What the Fed Said Today... Another Shift.

hey everyone kevin here let's take a

listen to see what the president

of the saint louis federal reserve mr

james bullard had to say

about the economy tapering and more

let's go ahead listen in we're going to

jump right into

the best parts let's go uh reading it

right now we're certainly hearing a lot

of anecdotes from our business contacts

about

uh supply chain disruption and uh

other increases in prices commodities as

you just mentioned

so i think we are going to see some

inflation then i expect some of that to

hang on in

2022 uh maybe two and a half percent in

2022

so so this right here is actually a

little bit more concerning because

loretta mester this morning who's

another fed president

mentioned as well that we could see

supply chain disruptions

uh start settling down and

see inflation come down in 2022 but we

wouldn't really see that inflation go

away until 2022.

now i have this belief that we're going

to see an inflection point

based on a video i made earlier and a

long-standing belief that i've had we're

going to see an inflection point in

inflation rotating to the downside

between july and october

but the more they talk about inflation

lasting through

2022 the longer the sell-off could take

let's keep listening part of that is the

fed strategy of

uh being less preemptive than we would

have been historically because we're

trying to make up for

past misses of inflation to the low side

of our inflation target

yeah so it sounds like this is because

of their new strategy called

fate which is flexible average inflation

targeting basically saying hey

we're okay if inflation just sits around

two and a half percent month after month

after month

that's what we want to get to an average

of two percent and eventually

we narrow down to two percent and that's

because they've had such a struggle of

getting to two percent

inflation per their metrics for a while

you're in the transitory

camp i'm trying to feel out where you

are on the transitory

you know well how likely is a good

question the fed would have to move

i love sarah just cuts them off you know

it's a good question so i

uh some of this is transitory but not

all of it

because part of what we're trying to do

is get inflation expectations

cemented at the 2 percent target

they've been slumping down below target

over the last decade and we want to

reinforce our inflation target so we

want to get inflation expectations up

this by the way is a clarification on

what jerome powell says jerome powell

says

hey most of the inflation we're seeing

is going to be transitory

he's saying well but not all of it

because we do after all want some

inflation we're trying to get to two and

a half percent inflation so again i'll

be transitory otherwise we wouldn't get

to our two and a half percent

so you're kind of seeing these these

mixed messages a little bit

there's someone on the same side but

they've also got a little different ways

of conveying things let's keep listening

have your break even has been trading

uh somewhat higher here uh but

not at such a high level that i'm uh

worried about it

um but i do think it's encouraging for

the fed's policy that we will be able to

get

inflation up and over two percent uh

over the next two years and and allow it

to be there for some time

how big a swing factor president bullard

for

um the level of transitory nature of

inflation is vaccination rates and if we

get above

expectations does that suddenly mean

we're in a worrying outlook for

inflation

they're trying to pin down hey if we get

like 70 80

people vaccinated does that mean we're

gonna overheat way faster

great question uh

the vaccination process seems to be

going pretty well i would say

a good baseline model to have in your

head is a technology adoption model

which is

always s-shaped whenever you see those

curves they're very slow at the

beginning then they rise

rapidly and then it's very hard to get

the last part of the technology adoption

that's what's going to happen with the

vaccinations here that's interesting

he's really saying

he's answering this by saying hey think

of vaccinations

as growing like an s-curve which just so

you have a graphical picture of what

that looks like

you have slow growth at first kind of

like a tesla right

then you get this sort of exponential

style growth

and then you get this slowing down again

which a lot of folks think we might

potentially be in this inflection point

phase now where we're slowing down

and this is another way of saying it's

going to take longer to get this last

portion over here

that last you know uh you know 40 or

whatever people is going to take longer

than than the first

60 percent let's keep listening uh but

nevertheless i think uh

it's it's going very well keep in mind

current vaccination rates i want to say

in california around 35 percent

nevada's around uh 40 so it's still

still

work to be done but anyway keep going

here well in the u.s

fatalities are coming down dramatically

confirmed cases are down

uh dramatically so i think that boats

very well

for the u.s economy and our ability to

reopen and put the pandemic

behind us not as good in the rest of the

world as you know but

uh but going very well in the u.s

which brings us to the jobs question

today we got data showing 8.1 million

job openings a record high

we've started to see wages move up so

there's clearly demand

for labor and yet april's jobs report

was disappointing in terms of the number

of hirings

why do you think that happened

uh i think it's just a little bit early

to really expect

a big jobs growth you've got

the pandemic not quite over yet not

everybody vaccinated still at risk out

there

it strikes me that for a low-wage worker

that's been disrupted

it's not that great a proposition right

now to tell that person

or ask that person to come back to work

so then he touches on jobs and some

history

got a little boring there but then sarah

eisen comes in with a good question

i'm going to tell you that question

right after i mentioned that you should

check out that extended coupon code

linked down below

i did hire somebody to work on marketing

so the next price increase is going to

be a little bit more than usual

check that out before that coupon

expires linked down below you get

lifetime access

to the lectures that's very different

from the content you get on youtube i

think you'll love it when you get inside

uh almost everyone does it's really

really great it's like 99.7

a love rate love rate but anyway uh

let's see his response

to uh sarah eisen's question why are you

guys still printing them

why don't you give it up if the economy

is doing so well stop

printing maybe then we won't have these

high inflation expectations

see what his response is once we get out

of the pandemic then i think it'll be

time to uh

look at whether monetary policy can

change

and as far as congress goes i'm growing

more skeptical

reading the political tea leaves that

they're going to be doing anything more

either

okay i'm just going to quickly because

we did jump into that there just to

clarify what he just said

this is a big statement here he's going

hey look you know what

yeah we're still printing money and

guess what we're gonna keep printing

money until the pandemic is

over remember what he said earlier it's

very important we're going to

he's basically saying we're going to

print money until we get to that

vacation

vaccination level and we think this

vaccination level is going to be

harder to get to right here because of

s-curve adoption rates

for the uh vaccine

then he says about congress though i

don't expect them to keep printing money

and uh this could sort of be an

implication well i think it's a clear

argument that he's not expecting

congress to send any kind of more

stimulus checks or whatever

but it might be a little bit of an

argument that maybe the congress or

congress is even having trouble getting

the infrastructure plan done which could

be another way of suggesting that hey

you know

look we're still reprinting we still

have work to do we're still going to

keep

holding firm until the pandemic's over

congress on the other hand

well they always have trouble spending

money the fact that they got the

spending done they did is great but

we're not going to see any big new

stimulus package

maybe we'll see the infrastructure but

hey skeptical we'll see what happens

what he said here it's a pretty big

response on on basically the fed saying

i mean we're just going to keep printing

let's keep going

that's interesting i finally just wanted

to get your sarah nails it

thoughts on the housing market which

which is red hot and we are seeing now

price increases double digits yeah

how price increases q1 went up like 16

in housing which was like

which does make me remember to mention

that if you want to find deals off

market

so you don't have to deal with these

crazy uh sellers that we're in right

there in this market that we're in right

now

and consider checking out deal machine

go to medkevin.com deals

and just send postcards using deal

machine in an

automated way to the properties that

you're most interested in buying makes

your life so easy

go to medkevin.com deals and consider

targeting some of your favorite

multi-family or fixer-upper deals

and making sure you get in front of

their face so that when it's time for

them to sell they heat you up first

hopefully check it out by going to

mkevin.com deals keep listening to his

response here on housing

bidding wards are back there's a low

supply

why is the fed still buying

mortgage-backed securities do you worry

that the fed is

stoking the flames of this hot housing

market and hurting affordability

such a great question again and she's

reiterating basically a similar question

to what she just asked she goes

why are y'all printing so much money

then he answered with himself

and congress now she's going what about

housing housing's blowing up you guys

are basically supporting the housing

market too

it's a great part two to her original

question

yeah i think uh it's certainly true that

the

housing market looks uh extremely strong

i you know i hope that elicits a supply

response

uh you've certainly got uh lumber prices

being talked about a lot here so i think

that uh when the time comes that's

something we could look at but

but uh i think it's too early to talk uh

taper here we're gonna let the chair uh

open that discussion when he thinks it's

appropriate

there's a headline too early to talk

taper we've heard it from a number of

fed presidents all day long we thank you

for your time

james willard president of the saint

louis vote that was good

uh i mean it was it was very insightful

i think the big bottom lines i took away

from this are

that the fed with two folks today mester

and

uh bullard are thinking hey look

inflation

we're gonna push for this to be two and

a half percent for a while we're going

to keep printing for a while don't worry

about us

raising rates or tapering just yet we've

got to get that s curve adoption for

vaccines

uh done and we don't even know what the

winter is going to look like last time

jerome powell talked

he mentioned that look winter could be

bad unless we get that vaccine adoption

so the fans holding firm they're going

to keep printing and keep supporting

and they expect that inflation will

inflict down sometime between now

and next year but that uh higher these

these inflationary prices will

definitely continue

uh throughout the rest of the year so

we'll keep an eye on that

all right folks thank you so very much

for watching go to mattkevin.com deals

for deal machine go to medkevin.com

join for the courses down below use that

coupon code to the moon and your

lifetime access to the lectures and the

new lectures that i add which i actually

add new lectures which is really cool

these are like living reading courses

thanks so much and we'll see you next

time bye