Hey everyone kevin here in this video we're going to talk about what just was said by our federal reserve, chairperson jerome powell, in congress. We expect similar testimony tomorrow, but we got a lot of good insight out of what jerome paul said and i'm excited to bring it to you. First, a couple notes: we did get eurozone inflation this morning that came in at 5.8 versus 5.4. That was expected.

That means slightly hotter than expected: inflation uh, that's in the eurozone. Now we did also get the adp jobs report. This morning the adp jobs report also came in higher than expected at 475 000 jobs versus 375 expected, but not only this. They also revised up their jobs from around negative 300 and 1 000 last month to positive 509 000.

So this private jobs report really showed us that the labor market is absolutely crushing it. The real space that got hit the hardest in that private jobs report was in the small business sector. They lost jobs, whereas big businesses, especially service and retail. They really gained a lot of jobs.

My assumption for this - and it's completely an assumption, is that, as the stock market falls, small businesses who more often fund their businesses with their wealth, their personal wealth, stop hiring or lay off people. When the stock market falls. I believe that's more true of small businesses than larger businesses, which can be more resilient to these sorts of shocks. Now, let's talk about j-pal and remember that this video is brought to you by extra go to metkevin.com extra to learn more about building your credit without a credit card using the extra debit card, all right, so good news, the good news is jay pal for the First time since january just spoke, and he told us that he supports a 25 basis, point liftoff.

This is what the market has been expecting it's. What the market has been pricing in now. He did indicate that he expects there to be a series of increases afterwards, but he didn't know exactly how many yet, however, he gave us a really big hint and i think most mainstream media missed this. He says this liftoff and tightening cycle will probably be much more like the tightening cycle of the beginning of the century, not the tightening cycle after the great financial crisis.

Okay, so there are two tightening cycles that happened this the century, one before the great recession and one after the one after happened in uh or started in 2011, and we had these slow, 25 basis. Point hikes: after about a three-quarters, initial hike and then these slow hikes, the one he's referring to now, though, was a was in 2004, where they did have a 50 basis, point bump and then 17 consistent 25 basis, point hikes so about every six to seven weeks. They hiked rates 25 basis points and the purpose of that is to constrain the real estate and housing market, which he says is hot and needs to cool down. It's to constrain, auto lending and ultimately constrain demand.

And when we constrain demand, then we can push inflation down, so he made it very clear that and the one part here is good news. He doesn't plan to rug, pull us, but don't expect the fed to be nice to us for the next. Probably two years. They're, just gon na hike and hike and hike and hike and hike continuously, potentially, if, if the reference is true to early 2004 or mid-2004, when they were hiking that started a 17-hike process which is wild right now, the market's pricing, in maybe five or six uh Before we start seeing potentially a pause so a little bit of a disparity there between the market and powell uh, he did talk about, and this was quite interesting as well.

How, when it comes to oil, the the question was: will inflation lead to or will we have sort of a spiral of inflation because of higher energy costs? And he says that oil prices going up do create a price level change, but they don't create a repeated change. So in other words, you don't tend to get this cycle of up up up up of the inflation impact. When energy costs go up. Yes, you will see one time larger hikes in inflation and uh in when he was asked about the things like the keystone pipeline.

He refused to talk about specific policy, but he did say: hey, look the laws of supply and demand work. In other words, if we have more supply of oil yeah, the cost of gas, gas and oil will go down in the united states. He did talk about how, over the last 25 years, we've seen essentially negative inflation for most goods and that it's only been recently here because of these shocks, the supply side, shocks and really the demand side, shocks that we've seen that inflation is as high as it Is now in terms of march again, he does expect to lift off. He does expect to proceed very carefully and the reason he expects to proceed more carefully and the reason he doesn't want to create any kind of shock in the market, and this is very important.

We don't want to see a rug pull is because of war. In fact, he went as far as saying hey look at first. They pivoted because of the high inflation, but they're now, essentially softening their pivot and in jerome powell's words quote. The war is quote a game changer to their trajectory now.

This is literally how i felt i you turned and sold a lot of stocks in january when the federal reserve termed hawkish, because i thought they were going to rug, pull us as soon as we had the invasion. I bought the dip like crazy. You look at the chart of last thursday, where some of those prices were that's where i did most of my buying, but i'm still only 50 50 in the market. I haven't flipped out of any positions that i've bought, except for gold, but that was more of a shorter term trade or some of the other shorter term trades that i do when sort of volatility goes up or down i'll play volatility and swing trade that but Beyond that, the larger portion of my positions right now is 50 50, and it really aligns a lot and i'm happy to hear this from powell that we kind of both feel the same way that at first it felt like uh-oh rug, pull necessary.

Now the war is a game changer, and we just don't know what the outcomes of this are going to be. But powell makes it very clear quote: we do not want to add uncertainty and so he's actually being very clear with us right now he's telling us he supports a 25 basis, point hike and he supports a tightening cycle like what we saw in 2004, where it Was 17 hikes in a row and ultimately that is designed to bring down inflation, which he does expect inflation to peak this year. He also tells us that uh, his actions are uh. They affect demand, they don't affect supply, so there's nothing.

He could do to fix supply chains, although he does expect them to get. You know, improve or see improvement this year, there's nothing they can do directly to effect supply. It's not like the fed can build more factories that would be up to congress. He says uh.

He does say, though, that uh before the ukraine situation uh and the crisis in ukraine, they were expecting to raise policy rates, uh, probably more substantially than expected, and they expect it to work on reducing the balance sheet. However, now they are - and i'm reiterating this - they are quote preceding more carefully, because there are too many unknowns. This is exactly what we expected that the fed would turn dovish because of war. This is why i bought - and this in my opinion, is why it makes sense to be 50 in the market.

However, personally, i still think we've got massive headwinds in terms of how long are we going to be going with these rate hike cycles and how is that actually going to affect company earnings? I don't think we're going to see the amazing earnings reports that we saw from q4 again in q1, q2 and onward now uh jerome powell again reiterates that he expects inflation to moderate uh. He uh did respond to credibility. His question the question of credibility, uh and and the federal reserve. He says that look.

We are responding to inflation. The way we should in the 70s and 80s, which is exactly what we're trying to avoid having the volcker of the market. The fed did not respond appropriately to inflation, and that was their fault. However, we're not making that same mistake today the fed was slow back.

Then. Today, inflation expectations are anchored back then they were unanchored. I really appreciated him making this comparison to the 70s and 80s, because that is also a big fear of mine is that the fed is going to have to sort of pseudo-volcarus, which is basically just rug. Pull us raise rates a bunch really fast force a recession and crush this economy, which would be bad, but it would kill inflation.

He says, because inflation expectations are anchored and because every time they talk about their policy actions, the market starts pricing them in that. Maybe we don't have to worry as much right now about inflation becoming unanchored and that we're in a better place today than uh than we were in the 70s or 80s, and we should be less concerned, though, still vigilant. I really appreciate him saying that now uh he does respond to, can we control inflation without a recession, and he believes that we actually can achieve a soft landing. He actually thinks it's more likely that we are going to achieve a soft landing than not now.

Of course, this is what we were told in 2006 as well, and we also we all know what happened after that, but i'm kind of inclined to agree with him, especially now, because of the uncertainties of war watch my war video yesterday, where it doesn't make sense For the fed to rug, pull us in a time of war where war is likely to push aggregate demand down, because it could lead to a stagflationary crisis where the fed loses on both ends: inflation and employment right now, they're winning unemployment, but they're losing on inflation And so they don't want to overly hawk and then kill both now he was asked about biden's suggestion that companies are just being greedy and that company should stop raising prices. This is something that biden mentioned during his state of the union. Address yesterday and powell played this like a game of 4d chess, he purposely didn't watch the state of the union. So that way he could just respond and say i didn't watch it.

I don't know, but hey back when i was uh, you know in the business world. Let's just say: companies are constantly managing their costs and therefore their prices and, in other words, he's saying. Look as companies have their input costs go up, they're going to raise prices. So it might be less of a matter of corporate greed and more of a matter of dude prices are going up, so they're going to try to do whatever they can to preserve their existence as a business now about the labor market.

He reiterates how tight it is and mentions that it's the bottom quartile that's seeing most of the wage gains right now, not so much the top 75 percent that it's the low wage earners that those are the ones who've seen the big wage increases, probably in retail And services and that the higher wage earners are actually not seeing as much now in terms of housing, he does say yeah, we look, we've got high housing prices. Why a lot of demand? Lack of workers, lack of legal immigration way lower legal immigration than we've had before very low rates, low availability. However, he does believe that housing is quote very interest rate sensitive and that, as rates go up, the housing market quote will cool, and this is of course, expected uh. There was a brief mention here regarding housing that there could be some risks in areas like florida, where fannie mae and freddie mac are starting to get nervous that people might not be able to repay their 30-year mortgages as sea levels start to rise in florida uh.

He didn't journal himself didn't have too much to say on this other than yeah. I mean the government's probably going to end up footing a lot of the bill for that unstable coins. Jerome powell mentioned that they're working on both the technical and policy aspect of this and their goal is to come up with something that is fair and honest, but it is a good sign that stable coins are pegging to the dollar and not to other currencies. However, he does call for substantial regulatory oversight, for example right now, binance we know has refused to block russians from being able to buy into cryptocurrencies, and we did recently think that cryptocurrencies were pushed up essentially in pricing because of the action of uh individuals in ukraine And russia buying uh cryptocurrencies.

However, it now appears the data is coming out, suggesting we actually experienced a little bit more of a short squeeze on on monday, when bitcoin, for example, hit 39 and a 40 saw a little bit of some short liquidations. That pushed us back to about 44. uh, however, on cbdc's they're still working on it, they do believe that existing digital digital currencies excuse me are mostly speculation and not a store of value. Now i do want to give another quick shout out before i finish this up here to extra.

If you want to build your credit without having a credit card check out extra, go to medkevin.com extra, you could get an extra debit card. Basically, what they do is you spend like usual like you would on a credit card and they lend you the money overnight over a business night, and then they take that from your bank account that you link so basically you're just spending money you have, but then They could report those balances to the credit bureaus as paid off credit balances, which is kind of a cool trick. Check that out, link down below metkevin.com extra now uh drum powell is concerned, obviously that the dollar could get displaced, but does not believe that this is a big issue right now, because inflation is being experienced throughout the world and it's not just the dollar, essentially losing Its value, he does believe that there will be some unintended consequences from the swift banking system that is, russia being kicked from. It certainly we're seeing issues with commodity prices like palladium corn neon wheat, all of these things skyrocketing, but he doesn't believe that money markets are going to have issues because russia is not a part of it uh.

He does not see any notable cyber attacks. Yet, though, cyber attacks are a big concern of his and ultimately, powell really believes that that we need to approach this market with care and caution, and that the worst thing to do right now is rug, pull the market and the big reason for that was war. That war was the in jerome powell's words game changer as to why, essentially, they can't rug pull the market that they have to take it slow and easy. Now and folks.

This is exactly how we expected jerome powell would respond. This is exactly what i've been saying on my channel for the last really two months here and folks, i'm investing as such. So if you want to see all of my trades remember to check out the programs link down below so that way, you know where i'm investing and where i'm not and folks as usual, we'll see in the next one thanks so much for being here. Goodbye.