The Fed *JUST* Reset EVERYTHING [FOMC Summary]

wow I don't know what it was but today

Jerome Powell just seemed extremely

frustrated it felt almost like he was

presenting a lie now there could be two

reasons for why you would be presenting

a line a lie I'm going to talk about

that we'll talk about the punch card

we'll talk about some of the other

important things that were said

including are we getting a rate cut this

year hint no so first why did he seem

frustrated my expectation was he seemed

frustrated because they're well there

are two explanations and I'll tell you

which one I think he would lean towards

one maybe he wanted to hike rates we got

a pause today maybe he wanted to hike

and he was frustrated that he had to

pause remember this was a unanimous

decision that's one possibility the

other possibility was that he wanted to

pause and he wanted to be done remember

what he told us in the prior two

meetings he told us that we are at

restrictive levels of rates today we

signaled a pause and it almost felt like

he had a script in fact at one point he

screwed up his script that was actually

quite interesting if you caught it if

you caught it I'll re uh read do it for

you basically he says hey if skip gives

us a full quarter of data oh the skip I

shouldn't call it a skip the pause

because skip implies a future rate hike

right so there are two ways to look at

it either he personally wants to hike

today and he was frustrated with the

questions and frustrated with with

markets because he wanted to hike and he

got a pause I don't believe that because

I actually think other members of the

FED are more hawkish than he is I think

he's the dove I think he actually wanted

to signal that this was it that rates

were restrictive but the higher powers

that be were whispering in his ear we're

holding a gun to his head saying you

need to talk this Market down you need

to lie to this market and tell them that

things are out of control that core pces

is rising again and this is a problem

look at it on a six-month chart for

example I'll pull that up in just a

moments here so you can see it in fact

actually here it is on screen now so the

sixth month is is you know bobbing up

again there's that little Bob up right

there if you look in the middle of the

screen here this sort of moderate blue

level oh it's bobbing up again this

isn't falling as quickly as we want

Jerome Powell tell the world that that's

why we're all gonna end up having rates

go up more now what we did is we had a

challenge we had a what I call a four

punch card challenge to evaluate Jerome

Powell today and the four Punch Cards

were well three of the four were

answered one of them was somewhat

answered three of the four were answered

so here's what our punch card was okay

uh I'll give you the punch card oh let

me quickly also finish the thought that

uh with his frustration just to prove

his frustrations to you if you remember

how he acted his answers were hey are

there lags I don't know credit

tightening I don't know restrictive

policy what level is that you know I

don't know last week or last month he

was pretty dang confident what

restrictive was in fact he gave us the

formula for what a restrictive was now

is now it's I don't know inflation High

I don't know it's trending a little high

you know we don't we don't want core to

be above 4 percent it's too high wages

going down I don't know they might be

going down but I I don't know the whole

thing field really felt really like

rather than him telling us how he truly

felt it felt like he was putting on an

act for us and so I think we can

somewhat evaluate his act by considering

the four punch card that we came up with

the four hole punch card so you ready

for this number one with a punch card

number one that we wrote down was is he

going to distance himself from the Dot

Plot that was actually a really big deal

The Dot Plot because the Dot Plot came

in a lot hotter than we expected to

remind you what the Dot Plot said in

case you didn't see it live take a look

at this we were looking at a 5.1 for a

Fed hike uh or or I'm sorry we were

looking at 5.1 was the last Max terminal

rate we were looking for a 5.3 or a 5.4

we got 5.6 that implies two more rake

rate hikes that's not great we did

expect GDP to increase and unemployment

to decrease we got those we matched my

expectation of 4.1 percent for 2023

unemployment and we beat my expectation

and the previous estimates of real GDP

the recession has basically been priced

out in fact if you look at the range of

estimates here the negative estimates

for a recession are gone we're not

pricing in that recession anymore

however this 5.6 I think came as a shock

to Jerome Powell and so one of the punch

cards that we wrote down was the

following we said will Jerome Powell

distance himself from the Dot Plot and

guess what he did because I think that

number is hawkish and I think because

that number is hawkish he's saying hey

you know what uh oh we are going to have

to unfortunately recognize that hey uh

maybe maybe for some reason markets uh

need to price in a little bit of a

higher rate yeah let's talk the market

down uh let's go with that SCP but I

don't buy it I don't buy it one bit and

I don't think Jerome Powell buys it

either and I think that's why he was

coming across as sounding like a lie so

what did he say well he said the

following well you know I can't really

talk about the SCP the other members of

the board here it is listen to this

quote quote they sit around the country

in their different offices they send in

their forecast on Friday and then we

submit it that's what the summary of

economic projections is he did not have

to say that he literally distanced

himself himself from that Dot Plot as

far as you possibly could he's like hey

look that Dot Plot man that that doesn't

represent my opinion at all people sit

around the country and that's what they

send in Jack I know they're saying just

give them a thumbs up okay I got a

concentrate sir so the second part of

the punch card was that our rates

restrictive and we're trying to evaluate

our rates restrictive and so Steve

leesman actually answered the question

or asked the right question he asked hey

so are we restrict like this is a very

confusing SCP again why Jerome Powell

was distancing himself from the sep in

my opinion and why it sounded like he

was coming across as lying because I

don't think he believes this SCP I think

there's no way in he double hockey

sticks he thinks two more raid hikes are

here I could be wrong but I think that's

why he was so frustrated so when it

comes to the restrictive question he

stated that look we're much closer to

sufficiently restrictive I think that's

sufficiently restrictive is where the

risks of over and under doing it are

closer in balance and we do have risks

of inflation going to the upside but the

reality is we need more data and that's

the more data part is what we have to

talk about because we have to talk about

when would the FED likely raise rates

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to keep it shorter for you so continuing

the the third thing that we talked about

was that is recession still a base case

scenario previously he suggested it

could be and here he didn't really give

us an answer in fact he somewhat implied

that a strong labor market that

gradually cools could keep us out of

recession he didn't really answer this

one directly I think the summary of

economic projections did but I think

it's a little Rich to say on one hand

don't look at the summary of economic

projections on the other hand say do

look at it so I'm going to say he didn't

answer that one the fourth one he did

answer which is that yes wage inflation

is gradually trending down to be

consistent with two percent inflation we

need three percent wage increases three

percent wage increases at about 70

percent for consumers brings you to

about two percent for inflation for CPI

it's roughly the background math don't

worry about it the point is he

acknowledged that yes wages are moving

into a more balanced environment no wage

price spiral no wage price spiral means

no poll volcker the really bad bad

potential of this Market is not here and

I think that's why even though markets

initially moved down they're already

rallying into the close Nvidia for

example is at 4 25 it went down to 416

during the press conference now it's

rallying into the close that could be

nuts but anyway Intel's moving up at

about the similar level and I'm really

bullish on Intel forget that for a

moment we don't need to talk about my

stocks that talk about that in different

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okay so those are the four Punch Cards

now I'm going to talk about some of the

other details that talked about but I

want to recap some of those four Punch

Cards really quickly I believe and this

is my opinion make your own opinion we

ran a poll as well the poll said that

out of 5 000 votes 53 of you thought

this was a bullish meeting 47 of you

thought it was bearish so basically

that's a 50 50 right there right so no

real Clarity on on the poll results but

what does Kevin think remember you come

here in my opinion to get my perspective

I try to give you the non-biased facts

and information and then I want to give

you my opinion so my opinion is Jerome

Powell was lying through his teeth that

this Market is actually going to give us

two more rate hikes I think he was lying

through his teeth because he had to he

had to send the unanimous message of

what the the chair want or the entire

board wanted I think the board said

listen pal we will give you that pause

that you want but only if you talk this

Market down make this Market stop

rallying make sure you tell them that

inflation is surprising to the upside

you know what here you need a piece of

data look what's what's one piece of

data that's slightly negative oh don't

look at the six month change for PC see

inflation don't look at the 12-month

change use the sixth month because

that's the one that went slightly hot so

talk about how it's going up again and

how there's more work to do and talk

about how you know what even though you

said rates are restrictive now we don't

know if they're restrictive anymore and

even though we're not looking at a

recession anymore that just means we

have more work to do on inflation and I

think that's why he was acting like a

fussy jerk during this press conference

he wasn't his his dovish usual self but

you know what there's actually something

else that was different about Powell and

the statement and his behavior in the

press conference so his behavior in the

press conference and the questions I

think was shaped by the board but you

know what he wrote there's something

that he wrote and he has full

responsibility of and you know what that

is

it was the opening statement and the

opening statement was not hawkish the

opening statement was dovish the fomc

statement was not hawkish it was neutral

we didn't really get a hawkish pause

from Powell we got a pause from Powell

and a Hawking board that's what we got

this meeting so what else did we hear

well first we heard that Jerome Powell

suggests that they've made no decisions

on future meetings they're not they're

at a point now where they're not

planning on hiking every meeting but

that they haven't made decisions on

future meetings they really want a full

quarter of data whether he was referring

to May June July or he's referring to

please hold on a second or he's

referring to September I personally

think much like what we saw this morning

the market is starting to price in that

the terminal fed funds rate might

actually come in September not in July

so I think you could get two pauses you

get a June pause you get a July pause no

meeting in August and maybe if you need

to you hike one more time in September

but there's two more hikes I don't see

it unless the data really started

getting dark if the data went dark we'll

adjust we'll flip-flop but right now the

data is saying stay paused maybe one

more hike the fact that this SCP

suggested two more hikes I think pisses

Jerome Powell off I think he's going

home he's gonna ride his bike home and

then he's gonna drink a fifth of vodka

that's what I think I think he's pissed

yeah that's a good one isn't it okay so

uh then uh we have uh a GDP uh obviously

stronger away from recession that's

great inflation takes time there's a lag

a lot of uncertainty uh speed of

tightening level of tightening how long

to stay there we're at the how long to

stay there part are we gonna Target

housing with more increases well no

we're looking at the broader economy

commercial real estate we expect some

losses oh this was a good one most of

the fudsters are using commercial real

estate as a way to say this Market is

going to crap Jerome Powell actually

gave us bullishness here you want to

hear what he said he said I think the

commercial real estate problem will be

quote around for some time versus some

kind of sudden Black Swan event that

essentially crashes the market right so

we'll be around for some time versus

sudden that was his line that's a very

big deal very big deal so this is just

sort of a gradual decline regarding the

reverse repos he acknowledged that the

reversal repo facility actually started

falling it started falling the balance

because the TGA is filling up the

treasury general account there's plenty

of liquidity in the system the Bears are

like but Kevin China's slowing down

there's a liquidity problem the treasury

general account needs to be filled back

up uh and and uh you know uh you know PC

core PC is running too hot and and we're

gonna have a wage price spiral all these

things are crap and Commercial Real

Estate is going to blow up all of this

is crap none of that like all of those

descriptors are a great explanation for

why we have five percent interest rates

but are they a reason to say the market

needs to plummet even further absolutely

not absolutely not so on the final note

here what what do we have we have uh

hiring rates yes they weigh on higher

ring uh it'll take some time to evaluate

inflation expectations are still

anchored okay so in summary no rate cut

this year absolutely inappropriate says

Jerome Powell he basically lied through

his teeth because the board twisted his

arm into acting hawkish but he is not

hawkish he is not hawkish because he is

evidencing that he is not hawkish by his

opening statement and the fact that he

distanced himself from the summary of

economic projections the furthest I've

ever seen him distance himself from that

SCP suggesting oh you know people sit

around in their offices around the

country and then they submit it in he

really distanced himself from the sap so

I think Powell is on par for pause wait

until September and maybe keep the pause

if some of these inflation numbers start

coming in hot fine give us another

single hike but this talk about two is

going to be something that the Hawks are

going to pick up on without evidence and

I think they're going to be wrong unless

obviously the data comes in harsh

remember I mentioned earlier in this

live stream uh that uh that uh Elon Musk

sees deflation coming elon's been a

pretty decent leading indicator of hey

inflation's gonna plummet hey deflation

is coming although he might just be a

little bit early and really is the Fed

solely paying attention to Elon Musk no

absolutely not so that's what you have

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goodbye