Power Lunch - Fed Cuts Rates by 25 Basis Points 9/17/25

Episode Date: September 17, 2025

Fed cuts rates by 25 basis points. Power Lunch brings you pre and post Fed decision analysis.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, the moment the market, maybe you have all been waiting for, is finally arrived. It is Federal Reserve Decision Day markets that could be coiled to respond. Welcome to Power Lunch, everybody. I am Brian Kelly is off, and you are just under five minutes away from the Fed's latest decision on interest rates. Wall Street anticipating the Fed will make its first cut of the year, one quarter of 1% expected. But there is way more drama than just an interest rate cut that pretty much everybody and their mother and their mother's mother. expects. We're going to get you the full storyline in moments. And with those moments to go, here's how things look. Stock's actually mostly on the rise. The Dow is up one-half-one percent.

People don't really care about the Dow. Small caps actually up about six-tenths of one percent. They're seen as more of a beneficiary of future rate cuts. So maybe small caps are telling us something, the NASDAQ down about four-tenths of one percent. The bond market, the longer in, as they say, the yield, not moving. Why would it? They want to hear what Jay Powell has. to say, maybe if there's any dissents. What do the dissents see? And then, of course, gold, Bitcoin, the U.S. dollar, the currency complex, gold down just a bit, but gold at a record high as well. Bitcoin on the move, too. Bitcoin down about a thousand bucks, but for Bitcoin, that's actually a relatively small move. All right. Enough talk. Let's get right now to our All-Star

panel here, all in studio. We've got David Kelly, JPMorgan asset management, Francis Donald, RBC Capital Markets and Jim Karen and Morgan Stanley Investment Management. All right. Bank of Canada is down. So here, Federal Reserve, U.S., Francis, what happens today? Well, we get a cut from the Federal Reserve and they're probably going to emphasize that that labor market is looking worse. But I want to hear how they characterize inflation, which is still too strong, likely to reaccelerate, and we're 53 months still above target. So this is a central bank that doesn't sound like a cutting environment to me. It doesn't sound like one. So I want to be. It sounds like one. So I want to hear how Chair Powell is going to navigate what is still an inflation problem and likely to become more of inflation problem while he's still cutting.

Okay. David Kelly, do we get a cut today. Yeah, we do. We get 25 basis points, but we shouldn't cut today because the first... Shouldn't cut, shouldn't cut, will cut. The reason we shouldn't cut is because the Fed is further away from its inflation objective than its unemployment objective. And I believe it's going to be that way at the end of the year. I don't think we're on the brink of a recession here. it's a slow economy. But the problem is there's politics here and there's also messaging. And I think what we're going to be looking at

is how many people dissent? Do we get three? I mean, is it a prerequisite in order to be in the game for a Fed chair that you have to descend 50 basis points today? Is that part of, is that just table stakes? So that's one question. And then a second question is,

does J. Powell have to defend cutting rates today by saying the economy is looking really, really weak? because that messaging actually hurts the economy. But one other thing, whatever we get today, rate cut does not help the economy grow faster at this point. Jim? So I think they cut 25 basis points, but I don't think it's just about the economy.

I also think it's about the balance sheet, and I also think it's about liquidity. So what we've started to see is that repo rates have started to rise, bank reserves are falling. As the Fed has kept interest rate policy unchanged and the balance sheet has started to shrink, that has created some liquidity tensions in the markets. So part of the reason why I think the Fed should cut rates, time around is to address those liquidity issues and repo rates rising in bank reserves and all the like. So I agree, you know, with David and Francis, look, you know, we can debate the economics around this. We can talk about the unemployment rate.

But the reality is I think that the Fed's insurance is really based on liquidity. Francis, we've got one minute to go. And we have possible dissents. How much does the non-interest rate stuff matter? Well, for the economy, it's not what the non-interest rate stuff is. It's what the interest rates actually do. And I'm going to pick up on David's point here. We've got to be really careful.

We're going to get headlines all today. The Fed's cut rates. This is not going to improve the U.S. economy very much at all. What ails the U.S. economy is not interest rate sensitive. It's a massive trade shock. It is a labor shortage. Is it an uncertainty shock at play? So even though we see a Fed today, even though we're going to see lots around dissents

and that matters to the story of the Federal Reserve, today matters way less for the real economy than maybe the headlines will I've said it before, David. I don't know what the Federal Reserve does about, you know, auto insurance rates that are up 40% in a year, electricity bills that are up 20% a year. Or the, you know, what I call it the tariff flu. The tariff flu both slows you down and also gives you a temperature. And that's really what's the problem here. And the Fed really isn't the remedy. All right. So with about 10 seconds to go, we got the Dow up six tenths of one percent, small caps, a mid-cap stocks up about two-tenths of one percent. But I'm going to stop talking

because Steve's got the decision. Federal Reserve cutting interest rates by a quarter point as expected to a new range of four to four and a quarter percent. New Fed governor and former CEO, current CEO chair, Stephen Martin dissenting in favor of 50 basis point cut. The median Fed official looking for two more rate cuts this year, but just barely. I'll get you details on that in the second. The statement importantly says the balance of risks have shifted. Downside risk to employment has risen. Job gains have slowed.

Unemployment has edged. up and the economic activity has moderated. At the same time, the statement does note that inflation has moved up and remains somewhat elevated, but clearly the Fed favoring the concern about employment here over the concern about inflation. It says uncertainty remains elevated as well. On the rate outlook and the so-called dot plot, some really interesting movements here. As I said, the median Fed official forecasting, two more rate cuts this year, but just barely,

there was massive disagreements among officials on the rate outlook for 2025. very unusual with just two more meetings remaining. Let me give you the data here. One official doesn't want to cut at all. There was no other dissent in favor of not cutting today, but one wrote down the current rate or the previous rate as their dot. Six want no more cuts after this one. Nine want two more cuts.

And one official, I guess we can guess who it is, wants five more quarter point cuts this year or 125 basis points to bring in the Fed funds right down below the immediate neutral rate. So there's a big time dove on the committee. I think the committee at the headquarters here will have some fun figuring out who exactly that is. The median wants one cut in 27 and one in 28, so I'll give you the numbers now. 36 is the median forecast for this year on the funds rate, down from the current of 4.125. So that's two cuts, 34 for 27 and 3-1 for 2028.

A little bit more on the economic out of the core inflation unchanged. outlook for this year at 3%. Unemployment Unchanged at 4.5%. GDP pushed up a little bit to 1-6 from 1-4. 5 members want to go below the 3% nutrient in 2026. That's up from 2 in September. So they're looking for a little bit of stimulus down the road next year in the funds rate. 6 want to do so by 2027. Brian, I'll send it back to you and the smart people around the table there to make sense of all this. Well, that's a pretty smart person down there in DC too, Steve. Should we assume that it is new Fed member Stephen Myron that is calling for the five quarter point cuts over the next couple of

meetings? This was my speculation leading into this, and that's what I think it is, Mike, Brian. I think it's Stephen Myron out there basically doing the president's bidding, calling for very sharp rate cuts immediately. I guess that would be in order to get there, you'd have to have a 75 and a 50 from here. So one of the remaining meetings would have to be a 75, one of that be a 50 in order for Stephen Myron's outlook or the person whose dot this is their outlook to be accurate. Yeah, that dot, as they say, is kind of like this Canadian reference. The yellow knife in the Northwest Territories is kind of way, way up and out there. Steve, stick around.

There was a joke, Brian. There was a joke among one of the Fed reporters here that we were going to have to get a legal pad to get the dot plot together. It has to be a longer piece of paper. I love that. You go from the 11.5 inch to the full. full 14. I mean, you know, I'm old enough to get that reference. Steve Leesman, thank you very much. Let's go back now to our esteem panel. Steve is still there. We still got to look through it. By the way, I'm trying to recycle the internet so I can compare the two. Francis, your immediate take on this decision.

Well, hearing about that dot plot, maybe he'll come in defense of the dot plot, there'll be a lot of comments about this being very political in nature, but this wide dispersion and views on this Fed. That's not the Fed wasn't political. It's independent. It's independent. Let me just say, because there's going to be questions about this, that there is a lot of confusion about the state of the U.S. economy now. It's not clear how much should the labor market truly be weakening.

When will tariffs come through? And some of this dispersion we might be seeing in that plot. Some of it, not all of it, may very well be a reflection of the confusion of this economic moment. So we have to be careful about taking any headlines around the median dot here, from what I'm hearing, because we have huge dispersion within Fed members. This is going to call more attention into absolutely who is going to be at the Fed and who is going to be leading the Fed not too many months from now. I think this is actually really important that there was only one dissent. Because what that tells me is that even though Governor Bowman, Governor Waller may want the job of Fed chair,

they're not willing to go against the consensus of the Federal Reserve in order to get that. I think that is a very, very positive statement. So, you know, I think, you know, Jay Powell is Mr. Consensus. He wants to get consensus. Clearly, you talk to everybody before this meeting. and to me the fact that they aren't, they're not going to fall over themselves to say 50 basis points now, even if they want more Fed easing,

I think that's a very positive sign because it says the Federal Reserve as an institution regards its independence as tremendously important and they're not going to fall over themselves to do what the administration wants right now. And I think that's a very positive sign. But our job, Jim, here, is to look ahead. And if we are to assume that Stephen Byron

or somebody else may become the next Jerome Powell, and that person is incredibly dovish. They want to lower rates that maybe they are not entirely apolitical. What does that mean for bond markets? What does it mean for stock markets? So ultimately what we have to think about is the framework that the Fed is working through, which is the Phillips curve. So effectively, what is that?

So the Phillips curve is a relationship between unemployment and wage inflation. So if the unemployment rate is going up, wage inflation, and therefore consumer inflation is likely to stay relatively low. If the concern is that the labor market's going to weaken, then they are very likely to be able to say, I'll look past 3% inflation today because it's not going to be a problem because the unemployment rate will be very high, so therefore we might as well cut. That plus the balance sheet, which I mentioned before. What it means for markets, though, is that you're seeing now wage inflation stay relatively low and likely to stay low,

which means that margins, profit margins, are likely to be higher. you're already seeing productivity start to rise. So essentially, as I tease through these statements and these numbers and everything else, what this is telling me is that productivity is likely to start to move higher into 2026. It's already doing so in 2025. That means markets can support a higher multiple, and it's bullish for the equity markets in that sense, because higher productivity means growth with relatively lower.

Okay. Speaking of the equity markets, a couple things I want to quickly hit and then get reaction to it. The macro, the bigger markets, not moving a whole lot, S&P 500, up one-tenth of 1%. Who cares? What is moving is these small caps, the SML small-cap 600 index. We don't talk about it a lot. It's up 2%. Here's why I'm talking about it, France, because small-cap stocks, domestic American companies, almost entirely all their revenue is in the United States, those stocks tend to move at the later

end of a rate cut cycle. So I want you to comment on that move as well. And here's the other news. The 10-year yield didn't move at all. It's exactly 4%. It moved down 1, 100th of 1%. In other words, if you're out there looking for mortgage relief, you're thinking, let's wait and buy a home because mortgage rates are going to come down. The bond market is saying you might be out of luck. Well, you have two issues in play here. One is that this market already priced in pretty significant easing from this Federal Reserve. So today was just meeting the expectations already in the market. You're going to have to out-ease those five cuts that were already put in if you want to see additional support coming through. But the second is we've talked about it on this show before. We've got fiscal dominance in play and that long end of the curve where mortgages are more tied.

In fact, fully tied, far less sensitive to what the Federal Reserve is doing and much more to what government is doing and what Washington is doing. So we want to pay attention more to shutdown risks, budgets coming through. If you want to focus about mortgage rates, then we do necessarily the Federal Reserve. Gary Cohn on CNBC earlier today said something very, very smart. It's a lot of smart things, David. But one of the things he said today was that we've got to remember the Federal Reserve, this rate call that we're talking about right now, the reason that we dragged you all to New Jersey, this is the overnight lending rate.

It's like basically tomorrow. What our audience mostly, what JP Morgan's client base mostly cares about is what happens down the road. and the longer-term bond market isn't moving. No, but this is actually good news because our great fear, I think all of us, is that the Fed becomes political. They cut short rates too much, and everybody says, you know what, we're off to the races in terms of government debt, we're off to the race in terms of inflation.

That would cause the long-term rates to go up. But we already did that. That's exactly what we did in 2020 and 2021. We've got a 4% long-bond 10-year yield. That is not high. If we lost Fed independence, it would go much higher. If we had more inflation, it would go much higher. higher. And the other thing I think is important here is the fact that we only go one

dissent to this decision makes me more confident that all this talk about not reappointing the Fed presidents. That's not going to happen. The Fed, as an institution, has a lot of strength if it holds together, and I think it will maintain its independence, and try to be apolitical. It's not a Republican Fed. It's not a Democratic Fed. They really want to do the right thing by the economy. And the fact that there was only one dissent today, I think really suggests that they will be able to do that. So I think it's very positive for markets and actually will help hold down long-term rates. Fair enough. I just wonder, Jim, and we've all been doing this a long time, okay? You've got AI. It's sitting out there. We don't know what that's going to do

to the labor market. We have a labor market that was wildly overinflated during COVID because companies over-hired. They were terrified of what's going to happen. They held on to employees. We saw 10-year yields go to what? Under 1%, David, as the Federal Reserve left its foot the gas. I hope we can all agree way too long, way too long. How much visibility, Jim, do you have and your team have on the American economy right now given the cloud of AI? I have no idea what the economy is going to look like in five years. Yeah, so it's a good point. So effectively what we're going through right now is a CAPEX driven cycle. We have 500 billion dollars to AI infrastructure a lot, right, a significant amount. We haven't seen this since the 19-

90s, right? So many people in the markets haven't even seen this. We have a CAPEX-driven cycle. You asked about small caps. You were talking about that. Look at non-farm, you know, look at the small business confidence level. Small business confidence is going up. Mid-sized company confidence levels are growing up. The reason is is that you're starting to get labor at a reasonable price. Labor is coming into the markets, the participation rates are moving higher. Cap-X AI, which is really driving the CAP-X cycle, and it's driving a lot of the economy, workers are going to start to come in in 2026, and they're going to come in with labor costs relatively stable and low. For companies, that's a positive. I can't emphasize this enough.

This is driving margins higher, which is why equities are where they are today, and they're able to look through all this noisiness in the market state. So what does AI do? Nobody really fully knows, but it probably leads to higher productivity, higher productivity, better growth, lower inflation, higher margins, supports a higher multile. Yeah, Steve Leishman still in D.C. Maybe you can expand a little bit on that, or by the way, just whatever you want, because I hope the point is well taken that coming out of COVID and then going right into kind of the age of AI, how much do the Federal Reserve officials that you talk to almost every day,

either publicly or privately, express concern to you that it is harder now to gauge the economy? Because I don't know maybe they do what the ultimate impact of things like, artificial intelligence like robotics, like those things are going to be on the American economy. When I talk to Fed officials about AI, they say put it on the list, Brian, for things that we're uncertain about. We haven't talked about the impact of immigration on the job market. The job market may be perfectly healthy given the immigration levels that we have, even

though the Fed is looking at downside risks here. I think, by the way, that's something that's stayed the hand of some Fed officials that are saying maybe we shouldn't be cutting more than one other time this year, because of the idea that we may be at a break-even rate of 20, 30, 40,000 a month, maybe the right number, given what's happening on the immigration side. AI would add to immigration, would add to tariffs, and you can see a line in the statement that says the economic outlook is uncertain or highly uncertain.

I want to pick up on something David said, which I think is really important. The idea that Bowman and Waller did not vote with Myron on a dissent for 50, I think it's very important. It does underscore that at least those two officials, are more interested in in the institution, in the independence than they are in getting the job. I think that's a big thing because what we've seen in the past, Brian, is you have a Fed official who dissents and they make their dissent known and then they come back into voting with the consensus. We've seen that a lot. One other thing that was not mentioned around the table, which is

we're now in a position for the data to do a whole lot of talking here. If the economy weakens further, the Fed is probably well positioned here. The market is probably well priced. If it does isn't weakened further, then I don't know that I would be on the board with saying we'll get another 50 basis points. Remember, we're running 3.3% on GDP on the tracking for the Atlanta Fed. So I think there needs to be some considerable weakness to lock in that additional 50 basis points this year. So a couple of headlines here. And Francis, I want to reiterate to our audience. There's a lot of information coming out very quickly that seven members of the Fed said no more rate cuts this year.

And I think one called for one more, two called for one more. That doesn't sound like a Federal Reserve that's like, let's just lower rates all year long. Parties on. Well, it's not a proper easing cycle, as we might have think of it. I'm also wondering. Could it be one and done? I'm wondering. Could it be one and done?

What is the reason to do one and done in the first place? Get the president off your back? A signal. And I'm going to agree with Steve here. We're heading into a period where we're likely to see the job market is going to to stabilize at lower levels that may be more structural than demand-based right now. And I'm still very concerned about inflation upswings into year-end. This idea that tariffs haven't come through into CPI yet, so they won't, I think is very

misguided. So this is going to be a challenge for this Federal Reserve to continue with an easing cycle or even a normalization cycle, as I might say it, when the data is not going to be working in their favor on either side of the mandate. Seven, calling for no more cuts. I think they call that the dot plots. Maybe the lights have turned out on that Fed lines. light, bright, as I have referred to it. Jim, David, Francis, really appreciate your insight.

Let you let you get back to your day jobs. Thank you very much. All right. Let's say I'm going to read on the stock market reaction. Dom Chu, I know all the attentions of the NASDAQ, the MAG 7. I get it. I hope you heard my point earlier about small caps. Suddenly now, Bobby Brady is the star of the show. All right. So here's what I'm going to tell you guys. If you look at the markets right now on your screen, what you are seeing is a general positivity in the Dow so far, but an S&P, and NASDAQ that are now below where they were before the Fred rate cut announcement came out. And just to kind of give you an idea of a benchmark, if you will, if you look at an intraday chart of the S&P 500, just before the decision came out, we were at roughly 6600.

Right now, the current price, as you can see, is 6587, so 13 points below where we were before the numbers came out. It got as high as 6624 in the two or three minutes right after the announcement. So it's gone up 24 points. there and given up all those 24 points and then lost another 10 to 13. That's the current state of play. So a bit of a roller coaster is we try to figure things out. Some key parts of the market to watch. Always on a Fed day, you're watching what the banks are doing right now. So take a look at the big ones like JPMorgan, Bank of America City, Morgan Stanley, Goldman Sachs, all generally still higher, but maybe losing a little bit of steam. Also check out what's happening

with the home building stocks. They are holding on to most of their gains. They did spike up after the rate announcement came out, but the likes of Lenard, D.R. Horton, Pulte homes, even the Home Depot's and the lows are in play right now, so we're seeing generally green across the screen there. The other point that you made, Brian, about the Mag 7 type stocks, large cap, mega cap technology and communication services. That's a little bit more of a mixed picture right now. Apple shares are still cleaning to one quarter percent gain, Microsoft and Nvidia, lower on the day so far. And then we'll round things out with a check on gold prices, Bitcoin and Ethereum as well.

They have generally been seen as reacting to this rate picture. And by the way, each of those assets, crypto and regular gold, all lower so far right now, Brian. So we'll keep an eye on the volatility as we head towards the press conference. I'll send things back over to you. Dom, looking at the stock market reaction. Now let's get the bond market reaction in Chicago. Rick Santelli, not a huge move in the tenure today.

But I would imagine you're going to tell us that the move we've seen the last couple of weeks has been the anticipation of the... of what we got today, or no? Well, let's get to that. Let's start first with the two-year. Two-year was around 353, up three base points on the session, when the announcement hit. You could see it traded down on the intradate chart to 346.

The current low-yield close for the year was on the 8th of September at a 348 yield. So we are technically guns hot for a new high-yield close, and that goes back to September of 2022. The tenure that was just referenced, the last six or seven sessions, it's been like compressing, compressing right around that 401 to 404 area going nowhere quickly. The big story on tens is the 4% threshold. Now, we have violated a bit right before the statement we were at 404.

So basically, twos and tens each moved about five basis points. We're hovering right at 399. We traded down to 398. But the reason 10 years are so important is, is because if we start to close the day or a week, a week especially is a high priority technical signal under 4%. That would be very significant. Right now, we're still seeing basically white noise, not a convincing performance under 4%. We are at the lowest yield closed at 4% from the 4th of April.

And finally, the dollar index is the big mover on the session, and nobody's talked about it. Dollar Index is down about a third to a quarter of a cent since the announcement. It's on pace for the lowest close going back to February of 22. And all things considered, I think you want to really pay attention to the 2's 10 spread. It initially steepen. Now it's back to 51. Without steepening, maybe we could trade a bit under 4%, although I bet against it. Back to you.

That dollar index is a big deal. Keeps going down to your point. Maybe not enough talk about it. Rick Santelli, thank you very much. right now. Let's get a trader's take. Joining us now, Steve Grasso, contributor, CEO of Grasso Global, somebody I will see on fast money tonight. That is correct. Looking forward to it. We're both going to schlep in New York after this show. It didn't look like the Federal Reserve hit the panic button. They did. And you wanted to check a box. And, you know, there were dissents last time

around. We had Bowman and Waller. They didn't dissent this time. They didn't dissent this time. But that was the first time last time in 30 years that there were dissents. So I think this time, they didn't want a dissent because they already got the quarter point. They said their piece. They said their piece. And they got a quarter point. They were looking for a quarter point. The environment changed. And then we had Stephen Myron. He dissented. So we do have someone who wants five cuts. We do have others that we're happy with the 25 basis point cut. But it depends on where the neutral rate is. So if the neutral rate is around three to three 75, we're still very tight in monetary policy.

So let's get into that a little bit because our job, again, Steve, is to look forward. I know we're going to look into next year, right, when Jerome Powell is replaced. No dissent. No dissents. No dissent because Bowman and Waller, to your point, got their one quarter percent, one quarter percentage point cut. Right. Myron wanted to, Stephen Myron, wanted to cut the Fed funds rate by one half of a percent. He was way out there to this point.

But you're talking about a guy that might become the chair of the Federal Reserve or someone Unlike him, could become the chair of the Federal Reserve. Where do we see Fed funds rates a year from now? Yeah, I think you're going to look for Fed funds rates to be around 3%. And I think that's what's really going to move the housing market or unlocked the housing market. Do you know 85% of mortgage holders have a rate below 5.5%? They're not going to move unless that rate narrows considerably. They still might pay more than they are now, but it can't be 3% more.

Correct. And when you think about it, we're not, we don't live in houses. We live in mortgages. We own mortgages, not the house. So in 2021, in January, 2021, people wound up refinancing their mortgage rates. They got it below 3%. I think you were one of those guys probably, right? No? I'm the one who didn't. That's right. So if you think about it, you need to unlock the housing market. Five and a half percent unlocks the housing market because we're going in the general right. direction. I think that's a big thing for the markets. So the move we're seeing, so small caps, the Russell 2000 guys, bring up the, what is the RTI, I think is the ETF for the Russell 2000. That's up 1.9%. Dom Chu hit some of the housing stocks. And it's interesting because like the Lennars and the D.Hortons of the world, they're moving up a little bit today, even though bond yields aren't moving down. You're saying it sounds like, because again, the market's looking out six to nine months. The market always prices six.

to eight months ahead of what we're seeing now. So everything that we're seeing, everything in the market, they're already pricing stuff that we have no idea what is coming down the pike. Think about the Russell, though. 40% of the Russell is unprofitable. That means that they rely on interest rates. That means they rely on variable rates. That is their margins. So if you think those things are going to do better, think about tech investment, those will do better. consumer discretionaries, your best buys, your home depots, Ford, GM. Anything that you will finance will do better with lower rates, obviously. I just quickly, we got Richard Claret on the way.

How much, GM's had a nice move, you know, because, again, how much of this is already priced in? Because the market's not waiting for the Fed. Yeah. If everybody said, well, we're going to get a cut, we're going to get a cut. They're going to move GM and Ford and everybody's stock weeks ago, months ago. Yeah, yeah. So I'm on record with thinking 25 basis points gave the market.

it needed. 50 basis points would have created an incredible rally. Zero would have created a sell-off. Can I ask you to stick around joining this conversation? Right here. I mean, they have fast money. We both go the same way. Let's bring in now a former Fed official's take. That is Richard Clare to, former Fed chair and global economic advisor at Pimco, Richard, kind of a dealer's choice. You got the actual Fed decision. Everybody expected. You got Myron calling for a half percentage point cut. He's kind of way out there. No dissence. The neutral rate. What do you think is the most important? thing here. Well, I think there was some risk management here along two dimensions.

One, the statement made reference to risk in the labor market. I think that was the primary motive for the cuts, but I think Jay Powell did some risk management on his committee. There was some thinking going in. You could have some dissents in favor of no cuts. On the other hand, you could have multiple dissents in favor of 50 or more. So a pretty close call if you just look at the dots in terms of the number of supporting the total of three cuts.

but it would have been a very interesting meeting to be a fly on the wall. We'll have to wait five years to get the transcript. Yeah, I get the hyperbole. No dissents from Waller and Bowman probably because, to Steve Grouse's point, they got their quarter point cut, so you're not going to dissent against the thing, which you were arguing for at the last time. What do you make a Myron's position?

Calling for a cut of a half percent. Well, I think that was my expectation. And in fact, there had been some discussion that he might vote, favor of a 75 basis point cut. Obviously, it's his first meeting. He just got sworn in, so we don't have much to go on. But no, I wasn't surprised that he descended in favor of a bigger cut. And then what do you make very quickly, Richard, of seven people calling for no more cuts this year? If you're super-doubished, that's not exactly a dovish Fed. Indeed. In fact, again, we've had commentary from Fed officials, including two voters,

Mr. Schmidt and Mr. Muslim, that indicated some skepticism. about further cuts. And so whatever divisions were on the committee between hawks and doves, I think largely remain coming out of this meeting. Richard, how do you square it when you look at tariffs where they could be that one-off price increase that Waller has argued? And then you look at the cracks in the labor market. Obviously, if you have a job, you can pay higher prices. If you don't, you can't. The answer to higher prices are higher prices, where do you come down on that? Well, I think that some of the tariffs are being absorbed not by consumers, but by exporters or

corporations. We're also seeing some improvement on the services side of the economy. So I think the Fed has formed a judgment that they are sufficiently confident that they are not going to be these second round effects on inflation. When coupled with a softer labor market, I think Powell has the quorum that he needed to get the rate cut and the signal of more rate cuts in. So what do you want to hear then from the last few meetings of J-Pow? I think he's got five meetings where he is the chair after this meeting. Don't at me. It's four, five, or six.

One of the two. But his term is coming up. So, Richard, what would you like to hear from the Fed chair? What would the market like to hear over the next few meetings? Oh, my. Well, I think there are a lot of... Go to hear, oh, my? Well, where do I begin?

I think they'll want to hear about his views about, you know, the end of the, of the Fed. They'll want to hear about his views about the balance sheet. They'll want to hear about his thinking about, you know, the risk to the labor market and to inflation. And so certainly there will be four or five more press conferences and he'll have plenty to talk about in the remaining months of his term. Yeah, Steve, what's your take from a stock market perspective? Again, hit more on this on fast money tonight, 5 p.m. Eastern, tune in. As long as I'm here, I'm going to just keep doing that. Yeah. We're not seeing everything move higher. And we've got a rate cut, I thought stocks were supposed to, because 25 basis points were factored in.

50 would have surprised the market to the upside. You know, and when you really think about it, if they did nothing, the market would be cascading lower because it was already factored in. So if we didn't get the cut, we'd be probably talking about a Dow down a ton. Yeah. And do we still have Richard? So I'm going to do that, bring that guess back in. So Richard, you brought up the balance sheet.

So when you look at the balance sheet, we're a balloon to $9 trillion. And I looked at pre-financial crisis, we were below a trillion-dollar balance sheet. Now you see it ballooned to $9 trillion. Now we're below $7 trillion. How can they still allow MBS to roll off and still be cutting? So you have that push-pull to me. And that MBS rolling off has the most inflation, if you will, upward price momentum on your mortgage rates. So it seems like there's a push-pull.

They're doing counterintuitive things. What do you come down on that? Well, it is a push pull. And indeed, it's been a push pull now going all the way back a year ago. Remember, we got 50 basis points almost exactly a year ago and another 50, the remainder of 24. And yet the QT program continued. You see something similar at the Bank of England. They're doing QT and cutting rates.

And so this is really where we are in this cycle. You know, central banks, certainly including the Fed, want to get towards a smaller balance sheet. We may be coming towards the end of that process at the Fed in the coming year or so. But sure, this has been a fact of life in markets now for at least a year. Yeah, and just a reminder to our viewers, we're looking at the podium. Jerome Powell tends to be exactly on the nose of time. So 2.30-0 Eastern time. He tends to walk out.

Ahead of that, the setup small cap, 600 up 1.8%. Russell 2000 up 1.3. Bitcoin, by the way, down about 1,400 percent. The market, we're not seeing a big move in bonds, 10-year yield at 4.02%. Steve Grasso, where was it before the Fed decision? 4.02%. So the move in the last couple of weeks, again, the market is not waiting around. The bond market is actually going to run the show.

Richard Claredea Pimco, really appreciate your time. Richard, thank you very much. 20 seconds, Steve Grasso, final comment. Yeah, I think you're going to, you hit it on the head before. If you're looking to May 2026 where Jerome Powell leaves his post, There's going to be a lot of doves that are released between now and then the market's going higher. I think, yeah, wise man once said this is what it sounds like when doves fly, right? Because I don't think the doves are going to be crying anytime soon.

Richard Clare to thank you. Steve Grasso, we'll see you tonight on Fast Money 5 p.m. And as we noted, right on time, Jerome Powell.