What Is The FED Planning? Jerome Powell Tells It ALL!!

What the Federal Reserve says and does Can move the markets and it's typically Very careful about what it says and does As a result sometimes however the Markets react even when the fed's words And actions are carefully crafted this Was the case with the fed's latest press Conference where chairman Jerome Powell Caused the markets to crash what's Strange is that the things he said Should have caused the markets to Rally That's why today we're going to bring You up to speed on what the FED has been Up to summarize its press conference and Explain what it could mean for the Markets Let's start with a quick recap the FED Has been raising interest rates since Last spring to fight inflation this Initially caused the markets to crash That's ultimately because there was Uncertainty about how high inflation Would go and how much the FED would have To raise interest rates to fight this Inflation As the months went on however it became Clear that inflation was coming down and That the Fed was nearing the end of its Interest rate Rampage and so the Markets Started to Rally because investors could See that the next step was for the FED To lower interest rates reigniting the Credit driven economy of course for a While investors were concerned that the

Fed's rate hikes would cause a recession But these concerns paradoxically Resulted in even more Market rallies That's simply because the fed's solution To recessions has been to lower interest Rates and start stimulating rocket fuel For markets This is the hard Landing scenario you've Been hearing about then investors Started realizing that the U.S economy Was more resilient than anyone had Imagined in large part due to government Spending naturally this also resulted in Even more Market rallies because a Strong economy plus declining inflation Meant that the fundamentals of the Economy would improve this is the soft Landing scenario you've been hearing About over the last few weeks however Something changed you see the fed and Other central banks only control Short-term interest rates specifically The interest rates that Banks use when They lend money to each other overnight By contrast long-term interest rates are Determined primarily by the free market Long-term interest rates in the U.S are Determined by the supply and demand for Long-term U.S government debt AKA bonds When there's lots of bonds selling Long-term rates rise and when there's Lots of bond buying long-term rates full As you may have heard long-term rates Have been rising fast logically then

This means that someone somewhere is Selling lots of U.S bonds for some Reason If you watched our video about the debt Ceiling deal you'll know that the U.S Treasury Department is one of these Sellers it's been selling U.S bonds to Refill its bank account at the FED but It's not the only one selling if you Watched our video about China's new Central Bank Governor you'll know that The People's Bank of China has also been A big seller it's been selling U.S bonds For US dollars to buy the Chinese Yuan To prevent its value from falling Further the bank of Japan has been doing The same thing for the yen And if you've been keeping up with our Coverage of the fed's press conferences You'll know that it has also been Reducing its balance sheet which Consists primarily of U.S bonds it's Been shrinking its U.S Bond Holdings as Part of its monetary policy something That's gone almost unnoticed until now As with the rise in short-term interest Rates last year the recent rise in Long-term interest rates seems to have Taken the markets by surprise and is Creating a lot of uncertainty among Investors as you'll soon see long-term Interest rates could continue to rise And this could continue to pull the Markets down it was against this

Backdrop that fed chairman Jerome Powell Took the podium at the fed's most recent Press conference now this press Conference was particularly significant Because it was accompanied by the Release of the fed's latest summary of Economic projections or SCP an updated Roadmap if you will Jerome started by saying the same thing He said since the start of last year the FED is committed to Bringing inflation Back down to two percent he announced That the FED had decided to leave its Interest rate of 5.25 to 5.5 percent Unchanged for now but has also decided To continue shrinking its balance sheet Jerome said that the FED will proceed Carefully when raising interest rates And will make this decision based on Incoming data about inflation and the Economy in Practical terms this means The core CPI and the pce for inflation And various employment statistics for The economy this is something Jerome has Said at recent meetings but this time he Included something different in addition To watching data about inflation and the Economy the FED will also be watching Unspecified risks not lingering on this Point for too long Jerome then pivoted To talking about the fed's latest SCP he Noted that fed members foresee the Economy being even more resilient than They had initially projected he

Explained that this is due to the recent GDP figures which came in higher than Expected FYI this is significant because It implies that most fed members believe There won't be a recession And it's a similar story when it comes To unemployment Jerome acknowledged that The unemployment rate recently spiked to 3.8 percent but pointed out that the FED Project's unemployment will only rise to 4.1 percent as with the fed's economic Forecast the fed's employment forecast Suggests they don't see a recession note That this was in stark contrast to Jerome's tone during his speech which Was abnormally cautious and even Downright hesitant at some points things Got even more interesting when Jerome Started talking about inflation figures He didn't highlight the recent CPI print As much as you might expect now this was Surprising given that the CPI for August Had come in above expectations in past Press conferences Jerome would have Underscored this fact instead he focused On the fact that fed officials expect Inflation as measured by the pce to come Down to two percent over the next two Years this not only implies that there Will be no recession but that there will Be a soft Landing inflation will come Down with no recession Recall this is supposed to be bullish Defense projections for interest rates

Should also have been bullish Jerome Noted that most fed officials believe One more rate hike of 25 basis points 0.25 percent is appropriate between now And the end of the year and then quickly Noted that the Fed foresees rate Cuts Sometime next year again this is Supposed to be bullish yet the markets Crashed as Jerome spoke not only that But Jerome took an uncomfortably long Pause when discussing the rate Cuts Probably nothing Jerome stressed that these projections Assume that the economy will evolve as Expected meaning the GDP figures and the Unemployment figures until then though The FED will continue to quote Significantly reduce the size of its Balance sheet and raise interest rates If need be now once Jerome finished his Speech the question period began the First reporter to ask questions was from The financial times they asked Jerome Why fed officials think one more hike is Appropriate Jerome said that it's all Because of the economic data rates may Not be restrictive enough just yet the Reporter Then followed up with a second Question and that's why the Fed Foresee's rate Cuts in 2024. Jerome was Visibly uncomfortable and responded by Insisting that the SCP is not a concrete Roadmap he then added that it reflects a Stronger than expected economy which

Doesn't make much sense now the second Reporter to ask questions was from The Washington Post they asked Jerome Whether there was an argument about Raising rates one more time Jerome said There was no argument they were just Merely discussing the data we'll find Out when the FED minutes come out in a Couple of weeks time Jerome also added that the recent Inflation data was looking promising This was an eye-opening comment given That aforementioned August CPI which Came in higher than expected From our perspective this comment Suggests the FED doesn't think inflation Is beginning a new trend higher make no Mistake this could very well be the case And will know when the September CPI Comes out in mid-october mark your Calendars next the third reporter to ask Questions came from CNBC They asked Jerome whether the FED Believes inflation will be more Persistent and whether this means that The default interest rate will be higher As a result Jerome completely dodged the question by Saying he doesn't know nor does the Fed The fourth questioner was from Reuters They asked Jerome why it is that he Keeps saying that bringing inflation Back down to two percent will require Below Trend growth AKA recession while

The FED is not forecasting a recession Jerome just said that the FED is Following the economic trend The Reuters reporter followed up with a Cutting question and that's whether this Means the soft Landing scenario is still On the table incredibly Jerome said no a Flat out no He explained that a path to a soft Landing could still exist but it will be Determined by factors that are outside Of the fed's control this begs the Question of which factors the FED is Talking about our best guess is that the Answer is the treasury departments or Rather the U.S government's spending Remember that government spending seems To be the reason why there's been higher Than expected economic activity on that Note many of the government spending Programs that were supporting the Economy have come to an end or will soon Be coming to an end the two elephants in The room are the employee retention Credit which just ended and the Deferred Student loan repayments which start next Week Then the fifth reported to ask questions Was Nick timuros of the Wall Street Journal now Nick is really the only fed Reporter you need to know by name his Nickname is the Fed Whisperer but this Time it was Jerome who did the Whispering Nick asked Jerome about

Inflation and interest rates in their Exchange it became clear that Jerome has Shifted his Focus from inflation to the Economy now this makes sense given the Changing fiscal situation a few moments Ago the thing is that Jerome's sudden Economic caution should have been yet Another bullish indicator for the Markets but it wasn't Sorry to interrupt you folks but I have To let you know about the coin Bureau Deals page my team and I have been able To pull together some of the best promos And discounts in the crypto space we're Talking trading fee discounts of over 50 Thousands of dollars in bonus airdrops Amazing deals at top exchanges and Reduced prices on Hardware wallets and Much much more besides so just go to Coinbureau.com forward slash deals also Linked to below and find the promo Suited to you and now back to the video Now the sixth reporter to ask questions Was from the New York Times They asked Jerome about the rate cuts the FED is Projecting for early next year Jerome Repeated that the fed's SCP should not Be taken as a road map but confirmed That yes rate cuts are coming and yet The markets continued to crash The seventh reporter to ask questions Was from axios they asked Jerome what's Causing the Apparently strong economic Growth Jerome said that it appears to be

Consumer spending this makes sense and It's especially relevant to stuff like The student loan repayments spending Will fall The eighth reporter to quiz Jerome was From Politico they asked him a de facto Follow-up to the previous question and That's how factors like student loan Repayments will affect the FED Jerome Revealed that the FED is watching these Factors very closely including the Recent increase in oil prices speaking Of which you should know that if oil Prices stay too high for too long this Will start feeding into the inflation Measures the FED is watching if this Happens the FED will basically be forced To raise rates for PR purposes consider That oil prices rallied like crazy During the 2008 recession probably Nothing anyways the ninth reporter to Ask questions was from Bloomberg lo and Behold they asked Jerome about a Potential recession jerem suddenly Morphed into a hawk and said that quote The worst thing we could do is fail to Restore price stability in other words Inflation is more important it's safe to Say that he didn't fully believe what he Was saying Next up was a reporter from the Associated Press they asked Jerome What's causing inflation to come down Jerome said that it's a combination of

Supply chains improving after the Pandemic disruptions and a gradual Pullback of fiscal policy AKA government Spending The 11th reporter to ask questions was From Bloomberg TV they asked Jerome why The FED didn't hike during this meeting If most of its members are projecting One more hike Jerome said it's because They've been moving fast and now they Need to be careful put differently They're a bit scared the 12th reporter Was from Yahoo finance they asked Jerome Whether the FED is accounting for base Effects and how the government shutdown Would impact the Central Bank regarding The base effects Jerome said yes they Take them into account hence the lack of CPI concern regarding the government Shutdown Jerome said that it could mean The FED won't get the data it needs to Make its interest rate decisions Newsflash that is bad because it means Uncertainty and uncertainty means Volatility this was easily the most Important answer Jerome gave at this Press conference by the way The 13th reporter to ask questions was From Fox Business they asked Jerome Whether Rising oil prices are a problem For the FED what's fascinating is that Jerome first said that Rising oil prices Will affect consumer confidence and Consumer spending by extension then he

Mentioned the inflation part this is Fascinating because it's further Evidence to the idea that Jerome is now More concerned about employment than Inflation as most of you will know Managing both is the fed's Mandate the Fact that Jerome starts on the economy Is apparently at odds with those of his Peers is even more fascinating The 14th reporter with questions was From market news and they addressed the Elephant in the room They asked Jerome why long-term interest Rates are rising if you were paying Attention earlier you know the answer From Jerome's perspective it's mainly Because of bond issuance by the treasury Then the 15th reporter was from American Banker instead of asking about the banks Which aren't doing so well by the way They asked about the housing market Jerome rambled a bit and then said quote In a financial crisis you have to do What you can to support the economy if That's not a red flag I don't know what Is anyhow the 15th reporter was from Marketplace and they asked Jerome Whether a decline in consumer confidence Would help the FED bring inflation back Down to two percent Jerome said Something to the effect of well I Wouldn't put it that way meaning yes yes It would The marketplace reporter Then followed

Up with a similar question and that's Whether a decline in consumer confidence Would cause a recession again Jerome Said something to the effect of well That's always a concern which again Means yes yes it would The 16th reporter to ask questions was From The Economist and they asked Jerome Whether interest rates are effective After beating around the bush Jerome Finished by saying that interest rates Might just have to go higher by now You'll know the reporter should have Specified the duration of those interest Rates anyway the final reporter to grill The big dog was from MarketWatch and They asked Jerome whether the FED will Start doing surveys to see how Low-income households are doing Jerome Said no even while he confirmed that the Fed's recent Outreach found that Low-income households are struggling I Guess they just don't care Anywho this brings me to the big Question and that's what all this means For the markets Well the answer depends on another more Important question and that's why Jerome Suddenly seems to be expecting a Recession while everyone else isn't and Why the Market's reaction to his speech Was all backwards Some would argue that Jerome's sudden Expectations of recession could be the

Reason why markets crashed but if that Was the case then long-term interest Rates would probably have come down as Investors started to buy bonds for Safety however the opposite happened Long-term rates rallied in case it Wasn't clear enough the markets don't Like high interest rates as such it's Probably the rise in long-term rates That cause the markets to crash some Would argue that it was actually the Rise in the US dollar but Jerome's Comments about rate Cuts should have Actually caused the dollar to weaken no Matter how you slice it it doesn't make Sense either recession is coming then Bond deals should be falling if the Economy will stay strong then markets Should be rallying and the US dollar Should be falling and it should be Falling a lot because this was literally The first time Jerome talked rate cuts When you combine this with the fact that Jerome seems to be extremely concerned About the economy it suggests that There's a much bigger game being played Here it's almost as if Jerome knows Something that very few others do Something that's causing him to lose his Cool which he rarely ever does now we Can't say for sure but we suspect this Has something to do with the fed's Fiscal counterpart the treasury Department if you've watched any of our

Videos about entities like the financial Stability oversight Council or fsoc You'll know that they always include the Heads of the fed and the treasury given All the bonds the treasury has been Selling lately it's safe to to assume That Jerome has been meeting with Janet Yellen and the heads of other government Agencies to ensure these massive sales Are going smoothly Janet herself has Confirmed that the treasury is working With Wall Street to this end now to the Public this Bond issuance is to increase The U.S government's cash pile at the FED behind closed doors however this Bond issuance could have another purpose And that's to squeeze the geopolitical Opponents of the United States for Context most governments and Corporations have lots of US dollar Debts when long-term interest rates rise These U.S dollar debts become more Expensive this means that these Governments and corporations must find Additional US dollars depending on which Government or Corporation we're talking About the only way to find more US Dollars is to sell other assets selling Other assets for the US dollar would Cause the US dollar to rise and this Would explain why the US dollar Rose Even while Jerome talked about rate Cuts But that's just half of the story If the treasury really is trying to

Inflict pain on the US's enemies by Raising rates this will affect the Domestic economy too chances are that This is what Jerome is seeing and it Would explain why nobody else at the FED Can see it only Jerome is privy to this Information only he can truly understand Just how high the treasury is prepared To raise long-term interest rates to Ensure that the US dollar and its Country of origin remain dominant Can the U.S afford to do this though Given the massive amounts of debt its Own government owes well common sense Says no but we're not dealing with a Normal Financial system and you can Learn all about it using the link in the Description Anyhow that's all for today's video if You found it interesting smash that like Button to let us know if you want to Make sure you keep getting interesting Content subscribe to the channel and Ping that notification Bell if you know Someone who would find this video Interesting share it with them as well And if you're stacking SATs while you Wait for the financial system to Collapse make sure you're doing so using An exchange with low fees and always Maintaining control of your private keys If you're looking for either of these The coin Bureau deals page has Everything you need it's got up to forty

Thousand dollars in bonuses and air Drops on the best crypto exchanges and The biggest discounts on trading fees And Hardware wallets the link to that Will be down in the description as Always thank you for watching and I'll See you next time my name is guy and I Bid you goodbye [Music]