**Prepare for the Fed RUG PULL** | YIKES.

better buckle up for a rug Pole from the

Federal Reserve because we just had some

data come out and we've got inflation

data and boy oh boy we got some problems

let's talk about that do keep in mind

today is November 1st which means it is

not only jpow day I'll be covering jpow

live but it is also the expiration of

house hacks fund raise the 2023 fund

raise comes to an end for house hack

we've been waiting for this so long

we're so excited to close the fund race

go to househ hack.com you have until the

end of the day email us if you have

questions at irh househ hack.com and

funding closes tonight so check it out

for house hack but folks we got to talk

data and we got to talk trajectory for

the fed's interest rate path because

some are now saying higher for longer

maybe higher forever literally look at

this white line that I have sort of

highlighted here with this box right

here look at that white line that is the

Fed funds Futures line this shows you

how high markets think interest rates

could be going all the way out to

December of

2025 that rates could be higher at over

4% for the next 2 years and potentially

even inflect up at that point that's

because markets are now beginning to try

to at least understand is it possible

that the neutral rate of interest could

be higher this is a fancy piece that

Nick T tweeted out it's basically a

piece that says treasury yields have

risen so much because markets are now

suggesting there's a chance the neutral

rate of interest which is where the

Federal Reserve is neither stimulative

nor restrictive could be a lot higher

than it's previously thought to be

previously the neutral rate of interest

was thought to be 2% so if you kept

interest rates at 2% as the Federal

Reserve well then the economy would grow

at about 2% so economic growth being

right arm neutral rate being 2% rates 2%

economy at 2% great easy if you want to

depress the economy you take rates and

you drive rates up which should drive

the economy to a slow down so you bring

rates to say 4% economy goes down to 1%

the problem is we've now risen rates to

55% and what's the economy doing it's

growing at like 4.9% based on the last

GDP read and it should be down here and

now people are worried okay well does

the FED have to go even higher and is

that going to actually drive us into a

deep dark recession it's just a little

visual for how you could try to

understand the disaster that's going on

but that is the problem the Federal

Reserve faces is what do you do do you

raise rates or not today markets are

expecting the Federal Reserve to Hold

Steady for their second pause that is

based on the FED Futures rate Monitor

and we're looking at a 99% chance of

that but look at some of the data that

came out this morning this morning we

had the joltz read jolts data came in at

9553 million that once again is higher

than the 9.4 that is expected that means

once again the economy is staying more

resilient that's exactly what we're

seeing in nickt tweeted piece here as

well where you have an economy that is

providing

more jobs the 6-month moving average

sits at

234,000 jobs the 3month moving average

sits at 266,000 jobs our ADP report

comes in soft again ADP coming in at

113,000 versus the 15 expected but

remember last time we got a soft ADP

report of 89,000 we got this blowout

336,000 jobs for the actual jobs report

this Friday we're expecting another jobs

report 180,000 jobs are expected problem

is we're starting to see multivariant

core inflation Trend up this is

calculated based on the fed's favorite

inflation numbers which just came out a

few days ago it's pce inflation they

don't like to go by CPI though everybody

watches CPI anyway they calculate

together this graph which this graph

here is sort of your probability band of

where inflation probably is you can see

it's very volatile even when it goes

down and it's trending down it has

periods where it goes up so that's very

normal that it feels like it has many

inflection points because it's a very

volatile graph we've had a very great

Janu January to like July September of

2023 where this is basically been

straight down the problem is now it's

doing a little bit of a tick up here

which could be very well part of just

the volatile nature of this chart again

you go out to the 70s you see almost

exactly the same thing thing here the

mid 7s here's the Paul vulker era right

even during the Paul vulker era you saw

this band move up occasionally you saw

it here you saw it here you saw it here

you saw you see it right here and that

didn't necessarily mean long-term trends

were breaking back up higher right we

don't actually highly expect that

inflation is going to rip up again

though there are some people who say

Kevin you're wrong and I very well could

be

maybe inflation will resurge it's not

what we're seeing in company earnings

calls it's not what we're seeing in

company earnings either of those both of

those are indicating declining volumes

and that prices are going to have to

fall for goods and services to continue

driving spending unfortunately the

rearview mirror data like Q3 GDP data

suggests people keep spending services

and goods consumption rising in Q3

residential investment increased for the

the first time since q1 2021 that's

mostly driven by home builders so you

have a very strong economy it's one of

the reasons you're seeing this drive up

in yields unfortunately these strong

numbers are great on one hand because it

means the economy is doing well but on

the other hand it keeps interest rates

again higher for longer and that's

likely what we're going to hear from

Jerome Powell today I think Jerome

Powell needs to be very hawkish in his

pause today I would not be expecting any

kind of hey we're going to cut rates

soon people are going to ask him these

questions he's going to dodge them he's

going to look at this particular chart

right here and he's going to say look

we're going to go with a hawkish pause

we'll pause maybe he'll even tell us he

probably won't though there's there's a

tiny chance like a 2% chance he'll say

we're done hiking now we're just going

to sit here I think he's going to be

very clear we're keeping the door open

to more rate hikes they have to fight

this curve down to below 2% which is

that line right here that bottom line

look at that we're not not there we're

not even close yet we have work to do uh

we could zoom out here and kind of see

pre-co for a moment this is where we got

to get back to we we were getting close

to it but now the trend is going back up

so we're going the wrong way I andan

look at that at the low we were at about

2.19% to 2.96 that was the ban spread uh

and now we're sitting at 2.4 to 3.28 got

to push that down you know you want it

to kind of be like where we were in the

past where I mean look at in the past it

was like5 to 2% this is why your Trend

was below right you were having

inflation below Trend so anyway drone

pile today I do not expect is going to

be very enthusiastic about suggesting

rate hikes are over he's going to tell

us that more rate hikes are a

possibility we're pausing but we're

attentive to inflation Rising this is

not going to be a bullish pause it is a

hawkish pause that's coming we'll create

a bingo card and we'll go through that

when it's Bingo time which will be in

about uh 3 hours it's about 11:00 a.m.

Pacific Time 2 p.m. uh Eastern that we

will be covering the event live so make

sure you're there in the meantime go to

house.com email us at IR house.com if

you have questions uh and uh thank you

so much for watching not advertise these

things that you told us here I feel like

nobody else knows about this we'll we'll

try a little advertising and see how it

goes congratulations man you have done

so much people love you people look up

to you Kevin PA there financial analyst

and YouTuber meet Kevin always great to

get your taste

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