00:00Look, I actually think that the details of the reporter are a little bit weaker than the headline figures suggest.
00:05Yes, there was an uptick in the headline, but part of that was supported by merely slowing the pace at which a decline in employment took place.
00:15Slowering is a word you just made up. I love it. I love it.
00:18A slowing of the pace at which layoffs are taking place.
00:22So we did see within the ADP numbers this week that there are layoffs that are taking place.
00:32We still see soft employment figures in here, and we also see relatively weak new orders data in the ISM numbers.
00:39And this is services as opposed to manufacturing services.
00:42You would expect to see some rotation towards services when you have small supply chains on the good side.
00:48You would expect people to allocate more of their budget towards services.
00:52It just doesn't appear to be the case coming through November.
00:55All right, pot calling kettle black. You did say sydnovating today.
00:59Sydnovating and slowering are two blocks for an English dictionary.
01:02Slowering makes way more sense, let me just say.
01:03Stuart, so on top of this, OK, you also had ADP data.
01:06That's all looking weaker, or at least for small businesses.
01:08Does any of this matter when we get headlines like this from Scott Besson saying that he wants to change the rules for regional Fed presidents
01:16to make sure that they live in their district for at least three years?
01:19It would seem to be laying the groundwork to completely reshape the Fed and probably get it more dovish.
01:26So do we care about the data when things like that are happening?
01:28I think that a reshuffling of any sort of personnel at the Fed is more important than any sort of survey data that we're getting from ISM
01:38or even the ADP data that we're getting this morning.
01:41I will say, though, that whether regional Fed bank presidents live in their districts, I think that's basically an insignificant development.
01:51When we look at the board of governors of the Federal Reserve, there's not supposed to be any overlap in where those governors come from.
02:00They're all supposed to come from different districts.
02:03And the amount of gamesmanship that takes place when it comes to those personnel decisions is literally like, you know,
02:09sure, you're a professor from USC on the other side of the car in Southern California,
02:14but you took a Delta flight that had a layover in Atlanta.
02:17So let's say you came from that district.
02:19I imagine that we're going to have basically the same thing.
02:21OK, so you went to grad school two decades ago in Texas.
02:25And so we'll say you came from Dallas, the amount of gamesmanship that we can see around that sort of development is a little bit is a little bit wonky.
02:35But by the way, it would feel like a good thing to actually come from the district you represent, right?
02:40It's really about the relationships that you have with the private sector, right?
02:44It's with the bankers, the class A directors, with business leaders and with the class B directors and with the rest of the community, your class C directors.
02:53And so if you're able to maintain relationships with those people, I don't think that it matters that much whether you're actually from the district and in an age where communication is a heck of a lot easier.
03:04And in districts that are so large, it's not like you're seeing all these people in person anyway.
03:09I don't think that it's that huge.
03:11I mean, this is something that we talked about on this program with Stephen Myron.
03:14Remember, I was like, does it matter that the, you know, the heart of the Fed is really in this like Harvard, New York, you know, pipeline?
03:23And he's like, I went to Harvard and I'm from New York, you know, they're all they all did.
03:28Right. But the point isn't where they're from.
03:33The point is that this could lay the groundwork for dismissing all of the regional Fed presidents and installing people who agree with President Trump along, you know, ideological, political and rates lines.
03:49That's right. It's not so much the technical changes that he's proposing as it is a transformation of the institution that matters.
03:56And any sort of tinkering sort of suggests that there is an acceptance within the administration that an effort towards politically capturing the Fed as an institution is just an idea that's taking deeper root within the administration.
04:12Secretary Besant was seen basically as the voice of reason when it came to preserving the independent Fed.
04:18As much as he advocates for having lower rates, he is the person who is seen as supporting that sort of institutional independence.
04:24And when he talks about interfering to any extent with how the institution operates or altering the Federal Reserve Act in any way, I think that's more important than the specifics of his proposal.
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