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[00:00:00] Welcome back to the What's Your 1 More podcast. I'm your host, Quinton Harris. You dial for episode 2 44 in this episode. Hey, we got Fed Watch coming up next week. What does that mean? And can Jerome Powell and Trump get along to make this thing work? Or is there gonna be friction all the way that more in this episode at What's Your 1 More
welcome back. So, hey, before we get started,Hey, new sponsor alert, pre stoked about this. We'll talk about that next episode here, spend some time on it. But super stoked, big thank you to Tech Center Bank for doing this. love it when we always get a new sponsor of the show and we're gonna do the proper shout out to them on the next episode and kind of give them a spotlight, talk about some of the really cool things they have to offer there that I think many of you listeners are gonna wanna take advantage of.
So we'll get you QR codes as well as links for all of that in the next episode. So let's talk about it here. Trump Powell, right? We've got the Fed Funds meeting coming up. I think it's federal open market committee talking about the Fed funds, correct myself there. But we've got that meeting coming up and I think there's a couple things right now.
I've continued to stay on the show and it's really labor over [00:01:00] inflation data at this point. And you know, that doesn't mean I've got like rocket science. You know, I came up with a. Clever theory there. A lot of people are saying that, and I think over the course of the last year we've seen indications of that, but this week was interesting.
I'm recording this on the weekend intentionally because during the week we had so much economic news. It was almost like. The Super Bowl of economic news hitting. We had PCE data come out that's the, the Fed's favorite form of inflation. We had labor data in the form of a DP and BLS report come out.
So we had like the double whammy all in one week. And I can't recall, I think this might be the first time in maybe a year, all three of those came out. On the eve of the Federal Reserve meeting. And I think that's important because, it's gonna set the stage. Now, if you were to look at the forecasters and all the odds makers, they're gonna tell you that it's probably nothing's going to happen, right?
It's a 97, almost 98% chance. The Federal Reserve does nothing. Here's what I question about this. is it that we're not gonna look at. The idea of lowering interest rates because we're concerned about inflation rearing its ugly head again, and we're gonna get into what that looks like in just a minute, or we're not gonna lo [00:02:00] lower it because we think the labor market hasn't suffered enough.
Right. And we're gonna get into that as well. I. Any way you cut it. My goal here is to answer both those questions and try to get a better understanding of what should and shouldn't be done. So in order to get started, obviously we know the Federal Reserve is an independent agency of the federal government, meaning they don't answer to the President of the United States.
Now, if you're in the Donald Trump camp, you believe, you know that he does. Right? He being Jerome Powell does answer to Trump. because Trump tells everybody that, but that's not the case. You know how I feel about that. But Powell is his own independent person who was appointed by the president, and I think the president has expressed much displeasure here over the course of really the last 10 days.
this relationship has become volatile. if you recall when the relationship started. At Powell's press conference in January, it's hard to believe it's may already. but in January, Powell was very close to chess about, conversations that he and Trump have had. He didn't release anything and he said, our job is to follow the mandates of the administration and the policies of the administrations.
He was very complimentary of, you know, [00:03:00] the discussion they had and that it was a good conversation and that things are progressing well and that, you know, Scott Besson's even gone as far as to complimenting Jerome Powell and saying that he thinks he's doing a great job and that it's not his job to lower interest rates.
And then in the course of the last 10 days, this relationship has gone sour. President Trump has come out and made many comments about how he thinks Powell is doing a terrible job, how he should be removed. we've even had to get clarification of does Trump think he can remove him? which he can't, without congressional, you know, approval.
And that's in, again, when they say act of Congress, that's what they mean by that's not going to happen. And then even as far as Sam. We should have lowered rates last meeting. What are we waiting on? and so you're seeing this kind of, banter back and forth and that was one of the things we said would happen with the Trump administration is that it was gonna get volatile.
We, but we, even, I think on the December episode we talked about those two are not gonna see eye to eye and I was very shocked in January, but it was all a facade. it was pretend, you know, there was never a relationship there. because it only took. You know, really what, two more months for that to go sour quickly.
And it did, and here we are, and you've got basically [00:04:00] two adults, kind of at this head still with one another, acting like childs about it. But the reality is, I don't think Powell is not going to do what he needs to do in the form of lowering Fed funds rate. I don't think the FMOC looks at this as saying, Hey, let's go.
Let's go against what Trump wants and do this. I think they are absolutely bent on the fact that it's labor over inflation. on. Earlier in the week, on the PCE data, everything came in as expected in some cases lower, but the year over year got lower. If you recall, they look at a six month measurement that in this last six months has declined.
The last 90 day trend has declined on the PCs, like all the inflation's getting down. Matter of fact, year over year, it's at two point, 2.3. So I mean. We're looking for a two. We're at 2.3. We were at 2.7. So I mean, you're looking at these numbers keep coming down in the right way. Now you could argue some of the tariffs and some of the things that are gonna be coming down the pipeline haven't made their way to the consumers yet.
and I think that's a fair argument because, you know, there's a lot of thoughts that, hey, listen, tariffs are still going to show up 30, 45 and days later on the West coast. And [00:05:00] 69 days later on the East coast. and there's a theology as to why that happens. 'cause things coming from China take time to show up.
There's been a massive delay in the amount of freights and containers that have really not left and not moved. the amount of, shipments have declined significantly. And once we resolve the tariff, ideology with some of the countries, it's gonna take time to process these orders and process these transactions again.
And then. Get the supplies back over here. And so they'll come quicker to the west coast and then you have to put them on freight lines and send them over, whether it's the 18 wheelers, trains, whatever it may be to the East Coast. And that's gonna take additional time. So that's where there's that lag there.
And so you could argue that the inflationary prices are not gonna reflect that until this gets resolved. because what you're seeing right now is current inventory being used and what's currently here in some of these measurements, in some of these areas. But nonetheless, the reading is the reading and we're at 2.3 and they want to get to two.
The bigger question I have here is on the labor market. And the reason I say that is because, you know, if you've been a listener of our show for some time, [00:06:00] and by the way, if this is your first time, welcome to the show. we're on every platform that you got, whether it's Apple, Spotify, YouTube. We definitely love for you to take a listen to us over there on YouTube.
If you're listening to this, we film this and do all the videos and all the charts on YouTube, and that's at What's your, one more with the number one. Hit the subscribe button on there. We drop an episode each week. We'd love to have you. Listen and be a subscriber on our show. Alright, so enough for the plug there.
But I think that it's labor. That's the issue here. And we're seeing declining things in the labor market. Now, I'm gonna specifically point to the private sector, and I think you'll agree with me that the private sector is more of the income providing sector, meaning you make more money in the private sector than you do in the public government sector.
So a DP is the index that provides that information to us. Well, when you look at their jobs that came in from that, it's pretty significant. And I'm gonna pull up one of the reports here. We were expecting, about 120,000 new jobs to be created and reported from the private sector. We got 62, we got 62,000, so we got just over half of [00:07:00] expectations.
and then if you look at the previous month's reading, it was revised down by 8,000, so. We're not growing in those departments like we should be. Now remember, this is a private sector, so this has nothing to do with Doge. This has nothing to do with the government cuts that's on the BLS side. That has nothing to do with this.
But I look at this and job cuts are not getting better. you know, and if you look at a couple other things in here that I think are report and we're seeing hourly rates tick up. It's just a little bit, but the hours worked are remaining flat, if not going backwards, meaning that you're.
You're working less, but making a little bit more for what you're working. So that doesn't really help and it doesn't really improve the situation. I also think of this that is when you look at a DP, when their report came out, they used something in there that they said was the word of the day in the report.
Uneasy. Uneasiness, excuse me. Easiness. Meaning that there's, there are employers trying to reconcile policies and consumers, Uncertainty with a run on mostly positive economic data. It can be difficult to make hiring decisions in such an environment is what they said. There's an unease in the environment.
That's the word of the [00:08:00] day. Now, the reason that's important, that means employers are not wanting to hire right now. They're not wanting to step out there and provide more jobs because it's been very volatile in the market and there hasn't been a lot of consistency. And obviously it didn't help when Trump came out with these gonz tariffs that he did that shook the whole market.
and you're seeing the equities recover a little bit from that. But the reality is there's a lot of uneasiness in the market. So. Here's where I think we are. I think we have some significant signs of weakness in the labor market. What I fear is it's not enough. Unemployment stayed at 4.2 U six.
Unemployment fell from 7.9 to 7.8. We need to see that unemployment go up. Now, I'm, again, I, you've heard my disclaimer on this, and I'll say it. I'm not cheering for people to lose their jobs. That's not what I want. I think it's inevitable in this market situation. I think it's going to happen. I think as it happens, I've often referred to as a potential runaway train that, you know, if employers get spooked too much job cuts can happen at rapid rates, not gradual rates.
And if it [00:09:00] wouldn't surprise me if we jumped from a 4.2 to a 4.4, which is a significant difference in that particular number, or even a 4.5. And I think when that happens, that's the pain the Federal Reserve needs to see and wants in order to make these cuts. And so, you know, I stood up here and I said I for sure thought there was zero chance.
They would not do a rate cut in May, and now I'm shocked that we're here. But the tariffs played a huge role in that. And what I mean by that is, I spoke to it earlier a moment ago, is that the tariffs have not shown up in the form of higher cost of goods yet. you have in some areas, and you got some people, I feel like they're using tariffs like as a covid excuse.
I was talking to someone that was getting furniture for their office the other day and he said, yeah, man, it's not coming in time because they said the tariffs. And I started laughing. I'm like. it felt like covid all over again. I, they're not coming 'cause of covid. I don't think the tariffs had anything to do with that.
Furniture not showing up on time that stuff was already here. that's just kind of funny that was an excuse being used. But I, what I'm getting is that hasn't cycled through to the consumer yet, and it hasn't shown up in these PCE readings or the other CPI inflationary readings yet. What we're seeing are [00:10:00] food showing up and that's been a battle that we've been having for some time.
But it's coming down each time in these areas. I think the federal reserve's pause here is could it go up and when it goes up, how much is it going to be? Because that's gonna cycle over the next 30, 45, 60 days, depending on what region of the country sees it first from the West coast to the east coast.
That's what I think is holding them back from decreasing this on, on Tuesday when they meet. Because the reality is if that job market was poor and we had an unemployment rate of 4.4, they would do this. They would go ahead and reduce that, and it's,and. I think that's what we were hoping for in this job.
this job day that we got, we didn't get it. and I also think that the more pressure that comes from this Trump administration, whether it's viral pressure, whether it's just speaking of words, I think that doesn't help the situation. because, you know, I. They're gonna, the Federal Reserve has their policy in place and they've already wink showed it.
And we've seen on dot plot map. We've already seen that. We know what's coming in the next six months, and the forecasts keep getting more and more aggressive on that. With the rate cuts. I mean, if I look at this by the end of the year.[00:11:00]
You know, currently we stand between that, that four and a quarter range right now, four and a quarter, four and a half on the Fed funds rate. If you just go all the way to December and look at what that is, the future forecast has a, somewhere between three and a quarter and three and a half. So it's coming.
it's just not gonna come on this meeting, I don't think. it just, there's no size, no indications of that. But I think if they don't do anything, here's the real interesting thing. Watch the reaction from the Trump administration. Watch how Donald Trump blames the Federal Reserve for their policy and the implications it's gonna have on the American people.
He's really good. He's very good at taking tactics and saying, okay, you don't do what I suggest and what I ask. I'm gonna show you what the repercussions of that are. He's going to put pal. On blast for the next six weeks until he gets what he wants. I think the person has the hardest job in this situation is Scott Besson, because now Scott Besson's gotta find a way to get that 10 year back below four, down to that target range he said of 3 8, 5.
We were there for a minute, and I mean for a minute we were there for like 30 seconds it felt like, but we got [00:12:00] there. We need to get back there and we need to stay there somewhere between that 3 7 5, 3 9 5 range. And he has the hardest job, I think right now, because he's gotta make those treasuries attractive so that people buy 'em.
So the demand comes into the market so that those yields can come down on there. And good luck to him on that. I know we got the right guy in place that understands it, but man, he just, if they don't make that cut, he just got the hardest job for the next six weeks to try to make something happen there to appease a person that guess what he does answer to, and he does have to get things done.
So it'll be very interesting to watch. So I tell you what, we will be back after the Fed Funds meeting. We're gonna talk about our new sponsor and some really cool things they offer. again, they've got something unique I have never seen that. I'm like, wow, we gotta get this on the show. So I'm excited to have them on here.
I'm excited to show you, what they've got. And again, for the most of our audience, it's something you're highly gonna take advantage of and look forward to sharing that with you guys. I hope
everybody has a great week. Thanks for tuning in. If you get a chance, if you're not a listener, go ahead and subscribe to us on Apple or Spotify or on YouTube, preferably on YouTube at what's your one more, leave us some comments on the like section.
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I got one more shot. I'm gonna make it one more chance. I'm.
