The Fed's CANCELLED Release *JUST* Revealed.

the Federal Reserve has just released

some more concerning opinions about what

the heck is happening and has happened

over the last few weeks these concerning

opinions are ones that we're going to

evaluate against uh oh what is the data

actually saying is January's data really

that bad and why is the Federal Reserve

all of a sudden getting a little

squeamish well let's take a look at the

press release from the Federal Reserve

outlining exactly their latest thoughts

now what's important here is to know

that this press release hot off the

press from Christopher Waller who is

obviously a member of the Board of

Governors of the Federal Reserve was

released in text instead of via a zoom

call because apparently somebody got on

the Federal Reserve Zoom call and

started showing porn

and after that was displayed the Federal

Reserve said that Waller's event has

been canceled due to technical

difficulties

so anyway uh you know I guess they were

trying to analyze you know BP and

pricing power you know but anyway

um

so we have it in the written form

so last month we received a barrage of

data that has challenged my view in

January Mr Waller his view in January

has been challenged

in January his view was that we were

making significant progress in

moderating economic activity and

reducing inflation

I'm not the only one whose Outlook has

shifted since the end of January

Financial Market participants have

revised their outlooks in a way that led

them to mark up their expectations for

the federal funds rate at the end of

2023 by about half a percentage Point

okay so that's that 5.1 percent terminal

rate that we got the data started to

shift with a bang in February and part

of our plan is to lower inflation by

reducing tightness in the labor market

but unfortunately the labor reports like

the jolts report which can be noisy

that's actually important to see because

them saying these reports in January

noisy is somewhat of a way to kind of

downplay the January numbers but anyway

even though there's a noisy data that

comes out in January we have to be

careful not to downplay large moves and

then jobs numbers that we got in in

February for January were scary and

instead of getting a box of chocolates

on Valentine's Day yes Chris Waller

literally said that we ended up getting

C API reports that were high suggesting

that inflation was running hotter than

we thought at the second half of last

year a pce report a few weeks later that

came in hot and retail sales and

spending data that suggested progress on

reducing demand may have stalled this is

all bad news from the FED here like

bears are going to eat this up the last

thing you want is the Federal Reserve

going progress is starting to stall

that's bad

any fear that we might face a two-sided

risk in achieving our dual mandate was

blown away by the January numbers says

Chris wallers Waller what does that mean

well what it means is the Federal

Reserve has frequently been told hey if

you go too far you'll unnecessarily

unnecessarily create a deep dark

recession and what Chris Waller here is

saying is any fear that we're going too

far got blown away by the January

numbers so in other words we can keep

going without that two-sided risk

wages are growing faster than they have

in decades at a pace that may contribute

to inflation continuing to be elevated

we've seen excess pressure in the fast

growth of services pricing and the

phyton bring inflation down to our two

percent Target will be slower and longer

than many had expected even just a month

or two ago that's bearish that suggests

rates higher for longer I mean we kind

of already know that the terminal fed

funds rate right now being priced in is

like

5.42 you're not pricing in any Cuts

anymore not only are you not pricing in

any Cuts anymore for 2023 but it looks

like you're probably not looking at Cuts

until 2024 that's the higher for longer

right great fantastic what else I don't

want to brush aside the fact that we

have made progress in reducing inflation

and there are indications of further

Improvement coming the three-month

inflation rate is running below the

12-month rate which highlights progress

and there are reasons to be optimistic

about continued Improvement including a

sharp deceleration of rents affected

coming in the next few months here

however if consumer spending isn't

slowing and labor markets are

unsustainably hot then progress could

have stalled so there are two scenarios

the FED is saying either progress

stalled or the January data was just a

blip seasonal adjustments a blip

something that's going to go away and

we're going to end up seeing the

resumption of a decline in inflation

going forward

and ultimately we hope that the February

data shows that we're just facing a bump

in the road but that might end up being

wishful thinking we might have to go

higher for longer because we can't risk

a Revival in inflation that's the

federal reserve's latest take as of

yesterday which again that latest take

was delayed a little bit because

somebody showed porn on the federal

reserve's live stream so what says the

market well the market has some opinions

on this

and uh the market actually responds with

uh well at least this one company

responds with this and suggests hey is

the January data really as good as it

looks in other words is it really as hot

as it looks and what they say is that if

we look at all of the data on a

four-month annualized basis so basically

you take four months between September

and January

and then you annualize it which means

you multiply it by three it's not

exponents don't use exponents damn it

annualize means multiplied I have that

fight all the time anyway the

measurement shows that there's still

solid growth though it's nowhere near

the growth that you saw in January

so here's a piece that suggests maybe

you don't need to be as worried look for

example here when you look at the uh the

January data alone the month over month

data suggests really really bad data

because if you annualize this you're

sitting at 10 to 12 on some of the data

or even more right so the January data

was very very bad but if you look at the

September to January data on an

annualized basis retail sales yeah up

5.6 and real personal consumption

expenditures which is inflation adjusted

are only up two and a half percent this

is actually much more normalized than a

line and actually falling from the 2.8

percent for real pce that we saw in 2022

as a whole and they say here as a

conclusion we're not trying to suggest

that January's data was bad by any means

it was very strong however we are more

skeptical that the economy has seen a

substantial renewed acceleration that

will be sustained moving forward so in

other words here's an here's an

institution that says I don't know it's

likely that the January data was

probably just a blip and maybe we don't

have to be as worried about that January

data now we did get data on March 1st

that suggested potentially stagflation

right we got manufacturing data that

suggested less orders and higher prices

which that's not fantastic that's not

what we want to see and so there are

real concerns that oh no the

inflationary impetus could continue and

that's actually where why might the

inflationary impetus continue well

potentially because of exported

inflation from Europe see inflation in

the Eurozone itself is not cooling right

we've seen a substantial increase in

inflation and a very very tight labor

market with a risk of a wage price

spiral in Europe which if you have a

wage price spiral in Europe you're

probably going to export more wage

inflation to America and that's bad as

potentially and this sounds crazy but

you hire American workers who

potentially are more available to do

certain jobs or prices rise for European

goods and services which leads to more

uh inflation broadly for the for the

world really but you know what else is

leading to high inflation in Europe well

quite frankly it's the strikes that are

happening in Europe it's not just

Germany uh facing labor strikes but it's

also labor strikes and protests in

France that are leading to strikes uh

you've you've got massive uh you know

here's sort of a history of some of

unions and the strikes that you see in

France uh but really what you're finding

is walkouts of rail unions you're

finding strikes amongst a German uh

airport staff you're actually seeing in

my opinion so much contention between

labor unions not just in Europe or

France but also in the United Kingdom

that you're inducing so much more

inflation in Europe via wage inflatio

and Supply interruptions you're actually

making a situations worse think about it

if you strike and you create Supply

disruptions you increase the cost of

providing Supply whether that's for

goods or services if you increase the

cost of providing Supply you're reducing

profit margins at businesses more which

actually means businesses have less

capacity to pay higher wages in the

first place

so in a weird way the crazy strikes that

are happening in Germany in France or

London are actually making inflation

worse for Europe now fortunately we have

less of that issue in America but you

still have a Federal Reserve that's

saying I don't know man if that January

data doesn't turn out to be a blip rates

are going to go up even higher and while

some folks say you know it'll probably

end up being a blip there are plenty of

reasons to say that maybe what's going

on in Europe could end up starting to

affect what's happening here and we do

end up with a revisitation of more

inflation which would obviously be very

very bad and this is why we have to

write down the very important catalyst

March 10th CPI uh sorry March 10th uh

labor report 5 30 a.m March 14th CPI

report 5 30 a.m I'll be covering those

Pacific Standard time and then of course

March 22nd when the Federal Reserve

Reams us at 11 A.M Pacific we'll pay

close attention to those but really

you've got a Fed right now that's like

eh let's see what the next data sets are

you've got leading indicators in America

that are saying they shouldn't be bad

jobs availability is substantially

expanding Uber Lyft Chipotle I don't

want to go through the list again I feel

I could do it every single day but wage

availability labor availability is

substantially expanding you still have

some shoots of potential pain in Europe

a lot of that potentially being caused

by striking in Europe right now and some

of that could end up exporting to

America which would be bad but we do

expect substantial wage and rent

disinflation to really help us anchor

inflation down and hopefully we'll see

yields plummet which will save the real

estate market for more certain pain

we'll see right now it seems like some

things are slowing down though yields

tend to be very very volatile so we'll

pay attention to this but this gives you

an example of what the Federal Reserve

is thinking and how labor strikes in

Europe could also affect inflation we'll

see in my opinion bottom line all of

this is very consistent with a Nike

Swoosh recovery it's very volatile this

is the kind of noise ways you would

expect but the the direction is very

very clear in my opinion and that's why

I'm a big fan of 90 to potentially 100

in not more because you don't really

want to be on margin 90 to 100 in not

personalized Financial advice 90 to 100

in on pricing power stocks stay away

from the collapse potentially from

Staples in the s p exposure focus on

pricing power stocks my day now some

folks were asking me hey what about Mr

Bostick suggesting hey maybe we could

pause at the FED of course of course

he's saying that but he's also very very

clearly saying look it's all going to be

based on the data all Bostic is doing is

saying look if the data is great maybe

we're closer to being able to pause

maybe January was just a blip if the

data comes in bad no pause yet of course

at some point the FED is going to pause

I don't think that's really the big

Catalyst I think when when the FED

pauses we're already going to have clear

and convincing evidence that inflation

is not running away anymore like the

pause will be too late for real Euphoria

I think I think the inflation data will

provide the Euphoria and then the FED

will just follow that