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Good evening everybody. I want to focus today's podcast or this evening's podcast here in Puerto Rico on the Jackson Hole speech on Friday.

Drone Powell, as is always the case, you have whoever is, the chairman of the Federal Reserve makes the annual pilgrimage up to Jackson Hole.

And you know, talks about monetary policy. It was a pretty short speech. I think they typically are. I think he spoke for about 15 minutes, but the markets were on pins and needles waiting for, you know, the words to come down, whether or not Powell was going to be hawkish or dovish and pretty much immediately after Powell started to talk, the markets sold off.

The stock market dropped sharply, gold dropped, the dollar rose, because Powell said that the Fed still has a long way to go to getting inflation back down to 2%. Now that's probably one of the biggest understatements of the year, maybe of the century, it's not that they have a long way to go.

They have an impossible distance to travel. In fact, the route is so far between where we are and where the Fed thinks it's going to get that it's basically a mission impossible. There's no way that the Fed is going to complete this journey.

I don't know if the Fed understands this. The markets clearly don't understand that. Also, Powell did make some other hawkish statements. He reiterated how resolute the Fed is going to be that the Fed is going to get inflation back down to 2% is committed to doing that.

He also said that 2% is the rate. It's not going to go any higher. The Fed is not going to say, well, it's now 2.5 or it's 3 or something like that, because there are people who think that maybe what the Fed will do is move the gold posts a little closer to where we are, so it can actually get over the finish line.

But Powell basically threw cold water on the idea that the Fed is going to move those benchmarks. It's staying at 2% and the Fed is going to do whatever it takes. It's going to keep on hiking and it's going to stay higher and longer and make sure that inflation goes down to 2%. I don't know if anybody expected him to say anything else.

I don't know if people thought that that might actually happen. I didn't think that he would cave. But maybe there was some hope out there that for the bulls. But the markets sold off on those hawkish statements, although the markets all recovered their losses.

So the Dow Rally of the day, the Nasdaq Rally, the market just totally shrugged it off, which is what the market has been doing. Yes, we've had a decent correction off the highs. But the market has basically held up very well in relation to the carnage in the bond market.

I expect that bond market carnage to continue. I mean, there's nothing that would stop bond prices from falling and yields from continuing to rise. In fact, Powell's statements on Friday simply reinforce the momentum that we have, I think, to the downside in the bond market.

I think the most interesting part about Powell's 15 minute speech is not what he said, but what he left out because here you are, you're the chairman of the Federal Reserve, and you're talking about inflation and how inflation is a big problem.

And you're trying to reduce aggregate demand. I mean, that's basically what Powell said. He said that the goal of higher interest rates is to reduce demand.

And what he wants is to let supply catch up with demand. Right. So we need more production. And the Fed is going to push back against a demand against consumption by raising interest rates.

And by raising interest rates, he makes, you know, mortgages more expensive and auto loans more expensive. And so this is how Powell thinks that the Fed is going to bring inflation back down to 2% by reducing aggregate demand.

But what Powell doesn't address is the elephant in the living room, which is that aggregate demand is not going out. It doesn't matter that the Fed has raised interest rates. It's done nothing.

And one of the main reasons it's done nothing is because at the same time that the Fed is pursuing a tighter monetary policy of quantitative easing.

And of interest rate hikes. The US federal government is pursuing the opposite policy. The US government is now running one of the most expansive, stimulative fiscal policies in our nation's history.

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