They checked the box. I want to bring it out to monetarymacro.com, CIO Joe Wang. You know, Joe, it seems that the heart of the matter to me is that the Fed was never built for Main Street. You know, they talked to Main Street, but I just think that, you know, as long as the rich and powerful are doing extraordinarily well and Wall Street is doing well, I think the Fed's OK.

I think that might be the case when I look at what's happening in the economy. Like you mentioned, it looks like job growth is just not going anywhere. We have a lot of indicators suggesting that the consumer is struggling, consumer confidence is low, and we're reading about all these anecdotes about companies leading people off. And at the same time, you see that the stock market is just roaring higher and higher and higher. And that's benefiting a very small swath of the population. So it really does seem that policy is not paying enough attention to most of the people who are not doing well. And so right now there's a struggle at the Fed as to whether or not they should cut rates in December. The market was thinking it was a done deal, but now we have pushbacks like we are seeing today. from President Logan.

You know, I think it might be more of a pushback. Honestly, I'm trying to read between the tea leaves, particularly since Myron got there. And I read somewhere that people are calling it a civil war. Now, this isn't my table, but I read it somewhere and I thought it was fascinating. If indeed there's a civil war at the Federal Reserve, what could it do? It may hurt or harm or end for reginance, right? We won't get it. They won't be on the same page. You know, you thought the dot plot was crazy before. If this keeps going, it's gonna be really crazy. Policy paralysis, inflation and recession trap. So we may get wild swings either way.

You know, this is what's happening. I don't know how much we can blame Powell, how much Powell's trying to referee this thing, but it feels like there are two sides that have distinct differences, and I'm not sure that they, can they come together with this sort of a house divided, you know, kind of situation? I'm afraid we wouldn't have to wait for the president to point a new Fed share before we have a resolution to this.

What it sounds like to me is that you have about a portion of the Fed that is basically looking at data. So, they're committed to driving looking at the rearview mirror. And so, if you're just looking at the data, you're not looking forward and you don't really know, you can't really prepare. Now, Chair Powell was like that earlier in the year, right? We had big policy changes with the president changing tariff policy. changes in regulation, changes in immigration. And Paul was just telling everyone that we're just going to not do anything. We're going to sit, look at the data, commit to being late, and that's going to cost the economy. But it seems like that's what he was doing.

Now, the new group of people led by Governor Myron, Governor Bowman, is a lot different. They're more forward-looking. So what they're doing is they're taking into account what the president is doing with their policy. They're saying, for example, immigration, lower immigration. That means lower rent, right? Because we have less. That's disinflationary. We should be cutting rates ahead of that, taking account in addition, all these investments coming into the U.S. So I think this forward looking. group of people is probably going to be ascendant because the president is going to choose someone who falls into that camp going forward.

Joe, before I let you go, you always post some intriguing things. And one thing you talked about is the relationship with the Fed balance sheet and the repo market. This is something that goes over most people's heads, right? I mean, I grapple with trying to understand it, but there seems to be something happening in the markets, not in full view, that have some people concerned. Explain this to us.

Sure. So what's happening is that in some corners of the market are running out of liquidity, specifically the repo market. And that's the market where people borrow short-term loans collateralized by Treasury securities. Now this is a really important market for the Fed. It's in the plumbing, but in 2019 the Fed basically lost control of the secondment of the market. the repo rate spiked higher and they had to go in and add reserves into the financial system.

Now the Fed stopped QT the last time because we see repo rates spiking again. At the end of the day, my view is that they're going to have to add a lot more liquidity into the system in the coming months, probably in the hundreds of billions, because the fiscal deficit is growing very large and at the end of the day, these repo loans are used to finance the And as long as the fiscal deficit continues to grow, the Fed is held hostage, and they'll have to continue to expand their balance sheet to essentially accommodate the fiscal deficit of the United States. So they're in a tough spot. They really are held hostage by Congress.

I gotta tell you though, Joe, just in that short period of time, you explained it in a way that makes everyone understand it. Thank you so much, my friend. Appreciate it.

Thank you, Charles.

All right, folks, by the way, a reminder, you can read my daily market