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And time to talk the economy and much more with our friend Jeremy Seagull, professor ameritus here at the Wharton
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School and a senior economist at Wisdom Tree. Jeremy, how are you today, sir? >> I'm doing well, Dan. Thank you.
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>> Thank you. All right, so we're coming out of a Fed meeting where we got a 25
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basis point cut. I don't think anybody is surprised at that, but give us your
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thoughts on what maybe we're looking at moving forward because it seems a lot of
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the conversation is uh more cuts to come. Yeah, it was it was an interesting meeting from everyone knew it was going
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to be 25 as you said. I I found a couple things interesting. I I found uh uh the
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it was interesting that Chris Waller only voted for 25, did not descent for 50, which I thought was interesting
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since he was uh one of the leading candidates for new Fred chair and obviously Trump wants more than uh 25. I
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also thought it was interesting that Kevin Hassid also brooded as one of the top candidates um said, "Oh, he's all
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right with 25." Of course, he's not on the Fed right now, but um uh we all
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expected Steve Merin to go for 50, which he did. Uh but the rest was a big support, I think, for Chair Powell. I
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mean, they all uh I thought there was going to be dissents on both sides. Um, also I thought it was interesting that
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um that uh although the median cut was two more cuts, half almost half say I don't want any more cuts and and then
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about half said yeah I'll go one cut each of the next two meetings. So there's still a lot of division there on
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the Fed. Uh I mean my feeling is they should be cutting. Uh I've made that point, you know, that uh I believe that
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the Fed funds rate should be in the low threes given that the 10-year is in the low fours and that there should be a gap
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between the two. But um uh you know, clearly the data has held up strong um and um uh I can understand the
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division at the Fed. >> Could you make a case for a 50 basis point cut this mo most recent meeting,
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Jeremy? I I mean I could make that case for a 50 basis point cut because uh you know I I
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think the Fed us moves too slow. I've I've written on the fact that in the
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past the Fed used to move much more up and down. It it wasn't viewed as if you
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start moving up you've got to keep on moving up or start moving down you keep
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on moving down. They look at the data every time. Um u employment growth has really weakened. uh certainly inflation
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has not but there are two very important factors. One, housing is definitely not
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showing the increases either at the rent or the price big part of the CPI. Um and
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also the tariffs which I do not believe should be a reason for raising rates um to the extent that they go in because
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they're really a tax. So for that reason, um I don't know if if I were on
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the board would I would have joined MRN on on a disscent, but I certainly would have voiced some support for for that
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position. >> But that being said, and as this we're taping this interview on a Tuesday, it
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will run on a Friday. We will have PCE data. We will have more weekly claims data. Then you go out a week, you're
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going to have another jobs report coming our way. So there is a lot of data that
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we're looking at in the next, you know, 10 days to two weeks that may be able to
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kind of guide us as to what we're going to see play out here. >> Yeah, most certainly. By the way, I
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think the Friday report, and again, it might be dangerous for me to to say so, you know, before while people might be
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listening to it afterwards, but I think that it's going to be quite tame. In
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fact, there's a possibility the CPI I mean the PCE deflator which is what does
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come out might on the overall be a tenth less than what is currently expected which is 3/10. I don't think I think
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that's going to look good. Uh the jobless claims which we had that one big uh you know weekly jump was due to
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Texas. They claimed there were fraudulent claims from Texas and we did see the next week it drop back into the
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200 to 240 zone which is the safe zone. Um and that is expected also to be on Thursday. Now when we get to the
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employment data in the following weeks I mean that's when when things really
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start you know getting uh interesting again uh in those uh you know will we you know will that tremendous slowdown
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that that we get will that continue and will that uh drive a negative print which I think is psychologically uh
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quite uh quite important but one has to say at this point um spending is holding
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up it's not going gang busters but it is it is holding up and even the high frequency uh and the anecdotal data uh
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suggests that we do have that holding up. Um again if if tariffs suddenly hit like a near when people start buying for
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Christmas and the holidays and they really see that uh you know prices going up could that turn psychology quickly? a
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possibility, but clearly we have not seen that yet. >> And and then you throw in what seemingly
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is a belief out there that there is some room to run for the economy in terms of
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growth. Uh the OECD upping its forecast uh both globally and the US. Uh your friend James Bullard in an interview on
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CNBC uh on Tuesday uh seemingly saying the same thing. So there's, you know,
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while there are still many questions out there, there seems to be some optimism as to where potentially this economy
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could be headed. >> Yeah. Well, you know, for months I've been saying the stock market has been
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going up because for whatever negative effects the tariffs have, and you know, I'm on record saying I don't like these
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tariffs. Uh AI has a good opportunity to offset them for profit margins for companies. I mean they can save more you
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know money using AI than they might be losing on the tariff side and that is why the stock one of the reasons as well
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as the tax cut reasons and others that that that the stock market is in fact doing so well. Let me finish up.
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Speaking of AI, uh we got the announcement by OpenAI and Nvidia of their partnership, but have you talk
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about just the level of investment that is being put in by so many companies in and around AI and then obviously all of
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the other areas that could be impacted when you think of energy and supply chain and technology. I mean, we're
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looking at a very unique time in our history, aren't we? >> Yeah, absolutely. I mean AI is a
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revolution. There's no sign of any stoppage or slowdown in that spending at all. Um in fact as as as we see if
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anything there's a sign of acceleration uh in the spending on that and again
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what we want which has been the only thing that's been slower than expected is the adoption of AI to actually
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improve uh the profits and save on costs by the the nonAI firms. uh that could be
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the real beneficiary ultimately of the AI revolution. >> Jeremy, always great to talk with you
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and get your thoughts. Thank you, sir. >> Thank you very much. And >> you got it. Jeremy Seagull, uh Wharton
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ameritus professor of finance and also senior economist at Wisdomree.