So did we call it or did we call it uh, When Jerome Powell spoke in Washington DC the market reacted in a positive way. The market closed in the green and one of the things that I said is this seems kind of funny because what it is that he said has nothing to do with you know, being dovish, right? Let me go ahead and share with you to uh to show you exactly what it is that I'm talking about on the five minute time frame I'm just gonna jump right into it, right? Jerome Powell Spoke yesterday and all the market was looking for was to pretty much have a better understanding if he was going to continue to be dovish which means less aggressive with up-and-coming interest rate hikes or is he going to be very hawkish meaning returning back to possible more aggressive interest rates I Want you to understand the why behind this? The Federal Reserve began to slow down with how aggressive they were being with interest rate hikes because inflation was actually coming down from 9. 9.1 percent is what we peaked at and it came all the way back down to six point five percent as of the last. CPI data report reported in the month of January For those that are unaware, there's going to be a CPI data report reported on February 14th at 2 pm Eastern time and I will be live streaming it for free on my YouTube channel.

So again, make sure that you subscribe. but the reason that this is so important is the comment that he said he's been more dovish meaning that the previous interest rate hike actually can show you right on over here. The previous interest rate hike was only 0.25 percent. The one right before that in December was point five percent.

But as you can see, there was four consecutive point seven, five percent interest rate hikes. That's very, very aggressive. And obviously as inflation was at 9.1 percent, they had a reason to be this aggressive. Now that they were beginning to slow down, it was expected that that was it for the Federal Reserve right? They already announced that they're going to focus on their quantitative tightening, which simply means that they're going to be reducing their balance sheet.

and all that means is they're going to be hopefully erasing up to 95 billion dollars every single month, up to 95 billion dollars every single month on Treasury bonds and mortgage-backed securities. And what that means is, well, let me give you an example of what happens when they don't sell off right when they add to their balance sheet. I Shared this in one of our previous videos where I showed in 2020 to 2021 when they were printing all of those stemi checks right that everyone was so happy about the economy went boom right? Because if they print more money, more money is most likely being circulated. That means economic growth and that's great.

But then guess what happens to the value of the dollar? Well, that's where inflation goes up and the value of the dollar? goes down. Your dollar is worth less as you begin to print more. It's not rocket science. Now that they got inflation down to 6.5 percent, the Federal Reserve was like okay, hey, you know things are looking a lot better.

There's no reason that I have to continue to raise interest rates 0.75 percent. You know they they test it out with point five percent and then as of January they tested out with Point uh, two, five percent. One of the things that Jerome Powell said in his discussion is something that was not expected. They had an expectation for 2023 to be much less aggressive than what they were in 2022, but he said that if job reports, if economic data continues to support that, inflation doesn't consistently decline as it has been, and if the economy is showing to be strong enough that they will have to raise rates more than what was expected.

And the really funny thing is, if you guys look back to to uh, when that actual meeting actually happened. one of the things that I talked about is all of these headlines we're talking about. You know, well, the market ended in the green. You know? Uh, Jerome Powell says that inflation is actually still coming down.

But the thing that I find so funny is yesterday I highlighted one in one thing Only is it's not going to surprise me if the headlines begin to shift when the market goes down because this is what was actually set right and I wanted to show you guys this firsthand. So um, it says stock Market Uh News live update Stock Market Falls as investors access earnings path for rates So what she's trying to say is that the the Wall Street weighs in for the Outlook of interest rate hikes after Federal Reserve Jerome Powell signaled for more rate hikes may be needed than what the market has already priced and pretty much just factored. it. Is that not exactly what we said and remember the focus for for the Federal Reserve is to bring down inflation and and this is what I talk to my learn Plan Profit Group about.

I'm not even showing you guys the technical side of things right now. I'm just explaining the fundamentals of why the Market's reacting the way that it is. if you know I I Wanted to give you guys this example because you know, take someone that weighs 300 pounds if they go from 300 pounds a day, you know and they begin to work out and exercise they can more quickly. Let's say in about two to three months, let's say six months they go from 300 pounds all the way down to 250.

Okay, great How long do you think it's going to take them to go from 250 to 200? Well it's always you know as you get closer to your goal as you get closer to you know, a smaller number, it gets much more difficult to get to that smaller number. You might have lost 50 pounds in six months, but it might take you a year to a year and a half to lose that additional 50 pounds, right? It's not just just because you lost the first 50 in six months, does that mean that you're gonna lose the next 50 in six months. And the reason I'm sharing this with you is, what does that have to do with inflation? Well, in the past couple of months, right as inflation went from 9.1 percent down to 6.5 What have we experienced a consistent decline Every single CPI data report. it's been so beautiful, right? But what do you think is going to begin to happen as we begin to, you know, actually come down closer to the sixes into the fives, right? Do you think every single month it's going to continue to go down month over month? No, right.

I Mean look at oil prices I mean they've They've come down quite a bit, right? And the cost of food? Yes, it's a little bit more expensive and we might still see consistent clients. But now this is where we begin to kind of consolidate and this is where you can begin to run into trouble. Because what did Jerome Powell say? He's just setting himself up for the alley-oop because I'm pretty confident that they're going to have to raise rates more than what was expected or more than currently is being factored in? Why? Well, because it's not going to come down every single month from 6.5 to 6.2 to then 5.9 to then 5.5 There's going to be months where we might come in at. you know, from 6.5 maybe to 6.7 and then to 6.3 and I made a 6.4 and then maybe to 5.9 This is where it's going to get Rocky And the reason I'm making this video is I want look into it.

Let's say I'm completely wrong, right? Don't over complicate it. just think about what's going on. Went from 9.1 percent down to 6.5 Do you really think it's going to continue to decline month over month when the Federal Reserve begins to reduce their balance sheet from uh by 95 billion dollars every single month? Do you really think that the the, um, what's it called that the overall economy is going to feel super confident when over 30 billion dollars of mortgage-backed Securities are being wiped off of the balance sheet? No mortgage rates are going to continue to Skyrocket or they're going to begin to go back up. Real estate is going to begin to slow down.

That's going to begin to get more expensive, right? And then this is where we begin that consolidation I All I'm saying is now is where I would say the people that are well positioned right that are not fully invested but understand what is going on are going to do really well. You're gonna see people in the comment section of like no, Market's going to recover right? No, Uh Federal Reserve You know things are going to go begin to go back up. Okay, let's follow up right? All I'm saying is I Think that Jerome Powell who's the head of the Federal Reserve because of that statement? Uh, they will raise rates if needed if you know economic data supports that inflation is not declining right month over month. I Think he's just setting himself up for an alley-oop.

Uh, where? Hey, you know? maybe not this. CPI data report on February 14th but maybe the one in March right? Maybe it comes in a little bit hotter than expected and then the you know Federal Reserve begins to factor in. Hey, we're gonna have to be. You know, go back to the point five percent interest rate hike or be more aggressive, right? It's not coming down as quickly as expected.

Tomorrow we have initial claims on continuing claims report right? we'll We'll see how the the unemployment rate continues to decline or rise if they see a strong labor market. If they see a strong economy, right? if I see a strong guy and he's my friend right? and I I'm messing around with them and again I just love giving analogies right? If I can see that he's strong I Can you know push him or something like that or be aggressive, right? And I know he can take it right. That's what Jerome Powell has pretty much seen from our economy where he's seen a a strong economy right now, especially because of our job market. and although that's a good thing, it just means that they can be more aggressive with interest rate hikes and the economy can most likely take it.

And that's what I want you to understand. It's the domino effect of white. Bad news is good news and good news is bad news right now, but only time will tell, right? So I really do appreciate you guys time and yet I wanted to be able to show you that on my SQ position I didn't trade beyond what it is that I showed you guys last time 15 500 and I'm very happy with how till they played out. If you have any other questions about what we talked about today, you guys know exactly where to reach out to me that's going to be via Discord or via Instagram and that's the first or third link in the description down below.

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I offer one thing and it's literally the second link in the description down below if you want to watch me trade Live every day if you want to work with me on a closer basis, if you want access to the A2Z video Lesson Library this is a one-time payment, lifetime access. And yes, by clicking the second link you get the biggest discount and you can watch me trade live as soon as tomorrow at Market open I Really do appreciate you guys time and like always, let's make sure that we're in the year. On a green note, take it easy team.