 It's it came out sticky, right? So the the the whole idea behind rate cuts is that central banks really want to see inflation moving towards their 2% target and I guess You know, not only does it need to move towards a 2% target is that The central banks are probably like expecting some sort of overshoot so So let me just draw this out one seconds second annotation, right? So can you guys see my pencil right here the red one? You're right. Oh, you're right Harold. Can you guys see my pencil there? Where I say it says 2% right the bottom of screen. Yep. All right, excellent so In order for, you know rate cuts to happen, right? So what we've seen is we've seen over the past, you know A couple of years you see an inflation move above way above the 2% target Therefore we've had interest rate hikes, right? And now we're seeing a move to the downside now What central banks The reason why central banks are looking to cut rates even as it approaches their 2% target Is because actually they're expecting some sort of overshoot for it to go, you know down to like 1% potentially Yeah, maybe even 0% so what they're trying to do is actually try to get ahead of The the the overshoot of of inflation by trying to cut rates because there's a lag in The in the data. Yeah, so as prices are falling Right towards their 2% target. They're looking to cut so that the cuts then Push inflation, you know, try to stabilize inflation and this is what like The the whole soft landing a hard landing narrative is about or the analogy, I guess, right? Whenever you see, you know Fed is expecting a soft landing or no landing It's really because You know, the the no landing scenario is where, you know, they can't necessarily even cut rates because Inflation is maybe stubborn around that maybe three percent, you know 2.5 percent mark, right overall So they might actually even get a no landing where they don't even cut rates, right? a soft landing will be where they start to cut rates and then Inflation kind of just about bottoms out stays around that 2% you know, I mean with some sort of Deviation it might go to maybe 1.8. Maybe 2.2. Maybe, you know, I mean that kind of thing But again, the landing is more within that range or maybe something like 2.5 to maybe 1.5, right? And that's where inflation stays. So as they start to cut rates and it starts to ease up, right? And they control inflation it stays within that kind of range. Yeah a hard landing is where, you know They start to maybe they cut rates a bit late And then you have this overshoot where you now start to have a Situation where you're getting in, you know with deflation, right? Where deflation is starting to take hold where, you know, they're cutting rates But they can't stop inflation from, you know, moving too much to the downside And they start cutting cutting cutting cutting just to get inflation to come back, right? That's really what the whole hard and soft landing narrative is about. Sorry It's a bit small on this screen, but can you guys can you guys see this? Can you guys do you guys Understand what I'm saying? Did anyone lost? Yeah Yeah, all good. Everyone's all good. Okay, brilliant Can your joke up? But um, but yeah, so that's basically what is what the situation is, right? So you'll see it. So if you notice you see the Swiss Frank, right? So the Swiss Frank, yeah Recently their data and their inflation came out even lower. So I think they were at 1.3% If I'm not mistaken and then I think it was earlier is it must have been last week last week Their data came out and now inflation is at 1% but remember they cut rates Yeah, um A couple of weeks ago. Yeah, so what was supposed to happen is is that the cut, right? Although the cutting cycle is supposed to kind of, you know Almost prevent or try to slow down the deceleration in inflation But obviously they haven't cut enough. So 20 so so 0.25 um Or 25 basis points 0.25 wasn't enough because inflation is still coming down Yeah, that's what's happening. Yeah with with with with this with the swiss rank in the swiss and economy, right? And swiss inflation So you can see where you're starting to get an overshoot where central banks react maybe a bit late to inflation Yeah, so guess what the swiss national bank have to do with their rates? Do they hold or do they cut? Do they hold or do they cut more? Right, exactly. They have to cut more to try to get inflation Back up to their 2% because if you're getting into that, you know deflation every cycle That's when you have to start to cut rates. Well done. Harold. Thank you All right, you got a cut rate now the us is in a different situation because Inflation now is remaining quite stubborn. It's not quite coming down to their 2% target. So You can start to see now that they are likely to hold rates They're not looking to cut rates because they're not expecting that overshoot beyond 2% at the moment Yeah, whereas other central banks may be like the swiss frank and maybe even, you know, the euro and some others, right? But it's all about the expectation. So um, what we saw here today um What are your thoughts if the rate on on rates if the stock market drops 20%? If the stock market drops 20% anyways, um So so getting back to what we saw what we're seeing today, right? So I hope everyone Does anyone not understand this and what's going on and if you and and if you don't then i'm i'm hoping that You you've if you don't and you've done the short course and test Then I will go over it If you haven't done the short course and test yet and you don't understand it Then I advise you to do the short course and test first and then come back to this video Then you'll understand or you should understand basically what i'm talking about here Yeah So if there's anyone else if there's anyone who's lost at the moment, let me know And I'll try and maybe explain it in a slightly different way or maybe try and refresh your memory when it comes to the relationship between inflation and interest rates Anyways, um, you know, you can just put you can turn your mic on or you can um, Put it in the chat meeting. Anyway, so I'm assuming that everyone's Understands this so so what we're seeing right now is we are seeing The if you go to the fedwatch tool, right and let me do a quick update a refresh on this what we should see Is a situation where The market is pricing out rate Um rate cuts in june. Yeah, so let's have a quick look Right, so no change is now up to 81 percent if you go back to last week's webinar, you'll see it was probably more 5050 I think it was something like 47 53 or something like that in terms of an ease Now that's just being totally priced out. Yeah, so yesterday it was a 42 percent, right? Um, and now it's like 81 percent Ken said did you see the post on the group though? Just a little bit of hype priced in in july. Wow. So they're really pricing out rate hikes Yeah, so The fact that and no change has Has oh, sorry. I've just gone to july. Sorry. Let's let's focus on june first, right? So The what what you're seeing right now is the market pricing out rate cuts. Yeah, so If we go to a price chart and we're looking at the dollar, right? So we're seeing this is the dollar index by the way that the equally weighted dollar index and you're seeing prices move to the upside and this makes all the sense in the world because um You know markets tend to move First of all in in auctions and ranges, right? This is For me, this is the way that I see the market