[0:02] All right. All right. All right. Welcome
[0:04] back everyone to another Federal Reserve
[0:07] meeting. Boy, it's uh it's been what,
[0:09] like six weeks since we've done one of
[0:10] these. Uh and uh you know, it's going to
[0:12] be kind of interesting because this will
[0:14] be the first one that we don't have good
[0:16] old JPL for. It's almost like, you know,
[0:20] it was bittersweet. When he had his last
[0:22] meeting, we were kind of thinking, hey,
[0:23] is he going to get a standing ovation?
[0:25] He didn't get a standing ovation. He
[0:27] didn't get applause, but he didn't get a
[0:28] standing ovation. Yeah. So, it's going
[0:30] to be interesting. We've got about um 90
[0:33] seconds to go until we get the potential
[0:36] um uh for you know a rate hike built
[0:39] into the SCP. We don't actually think
[0:42] we're going to get any kind of move
[0:44] today uh on rate cut or rate hike.
[0:47] Today's going to be all about the setup.
[0:49] What are we going to get for uh rate
[0:52] cuts in the future? A lot of people are
[0:54] really worried about rate uh hikes in
[0:57] the future. So, we'll see how that goes.
[1:00] Uh, but uh, again, we're about 60
[1:02] seconds away here from the summary of
[1:04] economic projections coming out. As that
[1:06] summary of economic projections comes
[1:07] out, I'm going to go through all of the
[1:10] details of the summary of economic
[1:11] projections. I'll read them off the wire
[1:13] services and uh, then we'll get into
[1:15] some of the details. We'll make a bingo
[1:17] board for the actual presser. Uh, we
[1:20] will get that rate decision. Again,
[1:21] we're not expecting a move, but we'll
[1:22] get that rate decision in about 40
[1:24] seconds. and uh expecting that hold uh
[1:27] summary of economic projections is going
[1:29] to be where the entertainment is and
[1:30] then of course we'll get into bingo
[1:31] board and you know what's war going to
[1:33] say and all that good stuff. So uh we'll
[1:36] find out uh what happens here and what
[1:39] kind of uh what kind of new joy we get,
[1:42] what kind of new phrases we get, what
[1:44] kind of changes we get. I wouldn't be
[1:45] surprised if Wars actually ends up
[1:47] getting rid of the summary of economic
[1:49] projections uh in general. Uh, and
[1:52] honestly that wouldn't be that big of a
[1:53] deal because even Jerome Powell had sort
[1:55] of suggested getting rid of them in the
[1:56] past. But, um, we shall see. We shall
[2:01] see.
[2:02] Uh, all right. Here we go. Okay. Federal
[2:05] Reserve median view of Fed funds rate at
[2:07] the end of 2026. 3.8. There it is.
[2:09] That's one rate hike built in uh for the
[2:12] end of 2026. End of 2028 back to 34. So,
[2:16] basically, we're expecting to go up uh
[2:18] one, at least one hike, potentially two
[2:22] depending on how these votes play out.
[2:24] Uh and then back down to where we are by
[2:26] 2028. So, a little bit of a hike is
[2:29] being priced in. 25 basis points of
[2:31] hikes priced in for 2026,
[2:34] followed by 25 basis points of cuts in
[2:36] 27, and actually another 25 basis points
[2:38] of cuts in 2028. Uh, we've got only 18
[2:42] of 19 policy makers submitted
[2:45] projections. I wouldn't be surprised if
[2:46] Worsh was the one guy who's like, I'm
[2:48] not doing projections. I bet you he's
[2:50] the one. Uh, policy makers see 4.3%
[2:52] unemployment rate at the end of 26
[2:54] versus 4.4 in the March projections,
[2:56] which means we're seeing uh the Fed
[2:58] members start indicating the employment
[3:00] market stabilizing. I've got um 2.2% on
[3:04] GDP growth in 2026 versus 2.4 seen in
[3:07] March. So a little bit of a write down
[3:09] on GDP but nothing dramatic there. Job
[3:11] gains have kept pace with the workforce.
[3:13] Unemployment rate changed little.
[3:14] Productivity growth capital investment
[3:16] are strong. Uh Fed uh Fed in favor of
[3:19] policy uh holding firm was uh unanimous.
[3:23] So uh everybody voted for it. Uh the
[3:26] committee reaffirmed policy of
[3:27] maintaining ample reserves in the
[3:28] banking system. Fine. Growth capital
[3:31] investments are strong. activity
[3:32] expanding at a solid pace despite
[3:34] elevated uncertainty due to in part of
[3:37] the Middle East. That's part of the
[3:39] anticipation as well. Uh we have let's
[3:42] see uh let's see Fed projections showing
[3:45] PC inflation is not expected to return
[3:47] to 2% target until 2028 unchanged from
[3:50] the March projection. So basically a
[3:53] slow sort of schlog down uh on
[3:57] inflation. Uh waiting for let's see here
[4:01] what else we have. Uh we've got uh okay
[4:05] let's listen to Steve just for a moment
[4:07] here while I pull up some docs.
[4:08] >> Upgrade both core and headline PCE
[4:10] inflation forecast to 3.6 from 3 2.7 uh
[4:14] this year on headline and from 27 to 33
[4:17] on core. The core remains elevated next
[4:20] year. That might be important uh at 2
[4:22] and a half%. So I'm recap capping here.
[4:25] A unanimous vote a much shorter
[4:27] >> Yeah. Their website actually does not
[4:29] have the Oh, there it is. It just came
[4:30] out. Project material. Okay. Play
[4:32] >> stuff from the statement that was really
[4:34] my opinion kind of worthless uh about
[4:36] how the Fed will make its decisions. Um
[4:38] and they also show a divided committee
[4:40] when it comes to the outlook on rates.
[4:42] Brian, back to you.
[4:43] >> This statement is so short. It's
[4:46] practically a tweet. I mean, this entire
[4:48] statement is one sentence, then two
[4:51] sentences, then two more.
[4:53] >> Here it is. I got it. Here's the
[4:55] statement. So, they've really reduced
[4:56] this. Look at this. Uh the Fed Open
[4:58] Market Committee approved the following
[5:00] statement for release. The Fed decided
[5:01] to maintain the target Fed funds rate uh
[5:04] between 3 and 1 half to three and a
[5:05] quarter uh following the Fed's dual
[5:07] mandate of reffirmed ample reserves in
[5:10] the banking system. Some uncertainty due
[5:12] to the Middle East inflation uh elevated
[5:14] relative to 2% goal. And you can see
[5:17] this is a lot sharper or sorry shorter.
[5:19] And that's part of Worsh's goals to stop
[5:22] trying to overcommunicate is his opinion
[5:25] that the Fed has been overcommunicating.
[5:26] I wonder if this meeting is going to be
[5:28] a lot shorter now. So unanimous hold.
[5:31] Not a surprise that we got a unanimous
[5:33] hold. Let's go look at the summary of
[5:34] economic projections in detail now. All
[5:37] right, here we go. So this is the actual
[5:41] SCP here. All right, let's see what we
[5:45] have here. We've got uh the unemployment
[5:48] rate. You can see no concerns here about
[5:51] the unemployment rate at all. This is
[5:53] pretty much green. Honestly, it should
[5:54] be green. Uh green across the board.
[5:57] There's really nobody as far as the
[5:59] averages here or the median uh
[6:01] suggesting there would be any kind of
[6:02] movement up on the unemployment rate.
[6:04] Now, if I look at range,
[6:06] excuse me, the highest uh estimate for
[6:08] the unemployment rate I see is in 2026
[6:11] and 7 at 4.6. But every single person
[6:14] submitting a projection does not
[6:16] actually see the unemployment rate going
[6:19] up. Now, as far as inflation, we can see
[6:23] the highest estimate for core PC is 3
[6:26] 1/2 4.1 on headline and that rapidly
[6:30] goes down in 2026 to 28 to 30. Now, I
[6:35] personally think that, you know, they'll
[6:37] project this potential. Let's take a
[6:39] look at the market here really quickly.
[6:40] uh they'll project this 25 basis point
[6:43] rate hike this year, but I think they
[6:45] won't actually end up hiking this year.
[6:47] Uh we did anticipate this morning that
[6:49] they would price in uh a rate hike for
[6:53] the year. I'm actually surprised the
[6:55] market is reacting negatively to that
[6:57] though because the bond market has
[6:59] already been pricing in a rate hike this
[7:02] year. So, a little bit surprising, but
[7:04] the market is reacting negatively to
[7:07] this number right here. So let's go
[7:09] ahead and highlight this. Uh right there
[7:12] you can see that increase of about 40
[7:14] basis points. Uh bond market was already
[7:19] pricing in one hike for 2026. Mark uh
[7:22] QQQ
[7:24] um did turn down on this release. Uh
[7:28] WASH may downplay with talk though.
[7:31] That's the big hope here is that WASH
[7:34] comes out and ends up downplaying this
[7:36] and then that's how the market can
[7:38] actually end up going up today. But this
[7:40] is u this really should not have been a
[7:43] surprise but the market is acting like a
[7:45] this is a surprise. Should not have been
[7:47] a surprise. What's actually interesting
[7:49] is that they only price in one hike and
[7:52] then they go right back down. Uh market
[7:55] was pricing in one hike for 2026 and one
[7:58] hike for 2027. So two total. This
[8:02] document is actually much more benign,
[8:04] right? This document is saying uh this
[8:08] document prices in 25 BP this year and
[8:11] 25 BP uh and and negative 25 BP next
[8:15] year. So basically up and down that's
[8:17] what you're pricing it. I actually don't
[8:19] think that's going to happen because
[8:20] that's kind of what they did in the 70s
[8:22] where you went up and down a lot and you
[8:24] made too many adjustments. Uh and Jerome
[8:26] Powell is going to be really anti that.
[8:28] Uh 1970s saw a lot of up and down
[8:32] adjustments. Oh my goodness, stupid PDF
[8:35] editor here does this. When I'm in the
[8:36] middle of typing, it just freaks out. Uh
[8:38] there we go. 1970 saw a lot of up and
[8:41] down adjustments which uh contributed to
[8:44] a lack of faith and confidence
[8:48] uh in the Fed. They were basically
[8:49] extremely responsive to you know random
[8:53] whims of the market uh in the 70s. Uh so
[8:56] a little bit surprising here. uh that uh
[8:59] this is actually better than the market
[9:01] had been pricing in yet the market is
[9:03] selling off on that. Uh okay, maybe the
[9:06] market was blind to what the bond market
[9:08] was pricing in. In other words, the
[9:09] stock market was blind to the bond
[9:11] market's pricing. Possible. Uh it just
[9:13] seems odd. Bond markets usually that uh
[9:16] you know crystal ball if you will or or
[9:18] like we talked about in the course
[9:20] member live stream, the Lord of the
[9:21] Rings palunteer.
[9:23] I literally just saw the first um Lord
[9:26] of the Rings of the trilogy. I'm like
[9:28] one and a half movies deep. I gotta say
[9:30] I totally understand why people are
[9:31] totally in love with this. I'm really
[9:33] excited. Like Tolken, what a bad. Uh but
[9:35] anyway, uh so as we can see here, the uh
[9:39] longer range, you actually do have
[9:41] somebody who thinks that rates could go
[9:44] as high as 4.4%.
[9:46] That's like a 100 bases. Look at that.
[9:48] Holy smokes. Hold on. Am I in the rates
[9:51] here? Yeah, dude. Somebody's going mega
[9:54] hawk. Look at this. In March, somebody
[9:58] had a high of 3.6. That moved to 4.4.
[10:02] Someone really honked this meeting. Uh,
[10:06] and if I look at the central tendency,
[10:08] that should be gone. Uh, no, that moved
[10:12] up as well. So, even on the central
[10:14] tendency, you moved up to 3.9. So, uh,
[10:18] let's write that down too here. Even on
[10:21] central uh tendency we got two hikes. So
[10:26] on central we got two hikes on median.
[10:31] So median versus I guess average
[10:34] probably. Uh we got uh we got one hike
[10:37] over here. I mean that's pretty close.
[10:39] This is 40 basis points. That's 50 basis
[10:41] points. And uh somebody really hawkked
[10:43] over here to pull up the range. That's
[10:45] quite interesting. Let's uh let's look
[10:47] at the GDP projection here. So change in
[10:50] GDP pretty consistent at 2%. You don't
[10:53] actually see much change in 27. There's
[10:57] really nothing that's been changed here.
[10:59] If you look at the range, you do have
[11:01] somebody who thinks the market's
[11:02] actually going to be running hot. And
[11:04] that's probably the same person who's
[11:07] coming in uh with this 4.4 rate. So uh
[11:12] let's see here. Someone thinks GDP will
[11:16] run hot.
[11:18] There we go. Okay.
[11:23] All right. So, uh let's see here then.
[11:27] Let's look at the actual dots. They'll
[11:29] give us a little bit more color on where
[11:31] they are all placed. So,
[11:35] this is the target range for the Fed
[11:38] funds rate. you could see that that
[11:41] trend down is still occurring, right? Uh
[11:44] so the committee in general is still
[11:47] committed to this idea of uh of a
[11:50] downtrend uh in rates which is I think
[11:53] appropriate. I actually have this
[11:55] mindset and it's really actually partly
[11:57] an investing thesis as well that by 2032
[12:01] we'll see lower rates than ever before.
[12:03] like will potentially be back to
[12:04] negative interest rates uh in Europe and
[12:07] maybe lower 30-year rates here in
[12:09] America, which you know has some
[12:10] benefits obviously for even companies
[12:12] like, you know, Robin Hood now doing
[12:14] mortgage referrals or SoFi now getting
[12:16] into uh uh home lending. Their home
[12:20] lending business, if you haven't been
[12:21] paying attention to it, it's
[12:22] understandable, but their home lending
[12:24] business has actually been growing at
[12:26] the fastest pace of all of their actual
[12:28] lending products. Uh, and it's a
[12:30] horrible time right now for home loans,
[12:32] which makes SoFi somewhat interesting.
[12:34] But, uh, as you can see here, this the
[12:36] thickness is what moved. So, this
[12:39] thickness
[12:41] right here just shot up about one, but
[12:45] you only have one knucklehead who's
[12:48] really high at that 4.4 range. That's
[12:51] only one dot. And we actually went from
[12:54] uh, and this is 2027, so to be clear,
[12:56] this is 2026. Uh, and you still have
[12:58] that same knucklehead right here who's
[13:00] sort of maintaining this this elevated
[13:02] outlook. Most of the dogs uh are are
[13:05] down here uh in the uh the mid3s to um
[13:10] uh lower 3s range, especially when you
[13:12] get into 2027.
[13:14] So um
[13:17] I don't know. I don't I don't see the
[13:19] votes for a rate hike because I have 1 2
[13:22] 3 4 5 6 7 8 nine. Not all of them will
[13:25] vote. One, two, three, four, five, six,
[13:28] seven, eight, nine. I've got nine and
[13:30] nine. We're 5050 honestly on a rate
[13:33] hike. 5050 on dots for a rate hike. Uh
[13:37] market was pricing in two. This is
[13:40] better news than expected again. Uh now
[13:44] again, we just need WSH to uh talk this
[13:47] down.
[13:49] Uh let's write that down. I now expect
[13:52] WSH to talk down the um
[13:56] the rate hike potential.
[14:00] All right, good. So, we'll do some bingo
[14:04] in just a moment. Uh let's see what we
[14:07] have here. Distribution of participants.
[14:08] That's fine. This we've got here a range
[14:12] for GDP. Uh this is where we're going to
[14:15] find the 2026.
[14:18] Why don't I see the one GDP guy who's
[14:20] going crazy with the the 4% in the
[14:24] range? I don't know if they're just not
[14:25] showing that. All right. Unemployment
[14:28] rate,
[14:31] you've only got one person expecting it
[14:33] to go up to 4.6.
[14:35] PCE inflation, most people are
[14:38] relatively uh stable here around 3 and a
[14:40] half, expecting that longer term to
[14:42] return to 2%. Core PCE, same thing, 3.3.
[14:47] so elevated for a while by 2027. See,
[14:50] you know, this is, you know, with with
[14:52] 50% of the members not pricing in a
[14:55] hike, you're still expecting this
[14:57] decline in the next year. So with that's
[15:00] important to write down with 50% of
[15:01] members uh not pricing in a hike uh the
[15:06] average of members still see and really
[15:10] really the bulk right uh inflation core
[15:14] getting down uh 1% over the next year
[15:19] right if if you thought without rate or
[15:22] without a rate hike we're not going to
[15:23] get inflation down they're really
[15:24] pricing in this roll over so this is a
[15:27] rollover of tariffs, uh, Iran and, uh,
[15:32] you know, possibly, uh, AI supply
[15:34] shortages,
[15:36] uh, sort of a a lapping of annual
[15:39] inflation, if you will.
[15:42] Okay. Very interesting. Uh,
[15:46] somebody's calling this, it's going to
[15:48] be the reverse vulkering. Well, yeah,
[15:50] Vulkar, um, you know, basically jacked
[15:52] up rates to crush the backs of, uh, the
[15:55] back of inflation and restore Federal
[15:56] Reserve credibility. basically put the
[15:58] pants on. Uh yeah, I kind of I I I guess
[16:01] you could call it reverse vulking cuz I
[16:02] kind of think Wars will take the pants
[16:04] off and be like, "We're good, baby.
[16:06] Let's go stripping."
[16:10] So, wow, look at that. The 725 bounce
[16:13] right here within 47 cents of that 725
[16:16] bounce. Uh I'm bullish on Warses
[16:19] talking. I, you know, I'm I'm positive
[16:21] on uh on on this actually being an
[16:23] opportunity, a longerterm buying
[16:25] opportunity. Uh, and I'm uh, you know,
[16:27] we've been calling out uh, Robin Hood,
[16:30] including this morning in our course
[16:32] member liveream, which if you want to
[16:33] join, we just, uh, we just, uh, we don't
[16:35] have an expiration going on right now,
[16:37] but you can always go to meet me.com. I
[16:39] think you can use coupon code pope. But
[16:41] this morning, we called out Robin Hood
[16:43] uh, because the finance sector has
[16:44] really started to uh, to pop off. And
[16:47] look at Robin Hood's performance
[16:48] intraday since our call out. We called
[16:51] it out right here at $96.
[16:55] And uh and it's up almost 12% right now,
[16:58] 11.75%.
[16:59] Uh SoFi also up, but not as extreme as
[17:03] Robin Hood right there off that 1771
[17:06] level. Both uh both I think have quite a
[17:08] bit of upside over the next uh few
[17:10] months as well. But anyway, let's focus
[17:12] on we're going to do some Fed bingo now.
[17:14] So, we're going to put a bingo board
[17:15] together and after we put this bingo
[17:18] board together, we'll uh we'll get into
[17:21] uh some of the other goodies. Okay,
[17:23] let's see here. So,
[17:26] oh, I forgot how to do this. There we
[17:28] go. Uh, you know, if you ever want to
[17:30] know how to, um, this is honestly just a
[17:33] dumb idea. Um, did I do it? Yeah, I did
[17:36] it. Okay. If you ever want to know how
[17:38] to get used to doing custom characters
[17:40] on your phone or like your iPad or
[17:42] whatever, like the the yen symbol or the
[17:45] euro or whatever, just change your
[17:47] password to include some of those
[17:48] freaking letters. Oh my gosh, you'll
[17:50] learn it real fast.
[17:52] But, uh, it also makes it really slow to
[17:55] unlock your stuff. Uh, okay. So, I'm not
[17:58] a fan of fourdigit passcodes while I
[18:00] pull up our bingo board. I, uh, I'm a
[18:03] big fan of like eight digits and letters
[18:05] and all that kind of stuff on your
[18:07] phone. I just feel like the phone's
[18:08] pretty important. And, and most of us
[18:10] have fourdigit passcodes. Uh, too easy
[18:12] to see over your shoulder. All right, so
[18:16] here we go. Bingo board. Popping that
[18:18] in. Coming right up. Uh, so my play
[18:22] here, this is my thesis, okay? I could
[18:24] be wrong, but my thesis is we bottom at
[18:27] 7:25 and we're up from there. And uh,
[18:31] why is this not inserting? Insert, you
[18:33] fart.
[18:34] And start.
[18:36] Okay, well, whatever. We'll get to the
[18:38] bottom of this. You know, maybe I could
[18:39] just use an old one. Uh, that's not
[18:43] convenient.
[18:44] Anyway, I'll I'll get this set situated
[18:47] in just a second. But um 725, I wouldn't
[18:51] be surprised if that's the bottom and
[18:53] we're up from here. Especially since I
[18:54] think I wouldn't, you know, seeing how
[18:56] short that statement is, I now wouldn't
[18:58] be surprised if Kevin Worsh actually
[19:00] ends up making this meeting very short.
[19:02] Uh it just says something basic like uh
[19:04] hey, you know, we are
[19:08] uh I guess let's let's think about this
[19:10] prediction in line with our bingo board.
[19:13] So, uh, if I were Kevin Worsh, what
[19:16] would I say? Uh, well, first thing I
[19:18] would do is I'd probably, if it were me,
[19:20] I'd probably walk out with like a Luigi
[19:21] mug. I'd spawn one in.
[19:25] That's the kind of Fed chair we need is
[19:26] somebody who's going to come out with a
[19:28] Luigi board or, you know, a Luigi um,
[19:30] coffee mug. But anyway, if I were wars,
[19:33] I'd probably say something to the effect
[19:35] of uh inflation shock uh from mediumterm
[19:41] uncertainty due to Iran is likely to
[19:44] fade. Uh we have uh a deal is uh
[19:48] imminent. Uh so I think he'll reference
[19:51] the deal, right? I think that uh oil
[19:55] prices are uh temporarily
[19:59] uh prompting
[20:01] higher headline inflation and some pass
[20:04] through to core. Uh we expect that to
[20:07] resume its downtrend
[20:11] after uh the straight of four moves
[20:13] reopens. This is uh going to sound very
[20:15] Trumpian.
[20:18] Sounds uh Trumpian, right? And then
[20:21] we'll end up getting um something to the
[20:23] effect of um goal is to uh remain
[20:28] stable. That's a key word. Key word
[20:30] right there. remain stable uh on policy
[20:35] uh until there's a greater sign of a
[20:39] data moving in either direction. Uh so
[20:43] that if uh inflation does lap tariffs
[20:48] last year and we see a uh drop in
[20:52] inflation in Q3, Q4, uh we can uh resume
[20:57] an easing bias, right? I think that
[21:00] would be very bullish for markets and
[21:02] understand too uh this would be bullish.
[21:06] Think about the data we've been getting
[21:08] right weekly data on Tuesday indicated
[21:11] about I think we were about 102k jobs
[21:14] per month on ADP. We had retail sales
[21:19] smoked this morning. Uh so really good.
[21:23] Uh even including or uh even excluding
[21:26] gas and cars, right? You've got uh
[21:30] obviously GDP is holding up, AI spent
[21:32] holding up. Uh so, you know, oil prices
[21:36] are coming down, rates are coming down,
[21:37] riots uh rights, oil GDP. Let's go see
[21:40] what the Atlanta Fed GDP is really
[21:42] quickly. Uh because sometimes they
[21:44] they'll reference this. We're at 3% over
[21:47] here on the uh Atlanta GDP. Let's look
[21:50] at Dallas trimmed mean as well.
[21:54] Dallas trimmed mean is
[21:58] so Dallas trimmed mean one month
[22:01] inflation rate trimmed mean right here
[22:04] we're over here at 25.
[22:08] This one, you know, is a little bit more
[22:10] volatile. Yeah, you can see the
[22:12] six-month trimmed mean is up but not
[22:15] that high, right? It's actually pretty
[22:18] close to that that 2% level. uh if this
[22:21] is a tool that you want to use, some
[22:23] people don't. It's considered an
[22:24] alternative measure of core inflation in
[22:27] PCE calculated by staff at the Dallas
[22:29] Fed. So, I actually wouldn't be
[22:31] surprised to see him reference trim
[22:33] mean. If you hear trim mean, it's
[22:35] bullish, right? Uh referencing trimmed
[22:38] uh Dallas Fed trimmed mean would be
[22:41] bullish. Uh that inflation gauge is
[22:45] closer to 2%.
[22:47] Okay. So, let's take some of this and
[22:49] jot it into
[22:52] our um bingo board here and let's see
[22:55] what we have. So,
[22:58] uh and then feel free to mention some
[22:59] bingo ideas uh as well. Let me know what
[23:02] you think. Uh let's It's going to be a
[23:05] little harder. Let's see if he honors
[23:07] the purple tie and if he's on time. All
[23:09] right.
[23:11] Uh okay. Come on, buddy. Come on, Dad.
[23:15] Okay.
[23:17] Am I going to have to use my finger
[23:18] here? Going on the iPad. All right. You
[23:22] know, this is what happens when you get
[23:24] a new fed chair. All the things that
[23:26] used to work just start falling apart.
[23:28] It's all coming to an end. There we go.
[23:33] All right. No problem. No problem. We
[23:35] can get through it. All right. There we
[23:37] go. So, uh, let's see if we can pull it
[23:40] off on time. Uh, should we go purple
[23:44] tie? You know, it feels weird to say
[23:46] purple tie, right? Feels a little weird
[23:48] to say that purple tie.
[23:51] I for some reason I think he's like I
[23:54] picture him as coming out with like a
[23:56] bunch of like messy papers. Uh comes out
[24:01] with messy papers
[24:06] versus some kind of like electronic
[24:08] device, right? I I don't know why I
[24:10] think that. Uh resume down. Okay. Um,
[24:13] talks about deal talks about
[24:18] Iran deal.
[24:22] Mentions trimmed meanions
[24:26] trimmed mean.
[24:31] Okay. By the way, if you haven't tried
[24:33] the uh stock AI app yet, uh that's
[24:35] inside of the Meet Kevin app, there is a
[24:37] free sample portion that you could use.
[24:40] Uh all you have to do is download the
[24:41] Meet Kevin app. It's totally free. So,
[24:43] you just go uh type meet Kevin into the
[24:45] Apple or Android app store and you could
[24:47] get our data tab. You could get the
[24:49] daily wealth, the videos tab, but you
[24:52] could also get the pricing power portion
[24:54] of the stock AI app, which is 1/4th of
[24:57] the stock AAI app. Uh, and of course,
[24:59] there's a lot more in there as well, but
[25:01] it's kind of cool. Uh, and then there's
[25:02] going to be some a new special feature
[25:05] coming out within like the next 24
[25:06] hours. We call it the Alpha Wire
[25:08] service. That's going to blow people's
[25:10] minds and I can't wait to show that off
[25:12] to you. But that should be released
[25:13] within the next uh hopefully 24 hours
[25:15] here. We'll see. Uh but you can download
[25:17] that app for free and uh uh we'll have a
[25:20] uh free period as well where you could
[25:21] use the alpha wire service. So you may
[25:23] as well download the app. Okay. So uh
[25:26] let's see. Uh mentions Tremine talks
[25:28] about the Iran deal, comes out with
[25:30] messy papers, purple tie on time. Uh we
[25:33] think that uh he'll talk about oil
[25:35] temporary, right? Oil
[25:38] temporarily
[25:41] uh temporaril
[25:44] whatever
[25:47] uh increasing inflation.
[25:50] Oh, I think he'll talk about AI
[25:52] deflation is coming. AI deflation
[25:57] coming.
[26:00] Uh, I also think he's going to want to
[26:02] get rid of the SE. Uh, may
[26:06] end SE
[26:09] or make
[26:13] it optional.
[26:16] It's honestly pretty useless in my
[26:18] opinion, and it does move the market,
[26:20] but it's usually wrong.
[26:23] Uh, Fed dual mandate. Yeah, sure. That'd
[26:25] be an easy one. Dual mandate. I mean,
[26:27] he's got to sound a little bit like the
[26:29] traditional Fed hair, right? Dual
[26:31] mandate. Uh, data dependent. Don't we
[26:34] have a halo sound to that? Uh, I thought
[26:37] I did.
[26:39] >> Data dependent.
[26:41] >> There we go.
[26:45] All right.
[26:47] What else do we have here? So, we've got
[26:49] goal is to be stable on policy. I think
[26:51] that's a big one. Stable on policy.
[26:53] That's very bullish. stable on policy.
[26:58] There we go. That would be quite
[27:00] bullish.
[27:02] Uh let's see here.
[27:04] Inflation shock to fade.
[27:08] We wrote that down too. Inflation
[27:12] shocks. Come on.
[27:16] To fade.
[27:19] Okay. Uh we've got uh employment
[27:23] employment improving.
[27:27] and improving. Uh it would also be
[27:31] useful if you said something like don't
[27:33] want to stand in the way, right? Don't
[27:36] uh want to send mixed signals
[27:42] signals
[27:44] by hiking
[27:47] to cut. That would be huge if he said
[27:49] that. And super bullish, right?
[27:52] So, shows up in a red suit, says
[27:54] somebody.
[27:56] Uh okay.
[27:59] So, let's see how yields are doing.
[28:01] Yields right now, yields went up about
[28:04] 2.9 basis points. Interesting. Yeah,
[28:06] this will set the tone. I agree. Uh,
[28:09] let's see here.
[28:12] Great message. Yeah. I don't know. It's
[28:14] it's just the problem is it's it's only
[28:16] a great messaging tool to the extent
[28:17] that it's accurate. And frankly, it's uh
[28:19] it's usually inaccurate. Yeah, I I do
[28:22] wonder if the meeting will be shorter.
[28:25] So, usually we have about an hour of
[28:28] Powell, right? Uh so, uh let's say less
[28:32] than 30 minutes,
[28:36] 30 minute meeting or it should be
[28:39] presser
[28:41] press
[28:44] less than 30 men presser. Uh I think
[28:47] that um easing bias will return
[28:56] to return
[29:00] and I think he'll say we've got to be
[29:02] patient.
[29:05] Uh economy is strong
[29:10] is strong.
[29:14] Let's see here.
[29:17] Uh someone
[29:19] Oh yeah, somebody asks about um
[29:23] uh his his prior like
[29:27] you know his history is asked
[29:31] about being wrong on inflation before
[29:37] inflation in the past. He thought
[29:38] inflation would skyrocket.
[29:40] That would be a great question if
[29:42] somebody hit his record, right? which is
[29:45] fine like you could change your opinion.
[29:48] Uh labor market uh what about uh you
[29:52] know lower rates could broaden
[29:55] lower rates to broaden success.
[30:00] That's a goal often of the Fed is if we
[30:03] get rates down more people can
[30:04] participate whether they're different
[30:06] races or income levels or cultures or
[30:09] you know whatever. That's usually a goal
[30:11] of the Fed, sort of like a side goal is
[30:13] increasing that participation
[30:16] uh in in the wealth effect. So, let's
[30:20] see here.
[30:22] Yeah. No, I know. I I I the Lord of the
[30:25] Rings thing. I know some people were
[30:26] surprised by that, but yeah, I just
[30:27] watched it and I was I was uh studying
[30:30] uh I mean I just I just opened it up. I
[30:32] just started this, too, cuz I I heard
[30:34] you're supposed to watch the trilogy
[30:36] first, but when it comes to the books,
[30:38] you're supposed to start with The
[30:40] Hobbit. So, I got The Hobbit. And uh I'm
[30:43] a little deep in it, but uh yeah, right
[30:47] now I'm learning about um Bilbo's
[30:49] father, who built the most luxurious
[30:52] rabbit hole for her, the mother.
[30:55] I guess I'm not that deep. Anyway, okay,
[30:57] we've got about a minute to go here. I'm
[30:59] running out of things to say, so I got
[31:02] four more things to say. Uh, let's uh
[31:04] fill these in really quickly. Uh, let's
[31:07] do
[31:09] uh valuations elevated. I don't actually
[31:11] think he say it won't say won't say
[31:15] valuations uh elevated.
[31:19] I think he'll say um housing
[31:23] uh to strengthen on lower rates. I think
[31:27] he's going to be pretty bullish on lower
[31:29] rates. Uh then we'll have let's see
[31:32] here. Uh
[31:35] yen carry trade. I don't think so.
[31:38] Dollar dominance. That's the way I would
[31:39] put it. I like that. Dollar dominance
[31:43] and uh maintain Fed independence. One
[31:46] more. Maintain
[31:50] Fed
[31:52] independence.
[31:55] And uh did we do purple tie? We did
[31:57] purple tie already.
[31:59] Uh
[32:01] did we did it on time? Uh I'll I'll just
[32:04] throw in the word uncertainty.
[32:09] Uncertain time. All right. Ready? Let's
[32:12] go.
[32:12] >> Hear war in his first conference to know
[32:14] what buzzwords might be for the future
[32:16] or is it going to be the usual things
[32:17] that it hints of?
[32:18] >> Big red background of that guy. Let's
[32:19] see if he's actually on time.
[32:22] All right. Here he comes out with a
[32:23] clown noise. No. Nose. Oh my gosh.
[32:27] Not my job. Yeah, that's a famous uh
[32:29] Apollo one. Reading from a laptop. Yeah,
[32:32] maybe. Oh, there he is. Oh my gosh. He's
[32:34] got no paper. He's got nothing.
[32:35] >> And here comes new paper. Nothing. But
[32:37] he's on time.
[32:38] >> Good day.
[32:39] >> Is that purple?
[32:40] >> It's an honor, a true honor to be back
[32:43] at the Federal Reserve.
[32:44] >> It's blue.
[32:45] >> And to take up this duty at a time of
[32:47] such
[32:48] >> consequence.
[32:50] I've been especially heartened by the
[32:52] warm welcome of old friends and new
[32:55] colleagues both. And I've listened
[32:58] closely to my fellow FOMC members for a
[33:02] lot of new ideas, new thinking, and
[33:05] genuine interest in moving the Fed
[33:07] forward.
[33:08] This week's FOMC meeting exemplified the
[33:12] very best of the Fed's traditions.
[33:15] Rigorous debate,
[33:17] open-mindedness,
[33:18] commitment to mission,
[33:20] >> boring,
[33:20] >> responsibility,
[33:22] and accountability.
[33:24] >> Does he have a teleprompter?
[33:25] >> No.
[33:26] >> In this business, they all add up to one
[33:29] thing. Getting monetary policy right
[33:33] as near to it as we can do. That is our
[33:37] northstar.
[33:38] >> All right. My colleagues and I are here
[33:41] to serve our legislative remitt, which
[33:43] you've heard us say before, price
[33:45] stability and maximum employment. And
[33:49] these objectives guided our business in
[33:52] the meeting just concluded.
[33:55] As you saw a few moments ago, the
[33:57] committee decided to maintain the target
[33:59] range for the Fed funds rate at 3 and a
[34:02] half to three and 3/4%.
[34:05] In support of the Fed's dual mandate.
[34:08] No.
[34:08] >> The committee also reaffirmed its policy
[34:11] of maintaining ample reserves in the
[34:14] banking system.
[34:16] Economic activity is expanding at a
[34:18] solid pace despite elevated uncertainty
[34:21] that owes in part to the conflict in the
[34:24] Middle East.
[34:25] >> Yep.
[34:26] >> Productivity go growth and capital
[34:28] investment both strong.
[34:31] Job gains have kept pace with the
[34:32] workforce and the unemployment rate has
[34:35] changed little.
[34:37] We recognize that inflation has been
[34:40] running well ahead of the Fed's
[34:42] longstated inflation goal of 2%. That's
[34:46] been going on for more than 5 years.
[34:50] Persistently high prices are a burden
[34:53] for the American people.
[34:55] But the recent past need not be
[34:57] prologue.
[34:59] I am pleased to report that members of
[35:02] the FOMC are unambiguous and unanimous.
[35:07] This committee will deliver price
[35:09] stability.
[35:12] At any institution, a change in
[35:15] leadership is a natural and timely
[35:18] opportunity to reaffirm its mission, to
[35:22] review current practices, and to
[35:25] consider whether those practices best
[35:27] meet our objectives.
[35:30] My Fed colleagues and I will be working
[35:32] in close collaboration to ask what
[35:34] changes might improve the conduct of
[35:37] monetary policy.
[35:39] On that score, you might have already
[35:41] noticed something, a difference in
[35:44] today's policy statement. It's a bit
[35:46] shorter, a bit simpler, and it dispenses
[35:49] with some older language.
[35:51] That statement just gives you the facts
[35:54] as best we can judge it. Absent also is
[35:57] so-called forward guidance, which we
[36:00] agreed was not well suited to the
[36:02] current policy conjuncture.
[36:05] This afternoon, you also received the
[36:08] usual summary of economic projections.
[36:11] It's been the practice of this committee
[36:13] for participants to submit these
[36:15] projections, and I have encouraged my
[36:17] colleagues to continue to do so.
[36:20] >> I, however, have refrained from offering
[36:22] any projections of my own, consistent
[36:25] with my long-held views on the SCP, at
[36:28] least as currently structured.
[36:30] >> Yep, he's the one who did.
[36:31] >> In the medium projections, real GDP
[36:33] rises at 2.2%. 2% this year, 2.3% next
[36:37] year, and total PC inflation runs at
[36:41] 3.6% this year, 2.3% next year. The
[36:46] unemployment rate stands at about 4.3%.
[36:50] The median participant judges at the
[36:52] appropriate federal funds rate to be at
[36:54] 3.8%
[36:56] at the end of this year and 3.6 at the
[36:58] end of next.
[37:00] Let me turn now to a few words on a key
[37:03] initiative that we're announcing today.
[37:07] I'm appointing a task force in each of
[37:09] five areas
[37:10] >> that are central to the broad conduct of
[37:12] monetary policy. First, Fed
[37:15] communications.
[37:18] Second, the Fed's balance sheet. Third,
[37:22] our use and reliance on existing data
[37:25] sources. Uhoh. Fourth, productivity and
[37:28] jobs in an era of transformation. And
[37:31] last, the Fed's inflation frameworks.
[37:34] These subjects are timely,
[37:37] consequential,
[37:39] and in my view, worthy of a fresh look.
[37:42] My colleagues and I discussed them with
[37:44] energy and purpose over the last couple
[37:47] of days. For each of these independent
[37:50] task forces, I'm enlisting some of the
[37:53] very best minds both inside and outside
[37:56] the economics profession.
[37:58] They will be supported by subject matter
[38:00] specialists from our superb Fed staff.
[38:03] And they'll have a straightforward
[38:05] charge. Start with first principles,
[38:08] ask hard questions,
[38:11] examine current practice, consider
[38:14] alternatives,
[38:15] and ultimately propose next steps for
[38:18] policymaker consideration.
[38:20] Since last summer, my colleagues discuss
[38:24] possible improvements in the form and
[38:25] function of Fed communications.
[38:28] This new task force will build on that
[38:31] effort and I expect propose some
[38:34] well-considered changes including to the
[38:36] SCP I mentioned a few moments ago. Uh
[38:39] the second task force, the one on
[38:41] balance sheet policy, will review the
[38:44] benefits and risks of the current ample
[38:46] reserves regime and the composition of
[38:49] the Fed's balance sheet. They will
[38:52] assess alternative frameworks for the
[38:54] conduct and operation of monetary
[38:56] policy.
[38:58] The third task force, the one on data,
[39:01] will evaluate new information sources
[39:04] and consider methodological changes to
[39:07] improve data gathering with the aim of
[39:09] giving policymakers more accurate,
[39:12] relevant contemporaneous
[39:15] and perhaps most important, actionable
[39:18] information on the state of our economy.
[39:20] Fourth, the task force on productivity
[39:23] and jobs. It'll survey the pace, the
[39:27] reach, the economic impact of new
[39:30] general purpose technologies including
[39:33] AI.
[39:34] >> Oh,
[39:34] >> and explore the implications for the for
[39:37] the Fed in pursuit of our employment and
[39:40] inflation mandates. Yeah, this is the
[39:41] last AIDL argument that he's building in
[39:45] >> that'll examine the drivers of inflation
[39:48] first principles and weigh the full
[39:50] range of ideas for delivering price
[39:53] stability in a changing economy.
[39:56] You'll hear quite a bit more about these
[39:58] task forces and this overall initiative
[40:00] in the coming weeks.
[40:02] >> Enough for now to make a simple
[40:04] statement.
[40:04] >> Okay.
[40:05] >> Each task force will serve an objective
[40:08] shared by everyone in the system. shared
[40:10] by everyone around that table that I sat
[40:12] with over the last couple of days. A
[40:15] Federal Reserve that is cleareyed about
[40:17] its mission, fit for purpose, and
[40:20] focused on the future. And with that, I
[40:23] appreciate your attention. I'm happy to
[40:25] take your questions.
[40:27] >> He's actually doing questions.
[40:30] >> Uh hi, Chairman Howard with Roers. Good
[40:32] to see you again and and welcome back.
[40:34] Um uh this is a lot to be putting in
[40:36] motion uh so fast. What is the timeline?
[40:39] uh you have in mind for for each of
[40:41] these.
[40:42] >> So um I think it'll depend on the task
[40:45] force. It also depends on the urgency in
[40:48] which we need clear answers. My
[40:51] expectation I'm still in the business of
[40:54] recruiting and finalizing them. My
[40:56] expectation is the task forces will
[40:58] begin work in the next couple of weeks
[41:00] and we'll start to get some more
[41:02] information from them, some more framing
[41:04] of how they see things starting in the
[41:07] fall and hopefully most if not all of
[41:09] them concluding by year end.
[41:11] >> And uh just specifically on the
[41:13] inflation uh framework, uh you talk
[41:15] about first principles. Does this
[41:17] include a review of the 2% target
[41:20] itself? Uh you've mentioned that things
[41:22] to the right of the decimal point don't
[41:24] matter. Nope.
[41:24] >> Uh should this be starting from a
[41:26] premise that
[41:28] 2% as a point estimate is is too strict?
[41:31] >> Let me break that into two pieces. Uh
[41:33] first on the inflation framework review,
[41:37] their remitt is what are the drivers of
[41:40] inflation? What's the Fed's
[41:41] responsibility for inflation? In part,
[41:44] how do we measure inflation? But that'll
[41:46] overlap with my data group. uh on the 2%
[41:49] inflation objective that is the Federal
[41:52] Reserve's longheld objective of 2%.
[41:55] You've heard me say before uh I tend to
[41:58] focus on the left of the decimal point.
[42:00] Well, the two is the left of the decimal
[42:01] point. For now, zero is to the right. I
[42:04] see no reason until we have
[42:06] reestablished our commitment and ability
[42:09] to deliver on the 2% inflation objective
[42:12] to revisit that. So, that will be
[42:13] outside the scope of what we're taking
[42:15] on.
[42:15] >> Stays firm on that. Good.
[42:18] Colobby,
[42:20] >> thank you so much. Colobby Smith with
[42:22] the New York Times.
[42:22] >> So they could transition to using
[42:24] trimmed mean though and then you'd be a
[42:26] lot closer to 2%, right? They could say,
[42:28] "We're not going to use PCE anymore.
[42:29] We're going to use P trim mean."
[42:31] >> But looking at the SEP, the bulk of your
[42:33] colleagues expect core PCE to run around
[42:35] 3.3% by year end and for the 2%
[42:38] inflation target not to be reached until
[42:40] 2028. So, I'm curious how patient you
[42:43] think the Fed can afford to be at this
[42:46] juncture in terms of waiting for
[42:48] one-time inflation waves to wash
[42:50] through.
[42:50] >> They could basically just use a
[42:52] different formula and get inflation down
[42:55] and then cut rates under the worst
[42:56] regime is kind of what he's setting up.
[42:58] That's actually kind of bullish.
[43:00] >> Some action and raising rates.
[43:02] >> Sure. So, quite a bit there. Let me let
[43:04] me try to break that into pieces. First,
[43:07] we have the capability and commitment to
[43:10] deliver on our price stability objective
[43:12] of 2%. That's exactly what we're going
[43:14] to do. Um, that in the Fed's review of
[43:19] its strategy over the last any number of
[43:21] years in January, the Fed, including the
[43:24] strategy that we're still bound by, the
[43:26] Fed statement says that inflation is
[43:28] primarily determined by monetary policy.
[43:31] You bet it is. I've said for years
[43:34] inflation's is a choice. You bet it is.
[43:37] >> And today I'm announcing that this
[43:39] committee unambiguously and unanimously
[43:42] have decided we are going to deliver on
[43:43] that. The rest of your questions sounded
[43:46] like a encouragement for me to give
[43:48] forward guidance. Uh we've dropped
[43:50] forward guidance. Uh some along the
[43:53] committee I think dropped it I suspect
[43:55] from our discussion the last couple of
[43:56] days because they said at this moment in
[43:59] time it doesn't feel as though providing
[44:01] forward guidance is right. Others have,
[44:04] I'd say, different views and think as a
[44:06] general proposition, forward guidance
[44:08] isn't the business we should be in, but
[44:11] that'll be taken up by the task force on
[44:13] communications and my policymaker
[44:16] uh colleagues. We're going to listen
[44:18] hard to what the experts say and make
[44:19] our own decision. Um, but I can't give
[44:22] you any forward guidance about what
[44:23] we're going to do next. The good news is
[44:25] we'll be meeting in six weeks. So just
[44:27] following up I guess on the current
[44:29] policy settings then I am curious how
[44:31] restrictive you think things are at the
[44:33] current current moment given the flow of
[44:36] data that we've seen and you know
[44:38] forecasts that are coming down the
[44:39] pipeline.
[44:40] >> Yeah I I've heard characterizations both
[44:43] inside and the Fed about that. I'll give
[44:45] you my own. It's uneven. If I look at
[44:48] the housing markets as one example,
[44:52] uh Fed policy isn't the the single
[44:54] determinant of the state of the housing
[44:56] market, but broadly I would say there
[44:58] Fed policy appears to be somewhat
[45:01] restrictive. I would have a hard time uh
[45:05] managing to say those words if I were to
[45:07] see what's happening in financial
[45:09] markets. So I'd say it's uneven.
[45:11] >> That's perhaps a function of different
[45:13] transmission mechanisms of monetary
[45:15] policy. whether monetary policy is
[45:17] coming from our interest rate tool or
[45:19] our balance sheet tool. But the good
[45:21] news, we have a task force on that too.
[45:22] And the balance sheet task force will be
[45:24] looking more at that subject.
[45:26] >> Mike McKe,
[45:29] >> you said you don't like uh forward
[45:31] guidance. You dropped it from the
[45:33] statement this time, but with the dot
[45:35] plot, nine members suggested that they
[45:37] want a rate increase by the end of the
[45:40] year, and the markets have taken that as
[45:43] forward guidance. So, what does this
[45:44] mean in terms of how you guide the
[45:48] markets and in terms of uh what the dot
[45:52] plot's future is?
[45:54] >> Um, I'm going to have to give you the
[45:56] same answer I gave to to Miss Smith.
[45:59] We've got a task force for that. Um,
[46:01] I'll give you a little bit more.
[46:03] >> Punt it all.
[46:04] >> I reviewed the dot plots and when I saw
[46:07] the
[46:07] >> that's going to be this guy's new meme.
[46:09] got a task force to answer that, but I'm
[46:11] not going to answer it.
[46:12] >> Kind of with the big erasers. Um, that's
[46:15] to say that I think my colleagues around
[46:18] the table when they submitted their dots
[46:20] understand the world is changing quite
[46:22] quickly and they didn't feel bound by
[46:24] them 6 weeks from now or 6 days from now
[46:27] and if in the event that their
[46:28] circumstances change. Um, I'll note a
[46:31] couple other things. What I heard around
[46:33] the table was as they submitted their
[46:36] modal forecasts, their modal forecasts
[46:38] to be clear weren't this was more likely
[46:41] than not. This was this was more likely
[46:44] than their other scenarios. So I didn't
[46:47] hear u tons of conviction. What I heard
[46:50] was the kind of humility that I think we
[46:52] should have. I did not submit a a dot.
[46:56] For me, it's not helpful in the conduct
[46:58] of policy. I suspect by year end as I
[47:02] mentioned in my opening statements
[47:04] there'll be a review about
[47:06] communications broadly press conferences
[47:10] dots uh meetings and the like
[47:13] transcripts minutes this will be part of
[47:16] that I don't want to prejudge the
[47:18] outcomes there um but I'm pretty
[47:20] open-minded about what they could be and
[47:22] I was just incredibly impressed over the
[47:25] last couple of days uh my colleagues
[47:27] over the last two days and frankly over
[47:28] the first three weeks I've been here,
[47:30] they've been very open about changes.
[47:33] Change isn't easy. Change is filled with
[47:35] risk. But our number one goal is to get
[47:38] monetary policy right. The way to get
[47:41] monetary policy right is to deliver on
[47:43] the remmit that Congress gave us to
[47:45] deliver on price stability. And there
[47:47] was uh no disagreement on any of those
[47:49] points.
[47:50] >> At the risk of uh possibly getting the
[47:52] same answer about task forces uh
[47:54] communications, uh what is your feeling
[47:57] about these news conferences? Are you
[47:59] going to continue one after every
[48:01] meeting? Uh do you think find them
[48:04] useful? Uh what is
[48:05] >> We have a task force for that. We'll let
[48:07] you know.
[48:08] >> Communicate.
[48:09] >> Well, this one's probably got another 15
[48:11] or 20 minutes in it, so I don't want to
[48:12] prejudge the outcome. Um
[48:15] uh press conferences can be a very
[48:18] useful way to communicate with
[48:20] households, businesses, and more broadly
[48:23] through using the likes of you. I had a
[48:26] a great old mentor named George Schultz
[48:28] and his mantra was press conferences are
[48:31] useful, but when you have one, you want
[48:33] to make sure you have something
[48:34] important to say. Today, I think we had
[48:36] something important to say about our
[48:38] commitment to deliver on price
[48:39] stability, our commitment to rethink
[48:42] practices with an eye of moving the Fed
[48:44] forward. And to give you and the
[48:47] American people a sense that these
[48:48] aren't idle thoughts, these are concrete
[48:50] thoughts. That we're going to seek out
[48:52] the best minds, both the best thinking
[48:54] inside of the Federal Reserve, the best
[48:57] people I know in business and economics
[48:59] and the academy and technology and the
[49:01] rest to share their views. That's what
[49:04] we're going to be doing here, the
[49:05] pursuit of truth. Uh I think we're going
[49:07] to come up with some new and interesting
[49:09] things. Um we made some changes today. I
[49:12] expect more changes to come and uh and
[49:15] some of those might well be worthy of a
[49:16] press conference.
[49:18] >> Chris Rabber.
[49:21] >> Hi uh Chris Rugverber at Associated
[49:23] Press. Thanks for uh taking our
[49:25] questions. Um could you give us a sense
[49:28] of how you see inflation more in the
[49:30] long term? I know you may not want to
[49:31] comment on the ups and downs, but is
[49:33] this mainly driven by energy prices in
[49:36] the Iran war at this point, or do you
[49:37] have any concerns about underlying
[49:39] inflation pressures in the economy?
[49:42] Thank you.
[49:43] >> So, I can't do much better than than the
[49:45] committee just did, so let me let me
[49:47] restate it. Inflation remains elevated
[49:50] relative to the committee's 2% goal, in
[49:53] part reflecting supply shocks that have
[49:55] driven price increases in certain
[49:56] sectors, including energy. That's
[49:59] paragraph goes on to say but to be clear
[50:02] the Fed will deliver price stability. My
[50:04] own judgment is the committee spent
[50:06] quite a bit of time not just in two days
[50:09] but over iterations of a couple of
[50:11] weeks. That's what we're prepared to say
[50:13] about inflation but the commitment to
[50:15] deliver is strong unanimous and
[50:19] unambiguous and that's I think an
[50:21] important message we've missed for five
[50:23] years and uh and we're going to fix
[50:25] that. Well, great. And then just on your
[50:28] the data task force and everything else.
[50:30] I mean, generally speaking, uh I think
[50:32] people feel the feel the Fed looks at
[50:34] everything already. Certainly that was
[50:36] the sense from before.
[50:38] >> Uh what's is there data that you feel is
[50:41] not given enough weight? Uh I mean you
[50:43] mentioned the trim mean in the past, but
[50:44] again that's well known to certainly
[50:46] most Fed members. So what is that task
[50:48] force looking at and and what what might
[50:50] be the I mean I know you don't want to
[50:52] prejudge the outcome but are there
[50:54] examples of data that you expect might
[50:56] be given more weight. Thank you.
[50:58] >> So you're answering my question so let
[51:01] me say I don't want to prejudge the
[51:02] outcome. I also don't want to say too
[51:04] much about what they're going to do
[51:06] because I still have a phone call or two
[51:07] to make before I've nailed down the
[51:09] people that are doing that. Um I'm
[51:11] interested in what the outside experts
[51:13] view is on the subject. I'll say this
[51:16] generally um most of the data that
[51:20] central bankers and other government
[51:22] officials in the United States consume
[51:25] come with old-fashioned survey methods.
[51:28] >> Uh
[51:29] >> uh a national accounts of the what the
[51:31] US economy looks like that looks very
[51:34] little like the US economy in 2026.
[51:38] um survey methods that don't have
[51:40] response rates that we need, asking
[51:42] questions that might have been quite
[51:43] applicable a generation ago that are
[51:45] less applicable now. So even inside of
[51:48] official statistics, I would be
[51:50] open-minded if the task force and our
[51:53] own best thinking had recommendations
[51:56] how those official statistics can be
[51:58] brought up to a standard of of our time
[52:00] using new analytic methods. I'd also say
[52:03] this, almost every private company CEO
[52:07] that's running his or her business are
[52:09] doing so with real time information that
[52:12] isn't subject to much revision, right?
[52:15] >> That is telling them what just happened
[52:16] at that very moment. As you know, there
[52:19] are normal long and variable lags in the
[52:22] conduct of monetary policy. What we're
[52:24] really interested in is what's happening
[52:27] right now. What we're less interested in
[52:29] is echoes of history. And you're hearing
[52:32] from my answer that some of the data
[52:34] that we receive that we're waiting on
[52:37] the first Friday after the month the
[52:39] payroll index or something else that
[52:41] might be an echo of history that's quite
[52:43] useful on its third revision. We need to
[52:46] take those error bounds down because we
[52:48] have to make hard decisions in real
[52:50] time. I'm really open-minded that there
[52:54] is a lot of new data sources that we can
[52:57] learn from the private sector, from
[52:59] reforms in the official sector, and new
[53:01] analytic techniques that are far more
[53:04] refined than asking a simple question
[53:06] about whether something was core or
[53:08] non-core.
[53:10] >> Edward,
[53:12] >> thanks. Welcome.
[53:13] >> Did I just hear long palunteer?
[53:15] So if you don't give a lot of ongoing
[53:19] forward guidance, won't the markets have
[53:21] more volatility and shouldn't Americans
[53:23] have more access into what you're
[53:24] thinking going forward?
[53:26] >> Um, so I think financial markets
[53:30] perform best when they react to incoming
[53:34] data. I think they the financial markets
[53:37] work less efficiently when they ask a
[53:40] question, how will the Federal Reserve
[53:42] react to that incoming information?
[53:45] Um, the more that markets are paying
[53:47] attention to what's happening in the
[53:50] real economy, deciding what's good data
[53:53] and what's less good data, the more
[53:55] financial markets can price what they
[53:57] believe is the most likely and what are
[53:59] the tail risks. Financial market prices
[54:03] are probably the most important source
[54:05] of information to guide central bankers.
[54:09] But when all the financial markets are
[54:11] doing is reflecting back what we've
[54:13] said, then we're taking the most
[54:15] important source of information and
[54:16] we're being blind to it. I'd like us to
[54:19] create a system where those blinders
[54:21] come off, where markets are following
[54:23] data that they efficiently think is
[54:25] reliable and they'll be watching data.
[54:28] We'll be watching data. They'll come
[54:30] with better information through market
[54:32] prices to us. We can make more informed
[54:34] decisions. But ultimately the goal that
[54:36] I said at the outset, deliver on the
[54:38] price stability objective that Congress
[54:40] told us to do that we've got to get in
[54:42] the business of doing. Yeah. If I could
[54:44] take you in the meeting a little bit. Um
[54:46] so your first meeting the the board
[54:48] members seem fairly hawkish when you
[54:50] listen to in general when you listen to
[54:52] what they're saying. Was there any
[54:53] discussion of a rate cut going forward
[54:55] today?
[54:56] >> Um
[54:58] there was one proposal on the table.
[55:00] There was no discussion of any other
[55:02] proposals. Um the discussion on that
[55:05] proposal I would say was quite limited.
[55:08] The group was unanimous and unambiguous
[55:10] on it. Um it has been the practice of of
[55:14] this central bank and others to have a
[55:16] range of alternatives. Um today we had
[55:20] one I thought it furthered discussion
[55:23] deepened it uh and made it clear what we
[55:26] needed to do and how we needed to
[55:29] deliver. I wouldn't prejudge what
[55:31] happens in the future, but there was
[55:32] only one big subject for us. We took it
[55:35] on. We had a good family fight on it for
[55:37] a couple of days and we ended up, I
[55:39] think, in a better place.
[55:42] >> Claire,
[55:45] >> thanks a lot. Claire Jones, Financial
[55:47] Times. um you know coming to this blind
[55:50] reading this very nice short statement
[55:52] that I think we've all appreciated in
[55:54] the room um one might wonder why you
[55:58] didn't raise rates today considering
[56:01] what you're saying here um about the the
[56:04] risks to
[56:06] your mandate
[56:07] >> waiting for the task force woman
[56:09] >> I guess why not and what would you need
[56:11] to see in order to get to that place um
[56:15] and secondly on your task force
[56:17] divorces. Are there any best practices
[56:19] at other central banks that you'd
[56:21] consider looking at? Thank you.
[56:23] >> Yeah, I'm glad they're in the practice
[56:25] of giving you two questions because my
[56:26] answer to your first question was going
[56:27] to be very curt. I've got nothing more
[56:29] to say than the statement itself. And to
[56:32] the point of the question I got before,
[56:34] market reactions to what we say
[56:36] unfiltered, I think is more helpful than
[56:39] having delivered a statement at me than
[56:41] improvising further upon it. Best
[56:43] practices of task forces. Um, this is a
[56:46] subject I've thought some about. I've
[56:47] been on a task force or two in my life.
[56:50] Um, best practice, find the best minds.
[56:54] Um, ensure that the task forces have a
[56:58] range of people both by backgrounds and
[57:01] predispositions
[57:02] so they too can have a bit of a family
[57:04] fight. Um, make sure when you establish
[57:08] a task force that the group that's going
[57:10] to be the recipient of the information
[57:12] feels as they've got some equities in
[57:13] it, too. That's why we're looking for
[57:16] haven't done the final roll call some of
[57:19] the most significant talent we have in
[57:20] the building and across the reserve
[57:22] banks on each of these and in some sense
[57:24] secunding them to this group for a
[57:26] period of some number of months um so
[57:30] that the leaders of the task force know
[57:32] what the most uh analytical central bank
[57:37] in the world thinks about that they can
[57:39] reflect on it and a final best practice
[57:41] we're not outsourcing decisions to
[57:43] anybody um uh administrations past and
[57:47] present, reserve banks have chosen a
[57:49] group of 19 people around the table.
[57:51] These will be our decisions. We can
[57:53] agree to some of the recommendations,
[57:55] disagree with others, have a good family
[57:57] fight about it, but what comes from them
[58:00] will, I hope and believe, make the
[58:02] discussion we have internally better,
[58:04] stronger,
[58:05] um more of a dialectic so that we can
[58:08] finally deliver.
[58:09] >> This guy sounds like a politician. I
[58:11] mean, you know, some of the stuff he's
[58:12] saying I'm on board with. I don't know,
[58:14] more real-time data. We got AI stuff,
[58:16] but man, he sounds like a politician.
[58:18] >> More tightening is needed. Would that be
[58:20] your read on what the 2-year yield is
[58:22] saying as well?
[58:23] >> We were in such a good place. This is
[58:25] why we don't do third questions, I
[58:26] presume. I'm not going to offer any
[58:28] commentary on market reaction over the
[58:31] last uh 30 or 60 minutes. Um, what we've
[58:34] given markets is a new chapter for the
[58:37] central bank, some fresh thinking. What
[58:40] we've given markets and households and
[58:43] businesses, I think, is a commitment to
[58:46] ask ourselves hard questions such that
[58:49] we can deliver on the promises that
[58:51] we've made before. Um, this is a lot of
[58:55] change for financial markets to digest.
[58:58] I wouldn't be particularly intrigued by
[59:01] how they react in the first several
[59:03] minutes or even first several days. What
[59:05] I think is most important is that
[59:07] financial markets and at least as
[59:09] important households and businesses know
[59:12] that this central bank will deliver on
[59:14] price stability.
[59:16] >> Brian,
[59:18] >> hi there chairman worship. Brian Chung
[59:20] with NBC News. Thank you for taking our
[59:21] questions. So when you say that we've
[59:23] dropped forward guidance for the lay
[59:24] person, that might sound like the Fed's
[59:26] going to say less or offer less insight
[59:28] into where their borrowing costs might
[59:30] go. So for the person that maybe you
[59:32] might run into at the grocery store
[59:34] where the price tags are rising at a
[59:36] faster pace than their wages at the
[59:37] moment, how would you explain it to
[59:39] them? I don't know if task force might
[59:40] be the answer there, but how would you
[59:42] kind of communicate this era, this
[59:44] chapter of the Fed?
[59:45] >> If I told somebody in the milk aisle
[59:48] that I had a task force for that, I
[59:49] think that would be doing a very poor
[59:51] job. So I appreciate it. Um, if I saw
[59:54] somebody in the grocery store, what I
[59:56] would say to them is that we cannot have
[59:59] a very significant effect on particular
[60:02] prices. The price of oil in the markets
[60:05] today or even the the the price of a
[60:07] dozen eggs um that does not have first
[60:10] order consequences to what we're doing.
[60:12] But we do have a really important job
[60:14] there and it's to make sure that those
[60:16] changes in oil or beef or eggs or milk
[60:20] don't broaden in the economy. Don't have
[60:22] second and third order effects. That's
[60:24] our job. That's our commitment. That's
[60:26] our capability and we're going to
[60:28] deliver on it. And then is the Fed's
[60:30] relationship with the uh Treasury also
[60:33] under review? There was the normal uh
[60:34] breakfast meetings with the Treasury
[60:36] Secretary. Is that something you intend
[60:38] to continue doing? And have you had
[60:39] conversations with the president since
[60:41] you're swearing it? So on the president,
[60:43] I I don't have anything for you. Um with
[60:46] respect to the Treasury Secretary, he
[60:48] has been posting pictures of our
[60:49] breakfast. So I don't think I can I
[60:51] don't think I can and deny that. The
[60:53] long tradition at the central bank is
[60:55] that the Fed chairman and the Treasury
[60:57] Secretary meet weekly. Uh I think we've
[60:59] pulled off three of those so far. I
[61:01] believe he's overseas this week, so this
[61:03] will be the exception to the rule. Uh I
[61:06] think they're very useful discussions.
[61:08] um the central bank's
[61:11] uh objectives and our roles and
[61:13] responsibilities are quite delineated
[61:15] from the fiscal authorities and in my
[61:18] view monetary policy is independent in
[61:21] the conduct of what we do but that
[61:23] doesn't mean we're not interested in
[61:24] what's happening with the fiscal
[61:26] authorities the way I think about it is
[61:28] this central bank needs to have a wide
[61:31] lens but a narrow remmit we need to be
[61:34] quite interested what's happening in the
[61:36] world um I won't be breaking any news
[61:39] here to suggest I'm quite interested
[61:41] what's happening in the Middle East.
[61:43] That does have some some effect on our
[61:45] day job. It doesn't mean it's our
[61:48] responsibility, but I think we're going
[61:49] to keep a wide lens and my meetings with
[61:52] Secretary Besson to this point have
[61:53] helped widen that aperture. So, we're
[61:56] aware of things that could affect our
[61:58] day job even if it isn't.
[62:01] >> Steve
[62:03] >> Steve Leeman, CNBC. Mr. Chair, thank
[62:05] you, Mr. Chairman. Thank you for taking
[62:06] my question. Um, you had said in the um
[62:10] before uh you became chairman that you
[62:14] thought productivity was a reason why
[62:16] the Federal Reserve could lower interest
[62:18] rates. Do you still believe that to be
[62:20] the case?
[62:22] >> So the committee had a discussion of
[62:25] productivity today. AI came up. The way
[62:29] I thought about it before and socialized
[62:32] with the group is that artificial
[62:35] intelligence, the latest generation of
[62:37] general purpose technology,
[62:40] is perhaps as important a change in the
[62:44] economy and business and households that
[62:45] we've had in my adult lifetime. It is
[62:48] filled with both a huge opportunity and
[62:51] with risks. I take both of those very
[62:54] seriously. Um, you may have heard me say
[62:57] before that AI is shorthand perhaps for
[63:01] American ingenuity. That doesn't mean
[63:04] that it's going to be easy. That
[63:05] certainly doesn't mean it's not going to
[63:06] be disruptive. But over the long term,
[63:10] my conviction, and I heard quite a bit
[63:12] of support for this around the committee
[63:14] today, is the United States is a winner
[63:17] as we go down this. The United States is
[63:19] ultimately going to be better off in
[63:21] that. Now to bring that back to the
[63:23] conduct of policy, timing, scale,
[63:27] speed, implications for output and
[63:30] employment. Um it's one of the things we
[63:33] have a task force to do.
[63:35] >> If you don't mind a followup from the
[63:36] other side, which is that when you look
[63:38] at the strong job growth that's out
[63:40] there, the elevated inflation, GDP seems
[63:42] to be going pretty good and the stock
[63:44] market seems to be soaring. Do you look
[63:47] around this economy and see the funds
[63:49] rate being restrictive?
[63:51] So um that's your second question. I'm
[63:54] going to give the same answer that I
[63:55] gave before. I'd say as I think about
[63:57] the conduct of policy, what matters is
[64:00] what's the effect of policy. Not what do
[64:02] we say, but what happens? And the best
[64:04] way I can describe is it's uneven. I do
[64:06] see some restrictiveness in things like
[64:08] housing. It's hard to use those same
[64:10] words uh anywhere else. I'll just make
[64:13] one other point. Um you talked about uh
[64:16] one of our dual mandates in the
[64:19] employment side.
[64:20] I don't believe that we have a cruel
[64:23] choice. I don't share the view that was
[64:26] expressed a few generations ago that
[64:29] Federal Reserve chairman show up at a
[64:31] podium like this and say you got to
[64:33] choose and uh you're going to have to
[64:36] decide whether you're willing to
[64:38] tolerate higher inflation to put more
[64:41] people at work. I don't believe in that.
[64:44] What I believe is if we do our job, we
[64:47] can make strong growth,
[64:50] low prices, and strong employment
[64:53] mutually compatible. And so what you
[64:56] heard from the committee today is we've
[64:58] got some work to do on the price
[64:59] stability front.
[65:01] >> Nick,
[65:04] >> thank you. Nick Timos with Wall Street
[65:06] Journal. There it is.
[65:06] >> Chairman Worsh, you've said repeatedly
[65:08] credibility uh is earned by delivering.
[65:11] If credibility requires delivering, the
[65:14] move would be to tighten or at least to
[65:16] threaten to. Now, you didn't do that
[65:18] today. Why not?
[65:19] >> Um,
[65:21] that judgment you expressed was not
[65:23] expressed by any of the 19 people around
[65:25] the table. Um, we'll be meeting in 6
[65:28] weeks. We'll take up the issue again.
[65:30] >> And, and if I could ask about AI, the
[65:32] buildout is generating enormous demand
[65:34] right now. Capex, data centers, power.
[65:37] Uh, the productivity payoff may be
[65:39] further out. So in your judgment today,
[65:41] is AI adding more to demand or to
[65:43] supply?
[65:44] >> It's a good question. Um,
[65:48] at the central bank in an economics
[65:50] profession, what we spend most of our
[65:53] time doing is counting demand. It's
[65:55] easier. We can see it. We can count it.
[65:58] We can check it. We can revise it. Um,
[66:01] what we do though is we infer supply.
[66:04] You'll notice in the second paragraph of
[66:08] what one of your colleagues described as
[66:09] a very short statement, we have a
[66:12] sentence on the demand side and a
[66:15] sentence about the same length on the
[66:17] supply side. They're both important.
[66:20] Just because we can count one better
[66:21] than the other doesn't mean we're going
[66:23] to favor one more than the other. With
[66:25] respect to AI and the growth of data
[66:28] centers and infrastructure around it,
[66:30] we're counting the demand side and it is
[66:32] no doubt showing up in GDP figures.
[66:36] We can be less certain when we infer the
[66:39] timing and extent of the growth in the
[66:41] supply side. It may well be an intuition
[66:44] the supply side is going to expand, but
[66:46] it'll take longer. I just describe it
[66:48] this way. There's a race between supply
[66:50] and demand. Milton Freriedman says that
[66:53] the only thing we know about economics
[66:54] is that there's a supply line and a
[66:56] demand line they ultimately cross. When
[66:58] they cross and what are the implications
[67:00] for policy, the good news for you is we
[67:02] have a task force for that.
[67:05] >> Andrew,
[67:08] >> uh thanks, Mr. Chairman. Um uh it
[67:11] sounded like uh on the task force on
[67:13] data that that you were looking at
[67:15] overhauling or completely overhauling
[67:17] the system of national accounts, the way
[67:18] the government minds the economy. Is
[67:20] that your ambition?
[67:23] >> Um, in a word, no. Uh, in a few words,
[67:27] uh, much of this data gathering happens
[67:29] in other government agencies to which we
[67:33] owe a tremendous amount of respect,
[67:35] tremendous amount of difference. But if
[67:37] in the course of this we come up with
[67:39] recommendations
[67:41] which Fed staff have already begun to
[67:43] develop about things that they could be
[67:46] doing to help inform us as policy
[67:48] makers. We're not going to hesitate.
[67:50] Again, I don't want to try to uh
[67:53] delineate the four corners of the
[67:55] research of the task force on data, but
[67:58] I do think there will be a review of
[68:00] official statistics and at least as
[68:02] important a view of bringing the best
[68:04] practices from the private sector and
[68:07] new analytical tools made possible by AI
[68:10] so we can forge these into a fabric that
[68:13] gives us better real-time information.
[68:15] And so, as I mentioned before, when
[68:17] we're making decisions, we're making
[68:19] decisions that we'd say are real
[68:21] contemporaneous data, not data that we
[68:24] call contemporaneous. That's really an
[68:26] echo of history.
[68:27] >> Child's here.
[68:28] >> Okay. Um, thanks. Uh, the other question
[68:30] I wanted to ask is uh related to the the
[68:32] building renovations. Are you
[68:34] considering any changes to the
[68:36] renovations, the projects um just in
[68:38] light of the fact that they became kind
[68:39] of a political football in the last
[68:41] year?
[68:42] >> I heard something about that. Um
[68:45] uh I don't think I'm breaking any news,
[68:47] but my view when you show up at a new
[68:50] institution, you should go meet with the
[68:52] inspector general just as a matter of
[68:54] good practice. Um it's a practice that I
[68:57] hope to continue. I've had one meeting
[68:59] with the inspector general and he told
[69:02] me what I believe the world knows, which
[69:04] he'll be coming out with a report on the
[69:07] building and the building projects at
[69:09] some point later this summer. Um, and
[69:12] uh, I'll be interested in reading the
[69:14] report. From my perspective, with a
[69:17] forward-looking glance, is there
[69:19] anything that we can be doing or should
[69:21] be doing from this moment until the
[69:23] completion of the project to do what we
[69:25] can to be good stewards of taxpayer
[69:27] money and to make sure that the we're
[69:30] delivering on the the promises that we
[69:32] made. Uh, some more work to do. You
[69:34] might not be surprised in the first few
[69:36] weeks. I've been somewhat preoccupied on
[69:38] other matters, but I promised it to to
[69:40] get to the full breath of the Fed's uh
[69:42] tasks in the weeks ahead.
[69:45] >> Victoria,
[69:48] >> hi Victoria Guido with Politico. Um, so
[69:51] I know that you did not submit a
[69:53] forecast, but you are the person who is
[69:55] authorized to speak on behalf of the
[69:57] FOMC. So I'm wondering if you could tell
[69:58] us in the SCP um the increase in the
[70:01] expectations for inflation. Is that all
[70:05] because of the Iran war? What was the
[70:08] discussion around what the expectations
[70:10] for inflation being higher and and also
[70:12] potentially growth being slower? So um
[70:17] my read of what I heard in the room
[70:21] reflected I must admit in the SCPs is
[70:24] half of my colleagues thought the policy
[70:27] rate given all those developments should
[70:29] be at this level or lower between now
[70:31] and your end and the other half thought
[70:33] higher. Um that 19th voter was me and I
[70:36] didn't submit one. Um there's a range of
[70:39] views on the questions of of uh first
[70:43] and second round effects. Uh no
[70:46] resolution or conviction, but we'll be
[70:50] meeting again in 6 weeks. I think we're
[70:52] going to know more then and I think that
[70:55] my colleagues are very attentive to
[70:58] incoming developments between now and
[71:00] then.
[71:01] >> And can I just quick follow up on the
[71:03] SCP? You said that you're still
[71:04] encouraging your your your fellow
[71:07] committee members to submit forecasts
[71:08] even if you're not doing it. So what do
[71:10] you think is the benefit of them doing
[71:11] it even if you don't?
[71:13] >> Uh that's the commitment that the FOMC
[71:15] made and it's a commitment that I hope
[71:18] we live up to. Commitment we made was to
[71:21] deliver price stability. I expect us to
[71:23] live up to it by the time we get to the
[71:26] end of this year. As I mentioned, I
[71:29] wouldn't be surprised if there was a new
[71:32] communications framework. There were
[71:33] some changes. The SCP, that's a
[71:36] committee discussion, a robust
[71:38] discussion. I think we'll have it. I
[71:40] believe we're going to come to a better
[71:42] mix of communications to
[71:45] um deliver on what we've promised, but I
[71:48] wouldn't want to prejudge what those
[71:50] are. But between now and then, I would
[71:52] continue to expect colleagues to submit
[71:53] their SEPs. Um some of them uh I think
[71:59] believe that the practice is currently
[72:00] structured is okay but I heard a lot of
[72:03] interest in real reform generally about
[72:05] all these topics. Uh you didn't ask it
[72:08] but I'll answer. It was a it was a
[72:10] pretty gracious couple of days and it's
[72:12] been a pretty
[72:14] uh warm few weeks. The institution wants
[72:18] to figure out how we can do better. the
[72:21] institutions going back to first
[72:23] principles and I'm encouraged that what
[72:25] we've done in the statement what we're
[72:27] thinking about doing with respect to the
[72:28] SCP that instinct towards a new chapter
[72:32] is a real one and by the end of the year
[72:34] I hope we can put some points on the
[72:36] board both in form and in substance of
[72:39] delivering
[72:41] >> going to end up for the last question
[72:43] >> last question you Mr. chairman current
[72:46] Bloomberg News. Could you guide us
[72:48] through please some of the principles
[72:50] that guide your own reaction function
[72:52] and tell us a little bit about kind of
[72:54] conditions that you think when the Fed
[72:56] should respond?
[72:58] >> Um it's going to be a very
[73:00] unsatisfactory answer to the final
[73:02] question.
[73:04] The Federal Reserve
[73:07] uh has a lot of responsibilities not
[73:09] just in monetary policy but in
[73:11] supervision and regulation, consumer
[73:13] affairs and payments.
[73:15] My own view is our credibility comes
[73:18] from delivering on what we're saying
[73:20] we're going to do across everything we
[73:22] do. Um I've devoted more time in my
[73:26] first three weeks to monetary policy
[73:28] than all those things. But the more we
[73:30] deliver on our promises as good
[73:32] supervisors and good regulators, the
[73:34] more benefit we get, the more
[73:35] credibility enhancement we have in
[73:37] monetary policy. When we deliver on our
[73:41] price stability objectives, which we
[73:43] will, uh, the American people will feel
[73:46] as though the hardships that they've
[73:48] been living through in part because of
[73:50] inflation the last 5 years are in the
[73:51] rearview mirror and that credibility
[73:54] will have dividends uh, dividends across
[73:56] what we do. and the institution will
[73:58] come to press conferences like this
[74:00] always with an impetus to reform always
[74:02] with an impetus to to do better but
[74:05] we're going to put some points on the
[74:06] board and Mr. had strong labor data in
[74:09] recent months. How would you sum up the
[74:11] labor data labor market right now? Do
[74:13] you see it as stable as a potentially a
[74:15] source of inflation? Thank you.
[74:16] >> Yeah. So, so the committee
[74:20] uh if I were to try to capture how the
[74:22] committee thought about it, the
[74:23] committee thought that the labor markets
[74:25] were stable. There were some people
[74:28] around the committee who thought that it
[74:30] was trending better than that.
[74:33] Uh trends matter more than data points.
[74:37] uh what's happening over three or six
[74:39] months matters more than any one data
[74:41] point any one data release and I'd say
[74:44] the jobs data has been moving in a good
[74:46] direction. If I heard one other thing
[74:49] around that subject over the course of
[74:51] the last couple of days what I heard was
[74:55] that strong productivityled growth is
[75:00] not something that we fear but something
[75:01] we embrace. Thank you all very much. M
[75:05] five 3 2
[75:09] >> Okay. Well, there you have it. We have a
[75:12] new fed chair. And boy oh boy, he uh
[75:16] he's pretty dry,
[75:19] man. JP was fun. This guy, I don't know.
[75:24] All right, let's do a review of what the
[75:25] heck is uh going on here. Uh dang, Robin
[75:28] Hood's up 12 and a half% right now.
[75:30] That's crazy. That was uh one of our
[75:32] calls this morning in the alpha report.
[75:34] Uh thank you everybody who's a member
[75:35] over there at mekevin.com. But for now,
[75:37] let's focus on what we just got. Uh so
[75:41] let's get into it. Uh here we go.
[75:45] Take a sip of this coffee, too.
[75:50] Well, we just got a new Jerome Powell
[75:52] dude. Except this guy is dry like
[75:55] sandpaper. He sounds like a politician.
[75:58] We're probably stuck with the guy for
[76:00] two four-year terms. So, eight years.
[76:03] Eight years of this. And boy, every
[76:06] freaking question that he gets as it's
[76:08] almost like he's trying to train the
[76:10] media to not ask him. His responses are
[76:13] either I don't give forward guidance.
[76:16] Ask the task force. Actually, you can.
[76:19] The task force will let you know. He's
[76:22] This is going to be weird, but let me
[76:24] just start with what I think he's doing.
[76:27] and then we'll get into some more of
[76:29] what he said because there's a lot of
[76:32] reading between the lines you have to do
[76:33] with this guy. So, let me give you the
[76:35] bottom line first because I respect your
[76:37] time. Bottom line, bullish.
[76:41] Why? Cuz this guy is probably going to
[76:45] change which measure of inflation they
[76:49] use. I think they're going to dump PCE
[76:53] inflation and I think they'll end up
[76:55] using something like the Dallas Fed
[76:58] trimmed mean inflation, which if you
[77:00] look at this, you could actually see
[77:02] right now it's sitting at 2.55%.
[77:04] It's been falling pretty stably. I mean,
[77:08] yes, we've got ups and downs like the
[77:09] stock market, but the trend is clearly
[77:11] down here. And if you look at the actual
[77:13] trim mean chart and you get into some of
[77:15] the details of it here, the one-mon
[77:17] level is at that 2.55 level. six-month
[77:20] level at 2.3. So, you're actually almost
[77:22] there at 2%. And if you come in and your
[77:25] task force says, you know, we should be
[77:27] using a different measure of inflation.
[77:29] And then you swap to something like trim
[77:31] mean now you can magically say, hey,
[77:35] look at this. We have officially reached
[77:38] 2% inflation. Guess what, boys and
[77:41] girls? It's time for rate cuts. That's
[77:44] my take with what he's doing with rates.
[77:48] Now he indicates that he's essentially
[77:51] setting up five different task forces.
[77:53] One on communications, one on the
[77:55] balance sheet, one on data sources, one
[77:57] on productivity and jobs, and one on
[77:59] inflation. I think the inflation task
[78:01] force will end up measuring inflation in
[78:03] a different way. That'll make his job
[78:05] easier because the productivity and jobs
[78:08] one is going to take into account quote
[78:10] implications from AI. That's a fancy way
[78:13] of saying exactly what he's been
[78:15] forecasting that he thinks artificial
[78:17] intelligence is deflationary, increases
[78:20] labor force productivity, and therefore
[78:22] we could lower rates while facing
[78:24] disinflation from AI, and we don't
[78:27] actually have to worry about inflation.
[78:28] Now, a lot of people are going to be
[78:29] really pissed about that because he
[78:31] comes out and he's literally like, I'm
[78:33] not really worried about the price of
[78:34] eggs or price of beef. I'm worried about
[78:36] broader measures of inflation and
[78:39] specifically utilizing real time data.
[78:42] Now, that's something else. I mean, I
[78:44] basically heard him say, "Long
[78:46] Palunteer, boys and girls." And I'll
[78:48] tell you, I just watched the first of
[78:49] the Lord of the Rings trilogy and I
[78:52] learned what a palunteer was that all
[78:54] steaming bald at communicating crystal
[78:56] ball. It's not really crystal, it's more
[78:58] clear, but anyway, kind of cool. I
[79:02] actually agree with this. Basically,
[79:04] Kevin Worsh came out and said, "Look,
[79:06] why are we worried about jobs data that
[79:09] comes out at the beginning of every
[79:10] month, but it's not actually useful to
[79:12] us until the third revision?" So,
[79:14] basically, you know, 3 months later, why
[79:17] don't we actually use real time data and
[79:20] then incorporate AI with that data? And
[79:23] so AI and other real-time sources of
[79:26] data can actually tell us what's
[79:27] happening in the economy in real time
[79:30] rather than relying on the these old
[79:32] reports that are subject to a lot of
[79:34] revisions and are subject to really low
[79:36] response rates. He's not wrong about
[79:39] this. Postcoid the response rates
[79:41] plummeted for the job survey for the
[79:43] jobs the uh opening and labor turnover
[79:46] survey. All of these have gotten reamed
[79:48] in response rates and so the surveys
[79:50] aren't as useful as they used to be. A
[79:53] lot of the surveys are getting filled in
[79:55] sort of backfilled in with estimates or
[79:57] assumptions, seasonal adjustments. So
[80:01] he's not wrong. I actually kind of
[80:03] support the idea of using more updated
[80:06] me like tools to determine what's going
[80:08] on with the economy. For example, you
[80:11] know, that could be based on earnings.
[80:12] It could be based on guidance from CEOs.
[80:14] It could be based on actual hiring. Like
[80:17] even the Jolt survey includes a lot of
[80:21] job openings that aren't actually really
[80:23] open anymore. They're just like
[80:24] forgotten listings on online hiring
[80:26] websites when you could probably use AI
[80:29] to measure the delta, right? change of
[80:32] job openings month-to-month much faster
[80:34] by analyzing big data probably using
[80:37] software like Palanteer frankly uh and
[80:40] uh and and analyzing month-to-month
[80:42] changes as opposed to these aggregates
[80:45] that could be full of old data. So, I
[80:48] don't know that I'm making assumptions
[80:51] on some of those components, but I'm
[80:53] building in what he said, which was we
[80:55] want better sources of data from the
[80:57] private market. We want uh information
[81:00] that is real- time information. We want
[81:02] to use artificial intelligence. We don't
[81:04] want to give forward guidance and then
[81:05] the economy freaks out to what we're
[81:07] saying. In fairness here, I thought that
[81:10] Kevin Walsh was going to uh talk down
[81:13] the risk of rate hikes. The most he
[81:16] really said about rate hikes was eh half
[81:19] the people are telling me they want rate
[81:20] hikes, half say they don't want rate
[81:22] hikes. Okay, fine. which let's look at
[81:25] what's actually happening in the bond
[81:26] market and what's happening with the
[81:28] odds of rate hikes and you'll kind of
[81:30] see why the market is reacting the way
[81:31] it is. Just a quick note this morning we
[81:35] shouted out Robin Hood as potentially
[81:37] being a part of the next sector to get a
[81:40] lot of momentum and since our shout out
[81:43] the stock is up 12 freaking%. We shouted
[81:46] this out at $96. It's trading at $108
[81:49] right now. Now, we've done some more
[81:50] fundamental analysis on it as well. Uh
[81:52] over in the Meet Kevin app for course
[81:54] members, major Meet Kevin stock AI
[81:57] update came out uh last week for course
[81:59] members. You could get a free sample as
[82:01] well. Uh we're coming out with the alpha
[82:03] wire service within the next 24 hours
[82:05] for course members. And so, of course,
[82:07] we'll be raising the price again. But
[82:09] for now, you could use coupon code pope.
[82:11] Uh that's mostly because the Pope gave
[82:13] me a nod while I was wearing the
[82:14] Reinvest shirt in Barcelona a few days
[82:17] ago. You could see that on X. But
[82:19] anyway, join and get all nine courses,
[82:20] every trade alert, every private live
[82:22] stream, every alpha report, allin-one
[82:24] membership over at meetke.com. Okay, for
[82:26] now though, uh in addition to awesome
[82:29] shoutouts, let's focus on what's not so
[82:32] awesome, and that is that we only have a
[82:34] 20% chance right now of actually staying
[82:37] stable by the end of the year on the CME
[82:40] futures market. This is bad. We've
[82:42] literally gone from about a 55% chance
[82:45] of a rate hike by the end of the year to
[82:47] an 80% chance of a rate hike by the end
[82:49] of the year. This is why markets are
[82:51] pissed off. In my opinion, they are
[82:54] wrong. They are absolutely wrong. And
[82:56] I'll show you why in just a moment. By
[82:58] July 28th, markets are pricing in only a
[83:02] 17% chance that we will be stable or
[83:04] lower, which is, you know, an 83% chance
[83:07] that we're going to get a hike or
[83:09] multiple rate hikes by July 27th uh of
[83:13] 2027 or sorry, July 28th of 2027. This
[83:17] is wrong in my opinion. But looking at
[83:19] the bond market, you could actually see
[83:21] the bond market is really plummeting the
[83:25] odds of a shock from policy. We can see
[83:28] the 102 yield curve has dumped today
[83:31] about nine basis points, which is a
[83:33] massive plummet. The chart has
[83:35] absolutely crashed on this, which is
[83:37] actually bullish for the economy. Now,
[83:41] why is this happening? It's happening
[83:43] because the 2-year yield is rising
[83:46] slightly and the 10-year yield is rising
[83:49] more. You can see the 2-year right now
[83:51] is sitting up about 14 bips. And if I
[83:55] jump over to the 10year, I want to say
[83:57] it's up somewhere around uh 34. Let's go
[84:00] here. Come on. Come on. Come on. There
[84:02] it is. Oh, 4.7 or 0.047 I should say. So
[84:07] 4.7 bips versus here about actually wow
[84:10] 14. No, you've actually come up quite a
[84:12] lot on the 2-year. So, that's actually
[84:14] very interesting. This is this is the
[84:15] market responding heavily to this idea
[84:19] that uh hey, all right, it sounds like
[84:22] we're going to get hikes. It's the same
[84:23] thing you see over here on the CME watch
[84:25] group. But that is not what the summary
[84:28] of economic projections is actually
[84:30] forecasting. This is why I think the
[84:32] market is wrong to assume we're going to
[84:33] get rate hikes this year. First of all,
[84:35] I think Kevin Worsh is going to change
[84:37] the definition of inflation and
[84:39] therefore we won't need rate hikes
[84:41] because we'll magically be at 2%. I
[84:44] think that's coming. But even beyond
[84:46] that assumption, look at the summary of
[84:48] economic projections. With 50% of the
[84:51] staff not pricing at a rate hike, the
[84:54] average of Fed staffers still sees
[84:57] inflation going from 3.3 to 3.4 all the
[85:00] way down to 2.3 to 2.4. That is a 1%
[85:04] decline as we roll over from tariffs,
[85:06] Iran, and AI supply shortages, a lapping
[85:08] of annual inflation. There's a 1%
[85:10] decline is being priced in without a
[85:13] guaranteed rate hike here. So, I'm I'm
[85:15] sort of surprised that the market is
[85:17] believing that, you know, Kevin Worsh
[85:19] just implied there's going to be a rate
[85:20] hike. I don't see that at all. In fact,
[85:22] I could see here you've got one
[85:24] knucklehead who thinks rates should be
[85:25] at 4.4%.
[85:27] Uh, five think there should be two
[85:29] hikes, one think there should be one
[85:31] hike. This is for 2026. But the vast,
[85:34] you know, the bulk of people right here
[85:35] are at a hold. And I think the bias is
[85:38] going to be towards holding and waiting
[85:40] because you don't want to repeat what
[85:41] happened in the 1970s. In the 1970s, we
[85:45] saw a lot of up and down adjustments
[85:46] that actually contributed to a lot of a
[85:49] lack of faith or confidence in the
[85:51] Federal Reserve and ended up getting us
[85:53] Paul Vulkar to sort of put the pants
[85:55] back on at the Fed. No sign here that
[85:57] the unemployment rate has any issues. In
[86:00] fact, Kevin Worsh himself mentioned that
[86:01] he is hearing a lot about how stable the
[86:04] unemployment market or the employment
[86:06] market, the jobs market is right now.
[86:08] Uh, it also should not have been a
[86:09] surprise that the summary of economic
[86:11] projections implied a rate hike over
[86:13] here. The market did turn down as soon
[86:16] as we got this. That shouldn't have been
[86:17] a surprise. We've already been pricing
[86:19] in a rate hike all year long. So, I was
[86:22] surprised the market did go down after
[86:24] this because we've already known the
[86:26] bond market was pricing in one hike rate
[86:27] hike for 2026. In fact, at one point it
[86:30] was pricing in a rate hike for 2026 and
[86:32] a rate hike for 2027. Bond market
[86:34] actually still is. But the summary of
[86:36] economic projections is pricing in a
[86:38] rate hike for 2026 and a rate cut for
[86:41] 2027.
[86:43] It's up 25 basis points this year and
[86:45] down 25 basis points this year. Now,
[86:47] somebody did or next year. Uh, somebody
[86:49] did hawk this meeting a lot. Somebody
[86:52] actually thinks the rate should be up
[86:54] almost one full percent. But that's only
[86:57] one person at the Fed. That's that one
[86:59] dot, that one knucklehead who's really
[87:01] hawkish right now. And it's not Kevin
[87:03] Worsh because Kevin Worsh didn't fill
[87:05] out any projections at all. He abstained
[87:07] from filling out anything. Uh their
[87:10] statement was also substantially
[87:12] shorter. They've removed essentially all
[87:13] forms of forward guidance. Uh and I hate
[87:17] to say it, but the market's revisiting
[87:18] the 725 support line. We bounced off of
[87:21] it earlier when we got the statement. We
[87:24] are falling into the close which
[87:25] unfortunately does mean that triple
[87:26] leveraged funds are likely to come out
[87:28] and also sell into the close as SpaceX
[87:31] is likely to have its first red day
[87:32] here. I am bearish uh SpaceX long-term
[87:35] even though I hold SpaceX. Uh once we
[87:38] get to July and we start getting
[87:39] lockups, I think a lot of people are
[87:41] going to be running for the exit on it
[87:42] and I think there'll be better chances
[87:43] and better opportunities to buy SpaceX.
[87:45] Uh we are looking for new sectoral
[87:47] leadership could end up continuing to be
[87:49] finance especially after that boost we
[87:51] saw at Robin Hood today. SoFi might be
[87:53] another beneficiary of that, especially
[87:55] with their home lending sector really
[87:57] exploding. But really long term here, so
[88:00] ignoring kind of shorter term moves in
[88:01] the market. Long-term, Kevin Walsh
[88:04] really came out here and suggested we're
[88:06] going to have a lot of changes. That if
[88:09] you look at the housing market, Federal
[88:10] Reserve policy is restrictive. If you
[88:12] look at the stock market, it's not. He
[88:14] thinks that inflation is a choice, but
[88:16] they don't have major urgency right now.
[88:19] that they have the luxury of time right
[88:21] now to sit down and sort of reanalyze
[88:23] how they want to put data together.
[88:25] Whether they're going to have press
[88:26] conferences or not depends on whether
[88:28] they have an announcement to make or
[88:30] some kind of press conference to give.
[88:32] He thinks that press conferences should
[88:33] really be reserved for when you have
[88:34] something useful to say. So, there is a
[88:36] potential future where we get fewer
[88:38] press conferences with Kevin Borch. We
[88:40] get a different inflation regime that
[88:43] suggests, oh, inflation's actually good.
[88:45] He's probably going to push rates down
[88:48] over his term. I actually expect we'll
[88:50] have lower rates than ever before by
[88:52] 2032. This is a mindset that I've had
[88:54] for the last four years. And I think
[88:56] that'll that'll be true. And I think
[88:57] he's going to use essentially more
[89:00] real-time data, potentially
[89:01] incorporating AI data to guide the Fed
[89:05] on where they should be with policy.
[89:07] Obviously, there's some risks with that.
[89:09] We've never had AIEL data controlling
[89:12] Fed policy or at least advising Fed
[89:14] policy. So, it's going to be interesting
[89:15] to see how all this plays out. But I
[89:17] think the bias here is hold until we
[89:21] get, you know, a new explanation for the
[89:24] economy and then probably cut. Today,
[89:27] though, markets are really pricing in a
[89:29] lot of rate hikes, right? I mean, this
[89:31] this is very aggressive. You've got uh
[89:35] probably two to even three, maybe even
[89:37] four rate hikes priced in over here
[89:39] going through the summer of 2027. And
[89:41] again, you go to the end of the year,
[89:42] you're pricing in one to two hikes with
[89:45] an equal chance, basically a one-/ird
[89:47] chance for each of them of a rate hike
[89:49] by the end of the year. I personally
[89:51] think this is totally wrong and it makes
[89:52] me bullish because I think money is made
[89:55] when people are not looking at certain
[89:57] stocks. I think in 2022 when I was
[90:01] loading up on Nvidia, which ended up
[90:02] being a 10x in my portfolio, made
[90:05] millions of dollars. I was really
[90:06] grateful for that. Everybody was making
[90:08] fun of me for buying chips then. It's
[90:10] kind of like, you know, today it's
[90:11] really unpopular to buy certain stocks
[90:14] that are printing money that are really
[90:16] cheap in their valuation and they're
[90:20] cheap at the same time as the market is
[90:22] pricing in rate hikes when I think we're
[90:24] actually more likely to get rate cuts.
[90:25] Now, we'll see. I could be wrong.
[90:27] Obviously, you know, that's what makes
[90:29] us human after all. But if you want to
[90:31] see exactly what I'm investing in,
[90:32] consider joining us over at mekevin.com.
[90:34] You could use that coupon code pope. Uh
[90:37] the reason again that pope is because uh
[90:39] we actually got that nod from the pope
[90:41] over here which I was really happy
[90:42] about. I was wearing the reinvest polo
[90:45] and uh yeah gotta say it's uh it's it's
[90:48] kind of cool. Uh was not expect people
[90:50] wait hours to see the pope and then we
[90:52] got the nod right there. How sick is
[90:54] that?
[90:56] So uh somebody told me it's it's um not
[91:00] blasphemous to say the pope likes you or
[91:02] gives you a nod. Only if you use God in
[91:04] that reference. So that that was good.
[91:07] Uh but anyway, that gives us a little
[91:08] bit of a uh breakdown of what's going on
[91:12] uh with uh Kevin Walsh. I I will say
[91:14] he's a little bit boring, a little bit
[91:16] of a politician. I uh expect a lot of
[91:19] changes to come from the Federal
[91:20] Reserve, but I think that they will bias
[91:22] down. And again, if you look at the
[91:24] summary of economic projections, you
[91:26] could even see that bias down on rates
[91:28] here. Uh and I think they're going to
[91:30] repel from that noisiness of, you know,
[91:33] oh, we're going to hike and then we're
[91:34] going to cut. I think that's a terrible
[91:36] idea. And in fact, I think one of the
[91:38] most powerful comments that I heard was
[91:41] Kevin Worsh was asked, hey, you know,
[91:43] was there like a consensus from the
[91:44] committee? And the consensus was that
[91:46] there is no consensus. He in fact called
[91:49] everybody pretty humble and uh, you
[91:51] know, pretty willing to listen to other
[91:53] commentary and potentially even change
[91:54] their minds. Uh, and so there was no
[91:57] overbearing push towards one direction
[91:59] or another, which is very consistent
[92:01] with my belief that we're likely to do
[92:03] nothing until we get a cut. The market
[92:06] is totally mispricing that in my
[92:08] opinion, which creates a long-term
[92:10] buying opportunity. So, yes, that makes
[92:12] me bullish. Probably sitting somewhere
[92:14] around an 8.3 on the bare bull scale
[92:16] right now, which, you know, was pretty
[92:19] elevated. Um, certainly not desiring
[92:22] rushing into debt. I'm not a big fan of
[92:24] debt uh because I do think that uh there
[92:27] you know the next time we have a
[92:28] recession whenever that comes it will be
[92:30] one of the worst and Kevin Worsh will
[92:33] actually contribute it contribute to it
[92:35] being bad. He'll cut rates to zero but
[92:37] he won't print money like the other guys
[92:39] like a Paul Vulkar or Janet Yellen or
[92:41] Jerome Powell. He won't print money like
[92:42] them or at least he'll try to resist
[92:43] from that. I think that his task force
[92:46] will also advise just that which uh is
[92:48] is unfortunately bearish for a
[92:51] recessionary period which makes me very
[92:53] uninterested in debt. But with that
[92:56] said, uh overall I'm optimistic here. I
[92:59] I I hate to say that I like what I heard
[93:02] because I'm tired of hearing task force.
[93:05] I am excited though about hearing, hey,
[93:07] we're going to update like how we
[93:09] collect data and how we analyze data.
[93:12] Honestly, it's long been needed. So,
[93:14] we'll see what they come up with, but
[93:15] respect for trying because I agree that
[93:18] that the data is quite dated. Anyway,
[93:21] there you go. Thanks so much for being
[93:22] here. I always appreciate you watching.
[93:24] Uh, consider sharing. Subscribe to the
[93:26] video or the channel. Feel free to
[93:28] follow me on XMEK or on Instagram at
[93:31] realme Kevinev. I try to post there
[93:32] every day. And, uh, go to meet Kevin.com
[93:34] and use that coupon code pope.