Warning | Watch *Before* 2pm.

welcome back to another day where the

Federal Reserve controls everything

that's because at 11 A.M Pacific Time 2

p.m eastern time we get the Federal

Reserve minutes for their December

meeting which was actually a very

important meeting because it signaled a

bit of a counter flip-flop remember back

in November we started seeing the

introduction of phraseology like hey the

fed's starting to have concern about the

monetary lags that could come from

having raised rates as quickly as they

had and that sent signals to markets

leading to Market rallies that hey you

know what the Fed was actually cautious

about the risk of over tightening the

risk of overdoing it in fact the Federal

Reserve has in the past told us in press

conferences like those by Jerome Powell

that hey you know what if we over

tighten no problem we could always just

turn the money printer on again but in

that November meeting Jerome Powell told

us ah but we don't really want to do

that because that has tremendous human

costs right we don't want people to lose

their jobs if they don't have to but all

that kind of flip-flopped in December

and it was not like a huge flip-flop but

it was enough to really kill any hope

with the Santa Claus rally and well lead

to the further collapse of a lot of

stocks even Apple now below the two

trillion dollar valuation leaving that

tea two tea Club so to speak so this at

the same time as this morning we hear

that smartphone shipments a year over

year are down to

34.1 percent out of China and Salesforce

says they've hired too many people for

their software business and they're

cutting a 10 of their staff as well as

reducing some big real estate holdings

interesting especially for house hack to

pay attention to these job style changes

but what are we looking for in the

minutes today well we're looking for the

fed's rationalization for their U-turn

why did all of a sudden we see see this

counter flip where all of a sudden Jay

Pals more seemingly concerned about the

jobs market and how sticky wage

inflation is going to be than actually

being concerned about that human cost he

said he was concerned about but

apparently ain't that concerned about

now we will get a little bit of clarity

today because at 7 A.M California time

10 a.m eastern time we'll be getting the

jolts report that's the job openings and

labor turnover survey we're expecting 10

million openings a number less than that

would be bullish we want less job

openings because it does seem like the

fed's really worried about jobs

inflation and the potential for wage

price spiral where wages are

accelerating at a pace faster than what

inflation ends up falling to because he

remember in the December meeting drunk I

was like ah yeah we had a couple good

inflation reports but we've been

expecting those we're just now worried

about jobs so that joltz report should

help us as we go into these fed men

minutes to try to glean and understand

why were they so darn fussy to us this

right here is the summary of economic

projections that we last received and

what was remarkable here was I had

personally been projecting a 4.9 percent

terminal rate on that on that uh fed

funds right here we got that 5-1 and

that was a hit not only this sort of

pivot from ah we're worried about lags

all of that seemed to go away in

December and all of a sudden we got a

fed that's like no no we're gonna be

more aggressive here and we're already

anticipating that inflation is coming

down and at the same time we're

basically going to hold our feet to the

recessionary fire not just for 2022 but

also

2023.5 here is a pretty low estimate

they're knocking on the door of

recession especially when we were

sitting at a GDP estimate of 1.2 percent

which they then revised down from their

September summary of economic

projections to 0.5 percent so this is

sending real concern to markets that oh

the FED is starting to realize the only

way we're actually going to solve this

inflationary crisis that so far is or

maybe isn't transitory so far it seems

like not is by actually having a lot of

people painfully lose their jobs while

being on the brink of recession that's

exactly what at least we see here right

we see higher terminal rate higher

unemployment rate and lower GDP and so

hopefully hopefully okay this is the

hopeful and then I'll talk to you about

the danger hopefully what we see in the

minutes is that hey the FED overall

realizes there are risks to a wage price

spiral but we're not seeing any signs of

that wage price spiral and you know what

it seems like things are moving better

than expected uh based on the last

reports that we've been getting in as

long as we stay on this path hey maybe

that does open the door up to an

interest rate cut in 2023. that kind of

verbiage in the minutes today

would be so amazing

but there's also the risk that we end up

getting the opposite which would be the

bad news scenario a reiteration that no

there will absolutely be no interest

rate Cuts in 2023 that instead of

inflation being transitory instead

disinflation might end up being

transitory until the labor market occurs

yeah I you heard me say that right the

FED could make an argument today in the

minutes that the disinflation we've seen

in the last few reports which just means

inflation coming down right deflation is

inflation being negative price is

actually coming down disinflation means

prices are going up at a slower rate

there's the potential that the FED says

hey um you know the progress we've made

on inflation so far the disinflation

could be transitory in other words

higher inflation could come back and we

want to be cautious of that and we don't

want to make the mistake of the 70s

where we loosen policy too soon and

started cutting rates too soon without

making sure that inflation was for sure

dead unfortunately this point of view is

a little bit more Michael burry remember

yesterday Michael burry warned of this

idea that the Federal Reserve could cut

rates in inflation could have a second

Peak and then the FED would really have

to rug pull us like Paul volcker did in

the early 80s well if we have the

minutes that point towards that kind of

fed

unfortunately there just might be more

pain to come in the stock market and

honestly I don't think anybody really

needs any more news that there could be

even more pain coming but we'll see

we'll also see in the minutes whether or

not the December CPI report was actually

Incorporated Jerome Powell kind of

suggested during the press conference

that the better than expected CPI report

for December was already something they

considered but if they already

considered that then that really means

we got two reports that were pretty good

for CPI inflation and we still ended up

getting a pretty aggressive summary of

economic projections in which case what

gives man how deep of a severe recession

do you really want us to have

Bill Dudley the former New York Fred fed

president mentioned in an interview with

Bloomberg surveillance yesterday yeah

look a recession is in the cards it

probably won't be a severe slowdown but

the goal of the FED right now is to

drive up the unemployment rate and

unfortunately to me that kind of implies

a problem because historically the

unemployment rate does not actually rise

until the late stages of a recession

that means the FED doesn't just only

have to induce a recession but they have

to kind of hold the boot on her neck and

our face in the mud of the recession

for a while before the unemployment rate

actually goes up that creates a delay in

when the FED can respond and if that's

what the FED indicates that hey you know

we gotta basically keep our boot on even

all the way through potentially you know

or 70 80 percent through a recession to

see that UI well unemployment rate go up

it's gonna suck so that's what we're

paying attention to today now I'll be

streaming live at 11 A.M and I'll be

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goodbye