254 - Dan Habib - FINAL?
===
Quiton: [00:00:00] Welcome back to the What's Your 1 More podcast. I'm your host, Quinton Harris, and on this episode I've got a standing co-host, Dan [00:00:05] Habib, If you have been listening to this show, you know exactly who Dan is, but if you don't, just a quick little update. Dan was recently [00:00:10] named 40 Under 40 Mortgage Professionals in the Rising Housing Award from Housing Wire.
Dan [00:00:15] also is the Chief Revenue Officer over at Highway, which is the parent company, NBS Highway and List [00:00:20] reports, which so many of you're familiar with, but also he's the co-founder of Crypto Charge, a platform that's designed to [00:00:25] educate investors on the crypto markets to help them kind of navigate those channels.
All of that shows up in this episode 'cause [00:00:30] Dan's gonna talk about why interest rates are what they are, but where they're
Quinton: going and why crypto can [00:00:35] play a large role in that. Also, what's going on with the Federal Reserve and the two meetings that are coming up and why he believes rate [00:00:40] cuts are on the horizon, is scheduled to happen.
And the last thing he touches on is real estate. Don't [00:00:45] listen to the headlines because a wave is coming and it's for the positive. All of that and more in this episode. What's your one [00:00:50] more.
[00:00:55]
Quinton: Welcome back to the show, Mr.
Dan Habib.
Dan Habib: Brother. Thanks for having me, [00:01:00] man. Excited to be back. And boy, it's crazy how much has [00:01:05] transpired since the last time I've been on. Yeah, I mean, we've had a crazy job reports. We've had, a little [00:01:10] bit of Headbut at the Fed, maybe even a shadow fed looming in the background there. We've had a, pretty audacious [00:01:15] Redfin report and, what all of that means to our audience and more, so I'm excited to hear you talk [00:01:20] about that and maybe kind of tease some rates and what's on the, upcoming opportunities there for people that are looking for [00:01:25] mortgages and refinances.
Yeah, well, you know. One of the things that we've been talking [00:01:30] about is how the bull market for our industry. It's a lot closer than many people [00:01:35] think, and boy, we've been seeing rates move lower until this morning where we [00:01:40] kind of went in the other direction a bit. But I will say that, the bond market, especially [00:01:45] mortgage-backed securities, have really taken it somewhat in stride considering the [00:01:50] report that came out.
We got some inflation data, which is always important. And just two [00:01:55] days ago we got the consumer price index inflation report, which was okay, but we got the [00:02:00] counterpart, the wholesale inflation report this morning, and that came out hot. [00:02:05] It was up nine tenths of a percent for the month on both the headline and core.
And [00:02:10] that was a lot higher than the two-tenths expected The year over year numbers jumped. Now [00:02:15] listen, everybody's been wondering when are we gonna see really the impact of these [00:02:20] tariffs? Because listen, the us, I mean, you hear President Trump and the administration talking about how they're pulling [00:02:25] in $29 billion a month.
That's gotta show up somewhere. You know, the [00:02:30] person that's, or the, you know, the country that is exporting that to us, you know, they're [00:02:35] certainly not paying the whole thing. Maybe they pay a little bit, but in a lot of cases that gets passed on. [00:02:40] You know, our stance has always been that it's going to increase prices temporarily.
So, [00:02:45] 'cause they're most one time price increases. But the impact on the consumer [00:02:50] we always felt would be less than people feared. Now, don't get me wrong, there's definitely going [00:02:55] to be an impact however. We always felt that it was going to be shared [00:03:00] like from, 'cause remember, you import something in here.
You have your distributor, you have your [00:03:05] wholesale, you have your reseller, and then it goes to the consumer. We always felt that it would be shared along the [00:03:10] line and that wouldn't fully be passed onto the consumer. And I really think the last [00:03:15] two reports that we got, the Consumer Price Index and the producer price index this morning really [00:03:20] echo and illustrate that because you had the Consumer Price Index report for the same month, [00:03:25] really not be too outta whack and come in pretty close to estimates, but then the [00:03:30] producer price index was much higher.
What does that tell you? Tells you that the producer side of things, the [00:03:35] wholesale side and such, is absorbing a lot of those costs. Now, one of the [00:03:40] things that was feared is, well, what happens with the Fed's favorite measure of inflation? [00:03:45] PCE, we get that at the end of the month. Well. We know the consumer price [00:03:50] index numbers were okay, but there's shared components between the [00:03:55] producer price index and the fed's favorite measure.
Personal consumption expenditures, I'd [00:04:00] say about the influence is around 12%. So it's not [00:04:05] insignificant. However, if you go in the line by line items, the ones that [00:04:10] are shared between both reports, they were actually pretty tame. So I'm not that [00:04:15] fearful that's gonna cause a really hot PCE report that's going to impact things [00:04:20] to the downside, at least seriously.
So at the end of the month, but I was, you [00:04:25] know, surprised. I mean, you see a PPI report come out, nine tenths of a percent would've actually [00:04:30] expected a bit of a worse bond market reaction. But maybe they are looking through that and they're also [00:04:35] looking at both the CPI and PPI together, seeing their producers are absorbing a lot of the costs.
And [00:04:40] also that those shared components, well, they weren't so bad, they were actually pretty tame. [00:04:45] Now, you know, Quentin. I wanted to just kinda share for your viewers, 'cause I always think they might [00:04:50] think that this is interesting production numbers and how many loan offices there are in the [00:04:55] country active right now.
So I think we have the best data out there for this. And our [00:05:00] criteria is that in order for us to count you as an active originator, [00:05:05] you had to have closed at least one loan in the last four months. How many people fit that [00:05:10] 174,000? Now it's clearly come down from some of the [00:05:15] numbers we were at several years ago, so a lot of your competition has kinda left the business, [00:05:20] left the wayside, but it's been tough.
I don't have to tell most of you listeners that are living and breathing this [00:05:25] every day. It's been a tough environment. There's been a lot less activity. But here's where [00:05:30] people stand and I think this is eye-opening. If you want to be in the 50th percentile, that means [00:05:35] half the people did more business than this and half did less.
It's only 4.2 [00:05:40] million over the last 12 months. Wow. Pretty tough, right? Yeah. Now, if you wanna be in the top [00:05:45] 25%, it's a little less than a million a month in business, top 10% around [00:05:50] 2 million a month in business, top 5%, a little less than 3 million, and [00:05:55] the top 1%, boy, a little less than 6 million a month. So.
[00:06:00] It's a difficult environment, but as I said before, I don't think we're that far away [00:06:05] from really seeing our business change. Obviously, one of the main catalysts there would be [00:06:10] lower rates and more than just a blip, lower rates on a sustained basis. So I wanna [00:06:15] just go over with you. You know, a couple things here.
So inflation, listen, it's gonna be a little [00:06:20] muddied in the short term by one time price increases from tariffs. But if we look over the next 12 months, [00:06:25] I do think we're gonna see inflation come down closer to the fed's target. Around [00:06:30] 2.2, probably more realistically, 2.3% that would help mortgage rates.
But the [00:06:35] labor market's gonna be key. You know, the labor market. We've been kind of beating the drum [00:06:40] on this, Quentin saying, sure. It's not as strong as people think. You know, the [00:06:45] Fed has been resting their cap on the fact that the labor market is solid. 'cause remember, [00:06:50] they have a dual mandate. They can't ignore the labor market.
Yes, they're fearful of potential tariff [00:06:55] impact on inflation, but they've been feeling pretty safe to [00:07:00] be patient and pause at the last several meetings because the jobs report from the [00:07:05] BLS has shown a lot of strength. However, that's all changed. And again, we've been [00:07:10] talking about this for a while because of the nature of the revisions.
But all the other reports are [00:07:15] showing weakness and not syncing up. Take a look at this, A DP, [00:07:20] it's only had like 44,000 jobs over the past four months, and two months ago it was [00:07:25] negative 23,000. BLS all along was chugging along with high [00:07:30] one hundred forty seven, a hundred forty 5,000 numbers, and we're like, this just doesn't make [00:07:35] sense.
And then you look at continuing claims. So when you lose your job, you get [00:07:40] laid off, you file for unemployment benefits, and then if you continue to file for them, you get [00:07:45] counted in continuing claims 'cause you're continuing to receive benefits. This [00:07:50] number has been just climbing. I mean, look at the chart here.
And for 12 weeks in a [00:07:55] row, 12 reports in a row, it's been above 1.9 million. In fact, it [00:08:00] is right around the highest level since November of 2021. Why is this significant? And you have to [00:08:05] remember, people can only in most states, stay on benefits for 26 weeks. So this [00:08:10] continues to climb as you have people's benefits expiring and they're falling off.[00:08:15]
And this. He's showing you that once you let go, you're staying on [00:08:20] benefits for longer because you can't find a job because there's much less hiring [00:08:25] happening. And to your point, and the job opening, to your point, that's people that have been on there for the last 12 months [00:08:30] basically continuing claims.
But you know, it used to, didn't we change that number? Like [00:08:35] what was it? Well then we used to measure that way beyond 12 months. Didn't that used to go well? Beyond that? Well, cont continuing [00:08:40] claims in most states, you can only be on there for half a year, half year, [00:08:45] however. You're right. Where after COVID there was all [00:08:50] kinds of extensions and such where you could be on there much, much longer.
But that's been largely [00:08:55] gone away with, it's usually about six months. You could stay on these continuing benefits, [00:09:00] but just look at the trajectory of what's happened with them. I mean, the number has really kind of [00:09:05] gone a bit parabolic. Right. And that's a sign to me that there's less hiring going on out there, and that's why they're staying [00:09:10] on benefits longer.
And there's less hiring, partly because look at how much less job openings there are. I [00:09:15] mean, correct. We had a peak of like 12 million, around May or so of 2022. I mean, [00:09:20] that's down to 7.4 million. And I think this number is grossly overstated because what happened after [00:09:25] COVID, you had work from anywhere, you could have this.
And the way they count this stuff is on a state by [00:09:30] state basis, right? So you could have the same job listed in 50 states and they're counting the same job 50 [00:09:35] times if it's a remote work job. So I don't really buy this number, but either way [00:09:40] you could see the trajectory. But the big thing is. And what really helped mortgage rates to begin to come down [00:09:45] was the jobs report.
Now we've been saying and criticizing the BLS because they've [00:09:50] been overstating job growth, only to revise it lower and then much later you get the QCEW [00:09:55] data showing, guess what? Last year, 50% of the jobs they said [00:10:00] happened, never did. They said there was about two and a half million jobs. Now they revised that down to [00:10:05] 1.25 million.
I mean, that's not like a small miss. And if you remember [00:10:10] last year, every time the job support came out, it just crippled us in the [00:10:15] mortgage and real estate space because it caused rates to go much higher Now. We've been frustrated [00:10:20] about this and now clearly the administration's frustrated. They got rid of the head of the BLS.[00:10:25]
But before we get into that, let's get into the latest jobs numbers. 'cause this was [00:10:30] very validating for me because it really underscored and showed that we've been correct [00:10:35] on the labor market not being as strong. So the latest report for July, it showed [00:10:40] 73,000 jobs created. The market was looking for one 10.
Clearly this was a miss, [00:10:45] but the true story was in the revisions. You had one of the [00:10:50] largest in a long time, revisions two months of negative [00:10:55] 258,000 to May and June. So what did that do to those numbers? Well, may was initially [00:11:00] 144,000 and June was 147,000. That's the Fed saying, Hey look, [00:11:05] labor market's solid.
However, now those numbers stand at 19,000 and [00:11:10] 14,000 respectively. And guess what? There's one more revision that's gonna come to [00:11:15] June, and there's two more revisions that are gonna come to July. And the average [00:11:20] revision 20 in 2025 after the two months is negative [00:11:25] 77,000 per month. So if that pattern holds true, this number's gonna be [00:11:30] negative, and this one might be negative as well.
So you certainly can't say the labor market is [00:11:35] solid. Now, in my opinion. And here's the other thing, this year [00:11:40] we've been getting crushed by the BLS because this year, and what I mean is [00:11:45] hurting us with rates because this year there's been so many opportunities where it looks like yields are [00:11:50] moving lower on the tenure year, mortgage back security is moving higher.
The table has been set [00:11:55] several times this year for us to get under six and a half, get to lower rates, and [00:12:00] then the BLS punishes us. If you know, you know, I like some shows out there like [00:12:05] Marvel's, the Punisher. Okay, well the B Ls has been the punish. Of [00:12:10] mortgage rates and take a look what happened. June 6th BLS report comes out.
[00:12:15] We lost 52 basis points in mortgage-backed security pricing. The 10 year went up 13 basis points. July [00:12:20] 3rd, we lost 71 basis points in NBS pricing. The 10 year went up 25 [00:12:25] bips. So it has hurt us and it's frustrating because we now find out those [00:12:30] numbers were baloney. And for our real estate agents. Just to kinda let you know what he's relating there is when that job [00:12:35] report comes out in the manner it is and those numbers, he just shared up 23 basis points on a 10 year treasury, [00:12:40] that's literally like a quarter, that's like a quarter swing in rates.
I'm talking to you at six and a half [00:12:45] now. I'm at 6, 7, 5 by the end of the day because of this report that, you know, as you're describing as a [00:12:50] punisher to the market that we're finding out is really more like the BS report as we call it. Right?
Today's episode [00:12:55] is brought to you by Texana Bank Mortgage. They're coming to the table with a revolutionary product. It's [00:13:00] called REMLO Real Estate Mortgage Loan Originator. And what they're doing is they're taking real estate agents and [00:13:05] they're taking loan officers, and for the first time in history, they're putting 'em together under one umbrella.
They're actually taking two [00:13:10] industries right now that sit on top of each other, and they're putting them together and backing it by full service bank [00:13:15] licensed in all 50 states. So imagine this, you're not just an agent anymore, you're a full service agent. You're the [00:13:20] single trusted point of contact for your client.
This entire process, you're seeing the loan and the home search front [00:13:25] to end. It's going to change the dynamic of real estate and mortgage lending together. Now, if you're a real [00:13:30] estate agent, I want you to do me a favor. I want you to go to askaboutREMLO.com. That's [00:13:35] askaboutREMLO.com because what you're going to find, there are significant details about this program, how to [00:13:40] enroll and how to gather more information.
So if you're ready to adapt and thrive. Go to askaboutREMLO.com. [00:13:45] That's [00:13:50] askaboutREMLO.com.
Dan Habib: What do you think about getting rid of the BBLs report altogether? Like just [00:13:55] only use a DP, the private sector?I don't think that's gonna happen. I think it's [00:14:00] important that we get, a BLS report. It's just that we need to get one that [00:14:05] is, I mean, the, you have to just think about it. The bbl s they really are in [00:14:10] charge of two of the most important economic data points we get.
The jobs report, you [00:14:15] could argue is the most important. I mean, job growth in the economy really tells you a [00:14:20] lot and the unemployment rate to the health of an economy and the markets react wildly to [00:14:25] it. The fed bases their monetary policy decisions on it, and [00:14:30] it impacts all of us and everybody in a certain way.
And they also have the consumer price index [00:14:35] inflation report and the producer price index inflation report. So jobs and inflation. Basically [00:14:40] what the Fed base all of their monetary policy on. Now, yes, the PCE is a separate report from the [00:14:45] BEA that comes out later. But because this one drops first around mid [00:14:50] month versus the PCE at the end of the month, and that's another inflation report by the way.
[00:14:55] this one you could argue is more important because this one usually garners more of the market reaction [00:15:00] because it comes first. We need these numbers to be right. There you go. You know, and you can't [00:15:05] have it be so important and have all of these decisions, whether it's investment decisions, the [00:15:10] fed decisions, you name it.
Be based on something that has such a high degree of error. [00:15:15] Now, I understand that it's a tough job, okay? I mean, trying to get the [00:15:20] job growth in the entire country in a timely fashion on a month to month basis, it's a [00:15:25] behemoth effort, but the margin of error has been getting worse. And [00:15:30] while it's been getting worse, there's also been more imputed data instead of hard data, [00:15:35] they say they're understaffed and.
It just boggles my mind [00:15:40] how it's not like there was one report that was wrong. We're talking about consistently over [00:15:45] the last several years, it has just been the same story and they haven't changed their [00:15:50] methodology. So based on that alone, okay. I don't like, personally, and [00:15:55] I don't wanna get political, I don't like the approach that was taken where, you know, we're [00:16:00] talking about numbers being messed with.
I think it's important to keep trust in our institutions, [00:16:05] and I don't necessarily listen, you never know in this world what's happening with things, [00:16:10] but you don't have to even go there because there is more than enough [00:16:15] warranted to make a change based on the consistent degree of margin of error and [00:16:20] inaccuracies.
Think about it like this, Quinn. I mean, if you're the manager of a baseball team or a sports [00:16:25] team, and not only are you losing, but you're losing consistently and you don't make any [00:16:30] changes, you're probably gonna be held accountable if you're the CEO of a big company. Percent [00:16:35] you're performing, percent perform poorly on earnings, and then you consistently are doing.
So when you're not [00:16:40] making any adjustments or changes, listen, people are gonna make mistakes, then you're gonna [00:16:45] probably be held under fire. And I think it's no different here. The head of the BBL s was fired, Sarah [00:16:50] Merc Anderer, and I hope I said that right, but Mac Anderer. But, [00:16:55] you know, I think that there was justification for making a change.
Now listen, we [00:17:00] could get into, if you agree with who was placed, Eric Anthony, or in her place, or EJ Anthony, [00:17:05] I should say. but all I want is to get some more accurate numbers because [00:17:10] this number is so important. So I hope that some changes will be made. Funny enough. There's a [00:17:15] text thread. My, my father was showing me with, you know, some of the who's who up there and, [00:17:20] they actually were asking him if they wanted if to throw his name in the ring, for the next head of the [00:17:25] BLS, but it wasn't something he was interested in.
Hard pass. But obviously we [00:17:30] break this stuff down pretty good. And see, I mean, I could see several ways that you could improve this. I mean, [00:17:35] well, you know, you know, think about a DP, wasn't it two years ago they took a time out and said, Hey listen, we're [00:17:40] calculating this and it's not right. We're gonna take two months off and get it fixed.
I mean, what a great model. Yeah. [00:17:45] They took a few months off to, to rework their methodology and, you know, there's been talks, maybe the [00:17:50] BLS makes it a quarterly release, so it gives them time, as opposed to this month to month, but they're using [00:17:55] so much. Garbage data. You know, one of the biggest skews is the birth [00:18:00] death ratio.
Now that's not like people being born or dying. That is, I'm glad you're clarifying this, coming online [00:18:05] or offline. Okay? And it is all imputed data. It's all based on [00:18:10] trends from the last five years. Guess what's happened since then? Had CO in such a [00:18:15] completely distorted everything. That's why I think part of the margin of degree for error is increasing.
But [00:18:20] also the response rates have been terrible. You know, on the household survey where the unemployment rate comes [00:18:25] from, it was like over 90% and now it is like 60% or [00:18:30] so. And then on the headline job creation survey, the business survey, it's a [00:18:35] similar story with the rate of decline there. Listen, I mean, you and I are forced if we [00:18:40] get, jury duty or something to go ahead and do this, and they still use snail mail, by the way, with all of [00:18:45] this data, digitize it.
And enforce it. Make people have to fill this [00:18:50] stuff out or businesses have to fill this stuff out. I mean, this is important stuff, but also [00:18:55] you shouldn't have the largest waiting of the entire inflation report out there. The owner's [00:19:00] equivalent rent, which is where they call households, and ask them how much they could rent their home for [00:19:05] unfurnished and without utilities.
Because guess what? You don't know the answer. I mean, if [00:19:10] somebody, I'm in this industry, if somebody were to ask me, Dan, your home that you have in Homedale, New Jersey, how much [00:19:15] could you rent it for? You think I couldn't tell you with a high degree of confidence what I think it would rent for. [00:19:20] How is Joe Schmo on the street that's not in the housing industry?
Gonna give you an answer and it makes up like [00:19:25] 33% of the report, which is crazy. So why [00:19:30] not FlipFlop the weightings and use the hard data that you have for rents and [00:19:35] put the imputed data at a lower percentage. So this, listen, this is just in two seconds. Here're giving [00:19:40] you a couple ideas. And I know there's PhDs at the BLS and it's probably a lot harder than it sounds, [00:19:45] but clearly there has to be changes made because margin of error has gotten worse and it's such [00:19:50] an important report.
Now listen, we heard from Austin Goldsby today. He's a Chicago [00:19:55] Fed President, he's a voting member, and boy has he flip flopped and we're gonna talk more about the [00:20:00] Fed, okay? In a little bit. But. He was somebody in a dime today. He was one of the [00:20:05] people that was like the most in favor of cutting rates. Yeah.
In fact, he said, and this was [00:20:10] not that long ago, he said the fed needs to get to neutral and he estimated neutral was [00:20:15] 2.9%. Well, with where the flood funds rate is, that would imply he thinks the Fed should be [00:20:20] cutting seven times at 25 basis points, a clip. He also was very [00:20:25] clear, he's not fearful of the inflation from tariffs because their one-time price [00:20:30] increases, they're gonna be transitory and imports only make up 11% of our economy.
[00:20:35] So now he comes out and he says we should, you know, he's [00:20:40] not committing to a September cut. He also said that, he's fearful of the [00:20:45] inflation from tariffs and the one that really struck a chord with me is he said the labor market is solid. [00:20:50] Well, how could you say the labor market's solid? I mean, [00:20:55] the way he does is this.
He says, well, the unemployment rate. Is at [00:21:00] 4.2%. So let's just go through that for a second because you know, you've heard of people trying to cherry pick data to like make [00:21:05] their case. Oh yeah. I'm gonna give you a great example here. All right? So, okay. You don't wanna pay any [00:21:10] attention to the 35,000 in average job creations over the last three months in the [00:21:15] headline business survey.
Meanwhile, there's gonna be more revisions and it's gonna be lower than that. But [00:21:20] there's two surveys within the BLS jobs report. The business survey where you [00:21:25] get the headline job creation number and the household survey where you get the unemployment rate, the [00:21:30] unemployment rate moved up in the latest report from 4.1 to 4.2%, but it was a ha [00:21:35] from being 4.3% notice, 4.248%.
And [00:21:40] you have to remember the unemployment rate's a ratio, right? It's a number of unemployed people by the labor force. [00:21:45] Well, how are you just gonna look at this and say, well, the unemployment rate's still pretty good and not [00:21:50] see, this report showed 260,000 job losses. [00:21:55] And over the last three months, 863,000 job losses.
Now, [00:22:00] why has the unemployment rate not gone up more than you would've expected? Because the [00:22:05] denominator, the labor force, they keep counting less people, okay? Right. There's been an [00:22:10] exodus of the labor force, so they're not counting them as employed or in the labor force, even though they're still breathing and [00:22:15] they have a pulse.
So that number skewed in my opinion. Now, listen, there's something called the U [00:22:20] six, this number here, 4.2 called the U three. That's the unplanned rate. [00:22:25] Everybody goes off of the U six, adds back. All these people that they're removing for various reasons, [00:22:30] like, oh, I'm disgruntled. I haven't looked for a job in four weeks.
So guess what? We're not gonna count you as [00:22:35] unemployed or in the labor force. It doesn't make sense to me. But anyways. The U six has gone up [00:22:40] to 7.9%. That's really indicative of like the true unemployment rate in the United [00:22:45] States, and it's the second highest reading since 2021. So [00:22:50] listen, I don't think the labor market's strong and even if you want to cherry pick the [00:22:55] 4.2%, which was almost four three, you've seen 863,000 job losses within [00:23:00] this report over the last three months alone.
So I think we're gonna see the unemploy rate [00:23:05] continue to move higher. I think it's gonna go from four two, which is where it currently is to [00:23:10] 4.6 over the next 12 months. That will help mortgage rates and also continue to pressure the Fed to [00:23:15] remove restriction and to cut rates. let brings the question I gotta ask, you know, [00:23:20] why did we stop using the U six rate in the nineties?
Like, why did we switch from U six to U [00:23:25] three I have people ask me all the time and I give them the answer that I think is right, but I'd love to hear your take on that real quick. [00:23:30] So I'll be completely transparent with you. I don't [00:23:35] 100% know the answer to that. Actually the first time I've been asked that, and I didn't realize that [00:23:40] they changed looking from the U six to the U three back then.
But [00:23:45] if I were to just say why, listen, there's been changes and this could be pure [00:23:50] speculation. Okay, but there's been changes before, to kind of fit the narrative a bit. There you [00:23:55] go. Right? That's so, you know, we changed our whole methodology on inflation. [00:24:00] Where they used to include things like home prices.
Now they look at homes as a service after the [00:24:05] seventies and stuff. Right now they, you know, the U six, I mean, if you're looking at the U [00:24:10] six, it looks like the unemployment rate's a lot worse than if you're looking at the U [00:24:15] three, right. So, you know, it certainly would probably be in a lot of people's best [00:24:20] interest and the markets in some cases to be quoting a lower unemployment rate.
So, [00:24:25] I don't know the answer truly, but you could see why there, there could be some [00:24:30] incentive to change the metric that you're looking at there. Yeah, I think they began publishing, I looked it up [00:24:35] while we're talking. They began publishing the use six in 94. And then continued [00:24:40] using, I guess. So they never really switched.
I should correct myself. They just favored the U three over the U [00:24:45] six. Gotcha. Yeah, I mean, as long as I can remember, they've always favored the U three. You know, they [00:24:50] report on the U six, but the U six is the real unemployment rate, in [00:24:55] my opinion. Fair enough. Fair enough. So the Fed right, the Fed critical, important.[00:25:00]
Fed didn't cut July 30th, but there was two dissenters, two [00:25:05] Fed governors, Bowman and Waller. First time in 32 years, you saw that went against the green. You know, one of the [00:25:10] problems I see with our Fed, and it's different than like, let's say the Bank of England, [00:25:15] they always are like lemmings and they fall in line with the fed chair or the general [00:25:20] consensus.
You rarely see dissenters. You know, you have some of these people talk in a big [00:25:25] game and then all of a sudden fed chair maybe, or you know, in the meeting that they have, they [00:25:30] decide we're gonna pause and then everybody usually falls in line. And you know, you look at like the [00:25:35] Bank of England's last meeting, it was like a five to four vote that they decided to cut [00:25:40] rates.
That sounds healthier to me. Like there's healthier debate, not usually with our fed, but guess [00:25:45] what? That changed a little bit with two disinterest at the July 30th meeting and everything. [00:25:50] Waller and Bowman said it's pretty in line with what we've been saying all along. But they were proven right? They said, [00:25:55] you can't believe the jobs data.
They keep revising it. And sure enough, we're seeing that unfold [00:26:00] now and you want to get ahead of it, right? So the Fed, they all say this [00:26:05] monetary policy as long and variable lacks. What does that mean? Translation, [00:26:10] if they cut rates today, it's not like tomorrow that filters through the economy. It takes a long [00:26:15] time.
So if you're trying to stave off a recession, if you're trying to stave off a labor market, [00:26:20] falling, to hell in a hand basket or falling apart, you have to get ahead of it [00:26:25] before it falls apart by looking forward. And boy, there was a lot of writing on the wall, a lot of [00:26:30] signs, and they didn't do that.
Now listen. . The Fed makeup is [00:26:35] always critical, right? If you have a more dovish fed, more hawkish fed, what that means? A [00:26:40] more hawkish fed would be less in favor of cuts, more in favor of hikes. [00:26:45] More dovish fed would be more inclined to cut rates. Okay? [00:26:50] So if you wanna see rate cuts, you want more of a dovish fed.
Well, we know Jerome Powell [00:26:55] has been a bit hawkish and very patient, very cautious. His term [00:27:00] is up May of 2026. Now, Kugler was a [00:27:05] Fed governor that was just replaced by somebody that Trump appointed Stephen [00:27:10] Miran. He was the head of the CEA and he also is somebody that's [00:27:15] dovish. Now it's unclear if he's going to be sworn in [00:27:20] before the September 16th and 17th fed meeting, which is the next meeting.
They vote on the [00:27:25] 17th.it's in probably the administration and his best interest if they want to see a greater [00:27:30] chance of a cut and such. For them to swear 'em in. But we don't know if that's gonna happen. So it could be Kugler voting [00:27:35] or it could be Miran. But Kugler, she resigned early 'cause she wants to go back to teaching at Georgetown and [00:27:40] she wanted to get there before the school season started.
Now Bowman we know is dovish. She's [00:27:45] gonna vote for a cut probably every meeting the rest of the year. Waller, same thing. [00:27:50] Goolsbee. Boy, when I made this slide, he was like a super dove, but now, [00:27:55] you know, it's questionable what he's going to vote for. He seems like he's really flip flopped and [00:28:00] done a complete 180 with some of the things he said.
I heard Muselam here speaking today. [00:28:05] He said some reasonable things. But listen, I think there's a great chance that we're gonna see a [00:28:10] fed cut September 17th. I think it's baked in to the, I mean, I think the market's [00:28:15] pricing in a greater than 95% chance. There's actually been people like Treasury [00:28:20] Secretary Scott Beson, who have said maybe we should do a 50 basis point cut because we should [00:28:25] have cut July 30th.
And if we saw the jobs data beforehand, we would have, but since we [00:28:30] didn't, let's make up for that. Yeah, I don't think that's gonna happen. Okay.
Quinton, it was such a pleasure being with [00:28:35] you, brother. I have to jump. Yep. Gotta know man. Hey, thanks for being on the show as always,
again, guys, if you like what you're hearing, [00:28:40] please share this podcast. Check us out on Apple, Spotify, and YouTube at What's Your 1 More for all the charts. Thanks again, Dan, for being on the show.
[00:28:45] Thanks brother, to see Buddy. Yep. Alright buddy. Bye.
I got one more shot. I'm gonna make [00:28:50] it one more chance. [00:28:55] [00:29:00] I'm.
