The Fed Meeting was NOT What Bulls Wanted [Jackson Hole Jerome Powell]

we got the 12 months of inflation

declines we got the higher only if

inflation uh goes higher this was a lot

of the could talk that we got from j-pal

we got the restricted for six months we

got expectations are anchored we got

positive real rates we got uh jobs

getting into balance but I had that

written as imbalance uh I uh as supplies

getting into balance we did not hear

anything about banking no green span no

volcker uh didn't warn about loosening

prematurely oh we got that that's great

that's actually great let me let me

double check that uh because we have the

transcript here uh and uh I just want to

see the word premature really quickly

because uh maybe did he mention that

because if he didn't mention that he

didn't mention that oh that's really

good why not advertise these things that

you told us here I feel like nobody else

knows about this we'll try a little

advertising and see how it goes

congratulations since man you have done

so much people love you people look up

to you Kevin financial analyst and

YouTuber meet Kevin always great to get

your take

the word prematurely was not used that's

a big deal I actually like that a lot

okay good so let's add that to the bingo

card that he didn't mention uh warning

against prematurely loosening uh he did

not invoke Paul volcker didn't invoke

Greenspan didn't invoke fate didn't tell

us about unemployment potentially being

uh you know uh like uh you know what

what level would be unacceptable to them

we didn't get that uh so there are some

things we didn't really get here uh you

know this I would probably give us this

too early to call Peak but maybe they're

very dependent on the data here so this

is kind of my bingo card you know you

can compare it to what you did but uh

let me let me give sort of an overall

view here uh I would say this is this

was a very neutral Powell uh he didn't

really

you know he didn't he certainly didn't

Pummel us like last year right last year

was a complete pummeling because he's

like we're not even restrictive yet we

got a long freaking way to go this time

he's telling us look we're we're getting

there but things could break uh and

that's really important this idea that

things could break in fact he

specifically emphasized the word could

uh multiple times actually uh so uh that

was sort of his way of conditioning I

think Mark it's to say look we have no

idea when he emphasized could a couple

of times take a look at where those are

and I'll show you where he says we have

no idea we expect this labor market

rebalancing to continue evidence that

this tightness in the labor market is no

longer easing could call for a monetary

response we don't have that evidence

that it's not easing but it could happen

so that code was a really important one

here was another one additional evidence

of persistently above Trend growth could

put further progress on inflation risk

and could warrant further tightening but

not necessarily look at the Double

conditional here he's basically saying

look just because we have above Trend

growth only matters if it affects

inflation actually if you go back to the

bingo card on the bingo card I think we

actually had exactly that let me see

where that was uh there there there it's

that one oh hold on it's black that one

the bottom left corner demand above

Trend may be acceptable as long as

inflation doesn't you know on anchor

right so I'm actually going to put a

check in that he didn't exactly say that

but that double condition in my opinion

is exactly what he meant so as a Fed

Watcher that that's a check mark for me

I'm gonna go back to the the sheet now

let's keep looking at what he said with

could so that double conditional right

there that's saying we might be okay

with above Trend growth look if the

economy is booming and inflation's down

we're not here to say that can't happen

uh equivalent rents uh okay well that

talks about that wasn't an important

could that's right and highlight it okay

talked about that that's the labor

market rebalancing okay here doing too

little could allow inflation uh to

become entrenched right this this

entrenching this has to do with

expectations and ultimately right could

require monetary policy to be higher

basically uh okay fine so a lot of

conditionals here right but notice this

is a very different tone this isn't a

j-pal that's telling us we we will go

higher

he's saying look if crap comes in bad we

could do more in fact uh we did just get

the University of Michigan sentiment

data uh we got sentiment that actually

declined a little bit to 69.5 the

expectation was 71.2 a one-year

inflation expectations actually ticked

up a bit 3.3 to 3.5 not great uh and the

five to ten year ticked up a tiny bit

from two nine to uh 3.0 both on

expectations and what we were before the

10-year treasury hasn't basically moved

at all it's basically flat uh markets

are still you know they're still

positive uh which is nice but a little

uncertain because people are trying to

digest this fed talk here and this was

this was not Victory we did not expect a

victory speech uh we expected this sort

of conditional optimism and that's what

we got now I want to show you this one

line that he says because it's pretty

remarkable so buckle up for this one

line that he says uh quick shout out

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but okay listen to this line right here

that we got from Jay Powell you ready

for this

conclusion I loved this line okay this

is hilarious

as is often the case we are navigating

by the stars under Cloudy Skies okay

that's impossible you can't navigate by

the Stars when you can't see the stars

he's literally saying look I was on the

schedule to give this speech I have

absolutely no idea what the he double

hockey sticks is gonna happen

things right now seem like they're okay

but there are some risks I thought this

was interesting it actually started

bearish he started bearish and I wrote

WTF on it when he said this uh because

there was this one part that was bearish

remember my goal is not to just feed you

one narrative I always want to give you

the good and the bad I really try my

best with that whether it's politics or

whatever look at this right here I

literally wrote what the f

so he's like hey on a 12-month basis

core pce inflation peaked and has

gradually declined uh you know basically

all the way through July uh and uh and

then he says lower core inflation

readings in June and July were welcome

but that's only two months of good data

and I'm like bro what are you smoking

it's been like a year of good data so I

I thought this was this was a way of him

kind of like trying to inject that

balance right I kind of think he had to

put some bad in with some good so that

it's not all good because he's trying to

Signal a uh it could go either way and

we have no idea that's basically what he

said here but again this is a world of a

difference from last year remember what

we heard last year last year we

literally heard him say

the historical record warns against

premature loosening he did not say that

we have to force demand and Supply into

balance didn't say that this time he

actually said hey if demand essentially

is continuing to go up uh we could raise

rates if inflation on anchors in other

words if inflation doesn't on anchor it

could be okay that demand goes up that's

impressive uh the labor market is

clearly strong devolved it devolved into

well the labor market is definitely

coming into more balance but there's

still some work to do

and that could change but it's trending

in the right direction

uh

last year he said we need to be

restrictive for some time this year he's

like we've been restricted for some time

uh uh well anchored inflation

expectations of course that's almost a

default check mark uh no no volcker

mentions this time

and uh and he didn't there was one thing

he mentioned last year which was

rational inattention so last year the

talk rational oopsies I'm trying to

those are my notes hold on uh what did I

do wrong here and that button okay there

we go okay uh what was I say okay

rational inattention is basically uh

inflation is uh is if inflation is

stable people don't care about inflation

like businesses and people don't plan

for inflation when inflation is stable

so they're not really worried about it

when inflation is unstable that's when

people are freaked out by inflation and

then they start pricing in more

inflation and they're worried about more

inflation so a bottom line out of all of

this to me bottom line out of the whole

kicking caboodle here is this was a

cautious fed he does not want to create

a stock market rally but he's not trying

to create a stock market crash last year

he's like

bend over

yeah so this is nowhere close to Victory

it is a neutral towel uh and I want to

see how the rate Market

uh is pricing in expectations we were

like at a 10 chance of a hike and the

next one

uh and let's see where we sit now

so we are sitting at a 20 chance of a

hike but that's been stable for

basically this week last week we're at

10 if we look at the five-year forward

break even it's again trending down uh

it's sitting at a 5.8 or sorry 2.35 the

uh five-year Break Even is sitting at

2.26

and

yeah

that's looking good so I'd call it

stable and as far as what Wall Street is

saying

uh the upcoming meetings we're in a

position to proceed carefully this is

just basically a way saying hey like we

might end up

uh pausing uh We're not gonna look for

our star we really have no idea where

that is so we're gonna look for the

incoming data

uh no fireworks at Jackson Hole expected

by the options market and that's what we

got no fireworks we got a neutral fed

fed uh didn't Splash any cold water or

hot water on anyone very neutral just

reading what what the suits were

thinking yeah I mean roughly the same

thing that we summarized here so uh I

would say this is kind of a no news is

good news uh approach I'm satisfied with

this no news is good news is a way of

saying hey we didn't get reamed by him

today so this is where you kind of go

oh okay Dodge the potential bullet

that's it all right thank you so much

for being here check out those courses

on building your wealth linked down

below oh wait wait is there a new Nick T

piece hold on hold on there's a Nick T

let's see what Nick T has to say really

quick uh I imagine it's going to be

relatively similar but let's see what he

has

uh J Powell's word of the day carefully

it was a risk management speech okay

well that's the same thing I said are

you watching my video okay it's not the

same thing I said I know I know as

expected Powell rejects the idea that

inflation Target would change well duh

that's not that's I mean nobody that's

nonsense that doesn't matter risk

management speech uh fad chair notes

economy hasn't cooled as expected that's

demand coming down right uh and says

signs of strength could warrant more

action right

could not will

very important Nick T literally put the

word could in the byline of his article

because we agree that was very very

important

uh let's see here yeah Nick T also

picked up on the two months of good data

or only the beginning I thought that was

weird that was the what the f that I

wrote down right so we picked up on the

same thing pal echoed some of the themes

in a more nuanced speech on Friday

explicitly rejected the idea about

changing two percent that's not a big

deal we don't know what the neutral rate

is that's not a big deal uh

Powell's speech Illustrated how he's

trying to thread the needle between

slowing hiring investment and spending

to bring inflation down without

providing so much restraint that it

would needlessly severely uh damage the

economy yep

call whoever said that in in the video

or in the chat here so I appreciate you

okay awesome again uh cautious

cautious optimism that's what I call it

alright folks appreciate you being here

thank you so much this is the first time

I've done a Fed meeting on Tick Tock uh

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twitch and YouTube

all right folks we'll see you goodbye