00:00Ed, the consensus is that Jay Powell is considering maybe sticking around, keeping his governor chair, even though his chairmanship is going to be ending next year.
00:09But you actually think that he would leave running the central bank earlier than his term ends?
00:15Yeah, Anne-Marie, I think the real question is, is that once you have a selection for chair, if the president has kind of nominated someone, if the Senate approves that individual and maybe look at kind of Steve Myron's term, it ends on January 31st.
00:32So there's going to be an open slot if it is Kevin Hassett. If the Senate has confirmed the replacement, is that person the new chair?
00:39All of the conversations that we were having about will Trump fire Powell, one of the only ways that there was a consensus out there that you could potentially replace a chair is if the president has appointed and the Senate has confirmed a replacement.
00:54Now, Jay Powell's term would have ended earlier than May 15th if Biden hadn't delayed in renominating Powell in the first place.
01:02And so I think this is going to be the conversation that speeds up pretty quickly here is, is there going to be a five, six month leg between an appointment and a confirmation?
01:12I don't think that the Trump administration is going to be OK with that.
01:15I think there's going to be a lot of pressure on the Senate to appoint and confirm that new chairman trying to speed this up.
01:23Jay Powell can stay as as a governor. His term goes until 2026.
01:27He'd be the first chairman since Eccles to do that.
01:29I still think that there'll be some kind of desire for him to step aside at some point.
01:34But I think the real question is, when does the chair actually get confirmed by the Senate?
01:38So let's look at who potentially is going to become the chair.
01:41Obviously, right now, all arrows are pointing towards Kevin Hassett.
01:45I'm sure you've seen the reporting. I'd love to understand how you are reading these tea leaves.
01:48Do you think the bond market or at minimum bond investors at the Treasury Department is talking to will get a vote?
01:54I think what we will see is the market will always test a new Fed chair.
02:00What I have been viewing is, you know, we got this leak about a week or so ago.
02:05The market reacted OK to that. Now a conversation about, oh, Besant could be the NEC chair.
02:11It's another trial balloon, Anne-Marie, to see whether or not there is a negative or kind of muted market reaction.
02:18The more muted the market reaction is to this drip, drip, drip, the more chance and the higher probability it is that it is going to be Hassett.
02:27If there were kind of a big negative reaction, I think that could be what spooks President Trump and maybe pulls back.
02:35But I think that these stories that are coming out are only positive for his candidacy at this time.
02:41Ed Mills of Raymond James, thank you so much.
02:44And I would ask, Neela, how much from an economic perspective rate cuts will actually do when it comes to dealing with some of these affordability issues?
02:52Because we're talking about this as though it's the silver bullet.
02:54And I just wonder, is it that? Is it $2,000 checks? Is it something else?
02:58What exactly is going to do the trick?
03:00You know, traditionally, the way that the Fed policy hit Main Street, including a rate cut, is through the housing market.
03:07And that, I think, it's agreeable.
03:10Housing has become expensive in the United States.
03:13And that channel for low-income households isn't there in the same way, especially for young people.
03:19We're seeing the average ages of a homeowner creep up because it takes much more equity to put down on a house now than it used to.
03:26And rates are higher than we enjoyed in the early part of or the late part of the 2000s.
03:34So we're having this conflation of demographics.
03:36There's a lot of people who want to buy and not enough housing stock.
03:39This is a chronic problem.
03:41So that channel is shut down.
03:43So to your question, one of the key channels of Fed policy into Main Street isn't really working that well.
03:49Now, there are other channels.
03:50There are other ways to get to that low-income, middle-income consumer.
03:54But it has to be much more deliberate than it has been in the past because we don't have the housing answer.
04:00That is an easy story for wealth creation in the United States the way it was perhaps in the 90s.
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