00:00The FOMC is divided. Inflation is sticky and the labour market is weak and I think in that context
00:06the markets were fully expecting that. Two descents in terms of on the hawkish side,
00:13I think maybe the markets were braced for maybe three, so a little bit less there than maybe
00:17expected. And then when you look at the details of the breakdown of the dots, you still have
00:24eight of the 19 looking for two cuts or more. So that's a pretty chunky size of the FOMC in that
00:32direction. Derek, has the FOMC ever been so divided? No, not in my time in terms of my recollections
00:40and that's what nearly 30 years of FX analysis. We're much younger than that, but why? Well, it is
00:46unusual in terms of this is post-COVID, post the largest global inflation shock since the late 70s,
00:53early 80s. And the labour market is definitely very weak. What I thought was interesting was
00:58this explicit estimate of the over-report in non-farm payrolls at 60,000. The six-month
01:05running average is 59,000. So essentially there's been no jobs growth for six months. It would be
01:11very unusual, in my opinion, for the labour market just to suddenly pick up on its own. So I think
01:17the risks going forward is still that we see labour market weakness. And then our view is that the
01:21inflation related to tariffs, a lot of that could already be in the data. Three of the last four
01:27months, import sensitive components have jumped quite considerably. So if we start to see goods
01:33inflation stabilise, then I think overall inflation can start to come down and then maybe the FOMC
01:38starts to look more unified. Derek, is this also just the, I guess, because of the K-shaped
01:44economy that we're seeing, that you're going to, it depends on also where you focus on,
01:48where you see risks or potential? Yeah. Well, you know, vulnerability in terms of today,
01:54given what happened with Oracle, in terms of valuation of AI, that K-shaped economy, yes,
02:00the top one-third income percentile, not really that bothered by the cost of living issues
02:06and certainly benefiting from equities, where the bottom one-third, absolutely not. We have a record
02:11low Michigan consumer confidence for the bottom one-third income percentile. You know, that is
02:18incredible when you consider the equity markets. And also, why is Trump's economic approval rating,
02:23according to a YouGov poll, at minus 20, when throughout his first term in office, it barely
02:29turned negative? So I just don't think the economy is humming and looking as good as maybe some believe.
02:36So I just don't think the economy is going to be. So I don't think the economy is going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be. So I'm going to be.
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