After yesterday, after the last few weeks, I'm sure Danny shares that for you. Danny Blanchard joins us now the Dartmouth Professor and former member of the Bank of England Monetary Policy Committee Danny The Bank of England Inflation year over year, double digits. People looking for a rate hike? Do you think that's the wrong move today? Well, I do. As you might imagine.

Um I Guess some news yesterday which was uh, inflation Rose More than folks think, but that's gone. that's passed. We're supposed to be focusing on what's coming. there's a major credit Crunch and the bank.

and the reality is that the Bank of England in its forecasts is forecasting no growth whatsoever for three years inflation below the Target and we've just had a huge fiscal tightening. So basically guys assume they're going to raise. Everyone thinks they will and what we're going to sit and watch. Here is disaster coming? Um, feels like 2008 all over again.

Who's holding what bad stuff presumably in the UK. With the mortgage markets now in disarray, we're going to start to see Banks holding bad. Um Bad Mortgages If you like that people can't afford to pay so I think this is the peak. This is a huge mistake.

I would have been voted for big rate cuts and what you'll see in the United States and the UK is disastrous. Data will show and central banks will then move into panic mode as the markets are pricing in already. Danny 25 is the wrong move. So let's talk about the Federal Reserve Was that the wrong move yesterday? Well, I think so too.

I mean we're seeing inflation now clearly has peaked. I Mean the question is, to what extent is this credit crunch a big deal? I mean our pal toast and Slot thinks that it's the equivalent of about 150 basis points of tightening. That's probably true. So this is a new set of tightening over where we were.

The FED has actually been entirely guessing. There is no economics to base their claims that this would be a soft Landing So you keep going and you keep going. But outcomes come about 18 months later. So the question is what? What is there out there that we don't know and the new reported so well on Credit Suisse and the 9 billion that UBS had to receive to kind of make up for what's hidden under the hood that we didn't know.

So at these times you should be cautious as to what's coming on. The downside? it's Hot. I Think the only question is how bad is it going to be? So this looks like a wing and a prayer. we're going to carry on raising rates.

Well, let's wait for some some data to come and my assumption is that it will start to come. I mean the markets thinks it's going to come I mean Howard says you know maybe we'll raise rates but look at, look at the FED watch until series Fed Watch Talk says markets are pricing in three cuts by the end of the year. So why would you raise when the markets think you're going to cut? So we're in confusion. We're absolutely in confusion and it really feels like 2008.

you know in the UK we've rescued Northern Rock Thought that that would solve everything. what happened was Bradford and being the Alliance unless they failed RBS fell all about the six to nine months later. So watch this space. This was an error.

shouldn't have done it. There is no economic basis for anything that they're doing and the real economy is what's going to matter. and wage growth is a big deal that's not picked up in the way that they thought. But really, the real economy I Have to cut it so wrong because a lot of people are listening to what you're saying and saying really like 2008 Banks aren't as leveraged at all.

What you're dealing with is a liquidity crunch, not a credit Crunch at least not yet. And you're talking about assets that are backed by sound loans not necessarily Mortgage Debt that was taken out by somebody with no income and who put nothing down. So this is a very different kind of scenario than it was in 2008. How do you push back against that? Every credit crisis and every housing booth for example.

The standard thing that everybody says is this times different for a variety of reasons. This time is different. It simply can't happen again. I Mean it's about it's not just about that.

Lisa I Think it's about confidence. Remember it's about confidence that the banks are whole. It's about confidence that my deposits are safe. And Janet Kellen I think made a huge error yesterday.

I mean her error is actually answering the question. So now we think, are you, you have a million dollars in some Regional Bank What should you do? Well, obviously you should pull that money up, it's not guaranteed. Then you should pull it out and take it to Bank of America So that looks like that, right? But it's about confidence. Lisa And each time in the history of the history of crises, everyone says this time is different and I think the other thing is that I mean you guys have reported on it.

What? What would you? what did UBS see under that hood that we don't know about. So I think that's a great deal of it. I mean remember as I say in 2008 Who would have thought in August 2008 yeah that RBS would fail two months later I Think you know I think it's these kinds of surprises. Let's put the uh, wrong of course.

I think you have to be mindful credit crunch. But let's put the banking crisis aside for one second. the no, no, no, no unknowns, unknowns, whatever you want to call them and just take a look at what the data was showing before this particular meeting. This sort of perhaps backward looking but hotter than expected inflation data that was persisting in the U.S as well as in the UK and other European nations.

From your perspective, have you been surprised by how sticky inflation has been? how long it has taken to show signs of coming down? Does that get you concerned at all about where we're heading in terms of Fed policy being used as a tool for financial? The way she said just like, get you concerned at all sounded like she was asking him, does that get you excited at all Obviously, because there are shops in the UK context, there's shocks imposed by Brexit. But again, go to August 2008. What you've said was essentially what people said. Then in August inflation was five and a half percent.

Within nine months, it had gone to deflation. And what we're seeing in the United States is those base effects are dropping out. Certainly, if you look at the uh, the unseasonably adjusted inflation numbers, they're really very, very low. I mean a lot of actually what you're seeing is about this weird technical thing about the seasonal adjusting.

So really, what we're talking about is inflation's high because of the way they've seasonally adjusted using new methods. So I Think the answer is that look at the way, look at the wages. Wages are not picked up in the way that people thought wage growth has been relatively benign. I Mean it's hard to read the data.

Lisa I mean it's as if people think we have a nice Playbook We have never seen anything like this other than the Great Recession Every piece of data since 1945. Yeah, today is utterly irrelevant. We have to look at other prices and what you'll see is then suddenly different inflation plummet. So I think that's what's called Danny I've got to squeeze this in just 60 seconds left if they came out and offered blanket Deposit Insurance would your view change probably would actually I mean I Think in a sense the answer then uh John is that what Wouldn't the bank of England and the Bank of Canada and the ECP have to do the same? But I Do think that the blanket Deposit Insurance would really be a help.

Certainly think that. Danny Thank you sir for catching up with us. Danny Okay, that was awesome. Let's break that down because there is a lot of information in that This guy like this is a top G right here.

and I don't mean like a top G like somebody who's stuck in jail I mean like a finance type G Okay so basically an old white guy. Okay, so what what do we have? Well look at this. So first of all this is the inflation that Jerome Powell was talking about yesterday. unfortunately during the intra meeting period coming in a little hotter than expected.

And really this idea is that if you look at averages over the last year, yes, inflation is trending down, That's fantastic if you look at average pages of over the last, say, six months. Okay, yeah, inflation also. oops. Let's go ahead and make the line actually go the way there we go.

It's also trending down. That's fantastic. In fact, the way you would probably draw this average is something more like this, since these low points right here would drag the line down right. So that's probably more of the moving average that you're looking at right now.

The problem is this this little pickup that we got right here. Why if we now look at just the last four months, Are we trending up on uh, basically Core CPI on a month over month basis, right? And this is what's creating some concern for John Powell No. I Think this individual makes a very good argument, is that Jerome Powell is so concerned about what the CPI and Pce numbers are showing. Pce is the Fed's preferred method of CPI.

It's basically the same thing. a little different with weightings, but they rely so heavily on these. uh, seasonal adjustments. and their weightings are based on some weird things.

The weightings used to be based on an average of two years of data. Now they're based on one year of data. Then at the end of every year, we change the weightings. Everything's a complete disaster.

Everything completely changes, right? So uh, what's remarkable about that is you have this individual suggesting Jerome Powell's convincing fight against inflation is what's probably going to destroy our economy. Now that means recession In Fairness Jerome Powell Kind of alluded to us walking into a recession yesterday. In fact, I would go as far as saying Jerome Powell Basically, yesterday told us the recessions confirmed folks. buckle up.

There are a few reasons for that. number one: Jerome Power when asked about out the soft, Landing basically said yeah, there's a path. we're trying to find it. but basically it's not happening.

We're going into a recession. So Jerome Powell realizes we're going into recession. Beyond that, look at this chart right here. This chart shows Jerome Powell's front end of the yield curve.

It is called Jerome Powell's favored Recession indicator, and based on this, it has always been correct. In the past, we are going into recession when this sucker inverts a recession follows within 18 months, and Jerome Powell realizes that now obviously markets change their opinion of what's going to happen with either rate Cuts or rate hikes. Based on data. For example, there's somebody in the chat here saying Kevin you initially thought 2023 rate Cuts would happen.

Then you said they wouldn't as market price. No. Cuts Okay, you have to remember when I'm reporting whether rate cuts are coming in 23 or not. It's based on what the Bond market is telling you.

In fact, I provide you, uh, the data of what the Bond market is showing you and showing you the charts saying hey, this is what the Market's pricing in right now the market is pricing in 100 basis points of rate cuts for 2023. this is the same thing that was true in November of 2022. the problem was in January and February all of those rate Cuts went away because inflation started running up. Then we had a bank thinking crisis and then the freight Cuts got priced in again.

So like you have to be careful how you how you analyze this data I I either I Want to make it clear to the people watching that whether we're having price Cuts uh or rate Cuts this year is kind of like watching a stock move one day, it's right. One day it's green. This stuff is changing every single day and what we're trying to do is pay attention to what's going on because there is a really weird Gap right now between expectations of what the Federal Reserve is going to do. Uh and uh.

expectations based on what the Bond market thinks. Look at this particular chart right here. Okay, on the right side you have these little dots I'm going to highlight them in green this right here in green at the top over five percent. Five point One percent is where the FED thinks we're going to end up having Fed policy uh, policy rates for the end of the year, right? That's where they think we're going to be at the end of the year.

Well, look at where they think we're going to be next year. I'll highlight it in pink right here right there at about 4.6 Fantastic. Well, what is the market pricing in for a terminal rate that is the highest rate we're going to get to? Well, the market is pricing in that we're going to be somewhere around uh, uh, by the end of the year 3.94 by the end of the year? Well, that's very different. That's actually substantially lower than both of the dots provided by the Fed.

Well, why is that? Well, it's because the Bond market is trying to price in this idea. That crap. We're probably going to go into a recession now at the same time as we're probably going to go into a recession. and even Jerome Powell's indicator suggests we're going into recession.

The reality is Jerome Powell Basically has to be dishonest to us. This is what this guy was saying. The guy was saying Janet Yellen crashed the market yesterday because she was honest. Look at this.

Uh, and and I Remember this yesterday because I was pitching the coupon code for the programs of building your wealth link down below where you get lifetime access to everything from learning how to be a millionaire in real estate, going from zero to millionaire, you don't even need anything to get started. You got stocks and psychology of uh, money. You've got the Elite Hustlers group learning about liability and insurances, building businesses, custom live streams in that group. All of that for which we're changing the pricing for uh, likely after this live stream here.

But anyway, take a look at this. this chart when Janet Yellen was talking uh is basically what crash the market because like this guy says, she was honest. So look at where we are here here. We had that classic W shape of Jerome Powell This is what happens.

The market goes up. When the press conference comes out, the statement comes out. rather so the the data comes out, the statement comes out the market. uh, actually Rises So it goes up.

After it goes up, it comes down a little bit. uh, then it comes up going into the presser, then it goes down and then it tends to close up. We tend to have a w shape unfortunately. Janet Yellen came out and said the truth that no, we're not backstopping Banks and markets cratered after that.

I mean the last 15 minutes of the day yesterday were a complete disaster while Jenny Healing was testifying uh, and so the individual we just saw in the interview he's like, look, Janet Yellen said the truth. What's the truth? Well, the truth is simple and the truth hurts. but it's very simple. No backstop of all deposits.

That's what Janet Yellen said and this is the first time we've really had this split screen event where you have Janet Yellen talking at the same time as Powell and they didn't have a phone call first to discuss being on the same page because Powell comes out and says your deposits are safe and then he's asked about it, are you sure and he says all I'm going to say is your deposits are safe, We have the tools Jenny Ellen's like nah, we're not going to extend FDIC And so what did this former guy from the bank of England say dude, in that case, go to Bank of America like basically get out of the small Banks and go to the big Banks It totally makes sense, especially if you have more than the FDIC limit, right? of course. But that's what we've been talking about for quite a while now. That's just the way the game is played. Oh, and so that created some stress in markets yesterday, But I actually agree with the individual that we are likely to see inflation plummet Every leading indicator I Look at leading indicator.

Not this lagging crap of these reports, but I'm talking company earnings companies forecast for hiring. What sentiment is on the ground, what business owners are doing in regards to hiring the availability of Labor Not the stupid Joltz data survey that says oh, there are all these job openings Bullcrap man, talk to people how many remote job opportunities are there They're dwindling. How many opportunities are there for getting jobs at tech companies? Very few. Uh, how much competition is there for tech jobs? Massive.

How many applications did Cloudflare get last year? For 1300 job openings, four hundred thousand, there is a glut of Labor Supply That's why you're seeing so much extra driver availability at Lyft and Uber the likes of which we haven't seen before. and it's leading to a reduction in in uh earnings for companies like Uber because you have no more Peak pricing because there's no p like. So it's kind of remarkable the the availability of Labor Supply that you're seeing that's deflationary uh as is obviously autonomy and Automation and and other leading uh factors we're seeing by the way, and this is just sort of a side rant: What the hell? Airbnb You want to rent an Airbnb for like 250 a night because it's like oh, the hotel's 250 a night, the Airbnb is 250 and I. Then when you get to checkout, it's like the 250 turns into like 600.

it's insane. Oh my. God The amount of extra fees that are added on now are just absolutely ludicrous. I Feel like rather than paying for like a room tidy up, I'm literally paying for house cleaners to do a deep cleaning of the entire house.

It's insane. But anyway. Uh, back to this. Uh, what this individual says, He's totally right to say.

Look, we're probably walking right into a recession and uh, and and the fact of the matter is I Think the easiest thing you could do is look at drone Powell's response to a question like this one I Think this, this was a good question. Watch this response right here from J-pal uh and uh, any. totally Dodges The guy when the guy's like, are you just basically giving us another false sense of hopium uh, listen in here. um, you know that's just something that we'll have to come through through softening demand and perhaps some softening in labor market conditions.

We don't see that yet. and that's that's of course, 56 percent of the index. So the story is pretty much the same. I Will say that the inflation data that we got to your point really pointed to Stronger inflation if I could follow up on that I Was curious why you don't see more coming from the credit crunch because it seems to me that's something that you'd actually uh, welcome to a degree and uh, expect, um, and are you not seeing more coming from that because you don't know or because you just don't want to have another round of wishful thinking.

So it's It's kind of interesting here. Another round of Wishful Thinking Uh, so so in other words, uh as sort of making this argument of here hey, like J J Powell Uh, you know why? Why don't you think this credit crunch is going to hurt us more? Do you really think you can make an excuse that's going to say oh, our Market's not going to crash because you think inflation is slightly still trending up and now we're going to have this wishful thinking that we could continue to hike and damage this economy and push us into a deep procession. Uh, because you had an inflation report that showed 0.04 or 0.4 percent month over month inflation? Come on. Jay Pal.

Like, you're losing the plot. The credit tightening that we're going to see could be as painful as a one and a half percent. Uh, a rate hike at least according to TS Lombard They think that could be anywhere between 0.75 to 1.5 percent. That means we're knocking on the door of of six percent interest rates here.

That's insane, of course. Jay Powell's response: It's really just a question of not knowing. at this point. There's exactly great deal of literature on the connection between tighter credit conditions, economic activity, hiring, and inflation.

Very large body of literature. The question is how significant will this credit tightening be and how how sustainable it be? That's that's the issue and we don't really see it yet. It's so so. People are making estimates.

You know, people are publishing estimates, and it's but it's very kind of rule of thumb. uh, guesswork almost at this point. but we think it's It's potentially quite real and that argues for, you know, being alert as we go forward as we think about for the right hikes for us, we'll be paying attention to the actual and all right, we'll be paying attention. Okay So you kind of get it.

It's basically like, yeah, we don't know, We don't know. Okay, but we already know that. So um, now here's here's another thing. uh, that a couple couple things that are interesting.

So I want to address this one comment here about uh, lower wage workers seeing wage hikes? Uh, and there's this comment here about cleaners. Uh, but first, I want to respond to this person: So this person's name whose looks like gag. uh, it's either two boobs and a four in between or or it's gag or her name I don't know who this is. but anyway, this person says friends don't make you pay for information.

A friend shares information that could change your life Kevin is not your friend he could share this info on YouTube freely his videos for an advertisement. Wow. So let's break this down. First of all, how many YouTube videos are on my channel and how many hours of content are freely shared on my channel? The answer is thousands and tens of thousands.

There's thousands of videos and tens of thousands of hours of content are available on the channel, so that's a a lot of information is shared freely on. YouTube The next issue that you didn't address is the fact that people are willing to pay for information that isn't available on YouTube or readily available on YouTube. Let me make that clear. the reason I have courses is twofold.

Number one, it organizes information in a row for you, so that way you can actually understand it and build your information together like if you watch a a Real Estate 101 video and then you go to a real Estate 110 video. Well, now you've lost context, right? And that's kind of what YouTube is. It serves you up really basic and then really complicated. You don't even know what you don't know when it comes to investing in real estate.

And so the beautiful thing in my opinion about courses is this organized structure for actually learning a download of how somebody views the world and gets perspective in order and in a way that actually teaches rather than in a way that gives you information that potentially is more scattered, right? I Mean many of you know I'm a big fan of wedge deals in real estate. Many of you know a lot of my principles. Uh, but that doesn't mean they've been taught in a way that's organized that. uh, that that you can adapt as easily as you could in a course.

Now sure, can we make videos on that? Yeah, and but that's what the course is. The course is 40. A lot of the courses are like 40 hours in a row of that. kind of content.

I Can't make a 40 hour long YouTube video I Can make 41 hour videos but again, the way the Algo serves it to you isn't that good. That's a uh and then B wow, How how dare a YouTube content creator try to make money, you know? I I Really Think this idea that uh oh people, it's it's evil for people to make money is really stupid I Don't know what's gotten into people's heads in America lately, but there's been this vilification of capitalism. Uh, it's really disappointing and and saddening because capitalism is disinflationary. The fact that you could learn how to be a millionaire in real estate for for 400 bucks through a course rather than going to college for four years or you know, and spending 40 Grand uh is is insane and they don't even teach you that stuff in college.

So uh, the the capitalism is so wonderful and we should really be. uh uh, you know a proponents of capitalism and people are making money. There are ways to have win-win products and services, right? I Think people have this inherent aversion for some reason of oh well. I won't click that person's link because they might make money.

Why is that bad? When somebody makes money, they're motivated to continue providing you a good or service and making it even better. So I I Don't know what this this weird aversion to capitalism is. It's like people who are like oh, I don't like your real estate startup because because you're going to make housing unaffordable and I'm like what are you smoking What makes housing unaffordable The lack of Rental Supply apply for renters What is my startup going to do? Take houses that are uninhabitable like hoarding houses or fixer-uppers and bring them to the market and then potentially add Casitas So you're going from zero homes on Market to one to two to three homes on Market Per Property like the the this vilification of capitalism and investors is so backwards and contorted. I Don't know what's being taught in schools, if it's just a lack of being taught in schools I think there's a lack of logic that's being taught in schools and it's sad.

It's really sad. and look, I'm not saying that you know J-pal has all the answers or he doesn't have all the answers. He just told you himself he doesn't have all the answers. I'm not saying I have all the answers, but the critical thinking that's that's missing in the world today is very sad.

But going back to this this hotel comment because I actually think this is a very reasonable comment. So Tom Baker here says I'm in the hotel business and it's next impossible to hire cleaners paying 18 per hour rates for rooms are going up. So this is actually is something that I think is very important to talk about when it comes to the topic of inflation. Uh, and I think it's useful to look at it.

Uh, you know on on screen here. So what I would say is if you go in and uh, basically say that the typical wage you would pay for uh, a manual laborer is 14. Let's say uh, and maybe now you have to pay 18 That is absolutely inflationary to you. That makes your costs of business go up.

Now that makes you desire to raise your room rates. but your room rates your 250 dollar per night hotel room is not predicated on what your costs are. That's not how capitalism Works your room rates are predicated on demand. So if demand for your rooms go down, you have to lower the price.

And that means you eat the difference in costs. That then creates a lower margin business. And it's It basically pushes inefficient businesses out of the market. Now just because Walmart and McDonald's are raising wages does not mean we have a wage price spiral.

After all, the average range wage in America is 32 bucks. Well, if the average wage in America is 32 bucks, even if you see lower wages go up and you have more of those, you're actually potentially dragging average wages down. Especially if you're losing higher paid wages, right? So that's another aspect to consider when it comes to inflation. What's the best way to ask for a wage? Uh, I would say wait right now I Mean we have a lot of strategies for that in the elite Hustlers group.

but this is probably the worst time to ask for a wage because it's such an uncertain time. I Think one of the best things to do right now is make sure you are invaluable to your your boss now. I Get this all the time. People are like, oh, but does my boss see the value I'm providing I guarantee you I guarantee it your immediate supervisor whoever that is.

Whether that's the owner of the company, your supervisor, whatever sees and knows which workers work the hardest, they know who's sitting on their phone all day long, and who is actually grinding all day long and those people who grind will always end up getting rewarded I'm highly confident of that. Our media and schools are corrupted. probably So I start my new career and job on Monday Congratulations. Uh, but but yeah.

anyway. Uh so these are these are interesting things to keep in mind. and I think it's very interesting. Uh about uh, what this Bank of England individual said regarding Jerome Powell I Think he's right, You know I think he's absolutely right that Jerome Powell is leading us into this tightening cycle that's going to push us into a an ugly uh recession.

sadly. Uh, and it's very unfortunate. Uh, hopefully that recession is very shallow because if the recession is not shallow, uh, all stocks are going to get reamed. If the recession is shallow, then I can play music for you uh and uh.

and and basically, uh, hope that pricing power stocks continue to do very well and uh, we move on. You know that's that's the goal. So anyway, check out those links down below for life insurance by going to Metcaven.com Life Met Kevin.com free for 12 free stocks from Weeble Uh and uh uh yeah. there you have it now.

I've run out of things to say while my music is playing I'm hoping to get you know to the end of that music because I think it's kind of cool.