00:00A couple of the districts did see the effect of the war with Iran businesses adopting this
00:06wait-and-see mode when it comes to making investment decisions, CapEx hiring and the like.
00:10What else stuck out to you? Well, in terms of hiring, they said there's more people who are
00:17taking part-time jobs because the companies don't want to hire on a full-time basis. Also,
00:23they noted that prices were not rising dramatically except for fuel and gasoline. But
00:29that is the leading tip of the spear of inflation when you have a situation like we're in now.
00:34It is the first beige book since the war started. And on an anecdotal basis, it does suggest that
00:40the economy is starting to bear the scars of the war economically, even if it hasn't shown up in
00:48some of the data yet. So, okay. And then you think about the impact of the war. So, Mike,
00:55like how are you starting to assess the economy? I feel like we've had so many guests come on,
01:00you know, certainly on the investment side saying, U.S. market, it's supreme. That's where
01:04investors are going to be going. That economy is doing well. What's your view on kind of where
01:11the U.S. economy might be headed? It's really impossible to say at this point because we don't
01:17know how long this is going to last. But of course, this is IMF week here in Washington. I've been
01:22listening to a lot of experts from around the world over the last couple of days. And they're
01:26almost unanimous in saying that the markets are acting prematurely, that the damage from this is
01:33going to be worse than people expect because it's going to take a lot longer to get the oil flowing
01:37again and to get prices back down again, even if the war were to end today. And a number of
01:43people
01:43this morning at the Institute for International Finance were suggesting that they thought that
01:49oil prices were going to stay up longer because a ceasefire isn't going to bring them down. It's
01:56going to take an absolute end to the war plus traffic moving through the Strait of Hormuz before
02:02we really see some price relief. So this could be an issue for the economy. And they get to a
02:07point
02:08where people don't have money to spend on other things. Demand gets destroyed. The economy slows down.
02:14Hey, Mike, I promised that we'd get to the president once again, mentioning that he would
02:19threaten to fire Jerome Powell. We did get some news from the Treasury Secretary that he does expect
02:24Kevin Warsh to be confirmed in the near future. So there's a lot at play here.
02:32Can the president just fire Jay Powell if he doesn't step down, if Warsh doesn't move through
02:37the confirmation process in time?
02:40Well, as far as we know, he cannot. This is still an unanswered question in terms of the
02:45Lisa Cook case, in terms of whether the president can fire somebody without cause. And then the
02:52question becomes, well, what would be the cause if the president tried to fire him? The idea that
02:58there's something wrong with the building construction, the Fed has provided extensive
03:03answers to that doesn't seem to have satisfied the administration. And even if there was something
03:10wrong, there have been no charges brought. These are just allegations at this point by the president
03:15in very general terms that, well, gosh, there must be something. So it would seem very hard for him to
03:20actually fire him. The question would come up if Kevin Warsh is not confirmed by May 15th,
03:26when Powell's term as chair ends. Then there might be a legal fight over who gets to be chair of
03:31the
03:31board of governors, whether the president gets to appoint somebody or whether Powell stays on as
03:36president pro tem. But Powell would stay on as head of the open market committee. They've already chosen
03:42their chairman for the year. So if if Warsh is not confirmed, nothing changes. And if this investigation
03:51doesn't go away, then the president is stuck with Jay Powell making interest rate policy.
03:56Yeah, just, you know, how many times can we say we are living in interesting times? I guess we can't
04:00say it enough. And that includes with what's going on in the Fed. Mike, so is there, though, also a
04:06scenario that we are probably possibly headed towards where Warsh is confirmed as Fed chair, but Jay Powell is
04:13still on the board and it just makes for some interesting dynamics or has that like the word
04:17interesting. It's such a cover so much. Well, there's only two ways that could happen. One is
04:25they drop the probe, but Powell decides to stay on anyway, maybe because he doesn't like the looks of
04:31what would happen at the Fed when he's not there. Or if Tom Tillis changes his mind and agrees to
04:38vote
04:38for Kevin Warsh and Warsh is confirmed, but the probe continues and Powell says he's going to stay on.
04:44So it's still possible, but it's more likely that we're not going to see Kevin confirmed in time
04:51or that he's confirmed and Powell steps down as chair and probably steps down as a governor.
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