Hey everyone meet kevin here wow we had a wild day from like an insane low this morning, tesla it's 790 to tesla being up 2 on the day and everything going great. This is such a volatile market. It is insane and it creates some opportunities, but we're going to talk about. Why was the market green today and what did the federal reserve just say that actually added some color and a little bit of guidance and a little suggestion regarding what could happen with inflation rate hikes uh and the future? Let's talk about that quick note, this video is brought to you by the daily upside there's a link down below for the daily upside.

If you want your news in five minutes or less sent to you via an email check out the daily upside link down below great morning, newsletter check it out totally free by the way. Okay, let's get into this, so neil kashgari uh, this was interesting. Okay, i got like i was surprised when i saw some of these headlines and these headlines weren't in the terminal they were on on smaller news agencies uh. Well, i guess i shouldn't necessarily say smaller.

It was like yahoo and other market watch and stuff like that. I guess there's probably smaller than bloomberg, but whatever uh and the headlines were things like neil kashgari says. Maybe only two rate increases this year, uh neil kashgari says fed, might pause in spring and i'm like oh my gosh. Those headlines are actually really bullish because, if you think about it, uh we've been told from the federal reserve they're planning to do three rate hikes.

Last time the federal reserve said they were gon na go from three rate hikes to two rate hikes. It was the end of 2018 and the market started rallying again after that, it's like, oh, is that potentially the reason do people have memories of 2018 and is that actually what he said right, some things to talk about, uh and and this pause in the spring. I mean what so like raise rates and then and then just like chill back and do nothing so i saw those headlines and i'm like. Oh that sounds a little weird on the tesla uh anyway.

You know what is that i don't know tesla, that's why it's down 31 this year anyway. So i'm like okay, let me read the transcript so once the market was closed, i'm like let me figure out exactly what's going on uh, i went through the transcript and here's what we know so, first of all, neil kashgari - and this is really important to know When you line up the federal reserve board members, neil kashgari, on a rank of who's, most dubbish to who's most hawkish in case you don't know what that means a dove like a little a little birdie little birdie birdie uh is like oh, no, don't don't raise Rates so you know it'll be okay, things will get better all their own. That's a dove right. Well, just give me some crackers to chew on and leave me alone uh, that's enough and then a hawk is like no i'm not getting in there.

My little kill and we'll kill inflation i'll. Take this down. Okay, that's that's! Awe on a scale of who's. Most dovish to hawkish, so hawk is being at the bottom dovish being at the top.

Neil kashkari literally ranks at the top. He is the most duffish. There is, he don't want to do anything because he doesn't want to see us go into the r word recession. Okay, so he gave us a little bit of insight in terms of his thoughts and then now we're going to get some insight as well into like.

Where did this click bait come through from those headlines, uh so, first on supply chains, he talks about because of the supply chain issues having penciled in two rate hikes for december, but this is a little bit misleading, because most fed board members are raising their estimates. For rate hikes after december powell said that on wednesday, so i hate to say it, but whoever ran that article, whether it was reuters yahoo market watch. I have to call this one clickbait, neil kashkari did say in the interview i penciled in two rates for 2022. But again he said in the interview he's probably moving this up, because things have actually gotten worse since december.

Now the only company so far to indicate that things have gotten or might be better in q1 of 2022 is apple, but they still say, even though things are going to be slightly better, we're still going to have quote significant supply chain constraints. There was a little confusion this morning because i mentioned that in a video, but some people like, oh but apple, said it was better. I think this again was a little bit kind of clickbait headline today, where uh app. The apple news was that, oh, oh that's it supply chains are getting better, no, not not quite so fast apple, literally in their earnings.

Call. You see it on my twitter said we're still experiencing significant supply chain disruptions. That was their word. I'm not adding the word significant.

They said that uh, it was, i think, their chief financial officer or whatever their earnings call. They said that uh and their primary chip supplier, one of their primary chip suppliers, says they don't actually expect a supply chain shortages to get better until 2023, and that's one of the primary suppliers for apple. So a little bit of click bait on the apple news. A little bit of click bait uh so far on this, this two rate hike news.

Now there is good news in what neil says i don't want to like. Take the good news away. I want to provide good context because i i want the market to do well. Uh recessions are bad, everybody loses money, it's not good and it's also very hard to open new businesses in a recession.

You want to open new businesses when things are booming. It's a lot easier to do that uh and i have plans of doing that this year, multiple times, but anyway, uh one of the other things he told us is that one of the the big things we've got to watch is how fast workers come back. He said what was unique was looking back to 2017 and 2018. We would see labor participation go up in the later part of the economic expansion, so what that means is as you're getting towards like all right.

This expansion's been going on for 10 years since, like 2008, more marginalized workers potentially come into the workforce, because businesses are broadening their reach for who to pick so. People potentially with lower skill, sets different races, different sex whatever, and that's a good thing. The fed wants that that's their version of maximum employment is trying to make sure that as many people as possible can be in the labor force. But the problem is he's saying: we've got a watch in labor reports and this is a big catalyst.

Okay, you want to write this down. You have not written this down on your calendar. I think you're, making a mistake february, 4th march 4th feb 4 march 4.. Those are fridays and those are at 5 30 in the morning when we are going to get labor reports - and he says one of the big catalysts for us basically slowing down or maybe pausing we'll see, he says conceivably that we could pause if things come in Substantially better right, big, big big, if which again means the headline was kind of clickbait about the pause thing, because he also had some other ifs in the other direction which we'll talk about in a moment.

But anyway, what he's looking for is labor participation. So seeing that number, which i think it's like 66.7, i think it went up like one tenth of one percent uh from the last month and what we want to see is we want to see that number tick up. So that's a big catalyst, the feb4 number and march 4 number. The problem is because of omicron it's entirely possible that uh that participation number could actually go down a little bit before it goes up, so there could actually be more bad news before good news uh, which isn't great, because what we don't want is bad news at The beginning of february and then everybody's looking forward to march 16th, going oh crap, the fed's about to raise rates, half a percent, and then we get a february freakout freak freak february.

That would be bad. We want rally fat right uh and we want positive catalysts. Like we want real catalysts, we don't just want uh, you know momentum, uh traders, pushing stocks up to the moon, uh and and then they collapse right back down. Because then that's not real uh stock growth.

We want real stock growth and we get that when we get positive catalysts in the market so mark your calendar march 4th and feb 4. Both of those we want to see. Labor participation come up. He says it is critical to see that labor participation come up.

Then he, the next thing, is obviously inflation. Okay, mark your calendar for this one feb 10 march 10, so 4, 10, 4, 10, feb, 10 march 10., uh the feb 10 march 10. That's when cpi comes out, he does say and he's the most dovish. He says.

Look inflation's lasted longer because of the covet shutdowns uh. He does think we could start to normalize this year quote if, if, if, if, if that labor force participation goes up, that was a big. If for him, he mentioned this, probably three or four times that we got to see workers come back and supply chain issues to work themselves out he's as a dove. Remember, the duff doesn't really want to do anything.

Uh, the dove wants supply chain issues and companies to resolve their own problems uh by the way i'm driving uh. You know to go skiing and uh in case you're wondering it is my birthday, which does mean the coupon code for the programs on building your wealth link down below uh does expire later today, so check that out. If you have not checked it out yet we've got the path course with lectures coming out tonight. The first big batch you get course: member live stream for life and when i buy back in the market, you'll be the first one to know what i buy uh.

Do i have shorts? What am i doing? What am i doing right now, just in full transparency, the only puts i have are on lucid, i'm just kind of hodling those until their earnings uh, but anyway so um. Okay, then he says things should start to normalize. His focus, though - and i thought this was a really good piece of information - says his focus for when inflation is going to come down, is actually the 12-month figure that maybe by mid-year, will start to see inflationary inflation numbers roll down. So that way, those higher prints start rolling off is is was his quote now.

I doubt that a little bit, because last summer the inflationary readings actually came in lower. You know we weren't doing too bad with inflation. We kind of have like a flat period in the summer, which is not so good about potentially numbers coming down in the summer. Inflation really came in high in like october or november december, and maybe that's when we start seeing year over year, smaller numbers, because obviously, if you're measuring compared to a higher number last year, it should be easier to come in with a lower inflation print.

He does think that inflation expectations are stable because - and this was a big one, because the fed has set the proper inflation expectations, so he believes because of the fed's communication. Inflation expectations are stable. Now, what's really interesting about. This is first of all, you can measure inflation expectations by looking at the five or ten year break even charts, if you even look at like the two year, break even charts and you're trying to find stability on the right side of that curve to where it's Not skyrocketing when it's going up, that means people think inflation is going to be worse in the future.

The bond market's pricing that in necessary people uh people, would be like consumer expectations right uh, but anyway uh. He says uh there. There are two things that are important: first. If inflation does come down, then we can do less, which he wants to because he's a dove right, but listen to this one he says quote, but we need to start by walking the walk.

We need to walk the walk, we need to walk the walk. He said that three times, so what does that mean? What does that mean when, when a fed person is saying, we need to walk the walk? Well, what he's saying is we got to go into march and actually do what we said we were going to do? We are communicating that we are going to end the taper in march and that we're going to raise rates and he's saying it's time for us to walk the walk. Otherwise, investors are going to lose faith in us and they're not going to trust us anymore, and then they might think that we're going to let inflation go out of control, so he believes they're setting the stage that we are going to deal with inflation. That's why jerome powell was so hawkish in december.

That's why jerome powell was so hawkish this wednesday we're going to deal with inflation, possibly because biden's yelling at him, but also, probably because inflation's, actually a problem right now, uh so they're, communicating that, but the most duffish guy, the most stovish guy you got at the Fed is saying we got ta walk the walk now, what's also kind of interesting to know about neil kashgari is he is not a voting member of the fed. So when you're not a voting member for 2022, it means he actually has no say in the interest rate policy as to whether or not they hike in 2022.. He does become a voting member in 2023 and since he's a dove that would help maybe ease inflation or i'm sorry, uh interest rate hike pressures right because again he's enough okay, good! Then this was an interesting one, and this was the c word okay. This was interesting.

He says the yield curve matters. This is uh. You know how everybody's talking, starting to talk again about the inverted yield curve and everything right yeah. He says the yield curve matters in his opinion, not to predict recessions, but to try to let us know where the neutral interest rate is.

The neutral interest rate is the interest rate where the federal reserve does no longer need to raise rates. Determining where that neutral rate is is key and he believes a flattening yield curve tells us, maybe there's a limit to how much we could raise rates. That's bullish by the way, however, what's not bullish, remember i'm always no matter what side i personally am on. My goal is always to give you the the facts the way it is, whether it's you know beneficial or not to me it doesn't matter.

The facts are what the facts are. This was an interesting one, so that's bullish, that's bullish, uh is basically saying there might be a ceiling on rates. What's not. Bullish, though, is this.

He says. Is it possible that we have to move to a net contractionary state where basically they're tightening more because inflation's not coming down or workers, are not coming back, which hint hint so far inflation's been getting worse? Not better says powell and we've been in more of a uh, an environment where workers are not coming back because they have more savings. People are retiring, people don't want to go and get mommy uh, especially older generations, or people retiring or older, right, uh or earlier. Well, existing folks who were working a retiree earlier, and so he says yes, it's possible.

I don't want to do that mistakenly, but it is possible that we have to move to a net contractionary course. For now, though, we need to walk the walk now. Folks, i don't, and i'm really done yet, but i don't know about you, but i want to ask you. Let me know in the comments just so far based on everything i told you.

Is it fair to have a headline that says, fed sees two rate hikes or fed may pause in spring. Come on man. That's bullcrap! That's bull! Crap, because all these extra details do not say uh those headlines at all. You know total clickbait uh, which does partly make me wonder if some of today's rally was potentially a little bit misplaced, and so i just want to give a warning that what's going to happen next week, is we're going to hear from some hawks we're going to Hear from some of the other fed members as they go out on the press circuit and go talk, the talk, uh and uh and we'll see what they say.

I imagine to be a little more hawkish than this guy, but anyway uh he does say. If supply chains sort themselves out, maybe we'll be good, the expectations are everything though uh and then listen to this. He says quote: we mean it we're going to walk the walk. I think if the most devish member is coming out, saying we're going to walk the walk.

I think all of the other board members, especially the hawks, will be like we are raising rights and much now powell indicated that we want to raise rates steadily so, which kind of goes. In contrast to this pause idea and yeah, okay, good, that's uh! That's all! So uh, what do we got? Well, we got a few things number one you're gon na go down a link down below and sign up for the daily upside. If you haven't done that yeah, why don't you want a quick, little five minute newsletter to make make sure you're caught up for the day before you begin your day, uh number two, you got ta make sure to check out the programs link down below i'm building Your wealth and it's my birthday, so i check those out birthday. Coupon code ends tonight.

You can also bundle up if you want and bottom line folks. I actually think this is very very crystal clear from neil kashgari here, he's very clear he's the most dovish guy, the guy who's least likely to want to raise rates, is saying we need to raise rates in march. We need to start walking the walk. We need to start doing what we're doing or say we're going to do, because we don't exactly know how much interest rates are going to affect the market and actually help reduce inflation, and if inflation gets out of control, we've got issues he does expect inflation prints.

Will go lower this summer? I think it might take a little bit longer because the the reads were a little flat in the summer. You could look at last year's uh summer and it was kind of like. Oh, is inflation going down? That's cool, but things have things have changed boy? Have things changed after delta but anyway those are uh. Those are the notes from neil kashgar.

I think they're quite useful and we should take those into a monday and see what news we get monday, tuesday, wednesday thursday friday. Thanks folks for watching and we'll see you next, one bye.