Hey everyone kevin here in this video we're going to talk about what jerome powell just said, and we've got some updates on taper time frames. Let's get right into this. I do want to make a note, though, when jerome powell talks there are usually good opportunities to trade stocks. I'm going to give you a very quick example, straight from the trades uh that i post in my stocks in psychology of money group and i'm going to show it to you live it's right here.

I bought a 50 000 january call this morning at 8. 26 a.m: for an average of three i'm sorry: 237, 237, 200 quantity and i closed that position up about 14 hundred dollars. There we go get into this one here: here's that closing alert uh just about two and a half hours later up. Fourteen thousand six hundred dollars market basically bottomed with jerome talking and is now recovering good j pal swing, thirty percent in two hours, i'm not going to not take 10 d's on that one.

So obviously i think erj has lots of potential. I think it's a great company and i hope it runs it's a company. I want to hold long term, but i do not right now because i think there could still be some downside, especially as we get through this uh crazy fear, supply chain winter. All right.

Folks, so let's talk about jerome powell by the way, if you want these kinds of alerts, make sure to check out the program on building your wealth. The stocks in psychology and money group link down below you pay once and you get lifetime access to the lectures and then the buy, sell alerts. Okay, jerome powell told us that supply chain pressures will quote likely last well into next year, quote well into next year. My estimate that well into next year is something like mid august to september.

That's about 70 through the year i think well into, would would imply about 70 percent through uh, certainly more than 50 percent through. So my expectation here is that jerome powell is essentially telling us we are going to be dealing with these pressures for quite a while now he does also say that quote. Overall inflation is running well above our target. It's worth noting, though, that that's not necessarily red flag which might explain why treasury yields actually came down after jerome powell finished talking, because drum powell has regularly said hey.

Look. We want inflation to run above our long run target so that way in average, inflation will be around two and a half percent, so this is all part of their policy on flexible average inflation. Targeting again that stands for fate. He does mention that supply constraints are pushing inflation higher and it's difficult to predict when these bottlenecks will ease.

He did seem a little bit more concerned than he has in the past about inflation, so he's kind of really walking down that road of you. Turning on temporary inflation and and i'm happy that he is because uh it's uh, it's him adjusting to reality. I've had to adjust to that reality as well. I did call for a market rally at uh and q4 here so far.

The market has been doing very, very well in q4 and kind of actually brushing off a lot of these supply chain and inflation fears, with the exception of course, once you get revenues that start falling like over at snapchat. Snapchat revenues get crushed on advertising revenue because of the apple uh modifications to how much data individuals can can glean off of apple users and that all of a sudden uh leads advertisements to be less effective, which is very important to know because every hundred dollars you Spend on ads your goal is to try to create two hundred dollars, but if all of a sudden you can't target as well and now you're spending a hundred dollars and you're only getting 150, you might look for other platforms to advertise on and uh. This could potentially be why you're seeing platforms like snapchat and google any sort of broad-based targeted ads falling, but companies like etsy actually doing well. In my opinion, this is potentially because people on etsy have a buyer profile that etsy can glean data from.

They don't rely on the app itself. They can get this data as a customer in terms of what they're checking out on what they're viewing and so on and so forth. So i think those integrated platforms do well at a time like this, when more broad-based advertising does poorly, so big big big bull on etsy. You know this is one of my top five positions uh so now, uh.

Obviously, jerome powell goes on to say that he's more worried that supply chain issues have gotten worse, and these are things that we're going to pay attention to by the way. This is another reason i'm bullish on a company like etsy, because if we have issues getting christmas gifts, people might be more interested in buying stuff off of etsy, where you have creators, creating uh, merchandise or whatever. That may be less reliant on on these broad massive supply chains and container ships. Inflation pressures he believes, will decrease as people shift spending back to services, but supplies supply chain constraints are likely to last longer than previously expected.

He said the same is true for pressure on wages and then that he's worried that essentially higher inflation will cause quote wage setters to expect unduly high rates for wages. This is basically a fancy way of saying unions demanding higher pay, which would just end up reiterating higher inflation. This is where you get kind of the inflationary spiral where prices go up. People demand more pay or companies pay individuals more in order to get them as employees to attract them.

They have to pay them appropriately, but now prices are higher because prices are higher, the employees demand even more pay or new employees demand even more pay, and so but then, of course, that increases the costs of uh goods that you're producing. So you have to increase the price of goods, which then reiterates this sort of cycle or spiral going up. It's the opposite of the deflationary spiral worth noting a lot of folks, potentially not being properly counted in the jobs data, as people move from working for companies to potentially working for themselves, not showing up properly in this jobs data but uh, which i don't think. The government's really good at counting jobs, data appropriately anyway, uh and uh, and ultimately we're seeing a lot of two income households turn into one income: households thanks to increased uh wealth earlier retirements, because retirement accounts have all done very, very well over the last 18 months.

Real estate has gone up substantially, so a lot less potential pressure to uh have um. How should i say: uh two incomes in a household, so we're seeing a lot of this and uh that again leads to a tighter labor supply. It's a problem now uh and that's coming from me. Jerome powell didn't talk about that, but when he talks about potentially this the spiraling up of wage prices, i think these are things that could actually uh accelerate that spiral.

So i don't think he's necessarily wrong about that, at least for the time being we're going to be dealing with that more. He does say that if inflation were a risk at risk of staying, obviously they would use their tools to preserve price stability. This is basically saying raise interest rates, uh and uh right now. We are on track to begin the taper in november uh.

We finally got a number, though the new york times got a hold of the number, and it looks like tentatively we're expecting to see a taper from 120 billion dollars per month of bond purchases, 80 billion of treasuries and 40 billion of mortgage-backed securities down to 105 Billion, that's uh, roughly a 13 reduction in november and then we would probably expect to see another - maybe 13 reduction in january, and we do that maybe eight times uh and then we're fully tapered by somewhere around july august, potentially uh. That pace could accelerate, though, but i would say, 15 billion a month probably puts us around that july time frame for finishing the taper so and again we're expecting that taper to begin, and i think the market's mostly priced in the taper. I don't think the taper is really affecting anyone anymore. If anything, this 15 billion is a slower pace than i think people were expecting.

I think people were thinking. We're gon na see like a 30 or 40 billion dollar boom cut really quickly and that could have affected markets a little bit more but yeah. You could actually see this by looking at the 10-year treasury yields, because the 10-year treasury yield has relatively stayed stable. Today, around that 1.65 level and uh, that's a a sign that the markets have priced in a lot of this.

This jerome powell talk already but we're getting insights like jobs, concern longer inflation. How long for the supply chain constraints per jerome powell's opinion? And when is that taper going to finish and what pace are we getting a big taper which could be a negative catalyst for the market or a smooth taper right now it looks like we're at a smooth taper. So we also have a talk that maybe yields fell because evergrand made a bond payment ahead of tomorrow's deadline, which brought the which actually bought the company another week. This was the end of their 30-day sort of uh delinquency period, and then they would have been in default, so they're delinquent they would have been in default.

They kicked that can down the road another week worth noting, though, that they've got 83 million dollars due at the end of the month. They've got 82 million dollars due november 6th plus the other missed payments. They've got 254 million dollars due december 28th. So this ever grand crisis, i mean that's a big number by the way 254..

It's evergreen crisis is gon na, be uh gon na be an issue going forward here: stock market, obviously uh uh sensitive right now to dronehouse talk overall. In my opinion, because i mean look at this - you got like square down four percent uh, because you know the more you have jerome powell talking about hey these supply chain issues are a bigger issue. The more companies want to, and investors want to, discount the potential for missed earnings up front now, uh worth noting that this morning i also did buy some matterport and bought matterport right around here. At this 1890 level, between 1910 and 1890 did move up a little bit since then, but was working on buying the dip over here.

Love matterport. I'm really thinking, there's a good potential that this stock will will either blow up after earnings, or it's going to go back to that 15 to 16 level. So i'm not going heavy with my purchases i'm doing little nibbles. Here i like the trend that we have the trend we've seen, we obviously got a little overextended for a moment here, but i like this trend that we're seeing it's not perfect.

I would really prefer a triple touch, so i think it's too early to really call a potential upright uptrend here, but if we do get back into this, certainly the uh sub 1637 level - that's gon na be a nice channel to be buying in, and so i Look forward to seeing matterport drop another three dollars before uh, ultimately getting uh more expensive anyway, just some thoughts but uh definitely enjoy nibbling on this one. So uh good! Well, there you have it folks! Thank you so very much for watching this video on what the federal reserve just said. If you're interested in my programs check them out, link down below and folks, we'll see you in the next one thanks again goodbye you.