Welcome back to another release of the Federal Reserve Open Market Committee And minutes they release in about four minutes from the start of this video and we should go through some preview of what to expect first. it's worth noting that in the last press conference from Jerome Powell drum Powell mentioned that he believes policy was almost, uh, tight enough. Uh, that policy is is tight and maybe we're at levels of being sufficiently restrictive and their goal has always been getting to sufficiently restrictive. Well, uh, just about a week and a half ago, Jerome Powell confirmed that policy is sufficiently restrictive.

So we've kind of now gotten to where we were pretty darn well believed. Jerome Powell and the Federal Reserve board are going to vote for a pause, especially that even someone like Neil Kashgari has been convinced, finally convinced to potentially pause. This is very good because Neil Kashkari isn't the biggest fan of pausing himself Now he's talking about basically having his arm Twisted into pausing. Which is kind of a good thing because we want to pause.

In fact, there's now a lot of talk that's starting to brew up more so than there is talk about inflation about potentially deflation now. I Know that sounds absolutely ridiculous to think about right now, but we are now 11 months after the peak of inflation and the Fed was really late to catching inflation. Is it possible the FED could make a mistake in the opposite direction? and basically what could happen is maybe we don't actually go into an inflationary recession. We go into a deflationary recession.

If The Fed is too slow to Pivot. In other words, a deflationary recession is something that looks like, hey, all of a sudden prices are falling. why bother spending anymore if prices are falling. The psychology of prices falling would actually encourage people to save money when they could.

Obviously, outside of things they have to spend money on, and the psychology of saving money, uh, going into a potential recession, which is something we really haven't seen much of, might be that icing on the cake that actually finally drives us into a recession. Now those are just some fears that exist right now. We don't know how founded they are. Uh, we'll find out obviously over the next year.

but there's talk that now this deflationary, uh, you know problem uh could come and questions are coming of Will the FED recognize that early enough? Who knows. But what I can tell you is I Highly doubt the FED is going to say a word about any kind of d deflation anytime soon. That's because today, most consumers, most individuals still believe that inflation is a big deal. They will suffer businesses lying to them, where businesses say hey, we'll let you protect yourself from inflation for the next three years kind of like Dish Network is doing.

We'll just let you pay the highest prices and even though our ability to raise prices is going down, we'll just lock your price in for the next three years to protect you from inflation. Isn't that nice of us? No, no, it's a brilliant marketing idea, but it's a lie. It's all founded in a lie. It's like ripping people off and and basically calling people clueless.

But then again, that's exactly what you expect. It's this. It's exactly what you expect consumers would fall victim to because consumers have this lagging impression of, well, prices are so much higher. that must mean inflation is bad, right? No, that's not how it works.

But anyway, we're about 10 seconds away now from the release of the Federal Reserve board minutes. And uh, let's see. The first thing we're going to do is we're going to kind of look at some of the reactions that we get through the tape. Here we go.

and then once we get the actual Um Doc, we'll be going through that as well. So Fed Uh minutes show officials split on support for more hikes that's as of May Uh, remember Neil Kashcari was getting his arm Twisted into this idea over uh, maybe credit tightening. Although credit tightening has happened, it hasn't been. maybe that terribly bad.

Uh, Fed officials saw timely debt limit increase as essential. They stressed a data dependent approach. Uh, talked about Cuts being unlikely. Now, this talk about cuts being unlikely is not a surprise.

Of course they're going to say that because they have to say that for now, we've got uh, the officials viewed a uh debt limit hike is essential. Uh, of course we're gonna make sure. uh, that gets I I Almost like I wish I could say I guarantee the debt limit is going to go up, it's going to go up and then stocks are going to be focused on the FED in the next inflation report itself. Uh, key takeaways and then we're gonna go through the actual report.

Policy makers appear divided about whether or not further rate increases would be necessary. This is very similar to what we saw with Neil Kashgari getting convinced. over this last month, some officials saw additionally tightening warranted like Kashkari don't think Bullard Bullard was uh, is somebody who's not a voting member even though he's a hawk. Several figured it was time to stop hiking.

See, that's great. Several wanted to stop hiking, some wanted to hike more, but Kashgari is one of those some and we already know he's been convinced to pause. Policy makers emphasize communicating a data dependent approach. A timely increase to the debt limit is essential.

Fed reiterated a forecast for a mild recession starting later this year. That is something that pretty much every analyst on Wall Street is talking about. Uh, let's see what we've got here now that we've got the actual notes. In terms of financial sector leverage going into the period of banking stress, Banks of all sizes appeared strong, with substantial loss absorbing capacity as measured by regulatory Capital ratios fine well above the Great Recession This is basically say, hey, banks are better now Staff Outlook: Here we go: Staff Forecast Prepared: Uh, uh in may continue to assume that the effects of the expected tightening in the bank credit conditions amid already tight Financial conditions would lead to a mild recession questions starting last later this year, followed by a moderately paced recovery.

Interesting. Uh, Okay, so then we've got uh. let's see here straight away: Uh, headlines, blah blah. Mild Recession forecast.

Okay, Yep. so so far, nothing in in the summary. Nothing scary yet. Now we're going to go through some of the details here.

Let's see here: Powell Said that his own forecast did not include a recession. That is true. Uh, we have nine results for inflation. What do we have for disinflation? Zero results for disinflation.

The one time they had disinflation mentioned like seven times, the market just skyrocketed. Uh, all right. so we've got nine mentions of inflation respondents. Upside? Uh.

Upside Inflation risks. Uh, albeit less than they did at their March Meeting inflation expectations. This is very big. They're talking about the University of Michigan Consumer sentiment.

Uh remained within the values reported in uh, recent months for longer term near-term measures of inflation. Uh, expectations from these surveys moved up, but we're still below their peaks of last year. That's good. Remember, if those inflation expectations de-anchor we've got real big problems, so we don't want that.

Uh, do keep in mind the five-year break even has started to take up a little bit. It's still way, uh, below. what anything concerning. It's uh, at levels that are consistent with basically being at lows of the year.

Uh, and uh. It was slightly off of the lows though as I because the last couple weeks it's been going up. Uh, the way to look at it. It the easiest way to look at the five-year Break Even is just by looking on screen right now so you can see obviously this massive downtrend here at the bottom right corner.

Uh, you can see we were lower on the five-year Break Even which we really want to see this number go under two and then I would start assuming the FED might start cutting. We're sitting at 2.18 right now, which is nice for a downtrend over the last 12 months, but still, we got to get this down a little bit more. so we've got some more work to do and the FED is picking up on the fact that inflation expectations are popping around a little bit, especially in the short term. Uh, let's see here.

Okay I Want to see where they're potentially talking about Cut? Do they use the word cut? And then we'll go through some more of this with inflation? Uh, see what? Okay, apparently I cannot type the word c Okay, okay, no, I cannot. Okay, that is the weirdest thing ever. Um, the C button is broken I can't do it I can't cut. Um, okay.

I will steal the letter C from consumer right there. I will paste it. Oh, of course that works. Cut: No, there's there's no, there's no word cut.

The word cut was not used. Okay, so uh. let's see here. then let's go to rate.

Uh. and if we go with the rate, we should be able to, uh, see a little bit more. Uh I don't know what's up with the Uh keyboard today? My apologies. Uh, there we go.

Come on. Oh my. God Um, all right. Well, we'll just have to deal with what we got.

Oh keyboard, oh is El brokeno Uh, more on the split. As I mentioned earlier, the June Dot Plot update will be very clear to this. Yeah, so that's true. Oh, there we go.

I fixed it. The Uh June Dot Plot is coming out on June 14th at the next Fomc meeting. Okay, let's see. survey respondents assigned a much higher probability to a peak fund fed funds rate between five and five and a quarter than they did in March This is basically a way of saying hey, like we're probably potentially at that Peak Uh.

Respondents expected the peak to be maintained through the January Fomc meeting. Uh, that's a way of suggesting hey, we're not actually seeing any rate Cuts until January Uh, It basically means hey, We're keeping rates high for a while and prices are going up uh, which is a great but um, uh, let's see here again. We know that it's going to be very difficult for the Federal Reserve to Signal any kind of uh array eight Cuts because if they signal rate Cuts What we'll end up getting is a market that prices in these rate Cuts very very quickly, many of them already priced in and at that point the market just goes euphoric and you end up losing. Uh, this this tightness that you have in the market right now.

The tightness in the market is what's leading to a lot of this uncertainty. Now the market. Presently you ready for this. This is how much the market is pricing in for rate cuts by January which does create a little bit of disparity.

uh, sorry, it's actually rounded like this. This is how many rate Cuts we're expecting by Jan Uh, as of today, so we're looking at minus 1.84 We are looking right now at the first rate cut uh, looks like is being priced in for September Uh, that is what the market is pricing right now. So we'll put a little note right here. Current, uh pricing.

We are at a negative 1.84 by January First Cut September That's what's being priced in. So just in case you're wondering, uh, we've got. Uh, we can go through the June and the July meeting with a hold no no cuts for June July no Cuts June July That I agree would be too premature, but getting to September would give us five more months of inflation data. Uh, great.

Uh, somebody's asking. Major recession this year? Yes or no, there's no indication of a major recession anywhere. Um, regarding the balance sheet money market? That's fine. Let's let's keep going with what we see with rates here.

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more on rates. We're uh, regarding the balance sheet of money markets balance sheet runoff continue to proceed smoothly Overnight, secured and unsecured rates continue to trade well within the range. That's fine. That just means that within the F fomc, they're not having to do any kind of crazy work here.

on the reverse repo, which are remaining to, uh, remaining elevated are expected to decline later in the year. Okay, we'll see about that. Uh, let's see here: use of the reverse repo declined at times over the intermediate period in response to Uh, the basically the banking crisis. Here, several participants remark that tighter credit conditions may not put that much downward pressure on inflation.

see: I Actually believe in that and I believe that inflation is going away, but I don't think it's solely going to be uh, tighter credit conditions. Let's jump to that for a moment. Uh, let's see here. Participants also noted that recent developments in the banking sector would likely result in tighter credit conditions for households and businesses, which would weigh on economic activity, hiring, and inflation.

However, the extent of the of these effects remain uncertain. Yes, this is true. Uh, in part because of lower credit availability. Where's that part? lower? Okay, I want to see this paragraph: lower credit availability And let's see here: credit remained broadly available in the Residential Mortgage market for high credit score borrowers who met conforming loan standards.

But credit availability for households with lower credit scores remain tight, but it's always tight for them. So overall credit quality for most businesses and households remains somewhat or remain solid, but did but deteriorated somewhat. For businesses with lower credit ratings, that's okay. that's what you would expect.

You would expect lower credit rating businesses to potentially even go bankrupt. We just saw seven bankruptcies two weeks ago in in the span of one week, which is a lot bad sign for the economy. Uh, let's see. some participants mentioned the developments in the banking sector so far only had a modest effect on credit availability.

This is a way of saying, hey, maybe maybe you're not going to see that much of an effect again. Uh, The only mention of a pause came in response to that of foreign Banks Of course, when they talk about their terminal rate, uh, that's uh, that's entirely. That's their way of talking about their own rate and pausing. Uh, some central banks pause their policy rate or increase the Uh, or their policy rate increases or altered their forward guidance.

submit uncertainty. Yeah, So in other words, no mention of the word pause from them. That's okay. uh.

Policymakers always have a menu of options. That's fine. Several participants noted that if the economy evolved along the lines of the current outlooks, then further policy firming uh, may not be necessary. There, it is.

Okay. Let's find that may not be necessary. Uh, that's not. That's there.

It is. okay. Uh, so this is on page 10. here we go, taking into account these various conditions.

Participants discussed their views on the extent of which further policy firming after the current meeting may be appropriate. Participants generally expressed uncertainty about how much more policy tightening may be appropriate. Many participants focused on the need to remain option or retain optionality after this meeting. That's okay.

That's a way of saying like, hey, let's let's pause and then we can always decide to hike again in the future. Historically, that would really be bad for The Fed's credibility because Jerome Powell has made it very clear during the cycle that they do not want to pause and then restart. and then pause. and then restart it.

It creates like an Aaron Burrs kind of setup of like the mid-1970s which led to the Paul Volckering in the late 70s, early 80s. So you really don't want to start stop. Uh, once they once they pause I think the pause is in, they'll just stay longer. Some participants come commented that based on their expectations, progress, and returning this inflation to two percent could be unacceptably slow.

Who cares what? what? Who gave the time frame of how long it takes to get to two percent? Nobody? Nobody. There's no time frame for that. There's no rush. Additional: Remember the FED right now thinks it's going to take until 2025 and they're talking about pausing so they're okay with it taking another two years already.

Based on their last summary of economic projections, several participants noted that if the economy evolves along the lines of current outlooks, then further policy type firming after this meeting may not be necessary. Now I Find that very interesting because the current economy is not that horrible. Uh, this. I And so this idea Brad here in the comments of Skip June and 25 in July blacks is is literally the opposite of what Jerome Powell says I mean I Just said it I'm not going to rehash it all, but it's literally the opposite of what Jerome Powell wants.

It would be a slap in the face to their credibility. I would bet 95 that will not happen. They will just keep rates higher. for longer they are already at higher.

They do not need to keep hiking. When the pause is in, they stop. It will hurt their credibility. What's left of it to keep hiking it.

It will show them that they just don't know what they're doing. It would be very bad if the market is pricing in uh, pause in June and hike 25 in July I Think it's bullish. The only way that makes sense is if inflation is bad the next two months, that's the only way. I don't have to be substantially bad.

Uh, take a look at the Um. this here. This is the Atlanta Fed. Uh, now estimate for GDP.

This is insane. It just came out again. and what is it now suggesting? It's now suggesting that GDP has risen from 2.6 May 16th to 2.9 Another increase? Look at the Fed's GDP estimates right here. This is what the market is thinking about GDP The blue right here.

This green line is what the FED believes the market is doing right now in terms of GDP. Mark is fine and they're talking about a pause with a 2.9 GDP Read right now. that's incredible now. Yeah, there is this talk about potentially this recession in in the second half, but boy if the GDP forecasts keep going up and not down I don't know.

Uh, Okay, let's see here. Almost all participants stated that with inflation well above the committee's longer run goal in the labor market remaining tight upside risks to inflation remained a key factor in policy. Oh, look, that's fine. Uh, looking for more quotes here? Remember that share power was out on Friday giving us the strongest uh indication that is leading towards a pause Exactly.

So he. he specifically told us that Uh policy had reached its restrictive level, which is not something that he said at the last Fed meeting. That was sort of a big, uh, a big reveal there in my opinion. it was the biggest hint yet.

All right, let's see, let's keep going here. So uh Google and European commission agree to develop AI Pact Uh, who cares? Left Behind Google They're actually doing really well. Okay, the Stock's doing great. Uh Bard's doing great.

Uh, very very good. Bart has a good leg up and some things on open AI So very, very impressive. Anyway, continuing with the report, we're here for inflation readings on labor market conditions inflation pressures Expectations Bloody body bloody. We'll take you into account wide range, fine and determining the extent committee will take account lags.

This is very important. Remember folks, What did Milton Friedman tell you? Milton Friedman tells you that the FED policy operates with long and variable lags as much as 18 months. You realize the FED just lifted off 12 months ago 12 months ago is when the FED lifted off. Technically, we haven't even really felt the tightening yet.

That's why people talk about. Oh, you know we're gonna have a recession at the end of the year because of the lags of tightening. So why is the Fed gonna hike again before seeing that it's not? Anyway, they also agree that tighter credit conditions for households and businesses will likely weigh in the economy and hiring. Yes, we know that members agree that in assessing the appropriate stance of monetary policy, they'd continue to monitor economic.

Outlook Boring. Oh, what's this one here at the corner? Uh, inflation remains elevated. Oh congratulations I I Didn't know that. Let's see here.

I Wish they would just give you like this. Summary of this: I mean I guess I Kind of already read out the summary, but uh, some of this just seems so redundant. Almost all participants stated that with inflation still well above the committee's longer run goal and the labor market remained tight. Upside: Risks to Inflation Outlook remained a key factor in shaping policy outlooks.

A few participants noted that they also saw some downside risks to inflation. There, it is no freaking way. At the intro of this video, we talked about how uh, um, let me make sure I'm reading this right. Opportunity to inflation well above the long-term goal Labor market remain tight.

Upside: Risk to inflation Outlook Remain The key factor Okay So at the beginning of this video, we talked about how there's actually more talks starting to come up because of this 18 month long and variable lag for monetary policy. There's more talk now about the FED potentially missing disinflationary signals. Golly folks, if you read the earnings calls like we do in the course member live streams almost every single day you see the disinflation. It's so obvious, but when it comes to deflation, that's what we want to start recognizing or seeing.

Like is the Fed starting to be aware that we're starting to see potentially the trend towards deflation And the answer here I Have not seen this yet, at least in my opinion. I can't recall seeing this I've not seen them ever say a few participants also think they saw some downside risk to inflation that seems new to me. that is really bullish here and and that's going to spread. That is good.

This is very good. I wonder let me see if I have the last uh minutes. Let's see here: minutes of Federal? uh uh, obviously minutes I Want to just see if I have the last one handy I Don't Yeah I know they're in here, but um, for some reason the search is just not popping up so we'll worry about it later. All right? fine.

whatever. it doesn't matter. Uh, okay. so let's keep going with our analysis here.

That's that's very good though. I I Like to see this, so this is a fantastic line you want something to phone home about right here? A few participants noted that they also saw some downside risks to inflation that's great. In the same line about talking about upside risks. Fantastic in determining the extent to which additional firming may be necessary to return inflation to two percent.

Remember this right here, folks. Over time, they do not give you a time frame, right? It's not like they're saying we need to be at two percent by the end of the year. So I like personally, I think it's just ridiculous when you see these these analysts go on TV and they're like, yep, inflation's failing, but it still isn't. It still isn't two percent.

It's still well above two percent. Yeah, no sh9t Sherlock no duh. But it takes time and they're willing to give that time. Which by the way, if you want to save time, check out Stream Yard by going to Metcavin.com Streamyard so you too could stream the way.

I Do you could throw banners up which is really cool. You can put little ticker see I Like throwing these little frames around like this. pitching my AI course you want to throw up. Get life insurance in as little as five minutes or some of the other paid promotions on the channel.

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People don't even ask for zoom links anymore, They ask for a stream yard link Now Isn't that great? All you have to do is go to Metcaven.com Stream Yard to learn more paid promotion on the channel. The channel here do I still have the paid promo motion button here? Uh, somewhere? I Do I think it's one of these buttons? no? Do I No I screwed it up Uh, but that's not on streaming already. It's on my little switcher board. I Have it on Stream Yard.

That's that's where you should always keep your buttons. Is you see? Look at that. Boom. Couldn't even find it on my switcher board.

but there it is on Stream Yard. See, that's why Streamer is great Metciving.com streaming. Okay, continuing here. Markets Now think the Fed uh uh will.

Let's see what is this here so implied Fed Funds raid? Uh, sitting at 5.2 percent? Oh, that's interesting. Let me see Fed Terminal Rate foreign and let's look at this probability. Let's see what we got here: line chart and okay, okay I see what they're saying. So if the average Fed funds rate is inching uh towards uh, is inching up and uh, this is the Upward Bound of the terminal rate.

And if it goes above this, there's this suggestion that the markets might start pricing in another hike. which that would be very interesting given all of the implications that we've seen on a um on a pause. But then again, a lot of the pause has been predicated on the banking crisis, which doesn't seem like a big deal. But anyway, I I Still believe it.

But whatever. the this is actually the Bond Market. Look at this slow creep that we're seeing here. So we got our last uh, uh, Fomc meeting hike here and this is how stable things have been.

Very stable, right? So we've been sort of around this level. But look in recent days here, just in the last five or six days, as the stock market has been doing pretty well, expectations have actually been slipping up a little bit. Uh for Uh for the Feds terminal rate. Now keep in mind Five Point Two Four Percent is still within the range of uh, where the FED wants to be.

So the way to look at this or the way to understand this is Let's uh, make this text actually legible Here There we go. So the way to understand this is the Fed rate right now is five to Five Point Two Five percent. Another rate increase would be 5.25 to 5.5 percent. So if the Bond market starts getting to maybe five point at the midpoint, three, Seven Five percent.

This implied this would imply another rate hike right here at some point. Uh, where we are right now, we're just knocking on the door of the upper end of where we sit right now. That's interesting seeing this little Trend up here as the market has risen over the last few days. Okay, keep an eye on that.

Very good. So, uh, let's see here. All right. Inflation Risk: Highly attentive.

Yes, we've heard participants agree that inflation was unacceptably high. Commented on that data through March indicated it cleansed. Inflation, particularly for measures of core inflation had been slower than expected. See, this is good: Core Inflation Slower than expected.

Although Core Goods inflation uh, had uh moderated since the middle of last year, it decelerated less rapidly than expected in recent months, despite reports from several business contacts of supply chain constraints continuing to ease. That's good. Additionally, participants emphasized that core non-housing Services inflation. This is not so good.

This line right here had shown few signs of slowing in the past few months. in other words, becoming sticky, right? Uh, Charlie Thank you for saying that. That's really nice. Becoming a course member was the best choice I've made in a long time.

Information learned has already paid for the course a few times over. Worth the joy. Thanks man. Appreciate you saying that.

Uh yeah. Espg I See you and yes, okay, uh would be needed to help bring inflation down on its components. Regarding Housing Services Inflation: Participants observed that soft readings on rent for leases signed by new tenants were starting to feed into measured inflation. This is true, We're finally starting to see that turn with housing inflation sitting closer to around 0.5 percent on the month-over-month basis.

Some more work to be done. Uh, but uh yeah. a lot of a lot of uncertainty obviously around here. blah blah blah.

okay, fine, uh. Core: CPI By the way, there is a chart that we could look at on course Epi This is not going to be your super core where we started extracting some things that are volatile like Autos or otherwise, but you could see that uh, that that stickiness if you just look at simple core which takes up food and energy and this is that simple stickiness in core inflation and it kind of stuck over there on that chart. Okay, continuing on, they would expect this process to continue uh and help lead to a decline in Housing Services inflation. Uh, in that tighter? Oh yeah, here we go.

Tighter credit conditions. This is not a great mention, right? Because when they say this, it does suggest that like, hey, one of the reasons we've been talking about pausing is because we thought the credit conditions were tightened and actually, uh, act as raid hikes for us. But if the banking sector hikes or tightness doesn't actually create that tightness, then then do we need to hike more? That's sort of the door they're trying to leave open here. I Just don't see.

not a pause, but whatever. Several participants remark that high credit conditions may not push down. Uh, put downward pressure on inflation in part because lower credit availability could restrain aggregate supply as well as demand. Oh, come on man, come on I mean that's an interesting argument.

It's really saying like, hey, if if less borrowing availability is possible for uh, buyers of goods, well, it's also possibly going to hurt providers of goods. Which actually means you credit availability and tightness could could crimp uh Supply and create shortages in some regard, right? That seems pretty remarkable. But anyway, right now, it's worth noting that the Federal Reserve is expected to pause with a 64.7 percent uh level of probability that has been teetering over the last few days. it's been as low as so.

That leaves us right now at a 35 chance of a hike, 65-ish percent chance of a pause. The hike level has gone as low as 13, and it's been sort of oscillating between those two extremes. Participants emphasized uh, uh, the appropriate firming of monetary policy. Well anchored long-term inflation expectations would support a return to two percent in the longer run.

That's good. Uh, it seems like inflation expectations are relatively well anchored, but we have some work to do. we have uh I think the next University of Michigan consumer sentiment and inflation survey comes out on Friday Yes, it does. So write these catalysts down.

Friday for U of M consumer sentiment, you have a Friday morning for the Pce numbers I'll be live for that. and then tomorrow we will get the GDP annualized quarter over quarter. We're looking for 1.1 percent. Okay, anything else here, Fed: Let's see as far as what it all means for the path of policy from here for the tightening will be predicated on the data.

That's not a surprise. Okay, no no more. So the summaries have stopped from Wall Street So Wall Street's kind of done with the minutes regarding the risk for inflation. Participants cited the possibility that price pressures could prove more persistent.

But then again, we also had people suggesting that this inflation could become more persistent. Uh, there it is. Further tightening credit conditions could reduce spended hiring all which would support the rebalancing and supply and demand reducing inflationary pressures. We'll see, though basically, we don't know, and the Fed's likelihood of flip-flopping flips a lot based.

I think this next inflation report really will seal the deal as to whether it's hike or pause. But anyway. Uh, the Feds told us they're willing to flip-flop as uncertainty is high. In fact, that's the time to flip-flop That's what Ben Bernanke said when he was with Jay Powell on that panel the other day.

he basically said, at times of uncertainties when the FED changes their mind most often, let's see headline: Core Inflation showed some signs of easing. If foreign economy is fine, Okay, that's just a little recap. That's old news. Uh, uh, kind of old news over here as well.

Credit Can credit flows for businesses and households have slowed moderately High Borrowing costs Market Volatility Banking Stress: non-financial corporate bonds leverage loans slowed mid-march Fine. Okay, uh. let's see what the Uh Treasury market is doing because the Treasury market can be a good tell of what people are thinking. So bonds treasury yields pretty much flat slightly up, a little bit slightly up.

Uh, it could. It could imply less of a need to run in and buy bonds. Now, Like if the market thinks the Fed's done forever and they're going to start cutting, you would expect treasure yields to fall as people go on Rush bonds and lock in those remaining deals. unless of course they're flipping over to the stock market which is possible as well.

But I think you'd see a combination of both. You just see cash deployed from Sidelines into stocks and bonds and that should lower yields. Look at this. Look at this.

In 2025, both Total and Core PC inflation were expected to be two percent were expected I thought or expected. Now that's an interesting choice of word right there. Uh, but anyway, that that's what they've been saying. Uh oh, I think they're referring to their last SCP that's why they're saying War Okay, well, we'll get another SCP in the next Fed meeting.

That'll be quite interesting. Inflation remained elevated versus Missouri The U.S Banking system was found in resilient. That's fine. We need to raise the debt limit.

Okay, all right, yeah, we've pretty much hit all the nodes now looking to see if there are any other comments coming through the street. City Economists Oh, City is calling for a likely hike in June Well, that's anti-my expectations. It's also anti the Market's expectations. But let's write that down right now: City City Uh, Economists now expecting hike in June Uh, due to Greater risks of inflation expectations becoming, uh, unanchored.

So we've seen. that is one risk we've been talking about. on the channel is the University of Michigan's consumer sentiment survey and uh, it U of M has been rising. but uh, The Five-Year break has been relatively stable.

Uh, it's at Lowe's uh, on a 12-month basis. Oh, I'm blocking that. Sorry, uh, here. let me just hide myself.

Uh, it's been at Lowe's on a 12-month basis, but uh, it's not at Um at Ultra lows, it's starting to rise a little bit again. We saw that earlier in the video. I'll quickly show it again here. the five-year break evens, but that is interesting City Calling for that.

the more you get those economists doing that, the more the more the Fed's gonna think. Oh oh, another hike is priced in Oh okay. uh. I mean that's not to blame the economist.

They're going to do what they think and it's the aggregate of them anyway that determines what happens. But right here on the right, uh, is your five-year break? even so you can see that downtrend is present. But um, definitely still something we, uh, we want to be paying attention to? Okay, so anything else on balance. The staff saw risks around.

Baseline Inflation tilted to the upside. Yes, because uh, but also some downside risks. and because inflation could continue to be more persistent than expected, inflation expectations could become an anchored. That's true, if inflation expectations come on anchored, they don't have time to wait until February that is probably the one.

Or until March until 2025 is what. I'm trying to say. That's probably the one note to keep in mind. if inflation expectations on anchor, there is no opportunity to wait until 2025 to get inflation down to two percent.

Uh, so the anchoring of inflation expectations is a downside risk to to the market right now. Uh, that. um, so far relatively stable though. some volatility present.

and so we'll see. some of this could be as the U of M told us due to negative press. uh on inflation from Q1 Year-over-year news about price increases. Most price increases took place in the first half of 2022, so year-over-year numbers look high in uh, first half 2023? Uh, that could push up expectations basically.

So okay, all right, obviously it's it's not a clear answer. Some risk so far. the market is convinced though. Rate: Cuts started in September Pause in June Will there be some volatility in this going into? June Of course, if we get a bad inflation report and some bad, uh, inflation expectations reports, I'll have to flip-flop too.

but so far that doesn't seem likely. So I'm not gonna win. Not going. What? Not Gonna win a popular opinion here.

Deflation would help the middle class more than anything. Well, uh, that's a reasonable argument that people make. Uh, and I Love Peter Schiff Been at his house, went to dinner with his mom, his son, his family Like these are, they're great people, really great people. Uh, I would push back slightly in that uh, deflation is generally misunderstood uh, by uh, consumers in a weird way.

and uh, when we see prices falling and then we go into a recession, we're likely to see more job loss and wage cuts, which then make people feel poor and drive you into potentially a deeper recession. So the psychology of deflation is actually really bad. Uh, and um, yeah, I'll leave out of that. Nick T Several participants noted that the economy had evolved along the lines.

Uh, if the economy evolved along lines of current outlooks, then further policy firming after this meeting may not be necessary. That's Nick t for you right here. Uh, uh. Let's see here.

Yeah DeSantis is expected to announce his Presidential campaign in the next two, three, three and a half hours here. I'll be covering that uh event live by the way. So uh, stay tuned for that. I Really think that'll be really entertaining? Uh, and I'd love for you to be there? Uh, it'll be a Twitter spaces.

Uh, so I'll I'll cover it and add commentary that is at 3 P.M So buckle up for 3 P.M But anyway, yeah, Nick T is the Fed's mouthpiece I Do think it's very interesting that Nick T is choosing to highlight not the part about like City economists thinking another rate hike is coming, but instead reiterating the Feds uh, policy of likely pausing that uh, that's a good thing because that's sort of Jay Powell coming in and saying hey, uh, you know we're ready to pass you. Ready, We're ready to pass. Uh, so okay. good.

So now with that said, make sure you check out the programs on building your wealth link down below. but not only the programs on building your wealth down below. Also, consider that uh AI course is coming out as part of the make More Money course that's dropping on. June 1st free upgrade for course members.

We're also going to be doing house calls Financial audits uh, starting with course members so we'll be flying around the country visiting people at their homes doing Financial audits Eventually I'll open that up to everyone on YouTube as well. We'll see how it goes first. uh and it'll be very exciting! So uh, thank you so very much for being here And uh, we'll see you in the next one. Check out those links again! link down below before June Thank you.