Planned Episode 9/17/2026

Kevin Warsh (0:01)

Evening.

Tom Bilyeu (0:02)

Buyers' Remorse.

Jeff Snider (0:03)

Buy a new car? I'll be moving in.

SPEAKER_4 (0:06)

Let's get started. Sorry, I think there's been a mistake.

Kevin Warsh (0:09)

I bought it from Carvana.

Jeff Snider (0:11)

You what? Yeah, great price. I even have seven days to love it or return it.

SPEAKER_5 (0:14)

So there's no...

Jeff Snider (0:15)

No, no Buyers' Remorse.

SPEAKER_5 (0:17)

More like Buyers' Rejoice.

Tom Bilyeu (0:20)

I guess I'll let myself out. Congratulations.

Jeff Snider (0:23)

I mean it.

SPEAKER_5 (0:24)

Buyers' Rejoice. Buy your car today on Carvana. Limitations and exclusions may apply. See our seven-day return policy at carvana.com.

Tom Bilyeu (0:31)

The Fed just did the most expected thing in the world, but that doesn't mean it was smart.

Kevin Warsh (0:36)

Good day.

Tom Bilyeu (0:37)

I'll be the judge of that.

Kevin Warsh (0:38)

In the meeting just concluded, the FOMC decided to raise the target range for the federal funds rate by a quarter of a percentage point.

Tom Bilyeu (0:47)

For the first time since, I think, July of 2023

Kevin Warsh (0:51)

To three and three-quarters to four percent, in support of the Federal Reserve's dual mandate. The committee is continuing its policy of maintaining ample reserves in the banking system.

As noted in the policy statement released just a short while ago, economic activity is expanding at a solid pace. While uncertainty remains elevated, owing in part to geopolitical developments, domestic spending has been resilient. Productivity growth is strong and capital investment is robust. Job gains have kept pace with the workforce and the unemployment rate has changed little.

Tom Bilyeu (1:31)

Okay, we're going to have to set something out on the table. This is the elephant in the room and I think is going to be the determining factor as to whether this ends up being a good decision on Warsh's part or ends up being something that doesn't play out well and he ends up backtracking very quickly. So the question everybody's trying to figure out is, is this going to be the beginning of a sequence of rate hikes or is this going to be something that he quickly realizes was a mistake and he backtracks? This is largely going to be around, I believe, something that he does not seem to be taking into account, which is that investors, people buying bonds, they feel one way about the economy. These are people that are on the right side of the K, let's say. The people that are on the wrong side of the K feel very differently about the economy. They do not feel like it's going steady. And we're going to look at some charts in a little bit that will point this out. But the consumer confidence for the average person is pretty low. Whether you're asking them, do they think they're going to have a job in a year or whether you're just asking them, can they make ends meet? They're not feeling good about the economy. And one of the things, the biggest tell for me is that when you look at the jobs data, if you put back in the number of people that are simply bouncing out of the labor force, they're saying, listen, I'm not even looking for a job anymore. Then all of a sudden, the labor force participation data starts to look a lot worse. And when you start looking at it through that lens, through the lens of the people on the bottom of the K, I think this all feels very differently. Now he's gonna talk a little bit about that.

Later as he goes, he starts talking about people that are not that well off or the worst off among us. But when you hear then how he echoes this in the policy, he doesn't seem to be acknowledging what they're experiencing. Now, data points should be the answer. But the reality is that people end up spending money, not spending money, taking loans, not taking loans, buying a house, selling a house, all that. It's all predicated on how they feel. It doesn't matter what the data says. What matters is how they feel. And so as I hear Warsh talk, all I hear is that he's looking at trends. Now to his credit, he's not just looking at blips or a single data point. He's trying to identify trends. But the one trend that he's ignoring is exactly how people on the wrong side of the K are feeling about this economy. And I think that ultimately is going to have the biggest impact in terms of whether this rate hike helps or hurts.

Kevin Warsh (3:57)

But inflation remains elevated. Today's policy action will support a timelier return to the committee's 2% goal.