Thanks, Scott. Thanks for having me back again. I think this is our 38th time after Fed Day or 39th. I'm starting to lose count.

You're right. Yeah, you're right. In fact, that was going to be my phrase of the press conference. So you're on the same page that I am, not a foregone conclusion and then he reinforced that with far from it. And then he went back to that theme a little bit later on in the Q&A, when he said: 'What do you do if you're driving through a fog? You slow down.' Which sounds to me like if we don't have any more data I think we need to price out to a certain extent the assumption by the market that there was going to be almost with 90 plus percent certainty a cut in December. I would say that has been reversed or should be reversed; it's begun to be reversed but I think it should be reversed fairly substantially, I might even put it at 50/50 when he says there is far from a foregone conclusion.

I also observed that the two-year Treasury rate is down just five basis points since the Fed started cutting last September, while the Fed has cut rates 150 basis points. Meanwhile, the 10-year Treasury rate and long-term bond rates are up, steepening the yield curve. The Fed tends to gravitate towards the two-year yield with the Fed funds rate, and now there is only about a quarter point difference between the two.

What’s really happened is that we’ve seen tremendous rallies in financial assets this year, including stocks in the U.S., Europe, emerging markets, and bonds have done surprisingly well. The investment-grade bond index is having one of its best years in decades.

The Federal Reserve is letting maturing mortgage-backed securities be reinvested in T-Bills and wants to reduce the duration of its balance sheet by emphasizing short-term securities, which are the rates they can control. This could be a clever way to reduce interest expense on the national debt. They may ultimately manipulate mortgage rates lower by doing quantitative easing when the environment calls for it. Inflation has come down but price levels remain very high compared to five years ago, affecting housing affordability.

I suspect that buying mortgage-backed securities to lower their yields versus Treasuries might be possible in the intermediate term, and we are quite positive on that market despite recent strong performance.

It’s been a great year for financial assets, a lot of that due to the Fed assumption of more cuts, although that assumption is getting a little weaker after today’s press conference.