Good morning everybody this is Tom Hope you're having a great week. Let's talk about what happened yesterday in the stock market. an absolute bipolar Behavior Market were green, then Powell started talking Market went red and today they seem to be green again now. yesterday I posted videos saying hey I think the FED will have to bail out the stock market and everybody in their dad commented on that video.

After two hours, two hours of a red Market saying this age like fine milk after two hours mind you. So what happened yesterday was I right and then what I think is coming next. So yesterday the markets were kind of green optimistic. Then we had the number 25 basis points increase versus the expected 50 from before Silicon Valley Bank collapse.

That along with the 300 billion bonds. the FED bot over the past week and a half basically sent a very dovish signal to the market. the market stuff climbing up. Pal came out.

he started talking, he was somewhat bullish, dovish whatever you call it and then he actually said when somebody asked them in the question segment of the press conference whether there will be interest rate decreases in 2023 and Powell said no, we're not expecting that to happen as of now now that sent the market down and then Of All Times Janet Yellen decided to come out from her office or layer whatever you're gonna I don't know where she lives or oral works and she said well you know this whole FDIC insurance for everybody even accounts above 50 250 000. we're not doing that now. That pushed the market downwards like Grandpa after New Year's Eve I mean it's basically on the floor now. Not to be judgmental of Janet Ellen She hasn't been the best predictor of governmental decisions because she said that nobody's bailing out Silicon Valley Bank and Signature Bank and that literally happened a couple hours after she said they're not going to do it.

So either Janet Yellen is not in the loop or she doesn't understand what she's talking about. or maybe it's a huge metrics I don't know I'm just a guy on the internet with an opinion. Might be wrong. Maybe an accurate might be the remix of the madman you got to do in research.

And as always, by the way, don't forget, don't click nothing, don't smash nothing, don't buy nothing Now we got that out of the way. so let's talk about it. So Janet Yellen basically did a one-two punch with John Paul John Paul said no right decreases and then yelling comes out and says no Fds insurance for everybody Market went down a grandpa right? So Market is down and then today we wake up. Markets are green at least for now.

So the first thing I expect is the same people who told me that my video didn't age well to come today and say that it aged really well. Now that we have two hours of green, of course they are long gone until the market is ready again for 45 minutes. So what happened? So basically people went to bed yesterday, the markets were red and then they really thought about it. So what did we have here? On the one hand, Janet Yellen said they're not doing the bailout, but Ellen has literally failed to predict any sort of governmental behavior of the past year and the fact that she said it really means nothing.

On the other hand, we have John Powell starting his own speech with five to eight minutes talking about the banking system and the importance of its stability Etc et cetera. So Jump Out is clearly worried about the banking sector at least as much as he worried about inflation. And if he is worried about the banking sector, he cannot raise more interest. It cannot be done.

You cannot say I want to have the cake in either two or I want to eat it and have it too. Whatever you want to call it, right. it's impossible. It's a contradiction.

Why? Well, because the whole banking system has the same problem that SBB had the diminished kind of scale. All these banks have bonds, which they purchased a long time ago when interest rates were near zero. Now these bonds are sitting on the bank's balance sheet, but interest rate is at five percent, which means these bonds now worth a lot, a lot less. And unless you hold on to these bonds till maturity, if you're forced to sell them at a huge loss, you risk having a bank run against you like Svb, All you need is a match to start that fire.

And your own pal understands that now that mismatch of bond prices between purchase and current market value is direct consequence of the high interest rates. Higher interest rates Drive Lower Bond prices lower interest rates Drive Higher bond prices. They're absolutely inverse correlated minus one. So if John Paul wants to help the bank survive this, he needs to do two things: Number one: Purchase Bonds on the free Market because if the FED is buying, actively buying hundreds of billions of bonds in the free market, it drives demand and drives the price of these bonds up, which they've been doing.

They bought up 300 billion dollars worth of bonds in a week. Just to kind of remind you, they sold 600 billion in quantitative typing for a whole year. They've dug back 50 of it in the week. So what's the complementary action to buying Bonds In the free market? You actually have to reduce interest.

You have to reduce interest to bail these Banks out. If the interest rate starts to come down, their mismatch problem starts to get smaller and smaller because the price of these bonds go up and then they're not in trouble and you don't have a bank run on your hands on Regional and smaller Banks This is literally what I explained in my video yesterday where I said the FED will have no choice but to bail out the stock market. But what I meant is to bail out the banking system. but they will have to reduce interest rates.

Do so and that's why the stock market will benefit. but that was too long of a title for me to use for a YouTube video. So Eventually I changed it to listen to John Powell's sorry, judge him by his actions no his words something like that? Never mind. So in our Zoom call yesterday, I did a private Zoom call for my members for my patrons.

The links to join are both below. It's five dollars per month and you get to participate in our community, the Discord, the zoom calls, etc etc. In my zoom call yesterday, we had a one one and a half hour Zoom call in which we talked about my weight loss for half an hour and then one hour about stocks I said I predicted this I said and you can ask any of my community members if there's any community members watching this video. please comment below and confirm what I said I said the market will correct back up to date because this was an overreaction to Janet Yellen ramblings and Jerome Powell's predictions about no rate decreases which everybody knows is.

So what's going on today Looking at the bot: Market The bond market drives stock market right? So the bond market basically came out today and said, we're not buying this we do not believe John Powell We're calling his bluff. He will have to reduce rates in 2023. Now if that happens, the stock market follows. and that's why you're seeing green until some new information or some new crisis comes out.

I Don't know, but this is the whole story of why I Said this. Now, the problem for the banks is not gone as long as the FED remains at five percent interest beyond the national debt problem, which is a whole video of its own. the Banking Crisis Still Remains So the Federal Reserve will have to both buy bonds, keep buying bonds, increasing balance sheet, and slowly slowly reducing rates. or at the very least, pausing these two things when they happen.

at least in the short term, they tend to give you better stock markets, but in the long term I'm not sure it's correlated. We have data of Fed raising interest rates and the stock market doing great. and we have data of the FED actually reducing rates and the stock market going Fufu and the economy going into the toilet. It's not exactly correlated.

But in the short term, the way the market is wired right now right now at the Stand, the market reacts to interest rate right when the interest rate Rises Stock market drops Enterprise drops stock market Rises Same with basically the FED policy. So I don't know why I'm having trouble talking but that's the whole story. I'm sticking to what I said yesterday. I was the only one who said I feel dovish about pow speech and 25 basis but everybody was oh my God no this is horrible.

The Powell just crashed the market Janet Yellen and I was dovish in my videos today I was that was in my zoom call with my patrons and community members and I'm still dovish at least until the FED decides that the banking system is no longer in risk and they can go back to fighting inflation until that happens. There's a lot of catalysts for the stock market. We have red days. We have green days.

so in case you're thinking about you know commenting below. this didn't age well. No, give it a couple days, give it a couple weeks. Let's examine this video in about a month.

I mean we will have red days and on which I expect to see you guys the haters commenting this age like fine milk as always As as always, if you haven't yet I'd appreciate it if you subscribe to the channel I'd really appreciate if you smash the like button and I'd really appreciate it if you check out stock. MVP The platform that I think is the best platform I help to build that helps you research stocks, research the stock market, look at absolutely terrific modeling options for DCFS For stock evaluation, look at Insider activity, look at actual institutional buying and selling the whole shebang. I've seen people who have no Finance Experience run a DCF in this app in about 30 seconds and you can do it as well. Seven days free trial.

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