**BIG** What Jerome Powell and the Fed JUST Said! [FOMC]

hey everyone kevin here here's a

complete breakdown of everything that

just happened at the federal reserve and

why the market is reacting the way it is

let's get right into it first interest

rates were kept at zero along

expectations nailed it doubled the pace

of the taper from 15 billion to a 30

billion dollar reduction in bond

purchases that means we are still

printing 75 billion dollars but we are

reducing as expected this is good the

market likes when things happen along

and in accordance with expectations the

market does not like uncertainty anytime

there's uncertainty stocks plummet

that's why we've had so many red days

leading up to this meeting every time

there's uncertainty over what j-pal is

going to say or do the market falls same

thing is true when you look at the

beginning of like right before the

election just as an example of of 2020

lots of uncertainty stocks fall very

normal now the federal reserve has

essentially guaranteed us a rate

increase in 2022 this is important to

know and what we could do is we could

look at a summary of economic

projections this is a little bit messy

i'm going to explain it there's a lot of

information here the blue dots are from

the fed everything else is my garbage

what you need to pay attention to we're

going to highlight it with this little

green highlighter is right here

okay this is what you got to pay

attention this yellow highlighter uh and

that is a guaranteed rate increase

essentially uh at least one rate

increase however the median forecast is

for a three

a triple set of rate increases in

2022 that would bring us to just below

one percent or an expectation of 0.9

keep in mind there are only eight

meetings in 2022 unless we double up a

rate increase in 2022 38 of the meetings

in 2022 will contain a rate increase we

do not believe the first one will be

january jerome powell made it clear we

will not raise rates until we finish

tapering we will not finish tapering

until march jerome powell was asked hey

are we going to have a lag between when

you finish tapering aka march and your

next meeting aka may jerome powell

answered this so now i'm going to remove

this little kevin's guest thing here

because i agree with what the market

believes now based on jerome powell's

answer that no we do not need to have a

lag between the last or when the taper

finishes and raising rates which

basically means march that's what he's

saying rates going up in march

the federal funds futures are already

pricing in a 90

chance that rates will be up for the

first time

by april but that means they're going to

do it in march based on the market's

expectation because that's when the

meeting is okay then we're expecting one

to two rate increases in 2023 and a one

to two rate increases in 2020

uh four i wrote down that there's only

like a five percent chance we would

actually actually see rate increases in

january very unlikely that we'll see

rate increases in january again

jerome powell made that pretty clear as

well

now the uh federal reserve has also

changed their summary of economic

projections uh regarding the

unemployment rate and inflation rate

this is very important this is critical

okay this chart is mission critical

right here the federal reserve

realizes that inflation is worse jerome

powell said this numerous times

specifically because of delta before

delta we had five months of cpi

inflecting down and crypto fell during

that time now you have cpi a lot higher

because of those supply chain

constraints basically jerome powell

saying we hit a wall with supply we

thought we would see inflation because

of all the fiscal and monetary money

printing essentially in the helicopter

money we've been doing but we're

actually seeing it because of supply

chain issues you go to a vertical supply

curve which basically means hey we want

car and then instead of price going up

diagonally price is just going up

straight it's just a visual depiction

doesn't really matter but anyway jerome

powell does believe and the fed does

believe together that inflation will go

down oops to 2.6

at the end of 2022 which is about half

of where we are now they have revised

to the better their expectations on

unemployment they expect the

unemployment rate will be three and a

half percent by the end of the year they

previously thought it would be 3.8

they have also increased their

expectations for gdp which means they

think the market is going to grow by

four percent of 2022 which is more

growth than they thought they would have

had in 2022 when they first did this

projection in september or when they

previously did this projection we think

we're gonna grow at four percent despite

the triple rate increases

the market has substantially priced in

this uh this interest rate uh news and

this federal reserve news and this is

why if you look at the s p 500 and a

substantial amount of stocks that have

sold off uh heavily

you can see that we've had a substantial

move to the upside here in not just the

s p 500 but many different tech stocks

the market is liking what they heard

from j-pal because they did not get rug

pulled this is why i put in multi-seven

figures of money into the stock market

over the last three days leading up to

this meeting sent all of those alerts of

course to everybody in the stocks and

psychology of money group and we talked

about this in our private live streams

which you can have access to as well if

you use that coupon code xmas before

december 25th at 11 59pm now part two

i've also bought during the meeting

essentially right now uh because there

was always the chance that we did get a

rug pull and then you'd want to have

money now we don't have a rug pull now

we actually don't have that many

catalysts of negativity going forward

now i'm going to talk a little bit more

about what jerome powell said but let me

just quickly reiterate the negativity

that we had on november 29th november

29th we thought lucid and neo were going

to go down went down we thought the

robin hood lockups were going to be a

disaster and you could watch this

december catalyst to watch meet kevin

type it into youtube we thought robin

hood was going to plummet because of the

lockups it did just the yolo on the dip

by the way this morning on that one i

got some call options on that one uh

full transparency we thought congress

with the budget deficit would be a

non-issue we thought the debt ceiling

would be a non-issue both of those ended

up being a non-issue we thought the fomc

meeting and the cpi uh release would be

the biggest negative catalyst they were

obviously profit taking and uh loss

taking towards the end of the year with

hedge funds and a lot of selling by

corporate executives because of taxes

going up we already know that

uh now uh some of the other things so so

this eliminates a lot of the catalyst

that we had the only catalyst right now

is omicron which most of us think is

really a nothing burger uh and that this

could actually be the beginning of the

end of the pandemic right okay next next

next then uh jerome powell told us look

uh inflation is well above our two

percent a target it's going to continue

well into next year uh how and there are

things that could continue to increase

inflation things that could continue to

increase inflation are things like rents

because the stupid way they measure

owner's equivalence rents lags rent

increases by six months uh so that is

going to push inflation up in 2022 wages

could push inflation up in 2022 however

the fed still expects inflation to have

by the end of 2022

as more of the transitory items come

down like transportation costs food

costs

and some of the other things that are

affected by supply chain issues like

chips

cars and so on

now why not stop the

stop all purchases of bonds right now

why are you still printing 75 billion

dollars because they want to take a

methodical approach and clearly signal

to the market what they're doing they

don't want to rug pull the market being

very very transparent and nice here now

drone pal is basically telling us we're

going to see liftoff in march i wrote

down i kind of already explained that

jerome powell also says that we're

probably not going to see a strong labor

force participation recovery until the

end of the pandemic omicron is a risk

however listen to this line from jay pal

okay jay pal literally said quote people

are learning to live with this

he's basically telling you who cares

like no obviously that's not what he's

saying but but like that's what he's

signaling he's like we don't think

omicron's that big of a deal he kept

referring to how bad delta is and how

delta is surging right now hitting the

northern part of the country the

northeast and coming down the east coast

and the wave of delta is a big problem

but omicron he did not talk about that

that much now uh he did talk about how

this was big okay he says yes inflation

is expected to be higher but he says

look we're being straight up here we

think that we are doing the right thing

by raising rates three times and

tapering the way we are right now

because of the more persistent inflation

that we're seeing we think this is the

proper reaction to get rates back down

he was asked hey but wait a minute

doesn't federal reserve like a policy

monetary policy sometimes take 18 months

i'm glad jerome powell answered this

because conventional wisdom economic

studying uh well i you know when i

studied economics for an economics

degree i was taught this as well you

have an 18-month lag this was a very

milton friedman argument jerome powell

said exactly those words but jerome

powell says because of the way he

communicates now or the way the fed

communicates now so clearly he thinks

the markets actually price in a lot of

these these moves by the fed much sooner

interest rate moves uh taper moves

whatever and that a lot of this gets

priced in by the market much quicker i

want to be clear here jerome powell did

not sound bearish today he sounded

realistic he gave us literally the best

presentation he could and the markets

are cheering on that now uh the s p a

lot of tech stocks have done very well

uh we'll we'll go back to the sticks uh

you know later on here but uh he's he's

being pretty crystal clear he talked a

little bit about cyber risk being a very

real threat he talked about seeing

cryptocurrencies as risky but he did not

see them as like an exigent uh financial

risk

he did mention

that consumers

seem to be at solid levels of leverage

like elevated levels but not concerning

levels he did mention that businesses

were at elevated levels of leverage as

well but no signs that they that

businesses were defaulting if anything

things looked uh businesses had a very

very low default rate that that was his

wording very very low defaulted

businesses

relatively low household debt despite

the fact that margin is at all-time

highs uh household debt relatively low

probably because of real estate equity

and asset equities and

asset equity so equity in other assets

uh he did say that valuations were

relatively high but that overall he does

not believe we are behind the curve and

if anything uh they're they're uh moving

appropriately in response to the

concerns the market has right now again

the market uh has been cheering this

volatility index fell immediately below

20. i would expect to see fluctuations

over the next few days but honestly i

hope that this is the beginning of the

santa claus rally and i hope you will

follow me

in uh

in

the moves well i mean not financial

advice don't copy my moves but i hope

you you appreciate the moves that i post

in the stocks and psychology of money

group link down below and you can use

that christmas coupon code xmas

to get the best pricing on it the

pricing does go up over time and it'll

go up next on the evening of christmas

well thank you so much for watching this

video appreciate y'all and we'll see in

the next one