“KTRH Money Man” Pat Shinn with Heritage Asset Advisors Joins Houston's Morning News

Pat Shin joins us, our KTRH Moneyman. What do you make... Hey, Jimmy. Hey, what do you make of what Jerome Powell had to say about inflation? Boy, oh boy, there's a lot to unpack here, Jimmy. So first off, for my intro music, I was hoping for Stevie Ray Vaughn walking the tightrope. That's what the Federal Reserve is doing right now. So remember, every other central bank around the world, they're only concerned with inflation. The Federal Reserve, they've got a dual mandate. Not only are they looking for low inflation, they also want full employment. And that is exactly why they're cutting interest rates. They have decided. They've moved to the goalpost, Jimmy, if you will. Because remember, their target rate is 2% inflation year over year. We just got the latest numbers. The Federal Reserve's favorite measure of inflation last week came in at 2.8%. So it's still well above their target rate. Yes, it's way, way down from where it was. But they are ignoring that, and they're focused on jobs. Now, this about fell out of my chair during Jerome Powell's... press conference, he says the government data is overstating jobs by 60,000 jobs a month right now. Well, if you look at the data since April, we've only been adding 40,000 jobs a month. So if Jerome Powell's right, and these jobs numbers are no good, we're looking at minus jobs numbers. I think President Trump is probably headed in the right direction in terms of the Fed probably needs to be lowering rates even more if their job is to, if they're trying to target full employment. So we've noticed that there are some companies that are beginning layoffs here in some of these national companies by the thousands. Yep. Do they consider that as well? Is that part of the jobs number they work with? Absolutely. So we do get a number called jolts. That's job openings and labor turnover survey. It was interesting what last week showed, showed that the big, big, big companies were adding jobs. The smaller companies know. And so if we look at just the total picture, we're seeing not a lot of hires. but not a ton of fires, so not a lot of layoffs. And so we're looking at unemployment right now around 4.4% way back when Alan Greenspan, he told Congress that what he considered full employment was 5%. So even 4.4 is not that bad. So remember, I want to add a couple of things, Jimmy. Remember when we talk about interest rates, there's no single rate. There's an entire spectrum that runs anywhere from overnight all the way out to 30 years. It's called a yield curve. What we're talking about the Fed doing is simply the overnight rate. This has nothing to do with mortgages, credit cards, car loans, et cetera. I could see the possibility, I don't know if it'll happen or not, where longer term interest rates go up and short rates go down. Certainly you and I talked, gosh, two years ago. I told people, you know, short, short rates are really high. Now's a good time to move your money out of the bank into one of these government money.

market funds, Schwab, Government Money Fund, Fidelity, Vanguard. The yields on those, Jimmy, are all coming down. Now, back when you and I talked about this, the yield is 5%. Right now, it's 3.8. It's going to continue to be lower, but if you want to beat your bank, that's still a good spot. And if you've got the money in one of those government money funds and you don't need it, Take a look at a treasury bill. I think rates are going to be coming down. Jerome Powell doesn't have much credibility, hardly any. He told everybody yesterday, we're only going to cut rates one time in 2026. The market is not buying it. They're still pricing in three rate cuts. Okay. Well, we'll see what happens with all this. But as always, thank you, sir, for all the great information. You got it. That's our KTRH Moneyman, Pat Schen.