Fed Rate Decision: The Federal Reserve announced a 25 basis point rate cut, marking the first cut since 2024, aligning with market expectations.
Market Reaction: The announcement led to significant volatility in the Treasury market, particularly in the 30-year and 2-year yields, suggesting algorithm-driven trading.
Interest Rate Expectations: The market had priced in a 96% chance of a 25 basis point cut, with minimal expectations for a pause, reflecting the labor market data's influence.
Investment Strategy: The speaker discussed their strategy of adding to positions in the 30-year Treasury based on labor market deterioration and the belief that this was not fully priced into the futures curve.
Economic Indicators: The Fed's decision was influenced by a slowdown in GDP growth and consumer spending, alongside moderate wage growth and inflation concerns.
Fed's Stance: Jerome Powell's remarks were perceived as dovish, emphasizing the balance of risks between inflation and employment, and the Fed's commitment to maximum employment and stable prices.
Market Insights: The podcast highlighted the complexity of market reactions, driven by a mix of algorithmic trading, short covering, and profit-taking, particularly in the bond market.
Investment Philosophy: Emphasis was placed on trend following and the importance of asymmetry in trading, where the upside potential outweighs the downside risk.
Transcript
Hello, fellow Robo Capitals. Hope you're well. So, we have the countdown. Oh my gosh. Three minutes until we get the Fed's rate decision. Are they going to cut by 25? Are they going to cut by 50? Are they going to pause? We don't know. But let's check out what interest rates are doing and we'll see if I have time to stay on until we get pal's at least the first remarks. I think that happens at 2:30 Eastern time. But let's check out rates because we got some volatility, my friend. We've got some volatility. Okay, so we'll do the screen share. We'll go over to let's start with a two-year Treasury and whoa, we were down on the day and then we just go up up up up up straight up. Now, it's not a huge move here. We're talking about three, four basis points. Looks like a massive move on this chart, but uh maybe it's a buy the rumor, sell the fact. I don't know. I I don't want to oversimplify things, but maybe, you know, a large component of this decline, of course, was the labor market, but in addition to that, maybe there's just more buyers. Hey, we're just going to buy by by until the Fed comes out with their rate decision and then we're just going to go ahead and sell. Maybe it's people that are selling before the decision um because they don't want to deal with the volatility. Uh, I know I've got a position not in the two-year, but I've got a position in the 30-year, and I was thinking about, you know, do I add to it? Because longer term, I like the position. Uh, longer term, meaning over the next few months, but I'm like, yeah, no. I'm just, who knows what Jerome Pal is going to say. Who knows when he comes out hawkish. I mean, what I am expecting, as most of you know from watching my video yesterday, here's my base case. Let me just say it quick here. It's a 25 basis point cut. It's a a devish dovish um Fed speak and then it's disscent with at least you know a couple of the the Fed chairs or whatever you want to call them. So I think that's what we're going to get a dovish 25 basis point cut with some descent maybe the most descent we have ever seen within the FOMC. So I just wanted to get that out there. for 1 minute before we get the decision. Let's go over to the CME group really quick. See what the odds are. Look at this. 6 seconds the countdown. Woohoo. Do a refresh. Where are the odds? We are at 95.8 for a 25 basis point cut. 4.2 and pretty much zero for the pause. one month ago. There's a 14% chance they'd pause, but then we got all the labor market data. Okay. Well, it is 2 o'clock Eastern time. So, let's go over to CNBC. I actually should just pull up my Twitter. That would be faster, but I don't have it on my computer. Okay. Any Usually you'll see like a breaking. Let me make sure I've got the screen share working. Yeah, I do. Okay, cool. Usually you'll see breaking breaking. Breaking. Oh, there you go. Okay. Fed lowers rates by a quarter point. First cut since 2024. All right. So, in line with expectations. Now, let's see what our friends in the Treasury market are doing. I don't even I don't even have a guess to be honest with you. Don't even have a guess. I think you're going to see a lot of volatility over the next hour because I think that's kind of a nothing burger, the 25 basis point cut, because as you saw, there's a 96% chance of that. But so that's priced in, but what's not priced in is what Jerome Pal is going to say and if he's going to lean more hawkish, more dovish. And so I think that's probably going to drive rates more. Um, and that comes at 230. So, let's see if we Oh, no. We had a Okay, so we have a big drop in the 30. That's That might just be it. Oh, and it's dropping more as we speak. I think that's kind of a knee-jerk reaction, though. You just get a lot of algorithms and it's just like Fed cut, buy long, and Fed, you know, and um that's kind of well, now it's really going down. It's kind of fun doing this in real time, isn't it? Whoa. Now it's really going down. I I don't know. Maybe it was buy the rumor, sell the fact, and then buy again really quick. I I've got to believe this is just algorithms, though. I see. Now we're back. I This is going to drive me crazy watching this in real time. Let's go. Let's Oh, jeez. The tenure is doing the same thing. Tenure dropped by a lot more. See, that really surprises me. Like, like everyone knew like like was the market pricing in maybe like a 5% pause? That can't be right. Let's go over to the two-year. Whoa. Jeez. The two-year is down. And I'm talking about from where it was prior to the announcement 3 minutes ago. It did it. Okay. So, right when they announced it, it blew up. It went to like 3 It had to be like 3.56 and then it just crashed. And right now it's at 3.48. I mean that's a called a 78 basis point collapse in like 3 minutes. Huh? I just can't believe that's the market reaction. That's got to be algorithms. And what I mean by that guys is just there's so much of the market especially intraday is algorithms and it's just Fed cuts rate there's there's no discretionary it's just programmed into the into the the trading vehicle. So it's just if Fed cuts you buy treasuries that's it. So Fed cut boom you buy treasuries algorithms. It's almost like it's it's you know when I talk to Mike Green and I've heard him say this on other podcasts. He's got a great way of saying it that the passive investing flows that's basically the most simple algorithm of all time. And it's just $1 in $1 buys, $1 out, $1 sells. And it it it's similar I think in a lot of stocks and a lot of assets that are that are traded, you know, with quite a bit of volume. But let's keep watching here. This Let's get out the popcorn. Let's go back to the 30-year. Huh? It's still It's still going down. My goodness gracious. Huh? Jeez. That go down. Now it's at 4.62. I mean, this is great for me because I for those of you who are Rebel Capitalist Pro members because I I whenever whenever I do something in one of my portfolios, I always make an announcement on Rebel Capitals Pro. We just do like a trade alert and um not it's still going down. I mean, this is what I would have expected if they would have done a 50 almost. Maybe that's it. Maybe that's it. Okay, now I'm thinking this through out loud here. Maybe if they would have done a 50 and because there was a slight chance that they would do a 50, the market perceives that to be more inflationary. And when they do the 25 instead of the 50, now you've taken that inflationary component off the table. And that's why long end rates drop. Um, but that wouldn't explain the two-year H. But but just thinking that through out loud, that might have something to do with it here. And then we're getting a big bounce, which is what you'd expect. Nothing goes down in a straight line. But, uh, let's actually go over to Rebel Capitalist Pro really quick here, and I'll show you what I'm talking about with the 30ear. Okay, Josh is back. So, that's cool. So here's the uh school community. Uh this is where we have the school platform is where we have the Rebel Capitals Pro community. And so you go to general discussion and here's where I do these these trade alerts. So we've got a trade alert here. That's where I sold micro. I've got a I've got a Bitcoin position that's just to have purchasing power outside of the system. And I also have a Bitcoin uh long position of as a as a speculative play. And I sold short Micro Strategy to kind of hedge that a little bit. And I think the the NAV might or the price might get a little bit closer to NAV. But anyway, uh let's go back here. Trade alert. So the first one regarding the this was 14 days ago. So I I bought the 30-year right here. And this is just a trade. It's not like I want to hold this for 30 years or anything like that. So just a a trade for a couple months because I saw the labor market deteriorating and I didn't think that was really priced in to the the futures curve I want to call it that because longer term uh contracts were trading at a lower value and meaning implying a higher yield and I'm like hm that that seemed a little off. So plus we got the Jolts data that day turned out to be great. Um, so then what I did is I I actually added to the position. Um, right here's the 7 days ago I added to the position. So going back to this 30-year chart of yields. Um, let's see. So two weeks ago, uh, it was right around I I bought right around 4.9. So I don't know. I I can't remember exactly when it was, but it was somewhere in here and uh it was probably here because that's when we got the Jolts numbers and then it's it's pretty much gone straight down. And then I added to the position. I think here when we had this bit this move up, I'm like, well, it's working and the data is going in my direction and my thesis is not only still intact, but based on the more recent data, my thesis is even stronger than it was before. So, I actually added to the position, which I think the lesson there is, um, what retail investors tend to do. Excuse me. It's not like I'm a pro. I'm just an amateur as well trying to, it's just I've read so many books and I've had the opportunity to hang out with so many uh, successful guys and gals in this business that I would consider mentors. uh I I've tried to absorb as much as I can and apply that to my own trading and my own investing. And you have to have asymmetry when you're trading or you're investing. In other words, when you're going into something, the upside has to be more than the downside. And when you're in the position, you you want to make sure that you ride your winners and you cut your losers. But where you get really good I is if you are able to not just ride your winners but add to them. And that's tough to do because like right here's an example. I had a huge profit, a massive profit because I I didn't just buy the long end. I bought futures. So for those of you who have done that before, you know the leverage is just mind-boggling. So, I was literally up I don't know like 40% within the matter of like a week and um every single fiber in your body is saying sell cell sell you idiot. You've got a 40% gain. Sell sell. But I I knew that that's not the right move. That that's not the pro move. That's the amateur move. So I uh not that you always want to hold, but if the fundamental analysis or your reason for doing it to begin with hasn't changed or it's improved, you got to you got to add to the position. So anyway, fortunately, it it worked well and uh I thought I might be able to get an opportunity to add to the position today because what I was looking at is under 4.64 just due to the chart. But um jeez, now it's down to 4 point. I mean, we might go into the 4.5 handle. Like, I can't believe we haven't had a And again, this is really going to be dependent on what Pal says. If Pal comes out with a hawkish tone, I mean, this could rip right back to 4.7 easy. So this is this is the volatility I was talking about and this is where you got to be I think pretty cautious. Uh but the more I think about it, the more I'm thinking this is a mixture of algos and the fact that the market had a slight probability of a 50, which some may have interpreted as more inflationary. And since that's off the table, you take that inflation component off the table. And again, the long end especially is all about growth and inflation expectations. So that's why you're getting that big that bid at the long end. That that's just my hypothesis. Just thinking out loud here. All right. Now, let's go over to CNBC and see what the news is. Oh, so Dow's up huge. But see that how was this not expected? or was the Dow up? Uh, I think the Dow was already up on the day. So, I don't think this 400 increase is just over the last few minutes. Let's see. Uh, I mean, it was up on the day and then it just shot higher. I don't know because you wouldn't expect like that made sense with the bond market. this. Okay, we've taken inflation off the table, but that doesn't make a lot of sense with the the Dow. H really weird. Let's see what's going on with Bitcoin. That's usually and Bitcoin's down. The NASDAQ. The NASDAQ's down. Hm. Not sure. That doesn't make sense to me, but I'll think it through. I'm going to do another video today. I just wanted to hop on really quick and do it live when we got the interest rate decision, but this isn't the main video for the day. Uh, I've got to talk to my good buddy Adam Tagert here in about 45 minutes for the thoughtful money podcast. And uh after that, I'm going to come back and do another video later on and just kind of summarize what happened to the market, what my thoughts are once I'm able to crystallize them a little bit better. But let's go over to gold. Gold up. I mean, this is this chart, guys. This chart looks great. My goodness, look at that chart. Wow. That is a hell of a good-look chart. You know what's awesome? As most of you know, I've I that's like I own gold forever. And um every time I set up a portfolio, it's kind of the pillar. And uh I don't really buy gold as a speculative position, more as an insurance policy. But when your insurance policy goes up this much, it's it's good. I'll take it. Uh where I tend to speculate in gold is more in the GDXJ which um there I might have a little bit more opportunity to add to my position than I'm getting in the 30-year Treasury right now. Let's go ahead and look at that chart. I'm curious. So here we're down on the day and gold ripped or GDXJ ripped higher and then sells off. Maybe that's ALGOS because that looks like an ALGO move right there. And now it's now that it's retracing and going back to where it was that seems whenever I see ALGO action. It it it seems to always be like this knee-jerk reaction or it looks like a knee-jerk reaction on the chart. Let's go. I'm going to I'm going to talk about GDXJ here, but I want to see if we're getting that same bounce. No. Jeez. Man, now we're not getting that that reversal on the 30-year. I mean, if you look at a year chart, I mean, we you broke through that. You broke through this and that a long time ago. You just smashed through this 6 point uh excuse me, 4.64. I mean, next stop is 4.41. if that offers any uh support level at all. Huh. Wow. Okay, let's Now it's down even further. I mean, every single time I refresh, it's down more. I mean, it very well could get Yeah, now it's down into a 4.6 handle. 4.608. I mean, it could get down into the 4.5s before Fed even before Pal even starts talking. Wow. All right, let's get back to the GDXJ. So, this is more of the move I would have expected across the the Treasury curve, but uh my that's not my point. My point is look at this chart. Fantastic. Fantastic. Fantastic. Fantastic. And when I first got into investing, I was really about just buy things when they're cheap, sell when they're expensive. Buy things when they're cheap, sell them when they're expensive. And you you definitely want to do that, but you have to realize that the the the guys that I have met that have made the most money in the markets have all been trend followers. Now, a lot of them wouldn't call themselves a trend follower, but if you analyze their strategy, basically that's what it is. So, the the value guys and gals that I know that make that are the best that have the best returns, what they'll do is they'll buy something when it's cheap, but they'll they won't buy it just because it's cheap. They'll buy it because it's cheap for the wrong reasons. And there's some sort of catalyst. there's some sort of catalyst there and and that makes all the difference in the world. But if you're buying something when it's cheap because it's cheap for all the wrong reasons and there's a catalyst basically what are you doing? You're you're trend following because you think the trend is going to go up and this is the start of a new trend and then you're managing the position along the way. So uh also if you read the rules of investing by Marty Zwag he came out this was I think in 1990 we discussed this last time I was in St. Barts he had like 15 rules to trading or investing and the number one thing was the trend is your friend. Number one trend is your friend. So what I what I tend to do is is think about things in terms of macro and I'll come up with a macro thesis and then I'll say okay if this thesis plays out such as the the United States economy weakening because the labor market is weakening. So that's the macro thesis. Okay, from there what bets do I want to put on if that's my base case? And then so for me that's okay rates are likely going to go down although they never ever go down in a straight line. And so then what's the best way to play that? Is it with uh you know options TLT? Is it futures? Is it uh the 2-year? Is it the 30-year 10-year whatever? And so then what I'll do is I'll try to look for a catalyst or andor look for a cat like a fundamental catalyst or um some sort of geopolitical catalyst something like that or even a narrative catalyst. Sometimes for me a catalyst can be just seeing it on the cover of the economist as far as a contrarian catalyst. Um, but then often what I'll do is just look at the chart and if the chart if you got a great breakout like this and you get a breakout like gold going back to that at uh all-time highs and you get this consolidation right here, got a big move up, you get consolidation and then you get that breakout and then you see this a continuation of the trend. I mean again I'm not a pro here. I'm an amateur just like all of us here trying to figure this out. But uh to me, I I would I would way rather buy right here when you see this breakout than I would uh let's just say right here when it's kind of consolidating when there's really no trend in place. Okay. And you know, GDXJ, I guess my point there was I'd love to see this pullback. I'd like to see a bigger pullback because if we do get a bigger pullback, I'd really like to use as an opportunity to to uh add to my position. I took a position about it was about a month or a month and a half ago, something like that. But I remember I bought at 68. So it was it probably would have been this little breakout and then you get the pullback. No, that's 61. So no, that wasn't it. No, no, no, no, no. It would have been up here. is right around here because you get this break and then it kind of comes back. I'm like, "Okay, that's probably a good entry point." And I was trying to play that gold catch-up trade. And so I I I probably would have I think I bought at like 68.2 or something. Um so anyway, uh let's get back to what's happening right now. Okay. So, you're getting a bump in the 2-year. You're getting a lot less of a bump in the in the 10-year. Okay. Now, we're getting a bump in the 30. Now, is that just it's it goes down by such a massive degree that that's just people taking profits or or it could be a short squeeze. That's another thing that you got to think about because I I mean you guys know this the the narrative out there in the mainstream media and especially on social media is interest rates are going higher especially at the long end you know because supply because of debts deficits debt deficits debt deficits debt deficits all the foreigners are dumping treasuries I mean I mean you guys don't need me to tell you this I'm sure you hear it at nauseium daily so as a result you have big big big short positions at the long into the curve. And so I mean these shorts on uh the 30-year have just gotten annihilated over the last few weeks. So then when you get this, you know, they're probably just praying for something to bail them out today. But then when you get this big move down kind of confirming the trend, this probably has a lot to do with uh short selling, taking profits. uh see what's interesting here is you have so many players in the market and I think that's what makes it so fascinating is and so complex because you not just have the short sellers potentially short covering but then you got the people going who were long you know taking profits and you got the algorithms and you got all these other all these things that just mish mash together and equal a a price and it's just uh It's really fun, isn't it? It's really fun. So, we get the bounce, but now we're at uh Oh, okay. Now we're going back down 6 4.62. Okay, let's go back to Oh, here we go. What is this? New Trump appointee Moran calls for the halfpoint cut in only descent as rest of Okay, so this is surprising. Not not that Moran called for a 50. Of course he's going to call for a 50. I'm surprised he didn't call for a 100. But and and by the way, by the way, can can we just put to bed this idea that Trump, whether he's putting someone in the Fed or he's putting someone at the BLS or putting someone in at the XYZ, they're going to be a Trump yes man. I mean, I I don't care how I It's not It's just It is what it is, right? Let's just call a spade a spade here. Trump is going to put in a Yes, man. I'm sure that's why he's trying to get out the gal that did the mortgages and everything. He's trying to get in another yes person. I mean, he he thinks he's right. He's 100% confident that he is right and that lower interest rates will magically solve all of our problems, all of our economic problems. or that's a key component, let's say, of MAGA economics. And he thinks that the Fed controls the whole curve. So if they drop rates, then that means, you know, all rates are going to come down. That's going to be a big boost to housing. It's going to make uh housing quote unquote more affordable. That's going to boost the economy. I I mean, and is that true? I don't know. It depends on growth inflation expectations because as we know definitively, the Fed does not control the long end of the curve. We know that just by the last, let's just say, rate cuts they did in 2024 where they cut by 100 basis points along the curve of the 10-year goes up by 100 basis points including mortgage rates. So, but what surprises me here is um this guy just looks like a politician, doesn't he? me just I don't know. I shouldn't judge people just based on how they look. But I don't know, man. Something about the way that dude looks just rubs me the wrong way. I I just uh he just looks like one of the slimy characters in an Ein Rand movie, like uh like uh Atlas Shrugged. But I I shouldn't I don't know the guy, so I I shouldn't judge him just based on how he looks in this picture. Okay. But what does surprise me is that we didn't have more Fed governors calling for the 50. Like what happened to Waller and Bowen? Here we go. Governors Michelle Bowman and Christopher Waller who had dissented at the Fed's prior meeting in favor of a quarter point were aligned with the Fed. That again that surprises me. I thought they would have been on board with the 50. Maybe they just didn't Maybe they just didn't want to seem like they were taking the side of Donald Trump and doing the exact same thing that Mr. Yesman was doing. Who knows? I mean, who knows the internal politics and what's going on in these people's mind. So far, we've got the 25. Just to recap here, got the 25. We did not get the mass the the three or four people desenting that I thought we would for the 50. So, the next step is what's Powell going to say? What's Powell going to say? I don't know. Let's uh let's see. I got to talk to Adam in a half hour so I can stay on a few more minutes. and maybe get the first things that Pal says, Josh, is that I'm assuming that's being um live streamed to Yeah, I think it's on live streamed on YouTube. Is that like on CNBC? Let me try to check it out real quick. And then if so, I'll I'll switch up the the uh uh screen share so you guys can actually hear the audio. Uh let's over there right now. Okay, by the way, let me do a quick plug for the George Gammon channel. If you guys have not been watching the George Gammon channel, what on earth are you doing? These videos are crushing it lately. Crushing it. So, I guess for those of you who are watching, thank you very much because we work very hard on these videos and it's great to see that people are really enjoying them. But, uh, here's just the backend analytics. So, this was the last video that I did. Two so far. It's got 217,000 views, but uh you go back and just look at the last few. We've got 217, 190, 330, 140, 130, 160, 150, 190, and then half a million. Half a million views right there. So anyway, George Gam, you guys are still, for whatever reason, loving the whiteboard videos. Thank you. Thank you. Thank you very much for watching. I sincerely appreciate it because these live streams are very easy to do. those whiteboards, those take a lot of time, a lot of effort, a lot of uh blood, sweat, and tears there. All right, let's go over to YouTube and Oh, is this it right here? Okay, maybe let's see. AP, can you hear that, Josh? Or no, I have to do the screen share. Let me switch up the screen here. Okay, there we go. So now Josh, you can hear this, right? The elevator music. Yep. I'll just turn it down until he comes on. [Music] Gosh, look at this. Isn't this funny? We have more. Let me actually check. Yeah, we do. We have more people on our live stream than the Associated Press has on their live stream about what we're talking about. Ah, so the Associated Press YouTube channel right now we can see it changing has 4,000 barely see that 4,868 people watching the Fed's uh Jerome Pal and we have 5,769 people watching George Gammon talk about Jerome Pal's uh press conference. Oh, that's awesome. That's awesome. Okay, let's uh Oh, here he Oh, here he comes. Here he comes. Here he comes. Let's go back. Good afternoon. My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people. While the unemployment rate remains low, it has edged up. Job gains have slowed and downside risks to employment have risen. At the same time, inflation has risen recently and remains somewhat elevated. In support of our goals and in light of the shift in the balance of risks, today the Federal Open Market Committee decided to lower our policy interest rate by a quarter percentage point. We also decided to continue to reduce our securities holdings. I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that growth of economic activity has moderated. GDP growth GDP rose at a pace of around 1 and a.5% in the first half of the year down from 2.5% last year. The moderation in growth largely reflects a slowdown in consumer spending. In contrast, business investment in equipment and intangibles has picked up from last year's pace. Tariffs activity in the housing sector remains weak. In our summary of economic projections, the median participant projects GDP to rise 1.6% this year and 1.8% next year, a touch stronger than projected in June. In the labor market, the unemployment rate edged up to 4.3% in August, but remains little changed over the past year at a relatively low level. Payroll job gains have slowed significantly to a pace of just 29,000 per month over the past 3 months. And we see a good part of the slowing likely reflects a decline in the growth of the labor force due to lower immigration and lower labor force participation. Even so, labor demand has softened and the recent pace of job creation appears to be running below the break even rate needed to hold the unemployment rate constant. This is what drives me crazy because I've heard this argument a lot and I'll get right back to it here, but just quickly, they talk about how this it's all about immigration and it doesn't matter if we have negative job growth because it's not going to increase the unemployment rate because we're at an equilibrium where we only have to add, let's say, 5,000 jobs per month and we had all these jobs go away, but we had all the immigrants go away. That is utter that that is nonsense on a level that's hard to even communicate. Why? Because we have fewer jobs. We have fewer people working. So just think for a moment if we had 100 million people leave the United States that were all working but the amount of jobs available let's say went down by uh 100,000 or excuse me 100 million is that good? Well the unemployment rate doesn't go up because we lost 100 100 million jobs but we had 100 million people leave the labor force because they went over to Mexico. What's that going to do to GDP? The economy is going to collapse. So I I don't know why we have this fixation on the unemployment rate versus the amount of people who are actually working in the economy producing stuff and buying stuff. In addition, wage growth has continued to moderate while still outpacing inflation. Overall, the market slowing in both the supply of and demand for workers is unusual. In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen. In our SEP, the median projection for the unemployment rate is 4.5% at the end of this year and edges down thereafter. Inflation has eased significantly from its highs in mid 2022, but remains somewhat elevated relative to our 2% longer run goal. Estimates ba estimates based on the consumer price index and other data indicate that total PCE prices rose 2.7% over the 12 months ending in August and that excluding the volatile food and energy categories core PCE prices rose 2.9%. These readings are higher than earlier in the year as inflation for goods has picked up. In contrast, disinflation appears to be continuing for services. Near-term measures of inflation expectations have moved up on balance over the course of this year on news about tariffs as reflected in both market and surveybased measures. Beyond the next year or so, however, most measures of longerterm expectations remain consistent with our 2% inflation goal. So far, this is dovish guy. The median projection in the SCP for total PCE inflation is 3.0% this year and falls to 2.6% 6% in 2026 and to 2.1% in 2027. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. At today's meeting, the committee decided to lower the target range for the federal funds rate by a quarter percentage point to four to four and a quarter%. And to continue reducing the size of our balance sheet, changes to government policies continue to evolve and their effects on the economy remain uncertain. Higher tariffs have begun to push up prices in some categories of goods, but their overall effects on economic activity and inflation remain to be seen. A reasonable base case is that the effects on inflation will be relatively short-lived, a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed. Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem. In the near term, risks to inflation are tilted to the upside and risks to employment to the downside. A challenging situation. When our goals are intention like this, our framework calls for us to balance both sides of our dual mandate. With downside risks to employment having increased, the balance of risks has shifted. Accordingly, we judged it appropriate at this meeting to take another step toward more ne a more neutral policy stance. With today's decision, we we remain well positioned to respond in a timely way to potential economic developments. We will continue to determine the appropriate stance of monetary policy based on the incoming data, the evolving outlook, and the balance of risks. In our SEP, FOM FOMC participants wrote down their individual assessments of an appropriate path for the federal funds rate based on what each participant judges to be the most likely scenario for the economy. The median participant projects that the appropriate level of the federal funds rate will be 3.6% at the end of this year, 3.4% at the end of 2026, and 3.1% at the end of 2027. This path is one quarter percentage point lower than projected in June. As is always the case, these individual forecasts are subject to uncertainty and they're not a committee plan or decision. Policy is not on a preset course. The Fed has been assigned two goals for monetary policy. maximum. What the heck? Inflation sustainably to our 2% goal. Just FYI, guys, now we're seeing massive volatility. The three-year Treasury or 30 is back up at 4.67. We're almost down at a 4.5 handle. 4.59. It rockets back up to 4.67. Remember I said it could rock it back up to 4.7. Who knows? Maybe higher. I mean, this is bananas. Bananas. But that but so far I this seems doubbish to me. Maybe you guys see it differently. Maybe the market interprets this more hawkish and keeping longerterm inflation expectations well anchored. Our success in delivering on these goals matters to all Americans. We understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission, and we at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you. I look forward to our discussion. Great. Uh thank you, uh Chris. Okay, there we go. So, let's do a quick recap on rates. I'm going to go ahead and switch up the screen share and uh Okay, there we go. All right. So, here's that. Look at the volatility. Wow. It's trading like GameStop. It's like micro strategy. Oh man, that's what I should have been long. I should have been long the move index. Wow. Now it's coming. Now it's coming back down. Got up to 4.67. Call it. Now it's bouncing all around. I have no idea where this is going to end. I have I have absolutely no idea. I actually hope it does close the day higher. In fact, I'd love for it to close the day higher because then I could um I could add to the position. We'll see. My guess is it's gonna just we're going to see some volatility for the throughout the rest of the day. Uh 10 year five. Yeah, seeing the same move, but not to the degree not the same uh basis point move. and then two-year and then this is even more muted. Um, let's check out the dollar. Dollar way down, which is what you'd expect with the move in the interest rates, interest rate differentials. And now, although this is delayed. Ah, that's important. That is important. Are these others? Uh, no, that is not. This I don't think is Whoa, now it's going straight up. He must have said something hawkish. Jeez, look at this. This is bananas. This is bananas. I'll bet you I mean, who knows? But I would not be surprised if this ended the day like flat like right around 4.65. We have all this, you know, whipssaw back and forth and back and forth and it ends pretty much right where it opened the day. All right, guys. Well, we'll have to we're going to reconvene a little later on to see how the markets close and uh I'll give you my interpretation, but there you go. So, I think we have a dovish drone pal. It's what it sounded like to me. Maybe I didn't hear it correctly or maybe the market is perceiving it in a different way. We have less descent than I thought there would be and then we did have that 25 basis point cut. So on that bombshell guys, enjoy the rest of your afternoon. We'll talk to you soon. I'm going to go talk to my good buddy Adam Tagert and we'll be right back. And as always, make sure you are standing up for freedom, liberty, free market, capitalism. We'll see you in the next video.
Fed Rate Decision REACTION LIVE
Summary
Transcript
Hello, fellow Robo Capitals. Hope you're well. So, we have the countdown. Oh my gosh. Three minutes until we get the Fed's rate decision. Are they going to cut by 25? Are they going to cut by 50? Are they going to pause? We don't know. But let's check out what interest rates are doing and we'll see if I have time to stay on until we get pal's at least the first remarks. I think that happens at 2:30 Eastern time. But let's check out rates because we got some volatility, my friend. We've got some volatility. Okay, so we'll do the screen share. We'll go over to let's start with a two-year Treasury and whoa, we were down on the day and then we just go up up up up up straight up. Now, it's not a huge move here. We're talking about three, four basis points. Looks like a massive move on this chart, but uh maybe it's a buy the rumor, sell the fact. I don't know. I I don't want to oversimplify things, but maybe, you know, a large component of this decline, of course, was the labor market, but in addition to that, maybe there's just more buyers. Hey, we're just going to buy by by until the Fed comes out with their rate decision and then we're just going to go ahead and sell. Maybe it's people that are selling before the decision um because they don't want to deal with the volatility. Uh, I know I've got a position not in the two-year, but I've got a position in the 30-year, and I was thinking about, you know, do I add to it? Because longer term, I like the position. Uh, longer term, meaning over the next few months, but I'm like, yeah, no. I'm just, who knows what Jerome Pal is going to say. Who knows when he comes out hawkish. I mean, what I am expecting, as most of you know from watching my video yesterday, here's my base case. Let me just say it quick here. It's a 25 basis point cut. It's a a devish dovish um Fed speak and then it's disscent with at least you know a couple of the the Fed chairs or whatever you want to call them. So I think that's what we're going to get a dovish 25 basis point cut with some descent maybe the most descent we have ever seen within the FOMC. So I just wanted to get that out there. for 1 minute before we get the decision. Let's go over to the CME group really quick. See what the odds are. Look at this. 6 seconds the countdown. Woohoo. Do a refresh. Where are the odds? We are at 95.8 for a 25 basis point cut. 4.2 and pretty much zero for the pause. one month ago. There's a 14% chance they'd pause, but then we got all the labor market data. Okay. Well, it is 2 o'clock Eastern time. So, let's go over to CNBC. I actually should just pull up my Twitter. That would be faster, but I don't have it on my computer. Okay. Any Usually you'll see like a breaking. Let me make sure I've got the screen share working. Yeah, I do. Okay, cool. Usually you'll see breaking breaking. Breaking. Oh, there you go. Okay. Fed lowers rates by a quarter point. First cut since 2024. All right. So, in line with expectations. Now, let's see what our friends in the Treasury market are doing. I don't even I don't even have a guess to be honest with you. Don't even have a guess. I think you're going to see a lot of volatility over the next hour because I think that's kind of a nothing burger, the 25 basis point cut, because as you saw, there's a 96% chance of that. But so that's priced in, but what's not priced in is what Jerome Pal is going to say and if he's going to lean more hawkish, more dovish. And so I think that's probably going to drive rates more. Um, and that comes at 230. So, let's see if we Oh, no. We had a Okay, so we have a big drop in the 30. That's That might just be it. Oh, and it's dropping more as we speak. I think that's kind of a knee-jerk reaction, though. You just get a lot of algorithms and it's just like Fed cut, buy long, and Fed, you know, and um that's kind of well, now it's really going down. It's kind of fun doing this in real time, isn't it? Whoa. Now it's really going down. I I don't know. Maybe it was buy the rumor, sell the fact, and then buy again really quick. I I've got to believe this is just algorithms, though. I see. Now we're back. I This is going to drive me crazy watching this in real time. Let's go. Let's Oh, jeez. The tenure is doing the same thing. Tenure dropped by a lot more. See, that really surprises me. Like, like everyone knew like like was the market pricing in maybe like a 5% pause? That can't be right. Let's go over to the two-year. Whoa. Jeez. The two-year is down. And I'm talking about from where it was prior to the announcement 3 minutes ago. It did it. Okay. So, right when they announced it, it blew up. It went to like 3 It had to be like 3.56 and then it just crashed. And right now it's at 3.48. I mean that's a called a 78 basis point collapse in like 3 minutes. Huh? I just can't believe that's the market reaction. That's got to be algorithms. And what I mean by that guys is just there's so much of the market especially intraday is algorithms and it's just Fed cuts rate there's there's no discretionary it's just programmed into the into the the trading vehicle. So it's just if Fed cuts you buy treasuries that's it. So Fed cut boom you buy treasuries algorithms. It's almost like it's it's you know when I talk to Mike Green and I've heard him say this on other podcasts. He's got a great way of saying it that the passive investing flows that's basically the most simple algorithm of all time. And it's just $1 in $1 buys, $1 out, $1 sells. And it it it's similar I think in a lot of stocks and a lot of assets that are that are traded, you know, with quite a bit of volume. But let's keep watching here. This Let's get out the popcorn. Let's go back to the 30-year. Huh? It's still It's still going down. My goodness gracious. Huh? Jeez. That go down. Now it's at 4.62. I mean, this is great for me because I for those of you who are Rebel Capitalist Pro members because I I whenever whenever I do something in one of my portfolios, I always make an announcement on Rebel Capitals Pro. We just do like a trade alert and um not it's still going down. I mean, this is what I would have expected if they would have done a 50 almost. Maybe that's it. Maybe that's it. Okay, now I'm thinking this through out loud here. Maybe if they would have done a 50 and because there was a slight chance that they would do a 50, the market perceives that to be more inflationary. And when they do the 25 instead of the 50, now you've taken that inflationary component off the table. And that's why long end rates drop. Um, but that wouldn't explain the two-year H. But but just thinking that through out loud, that might have something to do with it here. And then we're getting a big bounce, which is what you'd expect. Nothing goes down in a straight line. But, uh, let's actually go over to Rebel Capitalist Pro really quick here, and I'll show you what I'm talking about with the 30ear. Okay, Josh is back. So, that's cool. So here's the uh school community. Uh this is where we have the school platform is where we have the Rebel Capitals Pro community. And so you go to general discussion and here's where I do these these trade alerts. So we've got a trade alert here. That's where I sold micro. I've got a I've got a Bitcoin position that's just to have purchasing power outside of the system. And I also have a Bitcoin uh long position of as a as a speculative play. And I sold short Micro Strategy to kind of hedge that a little bit. And I think the the NAV might or the price might get a little bit closer to NAV. But anyway, uh let's go back here. Trade alert. So the first one regarding the this was 14 days ago. So I I bought the 30-year right here. And this is just a trade. It's not like I want to hold this for 30 years or anything like that. So just a a trade for a couple months because I saw the labor market deteriorating and I didn't think that was really priced in to the the futures curve I want to call it that because longer term uh contracts were trading at a lower value and meaning implying a higher yield and I'm like hm that that seemed a little off. So plus we got the Jolts data that day turned out to be great. Um, so then what I did is I I actually added to the position. Um, right here's the 7 days ago I added to the position. So going back to this 30-year chart of yields. Um, let's see. So two weeks ago, uh, it was right around I I bought right around 4.9. So I don't know. I I can't remember exactly when it was, but it was somewhere in here and uh it was probably here because that's when we got the Jolts numbers and then it's it's pretty much gone straight down. And then I added to the position. I think here when we had this bit this move up, I'm like, well, it's working and the data is going in my direction and my thesis is not only still intact, but based on the more recent data, my thesis is even stronger than it was before. So, I actually added to the position, which I think the lesson there is, um, what retail investors tend to do. Excuse me. It's not like I'm a pro. I'm just an amateur as well trying to, it's just I've read so many books and I've had the opportunity to hang out with so many uh, successful guys and gals in this business that I would consider mentors. uh I I've tried to absorb as much as I can and apply that to my own trading and my own investing. And you have to have asymmetry when you're trading or you're investing. In other words, when you're going into something, the upside has to be more than the downside. And when you're in the position, you you want to make sure that you ride your winners and you cut your losers. But where you get really good I is if you are able to not just ride your winners but add to them. And that's tough to do because like right here's an example. I had a huge profit, a massive profit because I I didn't just buy the long end. I bought futures. So for those of you who have done that before, you know the leverage is just mind-boggling. So, I was literally up I don't know like 40% within the matter of like a week and um every single fiber in your body is saying sell cell sell you idiot. You've got a 40% gain. Sell sell. But I I knew that that's not the right move. That that's not the pro move. That's the amateur move. So I uh not that you always want to hold, but if the fundamental analysis or your reason for doing it to begin with hasn't changed or it's improved, you got to you got to add to the position. So anyway, fortunately, it it worked well and uh I thought I might be able to get an opportunity to add to the position today because what I was looking at is under 4.64 just due to the chart. But um jeez, now it's down to 4 point. I mean, we might go into the 4.5 handle. Like, I can't believe we haven't had a And again, this is really going to be dependent on what Pal says. If Pal comes out with a hawkish tone, I mean, this could rip right back to 4.7 easy. So this is this is the volatility I was talking about and this is where you got to be I think pretty cautious. Uh but the more I think about it, the more I'm thinking this is a mixture of algos and the fact that the market had a slight probability of a 50, which some may have interpreted as more inflationary. And since that's off the table, you take that inflation component off the table. And again, the long end especially is all about growth and inflation expectations. So that's why you're getting that big that bid at the long end. That that's just my hypothesis. Just thinking out loud here. All right. Now, let's go over to CNBC and see what the news is. Oh, so Dow's up huge. But see that how was this not expected? or was the Dow up? Uh, I think the Dow was already up on the day. So, I don't think this 400 increase is just over the last few minutes. Let's see. Uh, I mean, it was up on the day and then it just shot higher. I don't know because you wouldn't expect like that made sense with the bond market. this. Okay, we've taken inflation off the table, but that doesn't make a lot of sense with the the Dow. H really weird. Let's see what's going on with Bitcoin. That's usually and Bitcoin's down. The NASDAQ. The NASDAQ's down. Hm. Not sure. That doesn't make sense to me, but I'll think it through. I'm going to do another video today. I just wanted to hop on really quick and do it live when we got the interest rate decision, but this isn't the main video for the day. Uh, I've got to talk to my good buddy Adam Tagert here in about 45 minutes for the thoughtful money podcast. And uh after that, I'm going to come back and do another video later on and just kind of summarize what happened to the market, what my thoughts are once I'm able to crystallize them a little bit better. But let's go over to gold. Gold up. I mean, this is this chart, guys. This chart looks great. My goodness, look at that chart. Wow. That is a hell of a good-look chart. You know what's awesome? As most of you know, I've I that's like I own gold forever. And um every time I set up a portfolio, it's kind of the pillar. And uh I don't really buy gold as a speculative position, more as an insurance policy. But when your insurance policy goes up this much, it's it's good. I'll take it. Uh where I tend to speculate in gold is more in the GDXJ which um there I might have a little bit more opportunity to add to my position than I'm getting in the 30-year Treasury right now. Let's go ahead and look at that chart. I'm curious. So here we're down on the day and gold ripped or GDXJ ripped higher and then sells off. Maybe that's ALGOS because that looks like an ALGO move right there. And now it's now that it's retracing and going back to where it was that seems whenever I see ALGO action. It it it seems to always be like this knee-jerk reaction or it looks like a knee-jerk reaction on the chart. Let's go. I'm going to I'm going to talk about GDXJ here, but I want to see if we're getting that same bounce. No. Jeez. Man, now we're not getting that that reversal on the 30-year. I mean, if you look at a year chart, I mean, we you broke through that. You broke through this and that a long time ago. You just smashed through this 6 point uh excuse me, 4.64. I mean, next stop is 4.41. if that offers any uh support level at all. Huh. Wow. Okay, let's Now it's down even further. I mean, every single time I refresh, it's down more. I mean, it very well could get Yeah, now it's down into a 4.6 handle. 4.608. I mean, it could get down into the 4.5s before Fed even before Pal even starts talking. Wow. All right, let's get back to the GDXJ. So, this is more of the move I would have expected across the the Treasury curve, but uh my that's not my point. My point is look at this chart. Fantastic. Fantastic. Fantastic. Fantastic. And when I first got into investing, I was really about just buy things when they're cheap, sell when they're expensive. Buy things when they're cheap, sell them when they're expensive. And you you definitely want to do that, but you have to realize that the the the guys that I have met that have made the most money in the markets have all been trend followers. Now, a lot of them wouldn't call themselves a trend follower, but if you analyze their strategy, basically that's what it is. So, the the value guys and gals that I know that make that are the best that have the best returns, what they'll do is they'll buy something when it's cheap, but they'll they won't buy it just because it's cheap. They'll buy it because it's cheap for the wrong reasons. And there's some sort of catalyst. there's some sort of catalyst there and and that makes all the difference in the world. But if you're buying something when it's cheap because it's cheap for all the wrong reasons and there's a catalyst basically what are you doing? You're you're trend following because you think the trend is going to go up and this is the start of a new trend and then you're managing the position along the way. So uh also if you read the rules of investing by Marty Zwag he came out this was I think in 1990 we discussed this last time I was in St. Barts he had like 15 rules to trading or investing and the number one thing was the trend is your friend. Number one trend is your friend. So what I what I tend to do is is think about things in terms of macro and I'll come up with a macro thesis and then I'll say okay if this thesis plays out such as the the United States economy weakening because the labor market is weakening. So that's the macro thesis. Okay, from there what bets do I want to put on if that's my base case? And then so for me that's okay rates are likely going to go down although they never ever go down in a straight line. And so then what's the best way to play that? Is it with uh you know options TLT? Is it futures? Is it uh the 2-year? Is it the 30-year 10-year whatever? And so then what I'll do is I'll try to look for a catalyst or andor look for a cat like a fundamental catalyst or um some sort of geopolitical catalyst something like that or even a narrative catalyst. Sometimes for me a catalyst can be just seeing it on the cover of the economist as far as a contrarian catalyst. Um, but then often what I'll do is just look at the chart and if the chart if you got a great breakout like this and you get a breakout like gold going back to that at uh all-time highs and you get this consolidation right here, got a big move up, you get consolidation and then you get that breakout and then you see this a continuation of the trend. I mean again I'm not a pro here. I'm an amateur just like all of us here trying to figure this out. But uh to me, I I would I would way rather buy right here when you see this breakout than I would uh let's just say right here when it's kind of consolidating when there's really no trend in place. Okay. And you know, GDXJ, I guess my point there was I'd love to see this pullback. I'd like to see a bigger pullback because if we do get a bigger pullback, I'd really like to use as an opportunity to to uh add to my position. I took a position about it was about a month or a month and a half ago, something like that. But I remember I bought at 68. So it was it probably would have been this little breakout and then you get the pullback. No, that's 61. So no, that wasn't it. No, no, no, no, no. It would have been up here. is right around here because you get this break and then it kind of comes back. I'm like, "Okay, that's probably a good entry point." And I was trying to play that gold catch-up trade. And so I I I probably would have I think I bought at like 68.2 or something. Um so anyway, uh let's get back to what's happening right now. Okay. So, you're getting a bump in the 2-year. You're getting a lot less of a bump in the in the 10-year. Okay. Now, we're getting a bump in the 30. Now, is that just it's it goes down by such a massive degree that that's just people taking profits or or it could be a short squeeze. That's another thing that you got to think about because I I mean you guys know this the the narrative out there in the mainstream media and especially on social media is interest rates are going higher especially at the long end you know because supply because of debts deficits debt deficits debt deficits debt deficits all the foreigners are dumping treasuries I mean I mean you guys don't need me to tell you this I'm sure you hear it at nauseium daily so as a result you have big big big short positions at the long into the curve. And so I mean these shorts on uh the 30-year have just gotten annihilated over the last few weeks. So then when you get this, you know, they're probably just praying for something to bail them out today. But then when you get this big move down kind of confirming the trend, this probably has a lot to do with uh short selling, taking profits. uh see what's interesting here is you have so many players in the market and I think that's what makes it so fascinating is and so complex because you not just have the short sellers potentially short covering but then you got the people going who were long you know taking profits and you got the algorithms and you got all these other all these things that just mish mash together and equal a a price and it's just uh It's really fun, isn't it? It's really fun. So, we get the bounce, but now we're at uh Oh, okay. Now we're going back down 6 4.62. Okay, let's go back to Oh, here we go. What is this? New Trump appointee Moran calls for the halfpoint cut in only descent as rest of Okay, so this is surprising. Not not that Moran called for a 50. Of course he's going to call for a 50. I'm surprised he didn't call for a 100. But and and by the way, by the way, can can we just put to bed this idea that Trump, whether he's putting someone in the Fed or he's putting someone at the BLS or putting someone in at the XYZ, they're going to be a Trump yes man. I mean, I I don't care how I It's not It's just It is what it is, right? Let's just call a spade a spade here. Trump is going to put in a Yes, man. I'm sure that's why he's trying to get out the gal that did the mortgages and everything. He's trying to get in another yes person. I mean, he he thinks he's right. He's 100% confident that he is right and that lower interest rates will magically solve all of our problems, all of our economic problems. or that's a key component, let's say, of MAGA economics. And he thinks that the Fed controls the whole curve. So if they drop rates, then that means, you know, all rates are going to come down. That's going to be a big boost to housing. It's going to make uh housing quote unquote more affordable. That's going to boost the economy. I I mean, and is that true? I don't know. It depends on growth inflation expectations because as we know definitively, the Fed does not control the long end of the curve. We know that just by the last, let's just say, rate cuts they did in 2024 where they cut by 100 basis points along the curve of the 10-year goes up by 100 basis points including mortgage rates. So, but what surprises me here is um this guy just looks like a politician, doesn't he? me just I don't know. I shouldn't judge people just based on how they look. But I don't know, man. Something about the way that dude looks just rubs me the wrong way. I I just uh he just looks like one of the slimy characters in an Ein Rand movie, like uh like uh Atlas Shrugged. But I I shouldn't I don't know the guy, so I I shouldn't judge him just based on how he looks in this picture. Okay. But what does surprise me is that we didn't have more Fed governors calling for the 50. Like what happened to Waller and Bowen? Here we go. Governors Michelle Bowman and Christopher Waller who had dissented at the Fed's prior meeting in favor of a quarter point were aligned with the Fed. That again that surprises me. I thought they would have been on board with the 50. Maybe they just didn't Maybe they just didn't want to seem like they were taking the side of Donald Trump and doing the exact same thing that Mr. Yesman was doing. Who knows? I mean, who knows the internal politics and what's going on in these people's mind. So far, we've got the 25. Just to recap here, got the 25. We did not get the mass the the three or four people desenting that I thought we would for the 50. So, the next step is what's Powell going to say? What's Powell going to say? I don't know. Let's uh let's see. I got to talk to Adam in a half hour so I can stay on a few more minutes. and maybe get the first things that Pal says, Josh, is that I'm assuming that's being um live streamed to Yeah, I think it's on live streamed on YouTube. Is that like on CNBC? Let me try to check it out real quick. And then if so, I'll I'll switch up the the uh uh screen share so you guys can actually hear the audio. Uh let's over there right now. Okay, by the way, let me do a quick plug for the George Gammon channel. If you guys have not been watching the George Gammon channel, what on earth are you doing? These videos are crushing it lately. Crushing it. So, I guess for those of you who are watching, thank you very much because we work very hard on these videos and it's great to see that people are really enjoying them. But, uh, here's just the backend analytics. So, this was the last video that I did. Two so far. It's got 217,000 views, but uh you go back and just look at the last few. We've got 217, 190, 330, 140, 130, 160, 150, 190, and then half a million. Half a million views right there. So anyway, George Gam, you guys are still, for whatever reason, loving the whiteboard videos. Thank you. Thank you. Thank you very much for watching. I sincerely appreciate it because these live streams are very easy to do. those whiteboards, those take a lot of time, a lot of effort, a lot of uh blood, sweat, and tears there. All right, let's go over to YouTube and Oh, is this it right here? Okay, maybe let's see. AP, can you hear that, Josh? Or no, I have to do the screen share. Let me switch up the screen here. Okay, there we go. So now Josh, you can hear this, right? The elevator music. Yep. I'll just turn it down until he comes on. [Music] Gosh, look at this. Isn't this funny? We have more. Let me actually check. Yeah, we do. We have more people on our live stream than the Associated Press has on their live stream about what we're talking about. Ah, so the Associated Press YouTube channel right now we can see it changing has 4,000 barely see that 4,868 people watching the Fed's uh Jerome Pal and we have 5,769 people watching George Gammon talk about Jerome Pal's uh press conference. Oh, that's awesome. That's awesome. Okay, let's uh Oh, here he Oh, here he comes. Here he comes. Here he comes. Let's go back. Good afternoon. My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people. While the unemployment rate remains low, it has edged up. Job gains have slowed and downside risks to employment have risen. At the same time, inflation has risen recently and remains somewhat elevated. In support of our goals and in light of the shift in the balance of risks, today the Federal Open Market Committee decided to lower our policy interest rate by a quarter percentage point. We also decided to continue to reduce our securities holdings. I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that growth of economic activity has moderated. GDP growth GDP rose at a pace of around 1 and a.5% in the first half of the year down from 2.5% last year. The moderation in growth largely reflects a slowdown in consumer spending. In contrast, business investment in equipment and intangibles has picked up from last year's pace. Tariffs activity in the housing sector remains weak. In our summary of economic projections, the median participant projects GDP to rise 1.6% this year and 1.8% next year, a touch stronger than projected in June. In the labor market, the unemployment rate edged up to 4.3% in August, but remains little changed over the past year at a relatively low level. Payroll job gains have slowed significantly to a pace of just 29,000 per month over the past 3 months. And we see a good part of the slowing likely reflects a decline in the growth of the labor force due to lower immigration and lower labor force participation. Even so, labor demand has softened and the recent pace of job creation appears to be running below the break even rate needed to hold the unemployment rate constant. This is what drives me crazy because I've heard this argument a lot and I'll get right back to it here, but just quickly, they talk about how this it's all about immigration and it doesn't matter if we have negative job growth because it's not going to increase the unemployment rate because we're at an equilibrium where we only have to add, let's say, 5,000 jobs per month and we had all these jobs go away, but we had all the immigrants go away. That is utter that that is nonsense on a level that's hard to even communicate. Why? Because we have fewer jobs. We have fewer people working. So just think for a moment if we had 100 million people leave the United States that were all working but the amount of jobs available let's say went down by uh 100,000 or excuse me 100 million is that good? Well the unemployment rate doesn't go up because we lost 100 100 million jobs but we had 100 million people leave the labor force because they went over to Mexico. What's that going to do to GDP? The economy is going to collapse. So I I don't know why we have this fixation on the unemployment rate versus the amount of people who are actually working in the economy producing stuff and buying stuff. In addition, wage growth has continued to moderate while still outpacing inflation. Overall, the market slowing in both the supply of and demand for workers is unusual. In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen. In our SEP, the median projection for the unemployment rate is 4.5% at the end of this year and edges down thereafter. Inflation has eased significantly from its highs in mid 2022, but remains somewhat elevated relative to our 2% longer run goal. Estimates ba estimates based on the consumer price index and other data indicate that total PCE prices rose 2.7% over the 12 months ending in August and that excluding the volatile food and energy categories core PCE prices rose 2.9%. These readings are higher than earlier in the year as inflation for goods has picked up. In contrast, disinflation appears to be continuing for services. Near-term measures of inflation expectations have moved up on balance over the course of this year on news about tariffs as reflected in both market and surveybased measures. Beyond the next year or so, however, most measures of longerterm expectations remain consistent with our 2% inflation goal. So far, this is dovish guy. The median projection in the SCP for total PCE inflation is 3.0% this year and falls to 2.6% 6% in 2026 and to 2.1% in 2027. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. At today's meeting, the committee decided to lower the target range for the federal funds rate by a quarter percentage point to four to four and a quarter%. And to continue reducing the size of our balance sheet, changes to government policies continue to evolve and their effects on the economy remain uncertain. Higher tariffs have begun to push up prices in some categories of goods, but their overall effects on economic activity and inflation remain to be seen. A reasonable base case is that the effects on inflation will be relatively short-lived, a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed. Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem. In the near term, risks to inflation are tilted to the upside and risks to employment to the downside. A challenging situation. When our goals are intention like this, our framework calls for us to balance both sides of our dual mandate. With downside risks to employment having increased, the balance of risks has shifted. Accordingly, we judged it appropriate at this meeting to take another step toward more ne a more neutral policy stance. With today's decision, we we remain well positioned to respond in a timely way to potential economic developments. We will continue to determine the appropriate stance of monetary policy based on the incoming data, the evolving outlook, and the balance of risks. In our SEP, FOM FOMC participants wrote down their individual assessments of an appropriate path for the federal funds rate based on what each participant judges to be the most likely scenario for the economy. The median participant projects that the appropriate level of the federal funds rate will be 3.6% at the end of this year, 3.4% at the end of 2026, and 3.1% at the end of 2027. This path is one quarter percentage point lower than projected in June. As is always the case, these individual forecasts are subject to uncertainty and they're not a committee plan or decision. Policy is not on a preset course. The Fed has been assigned two goals for monetary policy. maximum. What the heck? Inflation sustainably to our 2% goal. Just FYI, guys, now we're seeing massive volatility. The three-year Treasury or 30 is back up at 4.67. We're almost down at a 4.5 handle. 4.59. It rockets back up to 4.67. Remember I said it could rock it back up to 4.7. Who knows? Maybe higher. I mean, this is bananas. Bananas. But that but so far I this seems doubbish to me. Maybe you guys see it differently. Maybe the market interprets this more hawkish and keeping longerterm inflation expectations well anchored. Our success in delivering on these goals matters to all Americans. We understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission, and we at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you. I look forward to our discussion. Great. Uh thank you, uh Chris. Okay, there we go. So, let's do a quick recap on rates. I'm going to go ahead and switch up the screen share and uh Okay, there we go. All right. So, here's that. Look at the volatility. Wow. It's trading like GameStop. It's like micro strategy. Oh man, that's what I should have been long. I should have been long the move index. Wow. Now it's coming. Now it's coming back down. Got up to 4.67. Call it. Now it's bouncing all around. I have no idea where this is going to end. I have I have absolutely no idea. I actually hope it does close the day higher. In fact, I'd love for it to close the day higher because then I could um I could add to the position. We'll see. My guess is it's gonna just we're going to see some volatility for the throughout the rest of the day. Uh 10 year five. Yeah, seeing the same move, but not to the degree not the same uh basis point move. and then two-year and then this is even more muted. Um, let's check out the dollar. Dollar way down, which is what you'd expect with the move in the interest rates, interest rate differentials. And now, although this is delayed. Ah, that's important. That is important. Are these others? Uh, no, that is not. This I don't think is Whoa, now it's going straight up. He must have said something hawkish. Jeez, look at this. This is bananas. This is bananas. I'll bet you I mean, who knows? But I would not be surprised if this ended the day like flat like right around 4.65. We have all this, you know, whipssaw back and forth and back and forth and it ends pretty much right where it opened the day. All right, guys. Well, we'll have to we're going to reconvene a little later on to see how the markets close and uh I'll give you my interpretation, but there you go. So, I think we have a dovish drone pal. It's what it sounded like to me. Maybe I didn't hear it correctly or maybe the market is perceiving it in a different way. We have less descent than I thought there would be and then we did have that 25 basis point cut. So on that bombshell guys, enjoy the rest of your afternoon. We'll talk to you soon. I'm going to go talk to my good buddy Adam Tagert and we'll be right back. And as always, make sure you are standing up for freedom, liberty, free market, capitalism. We'll see you in the next video.