Ladies and gentlemen our lord and savior green candle jesus came to the rescue of of the stock market. All noble as can be holding his tie. Gripping it in a beautiful manner. He has saved us from yet another red day and we are going to discuss what he went over today guys.

It was pharmacy. This is typically the fed's once a month sort of way of addressing the fact that inflation isn't real and recession's not that bad either uh and we're gonna go over the details of what was discussed here. Today. And how this is going to affect us moving forward so without further ado let's just dive right into uh.

What we're gonna talk about today. This is the the schedule of events. I wanna talk about basis point hike. Because we had that happen today right it was a 75 bps hike.

We're gonna talk about what that looks like moving forward. And some concerns that uh other stock analysts so to speak have uh felt which i think actually presents a pretty likely scenario uh which is the lessening or the back off from quantitative tightening. We'll discuss that we're also going to look into recession talks definition uh because gdp is typically something that is used frequently when discussing what a recession actually is he also discussed labor markets being strong. But slowing down.

We're going to dive into this and sort of debate. What this looks like uh for the reality of a recession. The reality of the stock market the growth slowdown being necessary alongside the fact that they are not trying to cause a recession. You do not hear that incorrectly this is something that actually came out of green candle jesus's mouth and then the balance sheets rrps the reverse repurchase agreement market the overnight market uh which is a transaction that takes place between banks and the federal reserve uh for cash and treasury notes.

Which you can think of as uh bonds right. So let's just dig right into this okay basis point hike. Today. We got a 75 bps and i think that there was a very high likelihood that 100 basis points.

Was sort of the expected uh rate hike that you you should have seen. Today. That's what certainly was priced into the market to say the very least because if you were to pull up uh. What the spy did today you're going to find that it had some absolutely nasty hulk dick candles.

I mean. It was pure pure euphoric bull run that we got today out of the spy. As it came all the way up and filled the very top of this gap at about 401 and some change this comes off of expectancy. If you were to think about the market in terms of uh uncertainty versus certainty expectancy is what moves things so if people are expecting 100.

But it's better than that well stocks will go up a great example of this would be yesterday. Microsoft and i think google both missed earnings. However they didn't miss as bad as the market had priced in and as bad as was expected in a recessionary. Sort of economy and recessionary talks that surround the market right now when you're not absolutely bombing.

You're not freaking getting smoked out on earnings. That's beauty is a good thing. Because that is better than expectation. The expectations seem to have been at least according to the way that stocks moved that earnings would go a lot worse for lots of different companies out there this allowed the run that we had today.

But there's more to say. And what i think is really important to discuss is that the real pain has not been felt yet j. Power. Jerome powell green candle jesus.

Today said this during his speech and i find this to be quite peculiar when you look at sort of the state of the economy. Why is this important well when rates get raised it's sort of a lagging uh lagging tool you don't see the effects of rate hikes immediately within the economy. For example. Radix has been taking place for some time now.

However inflation continues to rise rampant and you still. See economic turmoil and problems that are taking place every single day. What he means by this is i the the pain. That is to come from these rate hikes for example higher overall interest rates on on car loans on your mortgage people defaulting on homes.

All these things that could come have not quite been felt yet as we haven't seen the ramifications and the repercussions of these rate hikes. Quite yet but this is where things get quite interesting is there are questions that were asked during this speech. Today from jaypal. People said.

You know what j pal. Listen. I don't necessarily think you're a bad guy. But sometimes i have to ask myself what would a bad guy.

Do what would a bad guy say. And they asked him are you actually going to continue with your right hike. As planned or are you going to pull back on quantitative tightening and sort of give some relief to the overall market and i think this concern in this question is quite valid considering the fact that the fed in many many decades has not actually followed through with quantitative tightening. The way that they have sort of alluded to so something that i'd like to see continuing.

Onward is rate. Hikes. Moving as planned right once you start to see a slow down in overall inflation. Sure you can pull back maybe.

It's a 50 bps hike maybe it's a 25 whatever but we don't want to see them completely stop quantitative tightening all right you want to see a continued rate hike. Even if it is a slowed rate hike. This is certainly better than not uh anything at all the other thing i'd like to see is the overnight repurchase agreement the reverse repurchase agreement market start to pull back here because it has not quite done this uh a lot yet it peaks out at what appears to be about. 23.

Trillion. Dollars and is currently resting right around that 21. Trillion dollar ish range. I'd like to see this drop by a good couple hundred billion to show that the federal reserve is actually lessening their balance sheets.

Because that has not happened whatsoever. Yet we have not seen a lessening of the overall balance sheet. And that reverse repo pulling back is going to be the first sign of that and furthermore. I think once you see that reverse repo really start to pull back some right a couple hundred billion dollars.

That's actually going to add some credibility to what the fed says. Why is this important credibility. Adds. Confidence confidence pushes stocks up.

If everybody in the market. All the big money believed. In whatever j. Powell and the fed was doing uh.

The stocks would start to go back up because they would believe in the overall master plan uncertainty and a lack of confidence in jay powell is what leads to stock selling off if there's no fear if people aren't scared if they believe what people are saying at the very top of the pyramid uh. They're going to just continue to buy stocks as planned you add that confidence back you start to pull back on the balance sheet. I think you're going to see some confidence get re established into the market. And that is really going to add some uh.

Some certainty to the the punches. That are coming next is recession talks. Uh you guys have all seen this meme that's floating around for whatever. Reason.

The white house. All of a sudden has decided that they're going to change the definition of an of an apple all right from now on this is what an apple looks like it looks like a vape pen. It's got the five percent menthol views pod inside of it uh. It's very healthy uh.

An apple a day keeps the doctor away is what they say sounds stupid right well that's the same exact thing they're doing with recessions. The white house is trying to redefine what it means to be in a recession uh by the books by definition. It's typically when you see two negative gdp quarters in a row. Which seems very likely coming into this week as we will be getting those gdp numbers.

This is an attempt to me to gaslight. The general public retail investors and yeah. I wouldn't say wall street. I don't think wall street buys that but certainly dumb money dumb money they're trying to get off the horse off the game and make it seem as though this isn't really where we are when in reality.

Despite a strong labor market. Which is certainly talked about a lot right a strong labor market isn't the definition by the book of what a recession is a recession is when you have at least two negative quarters of gdp in a row and typically it's lagging right whenever people say you're in a recession. Whenever. Mainstream media starts saying we're in a recession.

I think that's probably when you're close to the bottom of the recession. You're probably about down here. Then you're you're starting to round up a little bit. But nonetheless.

It's lagging and i would certainly say that that we are in that situation right now and that opens up you know good opportunities for buying labor markets being strong. But slowing down. Now this is something that jay powell has been on for uh for quite some time because of how strong our labor markets are and this is certainly not just him. But because of how strong our labor markets are we cannot be in a recession.

And he went on to say that we are now finally starting to see a slowdown in overall spending and a slow down in economic growth. Which appears to be one of his mainstream goals. He wants to see growth slow down. Because he finds it to be necessary and alongside that he claimed that we are not trying to cause a recession.

But i ask you this all right if you see a slowdown. The overall labor markets alongside rampant inflation you start to see a slowdown and growth in the economy. If you start to see a pullback in expectations from really big blue chip names such as walmart as an example what do you think that is going to do well. This is an oxymoron.

I'll answer the question for you growth slowed down being necessary uh. It does. It is not even remotely similar to not trying to cause a recession. If your goal is to slow down growth as is such whenever you are going through quantitative tightening as as such whenever you're raising interest rates.

The ultimate goal is to get people to spend less money you are going to cause a recession because what this does well it pulls back the overall economy. It is meant to be a a counter uh a counterweight right whenever you're trying to counterweight the economy. If we've seen too much growth. Too fast of growth for too long and we've been on this side of the scale.

Which is rampant rampant rampant insanely fast. Growth. You have to over correct a bit you have to bring things to the other side of the scale which is going to scare people which is going to cause recessionary talks to me it's very goofy the market didn't seem to mind much. I think what the market was the most happy about was a 75 bps compared to the 100 which was certainly discussed and certainly talked about for some time uh.

But this was uh positive. This was certainly the thing that was discussed the most and and certainly the leading. The most happiness lastly is the bounce sheets and i sort of touched on this before but something that i'm watching very closely is the reverse repurchase agreement. It is not a coincidence that when covet hit you saw massive amounts of influence of the reverse repo market.

You come all the way back to march 31st of 2021 and the banks really started utilizing this rrp reverse repurchase agreement transaction every single day and it has continuously grown and grown and grown and grown and grown. This has been a cause for concern for some time now and the majority of the reason is uh. Whenever you see this much money move in that quickly between banks and the federal reserve you see these transactions take place over and over and over and over and over again people have to start asking themselves. Where is this money going.

What is the purpose of these transactions and in the most simple way possible reverse repurchase agreement as i mentioned before is a transaction that takes place between banks and the federal reserve and typically what you're going to see happen is if you know banks this can go both ways may i add. If banks are sitting on a whole butt load of cash right. And this is the reverse repo market. If banks and the fed have these transactions that are taking place in which the fed is essentially uh selling right notes treasury notes back and forth to banks right banks will get uh treasury notes and then the fed will get money this would be considered a repo agreement.

Right the opposite of this is the reverse repo the reverse repo is when banks are getting a his ton of money from the fed. And then the fed is getting these treasury notes in return well what what needs to happen is the fed needs to start selling these giving these back to banks. Why are banks sitting on this much cash in the first place. Why are these transactions taking place well guess what uh.

The federal reserve isn't sitting on as much cash right now they're they're very heavy on securities. And what they are claiming that they'd like to do is start to become more cash independent. They want to sit on both loads of money instead of securities whether it be the stock market whether it be mortgage backed securities or whether it be the reverse repurchase agreement market they want to get some of that cash back in their in their banks and their books. And that is going to sort of give them some liquidity to sit on right well this has not happened yet banks are sitting on a ton but not necessarily the federal reserve which tells you that quantitative tightening has not quite been what it's been claimed to be yet we want to see this once you really start seeing these balance sheets.

The rrps start to pull back uh this falls in line with what i mentioned before confidence in the federal reserve confidence in their skills and their tools and all this nonsense to get the job done uh. I think at that point you can be very confident saying that uh things will be on the right track. But nonetheless confidence has certainly certainly restored to some extent today in the markets uh. We still have a couple days of the week left on a very big earnings week.

So things can turn around wicked split just like that uh. But this is a good sign. This is a i think a decent sign moving forward. Even if not quite everything j.

Pal. Said was uh up to snuff. There's things that i i think we'd like some more of and that's certainly not gaslighting about a recession and gaslighting about uh tools and blah blah blah. But uh it's a step.

It's a step in the right direction. And i'm i'm pretty satisfied with that and now you're up to speed with everything. I've discussed today. Those are my takes.

Those are my opinions. Please let me know what you thought about the the pharmacy. Meeting in the comment section down below. So i can read through it uh and that's what i've got for this video.

So until the next one i appreciate you guys much love is always late taps and peace.