All right, folks, here's what the federal reserve just said. First of all, they kept interest rates at zero. This was the base case scenario that we were expecting that they would not raise rates in in january uh. They also did not complete the taper, as expected.

They're still going to be printing and stimulating the economy by the tune of 30 billion dollars next month and in march, which is kind of wild but they're still gon na be printing, so keep that in mind uh. So this came in at expectations, which was good. The market rallied on this very briefly, unfortunately started selling down when we got some news from jay pal about what's really going on in the market, and this is what we've got to talk about all right. This is what jay pal says about the market.

I want to be transparent. I am 45 long and 55 cash on this particular market, so i'm getting burned uh by the market going down as well. Unfortunately, that's the way it works with jpal, so uh and we're probably gon na have more of that, and so that's why i'm keeping that that cash you know ready for buying the dip. Okay, let's now focus on what j pal said.

So first jerome powell federal reserve conclusion of this january 26 meeting did say that we are seeing reduced spending in covet-sensitive areas. However, we're expecting that cases will drop rapidly. They already have dropped rapidly in new york and we expect that they'll drop rapidly throughout the rest of the united states. This is good, he does say uh, and this is this - is unfortunately, not good news.

He says there is quite a bit of room to raise rates without threatening the labor market. This is literally what i've been saying in my videos literally been saying in my videos that, unfortunately, if we have so much flexibility in the labor market, then they can raise rates without affecting the labor market that much it's kind of like if the labor market's up Here and rates are way down here they and inflation's a problem they can raise rates and even if they bring the labor market down a little bit, that's okay! It's literally what we expected and that's exactly what uh. What he's saying now uh! He did also mention that uh. Well, that's in.

In doing so, he gave us some statistics on uh how the how strong the labor market is, how the labor market may continue to strengthen, which basically gives them uh room to raise rates. Inflation, he says, is well above target, and this is where things started: getting a little dirty well above target elevated levels of inflation, especially bottlenecks and supply constraints, limiting uh production in the near term. We knew this. We knew that ge was complaining about persistent inflation.

Raytheon doesn't think uh the uh supply chain issues are going to end until to uh the end of 20, 20, 20 or 2022, or at least they're not going to get better until the end of 2022.. Jerome powell reiterated this john powell said the supply chain issues are not going away: they're not going to go away in 2022. In fact, it might take until 2023 for them to actually go away, but that we, hopefully we have some form of disinflation or decline in inflation in the second half. Hopefully he says that inflation has spread to a broader range of goods and services, and while they expect inflation to decline, it is higher than expected.

It is lasting longer than expected and it's imposing significant hardship on individuals. They do think that an improvement on the supply side should bring inflation down and less fiscal policy, so congress spending will help bring inflation down. However - and this was very bad as well when he was asked - is inflation better uh or worse than where we were in the uh in the uh? What's it called um in the last meeting in the december meeting he said uh, it's worse. Things have actually gotten slightly worse, which is bad, that's literally what we did not want to hear.

That is not good uh. Okay, he does say we need a long expansion to continue progressing with this economy. That is slightly bullish. We want a long expansion.

That is, that is a good thing, uh that is helpful of the stock market, but when he was asked hey well what about the stock market essentially and financial conditions changing like? Does this potentially mean that uh that you know if the stock markets come down? Maybe y'all won't raise rates as much and what, if i always said folks, i say the same freaking thing all the time. Jerome powell does not give a crap about your stocks. Jerome powell is nervous that high stock prices or asset prices could actually create asset bubbles. Lead to more risk, taking more debt and then a crash.

So what was his answer when he was asked? Hey prices have come down, you know. Are you going to say anything about that? He says: look financial conditions, aka the stock market matter to the extent they affect inflation and employment, but that's it and he gave no comments about the market because he doesn't care about your stocks. Remember folks. We are in literally the opposite of of of a stimulating time, and i know that sounds weird to say, but but look i drew this little chart here.

This is the government and stimulus. Okay stimulus came in hot and fast on the left, and now it's waning soon, very soon we're gon na get a little child tax credit uh, that's gon na, come out in march and april. The second half of the child tax credit we'll get a little bit of a spending bump and then we're gon na go into running off the balance sheet which running off the balance sheet at the federal reserve is another way of removing uh stimulation from the economy. The downside uh of this is, he didn't really give us clarity in terms of how quickly we're going to uh reduce the balance sheet at the federal reserve.

He does expect to end purchases in march, but and that interest rates are their primary objective, because in raising interest rates is a little bit more predictable than uh trying to figure out how the market's going to respond to uh balance sheet reductions. So they are a little bit concerned that balance sheet reductions are going to be a little bit complicated. They expect to discuss reducing the balance sheet in march and may and they may not actually start reducing the balance sheet until the meeting after may, which i think is june or july. It's one of those, but anyway uh not it from j-pal.

It looks like maybe no balance sheet reduction yet uh for two meetings, which is good, but it does look like we're pricing and we're expecting. Jerome powell is expecting rates to go up march 16th, and this was my big concern leading into this meeting, that we would get some good news like a base case scenario. But then, unfortunately, we would end up kicking the can down the road for the rest of the issues leading to more uncertainty in the market and when you get uncertainty in the market, what happens prices go down now? That's not necessarily to say that we're going to keep crashing uh, i i think we've seen some substantial potential bottoms, tuesday, monday and tuesday, but unfortunately now it's going to shift to earnings february 10th inflation readings. If february 10 inflation readings come in ugly, things could get dirty again in the stock market, and unfortunately, this is where, even though we had big shorts on small like a lot of companies, i didn't have big shorts.

A lot of a lot of institutions had big shorts on small caps, because we didn't get the clarity the market was looking for. If anything, we got worse news than expected news that ah crap the fed actually thinks uh that things are worse now than they were in december, not better and everybody in the market's like. Oh things are better now things are better now yeah. No things got worse.

So what ended up happening market fell, uh that that was that was pretty rough anyway uh then we've got let's see here uh. He was asked multiple times about the size or pacing of rate hikes. He uh implied that they want to well. He said they want to communicate as clearly as possible, but - and this was bad - the economy is in a different place.

We have a much stronger economy now than we have had in the past. Unfortunately, when he was asked about hey, would you consider doing a half percent increase, he kind of implied that it was possible that we would do a half percent increase because of how strong the economy is right now, so a lot of talk about how strong the Economy is but how bad the supply chain issues are, and so what happens more brick in pain? Now the good news is, we did not get rug pulled, so this is where, in my opinion, i begin to start looking at opportunities again and by the dip between here and uh march. Now i think the rest of 2022 is still going to be tenuous, but personally this is where i go back to okay, we got through january. We've got pretty much a road map here.

We could still get rug pulled with a double point increase in march, and we've got that uncertainty. That's going to stay priced in the market. Shorts are potentially going to stay priced in the market. Now that does mean uh shorter term bets are going to suffer more uh but uh.

In my opinion, the best thing to do here is just shares, something something that you own, whether it's small caps, large caps whatever is down, maybe there's an opportunity to buy. Although i will probably stay uh more cash than than invested for for some time, we'll see, maybe we'll get to like 60 40 invested in cash, but i'm definitely keeping a cash buffer and not using margin. Payne would be a lot more right now, if you're, fully in and in margin right but uh for for long-term investors. I always advocate continue to buy the dip for short-term investors and traders uh.

I think there are trades to be made okay, so uh. That is what jerome powell told us again talking about. Moving steadily away from accommodative uh accommodation for the market does expect that the omicron impacts will be temporary and that we will see that reduction in supply chain issues. But again the big highlight there is that things are actually worse than they were in december uh.

It has not gotten any better and jerome powell was asked. Well, he stated uh in response to a question. If he had to write his economic projections down now, they his projections would actually end up being higher for inflation, not lower so kind of a multiple slaps of bad news. There so kind of no surprise that we saw the market go from these uh extremely elevated levels uh this morning, which were a lot of bets that the pain was fully priced in.

I made some of those bets too: okay, not perfect, but anyway uh again still more cash, though anyway, so we had some enthusiasm here. There were some dips to buy this morning. Uh we ran up to the meeting. We ran as soon as we got good news up here, ran to about 4 44 on the spy, but then, as soon as we listened to the meeting - and this is where i said this is where potential more pain could come from what happened.

We sold down back to spy support. We briefly broke spy support under 430.. Look at that perfect bounce off the red line here recorded this live can't move that line. I've had a support level drawn at 4 30.

For for for very very long time, we had a perfect bounce off of that does look like it is possible. We might get a little bit green going into the close, but with the news that we just got from jay pal, it is entirely possible that uh. This is just going to give an opportunity for short sellers to again establish some shorts, establish some puts and rotate potentially out of the market and sit more heavily in cash anyway. We are going to be experiencing and dealing with this crap for a while and there you go.

That's what the federal reserve just said.