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00:00What if, and we're going to have you on next week, what is if this inflation, this transitory
00:06that turned into super hyperinflation, what if they just blow the numbers off next week?
00:12I mean, they were pretty good.
00:13I mean, we've had a lot of inline stuff.
00:16I mean, even that, is that not going to change things?
00:20The inflation data is way more stable than the jobs data.
00:25So a surprise in inflation is highly unlikely.
00:29I mean, you know, everything's possible, but the odds on a big upward surprise in inflation
00:37are down in the 1%, 2% territory, they're very, very low.
00:42And if it did happen, I think the Fed would say it's a one month blip, and there'd probably
00:46be some explanation for it.
00:49But since I don't have the explanation in advance, I actually don't think it'll happen.
00:54By the way, this chart just shows that the Fed funds futures, the CME Fed funds futures
01:00are talking about a whole sequence of rate cuts, all the way down to 3% by the end of
01:05next year.
01:07I don't know that that's going to change very much based on this number.
01:13You know, where the Fed's talking about getting back to some kind of neutrality, I don't know
01:19where that number is.
01:20I don't think they do either.
01:22But it's probably between 3 and 1 half and 4, maybe not all the way to 3.
01:27So we're looking at a sequence of rate cuts.
01:30How many, I mean, do you think there will be at this point?
01:33I think you need the next chart.
01:36This is trying to figure out how many rate cuts are between now and the end of the year,
01:42end of 2024.
01:44And the Fed funds futures has 425% 25 basis points.
01:49So that's a full percentage point.
01:51I think this expectation may shift a little bit based on this number.
01:59The jobs, again, we're continuing to grow the economy, so there's no rush to cut.
02:06And so I really do not think the Fed will do anything in their November meeting.
02:14It's two days after the election.
02:15We may not even know the results.
02:17The last thing they want to do is be in the headlines that week.
02:21In fact, I'm surprised they're even holding the meeting.
02:27So you get a cut in September, you skip the first week in November, and then you cut again
02:32in December.
02:33So that's only 50 basis points.
02:35So on this chart, that would be a minus 2, 2 cuts.
02:40So I'm looking for some change in expectations.
02:43But when you go out a year or a year and a half, I don't think expectations change
02:48that much.
02:49So it's just the starting point is a little slower than some people were thinking.