00:00It is. I mean, look, the president, I think, notices it. He's trying to sell you advanced access to what
00:04he's saying, which I think is his own recognition.
00:06Oh, yeah, we saw that.
00:07It's his own recognition.
00:08Damien's got advanced, advanced access.
00:11Oh, sure.
00:11You can follow me on the Acela back to D.C. We can wait for our access to the correspondence
00:15dinner. Just put on a tuxedo and fill a seat.
00:18But really, it's shifted. Is he lame duck? Is that what you're saying?
00:21I mean, certainly there were one half, one party who thought he came in as a lame duck. He thought
00:26otherwise.
00:27But we've not heard a lot of talk about third termism ever since.
00:31But that said, I mean, the president has proven much of what he can say can move markets.
00:35But now he has to actually make good on it. It's been hard to do that.
00:38Well, Alex, your base case at FM before now, in the end of the year, is for one cut.
00:42Now, you know, that's become obviously an out of consensus decision.
00:45I mean, and yet you're still standing by it.
00:47What do you think is going to drive the Fed in everything that's going on here with energy prices and
00:51Hormuz to cut rates before your end?
00:53I think really it's Kevin Warsh was put in to do a job and he's going to need to deliver
00:58on doing that job.
00:59Now, I think he has a great understanding of the economy and that obviously a hike seems to be more
01:04appropriate.
01:05It's going to be almost untenable in the political environment, particularly going into midterms.
01:09Right. There's a reason why the Fed needed to be independent.
01:11It's really popular to cut rates and make money cheap so you can get elected.
01:14It's going to be really hard to withstand the political assaults.
01:18If you thought Jay Powell had it bad, just wait till it happens if Kevin Warsh were to do something
01:22the president didn't like.
01:23Well, Alex, you just you just hit the nail on the head.
01:25You said he was put in office to do a job.
01:28I thought his job was to defend the efficacy of the U.S. financial system, to basically growth and employment,
01:34to do a mandate.
01:35But if I'm hearing you correctly, his job was to do what President Trump wants him to do.
01:40Is that what you're implying here?
01:42I think that's certainly the job that it was he was told to do.
01:46We'll see. And certainly I don't disagree with you.
01:48I'm just asking the question to be really clear for our audience, because you're right.
01:51Is that his job to do what President Trump wants?
01:53That seems to be why he was hand selected to do it.
01:56I mean, we put the president, put Jay Powell back in, regretted that decision.
02:00Right. Made very clear selection.
02:01If you look at the vetting process, he went there was a very public sort of homage to the president.
02:06You had to start saying things, even some commentators have no doubt come through here who you would not have
02:10expected to say some of those things as they auditioned publicly for that job.
02:14Technically, the Fed chair's boss is Congress.
02:16However, practically, the independence sort of myth, as a friend of ours wrote a book about it, well, put it.
02:23Every time the Fed comes in to rescue the U.S. economy, Congress extracts some of that independence back and
02:28gives it to the political system, not just Congress itself.
02:31We're seeing that dividend now reinvested in the presidency.
02:35Well, Alex, you know, the markets have a funny way of throwing everything you just said on its ear.
02:39And the reason I say that is very simple.
02:41We see bond yields going up in the U.S. and across the whole of, you know, the G10 marketplace.
02:45Right. And, you know, if the Fed were to cut in the face of, you know, rising inflation or, you
02:51know, let's just say steady or even, you know, whatever, inflation kind of, you know, doesn't really go, doesn't really
02:56push higher.
02:57You know, it's the credibility issue. And what if that just prevents people from buying U.S. treasuries because of
03:03the credibility issue, because of the fiscal deficit?
03:06I mean, at some point, you know, the rubber is going to meet the road and you've got to believe
03:09Trump and, you know, Secretary Besson are going to basically say, whoa, whoa, whoa, whoa, we need to get a
03:13hold of yields here.
03:14If that means you have to hike, maybe I'm just asking.
03:17Yeah, certainly the president has proven the ability to pretty rapidly change his course with very little remorse about that.
03:24Certainly the bond market spooked him during Liberation Day, obviously new Liberation Day with less fanfare, fewer signs, fewer yelling
03:30at secretaries to get the small sign because of the wind this time around.
03:34But practically, I think the president has the ability to reverse course when expedient, just not yet expedient.
03:40And now after the Red Sox win streak, after FIFA, before the Hungarian Grand Prix.
03:44That's correct.
03:45The question of the summer, is gridlock good?
03:49I'm seeing it percolate in notes into the weekend.
03:52But I mean, it's a legitimate question.
03:54Is Alex Morris rooting for gridlock in November?
03:58I think so.
03:59I mean, gridlock is actually a feature, you know, not a bug of the political system we have.
04:04The idea was that we would ultimately get some amount of compromise, right?
04:07The Constitution came out of a very long series of compromises and gridlock.
04:11But practically, I think that might be the best outcome we could get.
04:15Can I rip up the script?
04:16Yes.
04:17This is one of the few guests I can do this with.
04:19Please.
04:19It's really, really important.
04:22I did virology and biochemistry at two institutions a long time ago, okay?
04:28David Baltimore was my hero.
04:31There was this abstract thing, mRNA.
04:34We didn't know what it was.
04:35It saved lives in COVID, et cetera.
04:39Discuss the state of science as you see it.
04:42You have the real degree in this, real, legit cred.
04:46Out of COVID, can we keep our science going as you studied at Cornell years ago?
04:52I think certainly we're going to see a lot more advancement.
04:55There's a lot more privatization than there used to be.
04:58And I think that's maybe a little bit of a problem.
05:00It used to be science belonged to all of us.
05:01In large academic institutions, it was free.
05:04Now there's a lot of sponsored by and a lot of buildings, a lot of places.
05:08And that's going to get hard.
05:10And I think the anti, particularly most recently in power here, there's been a very anti-academia, anti-science bend.
05:17Yeah.
05:18I'll go with that.
05:19That troubles me.
05:20I mean, I give a lot of institutions credit for fighting back, but it's pretty hard when most of your
05:26money comes from the government.
05:26The government says, here's how you need to behave.
05:29Right.
05:29Without money, the institution has, the academy has nothing.
05:32There's nothing.
05:32There's nothing.
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