David Kudla on the Markets (

little consolidation. How do you see it? Hi, Brian, I think that we're what we're saying, we're continuing to see is uh interpretation of is the FED going to pivot like we saw back in or the the narrative of a FED pivot back in July in early August. Now it's more of a Fed pause. We had a noted economist this is on Bloomberg earlier this week, uh ed Yar Denny that said he thought that the November meeting

would be the last hype by the FED. And then of course we have daily who beneficial who has said, uh, make make no mistake about it. There, we're not gonna stop hiking rates, We're not going to cut ray. It's next year. So it's just back and forth. And when we um have expectations that the Fed has a very aggressive tone, like after Jackson Hole, like the meeting stock sell off. When there's a belief of a pivot or a pause, stocks do better. And that's what we saw

the last couple of days, Jevin. I mean, let's not forget that. A lot of what we saw in the last couple of days. It's probably downe to a short squeeze and people conflating what after what the r b A did in terms of that lesson expected interest rate hike, that others are going to just slow down a little bit, so they perhaps conflated or confused what was going on

with perhaps a turnaround, a change in sentiment entirely. Yeah, I think between the confusion from the Bank of England where they're buying bonds on the long end of the curve but the raising interest rates lower than expected rate

hike in Australia, um that that's what tree is. These beliefs of uh, the central banks, major central banks, and I think certainly eyes in the US and a lot of eyes around the world are looking at the Federal Reserve that there may be a softening of that stance, There may be a less aggressive position, There may be a pivot or a pause. But when the Fed officials come out to dismiss that UM, the massive rally we had on Monday and Tuesday becomes a flattish day to

a down day like today. David, give us an idea of what you are looking for out of the job's report Friday and how it's going to inform the Federal Reserve. Well, I think that you know, we're looking at consensus estimates of two two seventy jobs and uh, you know, we've seen a continued strength in the in the workforce. Uh.

Recently the number of job openings had reduced. We saw data came down from about eleven million to ten million in the US, and so, uh, we expect that UM, that continued strength in the labor force to have a Obviously, the impact on has been has been the area of the economy that has remained very strong, very robust. Uh. As we've continued to have these concerns about a recession in the US, but with unemployment this low, with jobs

doing this well, it's hard to see that. Yeah. The point I was trying to make before we went to break was briefly that you were getting into where the data maybe more important than the commentary, and you understand why we're much closer to the so called terminal rate than we used to be. UM do you see it that way? And UM, how does the data sit with you?

I mean, do you feel comfortable with it? Well, we've got data coming in mixed, right, So we have when we look at UH, some of the U S I, S I S M factory orders that came in this week felt two points to fifty point nine near contraction territory, lowest level since May of two thousand and nine. UM. We have at the same time, we have housing prices that are at the lowest level for September since two thousand and nine, with mortgage rates that have continued to rise.

So we see that the economy is slowing and slowing UH significantly, but jobs are remaining, are remaining strong and haven't have we haven't seen the suration there. So I think that for the Fed too h really change their policy. They need to see that change in jobs. We've also we also know that we've never the Fed has never stopped a rate hiking cycle. With the FED funds rate UH not rising above real rates, above positive real rates rising the rate the UH, the FED funds rate above

that of of inflation. So that's a long way to go here. It's not very often you go from zero to three or four hundred basis points in this quick a time. So think that is a little bit of a check on that. Uh. And it does bring into the conversation this discussion about about whether the neutral rate gets adjusted lower given financial instability considerations, the debt levels are high, the rapidity of the hike increases maybe a

factor affecting where the neutral rate is. Yeah, but we've seen the new tra rate, or if we want to talk about the terminal rate, we were down near three point two percent Midsummer. We're now up to about four point seven four point eight percent. Uh, and I think if anything, we see that terminal rate and new TRA rate move even higher. Uh. They're they're talking about we've had discussions about uh, fragility of the economy. I don't think the Fed is concerned about those issues. Uh. They're

going to tame inflation. They're going to raise hikes, raise rates, continue to high rates until they see inflation coming down. So UH, obviously October thirteenth is going to be very instructive in terms of what we see for September CPI. David, very quick, they give us an idea of what you're investing in, very in brief. Well, you talked a little bit bit about what's happened in the energy complex here recently, or at least with oil. We've been bullish on energy

for all of this year. UH and with the holdings that we initiated last year. UH invest co Dynamic Energy Exploration Production et f p x C fourteen percent over these last three days, but having a very good year even through this summer corrections, doing very well this year. UH. And also with what's happening in housing, we like we're actually shorting real estate. David, thank you so much for

joining us. David, could let that I find in chief executive non chief investment strategists main stay capital management