00:00If you look at the Federal Reserve Act, it does say by, you know, for cause and it looks like those forms are not filled out accurately, that they were they were filled out improperly. And this is why Secretary Besson highlighted why he believes the Fed should do an internal probe. The law may not be clear where it dots everything out, where there has to be a specific process, it says for cause. The president believes he has cause. Certainly you have to take these things very seriously, given the fact the Fed is a regulator and we'll see where it goes. Don't you want to know if he has cause, though? I mean, is it up to the president to say that? Yes, I do. I think so, Joe. And as Secretary Bessen alluded to, Governor Cooke has not said she didn't do it. And that's I may be perhaps is quite important. The fact, look, we need trust in government. And the president came in, he wanted to fish and I make things more efficient, streamline, get rid of the bloated bureaucracy. We're seeing that. We're seeing government spending slow pretty significantly. We've seen a lot of excess federal jobs go go by the wayside. He actually wants to bring trust back to institutions. We've had other episodes in the past for Fed governors have had to resign because of alleged improprieties. And and this one certainly could be quite serious. And it's the president's prerogative. I believe he has the ability because, again, it's for cause. And looks like these things are pretty serious. And to basically do what he's doing, The administration willing to go to the Supreme Court on this? Well, we'll see what happens and see how the how the law plays itself out and going through that process. I don't know. I'm not being a lawyer, not knowing how it's going to work. But but the president certainly, I think, has a good reason to be concerned about what's happened and this notion somehow about Fed independence. You know, remember, whoever is ultimately confirmed for the Fed chair, for Adriana Coogler's position and possibly Ms.. Cooke's position has to go through your Senate approval. So this notion somehow that there's a hit to Fed independence is a bit misleading and out of context because whoever is chosen will have to be vetted properly. And I guess, Stephen, Myron will have a confirmation hearing next week. Is that what you. Yeah. Yeah, It's supposed to be moved up, so fingers crossed. Hopefully that happens soon. Did that conversation just get a little more difficult for him? Democrats are going to come out swinging on this, aren't they? The problem is the Democrats have not supported any of the president's picks to begin with. So I'm not sure that really matters. The same prep, if you're Stephen Meyer. I would think so. Yeah. He's got a very good record and he's already confirmed just back in March. So, you know, it's like what? What's changed? So I would hope that goes through smoothly and that Stephen gets it. He be a great governor. Bloomberg News reporting late yesterday in the Bloomberg scoop that the president wants to go further and actually start to affect the makeup of the 12 regional banks. Is that the next layer here? Because that will bring up a whole other conversation? Yeah, possibly. I mean, the thing you want to reshape the Fed to to I think to his own wants to be I mean, the Fed probably needs some serious overhaul and reshaping. I mean, the fact that, you know, the governors have have have basically agreed to every president, I think, in the history with which they've been, you know, actually the ability to not have a president get that position just shows the fact that everything has been rubberstamped and the presidents really aren't really going through a democratic process in that sense. Right. It's a private sort of quasi private entity elects these people to the reserve banks and then the board of governors then kind of approves it. I like what the president's trying to do. He's trying to have a very populist, very, you know, everyday American, every every man approach, so to speak, to policymaking where he wants to lift up Main Street. And the Fed oftentimes is perceived to be, you know, a a globalist elitist institution. That's that's the perception of the institution has. And I think even the Fed itself would probably admit that there's been some overreach, as Secretary Bessen has said that. And they want the Fed to go back to kind of its core core mission of low and stable inflation, full employment and and moderately, you know, moderate and low interest rates. We're going to get interest rate cut or cuts starting in September according at least to market expectations. There's a worry, though, that if the president puts a chill across the the Fed, that the board of governors may not always be acting on data, that it may be influenced by the president. What why do you doubt that? Well, a couple of reasons show. One is have two governors dissent and they dissented before we had that employment report, which had massive downward revision. So there were very strong cases to be made. Why rates should be lower before that meeting. And then, of course, those governors, Bowman and Wall are certainly their case, I think is more strong that the chair himself has said, look, interest rates are high relative to the neutral rate, even though they're high, even relative to the highest dot on the dot plot. So the Fed has put itself in a position or needs to be accountable for its forecasts and for what it's saying factually. Therefore, inflation forecasts have gone up from March to June as inflation dipped slightly lower. So their forecast error got. Wider. The bond market is telling you that there's not an inflation problem. Break even. Inflation is well-contained. The ten year note is well contained, so there's nothing in the markets who are forward looking that's worried at all about Fed independence. I think the president and Secretary Besson is has been echoing this, really want to bring accountability, get rid of the mission creep and reevaluate, you know, sort of to get back to the basics of what the Fed is supposed to do. I don't look at that as being at all an attack on independence, but rather, okay, let's let's fix this situation, which is had gotten a bit broken over the past dozen and a half years. You mentioned inflation. There are still questions about when this is going to start showing up in consumer data. The market did get a bit spooked by the pie, suggesting that, oh, maybe it's actually finally here. This is the threshold before it spills over on the retail side. Is that going to happen? And if not, who's eaten? So. The PPE was a bit higher than expected. That was after five months of very weak readings. Some of that was in things like retail services, which actually are margins from company to company. The CPI has not shown that inflation goods prices since the president took office are down 4/10 of a percent annualized since April, when all the tariff actually accelerated. Inflation is still barely positive. So I don't think, Joe, we're seeing any of the curve effect yet. Maybe it shows up at some point. But I'd argue, given the fact that we're debating whether there is a tariff effect is proof positive that clearly it was not anywhere near as bad as all the experts and pundits thought. The president said that we've got the leverage, that our trading partners are largely going to eat those tariffs. And I think that's exactly what's happened. Before you leave, I have to ask you about Nvidia, because it's in video day. We've got the earnings coming in your boss was talking about earlier today knowing that the government is taking a 10% stake in Intel. Should we have a stake in the world's most valuable chipmaker, Nvidia? Scott Bessant was asked about it on Fox earlier. Listen, I don't think Nvidia needs financial support, so you know that that seems not on the table right now. But I don't know if we need to take stakes in defense companies. You know, we'll see whether the defense companies are fulfilling their mission in terms of providing adequate and timely deliveries for the U.S. military. How does the winner of remaining moment, the conservative Republican inside of you feel about government stakes, publicly traded companies? The intel is a unique situation because the the Science and Chips Act or the prior administration gave significant and you feel like money that stake already. Yeah that stake and that's why so I look at the intel is being a very what about a Lockheed or something else that while the secretary said look we'll see what happens. I mean he's had not made any type of commitment to do that. I think people are conflating Intel. Are you thinking that's going to be a blueprint for other places? I think in this case, Intel is unique because of the grants they were getting and the administration properly thought that, look, the taxpayer could benefit much more with the upside of actually you converted to a non-voting equity stake.

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The Fed Needs Some 'Serious Overhaul' Says Lavorgna

Joe Lavorgna, counselor to Treasury Secretary Scott Bessent, said President Trump wants to bring accountability to the Federal Reserve and that's not encroaching on the central bank's independence Treasury Secretary Scott Bessent repeated his call for Federal Reserve Chair Jerome Powell to conduct an internal review of the central bank, and referred to mortgage-fraud allegations about Fed board member Lisa Cook as the type of thing that should be included. “I’ve encouraged Chair Powell to do this on an internal basis before there is an external review,” Bessent said in an interview with Fox Business on Wednesday. “This is the kind of thing that needs to be addressed,” he said, referring to the Cook matter. (Source: Bloomberg)