we just got rugged | fed

well we just got bogged at least that's

what markets think the Bank of Canada

just flip-flopped on us and most people

didn't see that coming in fact Reuters

says that 67 percent of economists did

not see happening what just happened and

this has some implications for the FED

which we got to talk about that's why

we're talking about it eighty percent of

those surveyed by Bloomberg did not see

coming what just happened and as soon as

what just happened happened the stock

market went whoopsie doopsies

so let's talk about what just happened

the Bank of Canada had a raised rates uh

starting in March of 2020 along with the

FED they tend to follow the fed and all

these Bankers they all talk to each

other which is a big deal because they

kind of take inspiration from each other

so that's why when the Bank of Canada

hiked about eight times between March to

January and then paused January 25th of

this year a lot of people were looking

at Canada going this is great banks are

starting to pause soon the federal pause

let's start pricing in the feds pause

now because when the FED officially

passes and officially u-turns markets

might go higher so let's pre-price it in

now well now every time there's a risk

to the Federal Reserve pausing stocks go

down and unfortunately the Bank of

Canada just started hiking again after a

four-month pause it paused in January

they paused in March they paused in

April and when you look at the calendar

that's about four months all the way up

to now in June

June 7th that's today Bank of Canada

totally unexpectedly raise rates a

quarter of a percent now you'd think

they'd maybe communicate that a little

bit more clearly but other than a

Reuters piece from Monday suggesting

that hey the strong economy is causing

some doubt that uh the Bank of Canada

will actually maintain its pause rather

than hike other than that nobody was

really seeing this coming however the

data in Canada should have given us a

heads up that this was probably going to

happen consider for a moment Canada

versus the United States so we can

evaluate properly how this would affect

the United States and how similar or

different it might actually be

Canada actually had their GDP for q1

which that report comes out between

April and May Come in way higher than

expected we were looking at an

expectation of 2.3 percent of a GDP uh

growth rate in Canada and guess what it

actually came in at and then I'm going

to talk about the fat but oh I'm gonna

hold my coffee because we're coming in

for a landing going to good old Texas

down there hey look at those property

taxes is so high but there's no income I

don't see any income taxes out there no

state income taxes you see any state

income taxes out there I don't see any

state income taxes

I see that's why they can't afford

reparations Like Us in California or or

law enforcement oh wait

anyway so back to uh back to this piece

uh oh by the way did I already mention

that I posted all of the AI lectures in

our uh making more money and getting

sh-19 done faster course it's pretty

cool we uh we uh we just posted those

last night which is really exciting so

check those out I don't know why I

always film these videos right coming

into landing and then that hot Texas

hair just whips us around totally smooth

light once the camera turns on we start

getting the bumps anywho so Canada's

expectation was 2.3 for GDP and q1 it

actually came in at an annualized rate

of 3.1 it's a pretty fat beat that fat

beat also came at the same time that

Canada had its first inflation increase

rather than decrease in I think it was

over 10 months because it's been coming

straight down except in April that

reignited and GDP beat by nine uh well

actually that's point eight eighty basis

points that's 0.8 anyway 80 basis points

that's a pretty big beat

our GDP was expected to come in at 1.1

percent for q1 it actually came in at

1.3 percent which is a 20 basis point

beat and we haven't seen that sort of uh

reignition of inflation like Canada so

I'm not sure that this is entirely

similar it's or that it's entirely fair

to compare the United States to Canada

given that our GDP is at a lower level

than Canada's we're beating at a lower

level than Canada we're not seeing that

re-ignition of inflation like Canada

just saw in April it's only one month

but also keep in mind Canada had already

been paused for four months we have not

had any pausing yet so there are some

that say Canada ultimately just wants to

be like America eh and that they're

going to end up getting to five percent

they're at 4.75 now if the United States

stops at five Canada will stop at five

they want to be friends they don't want

a gap basically no Gap no border just

the same that's potentially what they

want anyway so we've got some

differences here between the United

States and Canada but they did say the

following following a rapid turnaround

in the housing market and an upsized

surprise to CPI inflation in April that

resilience boosts the case for another

interest rate hike which we now judge to

be more likely than not uh and then what

did we get whoopsie doopsies we got the

hike that was a statement they had made

before four and then they hiked and so

in their actual press release they

stated that the United States economy is

slowing though consumer spending is up

and labor markets are still tight they

mentioned that a European growth stalled

but there's upward pressure on core

inflation they do cite that China is

expected to slow but in Canada things

apparently are still doing quite well

hence their GDP report now Financial

conditions have tightened they did

acknowledge that Financial conditions

have tightened but they did not indicate

that this financial condition tightening

led to any kind of reason that they

should continue pausing and this is

actually one of the more bearish

arguments and that is that look we have

the banking crisis It came it pretty

much went away everybody's like oh no

this is going to tighten Financial

conditions well so far we don't really

see tighter Financial conditions and so

what do we got well we got

probably more hikes coming from our

central banks so when this comes to the

United States right now we are sitting

at a 65.6 pause chance for uh June and a

67.9 percent chance that we will have at

least one hike by July the oecd did warn

today the economy is set for the global

economy is set to slow but again we

expect the United States to continue to

move

pretty resiliently uh I'm starting to

see some revisions of estimates that oh

we're definitely gonna have a recession

in Q3 I'm starting to see some of these

actually start moving back by analysts

towards iq4 Q5 um Q5 which q1

2024. uh and so overall I I don't know

that this sort of rugging really means

anything for the Federal Reserve but

that is why the market moved today in

case you're wondering and if you're

interested in more perspective make sure

to join me in the course member live

streams every day the market is open and

of course check out all the AI lectures

we just dropped so you can actually be

productive with AI rather than just see

all these AI tools on Twitter and not

know what to do with them or which

actually matter or how to use them

correctly so much inappropriate use of

AI it's crazy but you want to be part of

this revolution because it is something

that is going to cause massive job loss

in the future anyway looks like we're

Landing in there

I don't even know where we're Landing

but we're Landing somewhere here we're

coming in for that smooth old little

Landing you know when the floor is hot

it whips the plane around a little bit

more when you come in for a landing

which is kind of I personally enjoy it I

think it's entertaining I just have to

hold on to the coffee oh my iPad's gonna

go away anyway uh thanks so much for

flying with us today and uh we'll see

you in the next one

cheers