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Chapter 1: What is the main topic discussed in this episode?
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So please become a Marketplace investor today at marketplace.org slash donate or just click the link in our show notes. Fed chair emeritus. Is that a thing? From American Public Media, this is Market Class. In Los Angeles, I'm Kyle Rizdahl. It is Wednesday today, 29 April. Good as always to have you along, everybody. Jay Powell wrapped up his last press conference as Fed chair this afternoon.
Eight long years, 64 press conferences, so much water under the economic bridge. So we are going to start with a recap. Previously on Federal Open Market Committee press conferences... I have a brief statement, and then I'll be happy to respond to your questions. In 2018, President Trump appointed then-Fed Governor Jerome Powell to replace Janet Yellen as chair.
And Powell gave his first-ever FOMC press conference. The job market remains strong. The economy continues to expand. Aw, memories. But there were tariffs, political pressure from President Trump to lower interest rates, and then March 2020. Powell gave an emergency press conference as the Fed acted to stabilize the pandemic economy.
We're really going to use our tools to do what we need to do here, which is restore these important markets to normal function. FOMC meetings were on Zoom for a while. The economy rebounded. And then inflation picked up. We took a step back from transitory. We said expected to be transitory. Oops. I think we have to be humble about our ability to forecast.
Inflation hit a 40-year high, which pushed the Fed to hike interest rates 11 times. I wish there were a painless way to do that. There isn't. President Biden reappointed Powell. And when President Trump got reelected...
I've held back firing him. I've wanted to fire him, but I hate to be controversial.
Tons of threats to Fed independence, which reporters would not stop asking Powell about. I think I did answer that question in this very room. As I've said countless times over the years, no desire to change that answer and have nothing new for you on that today.
There were Supreme Court arguments over an attempt to fire Fed Governor Lisa Cook, a DOJ investigation into Powell himself, more tariffs, the biggest energy shock in decades, a new guy is one step closer to Powell's job, and that's what you missed on FOMC. J.C. Bolden and Maria Hollenhorst put that one together for us. Lest you think it is all fun and games, though, there was substance today.
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Chapter 2: What were the highlights of Jerome Powell's tenure as Fed chair?
That is the technical term over what message the Fed is sending. We had quite a vigorous discussion about that, that very issue and the guidance. And is it still appropriate? And that kind of thing. Is it still appropriate, that is, to send the message that an interest rate cut might still be in the mix? It's a good question, right? You see, inflation has moved up over the interim a bit.
Core inflation is 3.2 now, moving, albeit just a little bit, in the wrong direction. And we know that there will be, you know, that there's headline inflation coming out of the Gulf, and we don't know how much that will be. We just, we're going to need to see. One might even say he wants more data. There's so much uncertainty about the path ahead.
There doesn't need to be any rush to make that decision now because, you know, what happens in the next 30, 60 days, even by the next meeting, could really change the picture around that language. So, you know, it's a much closer thing on the committee than it was in March.
Anyway, it's going to be, unless something really surprising happens, Kevin Warsh in the big chair the next time the Fed meets. That will be in the middle of June. I won't see you next time. Wall Street today, a little up, a little down. A little mic drop there from Chair Powell. Oil, though, we are going to have the details when we do the numbers.
The Federal Reserve is holding its short-term interest rates steady, yes, but rates on long-term government debt have been rising ever since the president started his war with Iran. That's happening partly because investors are worried about all the inflation the war is causing, and partly because the war is adding to an already enormous pile of government debt.
Either way, those higher treasury yields, the interest rate the government has to pay, are affecting mortgage rates and car loan rates, rates on credit cards and the yields that big corporations are having to pay on the bonds that they issue. What makes that noteworthy is that a lot of companies have been going ahead and borrowing anyway, even though those higher rates are going to cost them.
Marketplace's Justin Ho checked on the corporate bond market and how it's handling all the geopolitical turmoil. Corporate bonds tend to pay higher yields than government bonds because, in theory, corporate debt is riskier. And when the war started, corporate bond yields rose.
Not massively, but enough to make a measurable difference.
That's Guy Labat with Jenny Montgomery Scott. He says that's partly because bond markets were slightly more worried about risk because of the war. But another reason, he says, is because corporations have actually been issuing a lot of bonds this year.
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Chapter 3: What does Powell's decision to stay on as a governor mean for the Fed?
It needs constant change and focus.
In the cat and mouse game of cybersecurity, AI is helping both sides do more. But the mouse only has to get lucky once. I'm Megan McCarty Carino for Marketplace.
Coming up. This is more sustained and it's more, you know, long running.
Not all parts of the labor market are created equal. But first, let's do the numbers. Dow Industrial is down 280 points today, six-tenths percent, finished at 48,861, did the blue chips. And NASDAQ added nine points. We're going to call that flat, 24,673. The S&P 500 flat as well, 71 and 35. Megan McCarty Carino was talking about concerns over cybersecurity and anthropic and mythos and all that.
The cybersecurity firm CrowdStrike Holdings fell six-tenths of one percent. Fortinet gained a half percent. Palo Alto Networks slid up three-tenths of one percent on the day. Brent Crude Oil. I mentioned oil just a little while ago up at the top of the show. Topped $120 a barrel. I saw $120.12 a barrel today. Gas, as you know, $4.23 a gallon. Bonds down. Yield on the 10-year T-note 4.42 percent.
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And yet, the Federal Emergency Management Agency is fighting for its life.
I've never been a big fan of FEMA. FEMA's a disaster. FEMA's a dirty word. People are waking up in droves to the FEMA camps.
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