#409 Danielle DiMartino Booth: Fed Is Hiking Into Recession, Consumers Tapped Out, & Credit Tightening

Danielle DiMartino Booth, CEO of QI Research and author of Fed Up, joins Julia La Roche to break down the Fed's 25 basis point rate hike under Chair Kevin Warsh. The statement first looked dovish, but markets reversed after Warsh's record-short 29-minute press conference hinted at more hikes. That sent the 10-year Treasury to 5.01%, its highest level since 2007. Danielle argues Warsh has broken his own "zero forward guidance" pledge and is "enamored with his narrative" of a Goldilocks economy. She points to a labor market already in recessionary territory, with long-term unemployed now outnumbering job leavers. She says core PCE inflation is on a steady path lower, while households face mounting strain from gas prices, utility bills, bankruptcies, and tightening credit. The two also discuss the K-shaped economy and why Treasury Secretary Scott Bessent may not be done acting on the bond market. Danielle explains why peak AI investment, propped up by hyperscaler accounting gains, is the biggest risk she sees. She closes on an optimistic note about the work ethic of today's college-age generation.Thank you to our partners Augusta Precious Metals — To learn more, visit https://juliabuysgold.com/ or text “Julia" to 35052Monetary Metals - learn more at https://www.monetary-metals.com/julia/Links:    Danielle's Twitter/X: https://twitter.com/dimartinobooth  Substack: https://dimartinobooth.substack.com/ YouTube: https://www.youtube.com/@DanielleDiMartinoBoothQIFed Up: https://www.amazon.com/Fed-Up-Insiders-Federal-Reserve/dp/0735211655Timestamps: 0:00 Intro0:40 Fed hikes 25 bps: the big-picture takeaway1:22 Markets price in three more hikes after the press conference4:21 Assessing Warsh so far: forward guidance despite his pledge5:37 Fed projections: 2.5% core PCE, 4.1% unemployment7:02 Sponsor: Augusta Precious Metals8:26 Labor market already in recessionary territory10:12 Warsh is "enamored with his narrative"10:53 The household squeeze: gas, utilities, beef to chicken11:47 Even the top of the K is losing confidence12:19 AI was 100% of GDP growth, and real AI investment has turned13:20 Payroll data quirks: the World Cup hiring surge14:06 Sponsor: Monetary Metals15:33 Trump's reaction: 10-year at 5.01%, stocks down16:05 Scott Bessent isn't finished17:04 Warsh gives Bessent the Heisman17:41 10-year at a 19-year high, and the Fed was easing last time18:14 What the Fed is getting wrong: August's one-off inflation blips20:03 Core PCE is coming down, plus BEA methodology changes20:56 Bankruptcy lawyers are making bank: record filings22:23 Do rate hikes even work? Cash-out refis and credit tightening23:29 The stock market isn't the economy: airlines and the top of the K25:16 Is Warsh chasing the wrong monkey on his back?25:47 Other worries: PE bankruptcies, rogue AI agents, socialism27:22 Bernanke's 2% target and post-COVID stimulus28:31 The risk keeping her up at night: peak AI investment29:49 Hyperscaler accounting games and the "E" in P/E31:40 What's making her optimistic33:25 Wrap-up