Hey everyone kevin here, the fed's back to well doing what they do best and sending the market on a spiral straight down again, and this has sort of been the history of the federal reserve since quite frankly, february of 2021, when every time it seems like they Talk things just go down and that has only gotten worse since december, but wait a minute. What did the fed tell us yesterday and how does that contrast to what we heard this morning from loretta mester, or does it contrast? Let's talk about that and strategies going forward so folks, you know i'm a big fan of paying attention to exactly what the federal reserve is saying. Two days ago i made a video and suggested that i believed that the federal reserve is going to have a very difficult time being hawkish, because it could lead to stagflation if they hawk and then they end up hurting unemploying employment right by leading to an increase. In unemployment and not getting inflation down quickly enough, then you lead to a stagflationary recession, which is a double failure of the fed, and this is where you can ultimately end up with some sort of totally weakening of the dollar regime change.

I mean terrible things. Come out of a stagflation, so we don't want to go in that direction, and so yesterday it was no surprise that powell, in his testimony before the house, keep in mind he is testifying in front of the senate as we speak, uh or rather, as i'm filming This video, depending on when you watch this uh he's so far been pretty much reiterating the same things that we heard yesterday. So not a big surprise here. We're not really expecting new information today, but some of the things that he mentioned yesterday.

There were four big things he mentioned yesterday and then mester just gave us some new information on top of this. So we'll talk about mester as well, because it relates a lot to this. So the four big things powell said yesterday uh were number one. War is a game changer which pushes essentially for slower hikes and more careful hikes number two.

He compared us to 2004, essentially that maybe we need a hiking cycle kind of like we had in 2004, where they basically hiked rates 17 times at 25 basis points in a row which is slow and steady, no rug, pull there number three uh powell uh says That we might be okay, raising the neutral level of inflation from two to two and a half percent to some level higher. We don't know what that level higher is, but who knows? Maybe the neutral level of inflation needs to be three three and a half percent and nobody's talking about fate right now, because it kind of sounds ironic to talk about fate when inflation is so high. But remember what fate is fate is a policy that the federal reserve uses it's called flexible average inflation targeting f-a-i-t pronounced fate, which again is relatively ironic, since inflation is doing the opposite of this, but anyway flexible average inflation targeting is basically always saying. Hey.

Sorry, i'm choking because it's all bs, okay, their argument is that if we want inflation to be two percent, then if inflation runs at one and a half percent for five years and two and a half percent for five years, then inflation's, basically an average of two Percent: okay: fine: how could that work in today's regime? Well, maybe if they say: hey we're: okay, with inflation being three and a half percent, we had two percent inflation for five years and we had. Oh, i don't know quick, math, five, five and a half to six percent inflation for five years. Well, then, that's about an average of three to three and a half, so maybe that higher inflation would be okay. All these things so far by the way are bullish.

All three of these things slow and steady bullish game changer. That war says no rug pull. Now we don't want to say that war is bullish, but in the case of the fed it is obviously our hearts go out to those dying in ukraine. Oh and quite frankly, both russian and ukrainian military.

It's it's terrible to see the loss of life uh, of course, uh, specifically civilian loss of life, freaking, putin, uh and then the fourth thing was that the oil price shock is not something that they actually think will create extended inflation that it's sort of just like A one-time price adjustment uh and it's not something that could lead or often leads to long-term lasting entrenched year after year after year, inflation because remember they're all about playing those inflation expectations. So all four of those things are bullish. In fact, all four of those things are kind of a little bit like a fed u-turn. In fact, if you think about it in december, and especially when we got those notes in january from them, the federal reserve basically went from uh inflation's, transitory inflation's transitory.

It's all good to oh crap, it's not transitory. We got a u-turn here. What we're getting now is kind of like this. This u-turn like like this - maybe it's not a sharp of a u-turn but we're definitely like okay hold on.

We got to be a little less hawkish here, because we don't want to uh. We don't want to go to the r word right. We don't want to go to a recessionary level which, unfortunately, the market is kind of starting to uh. To i mean as today, especially but yesterday as well, is still pricing in a little bit of the potential of the r word recession.

Now i'll show you the 210 chart here in just a moment but uh as i'm filming this video, it's freaking plummeting, which is terrible and we haven't even talked about what mester said yet so kind of going through the good news first uh. But then we got ta hit the bad news. I do wan na just quickly shout out ftx if you have not yet checked out ftx. What are you waiting for? Get yourself up to ten dollars on free cryptocurrency, linked down below check out ftx, go to metcalf.com ftx, use that link down below and uh uh.

This is, of course, what i've been using to watch btc get rejected at 44 uh and on the five minute chart, you can really kind of watch risk sentiment, move uh throughout the day, and i really enjoy doing that as well as using some of the other Technical indicators that you can on ftx so check that out: okay, so going back to this uh 210 or the 10 2 spread. Rather, look at this chart here shout out to bloomberg for this, but look at this folks. We are plummeting. This is a flattening of the yield curve here.

We're at 33 basis points the absolute lowest we've been at this morning during the course member live stream. We were like right here and we were kind of comparing like oh okay. Well, we were kind of there this morning, but why are we trending down? Yeah we went down further, it's pretty wild, and part of this is because the break-even rates for inflation are skyrocketing. So what did master say this morning that, in my opinion, kind of poopooed the market a little bit? Okay? Well, so master came on cnbc and she says: look our job is to remove accommodation at the same time as sustaining the expansion.

We have a healthy labor market, but it's very important that we get inflation under control. She does say that ukraine adds uncertainty, but now this is important to know. Mester is a little bit more of a hawk powell's a little bit more of a dove okay. But powell has a little bit more power because he's the chairperson, but anyway she says the uncertainty of ukraine does not change the need to get inflation under control.

This is true. We know it doesn't change the need to get inflation under control, but does it mean she supports a 50 basis? Point hike. She says that if anything, the ukrainian crisis adds the risk that up upsides to inflation might continue and that supply chain crises might last longer, and this is true - she is absolutely right about that. Remember if there are two forms of inflation we have.

In my opinion, we have the old, transitory inflation, which is kind of like the supply chain: uh, transitory inflation. That's no longer transitory right, so you've got the old covet induced supply chain, crisis inflation. Now you have what i call the new transitory inflation, which is the oil price spike and the ukraine crisis supply chain issue. Both of these together creates a little bit of an issue.

The good news, though, would be if, if there's any good news here is, if we could get the old form of inflation to go down, then they can point at the boogeyman of the new style of inflation and say: okay, okay! Well, the new form is definitely going to be transitory, see the old ones already going down so you're going to see this parsing out of these two different layers of inflation, either way inflation's still a disaster, but listen to this she's a hawk and when asked all Right, it sounds like we need to get inflation under control by steve leesman on cnbc. Does this mean we're going to 50 basis points? And she says no. She says my view is we're on the path to removing accommodation and we follow through with 25 basis. Point increases in the coming months, and this should put us in a good position, however, and this could be what's freaking markets out a little bit right now.

She says that we need to take actions to get inflation under control. She believes that these 25 basis point hikes in a row, can do that kind of like what we saw from 04 on right, where we had these 17 25 basis point hikes in a row. Why do we use o4 as a reference, because jpow said we want to hike like we did in o4 and let those 25 basis point hikes enter the market and let's see how the market behaves, then he does say that in terms of inflation or i'm sorry, Mester says in terms of inflation, her monitoring - and this is where things potentially get a little bit more. Not so great again, she says her monitoring is all about the second half they're, not so worried about high inflation in the first six months of the year.

In other words, they're, basically resigning to the fact that the february cpi data that comes out a week from today next thursday, the march cpi data the the april may june cpi data all of these next cpi data sets are probably going to be bad but they're. Okay with that they're, basically saying we're going to be data driven based on the second half. So what they're going to look for is an inflection point in the second half and the way we're going to look at. That is we're basically going to say, hey.

You know here we are in january inflation's sky high. It's not going to be a surprise if february inflation does this and we continue to kind of see this up ticking. You know, honestly. Maybe we even see a little bit more of a steepening because of the oil price shock, but come the second half of the year.

With our 25 basis point hikes, we better see some form of inflection point down here in june or july somewhere around here. If they don't start seeing this inflection point down, it would not shock me if, somewhere around september or october, they end up doing another potential rug, pull fear and suggesting all right. You know what this is not working. We need to start going with the 0.5 basis.

Point hikes: if inflation continues so really what the fed here has done because of the ukraine crisis is they've taken this fear of 0.5 basis points and probably delayed it about six months because of ukraine. So if we previously thought there was a chance that a rug pull in march or even an intra meeting rug pull in february because of ukraine, we've really kicked. This can down the road to about september. So about a half of half of a year, kick the can down the road in order to wait for more data, and this is something that mester says she says we have to be data driven if by mid-year, we've moved rates and started to remove accommodation and Inflation doesn't go down, we have to remove accommodation at a stronger pace now she's, just one member and remember this is a vote.

Some people think that the federal reserve acts in uh an always unanimous manner or that jay pal gets to make the decision. It's not true. It's vote based uh now she does say that we may need to move the neutral rate higher than two to two and a half percent. This, in my opinion, is bullish.

It's a way of the fed, basically saying again reiterating what j-pal said: we're okay, with these higher rates of inflation for longer, because we believe that these supply chains are going to repair themselves over time and we are going to reduce the balance sheet this year. So how do we parse this? How do we apply this to our investments? Well, look there there. There are always two ways to go here. You actually pro.

There are multiple ways to go, but i i would say the ways to look at this are number one. You could go ultra diversified by the dip and not worry about it. This would be by the dip on the indices. When you see uh the uh, you know our indices levels get relatively low either on qqq or on spy.

Maybe that's an opportunity to buy the dip. I personally, like using the day chart looking at the day chart watching the rsi. We do know that our dip here was lower than our january dip, but we're sitting right now around january lows. Maybe this is an opportunity to buy the dip on qqq and you just don't worry about it or you hop in over to the spy, and you just don't worry about it.

You buy again the lows of january, which is what we're getting right now we're not getting the lows of fab we're getting the lows of january right now you buy the dip and huddle and forget about it if you want to be more risky while risk on. Obviously is going to be anything tech related, so, for example, tesla today got rejected at 880.. You get rejected at 8.80 and look at it now we're at 8.49 you're getting a little bit of a sell-off on those risk-based assets. Again, draftking space, neo cloudflare we're going to see this pattern continue, probably honestly for the rest of 2022.

I don't think there is a rush to buy these individual stocks. This is uh. Now i am more in the market uh than than i am cash. I'm about 70 in and i've been looking for opportunities, sort of fear, days, uh to add and and to buy positions, uh of course, every time i make a purchase, i send those alerts out in stocks insight group link down below but most importantly, the the way To invest in my opinion in 2022 is uh, follow very, very simple rules.

Number one stay out of margin number two understand: if you're going into risky trades and you're you're, not diversifying well you're only going into tech, your portfolio is going to fluctuate a lot. If you want some balance in your portfolio, maybe you consider getting into let's say: uh, you, you add a little bit of wheat to your portfolio right, uh w-e-a-t! This is the uh wheat etf. Maybe you try to even get into some of the uh fertilizer companies like uh nutrient over here nutrient up again about one percent today, but obviously it's had a little bit of a run here recently. Maybe you add uh even a lockheed martin, which yesterday was selling off, let's see what it's doing today, yeah today it's down about one percent, but maybe you add a little bit of these to diversify in your portfolio a little bit or quite frankly, another thing that You can do is maybe purposefully stop buying a little too much of the energy and attack stocks.

And if you have a lot of tech stocks or you have a lot of crypto assets, maybe you take a certain percentage of your portfolio and you throw that into the index funds so that way, you're diverse you're, using the indices as a way to diversify right. So, for example, say you're, 60, tesla tech and energy. Well, maybe you take the other 40. You just park it in the spy at 4, 30 or you just leave it as cash.

Very, very, very important to remember that if you have no use for your cash other than investing this argument that your cash is trash and loses value is the most basic, stupid and wrong argument ever that keeps getting perpetuated on social media youtube and tick tock. It's so ugly, cash does not lose value when what you're trying to buy goes down. Okay, like i i i it blows my mind that when people try to make this argument that hahaha kevin sold tesla at you know 1070 and 954 hahaha what a loser kevin sold, tesla and then i'm buying tesla at 700 or 745 or 750 all levels. I was buying tesla at that somehow my cash has lost value because inflation's high.

That makes absolutely zero sense. Inflation has enabled my cash to actually gain purchasing power, not lose purchasing power. So look i'm more cash heavy than i've ever been before uh. You know in over the long term, in the short term, i've clearly entered the market uh quite substantially being about 70 in, but i'm still 30 cash heavy and i'm not very anxious to buy.

I feel well positioned uh. I did add a bit more after j pal's uh, you know sort of a bullishness yesterday. This is obviously going to be balanced by uh, increasing warfare, uh nato fear increasing inflationary fears. I mean brent ran up to like 116 yesterday.

Obviously, they're going to be these sorts of fears that continue to perpetuate, but that's, okay, those a lot of these things are going to be shorter term. A lot of these things create opportunities in the market, i'm not looking to jump out of these positions anytime soon. I am looking for good deals, though, and that's what i'm waiting for with the rest of my cash hola, so uh, that's sort of my thesis now and uh yeah. I am very glad that the fed has sort of removed, at least for the next i'd, say.

Five to probably eight months, the potential of a rug pull and i think that's that's a very positive u-turn by the fed. So thank you so much for watching this. Hopefully this was insightful. Let's see what other news there is and you'll hear it from me thanks.

So much bye.