Inside The Pros And Cons Of Powell's Jackson Hole Speech As Markets Roar | What's Moving Your Money - video Dailymotion

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On "What's Moving Your Money with Spencer Hakimian," Spencer shared his unvarnished reaction to Fed Chair Jerome Powell's Jackson Hole speech, which has seen markets roar.  Read the full story on Forbes:   0:00 - Introduction: Powell Signals a Rate Cut at Jackson Hole 0:38 - Why Markets Roared After Powell's Speech 1:47 - The Dollar Falls Amid Questions of Fed Independence 2:38 - Warning: Rate Cuts Don't Always Lower Borrowing Costs 3:19 - The Downside: A Falling Dollar is an 'Extra Tariff' 4:44 - Will a Weaker Dollar Actually Help US Exports? 5:51 - Get Ready for Massive Data Revisions 7:06 - A Dangerous Parallel to 2007: Are Rate Cuts Actually Bullish? 8:36 - Conclusion: Rate Cuts Are a Symptom, Not a Solution  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00hey everyone it's spencer akimian and welcome back to another episode of what's moving your money

00:06and happy jackson hole day to all those that celebrate especially to all those that are

00:12invested in the markets it was a great day today across the board assets rallied as jerome powell

00:21strongly signaled a rate cut ahead in this episode we are going to talk about

00:28the pros and the cons of what the fed is doing and what we can expect over the next 12 months

00:36as it relates to these decisions about monetary policy so stay tuned sit back tight and i hope you

00:43guys enjoy so at today's jackson hole meeting jerome powell strongly signaled that a rate cut is to be

00:54expected in september he specifically noted a very weak job market and he said that he personally

01:02believes that the effects of tariffs on inflation are going to be short-lived now i want you guys

01:09to comment what you guys think do you agree with powell's comments i personally do not and we're

01:15going to get into them but i want to hear your comments so comment here you can look at it on

01:21on my tick tock on my instagram on forbes youtube page i want to hear what all of you guys have to

01:27say about it nonetheless markets roared stocks bonds crypto commodities gold you name it it was up in an

01:38instant markets rallied on the news that powell was confirming rate cuts the only asset class that was

01:45falling and i believe for good reason was the dollar and the dollar was falling because we are going to

01:52expect lower real rates here in the united states and on top of it we are strongly beginning to get

01:58into territory where it is questionable how much monetary policy is truly independent here in the united

02:06states going forward but in the short term let's just cover that in we are going to be cutting rates the

02:14front end of the yield curve is going to be falling we are not so sure what will happen to the back end

02:20of the yield curve as you guys remember last year powell cut rates by 100 basis points and the long

02:26end of the yield curve went straight up mortgage rates went up borrowing rates for the real economy

02:32went up as a result of those rate cuts so it is no guarantee that borrowing costs will actually come

02:40down due to this but again this helps asset prices in the short term because asset prices

02:47to an extent are based off of risk-free rates and if risk-free rates go down everything else can get

02:53bid up a little bit further so that covers the good stuff and now let's get into some of the negative effects

03:01that we are potentially seeing here so we saw the dollar rapidly fall immediately after powell's comments

03:10now that is practically important right now because as the dollar falls our imports become even more

03:20expensive and this is at a time where we are having significant price pressures on our imports from all

03:27the tariffs retailers like walmart and target just yesterday said that they are expecting tariff rates

03:35and prices to go up all second half long due to the tariffs toyota said that their prices in the us have

03:43to go up they can no longer absorb these costs so the dollar weakening is acting as a secondary cut price

03:52pressure to all these imports that are already being pressured from tariffs and we know we have an inflation

03:58problem right now so this can actually make the problem worse and it is felt immediately because fx changes

04:06on the spot fx doesn't take six months to pass through like how tariffs do fx changes happen today if you go

04:14tomorrow morning to paris your trip will be more than it was if you went last week because the dollar fell today

04:19it is immediate one other thing that i think is very important that we have to keep an eye on is with a

04:28weakening dollar our exports should begin to do better but we have not seen any signs yet that that is

04:37happening we have not seen our exports grow significantly on an annualized basis or on a month over month basis we

04:46just not have not seen it yet with the upcoming christmas shopping season it will be critical

04:52to see how our exporters perform don't forget we don't just export goods as a country we also export

05:00services facebook instagram google you know all of these tech companies open ai these companies export

05:09their services to the world so a weakening dollar should help them but we have to see if it actually goes

05:16through economics yes you can read about it in a textbook but we have to we also really care

05:22about the real world implications so we're gonna have to wait on that and i guess we will see but

05:27again let me know what you guys think in the comments about that to close out today's episode i just want

05:33to briefly talk about what lies ahead in the coming weeks as we get some government data in on inflation

05:42and on the jobs report and on important export prices and on home prices we have to start considering

05:51that a lot of this data may be subject to further revisions in the coming months and as it is subject

06:01to revisions the fed is going to react to that we now know that the fed is very sensitive about the

06:08weakening job market just in a few weeks we're expected to get our annual revision to the payroll

06:14support not the monthly revision the annual revision and that could show close to 1 million less jobs

06:20gained in 2024 and 2025 than we had originally expected so look as these data points come in it's going to be

06:30interesting seeing the tug of war in markets between yes weaker jobs data is going to mean more rate cuts

06:38most likely but weaker jobs data also means a weaker economy right how bullish is that really in the

06:46long term if we are cutting rates because our economy is weakening right in 2007 we began rapidly cutting

06:54rates and for everyone that wasn't around back then 2007 was actually a very good year in markets

06:59because of the same idea that rates were being cut and that was good for asset prices and then finally

07:07in 2008 people caught on as to why rates were being cut and the narrative completely switched

07:15from rate cuts being bullish to rate cuts being very bearish because rate cuts are a symptom of a

07:22bigger cause which is a weakening economy so as we get into the fall as traders get back to the debt

07:29their desk as the europeans get back from their august holiday as markets pick up around the world i am

07:35curious to see does this bull market sustain or do we begin to price in some of the growth risks

07:44that are clearly baked into the picture here powell explicitly says they're cutting because of a

07:50weakening job market that is very different from cutting because they think policy is a little bit too

07:56strong that they are cutting because they see a weakening job market and they need to offer some

08:02monetary support to try and offset it so i'm going to leave it at that and i hope you guys have a

08:08great weekend and i'm going to see you on monday and as always please tune in please subscribe please

08:14like it helps a lot and thank you guys for watching

Inside The Pros And Cons Of Powell's Jackson Hole Speech As Markets Roar | What's Moving Your Money

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