Power Lunch - Fed Panel; Interest Rates Unchanged 1/31/24

Episode Date: January 31, 2024

CNBC’s Tyler Mathisen and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. “Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch alongside Courtney Reagan. I'm Dominic Chu, and we are just a few minutes away from the Fed's big rate decision. So Courtney, three and a half minutes just about. Very exciting, Dom. So let's get a check on the markets here ahead of that. The Dow is basically flat, but the NASDAQ is off by more than 1%. That is the laggard of the session, S&P 500 off by about three quarters of a percent. Let's get right to our all-star panel in the time that we have joining us, David Kelly of J.P. Morgan, Kristen Bitterly of City Global Wealth and Jim Karen of Morgan Stanley, investment research. So ladies first, we will start with you. What do you think, Kristen, are you expecting to hear today? I understand word on the street is no change, but obviously we still care a lot about the details in the statement and the press conference afterwards. That's exactly right.

I don't think there's any surprises in terms of what we expect from the public. policy rate, no change there. I think there's a lot of discussion right now about what we expect in terms of the policy statement and perhaps a removal of any tightening bias. I would say, though, the major event is really going to be the press conference. And we're looking for three key things there. One, quantitative tightening, anything that Chair Powell wants to give us in terms of any insight into the trajectory of quantitative tightening and tapering. Two, I think it's too early for him to declare that inflation that the battle has been won. But we have some really compelling data in terms of core PCE, for example, the past two quarters really spot on in terms of what

they were looking for. So some context there. And then I think the context around the labor market. And yes, what we saw joltz come in higher than expected, it was really concentrated in areas where there's structural shortages of workers like education and health care and construction. And so we do see some underlying cooling. So like you said, the devil's in the details, and we'll be looking to the press conference for more. Fair enough, David Kelly. I want to get your thoughts.

What details are you looking for here today? Well, I think they're going to have to upgrade their outlook on growth or at least admit that the economy is growing much fast than they expected. I mean, back in December, their forecast for 2023, fourth quarter to fourth quarter was 2.6%. We came in at 3.1. And we do have 9 million job opening. So they'll upgrade their assessment on growth.

I hope, as Kristen said, they do recognize and admit that inflation is, in fact, on their downward track that they were looking for. And in fact, we think that inflation will hit 2% by all measures before the end of this year, on a year-of-year basis. But I think the bottom line is growth is just too strong to allow for an early easing. And I think Jay Powell will push back on the idea of a March easing in the press conference. That's really what I think is going to aim to do. Wow. Okay. Jim, you've got a minute. Share your thoughts here ahead of the decision. Yeah, so I come from the angle that the Fed has a strong desire to want to start cutting interest rates at this time. They probably want to cut by at least 100 basis points this year, in my opinion.

So what I'm going to be listening for is what is it that they're going to try to pick out to try to open this door? We think they're going to open the door to rate cuts potentially starting in March. Maybe it starts a little bit later. But I want to know what exactly he's looking for, and I want to know what the criteria is. I'm really trying to benchmark this. So that's going to be the key factor that I look for. All right, fair enough. Let's get a quick check here on the markets before we get to Steve Leasman.

See where we are just moments ahead of the decision. The NASDAQ, again, is the laggard of the session here. We have seen that continue to be the case here. Although maybe S&P 500 is clawing back just a little, though, about bang on flat for the Dow. It's just about flat. This is pretty much the holding pattern. And Microsoft and Alphabet aside, you would be seeing probably much more of that holding pattern as well. there is. So keep a look and keep an eye on that. Again, the Fed decision is eminent. The Dow is

pretty much flat. Let's get right up to Steve Leesman for that big rate decision. Steve. Federal Reserve leaving rates unchanged at five and a quarter to five and a half percent, but making big changes to the statement. The statement twice mentions the possibility of changing the funds rate, setting out the circumstances for those rate cuts that maybe are nebulous, but maybe even a bit hawkish, depends on where you come from. I want to read you the statement that says here, the committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2%. It later says inflation has eased, but that it remains elevated. So it's saying the committee will only cut rates

when it's confident inflation is moving to the 2% target. No mention in the statement of whether it has that confidence. The statement also says, quote, In considering any adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risk. The committee removed that bias that was in there for hiking where it talked about additional firming. That's no longer in the statement. The risk to achieving its dual mandate, the Fed says, quote, are moving into better balance. On the economy, there was an upgrade saying it's expanding at a solid pace, had said it was slowing in the prior statement. Job gains, it says, has moderated but remained strong,

and it removed the section on concerns about the impact of tightening credit conditions. That's gone from the statement. It also removed the section on accounting for prior tightening and monetary lags. It was a unanimous decision with new voters Barkin, Daly, and Bostick and Mester voting as well. So cuts guys are obviously in play, but the Fed at best is not telegraphing any timing around it or amount. And you can be read to suggest those cuts may come later. than the markets now expect. Tyler? Steve, Steve, if you look at the statement, the key phrase that everybody was watching for was the

one that you mentioned, right, which was in previous statements, quote, in determining the extent of any additional policy firming that may be appropriate to return inflation to 2% over time, dot, dot, dot, dot. They've gotten rid of that. On balance, that should seem like it's net positive in terms of clearing the path for or opening the door a crack. for interest rate cuts. Yet the markets did react marginally negative to this bit of news. Is that maybe fair to say then that the markets were already ahead of itself with regard to how many and to what extent rates would be cut in 2024? I think that's a good assessment,

Dom. I always dislike the idea of gauging the market reaction right after the statement comes out. I think there's some black box trading that's problematic. But here's the thing. Removing that statement, Dom, was the ante. Everybody thought that was going to be gone or changed in a way that was no longer going to essentially telegraph additional rate hikes. The question was, what did we get, Dom, when it came to telegraphing of cuts? We got a little bit. They mentioned the idea of changing the policy, changing the rate twice, once in terms of reduction. But remember, that reduction idea is in negative terms, as in we're not reducing it until we're confident, essentially, that we're heading back towards 2% on a sustainable basis.

Bob, I want to go to you, Bob Pisani, for the market reaction here, obviously, immediate reaction. I know Steve expressed some concern about black box trading, but it does look like the S&P 500 at least took a little bit of a leg down here. What are you seeing? You don't need black box trading for this. This is very clear. Powell, there is no reason for Powell to give up strategic ambiguity on the rate cuts.

That's exactly what he has done. here. Remember, everyone was expecting some kind of timing that was very, very clear. Back in December, they were expecting 90% plus chances of a rate cut in March. The market's come down. Now it's 50% is going to go down a lot more after this one here. So I know the bulls have been arguing that, oh, we have disinflation, therefore real rates are higher, therefore the Fed should be more comfortable cutting. The problem here, which I think the Fed is acknowledged, is the Fed usually cuts when there's economic distress. And there is no signs of economic distress. So you've got attention here. And I think Powell is acknowledging that with

a strong comment on the economy here. So the question is this, could the market handle fewer rate cuts with a strong economy? I think it can, but this kind of aggressive statement was a little bit of a surprise for the markets. All right, that's the view from the New York Stock Exchange, downtown Manhattan. Let's head out to the Midwest Chicago, Rick Santelli, with what the rates and macro picture looks like in the wake of this announcement, Rick? Well, let's let the markets talk first. If you look at an intraday of two-year note yields, you can see it spiked up a bit, just shy of 430.

Well below where we were yesterday, well below where we were the day before, well below where we were the last Fed meeting in December when we were at 473. If you look at a 10-year, 10-year yields popped up, well to 4%. But here they are well below the highest levels of today. the dollar index, getting closer to unchanged. The way I read this is I'm totally in agreement with Bob Bassani. It's a giant Roershack. Pretty much, if you look at all the data points, whether it was ECI, ADP, regional Fed

surveys like Chicago, Philly, there's definitely weakness coming into the economy. You could still argue the labor market's doing better. We did see jolts. We did see consumer confidence. So there's some cross signals going on. But maybe some of the best signals are, you know, Hark and Bay, back to 2018, 2019, when the newspapers were all upset with the president, political meddling and rate setting, you know, heresy. But yet, look at what's been going on the last couple

days. On the 30th, Tuesday, Sherrod Brown, Senator, Sherrod Brown, lights a letter to Chairman Powell saying you really need to ease. Over the weekend on Sunday, you had Elizabeth Warren, Senator Hinkleloper, Jackie Rosen, Sheldon White House, all write letters, A letter, and all sign them all four. You need the lower rates. It seems though the senators are a bit nervous. I would think, based on the verbiage of most of the Fed speak, I see, they're going to keep talking tough, but they're going to give the market more than three rate cuts this year.

I'm not sure if it's going to match the market's ultimate aggressiveness on how they lower rates. But it certainly seems though the table is set, they're never going to give specifics. But as we get closer to the March meeting or maybe even the April May meeting, look for a lot more guidance to get the market on pace with the Fed, which is a little out of phase at the moment. I want to go back to Steve Leesman. He's spent some time going through more of the details of that statement. Steve, what can you tell us? Well, first I want to tell you that the way the market on the Fed funds futures reacted, we've had a up and down day. We were down around 48 percent, probably that March cut, went up to 60, 65 percent in part with some weaker economic data that was helpful on the inflation front,

but also some concerns about community banks. And now it's back down to 45% was the last read that I saw recently. So I like what Rick said. There is going to be time. There are several more inflation reports, several more employment reports, that the market and the Fed can get on the same page about how much cutting there's going to be and how fast it happens. I think the Fed is signaling, cuts are in the air,

but not really giving the market what it wants in terms of any expectation of timing. And the difficulty is going to be, in the next 20 minutes or so when we get to talk to Chair Powell is teasing out Mr. Chairman, what will it take for you in the committee to be confident that inflation is heading back to 2% on a sustainable basis? That's going to be the discussion in the press conference and we'll see how the chair tap dances around that answer. Okay, that's perfect. So let's now reintroduce our panel to viewers and listeners out there. We have David Kelly, JPMorgan Asset Management. We've got

Kristen Bitterly, head of investments, a city global wealth. We've got Jim Carren. Morgan Stanley Investment Wealth Management. He's the chief investment officer there. And of course, our own Rick Santelli and Bob Bassani as well. Let's go right out to maybe Kristen to you first. We've now had a chance to kind of at least first blush take a look at this statement. There have been some notable changes there. Do you feel as though this particular statement then changes your outlook, your models for the balance of the year? The markets did move lower for stocks, but not significantly so. So maybe there was just an incremental amount of development with regard to expectations.

I think for us, it doesn't change anything simply because our base case is that the earliest we would see the first rate cut would actually be in June of this year. So I think when we hear what was said in the statement, it really is kind of walking back and giving the Fed some flexibility because there is a lot of data between now and March. And going back to something that David said earlier, when we look at the resiliency of growth, when we look at the GDP number, the strength of the consumer, the strength of consumption, there's a balance that the Fed has to strike there. So I think pushing back a little bit on the market in terms of anticipating a March rate cut

and really kind of setting expectations that this is something that's certainly going to happen this year, but it could be more realistic for us to see more of a deterioration in the data or maybe not as strong of a growth picture as what we're currently seeing. David, I want to go to you. I wrote down as you were giving us sort of your expectations or what you would hope to hear

that you wanted Powell to admit the economy is growing faster than expected. What do you make of what you actually heard from the statement before we hear from the man himself? Well, I think that is pretty much what they said. I mean, I think it was trying to push back

on a rate cut in June. I think it really is setting the table for first rate cut in June because the March meeting they put out forecasts, but are they going to get enough information between now and then to really want to say, hey, now they think there is enough sense that inflation is headed towards 2%. So they'll probably pump there. Then they don't want to

do it in early May because they won't put out new forecast. So it sounds to me like June, September, December, is what they're thinking, three rate cuts this year, providing the economy keeps growing. And this is good. And the other thing is they put in a phrase about the balance of risks. And I really think that's what they're looking at here. There doesn't seem to be at the moment a sign that the U.S. economy is going to keel over and fall into recession anytime soon. And until they see greater damage or potential damage to the economy, given the huge run-up in markets we've seen, they just see the balance of risk more being on the side of inflation being sticky than the economy falling into recession. And that's why I think they're being hesitant to have near-term rate cuts.

All right, Jim, let's go to you with this. You have argued, or you've made the case, that the Fed should start cutting rates sooner rather than later. A lot of economists are now tilting towards that summer time frame, made a kind of July. You think that maybe it should still be in March? Is there anything in this statement that kind of puts you at ease? Or do you feel as though they should still go in March? Well, I think Steve Leesman nailed it because the question is, Mr. Chairman, what gives you the confidence to start cutting rates? We already know inflation's coming down.

The six-month annualized average of poor PCE, which is their measure of inflation, is already at or below 2% at this time. So I think the answer is like, what gives you that confidence? is that the labor market has to start to get weaker because what's been happening is inflation's come down but the labor market didn't get weaker so therefore they believe that the decline in inflation at this time might not be anchored so therefore it might be too soon. So we have a payroll number coming up on Friday. Look, you know, we'll see where that comes out. But I think the strike of the jobs market is now going to be something that they probably

hinge off of. So look, I mean, you know, should they start cutting in March, it's probably 50-50. Does the statement seem like they're kicking the can down the road a little bit? Yes, it absolutely does. But I do think that they want to cut, you know, 75 to 100 basis points this year. They like to get the ball rolling in March as long as the data cooperates. So it really is down to the labor market at this point, in my opinion. Yeah, I mean, what do you think then, Jim, I just want to pick up on your point.

I mean, the labor market does seem to be the key here. And if individuals have jobs, it seems that they're spending. I cover the consumer fairly in depth, and it seems like there's really no slowing the consumer, even if perhaps they're shifting the categories in which they're spending. I mean, what are your thoughts there on if you were on the Federal Reserve making some of these decisions? What would you need to see as far as deterioration in consumer spending, which is such a big important part of our economy, to be confident enough to begin to cut those rates without taking on the risks associated with that as well? Yeah.

So you look, so far the retail sales date is not cooperating. strong in the third quarter, strong in the fourth quarter. You know, there's still tightness in the jobs market. We saw the Joltz report come out. You know, so I think what the Fed really needs to start to see, and, you know, sad to say, but they really need to start to see companies have profit margins start to narrow and start to increase layoffs to improve their bottom line. That's not a great outcome, but for the Fed, what the Fed is trying to avoid is a price wage

spiral inflation. And if inflation's not anchored, meaning if the jobs market strong enough and if the consumer strong, which is 70% of GDP, and they're going to continue to consume, then maybe inflation isn't necessarily as might not be as anchored as they're hoping. So, you know, look, the readthrough to the consumer is so far the consumer's pretty strong. And if that continues to be the case, then we might be disappointed, as Rick Santelli was alluded to. Hey, Steve, I'd like to revisit a conversation that you and I had maybe just about 24 hours ago. with regard to Paul McCauley and with regard to what the neutral, natural rate of interest should be

out there, that so-called R-star. Is there anything that needs to happen for conditions to change markedly so that that R-star, that kind of neutral, natural rate of interest actually begins to shift, either significantly to the downside back towards two or maybe even higher because of inflationary threats? The problem with that question, Dom, which is a problem everybody's having, is our start supposed to be a long-term thing, and we're all talking about in terms of short-run, or short-term neutral rate. So, yeah, if you have a big weakening of the economy, that's going to change the Fed's view about how much restriction or restraint is putting on the economy. I did want to go back quickly give an idea, another thought to what Jim is saying. I don't think the Fed is quite as married to the level of job growth as it is to wages. You saw the ECI come down to. today. That's the employment cost index. That's something Powell has flagged is one of his favorite indicators. It came in below expectations at 0.9%. Normal's about 0607. So we're getting there. I think wages is the thing that really is concerning to the Fed when it comes to the job market and

inflation. I believe they're resigned in this job market or in this economy. Job growth is going to be at or above what we think is normal for maybe some time now. But it's the wage component that is the key to their inflation outlook here. Now, Jim, I know that you were chomped at the bit here. What exactly got you riled up? No, no. I think, you know, I thank Steve for the clarity. I mean, he's absolutely right. It's the wages. When I said, you know, strengthen the jobs market. I'm not looking at necessarily the headline number for, you know, for the unemployment rate or the jobless claims numbers. It really is all down to wages. Typically, there's a Phillips curve relationship with bringing down inflation and the level of and the level of jobs and wages in the economy. And so far,

that's been broken. So the fact that wages have held up, and that's, you know, likely to continue maybe potentially for a little while, this could be the fly in the ointment that the Fed has to navigate through. And the communication around this, this wage price spiral, inflation, this is something I'm going to be listening for in Powell's comments later on today. Hey, so Bob, a lot of the panelists have brought up labor in the jobs market as part of their conversation. We have seen job cuts across a lot of different parts of the market, but specifically in technology. And the reaction on the stock market side over the last year has been leadership from that group. What exactly does the economic picture in this Fed statement tell you about what the outlook is for what is arguably the most important sector out there?

Well, we have selective reporting. We didn't do massive reporting three years ago when Microsoft and Amazon were hiring tens of thousands of new people. We didn't do banners on that. We do banners when they fire a few thousand. And that's because people react more to negative news than the positive news. So that's a very good point. Hiring was very strong a few years ago in tech, and it's not as strong now. But look what you get out of this statement here, Dom.

Number one, the Fed says the economy is strong. Number two, I think anyone to read this will come to the conclusion that any expectation, for rate cuts in March and May, pretty unlikely at this point. So the issue is can the stock market, and I'm the stocks guy, can the stock market handle that kind of disappointment? And the S&P is down 15 points from when the meeting started. That is statistically irrelevant with a 4,800 S&P. So the answer, at least right now, is yes, it can handle that kind of disappointment.

And by the way, strategic ambiguity, this could all change on Friday we get the jobs report. They're going to go report by report by report. But right now, I would say this is a surprising statement, but the reaction is fairly muted in the stock market. Kristen, before we go, I would just like to come back and revisit sort of a bigger, broader question. What is the higher risk, in your opinion, for the Fed? Is it cutting too soon or cutting too late? I think at this point, cutting too soon in March, you don't want to be in a position where then you have to course correct from there. I think ultimately this difference that we're talking about as to whether or not it's going to be in March or whether it's going to be in June,

just think about it in terms of the market reaction and as an investor. And what you know to be true right now, you know that we've hit peak Fed funds rate. You know that inflation is coming down in line with the trajectory that the Fed is looking for. We know that there's $6 trillion sitting on the sidelines in money market funds that has increased by $1.5 trillion since the Fed started their rate hiking cycle. when you take a look at that backdrop and think about how the market is going to react, it's actually pretty constructive overall. Kristen Bitterly, David Kelly, Jim Caron, Bob Rick, Steve. Thank you all very much for joining us here on this very important Fed Decision Day.

Coming up, we will get more reaction to the Fed's decision. And, of course, we're just minutes away from Jerome Powell's press conference. We'll hear from the man himself and take you there live. That's right after a very quick break. Welcome back to Power Lunch, the Fed holding interest rate steady as expected, but making it clear that it is not yet ready to start cutting. So here for more reaction to this Fed decision is Dennis Lockhart. He's former president of the Atlanta Fed.

Dennis, it's great to have you here. In your notes, I sort of have your first key point as all eyes on March looking for the first cut. Seems like that's largely off the table. What's your reaction? Yeah, I tend to agree with you. I think the committee, by putting that sentence into the statement, was trying to reduce the frenzy of anti-examination. around a March move.

And it'll be interesting to see how Chairman Powell actually elaborates or interprets that in the press conference. But they didn't have to put that in. And that clearly shows they're trying to calm things down so that they, you know, don't have so much discussion of a March move. Yes, Steve Leesman said it looks like the expectations came down sort of immediately after that statement came out for that move in March. is the risk that if you cut too soon, inflation could reflare up when perhaps it's not completely under control? I think what's on their minds at the moment is this very strong top-line growth in the economy. And if they were to cut too soon, they might very well stimulate to the point of a resurgence in inflation. So they certainly don't want to risk that.

if the growth numbers were closer to trend, more around 2% or even a little bit lower, it might be a different story, but they're running the risk of adding fuel to a fire that could create a reversal of the inflation picture. Dennis, it's Dom. There's been this tug of war that's been playing out with regard to whether there is a tilt towards easing financial conditions or tightening financial conditions. on one hand, interest rates are well off the high cycle highs that we've seen. At the other end of the spectrum, you've got mortgage rates that are significantly higher than

they were a couple years ago, tightening versus loosening. We have stock markets at record highs. That's a cut of loosening of financial conditions. All of these back and forth are happening. On balance, your opinion, is the environment right now tighter or looser enough for the Fed to actually make a change to policy without causing all kinds of volatility? Good question. The way I'd respond is I think they are reasonably satisfied with financial conditions at the moment, notwithstanding what you point out about in mortgages. I look at the 10-year

treasury and it's basically orbiting 4%. I think the committee is happy enough with that, and the committee probably doesn't really believe or have a lot of confidence so they can manipulate market interest rates very much, so they just want to set the policy and let the markets react. I think their view is that at the moment, they're still restrictive, clearly still restrictive, but at a satisfactory level. Does it seem to you, Dennis, that we have avoided the possibility of recession entirely? Boy, I mean, based on the data we've seen in the last few weeks, you'd have to come to that conclusion. You never say never, and certainly the members of the committee are always going to be aware of the risk of a shock or the risk of a downturn that comes as a surprise.

But we appear to be into a soft landing, I would argue. And the recent data suggests that that's likely to continue. Dennis, before we let you go, is there anything that you think would be something J. Powell would want to seriously communicate to reporters in the next few minutes here? I kind of expect him to do what he often does, try to keep his options open, not take a rate cut in March totally off the table, although he'll have to be interpreting the sentence that was in the statement. and in general reinforce the messages that they are committed to getting the inflation rate down to 2%. And I would expect to hear some words like patient or cautious or careful, as he said in the past. All right. Dennis Lockhart, former Atlanta Fed president. Thank you very much, sir. We'll see you soon.

Thank you. All right. Well, let's get some final thoughts as we count down towards the Fed chair's press conference. That's going to happen in just about a few minutes time. Santoli joins us now from the New York Stock Exchange for it. Mike, you've had 27 minutes to go through that statement and kind of compare and contrast and everything. Senior markets commentator hat on. What's the takeaway for you? You know, Dom, in broad terms, I think it's what it made sense to expect, which is the Fed wanting to preserve flexibility. We have six or seven weeks of data ahead of the March meeting. It's going to be plenty of time in there for people to

solidify their idea of whether inflation's on the way to target or not, they definitely withheld any even vague commitment, obviously, to get the easing started. But to me, that wasn't make or break. A March cut was not make or break for the stock market. The S&P 500 is less than a percent and a half of all-time highs. We haven't had a 3 percent pullback since late October. Things are not really in a stressed position right here. I think the only hazard, I mean, if for some reason the chair were to come out in the press conference and start to go back and emphasize that they think the economy has to be run below potential for an extended period of time to get the job done on inflation. That was the stale rhetoric of last year when they

really felt like they were chasing inflation. So short of that, I feel as if it's like, look, guys, you're going to have to stay in suspense until March, maybe beyond that, May or June. And, you know, you could probably live with that if we have a resilient economy as it so far seems to be the case. A lot can change, though, as people have been saying, with the jobs number on Friday and subsequent inflation numbers. I was going to say, I mean, does this up the stakes even more on the data between now and then? Data is always important, right? But maybe now we're looking more at the labor market to look for any signs of cracks to then see if June's on the table. Yeah, I do think that, Courtney, they're going to want to try to seal the case and say that

things look pretty unequivocal going their direction on inflation. And I also have been saying they're not targeting stuff aside from inflation at this point. If the inflation numbers go in their favor, they should be satisfied with that. We're past the time when they have to talk about inflation expectations in the consumer surveys and broad financial conditions, I think. So therefore, it simplifies the picture a little bit. We'll see what happens over the next several weeks. As I say, the stock market probably could be due for a pullback even no matter what this statement says, no matter what the press conference holds. But we'll see if that's what we get as we go through really the rest of earning season. There's still plenty to chew over

the rest of this week. All right, Mike, we're just, we're still waiting on Fed share. own Powell right now with regard to coming in for the press conference. So if I cut you off, it's only for good reason. A final question is, depending on when Jay Powell comes in, the market reaction. You mentioned pullback. How significant could it really be, given that financial conditions, are as relatively easy as they've been for a while now? Yeah, unless something changes on that front, the credit front, or if rates really take flight from here or something, I don't think that the stock market is set up for something nasty. Therefore, usual three to five percent. random pullbacks happen at any time. So you shouldn't be surprised at that. I think if the

S&P stays about 4,800, that's where it kind of broke out from just a few weeks ago. You know, you're talking really about very routine profit taking around the end. Okay, Mike Zantilly. Thank you very much. Here comes Fed Chair. Jerome Powell.