Okay, quick preview on the FED minutes that are coming out at 2 P.m Eastern 11 A.M Pacific time today. these are going to be a massive deal because these are going to be the minutes from literally during the banking crisis. So March 22nd was the meeting. The Federal Reserve usually makes their decision on interest rate increases about two weeks prior to their Fed meeting.

so in other words, the FED might be making their decision today for whether or not we're going to get that 25 basis point hike in May at the beginning of May May 2nd. I Believe that we will now I Believe that we will because I think it would be a good that the Federal Reserve ends up going for a five percent terminal rate psychologically would be good for anchoring inflation. Uh, and keep in mind that meeting starts on the second, the actual announcement will be on the third. So I just want to clarify that.

So I do think the FED will end up going 425 BP and we'll probably see the market continue to price in a slight tilt tow towards that 25 BP But anyway, these minutes will show us how the Federal Reserve balanced inflation and the banking collapses of Silicon Valley Bank Signature Bank and the other banks that collapsed as well and the drama going on with the Regionals uh potential for a bank run how they responded. So what to expect? Here's an outline of uh, what to expect now first officials uh, comparing scenarios for should they keep hiking. What about quantitative tightening? How do the new liquidity facilities affect quantitative tightening? Is it possible that as the FED balance sheet goes up, they can keep raising interest rates? I Mean aren't those counter-intuitive to essentially on one hand be printing money and on the other hand be raising rates we expect today in those minutes to see the evaluation of how they came to the decision to make sure to keep fighting inflation and one of the things that I'm going to be looking for in a minute. Or you know, let's make a list of things that we're going to be looking for in a minute.

So the first thing that I would be looking for in the minutes is going to be economic strength. That's probably one of the most important things in the market right now is we want to see that the economy still has strength. The Atlanta Real Now GDP forecaster shows that we're still above two percent for real GDP The FED expects GDP to fall as low as 0.4 by the end of the year. By the last summary of economic projections what went into that? What data went into their projection that GDP is going to fall to point four percent by the end of the year and I want to see in the minutes what contributed to their fear that GDP was falling and they believed that we could still hold GDP positive.

So the first thing I would write this down to prepare for the minutes? Number one Write down Economic strength. That is probably going to be one of the most important takeaways from this next minutes report. Forget whether we're going to get 25 or not. 25 or not is going to be a fart compared to whether or not we go into a recession.

Whether or not we go into a recession, that's going to be the big deal and so focus on economic strength in these minutes. Number two: Obviously, any kind of hints uh, for getting to a terminal rate and further banking stress and event Number three: I'm going to write down their analysis of the credit crunch I would expect something like look, we've already seen a credit crunch. Are we seeing any accelerating of a credit crunch? The fourth thing I'm going to be looking for is any kind of housing indicators that they're seeing. Obviously, we've seen extremely tight Supply which has led housing prices to actually start trending up again despite interest rates remaining relatively high.

so focus on those here. Uh, then the fifth thing, and the last thing that I would focus on in the minutes is any kind of commentary on how quickly they want to get inflation down. so the timing of inflation down, and so those are going to be. We're going to be looking for words like average, opportunistic, uh, flexible.

Any kind of average. Well, we already said average two percent, right? Uh, Flex A fate if we get any reference to fade, it would be a game changer. I Suppose a sixth thing that I would be looking for would be also any kind of suggestions on the timing of Uh Services disinflation. When do they need to see Services disinflation? Remember Super Core today came in at point four percent for super Core inflation.

Super Core CPI Uh and uh. and maybe the timing of housing disinflation because even though we expect to see housing disinflation, we just went from 0.8 to 0.6 which is great, but it's still hot. When are we really going to see that roll off? Uh, JP Morgan believes we're going to see that roll off somewhere around June or July We're sitting just now in getting the March data, so maybe we're still three months away from getting that housing disinflation. Can the FED reiterate that three-month away housing disinflation? What about Services disinflation? If we're at four point four percent super Core right now, that's 4.8 percent annualized, 4.8 annualized is obviously way too high, and if we're at 4.8 percent annualized, when is that going to come down? How patient is the Fed willing to be? Does the FED think if they can pause at five percent, will CPI Super Core come down? Remember Super Core is really those Services X housing I do not believe and I'm going to write this down as number nine.

This is going to be the Uh start stop. A lot of people think that the Federal Reserve could just pause now and then pick it up again. In fact one of the new Fed board members Mr Gouldsby which when you write it, it's really funny but I feel bad for them but when you write Goolsby the autocorrect changes it to foolsby and he wrote or or said in an interview yesterday prudence and patience to assess tighter conditions uh, what would be wise and he suggested holding on further rate hikes until they have more information. but that suggests the start stop method I Don't think they're going to go for start stop.

The reason I don't think they're going to go for or stop start stop start again is because that's the mistake they made in the 70s during Aaron Burr uh and his Federal Reserve governorship. What the Federal Reserve did is they raised rates and then they saw the economy slow and then they paused and cut rates and then inflation reanimated. And then they raised rates again And they basically kept trying to adjust the temperature of the stove without considering the lag time that it takes for the heat to actually get to the food. And then they kept overcooking the food and undercooking the food, over cooking undercutting and it's like stop touching the damn dial, just set it and forget it and then and then cook with that.

uh and so the reason that's a problem is when you have that method is people watch you cooking at the stove and they're like you've lost your marbles. You don't know what you're doing, you have no control over what's going on. And when people believe that the Federal Reserve has lost control which, believe me, plenty of people already believe the Federal Reserve has lost control and that they're not jobs I Get it? Okay, there are plenty of people who ate the vet and I don't want to come across as a fat apologist because I agree. I think they've made some mistakes, but I think they could still end up being right on transitory inflation which is fantastic or would be fantastic for the Nike Swoosh recovery, which is obviously something we're making a bet on putting our money where our mouth is.

But what I really want to focus on here is saying that the fed's not going to repeat that. So I really doubt we're going to get any kind of like pause and then restart If the Fed pauses They're done I want you to write, write that down. Hold me to that. If the FED pauses, they are done.

This tightening cycle is over if that pause occurs. Now, what I will say is uh, the five-year break-even rate is still a little on the high side. I'd like to see this come down substantially I'm going to show that on screen here in just a moment. Let me pull that up.

Do keep in mind today is a coupon expiration day. Prices will be going up for those programs on building growth today. Email us for a bundle coupon code at Kevin.com if you'd like to bundle up. So what do we have right here? Well, what we have is the five year Break Even chart.

This goes all the way back to the beginning of 2022.. let me also go back to the five year, but look at where we sit. Unfortunately, we still have some work to do here we really want to see in order to see rate Cuts We would love to see this get down to about 1.6 percent. Uh, and while we've got a nice a rough downtrend, the downtrend was a lot better.

Right here. We broke that downtrend because of the January data. This downtrend was broken. Now we've got kind of a a crappier trend so to speak.

If we could get back down to Trend, we'd be over here at 2.15 Hopefully we Trend down to this level and inflation break evens are so important because they're really a way of the FED saying hey, uh, You know, as long as inflation expectations are anchored, we're okay. We don't have to keep raising rates. Uh, and that's good. But as soon as this really breaks out which it really started to going into the banking crisis, you end up having problems Now in order to go.

If you go back to 2018, you'll see that we actually have to get this right chart all the way down to about 1.6 to iterate fed. Cuts So that does indicate we still have some work to do with the Federal Reserve We'll see, we'll be getting those minutes today. I'm excited to see what happens. Uh, so we'll see somebody here.

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with that said, thank you so much for watching! I've got to get ready for the course member live stream. Remember, you get lifetime access to all of the course member live streams if you join the programs linked down below. Not only do you get lifetime access to all of the programs, uh, when when either of the programs you buy, you get all the access to all the content within them. Uh, and uh, lifetime access to the live streams.

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So thank you so much for being here! Wish you all the best and I pray that the Nike Swoosh holds so we can continue on our path to recovery today. CPI Data was fantastic. Let's hope that the minutes continue to reiterate that and we'll see you in the course member live stream in a few minutes. Thanks so much! Goodbye and good luck.

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