JEROME POWELL FLIPS AGAIN | CRITICAL SHIFT.

wow we just heard a lot of great news

from Jerome Powell and this morning I

predicted that Jerome Powell would pull

back on the hawkishness and tell us that

we're at a level where we can be a bit

less aggressive by talking the economy

down and talking the stock market down I

predicted that drum power would relax

and kind of back off that incredible

hawkishness that he gave us in the last

press conference after that reporter

asked a really stupid question saying

stocks were rallying when that wasn't

even true and folks I have good news I

think Santa Claus is coming to town this

year as long as CPI comes in okay on the

13th I think we got Santa Claus coming

and this is exactly what we predicted

this morning is exactly what Jerome

Powell did and I'm so impressed with

what Jerome Powell said today and I'm so

excited by the discoveries that we have

and the big bottom lines that I want to

provide you we have three core

discoveries that we just learned from

Jerome Powell plus we got a beige book

release this is very very exciting let's

start with the beige book release

because this is exactly what Jerome

Powell had prepared for him before he

went into this only five of 12 Federal

Reserve Districts reported any growth at

all and most of them reported flat

activity or slight to modest declines

and here's the thing folks the Federal

Reserve Jerome Powell told us this today

does not want to crash the economy

because that creates human hardship they

don't want to destroy the economy they

want if if growth is usually around two

to three percent they want us to be

around zero to one percent they don't

actually want us to be negative and

guess what Jerome Powell told us today

he told us that GDP is basically just

above zero this is exactly where Jerome

Powell wants the economy and he doesn't

actually have to be more hawkish in fact

he has to be careful not to be too

hawkish because then we go below and we

go no negative so he's really trying to

play this Balancing Act it's kind of

like flying a plane and you're trying to

keep your attitude at that right level

and you're like oh a little too high oh

trim up trim up trim down you know back

and forth right run the trim wheel

anyway so what were the three big

discoveries that Jerome Powell told us

well number one and this one's a little

bit in depth but it's worth

understanding watch what Jerome Powell

did

first he says inflation is too high old

news

then he breaks inflation down into three

things

core Goods which he tells us is

plummeting core good inflation is

plummeting okay so part one of three

solved

part two of three he says it has to do

with Housing Services which have risen

rapidly however as long as new lease

signings continue to plummet we expect

measures of Housing Services inflation

to plummet in 2023 so in other words

Goods inflation check Housing Services

inflation so far check

the third and last one has to do with

wages and this is because core services

are mostly propped up by wages and the

biggest piece of data that we got this

morning was actually the joltz report

which showed that we finally moved from

about two job openings a per unemployed

person down to about 1.7 openings Jerome

Powell said this was actually right

along expectations and even though wage

growth is only showing tentative signs

of relaxing we're not seeing signs of a

wage price spiral so while there's still

some work to do here we're on the right

track so think about what we're seeing

so far the economy is at the right place

core Goods inflation check Housing

Services so far check wage inflation

working on it but trending in the right

direction he's telling us the economy

like the attitude of that plane right

the level of the plane is kind of right

where we want it it's right where we

want it

slowly descending a little bit on that

inflation curve right

that was the that was the first big core

so we got the beige book where the

economy is in GDP then we've got him

talking inflation away the three pieces

of inflation that he talked away he's

basically telling you look

we're winning this was him going we are

winning

this was his Victory lap before actually

winning

and why was he doing this because you

don't want to loosen Financial

conditions do you well maybe actually

you do because the second core Discovery

was that

they feel like they've tightened

Financial conditions substantially he

says we have positive yield curves real

rates across curves we're paying

attention to the inverted yield curve

which is a dangerous sign that you could

go into a dark recession right dirty

recession really high unemployment

potential uh and right now inflation

expectations are stable both consumer

expectations of inflation and the market

expectations of inflation which if you

watch my video from this morning is

exactly what we predicted Jerome Powell

would reference and it's exactly what he

did so we got him talking about hey

Financial conditions are tight GDP is

where we want it inflation measures are

going down we're actually okay with

maybe Financial conditions loosening a

little bit because we don't want to over

tighten now this was actually really

really interesting

and this was the third big discovery

Jerome Powell previously told us he

previously said in just the last Federal

Reserve meeting he said you know

we can always just print more money if

we over tighten he said that with a

Cavalier attitude in response to a

reporter who is saying something untrue

prompting Jerome Powell to talk

hawkishly

Jerome Powell previously said

if we over tighten we just print more

money we loosen Financial conditions

again right what did he tell us today he

said well actually we don't want to over

tighten and that's why we are slowing

we want to go slower and hold longer at

a stable rate

in two separate instances those roughly

quotes paraphrases of Jerome Powell

pretty much guarantee a 50 basis point

hike in December he basically just told

us we're getting 50 in December I mean

we've had pretty much plenty of lead up

for that anyway so that's not really a

surprise but he also told us regarding

the terminal rate that he only expects

it to be somewhat higher than 4.6

percent the market had been pricing in

5.2 percent well 5.2 percent is quite a

bit higher than 4.6 is it somewhat

higher TBD but based on the rest of what

he's saying somewhat higher might be

like 4.8 we might not actually ever get

to five because he's starting to

recognize the human costs of over

tightening something he's never

mentioned before on top of that he's

also suggested that our recession risk

in the last set of minutes from the

Federal Reserve was pegged at 50 50. but

he actually doesn't believe that

he actually believes there's a greater

chance of a soft Landing that is the

non-recession path or shallow recession

without a big spike in the unemployment

rate so even though the committee

jointly thinks 50 50 he's on the no 50

side the no recession or or shallow

recession softish Landing side

what he wants to create is another long

expansion another 10-year expansionary

cycle where we go from 2010 to 2020 and

everybody's getting rich

and the people who get rich the most are

the people who own assets whether you

own assets like venture capital in in

house hack which has a deadline today

for accredited investors whether you own

real estate yourself whether you own

stocks yourself whether you own exchange

traded funds yourself whether you own

bonds yourself the people with assets

make money in Long expansions and it's

not until the seventh or eighth year in

Jerome Powell says that poor individuals

disproportionately Black and Hispanic

individuals start reaping the benefits

and that's because disproportionately

they own fewer assets than white and

Asian people

so Jerome Powell's talk today was very

dovish it is entirely possible and this

is a risk factor I want you to be aware

of it is entirely possible that because

this was so dovish and the market

responded so well that over the next few

days you end up having uh well we do

have the FED Blackout Window coming up

soon for the fomc meeting on the 15th

but it is possible that you get some

kind of Nikki leaks or whatever that

tries to talk down the market again so I

would caution against being too euphoric

because even though we could have a

little bit of euphoria here we're

probably going to go into CPI with a

little bit softness because I promise

you this if CPI comes in dirty High

drill power is going to come right back

out and go we're wrong we're going back

up we're going higher he doesn't sound

like that but uh he has he gave us a

warning up front in his speech he said

look inflation's come down before only

to go up again over this last year and

over the last 12 months we've made

basically no progress when you look at

core inflation it's been at five percent

all year core inflation core PC

inflation

and he doesn't see much progress there

so there are asterisks in this but if we

get a soft read in December on CPI

and you combine a soft CPI read

with this drone pal we had today

the next six months in the stock market

I expect will be glorious

I would not short this Market

that's all I have for you thank you so

much for watching this video If you

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see the next one goodbye