WEBVTT - Fed Cuts Rates With Three Dissents, Projects One Cut in 2026 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.520 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.440 --> 0:00:18.360 stay ahead with insight on the people, companies, and trends 0:00:18.360 --> 0:00:23.360 shaping today's complex economy. Plus global business, finance and tech 0:00:23.440 --> 0:00:27.320 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.640 --> 0:00:31.720 with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:33.240 --> 0:00:36.120 All Right, Fed decision Day, the eighth and final FOMC 0:00:36.280 --> 0:00:40.320 meeting of twenty twenty five. It is done, and widely 0:00:40.440 --> 0:00:43.960 as expected, the Fed cutting rates for a third consecutive time. 0:00:44.600 --> 0:00:47.080 The Fed also maintaining its outlook for just one cut 0:00:47.080 --> 0:00:52.320 in twenty twenty six. Okay, so two descents last time, yep, 0:00:52.800 --> 0:00:56.440 this time three descents correct, but in different ways correct, 0:00:56.520 --> 0:01:01.400 kind of spanning everything. That's Stephen Meyer into want a 0:01:01.400 --> 0:01:04.720 more aggressive interest rate cut right at fifty basis points. 0:01:04.959 --> 0:01:07.720 But maybe what people didn't expect were two dissenters who 0:01:07.720 --> 0:01:09.200 wanted to hold rate study. 0:01:08.920 --> 0:01:12.440 Mister Goolsby of the Chicago Fed and mister Schmidt of 0:01:12.520 --> 0:01:13.080 Kansas City. 0:01:13.240 --> 0:01:15.480 Yeah, exactly, saying we didn't need to do anything. 0:01:15.800 --> 0:01:18.479 Okay, Yeah, so not a lot of consensus, but. 0:01:18.600 --> 0:01:20.800 Must have been a healthy debate around the FED table 0:01:21.360 --> 0:01:24.640 on the wall. Yeah, exactly. So now we're done for 0:01:24.680 --> 0:01:26.280 the year and now we think about what's going to 0:01:26.319 --> 0:01:26.959 happen next year. 0:01:26.959 --> 0:01:29.800 We got a lot of commentary on that from fedho J. Powell. 0:01:29.840 --> 0:01:33.280 In fact, one of the things he really emphasized repeatedly 0:01:33.480 --> 0:01:37.000 in his comments in his opening statement that the committee 0:01:37.040 --> 0:01:37.280 is in. 0:01:37.240 --> 0:01:38.720 A wait and see mode. 0:01:38.880 --> 0:01:41.800 Also noting, by our account, thank you Talia, our producer, 0:01:41.880 --> 0:01:45.800 for actually pulling this out to our attention, noting by 0:01:45.800 --> 0:01:48.520 our account for the third FOMC meeting in a row, 0:01:48.680 --> 0:01:51.000 saying there is no risk free path forward. 0:01:51.080 --> 0:01:53.080 It's a challenging situation. 0:01:53.440 --> 0:01:55.960 In the near term. Risks to inflation are tilted to 0:01:56.000 --> 0:01:59.760 the upside, and risks risks to employment to the downside. 0:02:00.080 --> 0:02:04.800 A challenging situation. There is no risk free path for policy. 0:02:04.840 --> 0:02:06.800 You're going to get a great deal of data between 0:02:06.800 --> 0:02:10.160 now and the January meeting. Everyone around the table at 0:02:10.160 --> 0:02:13.440 the fom SE agrees that inflation is too high and 0:02:13.480 --> 0:02:15.600 that we want it to come down, and agrees that 0:02:15.639 --> 0:02:17.959 the labor market has softened in that there's further risk. 0:02:18.400 --> 0:02:22.040 Everyone agrees on that where the difference is how do 0:02:22.040 --> 0:02:25.480 you wait those risks and what does your forecast look like? 0:02:25.639 --> 0:02:28.440 And where do you ultimately weal Where do you think 0:02:28.480 --> 0:02:32.399 the bigger risk is? And you know, it's very unusual 0:02:32.440 --> 0:02:35.880 to have persistent tension between the two parts of the mandate. 0:02:35.919 --> 0:02:38.400 We're well positioned to wait to see how the economy evolves. 0:02:38.600 --> 0:02:39.400 We'll just have to see. 0:02:39.440 --> 0:02:42.240 It's a very challenging situation. I think we're in a 0:02:42.240 --> 0:02:44.359 good place too, as I mentioned, to wait and see 0:02:44.360 --> 0:02:45.519 how the economy evolves. 0:02:45.680 --> 0:02:47.440 All right, very challenging situation. 0:02:47.520 --> 0:02:47.919 Fit your J. 0:02:48.080 --> 0:02:48.480 Powell. 0:02:48.480 --> 0:02:52.400 At the press conference, you also did say gradual labor 0:02:52.400 --> 0:02:56.120 market cooling justified that rate cut today. So talking about 0:02:56.600 --> 0:02:58.519 some weakness that we've got in the labor market. 0:02:58.639 --> 0:03:00.600 Next f MC decision, folks, Not. 0:03:00.560 --> 0:03:02.280 That we like to kind of look ahead, but we do. 0:03:02.919 --> 0:03:04.960 January twenty eight, twenty twenty sixth. 0:03:04.800 --> 0:03:07.000 Mark your calendars, I am, are you? 0:03:07.200 --> 0:03:10.040 Oh yeah, it'll be the first of twenty twenty six. J. 0:03:10.160 --> 0:03:12.399 Powell still will be FED chair, So it'll be interesting. 0:03:12.720 --> 0:03:13.560 We should point out. 0:03:13.560 --> 0:03:15.880 After the decision, President Trump at the White House made 0:03:15.880 --> 0:03:17.880 some comments tim on today's FED move. 0:03:17.960 --> 0:03:20.440 He said that could have been doubled at least doubled. 0:03:20.800 --> 0:03:21.440 Not a surprise. 0:03:21.560 --> 0:03:24.360 We have heard criticism from the President when it comes 0:03:24.360 --> 0:03:25.240 to FED Chair J Powell. 0:03:25.280 --> 0:03:29.560 Well, interestingly enough, that's where Stephen Myron exactly, Stephen Myron voted, 0:03:29.560 --> 0:03:31.920 who's widely seen as somebody who has the most connection 0:03:32.040 --> 0:03:33.880 to the White House, who's on the FOMC. 0:03:34.160 --> 0:03:35.280 Yeah, exactly right. 0:03:35.320 --> 0:03:37.880 All right, So let's do a little bit more in 0:03:37.960 --> 0:03:40.360 terms of the commentary around this decision. We've had a lot, 0:03:40.760 --> 0:03:43.440 certainly come across the Bloomberg, including our live blog. Let's 0:03:43.440 --> 0:03:46.280 see what our Bloomberg Intelligence chief US Interest rates strategist 0:03:46.320 --> 0:03:49.480 Iri Jersey has to say about this. All right, Ira, 0:03:49.960 --> 0:03:52.680 We have heard from Fedchair J. Powell for at least 0:03:52.720 --> 0:03:56.880 the last three meetings where they cut that both sides 0:03:56.920 --> 0:04:01.960 of the Fed's mandate is challenged at the FED decision today. 0:04:02.000 --> 0:04:02.880 Does it make sense to you? 0:04:04.040 --> 0:04:04.600 I think it does. 0:04:04.640 --> 0:04:07.240 I mean it was fully priced. And you know clearly 0:04:07.280 --> 0:04:11.080 when they pivoted to worrying more about employment than inflation, 0:04:11.120 --> 0:04:13.080 they were going to go more than fifty basis points 0:04:13.120 --> 0:04:16.000 as kind of these risk management cuts, and you know 0:04:16.040 --> 0:04:18.440 now that they've cut seventy five basis points. Another key 0:04:18.520 --> 0:04:21.920 phrase that Jay Powell said was that that they're now 0:04:21.960 --> 0:04:25.159 in the range of neutral. So basically, with all the 0:04:25.160 --> 0:04:28.960 committee members, what is this mystical r star or real 0:04:29.040 --> 0:04:29.680 neutral rate? 0:04:30.040 --> 0:04:31.080 And are we there yet? 0:04:31.080 --> 0:04:34.240 And he conceded that he thinks that they're now in 0:04:34.279 --> 0:04:37.839 the range of being at neutral. So therefore this could 0:04:37.880 --> 0:04:40.040 be the end of cuts, or maybe they're going to 0:04:40.080 --> 0:04:43.840 cut again unless the economic data changes enough for them 0:04:43.880 --> 0:04:46.760 to be comfortable cutting again, because like you mentioned, you know, 0:04:46.800 --> 0:04:49.200 he did say that there's still this balance of risk 0:04:49.240 --> 0:04:50.600 between inflation and employment. 0:04:50.720 --> 0:04:53.760 Yeah, exactly, And look he did say we're even between 0:04:53.800 --> 0:04:55.680 now and January, not to mention between now and the 0:04:55.760 --> 0:04:59.440 end of next year, when some people think that another 0:04:59.480 --> 0:05:02.600 twenty five point rate will happen. He said, we're going 0:05:02.600 --> 0:05:04.240 to get a great deal of data between now and 0:05:04.279 --> 0:05:06.680 the January meeting, so a lot can change or a 0:05:06.720 --> 0:05:10.440 lot can be confirmed in the meantime ira before that happens. Though, 0:05:10.480 --> 0:05:12.960 I want to go back to this tension between the 0:05:13.000 --> 0:05:15.719 different parts of the dual mandate. Which part do you 0:05:15.800 --> 0:05:17.960 believe the FED needs to focus on more? Is it 0:05:18.000 --> 0:05:20.560 inflation or is it maximum employment? 0:05:21.600 --> 0:05:23.720 Well, I actually think that at the moment there's very 0:05:23.760 --> 0:05:26.400 little that they can do about inflation because you know 0:05:26.440 --> 0:05:29.599 that the interest rates still are relatively high compared for 0:05:29.760 --> 0:05:32.599 like the housing market, and there's not much that the 0:05:32.600 --> 0:05:35.200 Federal Reserve can actually do to help the housing market 0:05:35.279 --> 0:05:38.479 right now in terms of, you know, bringing house prices down, 0:05:38.480 --> 0:05:40.400 Like what are they going to do there? You know, 0:05:40.440 --> 0:05:43.120 if they lower interest rates a lot more, that's just 0:05:43.200 --> 0:05:46.159 going to increase the value of some people's houses because 0:05:46.680 --> 0:05:48.360 you know, maybe mortgage rates come down a little bit, 0:05:48.400 --> 0:05:51.840 that increases affordability, and suddenly house prices actually go up, 0:05:51.880 --> 0:05:55.400 which is actually against their mandate. And for other goods 0:05:55.400 --> 0:05:58.560 and services, they don't seem to be particularly elastic, like 0:05:58.600 --> 0:06:01.480 the elasticity to interest rate and a lot of these 0:06:01.480 --> 0:06:06.560 other goods, whether it's even automobiles or any other large purchases, 0:06:06.960 --> 0:06:10.039 there just doesn't seem to be a significant correlation between 0:06:10.080 --> 0:06:12.680 the two at the moment. I think part of that 0:06:12.839 --> 0:06:15.440 is quite frankly, because a large portion of the population 0:06:15.960 --> 0:06:18.240 does have very low interest rate mortgages, so they're not 0:06:18.279 --> 0:06:21.240 going to refi, it's not going to Lowering interest rates 0:06:21.320 --> 0:06:23.720 isn't going to be as stimulative as it has been 0:06:23.960 --> 0:06:27.200 in previous cycles. And at the same time, lowering interest 0:06:27.279 --> 0:06:31.159 rates again, isn't going to necessarily bring inflation, make inflation 0:06:31.240 --> 0:06:35.920 go significantly higher, if you know, if you don't get 0:06:36.120 --> 0:06:38.840 a big lending boom. And I'm not sure that that 0:06:38.960 --> 0:06:40.960 lending has you know, increased the whole heck of a 0:06:41.000 --> 0:06:44.080 lot anyway. So anyway, the fact that they were close 0:06:44.120 --> 0:06:46.360 to neutral, and we you know, we've always thought that 0:06:46.400 --> 0:06:49.640 they'd probably cut a little bit beyond three percent because personally, 0:06:49.680 --> 0:06:52.279 I'm a little bit more concerned about the job market. 0:06:52.360 --> 0:06:55.039 I think the job market shows some cracks beneath the 0:06:55.080 --> 0:06:57.839 surface that some people are either ignoring or you know, 0:06:57.880 --> 0:07:01.080 everyone's making excuse for why we're at fifty k ish 0:07:01.440 --> 0:07:04.440 payrolls the last couple of reports that we've gotten. But 0:07:04.480 --> 0:07:07.920 the fact is is that companies are still reluctant to hire. 0:07:08.200 --> 0:07:09.800 You have seen in some of the survey data. 0:07:09.840 --> 0:07:12.560 Maybe that leveling out a little bit. Yeah, but I'm 0:07:12.600 --> 0:07:14.760 still concerned about the job market, and I think that 0:07:14.800 --> 0:07:16.760 the FED is and the people who voted for the 0:07:16.800 --> 0:07:19.560 cut certainly are worried about the job market more than inflation. 0:07:19.680 --> 0:07:22.000 And we get to read on that next week. Hey, 0:07:22.040 --> 0:07:24.040 one thing I want to do before we go. We 0:07:24.120 --> 0:07:26.239 got about a minute and a half or so left 0:07:26.240 --> 0:07:29.560 here Just quickly, Ira, the FED move to expand its 0:07:29.560 --> 0:07:33.120 balance sheet again fresh purchases of short term treasury securities 0:07:33.120 --> 0:07:35.920 to maintain what they said an ample supply of bank reserves. 0:07:36.040 --> 0:07:37.760 Just got about thirty seconds. What do we need to 0:07:37.800 --> 0:07:38.160 know here? 0:07:38.880 --> 0:07:41.240 Yeah, well, that's actually probably the bigger story, even than 0:07:41.280 --> 0:07:44.200 everything else that we just talked about, because it's much 0:07:44.280 --> 0:07:46.960 larger than most of us thought it would be. They're 0:07:47.000 --> 0:07:49.640 adding somewhere around one hundred and sixty billion dollars of 0:07:49.680 --> 0:07:51.840 tea bills over the next couple of months. 0:07:52.080 --> 0:07:53.800 Through the April tax day. 0:07:54.480 --> 0:07:56.640 Risk assets seem to like that quite a lot, and 0:07:56.920 --> 0:08:00.480 it made the whole meeting a lot more doubvish to 0:08:00.840 --> 0:08:03.760 I think a lot of people's sensibilities and just looking 0:08:03.800 --> 0:08:08.120 at the whole cut plus the Qiwi light, if you 0:08:08.120 --> 0:08:08.800 want to call it that. 0:08:09.000 --> 0:08:11.320 All right, good stuff, Ira, Thank you so much. We'll 0:08:11.320 --> 0:08:13.480 be looking out for your research. Also later on today 0:08:13.520 --> 0:08:16.680 and into tomorrow, our Jersey chief US interest rates strategist 0:08:16.680 --> 0:08:20.119 at Bloomberg Intelligence from BI headquarters in New Jersey. 0:08:20.240 --> 0:08:22.960 Stay with us more from Bloomberg Business Week Daily coming 0:08:23.040 --> 0:08:24.000 up after this. 0:08:27.160 --> 0:08:31.040 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:08:31.080 --> 0:08:33.760 us live weekday afternoons from two to five eas during 0:08:33.960 --> 0:08:37.199 Listen on Apple Karplay and Android Auto with the Bloomberg 0:08:37.240 --> 0:08:40.880 Business app, or watch us live on YouTube. 0:08:42.000 --> 0:08:44.160 We're staying on the FED decision today. We're also thinking 0:08:44.160 --> 0:08:47.040 about FED leadership come twenty twenty six, We've got a 0:08:47.040 --> 0:08:49.520 great roundtable. Steve Moore's with us. He's co founder and 0:08:49.600 --> 0:08:52.760 chair of the nonprofit Unleash Prosperity. He's a former economic 0:08:52.840 --> 0:08:55.840 and senior policy advisor to Donald Trump in twenty sixteen 0:08:55.840 --> 0:08:58.640 and twenty twenty four, and served as Chief Economist and 0:08:58.679 --> 0:09:02.080 Distinguished Visiting Fellow at Heritage Foundation for twelve years. Yeah. 0:09:02.080 --> 0:09:05.000 He's also written a bunch of books, including trump Anomics, 0:09:05.000 --> 0:09:07.960 Inside the America First Plan to Revive Our Economy. Also 0:09:08.000 --> 0:09:11.040 another one, The Trump Economic Miracle. And you might remember 0:09:11.080 --> 0:09:14.240 back in twenty nineteen, President Trump selected Steve Moore for 0:09:14.480 --> 0:09:17.840 the Federal Reserve Board of Governors, which more ultimately withdrew from. 0:09:17.880 --> 0:09:20.319 So we have a lot to unpack and talk about. 0:09:20.520 --> 0:09:22.680 Steve joins us from Palm Beach, Florida. Great to have 0:09:22.760 --> 0:09:25.800 him here. Also with us is Bloomberg Economics US and 0:09:25.840 --> 0:09:28.760 Canada economist Stuart Paul. He's right here in our Bloomberg 0:09:28.800 --> 0:09:30.160 Interactive Broker studio. 0:09:30.360 --> 0:09:32.360 Steve, I want to kick it off with you. Welcome. 0:09:32.480 --> 0:09:36.400 Nice to have you here on Bloomberg. Your key takeaways 0:09:36.480 --> 0:09:38.440 from today's FED decision. 0:09:38.800 --> 0:09:42.400 Well, it was certainly Wall Street was happy with what 0:09:42.559 --> 0:09:46.200 happened today. It was very expected that the Fed did 0:09:46.240 --> 0:09:50.319 exactly what they announced today. Trump of course wants more 0:09:50.400 --> 0:09:55.559 rate cuts. You know, Look, inflation has come down, and 0:09:55.840 --> 0:09:58.280 it's still not where we wanted to be. We wanted 0:09:58.360 --> 0:10:00.880 to be at the two percent at target, and so 0:10:00.960 --> 0:10:03.520 we're running about two point seven two point eight, So 0:10:03.559 --> 0:10:06.280 there's still work to be done to bring inflation down. 0:10:06.320 --> 0:10:09.000 Of course, if you bring inflation down, affordability goes up. 0:10:09.360 --> 0:10:12.040 But look, this is a booming economy right now. It 0:10:12.120 --> 0:10:14.679 is so hot. Trump is right about that. In twenty 0:10:14.720 --> 0:10:17.320 twenty six is going to be a monster year for 0:10:18.000 --> 0:10:20.640 growth and for incomes and I believe for equities. 0:10:20.720 --> 0:10:23.040 If you were on the FOMC in a voting member, 0:10:23.080 --> 0:10:24.600 how would you have voted today? What would you have 0:10:24.640 --> 0:10:25.360 wanted to see? 0:10:25.760 --> 0:10:27.240 I would have done exactly what they did. 0:10:27.440 --> 0:10:30.120 You wouldn't have gone fifty basis points like Stephen Myron. 0:10:30.840 --> 0:10:33.240 No, I'm a little bit more of an inflation hot 0:10:33.240 --> 0:10:36.119 than Steve and Steven. I know Stephen, he's a smart economist. 0:10:36.480 --> 0:10:39.200 I lean towards making sure. I think the top priority 0:10:39.240 --> 0:10:41.560 of the Fed should be to make sure that we 0:10:41.640 --> 0:10:44.560 bring that inflation rate down to the target level. We're 0:10:44.559 --> 0:10:47.760 not there yet, and you know, look at the as 0:10:47.760 --> 0:10:51.040 a political matter, Trump really needs to continue to bring 0:10:51.080 --> 0:10:56.320 that inflation rate down because people are still angry about prices. 0:10:56.840 --> 0:10:59.439 Mister Moore, is really difficult to square the circle between 0:10:59.600 --> 0:11:03.440 being an inflation hawk and voting for or advocating for 0:11:03.520 --> 0:11:06.160 additional rate cuts. When you see somebody like President Trump 0:11:06.280 --> 0:11:09.080 focusing so much on affordability, but at the same time 0:11:09.160 --> 0:11:12.000 calling for the FED to cut rates even more, how 0:11:12.000 --> 0:11:13.440 do you really square the circle? 0:11:13.440 --> 0:11:14.080 How would you. 0:11:14.280 --> 0:11:18.080 Rationalize voting for a cut while also being an inflation hawk. 0:11:19.640 --> 0:11:25.640 Well, I think I believe that Wall Street puts way, way, 0:11:25.800 --> 0:11:30.720 way too much influence and interest in FED rate cuts. 0:11:30.760 --> 0:11:35.000 I mean, nobody the short term interest rate has become 0:11:35.040 --> 0:11:39.680 almost irrelevant, So I really don't believe that it's all 0:11:39.679 --> 0:11:42.480 that important. Frankly, whether it was a quarter point or 0:11:42.559 --> 0:11:46.920 fifty percent, fifty points or doing nothing. I don't think 0:11:46.960 --> 0:11:50.200 that it makes all that much difference. We should have 0:11:50.360 --> 0:11:53.920 learned the lesson. By the way, what look, what we mean, 0:11:53.960 --> 0:11:56.720 what we'd all like to see is for those mortgage 0:11:56.800 --> 0:11:59.000 rates to come down, in the ten year treasury interest 0:11:59.040 --> 0:12:01.680 rate to come down. The FED doesn't control that. I 0:12:01.760 --> 0:12:04.520 know that may surprise people watching with the FED has 0:12:04.520 --> 0:12:07.920 no impact on the ten year treasury or the thirty 0:12:08.000 --> 0:12:10.120 year mortgage. And we know that, by the way, And 0:12:10.679 --> 0:12:13.840 what happened in twenty twenty four when the FED cut 0:12:14.400 --> 0:12:17.560 the discount rate and what happened to the I mean 0:12:17.559 --> 0:12:19.400 the FED funds rate, and what happened to the mortgage 0:12:19.480 --> 0:12:22.880 rate and the ten year treasury went up. So I 0:12:22.920 --> 0:12:28.640 don't overly obsess about FED rate cuts. I think we're 0:12:28.679 --> 0:12:32.400 in a pretty good look. The most important thing is 0:12:32.440 --> 0:12:35.320 this incredibly healthy economy. We've got hundreds of billions of 0:12:35.360 --> 0:12:40.040 dollars coming into the US economy of foreign investment. We've 0:12:40.040 --> 0:12:44.200 got the highest s and P five hundred, the highest Dow, 0:12:44.640 --> 0:12:48.560 and the highest Nazza in the history of the country. 0:12:48.800 --> 0:12:51.000 People are making huge amounts of money. And this is 0:12:51.040 --> 0:12:53.240 a bet when the markets go up, this is a 0:12:53.280 --> 0:12:56.440 bet that policy will be well guided and that American 0:12:56.480 --> 0:12:58.720 companies are going to make money. So I have a 0:12:58.760 --> 0:13:02.560 hard time really having many much problem with the direction 0:13:02.960 --> 0:13:05.400 that we're going in with respect to this economy. And 0:13:05.400 --> 0:13:09.600 don't forget the sorry. In January, people will start to 0:13:09.640 --> 0:13:12.640 see the middle income people will start to feel the 0:13:12.679 --> 0:13:16.120 impact of those big, beautiful task cuts that passed and 0:13:16.200 --> 0:13:20.360 in terms of less money deducted from their paychecks and taxes, 0:13:20.679 --> 0:13:23.600 and the no tax on tips, the no tax on overtime. 0:13:23.640 --> 0:13:27.280 Those are all positive features that will help middle class Americans. 0:13:28.200 --> 0:13:30.760 That's a really an interesting point that fiscal policy is 0:13:30.800 --> 0:13:33.520 going to be especially accommodative in twenty twenty six. And 0:13:33.559 --> 0:13:35.920 I think that one thing that's interesting is whether we're 0:13:35.920 --> 0:13:39.880 going to see monetary policy that's equally accommodative or even 0:13:39.960 --> 0:13:42.440 more so, And that's going to really depends on who 0:13:42.480 --> 0:13:45.760 we get as the next Chairman of the Federal Reserve 0:13:45.920 --> 0:13:47.079 and chairman. 0:13:46.760 --> 0:13:47.760 Of the FOMC. 0:13:48.640 --> 0:13:52.080 What do you make of the White House's floating of 0:13:52.120 --> 0:13:55.480 a trial balloon with Kevin Hassett about three weeks ago 0:13:55.840 --> 0:13:58.760 and then seeming to reconsider you know, if there's anybody 0:13:58.800 --> 0:14:01.640 in the world who recognizes how difficult a process it 0:14:01.679 --> 0:14:04.280 can be to make it through the Senate. It's you, 0:14:04.880 --> 0:14:07.360 and so I'm really interested to hear what your thoughts 0:14:07.400 --> 0:14:09.840 on what your thoughts are about what's going on in 0:14:09.880 --> 0:14:12.040 the White House and on Capitol Hill in terms of 0:14:12.040 --> 0:14:14.880 whipping up the votes to support someone perhaps like Hassett 0:14:15.000 --> 0:14:17.920 or wash I like them both. 0:14:18.080 --> 0:14:20.040 I mean, I think the two Kevens, I've been saying 0:14:20.080 --> 0:14:23.680 this for two years now that you know, it should 0:14:23.680 --> 0:14:27.800 be one of those two as the FED chairman. I 0:14:27.840 --> 0:14:30.400 also like Larry Kudlow, but I don't think Larry probably 0:14:30.480 --> 0:14:32.480 is in the runnings to do it, but he'd be 0:14:32.520 --> 0:14:35.640 an excellent FED share as well. But look, the two 0:14:35.720 --> 0:14:42.880 Covens are monetary experts. They're extraordinary economists. I really truly 0:14:43.280 --> 0:14:45.680 either one of them I think would be fantastic picks. 0:14:45.680 --> 0:14:47.960 And I think they would also keep their eye on 0:14:48.000 --> 0:14:50.040 the most important thing that the FED needs to do, 0:14:50.120 --> 0:14:52.800 which is defend the dollar. Defend the dollar, make sure 0:14:52.800 --> 0:14:55.640 that it's strong and stable. That's all the FED needs 0:14:55.640 --> 0:14:57.120 to do. It doesn't have to worry about jobs, it 0:14:57.160 --> 0:14:58.920 doesn't have to worry about climate change or any of 0:14:58.960 --> 0:15:02.000 these other things. The most important thing is to keep 0:15:02.040 --> 0:15:06.320 prices stable and the dollars strong. I think both would 0:15:06.320 --> 0:15:06.560 do that. 0:15:06.800 --> 0:15:10.520 Steve, you have some great insight into President Trump behind 0:15:10.520 --> 0:15:13.320 closed doors. You know, he did nominate you for a 0:15:13.320 --> 0:15:17.720 FED governor position. You ultimately backed out of it. But 0:15:17.760 --> 0:15:20.720 I'm just curious what were your conversations with President Trump 0:15:20.800 --> 0:15:23.040 or what insight can you give to our audience, an 0:15:23.040 --> 0:15:27.120 investing audience trying to understand read the tea leaves, because 0:15:27.200 --> 0:15:29.680 we do have a president that most would agree that 0:15:29.720 --> 0:15:32.920 he's transactional, and so I think we're trying to understand 0:15:33.440 --> 0:15:37.040 that in terms of any appointments. Is that seen as 0:15:37.160 --> 0:15:40.480 an expectation that you're going to do the President Trump's 0:15:40.480 --> 0:15:42.760 bidding and listen to him if you are at the 0:15:42.800 --> 0:15:45.600 FED in terms of what needs to be done in 0:15:45.640 --> 0:15:47.560 cutting rates, if that's what he wants. 0:15:48.520 --> 0:15:52.520 Well, look, my opinion is that it is valuable to 0:15:52.560 --> 0:15:56.200 have an independent FED, but I also believe that the 0:15:56.240 --> 0:16:00.120 FED needs to be accountable and in my opinion, and 0:16:00.160 --> 0:16:02.280 it hasn't been accountable in the last few years. That's 0:16:02.320 --> 0:16:05.840 why we got, you know, a nine percent inflation under 0:16:07.000 --> 0:16:10.080 the current Joan Powell and so. 0:16:10.680 --> 0:16:12.720 Well, when you say that that nine percent was the 0:16:12.760 --> 0:16:16.200 result of the pandemic and incredible demand. I mean, there 0:16:16.200 --> 0:16:20.920 were some you know, unexpected events. That's crazcal policy too, 0:16:21.000 --> 0:16:23.440 fiscal policy. There was a lot of money slashing around. 0:16:23.520 --> 0:16:27.000 When you can see that that nine percent inflation, any 0:16:27.040 --> 0:16:28.880 president or any fed shair would have had to deal 0:16:28.920 --> 0:16:29.200 with that. 0:16:30.320 --> 0:16:33.560 Well, listen. I mean, I do think that Trump made 0:16:33.560 --> 0:16:36.400 a big mistake in that he passed a big, massive 0:16:36.440 --> 0:16:40.960 spending bill right before he left office. So you could 0:16:41.000 --> 0:16:43.800 you make a good point, but it was catastrophic everything 0:16:43.800 --> 0:16:47.200 that happened under COVID. We made the biggest mistake in 0:16:47.240 --> 0:16:49.800 the history of the United States and shutting down our economy, 0:16:50.240 --> 0:16:53.359 shutting down our schools, shutting down our hospital It was outrageous, 0:16:54.120 --> 0:16:56.720 and I think we've hopefully learned that level of lesson 0:16:56.760 --> 0:16:58.840 that will never never do it again. But you are 0:16:58.920 --> 0:17:01.840 quite correct that what caused the inflation, and I hope 0:17:01.840 --> 0:17:05.840 we remember this lesson for many, many decades to come, 0:17:06.240 --> 0:17:09.879 is that when you massively spend four trillion dollars, guess 0:17:09.920 --> 0:17:13.000 what you're going to have inflation. And it didn't stimulate 0:17:13.040 --> 0:17:18.560 the economy, it caused huge, huge reductions and real incomes 0:17:18.560 --> 0:17:22.439 for middle class people. It destroyed middle class incomes. They 0:17:22.520 --> 0:17:27.359 lost massive amounts of money because we very stupidly printed 0:17:27.400 --> 0:17:29.880 all this money and spent it, dropped it out of helicopters. 0:17:30.320 --> 0:17:32.720 And that's a policy that's never worked. 0:17:34.960 --> 0:17:36.960 So I want to go look. I think I think 0:17:37.000 --> 0:17:38.919 it's an important You bring up a lot of important 0:17:38.960 --> 0:17:41.359 points about what happened during the pandemic and the causes 0:17:41.359 --> 0:17:44.280 of inflation. But to Carol's point, you do have this 0:17:44.320 --> 0:17:46.080 direct line to the White House and to the President. 0:17:46.119 --> 0:17:48.199 You advised him back in twenty sixteen, you advised him 0:17:48.200 --> 0:17:50.800 in twenty twenty four. How would you characterize the relationship 0:17:50.840 --> 0:17:53.439 with him right now and to what extent are you 0:17:53.520 --> 0:17:55.680 and how often are you speaking to him about economic 0:17:55.800 --> 0:17:58.040 matters that hit the United States. 0:17:59.240 --> 0:18:01.680 By the way, I hope there isn't still a debate 0:18:01.720 --> 0:18:04.040 about what we did of COVID, because it really really 0:18:04.119 --> 0:18:08.760 is important that we learn how incredibly enupt almost everything 0:18:08.800 --> 0:18:10.520 that we did. And by the way, I'm in Florida 0:18:10.960 --> 0:18:13.920 right now, in Palm Beach, and one of the few 0:18:13.960 --> 0:18:17.360 politicians who got it right was Ron DeSantis, the governor here, 0:18:17.400 --> 0:18:20.280 who did not shut down the Florida economy. And then 0:18:20.320 --> 0:18:23.639 you have these blue blue states like New York and 0:18:23.720 --> 0:18:26.720 California and my home state of Illinois that shut down 0:18:26.720 --> 0:18:28.680 their economy, and that's one of the reasons, by way 0:18:28.760 --> 0:18:30.800 the way, these blue states have never really made a 0:18:30.840 --> 0:18:33.200 recovery from their tragic mistakes. 0:18:33.320 --> 0:18:35.000 So yeah, look, I don't think it's I don't I 0:18:35.000 --> 0:18:36.120 don't want to. We don't have a ton of time, 0:18:36.119 --> 0:18:37.680 so I don't want to rehash the pass. And I think, 0:18:37.720 --> 0:18:39.520 you know, we could do an entire segment about that, 0:18:39.840 --> 0:18:43.120 and that's. 0:18:41.680 --> 0:18:44.400 For people, right because it was you know, we don't 0:18:44.440 --> 0:18:47.000 want to ever make that mistake again, right, we don't. 0:18:46.840 --> 0:18:49.440 Hopefully, hopefully we don't face another pandemic. And I don't 0:18:49.440 --> 0:18:52.400 think any any of us we're countering your what you're 0:18:52.400 --> 0:18:54.800 saying there. What I'm interested in is what you're you're 0:18:54.840 --> 0:18:56.600 talking to the president about right now? What is the 0:18:56.640 --> 0:18:59.800 line that you have to President Trump on economic policy? 0:19:00.640 --> 0:19:02.760 What I tell him is that I think the tax 0:19:02.840 --> 0:19:07.560 cuts have been enormously beneficial and it's not a commen 0:19:07.600 --> 0:19:10.920 date of fiscal policy on the tax side. What it is. 0:19:11.119 --> 0:19:12.879 I mean, like, one of the most important things we 0:19:12.920 --> 0:19:15.800 did in the Big Beautiful Bill was we are allowing 0:19:15.880 --> 0:19:23.440 businesses to you know, instantly capitalize their expenditures and write 0:19:23.480 --> 0:19:26.720 them off instantly. And I believe that's one of the 0:19:26.760 --> 0:19:29.800 reasons we're seeing this capital boom in the United States. 0:19:29.840 --> 0:19:32.159 I mean, if you look at the last nine months, 0:19:32.160 --> 0:19:35.600 capital investment has been really strong as a result of 0:19:36.119 --> 0:19:39.280 this tax cut. So it wasn't really meant to just 0:19:39.320 --> 0:19:42.120 pump money into the economy. It was meant to incentivize 0:19:42.200 --> 0:19:47.280 through lower tax rates, lower lowering the corporate rate, giving expensing, 0:19:47.600 --> 0:19:50.880 lowering the individual income tax rate. Those are pro growth, 0:19:51.119 --> 0:19:54.560 pro supply side policies that actually help bring inflation down. 0:19:54.720 --> 0:19:57.120