Power Lunch - Fed leaves rates unchanged 1/28/26

Episode Date: January 28, 2026

The FOMC votes to leave rates unchanged. Our Fed panel breaks down the decision here on Power Lunch.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

You've got a new market milestone. Oh, and by the way, it is Fed Day. That's why we're coming to you five minutes early. Welcome to Power Lunch alongside Kelly. I am Brian. We are now less, what, four minutes until the Federal Reserve's call on interest rates. The odds of a rate cut, they're small. The market not expecting a cut, but why it matters to you and your money is not only the future path of rate cuts, Kelly, but Chairman Jerome Powell's first press conference since receiving a grand jury subpoena. related to the renovation costs of the Fed's headquarters ahead of it. Here's how your money and the markets are setting up. And as usual, no big moves. NASDAQ is up, what are they called a scosh? SNP down 8-100s of 1%.

But as you know, Kelly, you just talked about it. We hit 7,000 of the first time intraday ever in the S&P 500. They call that a squinch when we're down about five points. You know, if we pick your, it depends on which part of the country you're from. There is a look at the 10-year yield, about 420. That's going to be a level to watch, as we hear, not just from the Fed at two, but of course, from the chair. Mortgage rates are above 6% right now, according to Fannie. They're right about 616, so these moves will all pan out.

The dollar is up fractionally today, but trading near a four-year low after the president will have said, I'm not so sure he cares at this point. It is down 10% over the past year. Flip side of that, benefiting from its weakness, take a look at the commodities. Now, even oil is up a percent at 63 near a four-month high. The gold rally, of course, continues crossing 5,300 today. for the first time. And aside from all of that, the big test for tech comes after the bell today. Results from Meta and Microsoft, those shares in a holding pattern as well.

Yeah, and with oil, by the way, just watch Middle East. Just watch Iran as well. It's not a Fed move. Not a dollar story. There's some, you know, chatter out there. The president making some comments on social media yesterday. Just watch Iran. Great point. Put that in the back of your big brains, everybody. Let's get to our All-Star panel now as we're just moments away from the Fed's decision. here on set with us, David Kelly of JPM Morgan, Jeff Kilberg of KKM Financial. We're also joined by Jim Karen of Morgan Stanley and Francis Donald of RBC Capital Markets. Welcome to all of you.

Francis, I'll kick it to you first. Ladies first, what are you expecting? We know the Fed's going to hold today. What we don't know is how they're thinking about inflation. How are they thinking about tariffs and the elephant in the room, of course, Fed Independent? So it's going to look calm on the surface, Kelly, but there's a whole lot going on underneath today. All right, calm on the surface. David, you agree with that?

Yes, I do. I mean, the Fed's not going to cut rates, but I think we will see one dissent with Stephen Mirren voting again to cut rates. But I think the really interesting part is going to be the press conference. Does Jay Powell continue with this somewhat more aggressive language of two weeks ago? And, you know, does he make the case that we really don't need to cut rates? Because rates are really low. And, by the way, economy is fine.

There's no lack of liquidity. There's no real reason to cut rates here. We're not cutting rates, Jeff Kilberg, and the S&P 500. Intraday, 7,000. Markets the Honey Badger. It doesn't care. New all-time highs, but it's interesting. And at David's point, I think the Fed is in a predicament where we're looking for a dovish cut or a doveish conversation or potentially more of a situation. We will see them come in and kind of outline what's to come.

And we'll get personal. Understatement of the year, Sully, it's been personal for quite some time. Is it getting more personal? All right. And Jim? Jim, you there? Oh, I'm here. Hi, Jim.

How are you? 45 seconds with the Fed. What are your expectations today? I'm expecting no move. And look, I think that the Fed has a lot to think about, including the equity markets and also the value of the dollar and what it's doing to financial conditions. So I think the press conference is going to be much more informative. David, I agree. I think it's going to be kind of watch the dollar.

Normally it's kind of a side story, but right now it's front. No, no, absolutely. Because if the dollar falls some more, that's even more potential inflation pressure. So all that says, you know, that doesn't need to be toughish here. And then you also wonder, when do we get the announcement on the new Fed chair? I mean, if I was President Trump, maybe you just kind of want to do at the same time because that's what you do because you're the president. I don't know. By the way, Steve Leesman, the Fed's call on interest rates now.

The Federal Reserve pausing after three consecutive cuts, maintaining the rate of three and a half to 3.75. There were, however, two dissents, governors Waller and Myron, both dissenting favoring a quarter point cut. this time. They kept the language that they used last time to signal a pause saying that in considering the extent and timing of additional adjustments to the target range, that was what signaled a pause last time, perhaps telegraphing a future pause. There was also a noticeable upgrade to the economy and something of an upgrade to jobs. On the economy, they said it expanded at a solid pace, really marking to market what we know out there in terms of what's been happening with GDP. It had said the economy was spending at a moderate base.

job gains, they say, have remained low, but they say unemployment has shown some signs of stabilization. Last time they said, it had edged up. They also removed some language that said downside risk to employment have risen. That's gone from the statement. They remove language saying there's been a shift in the balance of risks. That balance of risk was towards downside risk to employment. That's gone right now, too. Inflation, they said, remained somewhat elevated, removing the language. It said it has moved up. New voters have. Logan, Koshkari and Paulson. I want to say the statement overall suggests that heat has kind of cooled down on both sides of the mandate for the Fed.

A little bit more relaxed about inflation, though they're saying it's still elevated, more relaxed on employment, removing that downside risk concern. And just a little bit of trivia here. I'm pretty sure this is right. With second time in six months that two governors have dissented, Waller and Bowman in July, now Waller and Myron. This time around, though, the dissent now is for a quarter, not a 50. Perhaps that's a little bit of coming together. The last time before this past six months we had that, guys, was 1993.

So still quite a bit of disagreement on the Federal Reserve. Well, Mark Committee, though, perhaps not exactly as much as we've had in the past. Kelly? If you had to kind of sum it up one more time, Steve, just as what you think the main thrust of this is, or if there's any real surprise for markets, do you think that there is one? There's not much of a market move. I mean, the Dow's down about 47 points. I think their hair is a little bit less on fire.

And I guess I could say this for me. You know, you've got two sides of the bald head here. You've got the two mandates out there. A little bit less on fire on the inflation side, a little bit less on fire on the employment side. They're a little bit more like, we're going to wait and see how this all breaks. I reported earlier on your show, Kelly, that there's going to be two things. A noticeable break to the downside on employment or an obvious cooling of inflation.

those things, as you note, the Federal Reserve is above the general belief of where neutral is. It's toward the high side of neutral. That's the way Powell has described it. So there's room for them to come down. But coming down now, I think, is going to require an obvious kind of break. It's not going to be a kind of judgment sort of thing at the margin. They'll do it when employment looks like if it's weakening very substantially, or they'll do it if it's obvious that inflation is headed towards the target.

Absolutely. Steve, thanks. And stick around. We'll see you again in just a moment. Let's talk about the reaction. I just quickly, Jeff Kilberger, if you don't mind to jump in here before we get to Rick. Some thoughts on what we're seeing play. This is almost like the halftime interview when they're heading to the locker rooms. We haven't heard from Powell yet. This is very early in the game still, to be clear. But what do you think of this? Well, two dissents is interesting. It's kind of a stalemate if you think about it. Because some folks were looking for it to be more hawkish, potentially more doveish. So this stalemate, I think she bodes well. We are going to see some volatility.

But keep in mind, the VIX at 16, it's illuminating the fact that we want more out of this press conference. David brought it up earlier. This press conference is going to be tangible, palpable to see what we can do from now until May when he supposedly Fed Chairman Powell is going to remain in office. Yeah, so it's kind of stuck. What was stagnant is that I was saying? Stalmate. It's an old football turn where you're on the goal line. You can't score. It's like the tush push. Soleil knows about that. Yeah, I know. Listen, but I would just very quickly, we'll get to Rick Santelli in a second, but David Kelly, I would disagree a little bit with my friend Jeff Kilberg and say, is gold is it soaring. Is gold telling us something about the market's risk? Or, to your point, Jeff, is it just its own thing? And maybe at Vix at 16 doesn't mean that gold's going to move. Gold is soaring. That's lots of liquidity.

Silver is soaring. That's lots of liquidity. Dollars coming down. That's inflation threat. And on balance, I think this is a slightly hawkish statement because they did put the, you know, a strengthening economy. I mean, they strengthened their economic language. And, yeah, I'm a little surprised that Waller dissented here. But that's 10 to 2 in terms of votes.

And getting another four votes. What's in favor of cutting is going to be really hard here, given the strength of the economy. Right. And so to kind of bring it back to Brian's question, then, everyone who's been bidding up medals and pushing down the dollar and worried about, you know, the new chair and how dovish they might be, this statement takes a bit of a breath on all of that. And just says, wait a minute, there's still, you know, maybe not a slam dunk case for a lot more. But I don't think that's really, I don't think this is happening because of liquidity to come. I think that's because of liquidity this right now. You know, I mean, there's plenty of beer in the fraternity right now without bring any more in. I think that that's what that's...

You did go to Michigan State. But this may put more pressure on President Trump to come out with an announcement of this new appointee. We're seeing a lot of movement. And at the end of the day, if you remember going back a couple of years at 1530, Henry the 8th, he wasn't happy with the Pope's ruling. So what do you do? He created his own church.

So will Trump potentially not be happy with who he's going to be a candidate for and appoint himself? I know I'm being a little tongue-in-cheek and little facetious, but this puts a lot of pressure because rates will not be coming down. Well, I wonder if Trump will treat the Fed Chair like Henry the 8th treated his spouses. We'll see what happens. I didn't go there. I just did.

Rick Santelli's in Chicago. He's got reaction in the bond market. Rick, there's not a huge move in bonds, but, I mean, how close are you watching this at some point announcement for a new Fed chair? Yeah, you know, I'm obviously very excited to see who he picks. I have my own thoughts on that. But I don't think any of this is really creating any drama. And that really is kind of a story, whether it's, you know, the criminal investigation,

whether it's the back and forth between the administration and the Fed. All of that gives good fodder for newspapers and websites, but it's not showing up in markets, and it certainly doesn't seem to show up in any of the underpinnings of this meeting or the statement. Two-day charts give you lots of information here, Brian. Look at a two-day of two-year and realize that we are dabbling a lot of action today under yesterday's low yields. And we were at 358 before the statement was read. We moved down about a base point.

We moved up about a basis point. And guess where we're at? Right at 358. If you look at a two day of tens, completely different. Yields are doing a lot of work above yesterday's high yields. Once again, that steepening effect, stickiness of the long end. It was basically right around 425 and a half. It went down a little bit, went up a little bit.

It's actually net net a little bit higher. Maybe the most interesting trade of all is the dollar index. Dollar index has been moving up a little bit. And right now, should it close here, it's actually back above what was the 2025 low close. So it's got some buoyancy. We were discussing earlier. Anybody who looks at a dollar index chart past 2003 sees the amount of time over 100 is minimal. So we shouldn't make a big deal about this.

But maybe the biggest story is the normalization of all the infraction central banks did for about seven to eight years right before COVID hit. And then they really went off the rails with things like QE4. So I think the bottom line to this discussion and questions to Chairman Powell ought to be, why is gold moving up? And are central banks largely responsible? That's why I asked our good friend, David Kelly, that exact first question. Rick Santelli, thank you very much. I want to go to my friend Francis Donald to RBC because I love your view because we're talking about exchange rates.

You don't just talk about exchange rates. You live exchange rates because you're working for the largest bank. Canada. You live in Canada. You get sort of that multicultural view and you also have to convert a lot of currency just in your personal life. What is what is the RBC view on the U.S. Fed and what they may or may not be trying to do or inadvertently doing to the U.S. dollar? Well, look, this Fed is on the sidelines, Brian. I'm looking here at the statement. We're being characterized. The economy is being characterized as solid. The job market is stabilizing. Inflation is elevated. You and I have been through a couple cycles here. You

could have paired this statement with a hike and no one would have batted an eye. But markets aren't moving. Why? Because they already know this. This is a mark-to-market statement that tells us what we already know. This is why the Fed is not in the driver's seat. They're in the backseat. Even in this last 10 minutes, we're not parceling comments about this. We're talking about the Mon market. We're talking about FX. These are the core drivers of this market and the economy moving forward. The Fed is on the sidelines. They just don't have the green light from the economy. And they are not actually going to be capable of solving what ails the U.S. right now. So what we see right now is that we're going to see a Fed that has to step back, allow fiscal

policy and markets to drive the narrative for the next several months at least. What ails the U.S. economy, Francis? A whole list of things. We've got enormous amounts of uncertainty, not just with respect to tariffs, but also we actually don't know the current state of inflation in the United States. We still have huge losses of data from Q4 that we don't have any clue on. We may be heading towards another government shutdown that's going to pull that back. What is the future of tariffs moving forward? And how will these large moves and markets impact the U.S. economy?

How sustainable is that U.S. dollar weakness? All of these are putting big question marks around where we're going next. Meanwhile, we are seeing some weakness in trade-related sectors. And guess what? 25 basis point cuts isn't going to bring back U.S. manufacturing right now. They're facing a whole other set of issues in play. This is not a particularly interest rate sensitive economy. It's not one that the Fed needs to deal with very specifically. They need to move to the side and allow some of these dynamics to play out. But if I could put it, Jim, David, just sort of, this is on the margin of hawkish reaction.

It is. The dollars up half a person is not a big deal. We haven't heard from the Fed chair yet, whether he's going to kind of confirm that direction or not. I think the market's waiting for perhaps a little bit more color on that front. I think that's right. And I think it's interesting to because the Fed isn't a predicament. This is the first time we have seen with new all-time high in the S&P 500, Fed meeting. Three of the Mag 7 names are reporting afterwards. So it feels like the market's a little coiled here. But at the end of the day, the market reaction somewhat muted. But we are seeing positivity. Look at the broadening in the market, Kelly. 65% of the S&P 500, just to push back a little bit on Francis north of the border there. Sixty-five percent of the

S&P 500 is outperforming the S&P 500, meaning the U.S. economy is strengthening, not weakening. We have a couple of people kind of in the hopper here. Mike, stand by for a second. Jim, Karen, we're coming back to you as well. Steve Leasman has a little bit more from the Fed itself. Steve, what can you tell us? Yeah, I'm having a little trouble seeing this. You know, Kelly, usually between you and me, there's a piece of paper between our different views here.

But I'm having a little trouble seeing this as hawkish for the following reason. It was the prior guest who made the correct statement, actually used the same phrase I use, which was marking to market. The Fed could not avoid the GDP numbers. It could not avoid the data numbers such as we have them. Obviously, we don't have complete inflation numbers. So I think the people who I talk to who follow the Fed very closely, we're fully expecting an upgrade to the economy,

a downgrade to the risk from unemployment, and a signal that maybe we're going to pause at least one more time. It's precisely how the market was priced going in. So I'm not really seeing this. as hawkish, I'm seeing this perhaps a return to neutral. Now, if you were on the bus that was hoping for rate cuts all the way from now until the end of eternity, then you're disappointed. But I think a lot of people got exactly what they were expecting today.

Jim, Karen, is standing by. Jim, you agree with that? So I think we need a different perspective to think about this, right? We have to think about this through the lens of the Fed. The Fed thinks about things through financial conditions, right, which is short-term rates, intermediate term rates, the equity markets, credit spreads, and the value of the dollar. Right now, what the Fed is observing is that the markets are easing for them. The markets are easing all around them. So now the Fed has to go back and think and rewind this and think about this in reverse order. What should the Fed do at this point? So right now the whole conversation

is about should the Fed ease? The way the Fed sees this is that given that they operate through financial conditions is that the market is easing around them. So if they continue to ease or if they think about cutting interest rates, then they're further adding to that. That's like an additional easing that's going through. So, you know, as I look at the dollar, as I look at equity prices, credit spreads, and, you know, as we were saying, bond yields seem to be relatively well behaved at the moment. This is actually an easing of financial conditions, which is very supportive for asset prices. hopefully it's supportive for the labor market and in a lower unemployment rate as well. Why do you think this is an easing of financial conditions?

Well, because financial conditions are comprised of five things. It's comprised of short-term interest rates, intermediate term interest rates, the value of the dollar, credit spreads, and the equity markets. Lower interest rates, short-term and long-term, right? Those rates have stayed relatively low. That's easier conditions. A weaker dollar helps with exports, so trade, deficits, things like that. That in corporations and profits, that's an easing of financial conditions.

You mean the moves broadly this month, not this moves in the last five minutes? Yeah, exactly right. Yeah, the moves that's going on. This is what the Fed is basically judging their policy actions on. Credit spreads are tight, so therefore the cost of capital is relatively low, and equity markets continue to go higher or at least stay relatively strong. So the way that the way that the Fed is operating, and again, they always operate through this lens of financial conditions. Their policy needs to be reflected in what's happening in markets.

So I would read this from the Fed's perspective is that their policies, relative to what's happening in markets, is pretty easy. Now, they could still cut one more time, but it's dependent on the labor market. Maybe they will. David, I want to, we're having a great discussion, okay? Very smart discussion. I want to pull it back a little bit because you know what question, Kelly, you probably get, I get, I know Kilberger, you down in Nashville. Hopefully the power will come back on soon for all your friends. Is winter rates going to go down meaningfully, David, because people want to buy a, homes. They want mortgage rates to come down. Ten-year yield is up today. Mortgage rates have just stubbornly kind of stuck around, right? Like a bad rash. And I'm just, I'm sure if you could

sort of lay in it out where basically when will people out there listening and watching right now who, you know, they don't trade bonds for a living, but they may want to buy a home. Will they see relief anytime soon? Mortgage rates are not high. The problem that we have in housing is the mortgage rates are way too low for a decade. That caused home prices to shoot up to levels, which can't be afforded with normal mortgage rates. Now, the problem is to get to really low mortgage rates, you're going to have to have really low long-term interest rates. The only way you're going to do that...

That's what the president wants, though. That's what he keeps talking about. Be careful what you wish for it. And he's going to put somebody in office that's going to basically try to do what he thinks. They can do that on short rates, but the only way to get long rates down is you're going to have to crush inflation and crush the economy.

Or Operation Twist, again? No, it's still not going to work. Unless you have a recession, you're not going to get those long rates down significantly. Real quickly, just pursuant to this discussion. We've seen some movement in the Fed Chair odds. I just want to show this on the screen for a second. Kalshi has now put Waller, I think, given him a little bit of a pop after this. So here, readers dropped down to about 30.

Now, he's still on top, 36% chance. There's Warsh at 27. There's Waller at 14, Hassett at 7. So readers' odds dropped more than... One percent. Readers down about 10 points in the wake of this, while Waller has been ticking higher since his descent. if that... Well, yeah, it's because of that dissent

because he didn't dissent the last time, around, and there was... But they cut the last time. Well, yes, but he could have dissented in favor of more aggressive set of cuts. I mean, presumably if he thinks you have to need another 25 now, he might have thought we needed to have 50 back then.

But I think... You have that graphic that we had this morning? I think that's what's moving this. But overall, you look at the numbers, there's very little reason for the Fed to cut any time first half of this year. I heard Steve Leasman. Steve's got a couple minutes before he's got to run

off into the Fed lockup. Steve Leasman, I know you want to jump. You're champing at the bit. Well, I just want to make a point. I think Chris Waller is voting his conscience here. I have to believe that. I don't think Chris Waller is voting. I don't think anybody implied this. But we have a graphic

here. I don't know if you still have it here that showed where the Fed is relative to all of the long run or neutral rates. The Fed is on the high side of most people's assessment of neutral. In fact, 16 of 19 officials are below the current rate in terms of where they think neutral is. So you can sit there and while the Fed is

maintaining rates, you can think that the Fed ought to be a quarter point lower or a half a point lower. And I will tell you, some people think neutral is a percentage point lower. And this is something to watch over time, which is whether or not the committee comes further together on their view of where rates are relative to where neutral is. And picking up on what Jim was saying, he's absolutely right, that they are looking at financial conditions. they look at this world and they don't see a tight fed. You're triggering David Kelly over here, so I just want to get him in for a comment.

I just don't think that economists actually know where neutral is at all. I mean, what this is is 19 officials with a blindfold on, throwing darts at the neutral dartboard to come up with 3%. They don't know that that's what the number is or even deeply think that. Here's the thing. Here's the thing. David, they all, everybody in their mind, you, Kelly, Brian, everybody listening to them. has a view in their head of what neutral is.

You make that assessment every time you make an investment, every time you decide to hold something, everybody has a view of it. It doesn't mean they're right, but everybody has a view. No, because the problem is this economy just does not respond to short-term interest rates up or down in a significant way. Because of that, you know,

if I kind of a view in a neutral rate, if the rate itself has such a minimal impact in the economy, that's why it's such a hard, I think our star is a mythical star. And quickly, I'll add, Rick Reader was talking about utilizing innovative tools. Yeah. They don't have to cut interest rates to achieve the goal. The messaging from the White House has been over the top about housing affordability.

Bring that long end of the curve. So I talked about Operation Twist, Kelly. But if you bring in Operation Twist and you bring the duration of the portfolio longer, you bring down those interest rates that that's going to accomplish the goal, if not even better, than the outcome of just cutting 25 beds. Okay, okay. Hold on. That's a great point, Chubby Checker.

I love the twist reference. Okay. Francis Donald will go... Chubby. I was like... Because Chubby Chekker... That's a little true. It's a little true.

No, no, you're husky. It's a different. By the way, we're the same size. So it's all good, brother. Francis Donald, help us out here because here's where the confuges. Jim Bianco, bond market guy, super smart guy,

posted this tweet, basically showing this idea of a K-shaped economy, right? Where consumer sentiment goes down, but the market goes up. There's the tweet, orange line, consumer blue line, stocks. We have consumer confidence at a 12-year low and American stocks mostly at a, an all-time

high from an economic perspective. Any reason why this is happening? There's a long list of reasons why we see all sorts of Ks in the U.S. economy. But as we're having this discussion, Brian, I just need to take a big step back. Next month, we're going to celebrate the five-year anniversary of inflation above 2% in this U.S. economy. And we don't even talk about that anymore. We've got a Fed that is maintaining a devish bias. We have dissents towards further cuts. And meanwhile, we have households who are raising their hand repeatedly saying food inflation is too high. Electricity is rising. The cost of living crisis is still very much in play for a lot of reasons. And yet that seems to be swept under the rug as we talk about some of the other minutia associated with the Fed.

I just wish we'd take a big step back and say, all right, if we're going to run inflation above 2% persistently, what does that mean for central banking? What does it mean for the economy? How do we fix it? Okay, Frances, I don't know how you're going to celebrate that five-year anniversary, maybe overpay for a cake, right, because of inflation. But how then do we break it? How do we break inflation? Because I think you're exactly right. I think everybody watching, they're hearing about the Fed. They don't care. You know what they're mad about? They're mad that a burger is $20 when four years ago it was $12, right? And next year it'll be $21. It won't be $30, but it's going to keep going up. How do we break? And the electricity bills, to your point, and who could afford rugs? Okay. So how do we break that without breaking the economy? There's a whole range of reasons why prices are higher and have been persistently, and a lot of them are supply side issues. Tariffs are impacting goods inflation, maybe not to the degree that many expected, but they are lifting goods.

We have droughts that are happening in South America that are contributing to coffee prices. Now, I'm not blaming the Fed for above target 2%. In fact, I would say a lot of the inflation in the system isn't interest rate sensitive, to your point on housing. But at first, just an acknowledgement that inflation is still running ahead and contributing to some of this weak consumer sentiment would be a welcome relief, I think, not just for consumers and for market participants, but also for central banks around the world that are grappling with this issue. David, do you want to kind of give us a final comment then from a room of practitioners' point of view? So we've got the conference now at 2.30. You know, you've said you're skeptical of the need to kind of maybe lower rates a lot more from here.

but the Fed chair seems more sympathetic to that point of view, to the idea that you can bring them down a little bit. Yeah, I think so. I mean, the Fed, and I think they are laying the groundwork for giving them the option to cut rates maybe once in June, maybe once in December. I think by next year, you know, I think

we could be looking at a completely different picture with the economy, with both growth and inflation, falling below 2% in 2027. I think that's possible. So then you may have an excuse to cut rates, but right now, there's a lot of uncertainty ahead of us, and it's way too soon for the Fed to be cutting rates. You're a little more bearish, longer run.

Well, I think that inflation is going to go away, and I think you're going to have, the Democrats are going to take over the House, I think. And if they do, more fiscal stimulus has gone. Because right now we're just about to have a boatload of fiscal stimulus through income tax refunds. We're probably going to get a second dose through a tariff rebate check. But that would, that gravy chain comes to an end.

Maybe Powell should just say that. If they have to skate, if they're going to act with 18-month lags with monetary policy or whatever, then maybe 27 anticipated weakness does matter. Well, there's a lot of ifs and maze before you get there. Jim Caron, quick final thought? Yeah, I think, look, I mean, the way that we break this cycle is that you have to have a stronger economy, higher wages, better productivity, so therefore you don't get this big boost in inflation and we keep chasing our tails.

So look, ultimately, I think what is in process right now in this case-shaped economy is that the lagged effect of tariffs is the labor market, right? So companies cut labor in order to maintain margins. That was largely a 2025 move. This is why the labor market's been weakening. The bet is right now is that by the second quarter of this year, that that labor swing is going to start to turn positive, and that the jobs are going to come back, the consumption's going to be there, and that you're going to get the confidence higher. That's the plan. We'll see if it works.

But I think that's the way that you break this. And hopefully you get this higher productivity move, which we're already seeing. That doesn't mean that inflation just keeps on going higher and that things just remain on. affordable. But that's how that $20 hamburger becomes a little bit more affordable is that you start making more money. That's an inflationary story, too. Wages have to go up, but that that raises the price of everything. So I don't know. Yeah. Thank you all. We really appreciate it. We watch the Dowdowne down. So even it is towards it. When we say stalemate, stand on. Stalmate. Stalmate. It's a football term. We got to talk about that.

No, I know what Stalmate is, but I keep forgetting the term that you stale made. It's exactly what we're seeing in the markets right now with the Dow up just about three points. Our thanks to Jim Caron, Francis Donald, David Kelly. Jeff, stick around. Our thanks to Steve as well. We'll hear more from Kilberg in just a moment. We're a few minutes away from hearing from the chair himself directly. And of course, this raises a whole host of questions around his tone

after the DOJ investigation and all the rest of it. I'll bring it to you live the moment it begins right after this. Stocks are somewhat muted after the Fed decided to hold. Usually we're in a holding pattern before the decision. Now we're in a holding pattern afterwards as well. It's turned back to KKARE Financial's Jeff Kilberg. and with due reason, because the press conferences are notoriously volatile, so why lay your bets out before we hear from the chair? And that's the forward guidance. We really want to understand that forward guidance. What is Fed Chairman Paul going to talk about? He only has a couple more meetings left, Kelly. This is his first and last one of 2026 for the month of January, and will he make it to May of 2020s? Will President Trump appoint someone differently?

So there's a lot going into this press conference. Couple that with we are seeing three of the Mag 7 reporting afterwards. It feels very coil here, and that's why we're seeing a bit of a stalemate, the word of the day. scale made. Okay, but hold on. We're entering year four of a bull market. The average return in a bull market in the fourth year after double-digit gains is 14.7%. Doesn't mean we're going to get those gains. But his history is on your side. So with a fifth time, by the way, in 100 years, we might have four double-digit returns in a row.

Is there anything you've heard from Jerome Powell that puts the market rally at risk? No, not yet. But at the end of the day, what we were seeing in this year four of the rally, we're seeing a broadening. The equal-ed S&P 500 is outperforming. Being the brakes off the S&P 500 total return, and you can attribute that to a lot of the MAG-7 profit-taking we saw in the end of 2025 solely. But what's interesting is broadening,

65% of S&P 500 stocks thus far in earnings season are outperforming. So I get excited about the profits. We talk about profits being a more important input to the economy. But yes, what Fed Chairman Paul says, or what President Trump says about who's coming in to potentially play the part that he wants. of lower interest rates is critically important. Anybody better for the markets?

Reeder, Walsh, Waller, Joe Walsh. Rick Reeder is a practitioner. He understands it. Obviously coming out of BlackRock, he's the guru. So having him control the innovative toolbox more so than one of the others,

but they're all great candidates. I don't get into politics, silly, but they're all great candidates. But Rick Reeder would be interesting because he could really come up with a couple different things to help the economy, maybe not lowering the front end of the curve.

It's the back end of the curve. Here it comes to chair, but it's the whole composition of the board for financial defeculation and all the rest of it. So as mentioned, here comes Fed Chair Powell.