The Fed's Christmas Meeting | This Changes EVERYTHING.

well J pound just flipped the script as

a big old Merry Christmas to you yes

merry Christmas and happy holidays to

you from your friend jpow and his

buddies at the Federal Reserve that's

literally what we got here now we have

to understand the longer term

implications of this so I'm going to

start with the longer term implications

and then I'm going to talk about what

jpow just said but this is going to flip

expectations it is a big deal look let's

be clear here there are a lot a lot a

lot a lot of money market assets sitting

on the sidelines total assets in money

markets have absolutely exploded they've

exploded as you can see by this chart

right here they've exploded because of

all the massive crazy money printing

they were somewhere right around before

covid they were somewhere right around 4

triles uh they're sitting somewhere

around 6.2 is right now in Money Market

funds and that's money markets that

doesn't even count the money that's

sitting in bonds ready to dive back into

stocks this in my opinion is the signal

Drome Powell today for the first time

suggested we are at or near the peak

he's basically softly trying to say

we're done unless something dramatically

changes the FED is done that is the

clearest signal you could possibly get

to buy treasuries from Jerome Powell

whether you want to use that signal or

lot on you not personal advice uh the

10-year treasury down 16 basis points

right now the 2-year down 25 basis

points that's great that is a

normalizing of the yield curve and if

you don't know what any of that means it

just means stons up it's a good thing

and Jal Powell seems and the FED seem

convinced that we're not actually

certainly not in a recession right now

but also not necessarily heading to a

recession yes could there be a recession

yes but jome Powell made it clear we're

not seeing any any evidence that right

now we are in a recessionary territory

instead what we are seeing is that all

three levels of inflation are trending

down goods inflation he had a great

quote he's like I don't know maybe

people aren't buying stuff anymore

because people bought enough stuff and

now they don't want more stuff that was

a quote anyway Goods

disinflation housing

disinflation core Services disinflation

it's starting and the FED is finally

waking up to realize we don't want to

overtighten as a result what do we have

an over 60% chance that we're going to

get rate Cuts in February boom number

one number two 10 years about to drop

below 4% this is very bullish for stocks

it's also bullish for bond prices yes

next what does it mean it's probably

going to start the transition and this

is the euphoric rally I talked about we

made a video about this and I warned

that this could come

if you're not joining me by the way

every day the market is open we talk

about this every day totally free we got

poverty chat on it's great uh everybody

can join and uh it's great every day the

market is open at 5:25 we cover the

market open and you can ask your

questions whatever you want uh but I I

made this video on December 8th called

warning stock market Euphoria is coming

there it is warning stock market

Euphoria is coming on December 8th and I

talk about how when the signals that

U-turn as soon as we hit Peak the market

will probably go euphoric absolutely

euphoric which is

fantastic because it's a way of Jerome

pal saying look we've done enough we've

put people through enough hell now let's

actually try to prop the economy up

again by letting asset prices go up let

people get richer again let people make

more money again and then they can keep

going and buying stuff for the economy

now what's very interesting which a lot

of people missed he was asked hey man

but prices are still high and he's like

that's true and you know what we're

doing about prices still being high you

ready for this this was priceless did

you catch it what he said what is Jerome

Powell doing in response to prices being

high well real wages just went positive

so hopefully you'll make more money to

be able to pay more yes that's basically

literally what he said when he was asked

about prices being high he said well the

good news is wages are going up so that

is true we just barely went positive in

real wages but it is a way of the

Federal Reserve saying hey um don't

expect us to bring prices down we are

going to turn the money printer on well

before we need to to make sure we don't

go into a recession and when jpow sticks

this soft Landing I'm putting a statue

the guy in my front yard so what else

what else did he actually say so

economic activity expanded at strong

Pace we held rates stable inflation has

eased over the past year uh they added

the phrase any as to whether or not they

would raise rates at all anymore and

then of course in the Q&A he suggested

they're done uh he suggested that uh

housing has flattened out we're seeing a

lot of rents down across the country

year-over year certainly at least flat

uh so slightly down or flat very very

common to see across the country does

indicate he believes we are at or above

Peak I think this is a great signal for

Real Estate there are a lot of real

estate Bears out there that think this

real estate Market's going to crash I'm

in this damn real estate market every

single day and I'll tell you there's

volatility week by week like one person

farts in a house and all of a sudden

nobody's buying it the next week there

are 20 offers on it the real estate

market has almost gotten as volatile as

the stock market it is really insane you

just don't see the candlesticks but it's

just people's emotions it's all the same

crap business is people this obviously I

mean we talk about this in the courses

business is people stocks comes down to

people's emotions and real estate comes

down to people's emotions very very

simple but anyway uh uh they talked

about uh uh they actually talked about

rate Cuts they had the discussion about

rate Cuts one of the reasons I did not

get Bingo on my bingo board which was a

pisser I I I was so confident we were

going to get bingo so confident and we

were so freaking close uh but one of the

reasons I did not get Bingo is I had to

put this blue X here because I wrote

that they're still not talking about

rate cuts no they actually started

talking about rate Cuts today

yep started talking about rate Cuts what

a game changer what a flip it's been two

years you remember the worst fed minutes

ever like I want who here remembers it

we covered it on this channel Federal

Reserve the worst minutes I've ever read

in my life those were from the December

2021

meeting December of

2021 what the hell oh my gosh it's been

two years years uh anyway so uh let's go

ahead and keep going here so we've got

inflation levels the 6mon very very low

12 month also trending low these are

important levels to look at uh it's it's

not the month over month that matters so

much it is important that we actually

end up looking at those Trends uh Nick T

does a good job of posting the trends we

can go ahead and pull up some of these

Trends uh here's an example for you this

is the CPI right here look at that 12mon

Trend that dark line right here coming

down the six-month Trend coming down

both of them down both of them mentioned

by drum Powell inflation expectations

low and falling great didn't get any

talk about oil I was surprised by that

or foreign deflation although those are

other factors that are also leading

inflation expectations to plummet wages

still a little bit above Trend so still

want to see a little bit of

restrictiveness coming into wages though

he thinks we're already on that Trend

we're at about 4% for wage growth we

want to be at 3% 3% is where you want to

be again the reason you want to be at 3%

is because roughly if you want to do

math to it consumers make up roughly 70%

of the economy so if you take 3% 3.0

time. 7 you get about 2.1% inflation

right that's just a quick math way to

kind of look at that and fact check

yourself uh unemployment rate still very

low positive developments recession is

not our base case not seeing signs the

S&P or the summary of economic

projections is not signaling weakness

the sep signaled three rate Cuts as

opposed to the two markets were

expecting the Fed was going to Signal

keep in mind markets have been pricing

in four rate Cuts as much as five

recently uh we were not expecting the

FED to come out and give us three rate

Cuts jome Powell suggested that those

that the FED sort of Incorporated the

latest CPI and PPI report and uh and

they said we we can't wait wait to cut

rates until we get to 2% because you'd

be way too late at that point uh 2%

inflation so I did talk about slowing

quantitive typ tightening once they get

to a level they feel comfortable they're

not sure what that level is they do

think that level will be above the level

of where it used to be this is the

Federal Reserves balance sheet Dr and

pal mentioned we're about $3.5 trillion

dollar above where we used to be my

guess is we probably honestly if we

level off at about 77 trillion that's

probably where we're going to level off

now why would I say we only have about

700 billion dollars of QT to go why

would I say that St Louis Fred Spell

correctly here today uh leis Fred we're

going to go with um fed repo facility

reverse repurchase agreements look at

that look how much money we have left

here 823 billion so 8 to 700 billion to

go that'll bring us to about 7 trillion

of a Fed balance sheet and I think

they're done then that's when they'll

start slowing or just stop entirely so

what is this practically mean look in

the short term this is fan freaking

tastic for inflation s sensitive stocks

interest rate sensitive stocks this is

great uh in the longer term this will

eventually be very good for your energy

style stocks your end phase your solar

Edge the break even cost on energy will

come down it should be supportive to the

housing market as uh now you're going to

get people starting to speculate they'll

be able to refinance back at a four or

5% mortgage next year you're going to

start getting that speculation priced in

starting now it's one of the things

that's been keeping a floor under the

real estate Market is not just low

inventory but people speculating that

prices will stabilize and so buy what

you want now so that's important now

there is a fear that uh there'll be a

flood of housing that hits the market in

the spring as interest rates start

falling I don't know if that's going to

happen nobody knows if that's going to

happen obviously if there's a flood of

inventory the question will be well how

many floods of buyers are we getting are

we getting more buyers or not I kind of

think things will stay kind of the same

and flattish that we don't need to

expect some huge rallies just get out

there and go buy good deals which

obviously I will teach you how to buy

good deals uh with an introduction even

in the gold course gold course is a

great way to get introduced to buying

real estate if you'd like so check that

out Gold Course remember it's 420 bucks

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