Warsh Says Fed Will Cut to 8 Meetings a Year, With a Strategy-Only Meeting in 2027
Fed Chair Kevin Warsh announced the schedule change after the FOMC voted 10-2 to hold rates, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a hike.
Fed Chair Kevin Warsh said Wednesday the Federal Open Market Committee will hold eight meetings a year starting next fall, with one meeting in 2027 devoted exclusively to monetary policy strategy, with no vote on the federal funds rate and no policy statement. He announced the change at his press conference after the committee voted 10-2 to maintain the target range for the federal funds rate at 3-3/4 to 4 percent. Cook and Hammack dissented, preferring to raise the range by a quarter of a percentage point, according to the Fed's statement.
Schedule change
Warsh said the committee had "decided on a change in our FOMC schedule." In 2028, he said, he expects two meetings dedicated to strategy discussions and six for setting policy. The next policy decision is scheduled for Dec. 9, the last meeting of 2026.
The Fed's statement said economic activity "is expanding at a strong pace," a step up from the "solid pace" in September's statement. It repeated that uncertainty "remains elevated owing, in part, to geopolitical developments" and that "inflation remains elevated." Warsh read those passages at the news conference, including that productivity growth is strong and capital investment robust.
The statement dropped September's line that a rate action would support a timelier return to 2 percent inflation. In its place it said that "the accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal." It also repeated: "The Committee will deliver price stability."
Outside reaction
Commentators on Bloomberg's broadcast described the chair's communication as vague and said he gave little guidance on the committee's reaction function. Several noted that he did not say why the committee held rather than raised rates, though they differed on how far he addressed the question. Those assessments came from commentators, not from Warsh.
Bulletins
FED HOLDS RATES AT 3.75-4%, 10-2 VOTE; COOK, HAMMACK DISSENT FOR QUARTER-POINT HIKE
FED STATEMENT: ECONOMY EXPANDING AT STRONG PACE, UPGRADED FROM SOLID
WARSH: DID NOT EXPECT COOK DISSENT, HER RECENT SPEECHES SHOWED CONCERN
WARSH: THIRD-QUARTER GDP APPEARS TO HAVE GROWN ABOVE 3%, LED BY CONSUMER SPENDING
WARSH: FINANCIAL CONDITIONS TIGHTER BUT HE WON'T CALL THEM TIGHT
WARSH: ENERGY, RELATED PRICES HIGHER AGAIN; FED MUST STOP INCREASES BROADENING
WARSH: FOMC TO CUT TO 8 MEETINGS A YEAR; 2027 MEETING TO SKIP RATE VOTE, STATEMENT
WARSH: PRICE STABILITY IS NOT ABOUT A FIXED DATE ON A CALENDAR
WARSH: INFLATION EXPECTATIONS, SWAPS-BASED COMPENSATION MOVING IN RIGHT DIRECTION
WARSH: FED HAS NOT YET ACHIEVED PRICE STABILITY, 'BUT WE'RE WORKING ON IT'
WARSH: HE DOES NOT PLAN TO SUBMIT A RATE PROJECTION DOT; 18 COLLEAGUES DO
WARSH: NO POLICY DECISION OR STATEMENT EXPECTED AT 2027, 2028 STRATEGY MEETINGS
WARSH: FIVE FED TASK FORCES HAVE YEAR-END DEADLINE; HE HAS SEEN NO FINAL REPORT
WARSH: FED PRODUCTIVITY, JOBS TASK FORCE TO HOLD NOV 16 FIELD HEARING
WARSH: THERE IS NO SOFT OR IMPLICIT INFLATION TARGET, ONLY PRICE STABILITY
WARSH: MARKET INTEREST RATES HAVE CORRELATED STRONGLY WITH OIL PRICES THIS YEAR
WARSH: OIL FUTURES PRICES HAVE RISEN OVER LAST SEVERAL WEEKS; FED TAKING NOTE
WARSH: HE WAS SKEPTICAL RATES WOULD NOT AFFECT AI; RATES 'GET IN THE CRACKS'
WARSH: CAPEX STRENGTH IS BROADENING, NOT CONFINED TO NARROW POCKETS OF ECONOMY
WARSH: POLITICS PLAYED NO ROLE IN RATE DECISION; NONE RAISED IN TWO-DAY MEETING
WARSH: DOES NOT BELIEVE IN FORWARD GUIDANCE ABSENT CRISIS; WON'T PREJUDGE NEXT MEETING
WARSH: BALANCE SHEET TASK FORCE RECOMMENDATION TO FOMC LIKELY EARLY IN FIRST QUARTER
WARSH: MOST COLLEAGUES DON'T JUDGE ECONOMY RUNNING TOO HOT OR TOO STRONG
WARSH: FINANCIAL CONDITIONS HAVE TIGHTENED SINCE LAST MEETING; POLICY IS WORKING
WARSH: ONLY ONE MORE CPI REPORT BEFORE DECEMBER MEETING; LITTLE TO LEARN BEFORE THEN
WARSH: FOMC SCHEDULE CHANGE, EIGHT MEETINGS PER YEAR STARTING NEXT FALL
WARSH: 2027 STRATEGY-ONLY FOMC MEETING TO HAVE NO RATE VOTE, NO STATEMENT
WARSH: EXPECTS TWO STRATEGY-DEDICATED FOMC MEETINGS IN 2028, SIX POLICY-SETTING
Posts (34)
Fed holds rates steady at 3.75%-4%. Vote 10-2.
FOMC statement, released 2:00 PM ET.Said 2:00:20 PM ET · drafted 2:00:20 PM ET
Fed Chair Kevin Warsh said third-quarter GDP "appears to have brought an even more rapid advance," with consumer spending likely growing above 3% and business investment likely rising at about a double-digit pace.Said 2:32:20 PM ET · drafted 2:33:14 PM ET
Fed Chair Kevin Warsh said overall financial conditions are tighter since the September rate increase but "I'm unwilling and unable to call them tight." He said credit has tightened for some businesses and households.Said 2:33:52 PM ET · drafted 2:34:06 PM ET
Fed Chair Kevin Warsh said, "inflation is too high." He said energy and related prices have moved higher again in recent weeks, and that the committee observed but was not surprised by bouts of market volatility.Said 2:34:42 PM ET · drafted 2:34:53 PM ET
"We've made clear our readiness to act as circumstances require and we have shown our willingness to act," Fed Chair Kevin Warsh said, ending his opening statement at a news conference after the FOMC held rates steady.Said 2:35:17 PM ET · drafted 2:35:41 PM ET
Fed Chair Kevin Warsh said that starting in 2027, "one meeting will focus exclusively on broad monetary policy, with neither a vote on the Federal funds rate nor a policy statement anticipated."Said 2:35:57 PM ET · drafted 2:36:57 PM ET
Fed Chair Kevin Warsh, asked about the outlook for the next rate move, said ensuring price stability "is not about some fixed individual date on a calendar." He said it is also not about "some isolated data point."Said 2:38:07 PM ET · drafted 2:39:16 PM ET
Warsh: “We doubled down on the 2% inflation target.”
Warsh on what the Fed has done on its inflation target since he arrivedSaid 2:39:12 PM ET · drafted 2:39:16 PM ET
Fed Chair Kevin Warsh on the Fed's 2 percent inflation goal: "If you think that we're tolerating some inflation target somewhere in the twos, let us disabuse you of it."Said 2:39:07 PM ET · drafted 2:40:16 PM ET
Fed Chair Kevin Warsh, on inflation: "You haven't achieved price stability, you're right about that, but we're working on it." He cited "nearly six years of inflation above target."Said 2:40:52 PM ET · drafted 2:41:18 PM ET
Fed Chair Kevin Warsh said, "I've got 18 quite independent colleagues," in response to a question about his colleagues. He said anyone in the FOMC meeting room the past two days "would come to believe that to be true."Said 2:43:12 PM ET · drafted 2:43:26 PM ET
Fed Chair Kevin Warsh said: "Don't plan on submitting a dot but the 18 of them do." He said he does not submit a projection to the dot plot and rejected the idea that he sends messages to committee members.Said 2:43:27 PM ET · drafted 2:45:28 PM ET
Warsh: “You would let the last six years of inflation above the Fed's target usually well above the Fed's target you'd let that continue so that's the most important thing we can do.”
Asked about the Fed's mandate and how it intends to fulfill itSaid 2:45:22 PM ET · drafted 2:45:32 PM ET
Fed Chair Kevin Warsh, asked what he could preview on AI, data or balance sheets: "These five task forces are hard at work." He said he has "scarcely seen" a final report and gave the groups a year-end deadline.Said 2:45:57 PM ET · drafted 2:46:36 PM ET
Fed Chair Kevin Warsh said findings from the Fed's five task forces, including one on the balance sheet, are "unlikely to find their way into this policy conjunction," saying FOMC members are consumers of those ideas.Said 2:47:07 PM ET · drafted 2:47:23 PM ET
Fed Chair Kevin Warsh said the Fed's productivity and jobs task force will hold a field hearing, saying: "On November sixteenth the productivity and jobs task force will be doing a field hearing."Said 2:47:27 PM ET · drafted 2:48:28 PM ET
Fed Chair Kevin Warsh declined to respond when a reporter asked whether he agrees with comments from public officials. "I'm not gonna be responding to to quotes from public officials," Warsh said.Said 2:49:22 PM ET · drafted 2:49:33 PM ET
"We just came out of a heck of a family fight," Fed Chair Kevin Warsh said of the FOMC meeting. The committee voted 10-2 to hold rates; Lisa Cook and Beth Hammack preferred a quarter-point increase.Said 2:49:32 PM ET · drafted 2:50:14 PM ET
Fed Chair Kevin Warsh, asked about a soft inflation target: "There's no soft inflation target." He said the target is price stability, 2 percent as measured by PCE.Said 2:50:32 PM ET · drafted 2:51:19 PM ET
"They go to the gas station too and they see that prices are up," Fed Chair Kevin Warsh said, on consumers' near-term inflation expectations. He said he would not say oil prices have not gone up.Said 2:50:57 PM ET · drafted 2:52:14 PM ET
Fed Chair Kevin Warsh said he was skeptical of a view that interest rate increases would have little effect on AI investment because investors expect such different returns: "I was skeptical of that view."Said 2:54:17 PM ET · drafted 2:54:29 PM ET
Fed Chair Kevin Warsh said interest rates "get in the cracks," affecting "directly or indirectly almost everything." He said he does not believe the technology sector is divorced from the rest of the economy.Said 2:54:22 PM ET · drafted 2:55:30 PM ET
Fed Chair Kevin Warsh said, "politics played no role in the decision." Asked about the FOMC's hold, he said he spent two days with colleagues and "didn't hear a reference to politics."Said 2:56:17 PM ET · drafted 2:56:31 PM ET
Warsh: “I don't believe in forward guidance.”
Asked about support for another rate hike this year; blackout ends FridaySaid 2:57:22 PM ET · drafted 2:57:27 PM ET
Fed Chair Kevin Warsh said he does not believe in forward guidance "absent exigent circumstances absent a crisis." He cited the 2008 financial crisis as a period when such guidance was helpful.Said 2:57:27 PM ET · drafted 2:57:48 PM ET
Recommendations from the Fed's balance sheet task force will go to the FOMC "probably early in the first quarter," Fed Chair Kevin Warsh said, adding, "don't hold me exactly to that timing."Said 3:00:07 PM ET · drafted 3:00:29 PM ET
"It is unlikely to have any material effect on this policy conjuncture," Fed Chair Kevin Warsh said of possible changes to the Fed's balance sheet that follow the review by its task force.Said 3:00:27 PM ET · drafted 3:01:30 PM ET
Fed Chair Kevin Warsh said the Fed does not have perfect foresight about how markets will react to its rate move. "We don't have perfect foresight on what financial markets are going to do with it," he said.Said 3:01:32 PM ET · drafted 3:02:32 PM ET
"Is the economy running too hot is the economy running too strong that isn't the judgment of most of my colleagues," Fed Chair Kevin Warsh said. He also said the economy is strong.Said 3:02:57 PM ET · drafted 3:03:36 PM ET
Warsh: “That isn't something that we're uncomfortable with that tells me that policy is working.”
On financial conditions having tightened a bit since the last meetingSaid 3:04:07 PM ET · drafted 3:04:11 PM ET
Fed Chair Kevin Warsh said: "The goal in my view and you've heard me say this before isn't to throw sand in the gears of the economy and throw people out of work." He said he does not think the Fed has to do that.Said 3:03:47 PM ET · drafted 3:04:49 PM ET
Fed Chair Kevin Warsh said, "there is one more CPI between this meeting and the December meeting." He said later that it is the only inflation measure the Fed will have before then.Said 3:19:40 PM ET · drafted 3:19:59 PM ET
Fed Chair Kevin Warsh said one more CPI report is due before the December meeting and that "oil prices are going up and you know that the war is still going on." He said he doesn't expect the Fed to learn a lot.Said 3:19:50 PM ET · drafted 3:21:12 PM ET
Fed Chair Kevin Warsh said the FOMC will hold eight meetings per year starting next fall. In 2027, "one meeting will focus exclusively on broad monetary policy strategy," with no rate vote or policy statement anticipated.Said 3:31:16 PM ET · drafted 3:31:31 PM ET
Transcript
got to
hint
of and what
I
was
just
answering
and a little bit
of
What you
see in
this
the
steepening
is
he's
sensitive to
it.
He's
sensitive
to
looking at
AI.
You know, we also got
another piece of
information that we
hadn't
maybe
heard
before
when
he
answered the
Korean
reporter.
you know,
with, I'm
really
more.
focused on your
markets than
you might
may
imagine
me to
be.
That's really
important
because he
understands
just how
important the AI
driver
is
to
Grow, even though he's
talking
about it
broadening
out. This is really
An important
piece. So if you see
some
wobbles
there, you know, I
think
maybe
not the Fed
put
in.
in that it
can
work,
but
certainly what we
Saw this
month
was the
market sort of
sniffing out
that
AI is a
macro event as much
it
is a micro
event.
And if there is
a
undermining of
it,
it's going to be a very important
good
a
macro
Event that
is
primarily
disinflationary.
It's supporting
Growth
on
the
consumption
side.
It's supporting it on the investment.
side.
He made that point, so he's well aware of it.
So that's where you get the interest rate.
aware
of it.
So that's where you
get
the
interest
rate
Sensitivity, and it's
really a
validation
of what we
saw in the
last couple of
years.
weeks.
You
were at
Carnegie
Mellon.
You had the
privilege
of
Alan
Meltzer.
his
1400-page
history
of the
Federal
Reserve.
What
would
Alan
Meltzer
think
of what we
observed this
afternoon?
Well, you know, it's
a
it's
someone
who said
it
earlier. I think it
Was
Mike
McKee
about how
he, he wants
to
change
the
Fed.
But
He's
locked into
the
old
communication. I would say
He's locked in, but
He's
Also trying to
change the
communications as much as he
can.
We're seeing that the changes
In the press
conference. You only get
one
question.
He picks which
one if
you
ask
2. Shortening
The
It
from about an
hour to about 30
minutes.
The statement being
revised. Meltzer would see
that in
the context of the
history of the Fed
as, yes, trying to
go back to the
earlier
interaction you
had
with
Priya
about, you
know,
can
go
back to
this
South
Halcyon
days?
of
The thing I would
add to
that
conversation
is
the
big
change
is
the role of
Financial
conditions
and
consumption, because consumption
is so
powered
by the wealth
effect. That
linkage, you
didn't have in the
Halcyon days. It was
much
more
Manufacturing, much
higher
savings
rate,
much
less
consumption out of the
debt.
Financed
means
so
much
less
interest
rates
rate
sensitivity and
financial
conditions
Sensitivity.
So that aspect
and
that's what
we
heard, the
transmission
mechanism
is through
Financial
conditions.
That's the
primary
way in
which the
Fed's policy
setting
affects the economy.
economy.
So I think we learned a lot
lot
about that, even though not much was
though not
much was
Changing to
Jonathan's
you know
comments
earlier
inside
some
of this
Conversation, I think we
did
hear
some
interesting
data
points.
Jeff Diplomatic
appreciate it. Thank you,
Sir. Jeffrey
Rosenberg
there of BlackRock.
The old Fed, what do they
The mum you get a
Crack, the
back of
away.
We had a
Crack. We had a bit of a crack in the credit
market over the
last few
weeks. This Fed has backed
away.
Yeah, the old Fed
is sitting
there looking at its dot
Plot. The new Fed is looking out the
window.
And I think I'm going to do some
more looking out the window
too.
I think half a
of Wall
Street had given up and started looking out the
outside of the weather
brand.
I think we're all looking at the
weather at
CoreWeave at the other
doing
Do
door. Thank
you.
Thanks for being
here. Prime
Mr.
Mitra
for
of
JP
Morgan. Come on
up
Tomorrow on
Blue
Blacks
Surveillance
on
Bloomberg TV. We'll catch
you every
up with Libby Cantrella
the former St. Louis Fed
President Jim
Bullard,
Mike Ferroli of
J.P. Morgan, Gagi
Chandry
of BlackRock from New York
City this afternoon.
Good
afternoon.
This
was Black
Bloomberg
Surveillance.
Markets
headlines, and the
breaking
news
24
hours
a day.
At
Bloomberg.com.
Bloomberg
Television.
and the Bloomberg
Business
App.
This is a
Bloomberg
Business
Slash.
It's
3:26 on
Wall
Street. We do check out the
Markets all day.
Long
here at
Bloomberg Fed
chair,
Kevin
Warsh, you heard
him
live right
here
on
Bloomberg
Fed
Officials
Today
leaving rates
unchanged.
They also
reiterated
their commitment to
containing the
inflation
without
offering a
clear
signal
that
They
might
raise
rates that
their
next
meeting
in
December.
Right now we got the two-year four
4.70%
10-year
5.03%. Further out, the
30-year
5.36%. Here's Fed
Chair Kevin Warsh at
The news
conference.
Talking about
overall financial
conditions.
Domestic spending has been
resilient.
Productivity growth has
is
Strong.
In capital
investment
robust.
Job
gains
have
kept
pace
with
The
workforce and the unemployment
rate has
changed.
Little.
But
inflation
remains
elevated. And the
Federal
Open Market
Committee
today voting
10-2
To
hold
its
benchmark
Fed
funds
rate in
a
range of
3.75%
to
4%.
Governor Lisa Cook and
Cook and
Cleveland Federal Reserve Bank
Federal Reserve Bank
President.
behind
Hammock
Dissenting.
Preferring
to
raise
rates
by
a
quarter
percentage
point.
Well, coming up in
just about
33
minutes after
the
closing bell, we've
got
earnings today
From
both
Alphabet
and
also
Microsoft
Amazon
tomorrow.
Alphabet
shares the
ahead of
earnings.
They are up
now by
1.2%.
Microsoft ahead of
earnings
after
the
bell down
now by
about
5
tenths of
1%.
Percent. Amazon
Meanwhile, is
pushing higher by
About faith. Scoop on this. You've been reporting about an
activist investor coming up and
trying to shake things up. What's the latest?
We've been hearing that there was going to be an activist at some
point. The question was: who? There is a convergence of
Technology and national security. United States is a
bad.
Fixed right now with the
S&P up 5 to
77
up
1/10 of 1%
percent. Dow
Industrials up today by 1%
1
tenth of 1
percent.
NASDAQ
composite
index
right
now down
24. That is a
drop of
just
about
one
of
one
1%.
I'm Charlie
Pellett. That is a
Bloomberg Business
Flash.
This is
Bloomberg Business Week Day.
Daily.
Reporting
from the
magazine
that
helps
global
leaders stay
ahead.
With
insight on the
People, companies, and the
and trends
shaping
today's
complex
Economy.
Plus,
global
business,
finance,
and
tech
news as it
happens.
Bloomberg
Business
Week
Daily
with
Carol
Massar
and
Tim
Stenevik
live
on
Bloomberg
Radio.
Television and
Bloomberg
Originals.
And a very good
afternoon.
Everybody. Yes, and
Indeed.
Welcome
to
Bloomberg Business
Week,
Daily. Carol
Masser,
Tim Stenovek. We
are not
In
New
York
City.
No, but
we
are in New
Boston,
Massachusetts. It is Schwab Impact
2026. We've
Been coming to this event for
years.
We're in
We're Philadelphia. We were
in San
Francisco. We were
in Denver. We
Were, and now we
are
in Boston in
2026.
We are. It is the
36th impact
Gathering. It's all about
the RIA
registered investment
advisors, the
community.
The support for that
community.
And I have to
say, I was thinking
about, you
know, last
year, we were
talking
about
different
Things.
There is a
lot to talk
get
and catch up with from the
Schwab
Team. I feel like whether it's AI,
whether
it's geopolitical.
Concerns, we've
got
elections just
Around the
corner, so there's a
lot to get to.
Yeah, the three days
that
at
this
event,
it's
just
packed
with
activities and
with
events.
More than
6,000
people
here.
We're going
to
be
covering it
all.
And a big part of
that backdrop
Carol, is
not
just
what we
heard
from
the
Fed
Chairman in
the
inflationary
environment, but
also what
he
said about
technology.
Especially
When
it comes to the
AI.
And that
being
a lot of
layer
of technology in
the
economy.
Pulling it all
in, was the
seventh
FOMC
meeting of the
year, and that's what's
really
fascinating. The fourth for the
New
Fed chair
relatively
still
new,
Kevin
Warsh.
And what's interesting, and I
Think
We're
What caught everybody's
Attention is that I'm going to be able to
Is
Yes, the
Fed
Left
An
Interest rates unchanged.
They reiterated
their
commitment to containing
inflation. That is
still
a
problem.
but without offering a
clear
signal that they might
raise
rates at their
next meeting in
December. That will be their last
meeting of
2026.
Two dissents,
Muted market
reaction,
initially. I gotta
say,
what caught everyone's
attention, it caught
us. It was a
Red
headline on the
Bloomberg.
Fed Chair Kevin
Warsh
on
the
Actual
meetings
themselves.
We've
decided on
a
change in
our
FOMC.
Schedule
starting next
Next fall, we believe 8
meetings per
Year is the right
number
for the
FOMC.
But
in
2021
one
meeting will be a very important
focus on the
exclusively on the
on
Broad
monetary
policy
strategy.
With
neither
a vote on
The
federal
funds
rate
nor
a
policy
statement.
anticipated. The
Rest
will
be
regular.
FOMC
policy-setting
meetings.
And I expect
that in
2020
we have to be able to do
2
meetings dedicated to
discussions of
strategy and
Six for
setting
policy.
All
Right, that of course fits.
Chair
Kevin Warsh at
today's press
conference
on
to
the next
decision, which is December.
9th.
But I gotta say
It's a new
era. It's a new era, and I
think that not a
Entirely coming as
a
surprise
given
what the Fed chair
has said over
the last
few
months
about the ways that
He thought the Fed
has
been
over-communicating. I'm
I'm not shocked. I'm
Actually shocked that it's not
more
than one fewer
meetings. It was a
shorter press
Conference.
Today, one question.
Question.
Is.
That we have to do it.
So people who usually are called on were not called on?
Yeah, we are definitely
living in
a different
environment.
Um, which is
why
we want to get a lot of
going
with
the
Conversations
here at
Schwab
Impact
2026.
And it's great to be
kicking
off
our
coverage with some of the other
things that we
talked
to
just
about a year
ago.
Omar
Aguilar. He's CEO of the CEO of the CEO
and
CIO
of
Schwab
Asset Management.
It is
good to be able
kicking
off
with
you.
First of
all, I guess I have to do
start with the next
Fed
decision.
How
important
was
It
That, you
know,
we're
not getting a lot
of
clarity
about what
comes
next. We might
have
fewer
meetings
where
There's
actually
interest
rate
decisions
or
decisions
that come
out. How are you
thinking about
This
New
Fed in
today's
environment?
Yes, well, first of
all,
welcome again to
Impact.
It's always great to have
you
guys, and
you
the energy
around
here
is
it cannot be the same without
you.
Guys, it's great. Thank
you.
Well, the
decision
uh was
not
a
surprise.
I think
What we look
at
it
There's two
dissent.
That's
obviously provides a
Little
bit
of insight of
what's going
on in the
discussions
there. And
Then the idea
that
they're going to be
committed to the
look at
inflation.
It only takes a lot of
tells us they're looking
at a lot
of
data.
And what that for
us means,
yes, they will
likely
Make a decision
in
December to
rate
hikes, it will be
very hard
unless they see
a
dramatic change
in
Inflation
data
for
from now
until
then that they
will
not make
a
move in
December.
The
communication
process
is
definitely
different.
I
Think
Uh,
it
is
clearly some of the things that we
is not a very important
something
that
the challenge
chairman
has
made
a
Conscious
decision
to
keep
this
a
little
more
vague
and
then
let
everybody
Else try to do
interpret
what they're
trying to
to
do.
I
think in
The
spirit
of what the Federal Reserve
is trying to
do,
philosophically, I
think, if
We
believe
that you
know
we'll continue
to
look
at
data as
being the
main
driver for
the
Decision
process.
You know, that really
doesn't
change
other
than the
communication
process.
But you know, if we believe
That
The
mandates
are
still the same, and
we believe that the
There are
still going
to
continue
to
Track
them, then.
I think the process
and
you
can
see the market
reaction
on
the
futures, you know,
clearly.
spiked up by
Sandy
December is probably
a
done
deal.
Let's
get
to
We'll get to December
Now and
then I want to
talk
more
about
communication.
Why wait until
December? Why not raise
Rates at this
meeting?
If inflation's a problem, right? Why not do it?
Yeah, it's
And I think that's a good
question.
I think if you look
at the
Data that's a
We
That got on
CPI and
PPI, and you look at
Your
How you
Know
a lot of
the
current inflation
is
really driven
by
energy.
And a
lot
of
the other
components
that
go into
the
inflation, whether
it's
wage
growth,
whether
it's
supply
chains, whether it's a
All
those
they're
just the
started
to
just
play
a
role.
I
think
that
decision
to
just
wait
for a couple of
more
months
is
probably
Not
as a
bad
decision
given
that you
it's
not
very clear to
me how
much
is just
oil.
Prices
being too
high.
Other
than
there is really
a
sustainable
thing that
is
going to
be hard
to
break.
Now, again, in the
past,
depending
on
the
The
Fed, you
know,
they
have
been
preemptively trying
to
just
not that
get out
of
hand.
This Fed seems to be a
little
more
patient, which,
again
is
a
double
edge
short
I could
It actually mean
that you know if they are
could be late, that that's
always
a
problem but
also at the same
Time, could
it be that they are
not
overreacting to
just
one
particular set
of
points.
You know, I always think about
When we get to catch
up
with
somebody, and
if there's a year or
12
months, a lot has
happened.
In particular, we've got
wars, but we're
also, I
think,
increasingly
Questioning
the AI
spend and
the impact of the
What's the smart narrative for
you?
Investment
thesis-wise?
Like about AI?
Which is a big topic
here.
It is a big topic, and you
know, I walk
around, and a lot of
RIAs, you know, keep on asking
About what is our
view
on AI
and
the
future of AI?
It.
Well, I think
we
got
to a
point
now
where
we
are
Seeing
deceleration
of
capital
expenditure.
So what that is, what that
is, what that
means
is
we
saw
a
Significant
boom
of
capex that
got
us
to
where
we
are
today.
And a lot of
that
has
come
primarily
from
these
Hyperscalers.
Now, the
ability
to
hyperscalers
to
basically
provide
that
boost
into
capex
for AI.
has
actually
Been
the
driver of a
lot
of you
performance
on
those
stocks that
are
driven
on
AI.
Mostly
semiconductors and the
areas
around
it.
Now, when you
see that,
diesel.
That doesn't
necessarily mean they're
going
to stop
their
capital
expenditures.
But
that
actually means
they're going
to
Be
more
selective of where they
go in terms
of AI.
in the
It's so smart.
Smart is
probably
a good
word to say
it.
On the other
hand, when you look at the
other
part
of it,
it, which is the advantage of
adoption of AI.
which is in my
mind probably the
phase
that has
been
More
or
less. You
know, talk
talked
about is how
many of you
the rest of
the industries
are starting
to adopt
and
invest in
that. And to
me, you
know, the
biggest, you
know
challenge that we
face
is that a lot of
the
rest
of the
industries
that are starting
adopting AI,
they're using the dead
market to try to
use
CapEx, and that's a little
more
dangerous. You know, it's different than it's
not just
companies that are, you
know.
not
the
hyperscalers.
Like you have
hyperscalers
that are
doing
this
now
that
you in
a
million
years
you
wouldn't
have
Thought
this would
be a
company
that would
be
have
negative
cash
flows.
Right,
exactly. And I think that's
The
key
piece.
If you— again, if you have somebody that has
a— you
know
significant
strength in
the
balance sheet.
And their
They
Borrow you
Would
Think that
They're
doing a good
thing,
right?
Instead of a way
They're
using
their
capital
and
Efficiently.
But you have a
company
that
doesn't
necessarily have to be able
that
cash
flow
or
it
doesn't even
have
that
strength to balance sheet.
and they're
using the dead
debt
market
To
invest
in
AI.
That's where we
we're starting to
see
challenges in
the credit.
Market.
And I think that's to
me,
going into
next
year, the biggest
part
of
what
we
have to
look
At.
Challenge or actual
bubble. And we're going to
see
some
implications of a
bubble
bursting.
And we may see some
cracks
in the credit
market as we
go
there.
We believe that that's
Obviously, also a pretty normal
part
of a
cycle where we
need to see
some, you
credit
events
for us to start
realizing that
you know cycle is starting
to
go
differently. With a spending boom like
This, does there have to be a
bust?
It doesn't have to, but it,
there will be volatility.
And there will
Be, you
winners and
losers. There will be, there
will be that kind
of
dispersion
that
will
exist.
What do you think is the biggest
risk, right
now?
And looking at the notes that you
shared, your team
shared with
us.
Midterms.
U.S. war with Iran.
Higher
energy
prices,
still put in the
persistent
Inflation, AI
meeting
that
high
higher rate
environment that we
we've
just been talking
about.
Cap expectations.
Spending
coming down.
Earnings
expectations.
And the
comparisons
that's
getting to the
in
and
Tougher.
What
is
the
biggest
risk you
think to
the
investing
environment right
now?
Well, I think for
us
it's basically a lot of the things that we
Looking
at
you
know,
the
profitability of the
AI
investing.
And I think that
is going to
Come
a
place
where it's going to be a very important
you
know,
you
can
spend
as
much you
want,
but at the
end
of
It
These
This has to
be some
return
I
on
investments that
we'll
need
to
show
on
earnings. Because if you
look
at
it, the
earnings
growth compared
component that we
have
seen over the
last few
years has
been
in a
way, you
fueled by
these AI
but at some
point, it
just
gets
to
an
area that that
doesn't
exist
anymore. And I think to
me, you
know, once you get to
that
point,
you
know, we still believe that
Earnings expectations
are way too high going
into next
year. So I think that at some
point
they
That
The potential
disappointing
on earnings
growth
It's
It's
latent. But don't you think
That, and this is the
whole
argument for productivity?
Don't you think
that the
companies that
are not necessarily the
picks and
shovels or the
hyperscalers when it comes to the
this
technology.
Maybe.
In the next
couple of
years, the
biggest
beneficiaries on an earnings
basis of the
technology? Well, I
think
the assumption there
is
that productivity.
Will
you
know,
get
into
areas
of
potential
cost
savings.
And it's not
very
clear to
me
that we
have
seen
any
instances
or
any
evidence
that
is the
case.
Just
And I
think the
in certain
way the
labor
market keeps
us
a lot
of
information.
There is no firing, there is
no
Hiring,
and a
lot of the marketing is
that
people
are
expecting that
productivity.
will
have
some
impact in labor
market. It hasn't
had
happened.
You're not convinced.
We're not
convinced
yet. You're
not
convinced that this
will
lead
to higher
Productivity?
Dawson
is a
s no no
No,
changes in
be a lot of
or cost
savings.
You know, I think what may
happen
is that
the
changes
in
productivity
will try
translate
in potential
acceleration of other
parts of the
their
business.
But doesn't
necessarily
mean that people
are going
to
get
fired
because
their
productivity
gains.
20
Seconds, is it an
easier environment this
year versus last
year?
In terms of
Investing?
Yeah, for the RIAs that are here.
Here.
Oh, these are their clients.
Clients.
Well, this is
We're challenging
Market this
year, you know, and especially
going into next year
for
the reasons that, you
know, mentioned
Between geopolitical
risk,
inflation, higher
yields
on bonds that we didn't get
To talk
about.
You know, interest
rates, you
know,
in a different
cycle.
Earnings expectations.
that need to be
come down.
deceleration
of
capex.
I can
go
on and
but
there's
Is a
long
list
of
you
what we
call the
wall
of
worries
getting
taller and
taller, so we didn't
talk
about fixed
Income.
So just come back and
visit with
us.
And we'll be able to do it.
We will have to.
Omar, thank you so
much. Thanks for inviting
us
in
again this
year. We really appreciate
it. Omar,
Aguilar,
CEO
and
CIO
of
Schwab
Asset
Management.
Mate, coming up
AI.
Certainty
a big topic
here
at Wall
Street and
at
Schwab
Impact.
Just last night, the company
announcing
an
investment.
Yes.
expanding its AI.
capabilities for
financial
advisors.
We are going to get the details on that right after we're going to this.
details on that
right after we're going to this.
this.
First up, though, we're setting it back to the Bloomberg.
