By coinnews 
00:00 Speaker A
What about I’m just curious to get your take on this April ISM manufacturing reading we got to. It did remain below 50. It was sort of little change at 48.7. It was slightly above the estimate. But what you, what you make of that reading?
00:16 Speaker B
Well, I I paid I paid closer attention to the commentary in there. You know, they always list anonymous commentary from the uh purchasing managers they survey. I think there were 10 of those this time from different industries. All of them were about tariffs. You didn’t see people talking about weak growth, high borrowing costs, unfavorable credit conditions. They all were focused on tariffs, the uncertainty, the the difficulty frankly in planning for the future. So, I think as it pertains to the Fed, they could face a choice here and the choice would be between recession or stagflation. If we end up in a recession, it does not seem like the sort of thing that they are going to rush to try to preempt because then you could be back in this stagflation scenario. Uh so then I think the question just becomes how bad is it? How much can the Fed cushion the hit and you saw a whiff of stagflation in the ISM manufacturing survey uh because prices paid rising, employment going down, maybe not as bad as last month, new orders not great. That’s different from 2021 when all of them were going up.
02:53 Nick
Nick and then there is this sort of political overlay, right? President Trump backed up and said, I’m not thinking about firing J. Powell, but he then has continued sort of the rhetoric of he thinks the Fed should lower rates. Scott Benson, the Treasury Secretary in an interview, didn’t directly say, but sort of implied he thought that rates should be lowered here. So does that, and I know that J. Powell is staunchly a political, but does it raise the specter of appearances here in that sort of hang over the Fed’s decision-making process?
04:14 Speaker B
Yes, it does. I mean the White House is clearly taking a point of view here on what should happen with interest rates with some threats to back it up. Threats to escalate a fight with the Fed. Um you know, it’s a fight that I don’t think Powell would back down from if it came to that. But it’s also a fight that is just not good for the Fed to have. And so, it’s possible they’re able to just filter this out and and sort of rise above the noise. But they’re humans, right? They’re humans and I think this sort of thing it forces the Fed, if they’re not going to cut, they have to have a very good argument for why you’re not cutting here. It could be the inflation numbers. It could be uh that the job market is doing okay. I mean, for right now, where we are here on May 1st, 2025, I don’t hear anybody really arguing that the Fed should be cutting rates right now. I think the argument really is about what’s coming down the transom here, that the increase in prices will not persist beyond 2025, but the weakness in the underlying economy could actually uh you know, overwhelm any inflationary impacts and so people are really having a debate not over whether the Fed should cut interest rates at this moment. The debate is about how quickly the Fed should move once they see that weakness in the economy. You know, we could get into a place later where we’re debating 25 versus 50 when it’s time to cut, how fast do you go. I think for right now, again, back to the ISM numbers, nobody’s really arguing that a 25 basis point interest rate cut would do anything to resolve the headwinds facing businesses.