The Fed JUST Responded | Inflation Shocker!

holy moly how the tables have turned the

Federal Reserve has responded to this

morning's CPI data we've got a Nikki

leaks update we've got so much to break

down in terms of Market expectations

we've also got a temper Euphoria because

we're still uh you know we still got a

December report coming up okay we'll

talk about that but folks wow CPI comes

in cold let's talk about the reactions

to that uh in case you haven't yet seen

my my reaction especially when my

prediction was nailed right on predicted

month over month of 0.4 versus

expectations of 0.6 that's what we got

year over year predicted 7.7 Market was

expecting 7.9 we got 7.7 that was

awesome core month over month coming in

at uh 0.3 below expectations and Corey

over here 6.3 below expectations so

great news now what do we know well here

are some things that we know first we

know that shelter inflation made up over

half of the entire CPI move that's

insane half of the entire CPI increase

was because of shelter inflation which

we know that rents have already peaked

and they're going down but CPI inflation

is still trying to catch up to it

because of the way they measure it with

owner's equivalent rent it's so stupid

but the point is it is making up half of

the inflation we're seeing now and

markets are saying well you've got a few

different ideas but markets are overall

saying that we expect that to actually

really meaningfully start rotating down

and really drag inflation down very

quickly sometime in 2023 some Market

experts say quarter one JP Morgan says

quarter three but either way the

consensus is a rental inflation is

expected to Peak now if you actually

remove rental inflation from core CPI

this is not saying we're not having

empathy for people who have to pay

higher rents it's just saying if you

want to isolate where the inflation is

if you remove and I tweeted this if you

remove shelter or inflation from core

you're at negative one percent the first

negative read since May of 2020 that's

insane okay that's like the bottom of

the the stock market uh well bottom was

like March April but near bottoms uh

during the covet pandemic make sure you

follow me on Twitter as well at realme

Kevin this is really good so not only

are you now seeing shelter inflation neg

or core inflation negative when you take

out shelter inflation but you're seeing

the FED already respond to the CP I

missed this morning in a great way so

fat Harker had talking or you know some

chatting to do this morning and he

immediately picked up on the CPI report

and now suggests that it could be

appropriate for the Federal Reserve to

pause at a Fed funds rate of four and a

half percent this is a huge shift just

last week after Jay Powell's talk we

were thinking potentially marketing

needed to price in a Fed pause at five

and a quarter five and a half and that

sort of expectation started leading

markets to say well what if it goes to

six percent and that's why we just saw

this utter decay in the stock market and

it was very very painful now markets are

pricing in a Fed pause at

4.865 which is actually slightly above

where fed Hawker is and anytime that

terminal rate comes down stocks tend to

Rally anytime that terminal rate goes up

stocks tend to fall so if Hawkers at

four and a half and he's right and the

terminal rate right now is deemed by the

market to be 4.865 we see that come down

you can see continued pushing up of the

stock market and it continued pushing

down of the US dollar remember the U.S

dollar does really well when bonds in

America are yielding more money because

more international buyers want to come

to America for the Guaranteed Rate that

treasuries offer for you if you hold to

maturity there the only thing you could

call a risk-free investment and in order

to buy treasury bonds you have to buy

the dollar so the Dollar's gotten really

really really strong but as soon as

inflation Peaks we expect it to collapse

and the collapse of the dollar has

already started if you wanted to invest

uh in the dollar before we get into that

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when you deposit or if you wanted to

invest uh in the dollar uh falling the

way you could do that is through an ETF

called you down that's u d n that would

be basically shorting the dollar and you

can see uh it has not performed very

very well but recently and now today

it's starting to move up here uh and

recently it's been trending up in

anticipation of the CPR report if you

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doing well you could always get you up

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dollar has actually been falling a

little bit so a couple interesting ETFs

that you could pay attention to

so uh if we look at

some things to well first of all you

know what what does this mean for the

fed and then if we look at some things

that we can do well what does this mean

for the FED it really means that if this

CPI report is replicated on December

13th which is when we get the next CPI

read which would be great right

then and when I say replicate I mean

it's also either soft or it doesn't

Spike again it could Spike and if it

spikes it just ruins all the optimism

that we're on a sustained downtrend but

at 5 30 a.m December 13th so in a month

and three days we'll be getting the CPI

read for December and that's actually

before the Federal Reserve meeting

which is really good because what

matters more right now killing jobs or

killing inflation and the answer is

killing inflation like that the FED does

not want to have to slow down the job

market if people can make more money by

switching jobs and inflation is low by

all means have at it but you can't have

a strong job market and high inflation

because you potentially lead to a wage

price spiral and then you really have to

rug pull the economy like Paul volcker

did and push us into a dirty deep

depression

so could this report be the start of the

FED pivot now that's different from fed

U-turn fed U-turn is when they're like

we're raising rates and now we're

dropping rates that's a Fed U-turn right

and markets are anticipating and trying

to price in that U-turn a Fed pivot is

like a 45 degree change right where

they're like all right we were going for

75 basis points in the next meeting and

markets were actually pricing in about a

50 chance of a 75 basis point hike 50

chance of a 50 uh 50 basis point hike at

the next meeting they pivot and go okay

we're going 50

that's a pivot right a reduction in how

much they're raising rates from either a

higher level like 75 basis points to 50

or from 50 to say zero that's a pivot

different from a U-turn those things are

very very important to know his markets

usually really rally Off full u-turns

although we are getting some pricing in

of anticipation of that eventual U-turn

uh okay so now what are the expectations

for a 50 basis point hike now they were

50 what are they now now they're 82

percent and that's partially because

Nikki leaks came out and tweeted

basically that this sets us up for 50

basis points in the next meeting

remember Nikki leaks is the guy at the

Wall Street Journal who always seems to

get text messages from the fed and then

he breaks the story so he's the guy

who's like yeah okay we're probably

going 50 and so markets are quickly

adjusting to that which is great now it

is interesting to note

uh that uh you do have gold up slightly

and you have some calls for or obviously

treasury yields are falling on this

that's not a surprise but you've got

some folks saying that if you believe

we're in a position of peak inflation uh

that's now behind us we're just off peak

inflation we're not going to get a new

Peak and we're going to continue to

trending down what are things that you

should do well here's some Investments

to consider one you could invest in

bonds you could buy bonds and as long as

inflation continues to Trend down you

would likely expect that bonds would go

up in value now I want to be clear and

the yields would go down but you would

hold your yield to maturity based on

what you bought if you hold it to

maturity but you could also trade them

uh so I want to be clear though while

yes I am a financial advisor and yes I

have courses of building your wealth

whether it's stocks zero to millionaire

real estate investing learn everything I

know about real estate I think you know

I know a lot about real estate property

management if you want to grow your

business income and be part of me with

with boot camps and and actually really

learn uh join the elite Hustlers course

that's linked down below right you can

get 60 off now

uh while I am a financial advisor and

while I do have uh products uh related

to education I want to be clear that

what I'm suggesting here is not

Financial advice I can't give you

personalized Financial advice I have no

idea what your situation is so bonds you

would expect to do well that is owning

them you would expect to do well you'd

expect the value of those to go up if

inflation has peaked you would expect

tax tech stocks and cyclicals like Arc

or Tesla or whatever to actually do very

well if inflation has peaked you would

also want to probably cover shorts you

want to still be careful in my opinion

and temper expectations for margin right

I don't think you want to go all in Yolo

margin right now uh if we are at a

bottom which is a dangerous word to say

then going in margin makes sense right

now right but if we get a dirty December

13th report or indicators are that we're

going to potentially get a dirty

December CBI report you can get screwed

you can get Margin Call terrible

situation be in so covering shorts good

idea uh with the exception of shorting

the dollar shorting the dollar could

actually be a very good strategy if

inflation has peaked uh now be careful

though because if you're going all in

Tech all in bonds and all in shorting

the dollar what do you have well you

have a recipe for disaster if inflation

ends up going up again because all of

those will underperform if inflation

goes up right so you really have no

hedging in what I've just described to

you uh now feder Hawker also came out

and mentioned that monetary policy lags

by up to a year now Jerome Powell

doesn't really believe that he seems to

think that uh you know that the lags

could be closer to six months or maybe

even three months but uh it's it's very

interesting that uh you've got this uh

this Hawker coming out suggesting a

one-year lag because that could really

mean yeah we do need to pause now

because we're gonna we're gonna have to

start are turning the money printer on

maybe in October of next year or

November of next year because we've over

tightened it'll be really interesting

could set up for a really nice bull

decade is that being too bullish I don't

know but get your 60 off I'm so I'm

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check that out via the links down below

folks thank you so much for watching

we'll see in the next one goodbye