SPECIAL REPORT: Federal Reserve Guidance Reaction With Axel Merk

**Adam Taggart** (0:01)
All right, and we should be live. Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, welcoming you to this special report, which we have now a pretty well history track record of doing every time the Federal Reserve releases its guidance, and then Fed Chair Jerome Powell goes out in front of the media. We dissect it for you and hopefully digest it and make it understandable for you with the help of Fund Manager and Fed Watcher Axel Merk. Axel, how are you doing today?

**Axel Merk** (0:33)
Very well. And I did not fall asleep, even though that might have been Powell's goal today.

**Adam Taggart** (0:40)
You know, I actually found this a little more interesting than it was sold. Because it was sort of sold like, look, he's not going to do anything. It's a big nothing burger. Don't worry about it. But I felt that he took, and sorry folks, I should say, right up front, the Federal Reserve did not change its policy rates. It did not change the pace of QT. So it literally is not doing all that much. But he took pains to say that, quote, risks of higher unemployment and higher inflation have risen. And he seemed to take several sort of subtle but deliberate jabs at the current administration saying, hey, you guys are making things a lot more uncertain. And as a result, I don't want to feel pressured into doing anything. So Trump, I know you're blowing up the headlines, telling everybody I should be cutting rates, but I'm not going to do anything until I see how this thing plays out further.

**Axel Merk** (1:35)
Yeah. And he had a script today and the talking points, and he repeated them numerous times. And it was kind of saying, oh, we're in a comfortable spot and we can afford to wait. He also used the word, I don't think we know. I don't think we know several times in different variations. And one of the traditions I think we have here is that we disagree with what Mr. Powell says. And so I will just say the outrageous thing that I disagree with Powell here.
Obviously, the Fed doesn't quite know what's going to happen. But they know that they don't know. And that makes all the difference. But usually, the Fed is boasting about what the economy is going to do. And of course, has a bunch of qualifiers and caveats and so forth. But normally, there is a cognitive bias that the folks at this debating club, as I like to call it, have. And then they'll test the economic data to come against it. And we argue that they're right, they're wrong, they shouldn't do this. I allege that they don't have a framework. Whatever it is, what's different today is they know that they don't know. And that they know with a very high certainty. And that's hugely relevant because as many market observers have noted, I think we've talked about it at some point, the Fed is no longer the most important game in town right now. Mr. Trump is, tariff policy is. Jonathan Thepero, he's an anchor at Bloomberg, he even said that Trump dictates what the Fed is going to do. We can talk about that in a bit, but more relevant in the short term, is that we know the Fed will not do anything in the short term, because they're not supposed to do anything in the short term, because they know that they don't know. And as abstract as that may sound, that is actually a lot more certainty than we usually have with the Fed. And maybe at risk of doing too much Fed talk here myself, by giving here this double negative, it means that the market rightfully focuses on other aspects, right? The market rightfully focuses on what might happen to terrorists, and really puts aside of what the Fed is doing, and Powell is correct, right? They're slightly restrictive, less restrictive they had been. And yes, we can argue whether they're gonna be too restrictive or not, but they really have their hands tied right now, and they know it. And so in that sense, there was a lot of information given out that they confirmed it, right? I mean, okay, if they didn't have a presser, we would also know that they don't know. So in that sense, I stick to my word that I've mentioned on this program, that I think maybe they're better off not saying anything. But it was in the sense when he says, I don't think we know, I think he knows exactly that they do not know.

**Adam Taggart** (5:01)