00:00As we were just talking about with Stuart, you parse out the Fed speak that we've been getting.
00:04And there is more concern, I think it's fair to say at this point, about the inflation trajectory
00:10versus, you know, what's going on in the labor market. Of course, it's not either or. You can
00:14be concerned about multiple things at once. But all of that being said, what are you going to be
00:19keeping an eye out for at 830 tomorrow morning? Yeah, so I think there's a few things that I'm
00:24watching in the jobs report tomorrow. One of them is the jobs diffusion or the breadth of job growth.
00:32So, you know, as we've been talking about in the previous segment, we are still seeing that job
00:37growth is fairly concentrated, particularly within the health care sector. That's not necessarily
00:42cyclical. So I want to see if that job growth is broadening out at all. I think the other thing
00:47to
00:47be watching is wages. You know, that I think is very important for the Fed right now. They view
00:54the labor market, even though it's improved more recently, as in an equilibrium and fairly stable.
00:59And the reason that they assess it that way is because wages have been gradually trending lower,
01:05you know, despite the fact that honestly, if you looked at what we thought would happen to wages,
01:12given the immigration shock over the last 12 months, you know, maybe you would have expected to
01:17see more tightness. But I think that you're not because there is a reasonable equilibrium that's
01:22forming. And I would say the last thing is the U6 underemployment rate that has actually been
01:28creeping up more recently. And so I just want to watch if that's going to stabilize or not. But in
01:34general, this report isn't going to help the Fed. The Fed is still really concerned about the
01:41inflation outlook. And what's really driving the inflation outlook right now is energy. And when you
01:46look at the correlation between rates and oil, it's remained very high, even as this conflict has
01:51persisted and equities have decoupled from oil. And Kelsey, of course, we're heading into Kevin
01:57Warsh's first meeting as chairman. And we know that he is no fan of forward guidance. He made that very
02:04clear, especially in his Senate confirmation hearing. And there's a lot of questions about what the future
02:09of the dot plot looks like, whether we're going to remove forward looking language from the statement,
02:14whether or not we're going to get fewer post decision press conferences altogether. And I wonder, you know,
02:19what you think the impact might be into the bond market, you know, weaning ourselves off of that
02:25constant communication. Well, to be fair, the Fed has been shifting away from forward guidance for
02:31quite some time now. So actually, this morning, I was looking at the number of words in the FOMC
02:37statement. And I was looking back at a few years ago, and there was a lot more words in the
02:42FOMC
02:43statement back then than today. And that's really just a function of the fact that we're moving away
02:48from the zero lower bound, that it seems like less of a possibility, you know, even in the next
02:53recession, when it does happen, we're not necessarily going to be cutting back to zero.
02:57And so a lot of these things that were created for that environment are no longer necessary. And so
03:02from that perspective, I think there may be more continuity than people expect, particularly on the
03:08dot plot. We know that he doesn't love it, but we also know that he wants to encourage debate.
03:14And so I don't know how he can say he would encourage debate and then unilaterally get rid of
03:21the dot plot on his own without consulting with the rest of the group. He, you know, he wants debate.
03:26So let's have that debate and decide what to do. But in general, the market is already operating in a
03:32data dependent framework. So forward guidance has kind of been out the window for some time now.
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