 Welcome to Julissa news. My name is Rob and today instead of doing a live stream I needed to break it down what's going on with the Fed and if they're going to pivot and there was this great Interview and it was with Mary Daly and she is a president of the San Francisco Federal Reserve And she asked and was asked and answered a lot of good questions one of those was Will you pivot and when will you stop the next one was when is restrictions enough? And what's the Fed's overall plan next one was how long could you be raising rates? And this is the one that is I think is most important So if you think it's gonna happen or stop anytime soon, I think you're wrong And also, how do you know when you've gone too far? And this is one of their biggest criticism forward versus lagging indicators and lastly we're gonna talk about the question was what about the global economy and the UN calling for you to stop and the Bank of England and other Fed reserves across across the World Which are starting to pivot why don't you guys and will you pivot so the first question is very simple? Mary Daly was asked will you pivot and when will you stop? And this is important to understand because right now a lot of people are calling for the Fed to pivot They believe that they will pivot I don't know if that is true and I was gonna have you listen to the snippets about a minute long And I'll be right back We are resolute at raising the interest rate into restrictive territory so that we can bring inflation down Which is causing millions of Americans to suffer a real pain. Everyone's experiencing it It's also very damaging to the economy to have this level of inflation So we're committed to bringing it down and staying the course until we're well and truly done So yeah, Mary bladed out pretty eloquently there is they are not going to pivot anytime soon So it made a lot of sense to me Let me know what you think about that in the comment section But the next question is I think what's on everybody's mind is is what is restrictive enough? How far are they going to go and what's the Fed's overall plan some of what Mary just described you exactly what's going on here? Well when we were speaking before the interview you said that the futures market hump shape The idea that you go up and then you come back down next year is wrong Yeah, I don't see that happening at all I see us as raising to a level that we Believe is restrictive enough to bring inflation down and then holding it there until we see inflation truly get close to two percent and and Demonstrate that price stability is restored. So pretty much what she just said there was look We know that there's some problems coming up And we know that there's some issues But if you're thinking like a lot of different Market makers and people who are taking a look at this analyst and saying well There's gonna be a big hump It's gonna go up and it's gonna go back down and that's it Mary here is saying no throughout next year We will probably continue to raise rates until we see it at our goal level, which is two percent So that would answer your question as to like is this gonna happen or it's taper off anytime soon And the next question that that she was asked was look How do you guys do this because it seems to me like you're looking at a lot of rear-facing Data that is not forward-looking and are you guys just going forward until something breaks and going okay? Put the brakes on and it's a pretty thoughtful out answer here. So just take a listen So we definitely don't raise rates until something breaks We actually are forward-looking very forward-looking you have to be and that's one of the things about data dependence You can look at the data that's published Those are tend to be backward-looking But a lot of the time I spend in my job is actually out talking to business leaders community members Small businesses workers and asking where are we in the economy? You put that together and you're constantly calibrating through this data dependence To risks not doing enough and having inflation expectations drift because inflation just won't die off or Doing too much over Oversteering essentially and causing unnecessary downturn that isn't relevant for the economy and the conditions we're trying to achieve So we're constantly monitoring both of those risks And I guess the main thing I want your listeners to know is it's not a backward-looking enterprise It's a forward-looking enterprise. We don't want to wait till we found we got there and then say uh-oh We want to get there as smoothly as possible This is the tool we have and it is a blunt tool and that's why we're so careful about how we're thoughtful about the data We are constantly out talking to people looking at the information we have It's not just about looking at a model and making a rule It's really that's you know the regional reserve banks that there's 12 of us. We spend a good portion of our time Talking to leaders business leaders community leaders workers groups to try to find out what the economy is and and here's what I'm hearing to a person That when you're out there talking in the windows just in Boise, Idaho People right now are worried about inflation and they want inflation to come down they recognize that's a major pillar of a Well-functioning economy and one young man said to me I have plenty of jobs But I only have 24 hours in a day and seven days of the week and every time I work I lose money because I go to the store I can't afford anything so really the main message here is inflation is problematic and we are committed to restoring price stability So whether you agree if that's the right approach or not It seems like the Fed is resolute and they have a vision as to where they want to go And the last thing really comes down to this is the question which is what about the global economy? Because as we do this and the dollar increases in strength it starts to to crash everything around it So what about the global economy doesn't America have a responsibility and we've seen the Bank of England pivot as they start to do Quantitative easing we send the UN call for America to stop So the question is what does this mean for the Fed and will they start to pivot just because of the global economy? So just take a listen we really have a domestic charter That's what Congress gave us and so we have to stay on our case The other thing I know is that when the US is it is a reserve currency of the world and there are many things going on besides global tightening we have the war in Ukraine China continues to struggle through COVID There's slowing across the globe and that often brings people into US currency So those are just things that happen as a natural part of the economy and the dynamics there But the Fed stays resolute to its mission the mission that Congress gave us price stability full employment We're obviously achieving on the full employment side. We're missing on the price stability side We have to bring inflation down and basically that's it. We understand there's a global economy We understand what's going on as far as the Fed reserve does but they're like look We have a mandate and we're going to hit that mandate And that is our goal here and that's pretty much it So let me think about that in the comment section and then just to follow up There was a question that came about like well, what about would this lead us into a recession and I think we're already kind of there I think we're already there period and I know that there's there's been some some different definitions But again, if we take a look at a recession's recessions don't last forever I mean, this is back in 1969 usually about 18 18 to 24 months, but after those time frames What do we see? We see big huge economic growth and we've had quite the run Since 2009. I mean 13 plus years take away coronavirus and for me if what Mary was talking about is like We're gonna keep continuing into 2023 and then maybe even 2024 to actually get out of it. That's not two years That's not two years and for me. I Don't really I see it as the same thing as we talked about before as far as the the four-year cycles I mean if we go from 2012 2015 having all-time high-dip resets having all-time high-dip reset from 2016 by 19 2023 if we're going to a recession 2023 and 2024 and then we're kind of getting out of it in 2025 What does that mean economic boom just like we saw over here? Does that mean it's going to definitely happen? I can't say that for sure because all models work until they don't and that's what leads me to my last point which is This is of course Mr. Wonderful Kevin O'Leary and he's just going to give his his opinion about where the Fed is going and also don't forget Kevin's gots his Fingers on the pulse of business and he sees a lot of data points about what's going on So just take a listen if you think that the what he thinks as far as a recessionary woes and if the Fed's gonna Pita look at it this way 75 basic points is coming. It's built into the market already So far it's had no effect on inflation still north of 8% so why would the Fed stop? I think people that think the Fed's going to pause our dreaming and so as investors You have to make a decision you can't time the market You know with certainty that there are days when you make two and a half three percent gains You just don't know which ones and at some point and I don't know what it is Maybe it's Q1 You're going to get a signal from Powell that he's going to slow down and on that day if you're not in the market You'll lose 30% of the gains of what's going to happen. So I have no choice, but to I can't control the Fed No, we control the Fed I'll tell you one thing that's not disturbing me that is really Perplexing me. I have data every week on top-line revenue and cash flows of private companies over 50 of them We are supposedly slowing down. We're supposedly in a recession. You don't see it Nowhere nowhere do I see it right? So there's this very weird irony Which is that all these CEOs say actually I don't feel it right now, but I think it's coming later That's where you are. Well the Fed is in its dialogue telling me to reduce my capex telling me to reduce my inventories Telling me to stop hiring people and by the way, that seems to be working. Well, yeah, except I don't see it I should see it. I get weekly revenue. I get weekly cash flow We've had the best quarter ever 17 and a half percent pre-tax cash flow when before the pandemic is 15 the economy is still working So, you know, it can take another 75 basis points. You know, that's from Kevin himself. Look his business looks to be doing pretty good I think other businesses might be doing pretty good. I think some are also lagging I think for people like you and me just the basic retail investor We may be feeling it at the pump at the grocery store and things like that as we see inflation Which I think is why inflation should come down. Now, let me know which thing about that in the comment section But here's what it is and Kevin said it perfectly two things first of all You can't control it. You can't control the Fed So just worry about the things that you can actually can control and what he talked about was those 10 days So those days to be in the market There was a great piece over on CNBC and it goes it talks about if you get out of the market for And you miss the 10 best days. How much you go down? This is a chart shows how $10,000 invested in the S&P 500 for the 20 year period between 1999 and 2018 What have performed under various scenarios? If you fully invest it didn't touch it for 20 years You'd be it you go from 10,000 to 30,000, which is not bad for doing nothing But average annual return even in the dark days, you would still be up 5.6 percent annualized That's year over year. If you miss the 10 best days, it drops by more than half 2 percent If you miss the 20 days, you're down. You miss the best 30 days You're down 2.4 miss the best 40 days you down 4.5 and so on and so forth So for me, you might take a look at it time in the market is a little bit more important than timing the market We try to time it a little bit But usually we're never gonna hit the tops of the bottoms and now will lead me to my very last point Which is you know what I'm doing. I'm sticking around. I'm staying in and this is what I'm doing This is from my coinbase account and I buy crypto every day Do I buy the same amount that I would when we're on you know We're on an uptrend and there's not fed tightening and there's not Fantastic inflation going around and there's some more stronger fundamentals. No, I am dollar-cost averaging But what I call micro DCing, which is I'm still buying but not as much as I did before and Bitcoin Ethereum They're my blue chips and I buy them every single day But it's less than what I usually would buy because I'm just waiting and I'm seeing I don't want to be totally out of the market I'm not gonna go all in and there are some alts down here that I buy Sometimes every day sometimes every week and I'll do those in a separate video But that is it for today now look and I went a little bit long But I wanted to make it crystal clear about where the feds mission is where they see things and what's happening There's things that we'd like to see I just don't know if we're actually going to see them again You can't fight the Fed and you want to control the things that are right in front of you that you can't control and that's it So look, thanks so much for stopping by I appreciate you like today's video Give it a thumbs up consider subscribing and that's all so I appreciate you stopping by and I'll see you on the next one