INFLATION IS A CHOICE!!!

[00:00:01]So, you thought Kevin Walsh was going to be Donald Trump's lap dog. You thought Kevin Worsh would come in and bully rate cuts. You thought Kevin Worsh would lower rates and save your terrible syndication. Nope, not going to happen.

[00:00:18]Kevin Walsh has made it clear with some of his comments that he is going after inflation. In fact, the most interesting quote and I read a lot of what Kevin Worse talked about is the following. Not only for its brevity but for its importance and here it is. Worse said four words that changed everything.

[00:00:44]Here they are. Inflation is a choice.

[00:00:52]One of the things you are going to see about Kevin Wars if he keeps with his style is he will be brief. He will not give forward guidance and he is going after inflation.

[00:01:05]I actually think there is a very good chance that when we look back through the time of history, some people might call Kevin Worsh Paul Vulker 2.0.

[00:01:20]What does that mean? Well, as you will see in today's summary, which is predominantly about the Fed, we got some unemployment data. We got some other stuff, but let's be clear, the Fed is the big talk track of today's daily financial news. Gosh, I have a page and a half of just what Kevin said. So, in no particular order, uh, let's go through it. First and foremost, uh there was no rate cut and no rate hike. Also, not shocking, it was unanimous. Both of these things I talked about yesterday morning in my nine questions for Kevin.

[00:02:00]Both were layups, both were makes. Next, we talked about getting rid of the easing bias.

[00:02:07]And boy, did they get rid of the easing bias. It was gone. Again, I will repeat, inflation is a choice.

[00:02:19]You're not ready for what's coming. Uh, as expected, Kevin Worsh abstained from uh giving his dot plot. You will not see him give forward guidance. You will not see him participate in it. And it would not shock me if by the end of the year the dot plot goes the way of the dodo bird. uh as Kevin Walsh wants to run the Fed differently. I I do think that's interesting. I'm not sure long-term that's valuable, right? I do think there is some importance in understanding what the Fed is thinking. But again, Kevin is in charge and this is what he wants. Uh on the dot plot, again, X Kevin's dot. So, not the full board. nine nine Fed presidents penciled in a rate hike in 2026. And yes, folks, I will continue to take my victory lap because I told you that first uh of any economist that a rate hike was coming in 2026. And now people are finally catching up. But you and I, we have been here for a long time.

[00:03:34]Again, one rate hike in 2025. The odds on the Fed watch tool, not to be outdone, now have a chance of a rate hike over 50% in 2026.

[00:03:46]Um, next up, we have uh Kevin Walsh overhauling communication. Again, this was in my list of nine. We got this one right as well. In fact, he went even further. He created five task force.

[00:04:00]Now, this is this is just what you got to do in a political group like that.

[00:04:07]You can't come in with a sledgehammer and say, "Thou shalt do these things."

[00:04:11]You go ahead and create these little focus groups on different topics and lo and behold, by the end of the year, you get what you want. So, what does Kevin Walsh want? Well, one, he wants to reduce communication. He wants to stop forward guidance. Of course, there is a task force for communication. Next up, balance sheet. Kevin Warsh wants a smaller balance sheet. So, what is he going to do? He's going to create a task force to look at how doing that. I will highlight for you that even yesterday I told you he is going to want a smaller balance sheet. And that could be a problem. If the Fed starts to suck liquidity at a faster rate, that could be a problem. But again, this seems like what is coming next. Again, I told you this in my list of nine. You can go back and watch yesterday's daily financial news. I gave you these nine. I said, "Let's hope we go seven for nine." So far, we are four for four. Uh let's see what happened next. Data sources. I told you that the Fed is going to stop relying on these antiquated phone calls and nonsense. They are going to start to use technology. Guess what? There's a task force called data sources. Next, productivity and jobs. The Fed is unclear on what is happening with AI.

[00:05:30]They are unclear on whether there will be a timing issue with jobs in work, but they are now have a task force to study it. And the last one that I told you was coming in my list of nine things is he is going to start to do the Jedi mind trick on inflation. He is going to make you think that PCE core is old and outdated and irrelevant. He wants you to start thinking about a new inflation measure. So what does he do? He creates a task force for inflation framework.

[00:06:03]Yes, folks, as I've said before, we are going to get a new name. The current Fed mean trimmed inflation is a mouthful.

[00:06:10]Nobody understands what it is. So one of the things I'm certain will happen is there will be a new acronym like PCE or CPI or PPI for the inflation that Kevin Worsh wants. So, so far folks, we are five for five out of our nine things.

[00:06:26]We'll get to the next four in a minute.

[00:06:29]Oh god, this was crazy. Uh, next up, again, uh, it was a unanimous vote uh, for no rate hikes and whatnot. So, again, we got that right. Kevin War said again, he said this again, he wants to have a good old family fight uh, on the Fed decisions. I'm not really sure what that means. I think what that means is, hey, hey kids, get in the room. Tell us where you're at, right? You're a you're a hawk. You're a dove.

[00:06:59]And let's just get at it. So, this is going to get this is going to get in. I I can't wait for the Fed minutes, assuming we still get them. Maybe Kevin Worsh won't give it to us anymore. Who knows?

[00:07:12]Uh, let's uh stop for a moment and do two things. First, let's congratulate Chase. Uh Chase is a member of our school community and just closed on his first deal. So congratulations Chase. Uh your card will go out in the mail. Uh and also congratulate Hada Hadti Hadtie for joining school yesterday. Make sure you introduce yourself, get around your other wealth builders, ask questions, get active, take the education, do what you do. So we will see you guys in school. All right, let's keep going. We got more stuff to talk about. Uh Kevin Worsh remember one of my things yesterday I said he's going to talk about housing.

[00:07:52]Got that one right too.

[00:07:54]Um where is it? I got it out of order.

[00:07:57]Let's just jump to that since I already brought it up.

[00:08:06]All right, I'll find it in a minute.

[00:08:09]Oh, here it is. Fed policy appears to be restrictive visav the housing market but not the financial market. Again folks we are seeing roughly 4 million existing home sales for the third year in a row uh i.e. a very restrictive housing market. However, the financial markets are racing higher. Uh so again uh there is a economy there. Next up, uh, oil market today do not have full order consequences to what we are doing.

[00:08:44]Again, we got that right, too. So, now we're up to what, seven for seven. Uh, basically what he said there is, sorry guys, I can't drill for oil. I can't ship oil. There's nothing I have in my Fed mandate that will help to lower the price of oil. Again, it's true. This this physical supply shocks are something that the Fed cannot do.

[00:09:09]Finally, not finally, at least finally for page one. I have page two. Uh dotplot policy statements and press conferences could all change or be eliminated.

[00:09:23]Yeah, Kevin Walsh is not playing around.

[00:09:26]Uh other on positive news, it appears that US and Iran have signed a memor memorandum of understanding to end the war electronically. So there is no visit to wherever it was in Europe, Vienna or wherever. Not happening. They just you know docuigned or like technology.

[00:09:45]Uh the Fed watch tool is not only calling for a rate hike in 26, they have two uh by summer of 2027.

[00:09:57]Uh again, Fed can't have significant effect on particular prices, i.e. oil.

[00:10:03]Uh the dot plot again ex Kevin Worsh had lower growth, higher inflation and rate increases.

[00:10:13]Yeah, gonna get interesting.

[00:10:16]Uh Kevin Worsh said at least 12 times, at least the following phrase 12 times.

[00:10:24]Price stability. Price stability.

[00:10:28]Remember folks how we open this with a fourword quote. Inflation is a choice.

[00:10:35]What does that mean? Well, I think Kevin Worsh is going to do the exact opposite of what President Trump wanted. I think Kevin Worsh might be Paul Voker 2.0 and he's going to raise rates and he's going to beat this thing down.

[00:10:54]The market is off sides. They are not ready. It's going to get interesting.

[00:10:59]All right, we got a couple of other things uh and then we will wrap this up because again it was very much Fed day in review. It is Thursday, so of course we got weekly unemployment claims and they are now back below 230. So, we did have a oneweek blip. Again, nothing to see here. 226,000.

[00:11:16]We do not get concerned unless it gets to 300,000.

[00:11:20]Uh, but there you go. 226. Uh, PIMCO.

[00:11:24]The Fed is getting the US ready for rate hikes. Hello. Who else told you that was coming?

[00:11:32]Yep, this guy. And then finally, Jeffrey Gunlock. Worsh will not will not be the easy money chairman. many hoped for.

[00:11:42]Folks, it's early, but there is a very good chance that Kevin Worsh goes on a quote unquote war path for inflation and he tries to extinguish it again. He said inflation is a choice.

[00:12:01]Yeah, get ready for what that means. It is going to get bumpy. All right, folks.

[00:12:08]Take care of yourself. Remember, please join school, get around 600 other wealth builders, introduce yourself, ask questions, get active in the forums, all the education, 10 accountability groups.

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