HOLY F**K JEROME POWELL

more open philosophically to doing

quantitative easing than you were

certainly when you're doing quantitative

tightening to the tune of of of you know

tens of billions of dollars of of per

month. So it looks like they're they're

focusing more on the employment

situation, less on the inflation

situation.

>> We got a cut from the Federal Reserve.

We got strong economy GDP and

unemployment guide in the summary of

economic projections. And we got a

really dovish Jerome Powell suggesting

that jobs could be plummeting to the

tune of 20,000 jobs per month because he

thinks the Bureau of Labor Statistics is

overstating the jobs report by 60,000

jobs per month, which is the reason that

they gave for cutting 25 basis points.

He says that the Fed voted on a vote of

three to nine. So three did not vote for

this 25 cut and nine did. We got Goulsby

and Schmid going for zero and Myron

wanting 50. So he wanted a bigger cut,

which is also what Hasset said earlier

that we should be pushing for a 50 cut.

But I want to get to the most

interesting stuff first, which is that

Powell told us that this jobs market is

the big concern and they will not let

policy stand in the way of the jobs

market stabilizing. They say that the

jobs market weakened more than they

expected which contributed to this cut.

And while they think that tariff effects

are basically going to expire in Q1, in

other words, peak out. So once as long

as we don't get any new tariff

announcements, we're going to peak out

on inflation in the first quarter and

then it's down on inflation from there

and we should be able to support the

jobs market. Now he says we're at

neutral now, which is a little bit

hawkish, right? Because it's like, wait,

so no more cuts? But he's also basically

telling you, hey, look, no more cuts,

but if if the job market actually keeps

weakening like this, we're going to keep

cutting and cutting and printing

basically. So, we got to break this

down. Makes it clear towards the end of

his press conference that the labor

market has significant downside risk.

And he kind of it's almost like he read

the Howard Marx piece that we were

reviewing this morning in the live

stream where he says that if the job

market turns down, this is going to be a

very unique downturn because it means

that AI, the very thing that induces the

downturn, might also prevent the

recovery because usually when you have

innovation like cars or radio or you

have a recession, you create more jobs

after the innovation or the downturn.

But this innovationled

potential downturn could actually eat

the very jobs that would cause and keep

you in a depressionary state. And so

he's basically telling the market, hey,

listen guys, right now we think we're

good, but we are ready to run this

freaking money printer. We are so

freaking ready. And this is broadly

bullish. I think this is why markets are

like, yes, we're going up. We broke

right through 627 this morning in the

alpha report. We gave it a 78% chance of

a bullish outcome today. We were

moderately bullish to very bullish. A

dovish Powell in fairness was not on the

bingo board. It was a possibility, but

it literally wasn't on the bingo board.

This is our bingo board. And if you look

at the different segments that we didn't

nail here, we didn't actually get talk

about a stable jobs market because we

actually got talk that the labor market

has not stabilized and that they are

trying to stabilize it and that it's

actually growing negative. See, that's

why I put a big orange check uh X right

here cuz I wrote that Powell would tell

us something like labor market break

evens around 0 to 20K. Data suggests

we're at break even. That's not what he

said. He actually said we're likely

below break evens right now, which is

bullish, but we did get a hawkish

summary of economic projections. So,

this is kind of like a weird thing to

reconcile, right? But if you look at the

summary of economic projections, we got

GDP growth that moved from uh a

projection of 1.8% in September right

here to 2.3. Now, Pal says some of that

is because of the government shutdown.

This should have been like 1.9 and 2.1,

he says. But basically really writing up

GDP that's technically bullish soft

landing hawkish rate cuts right I guess

2% on that mind you uh they kept

unemployment at stable to down which is

hawkish and the base case scenario is

soft landing no recession in fact if you

go over here to the range you can

actually see they basically removed the

negative potential for GDP you can see

that the person who in September mber

was betting that GDP would be as low as

1.5%.

Actually revised up to 2%. Which is

actually really remarkable because it

means that the consensus at everyone who

put together all 19 members, not the

voting 12, all 19 members of the Fed who

put together this SCP, they're like,

"Look, our base case is bullish, man.

This economy bullish. We're we're ready

to cut and print if we need to for job

cuts, but we are we are potentially

pausing right now. Drum Powell's first

question, mind you, was, "Hey, are you

basically saying pause?" And Powell's

response is, "Um, yes." And then, of

course, we'll be data dependent. Now, of

course, we're getting data next week,

which Jerome Powell was also asked

about. But that's where things got weird

because Jerome Powell basically looked

at the data and said, "Don't think about

it the way you're thinking about this."

And this is weird because I'm like, you

know, before this meeting, I wrote the

following down. I wrote down this. See,

uh, I wrote down that we've got a jobs

report coming out December 16th. We've

got it where we're expecting 50,000

jobs, which according to the Fed would

be -10,000. Okay? Because they're taking

60 off of those. Then you got CPI on the

18th. Then you've got jobs on the 9th

again. And then you've got CPI again on

the 13th. That's January.

Now, what's crazy what Fed did is he

literally put an asterisk on this.

Jerome Powell said the the reports that

we get in December for November, we're

going to have to quote look at very

closely because the way they collect the

data during a government shutdown isn't

good. In other words, you can't trust

that data that you're getting. So, B

Powell basically said, "Look, we're on

hold. We can't trust the data that we're

getting for November because of the

government shutdown and the collection

actions that failed because of the

government shutdown the first two weeks

of November and well first 12 days of

November and obviously all of October,

you know, longest shutdown in history.

Uh and so he's kind of saying like we're

just going to ignore that. We're going

to go to January and we see we'll see

what we get with the data releases that

come in January. Now the next meeting is

on my birthday, January 28th. Right now,

markets are expecting about a 25% chance

of a cut, which is the same spot where

we were before all of this release. Now,

again, how is that possible? Because we

got this hawkish summary of economic

projections. It was hawkish. The

market's like, "Damn, we're on pause and

we're hawking on the summary of economic

projections. Odds of a rate cut in

January, I was watching them dropped to

like 12%."

And as soon as Powell said, "Don't trust

the data that's coming out, we are ready

to print if we need to and the jobs

market is moving below break even right

now and this is going to be really bad

if we go into a downturn." As soon as he

said that, saying, "We've got the tools

to support the labor market. We're not

going to stand in the way of the labor

market." Soon as he said that, the odds

of a rate cut for January 28th went

right back up to 25%. Watched it happen

live. It was remarkable. So, we did get

bingo, but we actually got bingo on

things that are good for inflation,

right? No evidence of concerning level

of wage inflation. He referenced the

ECI. Literally, what we wrote down is

what he did. Inflation outside of

tariffs coming down as expected. He said

that we will see one-time overtime price

increases due to tariffs. He said that

no evidence inflation has spread to

other services or becoming

self-fulfilling. He said that inflation

expectations are anchored. He said that,

right? like all of those things that we

anticipated in that column which are

good for the economy. Inflation coming

down, great. But he gave us even more.

Not only did he give us the beautiful,

delicious Santaare reinvests coupon code

for the alpha membership at meetke.com

where we made our plan this morning and

released it every morning when the

markets open, but also our AI at

househack.com or reinvest.co, same

company. He also gave us this blessing

that said, "Listen, if we need to cut,

we're ready to and inflation's going to

peak in January or well, I mean, he said

Q1 in fairness. He thinks that inflation

will peak in Q1 and that we'll be sort

of on a downtrend from there in part

because of the housing sector because

housing rental inflation has basically

zeroed out." Now, he did also talk about

housing and he was asked, hey, like you

know, you're lowering rates, it's going

to be good for housing, right? And he's

like, "No, the problem with housing is

we don't have enough housing and that

keeps housing prices elevated is

essentially what he's saying." He says,

"The problem is it's not something the

Fed can control. You need to build more

housing to actually get prices to come

down." This is one of the reasons I love

investing in housing in areas where they

don't build houses. That's why here's a

property. We literally during the Fed

presser, I got an email. We just closed

on this. Look at this nasty, hoarder,

gross, moldy, disgusting disaster.

Nobody wants to live in this. Nobody

should live in this. No human deserves

to live in this filth. That's why we buy

it. We fix it up and we gain value by

doing that, right? We provide a good or

a service, a quality rental that

somebody can rent from. And we make this

beautiful. That's our job. That's the

basis of my real estate startup, right?

the real estate AI that we're doing is a

huge bonus that obviously could be a

massive game changer and is why I want a

soft landing. Like just to be fully

transparent, I would love nothing more

than a soft landing because if we can

soft land, it means we can IPO sooner.

But Jerome Powell is like, listen, the

labor market is doing way worse. And

this is the first time I've actually

seen Jerome Pal go, not only is the

labor market doing worse than we

anticipate and expect, you know, with

potentially being at 20,000. But we need

to do everything to avoid a sharper

downturn from employment happening.

That's why we're at neutral rates. And

if we need to move lower, we will. But

for now, we're on pause. That's the

easiest way to reconcile this. So, let

me make sure I got everything covered

here because there's a lot ah tommo. We

need to talk about tommo. Okay. A lot of

people are going to be really confused

by Tommo. Donald Trump, by the way,

right now saying the Fed rate cut should

have been double. We know that's what

Hasset said this morning. Hasset is

basically Donald Trump's shill. So, it's

not a surprise that Trump is saying it

should have been double. And this

morning, Kevin Hassid is like, "Yeah,

you know, a 3% GDP is a lowball. We

should uh we have an AI boom going on

with or 18 bill trillion, I'm sorry, in

new factories, and the Fed will need

more cuts. We actually support a 50

basis point cut, although a small 25

basis point cut is in the right

direction." That's what Hasset said this

morning. Not a surprise that Trump is

reiterating it because Trump probably

said it to Hasset. Hasset went on Fox

News and yapped it. Okay, that's how the

game is played. Okay, learn the rules of

the game and play the game. E eco 101

basically. Okay, now regarding uh tommo,

a lot of people are going to get

confused by what tomo really even is. Uh

and that's okay. I'm going to explain to

Tommo very clearly. So tommo is

basically overnight lending. it. Think

about it like injecting money into the

economy but then taking it right back

out the next day. It's very short-term

liquidity used to manipulate the

overnight funding rate. That's it. It is

not quantitative easing because the

money doesn't actually ease into the

market. Okay. A lot of people like you

know these people there are some people

that I won't name by name but that I

really don't have a lot of respect for

because they they never look at things

in a nuanced manner. They can only see

things that are beneficial to their own.

I'm not going to get into it anyway, but

basically I heard somebody go, "Oh,

well, you know, ending QT is basically

the same as QE." It's like, no, it's

not. Quantitative easing is the

expansion of the money supply in a

permanent manner by permanently running

the money printer to generate reserves

that show up at bank balance sheets and

and at institutions that can then be

lent out into the economy. That is

long-term 5 10 20 30year Treasury bond

funding stays in the economy for a

while. That's what we got after co tomo

or the temporary open market operations

is just a fancy way of saying listen

we're ending QT and as a result of that

we're going to be buying some short-term

treasury bills you know like one months

or sixmonths or whatever just to keep

liquidity moving but it is also bullish

so both QE is bullish ending QT is

bullish and Tommo is bullish why is it

bullish not because you're expanding the

money supply but because you are

reducing ing a risk of a private credit

shock.

So yes, bottom line, all three of those

things are bullish, right? Ningqt, QE,

which we're not getting right now,

obviously also bullish, and Tomo all

bullish. Why? Again, reducing shock

risk, which is important because the 102

Treasury yield right now is jumping to

61 pips. I honestly think that is

because the job market or the bond

market is looking going, "Oh crap. uh

the Federal Reserve might have to cut

rates even more in the short term to

prop up the labor market because drum

Powell is literally telling you don't

trust the data and you know while we're

on pause now we're ready to print. Okay,

that's tommo. What else? So, uh so far

we've got disinflation continuing. We've

got Tommo up to $40 billion in December

and may remain elevated. That was more

bullish than we anticipated. That was

more printing overnight, which gets

vacuumed up again, uh, than we

anticipated, which is good. Uh, we also

heard that the consumer keeps spending,

but that's mostly in the upper income

level. That's fine. My ski slope cup

right here. Going skiing next week.

Everyone agrees the labor market has

softened. The question is what's the

biggest risk? We have to be careful in

the assessment of the household data.

The data may be distorted. Data was not

correctly collected in October,

November. And in my opinion, this is

basically very messy. He's saying,

"Don't trust the data." And then he

says, "We need to be very skeptical of

this data coming out in the next data

set." Great. You did see three people at

the Fed committee project rates at 3.9,

which suggests a rate hike. Jerome Pal

says a rate hike is not the base case

scenario at all right now. Uh

unfortunately there's no evidence of a

sharper downturn in employment with

rates at neutral but we have very real

risks to pay attention to. Job creation

is negative and he says we need to watch

the situation very carefully. We do not

want to push down on job creation. We do

not want to push this labor market down.

That's huge. you know, then he got into

a little bit of like how great AI could

be from a personal productivity point of

view, but obviously remains to be seen

what it's going to do for the economy,

right, for actual like labor market. And

so this is where like this is broadly a

bullish reaction I think is is

appropriate here because what bottom

line if I had to put this all into one

line I would say the Federal Reserve

says the economy is soft landing and if

there's any hiccup that says the jobs

market's going to roll over they are

ready to run that money printer. Like

they've got a jet engine attached to the

money printer and they're like just say

the word baby just say the word cuz we

We [laughter] will run that printer. We

will run that printer faster than a Mach

2 jet engine from Boom. [laughter]

If you saw that news, you know the

turbines for AI now. It's crazy. Uh and

I get it. Like, you know, it's great.

There are cool things and we're just

really getting into the AI productivity

phase. I hate always bringing this up

because I feel like people think, you

know, I'm shilling this. It's not a

solicitation. You know, I should put the

not a solicitation banner up. Read the

disclosures. But like I I think the next

phase of AI is the actual productivity

stuff where when we release this

feature, you're going to be able to take

a picture of a home or your home or your

bathroom or your kitchen or your house

or whatever and we'll tell you if you

spend X dollars, your net worth could

move by Y. Like that formula function

for doing investments and for doing

renovations is a gamecher for real

estate AI. It's a game changer for

construction. It actually says if you

spend money on XYZ, it could make you

money. Like in my opinion, uh the AI

would come and say, "Hey, you know,

we're going to put together an estimate

of how much it costs to renovate this

for you all automatically with our

renovation AI." Uh and then we're going

to look at what this property is selling

for versus what we actually think it's

worth fixed up as a beautiful property.

You know, a property that's not

disgusting and a hoarder mess. And I

mean, look at this. This is terrible,

right? And like what does the AI say

that our net worth is going to increase

by remodeling these bathrooms or this

kitchen? You know, well, we believe the

answer is going to be a lot to the tune

of, you know,$1red to $120,000 or more.

I mean, who wants who wants to use this

kitchen or this bathroom, right? This is

disgusting. Look at this. Look at the

rust over here. But you know how much

that medicine cabinet costs us? 30

bucks, right? This is what we're trying

to teach with our real estate artificial

intelligence. Look how nasty that

this is why you don't have enough supply

because you know in Democratun states

where like this house for example is

they don't build new homes. So you rely

on people with the balls to go deal with

you know stocky botress or whatever the

hell this black mildew is. We don't like

to use the other M word and uh uh and

provide housing for people, right? It's

a lot to do. But anyway, that's, you

know, that's my bias is that we are

going to go into some form of productive

form of AI phase. But, you know, if

labor falls off a cliff, we got

problems. But the good news is Powell's

here to tell us it's all going to be

okay. Uh we're going to print. Now, is

this time really going to be different?

Is it all going to be okay? Well, I

guess we'll find out. Uh, all I know is,

uh, if you want to see the stocks I'm

buying, check out the alpha report. Get

it every single morning before the

market is open. Use that coupon code

Santa Reinvest at me.com or join a

reinvest AI at reinvest.co. And folks,

we'll see you in the next one. So, with

that,

thank you Jerome Powell for going

bullish today. It's exactly what we

wanted to hear. And [music]

cheers to everyone. I hope you make lots

of money out there. And I wish everyone

the best. I'm going to want to make more

coffee now. See you.

>> 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 Praath there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your [music] take.