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What do you think the market ultimately needs here in order to keep this momentum to the upside? Because here we are today, not too much movement but right around those record highs. Is it more than just further conviction within this AI trade?

I think it is. The market has already priced in the very high likelihood of an interest rate cut coming after the September meeting. It's not going to be a 50 basis point cut in my opinion. I think it'll just be a 25 basis point cut.

So boring, Kevin. I don't want this, how else going to jump off with that degree. Why 25?

I think they don't want to go beyond what they've already clearly communicated all the way back in March when they were suggesting at that time, three rate cuts of 25 basis points each. We still have three meetings left. I think we still get those three rate cuts of 25 basis points each and they'll take a very gradual pace from that point forward until the fed funds target rate gets back to 3%.

Kevin, should investors be looking at bad news as bad news for bad news for the economy, bad news for the market? Good news for the economy, good news for the market. I bring that up because of that 25 versus 50 basis point cut debate that's happening right now. Many are pushing, or some investors are really pushing for a 50 basis point cut, but we've heard so many people say you just got to be careful though for what you're wishing for.

Without a doubt. And it depends on how bad the bad news is. I think the Federal Reserve was very alarmed when they saw the unemployment rate hit 4.3%. Remember they were forecasting unemployment rates to end this year at 4%. We also saw first quarter GDP come in at just 1.3%. If I look at GDP now right now, the tracker, it's around 2% below Fed expectations. I think they're more concerned with this economic slowdown turning into a potential recession than they are with inflation staying about 2%.

Kevin, give me your You've been watching markets a long time. Give me your grade on on Jay Powell because we've had some very smart economists and strategists come on and say, you know what, the Fed is behind the curve here. The economy's slowing, they don't like what they see with the unemployment rate. What What do you think?

I would give him a B, B+ right now. What we have to remember though that That's a high school average.

That's not bad.

I'm sure you were at least A. Uh You have to remember the Fed is data dependent. So by definition, they're always going to be late to the party. And the Fed is trying to cure a problem that they didn't necessarily create. And I think back to the 1970s. Yes, I'm old enough to remember that point in time when Arthur Burns actually started cutting interest rates prior to inflation getting back to their 2% target. What happened back then? Inflation came roaring back, hit double digit levels. Paul Volcker stepped in, raised the fed funds target rate to 20%. We think 5 and a quarter percent is restrictive. Can you imagine 20%? That killed inflation, but it also brought on a recession. That's what Chair Powell is trying to navigate right now. And it's not an easy job. I wish he would have cut at the last meeting. I think that would have been the appropriate time to start the rate cutting campaign, but he didn't. And he didn't ask for my vote, so perhaps. Well, you never know. You know, maybe maybe you are just one phone call away after all.

Kevin, let's talk about what is already priced into the market because I think that is another big question here for investors. When it comes to those rate cuts that we are expecting, has that fully been priced in or to what extent?

I believe certainly a cut in September has been priced in. I believe 75 basis points in rate cuts has been priced in. I don't think 100 basis points in cuts this year has been priced in. But I look much longer term. As I said before, I don't have a crystal ball, I don't have a vote on the FOMC, but if I look at what they're telling us and their dot plot charts, rates should be much lower, at least on the short into the curve, over the next two years. If that holds true, rates are lower, yields are lower, inflation continues to moderate, that should be good for stocks, that should be good for bonds, and that's how investors should be positioning their portfolios now for what's likely to take place over the next two years.

You can't leave without talking politics.

Oh boy.

I know you're excited too. Let me ask you this, do you look at the market Can you look at the markets and think, you know what, they're signaling or suggesting in some way who wins in November?

To a degree, right? Certain sectors of the market will benefit from one party over another. But I believe based upon all the data that I see right now that in all likelihood, we're going to have a divided government coming out of this election.

And is that what the market wants, by the way?

That's what the market wants, because what that means to us is that there's no major significant legislation that'll get passed. And a lot of these tax-related thoughts that are out there right now are going to have a difficult time getting through. So our government stays out of our way essentially, you're saying, from the markets. Is that where you're going? Yeah, yeah. Absolutely. Kevin, always great to have you on the show, my friend. Pleasure.

Thanks for having me. Good seeing you both.