Fed Rate Cut Decision🔴Jerome Powell

Episode Transcript
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Speaker 1 (00:02):
All right, so welcome into the livestream today. We of
course will be covering the FOMC meeting, what could be
the biggest FOMC meeting for the markets that we've had
in the history of the markets out there, So everybody's watching.

Speaker 2 (00:15):
My name is Paul Barrew. Welcome back into the show.

Speaker 1 (00:17):
I want to thank our sponsor today and that is
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Speaker 2 (00:22):
Over on coinbase dot com.

Speaker 1 (00:23):
Very easy to set up an account over there, and
if you're brand new to crypto, which is quite a
bit of you out.

Speaker 2 (00:29):
There right now, we're getting a lot of new viewers.

Speaker 1 (00:31):
So if you haven't set up your crypto account and
started trading, go over to coinbase dot com. You guys
can of course get going on all of that. We
are going to get going on all of this today.
There's a lot happening when it comes to what's going
on with the FED, and one of the things that
I want to focus in on, and the biggest issue
is really around what's going on on not only the

(00:55):
fed's position of whether or not we cut a quarter
basis points, whether or not we cut fifty basis points,
all of that right now is really kind of looming
in very in.

Speaker 2 (01:05):
A big, big way.

Speaker 1 (01:06):
And another factor that's going to play into this, I
think is and by the way, we're going to get
into some questions today, so make sure and leave some
of those over there in the comments. We'll try to
get to those the best we can. I'm going to
try to get into a tab or to here if
I can get our response monitors to get going here,
and we'll get started into that.

Speaker 2 (01:27):
Hopefully that will happen.

Speaker 1 (01:28):
If not, I may have to quit that and go
into a reboot there.

Speaker 2 (01:35):
Yeah, let's go ahead. Let's go ahead.

Speaker 1 (01:36):
Yeah, let me go into our first clip real quick,
because I think one of the things that I want
to play into is some of the strategies that many
of the analysts are starting to look at. And a
factor that you have to consider right now is because
there's kind of this back and forth between a quarter
basis and a fifty basis point, can we go to
that first?

Speaker 2 (01:55):
Soot one? What does the market need? What does business need?
What does the economy need?

Speaker 3 (02:01):
The neutral rate today is two and three quarters inflation
plus three quarters of one percent. I think it's probably
the real Fed funds rate the real neutral FED funds
rate that gets you to three and a half percent,
I think it's hard for me to argue it should
be lower than that. So at four and a quarter
four and a half FED doesn't have that much room.

(02:22):
It's got seventy five to one hundred basis points. And
so the reason I think the Fed will take at
one meeting of the time will be careful about committing
is one of these cross currents. The fact inflation is
running well above target, and also the fact I think
with inflation above target, you could argue being somewhat restrictive,

(02:43):
but I think it's harder to argue you want to
get all the way down to neutral.

Speaker 2 (02:46):
And that tells you.

Speaker 3 (02:47):
The FED has about maybe fifty to seventy five basis
points or rate cuts to work with. Unless the economy
weekends a lot or inflation improves meaningfully from where we are,
that would be a.

Speaker 4 (02:59):
Good reason not to go fifty basis points today.

Speaker 1 (03:02):
Right one, That was an interesting statement, right there, go
one hundred, go one hundred basis points. So I don't know,
do you guys think we are going to be in
a position where we get more than a.

Speaker 2 (03:13):
Quarter basis points?

Speaker 1 (03:14):
Because I think this is a factor that could have
a lot of a bearing going forward on just in
general what's happening around the FED rate cut. And I
do want to get into a couple of points real quick.
Let me just jump over to my screen. Hopefully we'll
be able to bring it back in, and it looks
like we are not going to be able to do that,

(03:34):
So let me get to this real quick. Let's go
ahead and play this next clip and I'll respond to
that one while we get this picked up.

Speaker 5 (03:42):
Look, I mean, credit markets are extremely bullish at this point,
and you could argue that well, part of that is
that we have multiple rate cuts priced in. But if
you go back to one year ago when the FED
went into that September meeting and cut by fifty basis points,
financial conditions, credit mark market conditions are actually easier now

(04:05):
than they were one year ago. And inflation on a
three month annualized basis was very close to two percent
a year ago. Now we're closer to three percent. So
you have easier financial conditions and higher inflation today than
you did a year ago. And so, in my opinion,
I actually think the case is less persuasive for the

(04:27):
FED certainly fifty I think would be totally inappropriate, but
even twenty five, you know, I think that they could
end up delivering a message today that disappoints markets a
bit if they don't flame those expectations, which are for
you know, rates to fall one hundred and forty basis
points or so over the next twelve months. That seems

(04:47):
a bit steep considering the financial backdrop.

Speaker 1 (04:50):
Here, all right, So I think this is the one
of the things that we are facing right now is
there is a lot of expectations built around what it
could be people expecting a fifty basis points or maybe
even multiple comps cuts here in a very short period
of times. So that's my concern right now, is that
there might be high expectations and how the market comes

(05:13):
off of that is going to be pretty critical. So
when you look at that, along with what we're just
seeing in general, I think that one of the big
factors that plays into this is where we are right
now on just inflation. Of course, if I bring up trueflation,
this is another factor that the Fed of course is
dealing with, and that is how do they balance what's

(05:33):
going on with inflation, which most likely will be I
won't say hyper inflation, but I anticipate we're going to continue.

Speaker 2 (05:38):
To see ticks upward.

Speaker 1 (05:40):
And if you look at it right now all the
way back here to April, let's pull that, yeah, one twenty,
you know it's like right at one point two two.
It has been on a slow pace up here over
the past few months. So I guess the real interesting
point right now that chair pal is facing is watching
that occur when it comes to inflation, and then at

(06:00):
the same time seeing all of these jobs reports in
terms of these just massive revisions coming out of the BLS.
That all of that plays into where we're dealing with
right now, which I think is whether or not we
see a pump or a dump in the market and going.

Speaker 2 (06:15):
Forward here was Lark Davis says the FMC.

Speaker 1 (06:18):
Of course, twenty twenty, every September FMC except during twenty
two bear market had set bitcoin up for a massive pump.
And this is regardless of whether the FED cuts rates
or not. It's less about the decision itself, It's more
about seasonality. Bitcoin thrives in these stretches. Now, I would
say this is I'm not really into cycles, other than

(06:40):
when you look at liquidity cycles in general, but right now,
what we're dealing with I think is a much more
economic pressure in general around how consumers are responding to this.
And this goes back to my theory that I've been
talking about here on the show quite a bit, and
that is, is this cycle going to be the halves
versus the halves? And what I'm mean by that is,

(07:01):
in general, you look at where Bitcoin has been, you
look at where the market is right now, and the
fact that we're seeing such institutional adoption and all of
those kind of issues playing into it. I think it's
still in a position right now where we are not
really seeing retail coming in. And the factor that plays
into this is the fact that we are not seeing

(07:22):
the kind of activity on a lot of the whether
you look at some of the all coins, we haven't
seen all coin season necessarily adopt or respond the way
that we had anticipated. All of those kind of things
are factoring into this. So it is still a big deal,
all right. So it looks like the number is in
is going to be a quarter basis point rate cut.

(07:44):
So just if you're brand new to the stream right now,
the FED has announced it's going to be a quarter
basis point. We are waiting for chair Pal to come on,
and this will be a very significant statement and response
to the press core probably the big one he's done yet,
because the pressure coming in from Trump and the administration,

(08:05):
and also what we're seeing about both sides of the market.
What I was getting at there where you have inflation
raising up a little bit, and if you go back
to trueflation, remember this chart right here, slightly going up
up to two.

Speaker 2 (08:17):
Point twenty nine. Looks like we continue.

Speaker 1 (08:20):
To rise a little bit in reality, almost weekly, and
I think this is a factor that will continue to
put a lot of pressure on Pal. I'm surprised that
we only got a quarter, but I anticipate that one
of the reasons for that is they're trying to adopt
or i should say, digest more data coming in on that.
If you look at this statement right here, when the

(08:40):
Fed ray cuts with stocks within two percent of record highs,
the S and P five hundred finish the next twelve
months higher every single time, and then twenty out of
twenty was the win rate, So pretty significant right there.
If you just look at the next run on the
S and P five hundred, so this would say that
it's bullish for stocks, it's likely that it could be

(09:01):
bullish for risk assets because of the nature of what's
going on with inflation and jobs. So you've got that
double edged shored that a FED is essentially having in
terms of a dual mandate, and that is trying to
preposition what's happening in the job market, but at the
same time deal with an inflationary situation from an economic standpoint.

(09:23):
So all of those things are playing out right now.
It's the worst possible case for Chair Powell, and I
think because of that, we get into some issues that
many people would say, well, this is why we didn't
need a fifty basis point rate cut. We need to
see how the data responds, and I think that's the
real question. The other thing that plays into this, this

(09:45):
is where we get into history. And let me go
to this one right here. If you look at how
it's been in the past, small stocks outperform when the
FED starts to do a rate cut after a long pause,
and that's what we've been in longest pot since last September.
Remember that was a fifty basis points, so this is
a first one we've seen in a year, and going

(10:05):
into a cycle that we're losing jobs at the pace
in which we're losing them. So I think this is
where risk assets start to play into. And if you
think about small stocks, mid caps, etc. That has a
lot of similarities to the crypto side of things when
it comes to what's happening in the all coin market,
but also in some of the other performers, even in

(10:26):
the blue chips out there other things you got to
look at within this. There's a few things I agree
with in this article. Somewhat unique characteristic of this cycle
has been the elongated nature, which we talked about earlier,
long pause since the last rate cut that was December,
and then returns following rate cuts have been coming after
a pause of at least one hundred and twenty six

(10:47):
trading days. That's the encouraging part. Market split on short
term reaction, and I think this is the real question mark.
And if we go over to the chart, let me
go over to let me see if I can pull
up Let me pull up a chart for you guys
real quick, because this is going to be interesting. If
we go to the short minute, let me go to
the five minute chart right here on bitcoin, and we'll

(11:10):
take a look at how it's responding to the early
call right now.

Speaker 2 (11:16):
All right here we go, let's zoom in on this one.

Speaker 1 (11:19):
So looks pretty good right now. You see a little
bit of a retlacement. But I think the question is
is how does this perform over the next week to
ten days, especially as the data comes in from jobs
course EPI and what we'll see in Powell's remarks to
the press today, Because this is the real question now

(11:40):
that we know we have the quarter is now we're
setting on a position where we got to understand is
he ready to really receive information differently to save jobs
because he's got to pick one. You can't do both.
It's likely that either inflation is going to continue up.
The question is this is Kenny thwart the job loss.

(12:02):
I still believe that's going to take a few months,
possibly a full quarter into early next year before we'd
start to see that kind of response. And again still
on the five minute candles, two green candles right now
on bitcoin going up, Let's take a look and see
what ethereum has been doing. Of course, that big beer
tracement right there and back above forty five hundred right

(12:23):
now as we are recording this and going live again.
If you guys are not part of our Diamond Circle,
I want you guys to jump in on that. It
is our free We always leave a link down in
the description, but it is our free newsletter. It's one
that I write out to you guys and the team
every week. I send out here's what I think is happening.

(12:44):
A lot of this is compiled from our current research,
so a lot of times we can't get all the
research here on the show. We try to get that
out to you guys in a follow up, and also
it will give you a little bit of an insight
on where I think the markets are heading. Around all
of that, let me go over to this whole theory
that I have, and this is the halves versus the halves,

(13:04):
and I've been talking about this. Here's Lisa Browmowitz coming
over from Bloomberg. She says, hey, consumers in the top
ten percent of the income distribution account for fifty percent
of US spending in Q two. This is up from
forty eight percent. Okay, I know those aren't big, you know, variables,
but when you look at fifty percent of the market
and where it's setting, that's pretty significant. That was in

(13:27):
Q one and reaching its highest level in data going
back to nineteen eighty nine. Okay, so many of you
guys probably weren't even alive in nineteen eighty nine. So
that's the kind of impact that we have not seen
from the top ten percent carrying an economy. This is
the thing that gets me into this cycle. And if

(13:48):
you have the halves versus the halves, and it's a
real number unless we get into something that I feel
maybe an opportunity for a younger audience and people that
are more meme and or all coin oriented, is they're
going to start to see the inflationary pressure that could

(14:09):
push them into risk assets quicker and away from what
we've seen in the past, which is, hey, let's try
to figure out how to go buy real estate or
other kind of assets like that. So I'm in agreement
in the sense that this issue right now that we're
dealing with around the house versus the house. That's where
I think a lot of the blue chip tokens are
going to be traded. So look for that top fifty

(14:32):
to be the ones that probably end up with the
most volume. Typically that's obviously the case, but do we
get an outlier that starts to make a run in
the top fifty. Let me know in the comments of
what token or a series of tokens that you guys
think will be coming in. And I know we're going
to get to some polls as well. I don't know

(14:52):
if the guys have put up a pole yet for
you guys to kind of go in this direction. But
this is the point I'm getting at. This is the
housing day right here. This is renting which is now
significantly more affordable than buying a home, so by one
of the biggest gaps ever recorded. And this is a
big one because again it goes back to the point
I'm getting at around the issue with new investors coming

(15:16):
to the market. They have to make a decision now
of where do they put their money. So you can
either say, all right, I can go into something like
gold and silver which is barely maybe not going to
move as much unless we see a debasement acceleration, or
I can go into bitcoin and ethereum maybe I don't
see the kind of run that I'm looking for, Or
I can go ahead and jump into these in this

(15:39):
particular case, all coins which are the MidCap kind of
concepts behind that that's where it gets interesting, because that's
when you have a market that I think could flip
to the positive side for all coins. And this is
good example. Eric Trump calls crypto the perfect hedge to
real estate assets. And that's the concern I have right
now is that the American dream has been changed. The

(16:01):
American dream now, I think is digital assets, and that's
coming from the under thirty crowd, maybe even the under
thirty five crowd, that have either abandoned the idea of
owning a home and understand that they're going to rent.
Many many people in the top ten percent believe that
is the strategy is that you should never put money

(16:22):
in those kind of assets. You should be looking at
either cash flow assets or looking at dividend assets, or
in this particular case, assets are going to be able
to appreciate in value. And that's the whole point around
risk assets that makes this really a good position I
think right now for the market in general.

Speaker 2 (16:38):
We're going to get to some questions. I'll try to
get into a few of those.

Speaker 1 (16:41):
Let me view the queue and see what they got
in the queue here. Let's go to all right, so
let's see if we can get a few questions in
here looks like imagine the hike everybody's looking for like
a fifty.

Speaker 2 (16:58):
Where it's going to go from here?

Speaker 1 (16:59):
I think that's going to be the issue right now.
Let me view the queue, all right, Well, maybe they're
gonna send me some questions here in a minute, because
I'm seeing the queue come in blank. Other things that
are playing into this. And as a reminder, if you
just join the livestream, we have a quarter basis point
coming in cut coming in from the FED. So as anticipated,

(17:21):
that was like the ninety percent odds on what was
happening over on poly market, and I think the big
question right now obviously goes into the next layer. There's
the quick rundown. People are still looking at three basic
three cuts now at sixty percent odds for the rest
of the year, that would look pretty solid for the market,

(17:42):
I think in general, and we may find that out today.
So stick around for this because we will go to
the FED.

Speaker 2 (17:49):
Here they go.

Speaker 1 (17:49):
On about two thirty, he'll come in, he'll start addressing
the press corps. And one of the points behind what
we're getting at right now is when you look at
the three basis cuts or three cuts twenty five basis
points each playing into this because I don't anticipate an acceleration.
I guess the key here will be two things. One

(18:10):
CPI data coming in, how the jobs numbers come in
on the next report, because if we continue to see
that loss, that would be a problem, and that of
course could flow into maybe a more aggressive cut cycle.

Speaker 2 (18:24):
I don't know just yet, because again we'll see how
chair Pale reviews.

Speaker 1 (18:29):
How they're looking at the data right now, and it's
very possible they may already have some early data because
remember the BLS is trying to accelerate how the data
is being delivered to the FEDS, so that in itself
could change a little bit of a course of action
here for chair pal going forward. But a big spike
right here on three twenty five basis points coming up,

(18:51):
and of course the two starting to slide down. So
maybe it is just the fact that we saw the
quarter come in and we feel confident.

Speaker 2 (18:59):
That we're there. Is this a sell the.

Speaker 1 (19:01):
News event coming in from commendal right there? I don't
know that it is. And two ways that this could
go is if you look at the situation right now
where bitcoin is holding steady currently, now, of course everything
will depend on what shair Pal says in the actual
press conference. But if we start to see a little

(19:22):
bit of movement in bitcoin and ethereum, could it be
a short term issue? And I think that's maybe more
of a scenario. If you guys are a trader, maybe
that might give you an entry opportunity or at least
a chance to maybe even do a short if you
wanted to. But I'm looking at this beyond this, and
when I say that, I'm looking at mid October, what

(19:43):
does this look like, What does this look like in
the November meeting, and then what do we see at
the end of the year. Because this is all really
narrowing down, I think, to some very key times in
terms of how this plays out. A couple other things
I want to get into is let's go to the
government shut down. Let me pull this up real quick,

(20:05):
and then we've got a clip on this as well.
So the government shut down, this is an issue right
now that is being faced again. This is a little
bit more bearish for how the markets might respond. But
policymakers basically have until midnight September thirtieth, that's just around
the corner, to be able to set this up and
I've got a clip of Mike Johnson talking about this.

Speaker 2 (20:25):
Let's go to that clip real quick.

Speaker 6 (20:27):
The Democrats want concessions on healthcare. I guess medicaid or
something that was in the BBB. So if you don't
do what they want, you are responsible for shutting down
the government. It's totally Republican's fault because you're not doing
what Jeffries and Schumer want you to do. So it's

(20:48):
obvious that it's Republican's fault.

Speaker 7 (20:51):
Yeah, you frame that exactly right.

Speaker 8 (20:53):
Here's what's happened.

Speaker 7 (20:54):
We have been trying to force the government appropriations process
back to what we call regular order, supposed to work.
That's what's happening here. What they're trying to argue for,
not to get too deep in the weeds, is that
trying to insist that the Obamacare premium subsidies be continued.
That's a December policy debate and decision, not a September
funding matter. So they're trying to insert unrelated matters into

(21:17):
the middle of a clean government extension. And I don't
think that's going to work. If the government is shut down,
because they make their last stand, it will solely be
blamed on Democrats, because we're not playing politics with this
at all. We're just trying to keep the lights on.

Speaker 1 (21:31):
All right, So that could be a little bit of
a concern right now going into the latter half of
this year, if we get any kind of shenanigans. My
guess is that, like most of the cases are corrupt,
politicians will do what they do, and that is they
do deals.

Speaker 2 (21:47):
Behind each behind the doors.

Speaker 1 (21:49):
They put together something that gives this guy that, and
this guy gets that, and you end up with a
deal at the end, and it'll be at the last minute,
and of course there's going to be all sorts of
suations that play into this that probably will not be
good for whatever project is being dealt with at least
at that voting block time. But for the markets, I
think the key is just keep it into a position

(22:11):
that is positive where the SMP continues to see strength
coming in from the administration.

Speaker 2 (22:16):
That's the key. There.

Speaker 1 (22:18):
One big news item that just broke around the issue
of this quarter basis coin. The FED approved quarter point
interest rate cut and sees two more coming this year. Now,
this is based off of what was right now and
eleven to one. Let me see if I can zoom
in on this for you guys real quick.

Speaker 2 (22:36):
This was an.

Speaker 1 (22:37):
Eleven to one vote, signaling less dissent than even Wall
Street had anticipated.

Speaker 2 (22:42):
So it looks like, guys, this.

Speaker 1 (22:45):
May be the turning point for what we see in
the market. And if this is what everybody is waiting for,
whether it is people coming off the sidelines from money
markets number seven and a half trillion setting over there,
whether it is major institutional capital trying to reposition family offices,
high networth individuals trying to figure out are we ready

(23:07):
for this? All of that now looks to be where
we could be in the right direction here. And if
Chair Pale actually confirms this this is not confirmed data,
this of course coming in from right now from CNBC.
I think that would be very positive for the markets,
and it could help kind of thwart what's going on
right now, you know, at least from Capitol Hill, if

(23:30):
we get into situations around you know, slowing of government,
other things that are happening right now. You've got a
lot of money coming into exchanges, which is huge. This
will be good inflow. I anticipate this is going to
grow significantly after that day's quarter basis point, because people
want to be ready. So right now this is going
to expect more stable cooins starting to move in USDC.

(23:52):
This will of course benefit all the ETH ecosystem. All
of that I think is going to be good. Ray
cut was already baked in. I disagree, Blaine. I don't
know that it was now. Granted Bitcoin had moved to
one P seventeen started to recorrect, but I'm not sure
that we don't see a pop from here going forward
if we look at ETH and bitcoin Bitcoin back to

(24:13):
the chart kind of up and down here on the five.
But I think the real question will play and I
don't know that a lot of people understand what that
c C article just gave. That was very very bullish,
and if that is true, if Chirpal comes in and
validates what that was basically reporting, this could be pretty

(24:34):
significant in terms of how the chart comes in. Jerome
should have cut by one percent. I agree with you, Daniel.
We are in a position right now where I think
playing catch up, unfortunately is.

Speaker 2 (24:47):
The situation we're in.

Speaker 1 (24:48):
And you know it's going to be one of those
things if we get another three quarter basis points this year,
at least two and then maybe they sat back and
look at it, because remember, I think we're still going
to be in for higher inflation of that period of time.
But the key is did we thwart any of the
job loss that are that are now coming into this?

Speaker 2 (25:09):
So that in itself is a big deal.

Speaker 1 (25:10):
Let me load up a couple other topics here that
I want to get to.

Speaker 2 (25:15):
Here we go. This is another one I want to
hit to.

Speaker 1 (25:18):
New York Bank Regulator is now directing banks to use
blockchain analytics. This is a good signal going forward because
as we start to see the bank ecosystem adopting crypto
in general, of course stable coins are going to play
into this. You'll get some bank tokens that will play
into that. I'm kind of curious on a poll, would
you guys trust tether you know, usd C or a

(25:42):
bank token. I think I know the answer to that,
but let me know in the comments what.

Speaker 2 (25:47):
You would do.

Speaker 1 (25:47):
Just put put your favorite stable coin in there, maybe
our l U, s D, whatever it might be.

Speaker 2 (25:52):
Let me know. This is another thing that's kind of big,
And this was a tweet we put out.

Speaker 1 (25:57):
This is if you guys didn't watch our show yesterday,
go back and check this. This is good clip by
Tom Lee, and he's onto something and I would agree
with that, and that is that he basically stated in
this clip that banks right now have started to explore
blockchain at such a level that they themselves have started
to pivot into what is a tech first company. And

(26:21):
I think a lot of companies are in that space
right now, mainly because of just AI integration that's being
put into so many different companies out there.

Speaker 2 (26:28):
So yeah, I would have to agree with Tom.

Speaker 1 (26:30):
I think you're at a position right now where banks
are now starting to become tech companies, and that in itself,
I think is just going to be one of those
things that starts to move the vision of where crypto
is going to go. Ryan shan Adams from Bankless came
in with this prediction right here. I don't know that, Ryan,
I don't know if this is much of a prediction.
I think this is kind of known, and that is
US dollar stable coins would yield is going to drain

(26:53):
bank accounts. This is something, as we've said for a
very long time. The question is when does it happen.
Do we actually get that now? And I think we
do because you're looking at now a competing landscape of exchanges.
We're starting to see a lot of aggressive moves by
with Robin hood Gemini after going public coinbase. My anticipation

(27:16):
is we're going to start seeing even more yields paid
in the DeFi ecosystem. Follow the DeFi ecosystem, because those
yields will also indicate a lot of strength because that
will pull away from the traditional exchanges. And when that
a cant happens, then you've got another up level for
how people that are under the age of thirty five
who do not trust the system, do not trust the system,

(27:39):
they will be in a position where they're going to
start to play into this. So I would agree in
that particular case. I don't know if it's much of
a of a prediction. I think it's we're already here. Wow,
Holy moly.

Speaker 2 (27:52):
Okay, r l USD. When's the when's the when's the day?

Speaker 1 (27:55):
Where the I think the guys were just messing with
me the you know, to show the amount of Okay, fine,
r l us DR is your stable point of choice.
Other things I want to hit on because we're going
to be getting to chair pal here in a second.
Just for those of you who just joined the live stream,
we have a quarter basis point coming in from the Fed.

(28:16):
We have eleven no dissension, So basically eleven governors voted
for the quarter basis point. Trump's tactics apparently worked. Continue
to pressure. I mean, he just seems like he's playing
out an episode of The Apprentice here. You know, he
puts pressure on everybody. They they're jumping around trying to
get things done, and then at the end they come

(28:37):
through and maybe they deliver something that in itself, but
the biggest news of today is that there is anticipation
the chair Pal is getting ready to come on live
with the Press Corps and tell us that we got
two more rate cuts that are in store for this year.

Speaker 2 (28:55):
What would that do to the markets? Guys?

Speaker 1 (28:56):
What would that do to the markets if you saw
that happen right here on PBN of Chairpal saying yeah,
we think the market is going to be allowing two
more raycuts and then we're going to step back and
look at it at that point, what would you do?
Where do you think the market would be? If you
look at bitcoin, it's still holding somewhat sideways right now,
eth holding at forty four to eighty one, somewhat sideways

(29:19):
right now. These are the five minute charts out there,
so definitely one Philip says that we are going to
get another flush out and then on longs before it
goes up.

Speaker 2 (29:30):
So I don't know.

Speaker 1 (29:32):
I mean, there are some opportunities here, but that could
be crazy going forward. The I commander says that article
is hot air FOMC meeting hasn't happened yet. Well, yeah,
the FOBMC meeting has happened. They actually meet and make
these decisions and then they announce it to the press.

(29:53):
And that's what Chairpal is going to do here. In
a few minutes and seven minutes we will be live
with mister Powell going forward on all of this, and
of course that will start to move things to the
next level, and that of course is going to be
whether or not we start to see other parts of
the economy and other parts of crypto starting to move
with this market.

Speaker 2 (30:14):
Do we have the TikTok clip? Yeah, okay, let's play
that real quick. So I want to comment on this
because this is a big news.

Speaker 1 (30:21):
If you guys didn't hear TikTok, well, let me play
the clip for you and then we'll go.

Speaker 9 (30:24):
Into and the TikTok deal could be a blueprint for
how we can find those tense relationships. Maybe, Like to
your point, China is holding on to a pun intended
chip by doing what they're doing to restrict some of
the chips from Nvidia.

Speaker 8 (30:42):
So we shall see.

Speaker 10 (30:43):
But I do think that it's think it's all on
the bargaining table exactly.

Speaker 9 (30:47):
That's exactly where we are ultimately. I think this administration
is very deal oriented and wants to see a deal
on the table. I think we are seeing indications of
that just by virtue of what's happening with TikTok, and
I do believe that there will be some easing and
I think once those details come out from the TikTok deal,

(31:07):
what we will see is that it's an opportunity for
a little bit of face saving as well.

Speaker 1 (31:14):
All right, So there's a lot to be decided on
this deal. It is an issue though in the sense
that maybe it was used as a negotiating ploy in
some way for tariffs, could have been done with other
deals that are being done around in Nvidia and how
those chips play out within China right now, I mean,
right now, listen, this is definitely a lot of chess

(31:36):
moves being made by all of these major nations that
are trying to figure out this next step up into technology. Guys,
I'm telling you we are in a very interesting time,
whether you compile not only AI but also what's happening
with blockchain and the advancements of all this tech and
the fact that we've got government regulation now somewhat favoring.

Speaker 2 (31:57):
All of this.

Speaker 1 (31:58):
This is very very these rate cuts and I granted,
yes we have inflation, Yes we're going to have to
deal with that, but markets will correct and I anticipate
that these rate cuts will help businesses start putting people
back to work. And that's the key thing that Trump
will try to claim victory on is putting people back
to work.

Speaker 2 (32:17):
Mark my word.

Speaker 1 (32:19):
Market right here on September seventeenth on this Live that
he's going to be looking at by Q one the
ability to start claiming victory around getting jobs back. And
if that is the case, he's going to be going
into a midterm that is going to really start to
put a lot of pressure on that.

Speaker 2 (32:35):
Here's Eleanor Tarrett. Remember this is interesting.

Speaker 1 (32:37):
Remember that the White House voted not to include the anti
CBDC bill and Clarity Act in July favor in favor
of putting it on the Defense spending bill instead, And
now they just voted to retroactively combine him back to
the Clarity Act before sending it over to the Saidate.

Speaker 2 (32:51):
Remember this gut adjusted here. So we've got a big.

Speaker 1 (32:54):
Deal happening right now in DC. I asked a couple
of hillsources if there's a big deal. Broad response was
doesn't change anything as Senate is working on. Don't trust
them eleanor which bill will include anti CBDC language anyway,
hopefully that will stay on point.

Speaker 2 (33:10):
Be careful how that goes.

Speaker 1 (33:12):
French Hill basically said, by coming combining both measures and
send them to the Senate, the House continues to advance
both priorities. We stand ready to work with Chair Scott
and Lummus on a pathway forward to get both provisions
signed into law. If that is the case, that will
be more bullishness around the crypto market and blockchain in general.

(33:34):
If we get Clarity Act through, guys, I don't know
what else could happen that would be more bullish than that.

Speaker 11 (33:41):
Now.

Speaker 1 (33:42):
Granted, yes, inflation will be a problem, but that's good
for risk assets you've got to look at dedollarization. That
is real, it's happening right now. So why are you
not investing in digital assets? Why would you not go
that route? And if you're say, well that's just too riskue, well,
they're investing gold or silver away from the US dollar
and trying to keep up with inflation.

Speaker 2 (34:03):
It just doesn't work.

Speaker 1 (34:06):
Other things Drome might surprise everyone. Marod, Okay, you must
have joined late. We got a quarter basis point, so
we're good there. The question is whether or not he's
going to give us two more this year. So if
you are brand new to the livestream, a quarter basis
point point two five is the rate cut right now.

Speaker 2 (34:26):
This is the Fed Founds rate.

Speaker 1 (34:27):
This will start to take some interesting scenarios into the
market because real estate could get affected on this. And
what I see by that because a quarter racist point
you might say that's not really going to move interest rates,
think about this.

Speaker 2 (34:41):
Guys.

Speaker 1 (34:41):
Banks will be jockeying for position. They will start looking
at ways to lever up on giving a lower interest
rate on mortgage deals, even though the Fed Founds rate
isn't there just yet, but they know it's coming. That
is a factor that has been done in banking for
a very long time. And if you see early bank
banking move that says they're dropping mortgage rates or car

(35:03):
loan rates, then you know that you're going to start
to see a little bit of softness in the market.
And of course that goes back to the point I'm
getting at, which is get ready for a big move forward.
And that's that's the thing right now that I'm looking
at a couple other things.

Speaker 2 (35:19):
One how many cuts this year? Looks like it could
be three?

Speaker 1 (35:22):
We will find out here in a minute, and if
we're lucky, if we get two more. The real question
will be December. He may skip a month, so be
on the lookout for that. We'll cover that throughout the
month because there's gonna be a lot to talk about
there because there is a ton going forward.

Speaker 2 (35:38):
Is this I saw something come in? Should we take profit?
All right?

Speaker 1 (35:42):
First of all, not financial advice, but anything that I
would do right now. I wait, in my position I'm
looking at mid October, would there be some options, some
options and some opportunities to dollar cost average out of
certain assets. And if you're really bullish toward an all
coin run, then maybe you know factoring into those all

(36:04):
coins would be an option to go in that direction,
But right now, I think it's a little bit too early.
It's a good thing. I mean, obviously Eth has not
hit its stride just yet. I think Solana is going
to go to three hundred. I think XRP is going
to see a big run here at the end of
the year. And I think we're going to see Ethereum
and probably Suite and a handful of other tokens make

(36:24):
some pretty serious runs going forward.

Speaker 2 (36:28):
Pradeep says Eth versus soul.

Speaker 1 (36:31):
Right now, as we trade today, I would probably pick
Solana only just because of where I think it will
be in the short term.

Speaker 2 (36:38):
Now, long term Eth might be a.

Speaker 1 (36:41):
Better play if you're a big, big proponent of how
Eth is as an asset in general, meaning a long
term asset that could be two to three years.

Speaker 2 (36:49):
Here's chair palell.

Speaker 1 (36:51):
Let's get ready to cut to this live all right, guys,
here we go.

Speaker 8 (37:00):
Good afternoon.

Speaker 12 (37:02):
My colleagues and I remain squarely focused on achieving our
dual mandate goals of maximum employment and stable prices for
the benefit of the American people. While the unemployment rate
remains low, it has edged up job gains have slowed
and downside risks to employment have risen. At the same time,
inflation has risen recently and remained somewhat elevated. In support

(37:25):
of our goals and in light of the shift in
the balance of risks, today, the Federal Open Market Committee
decided to lower our policy interest rate by a quarter
percentage point. We also decided to continue to reduce our
securities holdings. I'll have more to say about monetary policy
after briefly reviewing economic developments. Recent indicators suggest that growth

(37:47):
of economic activity has moderateddp GDP rose at a pace
of around one and a half percent in the first
half of the year, down from two point five percent
last year. The moderation and growth largely reflects a slow
down in consumer spending. In contrast, business investment in equipment

(38:08):
and intangibles has picked up from last year's pace. Activity
in the housing sector remains weak. In our summary of
economic projections, the median participant projects GDP to rise one
point six percent this year and one point eight percent
next year, a touch stronger than projected in June. In

(38:29):
the labor market, the unemployment rate edged up to four
point three percent in August but remains little changed over
the past year. At a relatively low level, payroll job
gains have slowed significantly to a pace of just twenty
nine thousand per month over the past three months. A
good part of the slowing likely reflects a decline in
the growth of the labor force due to lower immigration

(38:52):
and lower labor force participation. Even so, labor demand has
softened and the recent pace of job creation appears to
be running below the break even rate needed to hold
the unemployment rate constant. In addition, wage growth has continued
to moderate, while still outpacing inflation. Overall, the market slowing

(39:14):
in both the supply of and demand four workers is unusual.
In this less dynamic and somewhat softer labor market. The
downside risks to employment appear to have arisen in our SEP.
The median projection for the unemployment rate is four point
five percent at the end of this year and edges
down thereafter. Inflation has eased significantly from its highs in

(39:39):
mid twenty twenty two, but remains somewhat elevated relative to
our two percent longer run goals. Estimates based on the
Consumer Price Index and other data indicate that total PCEE
prices rose two point seven percent over the twelve months
ending in August, and that excluding the volatile food and
energy categories, core PCEE prices rose two point nine percent.

(40:04):
These readings are higher than earlier in the year, as
inflation for goods has picked up. In contrast, disinflation appears
to be continuing for services. Near term measures of inflation
expectations have moved up on balance over the course of
this year on news about tariffs, as reflected in both
market and survey based measures. Beyond the next year or so, however,

(40:29):
most measures of longer term expectations remain consistent with our
two percent inflation goal. The median projection in the SEP
for total PCEE inflation is three point zero percent this
year and falls to two point six percent in twenty
twenty six and to two point one percent in twenty
twenty seven. Our monetary policy actions are guided by our

(40:52):
dual mandate to promote maximum employment and stable prices for
the American people. At today's meeting, the Committee decided to
lower the target range for the federal friends rate by
a quarter percentage point to four to foreign a quarter percent,
and to continue reducing the size of our balance sheet.

(41:12):
Changes to government policies continue to evolve, and their effects
on the economy remain uncertain. Higher tariffs have begun to
push up prices in some categories of goods, but their
overall effects on economic activity and inflation remain to be seen.
A reasonable base case is that the effects on inflation
will be relatively short lived a one time shift in

(41:34):
the price level, but it is also possible that the
inflationary effects could instead be more persistent, and that is
a risk to be assessed and managed. Our obligation is
to ensure that a one time increase in the price
level does not become an ongoing inflation problem. In the
near term, risks to inflation are tilted to the upside

(41:56):
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
risks has shifted accordingly, we judged appropriate at this meeting
to take another step toward more neutral policy stance. With

(42:20):
today's decision, we remain well positioned to respond in a
timely way to potential economic developments. We will continue to
determine the appropriate stance of monetary policy based on the
incoming data, the evolving outlook, and the balance of risks.
In our SEP FOMC, participants wrote down their individual assessments

(42:41):
of an appropriate path for the federal funds rate based
on what each participant judges to be the most likely
scenario for the economy. The median participant projects at the
appropriate level of the federal funds rate will be three
point six percent at the end of this year, three
point four percent at the end of twenty twenty six,
and three point one percent at the end of twenty

(43:01):
twenty seven. This path is one quarter percentage point lower
than projected in June. As is always the case, these
individual forecasts are subject to uncertainty and they're not a
committee plan or decision. Policy is not on a preset course.
The FED has been assigned two goals for monetary policy,

(43:22):
maximum employment and stable prices. We remain committed to supporting
maximum employment, bringing inflation sustainably to our two percent goal,
and keeping longer term inflation expectations well anchored. Our success
in delivering on these goals matters to all Americans. We
understand that our actions affect communities, families, and businesses across

(43:43):
the country. Everything we do is in service to our
public mission, and we at the FED will do everything
we can to achieve our maximum employment and price stability goals.

Speaker 8 (43:53):
Thank you. I look forward to our discussion.

Speaker 13 (44:00):
Thank you, Chris Rygabert, Associated Press. As you know, FED
Governor Stephen Myron has continued kept his position at the
White House even as he's joined the FED board. This
is the first time I believe the Fed's board has
had someone with executive branch ties in decades. Does this
compromise the Fed's independence from day to day politics? And relatedly,

(44:22):
how can you maintain the public's perception the FED is
politically independent with this dynamic think.

Speaker 12 (44:28):
So, we did welcome a new committee member today as
we always do, and the Committee remains united and in
pursuing our dual mandate goals. We're strongly committed to maintaining
our independence and beyond that, I really don't have anything
to share.

Speaker 2 (44:44):
And then just as quick follow I'm SARTs.

Speaker 13 (44:46):
Can you? You and other FED officials have spoken extensively
about the impact of tariffs on infletion, although perhaps with
many companies appearing to eat the tariffs, and tariffs may
be impacting the labor market other parts of the economy instead.
Do you see that as a possible outcome here, that
tariffs are the reason we're seeing some slowing, particularly the

(45:06):
labor market, rather than in inflation.

Speaker 8 (45:09):
Thanks, you know, it's certainly possible.

Speaker 12 (45:12):
You know, we're beginning to see we have begun to
see goods prices showing through into higher inflation. And actually
the increase in goods prices accounts for most of the
increase in inflation, or perhaps all of the increase in
inflation over the course of this year. Those are not
very large effects at this point, and we do expect

(45:33):
them to continue to build over the course of the
rest of the year and into next year. And you know,
it's also possible and that there may be effects on unemployment,
but that I would say, if you're looking at why
employment is doing what it's doing, that's much more about
the change in immigration. So the supply of workers has
obviously come way down. There's very little growth, if any,

(45:55):
in the supply of workers, and at the same time
demand for workers has also come down sharply and to
the point where we see what I've called a curious balance.
You know, typically when we say things are in balance,
that sounds good. But in this case, the balance is
because both supply and demand have come down quite sharply.

Speaker 8 (46:15):
Now demand coming down.

Speaker 12 (46:16):
A little more sharply because we see we now see
the unemployment rate edging up.

Speaker 14 (46:26):
Nick tim Rossa to Wall Street Journal Chairpell do economic
conditions and the balance of risks no longer warrant a
restrictive policy setting.

Speaker 12 (46:35):
So I don't think we can say we can say that.
What we can say is this that over the course
of this year, we've kept our polly A policy at
a restrictive level. And people have different views, but a
clearly restrictive level, I would say so, And we were
able to do that over the course of this year
because the labor market was in very solid condition, with
strong job creation and all those things. I think if

(46:58):
you go back to April and now look the revised
job creation numbers for May, June, July, and August, you
can kind of I can no longer say that.

Speaker 8 (47:07):
So what that means is that.

Speaker 12 (47:09):
The risks, which the risks were clearly tilted toward inflation.
I would say they're moving toward toward equality. Maybe they're
not quite out of quality. We don't need to know that,
but we do know that they've moved meaningfully toward greater
equality the risks between the two goals, and that suggests
that we should be moving in the direction of neutral.

Speaker 8 (47:28):
And that's what we did today.

Speaker 14 (47:30):
Under what circumstances would a larger than twenty five basis
points rate cut be warranted and how seriously was that
option entertained at your meeting this week?

Speaker 12 (47:40):
There wasn't widespread support at all for a fifty basis
point cut today. You know, I think we've done We've
done very large rate hikes and very large rate cuts
in the last five years, and you tend to do
those at a time when you feel that policy is
out of place and needs to move quickly to a
new place.

Speaker 8 (48:00):
Not at all what I feel certainly now.

Speaker 12 (48:02):
I feel like our policy has been doing the right
thing so far this year. I think we were right
to wait and see how tariffs and inflation and the
labor market evolved. I think we're now reacting to you
to the much lower level of job creation and other
evidence of softening in the labor market. And saying, well,
those risks are maybe not fully balanced, but moving in

(48:23):
the direction of balance now, and so that warrants a
change in policy.

Speaker 15 (48:29):
Colby Smith of The New York Times. Should we be
viewing today's cut as the Committee taking out some insurance
against the possibility that the labor market is at risk
of weakening? Or is it the committee's view that the
dynamics of a downturn are already in place. I guess
I'm just trying to square the shift and the rate
forecasts in the SEP towards more cuts than just three

(48:50):
months ago with the fact that the forecast for unemployment
didn't change.

Speaker 12 (48:54):
Yeah, I think you can think of this in a
way as a risk management cut, because if you look
at the SEP, actually the projections for growth this year
and next actually ticked up just a little bit, and
inflation and unemployment didn't really move on.

Speaker 8 (49:09):
So what's different now.

Speaker 12 (49:10):
What's different now is that you see a very different
picture of the risks to the labor market you've seen.
You know, we were looking at one hundred and fifty
thousand jobs a month at the time of the last meeting,
and now we see the revisions and we see the
new numbers, and I didn't I don't want to put
too much emphasis on payroll job creation, but it's just
one of the things that suggests that the labor market
is really cooling off, and that tells you that it's

(49:33):
time to take that into account in our policy.

Speaker 15 (49:38):
The SEP once again the median participant has inflation higher
than previously expected by the end of next year, and
the FED not getting back to the two percent target
until twenty twenty eight. So I guess I'm just wondering
how you characterize the risk to price pressures of kicking
off a series of cuts at this point.

Speaker 8 (49:54):
Yeah, So I would look at it this way.

Speaker 12 (49:56):
We fully understand and appreciate that we need to remain
fully committed to restoring two percent inflation on a sustained basis,
and we will do that. At the same time, we've
got a weigh the risks to the two goals, and
I would say, since really since April, to me, the
risks of higher and more persistent inflation have probably become

(50:20):
a little less, and that's partly because the labor market
is softened. GDP growth has slowed, and so I would
just say that the risks there have been less than
one might think. And in terms of the labor market,
what we're seeing is it's unemployment is still low, it's

(50:42):
still relatively low ripe, but we're seeing downside.

Speaker 16 (50:44):
Risks Michael McKee from Bloomberg Radio and Television. I'm a
little confused by your explanation of the FED cutting rates
because of unemployment. If you think that most of what's
happening in the employment area is related to immigration, which

(51:06):
your rate cuts wouldn't address, how do you see that
as more important than inflation, which has remained almost a
full percentage point above your target.

Speaker 12 (51:18):
Well, I was saying that what's happening in the labor
market has more to do with immigration than it has
to do with tariffs. That was the question I was answering.
So I wouldn't say that all of what's happening in
the labor market is due to tariffs. I mean, you
clearly have a slowing in it due to immigration. You
clearly have a slowing in demand which is now perhaps
more than that in supply, and we know that because

(51:39):
the unemployment.

Speaker 8 (51:40):
Rate has ticked up. So that's how that's what I
meant by that.

Speaker 16 (51:46):
I follow up every year since twenty fifteen, the SEP
has forecast that you would hit your target two years later,
and this year, this SEP says you're going to hit
your target two years later. Two percent does not seem
to be in sight. Does that suggest that the two
percent target is not really achievable? And does this present

(52:07):
any credibility problems for you in telling people that that's
what you're going to do if you can never reach it?

Speaker 8 (52:15):
Well, I mean that you're right.

Speaker 12 (52:16):
It does say we're going to get to two percent
inflation in twenty twenty eight at the end of twenty eight,
But that's you know, that's literally how you put the
projections together. You're writing down a rate path which is
designed to create over the course of the SEP, you know,
timeframe two percent inflation and maximum employment too.

Speaker 8 (52:33):
So that's that's that's all that is.

Speaker 12 (52:35):
You know, we don't no one really knows where the
economy will be in three years, But the nature of
the exercise is to write down policy that you believe
would return to the two percent goal over the over
at least at least by the end of the exercise.

Speaker 17 (52:54):
Thanks so much, Elizbiechlzie with ABC News. The latest inflation
report shows that price are still going up across key
categories from many households, including groceries. What will the FED
do if prices pick up more so?

Speaker 12 (53:09):
Our expectation, and you can see this consistently through the year,
has been that inflation will move up this year, but
that the effect basically because of the effects on goods
prices from tariffs, but that those will turn out to
be a one time price increase as opposed to creating
an inflationary process. That's been our forecast pretty much every

(53:32):
all the individual forecasts say that we can't just assume
that though right we have to. Our job is literally
to make sure that that is what happens, and we
will do that job right now. The situation we're in
is that we see we see inflation. We continue to
expect it to move up, maybe not as high as
we would have expected it to move up a few

(53:53):
months ago. The pass through into of the tariffs into
inflation has been slower and smaller. The labor market has softened,
so the case for there being a persistent inflation outbreak
is less. And so that's why we think it's time
for us really to acknowledge that the risks to the
other mandate have grown and that we should move in

(54:15):
the direction of neutral.

Speaker 8 (54:17):
So what'll we do. We'll do what we need to do.

Speaker 12 (54:19):
But we have two mandates and we try to balance
them for a long time. Our framework says that when
our two goals are intentioned, this is quite an unusual situation.
How do we decide what to do? Because our tools
can't do two things at once. What we do is
we ask which is farther from how far is each
from the goal? And how long is it expected to
get to the goal. And then we think about those

(54:42):
things and we see, as I mentioned, we have been
our policy had been really skewed toward inflation for a
long time. Really, now we see that there's downside risks
clearly in the labor market, and so we're moving in
direction of more neutral.

Speaker 17 (54:55):
Policycerned are you about the slowdown in the jobs market
for households at homes, especially younger Americans struggling to land
a job.

Speaker 12 (55:02):
So it's it's an interesting labor market, and obviously we
think it's appropriate that we reduce our rates so that
we become more neutral, which will be which presumably will
be better for the labor market. You see people who
are sort of more at the margin, so kids coming
out of college and younger people minorities are are having

(55:26):
a hard time finding jobs. The overall job finding rate
is very very low. However, the layoff rate is also
very low, so you've got a low firing, low hiring environment,
and the concern is that if you start to see layoffs,
the people who are laid off won't There won't be
a lot of hiring going on, so that could very
quickly flow into into higher unemployment.

Speaker 8 (55:48):
In a healthier economy, healthier labor market, there would be
jobs for those people. But now the hiring rate is
very very low. So that's been a.

Speaker 12 (55:57):
Growing concern over the last few months, and it's one
of the reasons why we think it's appropriate that we
begin to begin to shift our policy focus toward a
more balanced one.

Speaker 11 (56:11):
Steve Lee spent c mister Kerr in the past during
raycuse you use the word recalibration, and I wonder if
you pointedly did not use it this time, and in fact,
when you said policy is not in a preset course
that you mean to that is sort of the opposite
of recalibration. Are we meeting to meeting data point by data?

Speaker 2 (56:33):
Point.

Speaker 11 (56:33):
Are we in the process here of getting back to neutral?
Thank you?

Speaker 12 (56:38):
So I think we are. We're in a meeting by
meeting situation. We're going to be looking at the data.

Speaker 5 (56:43):
You know.

Speaker 12 (56:43):
Let me let me say a word about the SEP
really here, So we often point this out. This is
what the SEP is. It's it's an accumulation a accumulation
of the individual projections of nineteen people showing what they
believe at a particular moment in time to be the
most likely path for the economy and thus the appropriate
path for monetary policy as well. And as you know,

(57:06):
we don't debate or try to agree on what that is.
We just write them down and accumulate them. We do
sometimes discuss them, and so we always say we're not
on a preset path. Then we really mean that the
actual decisions we make are going to be based on
the incoming data of the evolving outlook and the balance
of risks at the time the decisions are actually made.

Speaker 8 (57:25):
So you will have seen that we have ten.

Speaker 12 (57:28):
Participants out of nineteen who wrote down two or more
cuts for the remainder of the year, and nine who
wrote down fewer than In fact, in a good number
of cases, no more cuts. So rather than looking at so,
rather than looking at this as certainty, I would encourage people,
as always to look at the sep as through the
lens of probability and so there are different possible outcomes

(57:52):
and likelihoods, rather than this one is certain and this
one isn't happening.

Speaker 8 (57:57):
So that's what I would say.

Speaker 11 (57:59):
Thank you for getting to my follow up question, is
the time right?

Speaker 1 (58:03):
So there's a lot happening here on what he's doing
in terms he's waffling both ways in terms of these
right cuts.

Speaker 2 (58:10):
We'll talk about this in a minute. As he tries
to get himself out of more grave digging, which is
what I think he's doing. It's terrible. Let's take a look.

Speaker 8 (58:19):
Labor market is really strong. That's when you be careful man. Inflation.

Speaker 12 (58:22):
So we have a situation where we have two sided risk,
and that means there's no risk free path. And so
it's quite a different, difficult situation for policymakers. And it's
it's not at all surprising to me that you have
a range of views. It's not so much about having
different views for the path of the economy, but it's

(58:42):
partly that. But it's also partly about what's the right
thing to do in light of this, of the tension
between the two goals, how do you wait them? How
worry to you about one versus the other?

Speaker 8 (58:52):
End? And so it's it's natural.

Speaker 12 (58:54):
I think it would actually be surprising if you didn't
have a pretty wide range of views based on you know,
in this kind of highly unusual situation.

Speaker 8 (59:02):
And we do so. But you know, we get.

Speaker 12 (59:06):
Together, we discuss, we have a great discussion, and then
we decide what to do and we act. But you're
right there, it is it's a wide dispersion of views,
and I think that's understandable and natural in the current situation.

Speaker 10 (59:24):
Hi, Victoria Aguida with Politico, You've talked a lot about
FED independence and the importance of it over the years.
But as as markets have questions about what exactly President
Trump's intentions are with the FED, what would you point
to as the things they should be watching to determine
that the FED is still making decisions based on you know,

(59:46):
the economic outlook rather than political considerations.

Speaker 12 (59:50):
Look, it's deeply in our culture to do to do
our work based on the incoming data and and never
consider anything else. That's just everybody who is at the
FED really feel strongly about that way. So you know,
you'll know it by the way we talk about what
we're doing, by by the speeches that people give, by
the decisions that we make, you'll know that we're just

(01:00:10):
still going to do that. That's all we do, and
we don't we don't frame these questions at all or
see them in terms.

Speaker 8 (01:00:17):
Of political outcomes.

Speaker 12 (01:00:18):
I think when you get to another part of Washington,
everything is seen through the lens of does it help
or hurt this political party, this politician. You know, that's
that's the framework, and I think people find it hard
to believe that that's just that is not at all
the way we think about things at the FED. We're
taking a longer perspective. We're trying to you know, serve
the American people as best we can. So I think

(01:00:40):
I think you'll you would be able to tell I don't.
I don't believe we'll ever get to that place. You know,
I would say, we're we're doing our work exactly as
we always have now, and people are they're making their
their arguments and and we're having really a great discussion
around these challenging issues.

Speaker 10 (01:00:56):
So do you see the court case around Lisa Cook
as being related to questions that FED independence.

Speaker 12 (01:01:03):
You know, I see it as a court case that
it would be inappropriate for me to comment on.

Speaker 18 (01:01:13):
Thanks mister chairman, Edward Lawrence from Fox Business. So we
saw the preliminary benchmark revisions down nine hundred and eleven thousand.
The revisions for June were the first negative revisions we've
seen since December of twenty twenty. You know, how can
the FED base important decisions on rate and what to
do with the with the interest rates on data that
seems to be, as you've called it in the past, noise.

Speaker 12 (01:01:36):
So on the QCW, the revision that we saw was
almost exactly what we expected.

Speaker 8 (01:01:42):
It was amazing how close the expectation was so and.

Speaker 12 (01:01:45):
The reason for that is for the last bunch of
quarters there's been almost a predictable overcount and I think,
you know, the Fear of Labor Statistics really does understand
this and they're working hard to fix it. Got to do,
of course, it has something to do with low response rates,
but it's also got to do with what's called the
birth death model. Because a good amount of job creation

(01:02:08):
happens around new companies and how many go out of business,
how many are founded, And it's just really hard. You
can't survey for that. You've got to have a model
that predicts that, and it's quite difficult to do, especially
when the economy is undergoing big changes. And they've been
working on that and are making progress on it. But
you know, the data we get is still well good

(01:02:29):
enough for us to do our work to the extent
we have issues around data right now. It's about low
response rates. That's happened all over all over. Really, response
rates are just lower to surveys now, both in and
out of the government. And it's no great secret. You know,
we want higher response rates and we need those to
have you know, less volatile data. And the way to

(01:02:51):
get that is to make sure that the agencies that
collect the data have sufficient resources to drive higher response rates.
It's not a complicated problem, but that's what it takes.
It's not a mystery.

Speaker 8 (01:03:02):
That's what it takes.

Speaker 12 (01:03:03):
The other thing I'll say, Edward is, in the case
of the job's job creation, the first the response rate
is quite low for the first month, or lower for
the first month. By the time you get to the
second or third month, you're still collecting responses for that
last month, for that prior month, and you get to
the place where the data are much more reliable by
the second and certainly the third month. So it's not

(01:03:25):
that we don't get the data, it's just that we.

Speaker 8 (01:03:26):
Get it a little later.

Speaker 18 (01:03:29):
If well, for the benchmarks, if that holds, it's fifty
one percent of the jobs that we thought were there
weren't really there. Shows a weaker market job market coming
into this year. If you had had that information, would
it have changed your mind related to where the interest
rates should be? Should there have been a cutter earlier?

Speaker 12 (01:03:45):
You know, we have to live life looking through the
windshield rather than the rearview mirror, as you know. And
all I can tell you is we see where we
are now and we.

Speaker 8 (01:03:53):
Take appropriate action.

Speaker 12 (01:03:54):
We took that appropriate action today.

Speaker 19 (01:04:00):
Thanks Howard Scheiner with Ruyters. So, as you mentioned a
minute ago, some margins of the job market would suggest
that the slide's already happening. A black unemployment right in
August was above seven percent, declining work week difficulty among
college graduates finding work, high rising youth unemployment. Why do
you think a quarter percentage point now is going to

(01:04:22):
arrest that.

Speaker 8 (01:04:24):
Well, I hadn't say that.

Speaker 12 (01:04:26):
I thought a quarter point would make a huge difference
to the economy. But you've got to look at the
whole path of rates, right, and markets has already been
baking in expectations. I mean, our market works through expectations, right.
So I think our policy path really does matter, and
I think it's important that we use our tools to
support the labor market when we do see signs like that.

Speaker 8 (01:04:46):
I did mention that.

Speaker 12 (01:04:47):
You know, you see minority unemployment going up, You see
younger people, people who are more vulnerable economically, more susceptible
to economic cycles. That's one of the reasons. In addition
to just overall all lower payroll job creation, that shows
you that at the margin, the labor market is weakening.
I would also point to labor force participation. Some part

(01:05:09):
of the significant decline in labor force participation over the
last year has probably been cyclical in nature rather than
just the usual aging process. So we put all this
together and we see that the labor market is softening,
and we don't need it to soften anymore, don't want
it to, so we use our tools, and you know,
we It starts with a twenty five basis point rate cut.

(01:05:31):
But you know, the market's also pricing in a rate path.
I'm not blessing what the market's doing at all. I'm
just saying it's not just one action.

Speaker 19 (01:05:41):
As a follow up to that, the growth mix right
now seems very concentrated in an investment and on the
consumer spending side in the higher income groups. Do you
feel that that's an unsustainable mix for the economy moving forward.

Speaker 8 (01:05:59):
I wouldn't say that.

Speaker 12 (01:05:59):
I mean, you're right, those are two we're getting unusually
large amounts of economic activity through the AI build out
and corporate investment.

Speaker 8 (01:06:12):
I don't know how long that will go on. No
one does.

Speaker 12 (01:06:14):
In terms of spending, you saw the spend The consumer
spending numbers were well above expectations, and that may well
be skewed toward higher earning consumers. There's a lot of
anecdotal elevens to suggest that. Nonetheless, it's spending. So, I mean,
I think the economy is, you know, it's moving along.

(01:06:35):
Economic growth is going to be one and a half
in the one and a half percent or better this year,
maybe a little better. Forecasts have been coming up as
you can see, so labor market is unemployment is low,
but you know, down downside risks, but it's still still
a low unemployment rate.

Speaker 8 (01:06:53):
So that's how we see it.

Speaker 20 (01:07:00):
Hi Stephanie Rule, MSNBC. Treasury Secretary Scott Besson has said
that the Federal Reserve suffers from mission creep and institutional bloat.
He's now calling for an independent review. Would you support
an independent review or are you open to any sort
of reform in any areas of the FED? I.

Speaker 12 (01:07:20):
Of course I'm not going to comment on anything the
Secretary says. There really any other officer says. So in
terms of reform at the FED, you know, we just
we just went through a lengthy and I think very
successful process of updating our monetary policy framework.

Speaker 8 (01:07:40):
I would say there's a lot of work.

Speaker 12 (01:07:41):
Going on behind the scenes around the assets we have
in the Federal Reserve banks, Federal Reserve system, and at
the Board.

Speaker 8 (01:07:51):
Are they the right size.

Speaker 12 (01:07:52):
We're actually going through a ten percent, ten percent head
count reduction through the whole FED, including the Board and
all the reserve banks. The employment employment at the FED
at the end of that will be basically at the
same level it was more than ten years ago, so
we will have had zero job growth for more than
a decade when we're finished with that, and I think

(01:08:13):
we'll probably we'll probably do more than that. So I
think we're certainly open to constructive criticism and ways to
do our jobs.

Speaker 20 (01:08:21):
Better, not an independent review.

Speaker 8 (01:08:24):
We're certainly open to you to always trying to do better.

Speaker 21 (01:08:32):
Mister Chairman Neil Irwin with Axios, there's been some debate
lately on whether AI is already starting to affect the
labor market in terms of lower labor demand high productivity.

Speaker 2 (01:08:41):
By contrast, do.

Speaker 21 (01:08:44):
Buy that and if that is true, does that have
implications for the monetary policy setting.

Speaker 12 (01:08:49):
So there's great uncertainty around that. I think my view,
which is also a bit of a guess but widely shared,
I think is that you are seeing some effects, but
it's not the not the main thing driving it, And
so particular focus on young people coming out of college
and yeah, there may be something there. It may be
that companies or other institutions that have been hiring younger

(01:09:12):
people right out of college are able to use AI
that more than they had in the past. That may
be part of the story. It's also part of the
story though, that you know, job creation more broadly has
slowed down, the economy has slowed down, and so it's
probably a number of things. But yeah, it's it's.

Speaker 8 (01:09:29):
Probably a factor. Hard to say how big it is.

Speaker 14 (01:09:34):
Yeah, thanks, mister chairman.

Speaker 21 (01:09:38):
What evidence do you see tariffs showing up in inflation?

Speaker 12 (01:09:44):
Well, if you can take goods just sort of the
broad goods category, and last year, goods inflation was negative.
If you go back twenty five years, that was the
typical thing, was that goods inflation was goods prices generally
went down, even adjusting for quality, so that was not
the case. During the pandemic. Of course, goods inflation went

(01:10:06):
very high, but we essentially returned to zero or slightly
negative inflation. Now, I think goods inflation over the course
of the past year is one point two percent, which
doesn't sound like a lot, but it's a big change.
So we think, I mean, analysts have different views, but
we think it's contributing, you know, point three or point
four or something like that to the current core PCEE

(01:10:28):
inflation reading, which is two point nine percent.

Speaker 8 (01:10:30):
So it's contributing.

Speaker 12 (01:10:33):
What's what seems to be happening is that you know,
the tariffs are not mostly not being paid by exporters
mostly being paid by really the companies that sit between
the exporter and the consumer. So if you if you
buy something and you sell sell it through retail, or

(01:10:53):
you use it to make a product, you're probably taking
those a lot of those costs on and not able
to pass it fully along to the consumer. Yet that's
a lot that appears to be what we're seeing all
of the all of those companies and entities in the middle.
They'll tell you that they have every intention of passing
that through in time, but they're not doing that now.
Consum to the consumer. The pass through has been been

(01:11:16):
pretty small. It's been slower and later, slower and smaller
than we thought. But the evidence is it's very clear
that there's some pass through.

Speaker 13 (01:11:27):
I also wanted to ask if you could share with
us the conditions under which you might consider leaving the
FED in in in May.

Speaker 12 (01:11:36):
I have nothing new on that for you today.

Speaker 22 (01:11:41):
Arena Hi Ketterina Sarival with Bloomberg News. I just wanted
to follow up on, you know, one of your answers
just a couple of minutes ago. You know, we've often
heard you talk about how you and your colleagues, you know,
do not think about politics. This does not enter the room,

(01:12:02):
but one of your new colleagues does come from this world,
right where everything is seen through this framework of politics
and of what party is being helped, and and that
person is still employed by the White House. How how
can markets and the public interpret you know, some of

(01:12:25):
his speeches for example, and then some of you know,
the forecast that we see today. I mean, the median
for this year was moved because of the introduction of
his forecast. I'm talking about the number of ray cuts
seen this year. What do you you know, what do
you say to markets and the public that are trying
to interpret you know, what you guys are saying.

Speaker 12 (01:12:47):
So there's twelve twelve vote, nineteen participants, of whom twelve vote,
as you know, on a rotating basis, so no one voter,
you know, can Really the only way for any voter
to really move things around is to be incredibly persuasive.
And the only way to do that in the context
in which we work is to make really strong arguments

(01:13:10):
based on the data. And you're one's understanding of the economy.
That's really all that matters, and that's how it's going
to work. And I think that is the way the
institution that's in the DNA of the institution.

Speaker 8 (01:13:24):
That's not going to change.

Speaker 22 (01:13:25):
And then I want to ask about a Gallup poll
that showed that Americans now have more confidence in the
President than the Federal Reserve when it comes to doing
what's right for the economy. Why do you think that
is and what's your response, what's your message the public.

Speaker 12 (01:13:40):
Our response is we're going to do everything we can
to use our tools to achieve the goals that Congress
has given us, and we're not going to get distracted
by anything. So I think that's what we're going to do.
We're just going to keep doing our jobs.

Speaker 23 (01:14:00):
Jones Financial Times. Given the range of views express prior
to the meeting, I think there was a lot less
descent today than a lot of people expected. It'd be
good to know just what you think the drivers were
of coming to their very strong consensus in the meeting.
And also on the flip side, to just explain why

(01:14:20):
the plots are really so scattered between you know, someone
even expecting rates to end up higher by the end
of the year to five cuts. I mean, what were
the kind of range of views you had about on
one side, why there was so much support for a
cut today, and on the flip side, why there's so
much divergence about what comes next.

Speaker 12 (01:14:39):
So I think there's quite a wide react, of wide
assessment that the situation has changed with respect to the
labor market. Whereas we could still say, and did say
in July at the time of the July meeting, if
the labor market was in solid condition, and we could
point to one hundred and fifty thousand jobs per month
and many other things. I think that the new data

(01:15:04):
that we've had, and it's not just payrolls, it's it's
other things as well, suggests that there really is meaningful
downside risk. I said there was downside risk then, but
I think that that downside risk is now a reality
and there's clearly more downside risk. So I think that
was I think that's broadly accepted, and so that meant

(01:15:24):
different things for different people. Some, you know, some wrote
down almost everyone wrote down supported this cut, and some
supported more cuts, and some didn't, as you will see
from the dot plot.

Speaker 8 (01:15:36):
So just the way, that's just the way it is.

Speaker 12 (01:15:37):
I mean, people have it's you have people who take
this work very seriously think about it all the time
do their work, discuss it with our colleagues, you know,
we endlessly discuss this in between ourselves, and then we
have a meeting where and we put it all out
on the table, and this.

Speaker 8 (01:15:55):
Is what you get.

Speaker 12 (01:15:55):
And you're right, there is there's a range of views
in the dots, and and I think that's, like I said,
very unsurprising given the quite unusual, historically unusual nature of
the challenges that we face. Let's remember, though the unemployment
rates four point three percent, the economy is growing at

(01:16:16):
one and a half percent, so it's not a bad
economy or anything like that. We've seen much more challenging
economic times. But from a policy standpoint, the same point
of what we're trying to accomplish, it's challenging to know
what to do. There are, as I mentioned earlier, there
are no risk free paths. Now it's not incredibly obvious

(01:16:37):
what to do. So we have to keep our eye
on inflation. At the same time, we cannot ignore and
must keep our eye on maximum employment, which is those
are two equal goals, and you will see that they
are just there're a range of views on what to do. Nonetheless,
we came together today at the meeting and acted with

(01:16:58):
a high degree of unity.

Speaker 24 (01:17:05):
Thank you, Archie Hawk and the economist. You mentioned earlier
that job creature was running below your guess at it's
break even rate. Here's two bit more about that, and
where you think the break heathen rate is.

Speaker 12 (01:17:16):
You know, so there are many different ways to calculate it,
and none of them is perfect. But you know, it's
it's clearly come way down. You could you could say
it's somewhere between zero and fifty thousand, and you'd be
right or wrong. I mean, there's just many different ways
to do it. So whatever wherever it was one hundred

(01:17:37):
and fifty thousand, two hundred thousand a few months ago,
it's come down quite significantly. And that's because very a
very lower amount of people are joining the labor force.
The labor force really not growing much at this point,
and that's that's a lot of where the supply of
labor was coming from over the last two or three years,
so we're not getting that now. We're also we've got

(01:17:59):
much lower demand. You know, it's interesting that supply and
demand have really come down together so far, except now
we do have inflation, sorry, unemployment ticking up. Outside just
one tick outside of the range where it's been for
a year. Four point three percent is still a low level.
But you know, I think this level of this speedy

(01:18:22):
decline in both supply and demand has certainly gotten everyone's attention.

Speaker 24 (01:18:28):
By may you mentioned the downside risk to employment a
fair amount, but it's striking that measures of kind of
activity and output for the third quarter, those that we
have seen pretty strong. The Atlanta FAD's GP now is
very strong. He mentionured strong PC numbers as well. How
do you square those things? Is there is there a
shance actually could be upside risk to the label market
if there's activity bashes all right.

Speaker 12 (01:18:46):
Well that that would be great, that we'd love that
to happen. So I don't know that you see a
big tension there, but it's gratifying to see that that
economic activity is holding in and it's you know, so
it's it's a good but a good bit from consumption.
It looks like consumption was stronger than expected what we
got earlier this this week, I guess, and also we're

(01:19:08):
getting you know, a fairly narrow sector is producing a
lot of activity, which is the the AI build out.

Speaker 8 (01:19:16):
And you know business investment, so.

Speaker 12 (01:19:20):
You know, we watch all of it, and I would
say we you know, we we did move up the
media and for growth for this year, actually moved up
in the sep between the June and September uh SEPs
so and really the inflation and labor market didn't change much.

Speaker 8 (01:19:37):
It's really the risks that we're.

Speaker 12 (01:19:38):
Seeing to the labor market that that that were the
focus of today's decision.

Speaker 25 (01:19:46):
Nicole Hi, Nicole good Kind with Barons, Thank you for
taking my question. Given the cumulative impact of high interest
rates on the housing sector, I'm wondering how concerned you
are that current rate levels are pascerbating housing affordability issues
and potentially hindering household formation and wealth accumulation for a

(01:20:06):
segment of the population.

Speaker 12 (01:20:09):
You know, housing is an intrasensitive activity, so it's at
the very center of monetary policy. When the pandemic hit
and we cut rates to zero, the housing companies were
incredibly grateful, and it was really they said that was
the only thing that kept them going, was that we

(01:20:29):
cut so aggressively and provided credit and things like that,
and they were able to finance because because we did that.
The other side of that is when inflation gets high,
and we raise rates, and you're right, it does burden
the housing industry, and so rates have come down a bit.
And as that happens. We don't set the we don't
set mortgage rates, but our policy rate changes do tend

(01:20:51):
to affect mortgage rates, and that has been happening, and
that will of course raise demand.

Speaker 8 (01:20:58):
Lower borrowing rates for for.

Speaker 12 (01:21:01):
Builders will help you know, get builders, will help supply.

Speaker 2 (01:21:05):
Uh.

Speaker 8 (01:21:05):
And so some of that should happen.

Speaker 12 (01:21:07):
I think most analysts think that we have to be
pretty big changes for it to matter a lot for
the big changes in rates for the for the to
matter a lot for the housing sector. And you know,
the other thing is by you know, by achieving maximum
employment and price stability. That's a strong economy, that's a
good economy for for housing. And then the last thing
I'll say is, uh, you know, there's a deeper problem here.

(01:21:29):
There's not a cyclical problem that the FED can address,
and that just is a pretty much nationwide housing shortage
or put a lot of places in the country just
don't have enough enough housing for people.

Speaker 2 (01:21:40):
Uh.

Speaker 12 (01:21:41):
And and you know, all of the areas around metropolitanarians
like Washington for example, are very built up and so
you're having to build farther and farther out and that
that So that's where it is.

Speaker 25 (01:21:52):
And just a quick follow up, during the last SEP
or the press conference following the last SEP, you seem
to indicate that policymakers life conviction about there are projections,
and I'm wondering if you still feel that way.

Speaker 12 (01:22:06):
You know, forecasts, Forecasting is very difficult, even in placid times,
and as I've mentioned before, forecasters are a humble lot
with much to be humble about. So I think right
now is a particularly challenging time, even more uncertain than usual.
And so I don't know any forecaster anywhere. Really Ask

(01:22:28):
any of the forecasters whether they have great confidence in
their forecast right now, I think they'll honestly say no.

Speaker 15 (01:22:39):
Thank you.

Speaker 4 (01:22:39):
Chair Pal Jennifer schawan Berger with Yahoo Finance. If you're
cutting rates, why continue to reduce the size of your
balance sheet than pause the unwinding.

Speaker 12 (01:22:50):
Well, I think we're you know, we're cutting the size
of our balance sheet quite marginally now. As you know,
with the balance sheet, we're still in an abundant reserves condition,
and we've said that we would stop somewhat above a
somewhat above an ample reserves levels. That's what we are

(01:23:12):
and we're you know, we're getting closer to that. We're
monitoring it very carefully. We don't think that that has
at all significant macroeconomic effects. These are pretty small numbers
moving around inside a giant economy. You know that the
number that the level of runoff is not very large,
So I wouldn't attribute macroeconomic consequences to that at this point.

Speaker 4 (01:23:31):
And at his recent confirmation hearing, Stephen Myron brought up
that the FED actually has three mandates from Congress, not
just jobs and stable crisis, but also moderate long term
interest rates.

Speaker 1 (01:23:42):
So what does.

Speaker 4 (01:23:43):
Congress mean by moderate long term interest rates? How should
we understand that when we see the ten year treasury moving?
And how do you think about this part of the
mandate when policy choices like right cuts or balance sheet
reductions affect the long end of.

Speaker 10 (01:23:56):
The yield curve.

Speaker 12 (01:23:59):
So we always think of it as the dual mandate
maximum employment and price stability for a long time, because
we think moderate long term interest rates are something that
will result from stable inflation low and stable inflation and
maximum employment. So we don't we don't, haven't we haven't
thought about that as for a very long time as

(01:24:22):
a third mandate that requires independent action.

Speaker 8 (01:24:25):
So that's where that is.

Speaker 12 (01:24:27):
And there's no there's no thought of as far as
I'm concerned, there's no thought of considering that, you know,
considering that we somehow incorporate that in as something in
a different way.

Speaker 8 (01:24:44):
Thanks Chapello. Matt Egan from CNN.

Speaker 26 (01:24:47):
We recently learned that average FICO credit scores are down
this year by two points, the most since two thousand
and nine during the Great Recession, and delinquencies are high
for car loans, personal loans, credit cards. How concerned, if
at all, are you about the health of consumer finances
and do you expect today's cut will help?

Speaker 8 (01:25:08):
So, you know, we're aware of that.

Speaker 12 (01:25:11):
I think this default rates have been kind of ticking up,
and we do watch that they're not at a level
I don't believe they're at a level or overall they're
they're you know, terribly concerning, but it is something that
we watch. You know, lower rates should support economic activity.
I don't know that one rate cut will have you know,
a visible effect on that, but over time, you know,

(01:25:31):
a strong economy with a strong labor.

Speaker 8 (01:25:33):
Market is what we're what we're aiming for.

Speaker 12 (01:25:36):
And stable and stable prices, so that should help.

Speaker 26 (01:25:41):
This rate cut is coming at a time when the
stock market is at or near all time highs and
some valuation metrics are elevated historically, is there a risk
of cutting rates could overheat financial markets, potentially fueling a bubble?

Speaker 12 (01:25:58):
You know, we we're tightly folksocused on our goals, right,
and our goals are maximum employment and price stability, and
so we take the actions that we take it with
an eye on those goals separately, and that's what we
why we did what we did today.

Speaker 8 (01:26:14):
Separately.

Speaker 12 (01:26:14):
We monitor financial stability very very carefully. And you know,
I would say it's a it's a mixed picture, but
households are in good shape, Banks are in good shape. Overall,
households are still in good shape in the aggregate. And
I know that people to lower into the income spectrum
are under pressure obviously, But from a financial stability perspective,

(01:26:34):
we monitor that picture. We don't have a view that
there's a right or wrong level of asset prices for
any particular financial asset, but we monitor the whole picture
really looking for structural vulnerabilities. And I would say those
are not elevated right now?

Speaker 2 (01:26:53):
Gene do you fee the last question.

Speaker 27 (01:26:57):
I share Perrell Gene Young with M and I Market News.
I wanted to ask about inflation expectations. You've said the
FED can't take the stability of inflation expectations for granted.
You mentioned at the short run they've gone up a
little bit. I wonder if you can talk a bit
about that, and then also at the long run, wondering
do you see evidence that the debate over FED independence

(01:27:21):
and the growing deficit is putting pressure on inflation expectations.

Speaker 12 (01:27:26):
So as as you said, shorter term inflation expectations have
tended to respond to near term inflation, so if inflation
goes up, inflation expectations will predict that it takes just
a little while to get back down. Fortunately, throughout this period,
longer term inflation expectations both both break even in the markets,

(01:27:46):
and almost all of the longer term surveys Michigan being
a bit of an outlier lately, have have have been
just rock solid in terms of, you know, running at
levels that are consistent with two percent inflation over time.
So we don't take that for granted. We we actually
assume that our actions have a real effect on that,

(01:28:07):
and that you know we need to you know, continually
show and also mentioned discuss our commitment to two percent inflation,
and so you'll hear us doing that. It's but you
know that we're as I mentioned, it's a difficult situation
because we have we have risks that are both affecting
the labor market and inflation. Those are two goals, and

(01:28:30):
so we have to balance those two. When they're both
at risk, we have to balance them and that's really
what we're trying to do. I don't inter your latter
part of your question was about independence, you know, I don't.
I don't see market participants.

Speaker 8 (01:28:44):
I don't see it.

Speaker 12 (01:28:45):
That's something they're factoring in right now in terms of
setting interest rates.

Speaker 8 (01:28:50):
Thanks very much.

Speaker 2 (01:28:58):
All right, guys, So it's not happening here. Getting somebody
out there.

Speaker 1 (01:29:01):
Okay, So we'll break this down for you in detail
on coming shows, but just some reports in case you
came in late. It's a quarter basis point cut right now.
The likelihood is that there is some pressure from current
Fed governors that we could see more ray cuts coming.

Speaker 2 (01:29:21):
Of course, Powell was very I feel like it was
a little bit.

Speaker 1 (01:29:23):
More dubbish or hawkish, I should say around whether or
not we're going to get the ray cuts this year.

Speaker 2 (01:29:28):
But the big key is is they are.

Speaker 1 (01:29:30):
Facing a big, big issue right now between both inflation
and jobs. We've been saying this all along. He's in
a rock and a hard place. I don't know that
he gets out of this. The other thing I think
that plays into this right now is more pressure from Trump,
whether or not Trump will go at him as hard
or if he feels like, okay, we got a quarter
basis points. We're on our way to getting corrected. As
Powell goes into the end of his term, which is

(01:29:53):
in May of next year.

Speaker 2 (01:29:54):
So this is going to break.

Speaker 1 (01:29:56):
Down, I think into a lot of situations on the charts.
I guess is that we are going to and I
shouldn't say guess where I feel that the market is
going to be heading is is most likely in a
bullish position right now. If you look at the four
hour on almost everything, I'll just go to XRP going
sideways on the four B and B is on a breakout,
Solana is on a breakout.

Speaker 2 (01:30:17):
Let's say if Cardono's on a little.

Speaker 1 (01:30:19):
Bit of a breakout, Sui was on a move right there,
so you can see some of the market is not
necessarily looking at this as a bad thing. So I
think the real question is how much pressure does the
rest of the Fed governors put on Powell to go
ahead for an additional rate cut in the upcoming meetings.
My guess is we will see more rising inflation that's

(01:30:40):
going to make it hard, and we're going to see
even worse job numbers that will probably offset it going forward.
So there is a lot to unpack here. The good
thing is is markets did not crash, markets did not boom.
That tells me that investors are a little bit more
numb to it in our I'm probably waiting to see

(01:31:01):
how this plays out. Remember, we have Clarity Act coming
through this fall, more regulation. We also have I think
a lot playing around international and global macro scenarios that.

Speaker 2 (01:31:14):
Will continue to push in this direction.

Speaker 1 (01:31:15):
And this is the first move by the United States
in reference to a rate cut since last year. So
very very good I think, at least direction going forward.
But again I feel like the Fed is and was late.
They're trying to correct. Whether or not they can catch
up is the real critical point. And when you look

(01:31:37):
about it right now. I think the scenario right now
bullish at sixty one sixty two percent. When you look
at it right now, the real question mark is how
to businesses respond. So I'm going to be watching retail
sales like a hawk going into the fall, because that
will give.

Speaker 2 (01:31:54):
Us a little bit of indicator.

Speaker 1 (01:31:55):
Credit is already in a basically shambles, and I'm talking
about retail credit that is a problem going into the
kind of scenario we're facing right now because it could
stimulate recession concerns. And this goes back to my whole
theory on hals versus the halves. So this market is different.
It feels very unique in the way of these cycles. Granted,

(01:32:17):
there are cycles that could push us into movement around
the end of the year, and I think towards the
end of the year that is when we are going
to have to make some very hard decisions on what
you're holding in your portfolios and how you're going to
manage whether you're going to stay in it for the
long term or you're going to start to dollar cost
average out of portfolios and into more other assets and diversify.

Speaker 2 (01:32:42):
All of that will break down for you. We're going
to get to all of that for you guys this week.

Speaker 1 (01:32:45):
We've got a lot coming in in terms of additional interviews,
will of course be doing these additional lives when we
do these big FMC If you like these, if you
like the live streams, just let me know in the comments.

Speaker 2 (01:32:57):
That's all you have to do, and make.

Speaker 1 (01:32:58):
Sure and hit like on the video if you do
like the livestream, that's the bare minimum. Last thing is
that right now. If you're not subscribed, get in on
the Diamond Circle. That is my private group that I
send out an.

Speaker 2 (01:33:11):
Email to each week. It's called the Baron Market Edge.

Speaker 1 (01:33:13):
And basically I break down a lot of what's happening
in the market, also play a little bit of where
I'm going in the markets in general.

Speaker 2 (01:33:20):
So get in. It's absolutely free.

Speaker 1 (01:33:22):
We'll leave a link down below, and of course follow
me out there on X at Paul Baron. We'll catch
you next time right here on The Paul Baron Show.

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