What Jerome Powell Said: This is What The Fed is Going to Do!!

The federal reserve has been moving Markets since last november and by Moving i mean crashing The thing is that the fed didn’t start Raising interest rates until march this Year This proves that what the fed says is About as powerful as what the fed does And it’s why investors have been Listening very carefully to the fed’s Monthly press conferences Today i’m going to explain how the fed Moves the markets with its rhetoric Analyze what the fed said at its recent Press conference and why this set us up For a recovery rally and when this rally Could end [Music] Before we talk about the fed i need to Make sure you’re not misled Financial advice is not how i make my Bread education and entertainment are The only things you’ll be fed so please Contact a financial advisor if your Portfolio is in the red Now if this is your first trip aboard The coin bureau ship my name is guy and Crypto is what i equip As your crypto captain i am obliged to Ensure that you are well equipped and Providing you with quality crypto Content is how i do this Coins tokens news reviews and many other Topics if you want to be a part of this

Trip subscribe to the channel and give That notification bell a hit Okay that’s it for the intro clip let’s See how the fed is moving the markets With its lips For those unfamiliar with the fed’s Central role here’s what you need to Know Following the double-digit inflation the United states experienced in the 1970s U.s politicians tasked the fed with two Things Ensuring maximum employment meaning no More than four percent unemployment and Ensuring price stability meaning no more Than two percent inflation This is called the fed’s dual mandate Now the fed achieves its dual mandate by Controlling the supply of u.s dollars in The economy this is done using a number Of tools in its toolbox the primary one Being the fed’s fund rate Increasing the fed’s fund rate generally Leads to a contraction of money supply While decreasing the rate increases Money supply Here’s where things get interesting Because the fed doesn’t always have to Raise or lower interest rates itself Instead fed officials can just announce That they will be raising interest rates In the future and the free market will Start to adjust interest rates on its Own in anticipation of the fed’s future

Rate hike Now the exact mechanics of how this all Works are outside the scope of this Video but the simple explanation is that When the fed announces it will be Raising rates at some point in the Future investors will start to sell u.s Government bonds i.e government debt This causes the interest rates on those U.s government bonds to increase and Since the interest rates offered by u.s Government bonds are used as the Baseline or risk-free rate for other Types of debt in the economy the Interest rates on those other types of Debt start to rise as well A simple example here is mortgage rates Which are heavily influenced by Longer-term u.s government bonds Specifically 10-year treasuries When the interest rates on 10-year Treasuries rise the cost of mortgages Tends to rise specifically long-dated Fixed-rate mortgages By contrast interest rates on Adjustable-rate mortgages or shorter Term debt like credit card debt are Heavily influenced by the fed funds rate Which is the interest rate the fed sets For overnight borrowing and lending Between u.s banks Now if you watched our video about the Macro factors that move markets you’ll Know that one of these macro factors is

The fed’s monthly press conferences Where the fed announces how much it will Be raising interest rates by What we didn’t mention in that video is That fed chairman jerome powell also Delivers a speech and takes questions From the press Obviously what he says can and often Does move the markets as well because it Causes investors to price in what might Be coming from the fed next based on Jerome’s comments This is basically what happened at the Fed’s most recent monthly press Conference last week and i reckon it’s An important one to unpack because it’s The last press conference the fed will Have until late september As such it sets the stage for the summer And as you’ll see it set the stage for a Rally Note i’ll leave a link to the full press Conference in the description if you’re Interested and i highly recommend you Give it a watch if you have the time So without further ado Let’s dig in As with all fed press conferences last Week’s began with jerome slowly walking Up to the podium with a big stack of Documents most of which were probably Blank pages Jokes aside jerome set the scene with His speech which began with an expected

Statement the fed is committed to Bringing inflation back down is moving Quickly with rate hikes and has the Resolve to continue doing so Translation the fed will continue to Raise interest rates so long as Inflation is high Next jerome stated that although higher Interest rates and other factors have Started to negatively affect the us Economy the economy has nonetheless Proved resilient This is evidenced by the strong labor Market in the united states at least According to the official employment Statistics Translation because employment remains High the fed can and will continue to Raise interest rates to fight inflation As they remain well above that two Percent target Jerome then reminded the audience that The fed recently started reducing the Size of its balance sheet For context the fed owns around nine Trillion dollars in u.s government debt And mortgage debt which it began slowly Selling in june Logically this cell pressure will Eventually cause longer term interest Rates to rise as per my earlier comments And if you watched our video about Jerome’s testimony to us politicians you Might recall that he tacitly admitted

That 500 billion dollars of cell Pressure is equal to a 0.5 percent rate Hike Jerome went on to reiterate that the fed Believes the economy is strong because Of official employment figures and that This effectively overrides the quote Softening in the economy the fed is Starting to see including in the housing Market translation so long as employment Remains high the fed will continue to Increase interest rates to fight Inflation even if it causes other areas Of the economy to decline In other words the fed doesn’t care About how much it’s crashing the markets Regarding inflation figures jerome Highlighted the personal consumption Expenditures price index or pce as a Point of focus now if you watched our Aforementioned video about the macro Factors moving markets you’ll know that The pce is the fed’s favorite inflation Figure and it doesn’t pay too much Attention to cpi Jerome also confirmed that the fed Decided to raise rates by 0.75 percent Bringing the fed funds rate to between 2.25 and 2.5 percent This came as a surprise to some given That the inflation figures for june came In much hotter than expected more about That in a moment After acknowledging how hard inflation

Has been hitting the average person Jerome confirmed that the fed is Actively quote looking for evidence that Inflation is coming down And that future interest rate hikes will Depend on the data that comes in between Now and late september As to how much the fed could raise rates In september jerome stated loud and Clear that quote another unusually large Rate hike could be announced depending On the various inflation figures the fed Is watching Just a few seconds later jerome stated Loud and clear that the fed could start To raise interest rate at a slower pace Depending on how previous rate hikes are Affecting inflation and the economy Which seems to be synonymous with Unemployment Then jerome turned the tables again by Bluntly admitting that the fed is trying To bring demand back down so that it’s In line with supply Translation the fed will continue to Raise rates and crash the economy until The demand from the economy is in line With the supply of say the available Energy This is actually pretty scary because Apparently the world is currently short Around three to four million barrels of Oil per day and according to macro Researcher warren pies the only time the

Global demand for oil was brought down By three to four million barrels of oil Per day was during the 2008 financial Crisis Finally jerome admitted that the fed is Trying to reduce the inflation Expectations of the public which Actually have an impact on inflation and Is striving to quote avoid adding Uncertainty in an uncertain time which You’d think would be a reference to the Fed’s forward guidance about interest Rates Unfortunately the question period Revealed some concerning things on that Front The first question came from the Washington post and its journalists Asked jerome why the fed didn’t raise Rates by a full percentage point in Response to the recent inflation figures Which you’ll recall were red hot Jerome responded that the fed officials Agreed the 75 basis point rate hike was Sufficient and he repeated that the fed Is prepared to make larger rate hikes When necessary striking a hawkish tone The second question came from the Financial times and its journalists Asked jerome something along the lines Of how a drop in commodity prices could Affect the fed’s future interest rate Changes The question was honestly a bit

Confusing Jerome responded that the federal funds Rate is at a level that the fed Considers neutral which you’ll recall is 2.25 to 2.5 percent This gave a more dovish impression as it Seemed to imply that the fed is happy With where interest rates are now and Would rather not raise them any higher If possible however jerome believes it Will be necessary to continue raising Rates past the neutral level as he Explicitly referred to the fed’s Previous plans to raise interest rates Up to 3.25 to 3.5 percent by the end of The year as part of his lengthy response To the lengthy question Jerome ended his lengthy response by Announcing that the fed will no longer Provide forward guidance regarding Interest rates the way it has done up Until now Put differently the fed will no longer Be letting investors know how much it Plans on raising interest rates in Advance This is a pretty big deal because Investor expectations play an important Role in price action around the time the Fed raises rates There’s nothing that investors hate more Than uncertainty and it sounds like Uncertainty is exactly what the fed Wants to create in stark contrast to

Jerome’s earlier comments On that note the third question came From the wall street journal and its Journalists asked jerome whether the Futures markets are correct about their Projections that the fed will raise Interest rates until the end of the year And begin to drop interest rates Sometime early next year Jerome gave a cheeky response and that’s That it’s impossible to predict the Future Even so he reaffirmed the fed’s plans to Continue raising rates until the end of The year and said that it’s possible the Fed could continue raising rates into Early next year and that this will be Revealed in september The wall street journal followed up with Another question and that’s whether the Fed’s terminal rate has changed because Of the most recent inflation reading for Reference the terminal rate refers to How high the fed plans to raise interest Rates in its current tightening cycle Jerome said that the fed will reveal its Updated terminal rate in september once More inflation data has come in and if You’ve watched our video about when the Crypto bear market will end you’ll know The fed typically raises rates for two To three years before backing down note That we’re only five months in Now the fourth question came from the

New york times and its journalists asked How the fed would react if inflation Started to decline for multiple months Jerome said that it all depends on Whether the fed feels confident that Inflation is headed back down to the Central bank’s two percent target and Added that quote supply shocks could Undermine inflation expectations This suggests that the fed might Continue raising rates even when Inflation starts to come down if Inflation expectations remain high and Jerome acknowledged that many of these Expectations come in response to the cpi Which the fed doesn’t watch too closely But the average person does The fifth question came from cnbc and Its journalists asked jerome whether the Fed agrees with the current Administration’s claims that the united States is not in a recession and how the Fed will react if it turns out that the Economy is in fact in a recession note That this was a day before the second Quarter gdp figures were released and as We now know the u.s is in a technical Recession That’s only a part of the picture However and you can find out whether the U.s is truly in a recession using the Link in the description i digress Not wanting to play politics jerome Seems to have dodged this question and

Only noted that it will be necessary to Slow down the economy to bring down Demand so that it’s more in line with Supply again confirming that the fed is Out to crash assets The sixth question came from reuters and Its journalists asked jerome whether the Risks of doing too little outweigh the Risks of doing too much when it comes to Interest rates Jerome again dodged the question though He did admit that he doesn’t personally Think the u.s is in a recession After the reuters journalists asked the Question again jerome admitted that yes The risks of doing too little do Outweigh the risks of doing too much and That the fed needs to keep raising Interest rates to ensure that inflation Doesn’t become part and parcel of the Average person’s expectations That’s because it would become much more Difficult to defeat and some of you will Know that hyperinflation is a mostly Psychological phenomenon not saying That’s what’s going to happen nor is it What jerome said just something to Remember just in case Now the seventh question came from axios And its journalists asked jerome whether The gdp print will influence the fed’s Monetary policy this time jerome felt Like playing politics though i suspect He knew the question was going to come

Up again and decided to come up with a Clever response This clever response was that he doesn’t Personally believe that the u.s is in a Recession At this time Emphasis on those last three words Jerome backed up his claim by once again Citing the strong employment statistics And pointing out that gdp figures often Get revised and i’ll quickly note that The first revision to second quarter gdp Will be released at the end of this Month The eighth question came from politico And its journalists asked jerome about Something we covered in another video And that’s all the alleged insider Trading that was being done by fed Officials and whether jerome has cracked Down on this practice Jerome started by saying that the fed Has the quote strictest rules of any Comparable institutions which presumably Means other central banks Nothing to brag about there that’s for Sure Jerome added that the fed is quote Building the infrastructure for Enforcement that the system is quote Just now up and running and better yet That the fed is quote proud of what We’ve done which is obviously a Reference to enforcement but still makes

For very bad optics now i reckon if any One of us here said something along Those lines in response to allegations Of insider trading we’d be sent straight To prison but hey power protects people From the popo ain’t that right pelosi Now the ninth question came from Bloomberg and its journalists asked Jerome what the fed is watching to make Its interest rate decisions and jerome Listed all the indicators we’ve talked About already namely pce employment etc Jerome also said something along the Lines of we’re not going to give you Guidance about our future interest rate Increases this time sorry not sorry Bloomberg then asked jerome another Question and that’s how quickly the fed Will move to raise interest rates for The remainder of the year Jerome responded by saying that the Economy is looking strong and could do Well in the second half of this year Which sounds like a non-answer at first But is really a hint that the fed will Continue raising interest rates Aggressively so long as the economy is Intact particularly on the employment Side This ties into the 10th question which Came from cnn and its journalists asked Jerome when we should expect to see a Slowdown in the labor market to which Jerome replied that the slowdown has

Already begun Jerome also said that the labor force Participation rate hasn’t increased as Much as the fed expected which begs the Question of whether these supposedly Impressive employment figures are just Coming from the fact that millions of People have left the workforce and are Therefore not counted The 11th question came from fox news and Its journalists asked jerome how the fed Can avoid a recession jerome repeated That he personally doesn’t believe the U.s is in a recession because employment Is strong and demand is too damn high Translation the u.s is not in a Recession because inflation is high and Recession always kills inflation i Suppose we’ll see if it does in the Coming weeks won’t we Now the 12th question came from market News international and in my personal Opinion this was the most important one That’s because its journalist asked Jerome about the fed’s ongoing balance Sheet reduction which you’ll recall has The practical effect of raising Long-term interest rates Jerome said that the fed will accelerate Its balance sheet reduction in september An important announcement that seems to Have been missed by most mainstream Media outlets this is very surprising Because this accelerated balance sheet

Reduction combined with a big rate hike Could be what causes the next crash in Stocks and cryptocurrencies It would also be consistent with roughly When the current recovery rally is Expected to end spooky stuff Now after a couple of redundant Questions from journalists at market Watch and marketplace a journalist from The economist caught jerome off guard With his question and that’s whether the Fed is watching an unemployment measure Called the non-accelerating inflation Rate of unemployment or nairu This is because the nairu suggests that Unemployment in the united states is Already up at five to six percent Something that’s way above the fed’s Target of four percent unemployment Jerome was visibly stunned and couldn’t Provide a coherent response probably Because he knows unemployment is much Worse than what the headline statistics Suggest Truly spooky stuff Cnbc was the next media outlet to take The mic and its journalists asked jerome Why the public should give any Credibility to his comments about a Recession given that the fed was so Wrong about inflation being transitory Jerome just repeated that he personally Doesn’t believe the u.s is in a Recession at this time and that the fed

Is committed to fighting inflation A journalist at the american banker Asked a simply spicy question and that’s What effect the fed’s rate hikes could Have on financial stability at home and Abroad Jerome explained that the fed’s rate Hikes posed no financial stability Threats at home and have arguably Lowered financial stability risks as They’ve been slowly popping all the Asset bubbles Not surprisingly jerome didn’t have Anything to say about the effects the Fed is having on the global economy and If you ask me that’s because he knows The fed’s rate hikes are doing serious Damage to developing countries with Large amounts of dollar-denominated debt Now the final question came from a Journalist at bankrate who hit jerome Right in the kisser by asking what he Has to say to all the people who will Lose everything because of rising Interest rates jerome punched back by Saying that the fed must reduce Inflation at all costs because without Price stability the economy will Completely fall apart Speaking of which you can find out how Best to beat inflation Using the link in the description So this brings me to the big question And that’s what all of jerome’s comments

Mean for the crypto market in the coming Months In short it all depends on the inflation And economic data that comes out between Now and late september when the fed Comes back from its break While it appears that the current Recovery rally could last until then There are a few wild cards coming up Later this month that could cut the Rally short The first is the pce figures for july Which will come out on the 26th of August Given that the pce is the fed’s favorite Inflation figure a high reading here Could cause the markets to crash in Anticipation of an aggressive hike The second wild card is actually Scheduled for the same day and that’s The revised gdp figures for q2 which Will also be published on the 26th of August circle it in red folks If these gdp figures are revised up Meaning the us is no longer in a Technical recession this could embolden The fed to raise interest rates even More The third wild card to watch out for Also takes place at the end of august And that’s the jackson hole symposium Which will take place between the 25th And 27th of august For those who don’t know the jackson

Hole symposium is a central banking Conference and the overlap of this Conference and the two statistics i just Mentioned means we’re likely to get some Sort of reaction from jerome in real Time If the stats are bad and jerome is mad The crypto market will be sad Then again if jerome is serious about Not giving any forward guidance then he May keep his thoughts to himself long Enough for the crypto market to continue Its recovery rally which is being led by The one and only ethereum thanks to its Highly anticipated upgrade that’s slated For september You can learn more about that and what It means for eth using the link in the Description And that is all for today’s video about The fed’s market moving mumbling if you Enjoyed this video smash that like Button to let me know if you plan on Coming back smash that subscribe button And give that notification bell a punch While you wait for the next video to hit The tube you can check out coin bureau Eclipse for more immediate crypto Updates and tune in to the coin bureau Podcast for in-depth crypto discussions You can also follow me on twitter tiktok And instagram and join my crypto clan on Telegram don’t worry there’s no spam If you’re wondering what cryptos i hold

As part of my portfolio subscribe to my Weekly newsletter to find out and see How i adjust my holdings as i go If you want to support the channel head On over to the coin bureau merch store And cop some cool crypto apparel you can Find your way to all these resources and More using the links in the description Thank you all so much for watching and i Will see you next time this is guy Signing off [Music]