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hey welcome back to two super guys TR Soxs I'm Dylan and I'm and we're going to talk about Drome Powell's speech and his decision to not raise High raise interest rates yet and how that will affect TLT if there's going to be a recession two stup guys STS so for those of you who did not see the news the Federal Reserve kept their key interest r flat today uh that's pretty much what the B what the market was pricing in was going to be no no increase now that does kind of contradict the Dot Plot you know if you will from the last meeting we had September where they were anticipating the average kind of fed governor was anticipating out 25 basis points sometime this year they only have one meeting to go so potentially maybe at the December meeting we could still see a little bit of tightening uh but really this is a good indication of where Powell's at because after he they get the press release he then gives a speech uh if you actually look at the press release here basically they they changed almost nothing you know it's amazing it's just like uh this is going to be the easiest job in the world writing these things uh you just like change a couple words and that's it uh so CNBC does this nice uh little service here if you will every time that they release one of these statements they go through and they show you all the changes you know oh you know obviously it's not solid it's strong and it wasn't expanding it's expanded yeah I mean that's an art form it's brilliant yeah it it's it almost has an earmark of like Bill Clinton where he had a question what the word is mean but you know yeah I still get it U but they kep the flat didn't really change a lot during his press conference a lot of the same kind of topics come up you really see the people are always trying to get pow the to you know show his hand a little bit and say some things he doesn't really hasn't really disclosed before but he's he's almost like a robot I kind of wonder who has better press conferences Rome Powell or Bill bich Bill bich I knew you were gonna say Bill bich I knew it okay he's like we're on to December meeting basically I would I would lose my mind if Paul said that we're on to the next one yeah I mean honestly I've listened to those questions before a lot of them are just dumb he just can't answer that you're like what would you do if you were you know not just Federal Reserve and you can do other things like he can't answer that stupid question don't ask that question yeah it's complet ridiculous question uh but you know he reiterated his points about you know the question that they're looking at right now is whether or not they're an offic sufficiently restrictive kind of monetary policy stance and that they will whether or not they will have to increase rates any further so that's that's question one question two is then how long do we keep keep it at these rates because of course someone asks like when you going to cut rates he's like when are we going to cut rates like you know what you you know we barely talking about preseason here you're trying to ask me something about the playoffs like you know that a complet ridiculous question in a year they're gonna ask at every meeting but yeah I would say at least a year like just keep it the same yeah I you know that's how it goes um but you know he he was kind of consistent about saying we've made some good progress got more to go particularly you know he highlighted the fact that we made 60 basis points of progress on the pce data in the third quarter alone see that's a pretty significant number he goes and I'm really happy to see that he goes if you look at the Dot Plot on our predictions we're looking at well into the twos during next year for for PC rates and then down into low twos by 2025 so you know he said that's consistent with prior episodes of inflation and what how long it's taken to control them and one of someone did ask a question about you know recession likelihood of next year whether or not that that's still in like their kind of predictions and they said no it was not actually in their predictions as of this meeting for next year at all that the economy has been still very resilient and he doesn't not see that as a likelihood at the particular point in time and you know this was interesting I don't know if you've mentioned this before but he kind of talked about the dynamic we were fighting here about how the cycle was created with pent up demand post you and all the savings post pandemic and then then created more kind of booming in small businesses where they had to increase hiring and they competing for employees so that wages had to rise it's like we saw this little cycle continue and he goes and that's the real question right now we're trying to face is when are people going to run out of savings we still saw spending rate go up 0.7% last month right so there's money out there still that households are doing yeah credit card debt is now over a trillion dollars but that's the real question that's driving this still to this day is how much money does the average American household have can they continue to spend on goods and services so we see and also American households don't have to have money to spend to spend it so that's a swipe it there's wife you Swip it and then it becomes Vinnie's problem um so there there's a couple things related to TLT to this so it ideally there would have been a rate hike because then it makes covered calls a little bit easier and and and uh cash secured puts I am in a rough place in mind because I think covered calls are too risky because it there's no really range for where it's going up it kind of bounces off 86 a lot but I'm trying to do put near 80 and it just every time it gets to 81 I'm about to pull the trigger it shoots up but there's some uh some TLT things that happened the last week so Bill lman covered is short right he saying it was too risky to remain short on bonds at current long-term rates he was short for a couple months made some cash um the other thing here that he said let me move this the economy is slowing faster than recent data suggests he wrote this on on x okay and he said there's too much risk in the world to remain short bonds at current long-term rates how do you feel about the economy is slowing FAS than recent data after Jerome pal speech yeah it's it's I I don't know I haven't really seen evidence of that you know both from the number standpoint we we grew at a 4.9% annualized GDP basis in the last quarter that's a big number for an economy size of the us growing at 5% a year that's big it's not three is is what you hope for okay so like you know even if we slow slightly we're still growing at very fast clip that's like meta numbers not the recent quarter they blew off the doors at 23% Revenue growth uh but if you actually go and look at like anecdotally right like every time I go out shopping with my wife I'm always kind of thinking about this like God damn man like people are still out there people are still at like it seems like they're at a above average kind of spending you know environment than they were pre- pandemic right like I sent Dylan a picture from the Apple store when I was there this last weekend like this place is freaking packed yeah it's packed um full disclosure if you guys bought the new iPhone it's the same as the other one titanium is not like a new metal for phones but they're marketing the hell out of it um so the other thing is Chinese investors sold about 21 billion is in equities and treasuries it's the most that they've done in four years most of it was US Treasury bonds and stocks it is hard for me to read into this a lot because they have their own CR Cris happening right now with giant property groups they have there's this is not as simple as this being bad for bonds there's a lot of moving variables here and people would love to spin that into like a China versus us like economic fight but not even approaching that level yet I don't it's not even close also it leaves out the fact that they bought a bunch like earlier in the year but that's fine whatever um and then I like the strategist at barlay said this week that investors shouldn't expect um the the US treasur yield of 5% to come down anytime soon um except the event of recession the hurdle for Bond rally is still quite High despite data continuing to show a resilient economy the consensus still expect it to slow very sharply in the coming quarters also kind of different than what federal drone pal said uh repeated misses beg the question whether consensus has been overly confident about monetary policy being too tight we argue the policy is barely tight and risks are skewed towards continued upside surprises fairly tight huh is it the name of your benoir that's pretty good yeah but I mean I don't know what is exactly is an economic prediction worth like you know that's what I don't want to give you an exact number on things he goes because that there that's no way it's going to be true so then I'm gonna look like an idiot like you know three months later he's like that's just how it goes he and when you try to put all these really kind of grandiose predictions but he said as of right now the Federal Reserve is not anticipating a recession it's not in their current expectations it's about as useful as me saying TLT is going to work out great I truly think it is I'm no one so I could I could be wrong here um this was just this has nothing to do with anything that anything that we said I just thought that this was very very interesting because housing data came out a little bit early last week and it was way better than people were thinking people were thinking that there's going to be less houses bought there's going to be less houses um sold sold because of interest rates being so high it did not show that at all um let me see let me move our faces here so the 418,000 is that overall the median sales this is just new homes because 430,000 oh average okay new residential sales the median overall home price in the US was 430,000 last I knew but that's why I was just kind of curious how you know kind of correlated with that number but same same Regional ballpark um well so the the seasonally adjusted annual rate was 759k houses sold for September uh previously it was 676 which is the revised August rate so I mean it's it's not what you'd expect because I feel like I keep on seeing stuff from unusual whales like tweets being like no homes like it it's it's they're very Doom and Gloom and then the data comes out and you're like that doesn't match yeah well I mean their their jobs to generate clicks but you know mortgage rate around 8% that's something poell talked about and how the housing market has moderated um you know anecdotally for me I I'm starting to see more homes in my area which I'm in the northeastern us uh come on the market and remain on the market even seeing a price cut or two before they're finally sold um so maybe we are getting towards at least locally for me a point where we're gonna have to Pivot a little bit in terms of the direction of the overall housing market possible I hope so because things are way too expensive all right guys let us know what you think get the next one
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