The Fed JUST Began the GREAT RESET | NEW DANGERS.

now i can make coffee right here while

streaming videos to you live got the

little nespresso right there and some

fresh coffee

welcome back everyone let's do a recap

of everything that jerome powell just

told us from his federal reserve meeting

and let me tell you there were some

bombshells in this one some mega

bombshells including i mean for how long

have i been talking about wanting to

start this real estate company because i

think the housing market's about to go

through a mega crash jerome powell

literally in this press conference told

us that the housing market is about to

go through a quote difficult correction

those are declines in excess of 20

percent

those are an opportunity for buyers and

my startup househack.com go there to

learn more especially if you're credited

okay let's get into the content of what

we need to cover with jerome powell

there's a lot all right and some of

these things are good some of them are

actually a little bit concerning so

first we got our 75 basis point hike

wall street was expecting two dissenters

we actually got zero that means we had a

unanimous 75 basis point hike the two

dissenters were actually expected to

potentially go for a 50 basis point hike

wrong every single person on the board

is expecting a 75 basis point hike in

addition to that before the summary of

economic projections came out we wrote

down estimates of what we thought that

the federal reserve was going to raise

rates to as a terminal rate the terminal

rate is a really important number

because that's how high we think

interest rates are going to go before

the fed pauses and then eventually

u-turns and on this document when we

covered this live i wrote down that i

thought we were going to see 4.6 my

estimates were in red in 2023 and then

3.9 percent in 2024 wall street thought

that the terminal rate would go to 4.1

next year and then 3.6 the year after

that

folks i nailed both of them 4.6

on the 2023 terminal rate that's the

upper end of the range i gave and on the

money 3.9 with the estimate that i gave

and that happened live it was pretty

epic but the reason i wrote those

estimates is because i said that i

believe the federal reserve made a big

mistake in june when they gave us their

last summary of economic projections

they didn't put on their big boy pants

they needed to put on their pants and

spank us a little bit and say you know

what we just have to be real with you we

need to be more aggressive than we have

been and finally today the federal

reserve did that that made me very happy

that the fed is finally putting on their

big boy pants and they're telling us get

ready for a spanking now that's good

because it does mean the fed is really

serious and they're trying to make sure

they build up their credibility as much

as possible that they're serious about

getting inflation down the jerome powell

gave us a few zingers that really hurt

and i'm not even talking about the

housing market singer one of the first

zingers that jerome powell gave us is

that in order

for inflation to go down

we need to do more for longer even if

inflation expectations are low

now that was a shocker for me because i

always say that the fed watches

inflation expectations closely both the

market inflation expectations as

measured by the five-year break-even

rate which have been plummeting and the

consumer expectations for inflation

which have also been trending down

unfortunately jerome powell today said

look it's great that inflation

expectations are low but the problem is

they don't have to stay low they could

jump up really quickly the best time to

get inflation down though is while

inflation expectations are low but that

means we have to be more aggressive now

while in inflation expectations are low

before higher inflation expectations

become entrenched now that's a mouthful

but it was basically a way of saying

yeah those charts are good kevin but

we're gonna have to be more aggressive

we have to put the big boy pants on

which i'm actually proud of them for

finally doing this was necessary to

finally have a summary of economic

projections that was realistic and spoke

to america with a sense of realism not a

sense of bs which we've gotten in the

prior summary of economic projections

which in my opinion have been complete

trash

now this is the summary of economic

projections that we have now and there

are a few things to really pay attention

to

number one change in gdp the federal

reserve believes we're going to be as

low as 0.2 on gdp for 2022 that is

dangerously teetering on the line of a

recession jerome powell mentioned the

word recession numerous times during his

press conference which in past cycles he

has avoided saying and he says that the

longer we have to stay at higher rates

and the longer we have to keep raising

rates the less likely it is that we're

actually going to have a soft landing at

all in addition they expect growth to

remain below trend for the foreseeable

future in fact you can see here that

growth is not expected to exceed two

percent any time over the next four

years the gdp is only expected to be 0.2

percent in 2022 1.2 percent in 2023

until rising to 1.7 in 2024 and even

though these estimates are bad the

estimates have always been not as bad as

reality reality has always been worse

than these now something else that's

really interesting is the unemployment

rate they projected would only go up to

about 4.4 percent next year and this was

one of the other dangerous things that

came up in this meeting the federal

reserve said in order for them to pause

inflationary rate hikes they would need

to see job openings and quits come into

balance if you quit your job it means

you can get another job and that means

you think the labor market is very tight

as an employee forget about quits for a

moment let's think about something

that's a little easier to understand job

openings right now we have about two job

openings per

one job

applicant

and the jerome powell has told us in

prior sessions and prior fed meetings

that we need to see that two job

openings go down to 1.8 1.7 1.5 1.4 and

match one so that way we have one job

opening per applicant and when we have

one job opening per applicant what

happens then now we have equilibrium in

the jobs market and we actually more

permanently bring inflation down because

right now even though people's wages are

going up which could lead to an

inflationary spiral a self-fulfilling

spiral of prices going up

people are not actually seeing their

real income go up because inflation is

so high and that especially hurts the

lower income demographics like we talked

about this morning in my course member

live stream where we try to do

fundamental analysis every day the

market is open whether it's on stocks or

real estate we analyzed american express

and we analyzed what both the cfo and

ceo were saying about this twin cities

approach we're seeing to income

demographics and potentially how

american express could be one of those

stocks along with tesla that could

actually fare well during an earnings

recession because their income cohort or

i should say their customer cohort has a

substantially higher income than other

individuals that's the tale of two

cities approach that jamie dimon over at

j.p morgan also echoes now going back to

the summary of economic projections oh

let me just finish that thought this

whole zinger about the the uh having to

bring uh the un the labor market back

into balance is a problem because

it hasn't been getting better job

openings have not been coming down and

that makes me concerned that the federal

reserve's

interest rate policy is actually going

to stay restrictive for not just

sometime but for some time longer and

the reason for that is they got to bring

the labor market into balance but this

is becoming harder and harder by the day

and so far the numbers aren't actually

going down so this is actually bad news

so it's good news the fed put on their

big boy pants but it's bad news that

they're telling us the numbers that need

to go down aren't going down sure

inflation expectations are low but those

only matter if the other numbers go down

and since the job numbers aren't going

down that his job openings aren't going

down we have a problem and we have to

get more restrictive and that is the

defense the fed uses against anyone who

says the fed might be overdoing it they

just look at the jobs market and go look

at the jobs market man that's all we're

going to say look at the jobs market

it's too strong that's a summary of the

federal reserve's opinion on on jobs and

it's very very critical now the summary

of economic projections does foresee

that inflation uh

pce inflation will go down to about 5.4

by the end of the year both all of these

expectations here will probably end up

getting missed uh they almost always do

the most important thing is that peak of

the federal funds rate i already

mentioned this though that the federal

reserve expects the peak to be about 4.6

and then go down to 3.9 percent next

year visually you can take a look at

this chart right here before the meeting

we had a blue line expectations of what

the fed rate hike would look like and i

warned before the meeting that it's very

likely we are going to see rates stay

higher for longer and the market's going

to adjust for that and now the new dot

plot represents the white line and the

orange line represents the uh the

post-fed market which means we're still

not aligned with what the dot plot says

which could mean more compression in

stocks if the stock market actually

cares about the dot plot which to some

degree they should because the federal

reserve is pretty unanimous in their

decision to raise rates uh next year in

fact these top dot plots right here

represent a high-end terminal rate of

about 4.875

and this right here represents about

4.375

that's 3 8.

and you can see that there's an equal

distribution of members who are looking

at a a terminal rate of between 4.375

and 4.875 there's only one person who's

voting outside of that range otherwise

everyone's pretty consistent that hey we

need to go pretty strong here on rates

it's not until 2024 that we really see a

diversity of opinion in terms of what's

going to happen and what this tells you

right here is the fed has absolutely no

freaking idea what's going to happen in

2024 but when it comes to 2023 the fed

understands

we're screwed and we need to work harder

okay very very very very important now

there's some other very important things

that the federal reserve talked about

specifically in regards to housing a few

months ago the federal reserve told us i

believe it was in june the federal

reserve told us jerome powell said that

if he was a first-time homebuyer right

now he would not purchase a home instead

he would wait for a pause or a reset

today he was asked what's your

definition of a reset what did you mean

when you said that and he responded and

today said that the housing market is

out of balance that people buying homes

for 10 over the asking price sight

unseen is not a balanced market that

there's a big imbalance and very

unsustainable levels of real estate

appreciation

jerome powell says we need to see supply

and demand align again so that way quote

people can afford a house again and that

quote we probably have to go through a

correction in the housing market end

quote which will end up being a quote

difficult correction end quote a

correction is defined as an over 20

decline in housing prices this in my

opinion folks is a massive opportunity

i've been warning of this opportunity

since january i sold 85 percent of my

personal real estate between january and

the beginning of june i was already

pretty much done in june but i sold all

my real estate in q1 and q2 because i'm

like no we are going to go through the

poopers and that's also why i'm starting

this company called house hack which

right now accredited investors can join

me in on go to househack.com upload your

w-2s a letter from invest ready or a cpa

or attorney verifying that you're

accredited and you can invest with me

you get founder shares and i make not a

single dime until your shares double in

value and we ipo and even after that i'm

subject to like an 80 lock up so like

i'm ride or die on this

in the future we've just retained well

we have just retained an attorney to

help us file for reg a so in the future

we should be able to accept

non-accredited investors as well but

that probably won't be until january but

stay tuned subscribe to the channel for

more updates on that i believe that

either you personally or through

househack i believe that there are going

to be massive opportunities to buy real

estate during this difficult housing

correction i believe that what jerome

powell is talking about is exactly what

i've been warning about that we are

going to go through a correction in the

housing market and not only are we going

to go through a correction in the

housing market but we're not even close

to peak fear yet peak fear is probably

more likely to visit us somewhere around

q1 to q2 of 2023 because that's when on

a year-over-year basis we're going to

look back and go oh dang the real estate

market is getting smoked

so we'll see it all depends on that

10-year treasury rate which is pretty

stable right now around 3.5 percent

which is a pretty painful level for the

real estate market and if you don't or

you're not interested investing in

household go buy a home yourself when

the market softens obviously subscribe

to the channel i'll be talking about

exactly what i'm buying and we'll be

having a lot of videos about me

traveling and looking for real estate so

you can watch along there and of course

you can always join the courses on

building your wealth link down below

especially that zero to millionaire real

estate investing course where you learn

everything that i know about identifying

wedge deals below market value deals and

making sure you're renovating

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below coupon code expiring in nine days

okay then uh we had this uh expectation

from wall street that the federal

reserve was really going to bs us again

we didn't get that we actually got a

little bit of a stronger fed here the

fed talked about weaker exports weaker

business investments the uh talked about

gas still being higher and more

expensive even if compared to last year

even though gas prices have come down

we've uh talked about or jerome powell

talks about core pce that's core

inflation being way too high that if you

chart core pc on a 3 6 and 12 month

basis inflation is at core inflation is

at 4.8 4.5 and 4.8 percent and that this

is not where we want to be that even

though supply-side chains being hot have

started to cool down inflation is not

coming down enough and it doesn't matter

if the rest of the world is going

through this synchronous hike of

interest rates and sure maybe there's a

risk of overdoing it but the federal

reserve more importantly risks

underdoing it because if inflation

expectations rise while inflation is

still hot the cost of actually bringing

inflation down will be much more

devastating and much worse to the

economy and could potentially even spell

economic collapse this is why paul

volcker paul volkered us in the 80s we

want to avoid the devastation from

inflation expectations rising and

therefore we need to do everything we

can to get inflation expectations down

now and that's why the fed is acting

more aggressively and this is why the

fed is giving us more dire projections

they want people's wealth to decline

with a wealth effect as studied by

robert schiller who came up with the

shiller uh case-shiller index for real

estate prices tells us that most of the

wealth effect occurs not from stocks but

from real estate and in order to really

bring down people's impression that they

can continue to spend money they have to

essentially cause a correction or force

a correction in the housing market it's

not a surprise and it's exactly what the

federal reserve has been alluding to for

almost a year now the writing was on the

wall

so bottom line what's my take on this

well i'm finally happy the federal

reserve gave us a serious dose of

reality the terminal rate is going to be

higher for longer the housing market is

going to crash and stocks are not going

to the moon anytime soon now maybe we're

going to have another fed relief rally

which we've had almost every single time

after a fed meeting we get like a one to

two week relief rally but that doesn't

mean the pain is over we are still

waiting for reports to actually show

that inflation is declining and we now

have a big highlighter on the jolts

report which even though we knew it was

important previously the biggest

highlighter was just drawn on the jolts

job openings report and it's scary

so folks you heard it here first thank

you so much for watching continue to

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much goodbye