Mm.

You know, I was saying this to, I was like, I went on a walk this morning with, with Max, and he was saying, you know, he feels like he's got so much more to like go through.

And it's like, yeah, he totally does, you know? Like, so, you sort of see how much future he has.

I think, you know, we were talking about me and Toby, and like Tubbo was so always into like doing events and kind of...

And even when I met him, it was like, "How can we do this live server event thing?" So now he's like kind of running these events.

Like that kind of almost is what he was doing before this.

And before this, like I, you know, grew up watching sitcoms.

Mm.

But is there going to be some more fallout? How does it implicate or not implicate the Fed here?

You know, I mean, like thinking about the long end, I'm assuming, right? Like, you know, I think it's just indicative of the fact that there's enormous potential for return on invested capital all over the markets.

And the Fed or not the Fed, the bond market, you know, the treasuries just don't offer.

No one wants to be risk free.

That's what I'm trying to spit out.

Right.

There's no real reason to be piling into the risk free rate when risk does so well.

Is it true, though, that for the investing world, you know, a dollar of issuance from, I don't know, meta has anything to do with demand for treasuries? I still struggle with that.

What do you got for us today, Tom?

I got a crazy story for you today.

I wouldn't believe it if it wasn't true.

At the center of the storm is a realtor named Glenis Cardona who worked with three co-conspirators to steal a $1.5 million house in Burbank, California.

Here's how she did it.

She orchestrated the sale of this house from an unknowing owner to the stolen identity of an unwitting buyer.

And then she arranged for lenders to fund $975,000 of the home sale using forged deeds filed with the county clerk's office.

That's what's so scary about this, Tom.

Hmm.

Uh, if businesses are, for instance, seeing margin pressure because they're having to pay tariffs, uh, or generally still seeing, uh, you know, wage pressure from a lack of, of skilled labor that's available, then they're gonna push those prices through to high-margin goods or services that are generally sold to consumers who are less price-sensitive, so, you know, upper income individuals.

Because the PCE deflator is a measure of the price changes in what people actually spend money on, it captures some of that, uh, you know, fact that it's only limited, uh, price increases that are being passed through.

When the CPI looks at the big basket of goods and services and kinda looks at what the average person buys, it's a lot of lower, you know, sort of more basic goods that are in there, and, and they end up, uh, not seeing as much price increases-

What do you think, Tom?

Yeah, I agree with Steve, actually.

I'm, I'm been having a hard time sort of understanding exactly how the market has come to this conclusion.

Uh, I wonder if perhaps there is some, um, you know, kind of crossed signals, I guess, in thinking about how energy is going to affect the stance of global central banks.

What gave you that sense?

Blind squirrels find nuts every once in a while.

But essentially, I think what happened is a combination of things.

But businesses didn't seem to hire quite as many people during the pre-holiday season.

So the way the seasonal adjustments work in the modeling, when there are fewer layoffs in January, it ends up with this sort of perversely strong number on payrolls, right? And I think that the texture of payrolls in January, plus all the revisions that we saw back throughout last year, really tells the bigger story, which is that hiring has slowed very significantly.

I would bet that when all is said and done, this January number is actually going to end up looking a little bit lower.

But economic forecasting these days has become much more of a case of sort of guess the number more so than the kind of mosaic interpretation of what's fundamentally going

So what is the broader narrative here? Is it one of unemployment? Do we need to create more hiring, or has the break-even pace come down so much that we're kind of fine the way things are?

But where would you kind of roughly put the odds of a recession at this point?

Yeah, so we have really stayed the course with our rate cut views in total when just looking at how many we were expecting this year.

We've been holding tough with our three towards the second half.

I did make a very small adjustment too, which unfortunately is not reflected on the graphic there.

But instead of kind of like every other rate cut path, at the end of the year where the Fed brings the policy rate closer to neutral.

Rather now, I think that they're going to look at potential weakness developing by mid-year and they'll want to cut back to back.

So thinking we'll probably see something closer to like June, July, September.

Tom, do you expect weakness to happen through the consumer or the demand side? Or does the weakness happen from the supply side?