Fed JUST U-turned AGAIN | Demanding Nasty Recession!

holy moly the Federal Reserve flip-flops

more than some YouTubers these days okay

this is a crazy we have yet another flip

just this morning a Halloween flip from

the Federal Reserve and it comes

essentially on the eve of the fomc

meeting which starts tomorrow and ends

on Wednesday where we're expected to get

the 75 basis point or image followed by

probably more pain listen to this this

is remarkable first just a Fri well two

Fridays ago Mr Nick T from The Wall

Street Journal who's basically deemed to

be the fed's mouse mouthpiece back in

the summer he uh mysteriously happened

to get a text from the FED that

suggested we were going to get the first

75 basis point hike well two Fridays ago

he writes this article in the Wall

Street Journal that actually LED markets

to somewhat start rallying a little bit

we saw the S P 500 and the Dow up four

days in a row right and even though the

NASDAQ was dragged down by companies

like Facebook markets were kind of

rebounding a little bit on this article

and this article the main highlights of

this one were that the FED is trying to

debate what to do after their next 75

basis point hike uh and in doing so

though they think they have to be very

thoughtful about their discussion

regarding the pace of tightening because

they want to slow down but even though

they want to slow down the pace of

tightening they don't want to do the

following they want to make sure they

explain to the public that they're not

backing down in their fight to prevent

inflation right so basically we got this

article that's kind of like hey uh yeah

you know we think rates are going to uh

slow down in terms of the pace of hiking

but but don't worry we're still fighting

inflation and the problem they cite was

the following markets rallied in July

and August on expectations that the FED

might slow or the pace of rate hikes

well they're about to slow the pace of

rate hikes potentially in December going

from 75 this month here in November to

50 next month and this article says that

conflicted with the central bank's goals

because easier Financial conditions in

other words a higher stock market and

lower treasury yields because treasury

yields also fell on this expectation

will stimulate spending and economic

growth which basically hurt inflation

right and listen to this that rally

prompted fed chairman Jerome Powell to

draft a major speech in late August this

is his Jackson Hole speech to basically

make it clear that they weren't backing

down from the inflation fight right well

today we get a new piece for Mr Nick T

we're going to jump into exactly what

Nick T says right here look at this cash

Rich consumers it's like literally a

complete flip-flop okay from this last

one so in the last article two Fridays

ago they're like yeah you know we want

to slow down but we were worried about

conveying that and creating a market

rally in this article what do we get oh

well people are still cash Rich so we

might actually have to hike stronger for

longer I kid you not listen to some of

the parts of this because they're ugly

and if there's any good news in this

article it is that today is Halloween

we're kind of doing a quiet exploration

of the Halloween coupon code better

pricing than what we'll have uh coming

up here in November so uh get in before

the whole November Madness happens uh

but anyway so the debate over the speed

of increases could obscure a more

important one about how high rates

ultimately rise look at this they're

basically redefining What markets should

be paying attention to they're trying to

tell you hey uh you know don't worry

that we're gonna go down to 50 basis

points that's not what you need to be

worried about what you need to be

worried about is how high we are

actually going to end up hiking rates in

our last summary of economic projections

we suggested that we would hike rates up

to 4.6 percent but now you know other

people are saying we're going to have to

go higher than 4.6 percent and then look

what they go on to say after that about

earnings savings and how high rates

could actually end up going you ready

for this households still have around

1.7 trillion dollars in savings that

they've accumulated through mid-2021

above and beyond what they would have

saved if the pandemic hadn't occurred

this is according to the that while the

housing market is entering a deep

downturn ah HDMI I'm going to kill you

it's an inanimate object okay settle

down anyway uh is entering a deep

downturn the housing market is entering

a deep downturn I mean again that'll be

an opportunity for house hack boy I

can't wait for us to open the

non-accredited around by the way there's

a deadline for if you are accredited to

sign your papers today you could wire by

Friday with signing papers today the

rest of the economy is so far holding

together and this is actually what the

FED doesn't want right the FED wants

everything to slow and sync not just the

housing market I mean we know the stock

markets come down but consumer credit

card balances are rising earnings

reports from companies like American

Airlines Bank of America Coca-Cola

Netflix point to a stronger consumer

this is true Netflix surprise to the

upside with the amount of ads that they

had American Airlines is basically

bragging about how strong demand still

is going into the fourth freaking

quarter and they say here this is not

the earnings season the FED wanted to

see now this is where they say the

upshot which is not necessarily the good

shot it's just what the potentially

means is that cooling the US economy

might require even higher interest rates

yikes listen to this okay because

they're going to give us their guide in

terms of how bad this might actually get

the employment cost Index this is like

their favorite index whereas 5.6 last

week this was like on Thursday this came

out this is this was not good this was

not a good report and now they're

referencing a Harvard Economist who

suggests that rates might ultimately

have to reach 5.25 next year with the

significant risk of topping out at an

even higher level potentially as much as

five and a half percent and a recession

coming in 2023 but there is more work

for the FED to create one now on top of

this Barclays yesterday suggested that

crap Bloomberg thinks and Bloomberg

economists think that Eurozone inflation

is going to top out at 10.2 percent but

because of some leading indicators like

flash pmis and and early estimates for

inflation in the Eurozone area we

actually think it's going to come in at

10.5 percent well guess what folks those

numbers came out this morning and they

ain't good the numbers came out with an

estimate of 10.7 percent in other words

Bloomberg economists thought we were

going to be at 10.2 percent Barclays

revises to a worst case scenario of 10.5

percent we actually get 10.7 percent in

Eurozone inflation led by

41.9 year-over-year energy inflation 4.4

Services inflation non-industrial Goods

at six percent food and alcohol and

tobacco up 13.1 percent and all items

excluding energy of 6.9

holy freaking smokes so what you have

here you got to put this together in

sort of a like a way that just is a

little bit dirty to say but what you

have here is a situation where the fed's

like okay we want to slow the pace but

we don't want the market to Rally

because that's going to lower treasure

yields and increase the stock market

which will lead to more spending so we

don't want markets to Rally we do want

to slow to 50 but we're probably going

to have to keep at hiking rates longer

and honestly everything that's happened

so far in this market has required more

patience not less nothing has happened

to the better faster everything has

happened to to the worst side and it's

taken a lot longer for these these

realizations to actually be made and

that's a big problem because it means

that we might not end up with a peak

hiking cycle in March as now expected we

might end up with that Peak in May or in

the summer which could mean we do end up

at that terminal rate of not 4.6 percent

not five percent but five and a quarter

or five and a half half or six percent

on the FED funds rate yikes that's

actually really scary because it could

really push mortgage rates and I hate to

say it because I feel like people think

I'm just trying to beat on real estate

because I'm trying to sell the idea of

househack dude it doesn't matter how

much money we raise for this this

company is happening this company is

going to kick freaking butt if I have to

manage 200 homes it's easier than

managing 500 homes for me okay this is

gonna have more time to sit here and

make videos because I mean that's going

to be a top priority but holy smokes

like

this isn't good the fat is now dropping

hints that oh yeah not only is this

going to take longer than expected uh

but we might have to go higher than

expected I mean here's Nick he's

basically your fed leak dog who uh who

gives you a little more insight this

morning here listen to him this fed

meaning in the actually this was last

morning but whatever I mean days what

are the conversations inside the Federal

Reserve right now about

when inflation gets better and what they

plan to do well the problem for the FED

is that monetary policy takes time it

acts with the delay on the economy so

you can't see your moves right away the

fed this year has raised interest rates

at the fastest Pace since the 1980s

normally they raise rates by a quarter

point uh every six weeks or so this year

they've been going that three quarters

of a percentage point and when you don't

have time to see how that influences the

economy it's like barreling down the

highway but using the rear view mirror

to guide where you're going uh it raises

the risk that you're going to drive off

the road and the problem here for the

FED is they can't take a risk of not

getting on top of this inflation because

even though the risk of doing too much

is a recession the risk of not doing

enough is that inflation just stays high

and you have to have a bigger downturn

later yeah this is basically the

argument that the FED has to force a a

sort of soft recession now not to be

confused with soft Landing because any

recession still sucks technically our

GDP went positive in the last quarter uh

but uh you know from from two negative

quarters before that but uh don't worry

the real recession might actually be

coming as the FED purposely has to force

us into a recession because of this

inflation that is just so freaking

sticky uh and uh and ultimately they

believe uh as as we see you know here in

the article that a recession is coming

but there is more work to do for the FED

to create one they're literally telling

us oh don't worry the recession is

coming it's a real one yikes so buckle

up folks I don't think we're getting out

of this anytime soon and it sucks