Projects
![]()
No projects found
Investors
New
DAO Treasuries
DATs
Lend / Borrow APRs
Chains
Categories
Spaces
Powell fudding our bags π€¬
Recorded: July 30, 2025 Duration: 0:53:10Space Recording
Short Summary
In a recent discussion, experts analyzed the Federal Reserve's decision to maintain interest rates amidst fluctuating market conditions, highlighting trends in cryptocurrency and economic indicators. The conversation revealed concerns over altcoin declines, anticipated economic data, and the potential influence of political dynamics on monetary policy, suggesting a complex interplay between market sentiment and economic forecasts.
Full Transcription
Thank you.γθ¦θ΄γγγγ¨γγγγγΎγγ Thank you. Music Thank you. Music I'm going to go to the next video. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Excuse me.
All right.
What is going on?
We have a decision today on rates. And if you haven't looked at the market yet, you can see that things are dumping in the case of alts and kind of pulling back in the case of Bitcoin and Ethereum.
The Federal Reserve maintained the federal funds rate at 4.25% to 4.5%, making the fifth consecutive meeting without a change. So that decision came with a
9-2 vote with two dissenting votes from governors Christopher Waller and Michelle Bauman. These are
both Trump appointees who favored a 25 basis point rate cut, which we didn't get.
The context and rationale of this rate.
So the Fed cited moderating economic growth in the first half of the year,
a still solid labor market and inflation remaining somewhat elevated as its reasoning.
And Jay Powell described the policy stance as modestly restrictive,
reaffirmed a commitment to bringing inflation back to the long-run 2% target, and emphasized
the importance of incoming data before making future moves. I feel like they should have still done something.
I don't, I guess, the somewhat elevated inflation as the reasoning makes sense,
but the labor market is solid and we're past the first half of the year.
So this is the first time in over 30 years that two members of the
Board of Governors, sorry, one second, this is the first time that they have a kind of
varying opinions, right, on a rate decision. So that's kind of interesting.
on a rate decision. So that's kind of interesting. Waller and Bauman argued for a cut due to
concerns over slowing economic momentum and muted inflation pressures. So the views aligned with
ongoing criticism of President Trump, I guess, urging easier monetary policy.
But the bottom line is there's no interest rate changes and notably internal split with
two governors voting for the 25 basis point rate cut.
I want to say this isn't becoming a kind of a partisan showdown, but I feel like, I don't know.
I don't know enough about it, to be honest with you, like the actual political dynamics that are happening between Powell and the personal dynamics happening between Powell and Trump.
But I want to still say that I hope Powell made
what he thinks is the best decision for our economy, for the U.S. economy.
And future rate cuts are data-dependent.
Markets are now watching upcoming CPI, PCE, GDP revisions, and the August jobs report.
And so hang tight for that.
I think that there is going to be a lot more data to go off of by later this year, maybe a month or two down the line.
By later this year, maybe a month or two down the line.
But, you know, if he doesn't, you know, if he doesn't increase race through the end of the year, I think I'd be sorry, excuse me, decrease race through the end of the year.
I think I'd be pretty shocked. And I do wonder if this is something that is become kind of a point of contention between J-PAL and President Trump.
Feel free to come up.
We don't have any regular guests today.
I had to move things.
Might be hosting these a couple hours earlier, right, and a couple hours later than what we usually used to do at 12 p.m. Eastern time, at 4 p.m. UTC.
Reason for that, again, as I've mentioned before, is that there are a lot of different spaces happening at 4 p.m. UTC.
That was not the case a year or two ago, right?
case a year or two ago, right? So it's become very saturated. And there are times of the day where
I'm looking for spaces that are similar to ours or similar to some of the other ones I like to join,
and I don't find anything. So I believe it can be a good idea to target those times. It might
be kind of late for Asia in certain cases, which I know a lot of you are from Asia. But it'll open up, I think, the opportunity for people that are looking for conversations like this at later times in the U.S., for example, to join and engage in discourse.
and engage in discourse.
So, again, two dissenters wanted cuts.
The Federal Reserve held the rates steady on Wednesday in a split decision
and gave little indication of when borrowing costs might be lowered
and drew descendants from two U.S. β excuse me, dissents from two U.S.
central bank governors. Again, these are both Donald Trump appointees who agree with President
Trump that monetary policy is too tight. The Federal Open Market Committee voted 9 to 2 to keep its benchmark overnight interest rate steady in the 4.25 and 4.5 range for a fifth consecutive meeting, right?
The policy statement did note that economic growth moderated in the first half of the year, possibly bolstering the case for lower rates at a future meeting should that trend continue.
So that's a silver lining.
But it also said that uncertainty, quote, uncertainty about the economic outlook remains elevated.
I wish, and maybe I need to go back and watch it, but I wish that was expanded upon a
bit more. And as I mentioned, this is the first time in more than 30 years that two members of
the Fed's seven-person Washington-based Board of Governors, Vice Chair for Supervision Michelle Bauman and
Governor Christopher Waller voted against a rate decision at the consensus-driven Central
Bank.
So this is three decades.
This has never happened.
Waller has been mentioned as a possible nominee to replace Fed Chair J-PAL when this term expires next May.
for the U.S. and for the economy rather than kind of engaging in something of less significance.
But something tells me that there is other dimensions to this and they might be playing
politics against one another.
So as a result, Wall Street stocks turned lower. Crypto also took a nice dip. And Treasury yields rose. So if you're in bonds, good for you. After J-PAL basically told reporters that it's too soon to say whether the central bank will cut its interest rate target in September. So I think it's multifaceted, right? On one hand,
So as a result, Wall Street stocks turned lower.
the unchanged rate today is not bullish, or I guess it's not what people are expecting.
bullish, or I guess it's not what people were expecting. However, I think him doubling down
and say that it's, you know, it's too soon to say whether they'll cut interest rates in September
and, you know, it being closer to the end of the year, people are now thinking, well,
are they going to cut rates at all, right? And so market reacts, S&P was off by 34 basis points.
And like I mentioned, the yield on benchmark U.S. 10-year notes was up about 4.8 basis points at 4.376% to be exact. And the dollar index extended again to almost 100 basis points.
Or excuse me, almost one basis point, excuse me.
Wait, no, sorry.
I'm misreading that.
0.98%.
That makes sense.
Anyway, guys, short one but sweet one today.
And I just want to read one more thing.
Uto Shinohara, senior investment strategist at Messy Crow Currency Management in Chicago,
said that the Fed's decision to hold rates steady came as no surprise,
though markets took note of two dissenting votes
in favor of a cut. I wonder, like, yeah, I always wonder what specifically the market reacts to,
right? Is it, is that what they reacted to, right? The fact that for the first time you had,
you had a split, a split in the Fed's seven-person Board of Governors or something else like the hawkishness potentially
through September.
The central bank's messaging does remain consistent though, according to Mr. Shinohara, it basically characterizes labor market conditions as solid
and inflation as somewhat elevated. And so because of that, they're kind of making that
decision to hang tight, which I can understand that perspective while continuing to acknowledge, you know, while they continue to acknowledge the uncertain outlook.
I mean, again, I think that this is probably the best decision with the information that
they currently have.
And, oh, let's see, we got some speaker requests.
You guys up.
Hello, Dr. Sonmez. How are you? Professor of Economics. Very cool.
Welcome. Any thoughts for me?
Yes. Hello, everyone. Thanks for having us.
Yeah, my pleasure. Yeah, just feel free to chime in anytime.
Oh, yeah, sorry, sorry, sorry.
I don't know why there was a double mute, I think.
Anyway, thanks for having me here.
Hello, everyone.
Yes, I think the person that you mentioned, the economist's assessment of the market,
of the economy, is correct.
Because, well, Powell thinks that they're going to move based on the data, right?
So the Fed makes decisions, you know, the Fed's decisions are data dependent.
And he actually made that clear.
We're going to have two sets of employment data, two sets of inflation data.
So he emphasized the fact that there was, that the labor market is in complete balance,
meaning that the demand for labor was decreasing
as well as the supply for labor.
Now, this is assuming, so you know that we have discouraged, if you're a discouraged
worker, for instance, you don't get reported.
You know, you're cutting out, Doc.
Oh, yeah, sorry.
So I got another call. But so basically, if you are a discouraged worker, you're not accounted for in unemployment.
So what he was saying is that the labor supply is coming down. Labor demand is also coming down, which brings the which brings unemployment in which puts unemployment figures in balance.
unemployment in balance, which puts unemployment figures in balance. So what would happen is that
if some of the discouraged workers actually decided to reenter the workforce, meaning that
they would no longer be counted as discouraged, but actually looking for a job, then the labor
supply would go up. That would mean that the unemployment would go up. So that would be the only case in which then the Fed would lean towards cutting rates.
But unless that happens, meaning labor supply goes up and the labor demand goes down, that would drive up the unemployment rate, then it didn't seem like Powell, I mean, the committee, FOMC
committee, was keen on doing a rate cut. And that's why the markets reacted. Because even
though, you know, Powell mentioned that, obviously, we all know it's a dual mandate,
has a dual mandate. But he did reiterate the fact that inflation is a greater concern than unemployment right now, because he mentioned many times that employment remains in balance.
So while inflation, he does see some inflationary pressures, in fact, coming outside of the tariffs.
So the inflationary pressures that he's saying, he mentioned, and you can listen to his recording,
is that the inflationary pressures are coming not just from the tariffs, but outside of it.
And he mentioned that the service sector, prices of service sector are actually going up, surprisingly,
actually going up surprisingly because that wasn't the case earlier so so basically the the summary
because that wasn't the case earlier.
of it all for me was what my takeaway from the from this from Powell's statements were that
you know was that so you know the inflation is remains to be a greater concern than does
unemployment so because he mentioned that unemployment, he mentioned that
the employment market is, you know, the labor market is in balance, while inflation seems to
be a persistent concern. And outside of tariffs as well, like I said earlier, the service sector
prices are also rising, and that's outside of what's happening with the tariffs.
So this is why I think the markets read it the way I read it.
Basically, prices are still a major concern for the FOMC committee.
FOMC committee and that an employment, you know, an employment.
And the only way they're going to do a massive rate cut is if unemployment goes up and for
the unemployment to go up, that means labor supply would, you know, so then the labor
demand and labor supply would not have to be in balance the way it is right now.
So, yeah.
So this is, I think, how the markets are reading it as well,
that they didn't think that, you know, that there will be an increase in unemployment numbers
in the near future. And that Fed is taking a data dependent approach, as it always does.
And they're going to look at this two sets of employment data and two sets of inflation data, and they're going to decide afterwards. So for anyone to say, yeah,
this is, you know, this is clear cut that there will be a rate cut in September is actually
mistaken. Because, you know, he, you know, Powell. Sorry, I got it. I got it. But anyway,
thank you very much. This is all I have to say. I mean, if you have any questions, you know, Powell. Sorry, I got it. I got it. But anyway, thank you very much.
This is all I have to say. I mean, if you have any questions, I mean, this is this was my take on the on Fed's decision today.
Yeah, no, I know. I sincerely appreciate the take. And I think you made some some valid points.
I'm curious to know what your thoughts are on the the two votes in favor of the cut.
Obviously, both Trump appointees. but the fact that that hasn't
happened in three decades. Would love to hear your thoughts on it. Thank you for asking. Actually,
you know, I have a paper on this, in fact, how the Fed makes unanimous decisions most of the time.
In fact, I have a presentation and a paper related to it. It said the Fed takes a herd mentality when they make their FOMC decision.
So, you know, the Fed chair steers the committee and a lot of people are under pressure.
You know, oftentimes they're under pressure to vote according to the chair's sentiments.
they're under pressure to vote according to the chair's sentiments.
So in this case, as you correctly mentioned, there were two dissenters, which is unusual.
However, Powell dismissed that because he kept saying, you know, why would there be two dissenters?
Because those two dissenters are focusing on the possibility of unemployment
rate going up. Right now it's 4.1 and he says it's imbalanced. It's perfect, you know.
Now, you know, those two dissenders are thinking that the, you know, GDP will slow down and that
will take a toll on the unemployment rate. However, as we have seen this morning, you know,
the GDP is actually doing quite, you know, that our growth is quite, is doing quite well.
So I don't, and that he thought, and Powell thought that was baseless, basically, because he kind of downplayed it, right?
He said, well, you know, unemployment, you know, labor market is in complete balance,
which means that he downplayed these two dissenters' foresight. You know, they think that the labor market is going to deteriorate,
while Powell thinks that's not going to be the case.
That is not the case at the moment, unless, you know, everything's changed,
because the labor supply right now has come down,
meaning there are fewer people looking for work.
That happens when you have discouraged workers,
and if those discouraged workers jump ship and start looking for jobs now they will get reported as unemployed and the you
know and that uh so then there will be more unemployed people looking you know for for jobs
anyway so so these people are basically basically powell downplayed these people's these two
dissenters concerned they think that the labor market is going to deteriorate while pow Powell thinks that's not going to happen. Those other people who voted alongside with Powell.
What do you think? What do you think? I don't think.
Do you think they have, I mean, you made your stance pretty clear.
But I'm curious to know if you think that these two descending votes had a point.
Hello?
Oh, sorry.
Sorry.
Sorry about that.
Yeah.
Based on the data that we're seeing, I don't think they had a point because, like I said,
the GDP figures that we're getting are rock solid, right?
So and the economist that you mentioned previously before I spoke before I started speaking, he also thinks that, you know, the employment, the labor market is also in good standing.
So, you know, the labor market is in good standing now because, you know, labor demand is falling.
And so is labor supply. But like I said, if more discouraged people start looking for jobs, things will change. However, I don't think those two people, the two people who wanted a rate cut, they're looking at, you know, other factors like delinquencies, right?
Like credit card delinquencies, like loan delinquencies.
They're focused on some of the delinquencies and, you know, and other things.
So, I mean, they're not looking at the labor data.
If you look at the labor data, I think the labor data looks promising.
And also that's because of GDP, because economic growth is robust.
So if economic growth was not robust, then we would see worsening, deteriorating labor market.
That would go along
with that. However, now it totally makes sense because we got the GDP figures this morning and
you know, it's high, you know, we have good growth, right? Three percent higher than expected.
So that means that and that the labor, the data, the data on the labor market matches the GDP growth rate.
So that seems to check.
Those two things seem to check,
which means that those two people who descended had no reason to dissent,
meaning that they shouldn't have asked for a rate cut.
Because in order to get a rate cut,
that would mean then the labor market conditions are deteriorating and they're not deteriorating or the economy is slowing down where we're going into a recession, which is not happening.
So basically their concerns are kind of baseless, in my opinion, given the data.
Given the data, they must be focusing on other perennial facts, perennial data like, you know, delinquencies on car loans or something, you know, things of that kind.
But they're not looking at, you know, what we see here with the labor market.
So, yeah. And the reason why I think those two people descended is because they had pressure from the, you know, from Trump administration
or something, or they had friends in that, you know, they had friends in the Trump administration
or the president is their friend or whatever.
There may be something to do with that.
We don't know why, you know, they would have descended given the date.
I don't understand why they would have descended. And it is clear to me that we should not be expect a 50 basis point
or more of a cut. I think the market read that very well. And that's how, you know, the markets
actually are efficient. Because as you know, the markets read Powell's statements clearly.
read the Powell statements clearly.
So he was more concerned about the inflation
than the labor market.
And therefore they did not expect
a higher than a 25 basis point cut,
which then the market basically,
as it shows in the S&P,
it went down more than expected, obviously.
Anyway, so I think the market sentiment right now
as it stands is correct.
Thank you for giving me the opportunity to speak. Yeah, of course. So with Governor Waller having
been mentioned as a possible nominee to replace J-PAL when his term expires next May, do you think
that this might have just been a political move?
Yeah, I do think that.
I do think that.
That's a very good point.
That's actually the point that I was trying to make earlier,
that those two dissenters were under pressure to look as if they're not happy with Powell's,
with the committee's decision.
So that, you know, it's basically,
I think their decision was purely based on political grounds
as opposed to looking at the data itself.
You know, because the data doesn't warrant,
you know, a cut right now.
If anything, a 25 basis point cut
should be expected for September, but really nothing more
than that, unless the data does change drastically from now until then, and we're going to get two
sets of employment and inflation data. So that will give us a clear indication as to whether
there will be a greater decrease of 25 basis points. But also, I mean, as you know, tariffs are lagging.
But however, Powell did specifically mention
that prices are rising not because of tariffs alone.
They're also rising because of services are going,
prices of service are going down,
and that's outside of tariffs.
So meaning prices are still stubbornly high.
I mean, they're not that high as far as you and I are concerned, of course, 2.4, 2.6 versus,
you know, 2.0 is where they aim at, right? So it's, I mean, it's 2.4, it's not, 2.0 is not that
high. However, you know, it is high in relation to their objective, right?
So whereas the labor market is in, you know, is in, you know, is in complete balance, meaning
it's not, there's not a, you know, it's not aberrational.
There's nothing wrong with it, basically.
So this is why I think, you know, we should not be expecting a 50 basis point cut unless the data changes dramatically.
And also, like now we're seeing Trump making is making deals with, you know, many countries with the EU and others are probably as well in Japan.
And so, I mean, those those rates will come down.
I mean, those rates will come down.
And in fact, the reason why we're not seeing tariffs take a toll on GDP is because these
countries have found a way to deviate dissensions.
They are actually, you know, China is sending to Vietnam and Vietnam is now sending the
same material to the U.S.
So bypassing those tariffs, basically.
So there are other ways of getting the goods
to the United States without having the country
just send the goods directly to the United States.
And that seems to be what has happened
because it's really ironic, it's really unusual
not to see a slowdown in the economy because of tariffs, which was anticipated,
in fact, you know, Powell mentioned that in his last FOMC conference that he said there could be
a slowdown in, you know, in the economy, you know, and, you know, because of tariffs. And we're not
seeing that in the data, which means that some of these countries are bypassing these tariffs through other means, you know, by sending their goods to other countries that are not being tariffed or something.
Or that, in fact, Powell also mentioned that the manufacturers are eating up the cost rather than passing some of it to the consumers.
So it's the consumers are still purchasing as much as they used to.
In fact, that's why the consumer spending is still robust.
You know, it's still very high.
Powell mentioned how consumer spending is still very high
and that it reflects on the GDP, you know,
so that those are all good signs, right? So why, you know, so that those are all good signs, right?
So why, you know, so everything looks kind of good as far as the labor, and that will
affect the labor market.
If consumer spending slows down, obviously, that's going to affect the labor market, but
it's not slowing down.
So it's not going to affect, it's not affecting the labor market right now.
Although private sector jobs have come down, it's mentioned, but that's just private sector jobs because then you have the government jobs.
We don't know. I guess there's also come down.
So, I mean, it is kind of ironic because when I read the report today, Wall Street Journal report, private sector jobs have declined in number.
However, I've noticed that, I mean, obviously today, the labor market we know is in full balance.
So how is it that private sector jobs have come down?
I mean, now we know why, because labor demand has come down, so it's labor supply.
So anyway, so the bottom line is, you know, the economy looks in healthy shape, actually, for the most part.
Yeah, so there's absolutely no reason to do a rate cut unless Powell is pressured to do so because of Trump, basically.
I mean, that's the only thing. And he would only do it just to keep his job.
That's the way I see it. You know, just to look, you know, just to be in good favors with Trump.
Maybe. I mean, also because, you know, the Fed building is getting renovated and all these things are happening.
I mean, maybe he wants to, you know, curry favor
with Trump. And that's, I mean, you know, but the Fed chair has a lot of control in persuading the
FOMC members to vote a certain way. That is actually was the core of my study. I did make,
I did draft a paper on this, a paper and slides for a conference, and it shows how much influence that the Fed chair has in getting the FLMC members on board with his policy choice.
So in this case, there were two dissenders. But like I said, I think those two people dissended for political reasons, you know, to look like that they've descended,
you know, in front of the Trump administration, Trump and others. Mega, maybe.
Interesting. So you do think, yeah, of course. So you do think that at least one cut is coming
possibly in September, if not later. Do you think two cuts will come or do you think this
is where it is going to get one before the end of the year?
You know, if the labor market doesn't deteriorate, I think we're just going to get one.
Because for us to get any like more cuts or steeper cuts, we have to see a recession coming.
The labor market has to deteriorate, which normally comes with slower GDP growth.
So today we have 3% GDP growth,
which is greater than expected.
Although there was a revision
for the first quarter GDP growth,
there was a revision on that.
However, despite the revision,
we get 3% and these figures
get revised all the time, by the way, GDP figures get revised all the time. But regardless, we have
a, you know, 3% GDP growth now, which is strong. And then we have the labor market that's if it
continues the way it is now, then we will, I don't think we would get a, I don't think we'll get to rate cuts.
I mean, I don't, I don't see that coming.
There was, I mean, it is alarming as far as, I mean, what is concerning is the housing
market, right?
So I think Trump wants a rate cut because he wants to bring down the rates for the housing
market.
However, you know, the reason why there's, I mean, by the way, Powell did mention
that the demand housing applications have increased in number, or I think it's one of the
spaces where he actually mentioned himself, that the application for mortgages, yeah, application
for mortgages has actually increased. So people aren't deterred by higher, you know, rates,
mortgage rates. It's rather that, rather the reason why the housing market is in,
is a slowdown is because the supply is low. The supply of housing is low, and that has caused the prices of homes to go up.
But the mortgage applications have been steady in number, or in fact growing.
So it looks like people aren't really concerned about the higher mortgage rate. It's rather the case of not having...
Did you get a call there?
You cut out.
Doc?
Oh, yeah, I'm sorry.
Yeah, I don't know why I cut out.
You cut out again. Oh, I don't know. Yeah oh i don't know yeah i don't know is it is somebody doing i don't know what
happened there i don't know no no you're good okay so so tom tom yeah so is the mortgage
yeah you're cutting out for me doc i don't know if the other co-host is like cutting me up but
you're not right no no i'm i'm that's my personal you're the only one that's okay yeah anyway so
basically like people it doesn't seem like people are deterred by higher mortgage rates because the mortgage applications are going up in numbers.
So it's not like people are holding back and buying homes because of the higher mortgage rates.
It's because the lower supply of homes is what's actually causing the house prices, home prices to go up.
It's the supply end of it that's causing, you know, how to go up. Yeah.
I hear you. Okay. So this is from Tom Percelli. I don't know if I'm pronouncing that correctly.
He's the chief U.S. economist at PGIM. He says that, he says, quote, I do think cuts are coming.
I think we'll get two cuts this year. That's been our longstanding call because we do think that beneath the surface, economic activity has slowed down. And that's true whether you're looking at
consumption or it's true whether you're looking at labor. There's enough evidence to suggest that
the Fed should be cutting right now. One of the debates happening right now is whether Bowman and
Waller are dissenting for political reasons or fundamental reasons.
I can't answer that question. Only they know the answer to that.
But I would hate for the potential for it to be for political reasons to overshadow the reality that what they're saying has elements of truth to it.
what they're saying has elements of truth to it.
What do you make of that?
I mean, he's looking at two rate cuts, which is conceivable.
You know, two 25 basis point rate cuts, maybe.
I don't think the economy is slowing down because consumer spending is up.
You know, we talked about about i talked about this earlier so uh the economy
is not really slowing down because consumer spending is up and um so we have all the right
um indications right you know consumer spending is up uh even though it's been revised like gdp
has been revised you know first quarter gps I think is lower than what it was.
It's lower than what it was in the previous year's data.
However, the, you know, we were expecting a 2.4 GDP growth rate.
We got a 3.3% growth GDP growth rate for this quarter. So, you know, so, you know, so we have positive
indications coming in that consumers are not deterred by tariffs. They continue to purchase,
you know, the whatever that they need. So that's not holding them back. Tariffs are not holding
them back. That's partly because companies are, you know, eating up the cost of the tariffs for the time being.
So, and that, you know, yeah, so, I mean, I don't think, you know, if anything, we're going to get
a 50 basis point, 50 basis points cut, one in September, one in December, 25 points each.
But that's about it.
And that's only because Powell is perhaps pressured a little bit to appease Trump, if that's the case.
And, you know, and if he's not feeling pressure, then I think he's just going to probably just do 25 basis points or nothing will change.
Because he was actually
pretty gutsy. He stood up, you know, against Trump. And he I thought that he might have delivered a
25 basis point cut now because there are rumors that he may get, you know, replaced. But, you
know, he wasn't you know, he didn't cave into that pressure. So if he didn't cave into that pressure so if he didn't cave into that pressure now when
things were really uh tough uh you know when the situation when uh when you know when everything
is going tough then why would he you know do a 25 basis point cut in september if the data remains
the same it's not better than what it is now so in fact don't know, maybe 25 basis points for the year, but I don't think
we're going to, we may not get 50 basis points even. I don't see that on the horizon, actually,
maybe 25 basis points. But I mean, things have to really deteriorate because, you know, this,
you know, in spite of the pressure that he's getting from everyone, you know, from Trump and from, you know, other people associated with Trump, the Senate and others, you know, he didn't, you know, ask the committee to do a 25 basis point cut.
I mean, that's what the chair does.
You know, just think of the chair of the committee, FOMC committee, as like the president of the country,
like he actually leads the committee, right? So Powell has that authority to lead and kind of
persuade others. I mean, so he actually probably, you know, thought himself that there is no need
for, you know, a 25 basis point cut. And if he thought that there was a need for it,
then he would have tried to persuade the committee also
to stand by his decision.
So if he didn't do that now,
why would he do that in September,
is what I'm asking myself.
I mean, if the data stands the way it is now,
even though tariffs are lagging,
I mean, the effect of tariffs is lagging, by the way, you may know this.
It takes six months for it to show in the data.
But, you know, if the data does not materially change from now until September,
then we may not even get a 25 basis point cut.
That's the way I'm looking at it, frankly.
So the market was correct.
The market was correct in its reaction today.
Yeah, no, when you lay it out like that, I can't help but agree.
Even though the market isn't doing what everyone wants it to do,
if you look at Bitcoin and Ethereum,
Ethereum's up 1.2% in the last hour. what everyone wants it to do. If you look at Bitcoin and Ethereum, they're pretty, I mean,
Ethereum's up 1.2% in the last hour.
So some of these crypto assets are quite resilient to current events.
I mean, when we had the 12-day war
between Israel and Iran,
I think Bitcoin was holding up quite well.
So kind of the last thing
that Porcelli was saying here is that in many ways the Fed is haunted by the ghost of trans story past.
That gives them an element of pause.
So when they see or hear tariffs are being teed up and they know that that's going to feed through into inflation, even though it's going to be temporary in nature.
into inflation, even though it's going to be temporary in nature.
And I think because of the transitory mistake, it slows down their reaction function.
So what do you think about that?
Yeah, I mean, he did, you know, Powell mentioned about whether tariffs will be, you know, transitory,
the effect of tariffs will be transitory or not.
Yeah, I mean, so the way I'm looking at it,
they keep making excuses.
Like in May, you know, when we get, I think, yeah,
this was in May when we had the inflation data, right?
So the effect of tariffs, the price increase didn't show up in that data.
And then they were saying, well, that's because, you know, Effective tariffs, the price increase didn't show up in that data.
And then they were saying, well, that's because, you know, and also GDP numbers, I think, didn't also show.
No, actually, it was the GDP numbers that did not show the effect of tariffs, putting a downward pressure on GDP.
So then they said, oh, you know, a company's front loaded-loaded the imports of goods so that didn't show up it didn't show up now like the tariffs
are not showing up again and having a negative effect on GDP so and the prices
are the same you know we thought the prices would go up in May, whenever the last FOMC meeting was.
And then we didn't see that.
Now we're not seeing it again.
So, yeah, I mean, there is a lag effect.
But by now, it should have shown up.
I mean, the prices should have reflected what's happening with the tariffs, right?
And some of the rates were like outrageous as you know and it would have definitely affected
the suppliers and the supply chain and everything else so it's not a you know so it's not um uh
it's not it's not having a negative effect on on prices that's because i think you know people
found a way to uh bypass those countries, people found a way to bypass those countries
and figure out a way to get the goods that they want without having to import from China,
but from Vietnam instead, as I mentioned earlier.
Whatever it is that people, whatever has happened, happened.
But I'm saying six months is now a long time to not see the effects of tariffs.
And they are transitory, yes.
But if we haven't seen the effects of tariffs now
i really doubt we're gonna see now again you know like if i really doubt that the prices will spike
in the next three months all of a sudden you know i just think we should have we should have seen
some signs of it now like if the if if the tariffs were really affecting um the you know manufacturers
suppliers whatever and they had to pass the cost to the consumers then we should have seen some of
that increase in prices but we haven't um you know so we are seeing a demand push uh inflation
um which he mentioned that has not that has nothing to do with tariffs, other types of service sector
prices going up, which has nothing to do with tariffs, by the way. Service sector is like
travel, restaurants, hotel, whatever. So that means people are in good mood, right? They They feel optimistic about for the service sector prices to go up. That means they're optimistic about the economy. Right. Most people travel eat out when they feel good about the economy. So now we said today service sector prices are going up. Well, that means, you know, people feel good about the economy. So how is it that we're going to have a recession and have high unemployment to justify a rate cut?
I don't see that coming. I really don't. So that is the bottom line. I think that is the takeaway
for everyone here, that we should not really be expecting a rate cut. And those people,
like I said, those two dissenders had to do it because they felt politically under pressure to
do so. Yeah, no, all great points, Doc.
And I want to thank you for joining us and dropping knowledge.
I'm going to close things out here.
Appreciate everyone joining.
Thank you very much for having me here.
Yeah, of course.
You're welcome back.
I will be following you.
Oh, I appreciate it.
We followed you back as well.
Take care.
