Rediker: Powell Is a ‘Tempering Influence’ on Fed Board

We have a lot we want to discuss with you, including what's happening with diesel and how it filters through the wider economy. But if we could begin with this news on Powell. No criminal investigation being reopened despite President Trump's suggestion that he should resign. How influential do you expect he is as a former fed chairman who remains on the board right now in determining the trajectory of monetary policy, how much does he still matter? So I think it's almost as if you've got this presence in the room that Jay Powell doesn't need to say anything, but by being there, it means that Chair Warsh and others are aware of his presence. So if Chair Warsh wants to go after his predecessor and go after the members of the board that defer to and his views, though his predecessor Jay Powell is sitting right there, it's a lot easier when he's not in the room to take, you know, to pick a fight. And so I don't think Jay Powell has to do very much anything he has to pound the table is not his style anyway. I just think Jay Powells presence on the board in the FOMC meetings is a tempering influence on what Kevin Warsh might be inclined to do. I'm not saying that there's bad blood, per se, but I just think having the former chair sitting there is an inherent check on going too far against your predecessor. Wasn't it Kevin Hassett who compared this to a CEO leaving the company, or a new CEO coming in and the old one still sitting there? This is kind of like Iger and Chapek at the fed here. How long can that endure. Oh I it's interesting because I haven't seen exactly what Todd Blanch said today word for word. But yeah, I could see um, Jay Powell looking for a means by which to slide off the board next year. Okay. Now that the IG report has come out, etc.. But I could also see a scenario in which he feels more comfortable sort of maintaining that I'm in the room. It's not a heavy lift. I'm keeping the institution on solid ground, and that's a public service. I see him thinking is worth potentially doing, but I don't think his initial intention was to stay till the end of his term in 2028. It's just events may be such that he decides to stick around well, forever. For however long he's there. He's going to have to be considering the economic data. We got more of that today, obviously in the form of the jobs report. Softer than expected 29,000 print on payrolls. What is the collective data keeping in mind? We got cooler inflation data this week as well, telling you about the U.S. economy right now and its relative strength as the president continues to push things like a trade war with Canada and a hot war in the Middle East. It's first of all, telling you that revisions are the name of the game that will work these well, that word or this game, I guess. Um, I mean, I think you're seeing survey participation down. You're seeing the data is all over the place. It gets revised. I think, you know, it is inevitable that markets will trade and react to the immediate release of the data. But I think we have to acknowledge that what's going on in the real economy and what's coming out on any individual press release or print is subject to revisions that should be in big, bold red letters at the top. Whether people react to it or not in real time is another question. What does it say about the economy? I think it says economy is moving along. We know that. We know that there's a lot of money churning through on the spending side. On the demand side, on the investment side, on the borrowings, I mean, there's a lot going on. Whether this is sustainable is a question none of us know, because so much of this is AI driven across all of that. And AI remains this behemoth in the economy right now, particularly in the U.S. economy. That is unprecedented in its impact. As I say on the supply side, the demand side, on the equity side, I mean, IPO markets waiting for the big IPOs, debt markets crowding out even the U.S. government is being crowded out of the debt markets. I mean, the dynamic is something we've never seen. So in the real economy. I think it's fair to say everybody is comfortable with the status quo. You saw effectively a flat job market. Wage pressures not being seen. Okay. Everybody's like, uh, I'm uncomfortable making a commitment longer term. Therefore steady as she goes. And she goes right now is an economy in the US that's doing okay. Is doing well. So do your hike days before an election. Well, that's a different question. Yeah, right. I mean, I've I've been reluctant to think that the fed is going to hike precisely because of the proximity to the midterms, but I wasn't really high confidence on that. I'm still not I think everything these days in Washington, it's always political. But is it more political these days? The fed, the Supreme Court, things that used to be apolitical are, you know, yes, pretty much has worse done enough to create, uh, to foster the credibility to, to not hike at the end of October. What would the markets think of that? I think first thing they say is politics. It's early days, but I think what happened today gave a good excuse to take the politics out of it. For the fed to not move, even if behind the scenes there is an element small, medium or large about the fact that the midterms are ten days later. Yeah, and that's really not a good look. Some people would say. So whether it is or is not politically motivated, this gives an excuse to make it appear that it's not politically motivated. But again, I'm not high confidence on this yet. Yeah, sure. Let's talk about something else that is influencing the midterms and is influenced by the president's policy. And that's gas and diesel prices. Diesel, of course, still well above $6 a gallon. The president have been toying with an export ban. Now he says he won't go forward with that because the G7 countries have gotten together to release $100 million of diesel and oil reserves. You're nodding your head like it's not going to make much difference, Duncan. Well, there's a difference between what the market is reading and interpreting and reacting to. And the molecules. Sure. So what we have seen throughout this whole year since the Iran war was commenced and we've had this Hormuz inspired gas. Um, the petrol crisis is the molecules are separate from how people are reacting to them. So we saw an announcement today. It's still very ambiguous. Is it just diesel? Is it diesel? Crude? Other product. How much of it is going to be front? How much of this is making up for what was committed to earlier this year and now accelerating that, or is it new? We don't know. What we do know is it the market saw a number a direction and then reacted. Will that be sustained through next week when the details come out? I don't know, but from what I can tell, there were a lot of commitments made earlier this year on SPR reserves in the U.S., in Europe and elsewhere that have yet to be fully fulfilled. In some cases, they are way behind. So if what this means is, okay, we're going to finally do what we said we were going to do four months ago. Then actually, it's not adding any more supply to the market. And let's be clear, when you're releasing from stockpiles from strategic petroleum reserves. You are not adding supply to the global market broadly more long term. You're just taking it out of storage and saying, I'm going to have to replace it later. And so, you know, is this a short term fix? At best it is a short term fix. At worst, it is just playing with accelerating something that was already committed and hoping that people don't look too closely behind the scenes. You spent a career at the intersection of business and politics, banking and politics. So I'm coming. I know out of left field on this, but I have to ask you because you're sitting here now. When we look back at all of these AI executives at the white House with President Trump, either the Last Supper photo or the gaggle that took place in the driveway, remarkable optics this week. What will we think? How significant was this gathering this week in Washington? Uh. I think if you look at the consequences of that, it was a photo op. Will it be good for the industry? Well, it was very making nice with the president, vice versa. And then this document that was signed, I think the document will go down as I was going to say fast. I don't want to say first. I'm going to say as a small step with very little long term traction behind it. It is an attempt to create the illusion of don't worry, we got this under control. We're collectively agreeing. Government, industry, Jensen Huang, Mark Zuckerberg, Gary Romney, I mean all of us. Don't worry, we're all in the same. Yes. I don't think that's a sustainable message because I don't think that's the reality. I think this was a way to put everybody at the table, everybody in Photoshop, everybody's signature on a page. Is this going to be what we remember? No. It's great to have you back. Thank you. You didn't let me get into bond vigilantes, but that's how well do you think they're asking what's going on? Oh, I think I think this is the story of the day. The month, the year is the bond markets now are really subject to the pressures of the bond vigilantes, U.S., France in particular. Okay. And I think people are missing it if they don't put that high on the list of things to talk about, which is why I threw it into the winds. The ten going to 6% them. Is it just a matter of when or is it if? Um, I think that depends on the data, but I'm not ruling anything out.