Foreign. Welcome Foreign. Hello Brother oh brother oh brother hello hello hello. Welcome back for the specialty Fomc Fair Drum Pal Chaos Markets Exploding type of extreme.

Hope you're having a good one. Hope you had a good lunch. Hope you crushed it this morning. I Actually just lost track of time I Was filming the update video for this evening so you better watch it because I've been working hard on it and I'm already stressing out my editor right now.

he's like you already gave me this video. why are you send me other clips and I was like because we have to edit all of it and it's just craziness so you better watch it. It will be coming out at 8 15 tonight. Eight 15 tonight so make sure you're watching that.

Um, so we're doing that. We're going to be streaming this so at 2 p.m in a mere 11 minutes, we will be getting the results of the Fomc meeting. the Federal Open Market Committee meeting where they're going to tell us that we got another 25 bips, right? Hike. That's what it's going to be.

We know that the odds are very high that that's going to happen. It would be crazy if it doesn't but hey, that's what we're here for. We're here in case there is craziness so that's going to be coming out at two and then at 2 30, 2, 30 the time when you should be seeing a dentist is when Jerome Powell the chairman of the FED will be speaking and that's really what we need to be listening in on to figure out if he's dovish, if he's hawkish. Are we getting another rate hike? Are we going to cut rates? If we do Is going to be this year.

Is it going to be next year? What's going on? Why did my girlfriend leave me? Those are the types of questions we're all going to be listening for to see if he answers. There's no guarantee he's going to be answering it, but that's what we're all here to be doing. There will be chaos in the market. This will prompt volatility.

It's gonna be nuts. I'm excited I Hope you are on the right side of whatever degenerate trades you end up placing. so 2 P.m Fomc comes out I hope Rick's until he's on CNBC Guys my favorite. Uh, we know Steve Leesman definitively will be.

and then at 2 30 we will be listening for Pal. So it's going to be a lot of fun. Um, so while we're waiting for this all to go down, annihilate the like button. Annihilate it, annihilate it, destroy it like it.

do whatever you need to, but like just pound it into the ground like God just get it into a nugget. just Smash It and Smash It Smash It Smash It Smash it. Uh, so do something like that and then also don't forget to subscribe I Do want to show you something really, really quickly. Uh, we are on the way to 69 420 Subs on Rumble So we're going to do a giveaway.

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to download. Check it out! I Know you will absolutely love it. So shout out to Streetbeat for sponsoring today's stream and with that all of the way, let's take a look at the market. The Spy Popped it, dropped, It popped, pop, dropped and locked it.

It was dancing like a queen. Uh, Pac-w It popped up. Now going sideways. Very very boring Tesla Popped up sideways.

Very very boring IEP Down Sideways. Very very boring. We are in a classic stall hole pattern. We are simply just waiting.

We are waiting. We are waiting. We are waiting for the show to get underway at 2PM Now we've done an extensive analysis on everything that's happened over since this. I guess the current rate hike cycle I Want you to know that a lot of the times the move from like 2 to 2 30 that first move, whatever how you ever you wanted to find the first move ends up getting reversed.

So if you see a giant jolt to the upside, a giant jolt to the downside. not all the time, but a lot of the time it ends up getting reversed. And that's why we have the saying like the first move is often the wrong one. so if you see like minute one, we pop, that doesn't necessarily mean it's a great idea to start popping if anything.

I Am strongly of the opinion that that first major move is actually the wrong one. So really I don't like to do anything until I see Jerome Pal start speaking and see what the market really thinks about him speaking. So saying this to you now I Personally wouldn't be like throwing any crazy trades on between the announcement of like the results of the Fomc meeting and Pal speaking. So we have this weird half hour where things are going to go crazy and I just don't want to get chopped up so I personally avoid it.

but I do want you to know as I'm speaking to you live now I still have my Pac-w puts and I have my IEP puts uh, both of which are looking pretty strong right now. so I would love for these to sell off even more because that's how I pay my studio rental I suppose so anyway I hope everyone's ready. The expectation is .25 which would bring our cumulative total all the way up to five percent. and I guess we could do a final check now that we are a couple minutes out, five minutes out if this ever loads uh are there too many people on the website? Are we over riding? It Looks like there's an 87.6 chance of a 25 bips which would bring the cumulative total to five percent.

but it's going to kind of get interesting because really what people are looking at of like well what's the expectation for June are we gonna if we go up, are we gonna then cut in June What about in July What about in September by the end of the year people are pricing in some like pretty noteworthy price Cuts Like You can see kind of this histogram looking thing of yes, some like some people are saying we could actually be down to four percent. we're about to go up to five so maybe in December uh so it'll be interesting to see how this all changed. Not really based on the 25 bips now, but what's in the report? What did they discuss? Was it unanimous? was their dissenters and more. so what is Jerome Powell Gonna say at 2 30.

that's pretty much the situation right now. That's the skinny on the situation right now. and other than that, obviously sign up for Street Beat pinned to the top of chat anywhere from five to five thousand. It's a free app to download and also if you want your chance at a Texas Roadhouse gift card, all I need is your Twitter handle down here.

If you want to be a premium member for free, just put in the code goonie and obviously this will all be triggered by when we hit that magical magical magical goal on Rumble of 69 420 Subs So I just wanted you guys to all know about that. With that being said, we could watch the market or we can pray that they're going to bring Rick on here. all right, we are a couple minutes out. I Guess we could do a position check.

Okay, here is the current position check. Uh so I have two positions on IEP because I've locked in so I bought a little bit of a YOLO so the main position is right here up 815 percent. Um I've already locked in half so we're absolutely crushing it. I mean it's that's a huge gain I got in a dollar they're trading at nine I'm crushing it and then on P-a-c-w I'm in at 45 cents.

they are trading at a dollar fifteen so I'm up 155 on that and then this one. then I'm down 18 on is the brand new play. just the lotto ticket that I got just in case. things get really bad for IEP here in the short term.

so just want to let you guys know where I'm at. Trying to be as transparent as I possibly can. Will it work out I have no idea. won't work out I Have no idea.

that's the point of being here in the casino. You just hope that it ends up working. Uh, but IEP I mean dropped like 20 yesterday, dropping another 20 today. they do have earnings on Friday so I want to listen to that because if they have to cut their dividend, if Carl Icahn has to cut his dividend because he just can't pay, he is absolutely screwed.

So that's where we're at right now. folks. Destroy the like button. Help me out.

It very much helps out with the algorithm here on YouTube if you guys are watching right now on YouTube Destroy the like button if you're watching on Rumble Destroy it. Uh helps out with the battle leaderboard over. There just gets more people in here, more of the party. What is this one? icon Enterprises Changes Q1 Earnings released to May 10th Are you kidding me? They're switching it on Me: That can't be good.

That cannot be good. Uh, when you're kicking your the can down the road on that one I am taking that as a positive sign to hold. uh this position icon Enterprises Change Q1 Earnings released to May 10th Oh, that tells me that I think I like my position even more I I Really Do I Really Do I Really Do I Really do? All right. With that being said, everyone load up.

Do you think? One thing that he will reference though is Titan in credit conditions Some commentary about Regional Banks Everybody about the most important up until the next one back to you Uh David Mentioned the labor market. We got news earlier this week. the job openings declined sharply. Is that kind of to use the cliche, a canary in the coal mine that some of the effects of higher rates are really beginning to dig into the economy? All right.

I have the page up. I'm waiting for the foreign afloat is that the labor Market's been strong. Consumption's been good, so therefore profit margins and Company earnings have been holding up okay, but it's really only a matter of time before that really slowly starts to deteriorate. What's everyone's guess? how much and how deep you have to get your guess in before the report's out.

So that means you have a couple seconds to either vote up or down. You got a point. up or down. type up or down.

You have seconds left if you vote. After the report comes out, your vote doesn't count. Um, and that said, it's always. you know the statement.

The language in the statements give us about whether they'll you know, use the words yet in their statement to kind of indicate some flexibility these people are screening. Give us, we'll come back to you in just give us because liberty or give us a decision here in just a couple of seconds that quarter point or something different Steve Federal Reserve Raising by one quarter point brother funds right up to a range of five to five and a quarter percent brother Federal Reserve offering I guess I would call it stranger. Somewhat hawkish for forward guidance that's a market when the last time around, the FED saying it is determining whether additional policy firming may be appropriate Prior language that it removed where it said it anticipates that some additional policy firming may be appropriate. So maybe one way to think about this is it's gone from being pretty sure it's going to hike to maybe it will, which we knew that we talked about this already.

So again, I'm going to repeat that it's gone Fed now saying it is determining whether additional policy fairing may be appropriate. Taking out language saying that it anticipates confirming will be appropriate. The U.S banking system the statement says is sound and resilient, but tighter credit conditions are likely to weigh on households. The extent and effects of that remain uncertain.

Inflation remains elevated. The committee it says remains highly attentive to to inflation risks and the economy just a couple lines. economic activity expanded at a modest Pace None of this is the surprise. There has been no surprise yet and inflation elevated.

So back to you guys to chew over what that statement means. Is it a pause? Is it a I Don't know what it is, Guys, back to you: Was it a unanimous vote? Steve It was absolutely unanimous vote Yes Unanimous. Okay, all right. Okay, okay, okay because we actually had some uh discussion from former Fed officials saying if they continued to hike.

Well, there you have it, because Eric Rosengren was one of those uh people. On your screen is a board of the regional Banks which are still in the green obviously. First Republic Accepted from that, although the gains are modest PNC up about a tenth of a percent U.S Bank up one percent M T a little less than three percent. Let me bring in babasani and Rick Santelli yeah, some quick Market Thoughts: what do you see? More books I swear if they don't give Rick enough time may be appropriate is different than saying some additional policy.

Unanimous appropriate. And so look. the question is the market was positioned for a hawkish bad meeting. Fed's going to raise rates indicate inflation's coming down, but it's still too high and we'll hike again if needed.

But what would make the market go up is any, kind of, uh, a dovish hike. The dovish hike would be okay. We've had some problems on inflation being made, the bank crisis is slowing London and implying somehow they're uncertain about how much more they want to hike. and to that extent, do you guys think it's going to hold the satisfied returning returning? What makes this really hard to figure out? It's just this whole impact of the banking crisis on yeah, that seems to be the real issue here.

So this this Bank thing is more from deposit flight into something bigger, about more regulation coming about tighter credit conditions, particularly in commercial real estate lending. So I think that's really what the market wants to hear. They want to hear that the banking crisis is causing the Federal Reserve uh to be additionally more cautious than they normally would be. They want to know that the rest of the year nothing is going to happen and that's I Think why the Market's holding up the market doesn't want to believe in the hard Landing They want to believe that growth is holding up their earnings are not getting slashed.

That's what we're seeing, but it's all dependent on how the FED is approaching the second half of the year. So we want to hear more about that banking crisis and how they're dealing with it. Uh, in the Press unanimously approved. It was unanimous.

Get what it expected. Did it hear what it wanted? Rick look to my sources as reflecting the general sentiment between the buyers outside on the street right? Pretty much everyone was expecting a quarter point and I think for a bit of a Market's kind of Dipping a little bit doesn't know what to do first move the wrong one for what it perceived the market priced in, many would question what the FED knew that the rest of the street didn't know I'm not sure I'd buy into that. but so the short answer is you tell them and as you look to your no eels have dropped three or four basis points. Tenure are fairly steady fed fund Futures as referenced by January of next year has moved up just to Smidge.

Here's the way I would frame it to try to keep it quite simple. For the most part, we're at the end of the line If The Fed needs to reverse course and ease at some point in 2023. I Think they lose a bit of credibility again. Of course they do the old Mantra Tyler's Don't Fight The Fed.

Well, let me think let's hearken back. Fed was buying Treasures Keeping interest rates artificially low and they're paying interest on excess going. And they've embarked on one of the most aggressive Titan sequences since the 80s. It should be no shock to what happened to the banks.

The fact that it was really continues to make me scratch my head from don't Fight the FED to what Don't Fight the FED but they switch from QE to QT. How can Traders keep up? I Think the notion of what the Federal Reserve is locked into is more function that they really don't like to go back and chew their tobacco twice. and you really can't fine-tune the economy like a carburetor. Tyler I Know it's old school, but you know, if you turn the gas down so it doesn't quite run as rich and it starts to choke you, crank it back a little bit.

You can't do that with the economy. Don't over tighten it, isn't it? They shouldn't be chewing their tobacco twice on the screw. What it means is you have to go back and try to save face because you went too far. Between gains and losses, Everything else looks pretty steady, but obviously the real fireworks often come at 2 30.

fucking modern day. we're gonna be watching that press conference very very closely. I Mean this is the thing. I I Those comments One of the things that are clearly breaking and so yeah.

this commentary around the fact that yeah, let's open up, let's get some Rick's popping off. That is what we're expecting. I'm not seeing enough Ricks in chat right now I'm upset I Think to risk assets and looking at we're not even talking about a demerit situation. we're just talking about media upset that you guys aren't stoked.

We already know about the breadth of this. Equity Market rally where you have seven companies that are that are comprising eighty percent of them. There is a lot going on purpose and so I think we'll look for the comments from chair. Powell uh Market has no idea what to do here.

Pacw coming down a little bit IEP Coming down weather further will be appropriate versus anticipating. crypto doesn't know what to do. What if it doesn't go down as much as they want, then they're gonna have to come back into the markets and that's going to be much, much worse. So they want to leave the door.

Who's this guy? That's not right? The potential that they may continue to hike just to keep inflation pressures under control. and I think that's a really, really key point. So I view this as more of a hawkish pause and I would say that the data doesn't particularly start to weaken as as many expectations, everyone's listening for power. I'm telling you, you're gonna save yourself some headache some hair by just waiting for pal to get talking.

You don't need to be trading, you can just chill and be chanting on Rick But the real question is way more fun though. Economy actually function as a rate of someone became a bot fighter on the Federal. when's the speed time? 2 30. 23 almost zero interest rates and I think the real key here is, you know, let's keep an eye on the banking industry, continue to see deposits flow out.

You could still have a have a problem here, and I think there are. there may be problems ahead quite apart from you know the debt ceiling issues and other issues and making problems ahead. So I still think the Federal Reserve is going to have to cut by the before the end of the year because I think they've gone too far. I think it's just going to take a few months for us to fully realize that and for them to realize that.

and David We all sort of look at this and say, well, a quarter point can't make that much difference to the economy, but if that's another bank just like dies right now? Did you guys hear that Sounds like that's about getting an online number, right? or other kinds of high yielding instruments that will pull deposits out of the system? This could matter a lot. Well, yes, because because we're assuming that that deposits are sticky. but shout Out process. Every time we tested that, we tested that camera Use language broadly similar to how officials concluded their interest rate increases.

Shout out Profit Banking system. There can be some problems there. So I think the Federal for this economy. We don't know if if over five percent is in fact too far.

Steve I Know you want to jump in well just seeing the June Fed Futures probability at Uh 96 percent for a pause. That's where it's at right now. Uh oh sorry. 80 88 for June I'm sorry.

With a slight uh uh hike built in on either side, that 12 points is kind of divided. Um I Think this is not as dovish as maybe some had hoped. If you think about it, they're saying it's like determining right now. 82 of a pause in June is probably going to be right.

Yeah, they're determining whether additional firming may be appropriate. I'd say Market bending down a little bit. maybe not the most happy. anything else.

it's not lower highs, they could turn around and if they were to hike in. IEP Let's do it. More important than the inflation issue. so we're watching this.

uh, the the gap between the Fed and the market. They wrote this a little bit too early. 75 basis points of disagreement. Where the market continues to believe the Fed's gonna turn around and start cutting towards the end of the year.

So I think we pretty much are where we are with maybe not right dovishness in in this expected pause is maybe some would hope for. Steve It looks like the Market's starting to price in rate Cuts in September after this decision I Don't know if we can show it? Yeah, that's where it's been October Yeah, so that feels like them reacting to you know the language opening today by saying boom, We're going to start to get our cut in a couple of months time. So the first quarter point Kelly is fully priced in September October and then another uh, quarter. Uh, so you're at a 450 room What? it is for the end of the year.

So what is that? That's almost 75 basis points of cuts built in and you get your first one. Uh. beginning, uh uh by by the end of the summer Kristen Final thought here. Hard Landing or something.

Other than that, for the economy by the end of the year, Yeah. Kristen Tell us about that. We're in the camp that we will see, uh, recession that it will be a mile actor right now. rate shock.

And now we're really about evaluating what is a credit shot. And so this idea that you're going to see the continued outflows of deposits into money market funds we Eclipse that 5.2 trillion dollars we've seen already since the beginning of the rate hikes close to a trillion dollars out of deposits and then just thinking of credit availability and what that means more broadly for the system I Think that can create some volatility that makes me wonder where you think the 10-year yield, where its next stop might be, and where you ultimately think it might settle out at this year? Kelly That's a great question. And as Steve Lisenman was saying, look, you mean Bond markets take warrant because if the FED sees that inflation isn't coming down, they could start to re-hike again. And I Don't think anybody's pricing that the bond markets are not pricing that at all.

A lot of markets are pricing that the Fed's making mistake that they're going to have to cut and they're going to have to cut. Agree about that. If that doesn't happen, some of these longer durations, high quality safe trades quote unquote safe trades may actually add risk to portfolios. So I Don't think we're out of the woods here yet.

I Don't think we're out of the woods with inflation I Don't think we're out of the woods with volatility and the uncertainty around the Fed. This is a long-term game and we're still. This guy's baloney is giving cold meats just below about three point four percent and we've obviously had guests. SRI Kumar comes to mind who said 275 could be the next stop.

so everybody seems to be on that side of the boat. David Even those who think that maybe the FED will try to keep hiking seem to be saying it's just going to cause more more damage in the longer run. Well, yes, and I I do think we are are actually out of the woods on inflation I'm You know everything I'm looking at in inflation tells me, look, it just comes down steadily. It takes a few years to do this right, but inflation is coming down.

I Believe By June the CPI headline inflation rate will be below four percent, well below four percent. and you know that's not too far away from where the Fed's headed. I think during the course of 2024, it'll come down 2-2 and probably go below that. So I think the Fed by by the middle of the year, the Fed's going to see the economy.

Basically, with you know, inflation continue to fall. But a you know growing concerns here about business spending in general about a credit Crunch and I and I think that's going to make them eventually cut. The problem is because they because they're You know what Pal is going to say this afternoon is, you know, don't believe the markets about this. We're not going to cost before the end of the year and the problem is, you know I think that that's going to force them or they're going to force themselves into staying too tight for too long and then cutting at the end.

Yeah, next year he hasn't be a little too late to stop us. Like slipping into recession by then the market when they think it's large a Tailwind So far this year does today change that? you know I was Rick In the camp that the dollar is going to weaken as we get to the end of this. Let's go Rick give it to him brother cycle. but now I'm going to revise that call I Think the rest of the globe still has more, uh, intense economic issues than the US I Think the dollar is going to fool many Traders and remain more buoyant.

I Do think it'll test 100 and then the final analysis I Think that the biggest issue that I would look at is we're going to have a very stagflationist economy where growth is going to be less and we're not going to see two percent. We'll maybe see two and three quarters to three percent with regard to pricing and inflation. Disagree with this. At some point the curve is going to steepen I think 10-year note yields stop around 10 percent, but after that I'd be quite careful that they start to move higher as the curve disinverts and re-stepens.

All right, as we often see uh, kind of as we get into the later stages. We really appreciate your time today as we await comments from Fed chair. Jay Powell We'll get that at 2 30 Eastern time We'll first get more reaction to the distance. All right, All right, All right.

The U.S banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The committee remains highly attentive to inflation risks.

Blah. We'll see what Nick Timuros Timorous right here. So this is the switch. Last time around the crossed out red, they said the committee anticipates that some additional policy firming may be appropriate.

This time they said in determining the extent to which additional. so they switched it up. They they did the old Switcheroo which apparently is very similar. uh, blah, blah blah.

The Fomc statement used language broadly similar to how officials concluded their interest rate increases in 2006 with no explicit promise of a pause by retaining a bias to Titan It sounds like we're done so. But as I've been telling you people, you people, I've been telling you just because we pause, not necessarily mean in a bull market just because we start cutting. not necessarily a bull market I've been over the facts and figures with you when we pause and we cut. There's actually typically a bit more downside before we get into that whole bull phase.

and that's what our boy Rick was talking about. Like we might have a little bit of a stagflationary economy slash market for a bit here I Want like this? would not make me like oh, I'm a bull time to be a bull time to rip to the High Heavens I Don't think we're there that you might think we're there and I wish you the best of luck I'm just letting you know my opinions on it all. Just because we pause and just because we start cutting does not mean it's time to get into some YOLO calls I Want to be very very very very very explicitly clear about all that with all of you, With all of you people, with all of you people uh, where are we at? All right Pac-w coming down Marsh no I Want an alert I Want alerts to know when these puts are breaking down I'm in Pac-w puts I'm in IEP puts I'm currently not playing the Spy I'm not in Tesla uh my Futures algorithm is flat right now not playing anything. Welcome back to Power Lunch.

Live in Washington for the FED decision on interest rates Scott Joining us now Senator Elizabeth Warren of Massachusetts Remember the Senate Banking Committee Uh, thank you. It's good to be with you. You have been critical of Mr Powell and you I think are going to be critical of this move today I Just think it's the wrong direction. Look because she knows so much about them right away that is.

Uh, inflation is abating, the economy is softening. We've seen GDP begin to pull back a little and We've acknowledged all along that the problems we have that have been driving prices higher Pocahontas That you can fix. You guys have a problem. You know we have a warn you.

Crane That messes up supply chain and energy costs and food costs. We've had a lot of price gouging that giant corporations don't want to talk about, but families are sure feeling it. And you can raise interest rates, but it's not going to affect those. You've got other tools you have to work.

We've had supply chain Kinks that are beginning to uncake. Again, not affected by she talking about. and what concerns me is this: Native American Lady indicating I haven't just raised interest rates, He has raised them on a curve unlike anything in 40 years. deepest.

in 40 years, in 14 months, he's gone up Five Points here and that's when things start to break. Plus, look where he's aiming. He's aiming to put people out of work. So I take your point, that inflation.

That's what he wants, but it is still elevated by recent historical standards. Absolutely. And that exacts a very severe price, particularly on low income people on fixed income. They they hurt because of that.

So if you, if you're committed to the idea of bringing inflation down, how can the FED help do that if not merely by raising interest rates? Well, what are the other tools they have? And let's put Congress on what about outside Because there's a fiscal side here too, right? Government spending? Crazy suggestions. Why don't we just cut government spending? What else can The FED do? The FED is a one-trick pony. The FED raises interest rates and lowers interest rates basically. so they look at that one, two three, don't you say that? effectively.

Quantitative easing and tightening. and the data depending on who you want to read and what you want to look at. but at least 40 percent of the increase in prices attributed to price gouging. that is, look at Industries where there's greater concentration and what you see is prices went up more sharply and you see that margins went up.

the profit margins were going up. Fed is the wrong actor to go into that. That's the yeah. They've done more than even they should have done.

and to to squeeze out what what inflation remains. You would look at What legislation to address price. legislation could be part of it, but the FTC is part of it. The Attorney General We have laws in place that give us some tools on price gouging.

I'd like to see us do more. That would be the legislation part. States Also have any price gouging laws and they can bring those to Bear partly. You can use Jawbone in on it too.

The the Chairman of the Fed, the President of the United States can talk about these industries with specifics. It is a great talker about who's The President of the United States justified by an increase in cost? You know it's funny I Hear from a lot of people who have been saying knowing we're going to speak with you today, they go normally I'm not a fan of Senator Warren's they might work on Wall Street for instance, they they might be on the other side, but they say but I agree with her on this issue. Now they might not agree with all of the reasons that you said. They say the FED is going to create a lot of job losses if they continue to hike here.

So there's odd bed fellows where sure, because they're sort of like the progressives. like the more, the people who are deeply in the markets are both calling for a pause here because they're concerned there's going to be a lot more pain to come economically. And you know what really troubles me about that? It's that the pain to come won't be a surprise, it won't even be incidental. Go back and read the FED report for example, the FED report from December which specifically said their target is to increase unemployment by one full point in less than 12 months Now what that means is go explain to two million people who are going to lose their jobs, People who are are making their mortgage payments and their rent payments and their grocery payments right now.

Sorry. For the good of the overall economy, you have to lose your jobs. But also are we at an all-time low? How many times out of the last 12 times that unemployment has gone up one full point in a 12-month period have we avoided recession? How many times? Zero? Zero. And here's the other one: How many times when unemployment has gone up by one? Aren't they literally just redefining the recession? Like are we in a recession at one point? Never once real once.

So it's been once. I don't remember which. Yeah, but the point is, it almost never happens. So the odds here, this is where the FED is aiming.

That's the part that gets me so worried about this. First, they do not have all the tools to fix the problem. they've got. It's the wrong.

It's a mismatch. I Have one. Sort of blunt. that's right, but they keep quantitative.

That's their measure of success. And their measure of success is two million people lose their jobs. And statistically speaking, the odds they shoot us straight into recession are really hot. Let's turn to the other aspect of this, which you're working on today trying to claw back some comment from the banks.

I don't know if you heard Senator Kennedy Who is on this sitting in your chair about 20 minutes ago and he very clearly said he thought this was an issue of bank mismanagement. So a how are you going to kind of come at that and B It's quite obvious mismanagement or not that we have a concern about the health of the banks. More broadly, you never want the public in that position. How do you stop that concern from metastasizing? Do you support raising Deposit Insurance limits on payroll accounts? So let's start with Clawbacks.

Okay, because the advantage here here's a tune where we can better align incentives and whenever you can get incentives better, it means Uhw is coming up good for me, probably not impacting. So the idea behind clawbacks is to break the cycle. Where We Are nail the the folks at Svb Bank and Signature and First Republic they all came to Congress in 2016 and they said loosen the regulations, loosen the regulations Donald Trump ran for president, said if I get elected, I'll loosen the regulations on these multi-billion dollar Banks he got elected. they put in Regulators who loosened the regulations in 2018 Congress came along at Donald Trump's request and with help from Democrats and Republicans loosened the regulations even more.

And you know what happened? Exactly what you would predict. The banks then loaded up on risk in order to boost their short-term profits and paid themselves huge salaries, bonuses, stock options. And then when the banks blew up, they kept the salaries, the bonuses, and the stock options. So look at what that means in terms of incentives.

if you can get yourself to a position where you're one of the top Executives at one of these multi-billion dollar Banks How far back would your clawbacks Go I mean five years, So five and I'll tell you they're total comp they will have to give I'll tell you why. it's because what the data show right now GAO Report on this said Svb started. It's pumping its profits by taking on risk and pushing that money out the door to the executives five years before the failure. So it's a five-year look back.

You don't have to take it all back if that didn't happen, but at least you've got a five-year window to be able to say If you guys started behaving like this, you're gonna have to give back that amount that you took. That's the message we need to send to every single executive of every single one of these. Giants So I take your point that that bank regulations were loosened and Regulators had a bit of a a hands-off approach. but Mr Barr of the FED took a fair amount of responsibility onto the FED for failing to do what they needed to do to prevent these Banks from failing.

So there it sounds like there was there. There probably was adequate regulation or the or they could have known what was going on in these Banks and done something about it and yet they didn't. True, right? true. But what inference do you draw from that? Why was the FED? Let me ask you two questions.

Why was the FED? able to loosen regulations like that? Well, part of that is from the 2018 change in law that gave the Fed the opportunity. But the second part was the culture. It invited the FED to loosen those regulations. Randy Quarles You remember him vice President earlier this week in charge of Regulation.

Let's go back and play the tapes from him talking about his mission was to change the culture at the Fed so that they were lighter, more hands off not looking over your shoulder. And now we reap the consequences of both the decision in Congress and the decision by Jerome Powell to back up. So you would say that on that point it was a problem of Regulation and of The Regulators. Yes, it was one and two, one and two and the fix is is exactly one and two.

So the fix is Congress should do its part and tighten back down so the FED can't do this. But even before Congress acts I mean this very afternoon instead of holding a press conference, Jerome Powell should be tightening down those regulations at the FED where they have the discretion to do that. And then part three is put some more tools in the arsenal-like clawbacks in order to align the incentives of the banking Regulators better with keeping those Banks stable. Let's talk a little bit about a topic that we touched on the last time you and I were together and that is, uh, stock.

Holdings and Investments of members of Congress Yes, what progress if any has been made on that front. And I note that you personally do not have individual stockholders. You have funds and mutual funds like that. That's right.

that's it for me. So so what's happened and what's left to do? A lot? So you want to talk about something that's hard you know, trying to get members of Congress who will all say in general that they think there's well, I shouldn't even say they all say it. Some will say there's a problem with stock trading, but look, um. I've been in negotiations with this I've got good bipartisan Partnerships going on here.

We've met, we've met, we've got the language down. We're meeting again next week. I Don't want to I don't want to show too much here. Uh, but we're moving this thing along because we've got to the American People cannot read time after time that members of Congress were trading in Bank stocks while the FED is trying to figure out whether to move in on a bank.

Uh, what? We just have to stop this. This is part of the cost of being in public service. You know if you want to be a stock Trader bless your heart, knock yourself out terrific. There are about eight billion different jobs you can have that you can trade stocks on the side or you can make it your principal occupation.

but you want to be. We have 19 seconds. An elected Officials great about raising the president. Insurance or not, do would you raise? Deposit Insurance payroll.

Look, right now we have unlimited Deposit Insurance Oh, come on, everybody knows that only the difference is the Big Banks and the big depositors that are taking advantage of it aren't paying a penny for it. We need to raise it and make the people who take advantage of it. This is all hurting small Banks more than anything. Absolutely because they're now going to have to pay into these.

and because of the the lack of clarity, the Big Banks keep getting bigger. which sounds like was so they want the insurance raised. They say that's how you level the playing field. We can compete with the big guys.

If you'll raise that cap for us, would you do that? Absolutely. I've got one eye on the door here. Uh, and there is Senator Warren Thank you so much Oh brother. Foreign.

Before discussing today's meeting, let me comment briefly on recent developments in the banking sector. Conditions in that sector have broadly improved since early March and the U.S banking system is sound and resilient. We will continue to monitor conditions in the sector. We're committed to learning the right lessons from this episode and will work to prevent events like these from happening again.

As a first step in that process. Last week we released Vice Chair for Supervision Bars Review of the Federal Reserve's Supervision and Regulation of Silicon Valley Bank. The review's findings underscore the need to address our rules and supervisory practices to make for a stronger and more resilient banking system. and I'm confident that we will do so.

From the perspective of monetary policy. our Focus remains squarely on our dual mandate to promote maximum employment and stable prices. For the American People, my colleagues and I understand the hardship that high inflation is causing and we remain strongly committed to Bringing Inflation Back down to our two percent goal: Price stability is the responsibility of the Federal Reserve Without price stability, the economy does not work for anyone in particular. Without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.

Today, the Fomc raised its policy interest rate by a quarter percentage point. Since early last year, we've raised interest rates by a total of five percentage points in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to two percent over time, we are also continuing to reduce I'm trying to get the stop looking ahead. We'll take a data dependent approach in determining the extent to which additional policy firming may be appropriate. I will have more to say about today's monetary policy actions.

After briefly reviewing economic developments, the U.S economy slowed significantly last year, with real GDP rising at a below Trend pace of 0.9 percent stream. Labs is screwing me. The pace of economic growth in the first quarter of this year continued to be modest I Don't know why I Can't edit the size of this. despite a pickup in consumer spending, activity in the housing sector remains weak, largely reflecting higher mortgage mortgage rates, higher interest rates, and slower output growth also appear to be weighing on business fixed investment.

The labor market remains very tight. Over the first three months of the year, job gains averaged 345 000 jobs per month. The unemployment rate remained very low in March at 3.5 percent. Even so, there are some signs that supply and demand in the labor market are coming back into better balance.

The labor force participation rate has moved up in recent months, particularly for individuals aged 25 to 54 years. Nominal wage growth has shown some signs of easing and job vacancies have declined so far this year, but overall labor demand still substantially exceeds the supply of available workers. Inflation remains well above our our longer run goal of two percent over the 12 months ending in March Total Pce Prices rose 4.2 percent, excluding the volatile food and energy categories. Core Pce prices: Rose 4.6 percent Inflation has moderated somewhat since I Hope that's our last year.

Inflation pressures continue to run. High In the process of getting inflation back down to two percent has a long way to go. Despite elevated inflation, longer term inflation expectations appear To remain well anchored, as reflected in a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets. The Fed's monetary policy actions are Guided By By our mandate to promote maximum employment and stable prices.

For the American people, my colleagues and I are acutely aware that high inflation imposes significant hardship as it erodes purchasing power, especially for those least able to meet the higher costs of Essentials like food, housing, and transportation. We are highly attentive to the risks that high inflation poses to both sides of our mandate, and we are strongly committed to returning inflation to our two percent objective. At today's meeting, the committee raised the target range for the Federal funds rate by a quarter percentage Point Bringing the target range to five to five and a quarter percent. looks like we're continuing to the process of significantly reducing our Securities Holdings With today's action, we have raised interest rates by five percentage points.

In a little more than a year, we are seeing the effects of our policy tightening on demand in the most interest rate sensitive sectors of the economy, particularly housing and investment. It will take time, however, for the full full effects of monetary restraint to be realized, especially on inflation. In addition, the economy is likely to face further headwinds from tighter credit conditions. Credit conditions had already been tightening over the past year or so in response to our policy actions and a softer economic Outlook But the strains that emerged in the banking sector in early March appear to be resulting in even tighter credit conditions for households and businesses.

In turn, these tighter credit conditions are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. in light of these uncertain headwinds. along with monetary policy restraint we've put in place, our future policy actions will depend on how events unfold in determining the extent to which additional policy firming may be appropriate to return inflation to two percent over time, The committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, economic, and financial development.

My bot just went. We will make that determination meeting by meeting based on the totality. Does that look good enough for you guys? I'm sorry for the outlook for economic activity and inflation I Think that's good enough? We are prepared to do more. If greater monetary policy restraint is warranted, we remain committed to Bringing inflation back down to our two percent gold and to keep our longer term inflation expectations well anchored.

Reducing inflation is likely to require a period of below Trend growth and some softening of labor market conditions. Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run. To conclude, we understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission.

We at the FED will do everything we can to achieve our maximum employment and price stability goals. Thank you! Quite the dip. And then the pop was that dip the fake out. Are they gonna rip it now? Hi Gina Smiling look at that volatility.

you're taking our questions I Wonder if you could tell us whether we should read the statement today as a suggestion that the committee is prepared to pause interest rate increases in June and I. Also wonder if the FED staff has in any way revised their forecast for a mild recession from the March minutes. And if so, what a recession Like what they're envisioning would look and feel like when it comes to, for example, the unemployment rate. So uh, taking your question of course.

Today our decision was to raise the Federal funds rate by 25 basis points. Uh, a decision on a pause was not made today. Uh, you will have noticed that uh. in the in the statement from March we had a sentence that said the committee anticipates that some additional policy firming may be appropriate.

That sentence is is not in in the statement anymore. We took that out. instead. we're saying that in determining the extent to which additional policy firming may be appropriate to return inflation two percent over time, the committee will take into account certain factors.

So we that's a that's a meaningful change that we're no longer saying that we anticipate and uh, so we'll be driven by incoming data. You know we'll approach that question at the June meeting. Uh, so the the Um the staff's Uh forecast is. So let me say start by saying that that's not my own most likely uh case.

which is really that that the economy will continue to grow at a modest rate this year. and I think that's uh, so different people in the committee have different forecasts. That's that's my own assessment of the most likely path staff produces its own forecast and it's independent of the forecasts of of the participants which include the governors and The Reserve Bank presidents of course. And we think this is a help.

They really think they're not especially influenced by what the governors think and vice versa. The governors are not taking what the staff says and just writing that down. So it's actually good that that the staff and individual participants uh, can have different perspectives. Um, so broadly.

the forecast was for a mild recession and by that I would characterize as one in which the rise in unemployment is smaller than is has been typical in modern era. Uh, recessions. Um I I Wouldn't want to characterize the the staff's uh forecast for this meeting. We'll we'll leave that to the minutes, but broadly broadly similar to that.

Rachel Thank you Chair Palavento Siegel From The Washington Post Thanks for taking our questions. I'm wondering if you can talk about the account of possible effects of a debt limit standoff. You've said repeatedly that the ceiling must be raised, but do you see any economics effects of even getting close to a default and what type of situation would that look like? Um, so I Wouldn't want to speculate specifically, but I will say this: these are fiscal policy matters for starters, and they're they're for Congress and the administration for the elected parts of the government to deal with and and they're really consigned to them. From our standpoint, I Would just say this: it's essential that that the debt ceiling be raised in a timely way so that the US government can pay all of its bills when they're due.

Failure to do that would be unprecedented. We'd be in Uncharted Territory and the consequences to the US economy would be highly uncertain and good could be quite diverse. So, uh, I'll just leave it there. We, um, we don't give advice to either side.

We just would point out that that it's very important that this be done. And the the other point I'll make about that though is that no one should assume that the FED can protect the economy from the potential you know, short and long-term effects of a failure to pay our bills on time. We, uh, it would be so uncertain that it's just as important that that this we never get to a place where we're actually talking about or even having a situation where the US government's not paying its bills. Philip was discussion around the uncertainty of a possible standoff.

Did that affect today's monetary policy decision at all? I Wouldn't say that it did, it was. of course it's something that came up. We talk a lot about risks uh, to the to the Outlook and that that will that come up. A number of people did raise that as a risk to the Outlook I Wouldn't say that it was important in today's monetary policy decision yet.

Oh thank you. Look at that whip saw Jesus Be careful folks. we're all over what the Federal Reserve board did in the wake of that February presentation where you were informed that Silicon Valley Bank and other Banks were experiencing interest rate risks. And can you tell me what supervisory actions you've done in the wake of the recent bank failures to make sure that banks are currently appropriately managing interest rate risk.

and kind of part three. But it's all the same question here. Do you still think this separation principle that monetary policy and supervision can be handled with different tools? Thank you Sure. So the February 14th presentation I didn't remember it very well and now of course I've gone back and looked at it very carefully.

I did remember it and what it was was a general presentation. It was an informational briefing of the whole board. the entire board. I think all members were there and it was about interest rate risk in the banks and and um, lots of data.

and there was one page on Silicon Valley Bank which talked about. you know the amount of losses they are marked to Market losses they had in their portfolio. There was nothing in it about uh that I recall Anyway, about um about the risk of a bank run. so it was I think the takeaway was they were going a way to do a an assessment a vertical, uh, sorry, a horizontal assessment of of banks.

it wasn't Um, it wasn't presented as an urgent or alarming situation. it was presented as a as an informational, non-decisional kind of a thing. and I thought it was a good presentation and and as I said did remember it. um in terms of what we're doing of course.

uh I think banks themselves or many many banks are now, uh, are attending to liquidity and taking opportunity now. really? since since the events of early March to to build liquidity and um, you asked about the separation principle I you know, like so many things that are you guys feeling bullish or bearish right now and all this because the whip saw it, you know ultimately are you a bowler in this particular case, if you found that uh, the monetary policy tools and the Financial stability tools are not In Conflict they're both. They're working well together. We've used our we're right in the middle to support Banks through our lending facilities tools to Foster maximum employment and price stability.

We're all over the map Here need to be argumentative, but the the staff report said Svb has significant interest rate risk. It said interest rate risk measurements failed at Svb and it said banks with large, unrealized losses face significant safety and soundness risk. Why was that not alarming? Well, I mean I didn't say it wasn't alarming it was. They're pointing out something that they're working on and that they're on the case that you know that? I'm not sure whether they mentioned I think they did.

Actually, they mentioned, um, that they had taken regulatory action, matter, or supervisor reaction in the form of matters requiring attention. So I think that was also in the presentation I think it was I haven't done anything yet. they're experiencing this these things and and we're on the case. Um, hi chair pal uh I wanted to ask Obviously with the recent bank turmoil we've seen uh, multiple banks by other Banks and I was just curious whether you think that further consolidation in the banking sector would increase or decrease Financial stability and whether you have any concerns about the biggest bank in the U.S getting even larger so you know we certainly don't and I don't have an agenda to further consolidate.

Uh Banks There's been consolidation, has been a factor in the U.S Bank industry. really since Uh Interstate Banking and before that even it goes back more than 30 years you when I was in the government a while back I think there were 14 000 Banks Now there are four thousand and change so that's that's going on. I Personally have long felt that having small, medium, and large size Banks is a great part of our banking system. Uh, you know the the Community Banks serve particular customers very well.

Regional Banks serve very important Uh purposes and the various kinds of G-sibs do as well. So I think it's healthy to have a you know, an arrange a range of different kinds of banks doing different things. Um I think that's a positive thing. Um, is it a financial? So I would just say in terms of JP Morgan Uh.

buying. Uh First Republic Um, the FDIC really runs the process of closing and selling a closed Bank completely that that is their role. So I really don't have a comment on on that process. As you know, there's an exception to the deposit cap for failing bank.

so it was legitimate and I think the FDIC I believe is bound by law to take the bid. that is the least cost bid. So I would assume that's what they did. the fact that they're they're getting larger in general.

Hell yeah. I I Think it's probably good policy that we we don't want the largest banks doing big acquisitions. That is the policy and uh, but this is. this is an exception for a failing bank.

and I I think it's actually a good outcome for the banking system. It also wouldn't would have been a good a good outcome for the banking system at one of the regional Banks bought bought this company and that could have been the outcome. But Ultimately, we have to follow the law in our agencies and the law as it goes to the Uh the the least cost bid. Thank you.

Uh Colby Smith With the Financial Times, at the March meeting, you mentioned that a tightening of credit conditions from the recent bank stress could be equal to one or more rate increases. So given development since then, how has your estimate changed? Yeah, I think I I think I Followed that up by saying it's um, it's uh, quite impossible to have a precise estimate of the words to that effect. But in principle, that's the idea. You know when we we've been raising interest rates and that raises the price of credit in that, in a sense, restricts Credit in the economy working through the price mechanism.

And you know, when Banks raise their credit standards that can also make credit tightener in a kind of broadly similar way. Um, it isn't It isn't possible to make a kind of clean translation between one and the other, although firms are trying that and you know we're trying it. But ultimately, we have this bar coding now and humble about our ability to make a precise assessment. so it does complicate the task of achieving.

You know, a sufficiently restrictive stance. but I Think conceptually, though we think that it you know interest rates will. in principle, we won't have to raise rates quite as high as we would have had this not happened. The extent of that is so hard to predict because we don't know how persistent these uh, these effects will be.

We don't know how they'll be and how long they'll take to be transmitted, but that's that's what we'll be watching carefully to find out, just to quickly. What does it suggest about the scope for the committee? Uh, to pause rate increases perhaps as early as next month? Uh, even if the data remains strong, then if if it's having some kind of substitute effect, it's that. this is just something that we have to factor in as we as we want to find ourselves. So I guess I would say it this way.

Um, the assessment of Uh of the extent to which additional policy firming may be appropriate is going to be an ongoing one. Meeting by meeting. and we're going to be looking at the factors that I mentioned that they're listed in in the statement. The obvious factors.

That's that's the way we're going to be thinking about it. Um, and uh, That's really all we can do As I say it does complicate we we have. You know, a broad understanding of monetary policy. Credit tightening is a different thing.

There's a lot of literature on that, but translating it into into rate uh Ike's is is uncertain. Let's say it adds even further uncertainty. Nonetheless, we'll be able to see what's happening with credit conditions, what's happening with lending. We get.

there's a lot of data on that, and you know we'll We'll factor that into our decision making. I bought bought some puts as a test here, but I'm going to cut them very quickly, noting that the statements dropped the reference to a sufficiently restricted literally I was wondering: uh, given your Baseline Outlook whether you feel this current rate of five to five and a quarter percent, this is a small position, nothing crazy. This is going to be an ongoing assessment data to accumulate on that. um, uh, not an assessment that we've made that.

That would mean we think we've reached that point and I just think it's uh, it's not possible to say that with confidence now. Um, but nonetheless you you. You will know that the Summer of Economic projections from the March meeting showed that in at that point in time that the median participant thought that this was the