Hey everyone me kevin here: okay, so let's do an update on what the fed just said. We'll keep it short, so i read uh the entire uh minute set, as i usually do, a big one that i wanted to point out. As many participants noted many. This was an interesting line.

Many participants noted that one or more 50 basis, point increases in the target range could be appropriate at future meetings, particularly if inflation pressures remained elevated or intensified throughout the entire report. Numerous times they mention how russia is likely to lead to increased inflation expectations, uh and, of course, inflation, increased inflation pressures, the biggest things for me, though, and i'm just going to go through my highlights really quickly. They talk about a more rapid pace of balance sheet. Runoff from the 2017 to 19 uh period of time, but what's interesting is then we were doing about 80 to 90 billion dollars of runoff, and now they were talking about hey.

Some participants talked about potentially not having any caps, maybe how we could have high monthly caps in terms of how much they actually run off. But then they said, participants generally agreed that monthly caps of 95 billion dollars would likely be appropriate. So i'm like that's, barely more of a runoff than what you did in 17 to 19., so that honestly doesn't seem like that big of a deal now it seems like they want to run treasuries off more than mortgage mortgage securities. The reason for that, in my opinion, mortgage-backed securities is probably because mortgage rates are skyrocketing and you've already got some potential tightness coming to that market.

And how much more do you really have to tighten above and beyond ordinary rates right? They also talked about how they're going to be some weird things for them to evaluate, because now we have the repo facility that has a bunch of cash in it, and it's kind of like hey. We haven't tapered before and with having this repo facility, which they didn't have in the last episode. Okay, that's not that big of a deal uh! Obviously they pointed out this, i thought was a really interesting one. I put a big star on this one here they say a couple: participants commented that increased uncertainty might lead businesses and consumers to reduce spending, though their business contacts currently were not seeing signs of such shifts or a significant pullback in demand.

That's a big deal because throughout much of the report they're talking about how hey there are upside risks to inflation, there are downside risks to economic activity. In other words, downside risks to the direction of recession, but upside risks to the direction of inflation, and we got to fight inflation. In fact, our big goal is keeping those inflation expectations down right uh, but the big thing that i've been watching is like, when are consumers actually going to reduce demand? I mean i'm at an airport right now and it's always freaking crazy when you're traveling, but as the fed here says, we do not yet see significant signs of shifts, uh or expectations of a pullback in demand, and so this is why earnings season which starts in Like a week and a half is going to be huge because we're really going to be able to determine how bad uh is a shift in consumer demand actually happening is, is that even is there even a shift right? That's going to give us big red flags for a potential recession. If we see something like that, excuse me.

So that's obviously, a big deal. Uh, okay, risk sentiment. Let the markets to come down delinquency rates for mortgages. Uh were stable.

This was an interesting one. Credit card balances increased significantly in the fourth quarter, now see that's another issue there that could lead to lower demand for the rest of 2022, because if you're maxing out your buy now pay later, if you're maxing out your credit cards and you're uncertain because there's a War and high gas prices higher food prices. All of that could lead consumer demand to come down, especially on those consumer companies that appeal more towards lower income individuals, as well as upper income individuals. Again, that could be your your nikes, your lulu's.

Whatever we'll see you know the macy's and so on, and so forth, uh, okay, another thing - and this i thought was really interesting as well. I put a big star on this one. I wrote: listen to this one. A few participants judged that, at the current juncture, a significant risk factor the committee was facing was elevated inflation and we know that, but listen this one and elevated inflation expectations that could become entrenched.

If the public began to question the committee's resolve to adjust the stance of policy as appropriate to achieve the committee's two percent longer run objective so between you and me. I think that means they all got together during that meeting and they're like y'all we're um we're losing the people's faith, we're losing the faith. We've got uh. We got ta deal with this after we have this meeting.

We all need to get out there. Every single one of us, okay, we're gon na, be like a team. We're gon na get out there all of us and we're gon na tell the world how serious we are about getting inflation down, and even though that sounds silly, it works. The five-year inflation expectations peaked about a week ago.

They've been coming straight down so so far their work is working. The the 10-2 yield curve has uninverted. This is good uh, so so uh, you know it's debatable as to whether or not if you touch the inversion and then you come back. You'll have a recession or not.

You know even kevin o'leary. When he's on my channel, the other day is like. Ah, it has to stay inverted for a while for it to actually be an issue anyway. So they talk about being nimble.

The upward pressures blah blah we've heard all this crap before only one person voted for the 50 bp hike the last time. We know that uh, based on sort of just giving you a little bit more of a broad summary here other than that wanting to be nimble the only time they talked about that 50, bp hike - they really talked about. They also said this, and i thought this was great remember earlier. I read you that quote about many participants noted that one or more 50 basis point hikes could be appropriate right.

Listen to this. A number of participants noted that the committee's previous communications had already contributed to a tightening of financial conditions as evident in notable increases in longer-term interest rates over months. That's a way of saying like hey just by us talking about 50 is already doing the job. Maybe we don't actually even have to do 50..

So, personally, my my belief, it hasn't changed. I think we're we're not going to see 50. uh. That's just my bet.

I could be wrong. You know right now. The market is, is pricing in like an 80 chance of a 50 basis, point hike, uh markets, obviously not very happy to me. The big buying opportunity, two two factors: one earnings forecasts come in strong.

If earnings forecasts come in strong and it's like no we're not seeing any reduction in demand like people are still spending like crazy, because people still have enough money or whatever bullish. Second thing: we get 25 bp in may bullish and, quite frankly, i think we will just because many are open to 50. Doesn't me at a future meeting does not mean more than half of them on the committee are going to be willing to actually vote for 50 in may. I don't see it happening, even though the market's pricing it in but again the fed, wants the market, pricing and more constriction, because that is actually what starts slowing the economy down and brings.

Hopefully, inflation down a little bit so they're trying to really run their yaps and it's working because it's hurting obviously the indices and such why the indices are moving down uh after this meeting uh after these, these minutes were released. Honestly, who knows uh it's like there was nothing in this. That was like really scary. If anything to me, it was bullish because they're like well we've kind of already been achieving the tightening.

We don't necessarily have to do 50 right away. You know what i'll do. One more thing i want it, and i i mean i read all of it, but you never know you can always miss something. I just want to see if they mentioned the r word, because i didn't see it.

No, the r word was not mentioned so the word recession was not mentioned. The word uh steady was mentioned three times s-t-e-a-d. I didn't put the y in there. I'm trying to think of.

Maybe rapid would be another one rapid was mentioned six times, and that mostly has to do with taper and rapid recovery from covid uh. Oh yeah, here you go more rapid removal of policy support in the united states, incoming economic data and federal reserve communications led investors to expect a more rapid removal of policy accommodation marketplace. Participants almost universally expected a 25 bp height the last time around okay, whatever so again to me, bullish nothing's changed on this. I'm happy fingers crossed and i'll keep buying the damn.

So um cheers good luck out there and make sure to get yourself life insurance in as little as five minutes by going back, kevin.com life.