What the Federal Reserve JUST Said.

hey everyone kevin here in this video

we're going to talk about what jerome

powell just said and we've got some

updates on taper time frames let's get

right into this i do want to make a note

though when jerome powell talks there

are usually good opportunities to trade

stocks i'm going to give you a very

quick example straight from the trades

uh that i post in my stocks in

psychology of money group and i'm going

to show it to you live it's right here i

bought a 50 000 january call this

morning at 8 26 a.m

for an average of three i'm sorry 237

237 200 quantity

and i closed that position up about 14

hundred dollars there we go get into

this one here here's that closing alert

uh just about two and a half hours later

up fourteen thousand six hundred dollars

market basically bottomed with jerome

talking and is now recovering good j pal

swing thirty percent in two hours i'm

not going to not take 10 d's on that one

so obviously i think erj has lots of

potential i think it's a great company

and i hope it runs it's a company i want

to hold long term but i do not right now

because i think there could still be

some downside especially as we get

through this uh

crazy fear supply chain

winter

all right folks so let's talk about

jerome powell by the way if you want

these kinds of alerts make sure to check

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the buy sell alerts okay jerome powell

told us that supply chain pressures will

quote likely last well into next year

quote well

into next year

my estimate that well into next year is

something like mid august to september

that's about 70 through the year i think

well into would would imply about 70

percent through

uh certainly more than 50 percent

through so

my expectation here is that jerome

powell is

essentially telling us we are going to

be dealing with these pressures for

quite a while

now he does also say that quote overall

inflation is running well above our

target it's worth noting though that

that's not necessarily red flag which

might explain why treasury yields

actually came down after jerome powell

finished talking because drum powell has

regularly said hey look we want

inflation to run above our long run

target so that way in average inflation

will be around two and a half percent so

this is all part of their policy on

flexible average inflation targeting

again that stands for fate he does

mention that supply constraints are

pushing inflation higher and it's

difficult to predict when these

bottlenecks will ease

he did seem a little bit more concerned

than he has in the past about inflation

so he's kind of really walking down that

road of you turning on temporary

inflation and and i'm happy that he is

because uh it's uh it's him adjusting to

reality i've had to adjust to that

reality as well i did call for a market

rally at uh and q4 here so far the

market has been doing very very well in

q4 and kind of actually brushing off a

lot of these supply chain and inflation

fears with the exception of course once

you get revenues that start falling like

over at snapchat snapchat revenues get

crushed on advertising revenue because

of the apple uh modifications to how

much data

individuals can can glean off of apple

users and that all of a sudden uh leads

advertisements to be less effective

which is very important to know because

every hundred dollars you spend on ads

your goal is to try to create two

hundred dollars but if all of a sudden

you can't target as well and now you're

spending a hundred dollars and you're

only getting 150 you might look for

other platforms to advertise on and uh

this could potentially be why you're

seeing platforms like snapchat and

google any sort of broad-based targeted

ads falling but companies like etsy

actually doing well in my opinion this

is potentially because people on etsy

have a buyer profile that etsy can glean

data from they don't rely on the app

itself they can get this data as a

customer in terms of what they're

checking out on what they're viewing and

so on and so forth so i think those

integrated platforms do well at a time

like this

when more broad-based advertising does

poorly so big big big bull on etsy you

know this is one of my top five

positions uh so now uh obviously jerome

powell goes on to say that he's more

worried that supply chain issues have

gotten worse and these are things that

we're going to pay attention to by the

way this is another reason i'm bullish

on

a company like etsy because if we have

issues getting christmas gifts people

might be more interested in buying stuff

off of etsy where you have creators

creating uh merchandise or whatever that

may be less reliant on on these broad

massive supply chains and container

ships

inflation pressures

he believes will decrease as people

shift spending back to services but

supplies

supply chain constraints are likely to

last longer than previously expected he

said the same is true for pressure on

wages and then that he's worried that

essentially higher inflation will cause

quote wage setters to expect unduly high

rates for wages this is basically a

fancy way of saying unions demanding

higher pay which would just end up

reiterating higher inflation this is

where you get kind of the inflationary

spiral where prices go up people demand

more pay or companies pay individuals

more

in order to get them as employees to

attract them

they have to pay them appropriately but

now prices are higher because prices are

higher the employees demand even more

pay or new employees demand even more

pay and so but then of course that

increases the costs of uh goods that

you're producing so you have to increase

the price of goods which then reiterates

this sort of cycle or spiral going up

it's the opposite of the deflationary

spiral worth noting a lot of folks

potentially not being properly counted

in the jobs data as people move from

working for companies to potentially

working for themselves not showing up

properly in this jobs data but uh which

i don't think the government's really

good at counting jobs data appropriately

anyway uh and uh and ultimately we're

seeing a lot of two income households

turn into one income households thanks

to increased uh wealth earlier

retirements because retirement accounts

have all done very very well over the

last 18 months real estate has gone up

substantially so a lot less potential

pressure to uh have um

how should i say uh two incomes in a

household so we're seeing a lot of this

and uh that again leads to a tighter

labor supply it's a problem now uh and

that's coming from me jerome powell

didn't talk about that but when he talks

about potentially this the spiraling up

of wage prices i think these are things

that could actually

uh accelerate that spiral so i don't

think he's necessarily wrong about that

at least for the time being we're going

to be dealing with that more

he does say that if inflation were a

risk at risk of staying obviously they

would use their tools to preserve price

stability this is basically saying raise

interest rates uh and uh right now we

are on track to begin the taper in

november uh we finally got a number

though the new york times got a hold of

the number and it looks like tentatively

we're expecting to see a taper from 120

billion dollars per month of bond

purchases 80 billion of treasuries and

40 billion of mortgage-backed securities

down to 105 billion that's uh roughly a

13 reduction in november and then we

would probably expect to see another

maybe 13 reduction in january and we do

that maybe

eight times uh and then we're fully

tapered by somewhere around july august

potentially uh that pace could

accelerate though but i would say 15

billion

a month probably puts us around that

july time frame for finishing the taper

so and again we're expecting that taper

to begin and i think the market's mostly

priced in the taper i don't think the

taper is really affecting anyone anymore

if anything this 15 billion is a slower

pace than i think people were expecting

i think people were thinking we're gonna

see like a 30 or 40 billion dollar boom

cut really quickly and that could have

affected markets a little bit more

but yeah you could actually see this by

looking at the 10-year treasury yields

because the 10-year treasury yield has

relatively stayed stable today around

that 1.65 level and uh that's a a sign

that the markets have priced in a lot of

this this jerome powell talk already but

we're getting insights like jobs concern

longer inflation how long for the supply

chain constraints per jerome powell's

opinion and when is that taper going to

finish and what pace are we getting a

big taper which could be a negative

catalyst for the market or a smooth

taper right now it looks like we're at a

smooth taper

so we also have a talk that maybe yields

fell because evergrand made a bond

payment ahead of tomorrow's deadline

which brought the which actually bought

the company another week this was the

end of their 30-day sort of uh

delinquency period and then they would

have been in default so they're

delinquent they would have been in

default they kicked that can down the

road

another week worth noting though that

they've got 83 million dollars due at

the end of the month they've got 82

million dollars due november 6th plus

the other missed payments they've got

254 million dollars due december 28th so

this ever grand crisis i mean that's a

big number by the way 254. it's

evergreen crisis is gonna be uh gonna be

an issue going forward here stock market

obviously uh uh sensitive right now to

dronehouse talk overall in my opinion

because i mean look at this you got like

square down four percent uh because

you know the more you have jerome powell

talking about hey these supply chain

issues are a bigger issue

the more

companies want to and investors want to

discount the potential for missed

earnings up front now uh worth noting

that this morning i also did buy some

matterport

and bought matterport right around here

at this 1890 level between 1910 and 1890

did move up a little bit since then but

was working on buying the dip over here

love matterport

i'm really thinking there's a good

potential that this stock will will

either blow up after earnings or it's

going to go back to that 15 to 16 level

so i'm not going heavy with my purchases

i'm doing little nibbles here i like the

trend that we have the trend we've seen

we obviously got a little overextended

for a moment here but i like this trend

that we're seeing it's not perfect i

would really prefer a triple touch so i

think it's too early to really call a

potential upright uptrend here but if we

do get back into this certainly the uh

sub 1637 level that's gonna be a nice

channel to be buying in and so i look

forward to seeing matterport drop

another three dollars before uh

ultimately getting uh more expensive

anyway just some thoughts but uh

definitely enjoy nibbling on this one so

uh good well there you have it folks

thank you so very much for watching this

video on what the federal reserve just

said if you're interested in my programs

check them out link down below and folks

we'll see you in the next one thanks

again goodbye

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