Fed JUST Released NEW Inflation Report [Details]

hey everyone me kevin here so recovery

stocks are selling off because people

are well now frantic about a recovery

not happening

in specifically the eurozone which is a

pretty darn big

travel destination and here is of course

our

financial times paper which says on the

front page virus surge and new lockdowns

cast

shadow on europe's economy but what does

this have to do with the united states

well

a lot if we have hyper growth in europe

we could potentially see more of that

growth push towards the united states

and

potentially risk higher inflation right

and inflation is the big buzzword that

everybody's freaking out about these

days because we believe

that if we see higher inflation we'll

see interest rates go up tech will get

pummeled bond yields go up

and the market just collapses like the

stock market collapses under the weight

of higher interest rates

and then if interest rates go up too

high then people with a lot of

margin debt or short-term debt end up

getting screwed we get bankruptcies we

get market crashes as a disaster right

well right now we might not have to

worry about inflation at least in europe

because while shutdowns not only is uh

or

are italy and germany going into new uh

restrictive modes

but paris is a locking town and europe

in general the entire eurozone is now

getting downgraded in terms of how much

growth there might be in the eurozone

in 2021 now this is in contrast to the

united states

where growth is actually projected to be

faster in 2021 than we thought it might

be last year

when we were looking forward to 21.00 so

we've got good news in the united states

bad news

in well the eurozone but

what do we know or wouldn't i just find

out better yet

about inflation forecasts and why do

inflation forecasts matter well first

it's helpful to know

why inflation forecasts matter first if

you

think that this headphone which let's

say you need to buy or this head

whatever uh this is this beats headset

here uh i guess it's not really a

headset because there's no microphone

although maybe there is a built-in

microphone

this beats headset here if you needed

this

at some point between now and let's say

christmas

and you thought uh oh there's going to

be a lot of inflation

we think that this is going to go from

say 199

or whatever the price is to 250

next year and it's going to scale up

over time we may as well

buy this as soon as possible because we

would be getting a better deal like the

price is going up over time

it's kind of like how the price of the

meat kevin courses go up

over time and this is true they've gone

up a lot over time

but that's because i keep adding value

and more content to them you get

lifetime access to the lectures and i

keep

i keep expanding what's in them anyway

that coupon code down below does expire

on friday so you can still lock in that

pricing for

a few days here that extension we're

officially ending it and the pricing

will change on friday evening

but anyway when we expect inflation we

are more likely to

spend money on things sooner i'm more

likely to buy a macbook if i think it's

going to be 10

more expensive next year i'm more likely

to buy it now so i don't have to buy it

next year

that's at least the argument and this is

something the federal reserve

says the federal reserve believes

people's inflation expectations

lead to inflation or not now this is

very different

from oh my gosh look at grocery prices

look at commodity prices look at the

cost of sheet metal

lumber copper brass sulfur bullets

like all these things are skyrocketing

around us and it feels like oh my gosh

there's so much inflation it feels like

everything is getting more expensive

but the question we have to ask

ourselves is do we think

do you like you gotta ask yourself this

i i know i got

people from all walks watching these

videos and i think it's wonderful but i

just want you to personally ask yourself

do i think over the next five years

we're gonna see hyperinflation and

don't just think am i going to see

hyperinflation i want you to

legitimately ask yourself

are these headphones going to be more

expensive in five years or

less expensive in five years that's the

question

and then how much more expensive and

that should help you gauge whether or

not you

actually think there's going to be

hyperinflation if you think a 200

set of headsets or whatever these things

cost is gonna double in price

then okay obviously you align with the

belief that there's going to be

hyperinflation now what i want to do

is i want to introduce you to something

known as the survey of professional

forecasters

that the federal reserve board looks at

and and the many different federal

reserve banks

now a survey of professional forecasters

is actually really unique because

it's basically asking analysts

throughout the country whether or not

they think they're go there's going to

be

inflation so these could be economists

they could be analysts

like and i'm not saying that they are a

part of this because these the

participants are anonymous for this

but it could be somebody like an

economist working for arc invest

who does models on inflation like those

are the kind of people

who get included in this survey and then

you like you can apply for this but

they will do their dude like these the

surveying company

uh well the federal reserve bank of

philadelphia and their surveying

department

uh does their due diligence on people to

make sure they're they're actually

involved in

basically dealing with economic

projections every day especially related

to inflation

like they're trying to get really high

quality survey data here

from outside of the fed so this is not

the fed

this is not the government saying this

which we know those are different

these are the professional forecasters

in the united states what do they think

how

bad is it going to get how bad are we

going to see inflation

all right so let's go ahead and pull up

the survey i'm obviously not going to

read you the whole

uh letter here because well i already

read it and i

it's easier for me to just synthesize

the darn thing basically

on page one they're like hey when the

pandemic struck we thought inflation was

going to be really really low for a long

period of time but we've recovered a lot

faster

and now we think inflation could trend

up a little bit but

here let's show you graphically what we

think inflation expectations are going

to do

now before i show you these charts

there's something really interesting you

have to know

i uh gotten a little confused and i

don't like getting confused because if

i'm confused on something i'm not gonna

bs you and pretend i understand it

and uh put you know some some garbage

video or whatever together

so i was looking at a particular chart

and uh the the

x-axis on the bottom this was talking

about six to ten year projections

for a particular chart and uh the x-axis

along the bottom here

showed 2016 to 2021 and i'm like wait a

minute this is supposed to be for six to

10 years out so i actually got on the

phone with the federal reserve

and let me show you or play the clip for

you of

what they said and then let's synthesize

what that means

and then get to the results i think it's

pretty interesting because this is what

every youtuber

should do when they don't understand

something and quite frankly what the

mainstream media should do as well but

anyway hi there my name is kevin uh i

was just talking with another one of the

staff members about

an economic letter uh that was put out

between uh

the bank of san francisco and uh the

philadelphia fed survey and i was

wondering if i could ask a quick

question on it

uh yeah i'm not quite sure what paper

you're referring to but you can ask if i

know anything about it i'll let you know

sure it says dispersion of short-term

inflation

outlook u.s expectations

six to ten years ahead yeah okay

and uh and it's been and uh on the

horizontal axis

which is of concern to you it's um

their concern is what now well it the

the title is six to ten years ahead but

the horizontal axis

gives me dates 2016 to 2021.

so i'm not really getting i'm getting

like six to ten years back

here's the here's the explanation uh

first of all i believe

uh we have a similar series that comes

from the good of the event surveyed a

professional forecaster

yes that's it yeah and

um the the the dates

on the uh on the uh horizontal axis

are probably survey dates

not dates of the horizon ah okay

okay so now we understand how these

graphs work or at least you heard them

explain it so i'll give a little

re-explanation here and this is pretty

interesting so

what they're saying is when we look at

u.s expectations one year ahead

every time they ask these forecasters

they would say okay it's 2017.

hey what do you all think inflation is

going to be in one year from now that's

what they're asking

so this point here is what do you think

inflation is going to be in

one year from now the top line are the

top 25 percent and that's not like the

top best those are just the ones with

the highest expectations

so this is highest 25 percent lowest 25

and then this is called the median right

here so so roughly the middle

okay so in 2021 the survey that was just

conducted

the top 25 or the people with the

highest inflation expectation the

professional forecasters

they believe that inflation could go

as high as draw a straight line back

somewhere around 2.6 that's not

hyperinflation

that's not that's that's just in one

year right so maybe that hyperinflation

will come in the longer term but

one year ahead the most bearish people

on inflation

the professionals think maybe we'll be

at 2.6

maybe now the other people who are a

little bit more

you know like hey we actually don't

think we're going to see as much

inflation

these guys are like 1.7 1.8 and the

middle number here if i draw this

straight over

on the polygon tool has us around like

2.2 2.3 percent

so okay that's not big inflation what

about eurozone

it's no better over there in fact it's

like they they have even more

compression

like these numbers are actually pretty

wide apart like if i do

you know from here to here see this sort

of wedge we've got right here

it's pretty wide look at the wedge over

here it's uh it's it's probably like

half as

as large of a wedge that we've got over

here in in the difference in other words

they have more consensus over here in

europe

uh and we can see if we draw this line

back here get a nice straight line oop

that's not the polygon tool we gotta

turn

turn the polygon tool on and this works

much better there we go

so we're at about what 1.6 on the high

side

and on the low side we're like 0.9 0.8

percent for inflation it's crazy

so for one year out not expecting

inflation

let's now go to six to ten years out

okay this is the big fear

that that's it that the 2020s are going

to be like the great depression again

we're going to get hyperinflation rates

are going up we're all screwed

the economy is going to collapse okay

these are the 6 to 10 year projections

and remember what the dude said on the

phone the moment

on the chart at the x-axis is when the

survey was taken for people's thoughts

going forward here are u.s

expectations going forward so u.s

expectations

for six to ten years ahead

are that on the high side the high side

the top

the 25 of people with the highest

projections they believe

that uh based on the survey that was

just conducted they believe

in a long run we might be on the high

side

around 2.7 inflation

and on the low side the bottom 25

percent

they actually think we're gonna match

that two percent level

uh and the median forecast is that we

might run

slightly above that which the fed has

never actually achieved their inflation

target which they've

they've only recently had the inflation

target i think it was it's like 2012

they started having the inflation

targets

and they've never gotten to their two

percent target uh and so here in six to

ten years

society or i should say the professional

forecasters they actually believe that

the fed should accomplish

uh their expectations and and maybe will

be a tiny bit behind that

but none or a tiny bit above that you

know 2.2 2.3

but none of this is hyper inflation

right now it is true they're not it's

not like they're all below 2

so they do think yeah look if we keep up

at this pace the money printing that's

going on sure we can get to that two

percent

but that's what the fed wants this is

not

a catalyst for a massive market crash is

it a shift for preparing for yeah rates

are going to be a little higher

sure the same is true in europe you look

in europe they're also thinking on the

high side maybe two percent

and on the low side around one and a

half percent so about a half percent

less inflation

than u.s expectations but overall

the bottom line messaging here is simple

professional forecasters don't see hyper

runaway inflation instead they see the

fed

actually getting close to achieving its

goals and yeah

that does mean at some point in 2023

2024 rates will go up a bit

yeah we'll have some short-term

adjustments but are we potentially

at least based on this survey going to

see runaway inflation that leads to a

massive

epic catastrophic crash because all of a

sudden we got seven eight ten percent

inflation because the velocity of money

went up or this that or the other

well at least according to these

professional forecasters the answer is

no and there are a bunch of them it's

not like it's just like a huddle up

group of three people who want to sell

you something

it's an anonymous group of i want to say

somewhere around

50 professional surveyors and they just

regularly give their

models to the fed and say well this is

what we think in the business world

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