Fed Releases Statement & Jerome Powell Speaks!

hello everyone welcome back to another live stream today we are talking about joe biden's infrastructure package mostly today but we are also talking about jpow and we're talking about earnings which means there's so much stuff going on but jay pal and the federal open market committee are releasing a statement within the next six minutes in this statement we will hear whether or not interest rates will be going up and we will be looking for any kind of signs of a taper uh in or any kind of change in strategy from the fed obviously we are not expecting anything to change but after we review the statement and we go through the verbiage in the statement we will also be looking at uh what the heck joe uh let's not show uh what uh jerome powell says in the q a that does begin at 2 30 p.m eastern time so basically next five six minutes we'll kind of take a look at the markets then we'll look at the statement we'll analyze the statement we'll try we'll get some reactions we'll see what's happening we'll get reactions maybe from bloomberg from cnbc we'll see how the market's reacting so we'll take a look at the sticks obviously and uh then we will um we will go into the jerome powell q a the mind medicine interview unfortunately got rescheduled super uh last minute uh like within the last little bit here i mean we were just in the course member live stream expecting it to still happen and uh it has just gotten rescheduled which is unfortunate i don't have a date yet for when but apparently there's some kind of compliance blackout for mind med after this up listing so uh instead we will be talking through joe biden or joe biden through jerome powell's uh q a session so we'll get to cover all of that all right so uh we are uh on standby for that federal reserve statement to be coming out uh that statement is expected to be released within the next five minutes let's go ahead and take a peek to see how the market is performing right now i know the nasdaq's down we'll take a look at the s p the s p we got let's see we'll start with spy pretty much flat s p has been pretty darn flat most of the day today as we are on standby for these notes to get released from the federal reserve so we're trading a little bit lower there on the s p 500 but fractionally lower on the day let's take a look at the nasdaq let's grab the nasdaq 100 for example nasdaq 100 is uh down slightly let's see if we can there we go actually show the details here on the right there we go down about a quarter of a percent on the nasdaq let's take a look at the dow jones dell i'll i'll have to have these uh on on like a cleaner list in fact i might do that i'll just pull up the uh uh it's volatility i'll pull up the bloomberg and we'll have the indices up like that otherwise in terms of the actual market itself outside of the indices while we wait for the statement and release from jerome powell we have uh en face and pinterest both suffering and kind of continuing to trend down throughout the day they've been sitting around negative 14 here after really bad earnings guidance great earnings report but a bad guidance then we've got uh we've got let's see uh spotify spotify is down uh 10.6 which is a little confusing because shopify is up about 10 there we go let's take a look at the indices here reserves decision on interest rates stocks right now uh are flat to modestly lower the s p 500 just barely in the red basically flat the 10-year yield about 1.65 so there are your benchmarks as we see what market reaction if any uh there is from today's fed decision on interest rates let's get straight to our panel for now led by mona mahajan senior u.s investment strategist yeah so they'll have panel commentary here over the next uh 20 minutes as we go into the joe bi i keep saying joe biden because joe biden is talking today as we go into the jerome powell q a we'll be covering the complete q a i'll be adding commentary obviously and we'll do summary as usual but most importantly we are waiting for that statement coming out within the next two minutes the meantime we can continue to look at the sticks here we've got dogecoin still sitting around that 31 cents mind medicine up 14.6 microvision pulling back a little bit and did have a little bit of a of a run there in the am running to 25.75 again pulling back a bit to 22.62 we've got uh shopify doing very well there up 10 on the day canoe and some of the other autos are doing okay canoe's up 4.9 percent churchill capital up two and a half percent uh so some of the evs and autos doing well etsy up despite this pinterest news etsy being a recipient from uh pinterest we've got uh tesla down one percent at six and ninety seven our comodo's down almost a little bit of almost a full percent here so we've got some a real sort of divergence in a lack of consistency in what's happening in this market you know nordstroms and macy's were up the other day actually yesterday they were up as well today they're down again it's a very messy market and i expect this messy market to really continue until we start seeing a little bit more consistency with inflation expectations and that's a big problem that we're seeing right now we're going to pull up the 10-year treasury as well so that way we have the 10-year treasury up while this fomc statement comes up we'll see how the treasury market reacts we'll also pull up the ic right now treasuries are up 1.64 usually as treasuries rise we do see cryptocurrencies rise as well treasuries have been going up every day this week possibly an anticipation of what's to come here but uh yeah big focus on this fomc statement coming out within the next uh next minute so excited bitcoin at inflection point amid recent sell-off ooh we'll see we'll see if we get back to that 60k like jp morgan was looking for so uh on standby for this statement right now fed decision imminent now keep in mind cnbc often gets these documents uh 30 minutes before and let's see if they release anything i'll check too let's go over to steve eastman steve the federal reserve leaving interest rates unchanged after its april meeting i am not changing and continuing with 120 billion dollars of asset purchases under its quantitative read that in a moment the fed for the first time though noting progress on vaccinations and uh saying uh there's been help from strong support strong policy support so a bit of an upgrade throughout here to the economy uh the fed has said employment has strengthened which is an upgrade from the prior statement where it said employment has turned up uh he said the pandemic as a pandemic affected sectors remain weak but those sectors have shown some improvement that's a new addition to the statement here and then uh bingo for uh david kelly there inflation has risen the fed says largely due to transitory factors some out there playing bingo some playing drinking game there's the first transitory of the day from the federal reserve the risk to the outlook from the virus the federal reserve says remains uh and uh the fed will continue to aim for inflation above two percent continue its 120 billion dollars of monthly asset purchases and is committed to using its full range of tools so tyler we have a federal reserve that is indeed upgrading its outlook for uh in uh for the economy uh noting the uh higher inflation rates that are out there but once again not changing policy in the face of that or even the policy outlook for the moment is there anything we're going to go ahead and pull back off this we'll look at the statement here uh in just a moment they definitely had that embargoed because they got that summary up fast take a look at this we are at uh treasury yields rising at the moment we're at about 1.65 1.64 ish now bobbing around but a little bit of an increase here intraday let's go ahead and go to the statement itself so here's the statement indicators of economic activity and employment have strengthened we've heard them kind of mention that as well we're going to go through and look at some of the nuance here sectors most adversely affected by the pandemic remain weak but have shown improvement and we expect this uh this weakness to unfortunately continue for a period of time until we really get the entire global recovery moving along so i do expect to see uh you know a lot of the recovery stocks which have priced in near perfection in a recovery to see some potential weakening over the next few months however it's actually the same thing that we're seeing in tech happening as well almost that tech and some of the consumer discretionary is being priced to perfection showing that hey now we're getting good earnings but not beating new already high expectations leading to some stocks to sell off like we've obviously seen here with pinterest as an example just in the last 24 hours inflation has risen here they go doubling down again on these largely transitory factors for inflation rising keep in mind this is why i believe we're going to see this massive volatility in uh in the stock market for the next six months people like oh kevin you know you bought this stock it's down or you bought this stock you're up or you're you're dumb or you're genius or whatever it doesn't matter anything in my opinion that we buy over the next few months is going to be going through insanity until we get to september october which is when we'll start getting into those inflection points for inflation where right now we're kind of doing this with inflation we want to start seeing that decline in inflation coming but this point right here is probably not coming until september or october and the fed is doubling down on this reiterating that these increases in prices that we are seeing are tr are being caused largely by transitory factors overall financial conditions remain accommodative in part reflecting policy measures to support the economy and flow of credit to u.s households and businesses path of the economy will depend on the virus ongoing public health crisis continues to weigh on the economy and risk to the outlook remain the committee seeks to achieve maximum employment inflation rate of over two percent or off two percent over the long run with inflation running persistently below this two percent longer run goal the committee will aim to achieve inflation moderately above this is general this is this is by you know this is verbatim that we see regularly here the committee expects to maintain an accommodative stance military policies uh or monetary policy until these outcomes are achieved the committee decided to keep the target reigns for the range for the fed funds rate at zero to one quarter of a percent and expects it will remain appropriate to maintain this target range until labor conditions have become more consistent with with the committee's expectations so a rate stable no mention here of tapering so far the big mention here is doubling down again on their inflation argument let's keep rating a little bit here just to see if we see anything else in addition the fed will continue its its treasury purchases so no taper yet same answer here until further progress has been made so no taper no rate changes still waiting that until further progress has been made until substantial further progress has been made in assessing the appropriate stance of the monetary policy the committee will continue to monitor implications of incoming information for the economic outlook the committee would be would be prepared to adjust the stance of monetary policy as appropriate as appropriate if risks emerge that could impede the attainment of the committee's goals so in other words if we start getting into price instability maybe it's time to start making some changes we are actually seeing treasury yields tick back down a little bit after some of this inflationary verbiage here so take a look at this we had a little bit of a jump let's just go to intraday really quick on the tenure as an example here look at that we had an initial jump on uh on the release of the fomc statement here but now we're seeing a decline in treasury yield potentially because of the fed again doubling down on this this very very key line that they inserted here that inflation has risen largely reflecting transitory effects this this really can't be understated i want to make this uh let's go let me pull back a little bit here let's go to i will just redraw it uh let's do this here i want to make that a little bit more clear remember what we have with inflation going on the big thing with inflation is that right now we already saw march inflation come in at 2.6 we're expecting to see inflation for the month of march uh or sorry for the month of april probably year over year coming something to the effect of 3.5 maybe we'll even see 3.6 could even be vice versa we might see three six uh and then three five so we're expecting to continue to see this sort of inflation increase level uh and really if this is uh this is the march release this is the april release this is the may release which gets released a month later we really shouldn't expect to really see this this sort of decline inflation until july to october in that range and that's going to be that transitory point where we say okay are we finally starting to work off that inflation is are we finally you know going to remove this inflationary pressure from the market by catching up on some of these supply shortages and take a look at this obviously the fed's uh wording here is helping the treasury yields still declining a little bit not terribly much of a movement here we're still sitting around 1.64 which is definitely a high for the week if we go back over the month we've been declining in treasury yields with the exception of the last few days here you can see this straight down trend uh with the exception of this uptrend here which very much follows uh how bitcoin has been operating in fact this is uh this is your annual or i'm sorry year to date 10-year inflation or 10-year treasury uh reading which is oftentimes a measure of people's expectations for inflation we saw that rapid rise here we saw the flattening in march we saw this decline in april but recently we've had a little bit of a bump here we can do is let's go ahead and add the bitcoin index to this we haven't done this since my sunday video where i mentioned this correlation and then what we're going to do is we're going to normalize this by a factor of 100 uh there we go oh it already was perfect so to take a look at this you can really see bitcoin this blue line here really operating with the 10-year treasury on sunday a lot of people like kevin what are you talking about that doesn't make sense there's no connection between crypto and the tenure there were some comments about that i shouldn't say a lot of folks there's some comments like that like really look at it now literally the 10-year treasury has been going straight up this week and so have the kryptos uh it's it's it's a fascinating relationship and it's one that you want to pay attention to because an uptrend in inflation expectations leads to an uptrend in yields on treasuries and seems to lead to an uptrend in bitcoin prices i believe that bitcoin prices move with inflation expectations and this makes sense why a measure of inflation expectations would trend with crypto the only time we've really seen an abnormality was right here and this was because of the coinbase ipo if this weren't here i would have expected this to be a little bit more of a flat to the downside but we did still see that dip and now that pump over here along with this chart so we got to pay attention to this going back to the fed statement no no major changes pretty much the same with the exception of that one phrase that inflation has risen largely reflecting transitory factors that's so key the fed doubling down on on their inflation estimates let's go take a look and see what bloomberg's saying here federal reserve officials strengthened their assessment of the economy on wednesday and signaled risks have diminished while leaving their policy rate near zero and maintaining the 120 bill of monthly asset purchases we have already read the quotes here yeah let's see jerome and his colleagues met again amid growing optimism for the u.s recovery helped by widening vaccinations and more aggressive monetary and fiscal support biden's obviously expected to unveil uh his 1.8 trillion dollar stimulus plan later today although we've already seen a lot of details of that such as the removing of the 10th or the limitation of the 1031 exchange which i personally think will have disastrous consequences for uh home buyers we've got uh the elimination potentially of the stepped up tax basis the elimination of carried interest being taxed as uh a capital gain i mean there's so so many big changes in and biden's plan here it's uh it's pretty incredible let's go see how the indices are doing i think i can just do a quick look here uh world equities here we go i don't want to do futures i just wanted to get world equities there we go world equity indices so uh right now looks like uh we've got the dow down about point three percent s p down a slight smidge schmidgen here uh the nasdaq down a tiny little bit as well this is kind of our world market here let's go ahead and look at individual stocks to see how individual stocks are reacting to this we do have biden speaking in 19 minutes so we'll take a peek let's see if we've seen any specific movement in any stocks not noticing anything i think that's because this this statement so far has almost perfectly matched expectations the stocks that are running are still running uh ethereum actually blowing up at the moment here after this statement release here the statement was released while ethereum was 27 15 ethereum now running up to 27.40 so we've got a movement to the upside in ethereum yeah let's take a look at where bitcoin is bitcoin at 55 000. also over the last eight minutes here uh trending up from about fifty four thousand eight eighty to uh just over fifteen i'm sorry uh just over fifty five thousand the uh same stocks that are doing poorly are doing poorly same stocks they're doing well or doing well pretty much the same look on the sticks today let's take a peek at the fed here let's take a look at rather cnbc here for a moment for some commentary i'll add commentary as well i've got bloomberg here and uh we are also ready for jerome to be speaking shortly absolutely boppo most of the stocks have been reporting well above expectations but look at the s p 500 earnings started two weeks ago with jp morgan the stock market has not budged since jp morgan came out even though we've had surprise after surprise in most of the big names that's a sign that the market's bumping up against the limits of its ability to surprise you want to doubt me on that look at amd i don't think you can get much better guidance than some of these semiconductors have been reporting releasing amd at a great number and overall look doing nothing today on tremendous guidance well above uh expectations so i think we're going to see now the focus is going to be not on the fed for the stock market it's going to be on the rate of earnings growth they can keep that up to keep the market up around here and even biden's legislative agenda is getting a lot more attention from the stuff absolutely on biden's legislation is going to have a huge impact on the market uh and uh market prices not only biden's legislation but like they said the uh the rate of earnings growth we've look we've been doing this with earnings we've we've basically just been the earnings have just been straight up now we're starting to see that inflection point where it's like okay well now we might flatten at these higher levels once we get to growth again in that rate i think that's when we're really going to see more of a sustained rally in the stock market a lot of folks are wondering kevin why don't you sell them why don't you sell and just wait for that time to come because those moments come fast and you don't know when they come those rallies can come extremely fast you can get if you i mean there's so many studies that show if you just miss the top few highest return days in the stock market your returns are dismal compared to what stocks and indices return in a year so you've got to be in the market you don't want to be out of the market trying to time it because when that rally comes it comes fast and it comes in a condensed period of days and my expectation for that is somewhere between september october when we really start seeing that inflection point uh trending to the downside on inflation same thing could be true by the way for cryptocurrency a lot of folks expecting a crypto winter coming we'll see will a decline in inflation and inflation expectations lead to potential declines in cryptocurrency we don't know we will see we will see you know that could have something to do with it and if they say the fed isn't going to move until they really start to see certain things in the numbers i'll tell you a number that'll make a move if tomorrow you see a 178 10 year and the day after that you see a 2 10 10 year guess what the fed's going to tell you something new it's highly it's about the markets and what they do and why they do it well nobody exactly knows for sure we could talk data all day long but there's trillions of dollars out there that are going to be raining for quite a long time kelly back to you i mean he's not wrong about that if we saw an insane surge in the 10-year treasury and inflation expectations really started flying yeah yeah he's right would be some issue 30 seconds here i have the fed fund futures rick fully pricing in a rate hike in december 2022 uh kelly correctly read that the euro dollar features futures is march 2023 would you square that circle so that kelly and i can be back in agreement where we always are yes absolutely okay you just told me that at like 2 16 eastern and all those percentages are accurate until 2 16 and 10 seconds okay it would be like you telling me where t-bills are today and in a year i go buy a t-bill and i say oh my god steve you lied to me because tables aren't there anymore it's it's good it's never left coming out of the broker's mouth that says it or as good as the keyboard that typed it but yes they're accurate in real time which means they change all the time and i guess i guess kelly the story kelly i just want to make one very quick point about this which is this the debate is is it december 22 or is it march 2023 that to me is a huge victory for the federal reserve's forward guidance in that the debate we're having is a year and change away during the financial crisis the market was always pricing in a rate hike six months down the road eight months down the road the fed has the market at bay too bad at least too bad they didn't listen yeah too bad ben and janet didn't listen back then that's all i can say no but i agree whether it was december 22 or march 23. we're talking about a long time from now uh at least thank you both rick santelli steve policeman coming up for less than wow wow okay well 13 minutes away from uh fed chair jerome powell talking uh golly folks it's uh we're gonna be in for one heck of a ride the next uh the next six months i'll tell you it's it's gonna be more of this you know people are asking hey when are stocks going to go up again the same the answer just consistently is the same september and october is what if you're looking for that bump september and october that's my take we got to get through this disaster of a summer this disaster started in february i don't think these inflation fears are going to go away until they actually start going away and guess what folks it freaking makes sense why would hedge funds think inflation is not happening when the prices of lumber and copper and stocks and housing and everything's going to the moon of course everybody thinks inflation's going to happen because inflation is happening the question is what happens once those inflation that these inflation numbers that are running when they start pointing back to the downside and we start seeing that that reduction in inflation not just inflation expectations but also in prices actually coming back down again as we normalize after this crazy screwed up all supply chains once we see that correction that's when i think we can actually really plan and the concern a lot of people have is well look kevin once we go up like this we're going to keep going up okay well we'll know that we'll know if that's true by september october if we trend down well we'll know that by september october it's intense it's definitely intense and a lot of a lot of things that we have to look forward to here so uh let's uh let's get into the sticks here briefly as we wait for jerome powell which uh jerome powell will be up very very soon uh so now still consistent here spotify and face pins still the big losers of the day starbucks down three point four four percent after their uh is missed there on same store comp sales microvision uh bouncing around thirteen percent of mine medicine still kicking bond up fifteen percent keep in mind that interview uh now uh being rescheduled due to uh mind medicine compliance issues uh coming up with uh with this recent uplisting here let's uh let's go see what uh fox biz has for us and we'll jump on over as well to bloomberg let's see here okay great so nothing over here let's go jump on over we are 11 minutes away from j-pal talking keep in mind jay pal he's one of the people that's almost always on time we're starting disney's offering employees things like flex work increased health benefits extra leave does that if that starts to take the place of higher wages are we looking at the right metrics by focusing on higher wages as a measure of inflation well i think we should look at wages and benefits so in our job satisfaction survey that we conducted late last year we found out that uh consumer well sorry that consumers workers were the happiest they've been in 20 years in fact our measure jumped to 56.9 and a lot of it had to do with some of the things that you mentioned including more flex time uh paid leave um a focus on mental health also okay we're gonna pull off this i do want to get back to fed talk and inflation talk uh keep in mind use that coupon code to the moon a link down below for those private live streams we do we do fundamental deal analysis real estate deal analysis stock analysis in the live streams plus q a directly with me it's a blast every day the market is open so listen in over here so i think that is much too uh uh relaxed about the fact that the philips curve doesn't exist very much but anymore uh that there won't be any inflation coming out i think they just must keep their eye on the inflation ball and not let inflation get out of control and that's i think really key they need to communicate that a hell of a lot better i think than they do yeah talk to me a little bit about that because i sense you are uh at least mildly critical rick of of the feds communicating and and it does seem that that they've been quite careful about telling the markets and the and and the players over and over again that they're not going to touch interest rates for a long time and they're going to keep buying bonds for a long long time yeah i think this is an issue about how you do what's called forward guidance which is to provide information about what you're going to do in the future uh the j palpate has been very reluctant to let people know how they'll react uh to future events and i think actually that's a mistake uh the issue is that they they do and i think rightfully uh uh have moved to this new framework which says we don't let bygones be bygones if inflation's been too low in the past we want to make sure that inflation uh actually is a little bit higher for a short period of time so the average is actually two percent uh but but you do require uh explaining how that could how you might change your policies given that there could be change in circumstances uh steve has been very reluctant to do that it's understandable they don't like to be paid yeah but this is extremely important particularly because uh you want you worry about having another taper tantrum you want the markets to understand what you're doing uh in case the economy keeps on coming much stronger than they expected which has been so uh recently if the vaccine does work which we hope it does uh they're gonna have to revise their plans a little bit and they actually should indicate how they'll do that but i think i think you you've hit on the idea there that i i if i were in or maybe you were in um jay powell's shoes the last thing you would want to do would be to tie yourself down to if a then b or if if a number comes out then we'll do this and and maybe there are extenuating circumstances or maybe the consensus isn't there in the in the room to do that so i yeah i want to just chime in on this you know people say oh the jerome powell hasn't been clear enough you know i i kind of disagree with that i think jerome powell has been extremely clear and and every time he talks he's more and more clear in fact in an interview with sarah eisen sarah eisen bluntly asked him hey you know if things change i mean you're going to have to raise rates right and jerome powell goes yeah i mean that's the principle tool that we use to control inflation if inflation gets out of hand so yeah they change their mind and they raise rates they've already signaled that to us this dude's trying to say jerome powell's not being clear enough i don't know how how much more clear drawn power could be personally if i have a drone power i'd be pissed off every day like i i don't get it like i'm being so clear like if if the economy keeps booming and we don't see inflation we don't do anything if the economy keeps booming and we see inflation through the next six to eight months we don't do anything but if inflation keeps sticking around between say month 8 and 12 from now maybe it's time to start tapering and then maybe it's time to start raising rates it doesn't seem like rocket science it seems like jerome powell has been very clear now you either believe them or you don't but there's stuff about people going you're not being clear enough yeah i wish you were more clear i'm like dude have you not been listening to the guy come on that's nonsense let's let's you know what forget these people let's go to bloomberg growth when you have asset prices uh levitating ever higher without the wage increases that should follow well i guess the key thing is that many of the people who are worried about low wages probably don't own any assets they may not be homeowners they may not own stocks or bonds so they're not benefiting from rising asset prices um and so and potentially those asset prices also don't factor into consumer price indexes so even though prices are quite high for homes and we're seeing the stock market continue to rally that's not affecting you know main street but i think what main street is really concerned about is the fact that they are seeing prices rise certainly for food and energy our own measure of inflation expectations over 12 months is is very high um also uh consumers are seeing prices rise for you know some of the services that they want um and we do anticipate that there should be a shifting away from high prices for goods towards services but we're going to see faster inflation that's going to potentially uh give some consumers pause but again we're still anticipating very strong growth for this year six percent um and that's probably conservative compared to some other folks and even with those uh inflation expectations that are elevated our consumer confidence index shows that consumers are happy they're willing to spend on cars and homes and they're even thinking about going on vacation yeah for sure thinking about going on vacation can't wait to go back on vacation oh it's gonna be exciting uh let's listen more on inflation here right now when you look at asia when you're looking at the numbers in terms of covid still rampant in india so painful to watch in latin america how much does this up to states how much does this something that has to keep an eye on um that the vaccine rollout has been great in the u.s so far with you know roughly half of the u.s uh adult population back it's just not true guys in india and brazil as you said and so that's going to have meaning for the fed in terms of trade where if the global economy is not prefer performing at its optimal level that means less trade for the us um it also means that even if the u.s you know and china are able to really ramp up global growth you're still going to have economies that are falling behind and so the fed want to be very careful about tapering or announcing tapering knowing that you could have a very negative financial market reactions in these economies that aren't as advanced in their uh recovery from the pandemic i'm gonna follow on that because scott you were out front on the pandemic um on covet overall and the global economic consequences of that at a time when everyone thought it would be sars 2.0 so how are you thinking about india and whether we're being too complacent that the pandemic is basically over here in the us i mean in what ways might india surprise us and and hurt the global economic recovery story in a way that will be filled this is actually a big question because india is just having one he double hockey sticks of a time with cobit uh jerome powell now expected within three minutes uh almost a freeze because of how bad the situation is uh that that reduces trade that uh increases uh the price of imports and it puts uh you know more pressure on the us economy uh but i think also dana's point uh we have to think about their stability uh you know without these economies recovering uh you know we're uh running the risk that it can cascade into a financial crisis and so uh from a financial stability standpoint it's it's critical that the us help these countries as much as possible to get uh the pandemic behind them we want to thank you so much scott miner of course guggenheim who's been rolling along with us ahead of the fed event the all-important fed chair jay powell to take to the press conference we have but a minute and a half tom what do you think the key watch word for you is going to be key for me is what he says on wages and what he says is employed america there's anecdotally question carolina we're seeing a surge in wages michael ferrolli and jp morgan talks about seven million jobs being formed over the summer maybe into the autumn and that is the recovery from where we were in february of last year what does the wage dynamic do anything he says on that to me will be front and center but you're wondering of course meanwhile oh i'm sorry caroline i i just want to all right we're going to pull back off this let's take a quick look at uh actually you know what give me one second here i want to make sure we've got uh fed jerome fetch here jerome powell ready to go so uh let's get this ready we are i'm expecting this to be on c-span that's going to be our fastest access to it so give us another 30 seconds here big shout out to c-span by the way they provide some amazing broadcasting okay one of the one of their channels will be showing it uh worst case scenario we can go directly to the fed although c-span will be a little faster so we are now within 30 seconds of jpow coming out he's generally very very much on time so we'll see uh we are on standby any second now for jay powell uh jay pal jay pal where are you all right we'll go ahead and pause bloomberg live still on standby okay okay it's gonna be on c-span three ah okay all right here we go afternoon along with our strong guidance on interest rates and on our balance sheet will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete widespread vaccinations along with unprecedented fiscal policy actions are also providing strong support to the recovery since the beginning of the year indicators of economic activity and employment have strengthened household spending on goods has risen robustly the housing sector has more than fully recovered from the downturn while business investment and manufacturing production have also increased spending on services has also picked up including at restaurants and bars more generally the sectors of the economy most adversely affected by the pandemic remain weak but have shown improvement while the recovery has progressed more quickly than generally expected it remains uneven and far from complete path of the economy continues to depend significantly on the course of the virus keep in mind he's reading the statement first then he's going to do q a nobody cares about the statement we already read the statement so he's just doing his reading then q a hospitalizations and deaths while the level of new cases remains concerning especially as it reflects the spread of more infectious strains of the virus continued vaccinations should allow for a return return to more normal economic conditions later this year in the meantime continuing observance of public health and safety guidance will help us reach that goal as soon as possible as with overall economic activity conditions in the labor market have continued to improve employment rose 916 000 in march as the leisure and hospitality sector posted a notable gain for the second consecutive month nonetheless employment in this sector is still more than 3 million below its level at the onset of the pandemic for the economy as a whole payroll employment is 8.4 million below its pre-pandemic level the unemployment rate remained elevated at six percent in march and this figure understates the shortfall in employment particularly as participation in the labor market remains notably below pre-pandemic levels the economic downturn has not fallen equally on all americans and those least able to shoulder the burden have been the hardest hit in particular the high level of joblessness has been especially severe for lower wage worker workers in the service sector and for african americans and hispanics the economic dislocation has upended many lives and created great uncertainty about the future readings on inflation have increased and are likely to rise somewhat further before moderating in the near term 12-month measures of pce inflation are expected to move above 2 percent as the very low readings from early in the pandemic fall out of the account increases in oil prices pass through to consumer energy prices beyond these effects we are also likely to see upward pressure on prices from the rebound in spending as the economy continues to reopen particularly if supply bottlenecks limit how quickly production can respond in the near term however these one-time increases in prices are likely to have only transitory effects on inflation the fed's response to this crisis has been guided by our mandate to promote maximum employment and stable prices for the american people along with our responsibilities to promote the financial stability of the financial system as we say in our statement on longer-run goals and monetary policy strategy we view maximum employment as a broad-based and inclusive goal our ability to achieve maximum employment in the years ahead depends importantly on having longer-term inflation expectations well anchored at two percent as the committee reiterated in today's policy statement with inflation running persistently below two percent we will aim to achieve inflation moderately above two percent for some time so that inflation averages two percent over time and longer term inflation expectations remain well anchored at two percent we expect to maintain an accommodative stance of monetary policy until these employment and inflation outcomes are achieved with regard to interest rates we continue to expect it will be appropriate to maintain the current zero to one quarter percent target range for the federal funds rate until labor market conditions have reached levels consistent with the committee's assessment of maximum employment and inflation has risen to two percent and is on track to moderately exceed two percent for some time i would note that a transitory rise in inflation above two percent this year would not meet this standard nice in addition we will continue to increase our holdings of treasury securities by at least 80 billion dollars per month and of agency mortgage-backed securities by at least 40 billion dollars per month as a big state of substantial further progress has been made toward our maximum employment and price stability goals the increase in our balance sheet since march 2020 has materially eased financial conditions and is providing substantial support to the economy the economy is a long way from our goals and it is likely to take some time for substantial further progress to be achieved our guidance for interest rates and asset purchases ties the path of the federal funds rate and the size of the balance sheet to our employment and inflation goals this outcome-based guidance will ensure that the stance of monetary policy remains highly accommodative as the recovery progresses 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 q a coming up now this is the big part to complete the recovery thank you i'll look forward to your questions yeah you will have a chair first of all hi uh chairman powell thanks for doing this um i guess uh since i'm first i'll go ahead and re-uh powers question from the last press conference um is it time to start talking about talking about tapering yet have oh your colleagues had any conversations those effects same thing over and over thank you so no it is not time yet uh we've said that we would let the public know when it is time to have that conversation and we said we'd do that well in advance of any actual decision to taper our asset purchases and we will do so in the meantime we'll be monitoring progress toward our goals we first articulated this substantial further progress test at our december meeting economic activity and hiring have just recently picked up after slowing over the winner same thing man and it will take some time before we see substantial further progress thank you thank you john l wasted your question on that okay hi thank you so much my question is about what's going on with the virus and what if we don't reach a level of hurt immunity per se so in your scenario thinking about the outlook in the economy do you have a model where you might start to still normalize a policy even if there's like a baseline of infections still going on or how can you you know talk about how you're weighing those things yeah so and we have to leave uh questions about herd immunity and what that looks like to the to the health experts but but i would certainly say that what matters the most to the economic recovery continues to be controlling the virus the economy can't fully is this dr fauci like come on questions suck involving crowds of people there may be people who are around the edges of the labor force who won't come back in unless they feel really comfortable going back to their old jobs for example and there may be parts of the economy that will just won't be able to um to to really fully re-engage until until the pandemic is decisively behind us but the you know we've articulated particular um uh guidance for tapering our asset purchases and for lifting off and raising interest rates so for for asset purchases we've said that we would continue at the current pace of asset purchases until we see substantial further progress toward our goals so uh and that is that is what it is substantial further progress for interest rates please get like sarah eisen in here to ask a real question market conditions consistent with maximum employment we want to see inflation at two percent and we want to see it on track to exceed two percent so those are our tests we don't have an independent test to do with the virus i will say though as i started with you know the the path of the virus is going to have an effect on our ability to achieve both of those tests okay better questions thank you gina hi chairpell thanks for taking our questions i wonder if you could talk a little bit about that test for raising interest rates that you just elaborated you've obviously made it very clear that you want to see improvements in the real economy in the real data and not in just sort of expectations data is good for making that move but i guess i wonder what happens if inflation expectations were to move up before you see some sort of return to full employment you know it seems like a lot of sort of the stability in inflation has been tied to the fact that those have been so low and stable and i guess i wonder how your reaction would be very sort of how your reaction to that is is how you're thinking about that new york times here that was good so it seems unlikely frankly that we would see inflation moving up in a persistent way that would actually move inflation expectations up while there was still significant slack in the labor market i won't say that it's impossible but it seems um it seems unlikely it's much more likely that we would having achieved maximum employment conditions we'd also be seeing two percent inflation and be on track to see inflation moving above two percent they tend to move together uh uh so that's not to say inflation won't might not move up but for inflation to move up in a persistent way that that that really starts to move inflation expectations up that would have to that would take some time and you would think that that uh it would be quite likely that that we'd be at in very strong labor markets for that to be happening if it if that actually were to happen though there is a there's a paragraph in the uh in the statement on longer run goals and monetary policy strategy which says that when the two goals are somewhat in conflict we weigh various factors including the the time it would take to get back and forth so we do it doesn't really tell you what to do but it tells you that we will weigh those two factors and how far we are away from them and how long it would take to reach them were we to reach that that sort of pretty unlikely state thank you steve nailed it thank you i'm gonna quickly put her name up on screen so you know who it was that was a good question you're thinking about how covet infection rates and the virus calibrate with monetary policy as you recall we had a major resurgence in the virus last fall i'm wondering would you need to be assured that there wasn't such a resurgence coming before you began i mean for lack of a better term thinking about thinking about tapering um and what kind of comfort level would you need would it be something that would be declared from the cb cdc or the or the world health organization for example downgrading uh the virus from from a pandemic before you have the comfort level to reverse course on policy thank you yeah we we really have or just articulated the goals that i've that i've just mentioned a couple of times which is substantial further progress toward our goals before we taper now that's very likely to for us to achieve that it's very likely going to be the case that we've also made really significant progress on controlling uh the virus through vaccination and other you know those two things should more or less co-exist we haven't articulated a separate test for a state of the virus that we'd like to achieve because we're not you know we're we're not experts in that area we're we're really focused on the economic outcomes and again my guess is that we it's very likely it seems to me that for us to achieve the economic outcomes we would need to taper or to raise interest rates we would also have to have made very substantial progress in getting the virus under control not not necessarily fully under control there is a a possibility of course that we will will have ongoing outbreaks uh over the summer of various regional outbreaks and potentially next winter as well but we'll be looking for substantial progress toward our substantial further progress toward our goals as we think about tapering asset purchases that we have not heard him say before potential outbreak next winter that's what they're talking about have not heard that before that's interesting 10-year treasury currently down at 161. i wanted to ask you've talked a lot during this crisis about the need to have a lot of help from fiscal policy and monetary policy to make sure that there's not long-term scarring in the economy and i was just wondering you know given all the policies that have been put in place do you expect there to still be some long-term scarring and if so um you know what are you most worried about where are you most worried about that showing up so um i would say that um we were very worried about scarring both in the labor market from people being out of uh out of the labor market for an extended period of time the evidence is clear that it becomes much more difficult if you're out for a long time to get back in and get back to the life that you had same thing with these small businesses many of which are the work of generations were we going to wipe out many of those unnecessarily that was a big concern i would say that so far you know here we are in late april of 2021 uh we have experienced that that level of scarring either in the labor market or among smaller businesses so we're not living that that downside case that we're very concerned about a year ago notwithstanding that um long limit where you know payroll jobs are 8.4 million below where they were in february of 2020. we've got a long ways to go and and also it's going to be a different economy so um we've been hearing a lot from companies that they are they've been looking at deploying better technology and perhaps fewer people including in some of the service industries that have been employing a lot of people you know uh it may well be it seems quite likely that a number of the people who who had those service sector jobs will struggle to find the same job and may need time to find work and get back to the working life they had these were people who were working in february of 2020 they clearly want to work so those people are going to need they're going to need help and so while i would say we haven't seen um really highly elevated levels of unemployment for you know up in the teens that we thought we might have for an extended period of time we've still got a lot of people who are out to out of work we want to get them back to work as quickly as possible and that's really one of the things we're trying to achieve with our policy thank you rachel siegel thank you michelle and thank you chair powell for taking our questions the housing market in many american cities is seeing booming prices bidding wars and all cash offers well above asking price yes that housing is becoming much more expensive for lower-income americans and people who are still struggling from the pandemic do you have concerns that there are localized housing bubbles or that there's the potential for that and what is the fed doing to monitor or address this thank you good so we do monitor the housing market very carefully of course um and i would say that before the pandemic um it's it's a very different housing market than it was before the global financial crisis and one of the main differences was that households were in very good shape financially compared to where they were in addition um most more people who got mortgages were people with pretty high credit scores there wasn't the uh subprime you know uh low doc no doc lending practices were not there so we don't have that kind of thing where we have a housing bubble where people are over levered and owning a lot of houses there's no question though that housing prices are going up and so we're watching that carefully it's um it's partly because there's there's clearly strong demand uh and there's just not a lot of supply right now so builders are you know struggling to keep up with the demand clearly inventories are tremendously low we're all hearing those stories and if you're if you're an entry-level housing buyer this is this is a problem because uh it just is going to be that much harder for people to get that first house and that's a problem i mean we it's part of a strong economy with people having money to spend and wanting to invest in housing so in that sense it's good it's it's clearly the strongest housing market that we've seen since the global financial crisis and you know my hope would be that over time uh housing builders can react to this demand and come up with more supply and workers will come back to work in that industry so um you know it is it's not an unalloyed good to have prices going up this much and we're watching it very carefully i don't see the kind of financial stability concerns though that really do reside around the housing sector so many of the financial crack-ups in all countries all western countries that have happened in the last 30 years i've been around housing we don't we really don't see that here we don't see bad loans and unsustainable prices and that kind of thing wow very big statement on real estate thank you chris rugaber associated press hi thank you for taking my question uh i wanted to ask about the labor market uh you you see things such as in the beige book you saw on the base book anecdotes about businesses not able to find workers oh oopsies back to the labor market for fear of getting sick um child care concerns and so forth do you see these as also just sort of temporary bottlenecks that won't uh have much effect on the long-term health of the labor market how are you thinking about these kinds of issues chris you're breaking up a little there but i think i did get your question so yeah i think there are a number of um a number of things going on there the the the uh tension between a high level of unemployment and and yet uh um uh many many companies uh saying they can't find an elevate number of companies saying that they can't find workers so what's really going on there it should be a number of different things they're workers who don't actually have the specific skills that the employers are looking for there may be geographical differences um it may also be that uh for example there one big factor would be schools aren't open yet so there's still people who are at home taking care of their children and would like to be back in the workforce but can't be yet there are people afraid of their virus fears that are weighing on people so some some people don't want to go back to work um there are also a significant number of people who say they've retired uh a large number of people say that they're retired now it's it's hard to say whether they will come back in as the labor market strengthens and as covid uh uh you know becomes uh in the rearview mirror in the history books if you will so um but clearly there's something going on out there as uh as many companies are reporting labor shortages we don't see wages moving up uh yet and uh presumably we would see that in a real you know in a really tight labor market and we may well start to see that um i do think so what will happen um what we saw during the last expansion and it may be a different expansion we don't know but but what we saw was that labor supply generally showed up in other words uh if you were worried about their about running out of workers it seemed like we we never did you know the labor force participation held up people came in the labor force they stayed in the labor force longer than expected so my guess would be that uh you will see people coming back into the labor force and these jobs will be the labor market will reach equilibrium uh maybe pay will go up uh but i do think that uh and i do think also the unemployment insurance benefits will run out in september so to the extent that's a factor which is not clear uh it will no longer be a factor factor fairly soon so my guess is that we'll we'll come back to this economy where we have you know equilibrium between uh labor supply and labor demand it may take some months though that's really good arguments in terms of why some people might not be returning the market yet uh labor market and what it's going to take to get people to come back we'll summarize though hello yeah i think they're a mute uh we we lost you chris let's go on to heather thank you good afternoon sir pal um i wanted to ask you know you've been hearing of course these uh concerns raised by larry summers and others about inflation and the fact that they think the fed might be might let things get out of hand with the new policy stance so my question is can you tell us what is different this time versus previous periods like in the 60s when inflation got out of control why are you confident with the lags and monetary policy that the fed can get ahead of inflation and and make sure it doesn't go too far above uh the two percent target yes question so actually a couple things i'd like to say about inflation including addressing your question so let me start with just saying that we're very strongly committed to achieving our objectives of maximum permanent employment and price stability uh our price stability goal is two percent inflation over the longer run and we believe that having inflation average two percent over time will help anchor long-term inflation expectations at two percent with inflation having run persistently below two percent for some time the committee seeks inflation moderately above inflation for two times above two percent for some time so with a little bit of context we're making our way through an unprecedented series of events really in which a synchronized global shutdown is now giving way to widespread reopening of economies many places around the world in the united states fiscal and monetary policy continue to provide strong support that vaccinations are now widespread and the economy is beginning to move ahead with real momentum during this time of reopening we are likely to see some upward pressure on prices and i'll discuss why but those pressures are likely to be temporary as they are associated with the reopening process in an episode of one-time price increases as the economy reopens is not the same thing as and is not likely to lead to persistently higher year-over-year in into inflation into the future inflation at levels that are not consistent with our goal of two percent inflation over time indeed right it is the fed's job to make sure that that does not happen if k if contrary to expectations inflation were to move persistently and materially above two percent in a matter that threatened to move uh in longer-term inflation expectations materially above two percent we would use our tools to bring inflation and expectations down to mandate consistent levels and i would say if i may that is a principle difference from we're all very familiar at the fed with the history of the 1960s and 70s of course and we know that our job is to achieve two percent inflation over time we're committed to that and we will use our tools to do that so that that's a very different situation than you had uh back in the 1960s or many many differences actually um so um uh let me talk quickly about the two reasons two or you could say three but really two main reasons why we think inflation will move up in the near term the first is the base effects um 12-month measures of inflation are likely to move well above two percent over the next few months as the very low inflation readings recorded in march and april of last year drop out of the calculation that process has already started to show up you saw it in the march cpi reading and you'll see it later this week in the pce price data these base effects will contribute about one percentage point to headline inflation and about seven tenths of a percentage point to core inflation in april and many may so significant increases and they'll disappear over over the following months and they'll be transitory they carry no implication for the rate of inflation in later periods so that's base effects the other big one i would talk about is bottlenecks so this is what we're seeing in supply chains in various industries and we're in close touch with all of these industries you know the the fed has a network of contacts that is unequaled in businesses and in non-profits for that matter too so what do we mean by a bottleneck a bottleneck really is a temporary blockage or restriction in the supply chain for for a particular good or goods something that slows down the process of producing goods and delivering them to the market we think about bottlenecks as things that in their nature will be resolved as workers and businesses adapt and we think of them as not calling for a change in monetary policy since they're temporary and expected to resolve themselves we know that the base effects will disappear in a few months it's much harder to predict with confidence the amount of time it will take to resolve the bottlenecks or for that matter the temporary effects that they will have on prices in the meantime so um you know i'll just sum up and say we understand our job we will do our job uh and um we're we are focused as you've seen for many years we've been focused on inflation deviating below two percent and we used our tools aggressively to keep it back up at two percent if if we see inflation moving materially above two percent in a persistent way that risks inflation expectations drifting up then we will use our tools to guide inflation and expectations back down to two percent no one should doubt that we will do that this is not what we expect but no one should doubt that in the event we would be prepared to use our tools wow thank you james that was a very good explanation pal you said a few weeks ago uh thank you chairpal um you said a few weeks ago that it would take a string of months of job creation of about a million to achieve progress towards your goal um can you define what your what your definition of a string of months is more specifically and on inflation the fomc said the rise in inflation we're beginning to see largely reflects transitory factors as you just described but why use the word largely and what are the factors driving higher prices that may not be transitory based on the initial data that you're seeing so what is a string what did i mean by a string well i would say what we have right now is one really good i can tell you what it's not it's not one really good employment reading which is what we got in march we got close to a million jobs uh in march and a very strong labor market reading and i was just suggesting that we'd want to see more like that we're eight and a half million jobs below where we were in february of 2020 and that doesn't account for growth in the labor force and growth in the economy the trend we were on so we have we're a long way from our our goals and we don't have to get all the way to our goals to taper asset purchases we just need to make substantial further progress it's going to take some time um good point on largely you know there are a bunch of factors i i was really thinking we were thinking of um of the base effects and also the energy effects i wasn't meaning to say there are some real effects i mean they're always they're always relative prices going up and down within inflation you know there's a basket for cpi or pce there you know many many many factors that go into it relative prices are always moving up and down this this we would we think it's it's very fair to say that the increases we see and frankly are about to see later this week are largely uh due to base effects um it would have been more contentious to say entirely due to base effects because there are some things that are always going up and so we just said largely wow come on you can do it thanks for taking our questions um over the past decade the fed has invested significant resources in large scale bank supervision has completely overhauled that approach and it's even created a special committee that looks horizontally across the largest banks to find common risks um did the fed not see that multiple banks have large exposures to archaeos um if not why not and then what radio would you like to see implemented to change that going forward we we supervise banks to make sure that they have risk management systems in place so that they can spot these things we don't manage their companies for them or try to manage individual risks in the grand scheme of these large institutions the art archagos risks were not systemically important or were not of the size that they would have really created trouble for any of those institutions what was troubling though was that this could happen in a business for a number of firms that is real thought to be to carry relatively well understood risks uh the prime brokerage business is um is a well understood business and so it was surprisingly a number of of them would have had this and it was essentially i believe the fact that that they were they had the same big risk position on with a number of firms and they weren't even the other some of the firms were not aware that that there were other firms that had those things i i wouldn't say it's in any way an indictment of our supervision of these firms it in some cases it may be they were it seems as though they were risk management breakdowns at some of the firms not all of them and that's what we're looking into thank you nancy marshall ginzer better question hi chair pal i i'm wondering are you planning to visit the homeless encampment that's near the fed in washington that you drive by have you been invited and if you went what would you be looking to learn there what you know frankly yes i have not had a chance to do it yet but i've been very busy but i will visit i don't want to visit at a time of a lot of media attention because i don't want that to be part of the story but i will i will go visit when when uh when it's no longer a news story and uh i you know i ask him if he rides his bike too and what he does at the dentist a number of times anyway let's say and i i think it's it's always good to talk to people and hear what's going on in their lives what you find out is they're you they're just us i mean they're they're they're these are people who in many cases had jobs and you know they have lives and they've just they've just found themselves in this place it's it's a it's a difficult problem though you know it really there are many many facets of it and i'm well aware that this is not something that the fed has all the tools for or anything like that but i i will do that when the need arises and when when it's not uh so much you know in the public eye okay back to inflation please we got some big things that we heard so far let's go we want more looking to learn there um not really i mean i i think i know what i'll find there i i think you you connect with these people and what you again what you find is they're like you that could be you i mean that could be your sister that could be you know your kid uh you always feel that way in that sort of an encounter and it you know it just is it's a you know what we need here is a plug to remind you to use that 39 off coupon code linked down below and expiring may 5th because that is much more entertaining than deciding what jerome powell is going to learn from the homeless camera don't get me wrong it's always good to support but come on folks let's get real questions hi uh i wanted to ask about digital currency uh you've previously said sometimes that you think it's important for the us to get a central bank digital currency right rather than be first but with countries like china moving very quickly on cbdc i was wondering what you think the risks are of moving too slow on on digital currency right so i think um the first thing to say is that we feel an obligation to understand the technology and all of the policy issues very very well central bank digital currencies are now possible and uh we're going to see some of them around the world and we need to understand whether that's something that would be a good thing for the people that we serve how would it work in our system and there are some very very difficult questions to answer but i think we and we are engaged in a serious program to understand both the technology and the policy issues um i am uh i would say this we're the world's reserve currency and that means that the dollar is used in transactions all around the world far more than any other currency and that's because of our rule of law our democratic institutions which are the best in the world our economy uh our industrious people all the things that make the united states the united states that's why we're the resort currency and of course we have open capital accounts which is essential if you're going to be the reserve currency so those are the factors that make us the reserve currency i i am i'm less concerned that someone another that another country might have a digital currency first you know ask yourself the question does that mean that if you were a company that's doing international business would you then suddenly start to use that currency to use your do your international transactions or would you still do them in dollars where which is what everyone does and i i'm not so concerned about about that i i am really concerned about getting it right uh it is it is a is it is a tricky set of questions that we have to navigate in a world where we already have remember a highly evolved payment system we have fed now and other immediately available funds pretty soon and everybody will be able to to do what people do in other parts of the world which is just use their phone to make immediately available payments all the time it'll be normal and what's what would be the role of a central bank digital currency in that kind of an environment far more important to get it right than it is to do it fast or feel that we need to rush to reach conclusions because other countries are moving ahead i mean that what what the the currency that's being used in china is not one that would that would work here it's wanted that uh that really allows the government to see every payment that's used for which is used in real time it's much more to do with things that are happening within their own financial system than it is i think to do with uh with the global uh you know sort of global competition thank you michael derby uh thank you for taking my question um i wanted to ask you another question about inflation and it uh yes inflation expectations a number of different uh surveys and and market indicators are showing you know multi-year highs in inflation expectations ratings so i wondered you know if if that was something that you saw as consistent with your inflation outlook is that something that worries you or do you see that yes maybe you know the success of the fed's new inflation framework you know making it out to the to the broader public right uh inflation and expectations before the pandemic hit and here we think of survey market-based survey being either households or or economists and and market-based you look at all of those and i would say that they were at the low end of what would have been consistent with a two percent inflation target particularly our two percent inflation target which calls for two percent average inflation so they're at the low end inflation expectations actually went down a bit at the beginning of the pandemic and now they've just moved back up to levels broadly that that are where they were in 2018 or in some cases 2014 and i would say more consistent with our mandate and we want them to be we want them to be higher and you know on a persistent basis we want inflation to run a little bit higher than it has been running for the last quarter of a century we wanted to average two percent not 1.7 percent and for that we need to see inflation expectations that are consistent with that really well anchored at two percent we don't really see that yet but i would say that that that you know break evens have moved up in a way breakevens are based on cpi of course but they're they're now at levels that are that are pretty close to mandate consistent whereas before they were below we monitor inflation expectations very very carefully as you would obviously know um so that's that's where i would say it is one small follow-up do you have any red lines on inflation readings where if you know you hit like a certain number on say you know core pc that would be you know a trigger response from the fed it doesn't work that way you know we're inflation measures are always going to be a bit volatile we expect as i mentioned we expect core and and headline pce to move up because of base effects and um you know and we expect that to go away we we also expect these these bottleneck effects uh to come in we don't know how persistent they'll be we think they'll you know it's a matter of uh of of when they will pass through not whether they will pass through but we can't be confident about the exact timing of that or the size of them uh they don't seem especially large at the moment but you know we we don't know i mean you know this is this is all about the reopening of the economy that's what's happening we had it we were in a deep deep hole a year ago and now with a lot of help from fiscal policy some additional help from from monetary policy and you know a great deal of help from vaccination we're seeing a strong rebound in activity and what's happening is it's it's you demand can be spurred with fiscal transfers and the saved up fiscal transfers and and people going back to work and things like that the supply side will take a little bit of time to to adapt new restaurants will have to be opened the supply of various inputs into the goods part of the economy uh will have to be brought back up to speed and you'll you're seeing some of that that'll happen over a period of time over coming quarters you'll see some of the bottlenecks resolved but the last one may not be resolved for some time thank you okay thank you brian chung ryan chung with yup hi chairman powell brian chung with yahoo finance i wanted to ask about financial stability which is a part of the fed's reaction function here um it seems like to people on the outside who might not follow finance daily they're paying attention to things like gamestop now dogecoin i mean it seems like there's interesting reach for yield in this market to some extent also rk goes so does the fed see a relationship between low rates and easy policy to those things and is there a financial stability concern from the fed's perspective at this time right so we look at financial stability for us is really we have a broad framework so we don't just jump from one thing to another i know many people just look at asset prices and they look at some of the things that are going on in the in the equity markets which which i think do reflect froth in the equity markets but really we're really we try to stick to a framework for financial stability so we can so we can talk about it the same way each time and so we can be held accountable for it so one of the areas is asset prices and i would say some of the asset prices are high you are seeing seeing things in the capital markets that that are that are a bit frothy that's a fact i won't say it has nothing to do with with monetary policy but it also it has tremendous amount to do with vaccination and reopening of the economy that's really what has been moving markets a lot in the last few months is this this turn away from what was a pretty dark winter to now uh a fast a much faster vaccination process and a faster reopening so that's that's part of what's going on the other the other things though um you know leverage in the financial system is it is is not a problem that's that's a that was one of the four pillars asset prices was one leveraging the financial system is is not an issue we have very well capitalized large banks um we have funding risks for for our largest financial institutions are also very low we do have some funding risk issues around money market funds but i would say uh they're not systemic right now and and the household sector is actually in pretty good shape uh it wasn't it was in a very good shape as a relative matter before the financial crisis so sorry the pandemic crisis hit there were real concerns of course with high levels of unemployment and loss of wages and all that that that the household sector would would uh would weaken dramatically that hasn't happened so with with the fiscal transfers money that's on household balance sheets they're in good shape you see relatively low defaults and that kind of thing so the overall financial stability picture is mixed but on balance it's you know it's manageable i would say and it's by the way i think it's appropriate and important for financial conditions to remain accommodative to support economic activity again eight and a half million people who had jobs in february don't have them now and you know there's there's a long way to go till we reach our goal um so that's what i would say as a follow-up you mentioned money market pressures the fed didn't make changes to interest on reserves or excess reserves what was the logic behind that it seems like sulfur has been drifting closer to zero so just hoping for clarification on that right so the federal funds rate has been well within target and um at target range and money market funds money market conditions are are fine we we have the ability to use our administrative tools to make sure that that remains the case we do expect further downward pressure on uh on rates through uh asset purchases and also uh the runoff in the in the uh treasury general account but at this point we didn't see a need for to to deploy our tools to to support rates and of course we will do so if if the need does arise thank you jean young hi chair powell um i wanted to ask a similar question um we are seeing elevated market valuations um and some economists are concerned that the economy might overheat at least for a period of time so should the fed and other regulators be thinking about tightening capital requirements or extending oversight to the non-bank sector so that financial stability risk stays as low as they have been thank you so i think capital requirements for banks uh are to me it went up tremendously really over the course of the 10 years between the financial crisis and the arrival of the pandemic and the banks really made it through a real stress test very well and um passed three three of our straw two of our stress tests and that is another one that's pending um so uh capital is is in a good place as far as i'm concerned in the banking system but to your point what we saw was so what what kind of happened during the pandemic crisis that that requires attention and number one is is money market funds and corporate bond funds where we saw run dynamics again and uh we need to we're looking at that so we're looking at ways and people around the world are looking at ways to make those vehicles uh resilient so that they don't have to be you know supported by the government whenever there's a you know severely stressed market conditions it's a private business they they need to have the wherewithal to stay in business and not just count on the fed and others around the world to come in so that was that the other one is treasury market structure dealers are committing less capital to that activity now than they were 10 or 15 years ago and the need for capital is higher because there's so much more supply of treasuries and so there are some questions about treasury market structure and there's a lot of careful work going on to understand whether there's something we can do about this uh because we you know the u.s treasury market is probably the most single important single most important market in in the economy in the world it needs to be liquid it needs to function well for the good of our economy and the good of our citizens so uh it's not clear what what where that takes you but we we are taking uh a careful look and the treasury department is is really going to be leading this uh at treasury market structure and all of the various aspects of that to make sure that we do have a resilient strong treasury market that can work even in difficult times as you know at the very beginning of the financial of the of this recent crisis there was such a demand for selling treasuries uh including by foreign central banks that um really the dealers couldn't handle the volume and so what was happening was uh the market was was really uh starting to uh lose function and that's that was a really serious problem which we had to solve through really massive asset purchases and you know so we'd like to we'd like to see if there isn't something we can do to is that do we need to build against that kind of an extreme tail risk and if so what would that look like okay next thank you edward lawrence uh thank you fed chairman uh for the for the question so i i'm interested in your thoughts uh there's so much fiscal health and accommodation from the federal reserve um you said today that vaccinations will follow the normal economic conditions or lead to more normal economic conditions later this year when do you see the economy being able to stand on its own feet so to speak and along those lines with the fiscal spending and the accommodation you talked about with transitory inflation does more spending need to be injected into the system or without affect that transitory nation nature of the inflation thank you um when will the economy be able to stand on its own feet um i'm not sure if i'm not sure what the exact nature of that question is well what i'm saying is is you know when will the when do you need to lower the the amount of treasuries you're buying it sort of taper off a little bit when can it stand without having that support from the monetary policy side and then and then here we go again okay sorry so we have you know we've articulated our test for for that as you know and that is just we'll continue asset purchases at this pace until we see substantial further progress and we're going to communicate well in advance of any decision we're going to let you know the public know that that's what we're thinking and and so there'll be a lot of warning and that kind of thing but it's about substantial further progress toward our goals that's that's really all it is it doesn't have any any external virus related specific requirement although again i do think it'll you know the virus will need to continue to be controlled for us to achieve those economic goals but it's really the economic goals now your second question sorry just let's just say again i didn't quite get that question yeah sure with questions spending that's happened in the accommodation and it did does the system need more spending either from the fiscal side or accommodation or would more spending affect the transitory nature of the inflation and put those upward upward pressures on inflation long term okay so it's really up to congress we um we're not an advisor to congress um uh you know we don't um we don't weigh in on specific fiscal bills or proposals that's really between uh elected parties you know the basically fiscal policy is the province of people who stand for democratic election and win and they get to make those very difficult decisions and they get to be accountable to the voters we didn't do any of that and we don't have a seat at that table we don't seek a seat at that table so that's really something for congress and the administration to uh to deal with thank you greg robb hi greg rob from marketwatch thank you thank you so much for the up for the opportunity i want to circle back to the housing market circle back kind of confusing the question and your answer you know the housing market is strong prices are up in and yet the fed is buying 40 billion dollars per month in mortgage-related assets why is that and are those purchases playing a role at all in pushing up prices thank you yeah i um i mean we're we we started buying mbs because the mortgage-backed security market was was really experiencing severe dysfunction and we've sort of sort of articulated uh uh you know what our exit path is from that it's not meant to provide direct assistance to uh to the housing market that was never the intent it was really just to keep that is uh that's it's it's a very close relation to the treasury market and a very important market on its own and so that's that's why we we bought as we did during the global financial crisis we bought mbs2 um again not not an intention to send help to the housing market which was which was really not uh not a problem this time at all so um and you know it's it's a situation where we will we will taper asset purchases when the time comes to do that and those those purchases will come to zero over time and that time is not yet great thank you and for the last question we'll go to mike mckee thank you mr chairman since i am last uh let me go back to paul's question the first question and ask him ask you whether uh not whether you're thinking about thinking of tapering but why you're not we're seeing bank lending fall the markets seem to be operating well uh are you afraid of a taper tantrum or is it as one money manager put it if you get out of the markets there aren't enough buyers for all of the treasury debt and so rates would have to go way up bottom line question is what do we get for 120 billion dollars a month that we couldn't get for less oh so it's really not more complicated than this we articulated the substantial further progress test at our december meeting and really for the next couple of months we made relatively little progress toward our goals and remember substantial further progress from december from our december meeting and then vaccination started to get more widespread the economy reopened we got a really nice job report for march um it doesn't constitute substantial further progress it's not close to substantial further progress we're hopeful that we will see along this path uh a way to that goal and we believe we will just as a question of when and so when that time when the time comes for us to talk about talking about it we'll do that and uh but that time is not now it's we're just not we're not that far we've had one great jobs report it's not enough you know we're going to act on actual data not on a forecast and we're just going to need to see more data that's it's no more complicated than that doesn't change anything but does it change anything if you actually tapered a bit if you spent less would you still get the same effect on the economy if we bought less you're you're very faint uh so if someone has a volume they turn up but if we bought less you know no i mean i think i think the effect is proportional to the amount we buy it's it's really part of overall accommodated financial conditions we we have tried to create accommodated financial conditions to support economic activity and we did that and we articulated the you know the the tests for withdrawing that accommodation and we think you know so we're waiting to see those tests to be fulfilled both for asset purchases and for liftoff of rates um and you know when the tests are fulfilled we'll we'll go ahead as we you know we've done this before we did it in the last uh after the last crisis and you know we'll do it in it maybe we'll do it as those tests are satisfied we'll do it and the and the only thing that will guide us is are the tests met you know that that's what we focused on is have the macroeconomic conditions that we've articulated have they been realized that will be the test for uh for tapering asset purchases and for raising interest rates boom summary time thank you very much thank you thank you jerome's going out down champagne and like i'm done with my job all right let's do a summary how about that we'll do a summary and then we'll go over to market closing market closing will be a different live stream let us do a summary very quickly oh yeah yeah yeah that was exhausting some of those questions are just so bad it's annoying i'm sorry so i just get frustrated all right y'all ready for this hold on do a summary of my commentary on what jerome powell just said right we'll start out like a new video as a usual hey everyone we kevin here here's what jerome powell just said in complete summary first question came out with inflation we expect inflation to rise over two percent jerome powell expects to see upward pricing pressure from a rebound in spending especially if the supply chain issues continue to limit companies ability to respond to that new demand expects that these one-time impacts to pricing will be transitory that's a big theme that's really been the theme the last few months that folks this is not going to stay uh this inflation is not here to stay in fact jerome goes deep on his inflation argument in just a moment which of course i will summarize uh now jerome powell also believes that rather than trying to predict exactly what inflation is going to do let's just wait and see to see what inflation is going to do and then react that means as usual we're pretty much expecting to wait until october september so that way we get the base effects behind us and we give some time for supply chain issues to start solving themselves so and this is my opinion but to me i don't think there's any way the fed can have outcome based guidance until we actually start having outcomes which we won't start seeing until august september october so then uh we get into uh is it time to start talking about talking about tapering bond purchases yet this question was asked many different times in many different directions we even had it asked in reverse and the answer was consistently a resounding no that jerome powell will tell us well in advance of when it's time to taper that he will make it extremely clear to america that we are getting ready to taper and that he's waiting for substantial further progress in the economic recovery today he gave a really cool definition of substantial further progress by the way and he kind of did it as an implication he's like look we are eight and a half million jobs down from where we were before and we're growing at a faster rate now than where we were before so that by the way is borrowing from the imf and the world bank because they said that the growth of america is on this sort of growth trajectory and the covid pandemic put that sort of v-shaped into that trajectory but because of all the spending that's been done we're not on that same course anymore we're actually growing at a faster rate so higher angle of faster rate than we were before the pandemic and jerome powell's going look we're growing faster than ever before and we're still missing eight and a half million jobs you think that's close to substantial further progress it ain't even freaking close well just stop asking me the freaking question we ain't close and so this has kind of been a theme of what jerome powell has been saying and it's interesting to hear him argue that that essentially the unemployment number is a very big piece of this puzzle well keep going he was asked about hurt immunity but obviously he's not dr fauci so he didn't have an answer for us on that uh then what if inflation expectations were to go up uh once we get to a full employment and so jerome powell breaks this into two parts he says here's the thing it's unlikely that inflation is going to move up persistently so that inflation expectations end up going up as long as there's still slack in the labor market so this is where he's literally tying together what i just said about substantial further progress being when we get all those jobs again especially since we're growing at a faster rate he's saying look it's really unlikely that we're going to see inflation over like year over year over year when there's so many jobs that still need to be filled when we still have so much unemployment it's very unlikely he says that we'll see inflation and inflation expectations go up keep in mind inflation is actual prices going up inflation you know perceptions or or expectations rather are what we think prices will do in the future and both of those are very important independently so he believes that first thing first we got to get to full employment first then we probably can evaluate are we going to start seeing this consistent inflation now he did say that he'd potentially be open to tapering before we get to this full employment level and before we sort of are able to evaluate exactly what's going on in inflation so the first thing that will happen is definitely that tapering he will tell us well in advance of that taper but a lot of expectations are that we'll start seeing a taper sometime towards the end of this year maybe beginning of 2022 and then rates to increase 12 to 18 months thereafter what about if the pandemic uh reversed course and uh this was really interesting because this is where jerome powell brought up something we haven't really heard of before he said look there's a very real possibility that we're going to have an outbreak in the winter like a like another wave of coving and that that's something that they're concerned about and paying attention to that's actually the first time we've heard jerome powell mentioned that about a potential outbreak in the winter actually weighing on their potential decisions thought that was pretty interesting labor market scarring not seeing that as a downside risk housing market he says we monitor the housing market carefully but because we don't have those low quality loans that we've had in 2007 and eight sure prices are going up and there's a concern with that but the issue is not over leveraged the issue is strong demand and a lack of supply and guess where this conclusion was we want more housing builders to come and build more homes that was the solution he doesn't see bad loans and he does not see unsustainable prices unemployment he says that uh there are many reasons why people aren't able to go back to work yet either they're still caring for their children their children haven't gone back to school yet some people are afraid of getting the virus some people are still getting the unemployment boost and so all of these things will hopefully start correcting the labor market more once we get to guess what september and october it's literally the same time frame we say all the time uh inflation and remember the september october thing is just my deduction from what uh what drone paul says inflation somebody asked why are you confident the fed can get ahead of inflation and this was really interesting because he goes he breaks down and i'm going to just keep this short but he really breaks down look we only have two inflationary pressures right now number one base effects which isn't even really inflation base effects are just all we're doing is comparing to the whole of last year of course numbers are going to be higher this year so that's not a big deal and it's certainly not long term or persistent number two he says that bottlenecks are the really the big thing pushing inflation right now and bottlenecks don't last forever in a capitalist environment bottlenecks get solved and this is why the fed thinks it's extremely unlikely that we're going to see long-run persistent inflation despite us seeing inflation now on recovery ah yeah this is where he says look we don't need to get all the way to our goals to start tapering but we are a long way away from our goals especially given the fact that we are still eight and a half million jobs short on digital currency he says he's engaged in getting digital currency right but he's not concerned with digital currency replacing the use of the dollar he gave this hypothetical of hey look if you're a company are you going to start transacting with other companies in a cryptocurrency or are you still going to use the dollar which has been working fine for a very long period of time so you know the question of this use for currency is still up in the air jerome powell obviously is someone who believes that cryptocurrencies are a tool for speculating in the market not really a good store of value and not really proven to be a good currency yet so he's somewhat mixed on that but just know his biases on that inflation obviously inflation expect somebody asked the question like look and people are expecting there to be inflation isn't that bad with your expectations if you're worried about people's inflation expectations well those are high aren't they and jerome powell goes no not really the expected expectations that we're looking at are at the low ends of our expectations and keep in mind we want inflation to be two percent we don't want it to be 1.7 percent we want it to be two percent but inflation readings are volatile so there's no red line on financial stability he says there is some froth in stocks and in the capital markets says that some asset prices are high seize leverage in the financial system but not at levels to where it's an issue says that banks are well capitalized that funding risks are low there are some issues in money markets but households overall are very good in very good shape and overall the main pillars of our financial system are very very strong and he actually expects downward pressure on rates going forward rather than upward pressure then uh he's asked why are you not tapering and he says it's simple we're not tapering because we have not yet reached substantial further progress which he did give us a little bit more of a deep explanation on this uh in this um breakdown so there you have it now the best thing to do is check out the program link down below take advantage of that 39 off coupon code that expires on cinco de mayo folks i cannot wait to have you in there we go live every day the market is open answer your questions and talk about stocks real estate finances you name it super excited to have you watch this thank you so much for participating and folks i am heading over to the market closing live stream now so if you stand by one second you'll see a pop-up and you'll get the link for the market closing live stream let's go and we'll see you there thanks

Channel: Meet Kevin

Views: 165,996

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Id: DYQHQqblq1o

Length: 101min 49sec (6109 seconds)

Published: Wed Apr 28 2021

Reddit Comments

[u/the18dogbaby]

He listed a lot of reasons for people not coming back into the labor market. It’s odd that he didn’t mention that the government is paying people to stay home