The Fed *JUST* Gave a Critical Update

hey everyone me kevin here boy oh boy

i've got a bullish and quick update for

you from the federal reserve this is

pretty remarkable and highly unexpected

so this is this is going to be great i

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folks

holy moly let's talk about the update

that we got from the federal reserve so

first of all if you just google fed

hawks versus doves the hawks are the

ones that are like let's raise rates

really really fast to get ahead of

inflation because we're behind the curve

okay those folks if you google a list of

that there are three super hawks

bullard kaplan and waller the problem is

kaplan is not a voting member so really

you're just going to focus right now on

waller

and bollard because those are your two

voting members in 2022

and guess what we just heard from both

of them

something bullish that is surprising why

because just a few months ago about

three months ago mr bullard was saying

folks we need to essentially rug pull we

need to go for 100 basis point hike we

need to go extreme here and finally

tighten monetary policy to get ahead of

inflation because we're behind the curve

we've lost the plot and we're losing

credibility and people agreed with him

they're like yeah i mean he's kind of

right well

now they're responding to arguments that

the federal reserve is buying the curve

and they're saying well if we knew what

we knew now yeah we would have raised

rates sooner but you know what no one

knew and that's just the nature of

monetary policy but

for those who are criticizing that now

the federal reserve is behind the curve

we disagree because there has already

been a substantial tightening in

financial markets and credit markets

take a look at how high interest rates

have already gone look at that 10 year

already sitting at 3.1 percent that is

pretty dang high we are now beating

levels that we were at in 2018 during

that cycle that pushed the stock market

down 20

we're basically that same level of down

in the nasdaq now as we were at the end

of 2018 in fact i think we're already

surpassing how much we've sold off which

is pretty wild but that's not the really

bullish part i want to talk about the

really bullish part right after i

mention

folks okay like between you and me i

just put one of my last properties on

the market that i have to sell i've got

two more to sell and i'm like

we're getting pretty dang close here and

things are slowing down man okay i'm

just saying like between you and me i'm

actually seeing it now and i'm like i'm

just at the tail end of like selling off

my portfolio i've already finished the

vast majority of it and i'm like oh

here it comes so i don't know like the

tightening is here okay

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okay folks listen to this the federal

reserve both buller

and waller are now saying that they

actually believe the pace that jerome

powell is on with 350 bp hikes in a row

is solid that they don't have to go

further in fact another member of the

board mr barkin barkin is kind of like

he leans hawkish but he's a little

closer to the middle he says quote i

never rule anything out so i think 75

basis points would be on the table this

is the 75 basis point more hawkish tilt

but he says i'll just say right now our

pace is pretty accelerated and so if you

go to the pace that chair powell

suggested that's already pretty

accelerated on top of the fact

that you've got

bullard and waller now saying hey you

know what

we're on the right path now now we just

need to walk the walk we need to do what

markets are expecting us to do and we're

going to be able to take control of this

and hopefully engineer a soft landing

and this is where i like looking at my

favorite statistics to see if the

federal reserve is on the right path

because they're not always on the right

path and the two ways we always look at

are the five-year break-even rates

and then of course consumer expectations

of inflation and i'm gonna zoom in on

this and hopefully you could get a

really good image of this all right

folks you see this right here this in

this corner here is where war started

and when war started we had the fear

that inflation could potentially go down

if individuals stopped spending but

that's not what happened people kept

spending and so we initially had this

shock of oh no commodity prices are

going to go to the moon oil and

commodities and all that so inflation

expectations went up but then we thought

oh but maybe that'll lead people to

spend less money on travel and stuff oh

no people are not spending less money on

travel they're spending more money on

travel inflation expectations moon

because you get like visa and mastercard

going despite the war people are

spending more money but then the federal

reserve gets aggressive and goes ah

we are going to go you know now

basically 3x50

and and so you're seeing those inflation

expectations come right back down which

is really really good we're at 3.22

right now on the five-year break even we

are substantially higher than where we

have been in the past but what i really

like about the level where we are now is

inflation expectations are roughly as

high as they were in november

following the delta disaster the delta

supply shocks so that really means we

are now no more fearful of inflation as

we were during delta and that extra sort

of war pain has been removed that

i'm very excited about and very bullish

about but i'm also bullish about

the shift from the federal reserve that

now you have the most hawkish folks at

the federal reserve uh almost all of

them in coordination agreeing that hey

like right now we're on the right path

like we've we've done policy tightening

just with our verbal action

now maybe it's time to stick with the

path the 50 bp path and let's see what

happens look if ultimately inflation

doesn't end up coming down we don't end

up having a peak by september maybe we

become more hawkish then but personally

i have my fingers crossed that this

loosening and sort of their stance that

we don't have to do this rug pull

anymore and that we're on the right path

is hopefully finally going to be bullish

for markets we might have to wait for

the cpi report though that cpi report

comes in that could be that final

verification that we need to say okay if

it comes in low

maybe the fed is actually on the right

path

so bullish news for saturday hope it

makes you enjoy your weekend better

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