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hey everyone me Kevin here let's talk

about the FED first of all could Jerome

Powell get more hawkish then we're going

to talk about what's priced in what the

FED has said so far fourth what the FED

is likely to say tomorrow and let's go

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right here we go will Jerome Powell get

more hawkish well expectations are yes

he's probably going to get more hawkish

now than than later in fact we kind of

expect that now there's a real

opportunity that Jerome Powell could go

dark on us too much so that he who used

to be a dove could end up becoming the

hawk that says no no I don't know we're

gonna stay ahead and get ahead of

inflation which they're nowhere near

ahead of inflation right now which will

give rise to a lot of fear and

uncertainty regarding potentially being

vulcered now I don't actually think Jay

pal is going to vulcer us vulcering

would be like rise at raising rates up

to like four to eight percent to try to

actually fight inflation right now we're

not even a neutral right neutral is two

to two and a half percent we're at

literally a quarter of a percent right

now we're gonna go up to like 0.75 big

freaking deal but his tone could end up

being hawkish tomorrow though I hope

that it's potentially the worst

likelihood of him being hawkish compared

to Future meetings and the rest of my

explanation will explain why so let's

talk about what's priced in well right

now 50 basis point hike a half percent

basis point or half percent hike is

priced in for May that meeting is uh

tomorrow May 4th I will be a live

streaming at that meeting as usual uh

now I do expect to be live streaming

that meeting at a different Channel at

meet Kevin live that's right I might be

moving all of my live streams to a

different Channel and then posting sort

of some updates to this channel we're

sort of more uh put together videos on

this channel or clips from those lives

on the appropriate other channels I have

so one of the first links that you're

going to see down below is actually the

link to that other channel don't feel

weird about the fact that there are no

videos or thumbnails or anything yeah

that's because we're just going to go

live with the FED meeting probably

tomorrow so stay tuned for that do check

that out link down below we will be live

streaming at 11 A.M Pacific time for the

FED meeting we might do market open on

that channel and we will also be live

streaming at 11 30 when Jerome Powell

and he's usually very punctual goes live

to answer questions that q a is going to

be very very critical so 50 basis point

for uh may it May 4th tomorrow May the

4th be with us uh has 100 certainty

based on Market expected and remember

the Federal Reserve generally likes to

do roughly what the market is expecting

now that doesn't mean that the FED won't

bleed us out like they kind of have been

the last four months they will do that

to reduce the wealth effect and kind of

try to constrain lending and spending uh

which is a part of kind of like

restricting an economy right so the

stock market has sort of been a

byproduct of the federal reserve's

actions this is pretty obvious and clear

but they don't want to shock us to the

point where they freeze lending or

institutions from functioning because

that's how you get things like the 2008

recession so the meeting thereafter is

the June 14th the 15th meeting and we'll

get a new summary of economic

projections in that meeting as well we

will not have a new SCP summary of

economic projections during the May 4th

meeting that's actually kind of good

because in March the last time we got

the SCP we kind of had this like sudden

collapse and heart attack in the stock

market when the fed's GDP estimate came

in at 2.9 which was under the 3.5

percent we expected since uh we've had

this negative you know especially since

we've had this negative Q 1 of GDP so

like if we get an SCP in June we're

probably going to look and go oh my gosh

like growth is maybe only one and a half

percent projected by the FED right that

would be kind of a two-folded problem

one it's like oh my gosh there is a real

risk that the FED drives us into a

recession and that we don't have a soft

Landing uh and so that sep is going to

be quite interesting but again we won't

get that in May so no set next economic

projections will be in June however what

we will get will probably be some form

of insights into the federal reserve's

path about continuing either doing 50

basis point hikes or going with 25 basis

point hikes here after at this point

again markets are expecting a 100 chance

that a 50 basis point hike tomorrow and

then now there's a range for June

there's a four to forty percent chance

depending on what sort of expectation

measure you're looking at of a 75 basis

point hike in June that pretty much

means another second 50 basis point hike

is already priced in for June and then

we'll be at 75 as sort of like the

upside risk for June on top of getting

an SCP in June so but you know again

hopefully uh you know some CPI numbers

start coming in soft and we actually get

a softer Fad in June so we'll see as the

data comes in but let's stick to a

little bit more of what we know so we

know that the FED is and they've given

us this in their last minutes that

they're expecting to start phasing out

the balance sheet by running off about

35 billion dollars first 20 trillion

dollars of treasuries 15 of MBS

mortgage-backed Securities and then

eventually increase this to 60 billion

dollars of U.S trash and a 35 billion

dollars of mortgage-backed Securities in

about three months now uh we'll talk a

little bit more about how I think the

balance sheet is going to uh sort of be

impacting markets here but it's

important really to see that if markets

right now are pricing in 50 50 or 75 and

then 25 20 25 25 basically for the rest

of the year they're doing that because

the Federal Reserve and jpal have told

us we will be at two and a half percent

by the end of the year now getting to

two and a half percent by the end of the

year can be be done in an equal path

like in 2004 which Jerome Powell first

said it's gonna be like 04 you know 1725

basis point hikes or it could be kind of

like 1994 where they have larger hikes

up front and then they kind of taper and

have smaller hikes towards the end of

the year right now the FED is telling us

that's exactly what they plan to do 50

50 would get us and then 25 basis point

hikes the rest of the year would get us

to exactly two and a half percent so

that's pretty much the generic

expectation now it's possible that if

they do 75 that they end up doing a zero

hike at the end of the year uh which

could end up end up being like one of

those really positive u-turns that we'd

like looking for we like the FED going

from hawkish to dovish that's really

good for markets when the FED goes more

hawkish it's usually really bad for

markets so again initially fed said

they're gonna go 25 steady Eddie now

they're saying never mind we're going to

front end it we're gonna go 50 maybe 50

or 75 and then go 25s but you know the

FED not only flip-flopped on that but

there's also the potential that we're

going to get some insights on their

flip-flop regarding the war see

initially in February at the

Congressional testimony Jerome Powell

told us that the FED thought war was a

game changer that war would slow

spending and potentially even though it

would bring up inflation for food and

energy in the short term might actually

bring down spending because people are

fearful that now we're at we have a war

going on however

the exact opposite is happening a sign

that could actually reiterate Jerome

Powell becoming more hawkish which is

not so good and so if you're kind of

catching my drift so far like

drum pal is probably going to be a

little bit more on the Hawkeyes side

tomorrow and it's even though I'm really

optimistic we're gonna get some green

like we did in March I don't know I I'm

less certain than I was in March like in

in March I was like oh 80 like we're

going green if we get 25 BP now I'm

probably more like 50 50. and the reason

for that is a the FED flipped twice on

us first saying 2004 now going 1994. uh

and then saying war is a game changer

but oh wait it's not which that's what

earnings reports are telling us so In

fairness they're kind of just adjusting

to what the market is doing but it's

still flip-flop so

now data what about the data well

inflation expectations are steady

however they're likely steady in one

part the part of consumers and in the

second part the part of markets both

things we can measure by a consumer

sentiment surveys and of course the

five-year break-evens and bond break

evens we can measure inflation

expectations those are steady and down

in part because the FED is talking

really harsh talk but also because

they're expected to walk the walk so for

those of us who are wondering like Kevin

isn't there a chance that the FED goes

for a 25 basis point hike tomorrow

highly doubt it highly highly highly

doubt it the market is pricing at 50 BP

the FED now needs to walk the walk they

need to put their big boy pants on and

raise the freaking rates already we're

still accommodating the markets remember

as long as we're under two percent we're

still accommodating markets we're still

stimulating why are we still stimulating

you know but this is originally why also

in January I thought that the Fed was

just going to hike us to two percent in

one meeting

like okay oh that would have been

aggressive yeah that would have had uh

that would have created a real shock to

the heart and the markets but anyway uh

tomorrow we're likely to hear that the

Federal Reserve is uh Vindicated in

raising rates and they're going to give

us the following uh facts again they're

going to tell us that we're still

accommodating markets we got to get to

neutral number two it's going to take

probably 18 months for the federal

reserve's balance sheet reduction to

actually hit the markets that's because

we've got like 1.6 trillion dollars of

excess liquidity lying around in the

reverse repo Market with banks which

basically means even though they're

running off the balance sheet there's

still a lot of money sloshing around the

system especially at Banks number three

jobs data is on fire with jobs opening

reports coming in hotter than expected

11.5 million job openings versus 11.2

expected again is going to vindicate the

FED going let's go 50 and and lead to

some hawkish talk from the FED earnings

are coming in way stronger than expected

which means more of a hawkish tilt from

Jerome Powell because oh no War's

actually not slowing down spending if

anything people are spending more in

travel I mean look at Airbnb fees beat

today the advertising sectors are

beating the airline sectors are beating

the uh you know restaurant sectors are

beating and people are still spending

money on consumer goods a little less so

uh online goods and a little less so

durables but they're still spending and

less on used cars number five the FED is

also likely to brush off the q1 negative

GDP print some folks think this is going

to lead drum Powell to go dovish I don't

think so because the q1 GDP negative

Prim was created in part because of

Omicron I remember January in fact I put

it on my Instagram story I'm like what

the hell is this like a recession or

what's going on like because I went to

restaurants and I'm like there's nobody

there everybody's just homesick with

Omicron and also in part caused by

supply chain issues since GDP did not

miss on the consumer end it actually did

very well on the consumer end but

instead missed due to a widening trade

deficit and lack of inventory rebuilding

due to supply chain issues so in other

words people still spending but we're

not actually able to spend on certain

things like inventory or or as much

trade because we have too many supply

issues in other parts of the world

in other words another reason why j-pal

is likely to go a little bit more

hawkish tomorrow number six it's also

likely that Jerome Powell even though

forecasted inflation expectations are

we're gonna have a weak inflation report

in uh in May for April with just a a 0.2

percent month over a month gain or point

four percent core which implies a drop

in energy and food prices from March at

a peak the data will still likely

reiterate Jerome Powell being a hawk for

now because a we're not getting the data

for another week after the Federal

Reserve meeting and Jerome Powell has

told us we're going to act first and

wait for the new data second

so they're being pretty damn clear with

us that we're probably going to expect

uh Hawk Powell tomorrow however I think

we're we might end up seeing the last of

not the Mohican but of harsh Powell if

we get positive data by May 11th and

before the June 15th meeting when we get

the May CPI data it could mean that we

could end up getting a little bit of a

dovish Fed in June but I don't see a lot

of reasons for the FED to be dovish

tomorrow now even though I'm optimistic

that a drone Powell will see some

reasons for hope he told us he's not

going to act on hope so I'm actually

less optimistic for green after Powell

tomorrow

but I will tell you most people whether

it's good news or bad news just don't

invest in the stock market before

Catalyst events so if there's any good

news and in my opinion a reason for the

market to actually run off these lows is

because once Catalyst events occur like

the fomc meeting guess what usually

happens we usually end up going all

right well we got the news all right we

had a little bit of a hockey pow all

right let's go back into the stock

market like this it's just it's just

very common so like I'm along the market

uh I'm optimistic that we're essentially

near a bottom but I'm not expecting

power to be very nice tomorrow

I expect that more so in June and

certainly towards the end of the year

so do keep in mind as well that if

you're trading during the FED meetings

stocks usually drop

okay anyway thanks so much for watching

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