Jeremy Hobson: In just a few hours, everyone on Wall Street will be looking at the Federal Reserve. The central bank will be wrapping up its latest meeting with a statement that may or may not announce new efforts to stimulate the economy. Josh Brown of Fusion Analytics joins us with his take as he does every Wednesday. Good morning, Josh.
Josh Brown: Good morning.
Hobson: Do you think the Fed should do something?
Brown: It’s tough to say. I think if they are going to do something, it’s better to do it now rather than do it close to the election and run the risk that they look like they’re doing something political. But the data is mixed and the Fed does not like to act without some kind of clarity. So for example, we have somewhat strength in housing, but manufacturing has grown more fragile. And there are all types of contradictions like that throughout all the things the Fed looks at.
Hobson: As the Fed has acted over the last few years, what has the effect been? Can they look at the past performance and say, ‘It’s worth it for us to do something, we’ll get these results.’
Brown: That’s the thing. It went from, ‘We’re going to create jobs’ to ‘Look how many jobs we saved.’ And saving jobs, while admirable, is not what the Fed’s mandate is. The Fed’s got to do a mandate of price stability and supporting the jobs market so that it can grow. It’s very hard to draw a line between buying bonds from banks and somehow saying that that’s adding jobs. All it’s really doing is pushing up the assets that basically the top 10 percent of America owns and making it easier for the government to borrow and for investment-grade blue chip companies to borrow, like IBM. This is not leading to any jobs growth because the companies that borrow at these cheap rates are hoarding, they’re not hiring.
Hobson: What do you think the Fed’s going to do, Josh? Any idea?
Brown: I wouldn’t be surprised to see them do nothing, but that’s a total guess. I’ll be honest, I know people that are watching the Fed for 30 years and even they have no idea. And they’re pretty open about it. Only the FOMC really knows and I wouldn’t be surprised if it’s a relatively recent decision, meaning over the last week or two. I really believe there’s that much debate within the Fed just based on their outward statements, so I guess we’ll see.
Hobson: Josh Brown at Fusion Analytics, thanks as always.
Brown: Thank you.
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