Foreign, foreign, foreign, hello, hello, What up? What up? What up? I'm still sick except now I have fistfuls of DayQuil and Sudafed and vitamin D and zinc and emergency in my system. We're here to bring you this Fomc day party. Let's hear party people. Let's hear pretty people in the back, can't hear you in the back.

We're partying. We're Party People we're her. We're partying Party People We're at a party in the market. Ugh, folks, you're probably wondering why I brought you all here today.

You're probably wondering why I all invited all of you to be here and the simple answer is interest rates. There's been a lot of murmurs on the street, a lot of murmurs in the Goonie community that the interest rates will be changing today, and I figured let's end the debate. Let's end the conversation and we'll talk about an interest rate. Straight up.

We'll uh, we're gonna talk about this. Straight up. No more murmurs in the Goonie community. Deez Nuts Oh folks, all hell is about to break loose.

You thought it was crazy the first time you watched. Jurassic Park It's gonna pale in comparison to this hail in comparison to this. I Don't think anyone really knows what that means, but uh, Fomc results coming out at 2 p.m If you're watching this live, you're gonna have to wait about another 12 minutes. If you are watching this as a replay and you were late to class, you're going to want to fast forward 12 minutes to get all the good stuff.

But you should also know that you get a demerit because you should have been here. Live So I just want to throw that out there. and if um, the minutes uh, taker of this particular meeting could note everyone who's here and who isn't here, but as long as we have a majority I think we could proceed with the following meeting but uh, if you're here, uh, please sound off with an i uh, we just want to know who is here and who isn't here. um obviously just for meeting purposes.

like we don't want there to be confusion in the future meetings of like oh like Karen said she was here but Jeff then said she wasn't So just like, if you're here obviously sound off with an eye just so we can get that all written down and then we'll be able to cross reference that with with people who are not here for the meeting so you sound like you're on drugs I'm on takeal I don't know what's in Dayquil but I'm on it um I am on the day quills I All right, someone write all those Downs That would be a great help I appreciate it. all right Captain hi Captain Um so yeah, you can fast forward 10 minutes if you're not watching this in real time. but um, do you deserve to watch? It is probably a better question. Do you deserve to watch it? Yeah, so the Market's been crazy.

Today we popped we came down I think I made money I don't know I ended up taking a bubble bath and then I took a quick nap in a uh owl blanket. Uh, and it's kind of cool. It's not a blanket made out of owls. it's a blanket that makes me look like an owl.

So um, it's kind of like a Batman Vibe except I'm an owl man. so it's like oh man like I am oh man. I'm owl man. Um, so it's one of those things.

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Matt M-a-t-t That's the code because if you forgot who you're watching like I'm at well technically my name's Matthew like that's my birth name. Very biblical. Um, fun Fact: Fun fun, fun Fact: My mom has never called me Matt I Don't know if my mom's watching right now, but I Don't think at any point in my life has she called me Matt It's always Matthew But then everyone else. actually there's a neighbor kid growing up.

his name was Elijah he called me Matthew as well but everyone else calls me Matt So anyway, that's why the code's matte. Uh, it. it's Matt M-a-t-t you put that code in and depending on how much your initial deposit is, you'll get anywhere from five to five thousand. Uh, but yeah, it's M-a-t-t Kind of like that thing you step on before you go into someone's house but with an extra T um for all you uh Matt people out there I Just want to clarify if there's any issues, there shouldn't be.

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Is it ttam Is it M-a-t How do I download the app like what do I do I don't know if you don't know how to do it. Maybe trading is not for you. Uh, but you could reach out to Chaos will help you. Why not Chaos? I'm just gonna give everyone your phone number.

so if you have any problems, you could reach out to Chaos directly. Um, and that would be a huge huge help. Matt What's your favorite? Profit: Strat Ling Stop. That's a good question.

It depends on the strategy. so I actually have some trailing stop strategies and then other ones I have like, uh, multiples of the risk. So like let's say, I'm risking five I might be going like oh, 15 like a three experts to reward so that would be like a limit type of a situation. Got out all the remaining Gme this morning.

4K Profit Thanks for being my worst best friend. Love you so hard! Okay also why are we all sick and nervous? Because Chaos tomorrow? Why are we all sick? Oh yeah, you're hanging out with Chaos tomorrow. Well be careful. He's been known to do some funny things when people aren't paying attention.

Uh, so don't let them pick on you or anything like that. Um, high on day equal? No, you can't be high on DayQuil There's something going on in my lungs and my nose for sure Folks, we're just, uh, going to meet Kevin's channel to watch fomc Alfredo Don't you leave us Alfredo I Swear to God if you leave I'm gonna find you Alfredo Alfred Alfredo If you leave, we're gonna have a big big problem. We're doing the Fomc meeting here Alfredo I will find you I will I will hunt you down Alfredo I Swear to God if I don't see your name pop up everyone find Alfredo find every Alfredo you could possibly can in the entire world. Alfredo Oh Alfredo We're gonna have a problem if if Alfredo left.

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Put in the code mat. Um, put in the code Matt Download streamy. That's how you get the money. but here's what you're probably looking at.

So Bitcoin has had a pretty good session. Coming down a little bit, but now bouncing. Same thing with the overall Market Pop this morning coming down. now popping.

This is a classic cold pattern, classic whipsaw, classic. Just like insanity going in. No one knows what's going on. We've essentially done a great job of going nowhere.

today. we're basically at the level of where we opened this morning. Such a common thing with Fomc meeting. Also, remember, with an Fomc meeting, it is very, very common that the quote unquote first move is the wrong move.

So whatever big jolt is like wherever we're holding it first commonly given back, not all the time. but it does happen quite often. So I want to throw that out there before we go into it which we do have two minutes. there is an 83 chance of the 25 Bips, it's gonna be 25 Bips, right? Hike.

The interesting thing is going to be this: So we're going to get the Sep: the Summary of Economic projections. Someone asked me where you can get this information I saw it in chat. Go to Federal Reserve.gov Monetary Policy if you want to see all this good jazz once again. Federal Reserve.gov slash Monetary Policy all spelled properly if you want all this good jazz for yourself.

But anyway, this is the last step. summary of economic projections. And the interesting thing is this right here 5.1 people are paying attention to is that going up? Is it going down? This in December was the projection for 2023. In with respect to the terminal rate, the high Water Mark We're seeing how that changes and we're also seeing how people are voting.

So this right here was the vote from last time. Kind of looks like a Christmas tree. We're going to see how things change this time around. Um, and where the Bulls are.

Obviously, it's going to be adjusted one level over to the left here because it was 2023 and now we're in 2023. If you believe in the linear nature of time, but don't get me started on that, this is where we're at today. This is what you need to know if you want to check it out yourself. Once again, what is it? What did I say Federal Reserve.gov Monetary Policy.

But we're also going to be able to listen to it right here. right here. right here, right here. All right folks, buckle up because things are about to get crazy twice before the end of the year.

So I Think that's uh, that's gonna be an interesting tension in markets Katie One more thought from you. Uh, in terms of what you expect them to say, uh, Visa vis-a-vis future rate hikes or changes in interest rates. 30 seconds, please. 30 seconds folks.

Buckle up your butts. I Think it's going to be a very, very carefully worded, carefully constructed statement to David's Point leaving all doors open to either: Bitcoin Bottom left Dollar Bottom right FRC we have a Regional Bank Top right Overall: Market Tops uncertainty. Let's go. Let's go.

Let's go 20 seconds What the story actually is. Let the record show that John Bellow says today's ordersfield largely about banking stability more than about monetary positions A few seconds time. Steve Leesman is waiting uh for the hour, as are we, and it is here right now. Steve the Federal Reserve raising by one quarter point by 25 basis points to a new range of 475 order filled.

It is the ninth hike in a row since the Fed the end hiking in May 2022. The FED providing some guidance saying additional policy farming may be appropriate. That's perhaps a bit of a downgrade of what they said last time where they said ongoing increases in the policy rate may be appropriate. Now they're saying additional firming.

We'll have to talk what that means now on they said recent developments which seems like a you've been prepped for the recent turmoil in the back. Market They said recent developments are likely to result in tighter credit conditions for households and businesses. Those type of credit conditions will weigh on economic activity, hiring and inflation the extent that they kept it the same: 5.1 Federal fund rate The high water mark the terminal rate direction for the funds rate at 5.13 which suggests a couple people voting higher. This is the comparison the last time and then be done they raise next year's fundraiser.

this was last time right here. Three percent like this projected for the years difference. There are some Cuts built in by the FED next year, but a little bit less than there had been before. They forecast a bit more inflation this year versus three five for the core Pce.

They said inflation remains elevated. Remember last time, this is the current one. it was gone. From this particular statement, they said the U.S bank system remains sound and resilient on the economy.

modest growth in spending and production and production. They've noted job games have picked up and running at a robust Pace Guys the one thing I'll notice from this thing is first change in language for some additional firming may be appropriate. The other thing is almost no connection at all from their comments. big pop at first tighter credit.

so I got it before the effects on the economy with policy except for that little squishy language about what happens next. Kelly All right Steve thank you Big drop of the dollar shooting higher than FRC but as we know we get Bitcoin went up and came down reaction. and then we get the FED press conference reaction. Then we get the closing bell reaction and then we get the rest of the week.

And by the way, Powell doesn't have a great track record for risk Assets in that regard. but right now the complex looks positive. The NASDAQ is up half of a percent. The Dow is up about 26 points.

A similar move for the S P 500 as well. Let's bring back our panel: Babasani Rick Santelli Watching the market action for us, Let's start with you: uh, what do you see in the tens, twos, and everywhere else uh, twos and tens Uh dropped rather dramatically. Twos Especially dramatically. we dropped to 393 and then it popped up to over four percent.

On the 10-year note, I saw the market get very close to kind of 340 uh, A349 area before it popped just a bit. The dollar Index did the same thing. it dropped a bit. So what are we looking at In macro simple terms, We're looking at interest rates moving lower across the curve.

We're looking at equities and I'm sure Bob will get to that in a minute Not looking too badly. Everybody, of course is monitoring what's going to happen with the next set of Fed meetings that happens in. May Are they going to do a quarter point or not? That's how it's turned so quickly. but there's nothing surprising here.

Every Trader I talked to was looking for 25 or fewer, actually looking for 50. every Trader I talked to thought stocks would be the better of it and that the U.S banking system is found in resilience are likely to result in tighter credit conditions for households and businesses. economic activity, hiring, and inflation. The extent of these effects is uncertain.

The committee remains highly attempted to. inflation. I'm going to take this away I Think the press conference if anything, uh, 25 minutes Bob What do you make of it? We've seen a seesaw or another kind of trying to claw into these gains. Focus Some additional policy problems here.

Assuming that a 25 basis point hike was what happened and that is what happens. Interesting. These are all the differences explicitly signal that they are pausing or they could hike and simply say the economic conditions are a little uncertain and it seems to be the later or the latter one. And I don't think that's necessarily a bad thing.

So uh, this phrase additional policy firming may be. We're talking about this right here. some additional policies in the future, but that's a much much weaker version. A much banking crisis is kind of striking.

They said recent developments are likely to result in tighter credit conditions, but the effects are uncertain. That's a nod, but it's a a pretty weak nod. So the the so far entirely sure what the outcome is here. So I would say that this is a pause, but a very, very weak form of the pause.

Just enough to make the markets satisfied. The real worry for the market was what happens if they explicitly said we're sorry the banking crisis. We have the tools to deal with this and we are not done fighting inflation and we are not necessarily going to uh to to uh to stop our interest rate hikes. That would have been a major problem.

That's not what happened here and that's why I think we're getting this modest rally right now. David What do you hear? What do you hear in the statement as we look at the famous octa-box That's my favorite thing. Eight people in one box. It's a thing of beauty.

Uh, what do you? What do you make of the statement? The OCTA box. Uh and uh. next resistance above Where we are right now from what it was, not down. I'm not surprised by that because our own models were saying that you know inflation's coming down, it just has to come down steadily.

and in fact, they were quite obviously just had a nice winning training. Um, so I'm not surprised I had to mark that up a bit, but it's still coming down. it's coming down very steadily. and I Just think that I think they're having a problem pivoting here.

They really should have pivoted to a much more neutral stance. I Think this is you know, clinging on to some hawkishness, which they're not going to be able to cling on to for very long. But it is a little bit more hawkish than I thought. But talking about, you know, further firming rather than further changes in rates.

Um. and also they didn't acknowledge any further progress on inflation. even though the year-over-year inflation rate has now fallen for age consecutive months and wage growth is running well below inflation. they could have acknowledged that, but unless they say they're making progress against inflation, then it's getting getting harder and harder for them to to you know, pivot without sounding like they're scared of the banking system.

So I think I think they missed an opportunity to go to a more neutral stands here: Katie Do you agree? Man, the dollar is vomiting? Well I I don't know just that they were going to raise 25 with another 25 to come and that they would. It does seem like we have another 25, which I think they didn't I think it's really interesting the focus on credit and not Financial stability as being as being sort of the transmission mechanism of what's gone on in the last few weeks and as we all know the next one is Wednesday is clearly focused on the direct transmission mechanism of this uh period of instability on growth and inflation and again keeping their options open. I Don't think they have the the ability really to uh not necessarily Out of the Woods yeah stability into into the market so they had to strike the balance and I think they did and we should add as we watch the Market's reaction uh Dows up about almost 100 points. so similar to where we were pre-meeting Um David Bellows Just want to go to you on this and this idea that kind of the FED has to do with the market is as priced energy today.

Yes, leave people with the sense of where they're going and then fulfill that and as a result everything's hunky-dory You know they did that for basically every meeting of the past 12 months. 22 minutes and yet the rate hikes still broke stuff. so it I don't think we need to be myopic here in looking at the reaction this half hour to a macro effect that's still going to play out for the next year year and a half for quite some time, you know? Kelly I Think that's exactly right. There's a lot of uncertainty about the Outlook right now.

You know the what is the impact of all the rate hikes that have happened. You know that that's broadly the story Market turning a little bit as they're being impacted by those higher rates. For sure, that won't be the last thing that's impacted in the FED Are you streaming on Rumble two or just YouTube I think there's a thousand people watching it on Amazon right now. Um, so I think you're really the right Point Regarding the uncertainty, you know I Certainly heard in the statement the research should be there and they have in the past.

There may be more firming and you know it's uncertain what the effects are. and I think that's realistic. So I think the FED um, you know is realistic. In citing the uncertainty there, you know I Just want to come back to this idea of financial disability I think that line that Steve just read about the right here system is safe I think that's a new addition to the statement you know I could be corrected there and I think that's a theme.

We're going to hear a lot more about it. I Think the market over the last few weeks has been trading primarily on this financial stability question. You know it's not so much about the inflation Outlook Bitcoin How high did it get? Almost 29 000. in order to pursue all these other objectives on inflation and unemployment Financial Stability Yeah, I think Steve you you would agree that the U.S banking system is sound and resilient.

Those were not words that necessarily would have been in previous statements, but we know why things have changed and so the statement needed more calls. But just apparently through the words here, what stood out to you: If anything, 62 chance of 25 minutes of the language affirming, um, maybe David Kelly will tell me if I'm wrong. but there's a couple ways that policy confirm policy would firm if for example, the policy rate Remains the Same and the inflation rate fell. So there is an interpretation here that I think we're probably going to ask chair Powell about which is did you go to the word firming because that means you may not want to raise rates.

For example, if tighter Financial conditions restrict lending and cause the economy to uh to slow down and bring in Alfredo, you're here then and the policy redeem is unchanged. the FED would not actually super word everyone Alfredo is here. Fresh quote here. the probability of that may height.

thanks for being here buddy 62 or 64 of their another quarter that is built in, but we'll hear how Powell explains what he means by firming and why that's different from ongoing rate increases I Suspect it's because the inflation rate could decline. The other thing is I feel like Powell's trying to have it a little bit both ways. I Don't know that he's getting away with it here, but we have this huge thing coming down the pike here of tighter Financial conditions which are going to do a whole lot of bad things to the economy. It's right there.

It respects me that if all those things about four in the coming years ought to have been a little more dovish Pce, they're looking for a big follow-up that would not be the first politician or office holder to want to have things a little bit both ways both ways because they've really screwed this up in more than two ways: waiting too long to hike, then hiking too aggressively. And listen. I'll tell you what are you guys Bullish? Bearish? Where are you at this too This entire conversation because I'm not gonna hold up. Does anybody here really look at these banking issues is something? Stand? You guys are a lot of negative names.

Tightening Cycle I Mean let's oversimplify this whether it's inflation. Bank Stresses illiquidity, mounting unrealized losses through accounting issues, geopolitics, inverted yield curves. All these are are under review and not even the big picture is included in that. Think about all the supply chains that have reconfigured.

The fact that they're going to be more inflationary is something to consider as well. We didn't see big pops when China reopened, mainly because there's a lot of question marks all over. China I Just think there's so many issues for the FED to talk about. Debating firmness seems to get lost in in that conversation in my world.

I Think the issue is everybody knows the FED should stop here whether they do or they don't. That's the having it both ways by almost diminishing the fact that they have caused the cracks that we are now witnessing. And I certainly don't think that this calm is going to just disappear here. These issues are here and they're going to remain here until the market gets used to this new Aroma in the room called rate normalization and and yet they still? David Kelly have the terminal rate at 5.1 percent? Yes! And to Steve's point, you know with I think maybe when they changed it from additional increases to firming.

The nice thing about firming is firming could be one increase. If you don't do that increases you either have to say interesting, one more rate increase. Interesting. that allows them to get away from the singular plural issue with regard to further rate hike.

So maybe that's what they did because as you said, they still got this 5.1 percent at the end of the year and the market does not believe that. and I don't really believe that either because we've got a lot of you know what? what we're seeing here is, we've had title ending conditions before all this happened. I Can't believe that after the last three weeks that banks are going to be more like demand or small businesses are going to look like a better spaghetti position to to loan officers than they did a few weeks ago. So I think you're going to have a lot of economic tightness.

Uh, as this year goes on. And by the way, also oil prices have come down, Inflation expectations have come down. So you know people have said the FED is between a rock and a hard place. I Think the FED is between a rock and a soft place.

Because we've got software inflation. We've got software economic growth. They should just stop and and not try to micromanage this economy and really overshoot on rates only to have to cut them next year. That's exactly what Uh Rick just said Katie Let me turn to you: uh David quibbles: it's going to get that high, do you? We do.

Actually, at this point, it might not get the wrong way. Um, there might be an opportunity here for the FED to skip a meeting um and assess the data as well as the cumulative impacts of of all the rate hikes that they've uh, that they've put in place so far. But until and unless we really see inflation start to fall in Earnest to consistently much faster towards the Fed's target I don't think they can really get away with pausing. and I think that uh, that Powell probably at the presser will take the opportunity to take a page out of Christine Lagarde's book by striking that separation between the financial instability issue and the inflation issue and making making sure that we all recognize that can't have one without the other.

Um, and that they have separate tools separate toolkits to address each. Um. So I think the FED has to remain really committed on this inflation issue and that's going to keep them a bias towards Uh towards Uh, tightening policy and and Hiking rates. And yet John the the yield curve is back to 50 basis anyway.

and would you describe that as kind of the sequence that usually plays out once we're already kind of heading into that macro slow down event. Or do you think this is a a bullish signal either for stocks or for the economy? A quick point On this word firming, You know. Steve points out that one-way policy confirm is uh, unchanged policy rate and falling inflation. Another way policy confirm is if the policy rate remains unchanged relative to the market expectations for a cut.

and so in that case, you know the FED will be delivering tighter policy than is discounted in the markets right now, and that could be considered affirming as well. You know I Think the broad Point here is: there's a lot of uncertainty about the Outlook I Think the Fed's acknowledging that. Um, and you know it's really hard to know exactly how that's going to play out over the next few meetings. You know, a few meetings.

Inflationary process underway. Uh, you know that's likely to be accelerated by the tighter Financial conditions from the credit crunch. It's a matter of time. before that, you know it's really apparent and kind of taking hold, and the FED acknowledges it.

But I Think that's what the yield curve is telling us is that disinflationary process is underway. It's a matter of time, and that's why yields are lower in the future. at least priced in the markets. Well, all right, Dow's down 10 points right now.

I Think he's still positive. We'll leave it right there. We know the real drama, at least for the markets in the press conference Microsoft But First President Dennis Lockhart To break down what's at stake, his response to the statement: what does firmness mean? There's more fed coverage ahead when power lunch returns? Well at first this was very much like, but now we are. We're kind of right where we started.

We are exactly where we started. A lot of people asking where do you get this stuff uh, see these comments come in Federal Reserve.gov monetary policy or just go to their website, click around. There's a lot of cool stuff there. Uh, every other one you get a Sep a summary of economic projections the fact that it's 5.1 we are now at five and this is basically indicating that they they believe there's only going to be one more rate hike most likely in the early May meeting I believe it is.

Whatever that first Wednesday is Wednesday I Want to say May 2nd I Want to say someone can fact check me on that I don't know my brain's cloudy uh but they at first this is why everything popped. They're like great. We are almost done with this hike. Cycle one more to do.

uh we'll see if that's right or not like it's no guarantee. but that is what they are currently projecting so you can see the set but then all. the press release. Uh the press release right here.

Uh so basically we are up to 4.75 to 5. Yeah, a lot of people were calling for them to like, keep it at zero It just it wasn't gonna happen I think that would have actually caused more Panic Uh, and then what's really interesting in determining the extent of future increases in the target range of committee will take into the accumulative tightening of the monetary policy. The lags, blah blah blah blah blah blah. The big change was right here and I like it just you could.

Uh Nick temeros I I Like to retweeted it so you can check it out. but what everyone's trying to understand, the committee anticipates that some additional policy firming may be appropriate. They did have before that in the last time ongoing increases in the target range, so this seems a lot softer. This seems a lot more dovish this and for that this scenario that seems a lot more bullish for the market.

And of course they're not going to come on like super hard and just tell everyone that hey man, like we're gonna keep crushing it like a borderline broke the banking system so they're not. They don't want to do that anymore. Um, so we're gonna see how it's gonna go as of now. It looks like in the early May meeting we don't have any in April It looks like in the early May meeting it appears as if we're going to get another 25 bips rate hike.

Uh, not in April There's just no meetings. Then we get one in May There's only about eight Fomc meetings a year, so no, you don't get them every month. Uh, what kind of weird ad did they just welcome back to Power Lunch everybody The FED Razer interest rate. We have about 10 minutes expressing caution about the recent banking crisis.

Hikes are nearing an end as we await Fed Chairman Powell's press conference. Let's bring back Dennis Lockhart former President of the Atlanta Fed for his reaction to the FED decision. As you kind of predicted, the the vote was unanimous here. Yeah, um, at least the consensus that came out of this meeting was quite tight.

I Think it's interesting to look at the dot plots and I have to compare them to the December dots, but that's the Christmas tree to me like a very tight consensus near term. but 24 and 25 you're beginning to see some Divergence so different views over the medium term of what could uh, develop? Sure, and I think that reflects. you know the fact that the macro has gotten more uncertain. Dennis So is this the right move? Or are they going to look back and go? Why do we hike rates After we were having a bunch of banking crises when the leading indicators are rolling over and it was obvious that we were heading into a downturn, Time will tell.

Kelly Um, I Think you know this was very much a judgment call. and I as I said earlier I Think it could have gone either way and there are very good cases. or there were very good cases. Either a hike of 25 basis points or a pause so we'll see how things play out.

You talk a lot with your panel just before the uh, the bottom of the hour or about, uh, the word firming, right? You know? My sense of that is they felt they had to be less explicit given the uncertainty that we're facing. This is a probably a big message that will come through in Powell's press conference: Uncertainty, uncertainty, uncertainty, and they just didn't feel they could go go forward with the same language they had. Texas Roadhouse Um, that was quite explicit. They're likely to be more rate hikes, so they just toned that down a bit.

Made it a bit more ambiguous to buy them some flexibility. Is this an environment where investors should want to own stocks should they try to gobble up whatever yield they they can right now on treasuries and and other kinds of short-term you know? High yielding Securities What would you do? Oh, you have all these experts that that there are Market experts which I'm not on the program, so that's a good question to ask them. Uh, my personal belief is that we should have long-term faith in the U.S economy right above yesterday's high owning some stocks. It makes sense and pretty interesting yield.

It's not a bad time to capture what is probably pretty close to uh, some Peak rates. but I'm not an expert I'm in a big off on that question. The the statement from the Fomc was appropriately mostly about economic conditions and interest rates and glancingly about uh, stability of the banking system. But my sense is my gamble would be that at 2 30, we're going to hear many more questions about stability in the banking system and the Fed's reaction to Silicon Valley Bank and others than we did in the statement I wonder what you think? Um, quote went wrong and quote with respect to Silicon Valley Bank and the others that are sort of inextremists right now.

And and was it a failure of Regulation and supervision? Was there a failure of of a Bankers making rookie mistakes? Was it some of some of each? some of a lot of things. Probably the sum of a lot of things. Um, we have an investigation underway by the FED that will look at the supervision of the San Francisco Fed. When we get a decent history of all this, there will be a a lot of people to point fingers at.

Having said all that. I I Think the supervision needs to think deeply about whether we understand the speed and and severity of a run. In a you know, an age in which Uh communication is All Digital we have social media and you can transact in a matter of seconds in the reading I've done over the last few days at that point comes through clearly that it's not your grandfather's Bank Run Any longer, it's a bank bank run that can occur in a matter of seconds literally. And uh, that that I think may change the Playbook going forward.

Yeah, it wasn't people. It wasn't people showing up at the doors of Svb with past books. Uh, saying get my money out. This was all being done.

Uh, thank you for your time today. Everyone is just waiting for what fed. Sherry Powell Has to say we're just moments away from Fed chair Jerome Powell press conference. You will likely be asked what does firmness mean many questions about Banks Yeah, we expect to see big Market swings.

The Dow's down four points right now. Power Lynch is back in two. Okey-doke artichoke. Well, we don't need that.

Uh, the big thing that everyone here's what you need to know if you're just tuning in right now. Well, first of all, like you're late to class. But what you need to know is 25 bips, right? hike. The FED fund rate is now higher.

It was increased by 0.25 before this. uh, we were at 4.5 We're now at 4.75 or 4.7 times. It's a range. It's a small range so we're at 4.75 up to five.

And it sounds like in May it's going to go from 5 to 5.25 That is what the summary of Economic Projections is predicting right here. Uh, this fancy schmancy little thing right here. 5.1 percent. Uh, looks like in the December projection, people probably won't like this that much.

The December projection had a drop down to 4.1 Uh, now it looks like in 2024, it's only going to drop to 4.3 So that could be a little bit of like pissing in someone's Cheerios So that may be not the most bullish sign, but we'll see I Think what it's really going to come down to is what does Pal say when he's asked about some additional policy? firming may be appropriate. So I think he's gonna have to answer that question? We'll see, We'll see, We'll see, We'll see. Thus far, we got a pop. we gave it back.

Uh, not the most is going on at this moment in time. so we're gonna have to wait. Uh, a little bit of a nothing Burger A little bit of a nothing. Burger But the nothing Burgers Probably gonna become a something Burger In about three minutes.

Three minutes. Three minutes. Three minutes. let me switch this over.

They're playing some like shitty elevator music. all alternate players. Uh, could I just switch it over here? The FED has their own thing. Okay, cool.

all right. Um I know there's no audio coming through yet. bats because we would get Dmc-8 So um I just have it coming through my headset for right now. We're waiting folks.

We're waiting we're waiting. We're waiting, What's everyone's best? Guess? what is everyone's best guess? Do you think how will today end the spies perfectly at that beautiful, technical, key psychological level of 400.? Do you think we're gonna be above or below 400. above or below? Smack that like button I Appreciate that. Thank you thank you thank you thank you thank you thank you Spy to a thousand to 50 cents.

You guys are all over the map, on it, all over the map. all right before we get into it because I'm not going to want to interrupt him while he's talking. If you haven't already, get on Street Beat. It is pinned to the top of chat.

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That's where you put it in to get the money. So if you don't have it on your phone yet, if you're watching this while we're waiting for Pal to speak, perfect time to download Shreepy and get your free five to five thousand buckaroos. Uh I got puts on spy five by tomorrow. You think it's gonna drop here, Does it? Uh, so we have people from all over.

It depends. Um I can't say for every country I Don't have it all memorized? Um, but it is more than just the US Yes, let's get ready. Let's get ready. There is a gap fill up to 408.

There's also one down to 394. I Think it's gonna be Whatever it is, we're gonna get something very indecisive. This is referred to as bar coding. Another way of saying just no one's made up their mind.

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starting to curl back up I mean all these trades were made as I was just sick in the bathtub waiting to hang out with all of you folks I Want to be a lazy Trader I Want to make my robot trade for me so starting to swing back up? This is my real account. Real money. Uh on the month uh from the first to now up about 1.8k Not bad for a 4K account. I'm just trying to get it all figured out trying to get it all figured out.

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we are live. good afternoon. Um, before discussing today's meeting, let me briefly address recent developments in the banking sector. In the past two weeks, serious difficulties at a small number of banks have emerged.

History has shown that isolated banking problems, if left unaddressed, can undermine confidence in healthy Banks and threaten the ability of the banking system as a whole to play its vital role in supporting the savings and Credit needs of households and businesses. That is why. In response to these events, the Federal Reserve working with the Treasury Department and the FDIC took decisive actions to protect the U.S economy and to strengthen public confidence in our banking system. These actions demonstrate that all depositors, savings, and the banking system are safe.

with the support of the treasury, The Federal Reserve board created the Bank Term Funding program to ensure that banks that hold safe and liquid assets can, if needed, borrow reserves against those assets at par. This program, along with our long-standing discount window, is effectively meeting the unusual funding needs that some banks have faced and makes clear that ample liquidity in the system is available. Our banking system is sound and resilient with strong capital and liquidity. that sounds good.

We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools as needed to keep it safe and sound very firm. In addition, we are committed to learning the lessons from this episode and to work to prevent episodes from events like this from happening again. Turning to the broader economy and monetary policy, inflation remains too high and the labor market continues to be very tight. My colleagues and I understand the hardship that high inflation is causing and we remain strongly committed to Bringing Inflation Back down to our two percent goal.

Price stability is the responsibility of the Federal Reserve Without price stability, the economy does not work for anyone in particular. Without price stability, we will not achieve a sustained period of long of strong labor market conditions that benefit all the U.S Economy slowed significantly last year, with real GDP rising at a below Trend pace of 0.9 percent. Consumer spending appears to have picked up this quarter, although some of that strength May reflect the effects of swings in the weather across the turn of the year. In contrast, activity in the housing sector remains weak, largely reflecting higher mortgage rates, higher interest rates, and slower output growth also appear to be weighing on business Fixed Investment Committee participants generally expect subdued growth to continue, as shown in our summary of economic projections.

The median projection for real GDP growth stands at just 0.4 percent this year and 1.2 percent next year, well below the median estimate of the longer run normal growth rate, and nearly all participants see the risks to GDP growth as weighted to the downside. yet the labor market remains extremely tight. Job gains have picked up in recent months, with employment Rising by an average of 351 000 jobs per month. Over the last three months, the unemployment rate remained low in February at 3.6 percent.

The labor force participation rate has edged up in recent months, and wage growth has shown some signs of easing. However, with job vacancies still very high, labor demand substantially exceeds the supply of available workers. Fomc participants expect supply and demand conditions in the labor market to come into better balance over time, easing upward pressures on wages and prices. The median unemployment rate projection in the SCP Rises to 4.5 percent at the end of this year and 4.6 percent at the end of next year.

Inflation remains well above our longer run goal of two percent over the 12 months ending in January. Total Pce Prices rose 5.4 percent excluding the volatile food and energy categories. Core PC or excuse excluding those core Pce prices Rose 4.7 percent in February The 12-month change in the CPI came in at six percent. In the change in the core, CPI was 5.5 percent.

Inflation has moderated somewhat since the middle of last year, but the strength of these recent readings indicates that inflation pressures continue to run High The median projection: the SCP for total Pce inflation is 3.3 percent for this year, 2.5 percent next year, and 2.1 percent in 2025.. the process of getting inflation back down to two percent has a long way to go uh and is likely to be bumpy. Despite elevated inflation, longer term inflation expectations appear to remain well anchored, as reflected in a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets. The Fed's monetary policy actions are: Guided By our mandate to promote maximum employment and stable prices For the American people, my colleagues and I are acutely aware of that high inflation imposes significant hardship as it erodes purchasing power, especially for those least able to meet the higher costs of Essentials like food, housing, and transportation.

We are highly attentive to the risks that high inflation poses to both sides of our mandate, and we are strongly committed to returning inflation to our two percent objective. At today's meeting, the committee raised the target range for the Federal Funds rate by a quarter percentage Point bringing the target range to four and three quarters to five percent, and we are continuing the process of significantly significantly reducing our Securities Holdings Since our previous Fomc meeting, economic indicators have generally come in stronger than expected, demonstrating greater momentum and economic activity and inflation. We Believe However, that events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes. It is too soon to determine the extent of these effects, and therefore too soon to tell how monetary policy should respond.

As a result, we no longer state that we anticipate that ongoing rate increases will be appropriate to coil inflation; Instead, we now anticipate that some additional policy firming may be appropriate. We will closely monitor incoming data and carefully assess the actual and expected effects of tighter credit conditions on economic activity. the labor market and inflation, and our policy decisions will reflect that assessment. In our SCP, each Fomc participant wrote down an appropriate path for the Federal Funds rate based on what that participant judges to be the most likely scenario going forward if the economy evolves.

As projected, the median participant projects that the appropriate level of the Federal Funds rate will be 5.1 percent at the end of this year, 4.3 percent at the end of 2024, and 3.1 percent at the end of 2025.. these are little changed from our December projections reflecting offsetting factors. These projections are not a committee decision or plan. If the economy does not evolve as projected, the path for policy will adjust as appropriate to Foster our maximum Employment and Price Stability goals.

We will continue to make our meeting decisions, meeting by meeting. Based on the totality of the incoming data and their implications for the outlook for economic activity and inflation, we remain committed to Bringing inflation back down to our two percent goal and to keep longer-term inflation expectations well anchored, reducing inflation is likely to require a period of below Trend growth and some softening in labor market conditions. Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run. To conclude, we understand that our actions affect communities, families, and businesses across the country.

Everything we do is in service to our public mission. We at the FED will do everything we can to achieve our maximum employment and price stability goals. Thank you I Look forward to your questions. Colby Smith With the Financial Times, how confident is the committee that the recent stress that we've seen and you've alluded to is contained at this point and that deposit flight among mid-sized lenders in particular has ceased.

Thanks! So I Guess our view is that the banking system is sound and it's resilient. It's got strong Capital liquidity. We took powerful actions with Treasury and the FDIC which demonstrate that all depositors savings are safe and that the banking system is safe. Deposit flows in the banking system have stabilized over the last week, and the last thing I'll say is that we've undertaken.

we're undertaking a thorough internal review that will identify where we can strengthen supervision and regulation. Well, looks like we're alone given all of the stress and the uncertainty that you've also alluded to in the statement. How seriously was a was a pause considered for this meeting? So we considered. Um, we did consider that in the Days running up to the meeting and you see the decision that we made which which uh, I'll say a couple things about.

First, it was supported by a very strong consensus and I'll be happy to explain why. And really it is that the the intermediate data on inflation and the labor market came in stronger than expected and really before the recent events, we were clearly on track to continue with ongoing rate hikes. In fact, as of a couple of weeks ago, it looked like we'd need to raise rates over the course of the year more than we'd expected at the time of the SCP In December the time of December meeting, we are committed to restoring price stability and all of the evidence says that the public has confidence that we will do so that will bring in inflation down to two percent over time. It is important that we sustain that confidence with our actions as well as our words.

So we also assess. As I mentioned that the events of the last two weeks are likely to result in some tightening and credit conditions for households and businesses and thereby way on demand on the labor market and on inflation. Such a tightening in financial conditions would would work in the same direction as raid tightening in Principle. As a matter of fact, you can think of it as being the equivalent of a rate hike pop and or perhaps more than that.

Of course, it's not possible to make that assessment assessment today with any Precision whatsoever. So our decision was to move ahead with a 25 basis point hike and to change our guidance as I mentioned from ongoing hikes to uh, some some additional hikes, maybe some policy firming. Maybe So going forward Um, as I mentioned in assessing the need for for further hikes will be focused as always on the incoming data and the evolving Outlook and in particular on our assessment of the actual and expected effects of credit tightening. Jerry Can you explain um the difference between ongoing rate increases and Firming Um does firming imply a rate increase per se or could policy firm? Without You increasing rates? No I Think it's it's meant to refer to our policy rate Really I would focus on on the words may and some as opposed to ongoing ongoing so we we clearly were what we were doing.

There was taking on board the on trying to reflect the uncertainty about what will happen. It's possible that this will turn out to have very modest effects. These events will turn out to be a very very modest effects on the economy in which case and inflation will continue to be strong, in which case the you know the path will look uh, might look different. It's also possible that this potential tightening will contribute significant Uh tightening in credit conditions over time and and in principle if that that that's that means that monetary policy may have less work to do.

We simply don't know. Uh, so do you have concerns At the recent that Heike did today could further exacerbate the problem in the banks? No. I mean we're with our monetary policy, we're We're really focused on macroeconomic outcomes. In particular, we're focused on on this potential credit tightening and what can that produce in the way of tighter credit conditions? I Think when we think about the situation the banks, we're focused on our on our financial stability Tools in particular our lending facilities.

uh, the the debt uh sorry, the discount window and also the new facility. Nick Nick Timuros Wall Street Journal Nick Timmeros of the Wall Street Journal Fucking, that's repel in your testimony. Two weeks ago, you had indicated you thought the terminal rate would be higher. Obviously that was before the stress in the banking sector and I realized there's a lot of uncertainty.

But can you can you explain it all to what extent your forecasts or those of your colleagues or those of the board staff Incorporated Today, a material tightening of credit availability because of the stress in the banking sector. Or are you waiting to see it in the data before you incorporate that potential tightening into your forecasts? So you know we've just come from an Fomc meeting and uh, you know the the people who write the minutes will be very carefully counting. but I'll tell you what I heard. But what I heard was significant number of people saying that they anticipated there would be some uh, some tightening or credit conditions and that would really have the same effects as as our policies.

Wow that you really know and therefore they were including that in their assessment and that if that did turn out not to be the case, that in principle you'd need more rate hikes. So some people did reflect that uh in their in their uh from in their SCP forecasts I Think there may also just have been. Remember, this is 12 days ago, you know we're we're trying to assess something that just is so recent and it's people you know. it's very difficult, it's so much uncertainty.

So December was a good place to start and we wound up with we wound up with uh very similar outcomes for December and it you know in a way the the early the data in in the first part, the first five weeks of the intermediate period pointed to Stronger inflation and stronger labor markets. so that pointed to higher rates and then this. this latter part kind of uh, the possibility of of uh, of uh credit conditions tightening really really offset that effectively. To follow up, have you considered at all whether your primary tool the funds rate is going to be enough to sustain the kind of tighter Financial conditions that you believe will be necessary without doing significant damage to the banking sector.

Have you, for example considered changing reserve requirements, selling assets out of the system open market account as a way to better achieve tighter Financial conditions that don't uh, accelerate deposit erosion for example from Banks you know we know that we have other other tools in effect, but no, we think our monetary policy tool works and we think, uh, you know many, many banks. Uh, our rate hikes were well telegraphed to the market and many banks have managed to to handle them. hi. Victoria Guido with Politico I wanted to ask um you you along with the FDIC and the treasury the FED board decided to invoke the systemic risk exception um to allow uninsured depositors to be protected at these two Banks and I Was just wondering if you could speak to why that decision was made.

Was it purely a confidence issue or were was there a concern that there would be some sort of economic contagion or financial conditions? The issue was really not about those specific Banks but about about the risk of of a contagion? to to other Banks and to the financial markets more broadly that was the issue. Okay, and then can you also just a follow-up Can you speak to the role that you will be playing in the Fed's internal investigation on its supervision and regulation? So Vice Chair Bar is is of course leading that review and uh, he's responsible for it in his capacity. it's Vice Chair for Supervision Dollars Bitcoin's coming back I Realized that that there was going to be a need for a review I mean the question we're all asking ourselves over that first weekend was how did this happen and uh so what we did was uh, early Monday morning we sat down and said let's do this and he's he was obviously going to lead it in his capacity So I don't you know my uh my role was to announce it and uh I I get briefed on it. but I'm not involved in in the work of it all right? Howard Schneider from Reuters So um I want to go back to your February press conference? You mentioned the word disinflation I believe uh, nine or ten times.

The process that you felt was, uh, stalker much Jesus but gratefully underway or something like that. Is disinflation still occurring in the U.S Today Yes, I mean what actually happened Howard was I Got the question 12 times. So it's a maybe it's a feature, not a bug, but uh so. but yeah.

Absolutely depressed. Absolutely the same. The story is is intact so it's really three parts, right? Goods Inflation's been coming down now for six months. It's proceeding more slowly than we would have liked, but it's certainly proceeding.

um Housing Services is is really a matter of time passing. We continue to see the new leases being signed at much lower levels of inflation. So that's 44 of the of the core Pce index where you've got a story that's ongoing. where we didn't have in February and we still don't have Now is a sign of progress in the non-housing services sector, and that is, um, it.

You know that's just something that we'll have to come through through softening demand and perhaps some softening in labor market conditions. We don't see that yet. And that's that's of course, 56 percent of the index. So the story is pretty much the same.

I Will say that the inflation data that we got to your point really pointed to Stronger inflation if I could follow up on that. I Was curious why you don't see more coming from the credit crunch because it seems to me that's something that you'd actually welcome to a degree and expect. Um, and are you not seeing more coming from that because you don't know or because you just don't want to have another round of wishful thinking? So it's really just a question of not knowing. at this point.

there's a great deal of literature on the connection between tighter credit conditions, economic activity, hiring, and inflation. Very large body of literature. The question is how significant will this credit tightening be and how how sustained will it be? That's that's the issue and we don't really see it yet. It's so so.

People are making estimates. You know, people are publishing estimates and it's but it's very kind of rule of thumb. uh, guesswork almost at this point, but we think it's It's potentially quite real. and that argues for, you know, being alert as we go forward as we think about further rate hikes for us, we'll be paying attention to the actual unexpected effects from that.

Gina Hi chair Pal Gina Smiley from The New York Times Thank you for taking our questions. Um I Wonder if you could talk a little bit I know that you've got your internal review coming. but I wonder if you could talk a little bit about what you think happened with oversight at Silicon Valley Bank and whether this suggests that something about regulation and supervision needs to actually change going forward? And I wonder you know? how can the American people have confidence that there aren't other weaknesses out there in the banking system given that this one got missed as you noted. So let me let me say what what I think happened and then I'll come to the questions around supervision.

So at a basic level uh Silicon Valley Bank Management failed badly. They grew the bank very quickly. They exposed the bank to significant liquidity risk and interest rate risk didn't hedge that risk. We now know that supervisors uh, saw these risks and and intervened.

We know that the public saw all this. We know that Svb experienced an unprecedentedly rapid and massive Bank room. So this is a this is a very large group of connected depositors. Concentrate a group of connected depositors in a very, very fast run faster than historical record would suggest.

So um, for as for us. So for our part, we're doing a