Rate Cut & What Powell JUST Said after Asked to QUIT

well this was probably the most bullish

jome Powell I have ever seen and

ordinarily I would listen to this

bullishness and say lfg let's go but I

have a weird feeling Jerome Powell was

applying for his job here now I know

that might sound ridiculous what do you

mean Kevin he already has his job yes

but he was asked three times during the

press conference what would he do or how

would he feel or would he basically quit

if he's asked to step down or how is he

going to feel if he gets fired by Donald

Trump and it was so expected that he was

going to get asked about it that we

actually wrote it down on our bingo card

in fact take a look at this on our bingo

card which we got Bingo on our bingo

card we literally wrote down are you

going to quit and then I wrote bonus he

says no and he literally just said no

and then went quiet to the point where

the reporter like do you do you have any

other comments on that no some of the

president alect advisers have suggested

that you should resign um if he asked

you to leave would you go no I knew the

question would come uh can you follow up

on you legally he you're not required to

leave no it was Stone Cold and great but

it showed you that like the idea of him

getting fired was under his skin so he's

kind of like okay yeah like I I I know

people are talking about this so I'm

going to come here and I'm going to be

prepared to talk about it that's I think

what we got here but at the same time

you also got a Powell who wanted to be

in a position of oh uh the econom is

actually great the economy is strong

this inflation is happening and you know

what the weakness that you're seeing in

the labor market don't worry about that

at all that's just normalizing it's just

going back to postco normal this was an

interesting point of view from Powell

and it is one that makes sense he

recognizes that bond yields have gone up

and suggests hey you know what bond

yields went up when Bill Amman shot him

to 5% as well and then 3 weeks later

they plummeted so who cares like they go

up and down big deal but we're not going

to really take a few weeks of bond

market movements and include that in our

pricing our point of view is that

there's no sign of inflation coming back

inflation is going down there's also

nothing that we're worried about in the

economy right now honestly that was all

pretty bullish like I said it sounds

like he's applying for his job because

if a president wants a bull you got JP

as your bull he's like hey things are

good uh Nick T did not s sit next to the

New York Times girl but he picks up on

you know hey but you know your cutting

rates and the the the financial markets

are are tightening he's like

fluctuations economy strong you know

maybe we'd be more concerned but then we

got really good positive revisions he

referred to the nippo revisions again uh

the nippo revisions are basically these

uh consumer service or consumer spending

and income uh numbers and those

revisions came out after the whole

Jackson Hole panic and they were pretty

good they suggested hey the consumer

saving more money than we had been

thinking uh they were we thought the

savings rate had fallen under 3% which

is really bad would be recessionary and

then all of a sudden they revised him up

to like 4.7% or something also very

bullish uh so you know he also discusses

this idea of hey you know we're in such

a place where GDP grew in the third

quarter at 2.8% it grew at the same Pace

in the second quarter and there are some

murmurings that the economy in 2025

could actually be stronger not weaker

which is really interesting because at

the same time as Powell is talking as

bullishly as he is the treasury market

saw a plummet in treasury yields you saw

the 10year come down

11.2 basis points here it is 11.2 basis

points down on the 10-year treasury

yield at the same time as Pal's talking

about how strong the economy is why well

probably because the 10-year treasury

has been really concerned about

inflation and sort of a a new wave of

inflation and it seems like that concern

over inflation has really gone away uh

in at least in the minds of Powell and

the board uh even though initially they

suggested oh you know we got rid of the

phraseology that we're gaining greater

confidence he's basically saying yeah we

got rid of that word because we're not

gaining greater confidence we are

confident that we are on a sustainable

path to 2% and the labor market where it

sits right now is fine so if things go

bad in One Direction or the other we can

react to it uh but he brought it up also

like expected he's asked about hey you

know payroll job gains slowed to 104,000

on average per month over the last 3

months I'd been using 103,000 he rounded

to 104,000 fine Powell that's half the

pace of what we had the first six months

of the year and his response uh to that

is ah but you know strikes and

hurricanes affected

this okay I mean that is the easy

blowoff that most people were going with

so I think here you had this unanimous

25 basis point cut because board members

were basically saying hey let's like

things are good right now let's just get

to next month and let's see how next

month goes because right now there's

really nothing to say that things are

falling apart the data isn't

unexplainably bad uh data overall uh in

a in a stock market at alltime high

suggests Things Are okay we also and

this is something I've been talking

about for many many months is this idea

about hey well well what about inflation

like some of these inflation reports

come in a little hotter than expected

and usually what I talk about in these

inflation reports is yes but inside

these inflation reports when you

actually decompose them you find that

most of the inflation is being driven by

uh insurance which is a lagging form of

inflation or the housing market uh

specifically owner equivalent rents

which is also a lagging source of

inflation and the problem with that is

when you're using lagging data uh to

suggest oh no inflation's high

inflation's high no not necessarily uh

it's definitely a possibility that

inflation is coming down but what

happens is you have as Powell called it

catchup inflation and this will skew

some of the numbers so catchup inflation

is basically saying hey all of a sudden

we're in a place where uh you know we

think that inflation looks like it's

going up on a month-over-month basis but

really oh that's just Insurance

inflation or rental inflation from a

year ago or two years ago this is

something that he made pretty clear as

well talked about a stronger September

jobs report off set by a weaker October

one but then he balanced that and said

look spending data is up and retail

sales and inventories numbers are up and

we have better savings revision so like

on balance it seems like the data is

roughly stronger so we're just going to

recap calibrate and we won't make any

predictions in terms of what we're going

to do with rates going forward but even

though the labor markets stabilized and

continues to gradually cool uh we're

going to respond and hopefully keep it

there by cutting rates a bit he doesn't

comment on the election of course as

expected he doesn't comment on this idea

that we're going to uh uh you know

speculate on what Trump's policies

whether they're tax policies or tariff

policies might be because sort of as you

would expect the FED to say they're

going to wait to see how would this

actually affect the economy and then

make decisions around that and then of

course wait for data uh before reacting

so really uh even though poell says they

can't rule anything out this this didn't

like in other words they can't rule out

having an interest heke next year they

can't rule out pausing they did say they

would pause when they think they're

closer to neutral and they did say

they'd cut faster if they had to if the

labor market started weakening really

there was nothing scary in this report

on balance this report was really kind

of like what you would want Powell to do

show up give us your 25 basis point cut

get us Bingo on meet Kevin's Bingo board

and then go back home go back home and

sit around for another 6 weeks until

your next fed meeting this is highly

expected so now the questions and

takeaways for this well Powell basically

poured cold water on the idea that

inflation is reigniting he also poured

cold water though on the idea that the

labor market is significantly

deteriorating so now all of a sudden if

if you are a bear okay this is important

if you're a bear in the economy you kind

of have to look at this and you kind of

have to say all right well you know

Powell does not see any weakening does

he not see any weakening because he

doesn't want to get fired does he not

want to say that there's any weakening

because if he does then there will be

weakening or is there truly no

weakening like it's it's somewhat hard

to say I think jpow is generally an

honest person and I do think that the

Federal Reserve at least what they tell

us by the beige book does see signs of

weakening but Jerome Powell's calling

this quite frankly normalization right

now probably because he wants his statue

he wants his Mount Rushmore statue of

the FED chairperson who actually stuck a

soft landing and was the first

chairperson to not cause a recession

after a deeply inverted yield curve a

yield curve that's so deeply inverted

that it would signal 500 basis points of

cuts and instead he's slowly feeding us

25s in the hopes that we're going to be

complacent and okay with that as a bull

you look you want to eat up everything

Powell just said because as a bull you

look at this and go bro he said again

everything is fine the economy is good

and actually it is bullish by him saying

this because by him saying this more

people make bullish bets more people

businesses maybe uh might buy equipment

might hire people oh okay pal says the

econom is fine people are going to

believe them and they're going to react

to it or at the very least they're not

going to react to the negative you know

if Powell came up and said we have

really big problems on the horizon next

year is going to suck it's not going to

be better then you're going to self-

fulfill that so uh all we can really say

out of this one is a we got 25 as

expected B we really got no forward

guidance on what to expect and while

there were a lot of fluctuations markets

went into this expecting a 67% chance of

a cut in December and they went out of

it expecting a 67% chance of a cut in

December so basically Powell just

survived the conversation gave us the 25

going on vacation for the next 6 weeks

that's kind of what she got out of Po

here uh which is good uh I mean that's

that's ultimately what you would want

because again you don't want Powell to

crack the economy because that would

self fulfill a recession uh now it is

very interesting that treasury yields

did weaken pretty much everything that

they gained after uh Donald Trump became

president and was was elected became

president-elect you know treasury yields

were up somewhere around 11 basis points

today they're down 11 basis points part

of this is probably Pal's confidence on

the lack of inflation which I completely

agree with and I also love his comment

on hey you know you remember when uh the

the 10-year treasury yield was like 5%

uh when Bill Amman was Hawking it over

here he's like 3 weeks later it was down

50 basis points I actually think there's

a chance that Jerome Powell just gave

you a clear as day signal to buy bonds

like hash TMF to the moon no guarantees

like don't don't trade on that you know

it's just an idea but uh it is

interesting because Powell's trying to

say hey economy is strong at the same

time and you know bond yields could

plummet but 's no inflation so he's

sending this it sounds to me like he's

actually not trying to send a clear

signal to the stock market or to the

economy he's trying to send a clear

signal to the bond market we have

inflation

cured Bond deals can go down and if he's

actually able to talk bond yields down

then what he does is he actually again

increases the odds of a soft Landing so

bullish TLT bullish TMF after that maybe

I mean I'm I'm biased on that I'm

exposed to those but I think that uh

that's interesting because I mean those

were the words he said watch watch it

yourself to see what he says uh so

anyway that's my take on the FED not

much of a game changer here but if you

look for

nuance the bullishness probably should

be taken with a grain of salt because of

the weakness in the labor market the you

know talking down yields going up should

probably be a bit of an indicator that

he'd like to see yields lower

but they ain't going to make any changes

this meeting on it so see what happens

over the next 6 weeks anyway those are

my take uh takes on the FED uh if you

want my morning report on what's going

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uh if you're in Ventura California

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do not advertise these things that you

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congratulations man you have done so

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