Massive Fed CONFUSION | Even NickiLeaks STUMPED!

uh Elon just tweeted about uh Powell

being wrong uh about rates not getting

cut in the next couple years that's not

what he said oh that's not what he said

so uh there's been a lot of debate about

Jerome Powell making this argument that

the FED is not going to cut rates for

the next two years this is another

mainstream media argument that oh Powell

says he's not going to count rates for

two years problem is if you look in

context of the question that he received

Jerome Powell was asked about two-year

projections so he was answering about

two-year projections he was not saying

rates are not going to get cut for two

years that's not what he was saying if

you look at what he said out of context

that may seem like that's what he says

but what he actually did is he referred

to his formula again he referred to his

formula which his formula is take

inflation expectations at some level of

restrictiveness and that's what nominal

rates should be so if inflation

expectations as he told us last month or

three percent and you want rates to be

two percent in terms of where you want

you want real rates to be two percent

well then that means you need nominal

rates to be five percent well that's

where we are now five percent minus

inflation expectations one year out of

about three percent one to three years

now uh then you get to a a restrictive

real rate of two percent and Jerome

Powell in this response to you oh they

need to they're not going to cut rates

for two years in his response he's

talking specifically about two-year

projections and he actually made it

clear in his response that well look as

inflation Falls you're going to have to

adjust rates down to keep rates at a

restrictive level that's equal to what

it has been because if you don't reduce

rates you're actually increasing rates

by not reducing rates that's what he

said however a lot of people were very

very confused by Jerome Powell's

response because he was responding to a

question specifically about uh this uh

you know two-year projection and I think

that really skewed people's

understanding of what he meant with no

cut for two years so

yeah I want to I want to add some good

clarity about that Jerome Powell did not

say they would not cut for two years he

did say they would not cut this year but

that's okay the bond Market's already

priced that in but there's no cuts for

two years it literally defies the very

definition he gave in the response and

the Very definition he gave last month

so no that that that's a fundamental out

of context misunderstanding of what

Jerome Powell suggests take a look at

what Nick T has to say in the Wall

Street Journal of this morning uh he got

a little schooled by j-pal yesterday or

at least that's how social media uh

picked it up when uh Nick T was asking

about the pace versus the level of hikes

and Jerome Powell made it clear that uh

there's there's a big difference versus

pace and the reason they pause is

because now they can focus on staying at

a level for a very long time so we'll go

through what Nick T here together says

however it's worth noting a few things

as we go into Nick T's piece first of

all Bloomberg is running headlines that

the FED is indicating at least two more

rate high likes or that Powell is I

don't think Powell was doing that at all

but the summary of economic projections

was obviously the summary of economic

projections coming in hot at 5.6 the

worth noting very good point that the

summary of economic projections came out

on Friday or was submitted by members on

Friday which is before both CPI and PPI

data despite this though markets are

read with a 71 percent chance of a hike

on July 26th and by July or by September

20th we're looking at a cumulative about

a 77 percent chance of at least one hike

if not two so let's take a listen here

to what uh Nick T says also keep in mind

that Richard Clarita this morning did

indicate that maybe only one more raid

hike uh would uh would be expected and

that two would be a bit aggressive and

so we'll see uh there's a lot of talk

that the FED is actually closer to being

being done then where they uh then where

people might think that they need to go

uh and that would apply maybe one more

rate hike but let's see a Nick T's piece

here so beneficials agree to hold rates

steady after 10 consecutive Heights the

new summary of economic projections

after their two-day meeting suggested

they were leaning towards slowing down

their increases versus stopping them all

together most of them penciled in two

more rate increases this year which

would lift them to a 22-year high they

really needed to hammer home the message

that this was not the end which they did

and this was something that we had all

suspected that is the Fed really

actually thinking about raising rates

two more times or are they just trying

to indicate some messaging to the market

that hey man don't don't think this is a

pause let's let's go a little strong

then and indicate or prove to markets

that this isn't a pause and let's send

them a signal even if we don't believe

it that this is just a uh you know a

temporary skip you know we even had

Jerome Powell will slip up and mention

the word skip once and then uh Retreat

and say oh well I shouldn't call it a

skip oh so have you been talking about

it being a skip anyway it's supposed to

be excitement the FED implied the

decision to maintain Benchmark fed funds

rate uh would be at the level where it

is now would be short-lived after

holding the FED funds rate near zero

following the pandemic the FED is raised

okay we know the history of it yeah we

want to get some more future leaks here

Nikki leaks we don't need a history

lesson here Wednesday's decision not to

raise rates is a continuation of that

process at j-pal common sense to go a

little bit slower yes officials had

signaled growing disagreement in recent

weeks over whether to keep raising rates

some officials became more doubtful at

March because of the banking crisis but

it's too early to see signs of banking

cred the banking crisis that's true

Jerome Powell gave a lot of I don't know

answers yesterday a lot of I don't know

if we're at a restrictive level of rates

I don't know if inflation's coming down

I don't know if the banking crisis has

taken a hold yet a lot of I don't

knowing yesterday again leading some

people to believe that Jerome Powell's

uh aggression potentially yesterday was

maybe uh somewhat disingenuous and

actually misplaced

Powell and some colleagues had hinted at

a potential compromise last month and

which officials would forego a rate rise

in June while leaving open the prospect

of an increase in July a potential

compromise hinted at last month

interesting but recent economic data and

hiring on inflation have been stronger

than many forecasted forecasters

anticipated this is true for hiring I

wouldn't argue this was true for

inflation inflation seems to have come

in softer in the latest reports

it's not clear what the criteria is

they're looking for projections showed

the 12 of the 18 officials think they

will need to raise rates uh up to

potentially 5.5 percent uh yeah that's

true actually it was 16 of them rather

uh projected uh a uh an increase to 5.25

to 5.5 and 12 projected 5.5 to 5.75

gives you a little bit more of a

breakdown on the piece here

another four officials projected they

would need to all go up by only a

quarter point exactly okay there's the

fill in uh Powell has kept his committee

United since inflation surged two years

ago it's true every vote so far has been

unanimous so uh that's the way uh

somehow Jerome Powell is as they say

corralling everyone

I will be harder next time for them to

raise rates than they realize says

Richard Reinhardt a former senior fed

Economist who is now an economist that

derived this in melon uh you know this

is actually something that Jeffrey

gondlog billionaire uh investor also

indicates and he's there he's very

bearish right now he actually thinks

people should be long bonds right now

yeah he's anti the stock market broadly

uh from just based on some of his

commentary but uh his latest commentary

yesterday suggests that the FED is done

uh that a pause is in and uh that that

you shouldn't be confused that this is a

pause and the FED trying to signal

hawkishness while in reality indicating

they're done uh yesterday I did run a

Twitter poll with about uh 3250 votes

51.2 percent of y'all indicated the Fed

was done however the other 48.8 percent

of you indicated the FED had either a 25

or 50 basis point hike left in them with

that vote about split on how much

the data probably will be a little bit

more ambiguous their headline

explanation is that they will know much

more in six weeks but the fact is they

won't know much more in six weeks

chances are they'll be more confused in

six weeks well that's why I think

they'll probably end up pausing through

to uh September the economy has shown

only modest signs of cooling in recent

months the share of workers voluntarily

leaving jobs has returned closer to

pre-pandemic levels suggesting that the

tight labor market has eased a bit but

steady hiring and wage gains could

sustain elevated inflation although In

fairness the FED did just throw in and

Powell did briefly comment on it they

did throw cold water on the idea that

wage gains are certainly linked to

higher inflation this is thanks to a

Federal Reserve piece out of the bank of

San Francisco where the feds indicated

that hey maybe maybe there isn't as

strong of a link between inflation and

wages as we had previously thought it

doesn't look like Nick T is choosing to

talk about that at all housing market

one of the sector's hardest hit by last

year's rate increases has seen some

improvements illustrating how difficult

it has been for the FED to slow the

economy and balance supply and demand

true because there's no housing Supply

so what do we take away from this well I

think what we take away from this is

well that of course Tomorrow there's an

expiration of those programs on building

your wealth all of those I mean look at

all the different programs we have and

they're phenomenal you've got the income

side and the investing side a lot of

people didn't realize by the way we had

the property management and Rental

Renovations course that's a very good

one we've got uh someone with uh over 35

years of property management experience

joins me and that one really exciting

real estate investing stocks obviously

but all of these programs at the income

course is getting a price increase uh

tomorrow at 11 59 PM that's the 16th and

that'll be part of the phase one of four

phases of increases and that's as we're

coming out with a large new lecture set

at the end of these four phases but I

guess my bottom line takeaway of this is

look we expected the FED would have to

talk dirty to us if they paused there

was no way they were going to be able to

pause and talk nice to us because that

would just sustain a market rally and

that's kind of not exactly conducive of

of encouraging inflation down we talked

about that we talked about the wealth

effects beforehand we somewhat saw that

I don't think anybody was expecting the

FED to be this hawkish we were expecting

a hawkish pause but not this hawkish

however when we evaluate that well but

wait a minute the summary of economic

projections was actually submitted

before this week's data it kind of makes

you scratch your head and go

what's the point of the summary of

economic projections if you don't put it

together when you have all the data it's

a little frustrating and maybe that's

why j-pal was actually frustrated

yesterday maybe just maybe he was

frustrated because he realized this data

came in softer than expected yet he had

to present this summary of economic

projections that was uh more frustrating

uh perhaps and unrelated to the latest

data that we've actually received so

we'll see but that's the latest that we

have from the fed and now we're going to

move on over to looking at the European

Central Bank and their rate increase oh

I suppose they could quickly also note

on this we talked about this a little

bit earlier in the Stream I figure I

just show this quickly as well one last

thing is this world interest rate

probability chart right here is still

indicating a bias towards potentially it

pause keeping it a pause in July this

5.25 level not being quite high enough

to really indicate that push through but

that push through does get priced in for

another rain hike in the September and

November meetings and as expected many

economists now uh hunting their

recession expectations that's something

else we've been talking about for a few

weeks now where we've said that Hey look

it's highly likely

economists are going to realize oh crap

Q3 is only two weeks away I guess the

recession won't come in Q3

and sure enough that's exactly what

we've been getting from economists and

new analysts here's for example a piece

here uh U.S economic economics we have

revised our outlook for a delayed

downturn and higher policy rates and

push out our anticipated slowdown in the

US economy by two quarters

now out to uh basically uh the beginning

well you know the end of the year rather

than Q3 and potentially uh q1 uh so

Morgan Stanley let's see what they have

to say

so a slight adjustment and a statement

should not be ignored as expected the

FED held the range of the FED funds

right steady but we think this slight

change in wording from in determining

the extent to which additional firming

may be appropriate to and determining

the extent of which additional firming

may be appropriate what's the difference

there in determining the extent to which

of which

to which additional policy firming may

be appropriate

of which additional firming may be

appropriate wow is the consensus of the

committee uh keeping further policy

moves in question despite a hawkish step

oh this is interesting

uh of additional policy firming to a

traditional firm I I I'm personally I

have a hard time breaking apart this one

I think what they're trying to say is uh

they're

while maintaining a tightening bias in

the statement

is it consensus keeping further policy

moves in question despite more hawkish

I'm not exactly sure how to read this as

expected the Fed

held the range of the FED funds rate

steady while maintaining a tightening

bias in the statement but we think a

slight changing in wording from those

statements

is the consensus on the committee

keeping further moves in question

despite a more hawkish SCP so what

they're saying is they're trying to say

hey that the statement

and the SCP were hawkish so it's a

little H there but that actual little

change was dovish

potentially putting in questions this

just shows you that they have no

freaking idea that's that's really the

answer there in the sap we saw a move up

to 5.6 from 5.3

we vividly recall that upward revision

to inflation projections despite data

coming in line with the fed's March was

most perplexing right I would agree with

that moreover the upward Revision in the

sap was paired with inflation risks that

are still weighted to the upside yeah

you said that like 30 times

in relation to our forecasts we think

this sets up core inflation to fall

faster than the FED currently projects

which should offset the takeaways from a

higher Peak rate in the Dot Plot by the

September meeting we believe core

inflation projections for this year as

well as the level of the fed's funds

rate

fed funds rate what

just gonna cut off like that

oh could get revised downward

interesting that's actually interesting

this is not the Mike Wilson Morgan

Stanley camp this is your your other

Camp inside Morgan Stanley and this is

actually somewhat of a bullish and and

dovish statement if anything

uh Powell attempted to strike a balance

between the fomc statement showed a more

flexible data dependent consensus

consensus

uh nearly all committee participants

expect that it will be appropriate to

raise rates somewhat further by the end

of the year and the July fomc meeting

will be live he also underscored the Dot

Plot shows no Cuts expected until 2024.

I think as anyone can see not a single

person on the committee wrote down a

rate cut nor do I think it's at all

appropriate at the same time there were

more dovish comments emphasizing that

these SCP projections are not a

committee decision or plan the committee

made this decision today only about this

meeting we did not make a decision going

forward it's true some more distancing

there

pause sets a higher Bar for a follow-up

hike there's only one more jobs than CPI

data print between June and July not

enough data to paint a different picture

of the economy

we preliminarily expect true and

payrolls to be over 200k but paired with

moderation and core CPI

uh let's see falling for a third

straight month Powell emphasized the

need to see more data we think that puts

them more on Pace for a September hike

see I agree with that I would lean

towards September as well just to get

enough data

buying time basically right

yeah all right so that's Morgan

Stanley's take uh in the latest Outlook

we continue to see a soft Landing for

the economy and wage is slowly easing as

well as job gains consistent with

economic Outlook we expect the FED to

hold the peak rate at 5.1 for an

extended period before making the first

25 basis point cut in March of 2024.

okay then let's take a moment and jump

on over to what JPM says and then we'll

have seen Morgan Stanley Goldman and JPM

they prepare jpms for us

here this is the one they're kicking the

door in again

oh these headlines

all right

Here Comes JPM

here's the JPM report

JPM the outcome of today's fomc meeting

was hawkish and peculiar while the

committee unanimously voted to leave

rates unchanged a large majority of the

fomc participants anticipated at least

two more weight hikes this year and only

two see the current setting as

appropriate so why not hike today Powell

said it was a continuation of slowing

down the heights he tried not to tip his

hand on July but given how many on his

committee are inclined to hike multiple

times this year it may be hard

to get them to pause for more than one

meeting as such We Now look for one more

hike in July

we continue to believe the lagged

effects of freight hikes will weigh

further on growth and don't believe the

median 2 forecasts will be needed so

nobody's really agreeing that the two

forecasts is the right way to go

since the decision to hold rates today

was well signaled the real news was the

dots particularly the dots suggesting

the potential for going up to 5.625

given these projections a recurring

issue in the press conference was

pausing when 12 of 18 participants see

at least two more rate hikes in the last

half of the year and four indicating one

more

one can speculate that a deal was struck

between Hawks and doves to pause but

strongly signal a future hike see I I

agree with that in fact that's what Nick

T suggested as well that there was some

kind of deal that we're going to pause

in June and uh and then they they

purposefully went hot to try to paper

signal another hike

that's possible

normally the post-medic statement isn't

a detail but edits to today's statement

were minor in reflect policy on hold

rather than tightening

um

trust forecast of disinflation but

rather need to see it happen right not

trusting the forecast right he did

Paladin mention the forecast wrong

before yeah that's JPM

okay so jpmc's July Morgan Stanley

September uh Goldman seems to agree as

well with with July and uh really seems

like what you got is uh

most people projecting at least one more

hike

I personally don't buy it because of the

Soft Data but I suppose we'll see what

happens over the next few days in data

and we'll uh or a few weeks here and

we'll see what happens uh next month but

boy you know I think a lot of people

were looking for clarity from this last

meeting

we did not get clarity from this last

meeting we got more confusion