Inflation is bad now i know this is some groundbreaking news. I know this absolutely blows your goddamn minds guys, but trust me when i say inflation is bad and jay powell seems to think so also man, the market today is this is, is uh is done at dirty reversal coming off of this rising wedge and i want To talk about today, why, i personally believe the market will actually continue to recover. This is actually falling, pretty close to a t uh. What i anticipated would be happening for uh the spy for iwm for the entire market.

Uh coming in today, guys welcome back to trey straight through. If you talk fast, don't skip class i'd like to purpose myself to find out voice. So today, jay powell came out and said: listen inflation's bad. We might have to be a little more aggressive with our rate hikes.

We may have to go to a 50-point rate hike. Now i got to come out and say uh, because i actually just made a video about this recently, and i want to show you this, because that is no. You know. I found that to be an unlikely scenario, because i don't think it really makes sense to be that aggressive this early on when we haven't seen sort of the results, the fruit of the labor of a 25 point rate hike uh.

It was somewhere back here. I was talking about uh the the rate hikes and sort of what this situation looks like, as it was kind of alluded to that you may end up seeing a 50-point rate hike. I think it was mark the date that could have been. It was either get ready to rumble one of those two videos, but nonetheless i got to eat it there i didn't think j-power would consider that to be a possibility.

So i decided to think on this. You know pardon the entire i'm just on my lunch break. Right now from work, but i'm going to talk about a couple different things here. I want to talk uh briefly on inflation.

What will happen if this does take place, a 50-point hike? What will happen if it does not take place? The recovery i want to come revisit my theory, my thesis and then how we will alleviate the uncertainty, because, let's just make this frank, why the market is starting to pull back right now is because of uncertainty. This is exactly what's getting baked into the stock market. Right now, in order to truly understand uh, why the market does what it does? You can't think in terms of good news, bad news right. You can look at things as good news.

Yeah i'll do good things for the second and the bad news, with the good things or bad things for the second whatever, but in the long term, right, uncertainty and certainty is what will always win and sometimes uh. You can have certain news. That is actually bad news, for example uh. Let's just say that tomorrow the 50-point hike was announced that it is going to happen.

Let's just pretend, hypothetically speaking, that j-pal said you know what guys listen here. Okay, i i am a genius. I am princess man. I am green candle jesus.

I know everything about the market. We're going to do this 50 point hike tomorrow. It's going to happen right initially bam. You get a huge slap down on the market.

You'd see uh you'd see some some bad red candles and i would almost guarantee you you'd see the market recover the exact same day, because what you would watch happen is uncertainty flip to certainty the market will be able to say all right. Let's price in this news and now we're back to cooking with goddamn crisco right. That would be the certainty. So this is what's bringing the market down right now, and i want to talk about what that actually means.

So inflation uh the next day that you're gon na have cpi data released, is gon na be april 12th, and what this is essentially going to say is: are we stagnant in inflation? Is inflation continuing to rise, or is inflation starting to decrease a little bit? I personally believe that stagnant or downward pressure inflation down, meaning that the inflation you know percentage is going down from that eight-ish percent down to let's say, seven: seven and a half six and a half whatever it would be uh. This would actually be bullish. I think the market would react pretty positively to that stagnant or down uh inflation, because it would mean that i do not believe the fed would need to raise rates by a 50-point basis, uh hike, but time will tell so watch for that. This is i'm actually going to revisit this here in a little bit this april 12th date.

I think this is going to be important uh. The point behind this i've said this before, but just in case you don't know they're raising rates because they're trying to avoid a recession. This is called tightening the economy. So essentially, what you want to think about is there's two different ways that the fed tries to take care of the stock market and take care of the economy.

You've got hawkish and you've got dovish. You can think of a dovish, essentially i'm probably spelling this wrong. Dovish is essentially loosening the economy; they make it easy to borrow cash cheap, to be able to get a mortgage for a home uh, it's very easy and cheap to get your hands on money. Hawkish is the exact opposite.

This is tightening of the economy. This is raising rates, so you're going to have to pay more for a line of credit, pay more for a loan pay more for a mortgage. It's just not going to be as easy to get your hands on cash, and what this does is prevent a recession by slowing down, essentially growth you're, going to see a slowdown in growth of the economy. There's just going to be less money circulating around as quickly right, and this is the point behind why they are raising rates in the first place and that has caused uncertainty right, there's uncertainty of.

Are we going to have a 50-point hike, or are we not going to have a 50-point hike is currently getting priced into the stock market? I'm actually going to finish off with this chart right here, so you guys can see sort of my thoughts on uh. What this will do, i'm still bullish, i'm still bullish on recovery and i'll touch on that more here in a little bit. So what will happen if we do see a 50-point hike right? I want to walk through both these scenarios. Uh give the best case the worst case scenario, because i want to poke holes in my theory as well uh by the off chance that something does end up happening uh in that sort of line right.

If this does happen, if, if jay pal comes out - and he says - listen, we are going to raise rates by a whopping uh 50 points. What i believe is going to happen is very simple. I think you're going to watch the stock market price that in basically immediately. I think, let's say that the news is announced right here: stock market's trading, it's trading, it's trading, j-pop comes out and says: hey we're gon na have a 50-point rate hike uh.

Next week same time, as today bam you get a huge price in. I think it would chop around a bit and i wouldn't even be surprised if you see it recover the exact same day. That would not surprise me, because what you just watched happen here was a flip from uncertainty to certainty in that exact one minute time frame right, it would be a beautiful thing. I think this is what would happen.

Maybe it doesn't happen same day the recovery, but i do believe that you would see a recovery because you do have that transition from uncertainty to certainty doesn't matter it's bad news. It really does not matter i've seen uh, for example. I remember when the russian news was coming out right, uh russia officially initiated war against ukraine. There was no longer just talks, it was no longer uh posturing.

It was a full-on conflict right. Well, what happened right that happened? Uh, they said: hey, russia's actually, a war with ukraine. You got a huge price in the futures market and then by market open bam recovered the rest of the day, because you saw the uncertainty transition over to certainty. I think you actually ended the day green.

It was. It was a wild thing. I think a lot of people got burned on puts because they expected this to continue rocking down when in reality it priced in that uncertainty. You transitioned over to certainty and then you got to watch some growth and recovery.

Uh begin to happen. I think that is what would happen with this 50-point hike as well. If it does not happen, if you don't get this 50-point hike, let's say inflation numbers go down. Uh, let's say that it says stagnant.

Let's say j-pal says you know what forget it. We don't need this uh. He will announce that if he doesn't announce it you're, just gon na see it in the in the rate hikes themselves. I would give two different scenarios scenario.

One scenario one which i find to be unlikely. I think jay powell would announce this uh, but j powell doesn't announce it and continues on as uh intended doesn't announce the 50-point rate hike. I think this would be the worst case scenario if he doesn't address it, if he just hints at it, and he leaves this b that leaves the uncertainty in the air, in which case i don't necessarily think you're gon na see uh downside in the market, but I do think you'll see a slower growth in the market, so you're probably gon na see this get priced right. Today.

It's gon na get priced and if he doesn't announce anything you're, just gon na see a lot of chop. It's gon na chop around chop around chop around chop around very similar to uh what we witnessed back here with the spy when nobody really knew what was happening across the world uh with different different situations such as inflation, such as uh, the conflict between russia and Ukraine, i think, you'd see a lot of this right. That's to me the worst case scenario is that jpow doesn't announce that he is doing it or he's not going to do it. He just continues on uh, with his intended rate hikes as planned.

The best case scenario here is jay powell does announce that he is going to not that he's not going to uh uh fall through the 50-point hike. I think if he does announce that you're just gon na watch a massive move up. I don't even think you're gon na price in any bad moves. That is sort of the scenario here.

If this does not take place or these two uh to me, i could be missing something if i am feel free. Let me know this is just my thoughts. This is my opinions, i'm just making some conclusions based on what i think makes the most sense right now. All in all, i don't think this is the end of the market.

I don't think this is the end of the world. I don't think this is going to be a market crash uh. I think this is what i would call a forced retracement and what i mean by that is where we are with the market right now. I remember saying last week that i feel, like things are a little bit too euphoric.

You guys remember that i made a video saying: look. The market is going to continue to rally, but i think short term you're due for a retracement, because what did we watch happen? Well, you got to watch the stock market go through. Some of the most explosive recovery. You've ever seen went from 413 up to a high of 447, which is like a 35 point, uh increase in overall spy stock price.

I mean that's absolutely absurd, so it was due for a retracement. But i kind of consider this news to be is a forced, retracement uh, in which i personally believe you're gon na watch, this tap back down close to or on the previous falling wedge, which was uh the bear market, so to speak right that three months of Time where there was really just a lot of bad things and uncertainty happening across the economy across the world in the market right, i think you're going to see that that confirmation that we are going to continue on with the recovery, which is going to continue on With the small mid cap growth that we have seen stocks like mullen, bbig uh imp, all the oil stocks, i am pp, i got a pp, i got pp, i got ta go pp test uh, but nonetheless i do think this is gon na continue on. I think what this is: uh is sort of that force retracement, as i had mentioned before, which is just going to tap down, in my opinion, back down to this uh, this falling wedge and that's not a bad thing to be watching right. So how do you actually alleviate the uncertainty? I think this is probably the last point that i can talk about and then uh.

We can send you guys on your way. I think there's three different things that you're kind of watching for here april 12th, which is the cpi data. I think if this comes out and you see it's stagnant or you see it go down uh, that's a good sign that you are unlikely to see a 50-point hike that not is necessarily going to uh alleviate entirely the uncertainty. But i think it'll ease some minds and you will likely see some growth that day so in terms of confidence, 10, 1, uh, 10 being good one being no confidence, 10 being high confidence.

I probably put the april 12 data right about at like a five or a six right, the next two things that i'd be watching for got ta refresh my page uh, the next two things that i'll be watching for the second one is going to be j. Pal coming out and announcing that he is going to be doing that 50-point hike right, so j-power announcement be watching for that this one i have like a 9 out of 10 confidence on. I would put this uh right about right about here. I mean that's some high confidence that that would in fact alleviate the uncertainty and then lastly uh what was my third one april 12th jay powell announcement.

I swear to god. I had another one april: 12th, j-power enhancement, that's it. I guess i just have two watch for those two things. I thought i had three but i'm sitting here.

Thinking and usually i can construe my thoughts pretty well, i could be missing it and, if i think of it, i'll just pin it, but i think dinner. This might be too so i'll be watching for these two things right, you see inflation data continue on uh higher. I think that's not good. You could see that continue on with the uncertainty you do want to see that go lower or stagnate, uh and then jay powell either announcing he will do it or he will not do it, which is going to come down to the next rate hike.

That was the third one, there's the rate hike right. If the next rate hike comes out and it's at 0.25, that's actually going to be good that'll alleviate uncertainty. Uh time will tell. I think this isn't something you would realistically see happen until probably may or june or so uh rate hike.

I would probably put about here five and a half six, something like that: uh. If they come out and they say yep point, two: five rate hike has just been priced in whatever five or six confidence that would alleviate some uncertainty, so be watching for that and i'm gon na finish off with this right, the broad market. So what what is there to say about the current situation? I still do firmly believe you're gon na watch, this tap back down uh to the previous, large-scale falling wedge right, and if it does this, if it taps back down and it bounces that is game over lights out. I personally believe that is the market recovery.

There's no uh, nothing that can really change my mind outside of the world, ending uh that that would really take away that market recovery possibility. Now the last thing that i do want to say that is a real risk here, uh and then, and then you guys are actually good. I know i said like three times is a recession. I think if the fed is too aggressive, this is the biggest repercussion that we face as americans.

If the fed is too aggressive with their uh, their rate hikes and all that sort of stuff you're going to see a recession, if you time the economy too much if you slow growth too much, this is why i don't think a 50-point hike is a good Idea, you are going to force a recession. I i do not think this is a good idea. This is this is a little too aggressive. In my opinion, i think they have to do.

I call it eaa. It's evaluate, eval assess, adjust, oh no, execute execute, assess, adjust, execute you continue down this over and over and over and over they've executed once and it feels like they're just skipping from assess to adjust. They just got rid of assess they're, going straight to adjustment. Without watching what happens, i think if you're too aggressive the economy is going to pay for it and ultimately, what that means for you guys and us, and everybody really is the potential of recession.

So i think, that's the worst case scenario, not necessarily the market in the in the current conditions. We are the economy. Different market does not equal the economy. Right market typically can be a reflection of the economy, but it does not equal the economy.

So uh that's kind of where i'm at right now. I i personally am not uh overly worried about this current situation. I think i'm probably one of you to be honest, uh and you guys are probably gon na criticize me. That's okay i'll take that, but if you uh, if you want to you, know, offer me some uh some counter arguments, i'm all about it.

I want my my theories to have holes poked in them. I love some good, constructive criticism and uh. If that, if you guys change my mind i'll talk about it, you know gladly. So that's what i've got for this uh catch you on the next one, as always appreciate you much love light taps, though, why did i do that? Peace,.