Joe Weisenthal live from Jackson Hole: labor market weakness is keeping September rate cut 'very live'

And you know who else is trusted by millions? Joe Wall Street himself who is in president of Wall Street Ultradome. He's in the Fortress Finance, but he's also in Jackson Hole. How was it? Was it emotional? Was there a standing ovation? It was incredibly emotional. It's incredibly emotional. Incredibly exciting.

That's amazing. It's a joy just to paparazzi shot amazing too. By the way, you got them. You got emotion. Okay, break it down for us. You know what's really funny is like the people around that paparazzi shot where you see the world's major central bankers, they call it the perw walk.

You know, like they joke about they're like, "Oh, this is where the perw walk is going to be. " I you know I don't want to like feed any like conspiracy theories about like what the world central bankers do, but I do find that to be funny that that is like what the people in that area refer to it as.

Um all that being said, you know, look, it's always sort of an extraordinary time, late August in Jackson Hall, Wyoming. Like there's arguably nowhere better to be in the world except for the fact that the internet access out here is a little bit spotty. Other than that, it is the perfect uh spot.

But you get why all the central bankers come here. You get why it's so compelling. And of course this year so many questions about the short-term path of the economy, the long-term path of the economy and the pressure on the Federal Reserve or central bank independence. It's the place to be.

Well, I'm just glad that we got through the bare market of Monday to uh Yeah. Talk to me about uh how people read the tea leaves. That is a Jerome Pal speech. I didn't have time to read the whole thing. I just kind of control Fed for inflation and there were 55 mentions which seemed high.

But are people doing a deeper level of analysis here? Is there even a deeper level of analysis that you can do or or is it always just him kind of like vague posting about what's going on in the economy and then people read from it what they will?

So I would say that typically speaking the control F approach is a very good approach to decoding monetary policy except for this year. Okay.

And the reason why I would say you can't do it this year is that every five years they announced the framework review which is not really anything to do with the short-term path of monetary policy. It's more like how they are thinking about meeting their goals. So this was a framework review year. Got it. um year.

And so therefore, there was just a bunch of words in there that are probably very important for like thinkers and long term that don't really reflect any sort of immediate thing.

In terms of the immediate cycle, you know, it wasn't a particularly extreme speech, but in terms of the immediate cycle, he flagged the labor market side of the mandate as being the source of where there's more concern right now.

Hence sort of keeping in play in a real way that uh September meeting, hence why the stock market got saved and everything is flying to the moon. Hence why Ethereum is up 12% today and so forth. Like all of these things.

Well, even even Circle was up almost 10% even though their revenue is tied to the federal funds rate. You know, you joke about that and I saw that uh observation and I mean there there's one argument that's like oh like why you know rates are going to be lower their spread is going to be compressed.

The fact that the stock is flying says to me you know it's still more a crypto play than it is totally than it is a bank you know. Well it's also just a growing company and people and there's risk with the stock and so you know lower rates mean I go more risk on right and it's just a trade-off.

But I think but I think the thing that was genuinely interesting is that you know we a couple in the last couple weeks we've got some sort of we got that very anxiety inducing um producal producer price index report and there is this concerns like oh maybe you know the the embers of inflation are not completely stomped out.

So even in just the last few days there's been this like wait do we have to start watching a pick up in inflation again? like that has been the vibes from like other um you know regional Fed presidents and so Brook we had Jeffrey Schmidt on our podcast the head of the Kansas City Fed that came out yesterday.

He was talking about you know there are scenarios in which one might be talking about higher rates rather than lower rates given where the stock market is given where the unemployment rate is given where inflation is and so forth.

And so the fact that like Powell came out and said look basically it still seems like we're in a trajectory where the cut is probably you know that's where the risks lie. I think sort of magnified the degree to which the markets took that as doubish. Uh give us music has been more hawkish as as one might say. Yeah.

G give us the update on the labor market debate and where uh where that sits. So there was like this revision downward. It seemed really bad but then there were lots of people casting questions about how real it is, what it actually means, like what what's the current thinking from the various camps. Sure.

I think this is a great question and you know there's two ways to think about those revisions and one I I like hadn't thought of originally until some conversations over the last few days because there's one version of events where it's like okay this makes sense like May June these were not great months like all of our predictions about the tariffs like they were it turned out they were right the economists were right tariffs weren't good for the economy and the numbers vindicate that right now and so that is one and then we are like sliding and maybe we're at the risk of a recession and so forth so that's one The other way you could look at those exact same numbers which I've been hearing from people and I find this very interesting is like look those were very uncertain months right those were crazy months of course hiring was slow but now we have a considerable considerable more tariff certainty today on August 22nd than we had in May or June so maybe already that was the lowest part of the year like maybe we've already seen the slowest two or three months of the economy of 2025 and that already maybe we're accelerating a little bit because businesses have more uncertainty than they had this spring or early summer and therefore if that's the case then the idea that recession is the risk is not so obvious even by looking at the same data.

So I think like you know this is the this is the tragedy of following economics which is you never really get an answer you just you think you get close to something and then there's new data it's like I got to look at it but I think it's still very unclear is Powell AGI pled is there any element of AI we saw Franis Chalet last yesterday on the timeline uh saying that uh AI productivity is not showing up in productivity numbers there there are like various takes on there's going to be this fast takeoff and people are going to be out of jobs or GDP is going to grow, but it feels like AI is just not even in the conversation when it comes to actual like the gravity of economic stats.

Well, yeah.

And and you you contrast that to the the tech's reaction to GPD5, which was generally people were my view on it was like this is good for like models plateauing a little bit is good if you have a consumer app like OpenAI and you have hundreds of millions of users that rely on you every day for like a utility.

Bad if you're the ne, you know, the b the the 10 to 20th foundation model lab. Um, and so there's been general kind of bearishness on on the timeline around AI broadly. Well, I'll say look, I do not know like you know what year chairman Paulo has for like when he sees breakout or take off.

He didn't say anything about that today. But that being said, the theme, the actual formal theme of this year's conference is like I forget the labor market in transition or something and talk about these big structural questions about the future of the labor market and AI is absolutely one of them.

I don't think there is a paper being presented on AI this year, but there is a panel I believe happening in that room to which I'm not do not have access.

There's a interesting thing about uh Jags and Mulla which is that a lot of media comes who actually don't really have formal access to the thing and so we just hang out in the lobby and try to you know flag people down etc. There is a panel though um that I believe is talking about AI.

So I do think this is it's sort of top of mind I would say for many uh of these central bankers and economists from a sort of theoretical perspective and probably less so at least at the moment from a policy perspective in terms of is any of the what we're seeing in the labor market specifically you know AI related that but certainly top of mind.

Yeah. Yeah makes sense. Um what uh we were talking to uh uh Chase Lockmiller from Crusoe yesterday. He mentioned that he was in Jackson Hole. He didn't say that why he was there. But uh I'm interested in some of like like the various parties, what they get out of it.

It seems like the central bankers from other countries need to know what fed United States Fed policy is because that will affect their economies. Uh it's obvious why journalists go. Um it's obvious why uh regional federal bankers and members and economists might go.

But who are some of the other characters that you're seeing and like what are they getting out of this particular event? So I I'll say two things. One is that prior to the financial crisis in 2008, I think you actually had more characters.

I believe that you actually had like um some of the top economists from Wall Street were formerly invited to the event and then there was a backlash and so I don't think they got invites after 2008 2009. So, like the actual it's actually narrow, but I also I sort of hinted at this at the top.

I don't think I could stress enough that like the actual like late August in Wyoming if you like fishing like when like what do people get out of this? I do in in no joking manner at all does it have to do with like I could take a work trip to Wyoming in late August and go fishing and hiking.

I think that's this is a catalyst for more stable. This is a catalyst for more stable global markets because if you're a power player in the financial world and you blow up the global economy, you're not going to get invited to Jackson Hole. And so you need to bring the VIX down. You need to bring down volatility.

You need to prevent the next recession. So if you're out there thinking about causing the next global recession, yeah, don't do it. You want to be spend Don't do it. Don't do it. Don't miss your chance. Get a chance to Yeah. Don't do it. It's that simple. Just don't do it. You're going to get to go fly fishing. Come on.

Yeah, it's that easy. It's that easy. Uh, what what else? Yeah. What else is on the economic calendar for the rest of the year that we should be looking forward to? When's the next Jackson Hole? Well, the next Jackson Hole is going to be next August.

You know, the funny thing is the other regional, so this is the Kansas, formerly it's the Kansas City Fed Monetary Policy Symposium. Again, the other regional Fed prisons, they actually have theirs that nobody ever talks about. Okay. There's an Atlanta Fed one that happens in Florida.

I don't think you've probably ever heard of it. there's a Boston one. No one ever really talks about it. Um there are so those happen. The big thing is going to be the next jobs report. Um you know the August jobs report that we get in early September and the September Fed meeting.

I mean those September was a very live meeting in terms of we genuinely don't know which way it's going to go.

is the is the how much of the uh August jobs report will be the result of of their approach to that report over the last year versus are we expecting changes in terms of how it's put together given the um given the the uh I forget the the the person who was fired over it what's what's the story there I mean look I think the widespread ex expectation is that it way too soon to imagine that something could change with the methodology prior to certainly prior to the August report.

I mean the um the the the new guy who has been um nominated EG Anthony he hasn't been confirmed yet or anything. I think the widespread assumption and maybe the assumption is mistaken because it's 2025 and we live in a world where a lot of assumptions are wrong.

like the widespread assumption is that for better or worse, whatever like the sort of um challenges of collecting this data under the existing uh approach, it's not going to change anytime soon. It's certainly not going to change by the August report.

Now, if there's something else going on and everyone's wrong, look, I guess that's possible, but I haven't really heard anyone think that this soon we could have some scenario where there's uncertainty about that. We really got to get the other feds to step up their conference game.

They should be going to Aspen, Vale, Park City, Big Sky. They can just be go all around. Just the Hamptons. Why not? Why not? Hampton, why not LAI, Hawaii, you know, really really pulling the heavy hitters that incentive to not blow up the economy?

Is there any concern on Wall Street with how levered up all these, you know, massive data center projects are, right? We we've been joke we joked off we joked off there.

It's like this is the first time that tech is this the first time that tech is levered up to this extent and it feels like like the next the next tech the next backlash against tech could very well be that tech blows up the glo the global economy this is real this is look I would say three things about that one is you know tech got really levered up in a sort of classical debt sense in 1999 with the telecom bubble so we do have and that blew up and it uh you know But but in the more recent era the the you know mobile etc.

Yeah. No. Yeah. That we we're not as used to that.

Two just the sheer vault you know what I would say there's probably more less anxiety about the sort of levering up part like or borrowing money to finance these data centers even though that is the case and there's probably more anxiety about just how levered the entire economy is to the stock market itself.

And the stock market is both this engine of consumer spending fueling this wealth effect but also an engine of investment impulse because if you keep getting rewarded at the stock market for just like more AI activity that fuels it and that fuels this sort of like you know potentially snowball effect and so I think that the anxiety is like yeah there is just a lot riding on the stock market but then also setting aside the financial market setting aside debt setting aside stocks there's just a lot of dollars being spent into the economy in is one area area and when you look at other parts of the economy it's like caring for old people caring for old people and data centers and those dialysis two things of the GDP is just dialysis and it's growing like all these things are like every year like yeah it's insane and so like you look at like the most recent jobs report the only sectors 73,000 jobs added and like it was like 48,000 48,000 in health and 25,000 in social services.

So basically all basically 73,000 jobs in caring for an aging population. So it's aging population and data centers. And that sort of feels like the growth drivers of the US economy right now.

And that doesn't feel insanely that doesn't feel insanely stable given how much everything else is sort of riding on the wealth effect from the stock market. Well, how long how much longer are you in Jackson Hole? I go back uh I go back to I go back tomorrow. Tomorrow. Okay. So, 24 hours to stabilize the global economy.

Talk some sense into people. Get it done. No excuses. Get it done. Thank you for joining. Get back out there, Joe. Great to see you. Take care. Thanks for having me. Have a great day. Bye. Uh, if you're looking to visit Jackson Hole, why don't you find your happy place?

Book a wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, 247 concier service. It's a vacation home but better, folks. And Tyler Flops, did you find anything on your timeline? Uh, we do have some breaking news in the chat. Uh, H18N asks, "Do we read live chat? " Yes, occasionally.

We can see it. Uh, we do read it every once in a while. We saw some breaking news in here. Um, that uh, Apple is planning to integrate Google's Gemini AI into Apple Intelligence. We talked about this uh, a lot and, you know, now there's new new article out about it.

uh makes a lot of sense that Tim Cook doesn't want to build out all the infrastructure to train and serve models. Seems like a reasonable um uh a reasonable strategy. Uh do you have anything else on on Apple Intelligence or Google? I mean, Gemini is a great model.

They're on the parade of Frontier and it's probably easier to get a deal done and Apple's had a relationship with Google on the search side for a long time. Yeah, it feels very natural.

Um but another post I like I I seen this in the the exg group um Daniel Tero he has this image the committee will continue to monitor continue to monitor the implications of incoming information for the economic outlook but it's like in this funny hopefully we can pull it up. Oh you put it in the group. Yeah on X on X.

I'm not seeing it anyway. I'm seeing something from junk bond salesman. Um oh did it just come through? No, not seeing it. Anyway, um, good things come to those who wait, says Ben. The KN OB1 has become shipping out of out for those who pre-ordered. Thank you so much uh for believing in my vision for this keyboard.

It's a dream come true. So, Ben built a keyboard and uh, shipped it. Very cool. You can go pick one up if you're interested. Anyway, we have our next guest. We have two folks coming