The Fed JUST Responded | Inflation Shocker! — Transcript

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1. 0:00holy moly how the tables have turned the
2. 0:03Federal Reserve has responded to this
3. 0:05morning's CPI data we've got a Nikki
4. 0:08leaks update we've got so much to break
5. 0:10down in terms of Market expectations
6. 0:11we've also got a temper Euphoria because
7. 0:14we're still uh you know we still got a
8. 0:16December report coming up okay we'll
9. 0:18talk about that but folks wow CPI comes
10. 0:22in cold let's talk about the reactions
11. 0:25to that uh in case you haven't yet seen
12. 0:27my my reaction especially when my
13. 0:29prediction was nailed right on predicted
14. 0:32month over month of 0.4 versus
15. 0:33expectations of 0.6 that's what we got
16. 0:35year over year predicted 7.7 Market was
17. 0:39expecting 7.9 we got 7.7 that was
18. 0:41awesome core month over month coming in
19. 0:44at uh 0.3 below expectations and Corey
20. 0:47over here 6.3 below expectations so
21. 0:49great news now what do we know well here
22. 0:53are some things that we know first we
23. 0:55know that shelter inflation made up over
24. 0:59half of the entire CPI move that's
25. 1:03insane half of the entire CPI increase
26. 1:06was because of shelter inflation which
27. 1:09we know that rents have already peaked
28. 1:10and they're going down but CPI inflation
29. 1:12is still trying to catch up to it
30. 1:13because of the way they measure it with
31. 1:15owner's equivalent rent it's so stupid
32. 1:17but the point is it is making up half of
33. 1:20the inflation we're seeing now and
34. 1:22markets are saying well you've got a few
35. 1:24different ideas but markets are overall
36. 1:26saying that we expect that to actually
37. 1:27really meaningfully start rotating down
38. 1:29and really drag inflation down very
39. 1:31quickly sometime in 2023 some Market
40. 1:35experts say quarter one JP Morgan says
41. 1:38quarter three but either way the
42. 1:40consensus is a rental inflation is
43. 1:42expected to Peak now if you actually
44. 1:44remove rental inflation from core CPI
45. 1:49this is not saying we're not having
46. 1:51empathy for people who have to pay
47. 1:52higher rents it's just saying if you
48. 1:54want to isolate where the inflation is
49. 1:56if you remove and I tweeted this if you
50. 1:59remove shelter or inflation from core
51. 2:02you're at negative one percent the first
52. 2:06negative read since May of 2020 that's
53. 2:09insane okay that's like the bottom of
54. 2:12the the stock market uh well bottom was
55. 2:14like March April but near bottoms uh
56. 2:17during the covet pandemic make sure you
57. 2:18follow me on Twitter as well at realme
58. 2:19Kevin this is really good so not only
59. 2:22are you now seeing shelter inflation neg
60. 2:25or core inflation negative when you take
61. 2:27out shelter inflation but you're seeing
62. 2:30the FED already respond to the CP I
63. 2:33missed this morning in a great way so
64. 2:36fat Harker had talking or you know some
65. 2:38chatting to do this morning and he
66. 2:40immediately picked up on the CPI report
67. 2:42and now suggests that it could be
68. 2:45appropriate for the Federal Reserve to
69. 2:48pause at a Fed funds rate of four and a
70. 2:51half percent this is a huge shift just
71. 2:55last week after Jay Powell's talk we
72. 2:57were thinking potentially marketing
73. 3:00needed to price in a Fed pause at five
74. 3:02and a quarter five and a half and that
75. 3:05sort of expectation started leading
76. 3:07markets to say well what if it goes to
77. 3:09six percent and that's why we just saw
78. 3:11this utter decay in the stock market and
79. 3:13it was very very painful now markets are
80. 3:17pricing in a Fed pause at
81. 3:204.865 which is actually slightly above
82. 3:23where fed Hawker is and anytime that
83. 3:26terminal rate comes down stocks tend to
84. 3:29Rally anytime that terminal rate goes up
85. 3:31stocks tend to fall so if Hawkers at
86. 3:35four and a half and he's right and the
87. 3:37terminal rate right now is deemed by the
88. 3:39market to be 4.865 we see that come down
89. 3:42you can see continued pushing up of the
90. 3:44stock market and it continued pushing
91. 3:46down of the US dollar remember the U.S
92. 3:49dollar does really well when bonds in
93. 3:52America are yielding more money because
94. 3:54more international buyers want to come
95. 3:56to America for the Guaranteed Rate that
96. 3:59treasuries offer for you if you hold to
97. 4:01maturity there the only thing you could
98. 4:03call a risk-free investment and in order
99. 4:05to buy treasury bonds you have to buy
100. 4:07the dollar so the Dollar's gotten really
101. 4:09really really strong but as soon as
102. 4:11inflation Peaks we expect it to collapse
103. 4:13and the collapse of the dollar has
104. 4:15already started if you wanted to invest
105. 4:18uh in the dollar before we get into that
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152. 5:54invest uh in the dollar uh falling the
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155. 6:04be basically shorting the dollar and you
156. 6:07can see uh it has not performed very
157. 6:09very well but recently and now today
158. 6:11it's starting to move up here uh and
159. 6:13recently it's been trending up in
160. 6:14anticipation of the CPR report if you
161. 6:16think the dollar is going to continue
162. 6:17doing well you could always get you up
163. 6:19uh where you could see that recently the
164. 6:21dollar has actually been falling a
165. 6:23little bit so a couple interesting ETFs
166. 6:25that you could pay attention to
167. 6:26so uh if we look at
168. 6:29some things to well first of all you
169. 6:32know what what does this mean for the
170. 6:34fed and then if we look at some things
171. 6:35that we can do well what does this mean
172. 6:37for the FED it really means that if this
173. 6:40CPI report is replicated on December
174. 6:4313th which is when we get the next CPI
175. 6:45read which would be great right
176. 6:48then and when I say replicate I mean
177. 6:50it's also either soft or it doesn't
178. 6:53Spike again it could Spike and if it
179. 6:55spikes it just ruins all the optimism
180. 6:57that we're on a sustained downtrend but
181. 6:59at 5 30 a.m December 13th so in a month
182. 7:02and three days we'll be getting the CPI
183. 7:04read for December and that's actually
184. 7:06before the Federal Reserve meeting
185. 7:09which is really good because what
186. 7:10matters more right now killing jobs or
187. 7:13killing inflation and the answer is
188. 7:15killing inflation like that the FED does
189. 7:17not want to have to slow down the job
190. 7:19market if people can make more money by
191. 7:22switching jobs and inflation is low by
192. 7:25all means have at it but you can't have
193. 7:27a strong job market and high inflation
194. 7:29because you potentially lead to a wage
195. 7:31price spiral and then you really have to
196. 7:32rug pull the economy like Paul volcker
197. 7:35did and push us into a dirty deep
198. 7:36depression
199. 7:38so could this report be the start of the
200. 7:41FED pivot now that's different from fed
201. 7:44U-turn fed U-turn is when they're like
202. 7:46we're raising rates and now we're
203. 7:48dropping rates that's a Fed U-turn right
204. 7:50and markets are anticipating and trying
205. 7:52to price in that U-turn a Fed pivot is
206. 7:56like a 45 degree change right where
207. 7:58they're like all right we were going for
208. 8:0075 basis points in the next meeting and
209. 8:02markets were actually pricing in about a
210. 8:0450 chance of a 75 basis point hike 50
211. 8:06chance of a 50 uh 50 basis point hike at
212. 8:09the next meeting they pivot and go okay
213. 8:10we're going 50
214. 8:12that's a pivot right a reduction in how
215. 8:14much they're raising rates from either a
216. 8:16higher level like 75 basis points to 50
217. 8:18or from 50 to say zero that's a pivot
218. 8:21different from a U-turn those things are
219. 8:23very very important to know his markets
220. 8:25usually really rally Off full u-turns
221. 8:28although we are getting some pricing in
222. 8:30of anticipation of that eventual U-turn
223. 8:32uh okay so now what are the expectations
224. 8:36for a 50 basis point hike now they were
225. 8:3850 what are they now now they're 82
226. 8:40percent and that's partially because
227. 8:42Nikki leaks came out and tweeted
228. 8:44basically that this sets us up for 50
229. 8:47basis points in the next meeting
230. 8:49remember Nikki leaks is the guy at the
231. 8:50Wall Street Journal who always seems to
232. 8:52get text messages from the fed and then
233. 8:54he breaks the story so he's the guy
234. 8:56who's like yeah okay we're probably
235. 8:57going 50 and so markets are quickly
236. 8:59adjusting to that which is great now it
237. 9:01is interesting to note
238. 9:03uh that uh you do have gold up slightly
239. 9:06and you have some calls for or obviously
240. 9:10treasury yields are falling on this
241. 9:11that's not a surprise but you've got
242. 9:13some folks saying that if you believe
243. 9:15we're in a position of peak inflation uh
244. 9:19that's now behind us we're just off peak
245. 9:21inflation we're not going to get a new
246. 9:23Peak and we're going to continue to
247. 9:25trending down what are things that you
248. 9:26should do well here's some Investments
249. 9:28to consider one you could invest in
250. 9:30bonds you could buy bonds and as long as
251. 9:33inflation continues to Trend down you
252. 9:35would likely expect that bonds would go
253. 9:38up in value now I want to be clear and
254. 9:41the yields would go down but you would
255. 9:42hold your yield to maturity based on
256. 9:44what you bought if you hold it to
257. 9:45maturity but you could also trade them
258. 9:47uh so I want to be clear though while
259. 9:51yes I am a financial advisor and yes I
260. 9:53have courses of building your wealth
261. 9:55whether it's stocks zero to millionaire
262. 9:57real estate investing learn everything I
263. 9:59know about real estate I think you know
264. 10:00I know a lot about real estate property
265. 10:02management if you want to grow your
266. 10:04business income and be part of me with
267. 10:06with boot camps and and actually really
268. 10:07learn uh join the elite Hustlers course
269. 10:10that's linked down below right you can
270. 10:11get 60 off now
271. 10:13uh while I am a financial advisor and
272. 10:14while I do have uh products uh related
273. 10:17to education I want to be clear that
274. 10:18what I'm suggesting here is not
275. 10:20Financial advice I can't give you
276. 10:21personalized Financial advice I have no
277. 10:23idea what your situation is so bonds you
278. 10:25would expect to do well that is owning
279. 10:27them you would expect to do well you'd
280. 10:29expect the value of those to go up if
281. 10:30inflation has peaked you would expect
282. 10:32tax tech stocks and cyclicals like Arc
283. 10:35or Tesla or whatever to actually do very
284. 10:37well if inflation has peaked you would
285. 10:40also want to probably cover shorts you
286. 10:43want to still be careful in my opinion
287. 10:44and temper expectations for margin right
288. 10:47I don't think you want to go all in Yolo
289. 10:49margin right now uh if we are at a
290. 10:52bottom which is a dangerous word to say
291. 10:54then going in margin makes sense right
292. 10:56now right but if we get a dirty December
293. 10:5913th report or indicators are that we're
294. 11:02going to potentially get a dirty
295. 11:03December CBI report you can get screwed
296. 11:05you can get Margin Call terrible
297. 11:07situation be in so covering shorts good
298. 11:10idea uh with the exception of shorting
299. 11:12the dollar shorting the dollar could
300. 11:14actually be a very good strategy if
301. 11:16inflation has peaked uh now be careful
302. 11:20though because if you're going all in
303. 11:22Tech all in bonds and all in shorting
304. 11:25the dollar what do you have well you
305. 11:27have a recipe for disaster if inflation
306. 11:30ends up going up again because all of
307. 11:33those will underperform if inflation
308. 11:34goes up right so you really have no
309. 11:37hedging in what I've just described to
310. 11:39you uh now feder Hawker also came out
311. 11:42and mentioned that monetary policy lags
312. 11:45by up to a year now Jerome Powell
313. 11:47doesn't really believe that he seems to
314. 11:49think that uh you know that the lags
315. 11:51could be closer to six months or maybe
316. 11:53even three months but uh it's it's very
317. 11:55interesting that uh you've got this uh
318. 11:59this Hawker coming out suggesting a
319. 12:02one-year lag because that could really
320. 12:04mean yeah we do need to pause now
321. 12:06because we're gonna we're gonna have to
322. 12:08start are turning the money printer on
323. 12:10maybe in October of next year or
324. 12:12November of next year because we've over
325. 12:14tightened it'll be really interesting
326. 12:16could set up for a really nice bull
327. 12:18decade is that being too bullish I don't
328. 12:21know but get your 60 off I'm so I'm
329. 12:23still like shocked and nailed those
330. 12:25inflation predictions so freaking cool
331. 12:27check that out via the links down below
332. 12:29folks thank you so much for watching
333. 12:30we'll see in the next one goodbye