Jerome's DIRTY Plan | Watch BEFORE 11am Wednesday.

you're going to want to watch this one

in full before tomorrow tomorrow is

December 14th you're going to want to

watch this before 11 A.M because that's

when we get a new summary of economic

projections this is going to be very

critical for the market it's going to be

much more critical for the market than

this 50 basis point idea because we're

going to get a new set of projections

from all the members of the fed and

we're going to see if the FED is in line

with which direction they're going in or

if they're scatter shot their scatter

shot you could have red flags because

scatter shot fed members means a lot of

contention and anything's game if

they're all game for one direction we

want to know what is that direction and

what are they potentially seeing so

folks let's go ahead and look at the

last time we got a summary of economic

projections going all the way back to

September 21st of this year that doesn't

sound like it's that long ago but then

again we had October November that just

vanished and then maybe like another

three weeks in between that that's wild

so it's been two months and three weeks

all right so we're gonna go ahead and

jump on over to these

the summary of economic projections

start with this very specific table and

I want to note something up here first

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we extended that coupon code to tomorrow

evening all right so what do we have

here well first it's worth noting a

quick may as well mention that core

services and CPI today came in at just

point one percent excluding energy and

rent this is really good because

remember Jerome Powell's you know third

concerning area is services and so the

fact that core services on the good side

rotated down like this really really

good this comes in after a 0.4 in

October a 0.8 in September a point

fourth should be 0.4 before that we did

have a zero in July though so this is a

number that could be a little volatile

so I wanted to mention that but so it's

it's good news for now because it's

trending down but you know it's been

zero before okay so this is what we had

last time this is the summary of

economic projections from last time and

I'm going to point out that probably the

most important piece out of all of this

I'm gonna pick an orange highlighter

here we're going to use orange uh as uh

as our most important highlighter and

that number is going to be right here

down there at the bottom so it is

actually the federal funds rate

projection that uh there we go that is

going to be extremely important the

reason that's so important is because in

June the last time we got an SCP before

September the Fed was only expecting to

raise rates up to about 3.8 percent now

we have the market anticipating that

rates could go as high as five percent

and there have been murmurings that the

FED might end up stopping at 5.25 maybe

5.5 some even say oh the fed's going to

go to six percent although those

arguments seem less likely now that

inflation has kind of tapered at least

in the last two reports so we're

probably closer to that five percent

number and the Fed was very clear in

November that if they had to redo the

summary of economic projections they

would revise up from 4.8 so I'm going to

go out here on a limb and make my

prediction that if I were at the Federal

Reserve what number I would expect all

of these uh factors to come in at so I

actually think the fed's going to end up

at about 4.8 now that's practically

going to be 4.75 I believe but I think

that their projection is going to be 4.8

if we get 4.8 it's bullish that's going

to be below what the market is expecting

right now which is about 4.95 if we get

5 4.9 that's going to be right along

expectations anything above that it's

going to be a problem

now the next number I actually believe

we could see a shift down on that's

because inflation expectations have

broken down we're not seeing this

runaway aspect to inflation anymore

we're more worried about policy lags and

I think that could be bullish for

markets to see a downshift here my

projection is 3.7 for the 2024 number so

this is 2023 in 2024. so not really

getting all the way down in the future

but it wouldn't surprise me to see this

potentially move down to 2.6 or maybe

even 2.5 so that way they're suggesting

that they might think that 2025 might be

the get back to the longer term where we

want to be two and a half percent fed

funds right so that way you have an

upward revision here but you actually

have a downward revision here and that's

a way in my opinion that the FED can

forecast front loading I think that

would send a very reasonable message to

markets I don't think this would

necessarily move markets ridiculously up

or down or move Financial conditions in

either direction remember when markets

rally and bond yields fall those those

are ways that Financial conditions

actually loosen and it's a way that the

Federal Reserve can can make things a

little happier and get people back to

spending and manipulate essentially

markets so if you're ever curious if

there's Market manipulation the legal

Market manipulation that occurs every

single day is over at the Federal

Reserve and I mean

Congress kind of gave them that

authorization so like it or not it's

what happens that's the game we play so

another number that I think will be very

critical will actually be the

expectation for up here change in Real

GDP so uh in the last measure they

actually thought real GDP might drop to

as low as 0.2 percent for the year of

2020. I actually don't know about that

so if you go to the Atlanta fed real now

GDP measure it's a lot higher than that

I'm going to pull that up in just a

moment here let's see five days ago they

published their last estimate okay we'll

look at this together him so the real

GDP from five days ago from for the

Atlanta fed estimate came in over here

above three percent for Q4 2022 we did

have a couple negative Quarters at the

beginning of the year and sort of mid

mid part of the year uh we the third

quarter we bounced a little higher

especially with the Atlanta feds real

GDP we'll see final numbers and all that

but but we were positive in Q3 a point

is even though these numbers can get

revised if we have a strong Q4 like this

we might actually see the FED

revise this GDP for 2022 up I I that's a

sign that maybe the market actually you

know or the economy is not doing as

terribly as potentially expected so I

would think that this might actually

move up I'll use my green color here

this might actually move up closer to

0.5

and they might actually be a little bit

more concerned now about the lagging

effects of policy it might potentially

take the economy here down to a 0.9 or

maybe a 1.0 for 2023 and I'm I'm okay

with the consistency here on the others

that's sort of below Trend under that

two percent growth on uh you know that's

below Trend GDP growth that's what the

FED wants they think that's going to

drive inflation down it also would not

surprise me to see the unemployment rate

revised up a little bit for next year

but not by much I would not expect a big

movement here maybe you get like a 4.5

or something to that effect pce

inflation obviously this number is going

to get revised up we're probably going

to be closer to something like a six

percent uh for the end of the year and

it's possible that next percent next

year could see something like a three I

don't think that's going to be very very

meaningful I think the most meaningful

part out of this SCP is really and I'm

going to rank these here in an order of

priority I think it's going to be the

federal funds rate right here absolutely

that terminal rate this is a game

changer if we get something well into

the fives it's going to be a big problem

because that means the FED even though

they're they're slowing down on their

rate hike cycle is actually suggesting

all right let's go 25 25 25 25

for a very very long period of time

rather than pausing and potentially

March or may a March or may pause would

put them somewhere probably around four

and a half 4.75 or 5 depending on when

they go to 25 which we think will be

pretty soon we think they might go 50

25.25 right something like that uh wage

50 would bring us to 4.25 25 would bring

us to 4.75 just as an example so uh

that's an expectation that's a big deal

though again if that's like 5.5 for 2023

if markets are gonna go to crap and this

is why to answer the question a lot of

people had I answered this also in

detail in my course member live stream

this morning because a lot of people

were wondering Kevin why did the market

all of a sudden just go to crap today I

I was look looking and really the only

explanation was that we're getting a sep

tomorrow when we get an SCP trading

volumes like people sell okay people

sell before you get the sap and you

generally buy after this app because

you're going from uncertainty to

certainty right generally people don't

like to buy when there's uncertainty and

generally the masses like to buy when

they have certainty this statement is

good you know you're not going to have

another let's see schedule uh fed 2023

you're not going to have another SCP

probably until March I don't think

you're going to have it in the February

meeting but I'm going to find out right

now so the February meeting is the first

Feb Market calendar on that yeah the

next SCP is not going to be until March

22nd that's uh four months in a week

from now really Jan Feb March no three

months

yeah three months in a week from now

anyway that's a long time that's a

hundred days between the basically

between now and the next SCP so for the

next quarter you're trading on this

chart like your expectations are based

on the new thing coming out tomorrow

it's a big deal so like is it really a

surprise that stocks move down after uh

you know in the afternoon today when

people realize ah crap we got a sep

coming out tomorrow no not a surprise at

all now what else is going to be

important well I think Unity is going to

be important so you'll get range and

you'll get central Tendencies here I

think Unity is very very important see

here even though 4.6 was sort of the

expectation for let me uh zoom in over

here 4.6 was the expectation for 2023.

the range was raising rates 3.9 to 4.9

percent

so that's like the low end and high end

the big concern would be if this range

says something which it probably will

4.4 I don't think anybody's going to be

in the threes anymore 4.4 all the way to

potentially six percent like if you see

a six handle there oh boy oh boy that

could be dirty because that person's

voice could get louder and louder so I'd

actually say that range is the second

most important thing

and uh I do think this there are a lot

of clues that could be gleaned from GDP

and then like big gap really but less so

you know their projections here on

inflation and Unemployment uh though

obviously we're going to look at them I

think really what matters to me more is

not they're hypothesizing on what the

unemployment rate or inflation is going

to do what matters more to me is their

impression of economic growth

and what they're gonna do about it which

is the Fed funds right right and then

the range of that fed funds rate another

way that you could visualize the range

of the FED funds rate is called The Dot

Plot dot plot's a really big deal

because look at this okay this is like

really really interesting in my opinion

in in 2020 uh two and in 2023 look at

what you had very tight

2023 very tight okay you could see those

years right here 22-23 right look how

tight those boxes are I mean you're

really seeing cohesion around that

4.3 to 4.9 level expectation for 2023

right look at how nasty that gets for

2024. they're all over the map and so I

want to see how much cohesion there is

go for for this box right here that's

going to be a critical one and if we end

up getting something like which I don't

think we're going to get but let's say

we end up getting something like you

know some people over here knocking on

the door basically uh you know that's

that's 5.75 you get something like ah

come on iPad you get something over I

think it's the iPad not the cables by

the way or the dongles because I've

tried three dongles and three different

HDMI cables

iPad come on Apple I get with it anyway

uh of course you take it to the Apple

Store and they'll be like we cannot

re-diagnose the issue Saya it's like

effort we'll just deal with the black

screen every so often you know what it's

an opportunity to take a sip of coffee

soak in the information and think about

that peepee

you know the coupon code expires anyway

okay so like if you got something like

this okay

that right here that would be hell

that's hell because that tells you

you're gonna go 5.25 to to nearly six

percent very very that could be terrible

very very very bad

um probably more likely I would expect

uh more more diffusion so I would guess

uh so I'll use orange since that's what

I've been using for my guesses for 2023

my guess is uh probably gonna be

we're gonna see some folks some doves

over here what do we got here we have

three three six six times three we got

18 dots to plot okay so I wouldn't be

surprised to see something kind of like

this where you really have that six I'm

gonna go with like eight eight Dots here

three low then that puts me at about 11

that gives me seven more dots to plot uh

I I do think I'm gonna get some I might

see like a one over here uh no not with

the last two inflation reads you're

probably gonna get more of a one over

here maybe two over here that puts me at

14 gives me four more dots uh and then

I'll go five and a quarter a little

heavier and then three over here that's

kind of my assumption of what you're

going to see where you have that sort of

central tendency around that 4.8 roughly

aligning with what I wrote on the sheet

but I do think you're gonna see some

bias into that that five and a quarter

range uh obviously if this skews more at

the top it's going to be a little

problematic but but that's uh those are

some of the X expectations yourself so

what do you do you know

um well like I think the the there are a

few things you can do uh number one this

is a very interesting time for tax loss

harvesting because you are running up

against uh Q4 earnings right so Q4

earnings reports are going to come out

third week of January to beginning of

February then you're gonna have a Fed

meeting

and if you have bad earnings and then

you have fear of the FED meeting in my

opinion you could be in a position where

you sell now you buy back in during that

fear of earnings and the Fed

that really gives you this week to tax

loss Harvest then you'll also have

another CPI report though that comes out

I believe it's on the 12th of January

you could Google that one really quick

it's either the 12th or the 14th it's

one of those uh and uh I'm pretty sure

it's 12.

that that you know could potentially set

off a rally again because that CPI

report is going to be like three weeks

distance from the FED where I see the

problem the reason we sold off on

today's rally is because you had the sep

coming out the day after uh CPI so it's

like even though CPI was good you can't

really rally yeah it's Jan 12. okay

sorry yes

uh anyway

um

yeah so so there is that potential for

tax loss harvesting one of the

interesting things that you could do is

you could potentially move from single

stocks you have losses on to an actively

managed ETF so that way if that actively

managed ETF runs that active ETF manager

can rebalance for you without passing

along tax implications to you check with

your CPA on that uh you know obviously

uh it's it depends on how the ETF

manager runs the fund but uh but yeah if

you have large gains on a stock within

an ETF the ETF manager can trade that I

am an active ETF manager right but an

ETF manager can trade that for a

different set of stocks and and

potentially not have a taxable event

that's really cool it's like trading

they call them like units and baskets

and the ETF it's weird but it's really

awesome because it's a way you could

rebalance a portfolio without having

those taxable games gains that you might

have in your portfolio or like ah this

one stock ran so much but dang it I

don't want to sell it because I don't

want to pay taxes at the end of the year

right anyway

so that's an interesting strategy right

now uh another thing obviously staying

at a margin uh you know keeping up the

cash working hard or grinding more it's

frustrating it's hard but like that's

called recession you know it's it just

sucks no nobody's having a great time

and even if you're killing it in some

trades uh it's uh it's so volatile it's

dangerous out there and that's why I

think our trading challenge is going to

take a very conservative approach to to

milking some some uh you know it's

technically active income but what'll

feel like roughly passive income so

we'll we'll see what we can pull off

anyway we're excited about that so uh

check out those links down below I'm

building a real thank you so much for

watching and folks we'll see you in the

next one