This video is brought to you by my courses on building your wealth more on that in a moment, but there will be new lectures getting released totally for free on october 24th, a lot of great new information and content, and the price goes up on october 29th. Let's get into the fed down: hey everyone meet kevin here. Let's talk about what the federal reserve just said, because we just had an interview on cnbc that gave uh some potentially scary insights. Now this was just one member of the fed, but you know this guy's buying puts let's just say that you know this guy's sitting in the board meetings on his weeble or public.com, and going oh well, wherever you can buy, puts and he's buying puts and uh.

Let's, let's go through some of the things he said, then. Let's talk about cpi expectations for tomorrow. Uh today is october 12th on uh well great, the 13th of october we're going to get uh the september inflation readings, i'm going to talk about expectations for those those come out at 5. 30 a.m.

California time 8, 30 a.m. Eastern time so set your alarm. If you're on the west coast uh a little earlier than usual uh, so uh, mr bullard just came up and discussed. How he's been advocating getting the taper process done as soon as possible so that we could be in a position to react to quote possible upside risks to inflation next year? Now it's worth noting kind of where consensus is right now consensus is that we're going to raise rates for the first time in the second half of next year.

So just to give you a little quick chart here, i would write this down somewhere. I think this is important. The expectation right now is that in november we we start the taper, so this is really going to be the start, and so this will be the taper line over here. So this is november 21 and right now the expectation is that we end and i'll call it end.

E for expectation is uh. Probably june is what i would say because they had mentioned mid so i'll put june, slash sort of mid over here june mid one board member came out a couple of weeks ago and suggested a potential uh end. So i'll put end one over here, uh that doesn't look too good here, let's use a smaller pen there we go end one and they suggested the fall, but ballard he's counteracting that and he's going pretty aggressive and so far the data's kind of been leaning in His favor, and so really what we've just heard is a potential taper as early as q1, so i'll put n2 here, and this would be a q, uh q1 end, which would be really by march, and the reason he wants to finish. The taper here is so that, rather than potentially raising rates in the second half - which this is the expectation right here is, this would be called liftoff over here.

So i'll, just write that lift off liftoff is just a fancy way of saying rates. Go up and that's the expectation right now so i'll do e again, but his suggestion is that we're ready to basically raise rates right after march, so potentially an april may raising of rates, and that's because he's more fearful about inflation taking off so far than than Many others uh - and this is you know, let's just say during his discussion. All you had to say was uh he's, he's buying, puts and pretty much what he was saying, aligned with that uh. He says that third quarter growth has been marked down.

He does think it's uh overselling this economy to call it stagflation. He suggests hey. Look. We've gone from six percent gdp growth at the beginning of the year to you know three to four percent growth.

Now, that's not really stagflation, it's just a slowing down, but uh. He does also see that growth has kind of stalled here in q3, but he doesn't believe it's evaporated. He believes it's just been delayed into q4 and the first half of next year, which is right where he really wants to talk about raising rates anyway, because he thinks okay, we had a little pause like we hit the brakes a little bit on growth with the Delta fears right around august, but now we're hitting that gas again and that's potentially going to contribute to inflationary forces kind of hurting us at the beginning of next year, which is interesting. He's talking about this.

On the eve of cpi data, which we'll talk expectations in a moment, i personally and no guarantees, but i personally think these people get a heads up on these reports before they actually come out. Who knows if they actually do, but anyway, he says that total growth will be diminished. Plenty of reopening has still has to be done, though, and we particularly have a lot of fiscal support, so congressional support and monetary support i mean some would disagree with that saying that our unemployment boost has been removed, but then we do have the child tax credit. That's flowing pretty well, it's going to be flowing through about tax season of next year, so about april 15th of next year.

So you do have extra stimulus that you didn't previously have. This is on a monthly basis, right 300 per child uh, while under six and 250 dollars per child under under 18.. It is true, that's that is stimulus. You know every every three months, that's like a 1200 stimulus check per child.

Think about that. It's actually gon na. You know, that's that's a potential inflationary pressure uh. He does believe that the pandemic is coming under greater and greater control.

Thanks to pills. Obviously, reference to the merck pill. Boosters all this on the horizon. He believes there's a good probability about a 50 probability that things will just be stable and that we get to about a three percent unemployment rate.

Maybe the upper three percent of the unemployment rate, but he wants to leave some openness for pricing in the risk of inflation, going quote higher and higher, or rather i think he said sorry quote, staying high or going higher. That was his quote. That's the risk! I want to be able to handle at the end of the taper and that it's worth understanding why he would say that, so we go back to this chart right here. If, if you, if you all of a sudden, get hit with inflation, and your interest rates are at zero, how you know now all of a sudden, uh you're you're in this position, where you're, potentially creating this lagging monetary support? Where, let's say interest rates are at zero until june of next year, just to explain what i mean here say: interest rates stay till zero here, but all of a sudden we have i'll call it.

You know what i'll call it mega inflation right here. Well, it's too late because to raise rates i mean obviously they're going to raise rates, but it's too late, because this zero percent monetary support is probably still going to push inflation higher. So we'll call it like super inflation right uh as time goes on, because it's going to take a while, for, let's say a rate increase to actually take effect, say you go up a quarter of a percent or whatever you end up going up, doesn't really matter. This is more just an example here, so really what he wants to do is say: well, if there's a chance, we're going to have let's say mega inflation by the middle of next year.

Let's start raising rates now and let's go to point two five percent or point five percent sooner so that way, if we do get over here, we're starting to kind of hit the brakes early, it's kind of like we see the traffic light, we're gon na start. Taking our foot off the gas a little earlier and uh being prepared to uh and actually potentially even starting to hit the brakes sooner so that way we don't have as abrupt of a stop, because it takes time. It's like it's like stopping a semi truck, although some semi truck brakes are pretty incredibly fast. So maybe maybe a better analogy.

Is it's like trying to stop a cruise ship? You should probably start taking the gap. Foot off the gas early maybe hit those those reverse propellers a little sooner uh. This particular member of the fed has been somebody who's been a little bit more hawkish than other members. Even sarah eisen pointed out that he was a person who came out as hawkish against inflation, while at the same time jerome powell was coming out as a dovish about about inflation and how transitory inflation was going to be.

Obviously transitory. Inflation has lasted a whole lot. More than expected, he does mention that more participants are moving into 2022 for liftoff, so in other words, more about board members are joining him with raising rates. Sarah eisen asked hey, you know the bank of england talked about maybe doing a rate hike at the end of 2021.

He kind of separates himself from what the other countries are doing. He also says that inflation tends to be higher in the us than in other places in the world. I think he's referring to europe when he says that, because our inflation level tends to be lower than other countries outside of europe, but whatever so then, we've got an interesting comment about supply. Shocks alone cannot cause inflation.

They have to be accommodated by easy monetary policy, because all prices have to go up together at the same time, which is somewhat what is happening. We are seeing that so he's saying it's not just supply. This is where bullard is coming from and where he differs from powell. Is that stop calling this just a supply shortage? It's it's supply shortages and easy money.

That's what's leading to this inflationary pain, so cpi is uh is is definitely going to be on bullard's radar. Here and uh he's a big advocate and of staking his claim that inflation's going to get worse before it gets better and he wants to be prepared for that risk and wants to taper. Sooner definitely wants to taper in november, wants to accelerate the path of the taper, even though - and i'm surprised they didn't ask him about this, even though the jobs report, the last jobs report came in weak, not a single mention of that weak jobs report a little Bit surprising not to see that on the radar more the focus again: inflation, inflation, inflation! So let's talk expectations for tomorrow, so we have an expectation of month. Over month, inflation coming in at 0.3 percent tomorrow, minus food and energy we're expecting 0.2 percent.

Tomorrow, cpi year-over-year headline read expected to be 5.3 uh. That is uh. That is unchanged from the prior month. We'll see we have.

We have a lot of expectations here. We also get the fomc meeting minutes from the september meeting that will be released at 2 pm eastern time tomorrow. So we've got a big news day tomorrow, meeting minutes and cpi data coming out tomorrow. These meeting minutes are expected to show the federal reserve probably being a little bit more dovish in response to delta and a miss on the prior jobs report from august uh, thereby deciding to wait to taper until november.

We do again have big expectations for cpi tomorrow. If this inflation comes in at a match, i expect the market will be stable right now we have been seeing a softening on the 10-year treasury, which kind of implies that the market is thinking. Cpi might actually come in potentially a little bit weaker than expected. Uh.

Maybe not, though, we'll see, i think the vast majority of the market participants like us and and institutions are really thinking that uh inflation's going to come in maybe higher uh than expected. I my hope. Originally this year has been that inflation would inflict down in the september october reads tomorrow: is that day tomorrow? Is that september read and uh we'll see if my timing was right or wrong uh or if it's just delayed? Personally, i'm not as optimistic about my original belief as i was previously and that's because we are still seeing used car prices going up, we're still seeing lumber prices going up, we're still seeing pain in the commodity sector, which dries up drives up inflation. Certainly, energy costs.

If i look at the manheim used vehicle index right now, we have let's go to the one month. We are uh. Okay, let's see here, try to get this out again. Uh yeah we're we're higher again higher than where this is for september.

Okay, we're higher again than where we were as of our peak in may. We did have a little bit of a trough there in inflation, which was expected in july and august, but we're inflecting back up so really looking at some things like used cars, supply, chain constraints, uh freight and shipping issues that we're seeing inflation isn't getting better. So i can't be optimistic for tomorrow. If anything, i think there's a chance that we we like, if i had to stake my grind ground right now.

My hope would be my hope would be like okay, 60 we're gon na miss we're going to get that inflection on the downside. My expectation is a 60 likelihood that we're probably going to have a match or a beat on inflation, which is not going to be so great for probably for tech companies, maybe that nasdaq and smp getting hit again. Personally, i hope it gives me opportunities for deals. I want i'd, be i'd even be considering starting a position in baba.

Uh qcom has been looking juicy, some of the value plays, uh or or really just lower. Multiple plays, don't necessarily want to call them value plays, but lower multiple plays, like corsair micron uh western digital, some of these united wholesale a mortgage company. Some of these have been pretty low, wouldn't be opposed if we do get an inflationary read and some more pain and supply wouldn't be opposed to trying to pick up some a deal on end phase. I'm sorry on etsy etsy, etsy etsy.

You already know i'm into enphase and docusign and tesla, and the others uh potentially call options on tesla, because volatility has been so low and then of course, as usual, if i make any trades you know, i will be sending an alert on any of those in The stocks and psychology of money program linked down below which there will be new lectures coming out on october 24th and the price is going up on october 29th, so make sure to check that out down below. You can also check out the real estate programs on real estate, investing building your wealth with property management, rental renovations, real estate agent sales or even making youtube videos so check those programs out down below. These are my thoughts on not just what the federal reserve said, but on cpi tomorrow, i'm very excited a little bit anxious, but i've got some cash on the sidelines to those weirdo commenters who were like wait. It was just not that long ago, you're like oh, i have all this extra cash.

I bought the dip in september, but i do still have cash on the sidelines and i'm excited so we'll see what happens no matter. What happens tomorrow, if we get a if we get a missing inflation, i'm just going to sit around and and enjoy the gains. If we get a beat on inflation and we got ta fall, i'm gon na go shopping. It's gon na be good uh.

I do stop my crypto position worth mentioning uh. If anything, i've increased my crypto position in the last dips uh. It is higher than what i've ever had before. I think i'm at 1.2 in crypto right now, uh, which is uh, which is the highest uh that that i've been at in terms of crypto, so uh there you have it my thoughts.

Thank you so much folks for watching and uh we'll see you all in the next one. Thanks again goodbye you.