Prepare for the Fed Rug Pull & Crash | Mark this Date.

hot damn the Federal Reserve threw their

mouthpiece The Wall Street Journal is

starting to talk about the FED pivot

yeah literally but their concerns are

that if they talk about the pivot

something like this will start happening

okay this is just a microcosm example

but take a look at this this morning

Nasdaq futures were falling and we were

basically trending down all morning and

all of a sudden we get this spike in

Futures and why is that is it because

Snapchat is down 25 because their

advertising revenue is plummeting and

their growth is like flat gee that

wasn't a surprise American Express is

potentially going to lose more money on

credit cards than expected that coming

in as a little bit of a surprise Elon

Musk telling us that the recession that

we're going to go through right now or

are going through might last until the

spring of 2024. I don't know but the big

news right now is the Fed trying to

figure out how they start massaging a

pivot into the market that's right see

remember the Federal Reserve acts in a

really weird and funny way they like to

do what the market tells them to do now

I say tells them with air quotes because

the FED likes to give the markets hints

or kind of push markets into the

direction that the FED is going and then

wants markets to price in what the FED

is going to do and the FED does it with

as little risk to financial stability as

possible they don't like to just rug

pull markets they like to bleed markets

because if things are bleeding out then

you could

kind of starts seeing if things are

slowly breaking rather than suddenly

breaking like you had in the United

Kingdom so this morning the Wall Street

Journal just about 20 minutes ago posted

an article and started talking about the

Federal Reserve working on their

massaging message for how are we going

to potentially raise interest rates only

by 50 basis points in December without

triggering a market rally and finally

The Wall Street Journal again sort of

The Unofficial mouthpiece of the pad and

we say that because remember this summer

the Fed was supposed to go for a 50 BP

hike we got a bad inflation report and

then like days before all of a sudden

someone in the media happens to get a

text message suggesting the FED might go

75 then markets crash and the FED ends

up going 75. right so you kind of see

how the game gets played so these

articles kind of previewing what's going

on at the Fed

unofficially are kind of like the fed's

newspaper and in the fed's newspaper

today they're warning us that hey hey

hey look last time we started this whole

like pause and pivot idea markets

rallied that was in Late July and early

August we had almost an entirely green

August where it's just

it was great

it was wonderful people were people were

spending money people were buying

courses on building your wealth which

you really should do in every Market

that you're in uh people were buying

life insurance and Met kevin.com Life

they were signing up for 12 free stocks

at Weeble at metcaven.com Weeble people

were happy markets were going up but

Jerome Powell wasn't happy so what

happened Jerome Powell had to come out

and talk markets down again and that's

exactly what the FED talked about in

this article in fact well when I say the

FED talked about well Wall Street

Journal talked about what they start

talking about is how is the Fed going to

be able to Signal a potential smaller

fed funds increase in December without

the risk of a market rally literally

their words in uh the Wall Street

Journal so the Wall Street Journal

swords we'll stick with that

they might do this

through their newly updated summary of

economic projections which could

potentially talk markets down for the

rest of the year in 2023 which is quite

remarkable because in 2023 we were kind

of all hoping that we would hit some

kind of bottom of this pain and get out

of the pain but now it looks like no

it's entirely possible that the pain

could actually last through 2023

especially as Elon Musk mentions this

morning the recession could last until

2024 and remember in the Tesla earnings

call Elon Musk made it clear that one of

the reasons they're not doing tests of

stock BuyBacks now at such cheap levels

is because they're preparing

for what if there is a really nasty

recession in 2023 rather than just sort

of your garden variety every day

run-of-the-mill

recession

combine this

with the fact that treasure yields are

going absolutely Bonkers and you have

what actually makes for a relatively

tight set of financial conditions look

at the 10-year treasury yield I mean

I've been freaking out about the

treasury yield near four percent because

that means mortgage rates around seven

and a half percent

well now it's 4.3 on the 10-year that

means we're probably starting to knock

on the door of 8 mortgage rates for Real

Estate which in the short term is going

to be absolutely glorious as it creates

a housing correction for house hack

because we're going to be able to buy

the dip really freaking cheap which is

great because you buy cash wait for the

payment to go away you wait a couple

years and then you refinance when rates

come down and you keep buying it's

simple the point is you want to buy the

bottom anyway this is a very set like

tight set of financial conditions and

what's weird is

they keep going up in the last three

days even after Liz trust resigned we've

seen the treasury yield only Trend up

earnings are pushing the treasury yield

up it's almost like earnings are telling

the Federal Reserve and the bond market

that hey uh this just isn't bad enough

this isn't the earnings recession we

were expecting yet it's just not bad

enough with the exceptional company like

Snap

we need even tighter Financial

conditions

and so next up

we obviously at this point have a 75

basis point hike priced in for November

2nd November 2nd folks is in less than

two weeks so we've got another fed

meeting already in less than two weeks

how weird is that and then six weeks

thereafter we get the Christmas rate

hike which we hope will be a little bit

of a discount at points out at 0.5 but

even though that might signal some form

of softening you already have the

Federal Reserve worried about oh well we

don't want to Signal a market rally now

you do have some folks over at the FED

who are saying look we gotta be careful

we can't hike so aggressively anymore

maybe we'll we'll quantitatively tighten

a little bit less as an idea that's

floating around now maybe we're being a

little too aggressive because we have to

wait for some of the lag of monetary

policy to take effect because we don't

want to over correct but then you have

others like Neil Kashkari who say things

like well but can we get Services

inflation down by pausing on rate hikes

so you have a real debate at the FED in

terms of rate trajectory remember folks

this is the Federal Reserves Dot Plot

and what you notice is you have a

consensus for 2022. that's pretty much

already in the bag Let's Go 75 and 50 or

75.75 that doesn't so much matter 2023

we mostly right now have a consensus to

the upside however this is likely

in the December summary of economic

projections to Trend up because the

Federal Reserve is still not seeing

progress on inflation and the most

important report that we're likely to

get coming soon here is not actually

going to have to do with what the market

thinks about rates it's going to be the

employment cost indicator this is the

employment cost indicator chart which

has been skyrocketing it comes out every

single quarter it's quarterly released

by the Bureau of Labor Statistics it's

basically CPI for labor and next report

is a week from today October 28th and it

could be dirty which could lead to a

75-75 as the feds worried about a wage

price spiral in 2023 and that could

actually lead to consistency of the 2024

numbers moving up and this is where the

uncertainty lies uncertainty lies in

2024 in other words how long do we have

to keep those rates up and what if all

of these folks start adjusting rates to

here and markets have to adjust down

because pain is going to last a lot

longer than we thought look

I hate to say it but I've said regularly

I've like 2022 is going to suck

no way in hell could you have asked me

hey in in you know January or March of

this year hey um

you think 2023 is gonna be better be

like hell yeah well now it's like Maybe

not maybe the recession will keep going

maybe it'll even get worse

and the FED is debating exactly that

and that's scary

but in the meantime stay in the course

and playing Mario Kart

see in the next one folks good