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Speaker 1: Welcome to another episode of the Chicks on the Right

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podcast where we talk to our friend and sponsor of

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the show, Zach Abraham from Bulward Capital Management, and today

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we are looking forward to a potential rate cut, an

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interest rate cut by the Fed.

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Speaker 2: Finally Trump has been screaming for this, calling your own

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Powell all the names for I don't even know how

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many months at this point, and it sounds like we're

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finally going to get one. Although I've heard you know,

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it could be quarter, could be half, a percentage point

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or basis point or whatever you finance folks call those.

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What do you think it should be? What do you

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think it will be, and what do you think the

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impact will be?

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Speaker 3: Okay, So when I say this, I want everybody to

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understand that when I do this for a living, and

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so I've gone to painstaking links to separate what i

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think politically from what I think financially right, just because

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I always tell people, I go, you know, investing is

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hard enough, leave your political thought, you know, leave your

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political ideas on the sidelines, right, because that just it's

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it's complicated enough to get into right, and if you

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add that other layer of complexity, it becomes almost impossible.

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So what I will say is this, I think it

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is a lock. The market is pricing in a twenty

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five basis point cut. I think it's actually pricing in.

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Last I looked, and I didn't look at these metrics

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before we got on, but last I looked, I think

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it was pricing in a thirty two basis point cut,

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which means that the market is like ninety three percent

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or ninety five or whatever, is like almost hundred percent

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sure that it's going to be twenty five, but leaving

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a slight chance for it to be fifty. Here's the deal.

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I was like, they're going to do. Are they going

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to cut or not? It's easiest prediction in the world.

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Just watch what the market is pricing in and twenty

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four to forty eight hours, whatever that number is, that'll

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be the number. The FED has only gone away from

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that number one time in over twenty years. Okay, So

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whatever the market is pricing in, that will be what happens. Okay.

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And one of the reasons is the Fed's objective is

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to communicate their rate policy far enough out into the

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future for the market to price in that cut, because

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they don't want to surprise the market. Now we could

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get into a whole discussion of whether they should or

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shouldn't have that posture, but you know that's beside the point.

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So bottom line is market's pricing twenty five or about

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thirty two basis points last I looked, you're going to

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get a twenty five basis point cut unless that unless

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that line moves appropriate. Do you think it's really weird

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if you're just looking if you're listening to Trump, I

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am not saying I do not hear what he's saying,

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and I don't necessarily disagree with some of the points

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he's making. The flip side is is if you look

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at the actual data, I also see where plat Powell's

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hesitancy to cut is because you've got inflation at least

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right now inflecting backup, not crazy, but looking like it

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wants to move higher again. You're right at three percent.

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You're looking at real growth that is dropping, so that

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would support a rate cut, But you're not seeing the

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kind of things that would tell you that you, oh, like,

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there is no data in the economy right now that

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would support one hundred and fifty bases point cut. So

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Trump is talked about one hundred and fifty to two hundred.

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I'm not saying he's wrong. Okay, six months from now,

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we could look back and go Trump with one hundred

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percent right. But the way the FED looks at it

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is they base their opinion solely on the data. Do

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they get political at times? I think it's crazy to

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say they don't. I think there's plenty of evidence of that.

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But if you look at the data, the data says you.

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The data is telling you you don't need a cut, right.

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So I people wip point to housing, but remember, guys,

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if you're trying to make house payments more affordable, if

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you cut drastically and mortgage payments go down, guess what

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happens to the house prices? They go they go out. Okay. So,

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and this is one of the things that we were

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talking about, and I think we're pretty much there. I don't.

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I don't think interest rate moves are going to make

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near the economic difference that they have in the past.

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And the reason why is the vast majority of homes

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out there are already financed at those lower rates, right,

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That's true, and they're financed it significantly lower rates. So

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even if you cut one hundred and fifty basis points.

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Those people aren't going to refinance. That would still push

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their rate up higher. Right. The other thing is we've

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been using monetary policy and interest rate cuts to once again,

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like we spoke about in a different segment, to anesthetize

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the pain and not deal with the actual cause. Well,

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like anything else, if you press that button too many times,

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it's not effective. Right. People are sitting there going, well,

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we can always go back to zero percent interest rates.

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You just had them for almost fifteen years. To think

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that they're going to be as effective as they were,

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then you're out of your mind. Right. If the average

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mortgage rate in the country was at six to seven,

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one hundred and fifty point basis or one hundred and

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fifty basis point cut would be that would be some

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serious stimulus, right, But that's not the case. So my

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so I think that generally speaking, we're going to see

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less efficacy from rate cuts than we've seen in the past.

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But it helps mes.

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Speaker 2: Like with the whole the interest that we pay on

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the debt, right, Like, doesn't that help us a whole lot?

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Speaker 3: It? It does, But then it also enables government to spend.

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Speaker 4: More, right, And the bottom line is people are looking

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at this for I want to be able to buy

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a house. I want to be able to buy a car,

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you know, I mean I want my payment.

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Speaker 3: To be lower.

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Speaker 4: That's like logistically, because let's just get real that the

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regular lay person, that's what they're looking at this for.

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So when you're saying it's really not going to make

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that much of a difference, or if the rate goes

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down and then the prices of houses, because I know

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around here in Texas, prices of houses are starting to

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go down a little bit because they were inflated, like

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after COVID everything like exploded, the house prices went crazy up.

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Now they're all starting to kind of go down again.

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And so if this makes how prices go up again,

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it's going to be like, well, what what the hell?

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Speaker 3: Well, and think about it, right, when we think about

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an economy that relies almost entirely on finance to purchase

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goods anyway, what we call durable goods, right, stuff that

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lasts more than you know, a month. When we rely

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on finance, what are we really doing when we're lowering

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interest rates? Right, what we're really trying to do is

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we're trying to push the price of that asset higher. Right,

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because because the cost of ownership is the financing costs

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plus the underlying cost of the asset. So if we're

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pushing the financing costs lower, what we're trying to do

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is boost the asset price. Right. What did zero what?

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What did zero percent rates for twelve years do? It

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took the S and P five It tripled the S

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and P five hundred and took it to a record

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high valuation. It pushes prices up when we're dealing with

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an inflationary problem, infrast rate infrast rate cuts make it worse,

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not better.

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Speaker 2: So do you think that Trump has been unfair? I mean,

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do you think he's been like too mean to drum Powell?

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Speaker 3: Yes and no. I think that the Federal Reserve has

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not had anywhere near enough heat on them for way

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too long. I think that they have no oversight. I

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think that they don't get audited, and those are problems.

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They're a black box.

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Speaker 4: Should they be discantled?

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Speaker 3: I think that they should be restructured. I think that

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I think it should be reworked. I think we shouldn't

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have anywhere near as many academics on the board. I

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think we should have we have you know, it's so

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funny to hear all this push for diversity and then

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you look at our government institutions and they're not diverse

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at all. People like, what are you talking about? I go,

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I care about real diversity to a black kid and

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a white kid that both grew up in the same

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neighborhood with wealthy parents, went to Ivy League schools that

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ain't diversity. Right, that's the same background. And I know

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that because my kids are half black, right, So y,

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my kids are not. My kids are not going to

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make the board, your board of governors more diverse. They're not, right, right,

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So that's do we need to remake it? Absolutely? But

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do we need to have an independent FED that makes

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monetary decisions without influence from the White House? Yes, And

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I'm not saying that aimed at Trump. I'm saying that

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aimed writ large because if the White House controls monetary policy.

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Notice I didn't say Trump, but if you get then

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monetary policy will become completely political, right by definition? Right?

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And like a, do we need any more political theater

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in this country?

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Speaker 4: Probably?

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Speaker 3: I don't think so. Probably not no, And so we

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need an independent FED. But independent is a really interesting word.

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See when I see a when I see a body

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basically a government agency like the Federal Reserve, that isn't audited,

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and it's not how it held accountable by anybody. Independen

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is not the word I would use for that, right.

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I'm not sure what the right word to use is,

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but it's not independent because if we don't know what

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they're doing. Remember, they have the sole power of creating

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money out of thin air. To not audit that power

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just seems insane to me.

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Speaker 4: That's yeah.

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Speaker 3: And here's the other thing where Trump where Trump has

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some points. When you look at their ability to print money,

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just think about it, like, if they didn't have that ability,

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and I'm not saying we should take that ability away

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from them, but if they didn't have that ability, if

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they were more if they were audited and held to account,

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do you think we would have had more or less

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military conflicts over the laste hundred years. My guess is

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we'd have way less. And why because you need wars

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are expensive, right, and manipulating monetary policy and deficit spending

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and all these kinds of things, you know, they're significantly

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more easy to do when someone's printing money and filling

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into paying for things. Right. The other thing is they're

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not audited. So what do you think the chances are

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that they put money in places that would horrify us?

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Speaker 1: Yeah?

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Speaker 2: Right, then I don't want to know that, and I

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want to know.

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Speaker 3: I totally want to know. I'm not even I'm not

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even making the allegation. I'm just sitting there saying these

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people are very much plugged into d C. Right, they're

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they're there in the Eclas building and they have the

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ability to print money out of thin air and they're

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not audited.

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Speaker 4: That is bad.

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Speaker 3: Yeah, it's bad. That's bad.

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Speaker 4: It's bad.

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Speaker 3: Now. Look, it's entirely possible that we open the books

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and the vaults and everything checks out. Oh I'm sure

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it's checking out. Okay, that's super likely.

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Speaker 4: Like everything else in government, because we learned that by DOGE.

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I'm sure everybody's going to be on the up and

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up exactly.

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Speaker 3: Yeah, and you know it, just and you and you

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know this. I just through life experience right where where

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when I see an un an unheedged or an uncontested

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power of something and that isn't observed and watched and

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supervised one hundred percent of the time, it ends up

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doing things it shouldn't exactly and so just the so

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it's I think Trump has been too hard on them,

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considering what he's saying or or considering the situation we're

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dealing with now, you know, I disagree that there's like

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I said, there's no evidence that we one hundred and

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fifty bas point cut do. I think he's going after

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them too hard generally speaking, though, because I think a

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lot of what he says. I think that they have

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become too political and they definitely need oversight so well.

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Speaker 2: And when the rates do what the rates do, that

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is when people have all the questions and they need

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a good financial planner. And we're just.

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Speaker 3: Saying that's another transition to act.

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Speaker 4: Zach is the guy.

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Speaker 2: So tell people how they can look you up and

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get your advice.

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Speaker 3: Yes, go to Know Your Risk podcast dot com. Go

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to Bullward Capital Management dot com. We do our daily podcast.

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It covers everything in finance and economics and try to

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keep it between twenty five thirty minutes. Goal of that,

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and I've said it on here, but goal of that

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was just to give you a source of news that

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you can trust about what actually happened in the economy.

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As opposed to some whack jobs, you know, liberal worldview

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put on top of one or two facts. So anyway,

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put that out daily. But yeah, you can find us

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easy to find. We're on YouTube for video feeds, all

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that kind of stuff. Bullworkcapitalmanagement dot com. Know Your Risk

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podcast not not hardifyd. Thank you, Zach, Zach, Thank you, ladies.

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I appreciate it. Investment advisory services offered through TREK Financial

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loc and SEC Registered Investment advisor. The opinions expressed in

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this programmer for general informational purposes only and are not

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intended to provide specific advice or recommendations for any individual

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or on any specific security. Any references to performance of

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security so it thought to be materially accurate and actual

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performance may different. Investments involved risk and are not guaranteed.

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Past performance doesn't guarantee future results. Trek twenty four three

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zero eight