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Federal Reserve game plan

Hey everyone me kevin here, so jerome powell just basically gave us a solid pathway for what interest rate hikes are going to look like now. He didn't specifically make this pathway, but what he just said gave me enough evidence to put this together. So i'm going to read this out to you, since i it's not really going to be super convenient to share screen here and then i'll tell you some new details about what he said and kind of how i derived this i'm going to try to give you The best info first right after, of course, i mentioned that this video is brought to you by ftx, use the link in the description down below and sign up for ftx. And when you sign up for ftx, you download their app.

You can throw in meet kev as the code every single time you trade crypto over ten dollars. You get free crypto, so check it out ftx via the link down below remember. This is a company that, in the future, is planning on bringing stocks uh options. Uh nfts they've already got lots of cryptos to check it out.

They are by the way i was here in miami they're advertising everywhere. This is like it's cryptocity and they're advertising everywhere. Anyway, link down below okay, so here's my projection and i'll tell you how the market aligns with this projection. Right now, the federal reserve is telling us we raised rates zero in january, so we remain at zero on the lower bound.

This is all going to be based on the lower bound, not the upper bound march. We raise rates a quarter of a percent. May we get our first 50. Bp hike now we're at 0.75.

That's where we sit now. We are now expecting at least two more 50 bp hikes. However, the path from there on is a little less clear, so the next rate hike cycle will be in june. The market is pretty much guaranteeing us a 50 basis, point hike and that's exactly what ballard and powell are telling us as long as things continue the way they are we're getting a 50 basis, point hike in june and july.

Those are the next two meetings, so the next two meetings could be quite uneventful, with the exception of the fact that we're going to want a forecast as to what happens in q4. There are a few things that could happen in q4, jerome powell today told us that the goal is to get to the neutral rate by q4 and if they do a 25 basis, point hike in the remaining three meetings september november and december, we will get to Exactly where the fed wants to be two and a half percent, that is a half percent higher than where they expected to be in their last summary of economic projections that came out in march and you'll. Remember after the march meeting, when they had that summary of economic projections, the market actually rallied for a solid two weeks, but that was followed up by jerome powell and the people at the fed, realizing crap. We need people's stocks to go down to make them, spend less money, wealth effect.

So let's just go back on the market a little bit and sure enough. They did and we've been in a bear market. I mean we've been in the real bear market since december, but we had that awesome, two-week rally at the end of march and that turned into the last six weeks being quite painful, with the exception of today being somewhat green anyway. So if we go from 50 basis points three times to 25 basis points three times, we'll literally be at two and a half percent.
I think this would be the best case scenario for the market, because we'll get to two and a half percent and it's actually substantially softer than what the market is pricing in right now, which means if we move to 25 basis points in september. We could potentially see a september stock market rally after the meeting. In my opinion, now john powell told us that they prefer to do what the market is expecting and, unfortunately, what the market is expecting is not three 25 basis point hikes towards the end of the year. In fact, only approximately 4.5 percent of the market thinks we will end the year at 2.5.

That means 95.5 percent of people are saying nope there's no way we're only ending at two and a half percent. Now, a couple weeks ago, marie daley from the fed told us we might have to go above neutral. I think we're going to hear more talk from the fed about going above, neutral john powell doesn't really know where neutral is? Nobody really knows where neutral is, but we've always thought that to be two and a half percent, and if there's talk about going above neutral, then we're probably going to see another 50 basis. Point hike if we get another 50 basis, point hike that delays the opportunity to see a more dove shift going to 25 basis points to november.

This folks would leave us with a rate of 2.75 at the end of the year, and the market with 30 believes that there's a 36.6 probability of this happening. So that means one-third of the market believes we're going to have four 50 basis. Point hikes we're going to end at 2.75. If, then, in november, we go to a 25 basis, point hike, maybe we'll have an end of the year rally.

Now, that is still not what the majority of the market believes. The largest percentage of the market believes will be at 550 basis, point hikes or potentially, even more, which is quite wild if we get to five fifty basis, point hikes we'll have a neutral rate or or we'll be at a fed rate of three percent, and if We get six fifty basis point hikes this year. That means literally all we have are fifty bases. One x no 25s will be at 3.25.

I really think we're going to see inflation start coming down by august september october. So personally, i'm i'm in the camp of saying we'll be somewhere around 2.75 by the end of the year. This way the fed can say, look we're slightly above neutral, we're starting to see inflation meaningfully come down. Let's sit here.

If inflation does not meaningfully come down, they will continue to push rates. However, there is no fed rock ball being priced into the market. In fact, 44.3 percent of the market believes we will see five fifty basis point hikes, that'll put us at three percent. I am in that thirty six point: six percent group at two point: seven five and then there's even thirteen point, four percent of the market that thinks we're going to get to three point: two: five percent: none of those are like a paul, volcker, rug poll which Would be like seeing nine percent interest rates, so, in my opinion there is no fed uh rug, pull that we need to be worried about now.
What else did jerome powell say today? Well, let's take a look, i'm just going to give you the bottom lines here, because i don't want to bs you with the garbage that he said a million times before. We already know that jerome powell believes the market works through expectations and, what's fascinating is he said, quote it's been good to see financial markets reacting in advance to financial tightening? I couldn't help myself, but i sent a tweet. You can follow me on twitter at realme. Kevin i sent this tweet while responding to some of your emails about those bundle coupons.

I'm almost done. I think i've got like 30 emails left if you still have an issue or any questions or concerns just send it to kevin kevin.com regarding those courses, but anyway, almost through all those bundle coupons with that expiring code, but anyway on twitter. I couldn't help myself and tweet something to the effect of got ta love or, like i quoted that from jerome powell, that he says it's good to see financial markets reacting advance and i'm like translated. I get great pleasure out of seeing your net worth get decimated and then the clown emoji, i'm like.

Oh no, but it's kind of true um, but don't worry the fed has sold most of their stocks before all. This happened in november anyway. Talks about how we're rolling shutdowns are still problems, uh still a problem in china uh. We have a path to assault, soft-ish landing the reporter's like hey.

What does a soft-ish landing mean that doesn't sound good like? I don't want the pilot to tell me we're gon na have a soft-ish landing drum pile's like uh. You know some landings are a little bumpier than others when you land, but you still end up landing safely. I think this is jerome powell's way of saying we're. Not going to pull the looker here, you know.

Yesterday we touched on the idea that if we needed to paul volcker, we could but we don't expect that that will be uh. You know the base case scenario that we're up against here and we think markets are tightening already meaningfully, as you can see, by the increase in the two-year treasury yield, which is a measure that dronepal prefers as one of his favorite ways of determining how much the Market is actually pricing in a tightening. Mr bullard also said today that he believes that we're going to have a fairly good economy through the next year and that we're going to start with these 50 bp hikes. But the fed really has a good plan, uh and course of action for more 50 bp hikes and so we'll see if it aligns with exactly what the market is expecting depending on how that inflation data comes down.
Jerome powell did say that this is not the time to get nuanced readings on inflation, so trying to like take apart inflation reports line by line isn't really going to help us, even though i do that uh, he kind of says, we need meaningful declines in inflation, Something very promising in order to basically go from 50bps to 25.. He also says that since the 1960s, we have not seen a time where you've had two openings for each unemployed person and a once in a century pandemic and a war, and so this is a very unique time and that uh he's optimistic. We can get through and uh have a soft ish landing, but anyway personally, i believe the biggest thing i got out of all of this was that again everything is consistent with with them saying look we're going to follow what the market is expecting. We do our job through expectations, which to me means we're going to be somewhere, probably around 2.75 to 3 by the end of the year in terms of the fed funds rate that'll be slightly above neutral, and as long as inflation ticks down there, we might end Up seeing them just say all right: we're just going to pause, we're going to wait now and let inflation kind of bleed out.

I've got my fingers crossed for that because i think we'll end up having a glorious end to the year and we're all probably going to look back to this time right now and go damn. We didn't get hyperinflation, we didn't get a fed rug, pull yeah. We bounced around the bottom yeah. We bought some stocks that were low and then they fell a little bit more, but damn i wish i bought more during that pain.

That's what i'm doing. If you want all my alerts, make sure to get the stocks in psychology of money group link down below and you'll see exactly how i'm rebalancing my portfolio when that time comes thanks. So much for watching we'll see in the next one bye.

By Stock Chat

where the coffee is hot and so is the chat

24 thoughts on “The fed s full plan – just exposed!!!”
  1. Avataaar/Circle Created with python_avatars Jack H. says:

    daddy kevin

  2. Avataaar/Circle Created with python_avatars Jack Dang says:

    love you kevin

  3. Avataaar/Circle Created with python_avatars Buckley’s Angel says:

    Brought to you by Carl’s Junior. Carl’s Junior.

  4. Avataaar/Circle Created with python_avatars J says:

    Who’s your favorite Bestie?

  5. Avataaar/Circle Created with python_avatars mike oconnor says:

    The fed ? You meat the crooks lol

  6. Avataaar/Circle Created with python_avatars Lopoli says:

    1st from Switzerland 😉

  7. Avataaar/Circle Created with python_avatars Test User says:

    Fed‘s probably bipolar though

  8. Avataaar/Circle Created with python_avatars Jeremy Friedman says:

    First view ☺

  9. Avataaar/Circle Created with python_avatars Ujjwal Sapkota says:

    First

  10. Avataaar/Circle Created with python_avatars JVCKPOT says:

    Discounts…. Discounts everywhere.

  11. Avataaar/Circle Created with python_avatars Inaam on Investing says:

    Does the man respond??? Will he do a zoom interview with me 😃

  12. Avataaar/Circle Created with python_avatars Javier Salazar says:

    2nd

  13. Avataaar/Circle Created with python_avatars TheAwesomeJassim says:

    2nd?

  14. Avataaar/Circle Created with python_avatars Kchubzz says:

    JPOW PATHWAY !

  15. Avataaar/Circle Created with python_avatars Dumpsterfire says:

    Better not be some BS Kevin

  16. Avataaar/Circle Created with python_avatars Erik Rosenkrance says:

    Let’s go!

  17. Avataaar/Circle Created with python_avatars J says:

    Yooooooo

  18. Avataaar/Circle Created with python_avatars S R says:

    Gud shit kev let's go

  19. Avataaar/Circle Created with python_avatars TJ SoLetsGo says:

    Oh sh111111t

  20. Avataaar/Circle Created with python_avatars fijicivic24 says:

    First

  21. Avataaar/Circle Created with python_avatars leeivc says:

    First

  22. Avataaar/Circle Created with python_avatars Danny G says:

    Meetdanny here

  23. Avataaar/Circle Created with python_avatars jay c says:

    Owee

  24. Avataaar/Circle Created with python_avatars Christian E.C. says:

    First

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