[Kittle] Great, Matt, thank you very much for that. Bill and Marc, a question about one thing Matt put in there. It’s goes without saying when he says bond yields are triangular, not moving anywhere, it’s kind like the Fed. And it looks if we’re gonna get a rate cut, it’s not gonna be until the September meeting. Would you agree with that?
[Bill] I’ll throw out an additional possibility and right, so if you ask a thousand people, you’ll probably get 998. That said, the Fed moves in quarter percent increments, which is correct, but there’s another little nuance that I’ve always called the Fed moving by an eight, and that comes down to what their messaging is. And if they come out with messaging that is in effect we’re really close to believing we should lower rates a quarter, but we’re gonna wait one more meeting kind of message that clearly has changed their bias and I look at that as the equivalent of their lowering rates by an eight. It starts to send a strong signal to the market that their mindset has shifted and given, that we know of and there may be more that are strongly advocating for a cut right now. I think that would be my best guess would be they lean harder into their messaging, but don’t actually make a cut. Which, and you go back to what Les said, that actually could be the best case scenario for the bond market where they’re signaling their intentions, but the bond market is comfortable that they’re not gonna get out over there again, go back to what Les said, that slower may be a little bit better for the long end of the curve. But I would be very in tune to both their statement where I think that’s where You parse it word by word, right? Matt does this after every fed meeting of exactly what changed, where they start to lean aggressively toward a cut without actually cutting this meeting would be my guess.
[Marc] I agree with you on that Bill. I’ve been mesmerized, but ever since I’ve been on this podcast about what happens with our projections on rates and a couple of times we feel like we project what’s gonna happen. We feel like heroes. And most of the time we said in dismay and wonder why nothing really happened. I believe I’ve said numerous things over the past six months. I don’t think the Fed’s gonna cut rates anymore than they have to, but I kinda lean to what you’re talking about. I really believe that Powell will lead the charge and allowing something to happen fairly soon if for no other reason than to get Trump off his case. Okay. I don’t think the numbers we have today really support a big decrease of any type, but I do also believe that we will have some, I think the housing market’s gonna be a driver and the housing and lending markets dried up in many areas of the company country. Again, I always talk about this in the affordable housing area. It’s terrible right now. There’s always a possibility then that there’ll be some other pickers that allow to go. One of the things that’s disappointed me is I really expected with all the cuts we had in the government, I expected the unemployment rate to change more than it did. That’s surprising to me that didn’t move like I was thinking in the back of my mind. But I think we’ll see something. I’m not predicting a half a point anymore. And I think we’ll see something fairly soon, and then I think we’ll see something else. I still believe we’ll have something else happen later on this year, too, just to stimulate the economy a little bit. So we’ll see what happens.
[Bill] And Marc, you you bring up an interesting point and, I think between between the three of us, we’ve been, rather vocal on the government component of job growth over the last couple years and how those numbers have been outsized and really, don’t have the effect of private sector job growth on the economy. But one of the things when you talk about expectations outta Washington and the downsizing that I hadn’t really paid attention to until recently is how much of that job growth is at the state and local level. And I think that’s another thing to watch that we can, we at the end of the day, the money that we all pay in taxes it’s still money going out. And while we’re focused on what the federal government is doing, we can’t lose sight of what the states are doing in terms of their government employee growth, overreach, et cetera.
[Marc] That’s a real good point, Bill, because Trump’s actually said in one speech. State should pick this up, but they’re not gonna pick up some of this stuff unless they hire people to do it too. So that’s gonna drive it. Some also.
[Kittle] You heard when do started around this, about cutting jobs and everything that many of the government don’t know if this is true or not. Workers, let’s say around DC weren’t even showing up most of the time working and many of them had other jobs while they were doing this. I don’t know if that has any effect on the fact that the unemployment rate hasn’t gone up or not, but an interesting thought to throw into that just a little bit.
[Marc] Nah, they wouldn’t do that.
[Kittle] Where are you, Leon Musk, when we need you. So Matt made a comment in there about Trump visiting the federal Reserve last week. So Bill, I’m sure you saw that I did. I thought there was a little more, while Trump wasn’t up in his face, he did hit him pretty hard on the cost overrun for the Fed refurbishment there, which is a ridiculous number. And overrun, don’t you think?
[Bill] It’s a ridiculous number, but I also thought watching it, the dynamics were interesting where Trump, somebody did not do him a favor with giving him updated information where he starts talking about 3 trillion and immediately, you know how, immediately he’s shaking his head going, yeah, that’s not right. And was, Trump went on long enough how was clearly able to put everything together in his head and go, and he looks at what Trump has. Yeah. You’re including another whole another third building. You, so I would not wanna be the person that gave Trump that piece of paper.
[Kittle] You mean that unemployed person? Yeah, probably yeah. I caught that too, although Trump, he came back with a quip and then immediately changed the yeah, the subject.
[Marc] Regardless of that, we know it’s a big number. And I think the most interesting fact about it is you take how many employees are employed there and divide it in the cost of that structure. It’s a little bit ridiculous.
[Kittle] It’s a lot ridiculous. Yeah. I think we’ve all been, I’ve been in the Federal Reserve several times over the years, and it didn’t look like it was in need much of an upgrade where I was. But it’s already done, is already spent. All that money.
[Bill] And it is symptomatic of a government problem too. I know being in Virginia, just reading over the last couple years, I think it’s probably been like a three year debate over where they were gonna relocate. The FBI’s headquarters to Virginia is competing with Maryland, and so they wound up to going, staying back in DC but the amount of money they spent amount in evaluating different options alone was huge. Forget the amount of time that people spend working on it.
[Marc] If the government had to evaluate and do all the things before they spend money like we have to do in public practice, it would be a different world. And they don’t, once they get something approved at a level and have range on it around it so they could do things, people go wild. And it’s like trying to spend every penny that’s out there and then know they can always go back. If they get into it, it runs over because they gotta finish it for the American people. And so what’s another billion here? Or billionaire? Anyway, it’s not a big deal.
[Bill] Yeah, unfortunately that’s so true.