Thoughts on Powell’s Semiannual Monetary Policy Report to the Congress

Hey everyone and thanks for jumping back Into the macroverse today I'm going to Provide my thoughts on the most recent Monetary policy report to the Congress By Jerome Powell today he spoke in front Of this U.S Senate committee on banking Housing and Urban Affairs and then Tomorrow he'll be speaking in front of The U.S House Financial Services Committee if you guys like the content Make sure you subscribe to the channel Give the video a thumbs up and check out Into the cryptiverse premium at into the again we do have several Different tiers available including a Free one where we put out a Weekly Newsletter make sure you sign up links In the description below Let's go ahead and jump in now I know The discussions about macro you know Macro Concepts and whatnot are not Necessarily the most riveting though I Do think they're important for sort of Informing us of of you know good ways to Potentially navigate financial markets So I do think a lot of important things Were said today by Jerome Powell sort of Concessions were made in terms of some Of the recent data that we've seen come In and one of the things that it's been Hanging over you know expectations at The next fomc are whether Powell would Look towards the most recent revisions And inflation data and and the hot jobs

Report as reason to be more hawkish than Perhaps otherwise expected so we want to Talk about a little bit about that Because he did he did comment on that in A in a potentially somewhat indirect way One of the things that that Powell has Said uh today in fact and he said this In his in his opening testimony was that They're essentially looking at a Reversal of of what they thought of what They thought they were seeing so they Thought at the last death of MC that They were seeing a sustained path of Disinflation where inflation was Continuing to slowly come down now There's a difference between Disinflation and deflation remember Disinflation does not mean prices are Not going up prices are still going up It just means they're not going up as Quickly as before deflation is where Prices actually go down so at the last Fomc there was at least some evidence of Of disinflation and and this is Something that we've spoken about many Times is that you know you can see uh These elements of of disinflation in Various sectors but in one of the Sectors that Powell cares the most about And he even mentioned it in his speech Today or in his kind today is he says There's little sign of disinflation thus Far in the category of core services Ex-housing and he's pointed to this many

Times and we can see that that sector Has remained a lot stickier than a lot Of the other sectors and even goes on to Say that this is a category that Accounts for more than half of core Consumer expenditures so He is very aware of of sort of the the Risk here that inflation uh is putting On on you know just regular people Throughout the country and he even sort Of you know chimed back at At some comment sort of calling him out On on trying to raise the unemployment Rate and his response is well what do we Do do we just not do our job and allow Inflation to just remain at five to six Percent for years to come or do we do Our job and and try to get inflation Back down and I think this is a tricky Thing because you know to see people Lose their jobs is is not something that You know people generally want to see But we also don't really want to see Inflation running at five to six percent For years to come because this is also Going to have extremely negative Consequences for I mean not just Financial markets but just for people That are trying to live their lives I Mean go to a grocery store today and It's hard to get out of there without Spending maybe you know twice is what She might have spent just a few years Ago so it inflation High inflation is

Certainly impacting the overall economy And and I I know that pal is is very Much aware of this Um he did say that the social costs of Failure are very very high in terms of Dealing within you know in terms of Um inflation he says so if inflation Were to continue at some point that Would become the psychology businesses Would come to expect High inflation and That would make it even more Self-perpetuating that would mean an up And down economy it would mean something That looks more like we've seen during Periods of high inflation Capital Allocation is difficult in a world like That what we want to do is restore price Stability firmly back up two percent so We can have a strong labor market for a Sustained period like we had before now There's been a lot of people that have Sort of discussed that the power that That Powell and the Federal Reserve are Going to shift their goal of two percent And despite this view that I've seen Expressed many many times over the last Year year and a half this is just simply Not been the case they've sort of Doubled down on it's it's the goal is Two percent and to see a sustained path Back down to two percent now there's Been a recent repricing in expectations For the FED funds rate and there's a lot Of different reasons for that of course

Powell was fairly hawkish today But one of the things that he said that I think is um that is is is is Worthwhile to to Really hone in on here Is he says and he was referencing his His opening testimony because as I Pointed out in my testimony we are Looking at a reversal of what we thought We were seeing to some extent a partial Reversal well what is he talking about And we we talked about this before right There there there's this left tail risk For financial markets of a temporary Re-acceleration of inflation right the Two main risks I think are the Re-acceleration of inflation and the Deterioration of the US economy that Doesn't mean they're the only two risks Right there's also the geopolitical risk As well and other risks but the the two Main ones that we were sort of thinking About over the last several months uh Were the re-acceleration of inflation And eventually the deterioration of the Overall economy of course the Geopolitical risk is going to always be There but you know that's always there Right whether you know no matter what's Really going on So that's all you know something to Consider of course but So he says this right that they're They're seeing a reversal of what they Thought they were they were seeing and

And actually take a closer look at this If you were to go look at at um let's go Look at the pce price index I want to Take a a look at this if you look at say Like the monthly change you can see that You know it hasn't really gone in the Direction that they were hoping it was Going to go right if you were to go take A look at at the pce price index Inflation year over year and look at the Monthly change on this you can see it's Gone back above zero meaning there's at Least some element of re-acceleration There and the question is as well is This temporary or is it going to be Sustained take a look at at core pce Price index inflation and look at the Monthly change on this again it was it Was negative now it has gone back to Being positive meaning it's there's some Element of re-acceleration and the Question is is it going to be a Sustained level of re-acceleration of Inflation or is it just going to be for Lack of a better word transitory now my Guess is that you know while they're While there there is some element here Of the re-acceleration of inflation Which is something we talked about for For months on end Um I do think there there would be Certainly an element of it being Transitory and one of the reasons for That is because I think the FED will

Will likely do what needs to be done to To continue to to put pressure on on the Job mark on the jobs market and on in General in the US economy so when you Look at this at least temporary Re-acceleration of inflation you couple That with what Powell is saying that They are looking at a reversal of what They thought they were seeing how can You not at least assume that they're now Considering a 50 basis point rate hike In March right and so let's not take my Word for it right or let's not go based On what Ben thinks but let's so what is The market thing does the market think That there's a chance the FED is going To go with a 50 basis point rate hike And the answer is yes as of right now as Of March 7th anyways Um maybe you're watching this video on March 8th but as of March 7th the Likelihood for a 50 basis point rate Hike in March has now gone to 67 and a Half percent so just a few days ago we Were looking at this as two-thirds and One-third for 25 basis point rate high Being two-thirds chance now it's flipped Now the odds of a 25 basis point rate Hike according to the market is only 32 And a half percent or about a one-third Chance so this is a complete repricing Of expectations at the March meeting If you go out to May if if we were to See a 50 basis point rate hike in March

Which right now is the expectation by The market a lot A lot's going to happen Between now and then we do have another Jobs report coming out we have another Inflation report coming out this is Subject to change right I know you're on The edge of your seat but if there's a 50 basis point rate hike in March to get Us to five and a quarter and you go look At what happens in May there's actually A chance there's another 50 basis point Right hiked then to get us to five and Three quarters and then it's like well You know if if after two or three Meetings from now we're at five and Three quarters let's say we're at five And three quarters by June potentially You're you're already knocking on the Door of six percent you know which again This is this was not even seen as a as a Strong likelihood not that long ago Right And this is why last year you know I was I was very hawkish myself on the FED Funds on on you know where the Fed was Going because you know it just seems Like inflation is going to be stickier Than they than a lot of people think It's going to be and you know the idea That we can't go above certain levels Just because it hasn't happened in the Last 10 years well sort of the responses Will wake up right inflation hasn't been This high in 40 years so we shouldn't

Look at what has happened in the last 10 Years to understand uh where they you Know where the FED should go right we Should look at it in the context of Where inflation was previously at levels Similar to this and during those times So the blue line is inflation year over Year the orange line is the is the uh is The effective interest rate during those Times interest rates went a lot higher Than you know than than maybe you would Have thought going into this based on The last decade of monetary policy so I Think it's worthwhile to consider when You're you know when you're navigating The macroverse not to just look at what Happened over the last 10 years but to Go find conditions that are at least Somewhat similar again we're not saying That the 70s are the same as now we're Not saying that the 40s are the same as Now but the similarities in terms of Being high inflation we saw the reaction Function by the Federal Reserve back Then and to assume it should be much Different today is you know could you Know could could work out not so well so When you look at at interest rates Compared to inflation in the past you Can see that interest rates did go a lot Higher and sort of the baseline or where They were previously This is of course is the the main risk That we've talked about is the is sort

Of this re-acceleration of inflation and What will the Federal Reserve do now As I mentioned there's a lot more data To come out between now and the next Fomc okay a lot more and so this can Change quickly It could go even more in the 50 basis Point direction right Could flip back to 25 basis points the Truth is I I don't know but what we're Talking about here is what is the risk Right what is the risk on the market and The risk is that the market is is sort Of thinking that inflation is just going To go back down in a linear fashion back To two percent but there's not really a Lot of evidence that this is the case There's actually a couple of interesting Quotes and and this is one of the Senators who said this to Powell If history is Right unless you get some Help in order and he's referring to Getting some help from say like other You know other Um people in government that can maybe Change fiscal spending that sort of Stuff so he says if history is Right Unless you get some help in order to get Inflation down from 6.4 percent to 4.4 Percent the unemployment rate is going To have to rise to seven percent based On history this is what he said and then Pavel said that is what the record would Say and so this is one of the things

We've spoken about before is that how do You get inflation down in a sustained Way without having some effect on the Labor market now one of the biggest Debates I think that that that Economists has had over have had over The last year and a half as are we in a Recession or not and one of the main Things that I I think people point to When they say when they when they argue That we're in a recession is they looked They would look at the quarterly change In Real GDP back in early 2022 and say Hey we got two consecutive quarters of Negative GDP therefore we're in a Recession Be that as it may even though we had two Consecutive quarters of negative GDP We've gone back up right and in fact Real GDP is is putting in new highs so You can't even point to two consecutive Quarters of negative GDP anymore as a Reason that we're in a recession right You can't look at that anymore But another way to look at this is to Just simply go look at the unemployment Rate and you overlay that with Recessions these gray shaded regions and Again when the unemployment rate starts To go up that's where you see your your Recession right that's where you Normally see it Furthermore during periods of high Inflation let's say you look at headline

Inflation year over year It normally takes a recession to get Inflation to actually come back down in A sustained way if you zoom in over here Right you can see we had a recession Here at the top we also started to come Back down and then inflation started to Re-accelerate and then we got a Recession and then that brought it down In a sustained way right it was coming Down and then that happened now you Might say well in a lot of these cases You'll see and you'll see a recession Near the peak of inflation right near The peak here and again near the peak Right at the Peak at the peak a lot of These are right at the peak coming out Of the peak so why this time are we not Seeing that again part of the reason for That I think is because the FED is so Far behind curve on on where they should Be again take a closer look at this Indicator the U.S inflation versus Interest rates Normally interest rates are are trying To stay above inflation right look at The Orange Line compared to the Blue Line But now look at where we are so you Could argue that the reason that we Haven't really seen a recession yet is Because Monetary policy has just been too loose For too long and had the Fed

Tracked the you know track the the Effective interest rate with inflation Or try to keep Pace with it the effects Of monetary of that monetary policy when It should have been implemented back in Say you know early 2021 Would already be would be felt today and And then those effects from those Interest rate hikes back in 2021 would Of course be felt you know by this point In 2023 and you likely would be looking At a recession but the problem is that It can take what like three to four Quarters for of the the effects of of Interest rate hikes to fully be felt now That's not entirely true I mean if you Look out at mortgage rates right we know That mortgage rates have been going up It's not like you had to wait a year to See that but in terms of how it affects Small businesses in terms of how it Affects the economy in general Um there are a lot of elements to say Look if people got loans at at lower Rates right it doesn't mean that it's You know that just because you raise Rates doesn't mean it's going to Necessarily affect their bottom line not Until you know they have to get out new Loans right think about one of the Reasons the housing market hasn't hasn't Come down quickly you know we've we see Low demand we also have low Supply what Do you why do you think we have low

Supply So many people locked in mortgages you Know at two to three percent that they Would be somewhat remiss to to sell Their home and have to get a higher Mortgage rate so right now yes it's true That there's very little demand because 30-year fixed mortgage rates are at like What seven percent now and could easily Go higher but there's also not a lot of Supply either and again it's because People don't really want to to to get a New mortgage rate because they know that They probably can't afford nearly the Same type of house as they could uh when They when they locked in their mortgage Rate now you could say well prices have Come down yeah prices have come down Some but not nearly enough to to offset How much more they have to pay an Interest because of how much higher the Mortgage you know how much higher Mortgage rates are now so I I think There's some element of this argument Around are we in a recession are we not Normally the FED wouldn't be so behind So far behind the curb right normally They would not we wouldn't be in this Predicament right they would have Already raised interest rates a year Earlier but because they waited so long Inflation has you know has persisted We've seen at least the temporary Re-acceleration of inflation

Um and and what ultimately is happening You're seeing the markets start to Reprice what the terminal rate is now Again I mean looking as I make this Video the odds of a 50 basis point rate High continue to go up earlier I saw Them at like 30 percent earlier uh maybe Like last night and then you know then You saw them at 40 and then 50 60 now It's 73.5 percent Just since I've been making this video It switched from one third to two-thirds Now one quarter three quarters now let's Go take a look at May right still likely Markets here are thinking 25 basis Points to get you to five and a half After a 50 basis point rate hike in March but take a look at the Probabilities over here this is what I Think is the most interesting aspect of It the terminal rate has has been Completely repriced right I mean it Wasn't that long ago when the market Thought the terminal rate was four and Three quarters right think about that Like think roll back the clock just a Couple of months the market thought the We were basically near the terminal rate And it was going to be over with soon Now Look at this the market is suggesting Five and three quarters will be achieved By June which is only three meetings From now five and three quarters by June

And then to hold there for the remainder Of the Year followed by rate Cuts in 2024 but no rate Cuts in 2023. now there Are some elements of you have to Remember that market expectations change All the time And some to some degree expectations of Of certain things can lead to then Ultimately things changing because the Markets are sort of pricing in the Change I know it's it's sort of mental Gymnastics to some degree but you know If if markets are finally starting to Believe the FED then and and you see Risk assets respond in kind and and Become more devalued then that could Lead to the quicker deterioration of the US economy than maybe would have Otherwise been seen had the market Continue to not believe the fed and so Of course you could see this shift to Seeing Cuts in 2023 if if the FED were To go on and break something but Remember one of the things about a Recession is that while it is difficult That people you know that people lose Their jobs the other thing that's Difficult is living with high you know High high inflation for years and years And years and in fact one of the uh one Of the one of the um I believe it was worn sad you know I mean you know she said okay so and Putting two million people out of work

Is just part of the cost they just have To bear it and then Powell retorted Woodworking people be better off if we Just walk away from our jobs and Inflation stays at five to six percent So it's like it's not an easy job you Know the FED is tasked with two things Right they want to keep unemployment low They also want to keep uh the the Inflation low but how do you keep Inflation low if you have a historically Tight labor market And an upward price or upper you know Wage inflation now he did say that wage Inflation where it was moderating but This is a risk that you have to you have To weigh and and and be that as it may I Mean all the interest rate hikes that Have occurred so far occurred while the Unemployment rate has continued to go Down so so far it has not even really Had I think the desired effect of Softening labor market conditions and Now it doesn't mean it won't remember It's a it's a key thing you have to Remember you can't just look at this and Say that you know we will never go into A recession because the unemployment Rate is the secular low I'm of the Opinion that we're not in a recession I Mean I've said this for what a year year And a half now But the thing is is the unemployment Rate can often hit the lowest levels of

That business cycle just before the Recession gets underway And you might look around and say well Restaurants aren't feeling the effects I Mean one of the issues you go to a Restaurant and there it seems like They're understaffed right it seems like They're understaffed which is true you Know I mean there's a lot of Truth to That but you also have to remember as Well that by the time by the time that The you know the U.S economy feels the Effects of all these interest rate hikes There's a good chance that risk assets Are already Back Off to the Races you Know and and and and and bottomed out Long before and are already trending Higher and I guess some some people Might make the case that that's already Already occurred where I have trouble Necessarily agreeing with that sentiment Is if you look at things like the Inversion of the yield curve okay I mean This is a pretty one this oldest time uh To some degree but I mean normally this This sort of precedes a recession now Again when you have the inversion of the Yield curve we're not normally in a Recession right look at the inversion of The two-year sorry the ten the tenure And the three months right when it's Inverted like we are right now we're not Normally in one but it's when it becomes Uninverted the same thing with the two

Year and the tenure it's not when it Inverts that you normally get a Recession it's when it uninverts and why Does it not invert because the FED is is Pivoting and why do they pivot because They broke something and why do they Break something because they were too Hawkish and why were they too hawkish Probably because inflation was too high And the cycle goes on and on and and so You know Powell came out today and was And was pretty hawkish Um About about what he had to say and I Mean you know one of the one of the Quotes that I said earlier to some Degree but I'll go a little bit more Detail now he says at the end of last Year we saw a couple of very promising Modest inflationary readings in November And December but earlier this year some Of that Improvement was revised away What does he mean by that well you know After they get the initial data they'll Often revise it you know a few weeks Later uh based on on you know more Accurate readings and a lot and as he's Right he's what he said is true I mean a Lot of the a lot of the things that look Good back in Nova even in November or December you know forget about the Re-acceleration right forget about that Even if you don't have the Re-acceleration there's elements of of

Some of the optimistic things that Occurred back in November and December Are no longer so optimistic because they Were revised back up to the upside so he He actually noted that Um And he said uh you know But earlier this year some of the Improvement was revised away in addition We got a very strong reading on Inflation in January also very strong Jobs reading also very strong retail Sales as I pointed out in my testimony We are looking at a reversal what we Thought we were seeing to some extent a Partial Reversal Now there were some things he you know He threw in there I think to make the Blow not so not feel so hard he said you Know he did say that the Federal Reserve Is accounting for the lags Um of the effects of interested hikes on Future decisions on future decisions for For raid hike so I I don't think he's Completely oblivious to the idea that Interest rate hikes have significant lag Times in terms of how long it takes for Them to be felt throughout the economy But the Counterpoint to that is if you Were to go look at the National Financial conditions index which is sort Of like a measure of loose or you know How how loose or tight monetary

Financial conditions are in the US Economy you can see that while Financial Conditions were becoming tighter Throughout a lot of 2022 you can see They sort of peaked here in October and Then they've been getting looser ever Since now this poses a challenge because If Financial conditions are getting Looser that means that you're you can See you know what we're what we're Potentially seeing here which is the Re-acceleration of inflation which again Is the left tail risk that we talked About for financial Assets Now if you Look at this closely though it's Starting to tr it's starting to curl up Here a little bit so let's take a closer Look look at the weekly change You look at the weekly change Financial Conditions we're getting extremely loose Not too long ago when we saw rallies in In a lot of financial markets uh not Only in equities but also in crypto But now that changes is quickly coming Back in and it you know if this can if This path continues we're going to see You know we're likely going to see Tighter monetary conditions uh in the Next few months and and so I would I Would speculate dubiously of course is That the FED is likely going to want to Bring this back in and and and curtail Uh some of the some of these loosening Monetary conditions that we've seen over

The last few weeks to make sure that Inflation and inflation expectations do Not become entrenched all right one of The things Um Uh that that I thought was interesting Is you know uh one of the Senators said If history is Right unless you get some Help and I maybe I mentioned this Earlier but I just want to say it again Because I think it's important because There's also another end of the quote Too if history is Right unless you get Some help in order to get inflation down From 6.4 to 4.4 percent the unemployment Rate is going to have to rise to seven Percent based on history and and Powell Said that is what the record would say So he acknowledges that it's a it's a Difficult battle to to bring inflation Back in line with the two percent Objective without seeing some softening Of living recognitions they also went on To say that you know something to the Tune of you know bringing it down to Even the two percent or around that Level could see the unemployment rate go Up to ten percent now I do struggle to See the unemployment rate going just That high I'm not saying it can't happen But I I do think that there is some Element of um of of a labor shortage Right now so I think there's still the Economy still has a lot to absorb uh in

Terms of in terms of you know the effect That all these interest rate hikes are Going to have and and getting people Back in the workforce so I don't really Foresee the unemployment rate going back To 10 percent uh but this is you know Powell did say that that is what the Record would say in terms of what does It actually take to get inflation from Six percent or six point four percent Four point four percent and Um and you know he he certainly Acknowledged that okay He did say that over time we can achieve Two percent inflation and we will sort Of going against these you know these Expectations that people say that They're going to change their objective To three or four percent Um and and so on and so forth and he did Say his normal his normal what he Normally says right he says the historic The historic record cautioned strongly Against prematurely loosening policy we Will stay the course Until the job is done the ultimate level Of interest rates is likely to be higher Than previously anticipated and I think That this is important because I I think That you know when you think about where Monetary policy is and and the effects That it's going to have on inflation if You get a period like what we had back In you know in the um

In the 1970s if you get a period like That you can see the market go sideways For a long time in the economy just sort Of stagnate for a decade and I think Powell is doing the you know is as good Of a job as he can at trying to avoid This scenario who wants to live in this Who wants to live in this scenario like I would prefer to live in the scenario Where you know inflation just comes back Down and then we can have another phase Of economic expansion because look what Happens while it's difficult like look What happened in the 80s living through This right you had two recessions to Bring this back down and it sucked right And the market the market went down but Look what happened after it you had a Crazy era of economic expansion and why Were you able to see that economic Expansion because we had low inflation Well it's one of the reasons right it's Not the only reason but one reason that You you were able to see uh this level Of expansion was because you actually Had a low level of inflation that could Support that expansion without going Back into into inflation and so I think That that's ultimately what Pals trying To achieve is is to get you know to get Um inflation and inflation expectations Back in line so that we can get back to You know a period of economic Prosperity I I think he he really looks at the

Historic record as he's mentioned many Many times Um and and wants to avoid some of the Mistakes that that that previous people Have made in the Federal Reserve and That's namely loosening monetary policy Too soon that then led to the not Transitory re-acceleration of inflation But something that lasted for several More years okay so that I think I think What pal is trying to avoid now when I Say that I think this acceleration of Inflation that we're kind of seeing Right now I do think it's transitory not In the sense of transitory in like two Or three years I think it's probably Transitory over the next like few months Right so like by the latter half of this Year I do think we're going to see Inflation coming back down in a more Sustained way probably because the Federal Reserve are they're going to Raise interest rates to the point to to Really bring inflation back down again And we know that recessions can can Bring inflation back down very very Quickly and ultimately there there Certainly is a risk that that is um that That's going to happen okay now how have Markets responded the U.S dollar Currency index is breaking to the upside This is one of the things we've we've Talked about many times is that there's A certainly a risk here that you'll see

The dollar break back up to the upside Uh if you if you go back and look at Weekly data on the US dollar currency Index and we take this back to the 1980s You will see a very similar type of move In fact where we went up to around that 114 115 level followed by a retracement Down to the low 100s or so we actually Just went a bit lower this time and then Followed by basically the dollar taking Off again now I'm not suggesting that The dollar is going to take off again Like this and even if it did it's not Necessarily bad for risk assets over the Long Haul if you were to Overlay the s p Over over this price or over the dollar Here you can see that it at least Temporarily the dollar going back to the Website led to the deterioration of the Stock market but once the dollar broke Back out and continued higher the stock Market just went off to the races for it For quite a long period of time and why Did the stock market go up one of the Reasons because inflation was backed Down right we actually accomplished Their objective it got inflation back Down so we could get to another period Of economic expansion so I think right Now when you're looking at the US dollar Currency index you know it's at 105.5 or so Um Certainly is here a chance that it's

Going to uh you know there is sort of This this Chance here that it just continues back Up to the upside one thing to consider As well another similarity is that this Actually took place over a very similar Time period you know about about four Months or so about 16 weeks from this Move here to the bottom and then this Move here to this bottom also took about About 16 weeks or so before before You've free started to see this um move Back up in the US dollar currency index So that is is something that I think you You still have to to keep in mind as Well and then of course there's crypto Which you guys I mean well let me let me Actually go to the to the S P 500 the S P 500 is back below 4 000 right now but I wanted to take a close look here at at Bear markets Um so if you look at at Bear markets for The S P 500 you look at the 2022 to 2023 Bear Market admittedly we don't know if It's a 2023 bear Market or the Continuation yet of the 2022 bear Market Until we put it any low uh but if you Look at the range of historical bear Markets you can see we're kind of at the Uh extreme of how high a bear Market Could go as a function of time in the in Equities before you actually saw the s p Finally start to roll back over Okay so This sort of shows you the Extremes in

In volatility of bear markets For the s p and and so I think that's Another risk that continues to remain is Look yeah we've had a great rally but we Also had pretty cool rallies in Prior Bear Market nonetheless didn't Necessarily mean a thing and of course Finally I suppose we should at least Mention Bitcoin you know Bitcoin right Now is at uh around 22.2 K and you guys Know my thoughts on it we've talked About this a lot in terms of like what Is a worst case scenario and and that Sort of if it follows the NASDAQ back in In crash right so like if it Does follow the NASDAQ in Crash I mean you know the sort of the the Blueprint is there I mean it could Deviate Could deviate at any time Um so I'm not gonna I'm not asking you To take it to the bank of course but Don't you know I would I would say Don't Just necessarily discount the Similarities just because you don't like Them you know you have you still have The 77 drop from the high uh right like If you if you if you measure this you Still have the 77 drop from the high you Still have the the 60 rally in the 50-week SMA by Bitcoin and then also the NASDAQ coming out of crash right Like that 77 drawdown followed by a 60 Rally to the 50 week sort of a double

Top look at the um look at the RSI the Weekly RSI Right double top here on the NASDAQ And then the RSI more or less double Bottoms okay which could help us Mark uh You know potentially great accumulation Phases in in crypto but then also you Can see the the Bitcoin did actually Something very very similar right in its Weekly RSI and when we made a video on This dedicated video in the worst case Scenario the weekly RSI on bitcoin was Actually Above This level but we said in That video look if this comes back down By the end of the week this too could Simply look like a double top just like The NASDAQ did and if it does then that Means that the market could see you know Continued weakness so I do think there's There's reasons to continue to be Cautious especially given this left tail Risk of the re-acceleration of inflation Potentially uh sustaining for a while The repricing of the terminal rate and Of course the inversion of the yield Curve which normally historically would Suggest that the only way out is via a Recession now right now again I don't Think we're in a recession right now but The risk Still Remains that by the end Of this we certainly could see one and If your Counterpoint is that the Unemployment rate is low and if your Counterpoint is that you know the the

Job market is is relatively tight these Are actually things that normally occur Before a recession right so I mean yes They're good indicator that you're not In one they're not a good indicator that One's not coming and that's why I think What we need to be aware of and you Might say well why do we need to worry About that remember markets are are very Much forward-looking right So by the time you see it in the economy Like by the time you go to a restaurant And and it's no longer packed with Customers or or there's no longer a Labor shortage right but like by the Time you see all that and can say oh huh Now looks like we're in a recession The the the market probably is already You know three five you know three four Five months ahead of you and saying yeah Like you know congratulations on Declaring the recession uh you know once It was obvious to everyone so you know Again I'm in the camp that we're not in One I remember right now I'm still in The camp that we're not in a recession But I'm also in the camp that that the Federal Reserve is is going to continue To remain hawkish until they see Inflation come down in a sustained way And there is a very high risk of them Pushing us into a recession before this Is all said and done so hopefully this Was informative in terms of

Understanding what was said today by Powell the effects that it's having on On markets he's gonna actually talk Again tomorrow I don't know if I'm gonna Provide the same comprehensive update Because I imagine it's gonna be more of The same but again if you do like the Content make sure you subscribe to the Channel give the video a thumbs up check Out into the cryptiverse premium and Into the and I'll see You guys next time bye


Coinbase is a popular cryptocurrency exchange. It makes it easy to buy, sell, and exchange cryptocurrencies like Bitcoin. Coinbase also has a brokerage service that makes it easy to buy Bitcoin as easily as buying stocks through an online broker. However, Coinbase can be expensive due to the fees it charges and its poor customer service.

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