Okay, Wow. Jerome Powell Today was like a dad who's mad at you for having kicked somebody's butt and he's he's yelling at you. He's like who dare you kick that kid's how dare you do that but he's got this little smirk on his face. He's kind of like how dare you because he's kind of proud of you and and in this case the fight is CPI It's like yeah, CPI is coming down kick its butt right.

kick it down and he's kind of like proud. He's like yeah, that's that's my son right but but he's also like Stern like, but don't do it again like don't mess up CPI you know he's always gay. That's what it felt like today. Like today.

Honestly, it didn't really feel extremely like hawkish or extremely dovish. We kind of got a hawkish SCP report that initially led to some selling off, but he was kind of honestly that Stern dad, that's like don't do it again but good job you know that was. that's that's kind of like the best. summary.

Honestly I have for this is is is that like the proud dad like the proud dad that you would have if you signed up for the program. So I'm building your wealth using that coupon code expiring today Papi so you could join the Trading Alerts in the Stocks and Psychology of Money group or learn zero to millionaire real estate investing. By the way, that I really think everybody watching can become a millionaire in real estate? Uh, it's kind of easy. Okay here let's get into the Fed So the way I wanted to break this up today is: I Want you to think uh, bad, neutral Good: I think that's the easiest way to break this up.

So let's start with bad. Okay, bad was what we got in the report Uh, I did not get a lot right in my projection. Which is fine because as we talked about in the live, the reason you make projections is to see where you don't align. If you don't make any projections, you can't adjust your feelings in any way, right? So we had initially a bad SCP because this came in way higher than the market was expecting in what I was expecting.

In fact, the Fed's Dot Plot I personally projected that most of them would come in under five percent for the terminal rate. That's not what we got here. Most of them were right here in that five to five and a quarter percent range 5.5 percent range. That's where the bulk was.

So we started with bad news. You know? our number one piece of bad news is we moved the terminal rate to 5.1 percent and the FEDS had a tendency of moving these up. That's not that great. The range was 5.1 to 5.4 percent.

Not that great. That was bad news. GDP Moving up in 2022 to 0.5 Big deal. Massive revision down over here in 2023.

That's potentially recessionary. We could have a q1 Q2 recession or or potentially a Q1 Q2 Positive. uh, economic growth. but then a Q3 Q4 recession and you could still end up with an average of 0.5 but have a recession within the year, right? Because you only need two quarters whereas you need four to create that number.

Unemployment rate projecting going up to 4.6 Jerome Powell says this is still low, so it's fine. This is probably the least important projection. Their inflation projection. It doesn't matter so much.

Uh, but uh, this SCP was aggressive. That's just the way to put it. It was aggressive. This was the this was Daddy Powell going hey, hey, don't don't don't do it again.

Stay the course, get inflation out. But that this was the Daddy power, right? but that you know he had some other bad things to say, which we'll talk about those. But the good part was that he's proud about inflation coming down. but we're going to talk more about that in a moment I Want to stay bad? Neutral good.

So sticking to the bad. We're gonna stay restricted for some time. Uh, we caution against, uh, premature loosening. This is old news.

We've heard that a million times before. No rate Cuts projected in 2023 by the Federal Reserve Now they're just saying that the market doesn't believe that them as far as the market can throw Daddy pow, they don't believe it. You know how the market doesn't believe it Bond Deals At the time of this recording after the meeting went down look at this. the FED talked dirty to us about how they're going to raise rates higher than it anticipated higher than what the market was pricing in for the terminal rate and told us they were not going to cut rates in 2023 and the market said whatever.

Old man rates down. Okay, that's another way of saying uh that that they the market doesn't believe the fed the market actually thinks the the FED is going to get the inflation reduction that that we're on the trend for now and they're going to end up cutting rates now. Jerome Powell gave us the recipe for when he's gonna cut rates. We'll talk about that in just a moment.

Uh, it's not a terrible surprise, but I I have a formula for it that I'm going to share with you my opinion. Uh, okay, so this uniformity by the FED around that five percent on the Dot Plot Unexpected. That was bearish. Uh, middle of the next year, they're expecting to see slow following inflation come in from housing inflation.

Which is really good because if you think about it, if we're on slowing inflation now, imagine how much inflation is going to drop when that rental inflation from that stupid lagging owner's equivalent rent which lags like six months comes in. You're going to see inflation just gap down. like after hours gap down. you know, as they say.

Anyway, So um, some beginning signs of inflation starting to rotate down. Uh, in the labor Services sector which is really good. you got 45 in Pce that comes from Housing Services 55 that comes from other labor services that other labor Services side is starting to see some softness. and that's good.

That's the third part of inflation coming down. goods, housing, labor. starting to see that rotation coming down in labor Jerome acknowledges that. However, he also says we need to see that consistency.

He does believe that eventually, uh, the labor market will soften and that will create some pain, but he kind of says, sorry, it's just just doing my job. Gotta do it. Sorry, some people are going to lose their jobs. He kind of admits to that, right? And okay, I get it.

I Mean he's being blunt about it basically. So on the neutral side, he kind of dodged a question about stagflation. It doesn't seem like stagflation or recessions or really scenarios that they're really thinking about right now. Uh, they haven't talked about what kind of recession scenario would be.

Uh, you know something that they would react to. So Jerome Powell did not give us really any insight into stagflation or recession. They're not expecting that now. they've been wrong pretty much on every projection they've made.

So you know, if you were to kind of lean towards the more hawkish side, that would be reasonable based on the trend. But uh, you know, maybe we're at a U-turn now? Who knows. Okay, so let's talk a little bit more about the good. This was the interesting part for me because of this new Sep five-year break-evens fell.

That's good. Five year Break Even is uh, it has to do with the the spread between treasury uh, inflation, protected securities and non-inflation protective security is. basically it's the Market's way of telling you what do we think inflation's gonna do And sir, we think it's gonna go down. In fact, these inflation expectations are at some of the lowest levels that we have seen all year.

They've only been lower once before this year, and that was at the end of September when we had a nice little rally which was cool. uh, but uh. but otherwise we are at the lowest levels we've been at for inflation break evens all year and the consumer sentiment surveys have been coming in lower. So this is this is great.

This is great. Uh, you know somebody here just donated to CHF I don't even know what that is? Uh, it's probably like two pennies. In fact, actually I probably have more money right here in my hand, which is two pennies. but I appreciate this.

Uh, too. Anyway, uh, bonds see more deflation? Uh yeah. I agree with you. Uh I I Agree that bonds see more deflation, but you put a little bear I don't I Don't know why that would be bearish it seems.

Uh, seems. bullish to me, but thank you for the two. Whatever. I appreciate it.

All right? So um, okay, now my expectation on on this sort of formula of when are we going to see uh, actually like rate Cuts I Think the Fed's going to make us wait until we get five sustained in CPI reports. That's because even though Jerome Powell applauded the two very good reports that we just had on inflation, he said, hey, those two reports just reiterate what we think is going to happen which is inflation is going to go down, but we really need to be confident that inflation is on its way to two percent. So I think two reports is the start I think you get three more reports. That's five good CPI reports in total and guess what you get I think that's when you get the FED U-turn Now my guess at this point, let me show you on the calendar what that looks like.

Okay, so I think this is I would write this one down. Okay, this is something I would write down. We just had the 50 basis point. Everyone and their granny knew we were gonna get 50 basis points today.

Uh, we have one CPI report between now and the February report which could be a 25 basis point hike, could be a 50 basis point hike Jerome Powell Gave us no clues, no clues at all I don't think it's going to be zero because we're at 4.25 They think the terminal rate is going to end up being 5.1 Why would we get a 25 in Fab Eh, it'd be nice I Don't think it's too likely, but we do get one CPI report between now and then. Maybe that third CPI report suggests they go to 25. Maybe we'll see March 22nd. We'll have three CPI reports.

So if we have all three of those CPI reports Jan Feb and March Whereas over here in Fabul only have the January report right? if we hit all three of those reports that come in low, what happens? All three of those reports come in low. That's when I think potentially the FED says we're gonna cut in May rather than doing 25 25 25 continuously, they might cut in the next meeting thereafter because then they'll have five reports in a row. In fact, they'll even have more by the time May comes around. Uh, you know they'll They'll have another four or five in total from now, which is kind of incredible.

So uh yeah. Q end of q1 beginning of Q2 seems to probably be the earliest potential for a rate cut though. Jerome Powell Made it very clear: don't expect rate Cuts but he has to say that you know if he's like, hey yeah, maybe we'll do some rate Cuts Dude, everything's gonna unwind, the stocks are gonna rally and and uh uh, you know all their work kind of will start getting undone before we actually get those reports. So uh, that said, you know markets are slightly down a little bit flat right now in reaction to this again I Think this was mostly an uneventful Fed meeting, but it certainly was one that gave us a little bit of uh of welcome news.

And that was actually Jerome Powell saying hey, you know what we uh, we're we're in a position where we're doing good. We've got two great reports. let's stay on that course now. I think uh, we have a lack of catalysts between now and uh January Really, that could potentially lead to a little bit more bullishness in the market.

It just my opinion. No guarantees obviously. But consider this usually right before fear events. You don't get a lot of rallying, right? But look at what we have here.

look what I wrote: boring fed meeting. quiet mode now with less uncertainty could create a near-term rally Santa Claus No guarantees obviously the next major catalystor January 7th for the labor report January 12th for the CPI report December 14th for the expiration of PP and the late January Q4 Earnings Q4 Earnings I Think are going to create some huge uncertainty and fear so I think there's a greater chance that you potentially have a little bit of a micro rally now rather than after January CPI because after January CPI you're going to go into earnings, then everybody's going to be focused on earnings. So I'm a little bit more short-term bullish right now, since like we didn't get rug pulled, you know. Daddy Pals At least somewhat happy with us.

and um, yeah, those are my thoughts. So anyway, thank you so much for watching. As always, if you found this helpful, consider subscribing to the channel. Share the video, invite your friends, check out my PP the coupon code that is.

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