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