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00:00 Speaker A
Ben, for the first half of this year, how many rate cuts do you think we get? And why?
00:08 Ben
Yeah, it could be one to two cuts, Brian, but this obviously very depends on how the Fed chair sequence plays out. I think that’s a major influence really because with the economy right now, a lot of these Fed members have again signal that they may like to stay on hold for a few months. But yet the influence on on the Fed rate setting will be significant, right? The most one of the most consequential events for this year will be the announcement of a new Fed chair. and that’s really different than anything that we’ve seen in history because the way it’s been positioned of the expectation and rates have to be slashed down, right? as a part of their job description. So, I think we could see one or two rate cuts, but to that discussion about labor, it is driven by that picture. Like if labor continues to deteriorate faster than anyone had anticipated, Fed will step in. But if not, you’re going to get this political influence. I think that plays a big role this year.
01:05 Speaker A
Dana, when we get that uh that information on who the next Fed chief will be, it’s supposed to come uh reportedly in a few weeks uh out of the gate here. What do you do? You know, and how does that that Fed pick change or maybe it doesn’t. How does it change how you go about thinking about investments for the balance of the year?
01:32 Dana
Well, I agree with Ben. I mean, I I think uh obviously this is a highly politicized appointment at this point. Um I think, you know, the concern here is how bad does the reaction have to be? I mean, you could still land in an okay place, right? We we could still land in a place where rate cuts are needed. Um we get the rate cuts that we need, we move forward and, you know, it it’s sort of pans out the way uh it should and could. Um however, there’s there’s obviously the prospect that you get rate cuts that aren’t indicated by the data, that the data starts to, you know, inflation uh creeps back up and even with a a bad employment picture, you could have you could be looking at stagflation at that point. I think nobody at the Fed lets this go forever, right? Because obviously this is bad for the economy. It’s bad for exactly what you’re trying to do, which is goose the economy, goose the market. Uh so eventually that does get reined in. Uh the so so the open question becomes, you know, does it go too far? Does the punch bowl as you will, uh sit out there at the party a little too long and do we get, you know, some some bad uh consequences as a result of that. And I don’t think you’re going to know that from the appointment. I think you know the appointment will lean dovish. There’s just no question. uh but you don’t know how it’s going to pan out until you know what happens with the actual data.