WOW | Market Tank, Jerome Powell goes DOVISH [Full Fed Explanation]

well drone Powell just canceled stagflation canceled the recession and cancelled really any potential of raate hikes that was the biggest fear that we had that after a quarter of hotter than expected inflation data of hotter ECI data hotter ADP payrolls numbers we actually got jpow going nah Moon baby how' he do that how' he do he basically Unwound some of the most hawkish expectations we could have had for the fan he Unwound the fear that we would actually have higher rates instead his paths forward are either we stay or we lower and he gave us a few paths he actually gave us paths he said there are three paths more persistent inflation hold off on rate Cuts greater confidence in inflation cut unexpected weakening in the labor market cut but what about these wage gains I mean wage gains That Could set off a wage price spiral right I mean if we have wage gains that all of a sudden are too excessive we're going to be back at a wage price spiral right that would be bad Jerome Powell's take we're not worried about it we want people to make more money in fact last year we saw wage gains that were elevated and inflation collapsed and we expect the same thing will happen this year wow this is way more doish than expected now the first sign that we were going to get a doish drone pow today was that we were expecting to go from $60 billion of Treasury runoffs down to 30 instead we got it go all the way down to 25 that extra five bill was your heads up from JP that this was going to be a doish meeting at the beginning of the meeting I said okay I'm now flipping 60 doish 40% hawkish because of solely because of that a flip and then throughout the meeting we got more and more doish in fact he even addressed our inflation expectations concern quite frankly jpow if you're not a course member yet we'll extend the coupon for another few hours for you we got McKay an email will let you come in because clearly you're you're reading off our bingo card okay you did a great job you address basically everything we've been bitching about on the channel it was really impressive I mean quite frankly there was a point it was almost as if he was reading our bingo card he addressed both of uh the second half of inflation should be lower on our bingo card and in the same box we're talking about the lag effect of real estate coming eventually and explaining why there's this lag and split effected real estate he almost write it off for bettim so thank you JP for being a supporter and a subscriber we love you okay but let's uh in in seriousness uh you know jpw addressed three really important things number one inflation expectations he finally addressed look inflation expectations moved up at the beginning of the year the uh 5-year Break Even level moved up from January all the way through about last week we went straight up on inflation expectations and what did we end up getting we got Jerome Powell saying in recent D inflation expectation uh inflation expectation data sets have come up on in the shortterm but the long-term remains well anchored so he washed the short-term concern then what about the fact that GDP came in at 1.6% in q1 well as we expected he would on our bingo card in fact we wrote that down as well we wrote down on our Bingo cart that he would split out uh on I'll show you the bingo card here uh that he would split out GDP that some parts like exports and inventories were weak but GDP was overall strong almost read that off verbatim how because he told us while GDP growth moderated to 1 . 6% in q1 private domestic final purchases complicated phrase there excludes exports and inventory buildup and that level came in at 3.1% which to them sends a clear signal that the economy is still actually very strong so washed the inflation expectation concern washed the rate hike concern washed the wage price spiral concern washed the stagflation GDP concern washed if I didn't say the rate high concern and then of course we have the real estate concern like oh but but you know owner's equivalent rent is still high yeah it's taking longer to come down that makes sense Market rents he says are flat we've seen that in housing as well Market rents are either flat to slightly down in most markets across the country the difference is people who are already in can't really realize a lower rent until they move you know when you move you get Market rent when you stay in you might be locked in higher until you actually move move because sometimes there's a low chance your landlord's actually going to lower the rent right so this entire meeting was Jerome Powell washing fears about the economy he says uh you know says look it's going to take longer than previously expected to lower rates remains committed to 2% the labor Market's been softening somewhat but nothing that's extremely concerning at this point feels like a normalization in fact when looking at surveys so leading indicators of employment he thinks we're back at prepandemic levels not substantially weaker uh he says obviously committed to the current stance uh clearly you know didn't want to delve into when rate Cuts will begin or how many we would get not a surprise but again the washing of these bearish factors in the economy was extremely doish now some people are saying oh it's doish that maybe he realizes something's wrong that something's coming but quite frankly he tried addressing that too that he doesn't actually see large damage in the labor market right now because if he did we would be cutting rates right now even in the face of inflation around 3% they'd be cutting to preserve the labor market uh when it comes to stagflation he says I was around for stagflation stagflation then was 10% unemployment slow growth High single digit inflation uh and he says I just don't see where that is coming from today he says I don't see the dag or the flation now I was tweeting during this as well and updating eac.gov or uh check out the ec.com page remember today is the expiration for investing in house Haack so if you're an accredited investor and you'd want to sign your subscription agreement just make sure you do that today we can get your credited investor letter uh after you could wire your funds in after please don't a make sure you wire uh and and read the information over at house.com that'll serve as a perspective right and a solicitation so let's keep going we've got uh Market implied interest rate Cuts right now let's understand some of the movement in what we're getting in the market we started this meeting with 1.18% expect sorry 1.18 rate Cuts expected for the year we ended with 1 uh 37 38 rate Cuts expected for the year so we actually increased the level of rate Cuts we expect for this year we saw gold move up about 1.28% we saw oil drop 3% we saw 10year treasury yields drop 6.2 basis points and we saw all indices the Russell the nas the S&P and the down all up 1 to 2% after this meeting when beforehand a lot of them were down as much as half perc like the NASDAQ so this was clearly a very optimistic meeting now going through our a bingo card just to make sure we've got all of our bases covered here this was our bingo card we got Bingo across the board we got the purple High maintain the 2% Target weakening in jobs could lead to a sooner cut have not gained greater confidence yet and he did address that at least longer term inflation expectations are well anchored he got very angry about somebody implying that politics won't affect us in fact I tweeted 911 I'd like to report a murder uh for how aggressively he responded uh he says we still have a goal of cutting rates uh sorry he didn't say that he still has a goal of cutting rates this year that is something that he said previously so we did not get that uh we got the uh split in Immigration jobs data we got uh split on GDP Jal was on time we did end the meeting more doish than where we started didn't get uh too much detail on why they went for that extra $5 billion so we didn't get that didn't get a repeat of question uh we did get a Nick T sitting next to the New York Times Blondie uh somebody in the chat's like she's a valid dictorian I went to high school with her I'm like dang uh but anyway stagflation and then he ended up I wrote stagflation described stagflation literally did uh the lag effect of real estate or the second half of the year should be lower inflation we got all that got data dependent and uh basically we got we believe we're at Peak and he didn't say specifically that word but that's I mean he must have made that clear 17 different times it was very clear he's very opposed to raising rates he's sending an extremely clear signal here that yes sta dependent it's going to take more time optimistic that the second half of the year's inflation is going to come down lower so what does this now put pressure on well this now puts pressure on May 15th now what is May 15th could May 15th be an opportunity for you to get life insurance in as little as 5 minutes link down below metkevin.com lifee could it be your chance to sign up for streamyard which is how I multistream metkevin.com streamyard check them out both paid Partners could it be the expiring coupon code or the deadline to invest in house no it's the next CPI report see the next CPI report just got a lot of pressure because drum Powell is basically like look the economy's fine inflation's going to come down things are good yes it hasn't come down as fast as we' like but we think it's coming he got rid of so many bearish concerns again the wage price spiral the stagflation the uh real estate lag he got rid of a lot of concerns of hiking these are huge removals of pain from the economy all of that was really removed and what he did is he put the onus on let's just see what happens in the second half of the year and get these inflation reports next April inflation report is obviously May 15th I don't actually think we have uh reports for that yet we do think that wage growth could continue to push up because of things like what are happening in California where you're raising minimum wages as aggressively or the aggressiveness that you're seeing in wage gains from unions but quite frankly there was nothing extremely bearish in this in fact there wasn't really anything even slightly bearish I mean the fact that we're not going to get rate Cuts in the first half of these year that is not a surprise it's not a surprise we're probably waiting until September to December uh and the fact that we didn't get punched in the face here we didn't get JPB is quite frankly neutral to in my opinion very d uh dovish which is bullish for risk assets that's obviously of course why we've seen uh Bitcoin move up during the meeting but I'll tell you there's something about the lines folks there's something about the lines these lines are magnetic and so you have a lot of speculation on that doish going in during the meeting ran from about 575 all the way to about 594 but look at that drop right back down to the line and so if you want to study those lines make sure you're part of the stocks and site course while I was live somebody joined the course is wait we we're going to change the pricing in a few hours there were just too many emails um and um what is it yeah somebody joined the course and the name they signed up with is djt like oh man they must be in a djt stock that's shout out to them whoever they are uh so there you go that is a full summary of what's going on with Jal I have to say this is probably the best version of jpow you could get uh you know purple tie on time very straightforward uh aggressively passionate about how strong the economy is now could they be wrong yes but he the fact that we don't have to so much worry about wage gains the fact that he unhelmed that and he addressed Our concern about inflation expectations I see that is reasonable bullish and uh thank you so shout out to jpow he he he did a he had a very good meeting here so good job why not advertise these things that you told us here I feel like nobody else knows about this we'll we'll try a little advertising and see how it goes congratulations man you have done so much people love you people look up to you Kevin paffrath there financial analyst and YouTuber meet Kevin always great to get your take even though I'm a licensed financial adviser licensed real estate broker and becoming a stock broker this video is not personalized advice for you it is not tax legal or otherwise personalized advice tailored to you this video provides generalized perspective information and commentary any thirdparty content I show shall not be deemed endorsed by me this video is not and shall never be deemed reasonably sufficient information for the purposes of evaluating a security or investment decision any links or promoted products are either paid affiliations or products or Services we may benefit from I also personally operate an actively managed ETF I may personally hold or otherwise hold long or short positions in various Securities potentially including those mentioned in this video however I have no relationship to any issuer other than house nor am I presently acting as a market maker make sure if you're considering investing in house Haack to always read the PPM at house.com

Channel: Meet Kevin

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Length: 13min 36sec (816 seconds)

Published: Wed May 01 2024