Okay, folks in this video we're going to talk about what someone over at the fed just said, but importantly, i'm also going to lay out a bit of a criteria for what would the conditions be for kevin to flip-flop again in the future. Now that flip-flop parts gon na be about five to six minutes down the road in the video. So you can watch the fed part and then understand the conditions for the flippy floppy floppy floppy flippity-flop, and this video is brought to you by the courses on building your wealth link down below with a coupon code expiring tomorrow and medkevin.com ftx, to sign up for An amazing crypto brokerage with tradingview, hey everyone kevin here. We just got an update from one of the federal reserve members, mr evans and mr evans, on the dove to hawk scale.

Always important to compare to the dove to hawk scale sits kind of more on the dove side, but he said something this morning that, in my opinion, gave a little bit of fed policy action away and it's, in my opinion, bullish and i think it's worth paying Attention to now fed evans is not a voting member in 2022 he's a voter in 2023, but why does what he said matter? Then? It's because he said that he believes his beliefs are in line with the median fed view. So, in other words, he feels he's in line with not only the median scp forecast, the summary of economic projections, but he's also uh in line with, essentially the sentiment of the average of everyone at the federal reserve. No guarantees he's he's not as powerful as powell, but if he's saying he's in line with kind of the middle ground, let's at least hear out some of the things that he said. So he told us he tells us the following, and this is always a very important setup.

Okay, so he's in line with what the fed belief is, and the first thing that he talks about is higher. Inflation would become embedded in expectations if policy doesn't respond. So the very first thing he says is hey. We got ta, we got ta work on those expectations.

So, let's step back for a minute last week, the federal reserve tells us hey we're. Basically, in so many words, planning 725 basis, point hikes going straight to basically 1.75 to 2 by the end of the year. That's what they expect. That's, basically what they told us a straight line, consistent 25 basis, point hikes, so what happened? The stock market rallied and at the same time as the stock market rallied inflation expectations, shot up.

Remember if you want to look at inflation expectations, there are two one: our inflation consumer expectations, which usually the university of michigan, puts those together and we get those new numbers tomorrow and then you have the market's expectations of inflation expectations. This is that line line goes up. Inflation expectations up well after the meeting inflation expectations went up, which is a problem. So what happened this week, the fed's like crap the stock market's going up, which is risky, uh valuations, go up.

That's that adds risk to the market at the same time as uh inflation expectations are going up and it's the first thing that evan starts talking about is yeah. You know expectations uh, you know we don't want inflation to get embedded in expectations. We have to respond. So i think the federal reserve this weekend had a powwow and kind of like a huddle and they're like all right guys when you go out there this week, you make sure to drive those expectations down, because if consumers expect and the market expects high inflation, then We self-fulfill higher inflation and it's literally like they're, losing control.

This is bad. This line keeps going, they will have to rug, pull us and i will have to flip-flop again. If this keeps going. I have no plans of flip-flopping, but when the data changes you have to respond right, so no no plans right now.

I think us sitting at like the 38 on the fibonacci retracement for the nasdaq is like this is. This is like no there's no point selling here. There's no euphoria in the market. There's no excitement, but what else did he say? So he told us he's in line.

He again talked about these expectations, which everyone from the fed has talked about so far. But what's the big thing that he said well, the big thing that he just said is over here on this other page i got to go to. He says he is open-minded to the idea of a 50 basis, point hike, but we a still need time to assess the bottlenecks and he's more comfortable with raising at each meeting by a quarter point that he expects inflation to cool over time and that, while we Should be nimble, he would prefer seven quarter, point hikes for 2022 and remember he's the one that says he believes he's in line with, essentially the average of what the federal reserve believes. Oh, i froze a little bit there.

We go uh which that to me is very interesting because if you've got a person saying hey, i'm kind of in line with the middle and he expects six more 25 basis point hikes this year and that yeah sure maybe we'll need a 50 basis. Point hikes. But we need more time to determine if, if that's actually the case, now we're getting a lot more of a relaxed point of view than this aggressiveness that we had earlier in the week from jay powell and people like bollard j-pal is not wrong to say nothing. Stopping a 50 bp hike, but i think the market's reaction was was so negative to him even suggesting it, and i think it was really their attempt to just drive down expectations.

That's it evans giving us a little bit more of a bullish outlook that, let's wait. Let's get some data first, and this is where we could look at the next cpi sets coming out and the next one comes out on april 12th, actually april 12th, so mark that down april 1st for jobs april 12th for cpi and then uh. The next fed meeting isn't until the first week of may now before we talk about the flippity flop, quick shout out to ftx, go to metkevin.com ftx use code meet kev when you sign up and download their app and you will get free cryptocurrency on every cryptocurrency Trade over ten dollars and their technology incorporates trading views. Amazing trading features okay.

So what are the conditions for a flippity floppity flop? So my belief is that if we have 25 basis point hikes throughout the year, that's not a rug, pull, i think fear gets extracted from the market. We don't have a fed rug poll, we don't get paul, volcker. Inflation starts inflecting down, hopefully, war ends. Commodity prices.

Come down, and then we deal with some of the known issues that we have and we stop getting these sort of black swans that keep popping up. Creating all this massive fear which has to get priced into the market. Well, as we remove those new fears, not necessarily solve all the problems, but as things start getting better, the market will react positively. In fact, i think, towards the end of the year, if uh war's over commodity prices start coming down, supply chains start getting better and, let's just say, inflation starts inflecting down and we start seeing this trend of it actually falling because of base effects.

That is comparing to last year - maybe uh. You know some of the the month-over-month inflation starting to inflict down because we're finally starting to reduce demand a little bit and we're starting to uh, see an inflection point down in uh in supply chain issues in in that case, well, stocks will rally. I mean those are going to be the conditions for all-time highs and you're going to want to be exposed to equities right. So what would the condition be for potential flip-flop? Well, it's sort of a gradient see in the scenario that i just described.

There's no point to selling you: you want to be in the market imo, not financial advice, if you're, if you don't want to do anything by the way, if you don't want time to work at all, just being like vti just buy the s, p 500 or Whatever buy an index fund or buy a basket, you want to diversify, get get a little, throw a little nasdaq 100. In there, some russell 2000 throw the s p 500. In there and boom. You got yourself a little basket of index funds right.

You could do that easy, easy peasy, peasy, peasy uh. You get a little exposure. Everything hey get some dow 30 in there as well right, okay, fine, so one extreme is, is really not the extreme. It's sort of my baseline expectation, 25, 25, 25 and things start getting better.

Okay, great you want to be in equities, the other extreme would be. The federal reserve loses control which maybe they already have a lot of people believe they already have. The federal reserve continues to be completely wrong about inflation. We expect it's going to get worse before it gets better.

We already know that the fed has delayed their peak inflation expectation by about three to four months, but three to four months come around and inflation's consistently. Worse, it's not inflecting down and the fed says you know, forget the whole 50 bp hike thing we're having an emergency session and we're yoinking we're going we're going to raise rates, one percent instantly or two percent instantly, and the fed says we at this point. We have to get inflation down and it's going to lead to hardships and stocks. It's going to lead to aggressiveness.

Whatever we got ta we got to hike, we got a yoink. Basically, if we got that kind of u-turn, i would probably flip-flop and sell everything and here's. Why? Because right now in 2020 we had the fed very supportive. So let's say this is happy face and then over here is sad face right.

The fed was our friend. It was like pump money, pump, money, punt money, print print print print. Then they're, like okay, we're gon na we're gon na print less money, we're gon na stimulate less. It basically was like here's, your 2020 here's, your 2021 and now they're kind of like okay, we're we're done printing money.

We have still accommodative rates, but we're done printing money. This is kind of like 2022 and then they're expecting midway through 2022. To start tightening like this is where everybody's freaking out right now right. If the fed comes to us and says yeah, we got ta, basically paul volker this to get inflation down.

They are going to force a recession and if they go dirty like if that's a 25 basis, point hike and balance sheet reduction over here and a 50 bp hike is just a little bit faster. Well, if they go dirty and they go yeah, no we're just gon na have to like jack rates real fast, because yeah it's out of control now, and they do something like this. They will literally force a recession, is on purpose, called a forced recession because forced recession crushes aggregate demand and when you crush aggregate demand, inflation goes away. Fast, it'd probably be a short recession, but it would go.

It would crush inflation very very quickly and it'd be over, so we're not in this realm we're not even we're not even anywhere in the blue right now, uh. In fact, we are probably if i just drew this dotted line, i believe we're likely for the fed. Just to say, let's wait, let's be patient, let's do the 25 bp hikes. Let's do this.

I think the market can sustain this. I also think the market can sustain. You know one or two 50 bp hikes and then we'd be almost like on this path. Right.

I don't think the market can sustain that, and so you would want to sell as soon as they announce they're going paul volcker and you would want to re-buy once they say: okay, we're done, we did it. You'd want to rebuy there right uh. I i don't believe we're on this path. Again, i don't think one or two 50.

Bp hikes really matters uh. You know, i don't think this is actually going to do anything to bring inflation down. It will just make it seem like the fed's doing something and when it seems like the fed's doing something, maybe inflation expectations will chill axe a little bit and we'll start seeing inflation come down and really you in that case you'd want to be in equities. So hopefully this provides a little bit more insight, make sure to check out our sponsor link down below ftx and we'll see you soon.

.