yikes, new Fed warning *just* out

oh the jolt stata just came out we were

expecting 9.4

million job openings a number below that

would have implied some finally

softening in the labor market a number

above that implies the strengthening

labor market what did we get

oh 10.1 million job openings and a

revision of the prior number up

this data combined with what the FED has

just started talking about is all kind

of leading to this potential for another

hike of course there's some other

catalysts coming up including Friday the

jobs report prices on my courses going

up tomorrow evening so check those out

link down below investing courses on

stocks and real estate as well as the

income course on how to make more money

featuring Ai and productivity that would

be really cool and then of course CPI

but let's talk about what the FED just

said and considering what just happened

with jolts

well the Federal Reserve is back at it

again and now it's almost as if they

listen to my video yesterday which is

really scary because maybe I just

shouldn't have said it but yesterday we

got number seven that real estate was

actually doing quite well the beginning

of the year real estate prices started

taking up again we've known this we've

been tracking it every single week

almost we've been talking about how jeez

you know real estate prices fell in

between May of last year bottomed out in

December started recovering in just the

last five months here now home prices

year over year down maybe three percent

on average Nationwide if you look at

Miami Tampa they are positive and you

look at Austin and Boise they're still

quite negative over 10 but one of the

concerns we brought up yesterday was

this idea that oh oh oh

remember how there were three parts to

the inflation fight and this is a

problem this is something we're going to

have to pay attention to and you know me

I mean I I will always flip-flop if I

need to but one of the things that's

actually concerning uh is that you have

three aspects of the inflation fight you

know this already this should be

redundant to you Goods disinflation

what's the next one

should roll off the tongue okay it

should rule off the tongue

housing okay and then what what's what's

the next one so if this one is hint hint

Housing Services then what about this

one how about everything except Housing

Services so

Services X housing is what we call it

okay cool so these three things are what

we expect to help bring inflation down

by the way the good news is I'm not

counted in CPI so when I say something

like hey check out the programs of

building your wealth link down below

before the price increase on June 1st

which is in like 36 hours at the time of

this recording

we're not counted in CBI so we're good

if we were counted in CPI because you're

locking in the best price guaranteed you

can email us if that's ever not true

we'll give you price adjustment uh but

because the price goes up over time if

if we were counted in CPI it'd be

shortened to spay

but anyway so Goods we know that

disinflation is happening Housing

Services we've been told that we expect

this disinflation to come because

leading indicators of rents have fallen

Nationwide rents have gone from about

1970 bucks down to about 1900 bucks

which is good you've actually seen some

softening in Housing Services which is

great that takes a year though to really

show up in the year over year data

that's how roll-off works that's how

base effects work

now Jerome Powell said this is in

disinflation we expect this to be in

disinflation but Jerome Powell has also

said we have not yet seen Services X

housing disinflate and part of that is

because it takes wages to soften to see

this come down

now uh ordinarily you would have to see

the jolts data come down so ordinarily

you would see job openings data come

down and you would see the unemployment

rate go up so far we haven't seen the

unemployment rate go up you've just seen

sort of some of the job openings fade

away which is good it's a sign that

maybe some of that sticky inflation and

services will slowly go away the problem

is and we talked about this yesterday

the problem is what if all of a sudden

rent prices and home prices actually

start trending up again well what you do

then is you actually suggest uh oh we

could instead of seeing the expected

disinflation and Housing Services we

could actually see re-inflation in this

segment now I I don't from that expanded

to real estate inflation which is kind

of exactly correct but let's not have an

auto expand here we go

so you can see reinflation here which

would be bad and we talked about that

risk Yesterday by looking at the fhfa

month over month data and the s p

um uh or rather the case shell or

CoreLogic at 20 City uh whole prices

which all became a little hotter than

expected

and so there's this red flag here that

we touched on yesterday and just now

Federal Reserve Governor Michelle Bowman

showed up this year said the following

quote while we expect lower rents will

eventually be reflected in inflation

data as new leases make their way into

calculations because of the lag that it

takes to get leases to show up in CPI

data with home prices leveling out

recently uh oh yeah here the residential

real estate market appears to be

rebounding with home prices leveling out

recently which has implications for our

fight to lower inflation she just said

this today just a few minutes ago in

Boston

she says uh essentially yet hey wait a

minute what if this could cause a

reanimation of inflation and this

reiterates Loretta Masters comments as

the financial times reported this

morning but that's just the financial

times other people have already

commented on quite a bit uh in Loretta

Master just recently here said

the headlines uh a suggesting rate Cuts

aren't that quote compelling in fact she

sees quote no compelling reason to stop

hiking interest rates in fact she says

quote I would see more of a compelling

case for bringing rates up and then

holding for a while until you get less

certain about where the economy is going

a lot of this could be driven by the

fact that the banking crisis is somewhat

turning out to be a little bit of a

nothing Burger originally the Federal

Reserve was considering pausing more

because of or considering a pause for

June as more likely because of the

banking crisis and it was seen that the

banking crisis was really a catalyst

that contributed maybe somewhere around

50 basis points of rate hikes well if

there's no banking crisis that means we

potentially need to get to about five

and a half percent instead of the five

to five and a quarter where we sit now

that would be two more 50 or 25 BP hikes

the Futures market right now is priced

again about a 62 percent chance of a 25

BP hike with a 38.2 percent chance of a

pause

as far as July it looks like we're most

likely with a 54.2 percent chance to

pause and then September you're sitting

at 42 percent to pause uh at uh at that

5.25 and potentially start pricing in

your first cut from 5.25 to 5. so

markets are definitely leaning towards

favoring the idea of of one more raid

hike uh which stands in contrast with

what Jerome Powell just told us Jerome

Powell told us hey we're at a level that

is sufficiently restrictive and that's a

way of him saying we've we've reached

the level that we need to get to uh he's

also convinced other Hawks like Neil

kashgari to pause though kashikari not

voting uh or sorry kashkar is Bullards

not voting right now he's the other bull

he bulllord wants us to get to five and

a half

uh Loretta Master also uh in the

conversation the financial times

mentioned suggested that uh Master still

says she could be swayed by incoming

employment data due on Friday as well as

the next inflation report she says quote

I just think we may have to go further

at this point I don't really necessarily

see a compelling reason why we wouldn't

want to take another small step to

counter some of that really embedded

stubborn inflationary pressure we're

getting to the real hard part here of of

how we assess trade-offs different

policy makers will have different views

about how they are assessing things so

you're starting to get that dissension

at the fed the lack of unanimousness now

remember we have jobs data coming out on

Friday that's in two days from uh today

that's on June 2nd we're going to have

this jobs data the jobs data going to be

a big deal because we are going to look

for Hey is the economy trending towards

recession or is the economy still

booming

whether or not that's going to be good

news or bad news is probably all going

to depend on the average increase in

average hourly earnings for employees so

we expect non-farm payroll to come in at

195

000 jobs private payrolls 164. we expect

the unemployment rate to actually take

up from 3.4 to 3.5 percent average

hourly earnings to move uh up 0.3

percent month over month and year over

year four point four percent obviously

if we get a Miss on that average hourly

earnings could be a red flag and then of

course on the 14th we're going to be

getting the inflation report sorry

that's on the 13th we'll get the

inflation report on the 14th we'll have

the FED inflation report on the 13th is

currently projected to come in at 0.3

month over month and for a core month

over month we're looking at point four

percent if we could come in soft on all

of the inflationary data we will

probably get a pause so this is the

cycle where there is actually a real

possibility of a pause at previous

Cycles it's always been clickbait that

there would be a pause or a 50 you know

or or higher than expected you know it

was always very well telegraphed what

the FED would do and the market

basically wrote it in with an 80 chance

of certainty what was going to happen

it's a lot of uncertainty right now

these next two reports will dictate it

as Loretta Master said and yeah there is

some risk for that real estate firming

up we're seeing though there's also the

question of is just matching last year's

level of increase is going to be enough

to actually create any kind of uh

renewed inflation of rent increases

hopefully not because obviously a lot of

people are frustrated about how many

rent increases there have been now I

want you to know this when it comes to

AI time is what's going to make you

money and if you can prove that value to

an employer you'll always be able to be

employed so this is another way of

making sure that you don't get replaced

thank you