WELCOME to the Crazy World of FED SPEAK, It is a Special Language Only a Few Know and it Can Be Nuts

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good morning everyone how are you doing

this afternoon

thought i would do another video about

jerome powell in the fed

i have a sneaky suspicion

that you and i

and specifically the stock and bond

markets

not to mention the dollar and interest

rates

we are about to go on a wild wild

ride

let’s just flash back to monday

48 hours ago

monday

jerome powell

in the morning

is saying things like you know what

this new uh mutation

means we’re gonna have to take in

more data

we’re gonna have to see how it impacts

the consumers

we think that this new

mutation

will have

downside risk

to consumers and thus the market

basically insinuating that rates will

stay

low

longer

24 hours later

jerome powell comes out and says

you know what

at our next meeting

we are going to talk

about tapering

faster

now obviously the essential insinuation

is if you taper faster you also raise

rates

faster

folks i have been listening to

fed speak since alan greenspan

alan greenspan was the master at saying

something without saying anything

jerome powell

is in a tough spot

so what did he say yesterday basically

what he’s saying is wow

this new thing this mutation could cause

consumers to change their behaviors

maybe they will stop traveling maybe

they will stop shopping maybe they will

stop going to events maybe maybe maybe

maybe maybe

24 hours later the mutation is not as

bad it’s maybe got more data

inputs and now he’s like you know what

inflation is a problem

we should at least talk about tapering

sooner

you really have to parse the words

first

let’s just pretend it’s monday right

let’s pretend it’s monday

do you not think

that regardless remember it’s monday

it’s not tuesday when i’m proposing this

don’t you think the fed would have

already been talking about should we

taper faster or slower

i would argue that the fed should be

talking about going faster or slower at

every fed meeting

now you fast forward to tuesday

and jerome powell admits that one of the

topics we are going to talk about is

we’re going to talk about tapering

faster

well no kidding i hope you are inflation

is running at six percent and getting

worse

this fed speak is getting interesting

because again what is happening in the

environment around this

well first off the 10-year bond market

or the 10-year treasury

what a wild ride that has been

so first off the fed comes out on monday

and says we’re going to leave rates

lower longer and rates go up count kind

of counterproductive or counterintuitive

then today the fed says or powell says

you know what we’re going to talk about

tapering and then rates go down

what a wild ride the 10-year treasury

has been on in the last 48 hours

folks at the end of the day

these folks are going to get together in

december

and

consumer behavior is what it is we are

spending records amounts of money on the

holidays wage inflation is going really

well

jobs number friday hello jobs number

friday 600

what was it 600 000 was the over under

or was it 650 i forget we had a

challenge on this channel

but at the end of the day

right now if you are evaluating one

rental at a time

30-year mortgages are cheap

and i’m shocked to say you that based on

the bond market activity today they’re

probably a little cheaper

i would not expect that to hold because

again

the fed tapers faster the fed raises

rates faster at least that’s the logical

thinking

so really what i wanted to do here is

for a lot of you that are watching this

the fed and specifically powell as the

chairman he is going to be talking

or jawboning a lot

he is going to be trying to influence

the environment in wall street he

doesn’t want a taper tantrum he doesn’t

want wall street to freak out

so he is going to be saying things so

wall street

gets ahead of the game a little

so i expect powell to come out with a

lot of

fed speak which again going back to

greenspan is a lot of fancy words that

mean

nothing

so that’s what’s going on with good old

jerome powell i think it’s still fair to

say that rates will stay low and the

rate rates are lower than they should be

i do not like where rates are i think it

is causing inflation i think it is

hurting

too many people but they are where they

are i do not have the power to adjust

them up

so my goal still is to take advantage of

low 30-year rates i wrote offers

yesterday as i shared on the daily

financial news

i will continue to do that

also just so you know what’s coming up

later today at 6 00 pm i interviewed a

cpa yes an accountant who does tax

returns for real estate investors

talking about cost segregation

bonus depreciation

uh loss carry forward all of the things

that we were thinking about with our

cost segregation expert i brought on a

cpa and you will be looking at that

uh that video will be available to you

at 6 00 p.m pacific tonight

i got a question here from angel no well

let’s talk about this angel this is a

good question do i believe interest

rates will go negative

so it’s a it’s a question angel about

how you calculate negative

i would argue that rates are negative

right now

i believe the interest rate is negative

right now and that is why i’m borrowing

money

how can that be well

the 10-year treasury

is at 1.3 percent and inflation is at 6.

to me that is a negative

4.7 so angel

i believe interest rates are already

negative

now angel if your question is more about

will the 30-year mortgage ever be

negative and the lowest i’ve seen ever

is 1.99 no i do not believe the 30-year

mortgage will go negative

so it’s a question of nominal or real

[Music]

again angel i would i would argue that

rates are negative and that’s why i’m

borrowing money

if rates are negative

borrow money that’s what i’m doing so

again inflation is six

the ten years call it one four five

sounds negative to me so that’s what i

got for you there any other question

since uh since i’m here we got angel how

you doing thanks for the question ar yep

real verse nominal great point you’re

absolutely right

so again watch jerome powell he’s going

to be doing this a lot on monday he said

this on tuesday he said this it’s like

dr jekyll and mr hyde it depends on what

he wants to do and he is going to be

yanking the stock market and yanking the

bond market

all over the place the next month or so

so take care of yourself have a

wonderful evening

don’t freak out

jerome powell is not really speaking to

you and i he’s talking to wall street he

doesn’t want a taper tantrum which is

something that occurred i believe under

bernanke i think that’s where it was it

might have been yelling actually i don’t

remember if it was yelling or bernanke

but anyways have a wonderful day

everyone have a wonderful evening take

care of yourself and don’t forget that

cost segregation and whatnot

uh here we go ar for your canadian

audience i love my canadian audience

folks if you are in

canada or you invest in canada do me a

favor connect me with other canada

investors or

uh podcasters or whatever you want to

call them i would love to interview them

i have lots of questions i would love to

get on their channels uh the the

environment is different just like ar

highlights you have five year money you

got 25 year ams it’s a different ball

game and they’ve had

impressive appreciation

so ar uh thank you for bringing this up

i gotta get more canada uh i’d love to

get a canada expert that we could talk

to every week wouldn’t that be a blast

so ar or any of my canadian friends out

there watching this please connect me

with others

i would love to get better coverage and

if you’re in the rest of the world

europe asia australia south america

let’s get let’s get something going

let’s let’s uh let’s bring one rental at

a time to the rest of the world

so back to ar’s question for the

canadians how would you feel about

five-year investing time horizons versus

your current philosophy on 30-year money

first and foremost

i’m only doing 30-year debt

five-year arms

freak me out at least in the united

states because i guess i have the option

in fairness

i’ve not studied the canadian market

enough

to realize how much of a true

crash is possible i you know maybe ar

you’ll know did how did canada do during

the great recession

did it actually fall were people on the

hook were property values down or they

stay flat for a long time this is why i

need to get some canadian experts or at

least get one canadian expert

in europe and

you know rest of world so

i would be concerned

frankly

um but i’m not sure how much

but yeah i’d be concerned how much of

interest rates gone up right remember i

did a 50-year journey ar or a 50-year

survey on interest rates in the u.s i’d

probably go do that in canada figure out

how

variable they are

those are things i would be looking up

for sure

hey dia

dion how are you trying to get my wife

to listen to help me out please tell

nero to listen and learn listen and

learn

we try to help ask questions get engaged

uh we are a very friendly channel we try

to help everyone

um

yeah we’re just trying to be positive

folks uh trying to help people and again

i’m trying to help a million people the

next 50 years of my life i’m going to

try to help a million people and the

only way i can do that is if all of you

who i help help others we’re going to do

this via

a network effect so if you think one

rental at a time is helpful please

tell others to join watch the daily

financial news ask questions let’s get

somebody from canada engaged so we can

grow our footprint up there

take care everyone have a wonderful

afternoon don’t freak out but jerome

powell

he’s going to be dr jekyll and mr hyde

if you don’t know that reference google

it

you have a nice guy and then

a not so nice guy he’s going to be all

over the map monday and tuesday as an

example

take care bye

 

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