Moly folks welcome back to another federal reserve fomc meeting that is the federal open open market committee meeting in which we find out what the federal reserve is up in their dark and mysterious caves of determining what the policy rate is going to be going forward. Now the biggest question that we have going into this is first of all what do we think the federal reserve's terminal rate is going to be right now we think that terminal rate is going to be somewhere around three 375. So we'll be looking for clues on that we'll also be looking for clues on jerome powell's definition of a recession. And we'll be looking for any kind of clues that jerome powell gives us on hey you know the pow curve.

You've been talking about is uh getting a little dangerously close to inversion. So are you gonna give us any kind of insights on that well first in about the next uh three minutes we're going to find out what the federal reserve policy statement has in store for us the policy statement is a pretty unique tool. This time. We do not have a summary of economic projections coming towards us.

So that means we don't get any kind of crazy estimates in terms of what they think inflation is going to do by year end or what they think gdp is going to do by year end or any of that kind of madness. We're just simply going to get is the federal reserve raising rates by 075. Which is 75 basis points or is the federal reserve raising rates by a hundred basis points or a full one percent so far the market believes that we are going to see. According to the rate monitor tool about us with a 72 degree of certainty.

We are going to see a 75 basis point a hike in fact that has just moved up within the last hour to oh. I've frozen a little bit here. Oh. That's bad uh there.

We go it has just moved up within the last hour to. 793. 793. That is the current uh expectation for a 75 a basis point hike and generally the federal reserve likes to match that they don't like to rug pull us so we're going to be looking for again those three things we're going to be looking for the federal reserve's definition of a recession.

We'll see how that aligns with joe biden's definition of recession. If it differs from joe biden's definition of recession. What's interesting is we'll actually have a fed that purposefully unaligns with the white house. So i wouldn't be surprised.

Because uh. Jay pal. Likes to be uh. You know pretty apolitical here as best as he can i wouldn't be surprised to see a little bit of a blowing off over here.

When we get questioned about j. Pal's definition of recession. So we're going to be looking forward to clues about the terminal rate mostly and j power's definition of the powell curve. The powell curve.

If you didn't watch this morning's video. Which you really should have is obviously the difference between the 18 month futures on the three year yield curve. You'd know all about this you'd be an expert. If you watched this morning's video.

You'd be subscribed to see these things okay and the present three month yield curve. So we will see uh. But anyway. We are now just uh within about 30 seconds away of the fomc meeting uh statement.

Which will provide us data on the rate decision. What kind of rate are we going to expect we have that uh that data up right now standby. We are within 30 seconds of this right now actually we are stand by within about 10 seconds of the answer. We're waiting for a 75 bp hike that's what we're expecting five seconds 10.

Seconds. Ish here. Fed raises 75 bp here. We go 75 bp to double down.

On inflation. Inflation. Remains. Elevated reflecting imbalances fed.

Repeats ongoing rate increases likely will be. Appropriate fed raises rates to 25. Percent. Uh.

We've got let's see that that uh coming through the tape here it's. Coming through so damn fast. Oh man we went from. 15 to 225.

We are uh raising 75 basis. Points. The fed is highly attentive to inflation risks spending and production are softer. Though job gains are robust however the fed is maintaining 75 basis points in a unanimous vote.

Folks that means a federal reserve. A member fed voting member esther voted for the 75 bp hike versus. The 50. Bp hike.

She voted for last time this is a unanimous 75 basis point height treasuries holding steady after the 75 bp hike. Fed notes are noting that spending in production again have softened. But that hiring has been robust that unemployment remains low 75 basis point increase comes as the fed attempts to lower high inflation. Fed raises again by 75 basis points.

As investors brace for recession. The fed is strongly committed to bring inflation down to two percent no time frame for that although we do have the federal reserve policy of fate which is flexible average inflation targeting to average two percent inflation over time they do see and anticipate ongoing increases. But again. We do have as expected 75 basis points.

My friends ongoing increases again likely highly attentive to inflation risks two year treasury yields reverse drop after federal reserve decision nasdaq and s p hold gains after hike market widely expecting this again we had a 79 percent chance of this federal reserve does see the economy uh softening. Which is uh uh is a sign that uh the fed is attentive to the fact that yes. We are starting to see that uh ted that three month treasury uh starting to potentially invert on the powell curve. We're going to go ahead and pull up the statement to see if there's any kind of unique juice in the federal reserve statement.

It is unlikely that there's any kind of real juice beyond what we've just stated in the federal reserve statement. Although we will go through it uh most important is obviously going to be the press conference coming up in about 30 minutes and of course that coupon expiration tomorrow. Which is july 28th. When we have coupon expiration.

The fomc meeting uh conference. Call or i shouldn't say conference. Call. The uh investor q.

A. Or uh media. Q. A will be in about 27 minutes uh.

We have looking. I'm parsing notes right now again. Fed repeats ongoing rate increases likely will be appropriate esther. George.

Again in favor of the 75 basis point hike. Let's go ahead. And just write down here that 11 30. Am.

Pst. 4. J. Powell presser.

We're going to go ahead and throw that up on screen here so we have it for you on screen as a reminder we've got about 27 minutes to go before the j pal presser uh. All right let's go ahead and look at the actual statement itself here. Although. We've already kind of got the conclusion of it we may as well just take a brief look here at the actual presser.

So we've got recent indicators of spending and production have softened. Very interesting. The federal reserve is choosing to make that the first line of the statement here nonetheless job gains have been robust in recent months and the unemployment rate has remained low remember. This is one of the most odd recessions ever if we are indeed in one.

Where job. Gains are actually going up rather than down. Usually right before a recession or during a recession. You actually see job loss.

Although by the time you start noticing job loss. It's too late for you to position your portfolio. Any differently. So generally you don't want to look at job losses as the leading indicator generally job losses are a lagging indicator.

That yes you are indeed in a recession. Inflation. Remains elevated reflecting supply and demand imbalances related to the pandemic higher food and energy. Prices and broader price pressures.

Now. This is going to actually be a very very interesting thing that i want to see the federal reserve talk more about i want to see if they take the approach of what i call the hot air balloon method the hot air balloon method suggests that inflation was really this transitory hot air balloon that came around with covid and we were expecting inflation to balloon hence hot air balloon uh with with the first covet pandemic. Where all of a sudden you actually had people reducing prices because they're like oh crap. We are about to go into a nasty recession.

So let's drop prices to try to empty the shelves. And all of a sudden. We got all this crazy stimulus money so. What did we get we got inflation and then when we compared back.

And we looked at the base effects. We're like oh damn that is high inflation then of course. What else did we have to elevate inflation after that well of course. We had the delta variant.

Because who couldn't have predicted that of course. There'd be another variant and then of course inflation cooled a little bit and then we're like oh. But no omicron and then we're like oh. But of course.

Putin's going to go to war. So we're just straight up screwed. But that of course is the nature of the inflationary hot air balloon. Which a lot of people see as suggesting the federal reserve lied to us about inflation being transitory at first i actually don't go as far as suggesting that the fed lied to us about inflation being transitory at first although of course.

That's a popular sentiment that's very easy to echo. Which i've toyed with echoing in the past let's be real uh. There's no way we could have predicted delta or omicron or uh or or a war with ukraine. But then again.

There are some trains of thought that no no those were entirely predictable fine fair. Enough let's go ahead and continue. This statement. Everybody's entitled to their opinion.

So russia's war against ukraine. Is causing tremendous human and economic hardship. So notice what they're doing here. They're telling you that look spending and production are softening right that's fine so spending and production are softening.

Though that doesn't necessarily mean they're declining and this is actually a very important statement because there's a very big difference between decline and soften and i really want i want you to think about that. For a moment. So. Declining.

Oh oh oh oh hold on we're. Losing. The mic. Here.

We're. Losing. Mike. Oh.

Sorry. If that's loud. Oh gotta take. I gotta tape that on a little better getting a little shreddy in here.

So uh. Let's go ahead and get that uh cosmetic. Medical tape or whatever the heck we call it out and uh just go ahead and slap on another layer shall. We oh yeah oh yeah okay sorry anyway so uh you know we it's very important to remember the difference between declining and softening so declining means that if we're at a zero percent.

Let's say uh threshold. Here a decline would mean something like negative one percent year over year like nike's revenue. Sorry nike had it coming okay a softening means hey we were growing uh credit card spend at 33. Now we're growing at 20.

We're still growing like we're still enlarging. We're still getting bigger. Which means the party could still keep going you know when things are enlarging the party could keep going. But what what we don't see is a decline and and the federal reserve is very very clear here in their word choice that we're not seeing decline that indeed.

We are seeing a softening. Very very different okay so we're seeing a softening at the same time as job gains. Our row bust. Okay good.

This is very true as the same time we are seeing the jolts indicator go crazy remember the jolts indicator is the job openings index. We are still even though we've seen tech layoffs and hiring. Freezes we are still sitting at 19. Job openings per unemployed person.

This is freaking ridiculous absolutely ridiculous. Now the committee seeks to achieve maximum employment inflation at a rate of 2 over the long run keep in mind this phrase. Here folks. Very critical language here over the long run why because it has to do with fate f a.

I t what does it stand for let's cheer it flexible average inflation targeting yeah seriously it's nothing to get excited about it's just basically the fed's way of saying. Hey if we're wrong for a few years don't worry it'll average out to be just totally fine and sorry. It actually sounds like fate. But it does anyway in support of these goals.

The committee decides to raise the target range by 75 basis points. Remember we generally count by what happens on. The lower end we went. From 15 to 1 to.

21. 1. Sorry 225. Which is a 75 basis point hike now in addition the committee will seek to continue reducing its holdings of treasury securities and agency debt as prescribed by basically your plans for quantitative tightening now this is very interesting and it confuses a lot of people the way that quantitative tightening works is is very confusing to folks that's fine quantitative tightening can do two things number one quantitative tightening can mean the selling of mortgage backed securities the reason you might potentially sell mortgage backed securities is because mortgage backed securities have a very long duration in the terms of 15 to 30 years so in order to actually reduce your holdings of these you're not going to sit around and wait for a roll off which means bond.

Expiration and you're going to just sell them on the open market. Potentially even for a loss and jpow has told us even if we sell mbs or mortgage backed securities for a loss don't worry we've had plenty of gains in the past so our previous gains can offset our losses. Now some people don't understand what this means so let me make this really freaking crystal. Clear.

If i lend you one thousand dollars. That means you got one thousand dollars of cash. And what did i get instead. I or kevin got an iou okay.

That's what i got i got an iou that i'm going to get that money back that iou is also known as a bond. A bond is basically an iou and i'm going to pay you interest over time. However if this bond is only written for 12 months then what does that mean that means after 12 months this transaction. Reverses kevin gets his thousand dollars back you get your interest back cool and then kevin could go out there and continue to buy new bonds or essentially give out these thousand dollars or whatever and get these i o u.'s or i could just say f.

It you know what i'm just not a buyer anymore. And if you're just not a buyer anymore that means you're no longer injecting that cash into the economy. That is a form of roll off tightening. Okay so there are two types of tightening.

There's just roll off of generally the t bills or there's the sale of mortgage. Backed securities they have not yet started the sale of mbs or mortgage backed securities so everybody's got to chill out when they start trying to shout in the comments or wherever the hell they try to shout. It actually they've literally been talking about selling mbs for the past six months. They haven't actually done it and that's fine.

They're just rolling off the t bills and not buying as many back that's fine. But they've been talking about that mbs so it's important to just pay attention to that because in theory in theory. Okay and all this crap is in theory. Because it's all balanced by what the market ends up deciding to do in theory if the federal reserve says hey you know what we have all these ius and we're just gonna dump them we want our cash back then in theory.

They lower the value denominated in dollar of those bonds. But they actually increase yields and see what's very very important to remember is that when the federal reserve increases yields what happens when yields increase folks the dollar goes up it's that simple the dollar goes up when yields go up because it means the risk free rate of return is higher. Because if anyone in the world wants to make a yolo bet. And suggest.

Which country is going to be the last default. I don't give a crap who you are or what country you're in you are a complete idiot if you do not say. It is the united states dollar and the united states okay the full faith and credit of the united states. Even for you crypto enthusiasts is still the most confident thing that you can put your money into in the world.

And hopefully. The last crypto crisis has helped teach us that but anyway continuing on to the statement here in addition. The committee will continue to reduce his holdings. Okay we just explained that blah blah blah blah.

Committed to two percent and assessing the appropriate stance for military policy. The committee will continue to monitor the implications of incoming information for economic outlook. Blah blah blah blah blah okay look the number one thing that you freaking need to remember is that first okay inflation expectations go down it's very very simple i literally just tweeted a picture of this i'm going to pull up the tweet of the picture. Oh nope that's lauren and i kissing.

That's not for you uh. I didn't have it on screen that made you look yeah anyway sorry uh okay. So uh. This is a picture of inflation expectations right here in the white is actually inflation expectations.

And what generally happens is inflation expectations. Almost. Always go down first and then cpi comes down and folks inflation. Expectations are at the lowest level that we have seen in a year.

And that suggests that cpi is likely to come down within the next three months and if you're blind to iron ore prices coming down. Which is an industrial metal. If you are blind to copper prices coming down. Which keep in mind that electric vehicles use four times as much freaking copper as ice vehicles.

Which if you don't know what that means ice vehicles. Internal combustion engine vehicles use copper. Okay. Evs use four times as much okay just to make that clear uh if you're blind to iron coming down copper coming down lithium prices stabilizing wheat a little volatile because of missiles okay the darn missiles i get it but commodities are coming down gas prices peaked in june and guess.

What the bottom of the stock market was in june. So if you're blind to those things. It's your freaking problem. But so far the data is suggesting that inflation is peaking.

And when this ends up proving to be the peak of inflation. Barring any other kind of crazy war with like taiwan and china or some kind of other inflationary disaster. Barring any of that if inflation ends up proving to be transitory then you're going to be a little dumb nut idiot. If you're still sitting around in cash.

It's fine. I don't care what you're doing with your portfolio. It's your freaking problem. But the point is you've got to be aware that if inflation ends up proving that it peaked in june.

You're screwed. If you're sitting on your hands. Still waiting for a sign on the bottom retail ain't capitulating the bottom 25 have more money than they did in 2019 in fact every income demographic has more money than they did in 2019. All these ceos and hedge funds.

Keep going around going. Oh. No the gloom is still ahead of us. I don't know in my opinion.

The gloom is behind us okay. I made a video on it earlier and i can't help. But think. It's true the more and more i look at this data.

I'm like damn. This is a lot of gloom. But people keep spending like the data just shows that people keep fricking spending money because people actually don't care in fact. Most consumers expect inflation to go nothing.

But down. I hate to say it. But it's the truth. So that's just what we face right now that is what we face right now.

So. Jerome powell speaks to us uh in about 14 minutes and now what i'm gonna do is i'm going to go to the beautiful bastards. Who have subscribed to the members chat or who have still been subscribed to the members chat to chat with me and i'm going to answer. Some questions in that member's chat right now and in 14 minutes.

We're going to review. What jay pal. Says and if he says stupid stuff. I'm not talking about it.

And maybe we'll also look at some sticks and you should take advantage of the coupon code that expires tomorrow because i'm tired of pitching the coupon code so i'm thinking about just raising the price once and for all one big fat time and then not have a coupon code anymore and if you want to join our awesome community you'll have to pay a fat premium just something that's on my mind just saying okay. Salty options. What's up tesla. Only dog all right demand for copper will drop during recession.

Obviously probably not depending on countries stimulate eeg china. But once economy picks up copper demand will rocket. Yeah. I mean that's entirely an idea the problem is right now you have pmis in contraction okay purchases.

Purchasers managers indices are in contraction so in aggregate. We are presently seeing contraction uh and that creates some concern if we're presently in contraction for pmis you know i wouldn't have near term bets on copper would i bet on copper over the next 10 years maybe but generally i don't bet on commodities. Why don't i bet on commodities because all it takes is some other douche bags to open up a mine and boom. What do you get you have you have more supply of copper like i i don't care about people digging for rocks.

I really really don't i i don't think it's very innovative. I think it's a convenience based look you don't believe me go ahead look at the. Chart right. Here.

Okay this is the. S p global. Us composite. Pmi it is in contraction at 475.

Percent. I got the chart right here you're screwed. Sure things are this is going to go bad like these indices are going to go back up again when we expand and honestly i believe that the second half of this decade is going to be beautiful. Oh.

Honestly i i'm going to probably take the biggest l. Ever and i'll reveal it here live. I will probably take the biggest l. Ever loss for those of you who aren't with it.

With like all. The zillenial talk these days. Uh. That's gen z.

And millennial combined in case. You're wondering l. Means. Taking a loss.

Okay. I thought that after the covet pandemic. We might see something called the i hate to even say it the frugal decade. But dude with how much people's pay has gone up i think i'm going to take the biggest freaking l.

On this like it's going to be so freaking huge because people are just making more money and here's what happens folks when people make more money guess. What people do they save more money not they spend more money okay. It's that simple. It's really that simple they don't save more money.

Oh. God they don't save. More money. At all uh.

Yeah. Yeah. Yeah. Okay.

Uh you think real estate will go down. More by january or is this the bottom. I don't know man real estate prices have started to do this okay they've started to go down. But here's the thing man so have mortgage rates.

The problem is that the 10 year treasury keeps falling. I need it to be like three and a half percent for longer to be confident that this crap is going to crash the real estate market hey we might see a five to ten percent adjustment adjustment with uh treasury yields. Where they are right now but i hate to say it with treasury yields. Where they are right now.

I'm not going to get a beautiful 20 reduction. I'll be lucky if i get a 10 reduction maybe if i get some dumb seller. I'll be able to get a 20 reduction. Which is fine.

I'll look for it in my series. A and screw. All the people who don't think my series a is a good idea. Which actually they're very few of uh.

But i'm really excited uh about the real estate company. We're starting if only the attorneys who are hopefully watching this could get off your damn ass and finish. The paperwork uh then uh then you know things will be great. But anyway.

That's that's their job. They like to cross across t's and dot eyes. And then they start crossing eyes and dotting t's it's just stupid. But whatever you know that's that's called attorneys they like to charge billable hours.

Anyway uh thoughts on redbox uh memestock. Okay what about the personal consumer debt bubble okay so in order for you to comment on the consumer debt bubble which i will also comment down in just a moment. We're gonna look something up uh saint louis fred debt uh personal disposable income. Okay sorry i had to write that uh okay here we go yes yes.

This is exactly what i was looking for okay. We pulled this crap up life you find another youtuber to pull this garbage up for your life you ain't gonna find it because it's fraught sorry i didn't say that uh anyway so uh. Let's just go ahead and zoom in over here to like uh 2000 to now household debt service payments as a percentage of disposable income. Yeah debt might be going up.

But it's uh still a lower burden than what it was in 2019. Which there weren't a lot of people with debt problems between 2013 and 2019 so yellow bring on the debt baby. Where's my affirmative stock. When i need it all right someone.

Here. Says inflation is not over it's going up all right dude. Short. The market bro real talk how much these markets cost.

They look gucci uh. You know i don't know i got them for free. But if what if we get oil rug pulled before deflation can happen uh. You mean like a really high peak of oil uh.

Yeah. I mean oil has a very big uh impact and energy has a big impact on headline cpi numbers. So yeah that's that's definitely a possibility uh okay regarding inflation oh a ten dollar donation holla ten dollar donation. Damn i don't know i was worth ten dollars i don't have to sit up straight for this one regarding inflation thoughts on people still getting mortgage rental forbearance thoughts on six ten year treasury inversion thoughts about student loan moratorium ending after the election yeah look any student loan moratorium person consider yourself a lucky bastard okay you are so freaking lucky you have had the longest stimulus checks coming into your bank account every goddamn month and you should consider yourself lucky like rental forbearance has stopped mortgage forbearance has stopped unemployment boosts have stopped everything is stopped except student loan forgiveness okay like if you have a federal student loan and you are here in 2022.

Listening this and you're like yeah okay i'm still taking the check you should be looking to yourself. And be a good hell. Yeah. Okay.

It is a free freaking stemi check that nobody else is getting consider yourself lucky okay. What do i think about it macro look. I mean we got like 49 million people in america with with uh this uh and and i do think it'll affect discretionary income spend uh. But uh in the grand scheme of things.

I i'm not terribly worried about it. It's not something that i really see is like a market based inflection. Point. If the market's going up and the market's doing this it's student loan forbearance sensitive it'll be like that like who cares.

It's not the biggest deal to me uh thoughts on 610 inversion. Really right now. I'm watching the powell curve watch my video for that i think that's honestly the most important curve because heater boss driving the ship and if the if the captain says one thing he'd a dude. I'm listening to because i'm on his ship.

And so far it doesn't look like i'm on the titanic. Which is good because at the beginning of the year. I made a copy or i made a video about the titanic. Which was then copied by other people uh which was really disgusting but whatever not bitter at all thoughts about student loan mortgage.

Okay we answered that one oh yeah thoughts about people still getting mortgage rental forbids i haven't heard of people still getting those forbearances. But um good for them you know the the biggest out of all of the stimulus that existed the biggest stimulus that ever existed was mortgage forbearance. I kid you not 18 months. Uh 18 frickin months time well maybe not because there's ppp but 18 months times a two thousand dollar mortgage.

Just thirty six thousand dollars basically for free because you can hang it on to the back of your loan. Okay i correct that though honestly the ppp loan was the biggest grift ever okay because if you got a hundred thousand dollars from the ppp loan. You were able to write off that hundred grand in expenses as well as get a hundred grand tax free which basically made that worth about a hundred fifty thousand dollars. This was the biggest grift of stimulus money that has ever existed and probably will ever exist in our lifetimes the ppp loans were sexy uh yeah and i don't blame anyone for taking them yeah.

It's free money okay. So screw. It help crypto go up all right here somebody named cs whatever says i troll you on the comments. No comments anymore uh.

But anyway about embracing what what am i embracing the tesla spirit by not advertising. But i actually respect your hustle secure the dough well i appreciate that thank you for saying that and thanks for the 999. You know i could buy hey jack jack jack hold that thought titanic video was the go great lots refinanced. When rates were low uh millions of homeowners have now refinance have now hundreds of extra disposable income every month to me for years.

Yeah well a lot of people when you refinance you get that in lump sum right uh hold on i'll talk more about that sorry i had to shout it jack. But anyway lots of when you refinance you get that money in bulk usually people blow it right away so it's not money you got for a while people getting 40 year loan. I finally me man if i could take 40 year loans all all year long or all day long for the series a we're launching. I would be a dumb.

But not to take it which even if you're not a course member although course members are going to get first priority and that coupon expires tomorrow even if you're not a course member you might have a chance of getting in about. 30. Days later if you go to met. Kevincom series a met.

Kevincom series a. Anyway jack's not. Coming but i was thinking that 999 is like a certain amount in roblox. I don't know if it's like a thousand robux or something like that but anyway.

He always asks about it uh. I do think that enphase is a a little overblown right now and this is a little bit of a danger uh. See the thing is you have to remember this okay stocks get really really hot right after earnings. But then they become not hot.

You know a month after earnings and two months after earnings. So i think there'll be plenty of opportunities to buy in face. I love end phase. It's one of my favorite companies everything about their earnings call was so sexy i almost bought uh.

But no like love and face long run. If i had to pick three stocks man tesla and phase apple to the moon. I'm sorry i shouldn't have said it here. I should have saved it for the course member live stream.

But i i spilled the beans. I don't know maybe i just need another shot of. Coffee anyway. Uh why won't you.

Answer my tesla for 499. Well probably because i haven't gotten into it yet or expired. I don't know what your test. The question is i'll scroll up what's your test.

The question. Where is it where's where's kevin sogle tesla predictions by end of week dude come on man. I can't make end of week predictions. What kind of garbage is this dude.

Let's let's be real okay come on i can't make end of week predictions uh. I i i can barely make predictions let alone into weak predictions. That's why this is ridiculous man you're playing end of the week. Uh predictions man you are straight up yolo gambling.

Okay that's that's all we're doing all right my kids. My friends my loved ones let me uh let me pop back into the doomberg here. And let's see what the suits are saying. Okay.

So uh s p. Is up one point three percent after the 75 bp hike. The nasdaq is up two point seven percent and the russell's small cap at two thousand index is up point nine percent next. Up is the press conference with drone power.

Which begins at 2 30. With today's three quarter point increase out of the way the big question is what about september. The fact that the fomc voted unanimously for another super sized hike. Even as downside risks to growth have increased and forward looking inflation data have south and suggest.

Policy makers are laser focused on keeping inflation expectations from unanchoring. How funny that's literally what i said in this morning's video. The number one job. Jay pal has over this next press conference.

Which begins in a minute is him spanking us and and teaching us. A lesson about how important. It is that inflation expectations remain low um. Is what it is and and it's true all right anyway so uh we got to get uh.

We gotta get jay powell up now uh and that means i need to get a microphone on okay. But i'm serious like that's my expectation is j pal's gotta gotta keep it real here soon all right here we go so we're gonna go ahead and pop this up all right so we will pop this over make sure l. Volume's on should be good. But i'll come back to that in just a second once we are good to go hold on a sec.

Let me just do a test here. Really quick hmm. Interesting hold on one sec. Oh okay.

I will get to the bottom of this stand by hmm. Okay. Oh. I know what we can do yes.

This is what we'll do i will go right here federal reserve. I will do it through this and share here we go share one sec share screen. I promise it's coming. It's coming been through a lot over the past oops.

Sorry for the echo. Okay. We gotta make sure we can hear this can we hear that give me a thumbs up if you can hear that can you all hear that just give me a thumbs up if you can hear that please no audio. That's a problem seriously scheisse.

You can't hear it why oh scheisse oh man okay. I can figure this out. Why can't i hear this ah. Maybe he has nothing to say stop you're being nice.

Um. Okay. Well that's a bummer here hold on until i figure it out. We'll do this no scheisse activity in the housing system now sorry my friends.

I unfortunately think i screwed this up. I can't believe that um. I'm going to try one different thing. I'm sorry about that uh the q.

A is the most important part. I'm devastated hold on let me try one more time otherwise. I'm screwed chrome tab. It's a chrome tab.

Oh oh oh i can do it i can do it. Give. Me. Like literally 10 seconds.

And i think i can do this i figured it out inflammation remains. Our longer run goal of 2 over the 12 months. Ending in. May.

Total pce. Prices. Rose. 63.

Excluding the volatile food and energy. Categories. Core. Pce prices.

Rose. 47. In june. The 12.

Month change in the consumer. Price index came in. Above expectations at. 91.

Percent and the change in the core cpi was 59. Percent. Notwithstanding. The recent slowdown in overall economic activity.

Aggregate demand appears to remain strong supply constraints have been larger and longer lasting than anticipated and price pressures are evident across a broad range of goods and services. Although. Prices for some commodities have turned down recently the earlier surge in prices of crude oil and other commodities. That resulted from russia's war on ukraine has boosted prices for gasoline and food creating additional upward pressure on inflation.

The fed's monetary policy actions are guided by our mandate to promote maximum employment and stable prices for the american people. My colleagues and i are acutely aware that high inflation imposes significant hardship especially on those least able to meet the higher costs of essentials like food housing and transportation. We are highly attentive to the risks high inflation poses to both sides of our mandate. And we're strongly committed to returning inflation to our two percent objective at today's meeting.

The committee raised the target range for the federal funds rate by three quarters of a percentage point. Bringing the target range to two and a quarter to two and a half percent and we're continuing the process of significantly reducing the size of our balance sheet. Which plays an important role in firming. The stance of monetary policy.

Over coming months. We will be looking for compelling evidence that inflation is moving down consistent with inflation returning to two percent. We anticipate that ongoing increases in the target range for the federal funds rate will be appropriate the pace of those increases will continue to depend on the incoming data and evolving outlook for the economy. Today's increase is the tar in the target.

Range is the second 75 basis point increase in as many meetings while another unusually large increase could be appropriate at our next. Meeting. That is a decision that will depend on the data. We get between now and then we will continue to make our decisions meeting by meeting and communicating and communicate our thinking as clearly as possible as the stance of monetary policy.

Tightens further it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation yes our overarching focus is using our tools to bring demand into better balance with supply in order to bring inflation back down to our two percent goal and to keep longer term inflation expectations well anchored making appropriate monetary policy in this uncertain environment. That's good recognition that the economy often involves evolves in unexpected ways. Inflation has obviously surprised to the upside over the past year and further surprises could be in store. We therefore will need to be nimble in responding to incoming data and the evolving outlook and we will strive to avoid adding uncertainty in what is already an extraordinarily challenging and uncertain time we are highly attentive to inflation risks and determined to take the measures necessary to return inflation to our two percent longer run goal.

This process is likely to involve a period of below trend economic growth and some softening in labor market conditions. But such outcomes are likely necessary to restore price stability and to set the stage for achieving maximum employment and stable prices over the longer run to conclude we understand that our actions affect communities families and businesses across the country everything. We do is in service to our public mission. We at the fed will do everything we can to achieve our maximum employment and price stability goals.

Thank you i look forward to your questions. This is good this was really good folks. He he planted the seed for a pause. Hi.

Chair powell. Thanks for taking. Our questions. Rachel siegel.

From the washington post. Wondering. If you can walk us through your thinking around the decision not to go for a full percentage point increase. Our ramp up after the may cpi report came in hotter than usual and then obviously the june figure.

Did too uh was there any discussion of a stronger hike at this meeting. Um. Yeah. Thank you sure so we did judge uh that a 75 basis point increase was the right magnitude in light of the data uh in the context of the ongoing increases uh in the policy rate that we've been making.

I'd say that we wouldn't hesitate to make an even larger move than we did today if the committee were to conclude that was that that were appropriate look at that that was not the case at this meeting. There was very broad support uh for the move that we made yeah you mentioned that the june meeting. We had said many times that we were prepared to move aggressively more aggressively if inflation continued to disappoint and that's why we did move to a more aggressive pace at the june meeting as we said we would do at this meeting. We continued at that more aggressive pace as inflation has continued to disappoint in the form of the june cpi reading qbq is going like straight up the last three minutes.

Thank you so much for taking our questions. Colby smith with the financial times. As the committee considers the policy path forward how will it weigh the expected decline in headline inflation which might come as a result of the drop in commodity prices against the fact that we are likely to see some persistence in core readings. In particular and given that potential tension and signs of you know any kind of uh activity.

Uh weakening. Here. How is the committee's thinking changed on how far into restrictive territory rates might need to go boring. So um.

I guess i'd start by saying. We've we've been saying we would move expeditiously to get to the range of neutral. And i think we've done that now we're at 225 to two and a half and that's right in the range of what we think is neutral. So.

The question is how are we thinking about the path forward um. So one thing that hasn't changed is that it won't change is that our focus is continuing to is going to continue to be on using our tools to bring demand back into better balance with supply in order to bring inflation back down that'll continue to be our overarching focus. We also said that we expect ongoing rate rate hikes will be appropriate and that we'll make decisions. Meeting by meeting.

So what are we going to be looking at um. You know we'll be looking at the incoming data as i mentioned and that that'll start with economic activity are we seeing the slowdown that we the slowdown in economic activity. Uh that we think we need and there's some evidence that we are at this time of course. We'll be looking at labor market conditions and we'll be asking whether we see of the alignment between supply and demand getting better getting closer of course.

We'll be looking closely at inflation. You mentioned headline and core. Our mandate is for headline of course. It's not for core.

But we look at core because core is is actually a better indicator of headline and of all inflation. Going forward. So. We'll be we'll be looking at both and we'll be looking at them for those both really for what they're saying about the outlook.

Rather than just simply for what for what they say but we'll be asking do we see inflationary pressures. Declining do we see actual readings of inflation coming down so in light of all that data. The question. We'll be asking is whether the stance of policy.

We have is sufficiently restrictive to bring inflation back down to our two percent target. And it's also worth noting that these rate hikes have been large and they've come they've come quickly. And it's likely that their full effect has not been felt by the economy. So there's probably some additional tightness significant additional tightening in the in the pipeline.

So where are we going with this. I think the best. I think the committee broadly feels that we need to get policy to at least to a moderately restrictive level. And maybe the best data point for that would be what we wrote down in our scp at the june meeting.

So i think the median for the end of this year. The median would have been between three and a quarter and three and a half and then people wrote down 50 basis points higher than that for 2023. So that's even though that's now six weeks old. I guess that's that's the most recent reading of course.

We'll update that reading at the at the september meeting in eight weeks so that's how we're thinking about it as i mentioned as it relates to september. I said that another unusually large increase could be appropriate. But that's not a decision. We're making now it's one that we'll make based on the data.

We see and we're going to be making decisions meeting by meeting we think it's uh. We think it's time to to just go to a meeting by meeting basis. And and not provide you know the kind of clear guidance that we had provided on the way to neutral dude. This guy first says we look at core.

Then says we look at headline. Now it's all we look at both nick what journal uh chair powell you've said that your policy works. Through influencing expectations and the policy needs to be at least moderately restrictive. Which means you need financial conditions to stay tight.

Yeah futures market uh pricing currently implies you will raise rates this year. Along the lines of your june scp. But then lower them a few months later next year are these expectations consistent with the need to keep financial conditions tight in order to moderate purchasing power and bring inflation back to two percent. So i'm i'm going to start by pointing out that it's very hard to say with any confidence in normal times in normal times.

What the economies be going to be doing in 6 or 12 months and so to try to predict where what the appropriate monetary policy. Would response response would be i mean of course. We do that in the scp. But nonetheless you've got to take any estimates of what rates will be next year.

Uh with a grain of salt because there's so much uncertainty these are not normal times. There's significantly more uncertainty now quick note. The ten year has plummeted and narrowly it's quite high so again. I i would the best data.

The only data point. I have for you really is the june scp which i think is just the most recent thing. That the committee's done since then inflation has come in higher economic activity has come in uh weaker than expected. But at the same time.

I would say that's probably the best estimate of where the committee's thinking is still. Which is that we would we would get to a moderate moderately restrictive level by the end of this year. By which i mean somewhere between three and three and a half percent. And that we the committee.

Sees further rate increases uh in um in 2023 as i mentioned. We'll update that of course at the september uh meeting but um i you know that's really the best. I can do on that you said inflation had been a little bit hotter uh than anticipated has your view of the terminal rate changed since june. So i wouldn't say.

It was i think we didn't expect a good reading. But this one uh this one was was even worse than expected. I would say um. I don't talk about my own personal estimate of of uh of what the terminal rate would be um.

I will write down that in uh. It's going to evolve. It's obviously it has evolved over the course. I think for for all participants.

It has evolved over the course of the year as we learn how persistent inflation is going to be and by the time. The september meeting. We will have seen two more cpi readings and two more labor market readings and significant amount of of our readings about economic activity and and perhaps geopolitical developments. Who knows it'll be it'll be a lot.

It's it's an eight week intermediating period. So i think we'll see quite a lot of data. And we'll make our decision at that meeting based on that data. Gina hi.

Jarrell. Thanks for taking our questions. Gina smiley. New york times.

Um. You kind of alluded to this earlier. But i wonder in the event that you see several months of very weak headline inflation numbers because oil prices are coming down so much but core inflation continues to be strong or even picks up. I wonder how you would think about that it's a good question core is important.

It's hard to deal with uh hypotheticals. But but i just would say this we you know we would look at both and we would we'd be asking ourselves are we confident that inflation is on a path down to two percent. That's really the question and we'll be making you know our policy stance will be set at a level ultimately at which we are confident that inflation is going to be moving down to two percent. So you would you know it would depend on a lot of things of course um.

As i mentioned core inflation is a better predictor of inflation going forward headline inflation tends to be volatile so in in ordinary times you you look through volatile moves and commodities. The the problem with the current situation is that that if you have a sustained period of supply shocks. Those can actually start to undermine um or to work to work on de anchoring. Inflation expectations.

The public doesn't distinguish between core and headline inflation in their thinking. So it's something we have to take into consideration in our policy making even though our tools don't don't really work on on the uh. Some aspects of this which are the supply side issues. Steve liesman cnbc thanks for taking my question.

Mr. Chairman uh earlier this week. The president said. We are not going to be in a recession.

Oh. So i have two questions off of that do you share. The president's confidence in not being in a recession second. How would or would not a recession.

Change policy is it a bright line. Sir. Where contraction of the economy. Would be a turning point in policy or is there some amount of contraction of the economy.

The committee would be willing to abide in its uh effort to reduce inflation blow it off j pal blow. It up so as i as i mentioned um. We we think it's necessary to have uh growth slow down and slow growth growth is going to be slowing down this year for a couple of reasons. One of which is that you're coming off of the very high growth of the reopening year of 2021 um you're also seeing tighter monetary policy and you should see some slowing we actually think we need a period of growth below potential in order to be blowing it off slack.

So that so that the supply side can catch up we also think that there will be in all likelihood some softening in labor market conditions and and those are those are things that we expect that and we think that they're probably necessary if we were to have uh to get inflation. We were to be able to get inflation back down on a path to two percent ultimately get there so we're going to be again. We're going to be focused on getting inflation back down. And we as i've said on other occasions.

Um price stability is really the bedrock of the economy. And nothing works in the economy. Without price stability. We can't have a strong labor market without price stability for an extended period of time.

We all want to get back to the kind of labor market. We had before the pandemic where uh differences between racial and and gender differences and that kind of thing were at historic minimums where participation was high where inflation was though we want to get back to that. But that's not happening. That's not going to happen without without restoring price stability.

So that's something we see as as as something that we simply must do and we think that in the we don't see it as a trade off with uh with the the employment mandate. We see it as a way to facilitate the sustained achievement of the employment mandate in the longer term uh. Howard schneider. With reuters um.

Particularly in regard to expectations uh. It's been said the last few months that the risks of doing too little uh outweighed uh. The list the risks of doing too much does that remain the bias. So we're we're trying to do just the right amount right we're not we're not trying to have a recession and we don't think we have to we think that there's a path for us to be able to bring inflation down.

While sustaining a strong labor market as i mentioned along with in all likelihood some some softening in labor market conditions. So that is that's what we're trying to achieve and we we continue to think that there's a path to that we know that the path has has clearly narrowed. Really based on events that are outside of our control. And it may narrow further um.

So you know i do think as as i said just now that um restoring price stability. Is is just something that we have to do there's there isn't an option to fail to do that because that is the thing. That enables you to have a strong labor market over time without restoring price stability. You won't be able to over the medium and longer term to to actually have a strong a sustained period.

Very strong labor market conditions so of course. We serve both sides of the dual mandate. But we actually see them as well aligned on this as a fellow into that given the uncertainty and the sort of paradoxical flow of data you've been getting if you're going to make a mistake would you rather make the mistake on doing too much raising too much and raising too little good question. We're trying not to make a mistake.

We let me put it this way. We we do see that there are two sided risks. There would be the risk of doing too much and and you know imposing more of a downturn on the economy than than was necessary. But the risk the risk of doing too little and leaving the economy with this entrenched inflation.

It only raises the cost. If you fail to deal with it in the near term. It only raises the cost of dealing with it later to the extent people start to see it as just part of their economic lives. They start to factor high inflation into their decisions.

When that on a sustained basis. When that starts to really happen and we don't think that's happened yet. But when that starts to happen it just gets that much harder and the pain will be that much greater so i i really do think that it's important that we that we address this now and get it done. Uh.

Thanks. Chair. Powell. Neil irwin.

From axios um. To build a little bit on on what steve was asking um. Do you believe. The united states is currently in a recession uh will the ep reading tomorrow affect that judgment one way or the other and has your assessment of the risk of recession changed any in recent weeks.

So i don't i do not think. The us is currently in a recession. Um and the reason is they're just too many areas of the economy. That are that are performing uh.

You know too well and of course. I would point to the labor market in particular uh as i mentioned it's true that growth is slowing and for reasons that we understand really the growth was extraordinarily high last year five and a half percent. We would have expected growth to slow there's also more slowing going on now but if you look at the labor market you've got growth. I think payroll jobs averaging 450 000 per month that's a remarkably strong level for for this state of.

Affairs the unemployment rate at near a 50 year low at 36. Percent. All of the wage measures that we track are running very strong so this is a very strong labor market and it's just not consistent with you know 27. Million people hired in the first half of the year.

It doesn't make sense that the economy would be in recession with with this kind of thing. Happening so i don't think the us. Economy is in recession right now ah haven't seen it and and we'll just have to see what it says i i don't uh. I mean i would say generally the um.

The gdp numbers do have a tendency to be revised pretty significantly uh. It's just it's just it's very hard it's very hard to accumulate us. Gdp. It's a large economy and a lot of a lot of work and judgment goes into that but you tend to take first gdp reports.

I think with uh with a grain of salt. But of course. It's something we'll be looking at victoria hi sherpal. Victoria.

Guido with politico um. I wanted to ask about the new conflict of interest rules that you all rolled out um. Some senators have written asking for those rules to have more teeth and to have sort of more transparency about fed's finance. The fed officials financial activity.

Um speak to that and whether you intend on uh. You know toughening. Those rules anyway so those are those are the toughest rules in place. You know at any comparable institution that i'm aware of we think you know we thought that thought about this carefully and we put them in place.

And we're building the infrastructure. So that so that uh you know the enforcement will be tight that actually you won't be able to make trades unless they're pre cleared and and and the amount the amount of trades you make will be they'll have to be 45 days or more before any fomc meeting. It's just i think we've really you know created a very strong and robust set of rules that will you know support public trust in the institution and and uh again. We're just we're just.

Now. This is blah blah. Blah. Did you hear pelosi sold nvidia.

Today lots apparently for like a 300 000. Loss. Bloomberg news. Um bloomberg.

I wanted to ask a little bit more about the 75 basis points. Versus 50 versus. 25. Um.

Can you talk a little bit about what um. What kind of goes into your thinking for um. You know making the decision on how much to raise rates um. And you know just talking about a very large amount that you alluded to could that possibly be a hundred basis points.

And then kind of along those lines is there any sort of weakness in the economy. Outside of inflation measures that would lead you to slow your hiking pace. So i'm gonna i'm gonna take that as a question about the next meeting and thereafter so um as i mentioned. We're gonna be looking at all of those things activity labor market inflation and we're going to be thinking about our our policy stance and where does it really need to be and i also mentioned that as this process now that we're at neutral as the process goes on at some point.

Now that we're appropriate to to slow down. And we haven't made a decision when that point is but intuitively that makes sense right we've been front end loading. These these very large rate increases. Now we're getting closer to where we need to be so that's how we're thinking about it and we're you know in terms of september.

We're going to we're going to watch the data and the evolving outlook. Very carefully and factor in everything and make a decision in september about what to do and i'm not really going to provide any specific guidance about what that might be see so. But i mentioned that we we might do another unusually large rate increase. But that's not a decision that we've made at all so maybe we are you know we're going to be guided by the data.

And it i think you can still think of the the destination as broadly in line with the september sorry the june scp because it's it's only six weeks old and sometimes sometimes scps can get old really quick. I think in this one this one i would say uh is probably the probably the best guide. We have as to where the committee thinks it needs to get at the end of the year and then into next year. So i would point you to that chris uh hi uh.

Thank you uh chris rugaber at associated press um. I wanted to ask about right now. There is a sort of growing gap between the fed's preferred measure of inflation uh. The pce pce index and the one that's followed by the public.

The cpi of course. How do you expect to handle this divergence uh. If the pce starts to come down enough for you to consider slowing rate hikes uh. Even if the public is still seeing much higher uh cpi ratings.

Thank you so it's a dangerous interesting situation of course. We've we've long used pce because we think it's just better at capturing the inflation that people actually face in their lives. And i think that that view is pretty widely understood that said the public really reads about cpi and the difference. It really is because the cpi has higher weights on things like food gasoline motor vehicles and housing than the pce index does and so that accounts for a lot of the difference.

However over time they tend to come together. You know we we were given the importance in the public eye of cpi. We are calling it out and noticing it and everything like that but remember we we do target pce that is because we think it's a better measure uh. They will come together eventually the typical gap was really about 25 basis points for a very long time and if it went if it got to you know 40 basis points.

That would be very noticeable now. It's it's now. It's much larger than that because of the things. I i mentioned so we'll be watching both and and but but again.

The one that we think is the best measure. Always has been pc at least since i think we some 20 plus years ago moved to pce blah blah. Give me some juice. I'd like to weave a couple of things together.

Mr. Chairman michael mckee from bloomberg tv and radio well mark. You said that the destination. Pretty much remains the same uh in terms of your end of the year target.

But where are you in the journey uh we've now seen the federal stimulus programs and you mentioned consumer spending business investment have slowed are they moving at a pace. You would expect or is demand still greater than supply too much greater than supply that you need to do significantly more and i ask because there are lags in the impact of monetary policy. As you mentioned and a lot of this might hit in 2023. The strong dollar effect may hit in 2023 when the economy might be weak.

How how do you know where you are and where you think you need to get to well just talking about demand for a second as i mentioned uh in my remarks. You do i think you pretty clearly do see a slowing now in demand in the second quarter consumer. Spending business fixed investment housing places like that i think you know people widely looked at the at the first quarter numbers. And thought they didn't make sense and might have been misleading in terms of the overall uh direction of the economy.

Not not true of the second quarter. But at the same time you have this labor market. So there are plenty of experiences. Where gdp has been reported as weak and the labor market is strong and the economy has gone right through that and been fine so that that's happened.

Many times and it used to happen if you remember in the first quarter of every year for several years in a row gdp was negative and the labor market was moving along just fine. And it turned out to just be measurement error. It was called residual seasonality. We don't know the situation.

The truth is though we think that demand is moderating. We do how much is it moderating. We're not sure we're going to have to watch the data carefully there there are there is a great deal of money on people's balance sheets that they can spend the unemployment rate is very low. The labor market's very hot.

There are many many job openings. Wages are high. So. It's the kind of thing.

Where you you think that the the economy should actually be doing pretty well in the second half of the year. But we'll have to see we don't know that because you do see a marked slowing in the second quarter. That does that is fairly broad. So we'll be watching that we'll be watching that of course as i mentioned.

We do want to see demand running below potential for a su