Tuesday: We Bet Cuts—Now the Fed's About to Answer

Rush LindellOh, it is Judgment Night, people. Judgment Night.

ReaganDramatic much?

Rush LindellI earn dramatic months, Reagan, months. We've been on this show calling a rate cut, and tomorrow the FOMC actually votes.

ReaganTomorrow.

Rush LindellTomorrow. Which means tonight, right now, is the last chance to go on record before reality shows up and grades our homework.

ReaganAll right.

Rush LindellNot pressure at all. This is The Rush Lindell Show. I'm Rush Lindell.

ReaganAnd I'm Reagan, the one who fact checks him.

Rush LindellBrought to you tonight, as always, by Lear Capital, because if this whole rate call goes sideways, at least somebody's gold is safe.

ReaganSubtle.

Rush LindellI'm never subtle. That's the brand.

ReaganFair.

Rush LindellHere's the thing that keeps me up at night.

ReaganWait.

Rush LindellWhat if we're wrong?

ReaganWhat if you're wrong?

Rush LindellBetrayal already.

ReaganI'm just saying, there's a version of tomorrow where this whole thesis we built doesn't survive contact.

Rush LindellAnd there's a version where we look like geniuses.

ReaganThere is.

Rush LindellAnd that's the tension I actually like. Genius or bust, no in between.

ReaganWelcome to the actual stakes then.

Rush LindellGenius or bust. I'll take those odds any night of the week.

ReaganYou say that now. Ask me again after tomorrow's vote.

Rush LindellSo before the Fed answers back, let's put the actual thesis on the table, exactly what we called and why. Okay, so tomorrow the Fed either hikes or it doesn't, and either way, we own it.

ReaganWe do. So let's say plainly what we're actually being graded on.

Rush LindellMonths of this show saying cuts. That's the call. That's what's on the table tomorrow.

ReaganRight. And tomorrow's the 16th. The decision lands the day after we record this, which means we're talking into a void right now.

Rush LindellA void I'm comfortable in, Reagan, because I've been right before.

ReaganHave you, though?

Rush LindellDon't do that to me an hour before the vote.

ReaganI'm just saying, before you take a victory lap, let's put the actual outcomes on the table.

Rush LindellFine. Fine. There are two doors tomorrow. Door one, they hike to 3.75 to 4.00%.

ReaganAnd door two?

Rush LindellA hold. A surprise hold. No move at all.

ReaganTwo outcomes, and only one of them was ever our prediction.

Rush LindellOur prediction was cuts. Neither door on the table Tomorrow is a cut.

ReaganWait, say that again.

Rush LindellHike or hold. Nobodys talking about a cut anymore. Thats the trial were on.

ReaganSo before you declare anything, walk me through why it shifted, not just that it did.

Rush LindellThats next. But you have to sit with it first. The range we bet on isnt even one of the two doors left.

ReaganWhich is exactly why I dont want a victory lap or a funeral yet. Show me the evidence.

Rush LindellYoull get it.

ReaganGood.

Rush LindellMortgages, credit cards, groceries, all of it rides on which door opens, and we still don't know.

ReaganWe don't. But we know how we got here, and that's the part that actually explains the flip.

Rush LindellAnd knowing how we got here means the flip isn't random. It's traceable step by step.

ReaganExactly. Which is why we walk the timeline instead of just the scoreboard.

Rush LindellFair enough. I just don't want us dodging our own scoreboard once it's inconvenient.

ReaganNobody's dodging. That's literally why we're doing this segment out loud instead of in our heads.

Rush LindellAlright. Alright. Let's switch gears. How does the meeting itself actually work tomorrow?

ReaganThe mechanics. Yes. Let's go there.

Rush LindellOkay, mechanics. The actual meeting isn't some one-hour Zoom call, Reagan. It's two days.

ReaganSeptember 15th and 16th. The vote itself, the statement, all of it lands on the 16th.

Rush LindellWhich is tomorrow.

ReaganWhich is tomorrow.

Rush LindellTomorrow. You hear that ticking? That's not my heart. That's the Fed clock.

ReaganIt's a committee meeting, not a bomb.

Rush LindellEvery committee meeting is a bomb if you own a mortgage.

ReaganFair.

Rush LindellSo what actually happens on day one, day 15?

ReaganMostly staff briefings, economic projections getting finalized. The real fireworks are day two.

Rush LindellRight. Nobody's live blogging a PowerPoint about labor participation rates.

ReaganExcept Kiplinger kind of is. Their team's been running rolling live coverage all week, treating this as the single biggest economic event on the calendar.

Rush LindellWait, an actual live blog, like a sports ticker, but for interest rates?

ReaganExactly that. Refresh, refresh, refresh. Waiting on what Warsh and company decide.

Rush LindellSee, that tells you everything about where the country's head is right now. Nobody's live blogging the infrastructure bill.

ReaganNo.

Rush LindellThey're live blogging whether their car payment goes up.

ReaganThat's the appetite. Yeah.

Rush LindellIt also means cable news finally has a chart more exciting than a poll.

ReaganBarely, but sure.

Rush LindellI love it, and I hate it. Mostly I love it 'cause it means people are paying attention for once.

ReaganOr it means people are scared.

Rush LindellSame thing, different lighting.

ReaganFine.

Rush LindellEither way, it beats people tuning out entirely until their statement arrives in the mail.

ReaganThat's true. Better scared and informed than blindsided next month.

Rush LindellSo tomorrow, the 16th, 2:00-ish statement drops, and we finally know.

ReaganWe know the vote. We don't know yet how it plays with mortgages and credit cards. That's a slower burn.

Rush LindellSure. But the headline number, we get that in real time.

ReaganWe do.

Rush LindellBut wait, before we get to tomorrow, we've got unfinished business tonight.

ReaganThe tell.

Rush LindellThe tell. The thing that got this whole grading exercise started in the first place.

ReaganJackson Hole.

Rush LindellOh, we are going there. Warsh, the podium, the moment everybody in this business replayed 40 times.

ReaganLet's get into what he actually said because it's not as clean as people think.

Rush LindellNothing about this man is clean, Reagan. That's the whole fun of it. August 28th, Jackson Hole. Warsh walks up to that podium and just guts the whole cut thesis in real time.

ReaganGuts might be strong. What did he actually say?

Rush LindellHe said, "You can't call financial conditions restrictive," straight out.

ReaganWait. Restrictive is the whole ballgame. If money's not tight, why would you cut?

Rush LindellExactly. And then he doubles down. Inflation doesn't automatically mean reverting. His words.

ReaganMeaning it doesn't just wander back to target on its own.

Rush LindellMeaning somebody's gotta force it back, and he's volunteering.

ReaganGreat.

Rush LindellCNBC's analysis of the speech called it more hawkish than his July press conference. Not a little more. Noticeably more.

ReaganThat's a real shift, not just a mood swing.

Rush LindellAnd CNBC also flagged the political piece. This puts him directly at odds with Trump, who's been pushing for lower rates the whole time.

ReaganSo the chairman picks Jackson Hole in front of every camera that matters to tell his own boss no.

Rush LindellThe nerve.

ReaganIt's not nerve. It's a signal. He's laying down a marker before the vote.

Rush LindellA marker written in all caps.

ReaganSure. But words at a podium aren't a vote. Talk is cheap.

Rush LindellTalk moves markets, Reagan.

ReaganSometimes. Depends who's listening.

Rush LindellTraders listen to every syllable a Fed chair says, whether they admit it or not.

ReaganSure. But syllables aren't votes. I wanna see it move something real before I call it decisive.

Rush LindellOh, people were listening. Trust me.

ReaganHow do you know?

Rush LindellBecause the second he stopped talking, the odds boards lit up like a pinball machine.

ReaganWait, wait. What actually happened to the odds?

Rush LindellAnd then, get this. Watch what that tell did to the actual betting odds. Okay, so after that speech, the odds market didn't just twitch, it convulsed.

ReaganNumbers. Rush.

Rush LindellLate July, hike odds sitting at 54%. Basically a toss-up leaning hike.

ReaganRight.

Rush LindellThen mid-August hits, and it craters. Twenty-six to 31%.

ReaganWait. It dropped that far?

Rush LindellAlmost half. Traders were pricing in a cut again like nothing happened.

ReaganAnd then Warsh opens his mouth at Jackson Hole.

Rush LindellBoom. Early September odds rocket back up over 58% for a hike.

ReaganFrom 30 to 58, that's not a trend. That's a seizure.

Rush LindellI love that for us.

ReaganYou would.

Rush LindellThis is per the tracking over at goldsilver.com. They laid the whole swing out, Fifty-four to Twenty-six to Fifty-eight, in about six weeks.

ReaganSix weeks to go from confident cut to confident hike and back.

Rush LindellGive or take.

ReaganAnd where did it land before the actual numbers?

Rush LindellFifty-fifty. Dead even.

ReaganSo anybody, and I mean anybody, us included, who stood up in August and said they had this thing locked was kidding themselves.

Rush LindellHarsh.

ReaganI'm not being Harsh for sport. This whole SEGMENT exists because we said we'd Hold ourselves to the same standard we'd Hold anyone else to.

Rush LindellFine. Hold away.

ReaganAccurate then. If a number moves Thirty points twice in a single month, Nobody had this Locked. Not us, not the hawks, not the doves.

Rush LindellNobody.

ReaganNobody. Fifty-fifty isn't a prediction, Rush. It's an admission that you genuinely don't know which way it breaks.

Rush LindellCool. Love admitting things on the radio.

ReaganGet used to it. That's the whole reason we're grading ourselves honestly tonight instead of pretending we had a crystal ball back in August.

Rush LindellOkay, fair. I'll take that hit. But, and I wanna flag this before we move on, a coin flip is a snapshot, not a verdict. Markets don't sit still just because we like the number.

ReaganNo, they don't.

Rush LindellAnd this one didn't sit still for long. The fifty-fifty didn't hold. Something happened right after that flipped it hard, and I mean hard.

ReaganHard like the goalposts moved overnight, not just shifted a little?

Rush LindellHard like that, yes. Overnight, basically.

ReaganGive me a hint at least.

Rush LindellNope. Not even a syllable.

ReaganCome on, Rush. Just give me one number to chew on.

Rush LindellNot a chance. You'll want the full picture, numbers and all, not a hint. Oh, you're gonna wanna sit down for this one. Okay, sitting down?

ReaganMotley Fool published this on September 10th. Hike odds on CME FedWatch were at 44.4% back on August 7th.

Rush LindellThat's basically a coin flip already. We covered that.

ReaganRight. But by September 8th, that number is 60.6%.

Rush LindellSixteen points in a month.

ReaganAnd it doesn't stop there. Year-end hike odds are above 85%.

Rush LindellEighty-five. That's not a lean anymore, Reagan. That's a stampede.

ReaganThe article ties it to AQI debt costs. If you're wondering why the market's suddenly nervous about holding rates down.

Rush LindellWait, wait. Walk that back for one second. We're not talking about some fringe blog here.

ReaganNo. Motley Fool citing CME FedWatch data directly.

Rush LindellSo the professionals moved, not the message board crowd.

ReaganThat's the part that actually matters, Rush. Message boards guessing wrong costs nothing. Big desks moving real money wrong costs them actual dollars.

Rush LindellSo when the money and the mood finally agree, that's usually a signal nobody gets to argue with.

ReaganIt's not proof of what happens tomorrow, but it tells you which way the room leans tonight.

Rush LindellWhich is exactly why I can't just wave it off as noise anymore.

ReaganAnd it gets worse for the cut thesis. There's a preview that ran one day before the meeting.

Rush LindellOne day.

ReaganCME FedWatch is showing an 86 to 90% probability of a hike to 4% even.

Rush Lindell90%. That's a house winning at the blackjack table every single hand.

ReaganThere's a reason. September 11th, an inflation report landed.

Rush LindellAnd landed.

ReaganAnnual CPI came in at 3.4%.

Rush Lindell3.4.

ReaganThat's not a number that lets a hawk like Warsh sit still.

Rush LindellNo kidding. 3.4% means grocery prices are still climbing faster than anybody's paycheck.

ReaganWhich is exactly why the market stopped hedging and started pricing in the outcome.

Rush LindellHedging turns into conviction fast when the number stops moving.

ReaganThat's exactly the shift we're watching happen in real time.

Rush LindellI have to be honest with you, listener. I built a chunk of this show on the idea that this goes the other way.

ReaganYou did.

Rush LindellAnd right now, the professionals with actual money on the line are saying I was wrong.

ReaganNot wrong yet. The vote hasn't happened.

Rush LindellFair. But 90% isn't exactly a nail-biter.

ReaganNo, it isn't.

Rush LindellGreat. Love that for me.

ReaganYou'll survive.

Rush LindellI will, because, oh, you're gonna love this part. This isn't just a number on a screen for us to argue about.

ReaganNo.

Rush LindellThis is what happens to your car payment, your credit card, your grocery bill.

ReaganThat's where we're headed next.

Rush LindellBuckle up. So forget the odds for a second. Forget the dot plot. What does a hike to 4% actually do to somebody's mortgage?

ReaganIt's not abstract anymore. Adjustable-rate folks feel it in the next statement cycle.

Rush LindellCredit cards too.

ReaganEspecially credit cards. Those rates float with the benchmark almost immediately.

Rush LindellAnd gas and groceries?

ReaganDifferent mechanism, but the same wallet. Higher borrowing costs squeeze small businesses, and that gets passed to the register.

Rush LindellGive me a real number, though. What's the actual gap between a hold and a hike on, say, a car loan?

ReaganIt's not huge on a single loan, but it compounds. A few tenths of a point on an auto loan or a revolving credit balance adds up over a year, and it lands on families who are already stretched.

Rush LindellAnd it's not evenly spread. Somebody with a fat savings account barely notices a rate move. Somebody living paycheck to paycheck notices every single point.

ReaganThat's the actual stakes underneath all the odds talk we just walked through. It's not abstract for the people paying the bill.

Rush LindellAnd that's before we even get to what happens at the pump.

ReaganWhich somehow always seems to spike right on schedule.

Rush LindellSo whichever way Warsh's committee breaks tomorrow, somebody's paying for it at the pump and the checkout line.

ReaganRight before the midterms, which is not a coincidence anyone in Washington enjoys. They do-

Rush LindellOh, they hate? You know what else I hate? Watching silver sit on a shelf instead of in somebody's hand.

ReaganHere we go.

Rush LindellNo, I mean it. My friends at Lear Capital are doing something I've genuinely never seen before.

ReaganWhat's that?

Rush LindellThey're selling a one oz silver American Eagle below spot price, below what silver is actually trading for right now.

ReaganBelow spot?

Rush LindellBelow spot. And Lear is covering the shipping and the taxes.

ReaganWalk me through why that's rare, because I don't think people register it.

Rush LindellSpot price doesn't even include what it costs to mint the coin, ship it, or cover dealer overhead. Buying at spot is already a good deal.

ReaganAnd buying below spot...

Rush LindellAlmost never happens. This isn't some obscure bullion piece either. The Silver American Eagle is one of the most recognizable, most sought-after coins in the world.

ReaganBacked by the government?

Rush LindellBacked by the US government for weight and purity. One ounce of .999 fine silver, IRA-eligible, something you can actually hold, whatever happens with rates tomorrow.

ReaganThere's a limit, right?

Rush LindellOne per person. New customers only. Free shipping, fully insured, and this is a 24-hour offer only.

Reagan24 hours.

Rush LindellGo to www.rushcoinoffer.com right now. The URL goes dark after that. When it's gone, it's gone.

Reaganwww.rushcoinoffer.com. That's it. Okay, so back to tomorrow.

Rush LindellBack to tomorrow.

ReaganBecause there's a version of this where we nailed the tell and the market moved our way.

Rush LindellAnd there's a version where we got it wrong for months.

ReaganRight.

Rush LindellNow, the other thing is, what happens to this show if the call was wrong? So here we are. Tonight's the last word before the actual word.

ReaganTomorrow at this time, we'll know.

Rush LindellWe go on record before the record exists. That's the deal.

ReaganThat's always been the deal, Rush.

Rush LindellRight. But I wanna say it plain. For anyone just tuning in, whatever gets decided tomorrow, it happens after we stop talking tonight.

ReaganWhich means every opinion in this episode is a bet placed blind.

Rush LindellI love that. Terrifying, but I love it.

ReaganYou would.

Rush LindellSo let's make it official. Reagan, you and me right now, we come back and grade this publicly. No quiet pivot. No, "Well, what I actually meant was."

ReaganNo moving the goalposts.

Rush LindellAnd I called it wrong. I say it on air, full name, full blame.

ReaganRush Limbaugh, wrong about the Fed.

Rush LindellDon't rehearse it. It's bad luck.

ReaganI'm serious about the accountability part, though. A lot of shows just stop mentioning a prediction once it's dead.

Rush LindellWe're not built like that.

ReaganWe shouldn't be. If the thesis was wrong, the audience deserves to hear us say it was wrong, not watch us quietly talk about something else.

Rush LindellAnd if it was right?

ReaganThen we say that too, and we don't pretend we knew it the whole time.

Rush LindellSpeak for yourself.

ReaganRush.

Rush LindellKidding. Mostly.

ReaganThe point stands either way. This segment only means something if we actually show up tomorrow and put a number next to our own name.

Rush LindellAnd if we chicken out and don't show up, call us out publicly, listener.

ReaganThey will. That's sort of the whole point of saying it out loud tonight.

Rush LindellSo that's the promise. Not a vague, "We'll follow up sometime," a specific one.

ReaganTomorrow on this show, we compare what we said tonight to what the Fed actually did.

Rush LindellWin, lose, or somewhere weird in between.

ReaganThere's no weird in between with a rate decision. It's a number.

Rush LindellFine. Win or lose. Happy?

ReaganGetting there.

Rush LindellWhat would actually get you all the way there? A written scoreboard? A phone call? What?

ReaganHonestly, just you saying the number out loud tomorrow, plainly, no hedging. That's the whole bar.

Rush LindellAll right. That's the accountability locked in. Now let's turn the page and close this thing out properly.

Reagan'Cause there's one more promise to make before we let people go tonight.

Rush LindellYeah. Let's get everybody set up for what happens when we're back tomorrow. All right. Before we go, remember when we told you to circle September 16th on your calendar?

ReaganYou said it like it was a holiday.

Rush LindellIt basically is now. Rate Watch Christmas.

ReaganPlease don't make that a bit.

Rush LindellToo late. It's already a bit. Point is, tomorrow, that circle gets filled in. Real number, real vote, no more coin flips.

ReaganAnd we said it. Win, lose, or somewhere weird in between, we own it on air.

Rush LindellNo ducking it, no quietly deleting the tweet.

ReaganWe don't even have a tweet to delete.

Rush LindellDetails?

ReaganSeriously, though, no matter which way it breaks, we're not hiding behind, "Well, technically."

Rush LindellGood point, because technically is where every bad prediction goes to retire, and I'm not going there.

ReaganHere's what I'll say straight. Being right matters less than being honest about being wrong. If Warsh and that hawkish tone carry the day, we say so plainly tomorrow.

Rush LindellNo spin.

ReaganNo spin. That's the whole deal with this show, and it doesn't change based on what the dot plot says.

Rush LindellThat's the whole show in one sentence, honestly.

ReaganPretty much. Now go set your alarm for tomorrow's number.

Rush LindellAll right. Hit Subscribe, leave us five stars, and tell a friend to circle tomorrow with us.

ReaganSee you when the number's real.