What the Fed Knows But Won't Say | Danielle DiMartino Booth
Summary
Market Outlook: The guest highlights rising division within the FOMC, questionable data quality, and a growing risk of policy error as recessionary signals build.
Private Credit Contagion: Significant concern that private credit stress can spread to high yield and even investment grade, with liquidity risks amplified by bank loan reclassifications and tightening standards.
Key Companies: References to AAPL, MSFT, GM, JPM, and MS illustrate credit bifurcation (Big Tech ease vs SMB strain), auto sales softness, and institutional positioning in private credit.
Energy Shock: Higher WTI prices from ~$65 to ~$95 are squeezing households, depressing travel intentions, and reducing consumers’ ability to absorb shocks as wage growth lags 2019.
Consumer Weakness: Job-finding probabilities have fallen below 50% across demographics, student loan repayments resume, and BNPL stress emerges alongside broader household strain.
Industrials: Early-year bullishness from inventory restocking is fading as end-demand weakens, signaling potential pressure on cyclical industrial exposures.
Banks and Credit: CRE loss recognition and broad-based tightening in bank lending standards could constrict credit availability, intensifying spillovers to consumers and SMEs.
Autos Softness: GM’s Q1 declines, including double-digit Escalade weakness, and broader auto sales disappointments point to pressure in higher-ticket discretionary spending.
Transcript
Fed officials know. They all know that there is something wrong with the data. >> I can tell this really bothers you. >> It It really bothers me, Julia. Right now, nobody's looking out for American families. Nobody. And does that upset me? Hell yes, it upsets me. It should upset me. It should upset everybody. And it should upset the political operatives because there's a midterm coming up. Hey everyone, welcome to another special instudio episode of the Julia Larose show where we are joined by friend of the show Danielle D. Martina Booth. She is the CEO and chief strategist at Qi Research, author of the book Fed Up. So great to see you again Danielle. >> Hi Julia. It's good to see you too. Last time we were kind of remoteish. >> I know. And we missed you at the March FOMC. >> Yeah, I know. I was Well, you know, you only have your high school senior spring break >> once. >> That is so true. and um you were missed by this audience because they love hearing from you, but I totally understand taking a break and what a great day to have you with uh gosh there's so much happening in the world, but let's talk about the FOMC meeting minutes. What's the big takeaway for you this time around? >> Um I think the biggest takeaway for me is that there's even more division. So, we went from several members of the committee advocating for a rate hike this year to some. And Julia, every single word of these minutes are contemplated and parsed and voted on. Um, and yet others were concerned about the economy slowing. So, but to me it it just shows that there's a brighter and a wider line in between the Hawks and the Doves on this committee. >> So, a lot of division, more division that you're gleaning from this. How problematic is that going to be? >> Well, I mean, I don't know. I don't know who's going to be head of the Fed. >> That's the question. And so in in in theory, and this is what I keep telling myself, as long as you have a leader come in and just kind of put up a big whiteboard and say, "We're no longer in the game of deny, deny, deny. We're going to come into this century. We're going to look at alternative data metrics, and you're going to quit lying to the public. And if you can't quit lying to the public about the the true state of the economy, then be quiet. But I think as long as you have a new leader focus the members of the committee on the actual data, then it's not going to be moving a mountain to get a rate cut. But first, you have to get him in that position, which means that, you know, all this politicking has to go away. >> Do you think it will? Get I was just talking to a reporter about this very subject and the the reporter couldn't figure it out. I can't figure it out. A federal judge gave the out. It was a graceful exit and and yet they doubled down. So, I just don't understand what the thinking is, what the logic is of hunting down this one man when the polls are saying what the polls are saying when one big beautiful bill did not produce on average $1,000 larger tax refund. In fact, it's $350 and a good chunk of which has been eaten up by higher gas bills. So, you know, James Carville famously said it's the economy stupid and any working family in in the United States. And what we're seeing with the University of Michigan is that consumer sentiment is really getting shaky all the way up the income ladder. So, if that's the case, and and that's why Khi has seen a flip in the odds for the Senate. And now it's I think it's 51% Democrats take the Senate, 49% take the House. Again, you know, if I'm if I'm John Thun, if I'm Mike Johnson, if I'm anybody in the GOP, if I'm anybody in the White House, if I'm Scott Bessant, I'm saying the midterms are upon us and Americans are concerned about the economy. Let's focus on that and get Kevin Worsh in the chair >> and that's going to be a probably a like that will probably be an uphill battle even get him in the chair at this point. Don't you think? >> No, you don't. >> No. I I think that once the criminal charges are dropped that um Worse had a very good vote the first time around when he became a governor. um everybody on the committee on both sides of the aisle um have has expressed respect for his views. He'll breeze through committee if Tom Tillis gets out of the way and the only way he's getting out of the way is for these criminal charges to be dropped against Powell. No, I think I think worse will be confirmed pretty quickly. But Juliet, take this to the extreme, right? Tillis leaves office on January the 3. What if the betting markets are right? I mean, if this administration really wants to go the distance, they're not going to get anybody confirmed to be chair. >> What happens in that what happens in that scenario then? Just >> Well, you know, it's interesting you asked because again, I was just speaking to a reporter of the Washington Post. Um, recall I I had my open letter, but recall that that J. Powell was elected to be chair of the Federal Open Market Committee at the January FOMC for the entire calendar year 2026. Yes. And he has said >> and he said at the last meeting. Yeah. >> At the last meeting. I mean he he had three prepared remarks. Three prep. In fact, he asked the reporters on their behalf. He's like, "I know what's coming next. This is my answer. I know what's coming next. This is my answer." And basically he's saying I'll stay in the position as long as there's not a new confirmed chair as long as these criminal charges are dropped. And the only one he said I don't know about was whether or not he would still stay. Even if all of these obstacles go away, it's still an unknown whether or not he's going to remain on until January 2028 as governor after having witnessed, you know, a full frontal assault of the institution. And again, Julia, let me be clear. I do not agree with Fed policy makers right now. I I think that they should say this is our leader until the criminal charges are dropped, but we recognize the plight of small businesses. We recognize the plight of working Americans, but they're refusing to do that. >> Okay. It's is it the the the latter part that they're not doing? The recognizing what it means for the everyday American, the hardworking American, the one that you write those letters on behalf of. >> They're roundly ignoring them. >> Do you think this intentional? >> I hope not. >> Um, no, actually. Okay. So I worked there for nine years. It's not intentional, but they think that they're standing on principle right now to safeguard the institution, to safeguard the independence of the Fed, which I understand. But if you and I can sit here and have a conversation about this, then Jay Powell and the other members of the committee can have an adult conversation with the American people and say, "Despite what's happening, we're going to do everything that we can." Powell's still not going anywhere, but you know, ISM non-manufacturing employment printed at 45.2. ISM history goes back a mighty long time. And there's a difference between 49 and 50. >> Yeah. >> 50 meaning expansion, 49 meaning contraction, and 45. 45 is the known line of recession. The last time we had an ISM non-manufacturing employment index representing 80% of working Americans at 45 was in 200 2007209 the Great Recession and 2001. We just published about this. >> Uh yes, you did in the in the um Daily Feather 2007 2001. Are you seeing parallels? You're seeing parallels. >> A lot of parallels. >> And you know what? So is the Fed. The New York Fed came out with its latest survey of consumer expectations. People's prospects for finding a job, the worst they've been this cycle. University of Michigan, ditto. Look, we can don't put it on me. put it on the 80% of the economics community who before the criminal charges against Powell really muddied up the waters and before Trump tried to replace the head of the Bureau of Labor Statistics before any of that happened 80% of the economics community did not trust official data I wonder why gee I don't know March was the warmest March in the history of the United States how on earth did the Bureau of Labor Statistics concocted out of thin air 79,000 Americans who were not at work because of the weather in the warmest March on record. And then the birth death model added another 100,000. So that adds up to oh, I don't know, 179,000 jobs created because of seasonal adjustment when the headline number was 178,000. >> Mhm. >> The numbers are hard to trust. >> It's getting old. >> Yeah. >> It's getting really old. >> Yeah. And it's even older because of what the bankruptcy numbers are telling us. Because of the Kansas City Feds small business survey that's produced on a quarterly basis that's showing it is really hard for small businesses to stay in business. And it is the Fed funds rate that affects small mom and pop businesses. If I'm Apple or Microsoft, I can borrow whatever rate I want. Big whoop-dedoo. If I'm a small business, that policy makes a difference. >> And they are the backbone of the economy. Small business. >> I want to bring up a piece that you published. I think this was today. I liked the headline um because it got my my attention. We're going streaking. That was the headline of the Daily uh the Daily Feather. >> Yes. It referenced back to that lovely scene with Will Ferrell running down the street butt naked. >> Yes. uh New York Fed's survey of consumer expectations showing job finding probability as you were just pointing out at just 45.9% which is still below the healthy 50% level for the first time ever all three education groups and stre um and stretches across income and age groups are flashing red under 50% over 6 months job insecurity is literally streaking >> it's again all areas of education all age groups all income tiers. These are nine different demographics and they're all saying can't get a job. And this is New York Fed data. >> Yes. Because we talked about the K-shaped economy and it sounds like even that upper part of that K is now getting worried about their job prospects. >> Look, July the 1st is coming. Maybe it doesn't feel like it because it was 30° in New York this morning. Thank you very much. But countless Americans on July the 1st, they're going to have to pay their student loans. Choose not to. Fine. We're going to garnish your wages. Next year, for good measure, we're going to take your income tax refund. The people with the highest student loan debt are dentists. They're lawyers. They make more than $100,000 a year, but they certainly cannot afford another big ticket on top of their mortgage payment that's still too high. on top of their car payment that is still too high. On top of tuition that is still too high. Well, I'm almost about to have four paying tuition. So, I'm a little sensitive to that. But, but it it's a lot. It's a lot >> on the average American family. And the Fed's just ignoring the situation. Hey everyone, I hope you are enjoying this interview. If you can take a quick moment and hit that subscribe button, we are on a mission to hit our next goal of 100,000 subscribers and your support could really help us get there. Thank you so much and enjoy the rest of the interview. >> Kind of reminds me when you're saying that too a little bit of like what Mike Green has been writing about as well and like >> the poverty line. >> Yeah. >> Yeah. >> Poverty line's a hell of a lot higher than what some think tank in Washington DC. It's $100,000 nationwide. If you're in New Jersey or in White Plains or worse New York or worse, San Francisco, it's closer to 140 150,000 the poverty line. >> Yeah. Yeah. Um like you have very little room for error because there's no safety net for you at that at that level either. >> No. And and and and how much error room for error do you have? We're all like, "Yay, oil prices fell." There's still $95 for West Texas Intermediate and there were $65 before what happened with Iran. I'm I'm sorry, but an extra $75 a month out of your budget. It just look at the University of Michigan intentions to vacation. They've collapsed, including foreign travel. >> Interesting. Yeah. >> Foreign travel means wealthy people. >> Yes. >> They're not planning to travel. >> Yes. Do you think the Fed is underestimating um the energy shock and the impact on the consumers? >> Yes, only in one sense. Mhm. >> We're already at a point, according to Fed data from the Atlanta Fed, wages are already growing at a slower pace than they were in 2019 prior to the pandemic hitting. So yes, households are less able to absorb a shock and it doesn't matter what the shock happens to be. They're they they've just got less wiggle room. And so is the Fed ignoring this? Yes. Do they need to be worrying about inflation? No. Talk to anybody trying to sell an apartment development. Talk to anybody trying to raise the rent. you know, talk to anybody in the sunb belt who's having to lower the price of their homes. It It's This is real. >> Do you do you think the en environment is Do you would you describe it? Do you think we're headed towards stagflation or No, >> I think that we need to worry a little bit harder about the stag. >> Okay. >> So, let's slow down. >> We do. Mhm. We had and we've been tracking and in fact we were bullish industrials coming into the year because inventories had been so depleted that either you were going to close the doors or you were going to restock. It was pretty simple. And so we've seen this burst of industrial activity but it's already starting to come off because they've restocked but the demand's not there. You only continue replenishing stock. >> You have the demand >> the demands there. I mean, General Motors announced a few days ago that not only had sales fallen in the first quarter, but it was Escalade sales that fell by double digits. Haven't seen that in oh, I don't know, forever. So, if the higherend slash aspirational consumer starting to feel it, we got problems. Mhm. So, let me go back to what you were saying earlier around kind of the parallels of 2001, 2007, like that similar setup. Maybe the Fed Fed made mistakes back then, too. >> Um, do you think we're headed for a mis are they setting themselves up for a mistake um ahead? >> Well, uh, yes. what we publish almost every day is that as a factor of time, the policy error just keeps growing. Um, and everybody wants to wish away this private credit thing, but it doesn't appear to be going anywhere. And this is, you were just asking me about households cushions >> to withstand a shock. Very quietly Friday after the close of business in the Fed's weekly H8 publication, they announced that they were reclassifying more loans. They had been commercial and industrial, but now they're being reclassified as non-depository financial institution loans, as in loans that big banks make into the shadows to the non-banks. Should we be worried that regulators couldn't identify what a loan was and had to reclassify it not once but twice? First time followedricolor. Yes, we should. Does the Fed have cushion given what's happening in private credit? No. >> What would the cushion be for the Fed? >> Liquidity. >> Liquidity. H >> liquidity. We forget. I'm not drawing. I'll be accused of correlation does not equal causation. Blah blah blah. Iran started the day the 10-year benchmark Treasury yield closed at 3.96%. The only reason it closed below 4% which became a hard concrete floor was because there was so much concern about contagion in private credit. So the administration knew that they didn't need a distraction, they needed a big distraction. So, the missiles flew. Are they necessarily related? No. But you got the you got the tenure back above 4%. Because the last thing you want to see is falling bond yields because if they're falling, that means that the market is beginning to get concerned about liquidity. >> Interesting. >> And it all tied back to private credit. the idea of contagion, the idea of systemic risk, the idea of liquidity drying up. >> And on top of all of this, you had a supply shock and yet another body blow to US households, which ate up more of the Fed's cushion. >> You know, private credit has been a story that we've talked about extensively on this show with um many guests. We just had Jeffrey Gunlock talking about it. Um he he said it would um he used his famous line from the summer of 20 2007 where he said um it would be a total and unmitigated disaster. It's only going to get worse. That's what he said about subprime that summer. He said the same about private credit. Um >> no Jeffrey will >> every time. I know you do. Um you go to the double line prime round table. >> He's not prone to hyperbole by the way. >> He tells it like it is. Um I have a lot of respect for him too. Every time I open up X now, um, private credit every single day are the headlines. I'm just so curious. Um, okay. Cockroaches. Are we at an infestation? Like, what's the private credit story for you that's not getting enough attention that you're like, "This is just beyond." The private credit story for me was that two days after the Financial Times wrote a reassuring story about Okay, so we're starting to see a little bit of disruption in high yield, we're starting to see a little bit of disruption in collateralized loan obligations, leverage loans, but don't worry, investment grade bond flows were positive for the month of month of March. 24 hours later, there's Morgan Stanley reporting that investment grade bond flows had turned negative. That's what contagion looks like. >> And then you had Jamie Diamond even talking about in his annual letter um as well. How about um how do you see this? >> But you got you got what I just said, right? If if private credit gets bad enough, all of credit's going to seize up all the way to investment grade. >> Okay. all of credit's going to seize up. Um, how does how do you see this one impacting maybe consumer credit? Does is there spillover to like consumers here? Is there something? >> Absolutely. Again, most of the auto manufacturers reported disappointing sales and we know from the Dallas Fed, which publishes um a banking condition survey came out just a few days ago, the only area that they did not clamp down tighter was, I think, like personal consumer loans. every other area they're tightening standards and I promise this isn't an on sequer but commercial real estate losses are being recognized anytime you have banks begin to recognize losses it's going to take away their ability to make other kinds of loans there's only so much balance sheet they have So yes, I think we're going to see increasingly tightening lending standards across the board until somebody gets a hold of this private credit situation as opposed to just the financial media coming out with reassuring stories every day papers that the firms are dropping now. It's like here's a here are all the myths of private credit. I'm sure people post at you on X too. I've started getting them too just for interviewing people on the topic. >> It's again a very large investment bank was selling subprime debt to its high net worth in investors while it was also shorting it for the house. >> You've seen this movie before? >> We have. >> Yeah. Okay. And JP Morgan a few days ago said it was being bombarded by clients wanting to short their new private credit product that can be shorted and they're like we're not quite ready yet. >> Goodness. >> And yet JP Morgan just raised another private credit. >> My goodness. Okay, another question for you on the topic because you and I have talked about this. Um it's come up in prior conversations. Buy now pay later. >> Is there a buy now pay later story to private credit? Well, that's what funds buy now pay later. >> That's why I'm asking. Yeah. >> Yeah. And I mean, if you've seen the stocks of CLA and there it looks like a blood bath. >> Yeah. >> Again, US households have just been hit by a shock. And can you imagine can you imagine if you're one of the 80 million gig workers in this country and you happen to be an Uber driver? A You're a 1099 employee, right? You didn't get to file for a tax refund. In fact, you are supposed to be paying quarterly taxes to the government. So, not only did you not get a tax refund, you drive for a living. Gas prices gas prices just went up. So, your take-homes falling. The number of Uber drivers, Door Dash drivers, Lyft drivers is exploding. And we did some pretty easy research that we published a few weeks ago. Of all of the unemployed Americans today, only 25% are collecting benefits. >> Wait, repeat that again. Yeah. Yeah. There are millions and millions of unemployed Americans. Only 25% are collecting unemployment benefits. >> Wow. Huh. Why do you think Why do you think that is? >> So, the year I was born, which I'm not saying out loud. >> Oh, Danielle, you look fabulous. >> Thank you, >> Matt. Thank you for laughing back there. Anyways, he agrees. He agrees. The year I was born, unemployment benefits covered about 2thirds of your living expenses. Today, unemployment benefits cover onethird of your living expenses. So, people lose their jobs, they do the math, and they're like, I I've either got to move back in with mom and dad or I've got to drive for Uber. >> Okay. I have a question in regards to that. Does that impact the data that's collected then or like what unemployment looks like and what it really is then or I guess underemployment but yeah I mean just the data is going to be skewed because >> everybody's like look the unemployment rate fell to 4.3%. I'm like look the undermployment rate rose to 8% >> because I know people who've gotten laid off and they'll do some consulting um or >> we live in a LinkedIn world. You cannot have a hole on your That's why they do it too. Yeah, that's why they do it. Um, that's See, that's where the the data's Okay, so speaking of the data, then do you think on the labor side, is the Fed coming around and starting to recognize this or just does this continue to be frustrating that again this is where we get back to Kevin Worsh because Christopher Waller is a very highly respected Fed official. He has spoken about the systematic revisions 14 months in a row. >> Yep. >> Fed officials know the Fed staff, they all know that there is something wrong with the data, but they can't recognize it. They can't talk about it until this political spectre goes away. So it this is just one of the biggest blunders by an administration I've ever seen. And this could be any administration. This could be the Green Party for all I know. It holding the US household holding the US economy hostage. It's it's stupid. Mhm. Yeah. >> As technical as I've ever been. Julia, >> I look Danielle. Um, Fed meeting coming up end of April. >> Mhm. >> What do you think? Do you think cuts are on the table or no or hope? No. >> Should they be? >> Mhm. >> Sure. They're going to hide behind the potential that oil prices aren't going to fall. I can tell this really bothers you. >> It It really bothers me, Julia. It does. I worked there for nine years. >> And they're a bunch of bureaucrats. But when I worked there, we always knew who the good bureaucrats were. Right now, nobody's looking out for American families. Nobody. And does that upset me? Hell yes, it upsets me. It should upset me. It should upset everybody. And it should upset the political operatives because there's a midterm coming up. >> You are someone who writes on behalf and gives a voice to that hardworking American that they know something went wrong. Um >> I'm my mom was one of them. I know many of them. They deserve a voice. >> Oh gosh. Lord, do I want to leave this one today? We always ask. We always ask like our two-part question here. Um, okay. Here's one. >> I'm trying to smile, Julie. >> I know. I always ask you like we can do the one that we usually do or what's one thing you wish more people understood, whether it's investors, business owners, or the everyday hardworking American about where we are right now in this cycle. I wish more Americans understood how much you have to earn to get by. Just to get by. Not to live high on the hog. Not to go to Disney World. Just to get by. And I'm saying that to your audience because so many of your audience are investors and these are theoreticals. They don't actually have to go down there. But down there is not as low as we think it is. It's a lot higher than we think it is. Somebody has to start speaking up for Americans, Julia. Somebody has to. It's time. It is. Well, we are so grateful for you, Danielle T. Martino Booth, CEO and chief strategist at Qi Research, author of the book Fed Up, and also author of The Daily Feather, available on Substack. I am a paid subscriber. Go subscribe everyone. I'll link it in the comments below. Any parting thoughts for this audience? Anything that you'd like them to think about or anything else that you want to plug? The floor is all yours. >> Um, so we just came through Easter weekend and the thought I had at the end of the day and it was a great Easter. I spent it with some of my closest family members, my best friend. It was a great Easter. Sometime in the middle of the day, I was like, I started going through my texts and I'm like, I'm going to reach out to everybody. We need to reach out to our friends and family like it's Easter Sunday on a regular basis. We do. We don't need to wait for a holiday. We need to do it every day because spreading kindness makes us happy. >> I love that. Amen to that. Daniel D. Martin, thank you so Uh, thank you, Julia.
What the Fed Knows But Won't Say | Danielle DiMartino Booth
Summary
Transcript
Fed officials know. They all know that there is something wrong with the data. >> I can tell this really bothers you. >> It It really bothers me, Julia. Right now, nobody's looking out for American families. Nobody. And does that upset me? Hell yes, it upsets me. It should upset me. It should upset everybody. And it should upset the political operatives because there's a midterm coming up. Hey everyone, welcome to another special instudio episode of the Julia Larose show where we are joined by friend of the show Danielle D. Martina Booth. She is the CEO and chief strategist at Qi Research, author of the book Fed Up. So great to see you again Danielle. >> Hi Julia. It's good to see you too. Last time we were kind of remoteish. >> I know. And we missed you at the March FOMC. >> Yeah, I know. I was Well, you know, you only have your high school senior spring break >> once. >> That is so true. and um you were missed by this audience because they love hearing from you, but I totally understand taking a break and what a great day to have you with uh gosh there's so much happening in the world, but let's talk about the FOMC meeting minutes. What's the big takeaway for you this time around? >> Um I think the biggest takeaway for me is that there's even more division. So, we went from several members of the committee advocating for a rate hike this year to some. And Julia, every single word of these minutes are contemplated and parsed and voted on. Um, and yet others were concerned about the economy slowing. So, but to me it it just shows that there's a brighter and a wider line in between the Hawks and the Doves on this committee. >> So, a lot of division, more division that you're gleaning from this. How problematic is that going to be? >> Well, I mean, I don't know. I don't know who's going to be head of the Fed. >> That's the question. And so in in in theory, and this is what I keep telling myself, as long as you have a leader come in and just kind of put up a big whiteboard and say, "We're no longer in the game of deny, deny, deny. We're going to come into this century. We're going to look at alternative data metrics, and you're going to quit lying to the public. And if you can't quit lying to the public about the the true state of the economy, then be quiet. But I think as long as you have a new leader focus the members of the committee on the actual data, then it's not going to be moving a mountain to get a rate cut. But first, you have to get him in that position, which means that, you know, all this politicking has to go away. >> Do you think it will? Get I was just talking to a reporter about this very subject and the the reporter couldn't figure it out. I can't figure it out. A federal judge gave the out. It was a graceful exit and and yet they doubled down. So, I just don't understand what the thinking is, what the logic is of hunting down this one man when the polls are saying what the polls are saying when one big beautiful bill did not produce on average $1,000 larger tax refund. In fact, it's $350 and a good chunk of which has been eaten up by higher gas bills. So, you know, James Carville famously said it's the economy stupid and any working family in in the United States. And what we're seeing with the University of Michigan is that consumer sentiment is really getting shaky all the way up the income ladder. So, if that's the case, and and that's why Khi has seen a flip in the odds for the Senate. And now it's I think it's 51% Democrats take the Senate, 49% take the House. Again, you know, if I'm if I'm John Thun, if I'm Mike Johnson, if I'm anybody in the GOP, if I'm anybody in the White House, if I'm Scott Bessant, I'm saying the midterms are upon us and Americans are concerned about the economy. Let's focus on that and get Kevin Worsh in the chair >> and that's going to be a probably a like that will probably be an uphill battle even get him in the chair at this point. Don't you think? >> No, you don't. >> No. I I think that once the criminal charges are dropped that um Worse had a very good vote the first time around when he became a governor. um everybody on the committee on both sides of the aisle um have has expressed respect for his views. He'll breeze through committee if Tom Tillis gets out of the way and the only way he's getting out of the way is for these criminal charges to be dropped against Powell. No, I think I think worse will be confirmed pretty quickly. But Juliet, take this to the extreme, right? Tillis leaves office on January the 3. What if the betting markets are right? I mean, if this administration really wants to go the distance, they're not going to get anybody confirmed to be chair. >> What happens in that what happens in that scenario then? Just >> Well, you know, it's interesting you asked because again, I was just speaking to a reporter of the Washington Post. Um, recall I I had my open letter, but recall that that J. Powell was elected to be chair of the Federal Open Market Committee at the January FOMC for the entire calendar year 2026. Yes. And he has said >> and he said at the last meeting. Yeah. >> At the last meeting. I mean he he had three prepared remarks. Three prep. In fact, he asked the reporters on their behalf. He's like, "I know what's coming next. This is my answer. I know what's coming next. This is my answer." And basically he's saying I'll stay in the position as long as there's not a new confirmed chair as long as these criminal charges are dropped. And the only one he said I don't know about was whether or not he would still stay. Even if all of these obstacles go away, it's still an unknown whether or not he's going to remain on until January 2028 as governor after having witnessed, you know, a full frontal assault of the institution. And again, Julia, let me be clear. I do not agree with Fed policy makers right now. I I think that they should say this is our leader until the criminal charges are dropped, but we recognize the plight of small businesses. We recognize the plight of working Americans, but they're refusing to do that. >> Okay. It's is it the the the latter part that they're not doing? The recognizing what it means for the everyday American, the hardworking American, the one that you write those letters on behalf of. >> They're roundly ignoring them. >> Do you think this intentional? >> I hope not. >> Um, no, actually. Okay. So I worked there for nine years. It's not intentional, but they think that they're standing on principle right now to safeguard the institution, to safeguard the independence of the Fed, which I understand. But if you and I can sit here and have a conversation about this, then Jay Powell and the other members of the committee can have an adult conversation with the American people and say, "Despite what's happening, we're going to do everything that we can." Powell's still not going anywhere, but you know, ISM non-manufacturing employment printed at 45.2. ISM history goes back a mighty long time. And there's a difference between 49 and 50. >> Yeah. >> 50 meaning expansion, 49 meaning contraction, and 45. 45 is the known line of recession. The last time we had an ISM non-manufacturing employment index representing 80% of working Americans at 45 was in 200 2007209 the Great Recession and 2001. We just published about this. >> Uh yes, you did in the in the um Daily Feather 2007 2001. Are you seeing parallels? You're seeing parallels. >> A lot of parallels. >> And you know what? So is the Fed. The New York Fed came out with its latest survey of consumer expectations. People's prospects for finding a job, the worst they've been this cycle. University of Michigan, ditto. Look, we can don't put it on me. put it on the 80% of the economics community who before the criminal charges against Powell really muddied up the waters and before Trump tried to replace the head of the Bureau of Labor Statistics before any of that happened 80% of the economics community did not trust official data I wonder why gee I don't know March was the warmest March in the history of the United States how on earth did the Bureau of Labor Statistics concocted out of thin air 79,000 Americans who were not at work because of the weather in the warmest March on record. And then the birth death model added another 100,000. So that adds up to oh, I don't know, 179,000 jobs created because of seasonal adjustment when the headline number was 178,000. >> Mhm. >> The numbers are hard to trust. >> It's getting old. >> Yeah. >> It's getting really old. >> Yeah. And it's even older because of what the bankruptcy numbers are telling us. Because of the Kansas City Feds small business survey that's produced on a quarterly basis that's showing it is really hard for small businesses to stay in business. And it is the Fed funds rate that affects small mom and pop businesses. If I'm Apple or Microsoft, I can borrow whatever rate I want. Big whoop-dedoo. If I'm a small business, that policy makes a difference. >> And they are the backbone of the economy. Small business. >> I want to bring up a piece that you published. I think this was today. I liked the headline um because it got my my attention. We're going streaking. That was the headline of the Daily uh the Daily Feather. >> Yes. It referenced back to that lovely scene with Will Ferrell running down the street butt naked. >> Yes. uh New York Fed's survey of consumer expectations showing job finding probability as you were just pointing out at just 45.9% which is still below the healthy 50% level for the first time ever all three education groups and stre um and stretches across income and age groups are flashing red under 50% over 6 months job insecurity is literally streaking >> it's again all areas of education all age groups all income tiers. These are nine different demographics and they're all saying can't get a job. And this is New York Fed data. >> Yes. Because we talked about the K-shaped economy and it sounds like even that upper part of that K is now getting worried about their job prospects. >> Look, July the 1st is coming. Maybe it doesn't feel like it because it was 30° in New York this morning. Thank you very much. But countless Americans on July the 1st, they're going to have to pay their student loans. Choose not to. Fine. We're going to garnish your wages. Next year, for good measure, we're going to take your income tax refund. The people with the highest student loan debt are dentists. They're lawyers. They make more than $100,000 a year, but they certainly cannot afford another big ticket on top of their mortgage payment that's still too high. on top of their car payment that is still too high. On top of tuition that is still too high. Well, I'm almost about to have four paying tuition. So, I'm a little sensitive to that. But, but it it's a lot. It's a lot >> on the average American family. And the Fed's just ignoring the situation. Hey everyone, I hope you are enjoying this interview. If you can take a quick moment and hit that subscribe button, we are on a mission to hit our next goal of 100,000 subscribers and your support could really help us get there. Thank you so much and enjoy the rest of the interview. >> Kind of reminds me when you're saying that too a little bit of like what Mike Green has been writing about as well and like >> the poverty line. >> Yeah. >> Yeah. >> Poverty line's a hell of a lot higher than what some think tank in Washington DC. It's $100,000 nationwide. If you're in New Jersey or in White Plains or worse New York or worse, San Francisco, it's closer to 140 150,000 the poverty line. >> Yeah. Yeah. Um like you have very little room for error because there's no safety net for you at that at that level either. >> No. And and and and how much error room for error do you have? We're all like, "Yay, oil prices fell." There's still $95 for West Texas Intermediate and there were $65 before what happened with Iran. I'm I'm sorry, but an extra $75 a month out of your budget. It just look at the University of Michigan intentions to vacation. They've collapsed, including foreign travel. >> Interesting. Yeah. >> Foreign travel means wealthy people. >> Yes. >> They're not planning to travel. >> Yes. Do you think the Fed is underestimating um the energy shock and the impact on the consumers? >> Yes, only in one sense. Mhm. >> We're already at a point, according to Fed data from the Atlanta Fed, wages are already growing at a slower pace than they were in 2019 prior to the pandemic hitting. So yes, households are less able to absorb a shock and it doesn't matter what the shock happens to be. They're they they've just got less wiggle room. And so is the Fed ignoring this? Yes. Do they need to be worrying about inflation? No. Talk to anybody trying to sell an apartment development. Talk to anybody trying to raise the rent. you know, talk to anybody in the sunb belt who's having to lower the price of their homes. It It's This is real. >> Do you do you think the en environment is Do you would you describe it? Do you think we're headed towards stagflation or No, >> I think that we need to worry a little bit harder about the stag. >> Okay. >> So, let's slow down. >> We do. Mhm. We had and we've been tracking and in fact we were bullish industrials coming into the year because inventories had been so depleted that either you were going to close the doors or you were going to restock. It was pretty simple. And so we've seen this burst of industrial activity but it's already starting to come off because they've restocked but the demand's not there. You only continue replenishing stock. >> You have the demand >> the demands there. I mean, General Motors announced a few days ago that not only had sales fallen in the first quarter, but it was Escalade sales that fell by double digits. Haven't seen that in oh, I don't know, forever. So, if the higherend slash aspirational consumer starting to feel it, we got problems. Mhm. So, let me go back to what you were saying earlier around kind of the parallels of 2001, 2007, like that similar setup. Maybe the Fed Fed made mistakes back then, too. >> Um, do you think we're headed for a mis are they setting themselves up for a mistake um ahead? >> Well, uh, yes. what we publish almost every day is that as a factor of time, the policy error just keeps growing. Um, and everybody wants to wish away this private credit thing, but it doesn't appear to be going anywhere. And this is, you were just asking me about households cushions >> to withstand a shock. Very quietly Friday after the close of business in the Fed's weekly H8 publication, they announced that they were reclassifying more loans. They had been commercial and industrial, but now they're being reclassified as non-depository financial institution loans, as in loans that big banks make into the shadows to the non-banks. Should we be worried that regulators couldn't identify what a loan was and had to reclassify it not once but twice? First time followedricolor. Yes, we should. Does the Fed have cushion given what's happening in private credit? No. >> What would the cushion be for the Fed? >> Liquidity. >> Liquidity. H >> liquidity. We forget. I'm not drawing. I'll be accused of correlation does not equal causation. Blah blah blah. Iran started the day the 10-year benchmark Treasury yield closed at 3.96%. The only reason it closed below 4% which became a hard concrete floor was because there was so much concern about contagion in private credit. So the administration knew that they didn't need a distraction, they needed a big distraction. So, the missiles flew. Are they necessarily related? No. But you got the you got the tenure back above 4%. Because the last thing you want to see is falling bond yields because if they're falling, that means that the market is beginning to get concerned about liquidity. >> Interesting. >> And it all tied back to private credit. the idea of contagion, the idea of systemic risk, the idea of liquidity drying up. >> And on top of all of this, you had a supply shock and yet another body blow to US households, which ate up more of the Fed's cushion. >> You know, private credit has been a story that we've talked about extensively on this show with um many guests. We just had Jeffrey Gunlock talking about it. Um he he said it would um he used his famous line from the summer of 20 2007 where he said um it would be a total and unmitigated disaster. It's only going to get worse. That's what he said about subprime that summer. He said the same about private credit. Um >> no Jeffrey will >> every time. I know you do. Um you go to the double line prime round table. >> He's not prone to hyperbole by the way. >> He tells it like it is. Um I have a lot of respect for him too. Every time I open up X now, um, private credit every single day are the headlines. I'm just so curious. Um, okay. Cockroaches. Are we at an infestation? Like, what's the private credit story for you that's not getting enough attention that you're like, "This is just beyond." The private credit story for me was that two days after the Financial Times wrote a reassuring story about Okay, so we're starting to see a little bit of disruption in high yield, we're starting to see a little bit of disruption in collateralized loan obligations, leverage loans, but don't worry, investment grade bond flows were positive for the month of month of March. 24 hours later, there's Morgan Stanley reporting that investment grade bond flows had turned negative. That's what contagion looks like. >> And then you had Jamie Diamond even talking about in his annual letter um as well. How about um how do you see this? >> But you got you got what I just said, right? If if private credit gets bad enough, all of credit's going to seize up all the way to investment grade. >> Okay. all of credit's going to seize up. Um, how does how do you see this one impacting maybe consumer credit? Does is there spillover to like consumers here? Is there something? >> Absolutely. Again, most of the auto manufacturers reported disappointing sales and we know from the Dallas Fed, which publishes um a banking condition survey came out just a few days ago, the only area that they did not clamp down tighter was, I think, like personal consumer loans. every other area they're tightening standards and I promise this isn't an on sequer but commercial real estate losses are being recognized anytime you have banks begin to recognize losses it's going to take away their ability to make other kinds of loans there's only so much balance sheet they have So yes, I think we're going to see increasingly tightening lending standards across the board until somebody gets a hold of this private credit situation as opposed to just the financial media coming out with reassuring stories every day papers that the firms are dropping now. It's like here's a here are all the myths of private credit. I'm sure people post at you on X too. I've started getting them too just for interviewing people on the topic. >> It's again a very large investment bank was selling subprime debt to its high net worth in investors while it was also shorting it for the house. >> You've seen this movie before? >> We have. >> Yeah. Okay. And JP Morgan a few days ago said it was being bombarded by clients wanting to short their new private credit product that can be shorted and they're like we're not quite ready yet. >> Goodness. >> And yet JP Morgan just raised another private credit. >> My goodness. Okay, another question for you on the topic because you and I have talked about this. Um it's come up in prior conversations. Buy now pay later. >> Is there a buy now pay later story to private credit? Well, that's what funds buy now pay later. >> That's why I'm asking. Yeah. >> Yeah. And I mean, if you've seen the stocks of CLA and there it looks like a blood bath. >> Yeah. >> Again, US households have just been hit by a shock. And can you imagine can you imagine if you're one of the 80 million gig workers in this country and you happen to be an Uber driver? A You're a 1099 employee, right? You didn't get to file for a tax refund. In fact, you are supposed to be paying quarterly taxes to the government. So, not only did you not get a tax refund, you drive for a living. Gas prices gas prices just went up. So, your take-homes falling. The number of Uber drivers, Door Dash drivers, Lyft drivers is exploding. And we did some pretty easy research that we published a few weeks ago. Of all of the unemployed Americans today, only 25% are collecting benefits. >> Wait, repeat that again. Yeah. Yeah. There are millions and millions of unemployed Americans. Only 25% are collecting unemployment benefits. >> Wow. Huh. Why do you think Why do you think that is? >> So, the year I was born, which I'm not saying out loud. >> Oh, Danielle, you look fabulous. >> Thank you, >> Matt. Thank you for laughing back there. Anyways, he agrees. He agrees. The year I was born, unemployment benefits covered about 2thirds of your living expenses. Today, unemployment benefits cover onethird of your living expenses. So, people lose their jobs, they do the math, and they're like, I I've either got to move back in with mom and dad or I've got to drive for Uber. >> Okay. I have a question in regards to that. Does that impact the data that's collected then or like what unemployment looks like and what it really is then or I guess underemployment but yeah I mean just the data is going to be skewed because >> everybody's like look the unemployment rate fell to 4.3%. I'm like look the undermployment rate rose to 8% >> because I know people who've gotten laid off and they'll do some consulting um or >> we live in a LinkedIn world. You cannot have a hole on your That's why they do it too. Yeah, that's why they do it. Um, that's See, that's where the the data's Okay, so speaking of the data, then do you think on the labor side, is the Fed coming around and starting to recognize this or just does this continue to be frustrating that again this is where we get back to Kevin Worsh because Christopher Waller is a very highly respected Fed official. He has spoken about the systematic revisions 14 months in a row. >> Yep. >> Fed officials know the Fed staff, they all know that there is something wrong with the data, but they can't recognize it. They can't talk about it until this political spectre goes away. So it this is just one of the biggest blunders by an administration I've ever seen. And this could be any administration. This could be the Green Party for all I know. It holding the US household holding the US economy hostage. It's it's stupid. Mhm. Yeah. >> As technical as I've ever been. Julia, >> I look Danielle. Um, Fed meeting coming up end of April. >> Mhm. >> What do you think? Do you think cuts are on the table or no or hope? No. >> Should they be? >> Mhm. >> Sure. They're going to hide behind the potential that oil prices aren't going to fall. I can tell this really bothers you. >> It It really bothers me, Julia. It does. I worked there for nine years. >> And they're a bunch of bureaucrats. But when I worked there, we always knew who the good bureaucrats were. Right now, nobody's looking out for American families. Nobody. And does that upset me? Hell yes, it upsets me. It should upset me. It should upset everybody. And it should upset the political operatives because there's a midterm coming up. >> You are someone who writes on behalf and gives a voice to that hardworking American that they know something went wrong. Um >> I'm my mom was one of them. I know many of them. They deserve a voice. >> Oh gosh. Lord, do I want to leave this one today? We always ask. We always ask like our two-part question here. Um, okay. Here's one. >> I'm trying to smile, Julie. >> I know. I always ask you like we can do the one that we usually do or what's one thing you wish more people understood, whether it's investors, business owners, or the everyday hardworking American about where we are right now in this cycle. I wish more Americans understood how much you have to earn to get by. Just to get by. Not to live high on the hog. Not to go to Disney World. Just to get by. And I'm saying that to your audience because so many of your audience are investors and these are theoreticals. They don't actually have to go down there. But down there is not as low as we think it is. It's a lot higher than we think it is. Somebody has to start speaking up for Americans, Julia. Somebody has to. It's time. It is. Well, we are so grateful for you, Danielle T. Martino Booth, CEO and chief strategist at Qi Research, author of the book Fed Up, and also author of The Daily Feather, available on Substack. I am a paid subscriber. Go subscribe everyone. I'll link it in the comments below. Any parting thoughts for this audience? Anything that you'd like them to think about or anything else that you want to plug? The floor is all yours. >> Um, so we just came through Easter weekend and the thought I had at the end of the day and it was a great Easter. I spent it with some of my closest family members, my best friend. It was a great Easter. Sometime in the middle of the day, I was like, I started going through my texts and I'm like, I'm going to reach out to everybody. We need to reach out to our friends and family like it's Easter Sunday on a regular basis. We do. We don't need to wait for a holiday. We need to do it every day because spreading kindness makes us happy. >> I love that. Amen to that. Daniel D. Martin, thank you so Uh, thank you, Julia.