You already know this video is brought to you by the amazing programs on building your wealth and that black friday coupon code expiring at 11, 59 pm on friday check it out, link down below hey everyone meet kevin. Here. We've got some risks to talk about for the market and a lot has to do with the federal reserve. Now we've already had conversations about what happens if we just get brain art, is she just going to be a mirror image of jerome powell and is it going to make a difference or if we keep jerome powell? Is the market just going to shrug off the fact that the chair ever even came up for renomination and who cares? We've also talked about timing.

We've talked about the fact that joe biden told us that we should have an answer within the next four days. On monday, which means we should have an answer today on who the next chairperson for the federal reserve is going to be? Is it going to continue to meet your own powell? Is it going to be? Brainard is going to be somebody else, but now we're hearing that the decision might come over the weekend and at the same time, as hearing that the decision might come over the weekend. Some folks think, ah maybe we'll hear when we finally get to thanksgiving and we'll hear by then who knows the point, though, of this video, is to highlight two potential concerns and potential issues related to this nomination, because while we wait for joe biden to get it, I mean to get his nomination up. We can finally look at something like the wall street journal's editorial board and say wait a minute.

These are two real risks that maybe we haven't considered before so take a look at these risks. First uh, as a preface before we talk about the two risks. It's worth noting that uh the wall street journal's editorial board agrees that brainard will probably be very much like a conjoined twin to powell and act very much the same as powell. That is, keep rates, low, keep uh, keep uh, essentially uh the taper moving at a relatively slow pace and be patient with the market.

Wait to see what happens with inflation before acting too fast or potentially too quickly to tighten, but the wall street journal editorial board gives us two potential risks. The first of the two is right here. Take a look at this. The wall street journal editorial board basically goes as far as calling bernard a flip-flopper look at this donald luskin of trend.

Macro notes: brainard struck a dovish tone in september of 2016 before the election, but on the eve of the trump presidency's inauguration in january of 2017. She suddenly discovered that the fed was close to its inflation and unemployment targets and two months later called for tighter monetary policy. So here the wall street journal editorial board is giving us a a warning you're giving us a heads up that hey wait, a minute! Wait! A minute wait, a second. If we get powell, we might have somebody who stays consistent, who stays the course and stays with that inflation's transitory argument through the middle of next year, if we get brainerd, while we think that she's going to be on the same course, that might be the oversimplification She could end up flip-flopping, just like she has in 2016-17, where she previously flip-flopped, literally on the same discussion, inflation versus tighter monetary policy.

This is a warning. This is a risk to the markets that hey. If we get brain art, we have a higher likelihood of a sudden flip flop than we would with powell, but the second concern that the wall street journal editorial board brings up really comes after they just utterly crush drone powell. Listen to this.

Neither one deserves the job powell or brainard if you judge them based on how well they have performed in their main duty of maintaining price stability. The powell fed has presided over inflation that it failed to predict and has been slow to address. The fed's professed inflation target is two percent, but consumer price index that consumer price index rose 6.2 on october above a year earlier by any measure. This is a historic failure.

Mr powell's credibility has been damaged with his persistent refrain until recently that inflation is transitory. His new monetary policy framework of average inflation targeting this is by the way, formerly known as fate. Flexible average inflation targeting unveiled in august 2020 has been a bust now, obviously the fed would say: hey well wait a minute. We designed fate for a three or four year time frame.

It's going to take time to see flexible average inflation targeting you can't just average. Over a few months. You got ta have average over a few years, so obviously powell and brainard would probably defend the fed uh dramatically here, but it's interesting where the wall street journal editorial board takes us next. If biden wants to distract himself from the inflation failure, he'd nominate a current critic of the fed policy.

This is interesting. So take a look at this they're playing politics. The wall street journal editorial board is basically saying if biden wants to set wants to. First of all, probably get his build back better plan passed by somebody like joe manchin in the senate, which now we've passed, the uh buildback better plan in the house.

But it's going to be up to the senate to pass it, which is really going to hinge on two votes: kirsten cinema and joe manchin and they're very worried about inflation. So here, if bide wants to distance himself from this inflation failure, he'd nominate a critic of current fed policy to basically show he's very different and doesn't agree with what's happening with inflation. That could actually be what's needed to get joe biden's plan through, but that could create some shake-ups in the market. Right, take a look at the recommendation, they make, they suggest - and they even admit they never thought.

They'd say this, because the wall street journal leans conservative. They suggested or suggest here that larry summers, a democrat, would be a logical choice given his purse. Basically, his persistence on inflation uh coming in higher than expected, that is larry summers is somebody who, at the beginning of the year, said that joe biden's 1400 stimulus check plan would lead to rampant inflation, that the white house is underestimating inflation, that inflation is going to Come in way higher and what we need are stronger actions by the fed, in fact the washington i'm sorry the hill reported the following quote: quote from larry summers. My experience is that you should hope for the best and plan for something less than the best.

I think that means stronger action by the fed. It means the administration has to be thinking about inflation, and this is essentially a response to the fed being weak on uh, on inflation being potentially behind the curve being wrong about here. Larry summers said they said when september came and people went back to school, that the labor force would grow and it didn't. Inflation doesn't look like it's transitory and they said that inflation would be behind a few specific factors, but it doesn't seem to be specific factors.

It seems to be everything so larry summers is taking these three things to basically say: hey jerome powell is wrong like everything that they thought they've been wrong about. So now it's time to kick him out and have a strong fed take action against inflation. That's what larry summers believes who's a democrat, and so this wall street journal editorial piece really paints the the possibility that we can have two things happen here. Actually we can have three things happen here and and then separate consequences for all of these three things here.

So write down these three things here, number one: you could keep powell. If we keep powell, then it makes it a little harder to get the buildback better plan done in the senate, but biden can really distance himself from a trump appointment. So biden can just point to the fact that powell is a trump appointee and you know it's not his fault. So biden can stay distance from the fed, but it hurts him with the build back better plan if he ends up picking somebody like brainard and she ends up acting like powell.

Well then, unfortunately, for biden, biden takes responsibility, biden takes the r and it probably doesn't help him with the buildback better either. So here we could call it a plus for biden that trump takes the r the responsibility, but it hurts his buildback better plan. Keeping powell going to brainard means biden takes responsibility. He probably doesn't get much help with buildback better, and we have the risk factor that we could get.

Somebody who ends up flip-flopping, which is, would create a lot of uncertainty in the market or you could have something like what larry summer or what the editorial board here is saying. The wall street journal editorial board. You could have a total blind side end up getting somebody who's, a hawk like larry summers, who's kind of like a paul volcker democrat get in there cut inflation, raise rates, cut the taper fight, fight, fight fight fight. You know you've even got richard clarida who just came out and said quote.

It may be appropriate to discuss the taper pace in december. In other words, maybe taper faster right, that's more hawkish. Larry summers is somebody who'd, probably be very, very hawkish. This would probably be a positive for joe biden getting the build back better plan done, because it would show that he cares about inflation and he's going to do everything in his power to try to reduce inflation as soon as possible, and he could potentially use that.

As leverage to convince cinema and mansion to pass the buildback better plan, which would be good for joe biden politically, but it could have long-term consequences of of if we potentially tighten too soon, we could end up tightening ourselves into a deflationary recession which is bad. And that's the same thing that happened in 1949: the federal reserve tightened too soon and we tightened our way into a deflationary recession and deflationary spiral, which is where people stop spending money because they expect prices to be lower in the future, which is really bad people. Don't spend money, the economy suffers. Remember velocity of money.

You don't spend a dollar, you rob our economy of five dollars, that's the way it works, so that could be good for buildback better. It could also be good for biden politically in the short term long term. It could have consequences, but we might not see long term for another four or five years and biden might not be president uh. You know in four or five years so in terms of the market, though, what's probably best for the market is powell, so powell would be a triple plus for the market.

I think brainard would be a single plus for the market, because we're going to get the flip flop uncertainty of our history. Larry summers would probably be a minus for the market, at least in the short term, because he's expected to be a hawk now right now. There isn't public discussion that larry summers is even an option uh. In fact, he we're not even aware that larry summers has been interviewed by joe biden.

Maybe he has. We don't know everything, but we don't believe he has so right now, the highest likelihood, the largest like. If i were a betting person, i would probably bet uh somewhere around 70 chance that we end up keeping powell, maybe a 20 chance that we end up with brain art. Actually, i probably call that 25 and maybe like a 5 chance that we get some crazy shock out of left field uh and we get something like a summers that could potentially lead to some negativity in the market.

But otherwise i i'd say the the fed issues here are uh more bullish than they are not bullish. Uh odds, wise, like the expected value here is, is, is very bullish for the economy uh and for markets, and it's difficult not to be investing in the market. Right now, because the market's just zooming, now i've gone to cash to some degree, i'm about eight point: uh four percent cash uh, and it's mostly because i'm looking for those opportunities and as soon as i find one that i feel confident in i'm going to jump On it and of course, once i find that i'll be sending alerts in stocks and psychology of money group so use that black friday coupon code check out the programs link down below and folks we'll see in the next one thanks so much goodbye. You.