00:00Yeah, it's not bad. I think we're flirting here with, dare I say, an inflationary boom.
00:05That's what you've been feeling, right? You've got great growth and you've got inflation that
00:09was it's more than energy. Right. So this all all our inflation cycle stuff kicked up before
00:16the hostilities in Iran. So we've got growth and inflation. Your nominal numbers blow out.
00:23Right. OK. Feels pretty good. Right. But you got eight percent last quarter. You got eight
00:29percent nominal. You got one and a half percent real. All that stuff in there is inflation.
00:34So let's see what happens. OK. Yesterday I brought this up live and, you know,
00:38Brammo and I are going back and forth on she didn't disagree. She didn't agree with me.
00:43Kevin Gordon had the beautiful chart here. That entire meeting is predicated out to 2029.
00:50Somehow the American economy doesn't slow down. You guys have been doing this since the 1930s.
00:55I can't. At some point, nominal GDP comes in. Yeah, yeah, yeah. And then and then the squeeze
01:02happens. Right. So either your growth falls off and your inflation is still high. So margins get
01:08squeezed or inflation comes down, which means your profits aren't what they used to be. So
01:15so this squeeze happens at some. Look, trees don't grow to the sky. Right.
01:20I can't see to 2029. I can look out a few quarters and I could say it's holding up. There's
01:26no there's
01:27no huge downturn. There's no big bump in the road here. And we have inflation still moving to the
01:34upside. Energy prices notwithstanding the long end coming down a little bit because he hiked not
01:41withstanding underlying cyclical direction of inflation. The trend. Mr. Warsh emphasized the
01:50trend. My only gripe with him is he's looking at the coincident data. I'm looking at the forward
01:56data. The trend in the forward data remains up. So one and done. No. Now, maybe everybody's adjusted
02:05to two and done. No. I think the history shows us they tend to do more than that.
02:11So, again, that's kind of where I wanted to go here. I mean,
02:16historically, it's not one and done. Historically, the Fed does
02:19two, three, maybe even more. Yeah. Could it be more? Oh, yeah. Yeah. Everything I'm saying is,
02:24yeah, totally. You should adjust to more. And when you when you when you look at where's the gas?
02:31Right. I think people have come around to the economy's doing OK, despite the K, which is real.
02:39I just don't want to I don't want to ignore the K. But I think it's the inflation expectations
02:43component. That's been pretty chill, relatively speaking. And that's where I think there's some
02:49opportunity for movement. So, you know, the economy running, I guess you call it hot, right?
02:57Yeah. North of six. Yeah, it's hot. I mean, it's 6%. But I mean, how long is that? How much
03:03is that
03:03is AI? Because that's one of the questions I have, because I'm not sure the answer. It feels like it's
03:10meaningfully contributing to economic growth. And I'm not sure how long that AI investment stage
03:15continues. How do you guys think about that? Look, it's all around us. We've got the we've got but
03:22we have the solo paradox and like the AI version of it, which is it's everywhere except in the
03:28productivity statistics, which have come down. Right. They everybody got excited because productivity
03:32edged up towards three percent. Now it's closer to two. So it's not there, which gives you some
03:39inflation issue. You don't have a structural inflation break. I know Warsh wants that, but
03:45he recognizes he doesn't have that. And so when he's looking at the coincident data, he sees
03:50the trend is in the wrong direction. I'm telling you, we look at the forward trends, it's going
03:56to continue to go that way. One final question. Within the massive heritage of the economic
04:02cycle researchers, full disclosure, folks, my grandfather subscribed to ECHRI. I remember
04:08seeing it, you know, they're in the smoke-filled haze of his study. What happens after Trump?
04:15The cycle stays the cycle. Look, there are personalities. And and and and for as big of a
04:22personality Trump is, he's not the first president to say lower interest rates and do this and do that
04:27and spend more money or whatever. I mean, that's what they all do. They all and their variations on
04:32it. But at the end of the day, in a free market oriented economy, you're going to have business
04:38cycles. As far as I can see, I've looked for centuries in the US and I've looked around the
04:43world for almost a century and the cycles persist. And right now.
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