Power Lunch - The Fed cuts rates by 25 basis points 10/29/25

Episode Date: October 29, 2025

The Fed cuts rates by a quarter percentage point. What does it mean for stocks, bonds and your money? It's all 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.

All right, welcome to Power Lunch. I'm Dominic Jew in for Brian Sullivan today. We are just about, I'll call it less than five minutes away, until that very key Fed rate decision. We're going to bring you that decision, the market reaction and what it all means for your money straight ahead. But first, let's get a check on the market's all-time highs for each of the major indices out there. The S&Ps up a quarter percent. Fractional gains for the NASDAQ composite, the Dow Industrials, the NASDAQ 100 large-cap index as well. Now, let's get right to our all-star panel as we get just closer and closer to that big Fed rate decision. Joining us now are Jim Karen of Morgan Stanley Investment Management, David Kelly of JPMorgan Asset Management, also Francis Donald of RBC Capital Markets. Again, all-star panel to break all of this down. Let's first, though, get out to maybe have the conversation a little bit first about what's happening overall for that big rate decision coming up.

We're going to get out to Steve Leasman. actually, we're going to stay right here. We'll get to him just a moment. He's in lockup right now. So, David, we're going to start with you. This is perhaps one of the more telegraphed, if you will, rate decisions that we've had in recent memory. Is there anything that we're going to expect

that could change the narrative one way or the other based upon not just the decision, but what we hear from Jerome Powell in 30 minutes after that decision comes out? I think on the rate cut itself and on the prospects, it is pretty much telegraphed to markets. But I think the interesting issue is going to be quantitative tightening. We've seen some spike up in short-term rates.

They've been gradually reducing their balance sheet. I think they're going to come to an end to that. I've put an end to that because they don't want to cause volatility in short-term markets. So I think that's the first thing. And then it'll be really interesting in the press conference to see just how far the Fed is telegraphing rate cuts. Are they really slowly coming down to neutral or are they going to stop short of that if the economy is looking fairly strong? Do you think that it would be in their best interest to do that? Or do you think that they want to keep things in more of a wait-and-see to provide that optionality when and if data actually starts coming out again?

If I were in their shoes, honestly, I wouldn't cut it all. And the reason is I think the economy is doing okay, but these markets are bubbly. And you've got a lot of animal spirits running rampant here. And, you know, when you go to the zoo, they say don't feed the animals. I think the Federal Reserve shouldn't feed the animals here. I think they should not feed these animal spirits at this point because the market has got a lot. of euphoria in this. Jim, are we feeding the animals or not? Well, look, I like to differentiate between the market and the economy. The economy's not the market. The market's not the economy.

So when I think about this, I think about the jobs market. And what I'm going to be looking for in this decision and the commentary from the Fed is how are they assessing the data? What private sector data are they looking at or what other indicators are they seeing? Because ultimately, what it means to me and what I think it means to the Fed is if the labor market is slowing or non-dynamic, then what we need to see is further rate cuts. Yes, I know that the inflation is above target right now, but as long as the unemployment rate is likely to rise, and by the way, I think the unemployment rate is truly closer to 5% than the 4.3% that we last got based on some of the private market surveys. So I think the Fed is very wary about that, and that probably puts a couple

of more rate cuts in front of them. All right. Now, Francis, if we turn towards you, there have been allusions now from both of our guests here on the panel with regard to kind of what other data points might be at play. From your standpoint, what would you, what were you looking at over the course of the last few weeks in the absence of any official government data coming out, X the CPI print we got last week? Quantitative data from the private sector and also some qualitative data from the Bejjvote, but that's exactly what I want to hear from Powell today is we have a sense of what their decision-making function is, but what are they going to be reacting to? because this isn't just about one month of lost data.

We're going to have several months here where the data is going to be very skewed, very difficult to get a core read, especially on the inflation side. That's really hard to look backwards on and tell us where we were three months ago. So I want to hear from Powell today. This is what we're going to be looking at, not just how we're going to be reacting to the economy ahead. Now, Francis, one quick point here before we get to that decision. From a data standpoint, do you feel constructive about what the economy is doing right now as we head into this print? No, this is a what we call stagflation light type of environment.

It is growth below comfort level, and it is certainly inflation above comfort level. I don't know what the Fed's trying to achieve with these rate cuts here, maybe not being as restrictive, but a lot of the job weakness that we've seen is that low hiring, low firing results from a trade shock that's coming through. I'm not sure that these rate cuts that we've seen from the Fed is going to cure what ails the American economy. All right, Francis, hold it right there. Let's get out to Steve Leesman for the Big Fed rate decision, Steve. The Federal Reserve cutting interest rates by a quarter point to a new range of 375 to 4%. There were two dissents on this.

The second one by new Fed Governor Myron, who wanted 50. First one by Kansas City Fed President Jeff Smith, who wanted no change. So descends on both sides, a kind of a rare occurrence for the Fed. The Federal Reserve announcing it is stopping quantitative tightening or the roll-off of its balance sheet as soon as December. all roll-offs of treasuries from here on out and mortgage-backed securities on the Fed's balance sheet will now be invested into T-bills. It's a bit of a change there. On the economy, the Fed said economic activity expanded at a moderate pace,

according to available indicators, one of two nods in this statement to the absence of data by the Federal Reserve. It had said in September that the economy was moderating, so almost a bit of an upgrade to the economy, but according to available data. Job gains, it said, has slowed, however. Unemployment remained low through August, and again, it said, more recent indicators are consistent with these developments.

That's another nod to the idea that the Fed doesn't really have the official data. More recent indicators is what you're using. Inflation, it says, has moved up since earlier this year and remained somewhat elevated. That is the same characterization as September, and there's not much in the way of forecasting the future path of rates. I believe that will have to wait for the press conference from Fed

Chair Powell. But again, the Fed cutting by a quarter, two dissents on both sides of the issue. One per wanted more, one wanted none at all, and the Fed stopping quantitative tightening as of December. Guys? All right, Steve Leesman, please stick around here. Let's get back to our panel for some reaction here. Jim, I'm going to start with you first. We showed the charts of the market reaction. Equity markets have been relatively stable as they were going into this print. The curve from the two year all the way to the 30 have moved maybe higher by anywhere from what I could see one to three basis points. This is all about the Fed rate press conference now at this point. But what stood out to you from hearing what you heard from Steve and then what you saw or didn't

see from the market reaction? So that's a great question. So I think that we are in the sweet spot of policy uncertainty for markets. And what I mean by that is that we're expecting there to be better growth in 2026. But at the same time, we're also expecting the Fed to cut interest rates. So you may have higher growth. You may have a labor market, which is keeping wage inflation and wages relatively, you know, stable, which keeps profit margins high for companies. And again, better growth, lower rates, you're discounting those future cash flows at a lower rate, you're increasing the present value. And what it's doing is a supporting valuation. So this uncertainty that's being discussed right now with the labor market

and what Fed policy is likely to do and lower interest rates, equities of the beneficiary. Okay. David, you see it all from an asset management perspective. Does this change at all anything with regard to how you view future allocations, how new client money gets put to work? What exactly does this mean in the construct of how investors have to view what this rate decision will mean for them? Well, I think the one interesting thing was that dissent in terms of not cutting at all from the Kansas City Fed president. I think that that is really interesting because it does say it says that there's some pushback.

And I think the pushback isn't about the economy. I think it is about, you know, how strong markets have been this year. And if that gathers a little momentum, we may see a Fed easing a little bit more slowly next year. So maybe not heading straight down to 3%. In terms of investors here, you know, I think. It's been a wonderful year for investors, but that follows two great years. And I'd say, rebalance, rebalance, rebounds, rebalance. I mean, I think people just need to look at the risk side of their portfolios

and not just the very strong gains that we've seen in equity markets. Francis, you use the word. I'm going to bring it up again. You used stagflationary as part of your response to my previous question. Do you feel any differently or similarly based upon what you heard from Steve? I know that we're going to break down the entire kind of report and the press conference afterwards. But do you still feel as though this is a market that is going to succumb to stagflationary pressures in the coming months? Well, we have the qualifier stagflation light in that this is clearly a long way from the 1970s.

But look at what the statement says, as it flags exactly that scenario. We have job games that have moderated. We have inflation that has moved up. And that's okay for right now because the unemployment rate hasn't broken out. The bottom hasn't fallen out. And inflation, while I would say is still too high, is not up at that forehandle. But one of these sides of this stagflation environment is going to break. And the Fed is not going to have the same luxury middle of 2026 as it does now to play both

sides of that. And even in the dissent, you can see we're getting dissents on both sides of the mandate right now. That's a real call out to that. This equilibrium that we're in, it's not going to last forever. Our view is that inflation is going to turn out to be the real problem. And heading into 2026, this Fed is not going to have the ability to point to the power. the job market to the same extent as they have now,

they're going to have to slow down here when they see inflation rising further into Q1. Francis, at multiple points over the past few months, we've heard Fed Chair Jerome Powell make public statements to the effect or the tune of that there is no risk-free path going forward with regard to inflation and or slowing job market. So you mentioned inflation being the one that you think could be keyed upon more. What exactly is that perfect?

ponderance of risk for the economy vis-a-vis the markets, do you feel as though there is a tilt one way or the other based upon what we know or what we, I guess, don't know about the economy? Yeah, lots in that question. And I agree that inflation is going to be the bigger part of this story. And particularly, you know, we heard my colleagues here on this panel talk to how the equity market is the real beneficiary from this cut. When I hear equity market is the beneficiary, what I hear is upper income, higher wealth, Americans are the beneficiary here. And when inflation comes into play, that's the lower income

Americans that are being penalized. So what we're seeing here, this stagnation type of environment, it doesn't hit everybody equally. It really exacerbates that K-shaped economy that's in play. And what's so challenging for a Federal Reserve here and their concept of the risk-free path, is that no matter what direction they go in, they will exacerbate that K going forward. And that's why at this moment, this is a market, this is an economy, this is an economics profession, that's going to have to think a little bit more deeply about whether we constantly go to monetary policy to solve what are increasingly structural problems

and problems that are less rate sensitive. That is at the core of the statement we hear today, even if it's not explicitly mentioned, which is monetary policy is not going to solve the challenges that the U.S. is facing in 2026 and beyond, and they may actually end up exacerbating it when we rely exclusively on monetary policy. Steve, I'm going to give you the last word

before we take a little bit of a break here. Steve, you're going to be one of several reporters in this press conference with Jay Powell in the pan of 23 minutes here. What exactly do you think most of the questions will be tilted towards? From my perspective, it would be what exactly has the Fed been looking at over the past several weeks if we've had no data? I think that's a big part of it. And as I said, Dom, the lack of data shows up twice in the statement.

It's kind of interesting that the person I want to ask a question of is not at the press conference. It's Jeff Schmidt. And I want to pick up on David Kelly's idea of whether or not this dissent is part of a single act by a Fed president or is it part of a broader movement. There are a bunch of people on the committee who have expressed concern and caution about the cutting rates. And I want to ask Jeff if he's cutting rates because he's concerned about inflation being high or is it the shutdown? Is there a reason that you don't want to do further rate cuts at all or move policy if you're out? out of the, if you don't have the data that you need to make those decisions. So and I am interested at whether or not there's some caution here because we know why Myron wants to do it.

He's sort of been there and done that. But this idea of whether or not there's now somebody who will step forward and say, wait a second, maybe with this inflation rate at 3%, we shouldn't be heading forward, changes the outlook for the market. I did note that the probability of a December cut is still very high, but it's not for January. January. January was still around 45% last I checked.

One other thing is, I'll leave it there, Don. All right. A quick couple of final thoughts from you guys. David, for you first. Well, I think overall it does bring into question whether the Fed cuts quite as aggressively going forward. But, you know, for investors, I think the economy looks fine. It's not really to me a matter of the economy. I just don't feel that the Fed needs to be cutting quite so aggressively, given where the market is right now.

Jim? I think we're in a soft patch in the fourth quarter. I think that starts to turn around as we start to get into the first quarter. We get big tax refunds. The consumer is going to get a boost of capital just based on the one big beautiful bill act. Consumption, 70% of GDP. I still think there's going to be economic activity. Plus all the business investment, to me, leads to a little bit,

it creates some robustness in the jobs market. So I would argue that going forward, I think the Fed gets to three and a half percent in terms of the policy. so December and then maybe one more in early next year. But then I think anything after that's an insurance cut. And I don't know that they have to go beyond 3.5% at this point. All right. And Francis, to you for the final word. Stapflation light is going to continue to burden this central bank.

There is no risk-free path ahead. And now they have no clear data either. So challenging time to be a central banker, focus on the fundamentals driving this market and this economy. All right. Francis, Donald. David Kelly. Jim Karen, thank you guys very much. All-Star Group here, breaking it all down.

Don, just real quick. Dom, we are double-checking this notion. For sure, that MBS rolls over into bills. I'm trying to figure out if it's accurate that treasuries roll over into bills. It may be that coupons roll into coupons and bills into bills. We'll double-check that and get back to you on that.

All right. We'll get the update from Steve on that clarification soon here. Thank you very much for our entire panel here. Let's now send it out to Chicago for reaction from the bond market in the pits out there. Rick Santelli joins us now from the CME group. out in Chicago, Rick. There's a lot of turns and twists here, Dom.

Consider this. A two year was at 351 before the announcement at top of the hour. You can see that we're slightly elevated in yields, and yields were already up a little bit on the session. But here's the point. You know where they were before the last interest rate cut? So they cut on the 16th, they cut today. On the 15th, the day before the September cut,

a two year closed it, 354. They're virtually unchanged. Look at the 10 year now. Okay, the 10 year was hovering right around 4%. So it's a little hotter since the announcement and the rate cut. Where was it? The day before the September cut, 404, virtually unchanged. The dollar index, we see that it's improved slightly, highly unchanged since the 25 base point rate cut.

And the day after the 15th to 16th, when they actually cut rates is when the dollar index made its multi-year. low. So the point here is we're all talking about the Fed and cutting rates. It certainly looks like December's priced in and Jim Carrey it's probably right. Probably get one more next year. But the issue is we're all looking towards the yield curve and especially thinking about housing and the rest of the curve, but the rest of the curve is bucking the trend. We've had a cumulative 50 basis points and basically the interest rate markets are unchanged. And since the October 1st shutdown of the government, the yield curve is flattening, which tells me there's nervousness that it's negatively affecting the economy. Back to you. Rick, if I could just follow up here,

what sense do you get from the trading community out there where you are in Chicago that the Fed is on the right path with a potential campaign or a trajectory of lower interest rates over the next several months? Well, they like that because it most likely helps positions. But in the grand scheme of things, most sources I talk to think it's very difficult to grade what the Fed's doing because their GPS wasn't doing all that great when the government was open to data was questionable. Now, how are they getting data? I know they put it together and there's a lot of anecdotal puzzle pieces they're using. But in the end, my comment would be, and I don't mean this in a derogatory fashion, but I think that the grade for the Federal Reserve is see it best with my sources. and they believe that the economy is going to reheat and definitely keep the great cut cycle to a minimum

compared to what some are looking forward towards 2026. All right. Rick Santelli with a view from out in Chicago. Thank you very much for that. Now let's get a trader's take with regard to what's happening, given the Fed interest rate decision, the commentary around that and everything else we've heard from our all-star panel. Steve Grasso, CEO of Grasso Global, also a CNBC contributor, often seen on Fast. money. Take us through what your initial read has been, given what you heard about the rate story, what you heard about the commentary in there, and what you've heard from our panelists so far.

So anything less than a cut would have been a problem for the overall markets. I think that you're going to see Chair Powell is done in May of 2026. I think you're going to see 25 basis point cut every meeting that he's available to cut 25 basis points. I don't think you'll see a 50. I think that allows him to keep President Trump at bay, or criticism at bay, allows him to satisfy the markets, and it allows him, just think about this, every quarter point cut, you know, the debt is at historic highs. Every quarter point cut saves the government $88 billion on an annual basis to service that debt. Sounds like a win to me. The markets think it's a win. Unemployment rate should probably be higher if the full participation rate is really moving in a static flow going forward. Off of the April tariff

tantrum, what rallied the most, the most unprofitable companies, the unprofitable companies rallied the most. We're starting to see sort of the mega-cap tech take over leadership again. So I think you're going to go high and low. You're going to go unprofitable companies. You're going to go Russell 2000 companies that are really relying on variable rate debt financing, right? 30% of them rely on this month to month, Dom. I think this is a huge thing. We saw something to the extent of that, I believe it was from Torsten Slocke over at Apollo, showing the Russell 2000 profitable versus unprofitable and the performance gap that we've seen

with the outperformance coming from the not profitable Russell 2000 smaller cap companies over the course of this kind of year. And it's been expanding. My question then, though, is we've talked about this divergence in case-shaped recovery ever since not just the pandemic, but call it the great financial crisis lows. Something has to give at some point because inflation is still a problem. It's still out there. There doesn't feel like there's a view that it could percolate up again to the levels that we saw at four decade highs at points over the last three to four years.

But it has to still be a concern if you're a central banker thinking about a cycle of interest rate cuts. Is it not? Correct. What would you think, though, is more of a concern now. This is what the Fed is trying to weigh. Is it price stability or is it full employment? And at this point, we're at a juncture where it is full employment. The reason why I say that is the tariffs really do that one-time price shock to the price of goods. And you can't really get your head around that, right? When you think about it, tariffs are going higher. It's got to be an ongoing basis. They don't go up once. They stay up once.

So the amount of corporations that are passing it on, that could be different. But let's think about the Budget Act that President Trump passed. People are going to get roughly per household $2,000 coming in the door with those tax cuts. Terrorists are costing them roughly $1,000 per household. These are averages. So they're actually above water on those tax policies. So that's where I think that's where I think that most of the market is not pricing in. And then the full expensing, right?

So that free cash flow, net profits, those are all tailwinds to the economy. But when you look at where we're at now, look at the amount of layoffs that we've seen in the last 30 days. Just in white color jobs. And white color jobs. Right. Right. So if you're thinking where do I want to really put my emphasis, it's on jobs right now. It's not on tariffs.

We've already seen the bulk of inflation on that. I'd rather place my bets on cutting rates. And the two-year is lower than the Fed Funds rate. Does not happen often, especially in a rate-cutting cycle. That two-year should be above where the Fed Funds rate is, and it's still lower. So I think you're going to see us get back down to that neutral rate. They think it's at 375-4. I think it's at 275-3.

All right. So don't go anywhere, Steve. You're going to stick around here. we're going to talk a little bit more about this with our next guest here, a former member of the Fed's Open Market Committee, a former president of the Federal Reserve Bank of Dallas. Let's now bring into the discussion here, Richard Fisher. Richard, you know, you and I have spoken over the years at numerous times,

and you've always kept a steady eye on both aspects, jobs and inflation. But inflation's always been a sticking point for a lot of folks out of the Fed, you included. When it comes to the tilt of jobs versus the Fed's mandate on inflation and price stability, which do you think it should tilt more towards, given what we've seen so far? Well, look, one of the very rare things would be to cut rates when you have 3% inflation or slightly under 3%, wherever the number is. We always want to keep 1% real rate.

So this may be as far as you can push it right now, and maybe that's what the Kansas City Fed is concerned about. We'll have to see when we get a better briefing on the commentary. I think, again, every elected official, whether they're Republican or Democrat, Trump or Clinton, worries about employment. That's where the voter base is. But it is the Fed's job to have a dual mandate and to make sure we don't have inflation or deflation. So I think, of course, you have to remember, Dom, I was a hawk. So I always worried more about the inflation side than the other side.

With regard to that the two dissents, Myron is obviously going to do what the president wants him to. He doesn't seem to be carrying the table. You've got to convince 18 other people of your argument, and he's not winning that argument. As far as Kansas City is concerned, you have to remember, Tom Honick, who's one of the great leaders of that bank, was also very hawkish and voted against a lot of what we did to cut rates when I was there. So it's part of a Kansas City tradition. to be on the hawkish side. I do think it's an interesting indicator. I would expect Chairman Powell in his press conference

is not going to signal anything further going forward. You have an excuse with regard to the lack of data that's available. And I think the other thing to mention, I think maybe only four times in history or maybe less, have we ever seen a rate cut when the equity markets are rallying to this degree being priced relative to underlying value to this degree,

when the spreads are so narrow in the credit markets. So I understand why a trader is rooting for more. From the standpoint of the real economy, Rick Santelli nailed it. Rates are not going down. And businesses depend on not on Fed funds. Businesses depend on what's happening further out the yield curve. The 10-year treasury is the most important of all in the entire world. It hasn't moved.

And Rick made the point, and I think he's right, rates have been steady through all this rate cut discussion. That's what businesses depend on. To be sure, all the Federal Reserve Basebook stuff is showing a slowing of the economy. There are other data that are showing it holding up. And remember, these big layoffs that have been announced, those are important. But what really counts to what small and medium-sized businesses that don't trade in the market, what's happening with their employment? and how are they getting the kind of workers that they want?

Historically, those little bitty companies that don't trade in the marketplace are the most important from an employment standpoint. They create 80% of the jobs in America. They hold roughly 50% of the jobs. So I think the key thing to watch here is what's happening in the SME, small-vium sector of businesses, and not get too caught up in the big companies. It's really the smaller companies, the non-traded companies that move the economy.

So you have to diverge from the economy versus what the trading market wants to see. I understand why they want lower rates. I'm a little skeptical that they're likely to get them in December. And I'm quite skeptical unless the economy really implodes that they'll get more following on that. Powell has four more meetings after this. And I believe, knowing him as I do, he's going to hold to principle, never give in to political pressure. And Mr. Myron may have a real difficult time. convincing the rest of the committee that they need to move more aggressively.

All right. So Richard, that's an interesting thought. Steve, I want to get your response to that because Richard brings up interesting points with regard to the policy initiatives versus how the markets want things to go. Right. So you're the markets representative and not the central bank representative like Richard Fisher is. What exactly is your response? By the way, I'm happy to change places with you.

No, I'm sure you are, Richard. I know you are, Richard. So, Steve, let's respond to Richard right now, given what you. You said, then how he responded, what exactly is the market reconciliation with the economy and some of the pros and cons that we've seen in the absence of government data? Right. So first, let me start off with, I always love hearing Richard's comments. I always value those. That's why he's on the network and that's why he's been around for so long. So if you look at, he nailed it, right? Small companies. $80% of the hiring. Do they want higher or lower? And he said it. They would rather have lower because they were allowed.

on that variable rate fluctuation, so they need lower rates in order to hire more. So I think we have to make sure the backbone of America on a jobs front has what they need to continue the productivity that they would like to continue. That's number one. Number two, think about existing home sales and new home sales. New home sales, you can offer incentives. You could buy down mortgage rates. But existing home sales, you don't live in a home. You live in a mortgage. So that's been locked up for so many years now. And that golden rate, that many, many fields, the golden rate is five and a half percent on a 30-year fixed mortgage. We saw this during COVID. People didn't buy up as much real estate as they probably wanted to, but they did refinance a lot. And they refinanced around

3 percent. So we have a huge percentage that are locked in their homes. If we can lower those rates. Now, this is where it comes in to tie it all in. If you stop QT and you stop the 35 billion of MBS per month rolling off the balance sheet, that has the single most upward bias on 10-year yields. So if you stop that, which they are, that gives the ability for that mortgage rate to drop, hopefully precipitously, I don't know if it will be as quick as homeowners would like it to drop to get to that golden rate or below that golden rate, because that's where they'll take a leap. But I think for the economy, for homeowners, for smaller companies, your people need lower rates to continue what they would like to do, to continue to spend money, to continue to take out debt

and finance their debt. This is not only good for the average person on the street. This is good for the United States of America, that their debt financing will be tremendously cheaper the lower we go. I don't think inflation, and I appreciate Richard's comments, he's an inflation hawk, and I get where he's coming from, and he is right. I'm a market participant, but I'm well-rounding this all out. I could see both sides of this. I think to get from A to Z for the economy for the markets, we need lower rates, and we need those rates around 3%. All right, Richard, I want to ask you this question because as the former head of a regional Federal Reserve Bank out in Dallas, we've spoken a lot and maybe even speculate as maybe not

the right word. We've thought a lot about what exactly policymakers are using for data in order to get the best, I guess, view possible about what the economy is doing in the absence of any government-specific data coming out of the Labor Department of Commerce or anywhere else. One of those things has been the use of regional Fed banks and their kind of beige book participation type data to glean a better picture of what's going on. I would like to know from you as the president of former president of the Dallas Fed, just how robust is that data coming into these regional banks and how exactly can it be used, if effectively at all,

by the central bank to help guide policy? Well, it's not just the beige book, Dom. Every president, when they go to the meetings, which just concluded, they report what they see, what they're picking up to the minute and turn to their districts. Some districts are doing better than the others. Obviously, my former Federal Reserve District here in Dallas is one of the gross spots of America. But all of them are reporting a bit of a slowdown here. So a lot of it, yeah, again, please bear in mind.

This is a judgmental business. There's no mathematical precision, despite what econometricians would like to infer to making monetary policy. You've got 19 people sitting around the table, best judgment from all the stimuli and what they're hearing. They would like to have reliable gold standard official data. They don't have that right now. So they are flying in a bit of a fog, but it's not with complete darkness. They're getting a lot of input from the banks. They're also creating alternative models to understand mathematically, at least from an

econometric standpoint, what's going on in the economy. And I wouldn't say they're flying blind, but they are definitely in a bit of a fog here. The one thing I want to come back to what was commented on earlier. One of the reasons we bought up, and there's now $2 trillion in mortgage-backed securities on the balance sheet to this day, was to assist with the process of keeping those mortgage rates down when we put all that stuff on a balance sheet. And if you're going to start rolling that stuff off, it might have a negative impact in terms of mortgage rates. We'll have to watch.

Here comes Powell. Okay. No, we're going to wait just a moment here. Steve, we are waiting, as you can see here in the image, waiting for Fed Chairman Jerome Powell to take the podium. We've got roughly, call it maybe a minute 45. He's very prompt, by the way, Jerome Powell, stepping up to those podiums right now. So in the minute and 25 or 30 seconds that we have left, Steve, I'll give you a final word here. What exactly would you be wanting to listen for right now? Yeah, yeah.

So I think a lot of these press conferences are checking the box, right? So Chair Powell is very good at playing it down straight down the middle of the fairway. I don't think he's going to tip his hand. I think he's going to say this was an insurance cut, and those will be the next insurance cuts. based on trying to save the jobs market. I will leave you with this, and then I'll let Richard close it out. If you feel like the Fed is on time and making decisions, they're late. On time is late in the Fed policy world due to the long and variable lags.

So if it feels early to you to be cutting rates, he's probably on time. All right. So we've got a little balance here. Richard, I'll give you the final word, your final thoughts before a Fed's your own politics. The podium. Remember, monetary policy, we used to think that it would take 18 months to have its impact. I think the period is much shorter now, but there is a variable rate of time that it takes for these decisions to actually hit the economy. The markets react almost instantaneously right or wrong.

But I thought that was a very good point. And we're just kind of to see how he handles himself here and what he says. And I expect him to be cautious. And the last thing I'll say is this. No Fed chairman has communicated this constantly with the marketplace. Remember, Volker said nothing. Greenspan talked, but we couldn't understand what he was saying. He was just a great mumbler.

And it was only every quarter that you might have gotten or sometimes only twice a year from previous chairman. Let's give Jay Powell credit after every single meeting he meets. He also is open when he talks. And I think that's very important. I'm telling you he's prompt. Richard Fisher. I want to cut you off right now. Fed Chair Jerome Powell is taking the podium as we speak.