It's Official: The Fed Lied.

well we just had really bad news from

the Federal Reserve in three different

ways it's not good specifically for a

certain Subs sector of the market and it

doesn't matter for another Subs sector

of the market we're going to talk about

all of that in this video but I have to

say the things I heard here were not

great first I have to start with the

greatest disappointment for the last

over two years probably closer to three

years I've been talking about this

subject called fate it was a 2019

proposal that went into effect in

2020 it was the Federal reserve's 4year

game plan on how to try to essentially

have an average of 2% inflation it's

called flexible average inflation

targeting well I feel like a knife was

thrown through my back today because

apparently Fate has nothing to do with

actually having flexible average

inflation targeting because when Jerome

Powell was asked about it in Congress he

said well we made that because inflation

was low it was a way to Anchor inflation

expectations at 2% and keep them from

sliding down the pandemic may have

changed that in a significant way and we

will review this framework at the end of

the year and it'll take about a year to

review so in other words let me

translate to that to English when we

said we wanted to Target inflation at 2%

with a flexible mindset we only said

that because inflation was too low now

that inflation is too high we don't care

about fate anymore it was just a

manipulation it was just a rigging to

keep people thinking we cared about 2%

inflation well I Feel Like a Knife just

went through my freaking back okay I'm a

little pissed the FED tells you one

thing and then does the opposite you

suck you suck and why does it really

suck because I thought as we would get

to maybe two and a half to 2 and 3/4%

inflation the FED would say you know

what this is good we had low inflation

for the decade before the pandemic we

have 2 and a half% afterwards guess what

we don't have to changeed the inflation

Target to 22% because of Genie out of

the bottle fate f fible average

inflation targeting it's here to make it

all okay and we'll cut rates even though

inflation's not at 2% yet because of

Fate well by rug pulling us on fake fate

fake fate uh and admitting that it was

just a lie the Federal Reserve just

blatantly told us it is going to take

even longer for rates to go down if

that's not obvious yet what that means

that doesn't necessarily mean we're not

going going to get our two or three rate

Cuts this year it just means actually

getting back to the normalized rates

that support interest rate sensitive

stocks going to take way longer cuz

there's no fate coming to save you maybe

that was the Fate all along what an

irony the second thing that was a

disaster that we heard was drone Powell

was asked about stock uh Scott Recker

white paper which was previewed in

Fortune Magazine calling for quote 500

or more bank failures coming with a doom

Loop ahead of us of pain and a quote

slow moving train wreck as waves of

commercial real estate loans mature over

the next few years and an industry that

is incapable of solving for that

commercial real estate problem this

commercial real estate problem is the

equivalent of the residential housing

problem we saw in the 2008 recession

okay drone pow was asked about that

drone pow's response was well well we

think the commercial real estate sector

is manageable everything's manageable

here we'll be

fine well at the same time as everything

is fine what happened with everything is

fine New York Community Bank well New

York Community Bank decided to come out

while I was trading for about

$3.14 and decided to say hey we are out

of money and our bank is failing so

we're going to raise some money on the

stock market and the stock market's like

oh hell no you are stock down 42%

probably honestly halted for the rest of

the day at this point so very

inconvenient timing for JP's testimony

but a reality that we face that we now

have two big oopsy dupsies for when it

comes to the Federal Reserve number one

fate is a lie and number two the banking

system is sound and resilient except for

some okay number trace okay third

one Jerome B uh so uh first one we had

here we had fate uh we had New York

Community Bank was the next one oh yeah

uh and then of course uh throughout most

of the testimony here we got a lot of

commentary about frankly the the Federal

Reserve being asked about basil 3

banking regulation we're not really

going to talk much about that because I

don't think that matters to normal

Americans what matters to normal

Americans is what's going to happen with

inflation interest rates and quite

frankly the reality of the direction of

our economy and the Atlanta fed gave us

an update this morning rather than GDP

continuing to Trend Down Under the

weight of interest rates GDP P estimates

have once again been revision revised up

for q1 2024 we're now sitting at

2.5% up from the 2.1% where we were

about a week ago down from the 3% from

where we were ahead or for for the prior

portions of this quarter and what that

signals in conjunction with higher CPI

reads for January although those might

be one-timers higher job gains from the

ADP report this morning for job Changers

which is the first time we've seen an

increase since August of

2021 the high jobs report that we had in

January and the jolts data today coming

in roughly at expectations showing

really we're not having a layoff

recession we're not seeing uh

unemployment meaningfully rise we're not

seeing unemployment claims meaningfully

rise and GDP continues to Boom whether

it's because of fiscal spending debt or

AI the reality is raid cuts are probably

going to get punted now drum Powell did

suggest that the December December

summary of economic projections looks

for three rate Cuts coming in

2024 the problem is he makes it very

clear that those projections are old and

that they'll be updated on March 20th

keep in mind March 20th is the next fed

fomc meeting date it's also the date uh

that my daughter will have her

reattachment surgery which scary uh but

anyway we'll be covering the FED live

then I'll be going to the hospital so

that's on March 20th mark your calendar

for that mark your calendar as well for

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super excited to see you there check it

all out at meek kevin.com but what does

this actually mean well if we look at

the Fed rate monitor and we start adding

together what we're actually looking at

rate Cuts we know the market is already

starting to unpr rate Cuts last year we

were sitting at an expectation that

markets and the FED uh we going to align

with seven rate Cuts in

2024 at this point and time we are

sitting

at uh let's add that together here

quickly we are sitting at a 46 % chance

that we are going to get three rate Cuts

we are sitting at a four rate cut

percentage of let's see here if I add

this together four rate Cuts we're

sitting

at

54% so we're somewhere right there at a

coin toss as to whether we're going to

get three or four I think unfortunately

there's a risk the FED is might the FED

might actually Kick the Can down the

road a little bit more and why do do I

say that well because of the problem

number three with the FED yesterday

rafhael Bostic suggested there is a

chance the Federal Reserve will not

start cutting until Q3 and then after

they start cutting in Q3 which could be

July could be the July 31st meeting

right now uh there's a uh 10% chance we

have zero cuts by July uh and then

there's a 49% chance we have our first

cut in July well after the First Rate

cut in July we might actually end up

pausing at some point within Q3 holding

rates higher for longer so these are

things that we're really starting to

hear loud and clear here from the

Federal Reserve and again does that

affect interest rate sensitive stocks

absolutely it keeps the boot on the back

does that affect AI stocks not at all if

anything some argue higher interest

rates give companies like Microsoft

Amazon Apple and Google more cash flow

thanks to the amount of cash they have

on their balance sheet and and they

basically get to buy AI chips with free

money from the interest that they're

earning on all the cash that they have

in other words they're so rich they

could just keep spending on on rich

people chips crazy anyway uh Jal Powell

obviously reiterates his goal of uh uh

you know getting to 2% inflation that

they'll come out with a plan for bosel 3

whatever basil 3 BOS 3 whatever you want

to call it uh he does call uh Housing

Services or or suggest that Housing

Services might be elevated in inflation

because well quite frankly uh we Ed

lagging measures of evaluating Housing

Services inflation but there's also the

risk that you people just don't move and

you don't actually realize lower New

Market rents which is a downside that

could that could potentially keep those

Housing Services levels of inflation

higher for longer of course the FED is

aware of that and I think they try to

price that in uh He suggests overall

we're on a good path in terms of of the

economy that it does not look like we

are facing a recession in the short term

uh you do have uh Jerome Powell

suggesting we need just a bit more

evidence so that's bullish right that's

somewhat bullish it does say we want

some more confidence we want the

12-month data to be good not just the

six-month data regarding fed now he says

there's been slow adoption and regarding

the AI productivity boom he says it's

hard to tell what AI is going to do if

it's going to replace workers or augment

workers

but the reality is right now it looks

like productivity and the economy are

probably trending up which does actually

give the Federal Reserve more latitude

to not cut as soon so on a bullish side

look Dr Powell suggests we just need a

bit more to start with rate cuts on a

bearish side I kind of think you've got

a Fed here that's starting to imply that

they might unpr three rate Cuts I think

there's a chance they might revise their

summary of economic projections for

March 20th to show two rate Cuts rather

than three now we'll see we have one

more data set to go here A big one well

we've actually got jobs on Friday and

then we've got CPI coming up uh so once

these data sets come up I think we'll

have a little bit more insight into

which way March is going to go but March

is going to be a signaling meeting I do

not expect rate Cuts in March neither

does the market we're looking at just a

4% chance of rate Cuts in March so in

other words no rate Cuts in March we

would have heard about it today

otherwise March 12th is the CPI release

day and other than that I have to say uh

the economy is doing well so you can't

be mad at the economy booming unless of

course you're praying for interest rates

to fall quickly which ironically would

require a recession which would hurt the

rest of the economy so that is what we

got out of jpow for being live 3 hours

and putting together a 10-minute summary

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