uh last time we spoke was October I think so six months or so it's a lifetime obviously in the markets the economy and especially with the fed and I've been and you I know you watch I've been perplexed and we will talk about perplexity later uh but I've been perplexed about the unwavering Focus the FED has had on on on Cuts it's been difficult to understand because it's been the entire time um and I'm just wondering how do you view this period That's six-month period where the focus that's all we've heard about did Cuts make
sense the whole time what what what's causing that um thank you and I'm happy to be here thanks for having me on I was uh I was perplexed with the December pivot if that's what you're referring to it seemed to me the Fed was in a perfect position inflation was coming down Financial conditions were tightening and to some extent I feel like they fumbled on the 5 yard line with the game on the line um I remember saying to some of my partners that's a speech I thought we might hear in March um as opposed
to now because there's like four or five more months that potentially um could lead to inflation coming down the way they needed to come down instead um they set Financial Financial conditions on fire again Bitcoin I can't remember where it started from but it went from like 30,000 to 70,000 um equities obviously credit um interest rates I ironically Duane was a major beneficiary of it because um um I had spoken at a Robin Hood conference and like an idiot forgot that there was press there and and revealed that I had a Paul got me going
in the interview and revealed that I had a massive leverage position in two years um because I thought the risk reward I think they were like 510 or 515 the risk reward with what was going on we could potentially pull this thing off uh sometime in the next year and the risk reward was was terrific for that um I was a beneficiary because after their pivot two years went down to 415 I didn't get the low but I did get 430 and but at that point it was obvious that Financial conditions which is one of
the things had put me in them in the first place we turning we were starting to get anecdotal from businesses that their business businesses were picking up um so I exited the position so I I was a major beneficiary but once Financial conditions took off it became very clear um that this thing could go either way so I didn't even understand um why they put it on the table but more curiously why they and others continued to talk about well it's not going to be six Cuts it's only to be three Cuts or four Cuts
or two cuts and I'm going why are we even talking about Cuts because inflation if you remember we did trillions of dollars a QE because it was 1.7 instead of two over a decade but somehow now that we're at three versus two we got to start cutting rates to bring in a smooth Landing so to me it didn't make any sense it was a huge mistake but it goes back to I don't know whether you remember but Kevin warsh when he was in in the running for the FED job used to talk about reforming the
fed and I go Kevin well what is the major reform we do says we got to get rid of forward guidance all this talking and all this forward guidance first of all we're all wrong on the economy quite often me included and when you put forward guidance out unlike me when I'm wrong who tend to change my mind very rapidly they sort of get trapped into the for guidance and stuck in it and to some extent they were stuck in this um talk about continuing to cut rates so Financial conditions just continued to melt up
um and finally um in I guess a month or so ago the FED pivoted but then bizarrely um the last press conference seems to still be hanging on to this asymmetric directive of we're not going to hike and we expect to cut but we're going to wait for the data we're not guaranteeing you're going to cut but but it's weighted that way and for the life of me I can't figure out why because if you look at the six-month rate of inflation the the chart's very clear it it comes down from very rapid rates and
now if anything it's looks like it's turned up look I don't know where inflation's going to be in a year jome pal don't know where inflation is going to be I don't think anybody knows but they worked so hard and they they did so much work when they went from basically 0 to 5% um I'd hate to see them all throw it away here the first time I and the first time I noticed was when he said yeah uh we're not going to do it to today but we're close we're getting closer and I didn't
know how do you how do you know that we're getting and that that went from but we're getting close to now yeah it's definitely not going to be now but uh we think things are going to work out and they're going to be he's never taken them off the table and never talked about even saying a hike is just I mean he took that off the table and a hike is not you think a hike is off the table definitely zero chance 0% chance no because there's not a 0% chance that INF as the bottom
I don't know what I would do is just say nothing and do what fed Cher used to do when you need to raise rates raise them when you need to cut them cut them don't go on 60 Minutes you're not a rock star okay you're the FED chairman you're supposed to be running monetary policy um for the good of the country not not to be going on 60 Minutes and you know the whole thing banki did a lot of things that by hindsight I don't feel very good about one of the worst was forward guidance
you got a bunch of academics talking about um Sending message to the market you know as a practitioner I'd rather them just get rid of the whole forward guidance and just do their job when you need to raise rates raise rates when you need to cut them cut them
