What the Fed JUST Said | Danger.

Vice chair of the Federal Reserve Jerome

Powell's right-hand person just spoke

and we should analyze what it was that

he said and the direction that he thinks

rates will end up trending in it'll be

very important for us to pay attention

to especially since the next fed meeting

is about five weeks away we got CPI data

coming out in two days I'll be live

streaming that that'll be very important

and basically the day that Bill Ackman

went short treasuries and we started

talking about the trade potential of

going long on TMF the 3x leveraged uh

treasury Yield Fund

we started seeing treasuries actually

bottom so in other words the day Bill

Ackman goes short they seem to bottom

and they come up from there which is

great especially if you're investing in

TMF now we've been paying attention to

TMF here as a trade and we've been

talking about this Thursday Friday of

last week that was the bottom and we're

already up on TMF by the way if you want

more of this kind of discussion whether

it's fundamental analysis or trade

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analysis you name it check out those

programs on building your wealth link

down below but what's more important is

talking obviously about what's on my

iPad oh yeah and it's of course Tiffany

the woman behind the viral that mother

effort back there is not real meltdown

video she's finally been identified as a

marketing executive from Dallas

but instead something to pay attention

to when it comes to actual Finance is

the five-year five-year forward Break

Even chart ah yes more confusing charts

right well look this is the one you're

used to it's a five-year break even as

you can see it's about 2.27 that's the

average expected inflation rate over the

next five years we'd like to see that

around 1.8 1.7 so the FED can finally

cut

The Five-Year five-year forward is a way

of saying what is the market think

inflation will be in five years for the

next five years going forward and that

just had a little bit of a pop so we're

going to want to pay attention on the uh

to this chart because this pop on that

right side is the highest pop we've seen

the last year so we'll really want to

watch that a bit uh and then of course

we've seen the 10-year treasury yield

finally come down ever since uh Bill

Ackman shorted it which means prices

have gone up so Bill Ackman wants to get

a bottom signal Michelle Bowman who's a

voting member of the fomc does indicate

that rates could Trend up again uh that

we might need to see additional

increases to get to two percent but she

in my opinion doesn't matter as much as

John C Williams the chair or the uh Vice

chair of the Federal Reserve and the

president of the Bank of New York he

argues that look we're clearly not in a

recession and supply and demand are

finally moving closer together that we

still have some excess demand however we

seem to have rates now where we are on

the path to two percent inflation the

reason he argues this is for three

reasons number one he uses multivariate

core Trend inflation it's basically a

fancy way of saying his Federal Reserve

Bank thinks that inflation including

core and sticky inflation categories are

clearly trending down in fact

multivariate core is sitting at

2.94 which is a way of saying that we're

almost at two percent for that core

inflation like we're getting there uh

now that's a little different from core

pce which is still sitting at 4.1

percent but what they look for Here

specifically the sticky categories and

those Dangerous Ones and those are

really trending down which is great to

some extent you're finally seeing a

little less hiring and Leisure and

Hospitality as well which is potentially

a sign that maybe those sticky parts of

inflation are finally coming to an end

so those will be important to pay

attention to a lot along with housing

disinflation the San Francisco fed maybe

because it's San Francisco but then

again they're applying this to the

entire United States they argue that

shelter inflation is not only expected

to plummet between now where we are now

on this chart is really sitting right

around here is not only expected to

plummet towards zero over the next 12

months which is a really great

disinflationary headwind but it might

actually end up going negative now this

is just a potential path so we don't

know if this is obviously guaranteed to

happen we'll see it's just a forecast

and forecasts are notoriously wrong but

the point is John Williams argues that

inflation is on the right path and quite

frankly we might not have to raise rates

anymore in fact he says we're definitely

at a restrictive level we are well above

what neutral is and we probably don't

have to talk about raising rates anymore

instead we should just talk about how

long are we going to keep keep them

there he does indicate we expect to cut

rates uh next year potentially the net

year thereafter as well and that's all

going to be dependent on keeping real

rates steady because as John Williams

here mentions they don't want to do too

much and that's one of their concerns is

they want to bring this inflation down

without doing too much now of course a

lot of us don't necessarily believe them

but as John Williams says things are

moving in the right situation still have

pretty strong demand and wages should

grow with productivity and hopefully

productivity continues to move in a

positive direction to where we can

finally bring the economy in balance and

not face any longer term issues more

raid hikes or recession that's still

possible and potentially likely to

happen based on the inverted yield curve

but when it comes to the FED they're

indicating they're at a restrictive

level and now instead they don't need to

take immediate or specific action and as

they say instead let's just collect the

new data that comes out like CPI in two

days which is great and it's one of the

reasons why we only have about a 10

chance now of seeing a rate hike in

September from the FED in other words we

could potentially be done I do think

it's interesting that already being done

with rates and this is a red flag

already being done with raids they think

Mr Williams here thinks that the

unemployment rate may rise to something

like four to four and a half percent

this is a problem because historically

when the unemployment rate Rises one

percent from something like 3.5 to 4.5

it usually goes on to go up another one

percent which would mean we'd actually

be going up to about 5.5 unemployment

and that's probably going to be where we

wonder is that a recessionary time are

we really cutting back to zero rates

there then of course the Bears argue

that's it we go back to inflation

of course I think we really only go back

to the serious inflation we had if we

run the money printer as quickly as we

did last time we'll always be running

the money printer printer don't worry

like Fiat will collapse at some point in

the future but it might be hundreds of

years before that actually happens so

can't really play the oh it's going to

collapse tomorrow game you want to you

gotta make money while you can and play

the game uh anyway obviously indicators

suggesting demands still exceeds Supply

and that's why they want to keep things

tight but they're pretty happy with the

liquidity buffers they have that was a

big bear argument that fell apart

earlier this year not only that but they

talk a little bit about some risks in

commercial real estate though they think

those are a little bit more uh

constrained they talk about this

potential fear about re-acceleration but

not not being as big of a fear as

potentially over tightening they

actually in this interview talks more

about the fear of over tightening than

the fear of re-accelerated demand now we

could look at the fed and go look this

is all Bs you can't trust these people

as far as you can throw them but it is

worth seeing where their heads are that

yes in the meantime while the stock

market is trending down and you've got

Disney creating this converging downward

pattern which potentially suggests

you'll get sort of a pop uh tomorrow on

earnings or not because maybe they'll

Miss on cloud again who knows maybe

everybody dislikes Disney point is it's

very likely that the sort of correction

that we're seeing now in the S P 500 you

zoom out to the weekly chart is actually

just a kind of healthy correction that

you sort of need and that is a way to

set up your next potential rally you can

almost say the same thing about the cues

although the cues have barely even shown

any correction here so you know a lot of

people sad about this but we barely

moved it's really though that most

stocks have capped out especially around

when you look at Tesla most stocks

capped out right around July 19th so

we're at about a three week-ish sell-off

here I mean even look at a company like

like solar Edge and the total dumps

since about July 19th it's really where

a lot of things capped out could create

some buy the dip opportunities in the

short term but it does appear that if we

get a positive inflation read here on

Thursday the Federal Reserve is

basically telling us we're done we want

to be careful about over correcting and

of course the big risk is unemployment

being such a lagging indicator that we

do end up falling into a recession as

even one of the people that's like hey

things are going good is saying hey

unemployment's probably going to go up

another whole percent and again once it

starts going up a percent it's hard to

just get it to stop at just one percent

so those are some red flags going

forward not sure if they call for sell

everything and buy gold but it does seem

like TMF could be a valuable trade so if

you think treasury yields have topped

out check out TMF as a potential trade

drop your information over at

househack.com if you want to be uh

notified when we're ready using money

from anyone non-accredited investors

included no real qualifications which is

great wait for that stand by thank you

so much for watching and we'll see you

in the next one goodbye now I want you

to know this when it comes to AI

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