got it under control.
Speaker 2 (14:49):
And so this came to a head. The inflation question
came to ahead Mark McKee. I'm sorry, Mike McKee asked
this question yesterday, which that was a great question. The
people who were there like they were honestly like, what
are you talking about on this? This is Mike's question.
Every year since twenty fifteen, your step has stated that
(15:11):
you would reach your inflation target two years later, and
this set says that you're going to hit your target
two years later. Two percent inflation does not seem to
be in sight. Does that suggest that the two percent
target is not really achievable? And does this present any
credibility problems for you in telling people that's what you're
going to do if you can never can reach it?
(15:31):
Which is like wow, like, hey, fed you guys say
you've got a two percent inflation target, but you never
hit it? What gives man? I mean I'm like, okay,
like that, that's a real question. Sure. And Powell's answer
I wrote down. He says, you're putting down a rate
path that is designed to get to two percent inflation.
The nature of the exercise is to put down policy
(15:53):
that will get you to the goal by the end
of the exercise. So that's why he basically says, Look,
we always say we're going to get to two percent
inflation because we think we're gonna be able to prescribe
policy that gets us there. Well, okay, is kind of
what what Mike's saying. But how come you never actually
get there? And should we believe you when you say
(16:14):
you're targeting two percent inflation when you're cutting into three
point one percent core inflation right now? Which I just
thought was like a great question on okay, we believe
you on the employment side of things, because quite honestly,
as we've talked about a lot, Powell's Fed has always
been dubbish when faced with a fork in the road.
(16:34):
You can go back to late twenty eighteen, when hey,
the Fed's balance sheet is on autopilot, and then the
stock market and bond market started getting a little wobbly
and three weeks later, Pal's like, now we're gonna stop
the balance sheet run off. Now, I don't think we're
gonna do that anymore. And there were no more right
hikes in twenty nineteen. After hiking in twenty eighteen. We
(16:54):
then come to, you know, early twenty twenty two, late
twenty one, inflation's running north of seven percent. Still, Hey,
what are you gonna do with your first you know,
meeting of twenty twenty two. Now we're gonna hike by
a quarter percent? You're gonna do what? Yeah? We you know,
there's still you know, some risks that may materialize. We
don't want to go too far. Okay, Well, then surely
(17:15):
once you know, war breaks out in Ukraine and oil
prices go through the roof, Hey, you're gonna hike faster
because inflation's coming, you know, more hot and heavy. Well,
there's potentially downside risks to the economy because of this,
so we don't want to go too quickly. Okay, Okay,
I got you. Okay. Then we come to last year.
(17:38):
Economy is slowing and you know, some concerns about the
labor market heading into the fall. What are you doing September?
We're gonna cut by fifty bases points Jeremy Siegel's screaming
for seventy five and an intermeding you know thing, but
we're not gonna do that, Well, we'll do fifty, okay. So,
(17:59):
like the facts are in evidence that when faced with
inflation versus the labor market, they've typically wanted to support
the labor market more than batten down the hatches against inflation.
You could make a case that that's probably why we're
still in this situation right now. Is Look that the
biggest problem with the Powell Fed. They did not hike
(18:21):
quickly enough and steeply enough in twenty twenty two, in
my opinion, and that might be why inflation's still lingering
is you didn't just beat it into submission at the
cost of, you know, the labor market to a certain extent.
So I think that what you have here is Powell's
just kind of uncomfortable right now because he's like, I
(18:43):
think there's problems with the labor market. And he said this,
there's a couple other quotes that I want to read
on this. He said, Uh, let me make sure that
I have them here we go. I don't think we
can say that conditions do not warrant a restrictive policy now.
So he's not saying that we shouldn't be restrictive, but
that the risks were tilted towards inflation, but are now
towards you know, a more equal balance, and if they
(19:06):
continue to move in that direction, then we need to
be moving more in the direction of neutral as it
goes there. So what he's saying is the risks are
evolving right now where he's more concerned about, you know,
they're kind of in balance, but because of the direction
of travel, they want to try to get ahead of
it and prevent the labor market from becoming even worse.
I want to talk more on this because again I
(19:27):
think there's this it's a really interesting position that fed's
in right now. Quick Break Wall Street. Watch more FED talk.
Speaker 1 (19:40):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall Street.
Watch a complete look at what's moving markets so far
today right here on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Market seeing a little bit of a rally here today
after the Federal Reserve reduce interest rates by a quarter
of a percent. That's at the conclusion of their meeting
yesterday afternoon. AI in Chip Giint in Vidia also remains
in the spotlight with more developments. Right now, the Dow
is up six tenths of one percent, or two hundred
(20:21):
and ninety six points higher, SMP five hundred is up
eight tenths of one percent or fifty three points higher,
and the Nasdaq is up over one percent or two
hundred and sixty one points. Russell two thousand is up
one point six percent. A ten year treas reeled up
four basis points at four point one two percent. In
(20:41):
crude oil is up about a half a percent, rating
at sixty four dollars in thirty seven cents. A barrel
big tech news on the day revolves around in Nvidia
and Intel, after Nvidia said it would invest five billion
dollars in struggling chip maker Intel to code develop data
center and PC products. After losing nearly three percent yesterday,
(21:02):
and Video stock is a rebounding three percent today, Intel shares,
on the other hand, are surging twenty seven percent. Meanwhile,
shares in Novo Nordisk jumping over six percent after the
drug maker said late stage trials of its once daily
obesity pill showed significant weight reduction in line with its
(21:22):
we Go Vi injectable weight loss drug. Elsewhere, PayPal and
Alphabet announced it would team up on online shopping, laying
out plans to combine Paypals payment infrastructure with Google's AI expertise.
Both PayPal and Alphabet shares are climbing one percent. Cracker
Barrel posted mixed quarterly results after it missed on earnings
(21:43):
yet beat revenue expectations. The family dining chain also said
it expects guest traffic to fall further a mid controversy
over its branding. That stock is down one percent, sticking
with the restaurant space where Darden shares are sinking ten
percent after the Olive Garden owner raised its annual outlook
but posted adjusted earnings below forecasts. And after today's closing bell,
(22:07):
we'll see earnings from FedEx and Lennar. I'm Tucker Silvan.
That is Wall Street.
Speaker 2 (22:13):
Watch, Mike. We we were talking about j Poll's press
conference last segment. Anything that you want to add on it.
Speaker 3 (22:20):
No, I think I agree with you that there's a
fair bit of uncertainty about what comes next. I think
part of that. As critical as I am about where
the fed has found themselves over the course of the
last few years, and they're seeming biased towards protecting the
labor market over inflation.
Speaker 2 (22:40):
I will be more than.
Speaker 3 (22:42):
Happy to say that it is easy to tell why
they're confused about what to do next. Sure, it is
not an enviable job to try and navigate this right now,
because there are a lot of things that point towards
both threats from inflation as well as higher unemployment. And
so I do not envy the position, and I just
(23:04):
remain convinced that should I'm not sure that I'm not
convinced that we will get the inflation, but if we do,
I'm convinced that we have a federal reserve that is
not doesn't really have a great playbook for what to
do about it.
Speaker 2 (23:18):
No, I mean, look, look, they were clearly behind the
eight ball in twenty twenty two, and you know, did
not respond appropriately as rapidly as they needed to in
my opinion, And if faced with rising inflation again, it's
an open question because of something that was just three
years ago, Hey, how would you do it differently this time?
(23:39):
I think is a real question.
Speaker 3 (23:40):
So, and by the way, all this is feeding into
you know, market optimism long term rates coming down over
the last several weeks is I think most investors and
most people looking at this are taking a look at
the FED and saying, what is the path for them
to really hyke rates here? How bad would things need
to get on the inflation side, because that's ultimate What
could hit markets pretty hard and reverse this trend line
(24:04):
that we've seen is them happening to reverse course, and
there just doesn't seem to be much of an appetite
to do so.
Speaker 2 (24:09):
Now. The interesting thing is, for all of the noise about,
you know, kind of where interest rates are and everything,
and how they've been moving, yesterday and today, tenure treasury
moved back up about thirteen fourteen basis points between the
two days, and you're pretty much the same spot that
(24:31):
you were at right after the jobs report. Now at
the beginning of this month, you're also, by the way,
at the same spot that you were in the end
of April, the start of March, and the end of December.
The tenure Treasury has effectively not really moved in the
(24:52):
last ten months. Now. It's wobbled, certainly, and it's just
been there's been no trend. I guess is what I'm
getting at like it's gotten up to a high of
four eight, it's gotten down to a low of you know,
three eight, and we're at four one two right now.
We've mostly spent most of our time, you know, between
four two and four five. That's kind of in the
range that we've we've landed in generally, but rates haven't
(25:15):
really moved a ton h overall. Does that, you know,
start to change? I think again we need clear facts
in one direction or another. Either the economy is worsening
to the point where recessions a real concern, and the
Fed's got to you know, cut interest rates you know
two three percent, or hey, inflation is you know, accelerating
(25:39):
past you know, three and a half, and the Fed's
got to start hiking again. And to this point, I
don't think you have you know, evidence that either of
those are happening, right, you know, for better for worse.
I'm not saying this is good, bad, or ugly. I'm
just saying that it is. If inflation sits at three
and unemployment stays at four three for the next year,
(26:00):
should the tenure be anywhere different a year from now?
Speaker 3 (26:03):
Yeah?
Speaker 2 (26:04):
Hypothetically, No, not really, you know, like the direction to
travel matters, obviously, But this is kind of the place
that we've been for the last year. I mean again,
unemployment is pretty much the same spot it was in
last year. Inflation basically in the same spot it was
in last year, a little bit hotter there. Unemployment's a
little bit higher as well, but like we're talking like
(26:25):
a quarter percent on each Yeah, is it any surprise
that the tenure hasn't really moved in a year. Not
really the times that it has moved. It got up
to four to eight at the beginning of this year
when just before the inauguration and everyone was excited about
the potential for more growth. It got down to three
to nine shortly after Liberation Day when people were worried about,
(26:47):
you know, how high tariffs could impact the US economy.
And other than that, it's basically been just in a
pretty narrow range, not really doing much of anything. So
this is why we keep coming back. Like I've been
getting a lot of questions like, Hey, how come the
market's not reacting as much to different, you know, announcements
in this and that anymore. I'm like, the market cares
about data now, doesn't care about announcements. The economic data
(27:11):
is what's going to drive the tenure treasury or you know,
things like that. The market's not worried about announcements anymore.
Did that in the spring and decided, Hey, like I'm
not going to pay attention to that. Yeah, you know, uh,
let's talk a little bit about anything else on FED
or rates or anything.
Speaker 3 (27:27):
Mike, No, he Look, this was making a splash because
it is the restart of a rate cutting cycle. I
do tend to think that we're going to see a
few more of these. Based on the SEP and based
on the commentary, it seems likely that we will see
this at one or both of the next two meetings
as well. And you know what it means for everybody
(27:50):
out there listening is yeah, lower rates on some types
of financial products, but a real lack of clarity about
what might come now. And I don't know were at me,
It is me to some extent, I am preparing for
higher inflation for not the immediate but you know, for
(28:12):
kind of the intermediate term as a potential outcome of all.
Speaker 2 (28:15):
This also just one other thing, and to look, it's
it's one day, so let's not read too much into this.
But remember last year in the fall, the Fed started
a cutting cycle. They cut interest rates, They kept the
Fed funds rate by one percent. During that time, the
ten year treasury went from three to eight to four eight.
As a result, mortgage rates went from the low sixes
(28:37):
to the low sevens. Granted it's just one day, but
yesterday what the Fed do mic cut rates. Thirty year
fixed rate mortgage, according to Mortgage News Daily, up point
zero nine percent to six point two two.
Speaker 3 (28:48):
Ten year treasure yield up today as well.
Speaker 2 (28:50):
So again, just because the Fed is cutting short term
interest rates does not mean that long term rates move
in lockstep. They may, they may not. But this is
something that I just like to remind people of. The
Fed does not control mortgage rates directly. They do control
the short term Fed Funds rate, but longer term rates
like mortgages, can move in different directions based on market behavior.
(29:14):
Another data point that we got this morning Weekly Jobbles
was claims. Last week we talked about the elevated numbers
and I kind of gave the thought, look, there's a
few things on this report that makes me think this
is a one off outlier. First, it's around a floating
holiday and Labor Day. They can have all kinds of
weird seasonal impacts. Second, the Texas numbers appear skewed significantly
(29:34):
higher because of a combination of potential fraud as well
as a deadline for filing unemployment claims from the floods
from this summer. And so we kind of looked at
it and said, pretty unlikely that you see this repeat,
but if it does, its cause for concern. The good
news this week it did not repeat. Claims fell from
two hundred and sixty four thousand on a revised basis
(29:57):
down to two hundred and thirty one thousand, So you can,
at least for now just kind of write that off
as a one off. Yes, claims are still moving up
at a you know rate of you know, six seven
percent year over year, but it's not something where we
were seeing this, you know, potential jumping claims that suggested
a shift in the labor market in terms of more
firings and layoffs. And so I think this is good
(30:18):
news that claims came back down here. It suggests that
the labor market remains you know, tentative and somewhat weak
on the hiring side, probably, but there's no real uptick
that I'm seeing at this point in terms of firings,
and I think that's good news that the labor market
doesn't appear to be, you know, worsening exponentially. It's just
kind of a gradual weakening that we've seen over the
(30:40):
course of this year.
Speaker 3 (30:41):
One more data point on the labor market that we're
going to be getting tomorrow. Actually this was not on
my on my calendar of things, but I was looking
deeper the I've been pretty interested in the state level
unemployment claims because we've seen such a trend here in
Massachusetts and in other parts of the country. That's actually
due out tomorrow at ten am. So I'll be interested
to see we've seen a dramatic uptick in some parts
(31:02):
of the country on unemployment and we will get that
state by state level data for August tomorrow morning at ten.
Speaker 2 (31:09):
So something something else to cover tomorrow. Just take a
quick break here. When we come back, we'll talk about
how to handle a job market that might be a
little bit worse than it looks. Right after this.
Speaker 1 (31:19):
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Speaker 5 (31:46):
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Speaker 2 (32:26):
Mike Pece to the Wall Street Journal titled how to
Handle a Job market That's worse than it looks the subhetter,
it's time to change your attitude and approach as the
gloomier employment picture comes into focus. And this gets the
fact that one of the things Palill said you today
is like, look, we're in this unusual situation right now
where both the supply of workers and demand for workers
have come down quite sharply, but the demand for workers
(32:49):
is falling a little bit faster right now, and that's
why unemployment is edging up a little bit, not a ton,
but just a bit. And so even though there's not
a lot of firing out there, hey, if you look
at this job market, it's a very slow hiring pace
right now. And what this piece is arguing is, hey,
you basically have to be really aggressive trying to get
(33:10):
out there, network, do anything that you can, because hiring
opportunities are not plentiful in this market.
Speaker 3 (33:17):
Yeah, and I can see that they interview one person
who I don't know the timeframe. I think it was
some time earlier this year or last that you quit
a job to focus on some education stuff, and you know,
just kind of assumed, based on all the reports of
the labor market that would be fairly easy to find
a new job and instead of finding that, Yeah, maybe
those numbers that we report on all the time, and
(33:39):
you know, I think we attempt to be a little
bit more nuanced in this, but they don't reflect the
hiring situation necessarily, just because we describe the unemployment rate
as quite low doesn't mean that there's a big appetite
to be able to find a big appetite on the
part of employers to hire new people. And so yeah,
I guess yeah. That's the other side of this coin
(34:01):
is beware what you're seeing in the labor market. It
might seem like your employer is desperate to hold on
to you, but uh, yeah, we're finding that. On the
other side, it's pretty tough to find that new work
based on just the pace of those hirings.
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Speaker 2 (35:21):
Mike. In the high end credit card wars, American Express
upping their fee on their Platinum card to eight hundred
and ninety five dollars. It's a twenty nine percent hike
from the six ninety five it's currently at. There are
thirty five hundred dollars out there in potential annual benefits,
so if you take advantage of a large chunk of these,
(35:42):
you can end up in a situation where you're basically
covering all of that fee or more. I mean, I
don't know that anyone's gonna, you know, set their life
up to be able to do all thirty five hundred
dollars in benefits, but I guess if you do, like, okay,
I guess this is the card for you.
Speaker 3 (35:58):
But ultimately exhaust. Well, I've got them up here. So
you've got eight hundred and fifty dollars in lounge options
at airports, six hundred dollars hotel credit you have to
book through MX Travel, two hundred dollars in Uber cash.
Speaker 2 (36:14):
One hundred and twenty dollars. But the two hundred Uber
cash is fifteen a month and twenty in December.
Speaker 3 (36:18):
Right, So like okay, one hundred twenty dollars Uber one credit.
Speaker 2 (36:24):
Two hundred dollars airline fee credit.
Speaker 3 (36:27):
So I guess like okay, this will reimburse some of
your baggage fees if you book with this credit card
on that airline. Five hundred dollars in value fine hotels
and resorts, so you can save on that. I saw
something about a meal credit if you book the reservation
on rezi. You know what this reminds me.
Speaker 2 (36:47):
There's a Lululemon credit you can get seventy five dollars
a quarter if you're spending at Lululemon every quarter.
Speaker 3 (36:53):
One hundred and fifty five dollars on Walmart plus. This
reminds me, you know, like the sports teams that will
show up and sell you those coupon books that they've
gotten sponsored by every restaurant in town. It's like, yeah, yeah,
there's like one hundred and fifty dollars in value here
if you if you use every one of these coupons.
This is what these luxury credit cards are becoming.
Speaker 2 (37:13):
To me. It's what they're turning into the they used
to be a lot simpler and straight more straightforward, where
it was, Hey, here's like three hundred dollars for travel,
we'll just you know, credit your statement if it's in
that category. And here's you know, a couple hundred dollars
for you know, dining, We'll do the same thing. And
it's it's so niche now that you kind of look
at this and you're like, yeah, it's it's a big
(37:36):
coupon book. And look, they're obviously doing it this way
because yes, they can say there's all this value, but
how many people actually do all of this stuff to
be able to unlock it? Well?
Speaker 3 (37:47):
And I presume too, that like Walmart is paying to
be part of this membership. You know, all of these
companies aren't very happy to ooh, I might get an
MX customer to try out my subscription service, but man,
I just don't know who this is for.
Speaker 2 (38:01):
Yeah, it's uh, look it's if you're someone who's you know,
a high spender and these are the things that you
spend your money on, it probably makes sense then, right,
I guess, if not. Kind of a tough punt quick
break here, Our two coming up in a bit
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(01:06):
Zada and Mike Armstrong.
Speaker 2 (01:09):
It's the day after the September FED meeting. Chuck, Mike
Nentucker here to break down what happened for you. If
you want the quick and easy summary, The Federal Reserve
cut interest rates the short term FED funds rate by
a quarter percent. They made no changes to their plans
for the FED balance sheet, and there was only one
(01:31):
descent that we saw on that quarter percent cut. The
one descent was from Stephen Moran, who was just appointed
to the Federal Reserve Board of Governors, and he dissented
in a more dovish direction, wanting to cut by a
half percent. Interestingly, no descents to the upside. I wondered,
you know, prior to the FED meeting, could we maybe
(01:54):
see bi directional descents where you have one or two
descents to the downside and maybe one or two saying hey,
let's not cut interest rates right now. You didn't see
that directly, I say directly, because we'll talk about what
we got from the summary or the uh, yeah, the
summary of economic projections in just a bit. But ultimately, Mike,
(02:15):
the actual action taken by the Fed completely in line
with expectations from the market and not unexpected in any way,
shape or form.
Speaker 3 (02:24):
Yeah, look at confirmed what everyone had been anticipating, a
twenty five BIB cut, but a lot less drama in
the vote itself and press conference afterward than I think
some probably in the media had been hoping for. There
were like you said, there is one descent, And how
are we pronouncing his name because I've heard it pronounce
Miran Myron.
Speaker 2 (02:45):
I guess it doesn't matter, but I'd like to get
his name right. I've been going with Miran, but it
might be different. Okay, well we'll look at quite a few. Yeah, yeah,
I've heard. I've heard a number of pronunciations. But I mean,
I remember before Scott Besson came in, it was Bessent,
it was yeah, yeah, you know, Yeah, I don't know.
So we can't all have nice simple names like Zoda
(03:08):
and I have.
Speaker 3 (03:09):
To say your name is Zoda to get my phone
to actually call the right person when I do it.
Speaker 2 (03:13):
So I appreciate your phone.
Speaker 3 (03:15):
The drama, the fireworks that people were alluding to ahead
of this, right, you've had a few different pieces of this.
You've had the President calling for three hundred basis points
worth of cuts. You have a brand new member of
the FED who is taking a leave of absence from
his role at the Council of Economic Advisors. But that
(03:35):
is a first time something like that's been done since
I think the nineteen thirties on the FED, right, this
is usually they are independent members who resigned from their
other jobs. Myron, hasn't you have the attempted firing of
Lisa Cook where a judge blocked it at the last
minute so that she could actually vote in this matter.
(03:57):
And then beyond all of that, you have in slightly
unbattled Jay Powell here, who has been heavily criticized by
the President for his lack of action so far on
the on interest rates, for his oversight of a construction project,
and you know what seems like the President's just general
distrust and dislike of the sitting FED chair. And you know, honestly,
(04:22):
to I guess Jay Powell's credit, he was able to
really bring everybody in and say, hey, we need to
act together on this, and they really did without any
of those fireworks that could have been there. So I
don't know that there's much else to read into other
than yeah, the other members of the FED really wanted
to show a I guess a united front that hey,
(04:46):
this is where we think the direction should be. To
your point, a lot less clarity wants to start looking
at those economic projections, which came out yesterday and come
out once per quarter or four times a year.
Speaker 2 (04:57):
So let's look at those, and then and after I
want to talk about Powell's press conference, because I thought
his press conference was one of the more interesting ones
that I've seen in a few different respects. But let's
talk first about the Summary of Economic Projections. Sure, so
four times a year, the FED meets eight times a year,
and in half of those meetings they put out the
(05:18):
STEP and it's basically, hey, where do you think they
ask each member on the Fed, and it's it's all
done anonymously, so no one knows, you know, who exactly
is saying this or that, But they say, where do
you think GDP is going to be? Where do you
think headline and core piece of ear going to be?
Where do you think the Fed funds rate is going
to be? And where do you think the unemployment rate's
going to be? And they do this the one that
(05:40):
we got this week or this this round was you
get twenty five, twenty six twenty seven twenty eight, so
you know, four years of projections and then longer run.
I don't really care about the twenty seven and twenty
eight ones because who knows. Let's be honest, do we
have any idea where the economy is going to be
in twenty twenty eight? No, like you could have. You know,
(06:00):
Yellowstone erupted into super volcano and the whole world changes,
and so I don't really care about the twenty twenty
eight projections or even the longer run ones. What I
do find interesting are the twenty five and the twenty
six ones. And let me give kind of the base
summary that we have here. For twenty twenty five, they
guided up growth from one point four to one point
(06:21):
six percent. Okay, good, so they think growth is gonna
be stronger than they thought three months ago. For twenty six,
same thing, they guided that growth would be one point
eight versus one point six percent. Okay, these are good things.
Headline PCE for this year, they still think it's gonna
come in at three percent versus two point I'm sorry,
versus three percent last time, So no change there. They
(06:43):
do think headline pc is gonna be a little hotter
next year. So two point six versus two four. So
growth is gonna be stronger next year, but inflation's gonna
be a little bit higher as well. Okay, core PC
they still think is gonna be three to one this year,
same as the last time. For next year, they think
it's gonna be two six versus two four. So again
saying even core inflation gonna remain a bit more elevated
(07:06):
than they thought in March. By the way, they thought
it would be two to two for next year. So
up all, you know, four tenths of a percent since
their March estimate. FED funds rate they think at the
end of this year it's now gonna be three six
versus three to nine in the previous meeting, and for
twenty six it's gonna be three to four versus three six.
So let's this is the first place where we start
(07:27):
to get some real meat here that you can talk about.
They're now bringing in one additional cut this year than
they previously were, So previously they were guiding towards two cuts.
They're now guiding towards three by the end of the year.
Kind of matches what the market was expecting. That's firmed
up a little bit in the last couple of weeks,
and the place where there's divergence from the market, the
market was expecting three cuts next year. FED basically is
(07:49):
guiding towards only one. That's a divergence there, and that's why,
in my opinion, you see kind of the intermediate from
the belly out on the yield curve from basically like
the two year on up through the thirty year bonds
have been selling off since the FED meeting is because
they're not guiding as dubvishly longer term. So I think
(08:12):
that that kind of messures with what you're seeing there.
Unemployment rate. They think this year is still gonna finish
at four to five. Next year, they think we'll finish
at four to four versus four or five previously. So
you take this and you say, okay, what does this mean.
They think the economy is going to be doing GDP
is gonna be up so hotter, growth, inflation is gonna
be higher than they projected. So that tells you higher
nominal growth, not just higher you know, real growth. But
(08:36):
they're gonna cut more than expected and unemployment's gonna be lower.
So pretty much it's the FED saying yeah, We're willing
to let things run a little hot, but we're not
gonna confirm three cuts next year because that would be
too hot. Is the message that I think they're sending.
Speaker 3 (08:52):
I tend to agree.
Speaker 1 (08:53):
Yep.
Speaker 2 (08:53):
It's kind of a messy step this time around, like
nothing's quite pointing in a clear direction. Now, there are
a couple of interesting things, because the numbers that I
just gave you were the basically the median of the
people that the FED asks on this. But you do
also get what's called the dot plot, which shows you where,
(09:14):
specifically for the FED funds rate, where members are saying, hey,
this is my marks to you know where I think
the FED funds rate is going to be in these times.
It's still done anonymously, so you don't know who is who.
But you do get a couple of interesting things here
the first week. I know who one of them is.
I think we have a pretty good idea who whose
dot is at the bottom, and that's Steve Morons or
(09:37):
Steve Myrons. And that's because he's saying there's one dot
saying FED funds rate should be two point nine percent
by the end of this year, which is an additional
one and a quarter percent in cuts from where we
are today. Given that he was the only one to
dissent at fifty bases points, I think we have a
pretty good idea that that's him. The one that's really
(09:58):
interesting to me, hike, there's one dot saying a quarter
percent hike from where we are today. So someone in
the FED, in the Board of Governors, or a Federal
Reserve Branch president, because those are the people that get
you know, surveyed for the dot plot.
Speaker 3 (10:16):
And remember here that this does not necessarily mean that
they voted yesterday, no, because.
Speaker 2 (10:21):
It could be a non voting president. Remember the presidents
rotate through so it could be a non voting member,
and so it doesn't necessarily matter. But there's someone on
the FED board or a FED president who said, yep,
I got a quarter percentage point in rate hikes by
year end. That's kind of interesting to me. Yeah, So
(10:45):
that's what we've got on kind of the summary of
economic projections. Let's take a quick break. When we come back.
I want to talk a little bit about j. Powell's
press conference, because really interesting one for me, and I
don't want to spoil it. So let's just take a
quick break we'll talk about why I thought this was
one of Powell's most interesting press conferences. Right after this.
Speaker 1 (11:07):
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(11:29):
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Speaker 4 (11:33):
The Committee decided to lower the target Marange for the
Federal friends rate by a quarter percentage point in the
near term. Risks to inflation are tilted to the upside
and risks to employment to the downside, a challenging situation
when our goals are intentioned like this. Our framework calls
for us to balance both sides of our dual mandate,
with downside risks to employment having increased, the balance of
(11:53):
risks has shifted.
Speaker 2 (11:58):
All right, So we've covered the summary of economic projections
from the Fed. Now, Mike, it's time to dig into J.
Powell's press conference. And I take two different kinds of
notes when I'm listening to this. Uh. The first, I
try to directly transcribe what Powell is saying, or at
least like as closely as I can to get, you know,
(12:20):
the gist of it. And that makes up ninety five
percent of the notes that I take, just because I
want to be able to, you know, say, Okay, here's
what he said. And I'm basically looking at, you know,
the market while this is happening, just so that I
can see how the market is reacting specifically to what
he's saying, like what is moving the market in different directions.
(12:41):
The other piece that I do, and this is maybe
five to ten percent of the notes I take, is
my own interjections as to, oh, gee, here's why I
found this interesting. And I had one of these yesterday
and it's this is direct from my my notepad. Here
(13:01):
says not a direct quote. They have no idea what's
gonna happen with the economy next year either. Yeah, at
least we're on the same boat. I have never seen J.
Powell so confused in a press conference. And I don't
mean confused like oh, like you know, I don't understand,
you know, what's going on, like where I am. What
I mean is I truly think that Powell and the
(13:25):
rest of the Fed have absolutely no idea what's gonna
happen to the economy next year? And it's because it's
at this hinge point. It's at this pivot point right now, where, hey,
if the labor market continues to worsen, yeah, there's some
real problems and they're gonna have to cut rates, you know,
significantly further. If it turns out that this labor market
stuff is just an aberration and a short term dip
(13:46):
that you know, gets resolved. I think Jay's sitting there saying,
pretty glad I'm off the job in a few months,
because I might have to be dealing with higher inflation
next year in the event that this economy starts to
really get cranking. Yeah.
Speaker 3 (14:03):
I did also get the sense, and I wasn't watching
it live, I was in a few meetings. I did
get the sense that there was a general struggle to
describe I guess the trade offs right now between their
dual mandate which one they should be more concerned about.
Speaker 1 (14:21):
And I just.
Speaker 3 (14:24):
I struggle to believe that they are going to be
If inflation ends up being the bigger concern, I'm very
concerned about their ability to react to it. If it's
an unemployment I think they've got a pretty good playbook.
I know, I think I know exactly what they're going
to do. But man, if the inflation comes back, I
don't think that anybody there has a real solid sense
of how they're going to successfully combat it and convince
(14:46):
the general public that they've got it under control.
Speaker 2 (14:49):
And so this came to a head. The inflation question
came to ahead Mark McKee. I'm sorry, Mike McKee asked
this question yesterday, which that was a great question. The
people who were there like they were honestly like, what
are you talking about on this? This is Mike's question.
Every year since twenty fifteen, your step has stated that
(15:11):
you would reach your inflation target two years later, and
this set says that you're going to hit your target
two years later. Two percent inflation does not seem to
be in sight. Does that suggest that the two percent
target is not really achievable? And does this present any
credibility problems for you in telling people that's what you're
going to do if you can never can reach it?
(15:31):
Which is like wow, like, hey, fed you guys say
you've got a two percent inflation target, but you never
hit it? What gives man? I mean I'm like, okay,
like that, that's a real question. Sure. And Powell's answer
I wrote down. He says, you're putting down a rate
path that is designed to get to two percent inflation.
The nature of the exercise is to put down policy
(15:53):
that will get you to the goal by the end
of the exercise. So that's why he basically says, Look,
we always say we're going to get to two percent
inflation because we think we're gonna be able to prescribe
policy that gets us there. Well, okay, is kind of
what what Mike's saying. But how come you never actually
get there? And should we believe you when you say
(16:14):
you're targeting two percent inflation when you're cutting into three
point one percent core inflation right now? Which I just
thought was like a great question on okay, we believe
you on the employment side of things, because quite honestly,
as we've talked about a lot, Powell's Fed has always
been dubbish when faced with a fork in the road.
(16:34):
You can go back to late twenty eighteen, when hey,
the Fed's balance sheet is on autopilot, and then the
stock market and bond market started getting a little wobbly
and three weeks later, Pal's like, now we're gonna stop
the balance sheet run off. Now, I don't think we're
gonna do that anymore. And there were no more right
hikes in twenty nineteen. After hiking in twenty eighteen. We
(16:54):
then come to, you know, early twenty twenty two, late
twenty one, inflation's running north of seven percent. Still, Hey,
what are you gonna do with your first you know,
meeting of twenty twenty two. Now we're gonna hike by
a quarter percent? You're gonna do what? Yeah? We you know,
there's still you know, some risks that may materialize. We
don't want to go too far. Okay, Well, then surely
(17:15):
once you know, war breaks out in Ukraine and oil
prices go through the roof, Hey, you're gonna hike faster
because inflation's coming, you know, more hot and heavy. Well,
there's potentially downside risks to the economy because of this,
so we don't want to go too quickly. Okay, Okay,
I got you. Okay. Then we come to last year.
(17:38):
Economy is slowing and you know, some concerns about the
labor market heading into the fall. What are you doing September?
We're gonna cut by fifty bases points Jeremy Siegel's screaming
for seventy five and an intermeding you know thing, but
we're not gonna do that, Well, we'll do fifty, okay. So,
(17:59):
like the facts are in evidence that when faced with
inflation versus the labor market, they've typically wanted to support
the labor market more than batten down the hatches against inflation.
You could make a case that that's probably why we're
still in this situation right now. Is Look that the
biggest problem with the Powell Fed. They did not hike
(18:21):
quickly enough and steeply enough in twenty twenty two, in
my opinion, and that might be why inflation's still lingering
is you didn't just beat it into submission at the
cost of, you know, the labor market to a certain extent.
So I think that what you have here is Powell's
just kind of uncomfortable right now because he's like, I
(18:43):
think there's problems with the labor market. And he said this,
there's a couple other quotes that I want to read
on this. He said, Uh, let me make sure that
I have them here we go. I don't think we
can say that conditions do not warrant a restrictive policy now.
So he's not saying that we shouldn't be restrictive, but
that the risks were tilted towards inflation, but are now
towards you know, a more equal balance, and if they
(19:06):
continue to move in that direction, then we need to
be moving more in the direction of neutral as it
goes there. So what he's saying is the risks are
evolving right now where he's more concerned about, you know,
they're kind of in balance, but because of the direction
of travel, they want to try to get ahead of
it and prevent the labor market from becoming even worse.
I want to talk more on this because again I
(19:27):
think there's this it's a really interesting position that fed's
in right now. Quick Break Wall Street. Watch more FED talk.
Speaker 1 (19:40):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall Street.
Watch a complete look at what's moving markets so far
today right here on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Market seeing a little bit of a rally here today
after the Federal Reserve reduce interest rates by a quarter
of a percent. That's at the conclusion of their meeting
yesterday afternoon. AI in Chip Giint in Vidia also remains
in the spotlight with more developments. Right now, the Dow
is up six tenths of one percent, or two hundred
(20:21):
and ninety six points higher, SMP five hundred is up
eight tenths of one percent or fifty three points higher,
and the Nasdaq is up over one percent or two
hundred and sixty one points. Russell two thousand is up
one point six percent. A ten year treas reeled up
four basis points at four point one two percent. In
(20:41):
crude oil is up about a half a percent, rating
at sixty four dollars in thirty seven cents. A barrel
big tech news on the day revolves around in Nvidia
and Intel, after Nvidia said it would invest five billion
dollars in struggling chip maker Intel to code develop data
center and PC products. After losing nearly three percent yesterday,
(21:02):
and Video stock is a rebounding three percent today, Intel shares,
on the other hand, are surging twenty seven percent. Meanwhile,
shares in Novo Nordisk jumping over six percent after the
drug maker said late stage trials of its once daily
obesity pill showed significant weight reduction in line with its
(21:22):
we Go Vi injectable weight loss drug. Elsewhere, PayPal and
Alphabet announced it would team up on online shopping, laying
out plans to combine Paypals payment infrastructure with Google's AI expertise.
Both PayPal and Alphabet shares are climbing one percent. Cracker
Barrel posted mixed quarterly results after it missed on earnings
(21:43):
yet beat revenue expectations. The family dining chain also said
it expects guest traffic to fall further a mid controversy
over its branding. That stock is down one percent, sticking
with the restaurant space where Darden shares are sinking ten
percent after the Olive Garden owner raised its annual outlook
but posted adjusted earnings below forecasts. And after today's closing bell,
(22:07):
we'll see earnings from FedEx and Lennar. I'm Tucker Silvan.
That is Wall Street.
Speaker 2 (22:13):
Watch, Mike. We we were talking about j Poll's press
conference last segment. Anything that you want to add on it.
Speaker 3 (22:20):
No, I think I agree with you that there's a
fair bit of uncertainty about what comes next. I think
part of that. As critical as I am about where
the fed has found themselves over the course of the
last few years, and they're seeming biased towards protecting the
labor market over inflation.
Speaker 2 (22:40):
I will be more than.
Speaker 3 (22:42):
Happy to say that it is easy to tell why
they're confused about what to do next. Sure, it is
not an enviable job to try and navigate this right now,
because there are a lot of things that point towards
both threats from inflation as well as higher unemployment. And
so I do not envy the position, and I just
(23:04):
remain convinced that should I'm not sure that I'm not
convinced that we will get the inflation, but if we do,
I'm convinced that we have a federal reserve that is
not doesn't really have a great playbook for what to
do about it.
Speaker 2 (23:18):
No, I mean, look, look, they were clearly behind the
eight ball in twenty twenty two, and you know, did
not respond appropriately as rapidly as they needed to in
my opinion, And if faced with rising inflation again, it's
an open question because of something that was just three
years ago, Hey, how would you do it differently this time?
(23:39):
I think is a real question.
Speaker 3 (23:40):
So, and by the way, all this is feeding into
you know, market optimism long term rates coming down over
the last several weeks is I think most investors and
most people looking at this are taking a look at
the FED and saying, what is the path for them
to really hyke rates here? How bad would things need
to get on the inflation side, because that's ultimate What
could hit markets pretty hard and reverse this trend line
(24:04):
that we've seen is them happening to reverse course, and
there just doesn't seem to be much of an appetite
to do so.
Speaker 2 (24:09):
Now. The interesting thing is, for all of the noise about,
you know, kind of where interest rates are and everything,
and how they've been moving, yesterday and today, tenure treasury
moved back up about thirteen fourteen basis points between the
two days, and you're pretty much the same spot that
(24:31):
you were at right after the jobs report. Now at
the beginning of this month, you're also, by the way,
at the same spot that you were in the end
of April, the start of March, and the end of December.
The tenure Treasury has effectively not really moved in the
(24:52):
last ten months. Now. It's wobbled, certainly, and it's just
been there's been no trend. I guess is what I'm
getting at like it's gotten up to a high of
four eight, it's gotten down to a low of you know,
three eight, and we're at four one two right now.
We've mostly spent most of our time, you know, between
four two and four five. That's kind of in the
range that we've we've landed in generally, but rates haven't
(25:15):
really moved a ton h overall. Does that, you know,
start to change? I think again we need clear facts
in one direction or another. Either the economy is worsening
to the point where recessions a real concern, and the
Fed's got to you know, cut interest rates you know
two three percent, or hey, inflation is you know, accelerating
(25:39):
past you know, three and a half, and the Fed's
got to start hiking again. And to this point, I
don't think you have you know, evidence that either of
those are happening, right, you know, for better for worse.
I'm not saying this is good, bad, or ugly. I'm
just saying that it is. If inflation sits at three
and unemployment stays at four three for the next year,
(26:00):
should the tenure be anywhere different a year from now?
Speaker 3 (26:03):
Yeah?
Speaker 2 (26:04):
Hypothetically, No, not really, you know, like the direction to
travel matters, obviously, But this is kind of the place
that we've been for the last year. I mean again,
unemployment is pretty much the same spot it was in
last year. Inflation basically in the same spot it was
in last year, a little bit hotter there. Unemployment's a
little bit higher as well, but like we're talking like
(26:25):
a quarter percent on each Yeah, is it any surprise
that the tenure hasn't really moved in a year. Not
really the times that it has moved. It got up
to four to eight at the beginning of this year
when just before the inauguration and everyone was excited about
the potential for more growth. It got down to three
to nine shortly after Liberation Day when people were worried about,
(26:47):
you know, how high tariffs could impact the US economy.
And other than that, it's basically been just in a
pretty narrow range, not really doing much of anything. So
this is why we keep coming back. Like I've been
getting a lot of questions like, Hey, how come the
market's not reacting as much to different, you know, announcements
in this and that anymore. I'm like, the market cares
about data now, doesn't care about announcements. The economic data
(27:11):
is what's going to drive the tenure treasury or you know,
things like that. The market's not worried about announcements anymore.
Did that in the spring and decided, Hey, like I'm
not going to pay attention to that. Yeah, you know, uh,
let's talk a little bit about anything else on FED
or rates or anything.
Speaker 3 (27:27):
Mike, No, he Look, this was making a splash because
it is the restart of a rate cutting cycle. I
do tend to think that we're going to see a
few more of these. Based on the SEP and based
on the commentary, it seems likely that we will see
this at one or both of the next two meetings
as well. And you know what it means for everybody
(27:50):
out there listening is yeah, lower rates on some types
of financial products, but a real lack of clarity about
what might come now. And I don't know were at me,
It is me to some extent, I am preparing for
higher inflation for not the immediate but you know, for
(28:12):
kind of the intermediate term as a potential outcome of all.
Speaker 2 (28:15):
This also just one other thing, and to look, it's
it's one day, so let's not read too much into this.
But remember last year in the fall, the Fed started
a cutting cycle. They cut interest rates, They kept the
Fed funds rate by one percent. During that time, the
ten year treasury went from three to eight to four eight.
As a result, mortgage rates went from the low sixes
(28:37):
to the low sevens. Granted it's just one day, but
yesterday what the Fed do mic cut rates. Thirty year
fixed rate mortgage, according to Mortgage News Daily, up point
zero nine percent to six point two two.
Speaker 3 (28:48):
Ten year treasure yield up today as well.
Speaker 2 (28:50):
So again, just because the Fed is cutting short term
interest rates does not mean that long term rates move
in lockstep. They may, they may not. But this is
something that I just like to remind people of. The
Fed does not control mortgage rates directly. They do control
the short term Fed Funds rate, but longer term rates
like mortgages, can move in different directions based on market behavior.
(29:14):
Another data point that we got this morning Weekly Jobbles
was claims. Last week we talked about the elevated numbers
and I kind of gave the thought, look, there's a
few things on this report that makes me think this
is a one off outlier. First, it's around a floating
holiday and Labor Day. They can have all kinds of
weird seasonal impacts. Second, the Texas numbers appear skewed significantly
(29:34):
higher because of a combination of potential fraud as well
as a deadline for filing unemployment claims from the floods
from this summer. And so we kind of looked at
it and said, pretty unlikely that you see this repeat,
but if it does, its cause for concern. The good
news this week it did not repeat. Claims fell from
two hundred and sixty four thousand on a revised basis
(29:57):
down to two hundred and thirty one thousand, So you can,
at least for now just kind of write that off
as a one off. Yes, claims are still moving up
at a you know rate of you know, six seven
percent year over year, but it's not something where we
were seeing this, you know, potential jumping claims that suggested
a shift in the labor market in terms of more
firings and layoffs. And so I think this is good
(30:18):
news that claims came back down here. It suggests that
the labor market remains you know, tentative and somewhat weak
on the hiring side, probably, but there's no real uptick
that I'm seeing at this point in terms of firings,
and I think that's good news that the labor market
doesn't appear to be, you know, worsening exponentially. It's just
kind of a gradual weakening that we've seen over the
(30:40):
course of this year.
Speaker 3 (30:41):
One more data point on the labor market that we're
going to be getting tomorrow. Actually this was not on
my on my calendar of things, but I was looking
deeper the I've been pretty interested in the state level
unemployment claims because we've seen such a trend here in
Massachusetts and in other parts of the country. That's actually
due out tomorrow at ten am. So I'll be interested
to see we've seen a dramatic uptick in some parts
(31:02):
of the country on unemployment and we will get that
state by state level data for August tomorrow morning at ten.
Speaker 2 (31:09):
So something something else to cover tomorrow. Just take a
quick break here. When we come back, we'll talk about
how to handle a job market that might be a
little bit worse than it looks. Right after this.
Speaker 1 (31:19):
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All morning. Long Face is the Financial Exchange Radio Network.
Thankst US six one, seven, three six, two thirteen eighty
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let us know what you think about the stories we
(31:39):
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Speaker 5 (31:46):
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Speaker 2 (32:26):
Mike Pece to the Wall Street Journal titled how to
Handle a Job market That's worse than it looks the subhetter,
it's time to change your attitude and approach as the
gloomier employment picture comes into focus. And this gets the
fact that one of the things Palill said you today
is like, look, we're in this unusual situation right now
where both the supply of workers and demand for workers
have come down quite sharply, but the demand for workers
(32:49):
is falling a little bit faster right now, and that's
why unemployment is edging up a little bit, not a ton,
but just a bit. And so even though there's not
a lot of firing out there, hey, if you look
at this job market, it's a very slow hiring pace
right now. And what this piece is arguing is, hey,
you basically have to be really aggressive trying to get
(33:10):
out there, network, do anything that you can, because hiring
opportunities are not plentiful in this market.
Speaker 3 (33:17):
Yeah, and I can see that they interview one person
who I don't know the timeframe. I think it was
some time earlier this year or last that you quit
a job to focus on some education stuff, and you know,
just kind of assumed, based on all the reports of
the labor market that would be fairly easy to find
a new job and instead of finding that, Yeah, maybe
those numbers that we report on all the time, and
(33:39):
you know, I think we attempt to be a little
bit more nuanced in this, but they don't reflect the
hiring situation necessarily, just because we describe the unemployment rate
as quite low doesn't mean that there's a big appetite
to be able to find a big appetite on the
part of employers to hire new people. And so yeah,
I guess yeah. That's the other side of this coin
(34:01):
is beware what you're seeing in the labor market. It
might seem like your employer is desperate to hold on
to you, but uh, yeah, we're finding that. On the
other side, it's pretty tough to find that new work
based on just the pace of those hirings.
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Speaker 2 (35:21):
Mike. In the high end credit card wars, American Express
upping their fee on their Platinum card to eight hundred
and ninety five dollars. It's a twenty nine percent hike
from the six ninety five it's currently at. There are
thirty five hundred dollars out there in potential annual benefits,
so if you take advantage of a large chunk of these,
(35:42):
you can end up in a situation where you're basically
covering all of that fee or more. I mean, I
don't know that anyone's gonna, you know, set their life
up to be able to do all thirty five hundred
dollars in benefits, but I guess if you do, like, okay,
I guess this is the card for you.
Speaker 3 (35:58):
But ultimately exhaust. Well, I've got them up here. So
you've got eight hundred and fifty dollars in lounge options
at airports, six hundred dollars hotel credit you have to
book through MX Travel, two hundred dollars in Uber cash.
Speaker 2 (36:14):
One hundred and twenty dollars. But the two hundred Uber
cash is fifteen a month and twenty in December.
Speaker 3 (36:18):
Right, So like okay, one hundred twenty dollars Uber one credit.
Speaker 2 (36:24):
Two hundred dollars airline fee credit.
Speaker 3 (36:27):
So I guess like okay, this will reimburse some of
your baggage fees if you book with this credit card
on that airline. Five hundred dollars in value fine hotels
and resorts, so you can save on that. I saw
something about a meal credit if you book the reservation
on rezi. You know what this reminds me.
Speaker 2 (36:47):
There's a Lululemon credit you can get seventy five dollars
a quarter if you're spending at Lululemon every quarter.
Speaker 3 (36:53):
One hundred and fifty five dollars on Walmart plus. This
reminds me, you know, like the sports teams that will
show up and sell you those coupon books that they've
gotten sponsored by every restaurant in town. It's like, yeah, yeah,
there's like one hundred and fifty dollars in value here
if you if you use every one of these coupons.
This is what these luxury credit cards are becoming.
Speaker 2 (37:13):
To me. It's what they're turning into the they used
to be a lot simpler and straight more straightforward, where
it was, Hey, here's like three hundred dollars for travel,
we'll just you know, credit your statement if it's in
that category. And here's you know, a couple hundred dollars
for you know, dining, We'll do the same thing. And
it's it's so niche now that you kind of look
at this and you're like, yeah, it's it's a big
(37:36):
coupon book. And look, they're obviously doing it this way
because yes, they can say there's all this value, but
how many people actually do all of this stuff to
be able to unlock it? Well?
Speaker 3 (37:47):
And I presume too, that like Walmart is paying to
be part of this membership. You know, all of these
companies aren't very happy to ooh, I might get an
MX customer to try out my subscription service, but man,
I just don't know who this is for.
Speaker 2 (38:01):
Yeah, it's uh, look it's if you're someone who's you know,
a high spender and these are the things that you
spend your money on, it probably makes sense then, right,
I guess, if not. Kind of a tough punt quick
break here, Our two coming up in a bit
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