Thank you Oh my. God Help me foreign. All right, foreign. hello Jerome Powell Miss Mr Powell What are we doing with the market? Oh, here we go, People are pouring in.

Let's get going folks. This is the moment we were all born for. Till this very moment, you might have been wondering to yourself, why was I born? What was my purpose of being on this floating space rock with a bunch of other hairless Apes out there? This is it. This is the exact moment you were born for is to listen to what the Chairman of the Federal Reserve within the great USFA has to say about the economy.

But before you do that, yeah, let's stick it up a little bit. Oh my lipstick I mean chapstick I don't really know the difference I hope they both moisturize. but anywho, this is it. We're going down in less than five minutes.

we're going to be listening to Jerome Powell Chairman of the FED addressed the world at the like uh, a economic Club of Washington I Want to say a lot of people kind of interested about this one because it was scheduled a little last minute scheduled on Friday which is an abnormality now is the whole world of Finn twit reading into it a little bit too much. Maybe maybe he says nothing or maybe he says a lot of things. We heard the Minneapolis fed president this morning uh, Kashikari say some pretty hawkish things and in this scenario, that's pretty bearish. but now we're trying to see what's going on.

It's Kashkari just being himself, just being a little hawkish because he has nothing else to do in a freezing cold Minneapolis winter. Or is he priming the world to get used to the fact that we might just get crushed here? Time will tell. Time will tell. Time will tell.

Uh, he is scheduled to go on at 12 40 p.m ET So obviously we're getting underway to get more people in here, just to liven up the party a little bit more. Hit that like button. Hit the Subscribe button. But really, like, just destroy the like.

like take your keyboard, smash it so hard, you hit the like until you break it, then go find another keyboard whether it's someone you're working by, your significant other, your spouse, your kids I Don't care. Get that keyboard, plug it in Smash the like again until that one breaks, and then go find a third one. And that's what you could use to correspond with everyone else in here for the remainder of this particular stream slash video. So folks: Get Ready Get Ready Get Ready.

It's gonna be a fun one right now. I'm still holding my net short position against the market just because I Think the risk is skewed I Think the risk is skewed for the Bears right now because everyone's already kind of in the mindset that things were good with the fed. That's kind of what the market told us after pricing and everything. But what if Powell comes up and it's like hey, no.

Actually, this jobs data is extremely extremely concerning. um I Just think the odds currently favor in the very short term. Just the short term. That's all I'm talking about.

But if I see see things start to rip and turn around. hey, I'll cut the position and go along. Um, that's what being an active Trader is I I'm trying to be a little bit predictive here and maybe my tinfoil Hat's on a little bit too tight about what's about to go down. but maybe I'm right.

and if I'm wrong. okay, I'll react to the price action if we start to rip, I'll cut everything in I'll just go along and I'll join in on the party with all of you. So we're gonna see how this is getting going. I Just want to make sure everything is set up over here.

I Have the zoom call I Found various I guess examples of this stream to begin with. Where are we at? All right, we're we're looking good there. I Just want to get everything ready, Everything ready, everything ready. It's going to be a day quite the day we have ahead of us.

Quite the day we have ahead of us. all right? I Have the zoom call I Signed up I gave them all my own personal information just so I could get into this this. Zoom call. Nope, that's not the right link.

Oh hello hello hello hello hello Join us Mobile Service: I'm not supposed to share this. This is unique to me. allegedly not allowed to share my own login here in Teresante Interesante. All right I Think we're getting ready to we're getting ready to go I'm excited for today.

Let's see how this all lines up. All right in chat. What is your best guess here? Team and your two guesses are allowed? Well I guess I'll give you three guesses is your guess that the market does absolutely nothing and we chop into clothes Is your guess that the market goes rippity, skippity doo-dah doo day and we just ripped a kingdom? Come, where's your guess that the market falls to the like absolute depths of hell. So nothing as in chop bullish or bearish? That's what I want to know I want to know you were best guesses? Comment away, Comment away and you only have a little bit of time.

You have less than four minutes. How is is the volume? Nope. you guys can't even hear anything yet. Uh, that tracks that tracks for this particular show where we barely have everything or anything together.

That's what you guys tune into this for for all the good stuff. All right, don't need that at this exact moment. I have the charts ready so we can see the charts as he is speaking I have the ability I think to move around my head in case my head is too big and it gets in the way here. Uh, should be an interesting one.

Definitely should be an interesting one and let me just switch this over. All right, they are playing some music that will probably get me Dmca and the last thing we need to do is simply add in the chart that we care about window capture. Okay, let's do it done all right. Here's the old: S P 500 ETF the old Spy Uh, you guys probably can't hear anything yet as is by Design what's the best way to should I just zoom in a little bit more, make it real close, real intimate.

and then I think I have a way to change the opacity. But do we even want to change the opacity? Ah, they never make it that nice. All right, here's what we're gonna do. We're going to stretch this out so it's roughly in line with my Noggin All right I Feel like that looks decent I I Feel like I think we did a good job for an initial rough cut.

Why not not that bad of a job if I do say so myself if I do say so myself. All right. So we have that set up and then also we have this one set up. that's the fancy dinner thing that they're at anyway right now.

All right. Okay, Okay, okay so we have this as a backup just in case we need it. Uh, quick check in on the overall. Market The Spy is currently just above break.

Even the cues are actually doing pretty well. We saw some strength in the likes of Apple Google Microsoft this morning, so it makes sense that the queues are doing well. Bed Bath is pretty much getting yeeded off of a cliff. Gme is getting heated off of a cliff.

AMC is being needed off of a cliff. And even though it's being needed off of a cliff to less of a degree. ape. Uh, so it's down 3.5 percent.

Uh, we have Rum Green holding above ten dollars. Love that Crude oil is bouncing. Uh, we're now at 76 and a half so oil is going up. Which also means that Oxy is now having a decent day just to give you a quick checking on everything.

Uh, oil bouncing. Remember, it's expected that the Biden Administration whenever oil gets close to 70 and it hits 76 or recently hit like 72-73 Uh, it's expected that they're gonna buy. Um, so that's my long thesis right now in oil. But overall, the small cap sector down the NASDAQ up and the Spy essentially break even and everyone is just wait and wait and waiting.

Thank you! So as I think everybody knows, our special guest is the chairman of the Federal Reserve board who has now completed five years as chairman as of two days ago your fifth year and now been on the FED Board for almost 12 years. So Jay Um, thank you very much for being here. And why don't we start with an easy question? So you made a speech last week commenting on the Fomc's decision to raise the FED discount rate by um, a small amount relatively speaking, 25 basis points. Some people would say that was small, but at the time it wasn't clear that the Jobs report would be as strong as it turned out to be.

Subsequently, had you known that the Jobs report was going to be as strong, would you have done 25 basis points or something different? David Thank you for that question and thank you. Why is the camera? Thank you for inviting me here today so bad? Uh, so we don't get to play it that way. Unfortunately, we have to. Uh, but I'll I'll take it this way.

So the message we were sending at the Fomc meeting last Wednesday was really that, um, the disinflationary process. The process of getting inflation there behind. As a camera. it's begun in the good sector, which is about a quarter of our economy, but it has a long way to go.

These are the very early stages of disinflation. So the services sector, really, except for Housing Services pardon me, is not really showing any any disorders filled. Our message really was. This process is likely to take quite a bit of time.

Uh, it's not going to be. We don't think smooth, it's probably going to be bumpy and so we think that we're going to need to do further rate increases as we said and we we think that we'll need to hold policy at a restrictive level for a period of time. Then comes the uh, the Labor Market Report for January And it's very strong. It's certainly stronger than anyone I know, expected and so.

but but I would say we didn't expect it to be this strong, but I would say it. It kind of shows you why we think that this will be a process that takes a significant period of time. The the labor Market's extraordinarily strong. and by the way, it's good.

It's a good thing that inflation has started to come down without it. That has not happened at the cost of a strong labor market. So and of course, since then, labor work sorry Financial conditions have tightened significantly since then. so let me ask it another way.

Um, so by the way, when the the numbers coming out the jobs numbers 519 000 jobs does anybody call you up in the government give you a little heads up? This is going to happen Or they never do that. So on on some uh data. Sometimes we get data just the night before and it's only me, only me and uh so, but not on all pieces of data. It's it's A It's A.

It's a very small amount of data and we get it just just the night before. For example, if we if we were going to get a big piece of data in the middle of an Fomc meeting as often happens on the day of an FMC meeting, it will help me to to know it the night before. Okay, so the markets. Um, after your speech last week, the markets assumed that therefore there would probably be another 25 basis point increase in your next Fomc meeting.

Um, was that a bad assumption by the Marcus So what Again, what we said at the meeting was was that uh, we we believe that we anticipate is what we said that uh, ongoing rate increases will be appropriate. Uh, and the reason is we're trying to achieve a stance of policy that is sufficiently restrictive to bring inflation down. We don't think we've achieved that yet. So we said that uh and I And you know Now you see the Labor Market Report and I think again.

Financial Conditions are are more well aligned with that than they were before. So the Assumption when you made your speech was that probably their Fed might even consider uh, decreasing rates. by the end of this year, the markets no longer assume that you think the markets are wrong. Well, so let me say these are, um, all of these numbers that we're throwing around here are conditional on incoming data and what happens so we never say this is this is.

what we think will happen. You know we. We make a tentative forecast and then we let the data come in. For example, if the data were to continue to come in stronger than we expect and we were to conclude that we needed to raise rates more than is priced into the markets or then we wrote down at our last group of forecasts in December, then we would certainly do that.

We would certainly raise rates more. Okay, so um, today, for people who aren't familiar with the Fomc who is actually is on the Fomc, so they're uh, the U.S Central Bank consists of a Board of Governors. Here in Washington, there are seven Governors. Those governors are nominated by the President and Uh confirmed by the Senate and we serve terms that are that are not synced up with the election cycle.

So we're we're independent. There are also 12 reserve banks around the country which have a degree of Independence and they're so the So. each each Reserve Bank is led by a president who works there full-time All 12 of them sit on the Fomc, so that's 19 people sit on the FMC So it's quite a large Committee of which 12 vote in any given year. The Reserve Bank President's vote on a rotating basis except New York which votes every year.

So when you vote, um, do you vote at the beginning of an Fomc meeting and then just kind of have discussions afterwards. Or do you wait to the very end and then you vote no, we vote at the end I mean the whole the Fomc meeting process takes, you know more than a full week I'm talking to all of the participants all night. All the 18 other ones and staff has sent around memos and there's something called the Teal Book which is the staff's assessment of the uh, you know of the economy and an international economy and monetary policy and all that. Then we we have an extensive discussion on the morning of the first day about the economy.

Everybody talks about that. On the second day, we talk about monetary policy and then we vote on monetary policy at around noon on the second day. So does the chairman of the Federal Reserve board speak first and say here's what I think and or does he wait until the end and say, well, thanks for what you think But let me tell you what I think What do you do Different shares have done it different ways and so I I tend I've tended to do what my prede media predecessor did: I think Well, this is what I do I I speak last on the sort of the economic go around. so everyone else talks about what they think about the economy and in their district.

For example, The Reserve Bank president and I listened to all that and then I give my comments at the end. and I kind of sum up what people have said. and then I speak first on monetary policy. Okay, so you've said that your inflation rate target is two percent.

Um, but why two percent and not three percent? Three percent, you know could be tolerable. Really? I mean most. For most of organized history, three percent is considered okay. Why do you want two percent? So two percent is the global standard and that is our objective.

two percent piece as measured by the the Pce index. And that's just. that's not something we're looking at changing that isn't going to change. It's that's not going to change.

Not Gonna Change now. But okay, so you need to get the two percent and your goal to get there is by what period of time would you like to get there? Well we say, we say that we're using our tools to get there over time. If you look at our forecasts, we expect 2023 to be a year of significant declines in inflation and it's actually our job to make sure that that's the case. But I would tell you that, Uh, you know, with inflation, headline, Headline Pce inflation is running about five percent.

This is on a 12-month basis. Core is running it at 4.4 My guess is it will take certainly into not just this year, but next year to get down close to percent. Okay, so two percent is firm. That's you're not going to get off that.

Yes, Okay, so uh, the theory of raising interest rates Um, is that it will decrease economic activity and increase unemployment. But you've been increasing interest rates for a while and unemployment is now at a record low. So what's wrong with the theory? Why is unemployment not going higher? Well, the labor market is strong because the economy is strong. And as I mentioned, it's a good thing that we've been able to see the beginnings of disinflation without seeing the the labor market weaken.

Um, it's just that. Uh, there's a lot of demand for workers. In fact, if you, if you look at the supply of workers versus demand for workers, demand for for U.S workers is now more than 5 million greater than the available Supply and the available Supply consists of people who are either working or actively looking for a job. So this this is.

This was not the case before the pandemic. The pandemic really had a significant left, a list lasting Mark so far on labor. Supply In the United States labor force participation rate came down and there now is a shortage of workers and it it feels it almost feels more structural than cyclical. So that that's a that's a significant issue.

Now you've resisted I Think saying what unemployment rate would be acceptable to you I think. But is there an unemployment climate rate that you think would moderate inflation such that you would tolerate unemployment at four percent? Five percent? Six percent? I Guess I Think about it this way. Um, you know our we have two goals that Congress has assigned us: Maximum Employment and Price stability. Price Stability, as we've agreed, is two percent inflation.

Maximum employment means if you want a job, you can get one. So right now, the labor market is at least at maximum employment. but many would say that it is out of balance with more demand than there is Supply So what we're trying to do is get inflation down. We're not.

We're not targeting uh, you know, a different uh, unemployment rate we're trying. We're trying to use our tools to get inflation to come down over time. In hindsight, would you say that when Kobe hit the economy and we injected five trillion dollars of fiscal policy uh into the economy and the FED did, uh, quantitative easing and other related things kept interest rates very low Would you say in hindsight, that was a mistake or was the right policy at the time? So I think you have to go back to the decisions that were made in real time and it was something nobody had ever seen. The global economy came to a virtual standstill.

People were talking about depression, People were talking and we didn't think we. we had no idea when we would get vaccines that worked. So Congress took very strong measures and we took very strong measures and you see where the economy is. You've got a very, very strong labor market, but you have high inflation.

As I mentioned, we're at the beginning of getting that down If you look around the world though at other countries, they're also experiencing High inflation. including countries that didn't that didn't do as much as we did either from a fiscal or monetary standpoint. So that that tells you though, that a big part of this inflation is actually related to the the you know, the the pandemic itself, the shutdown, and then the reopening. That's a big part of it.

Now the quantitative Interesting program has increased the balance sheet. I guess of the Fed and what is your balance sheet now I think it's 8.4 trillion dollars. It sounds like everybody you know that was yesterday. Okay, all right, um, what would you like it to get down to over the next year or two? Is there some lower number? So we are in the process of shrinking the balance sheet actively actually, uh, passively as I should say.

So what happens is as treasury Securities on our balance sheet mature up to a cap. a monthly cap. we we that the balance sheet shrinks in that amount. same thing with mortgage-backed Securities as they are prepaid or so.

So we we, um, the balance sheet is shrinking in terms of the target level of it, We haven't put a specific dollar number on it. The idea is we're in a regime of ample reserves. reserves are uh, basically deposits at the at the reserve banks and when we get close to that level where we feel that we're we're reserves our ample kind of where we were before the pandemic. Then we'll slow down and we'll sort of test where we are and that, but it'll be a couple of years We think till we get to that level.

the FED does not uh, sell Securities That waits for them to mature and then you just, uh, cash them in, right? You don't? You're not in the market selling securities that are not yet mature. Is that correct? That is correct. It's also correct though that we've said we would consider sales of mortgage-backed Securities but I will tell you that's that's not something that is on the on the list of active things things being actively considered. So some people that are worried about the federal debt limit and that we might not be able to extend it on time we have 31.4 trillion dollars of debt.

Are you a little worried about the debt limit not getting extended? So the debt limit is really something for the fiscal authorities to deal with. the FED Our only role in this is that we're that we're the Fiscal Agent of the Treasury Department. We're not a policy maker on that and I will just say this, this can this really can only end one way. And that is with Congress raising the debt ceiling in a timely fashion so that the U.S can pay all of its bills when and as due.

That's what has to happen. And if that doesn't happen, no one should think that the FED has the ability to Shield the financial markets or the economy and the consequences of of moving too slow so you don't have any program in place ready to go if in fact, the that limit isn't passed in time. This is something that Congress has to deal with and the same. The the so-called trillion Dollar Gold coin solution is not one year in favor of I.

Guess I As I said, this ends in only one way. and that way is Congress voting to raise the debt ceiling so that the U.S can pay all of our bills. Okay, in terms of consultation: Um, do you consult regularly with the Treasury Secretary Terry or the head of the National Economic Council or the president? United States How do you kind of relate to the administration for a long, long time? You know, 60 or 70 years there? I Think there's been a weekly breakfast or lunch with the Treasury Secretary and the Fed chair and that's what I've had with with uh, Treasury secretaries that I've had as fed share I've also had a regular article I Call it irregular lunches with the head of the NEC. We also have regular, regularly scheduled lunches with the Council of economic advisors and that's that's really the that's that's the institutional structure of our of our contacts with the administration.

So in the way the Fed works today, If You Could reconstruct the operations of the Fed. you know, would you change the legislation anyway? Would you think the FED operates in a in a way that's as efficient as you can realistically operate. We're not looking for any changes to the Federal Reserve Act I mean I think it does work the the structure that I discussed earlier where you've got the 12 Reserve Bank presidents coming in. What that assures really it institutionalizes diversity of thought.

So we get different people coming in who've got different backgrounds, different careers and they and they think different ways and I think that's enormously beneficial to our decision-making process. So there has been discussion recently about the FED. some Fed members spread board presidents selling their Securities and maybe not doing everything they were supposed to do in terms of disclosing it. What have you done To fix that process? We put a new system in a new set of rules in place which I think are best in class for a public institution like the Fed.

and uh, you know the the Innovations were that that if someone wants to sell something that they own or buy something they have to clear that in advance with with staff at the Board of Governors and then you've got to wait 45 days for that to execute. Also you can't own individual stocks and they're they're You can only do these. You can only authorize these transactions or execute them during specific times. Um and it you know it's it's A and we just of course all of these are are disclosed if if you're if your idea is to go to trade things, buy and sell them because you think you know you think this stock is cheap and that kind of thing.

that's just not something that will work. So what is the salary of the chairman of the Federal Reserve board? It's um it's around a hundred and ninety thousand dollars I Believe Okay so you live on 190 000 If you need to sell something what do you do You have to clear it for 45 days. Sure that's right we we've you know too if we have family expenses that if we have them that exceed my salary then we have to sell an asset I think that fair salary for the job or I do Yes No Okay so today I accidentally get paid more. How do you coordinate with uh central banks? Let's say in England or Japan or or China do you have regular conversations with them about what they're doing? We do you know and I meet six times a year in Switzerland with the heads of all the of many many central banks you know, even the even the small and medium-sized ones in Basel at the Bank for International Settlements.

In addition, among the major central banks I have a regular dialogues going with with most of them and so we. What we're talking though about is really what's happening in the economy and how are you thinking about policy and that kind of thing? It's very important that that we keep those discussions going because particularly in a crisis, you're going to need to know each other and you're going to need to know. You're going to be able to trust each other. And do you think the U.S economy is pretty much in control of its own inflation rate or their Uh events outside the United States Like what China is doing or the Ukraine war that are affecting inflation and make you nervous about where inflation might be going? We have the tools.

The FED has the tools to achieve our two percent goal over time. But uh, in inflation in the United States is of course very closely related to things that happen here, including the balance between supply and demand. It's also affected by, for example, commodity prices that are really set on the global markets. you know, oil and many agricultural Commodities are priced globally.

So there there are. certainly it's an integrated global economy and Global markets and we, you know we are part of that. So you get data from all the various government agencies. but do you ever use anecdotal things like you go to the supermarket and your connections are high and say this price is high or how do you get you ever get anecdotal things or people ever call you up or friends and say by the way you should do this or that do you ever get that kind of information or you only get it from the government reports I mostly get uh data but I will say the the the I I Do believe that anecdotal information is very useful and one of the things the reserve banks are great at is all 12 of them have big operations where they talk to businesses and non-profits universities, every sector of the of the country and the economy and they bring that back to the Fomc meetings and they talk about what they're seeing because often you know staring at data is is great but you need to, you need to have a story and and I think hearing the stories that people tell it does help me to sort of you know, assess what's going on out there.

So as the chairman of the Federal Reserve is obviously an important job, how do you reduce the stress level you have I mean uh, you can't be on watching economic numbers all the time. So what do you do to relieve the stress other than interviews like this, you know the usual things. I I Read: uh, pretty light fiction, detective and spy fiction I Exercise as much as I can as you know I like to ride my bike I play the guitar I play music. Is that safe Riding a bike? Um, you know, dangerous.

Sorry. it's safe if you stay on the bike and you're good at that. That's what I try to do, you're still playing the guitar. I Do I do Yeah, your hair is awfully short for playing the guitar.

You actually need longer hair with your hair longer when you were younger. greater it's too great too. Okay, so let me ask you uh about um, the the issue of um, what it's like to be Chairman of the Fed you? you? You can't go. Have you know, regular friendship kind of dinners or meetings? Can you people people treat you much differently I assume than they used to.

Right when you go to a restaurant are people listening to what you're saying or something like that? I I Have always thought that my jokes were funny David but uh no. So yes it's um I I've never been a public figure before. like this recording in progress. Um, you know it's It's a great honor to say just start recording.

Yeah when you go in public places you have to be very careful about. okay and um which is the President United States Ever call you with any advice or you don't realize did President Trump ever call you or President Biden ever call you or well I think it's a matter of public record that President Trump did used to call me from time to time. What did he call you? We got the zingers folks. Um, no.

I I haven't had that kind of I haven't gotten any calls from uh from President Biden Okay, so the biggest challenge you have now is being able to keep a straight face not telling people what you're gonna do in the future and look at the data and then come up with the right solution. right? That's mostly it. I Think the biggest challenge we face at the FED is completing the process of getting inflation down to two percent. And what? What I want to point out is that the we're seeing disinflation in the good sector, we're we're going.

We expect to see it in the Housing Services sector and that's that's these are the three parts of the of the core Pce inflation index that we look at. There's 56 percent of the economy, which is the rest of the services sector. It's the biggest part obviously and we're not seeing disinflation there yet and that's going to take some time and I just we. We need to be patient and we think we're going to need to keep rates at a restrictive level for you know, for a period of time before that comes down.

So when you made your speech the other day, when you talked about the FED discount rate, you use the word disinflation 11 times. Not that I'm counting, but 11 times so. so you were saying that this inflation is beginning to appear. Would you use that word 11 times again today after the Jobs Report or you would be less inclined to use that word so much.

I I might use the I might say I would certainly use the word disinflation Yes, which means declining inflation and I I would call it declining inflation too. For and uh, today. what about the uh, the debt Total debt of the United States which produces some inflation? 31.4 Leaving aside the debt limit. Are you worried about the total indebtedness? United States Reducing inflation? Or you don't think that's a big problem.

Yeah, it's not the level of debt it I I would say. the thing I'd say about the level of debt is really it's not. First of all, it's not the Fed's job. But I would say that we we we're on an unsustainable fiscal path at the Federal Government level.

That has been the case for some time and it's something we will have to deal with and better to deal with it sooner rather than later. Now many of your predecessors were economists. You were trained as a lawyer. um, so um, they spoke in what I call Fed speak which is to say incomprehensible kind of economic language which was done intentionally I think sometimes they would say so you tend to speak in English has that have been a A Plus you'd say when you're dealing with members of Congress they can understand what you're saying I like to think so you know I've made it a real priority to Um to engage a lot with Congress in our system of government.

Unlike the parliamentary system, our accountability is to the legislature. It's to send it in the house and particularly the two oversight committees Senate Banking and House Financial Services. And I I think it's very important that we respect that and explain what we're doing and listen to their concerns and and share with them how we're thinking about things. And I think they appreciate that and but that is.

you know we have this precious Independence We can't be removed from office. We serve these long terms. The other side of that has to be accountability And the way for us to get accountability is to be as transparent as possible and try to reach you know the people of the United States through their elected representatives. This is a very high priority and we're going to keep doing it.

So when you testify in front of Congress how much time does it take to prepare for that? Is that a one-hour preparation session? or is it a one-day session or a one-week session? You know they're supposed to. These are supposed to be monetary policy hearings under the Humphrey Hawkins act and they're actually on any anything that's any political issue. so you it's It's quite extensive. You have to prepare for everything that the FED is involved in and many things that the FED is not involved in.

Uh, so it's It's a lot of preparation, so when you get questions from some members, you have to bite your tongue and say, why are you asking a question like that Or you never have that problem that never happens, Never happens. Okay, okay, all right, well good. Um, so today as you look at um, the country's economy, what is the biggest worry you have about inflation? Is it just that, um, that fiscal policy is not completely under control, We have exogenous events outside. What is your biggest worry about inflation today? Well, it's it's uh, kind of what I was saying earlier.

which is, um, we're just at the beginning of this process, right? Goods Inflation. So we need that process to continue Goods that the whole thing began. The inflation began with people not being able to buy Services instead buying goods and then Global Supply chains collapsing and so you couldn't get goods and prices of goods went up and that's where it started. But that is now starting to get better as Supply chains are improving and as people are rotating their purchases back to Services, you move on.

Though we're not seeing it yet in Housing Services which is either rent or or the ownership, the imputed costs of house ownership. But we expect to see that so we need that to happen. That's another big part of the economy. It's got to come.

It should come in the second half of this year. then. the biggest piece of it. And what I worry about the most is when are we going to see distant disinflation or declining inflation in core Services X Housing So that's what I worry about.

The last thing I worry about is just another exogenous event. It's a risky world out there. Uh, get you know, with the war in Ukraine and the reopening of China and you know we've there. there.

those are things that can affect our economy and the path of inflation, right? So the balloon was not your worry though, you don't care about the balloon, it's not not within our Ambit Okay, so today, um, the Federal Reserve gets data from all over the country and um, are you convinced that you get the best data? You have the best data collection methods? Uh, or do you think it's not as uh modern as what Wall Street gets? We so most of the data that we get are just the same. You know we don't collect the data on unemployment or inflation or most things, so most of that's just government data and a lot of that's for example very high quality. The labor market data is very high quality. We what we get which I think is better and different from what everybody else gets is what I mentioned earlier and that is the reserve banks putting together the the um yeah the beige no not the beige book the um Facebook yeah the beige book putting together the beige book and also coming in and and you know sharing the anecdotes and you know what they're hearing.

what's happening with each district is different. You have agricultural districts, districts and energy districts and so that I think I think our anecdotal but also just the Hall of information we get through that through that network is is I don't I don't think anybody else has that. So do you consult regularly with some of your predecessors I mean obviously one is Secretary of the Treasury now but uh Ben Bernanke for example or I do I talked to uh former chairman Bernanke I talked to you know uh secretary Yellen I still talked to Alan Greenspan now and again and uh, when you're dealing with this with the your colleagues on the FED board and you disagree with them, do you say look, I'm the chairman of the FED I am the person who has to make the final decision and this is what we should do or you don't quite do it that way. It's a it's a process of reaching uh agreement and um I hear what people have to say I tell them what I think and then I'm the one who has to bring a proposal in front of the full committee, not just the board in front of the Full Committee on Monetary Policy and it works.

You know we have to reach an agreement and uh, you know we get to a place. I I Think you can tell Today we are blessed with a diversity of perspectives on the FMC With 19 people of course we are. But you you have one thing that unites all of us and that is a very strong commitment to getting inflation down. So in some parts of Washington people say if you give me this I'll give you that I'll trade this for that.

You never do that at the FED when you're coming up with a decision, I'll do what you want. if you do what I want, that doesn't happen ever. Not really. No Oh no.

okay, like you mean a better office or something like that? Uh, well. just uh. you know I'll say what you want me to say if you say what I want you to say or something and that never happens, right? No, No, it doesn't happen. I mean and when you want to talk to members of the of the board of the Federal Reserve board, do you go to their office or they come to your office? I Like to do both I mean I Really don't like to sit in my office all day and and have just have people come To see me I Like to go barging on people and you know I Think it's much better to get up and walk around and see people.

The FED has been pretty good at uh, avoiding leaks of its decisions. Uh, how do you do that right? Most people in Washington Bullshit. How do you avoid leaks? We do have. you know we've got very strict rules around confidentiality, particularly around the written materials that we have.

You know, we publish these things internally for for the FMC meeting, memos, and the Teal book and all that. Um, but the other thing to remember though is, you know we're not trying to hide our decisions from the public. We actually in in the modern In modern monetary policy, we want the public to understand how we think how we're thinking. And and you know, if markets really understand how you're thinking in a new a new piece of data comes in, the markets will go where they're going to do this and it sort of happens organically.

And that happened all last year as we were. you know, talking about raising rates. The market priced in rate increases long before we actually enacted them, so it's not. We want to be transparent.

We're not looking to surprise markets with these decisions, but from the time that you make your decision on the Fomc, whatever time it is at the end of the day, and you your press conference at two o'clock or something like that 2 30, 2, 30. your decision is made by two o'clock or whenever it is or something like that. So you got a half hour. but you have to avoid leaks during that half hour because that's very Market sensitive information.

How do you make sure nobody is calling their spouse and saying, guess what we're going to do Well, We you know we people take this very seriously, then none of that happens. You know I mean you're taking your professional life in your hands if you do something like that. I Think people have a sense of self-preservation so they're You know people are very careful about about this information. There is a period of a couple of hours after the meeting and until we announce the decision.

But we actually we announced the decision at two. The press conference is at 2 30. So I Think you know it's a fairly small group of senior staff and policy makers that that kind of know what happened and what we're going to say. and I just think everybody understands that that you've just got to be really careful with that to go back to the jobs discussion.

If next month you had another 519 000 jobs created net jobs. Would that be good or bad? From your point of view, Have we a lot of people working but maybe producing more inflation so we we don't? We don't have the luxury of thinking about good or bad, it just is what it is. so. but I I would say again, we most most analysts most economists would say that to get inflation down from high levels that we've had, if you look at history, there is some softening in labor market conditions that goes along with that.

And that is still you know, very possible, and indeed likely here, some softing in labor market conditions. However, this cycle is different from other Cycles because of where it came from. and it's just confounded all all sorts of attempts to predict what it would do. So it is good that we have seen very strong labor market, but at the same time we're seeing wages moderating.

Wages are still wage increases are still very high, but wage increases have come down to a level that's closer to what would be sustainable. still well above what would be sustainable with two percent inflation. And same thing with inflation in inflation is starting to come down and the labor market hasn't softened. We do expect that it will soften.

Um, but you know it will do what it will do. Our job is to get inflation down to two percent and preserve maximum employment. So when the Fomc meets as it does regularly eight times a year, Yes, eight times, you pretty much know how the decision is going to come out before you actually get together because you've been talking to each other. Where does the meeting of the Flomc changed? Minds In ways that you might not have expected before the meeting started.

It depends on the meeting, you know. I Do I Talk to each of the 18 other participants at least once and we go through everything. What? You know? What's your analysis of the economy? We'll have everything about monetary policy. how are you thinking about the path forward and all of that.

So um, in some some meetings I will say some of the time you get into a discussion at the meeting which suggests that maybe you should communicate differently and then we'll think about that and we might actually take a break in the middle of the meeting and then go off with a smaller group and think about that and come back and make changes. Sometimes though, everything plays out as expected. and when you're having these Fomc meetings I Assume somebody sweeps the room to make sure there's no bugs and anything else. All that, no, no leaks, no okay.

and today, as you look forward as we are going forward for the next remainder of this year, your basic view would be: you'd be happy if the inflation rate were to get down by the end of the year to two percent may be unrealistic, but your core inflation now, or overall inflation you think is about four or four and a half percent. Something like that, or what would you say it is, it's it's in that range. There are different measures. Yes, we we expect.

you know significant progress on inflation this year and again, it's our job to produce it. And and I want to I want to say again, you know we put we throw these numbers around. but the reality is, we're going to react to the data. So if we continue to get for example, strong labor market uh, reports or higher higher inflation reports, it may well be the case that we have to do more in race more than a surprise ten.

So if I wanted to go get a mortgage on a house I was going to buy for example uh, you would say I'm not going to be any better off waiting to next year than now because rates aren't going to come down that much at the beginning of next year. so I might as well go to the house now. Mortgage: Surprisingly enough, I get a lot of requests for advice on those kind of things and you don't give any and I I but I really can't okay I can't I really can't respond so uh, okay. so on the whole, to summarize where you are, you're basically saying that the jobs data was that came out was a little bit surprising, but in the end, you're taking you've taken into account and you're pretty comfortable with the guidance you gave last time.

and you're not prepared to give anything that's completely different guidance than you gave last week. Well, I mean this is a world in which we've had the the inflate sorry, the the The Labor Market Report and I think that does I think it underscores the message that I was sending at the at the Um press conference and in the meeting that we have a significant road ahead to get inflation down to two percent. And and I think there's been an expectation that it'll that'll go away quickly, uh, and painlessly. And I don't think that's at all guaranteed.

that's not the base case. The base cases it will for me is that it will take some time and we will have to do more rate increases and then we'll have to look around and see whether we've done enough. Okay, and and two percent is the rate we have for last 25 years before inflation came along. But prior to that for most of us history we were higher than two percent.

Is it that two percent is? We're now. Uh, so used to two percent after 25 years of it that you think that's the appropriate level. So for we went through this long period where inflation was was really anchored around two percent. and we we think that.

and you know economists think that that's because people start to expect two percent inflation and inflation. It's in in a way, if people, if everyone expects that prices are going to go up, prices and wages are going to go up two percent per year, then plus productivity in the case of wages, then it will. That's what will happen. Having that, having price stability, real price stability for an extended period of time is just enormously beneficial to the public.

Because you can then on the back of that, you can build a very strong labor market. As we had, we had a labor market with really three and a half percent unemployment in two thousand, uh, 18 and 19.. and we had inflation running. You know, just barely getting to two percent wages moving up the most for people at the lower end of the of the spectrum.

And so this was a we all want to get back to that place. but the the Bedrock of the whole thing is to get inflation under control. The unemployment rate hasn't come down as much as people are going up as much as people thought. In part, some people say because we don't have as many immigrants coming in the country, legal immigrants coming in taking some of the jobs that otherwise would take.

you think immigration is an issue in terms of giving us more labor workers or you think that's not a factor, so it just as a matter of arithmetic. It was a factor because there was very little migration across borders during the pandemic. Uh, and that was part of of what was happening, particularly in certain sectors like the agricultural sector and food service and things like that where there just weren't the people. However, just just very recently here the the immigration data have turned up again and so and I Think that may be part of why people are feeling somewhat less pressure in a labor market to find workers.

This is an issue, Not for the feather. This is immigration is obviously a political issue. We do not seek to be a player on this, but it's just a fact though that that, um, you know right now the United States has has fewer available workers than it has Jobs Plus job openings. and when you increase interest rates, the traditional effect is to increase the value of the dollar versus other currencies.

Uh, do you have any concern about the value of the dollar going up too much? or that's not something you comment on. So the the actually the responsibility for the for the change rate is really rests with the treasury Department and the administration, not with us. Of course that's another. That's another Financial variable that goes into every economic model, but we don't.

We don't look at it as something that we're working on. All right. Well, I think I haven't been able to get you to say anything you didn't want to say. So um, you know I would say Jay I I've known you a long time I Think you've done a great job.

uh, in a difficult situation I appreciate your service to the country. At a 180 000 a year or whatever, the salary is 190. So thanks very much for being here. Honestly, thank you for yourself.

Thank you David Great to see you Thank you! Well looks like that is the end of that. which means I could delete this bad boy and then let's bring this back up to where we need it. They're way behind. I Know the quality wasn't as good, but that was just like a faster stream or a more timely stream.

Let me get back to this right here. So initially when he started speaking, the market popped and I think the market popped on the fact that he didn't say anything too surprising, like there was nothing like he didn't come in and say listen, if you're a bull, I'm gonna come shoot you in the head he didn't say that so that's a good thing. But then when people kind of realize this like we got a big push, a little bit of excitement, and now it almost just seems like it's coming back to reality. So if I wrote this up which I didn't because I've been positioned kind of bearish into this whole thing I would have been already taking my gains.

Uh, kind of an interesting reaction. and now potentially more interesting is to see how things are going to play out for the remainder of the day here. Uh, things got a little bit of a pop, but it's seemingly quickly giving it all back. Uh, well, not all of it.

We've given back half the game by now and we'll see kind of things how they end up coasting. I Do want to remind you of this just because today's schedule is getting a little bit. uh, weird. Just instead of doing the Power Hour stream, we're obviously doing this I wanted to quickly call out some things you need to pay attention to for tomorrow.

So for 2 8, Feb eight, it's the trading day of the month Six. Just so you know, tomorrow is a bearish day. Over the past 25 years, the bull is about a 50 50 split. but the days that the Bulls lose I.E the days that the Bears win Uh, it's more dramatic.

So tomorrow, just from a seasonal perspective, it is definitely a bearish day. Not an absurdly bearish day. but I want you to know the seasonal bias for tomorrow is a bearish one. You also should be on the lookout for another fed discussion today and then a whole host of them tomorrow.

Let me show you what I'm talking about right here. So at 2 p.m which is in roughly 40 minutes, Michael Barr will be speaking the fed vicer and then tomorrow we have John Williams we have Lisa Cook we have Michael Barr and Bostic. Then we have Kaskari and then we also have Waller So that's all Tomorrow So in terms of macro economic reports, none. but in terms of macroeconomic discussions, yes, a whole host of them tomorrow, People were most eager to see what the hell is going to happen here.

and I'll actually give it. like the the Cadence and the tonality of the questions. It was like kind of a rapid fire thing. but Jerome Powell He's gotten far better at speaking.

He didn't really, uh, get tripped up on anything. so I wanted to call those out. So tomorrow, from his seasonal perspective, it is bearish. Today there's still one more event, then we have a whole host of Fed members tomorrow.

And then the last thing I want to bring to your attention before we get this to an end is the earnings that are coming up. Yes, we are still in earning season. One of the best resources you could use is earnings. Whispers And I Wanted to bring this to your attention right here.

Uh, so today after the market closes, we have Enphase Chipotle before the Market opens. Tomorrow we have Uber's CVS Wendy's Under Armor and then after the market closes tomorrow we have Walt Disney we have Robin Hood and we have MGM. Later on this week we have Pepsi PayPal Lyft Hilton catalogs and maybe a little bit of Expedia. Maybe some of you are checking that out, but I just wanted to bring this to your attention of the main things like kind of the binary events of good bad bullish Bears beating not beating for the remainder of this week.

But overall, in terms of streaming, this is what I have for you. today. We kind of just swapped out the Power Hour stream for this one just because it clearly had an impact on the market. We ripped up.

we're giving it back. Don't forget to check out what's pinned to the top of chat. maybe over there. Um, Macquares.locals.com use the code Goonie, G-o-o-n-i-e to get in for one month free.

There is a free version. there's a paid version and you could get the paid version for free by putting in the code. goonie I post my trades. you can post your trades.

we do some streams I post the seasonality stuff. It's definitely going to be a useful Trader resource if that's something that you'd be interested in, but once again, pinned to the top of chat in the description of the video If you're not signed up. You might as well, at minimum, sign up for the free version because I kind of use it as an email listserv where for all of you I could put out like major announcements and whatnot but that's what I have for you. In terms of streaming, we are going to be posting content later on today.

Just important wrap-ups and developments in the world of Finance the economy in the market. and then we're going to be streaming again tomorrow morning at 9 00 a.m Bright and early. So if you haven't already, help me out the algorithm. help me out with the battle leaderboard by hitting that like button.

But most importantly, do Not forget to subscribe. Hit the sub, Hit the sub, Hit the sub. Thank you so much for all the good vibes I Will catch you later. Peace Out.