DiMartino Booth: Fed Chair Kevin Warsh Gets A '9 Out of 10', But One Thing Could Derail Everything
Summary
Fed Policy Shift: Guest applauds the end of forward guidance and diminished reliance on the dot plot, favoring real-time data and accountability from the Federal Reserve.
Rate Cuts: Significant discussion on the path of rates, including prediction-market probabilities and the conditions under which cuts or a policy pivot could occur.
Credit Stress: Emphasis on widening credit spreads, potential freezes in junk bond issuance, and the Fed’s lender-of-last-resort role if liquidity deteriorates.
Recession Risk: Argues the NBER has failed to call an evident recession amid payroll revisions and rising bankruptcies, signaling a weaker underlying economy.
Inflation: Critiques the 2% target and current PCE framework, advocating for trimmed-mean or alternative measures and noting the Fed’s limited influence on items like gasoline and food.
Financials Sector: Banks could further tighten lending standards as liquidity tightens, with knock-on effects for credit markets and risk assets.
Market Indicators: Watch the MOVE index, credit spreads, and junk bond issuance as key signals for stress and potential policy response.
No Stock Picks: No specific public company tickers were pitched; the conversation centers on macro policy, risks, and market structure.
Transcript
He at least appears to be going about establishing himself in a more strategic manner than Powell. But War stood up there today with a plan. Like this is a broken institution. I'm going to fix it. This episode is brought to you by Kshi, the largest prediction market in the US. I love using Khi and I'm excited for you to see it in action later in this episode. Download the Koshi app and use code Julia to get $10 when you trade $10. K A L S H I KI trade what's next. Hey everyone, welcome to a special instudio episode of the Julia Larose show coming to you on Fed day with none other than Danielle D. Martino Booth, CEO and chief strategist at Qi Research author of the book Fed Up. Danielle, great to see you. >> It's great to see you. Um, >> you're in a really good mood. >> I am in a great mood. Somebody reached over when we were live on set today in in the hour between when the Fed releases it statement um and said, "It sure does look like Wars is fed up, too." And I'm like, "Yes, yes, it sounds like he's fed up." >> Finally. Um, okay. So, let's start with the statement. Um, very short statement. It looked like a tweet. It did look like a tweet until you realized that um Greenspan released a statement once that was 99 words. >> So this was like 140. Um but compared to the 341word April statement, it was teeny. Yeah, >> it was like a net of communications and with no forward guidance >> which um we had Kevin I was about to say pal Kevin Wshair Wsh call out in his professor no more forward guidance. >> No more forward guidance. >> All right. What was your reaction to that? >> I mean it's like amen Hail Mary. Yay. >> Finally. >> Uh but let's see. But um he at least appears to be going about establishing himself in a more um strategic manner than Powell. Powell had sound bites here and there. We were talking before we started filming that his first congressional testimony he basically said, "We don't make monetary policy to to benefit stock market investors." Mhm. >> Um but War stood up there today with a plan like this is a broken institution. I'm going to fix it. He and this is how I'm going to fix it. I'm not going to give you trite words or reassurances. I'm not going to give you anything you actually want to the reporters, >> but I'm going to tell you exactly how we're going to get there. And one of the things he said that they would deliver that price stability. How did that land with you? >> Um I mean good luck. I'm happy that I'm happy that we don't have the information in hand of what his dot would have been because he basically said in a recent interview forecasts are garbage. Mhm. >> Fed forecasts are like really bad garbage, like toxic waste. So, the reason I bring that up is because they increase their expectations for inflation by the end of this year, but we we have no idea what worser's thinking is on inflation and and on how quickly the Fed's going to get there. >> Do you think that's the right move for him to to exclude from the dot plot? >> Show don't tell. >> Show don't tell. Okay. >> Yeah. Look, Powell said on many occasions that he basically thought the dot plot was useless, but he never did anything about it. >> Oh, there you go. >> If Powell was so anti-dotplot, remove your plot. Remove your dot from the plot. >> There was nothing stopping him from doing it before. >> Absolutely not. >> Were you um were you surprised with your reaction today or just like what were your expectations going into? >> Well, I'm you. So, I gave some prefed interviews this morning and I'm like, am I and I'd like for him to get rid of forward guidance and I would like for him to take a machete to Fed communication and I would like for him to explore new data sets. I mean, it was like check check. I mean, I was a barking seal. I was so happy. >> Well, maybe he's been watching and listening to you. Maybe he read fed up. Maybe he >> he may have read fed up. I mean, we um he and I were on a virtual panel. He was at Stanford um and I was filming remotely from Dallas. Um it he he certainly knows who I am as a it was just the two of us talking about monetary policy and QE. Um I I'd like to think that he's read that up because it's a quick read. Um and plus he he like lined he outlined my last chapter in his five task forces. task force and one of those yes if you point out um being communications the creating the task force around that um because there's been so much excessive I guess guidance in the past or forward guidance >> right I mean you know we're at a stage right now when Christopher Waller who's a very respected governor um on the Federal Reserve board I mean his name was in the running to be chair >> but we're in very few in the media picked up on the fact that Waller came out a few weeks ago and said, "Do we really need 12 district banks when their functionalities were created very close to when Wells Fargo used to deliver telegrams by horse?" Um, and so Waller has um he's he's made a very quick enemy of the presidents of the Federal Reserve district banks by suggesting that some of the districts themselves are irrelevant in a world when money moves around electronically. >> Um, >> it's a very different economy then. It will be in I'm I'm sure that Waller and Worsh uh are in agreement on this. Uh the question then becomes one of what will the district bank presidents do? Now when I was there, you used to have to run up the flag pole a speech that you were going to give up to Washington DC. And if there was anything that the the chair in Washington DC felt was too incendiary, too far off um from where the majority of those on the Fed was. If it if it was just creating sound bites to get quoted, it could be shot right back down. But he doesn't legally and technically have the power to truly rein in communications unless unless they agree to it. So let's see another um area across the different task force um looking at inflationary frameworks. So, do you think this could eventually lead to a review of that 2% target? >> Oh, absolutely. >> It's arbitrary, unnecessary. It's it it adds an element of instability that I mean, who says I want to sign on for here? here's my newborn kid and in 50 years I want to make sure that he or she that the dollar I'm putting in this kid's diaper is is worthless in 50 years. >> Who signs up for that? Nobody. So, um, yes, I hope he revisits the the 2% target and I hope he revisits the way the Fed measures inflation because right now core PCE can be inflated upwards if the stock market goes up. >> It's become an extraordinary force inside the PCE. Well, that's just a bunch of BS I've biggest bunch of BS I've ever heard. But somebody like Worsh suggesting they move to a trim mean or a different type of inflation metric that kicks out the outliers that are causing major skew in inflation readings as opposed to looking at the headline or the core. >> I mean good luck to him. We want this to happen. Gold has been one of the few standout assets of the last few years, reaching new record highs as investors respond to rising fiscal deficits, geopolitical uncertainties, and growing demand from central banks worldwide. But here's something most people still overlook. Price appreciation isn't the only way to benefit from owning gold. What if your gold didn't just sit in a vault, but actually generated a return? With monetary metals, you can earn a yield on gold, paid in gold, without having to sell. Instead of earning in dollars that can be eroded by inflation or policy changes, you can earn more ounces of gold. That means your gold holdings are growing in real terms, not just nominal ones. Earning gold offers a fundamentally different approach. You're not just preserving wealth, you're increasing your exposure to a hard asset over time. So, you're earning additional ounces of gold while still benefiting from any potential price appreciation. It's a way to make gold a productive asset, not just a defensive one. As more investors turn to gold for wealth preservation and portfolio diversification, a natural question follows. If you're going to own gold, why not earn gold while you own it? Thousands of investors are already earning a yield in physical gold and silver through monetary medals. You can learn more at monetary-medals.com/julia. Now, back to the rest of the episode. What do you think people get wrong about inflation today? I think social media has done a great disservice to inflation because you have all these people out there talking about this shadow committee and that shadow committee and inflation's really this and inflation's really that. Um, it depends because right now if you're an apartment operator in the sunb belt, you can't I mean you the amount of money that you're spending on concessions is chewing through your ROI in terms of what you need it for rents. People just can't afford it. Um, real estate agents today must have hated Kevin Walsh today. today. Well, I'm not gonna say what I was gonna say. >> Oh, say it like a rip. >> They they'd have to be paying attention to interest rate policy to get angry at worse. >> Oh, god. Um, but inflation needs to be understood and appreciated in terms of who is living the inflation. Because if you're a multi-billionaire on this little 18 by2 mile island called Manhattan, you could give a rat's ass if Sorry, I know this is a family program. You could care less if the price of gasoline has gone up. Yeah, it's a non-issue for you. If you are a working mom who drives Uber as a side gig in addition to her full-time job, a it's harder for her to get back and forth to work. B, you've just made her job driving for Uber a heck of a lot more expensive. >> So inflation matters differently for different people. And and even though he said, you know, I he presented himself, worse presented himself as going to a grocery store and asking people if they believed that the actions that he could take to help them would have any influence at all over the price of gasoline, the price of beef, the price of eggs. Those are the three that he pointed out. Mhm. >> And so once you get the the lay person to understand that Fed policy cannot address certain kinds of inflation, then I I think that's making a step in the right direction. I mean, there's an epidemic of financial illiteracy in this country. Um, but it sounds like worse wants to cut right through that. >> I There was a comment like inflation is a choice. Did you pick up on that one or inflation is a choice? Maybe I misheard. >> I don't know. I'm I'm I'm downloading the whole transcript. It's going to be my night nightly reading here for I'm going to read it over and over and over again. >> I'll have to go back and look at that one too. Um I guess too like Okay. So on rates though. >> Mhm. >> Cuz I know for a while you've talked about rate cuts. >> Rate cuts. >> I was looking at the prediction markets. So using Kshi and right now the number of rate cuts in 2026 >> folks are expecting exactly zero that's trading at a 74.8% probability while just like one rate cut is trading at a 21.9% probability and meaning like anybody who's placing a trade there if they place $50 trade that would pay out 22 $226.65 65 cents for a correct prediction on one rate cut if they are thinking about rate cuts. But most people are thinking no rate cuts. Well, if this is just a one day blip in the markets, that's what they're going to say. But if the speculators are not on the right side of the trade, I give them about a week before they start crying for rate cuts. They won't hesitate to say the Fed will never let the market correct. >> And that's what they say. That's exactly what they say. And since Greenspan took office, they were right because Greenspan had the Fed start interfering with the markets on October the 20th, 1987 because he couldn't stand the stock market falling. Mhm. Do you you don't think it'll be different with Worsh? >> Let me think. What did the president say was the best gauge of his success at the G7? Oh, the stock market. So, I can't imagine that the president would be very happy with today's I um No, I can't imagine that he would be I I don't know if if they did like like if they did pinky up in like they cut cut each other's skins and said, you know, God is my witness. I'm going to give you three months on your own and I won't say a word. I I won't I won't send out a single post on truth. I don't know. But the president who hated Jay Powell, had Jay Powell done something like this on his watch, I don't care if it's the middle of the night in Europe, >> the G7. Yeah. >> Worse would have sorry, Trump would have been. So something is making him give Worsh latitude. That something may be the individual traveling with him. It might be Scott Besson saying, "Give the guy a chance." Um, we saw markets lower today. How do you think Wall Street's perceiving the worst Fed? Well, I don't think Wall Street's perceiving it. I don't This is probably Wall Street calling his bluff or the beginning of calling his bluff. >> How so? If this continues and credit spreads gap out and if junk bond sales stop happening and if market liquidity becomes front and center for worse, um he'll have to open up his handydandy Fed Policy for Dummies book to appreciate that, oh my gosh, wait a minute. Um, we're the lender of last resort >> in times of emergencies and it's in the Federal Reserve Act. >> So, you're talking about like interest rate sensitive parts of the economy. >> I'm talking about parts of the economy that are blowing up already, >> right? And there's not a lot of room for error then. >> Not when Look, Bankruptcy Watch does a great job. They've been doing this since 2007. Every single week they publish bankruptcy filings that go through the US court system. So through the beginning of June over the same period in 2025, bankruptcies are up 38.4%. >> 38.4%. >> Yeah. >> Over the first six months of 2025, >> how does that compare? Okay. >> And 2025 was ugly. >> Yeah. >> Okay. >> So liquidity is the lifeblood of the markets. It's clearly already dried up for plenty of risky players or they wouldn't be filing chapter 11, >> right? >> But if it gets worse, that means that you're going to see more commercial real estate write downs. You're going to see more private debt blowups. You're going to see more private equity blowups. And you're going to see a bleed into the public credit markets. And that's when we're going to knock on the door. Um, one of the things I've learned is that bankruptcies, they are a leading indicator, I believe, not lagging. It's where things are headed. So, do you think that means we could be headed for rate cuts eventually? >> Again, um, the most important dot was missing from the plot and that would be Kevin Warses. Um because we have seen last year we were seeing pretty much unchanged readings on personal bankruptcies >> because personal bankruptcies follow corporate bankruptcies. Now we're up 8% year-over-year personal bankruptcies. >> So all of these companies going bankrupt and unable to find liquidity to even avoid chapter 7 filings and full-on liquidations. People lose jobs every time there's a chapter 11 filed. >> We've talked about the state of the consumer. Um >> how concerning is that for you today? >> Um the tighter financial conditions are which they're very loose right now. I mean one day does not make it it's it's nonsensical to talk about what one day in the market means. But to the extent that financial standards tighten financial um sorry I got that backwards to the extent that that the market tightens liquidity then banks will tighten lending standards even more and that's with Americans record numbers of Americans with car payments that are north of $1,000 a month. >> Yeah. We've also talked about the labor market, the labor side of things as well and the concerns there. >> What is it that you're most focused on today as it relates to the labor side? A awesome quote from Wars. Um my greatest concern is uh on a serious note is that the National Bureau of Economic Research has fallen down on its duty to call recessions. in the weekly quill that that we published last week. Um I did a deep dive on the history of the MBER. The National Bureau of Economic Research is duty bound to call >> recessions in the United States. >> It was founded in 1920 because income distribution was so skewed. >> Now not as skewed as it is today. >> Interesting. But that that's that was why it was founded in 1920 because the data did not properly reflect how skewed income was distributed across the US economy. And yet here we are today. We have revisions in hand um from the most reliable from more than 95% of US employers by law have to report headcount once a quarter to the census. And so we we check that against what the Bureau of Labor Statistics um reports. And now we know that in the second, excuse me, in the first and the second and the third quarter of 2025, the US economy shed jobs. Where is the NBER? Why aren't they calling the recession that happened even if theoretically we're coming out of it as bankruptcies are up 38% year-over-year dot dot dot >> where is the NBER in the 27 months ended December I think December 2010 or July 2010 sometime in in 2010 after we had exited the great recession for 25 straight months we had the the QCEW BU the quarterly census of employment and wages. It's just a filing of 95 more than 95% of US employers came in below what was initially reported by the BLS. When did we break that record of 27 consecutive months with the December with the fourth quarter 2025 release of the QCW recently that shows we've gone 30 months in a row where the actual payroll numbers in the United States were short of what was reported on non-farm payroll Friday. Where is the NBER? Where the hell are they? And that's what I wrote about last week because they're absolutely derelct in their duty unless they don't want to make somebody look bad or unless they're waiting to get closer to the midterms to make somebody look really bad >> to call recession. That's not their job. It's not their job to be political. They're they're an unbiased a-olitical institution. >> So when should they have called it again? They do. Do you think we should have been in a recession then? Well, they might have said, you know, two quarters does not make for a trend. There were two quarters of GDP contraction in 2022 >> and they did not end up calling that recession. That was correct on their part because actually labor and income were growing throughout that period. But now they have unequivocal data in hand >> that shows that the United States was in recession and all we hear is the sound of their silence. It's a travesty. Mhm. >> And that's why again I was barking like a seal when Kevin Worse said >> the echoes of history, right? Was that the line? What was the line? He talked about wanting more real-time data instead of the echoes of history. >> Yeah. when he was um when he was asked about the labor mandate >> and one of his five task force on finding new ways to measure data >> the data I I should have asked you that one of the five that was probably one that stood out the most for you for the data because you've talked about the sources of data >> and the way he referenced the Bureau of Labor Statistics data was an echo of history that's relevant on its third revision. I mean, it was a slap to the face. And he basically said to the world, "Non-farm payroll data ain't something I'm following." Wow. How big of a problem do you think that lag that that lag has been and that revision process that we've seen play out because it that's I mean that sounds like very welcome to you that he's calling out. My I'm telling you, I thought I was going to like pull out my earpiece when I was on set earlier today. Every word that came out of his mouth, I was like, "Yes." Um, he's being realistic. He's acting his age. He's acting his age, and he should be. >> What do you mean by that acting? >> He's not acting. He's not a gray hair. >> I know. >> Yeah. >> He's like, "Let's get with it. Let's Let's get data that actually reflects what's happening on the ground. We have to How many times did he use the word accountability? Every single time he did, I was like, "Score one for Worsh." >> They have to be accountable and they have to be accountable for following bad data if they know it's bad. That's why he said that's why he dissed non-farm payrolls. It's like, what relevance does it have if if we don't really know what the data is going to be until we get the third revision >> or the QCW? >> Yeah. One of >> Oh my god, my hair is falling out. I'm so excited. >> My hair is falling out earlier. Matt Matt gave me a flint roller. So, it's um we we'll leave a lot of hair in our seats. Um he also said that financial markets work best when they can react to data rather than trying to guess what the Fed how Fed is going to react. >> I was going to say you agree with that one too. >> Oh god, yes. I mean that was he's he's saying he's not going to spoon feed investors with Fed speak. >> Interesting. It's a different change. It's a welcome change. It's a hugely welcome change. >> Um, so overall impressions are really positive for you. Like out of a one out, >> they are, but I mean you No, no, he today was a 10. >> Okay. >> Um, I take that back. Today was a nine. >> Okay. because in the statement, the statement did reference that the unemployment rate um that the labor market is I have it here if you want it. >> Yeah, >> it's at the top. >> Job gains have kept pace with the workforce. Job gains have kept pace with the workforce. >> You don't agree with that? I don't think that this country will operate well if we only create 20,000 jobs a month. And that's the Fed's current break even rate. >> Mhm. >> Okay. So that's why it's a nine, not a 10. >> That's why it's nine. >> You could put a question to Fed Chair W. If you were in that room, what would you have asked him? I would have asked him if, as was the case in late 2018, there wasn't a single junk bond sale for 41 days, what would your reaction be? Would you have to pivot just like Powell did? >> How are you going to approach? Because I didn't hear about any task force. I did not hear about task force number six to explore lender of last resort and when it's appropriate to go into defcon 1 emergency mode from him. Do you think we'll end up going into that emergency mode? If we invert the yield curve if if rates stay this high and it won't take long. This time it won't take long because we're already kneedeep in a bank bankruptcy cycle. Okay. >> And your tell is going to be what's happening with move index, what's happening with credit spreads, >> volatility in the bond market. Um, we'll have the Fed minutes in a few weeks. >> I know. I'm so excited. >> Oh gosh, Danielle, I love this for you. This is so fun. When you're excited, I'm excited. >> So excited. >> What are you going to look for? >> I want to know what a good family fight looks like on a few pieces. >> Wait, like unanimous and unamig unambiguous and unanimous. >> Oh, I know. So, he he did something. Did he drug him? I don't know. He did something to have a unanimous vote right out of the gate when prior to blackout. It sounded like they were going to be on a witch hunt on day one of the Fed meeting yesterday. And somehow someway he managed to corral all of them. Every last one of them. >> All right, before I let you go, parting thoughts for the audience. Anything I didn't ask you that I should have? No, I mean I think we now we just wait and see. Now is the hardest part. I've already got my, you know, my tissues ready. I'm already expecting the condolence letters. I mean, this all happened on January the 5th, 2019. I got letters in the mail. Everybody was sad for me because of the POW pivot. >> Wait, what do you mean by that? because he got up on stage after there were no junk bonds sold >> in 41 consecutive days in late 2018 and then there was a blood bath in the stock market >> on Christmas Eve of that year >> and his next appearance Bernanki and Yellen were on stage he sat in between the two of them and he he said just like Marilyn Monroe said I I was young I needed the money I'm sorry um I take it back Q is a good thing >> so you're hopeful but you're also wait and I'm wait and see. >> All right. Daniel D. Martino Booth, CEO and chief strategist at QI Research, author of The Daily Feather. You can subscribe to it on Substack. And also author of the book Fed Up, an insidider take on why the Federal Reserve is bad for America. Great to see you as always, Danielle. So fun. >> Yeah, let's let this happy moment last. Great to be here.
DiMartino Booth: Fed Chair Kevin Warsh Gets A '9 Out of 10', But One Thing Could Derail Everything
Summary
Transcript
He at least appears to be going about establishing himself in a more strategic manner than Powell. But War stood up there today with a plan. Like this is a broken institution. I'm going to fix it. This episode is brought to you by Kshi, the largest prediction market in the US. I love using Khi and I'm excited for you to see it in action later in this episode. Download the Koshi app and use code Julia to get $10 when you trade $10. K A L S H I KI trade what's next. Hey everyone, welcome to a special instudio episode of the Julia Larose show coming to you on Fed day with none other than Danielle D. Martino Booth, CEO and chief strategist at Qi Research author of the book Fed Up. Danielle, great to see you. >> It's great to see you. Um, >> you're in a really good mood. >> I am in a great mood. Somebody reached over when we were live on set today in in the hour between when the Fed releases it statement um and said, "It sure does look like Wars is fed up, too." And I'm like, "Yes, yes, it sounds like he's fed up." >> Finally. Um, okay. So, let's start with the statement. Um, very short statement. It looked like a tweet. It did look like a tweet until you realized that um Greenspan released a statement once that was 99 words. >> So this was like 140. Um but compared to the 341word April statement, it was teeny. Yeah, >> it was like a net of communications and with no forward guidance >> which um we had Kevin I was about to say pal Kevin Wshair Wsh call out in his professor no more forward guidance. >> No more forward guidance. >> All right. What was your reaction to that? >> I mean it's like amen Hail Mary. Yay. >> Finally. >> Uh but let's see. But um he at least appears to be going about establishing himself in a more um strategic manner than Powell. Powell had sound bites here and there. We were talking before we started filming that his first congressional testimony he basically said, "We don't make monetary policy to to benefit stock market investors." Mhm. >> Um but War stood up there today with a plan like this is a broken institution. I'm going to fix it. He and this is how I'm going to fix it. I'm not going to give you trite words or reassurances. I'm not going to give you anything you actually want to the reporters, >> but I'm going to tell you exactly how we're going to get there. And one of the things he said that they would deliver that price stability. How did that land with you? >> Um I mean good luck. I'm happy that I'm happy that we don't have the information in hand of what his dot would have been because he basically said in a recent interview forecasts are garbage. Mhm. >> Fed forecasts are like really bad garbage, like toxic waste. So, the reason I bring that up is because they increase their expectations for inflation by the end of this year, but we we have no idea what worser's thinking is on inflation and and on how quickly the Fed's going to get there. >> Do you think that's the right move for him to to exclude from the dot plot? >> Show don't tell. >> Show don't tell. Okay. >> Yeah. Look, Powell said on many occasions that he basically thought the dot plot was useless, but he never did anything about it. >> Oh, there you go. >> If Powell was so anti-dotplot, remove your plot. Remove your dot from the plot. >> There was nothing stopping him from doing it before. >> Absolutely not. >> Were you um were you surprised with your reaction today or just like what were your expectations going into? >> Well, I'm you. So, I gave some prefed interviews this morning and I'm like, am I and I'd like for him to get rid of forward guidance and I would like for him to take a machete to Fed communication and I would like for him to explore new data sets. I mean, it was like check check. I mean, I was a barking seal. I was so happy. >> Well, maybe he's been watching and listening to you. Maybe he read fed up. Maybe he >> he may have read fed up. I mean, we um he and I were on a virtual panel. He was at Stanford um and I was filming remotely from Dallas. Um it he he certainly knows who I am as a it was just the two of us talking about monetary policy and QE. Um I I'd like to think that he's read that up because it's a quick read. Um and plus he he like lined he outlined my last chapter in his five task forces. task force and one of those yes if you point out um being communications the creating the task force around that um because there's been so much excessive I guess guidance in the past or forward guidance >> right I mean you know we're at a stage right now when Christopher Waller who's a very respected governor um on the Federal Reserve board I mean his name was in the running to be chair >> but we're in very few in the media picked up on the fact that Waller came out a few weeks ago and said, "Do we really need 12 district banks when their functionalities were created very close to when Wells Fargo used to deliver telegrams by horse?" Um, and so Waller has um he's he's made a very quick enemy of the presidents of the Federal Reserve district banks by suggesting that some of the districts themselves are irrelevant in a world when money moves around electronically. >> Um, >> it's a very different economy then. It will be in I'm I'm sure that Waller and Worsh uh are in agreement on this. Uh the question then becomes one of what will the district bank presidents do? Now when I was there, you used to have to run up the flag pole a speech that you were going to give up to Washington DC. And if there was anything that the the chair in Washington DC felt was too incendiary, too far off um from where the majority of those on the Fed was. If it if it was just creating sound bites to get quoted, it could be shot right back down. But he doesn't legally and technically have the power to truly rein in communications unless unless they agree to it. So let's see another um area across the different task force um looking at inflationary frameworks. So, do you think this could eventually lead to a review of that 2% target? >> Oh, absolutely. >> It's arbitrary, unnecessary. It's it it adds an element of instability that I mean, who says I want to sign on for here? here's my newborn kid and in 50 years I want to make sure that he or she that the dollar I'm putting in this kid's diaper is is worthless in 50 years. >> Who signs up for that? Nobody. So, um, yes, I hope he revisits the the 2% target and I hope he revisits the way the Fed measures inflation because right now core PCE can be inflated upwards if the stock market goes up. >> It's become an extraordinary force inside the PCE. Well, that's just a bunch of BS I've biggest bunch of BS I've ever heard. But somebody like Worsh suggesting they move to a trim mean or a different type of inflation metric that kicks out the outliers that are causing major skew in inflation readings as opposed to looking at the headline or the core. >> I mean good luck to him. We want this to happen. Gold has been one of the few standout assets of the last few years, reaching new record highs as investors respond to rising fiscal deficits, geopolitical uncertainties, and growing demand from central banks worldwide. But here's something most people still overlook. Price appreciation isn't the only way to benefit from owning gold. What if your gold didn't just sit in a vault, but actually generated a return? With monetary metals, you can earn a yield on gold, paid in gold, without having to sell. Instead of earning in dollars that can be eroded by inflation or policy changes, you can earn more ounces of gold. That means your gold holdings are growing in real terms, not just nominal ones. Earning gold offers a fundamentally different approach. You're not just preserving wealth, you're increasing your exposure to a hard asset over time. So, you're earning additional ounces of gold while still benefiting from any potential price appreciation. It's a way to make gold a productive asset, not just a defensive one. As more investors turn to gold for wealth preservation and portfolio diversification, a natural question follows. If you're going to own gold, why not earn gold while you own it? Thousands of investors are already earning a yield in physical gold and silver through monetary medals. You can learn more at monetary-medals.com/julia. Now, back to the rest of the episode. What do you think people get wrong about inflation today? I think social media has done a great disservice to inflation because you have all these people out there talking about this shadow committee and that shadow committee and inflation's really this and inflation's really that. Um, it depends because right now if you're an apartment operator in the sunb belt, you can't I mean you the amount of money that you're spending on concessions is chewing through your ROI in terms of what you need it for rents. People just can't afford it. Um, real estate agents today must have hated Kevin Walsh today. today. Well, I'm not gonna say what I was gonna say. >> Oh, say it like a rip. >> They they'd have to be paying attention to interest rate policy to get angry at worse. >> Oh, god. Um, but inflation needs to be understood and appreciated in terms of who is living the inflation. Because if you're a multi-billionaire on this little 18 by2 mile island called Manhattan, you could give a rat's ass if Sorry, I know this is a family program. You could care less if the price of gasoline has gone up. Yeah, it's a non-issue for you. If you are a working mom who drives Uber as a side gig in addition to her full-time job, a it's harder for her to get back and forth to work. B, you've just made her job driving for Uber a heck of a lot more expensive. >> So inflation matters differently for different people. And and even though he said, you know, I he presented himself, worse presented himself as going to a grocery store and asking people if they believed that the actions that he could take to help them would have any influence at all over the price of gasoline, the price of beef, the price of eggs. Those are the three that he pointed out. Mhm. >> And so once you get the the lay person to understand that Fed policy cannot address certain kinds of inflation, then I I think that's making a step in the right direction. I mean, there's an epidemic of financial illiteracy in this country. Um, but it sounds like worse wants to cut right through that. >> I There was a comment like inflation is a choice. Did you pick up on that one or inflation is a choice? Maybe I misheard. >> I don't know. I'm I'm I'm downloading the whole transcript. It's going to be my night nightly reading here for I'm going to read it over and over and over again. >> I'll have to go back and look at that one too. Um I guess too like Okay. So on rates though. >> Mhm. >> Cuz I know for a while you've talked about rate cuts. >> Rate cuts. >> I was looking at the prediction markets. So using Kshi and right now the number of rate cuts in 2026 >> folks are expecting exactly zero that's trading at a 74.8% probability while just like one rate cut is trading at a 21.9% probability and meaning like anybody who's placing a trade there if they place $50 trade that would pay out 22 $226.65 65 cents for a correct prediction on one rate cut if they are thinking about rate cuts. But most people are thinking no rate cuts. Well, if this is just a one day blip in the markets, that's what they're going to say. But if the speculators are not on the right side of the trade, I give them about a week before they start crying for rate cuts. They won't hesitate to say the Fed will never let the market correct. >> And that's what they say. That's exactly what they say. And since Greenspan took office, they were right because Greenspan had the Fed start interfering with the markets on October the 20th, 1987 because he couldn't stand the stock market falling. Mhm. Do you you don't think it'll be different with Worsh? >> Let me think. What did the president say was the best gauge of his success at the G7? Oh, the stock market. So, I can't imagine that the president would be very happy with today's I um No, I can't imagine that he would be I I don't know if if they did like like if they did pinky up in like they cut cut each other's skins and said, you know, God is my witness. I'm going to give you three months on your own and I won't say a word. I I won't I won't send out a single post on truth. I don't know. But the president who hated Jay Powell, had Jay Powell done something like this on his watch, I don't care if it's the middle of the night in Europe, >> the G7. Yeah. >> Worse would have sorry, Trump would have been. So something is making him give Worsh latitude. That something may be the individual traveling with him. It might be Scott Besson saying, "Give the guy a chance." Um, we saw markets lower today. How do you think Wall Street's perceiving the worst Fed? Well, I don't think Wall Street's perceiving it. I don't This is probably Wall Street calling his bluff or the beginning of calling his bluff. >> How so? If this continues and credit spreads gap out and if junk bond sales stop happening and if market liquidity becomes front and center for worse, um he'll have to open up his handydandy Fed Policy for Dummies book to appreciate that, oh my gosh, wait a minute. Um, we're the lender of last resort >> in times of emergencies and it's in the Federal Reserve Act. >> So, you're talking about like interest rate sensitive parts of the economy. >> I'm talking about parts of the economy that are blowing up already, >> right? And there's not a lot of room for error then. >> Not when Look, Bankruptcy Watch does a great job. They've been doing this since 2007. Every single week they publish bankruptcy filings that go through the US court system. So through the beginning of June over the same period in 2025, bankruptcies are up 38.4%. >> 38.4%. >> Yeah. >> Over the first six months of 2025, >> how does that compare? Okay. >> And 2025 was ugly. >> Yeah. >> Okay. >> So liquidity is the lifeblood of the markets. It's clearly already dried up for plenty of risky players or they wouldn't be filing chapter 11, >> right? >> But if it gets worse, that means that you're going to see more commercial real estate write downs. You're going to see more private debt blowups. You're going to see more private equity blowups. And you're going to see a bleed into the public credit markets. And that's when we're going to knock on the door. Um, one of the things I've learned is that bankruptcies, they are a leading indicator, I believe, not lagging. It's where things are headed. So, do you think that means we could be headed for rate cuts eventually? >> Again, um, the most important dot was missing from the plot and that would be Kevin Warses. Um because we have seen last year we were seeing pretty much unchanged readings on personal bankruptcies >> because personal bankruptcies follow corporate bankruptcies. Now we're up 8% year-over-year personal bankruptcies. >> So all of these companies going bankrupt and unable to find liquidity to even avoid chapter 7 filings and full-on liquidations. People lose jobs every time there's a chapter 11 filed. >> We've talked about the state of the consumer. Um >> how concerning is that for you today? >> Um the tighter financial conditions are which they're very loose right now. I mean one day does not make it it's it's nonsensical to talk about what one day in the market means. But to the extent that financial standards tighten financial um sorry I got that backwards to the extent that that the market tightens liquidity then banks will tighten lending standards even more and that's with Americans record numbers of Americans with car payments that are north of $1,000 a month. >> Yeah. We've also talked about the labor market, the labor side of things as well and the concerns there. >> What is it that you're most focused on today as it relates to the labor side? A awesome quote from Wars. Um my greatest concern is uh on a serious note is that the National Bureau of Economic Research has fallen down on its duty to call recessions. in the weekly quill that that we published last week. Um I did a deep dive on the history of the MBER. The National Bureau of Economic Research is duty bound to call >> recessions in the United States. >> It was founded in 1920 because income distribution was so skewed. >> Now not as skewed as it is today. >> Interesting. But that that's that was why it was founded in 1920 because the data did not properly reflect how skewed income was distributed across the US economy. And yet here we are today. We have revisions in hand um from the most reliable from more than 95% of US employers by law have to report headcount once a quarter to the census. And so we we check that against what the Bureau of Labor Statistics um reports. And now we know that in the second, excuse me, in the first and the second and the third quarter of 2025, the US economy shed jobs. Where is the NBER? Why aren't they calling the recession that happened even if theoretically we're coming out of it as bankruptcies are up 38% year-over-year dot dot dot >> where is the NBER in the 27 months ended December I think December 2010 or July 2010 sometime in in 2010 after we had exited the great recession for 25 straight months we had the the QCEW BU the quarterly census of employment and wages. It's just a filing of 95 more than 95% of US employers came in below what was initially reported by the BLS. When did we break that record of 27 consecutive months with the December with the fourth quarter 2025 release of the QCW recently that shows we've gone 30 months in a row where the actual payroll numbers in the United States were short of what was reported on non-farm payroll Friday. Where is the NBER? Where the hell are they? And that's what I wrote about last week because they're absolutely derelct in their duty unless they don't want to make somebody look bad or unless they're waiting to get closer to the midterms to make somebody look really bad >> to call recession. That's not their job. It's not their job to be political. They're they're an unbiased a-olitical institution. >> So when should they have called it again? They do. Do you think we should have been in a recession then? Well, they might have said, you know, two quarters does not make for a trend. There were two quarters of GDP contraction in 2022 >> and they did not end up calling that recession. That was correct on their part because actually labor and income were growing throughout that period. But now they have unequivocal data in hand >> that shows that the United States was in recession and all we hear is the sound of their silence. It's a travesty. Mhm. >> And that's why again I was barking like a seal when Kevin Worse said >> the echoes of history, right? Was that the line? What was the line? He talked about wanting more real-time data instead of the echoes of history. >> Yeah. when he was um when he was asked about the labor mandate >> and one of his five task force on finding new ways to measure data >> the data I I should have asked you that one of the five that was probably one that stood out the most for you for the data because you've talked about the sources of data >> and the way he referenced the Bureau of Labor Statistics data was an echo of history that's relevant on its third revision. I mean, it was a slap to the face. And he basically said to the world, "Non-farm payroll data ain't something I'm following." Wow. How big of a problem do you think that lag that that lag has been and that revision process that we've seen play out because it that's I mean that sounds like very welcome to you that he's calling out. My I'm telling you, I thought I was going to like pull out my earpiece when I was on set earlier today. Every word that came out of his mouth, I was like, "Yes." Um, he's being realistic. He's acting his age. He's acting his age, and he should be. >> What do you mean by that acting? >> He's not acting. He's not a gray hair. >> I know. >> Yeah. >> He's like, "Let's get with it. Let's Let's get data that actually reflects what's happening on the ground. We have to How many times did he use the word accountability? Every single time he did, I was like, "Score one for Worsh." >> They have to be accountable and they have to be accountable for following bad data if they know it's bad. That's why he said that's why he dissed non-farm payrolls. It's like, what relevance does it have if if we don't really know what the data is going to be until we get the third revision >> or the QCW? >> Yeah. One of >> Oh my god, my hair is falling out. I'm so excited. >> My hair is falling out earlier. Matt Matt gave me a flint roller. So, it's um we we'll leave a lot of hair in our seats. Um he also said that financial markets work best when they can react to data rather than trying to guess what the Fed how Fed is going to react. >> I was going to say you agree with that one too. >> Oh god, yes. I mean that was he's he's saying he's not going to spoon feed investors with Fed speak. >> Interesting. It's a different change. It's a welcome change. It's a hugely welcome change. >> Um, so overall impressions are really positive for you. Like out of a one out, >> they are, but I mean you No, no, he today was a 10. >> Okay. >> Um, I take that back. Today was a nine. >> Okay. because in the statement, the statement did reference that the unemployment rate um that the labor market is I have it here if you want it. >> Yeah, >> it's at the top. >> Job gains have kept pace with the workforce. Job gains have kept pace with the workforce. >> You don't agree with that? I don't think that this country will operate well if we only create 20,000 jobs a month. And that's the Fed's current break even rate. >> Mhm. >> Okay. So that's why it's a nine, not a 10. >> That's why it's nine. >> You could put a question to Fed Chair W. If you were in that room, what would you have asked him? I would have asked him if, as was the case in late 2018, there wasn't a single junk bond sale for 41 days, what would your reaction be? Would you have to pivot just like Powell did? >> How are you going to approach? Because I didn't hear about any task force. I did not hear about task force number six to explore lender of last resort and when it's appropriate to go into defcon 1 emergency mode from him. Do you think we'll end up going into that emergency mode? If we invert the yield curve if if rates stay this high and it won't take long. This time it won't take long because we're already kneedeep in a bank bankruptcy cycle. Okay. >> And your tell is going to be what's happening with move index, what's happening with credit spreads, >> volatility in the bond market. Um, we'll have the Fed minutes in a few weeks. >> I know. I'm so excited. >> Oh gosh, Danielle, I love this for you. This is so fun. When you're excited, I'm excited. >> So excited. >> What are you going to look for? >> I want to know what a good family fight looks like on a few pieces. >> Wait, like unanimous and unamig unambiguous and unanimous. >> Oh, I know. So, he he did something. Did he drug him? I don't know. He did something to have a unanimous vote right out of the gate when prior to blackout. It sounded like they were going to be on a witch hunt on day one of the Fed meeting yesterday. And somehow someway he managed to corral all of them. Every last one of them. >> All right, before I let you go, parting thoughts for the audience. Anything I didn't ask you that I should have? No, I mean I think we now we just wait and see. Now is the hardest part. I've already got my, you know, my tissues ready. I'm already expecting the condolence letters. I mean, this all happened on January the 5th, 2019. I got letters in the mail. Everybody was sad for me because of the POW pivot. >> Wait, what do you mean by that? because he got up on stage after there were no junk bonds sold >> in 41 consecutive days in late 2018 and then there was a blood bath in the stock market >> on Christmas Eve of that year >> and his next appearance Bernanki and Yellen were on stage he sat in between the two of them and he he said just like Marilyn Monroe said I I was young I needed the money I'm sorry um I take it back Q is a good thing >> so you're hopeful but you're also wait and I'm wait and see. >> All right. Daniel D. Martino Booth, CEO and chief strategist at QI Research, author of The Daily Feather. You can subscribe to it on Substack. And also author of the book Fed Up, an insidider take on why the Federal Reserve is bad for America. Great to see you as always, Danielle. So fun. >> Yeah, let's let this happy moment last. Great to be here.