This Is Peak Hawkishness From The Fed | Joseph Wang
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Thanks so much for inviting me, Felix. It's glad to be back. I remember the last time we spoke, it was earlier in the year, and you were telling people we go to s and p 5 100 to 6,000, and here we are. So congratulations on a great call.
Thanks. I appreciate that. And, yeah, you've had some wicked calls yourself. So I think, yeah, we'll we'll give each other a quick pat on the back and No.
I know. I will get back to that as well. So I'm I'm happy. We we both had tremendous years. So There you go. It's it's a great way to to end the year. Today has been down day, but, you know, it's happens. It
it happens. It happens. And, before I get into it, I do wanna say that, if you enjoy this conversation, Joseph is also gonna be at our DaaS conference in New York in March. I'm gonna be there as well. So there's gonna be plenty of interesting, keynote speaking going on, and he'll be a speaker there. So if you're interested, hit the link in the description. Go sign up, get your tickets. It's gonna be a ton of fun. Alright. So with that aside, let's start from the top. I wanna get your high level takes of what were the biggest takeaways and surprises and insights that you derive from today's FOM
mean, one look at the market pricing tells you everything. Right? It was a really it was perceived to be a hawkish conference. You have yields shooting up across the curve. You have a risk assets tanking. So, personally, for me, heading in, I was thinking we would get a more of a dovish meeting. So this surprised me. Now the reason why it's it's hawkish, I think, largely comes from the dot plot. Now the last time we had a dot plot was in September. And at that time, the Fed was pricing in 4 cuts next year. The basis for that downbeat projection was that at that time, the Fed was was pretty dow
Yeah. Totally. So I'm just gonna bring up here the the updated SEP data, because this is really what drove markets, I think, today is, obviously, you know, everybody expected a 25 bps cut today. That's not what is driving market price action clearly because you would think, okay. 25 bps cut. That would sound bullish for markets, but, it's clearly not the case. So there is a lot more going on here underneath the surface. So as you mentioned, they did mildly you know, well, substantially increase the real GDP production for year end, but mildly increase it for 2025 versus their original expectat
So I think it's been really hard. Well, first off, we have to remember that the Fed's mandate is full employment and price stability. That's not the same as growth. So, usually, that you know, looking at growth can give you a a good sense of what the labor market would do. But one of the interesting things that's happened in the past few years is that we've had a tremendous influx in migrants. So you have this divergence where you can have stronger GDP growth simply by adding more people. So but at the same time, you can also have a rising unemployment rate because people are having trouble. T
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