00:00 the Federal Reserves summary minutes
00:02 just came out one thing to know about
00:04 the minutes is that they can be massaged
00:07 this has to do with the end of January
00:09 fomc meeting which is technically before
00:11 we got the January CPI data which we
00:13 just got you know the second week in
00:15 February so since the minutes are coming
00:18 out in the third week in February you
00:21 think this would only reflect
00:22 information known prior to that CPI
00:25 release we got so maybe this information
00:28 isn't useful right but what's important
00:30 to remember is that the minutes can be
00:32 adjusted and doed with and they can
00:35 remove certain phrases and add certain
00:38 phrases to send a signal after all the
00:41 Federal Reserve wants to clearly
00:43 communicate this is something Drome
00:45 Powell has regularly told us through the
00:46 pandemic he wants to clearly communicate
00:48 when they're getting something right
00:49 what their path is what their goals are
00:51 what their target is as best as they can
00:54 and so I think this is a messaging tool
00:56 much more than anything and given that
00:58 you've got a lot of folks talking about
01:00 hikes again it might be comforting to
01:02 see this in the minutes regarding
01:05 considerations relevant for future
01:06 policy actions members agreed given
01:09 their assessment of the policy rate
01:11 being likely at its peak for the
01:13 tightening cycle to then adjust the
01:15 phrasing of their last minute release
01:17 right or their last uh fomc statement
01:19 rather so that to me really started
01:22 indicating this is going to be a
01:24 cautious minutes read and as we went
01:27 through this we got some caution in a
01:29 way that we haven't seen before uh first
01:32 of all we got more of an amplification
01:35 on China and foreign markets and we
01:38 actually compared the last minutes to
01:42 this set of minutes just to see where
01:43 the fed's head is and this was
01:46 interesting in the last minutes they
01:48 suggested that China's quote economic
01:51 growth remained modest and in today's
01:54 minutes they said in China a property
01:57 sector slump and depressed consumer
01:58 confidence continue to weigh on domestic
02:02 demand key word demand why would keyword
02:06 demand be so important well because if
02:08 we start looking at what they think when
02:10 it comes to demand and foreign
02:13 environments take a look at this or
02:15 foreign economy the upside risk to
02:17 inflation were basically a copy and
02:19 paste as usual there could be supply
02:21 chain shocks or wages could basically
02:24 stop slowing their wage growth right
02:27 that's all the same as usual but what
02:29 was different I like differences what
02:31 was different down this section right
02:34 here downside risks to inflation and
02:37 economic activity noted by participants
02:39 included geopolitical risks that could
02:42 result in a material pullback in demand
02:46 possible negative spillovers from lower
02:49 growth in foreign economies that risk uh
02:54 and the risk that Financial conditions
02:55 could remain restrictive for too long or
02:58 the possibility that weak ing of
03:00 household balance sheets could
03:01 contribute to greater than expected
03:02 deceleration so you've got four issues
03:05 there and one of the ones that're really
03:07 highlighting here is this idea that well
03:09 what happens if foreign economies keep
03:12 exporting deflation to us at the same
03:15 time as household balance sheets weaken
03:17 in America you could see more rapid
03:19 deflation in fact you could even have an
03:23 upside a surprise upside in foreign
03:27 economies but still infl that surprises
03:30 to the downside because of looser Supply
03:33 chains this was such an interesting
03:35 section because of course they had their
03:37 usual section in here about oh wage
03:40 growth remains elevated and the risk of
03:42 Supply shocks of course we know January
03:44 core prices were surprisingly High
03:47 Barkin this morning tried to sort of
03:49 brush those off as ah well it's January
03:51 so you get a big seasonal adjustment of
03:53 course that puts more weight on the next
03:54 CPI report but this idea about either uh
03:58 yes they're being risk of stalling
04:00 inflation uh progress being a concern
04:03 not so much of a highlight on oh
04:05 inflation's going to Skyrocket again
04:08 more of a concern is it might level off
04:09 at a level that's still a little too
04:11 high but this extra emphasis on how much
04:15 deflation we're getting from basically
04:17 China and this you know collapsing
04:20 demand in China the collapsing property
04:22 Market in China weighing actually on US
04:25 inflation with foreign deceleration
04:27 leading to more deflation or
04:29 disinflation rather and even if there's
04:31 a foreign activities pickup we could see
04:33 Supply chains move better to create more
04:36 disinflation really interesting so this
04:38 whole section here just to summarize
04:40 that section is the fed's paying
04:42 attention to what's not just happening
04:43 in America but what's happening around
04:45 the globe for disinflationary pressures
04:48 of course those have to end up coming
04:49 through in our data but they do mention
04:51 in here hey look six-month PC is at 2%
04:56 or core PC on the six month is below 2%
04:59 they're not going as far as declaring
05:01 Victory but they're cautious here and
05:03 they're definitely not indicating in any
05:06 of this verbiage that they're interested
05:08 in going up they are suggesting that
05:11 they're not sure yet when they're going
05:13 to cut is it going to be March probably
05:16 not because that would be imminent I
05:17 think they're going to signal and March
05:19 with a summary of economic projections
05:21 and the first cut will then TBD I don't
05:23 even think they've decided yet be either
05:25 May or June and that's what's that
05:28 that's what markets are pricing in right
05:29 now as well now we're going to have this
05:31 full summary on ec.com I also did put on
05:35 ec.com that before the rate cut
05:39 expectations were 94% for no rate cut in
05:44 65.7% no cut in May and then a 73%
05:48 chance of a cut in June those have now
05:52 adjusted teeny little bit it's still a
05:55 little too early to really get an
05:57 adjustment here but you did get a slight
06:00 increase from 65.7 to
06:02 67.6% of no cut in May but you're really
06:06 removing this potential for another hike
06:09 we're basically at Peak you're not
06:11 seeing a pricing in of higher rates but
06:15 you are seeing higher for longer which
06:17 they did advertise so that's why it's
06:21 more likely that we're going to see Cuts
06:22 in June or July than in May uh again
06:26 foreign headline inflation continued to
06:28 fall this is X reporting deflation we
06:31 talked about how uh indicators of
06:33 financial conditions did ease however uh
06:37 the stock market had started Rising
06:39 though that was really concentrated on
06:41 larger uh Mega cap tech companies so
06:44 wasn't necessarily fully broad base but
06:47 then again when you look at what we saw
06:49 this morning and we did an analysis on
06:51 Wing Stop in our Market open live stream
06:54 we're all like what is going on how is
06:56 Wing Stop at like a four Peg the
06:58 valuation is in insane uh the pricing
07:01 for that stock is is quite frankly
07:03 stupid but anyway this was also
07:05 interesting commercial real estate
07:07 prices continue to decline especially in
07:10 multifam this was a very interesting
07:12 highlight because I've seen this with
07:14 house hack my real estate startup if you
07:16 haven't learned about house hack yet go
07:18 to the house hack homes YouTube channel
07:19 it's linked in the description below
07:21 we're probably doing a fund raise on
07:23 Friday uh so stay tuned for that and
07:25 we'll have another video with some more
07:27 information answering some of your
07:28 questions on that but we're killing it
07:31 but one of the reasons we're killing it
07:32 is because there's so many opportunities
07:34 in multif family right now it's not
07:36 looking good in multif family not
07:37 because we're seeing an imminent
07:38 collapse but because we're seeing
07:40 defaults increase 20x the defaults this
07:44 January as what you had last January
07:48 that's wild default rates at 4% last
07:51 January now at 18 uh sorry 9% which is
07:55 22x and lates are at like 1/3 like
07:58 somewhere around 2 9 to 30% it's crazy
08:01 so the FED is highlighting that that
08:03 commercial real estate there there are
08:05 you know well there's pain there I see
08:07 these as opportunities uh leverage in
08:09 financial sector was characterized as
08:11 notable I thought that was a really
08:12 interesting note they talked about
08:15 consumers weakening and using buy now
08:17 pay later again but they've talked about
08:19 that in the past so that wasn't so much
08:21 of a change I didn't see much of a
08:22 change here this is where you have on a
08:25 six-month basis PC was near 2% on an
08:27 annual rate core PC a just below 2%
08:30 although they were concerned that maybe
08:32 this was just because certain parts were
08:34 going down and we didn't have that
08:35 broad-based disinflation yet and uh they
08:39 did also note that job openings were at
08:41 about that 1.4 level this is something
08:44 they want to see how many job openings
08:46 do you have compared to unemployed folks
08:48 we have uh various participants noted
08:50 that Housing Services inflation was
08:52 likely to fall further and the
08:54 disinflation and rents on new leases
08:56 continue to pass through there is a
08:58 problem with this I just want want to
08:59 explain the problem really quick just
09:02 because new rents fall does not mean
09:06 housing inflation goes down because
09:08 let's say you're renting a place for
09:10 $2,000 and now the same place is
09:12 available for $1900 are you really going
09:14 to move for a $100 discount per month
09:17 maybe but it probably costs you 1,200
09:19 bucks so your year savings just to move
09:21 and it's a hassle and a stress or
09:22 whatever so there is a risk and Barclays
09:25 was highlighting this as well that you
09:27 don't actually get housing disinflation
09:28 as quick as you think because even if
09:30 rents come down people aren't going to
09:32 move to necessarily realize that right
09:35 away uh you do have many participants
09:38 pointing to disinflationary
09:40 pressures coordinating to uh a a uh
09:43 improvements in aggregate supply stock
09:46 market didn't really love these minutes
09:48 although they might be declining because
09:49 of Nvidia earnings coming up which of
09:51 course we'll be covering live and we
09:54 also have the possibility that economic
09:56 activity could surprise to the upside uh
09:59 and inflation to the downside because of
10:01 more favorable than expected supply side
10:02 developments we touched on that already
10:04 we have uh High commercial real estate
10:06 exposures at Banks being a cause for
10:08 consern and also some talk about slowly
10:11 thinking about slowing down the runoff
10:14 of the re uh of the balance sheet of the
10:16 Federal Reserve though we're probably
10:18 not particularly close on that uh this
10:21 does feel cautious and it is interesting
10:24 that they're cautious 10 of the
10:26 individuals don't want to cut too fast
10:28 or too soon two of them are worried
10:31 about us being too high for too long so
10:34 you're clearly waited to uh let's not
10:36 cut so quickly as opposed to having more
10:39 concern over that uh however the
10:41 committee judged that inflation and
10:44 labor goals were more in Balance which
10:46 is something we've heard before and
10:48 that's pretty much your minute set so
10:50 bottom line there cautiously optimistic
10:53 but not in a hurry right it's like hey
10:55 you know they're looking out to 2026 to
10:57 make sure they don't get a recession in
11:01 6 but they're not necessarily seeing the
11:04 pressure to start cutting ASAP so we're
11:06 going to un price March and it's still a
11:09 tossup are we going to get uh May or or
11:12 June as a cut or maybe even July frankly
11:15 so right now the market is pricing in
11:16 June I will tell you the Market's
11:18 unpriced a lot of cuts for December
11:20 though we used to sit at 50 we used to
11:23 actually sit at nearly 100% that we
11:25 would have four rate cuts by December
11:28 we're not four rate cuts for December
11:30 anymore right now in fact oh it just
11:32 moved actually quite a bit even more
11:34 we're at 55% for December so we're down
11:37 to a coin toss now H 55% a little bit
11:40 down uh down to a coin toss as to
11:43 whether we have a four total rate cut by
11:46 December which the market was pricing in
11:47 seven rate cuts at one point so we're
11:49 not really seeing that uh at this point
11:52 now again we'll be live uh in about an
11:54 hour and a half for the uh Nvidia
11:56 earnings release but here's a summary
11:58 for for us on what the FED is thinking
12:00 no rush from the Federal Reserve it's
12:02 going to keep some pressure on some of
12:04 the interest rate sensitives probably
12:06 though I will say nase sort of recovered
12:09 after these minutes these minutes came
12:11 out n phase is only down 1 and a half%
12:14 honestly if you're an end-phase investor
12:16 that's a gift for when solar Edge is
12:17 down 11% to only be down 1 and a half%
12:20 that's a gift the this is a very
12:22 interest rate sensitive stock and people
12:24 know that they invest in the stock
12:25 because they believe they'll have a
12:27 Tailwind when interest rates come down
12:29 yes that comes later than expected fine
12:31 more pay for longer but the fact that
12:33 it's only down 1 and 1/2% after these
12:35 minutes is a sign today's market
12:37 movements are probably not interest rate
12:39 risk they're actually probably Nvidia
12:41 risks this movement here on the cu's my
12:44 opinion almost exclusively fear that the
12:47 tech bubble has explode or is about to
12:50 explode and you've got some downside
12:52 risk ahead of you so buckle up check out
12:54 house hack to learn more uh why not
12:57 advertise these things that you told us
12:58 here I feel like nobody else knows about
13:00 this we'll we'll try a little
13:01 advertising and see how it goes
13:03 congratulations man you have done so
13:04 much people love you people look up to
13:06 you Kevin PA there financial analyst and
13:08 YouTuber meet Kevin always great to get
13:11 take even though I'm a licensed
13:13 financial adviser real estate broker and
13:15 becoming a stock broker this video is
13:16 neither personalized Financial advice
13:18 nor real estate advice for you it is not
13:20 tax legal or otherwise personalized
13:21 advice tailored to you this video
13:23 provides generalized perspective
13:25 information and commentary any third
13:26 party content I show should not be
13:28 deemed endorsed by me this video is not
13:30 and shall never be deemed reasonably
13:31 sufficient information for the purpose
13:33 of evaluating a security or investment
13:34 decision any links or promoted products
13:36 are either paid affiliations or products
13:38 or Services which we may benefit from I
13:40 personally operate and actively manage
13:42 ETF and hold long positions in various
13:44 Securities potentially including those
13:46 mentioned in this video however I have
13:48 no relationship to any issuers other
13:50 than house act nor am I presently acting
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