Everyone me kevin here boy oh boy here's exactly what just happened with the the federal reserve first off they gave us the 75 basis point hike. Which had 79 chance a likelihood of happening and that's what ended up happening. Jerome powell talked about starting to significantly reduce the balance sheet and quote. We will be looking for compelling evidence that inflation is coming down.

This is the second 75 basis point hike that we have we have had considered to be unusually large and jerome powell. Says that quote while another unusually large hike could be appropriate at our next. Meeting. That decision decision is dependent on the data that we get in other words.

Remember folks. It is currently july. They are off in august other than going on the tv to blob about blah blah blah blah. Keeping inflation expectations low.

But they do not have another fomc meeting until september in september. We will probably we should have two cpi opportunities in fact we'll be able to verify that right now by looking at the fomc calendar. And then the cpi calendar. We will probably have two cpi reports before the september meeting.

Which is september 20th to the 21st. Which means we will next be meeting on one of these fomc reports and news conferences on september 21st to mark your calendar for that we have two cpi reports coming out august 10th. That's lauren's birthday. Wish or a happy birthday on august 10th that'll be the july cpi inflation report and on september 13th.

Which is before september 21st. Which comes. Which represents the august data set so we have two cpi reports to go before the next federal reserve. A meeting and the federal reserve chose to only hike by 75 basis points as a result the 10 year went plummeting down to 2765.

Percent break. Evens fell. Even more consistent with the idea that the bond market is correct. That inflation.

Expectations are consumed consumer expectations of inflation. Are plummeting. Because inflation will likely be coming down in the next. Two to three months which hopefully in the next cpi reports the next two we will see that so that way we could get a soft raise from the federal reserve in the september november december meeting now the federal reserve was extremely clear in multiple instances to argue that the sep from july or i'm sorry from june was still valid now it is very important to note.

This is a very di big divergence from what we have previously heard from the fed. When the fed had their meeting in january. They said man if we could go back to our december notes. We would change all of that in other words.

They thought they were wrong. They said. The same thing when they came out with the june notes boy. Oh boy.

The march notes. Were so wrong. Because remember the summary of economic projections. Only comes out on average every other federal reserve meeting so we did not get a new summary of economic projections or scp instead.

Jay powell. Reaffirmed this scp rather than giving us some vague. Oh yeah. It would be worse this time he didn't say that he actually softened his statement by saying that what we said in june.

Is pretty much accurate which means that the fed expects to get the rate or fed funds rate to about. 34 to 35. Percent. By the end of the year which implies.

We have one to one and a quarter percent to go one. Two one and a quarter percent to go could literally be a point seventy. Five a point two five and a point two five or more likely if we get any kind of softness. In the data something like.

A 05 which would bring us. To. 275. 025 which would bring us to a.

32. Uh. Sorry bring us to a. Three.

Point even and then a. 325 on the next 025 basis point high. So really we don't really need these 75 bp hikes anymore. I believe that by jerome powell.

Reaffirming and revalidating this scp. He has basically taken. 100 and 125 or any form of rug. Pull.

And said. No chance baby no chance. The only chance you got is that you got the best chance right now to get the best deal on cameron's programs on building your wealth which have a coupon code expiring on july 28th because then the price goes up as we add more value and more content. But folks this scp really really really really important and it is the first time.

Jerome powell. Has actually reaffirmed one of these scps in a very very long period of time in addition to that. Jerome powell also changed the first line of the statement. Usually the first line of the statement suggests that hey following a brief decline in the first quarter.

We've seen a meaningful progress of economic conditions. But instead what did we get this time folks. We got the following as a very first freaking sentence. Which if you are a youtuber you will appreciate the following statement.

Right here at the first sentence. You have 99 retention right here or about uh. You know almost halfway through you have about 45 retention. And over here.

You've got about 23 retention. Okay. So jay powell and the crew. They know that they're most likely to have most people read the first sentence.

Which is recent indicators of spending in production have softened. Which is basically the fed saying. Hey what we're doing is working hey. But in the meantime.

We still have the jolts. Indicator that's pretty damn. Strong which suggests that there are 19. Job openings for every single unemployed person and hey keep in mind that as long as we average 2 over the long term via flexible average inflation.

Targeting also known as fate. We're gucci. So it's okay if we had a little bit of high inflation. As long as we can end up averaging two percent over the long run.

But folks we had some really big bangers today like some juicy bangers today in addition to the first statement changing. This was probably one of my favorite statements right here. Although there's some more juicy ones folks jerome powell said the following about getting to neutral. He.

Said getting to neutral is important i think we've done that now 225. Is where we are now and he believes that is roughly the neutral rate. Now. Jerome powell does believe it is appropriate to go slightly above neutral to tighten monetary and financial conditions appropriately.

However he believes we are presently at neutral. Which neutral is where we expect to go back to after these rate. Hikes complete and inflation ends up proving to be transitory. Okay you can watch the full live stream.

That i did at the beginning. The first 20 minutes or so when i talked about transitory inflation. If you want to dispute that but anyway. Jerome bowell.

Did do something that bothered me a little bit again. But he's been kind of uh you know he's kind of been pretty typically doing this lately at the beginning of the year. He's like oh yeah. We look at core cpi.

Don't worry we don't look at anything other than core then in the last meeting in june. So this was like in january. Okay then in june. He's like oh no no we look at headline.

We just look at all cpi and now here in july. He's like well actually we look at both so if you're trying to figure out what the hell. He's looking at regarding inflation. He don't even know okay.

He he don't even know the answer and that's fine. That's fine as long as it all goes down. We're good now he was drilled multiple times about his definition of recession and every time. He was asked he says we think it's necessary for growth to slow down.

We think we're coming off high growth that we had during the reopening year of 2021 and that you are seeing tighter monetary conditions. Which could have a lagging effect on the economy especially with softening labor numbers coming in but jerome powell as expected completely blew off the definition of inflation and completely ignored. The question of biden's re defining of a recession. He says that he's not trying to receive a uh uh.

You know trying to put us on the path of a recession. And that he's really not going to comment about whether or not we're in a recession or not because. While he'll look at the data. He doesn't really care okay fine whatever he does believe.

However that acting too slowly is a danger because if he acts too slowly. Then inflation could become entrenched. Fortunately he does say though that inflation does not seem to be coming entrenched. Because break even rates are coming down.

This is a very very critical argument that i have previously made many many many many times this year. And was actually one of the reasons that i sold in january. Because these break even yields were skyrocketing but generally break even yields as shown on screen now generally break even yields. Precede inflation coming down they also generally go up before inflation goes up so break even yields are a really good indicator.

Because the market is telling you what they expect that cpi will be and right now. The expectation is that that is going to plummet at this last reading when i took this. Screenshot it was sitting at about 26. Now that doesn't necessarily have to align exactly with cpi.

It's really the direction that you're looking at and the fact of the matter is the direction is the lowest. We have seen in literally the last 12 months. That means. The market has had lower inflation expectations at no point.

In the last 12 months put another way at every other point during the last 12 months. We have had expectations that inflation would be worse rather than better uh and so this is good we're in a very good position right now now he does again say regarding the hiking pace that we're going to watch the data for september that we do think that demand is moderating. This is good this is him saying that hey if demand is moderating our work is working so he's telling us that the economy is softening. He's telling us that demand is moderating.

He's telling us that he's going to wait for the data. And he's telling us that he believes that there are lagging effects of monetary policy. I don't know about you but i don't think he could be any more freaking clear that we're probably not going to get anything more than a 50 basis point hike in september. Unless of course.

There's some kind of crazy data that comes out so why are we seeing a rally in the nasdaq in tech. Right now because nasda the nasdaq and tech probably bottomed last month. And if you've been sitting on cash. I don't know if there could be any better of a sign to go by although then again.

I've said that before and things have gone lower. So no guarantees. I am your financial advisor and i ain't responsible for you losing money just like i'm not responsible for you making money. Although if you want to send me a 10 commission of any money that you do make in the market.

Any market. It is i'll take it but let me put it this way nobody ever does okay so continuing on regarding qt. He actually thinks markets are fully accepting of quantitative tightening. Which is very interesting because the more we tighten the more demand.

The federal or i should say the more supply. The market uh puts on or the fed puts on the bond market. Which means yields go up and we're actually seeing yields kind of soften. We're seeing break evens come down and drone powell gave us zero.

Mention of the forward three month treasury and nobody asked about it which was really kind of shocking regarding unemployment. Jerome powell almost verbatim copied my video this morning about inflationary pressures coming down if job openings come down and he goes on to suggest that if the pandemic caused. The labor market to move up then you should see it come down soon. Which means.

We don't actually necessarily have to run pull markets to see it come down because in time it will come down because it was the temporary effect of the pandemic propping it up he does see that potentially lower wages suffer the most during inflationary times. Although this morning. We also made a video suggesting the data shows that lower incomes are actually the ones seeing the highest wage increases maybe they're actually not having the biggest burdens in terms of needing to slow down spending. Well yeah.

Usually food and gas prices and rents are most felt by those in the bottom quartile of incomes and ultimately i have to say if i were bullish on anything at this point it would be tech and honestly potentially real estate sucks hate to say it but it's true anyway thank you so much odani for the 10 commission. Thank you so much hope to see you when the program's on building your wealth because we're going live in the course member live stream right as i end this thanks. So much we'll see you in the next one good luck. Everybody and enjoy the attendees goodbye.