Jefferies' David Zervos: You can make pretty cogent arguments for a lower neutral rate

Summary

David Zervos, Jefferies chief market strategist, joins Squawk Box to discuss the Fed's rate path, the debate over a lower neutral rate, and the search for the next Fed chair. He says market pricing of about 41 basis points of cuts this year is reasonable but he would lean slightly more dovish. He sees a supply-side productivity boom alongside a weak labor market, questions whether AI alone is driving productivity, and argues rate cuts would stimulate rate-sensitive sectors like construction, housing, and the consumer. He also says markets would applaud Rick Rieder as Fed chair.

• Fed rate-cut pricing around 41 basis points for the year is called a safe baseline.
• Zervos would lean toward slightly more easing than currently priced.
• He sees cogent arguments for a lower neutral rate.
• The next Fed chair debate includes Rick Rieder, Kevin Warsh, and Kevin Hassett.
• Zervos says markets would likely applaud a Rieder chair.
• He describes a supply-side productivity boom with weak labor market signals.
• He questions whether AI is the entire productivity story.
• He expects rate cuts to stimulate construction, housing, and consumer sectors.