Hey everyone meet kevin here. Here's a summary of everything, jerome powell just said and announced so first, the taper schedule is out we're going from 120 billion dollars a month of stimulus money, that's money being printed and injected into the economy, at a rate of 80 billion dollars to treasuries a 40 Billion to mortgage-backed securities, which just think of those as slices of mortgages sold off as bonds, so you're paying interest to bond holders not to banks. But anyway, this 120 billion pot is being reduced by 15 billion 10 billion off of treasuries 5 billion off of mortgage-backed securities expecting to reduce this 15 billion in november 15 billion in december. Those two have been decided and are likely expecting to see the taper continue at a rate of 15 billion dollars each month thereafter.

That would put us around june when we would be completely tapered. John powell does not want to talk about liftoff or when interest rates will actually go up until we have completely tapered, because otherwise he sees that as it could like. It doesn't make sense. That'd be cognitive dissidence to be printing money and stimulating the economy.

At the same time is making that money more expensive by raising rates, he doesn't see that as logical, so they're going to complete their taper first, which there was a reference, and this becomes very, very important. There was a reference to jerome powell. Why are you tapering at twice the rate that you tapered at when we first had a taper in 2013., and he said his response was actually very bullish. He said in this economy.

Demand is very strong. Job openings are plenty and we are still years from 20 uh. I mean we that we are today years from the 2013 levels, uh that we were in uh in a very positive way, that is in 2013. The economy still had to grow for years to get to levels of demand where it is now.

This was really bullish and we actually saw stocks like tesla and the s p 500 right. When that comment was made by jerome powell, that demand is very strong. We saw markets move up markets like this. So far, markets have been pretty optimistic about all the things that were talked about here.

We did have a shift in the verbiage. That's used in the fed statements. We shifted from using the word transitory to expecting inflation to be transitory and spending more time. Talking about the rationale as to why the fed believes that inflation is going to go down, and so this helps make the fed seem a lot less tone-deaf about inflation happening.

You know when they're like oh yeah, inflation's, transitory and inflation data is coming in really really high and we expect inflation data to come in high in quarter one and quarter. Two. Then it makes the feds seem like they're morons, which some of you may still believe is true. You know regardless, but anyway, now they're talking about how look.

We expect inflation to rotate down in the second and third quarter of 2022. It's taking longer than anybody forecast in in markets that they talk to, that is their market participants or their forecasters, thought they're, seeing this inflation take longer to rotate down, but they do think that in the second and third quarter, inflation will rotate down and that will Come at the perfect point when the taper has completed, and then the fed will say: okay, good, the taper has completed now we're in a position where we can talk about raising rates, how much inflation do we actually have left now that we're in june of 2022? How much inflation is left? Do we actually have to aggressively raise rates, or can we take our time with raising rates, because maybe the fed was right and inflation did end up inflecting to the downside in the second and third quarter of 2022 uh which, by the way gives us, in my Opinion a little bit of a time frame for crypto that crypto's still going to enjoy the benefit of high inflation readings for q, few uh, q4 uh, q1 and q2, but that that inflection might not come around until that summer. That midpoint of 2020 uh two. So we'll keep an eye on that.

Obviously all right then uh. He talks about. Let's see here a lot of different things. So, let's, let's just get into the summary of some of these things, so household and business investments flattened in october.

However, uh businesses and households have very strong financials or in strong financial conditions, sees covid receding further and that growth should actually pick up from last month in in this quarter here, which last month is still part of this quarter. But growth should pick up and that's because we're escaping that delta surge that we had in august and a little bit of september that also led the markets to really soften uh and spending to soften. He says that the pace of economic growth, as a result of that has slowed but again we're expecting that to go up we're expecting to see job gains closer to averages. Averages are somewhere around 550 to 600 000 in jobs gains.

Last two months we've been in the 100 thousands and in the summer we in june july we were at a million jobs, so we've got some work to do, and hopefully this friday we get some positive news on jobs data this friday. That's in two days, we will be getting the jobs report, 4.8 percent unemployment. He believes understates the amount of unemployment there actually is. He thinks there's more employment or unemployment, and that's because people have left the labor force.

You've got more retirements, less participation, participation amongst prime aged workers is down. Some of this could be due to be due to fears of covid uh having stronger financial positions in households, because household wealth has gone up by a real estate in stocks or potentially, because people are still caring for older family or children who cannot get covert vaccinated. Yet now others, including barons, make actually the opposite argument that the federal reserve is overstating how much unemployment there is, because the fed is actually not properly able to track how much new business creation there is and how many people are just going off and working for Themselves and that right now, comparing right now to 2019 we're creating 50 percent more businesses every single month than we did in 2019 uh, and that pace was pretty strong during the pandemic as well. It was even higher anyway uh.

He does mention that, and so anyway, the point of that is is really that you could potentially have the fed missing the boat on employment, that employment is actually much higher than it looks according to their numbers, so they think employment is actually the employment reports. Are worse and behrens thinks no, they could actually be better than you think so, we're kind of in opposite directions there on jobs and that could have a big factor in inflation. Even though we expect consumer price inflation to go down next summer, we actually don't expect wages and rents to go down so you're going to have this sort of negative growth of prices. In my opinion, on things like cars, you know durables like washing machines or appliances or computers or hardware or whatever and chips.

You see. Prices of these things come down, but i think you'll probably still see wages and rents trickle up, which will still contribute to inflation. Right john powell does say that high inflation does propose some difficulties for those who can can't afford or don't have the means to afford essentials like food and transportation. He says that our tools cannot solve supply issues.

However, over time we believe we can support the economy to essentially lead that inflation to come down, so that the supply chain issue has become more normal. He indicates also that they have a completely different set and more stringent requirements outlined for when they're going to raise rates. Again, we don't expect that to happen at all until some point next year - probably the third or fourth quarter of 2022 for the first sort of rate increase and that's going to depend on how much inflation goes down by the summer. That'll be the big indicator.

He does believe that supply bottlenecks will last well into next year, but we expect that inflation to go down in the second or third quarter. He says we could be patient, no direct signal is being given on rates and he doesn't believe that we're going to see a wage price spiral where prices are going up. Therefore, wages are going to spiral up and because wages are spiraling up now, prices have to go up because he sees productivity still is increasing, which is good. He didn't want to give exact conditions for what they mean by max employment, but i think a lot of this is just going to have to do with waiting out to see how supply chain issues change over the next six months before we get to a potential Talk about raising rates now uh then jerome powell mentions that, if anything changes in the economy, he will use whatever tools he has available.

So if they have to adjust the pace of taper, that is taper faster because inflation is lasting even longer or tapers slower, because inflation is starting to subside, then he will do so. Obviously, if they needed to raise rates immediately, because inflation just exploded, they could just taper 100 tomorrow, with emergency action, jump rates immediately if they needed to, if they just missed the boat. That badly - and i would expect something like that - would probably lead to some panic in the market, though it doesn't look like. That, is something the market's really anticipating or expecting right now, otherwise, we'd see bond yields.

Higher bond yields right now, not really reacting uh as much as you would think, because when the fed starts talking about tapering, it means they put less pressure on bond prices, which means bond prices, go down, which means yields go up and the yields haven't really gone Up, i mean the 10-year 1.59, it's kind of where it's been sitting for the last like two or three months. Here, it's maybe not two or three months, but at least the last two months. It's been sitting a little flat there, but anyway uh okay. Then we have uh a little bit of talk about how labor dynamics have certainly changed, but that jerome powell actually thinks we could end up seeing a winter bump, uh or winter yeah winter bump in in jobs that if we don't have a covet surge this winter, We might see hiring explode this winter and if hiring explodes this winter, then we could.

We could end up having getting to max unemployment or sorry max employment sooner, and that would be good for not only gdp growth but potentially dealing with our supply chain issues. Remember folks, if amazon can hire more workers or logistics, companies can hire more workers. It means we can actually clear our supply chain issues faster, so in a crazy way, even though sometimes the market's, like oh my gosh, we're adding so many jobs. Are we overheating? We want to see jobs added because the more jobs get added the more hands we have on the supply chain issues: people stocking shelves, people distributing people taking stuff off container ships, whatever right or taking containers off of ships whatever and uh.

And then, then we can work our way through these supply chain issues faster, and that means the more we get people employed the sooner we can actually see the supply chain issues abate, we're still going to see those wage pressures going up, but we'll we should start Seeing those consumer prices come down substantially and that would be really nice for markets. Of course, until that happens, we expect cryptocurrencies to do very, very well uh through around the middle of 2022. uh. I i still support sort of the position that i have for crypto, which is 20 bitcoin, uh, 40 aetherium and 40 cardano.

I have a little bit of rebalancing to do because i'm transitioning between wallets right now and i just paid off all my margin, but i just wanted to give an update on that, but i still feel that way so uh, okay, good that uh. That gives us a breakdown of what jerome powell just said and what happened at the federal reserve.