A highlight from 1261. Fed Meeting vs. Crypto LIVE | Jerome Powell + Inflation Sentiment Analysis
All right, so welcome in everybody to the live stream today. We'll be breaking down the FOMC meeting and also talk a little bit about what Chair Powell has decided to do along with the Board of Governors and break down all that, what kind of implications this might have on the market for you. It's going to be a good one. My name is Paul Beyer and welcome back in the Tech Path. All right, so joining, of course, today we will be doing our normal live stream where we air the Fed meeting. And it's not necessarily the meeting, but it's the remarks. It's the press conference after the meeting, which obviously we've got news in now that there is no rate hike. So whether you think that's a good thing or a bad thing, I think the key here is that the Fed has continued to hold this position of softening now is and can they navigate a soft landing is the real question. I think this is going to be the one that we'll have going into this. We're probably going to take, I think we may take some questions. It depends on how long Chair Powell talks. So make sure and drop some of those over on the side. And if this is your first time here on the channel, all I would ask is that you subscribe. We do a lot of hard work and research to hopefully bring the best news content out there in the crypto and blockchain space to you. So just hit that little subscribe button. And if you can hit the little bell, it's going to give of you notifications when we go live, just like this one right here. So we'll break in and all that. Just to let you guys know, so when the Fed meets every month to every two months, depending on the on the period of time, basically you have a board of governors that comes together. They start working through all of the data that comes in from the market. And then at that point, they start to make the final decision of how they're going to go interest about rate hikes or potentially interest rate declines. So we'll be airing Chair Powell's speech when he addresses the press corps here in a bit. So just be on the lookout for that. They are probably about 10 to 15 minutes away. We'll go through some things here today I want to talk about today. First of all, how would Bitcoin react to the Fed's interest rate decision? Obviously, right now we're starting to see Bitcoin do a little bit of slight move down. But that's my question is, do we continue to see Bitcoin in more of a holding pattern right now with where it has been? Or if you look at the chart, let me kind of bring up the Bitcoin chart real quick and I'll just jump over to my chart. And I'm on the five minute chart right now. But as you can kind of see, let me go to the one hour so we can kind of push that out for the last couple of days. You can kind of see a little bit of that incline that we've had over the past few days where Bitcoin slipped right into that $27 .4K range at its high and it started to adjust off of that. And I think this is the scenario that I think a lot of people are looking at. And that is when you consider the current status of the macro pressure that the markets are getting. Remember the S &P and I'm going to show you guys some cool things. Let me jump over to the S &P real quick because this is something that we've been doing here on our power index or our market sentiment index and that is starting to measure a little bit more of the S &P compared to what's happening in crypto. Right now I'm looking just at the one hour but this was the decline that we've seen in the S &P 500 which of course has started to adjust a little bit. Now some of that may be coming from the softening in the market itself. Let me jump over to this article here because I want to go back to this point on Bitcoin. Fed's interest rate decision everybody's expected today did come in at what was expected being no interest rate hike. However some experts also said that low volatility may continue after Fed's decision and investors expecting high volatility in the Bitcoin price may be disappointed. I am in somewhat agreement with that. Now there are two I guess two camps thinking of where this direction may go and what it really boils down to is two things. One of course is going to be the situation of when the Fed does pivot and the other is going to be how much lagging data is coming in in the last quarter because here we are going into Q4 October 1st. Once we start to move into Q4 we're going to start to see one the Q3 earnings that will give us some indicators of how most of these companies are doing which will cause some action on the S &P 500. And then with that you are also going to get lagging data on jobs. You're going to be lagging data on general scenarios that are market pressures coming things like the oil market. And then what we'll see is I still believe is the CRE market the commercial real estate market. That's going to be the one to watch for. And that is my concern if we continue to see a little bit of a decline there. Now the other question that plays into this is how sticky will inflation be during this last quarter because all of what we could see and including possibly another quarter point and we'll probably hear this from Chair Powell here in a few minutes when he comes on to address the press is whether or not we will see another quarter basis points rise in the fourth quarter of this year and how that sets up Q1 and Q2 for 2024. Now you have to be thinking about what is this going to do around an election year. You've got a lot happening with the UAW. That's the United Auto Workers strike potentially looming. Biden administration is pushing hard to try to position against that along with what's happening on the labor market tightening somewhat. And then of course what we've seen with sticky inflation. So all of this was really playing into when is that bottom really in. Now that's the question mark for Bitcoin, Ethereum and some of the blue chip assets. Have we started to see maybe a little bit of that swoop off of the bottom and started that into that stabilization. And I'll show you guys some examples of that. But here's the U .S. Federal Reserve keeping rates elevated through 2024. This is the concern that I think slows things down a little bit in the general market. And that is that if BlackRock is right and that if we continue to see higher rates interest rates through 2024. Now when I say higher he could still pivot and start that quarter point softening of a market. That in itself would most likely send the markets into a tizzy. But I think the other issue is whether or not we actually reach the scenario of an inflation cap that actually gets hit by consumer price index which obviously will affect consumer spending all those kind of things. And that starts to roll into the potential of a recession. And that is the real question mark looming here right now. A couple of points I want to hit out on this article on BlackRock. BlackRock's head of global fundamental income strategy agreed that the Fed is unlikely to change rates. Everybody's right on that. But the big deal is since March 2022 the Fed has increased rates 11 times to fight soaring inflation. And we've got a few charts I'll show you here in a minute of the history of inflation and the reaction of markets and how they've been able to respond. What you see there right there in 2023 is where we are now. But obviously this back in the 1980s when we were at pretty much all time inflation hits. Additionally if you guys did not follow this Citigroup announced the Fed interest rate forecast for September and November. This is another one that I think is important. From now on markets will price and how long interest rates will remain high and rather than whether there'll be an increase in interest rates. And that's my point is if we're talking about all of 2024 seeing a five plus interest rate Fed fund rate that's going to continue to pour money into the money market overall. And I think that's the other scenario especially when you look at the amount of liquidity that's going to be setting in on the sideline. So that's another factor into 2024 because you've got the halving coming with Bitcoin. You have a new election year coming in and then you have these crazy scenarios playing in on all these market pressures coming in from the macro side of things and that's providing that we don't end up with a united autowork because I think if we get a strike in the car market that could have some pretty big effects possibly even actually be one of the things that pushes us into recession because of how the auto mobile industry is so connected to so many different job industries so many sectors and obviously part of what we'll see in terms of just consumer pricing. Other parts on this I wanted to show this is kind of the the nominal Fed funds target rate increase during the FOMC tightening episodes. This goes all the way back to 1983. And this is good because it shows you how quickly this is us right now in the green the twenty two twenty three range. Look how quickly we've accelerated up that chart versus if you look at the 2004 to 06 tightening all the way back to the 2015 to 18 very slow and steady until we had the you know what. And then back here in the 80s which was really kind of that flat line and then boom that heavy acceleration that we had in the early 80s when we really started to see kind of a redefinition of what high inflation truly was. And I don't know how many of you guys are around. I was still in high school at the time but but it this kind of shows where we could be. Now that's the question mark right now because if we stay at this rate right here if we start flat lining right here what maybe we'll have a little bit of this kind of effect back in the 80s where before we saw that last two to three point raise. And that's the concern I have is if we do see any kind of somewhat tentative recovery here in the Q1 possibly even in Q2 does the Fed look at 2024 data and start to reposition. I still believe that we are at the end of this cycle.