The Fed is *Freaking Out* | Jerome SCREWED UP!

today is Black Friday the expiration of

our biggest coupon code of the year and

folks the Federal Reserve is again in

Focus the stronger consumers behave

today the more the FED may have to raise

interest rates to crimp our economy

further hurting stock valuations and

real estate valuations AKA asset

valuations as well as cryptocurrencies

of course if the Federal Reserve

believes they might actually be acting

too aggressively and they may actually

be pushing us into a recession when

that's not their goal because a

recession could lead to unnecessary

bankruptcies and job loss then the

Federal Reserve may decide you know what

why don't we pull back a little bit on

the reins and just wait to see how the

effects of what we've already done play

through the economy in just a nine short

months we've seen interest rates go from

zero along with money printing to 3.75

percent about to be 4.25 next month and

quantitative tightening which rather

than running the money printer means

running the money vacuum like in Luigi's

Mansion

so what do we know about what the

Federal Reserve is thinking now and do

we have any updates well we will have an

update next week because Jerome Powell

is scheduled to speak next week which is

right before the Federal Reserve goes

into their two-week blackout period so

we'll get some insight and expect some

volatility going into next week I also

closed out some of my short-term option

trades today because I want to get ready

for exactly how I strategically want to

play leading into Powell's speech next

week and this is part of my five million

dollar options trading portfolio

challenge which Launches on Monday for

those of you in the stocks and

psychology of MoneyGram now let's go

ahead and take a look at this latest

report here this is a report from the St

Louis fed and I find this very

interesting because first they're going

to give us a little bit of a preview

about some things that are happening now

then they're going to go into what they

predict going forward and I think it's

quite remarkable and it's really

important because it's going to give us

an idea of what does the FED actually

think so let's look at this first we see

that right now the economic activity we

know this has been uneven we saw

negative GDP of 1.6 to negative 0.6

percent for the beginning of the year

that's technically a recession though

Joe Biden didn't want to Define it as

such because well that's quite

politically unpopular growth in the

third quarter was unusually brisk though

with a large contribution from realnet

exports the largest contribution in 40

years however this boost in GDP we got

in the Q3 the Saint Louis fed here

actually tells us is artificial because

the dollar has been so strong making our

exports look substantially stronger and

more expensive and our Imports

substantially less expensive this makes

sense if you have a dollar that goes up

in value it takes less of your money to

buy stuff from China but it costs the

Chinese more of their money to buy our

dollar denominated stuff what is the St

Louis fed telling us well here they're

telling us this is a minus for the

economy two negative gdps in a row but

the growth we had in Q3 was actually an

anomaly and one that we don't expect to

continue that's another minus for the

economy the more minuses they tell us

the more likely the FED is to slow down

on their aggressive posture because they

don't want to overly hurt or crash this

economy Beyond what's necessary to bring

inflation down speaking of which

inflation and GDP let's take a look at

what the November survey of professional

forecasters predicts now forecasts are

often wrong but you're going to see this

reference to SPF that's the survey of

professional forecasters so let's keep

that in mind

the forecast now is for an annual

annualized rate of one percent GDP in

the fourth quarter meaning our GDP would

end up for the year of 2022 sitting at

point eight percent not only is that

substantially below the 5.7 percent

growth we saw in 2021 it is a

substantial negative it is much slower

than where we want to be negative really

anything below Trend growth would be

minus two percent and we've got three

negatives here in a row I mean at 0.8

even though it's not negative it's a bad

number and it's really only propped up

because of the strong dollar which

actually isn't expected to stay strong

that much longer shorting the dollar

could actually be a good strategy now

the Saint Louis fed and Jerome Powell

via the federal reserve's minutes are

both now indicating that a recession is

not out of the question this is a very

big shift that we've heard from the FED

in just the last week and that we

haven't heard previously previously the

Federal Reserve has always told us ah we

don't have a recession in our forecasts

now they're starting to say yeah soft

landing's looking hard citation the last

press conference of the fomc Open Market

Committee meeting at the beginning of

November and in their minutes they talk

about a recession as being as likely as

not about a 50 chance and here they are

in the St Louis fed piece talking about

a recession not being out of the

question this my friends is a very clear

minus sign and it's one that a lot of us

starting in January of 2022 thought was

a real potential that the Fed was

essentially going to force us into a

recession I just don't think they were

as honest up front as they could have

been about it probably because of

political reasons notice how interesting

it is that all this recession talk is

now starting right after the election

how convenient anyway I'm not trying to

put on tinfoil hat here just saying they

tried forcing a recession from January

and they bsed us until now and they

might still be bsing us anyway the

survey of professional forecasters

suggests that headline and core

inflation will slow

sharply in 2023 headline inflation is

projected to come down from 7.7 percent

in 2022 to 3.4 and 23. now that's still

above the federal reserve's goal of two

percent inflation and core inflation is

also expected to be around that three

and a half percent level suggesting that

the FED still has some interest rate

hikes ahead of it and it's probably

going to take until at least 2024 for

interest rate or for inflation to get

anywhere even close to two percent if

they're even lucky that that ends up

happening of course some like Kathy Wood

will argue that we'll actually end up

going into a disinflationary period

where we could see even lower than two

percent inflation though I wouldn't say

that's anybody's real base case scenario

right now either way this is actually a

plus for the economy and I'm saying it's

a plus not because anybody wants

inflation I'm actually saying it's a

plus because the more pluses we have the

more aggressive the FED has to be and

the more minus we have the more calm the

Federal Reserve should be so far we've

got a lot of minuses okay now let's look

at this this section right here this red

box stock price is going down real

estate mortgage is getting more

expensive and this fancy phrase credit

risk spread widening is all a fancy way

of saying Financial conditions are

tightening and this is something the

Federal Reserve wants and demands the

Federal Reserve desires to see Financial

conditions tighten and stay tight

because they believe that when Financial

conditions tighten people spend less

money leading companies to raise prices

less often or potentially decrease

prices therefore leading inflation to

come down so in other words falling

stock prices home prices and bond values

are all part of the puzzle they're all

part of the game to make you poorer so

that they can win their game of getting

inflation down this is actually a good

thing that these Financial conditions

are very tight and so we're going to put

a minus there that the FED does not have

to keep going heavier because they've

already done quite a good job at not

only ruining home builder sentiment but

tightening expectations for financial

conditions and actual Financial

conditions now we still have mixed

readings on consumer outlays but the

Federal Reserve is starting to notice

that the reason people continue to spend

is because of the following they believe

that people are still spending because

people are normalizing their

expenditures check out that green line

at the bottom normal Main retaining

normalized expenditure patterns through

increased debt and by using savings

they've accumulated during the pandemic

this is actually a sign that the

consumers might be on their last leg of

being able to spend especially when you

start seeing durables turn over they're

some of the most interest rate sensitive

items and tend to be as the FED says

more discretionary in nature so this

actually right here is another minus the

turnover of interest rate sensitive

environments and we have a minus over

here that spending isn't being driven

necessarily by high incomes it's being

driven by potentially more debt spending

now we are seeing more payoff right now

which is great more debt payoff however

that's also aligning with more debt the

more debt we have the more payoff we

expect unless of course we expect

defaults then you would see more debt

and lower payoffs or stable payoffs but

while we're not seeing defaults it's

clear that people are moving from having

lots of money to having less money and

now take a look at this when it comes to

the jobs Market the Federal Reserve

actually thinks that the jobs Market

even though it's been relatively

impervious to the pain might actually

end up going negative by the fourth

quarter of 2024 with job gains they do

though think that for the entire year of

2023 which is right here that inner

circle they think the average job gains

will be around 36 000 per month which is

a Far Cry of the over 261

000 jobs per month or I'm sorry

year-to-date 407

000 jobs per month year to date that

we've seen 261

000 just recently in other words we've

been averaging around this 400 000 level

and we're finally trending down a little

bit towards the end of the year and the

forecast is for that to really plummet

next year and and this is very good news

for the Federal Reserve you're going to

see here that compensation has not kept

pace with inflation that line right

there is probably one of the most

important things so we actually have two

minuses in here that's because the

Federal Reserve is deathly afraid of

something known as a wage price spiral

and when the Federal Reserve says that

compensation is not kept pace with

inflation now and that the employment

cost index was only up five percent from

a year earlier while inflation is up

seven and a half percent or seven point

seven percent this is a sign that we do

not have a wage price spiral which is

usually marked by having wages that are

going up at a higher rate than what

inflation is if that were the case the

FED would potentially at this point have

to force us into a Great Depression

because the risk of letting inflation

become unanchored and run away via a

wage price spiral would be even worse to

the economy than just squeezing out

inflation the way we're doing now

now in case that's confusing let me just

be very clear as soon as people think

that prices are going to go up forever

that is expectations of inflation break

because they can keep getting higher and

higher pay then inflation will continue

to go up and the only way to break it

will be to essentially pull volkerty

economy like what we saw in the early

1980s where Paul volcker raised the

Federal Reserve rate to well above the

level of inflation inflation around 18

percent fed funds rate running up to

about 20 percent look at where we are

now fed funds rates sitting around three

and three quarters of a percent and

inflation over twice that so there's a

big gap today our fed funds rate is like

here and inflation is like here then get

rid of that inflation's here and the

fed's like um nope we're going above

that to squeeze that sucker down and

that they did they were able to lower

inflation from about 18 to just about

nine percent in just a matter of a year

but they crushed the economy in doing so

now uh there is also the belief that a

falling a capital spending and business

spending will end up leading to lower

stock prices as we go into what's known

as an earnings recession this is

actually the recession that I'm really

fearful for in the world of stock

picking I believe that in the world of

stock picking for 2023 and I think this

is critically important you really need

to focus on companies that can manage

EPS growth in 2023 I think having EPS

growth in 2023 is going to be very

difficult perhaps companies like Adobe

Tesla uh end phase depending on how the

real estate market performs solar Edge

and some of these companies will be able

to maintain High margins as well as

AutoCAD unless of course we have a

massive slowdown in the construction

business leading to cancellations of

architecture software though I think

that's unlikely since even if you're an

architect just doing one Arc

architectural drawing a year you're

probably going to keep your AutoCAD

subscription but anyway that part is

just speculating and of course I can't

give you specific Financial advice even

though I'm a licensed financial advisor

this video is just broad-based financial

information and if you want specific

information for your situation make sure

you contact the appropriate

professionals to help you out now in

conclusion the FED says here the balance

of risks facing the economy over the

near term are decidedly weighted to the

downside now this year at the bottom is

yet another big shift from the Federal

Reserve previously they suggested that

the risks to the economy were that the

economy would perform to the upside and

that inflation would perform to the

upside both of those were bad because it

meant Titan Titan Titan Titan now what

you have is the Federal Reserve saying

uh oh our economy's risks are actually

weighted to the downside and yeah even

though forecasts aren't perfect and

there can still be issues in and you

know inflation actually coming down

we've done pretty damn well at slowing

this economy not necessarily crashing it

even though that might be what it feels

like in the economy but we're doing

pretty decently at slowing things down

and now it's time for us to slow down

which quite frankly the fed's slowing

down is actually bullish for the economy

and in a weird Twisted way the FED

listen to this okay the FED know not

only wants you to check out on that 60

off coupon code for the programs I'm

Building Wealth and Black Friday coupon

code that expires at midnight tonight

but the FED might actually want

Financial conditions to loosen

for fear of having gone too far how do

you loosen folks you encourage a stock

market rally baby now no guarantees

but this is a really interesting

potential I think it's all obviously

conditioned on next month's CPI if next

month's CPI report comes in weak

oh boy oh boy we could be in for a juicy

juicy ride to the upside a rocket ship

dare I say anyway thanks so much for

watching consider sharing the video with

someone else and subscribing and we'll

see in the next one good luck goodbye

and happy Black Friday