Okay, so once again, the market dumps in anticipation of the Fed's rate hike decision not the last couple of days, but certainly the last couple of weeks. And then when the Fed actually talks market shoot up, you had pretty insane knee jerk rebuying today, the Sleepy Dow up close to three percent, the S P 500 just under three percent, and then the Nasdaq up three point one, nine percent and you out the most multiple sensitive stocks, the ones whose valuations are very, very closely tied to how hawkish or how dovish the Fed is like, for example, ark up more than five percent today. And obviously we saw similar performance in the broader markets after the Fed's last Fomc meeting and rate hike that led to indices jumping for two weeks straight before once again bludgeoning as markets lost confidence in the Fed once again, mostly because Central Banker started coming out around the time that markets were getting into the last stages of recovery and started saying things like oh, we're gonna have to be more aggressive with these high key high keys And then of course, prices went down. The Fed of course tries to manage broader economy and of course, market expectations.

and perhaps they didn't want to see markets get euphoric again and then have to get bludgeoned on the next rate hike increase. But of course, this has led many folks to assume that the Fed is going to do whatever it takes to calm expectations. Every single time, the market gets euphoric, which isn't exactly a fun time. But let's talk about what the Fed did today, and more importantly, what they said.

And then we will talk about the implications for you and your moolah. This isn't going to be a long video by any stretch of the imagination, but I want to get right to the meat of this. So Synopsis: The Fed did today what the market expected it to. It calmed fears about an even faster rate hike trajectory and boldly painted a picture of a possible soft landing.

The Fed raised rates 50 basis points, which is the biggest rate hike since 2000. The current target range is now 0.75 to 1 and they are unloading at an original monthly pace of 47.5 billion dollars in June, stepping up over three months all the way up to 95 billion dollars. Keep in mind that the Fed's balance sheet is currently just under 9 trillion, so there's a lot more to go. And it's really hard for me at least to visualize these numbers.

But another way to look at this is: the current size of the Fed's balance sheet is roughly one third of the entire U.s Gdp for a year, so if they wanted to unload all of their balance sheets, they'd have to basically unload onto the market a third of Usgdp. Pretty insane if you think about that from the standpoint of how big of an effect that would have on the financial system. Also, when you think about how extreme intervention has been in the past in order to get the financial system rolling during some bad, bad and dark periods. But anyways, today's rally was a lot more about what the Fed said versus what the Fed actually did Because the Fed met expectations and Papa Palace in one line that really allowed the markets to sigh a sigh of relief.

He set a 75 basis point hike is not something that the committee is actively considering and this is a big stinking deal because market expectations had placed a 95 chance of the Fed making a 75 basis point hike in June. So now that he has shot down that expectation that allows markets to rally on excitement for a lower hike. Of course, markets in the past were also stabilized by Jerome Powell saying that inflation would be transitory and we know how that ended. But at the end of the day, markets are always kind of on this pendulum of do we trust the Fed? Do we not trust the Fed? Do we trust the Fed and that kind of goes back and forth.

Today they trusted the Fed a bit more. The Fed also acknowledged that there may be some pain with getting back to normal inflationary numbers, but said there's a good chance of a soft or soft-ish landing, which again, is something market stabilized and perhaps even rallied on. The Fed hasn't been this rosy with their projections in quite a while. They're a little bit rosy.

Mcrosers only time will tell if they're actually right this time. But one thing I really liked was they committed themselves to fighting hard against inflation, which is something they haven't really said before. I mean, they kind of said it in a foofy way, but markets were kind of left to speculate on how the Fed would react if inflation numbers started moving in our favor. Would the Fed just threw up their hands and let it play out what the Fed decide to continue on the current pathway and the Fed kind of took the middle ground with that and provided some stability.

They said even if inflation comes down, they are not going to stop. they are just going to go down to 25 basis point increases, suggesting that even if the data supports that inflation is coming down, the Fed's not going to give up the fight. It's going to keep fighting and making sure that we get on top of this problem. But we're also going to acknowledge the data and not just stay on a very, very aggressive, hawkish pace.

Even if data does suggest that, you could be a little bit more dovish, which I think is a pretty good middle ground there, and something that might be very, very relevant in a few more meetings and especially come fall Now. Short-term versus long-term implications. Short-term implications. This was a green light for markets to rebuy back into equities that were bludgeoned on even higher rate fears.

Recessionary. worst case scenarios being factored in, and uncertain Fed policy responses, but long-term implications for the market. In regards to this meeting today and the announcements probably very, very minimal, if not nothing. all we know today is that the Fed has recommitted themselves to fighting inflation which kind of is their mandate anyways, and in the past they've shown themselves to be under-reactive to it.

But in regards to their rosy economic projections, I would say they mean Jack nor Susan. A soft or soft-ish landing doesn't mean much considering the Fed's history with fighting inflation without causing a recession, which it's had a very, very difficult time doing even in low inflationary periods. And given this Fed's history with under factoring in inflation, I think markets as a whole and myself included had a little bit more confidence in the Fed after today's meeting. but again, confidence is kind of a feeling and we need actual data.

We need actual data to suggest that we're heading for a soft or softish landing. And right now, the data suggests that the current economy is on decent footing. employment is obviously great, there's more jobs than people, and some of the data in terms of inflation like core Cpi is decelerating, which suggests that we could be close to a peak or have already passed the peak like the Fed has suggested. but still, the current economic slowdown in contractionary Q1 isn't a great context to give more rate hikes into.

So anyways, I guess my conclusion would be: let's hope the Fed can engineer a soft landing and let's put all this Bs behind us so that we can get into the new wave of problems that's going to come after this. which who knows what that's going to be at the end of the day. Rain or shine, there's only so much that we can control and so much that we can predict. I choose to be an eternal optimist in terms of the long term when it comes to American equities and a lot of the biggest and best growth companies in today's market.

Which leads me to see these times as a great opportunity to buy the dip and double down on your highest conviction stocks. I'm a strong believer that you have to be able to look and also feel really stupid in the short term in order to actually be really smart in the long term. If you take the time now to find companies and do your due diligence on some of your favorite stocks and look at the numbers they're going to be doing in five to ten years, I think you're going to find yourself in just a few years having a lot of returns, but who really knows? Maybe we're going to go into the great reset and all stocks are going to go to zero and short sellers are going to say even then they're overvalued in a market of constant uncertainty. You got to have a sense of humor, right? Anyways, have a good one folks and I'll see you in the next video.

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