It says hey, everyone, welcome back We've got the minutes coming out in seconds here. Market right now slightly Green Let's see what happens I'm gonna pull the minutes up as well I've got uh I've got Wall Street and the notes of Willow Street ready to go. Okay, here we go. They should be out now.

So waiting for those to actually populate on the web page? We're gonna go through these notes. Remember, we're looking for any kind of remarks on uh, the potential obviously for disciplation, but also wages. How serious is the Fed going to be about waiting for these wages to come down? uh, or stabilize? Okay, Fed sees. Okay, it says a few officials favored going potentially back to the 50 BP hikes I'm actually not a big fan of that I Think that would really affect their credibility for a bit? Uh, and it's already been pretty well damaged.

You've got fatsaw upside inflation risks as a key factor in shaping. Outlook Well, obviously they say that every single time waiting for a little bit more here on the minutes. Okay, let's see here: I've got the entire set myself as well. Okay, I'm The first thing I'm going to look for is I'm going to look for any comment on deflation Wall Street So far not mentioning anything, no mention of the word deflation at all.

Let's go for a disinflation. No mention of the word disinflation at all in the minutes. I Wouldn't be surprised if they scrubbed some of this after the market started moving up. although yields did move up as well which tightens Financial conditions Uh, so far coming in as expected here, with some Fed policy makers favoring stronger Half Point That's the only thing I'm getting from Wall Street Itself: go back to the actual minutes themselves.

Uh, let's see here: Staff review of economic situation: This was on: February 1 Consumer Price Inflation 12-month Pce Uh, solid total non-form payroll They refer to getting down to 3.5 on unemployment. So far, nothing new here. we've got Consumer Price Inflation eased in November and December Here we go, but remained elevated. Total Pce inflation was five percent over the 12 months ending December 1.1 percent lower than the October figure.

That's great core PC Inflation which excludes changes in Consumer Energy Prices in many consumer food prices was 4.4 over 12 months. Obviously still higher than we want, but down 0.7 from October. So this is sort of their review. Foreign economic growth slowed in the Fourth Quarter, weighed down by covet related slowdowns of China.

However, obviously we know that China is reopening. uh. Financial Conditions: Elevated borrowing costs Credit quality remains strong Market Implied Fed funds rate path was a little changed on that. this was before.

Obviously the numbers came out. that's moved up from about 4.9 percent to about 5.36 percent as a terminal Fed funds rate this morning. Secured markets repo rates roughly the same. No stress on repo elevated daily.

Demand On the reverse repos, this is really Banks Having excess casts the cash available that they're depositing over at the repos. There's been a lot of concern that would actually lead to treasury yields going higher because why would you buy treasuries if you just park it into the repo market? So far, we haven't seen that kind of stress Key phrasing here. The minutes said: almost all officials agreed it was appropriate to raise interest rates by 25 basis points at the meeting, while a few favored or could have supported a bigger 50. BPI So far, that's the only thing Wall Street is picking up on Headline Uh.

data here: Fed notes: importance of financial conditions matching policy. So actually I said that in the prepare for the Fomc meeting. that's one of the quotes I picked up from Jerome Powell last time Wall Street reiterating and reiterating that right here and financial conditions have tightened. Obviously, you've seen the 10-year treasury yield pop up to uh, right now.

let's see where we are right now, but this morning we were at 3.94 dropped to about 3.9 Right now, they're sitting at a 3.91 so we're pretty stable so far. Indices all positive at the moment, as the status coming in so far looking relatively chill. Uh, relatively quiet. Several officials were concerned about the impact of higher rates on Commercial Real Estate Discussed the risk to commercial real estate Uh S P Yeah, okay, slightly slightly pairing games line.

Let's go ahead and keep going here Again, No mentions of disinflation here, despite how many times Jerome Powell talked about that Consumer Price Inflation East November We talked about that staff review of financial conditions we went through. This credit remained broadly available for businesses and households strong credit quality, but remained tight for lower rated borrowers. There's a lot of talk about tightening loan standards personally. I'm only seeing that at lower Tier Credit borrowers higher Tier Credit is still widely available.

A lot of folks are worried about homework. We might. it's maybe getting Frozen So far, we're not seeing any kind of risk to that. Despite facing real estate price declines, Commercial Real estate loan growth on domestic bank's balance sheet remained robust.

Meanwhile, the issuance of commercial-backed mortgages mortgage-backed Securities remain slow in November credit broadly available in Residential Mortgage Market for high Credit Score: Borrowers who meet the standards for conforming loans ability to repay home equity line of credit balances that Banks continue to grow into the Fourth Quarter on Net, potentially reflecting homeowners using Helux as a preferred way of extracting equity in the presence of current higher mortgage rates. Somebody he looks right now, you're looking at nine percent on Helots. Overall credit quality remains strong, although there was some deterioration for credit card and Auto Loan borrowers oftentimes also lower credit score borrowers. The volume of corporate bond rating downgrades outpaced upgrades in December Leveraged loans experienced a notable net rating downgrades in December This is one of the potential areas you could see a Black Swan is basically private companies or highly leveraged company.

these with low credit and low cash flow. potentially a defaulting. Uh, so far, we haven't actually seen a substantial rise in corporate started kicking up, but we're still below trend from 2019. credit quality of households remain strong.

Some signs of deterioration. Delinquencies: Oh, this is interesting. Delinquencies For FHA Mortgages: these are your three and a half percent down these credit loans. Or these, these loans can go down to about 620 uh on your credit score, sometimes even as low as 580.

delinquencies for FHA increased slightly, but overall mortgage delinquency rates were still near pandemic. Our pre-pandemic lows delinquency rates for credit cards and auto loans continue to rise during the third quarter, while delinquency rates on Uh credit cards were still relatively low those on auto loans Rose above pre-pandemic level. So there you go on: Autos You're starting to see some cracks there on credit. So far, it doesn't look like let's see measures of hedge fund leverage have decreased since the pandemic shot.

Vulnerabilities associated with funding risks were characterized as moderate so far, nothing super scary or unexpected from this report on financial conditions, which have moderated debate in recent weeks. This is from Uh Wall Street After talking performance in the last part of 2022, officials said it was important that quote Financial conditions be consistent with the degree policy restraint, right? but they've already tightened. That's fine. You've got a head of currency strategy and BBH with an immediate reaction.

A few means it wasn't just master and Bullard that favored the 50 basis point hike. That's actually an interesting observation that maybe it wasn't just two members of the FED that wanted to go 50. maybe you had more voting members? Uh, yeah. Wall Street Now picking up is one of the first things I actually searched for as you saw in the video word count: zero mentions of disinflation versus 91 mentions of inflation down from 103 in the last meeting.

But they they totally scrubbed the phrase disinlation from this report even though Jerome Kyle mentioned it a million times. Uh, during his presser. The forecast for the U.S Economy prepared by the staff for this Fomc meeting had somewhat higher path of a real rate of GDP. That's actually something J-pal mentioned as well that if he had to redo the summary of economic projections now, he would actually write in a higher terminal GDP rate for this year.

Fourth Quarter 22 was stronger than expected. Real? Uh GDP Growth was weaker than previously forecasted end of 2022, but again forecasted to be stronger at 23. there's a lot of time. You might not see that recession at 23, that it might get delayed until 2024..

the Staff The staff forecasts continue to include a pickup in Real GDP growth starting next year, although projected output growth in 24 and 25 remains below the staff estimate of potential output growth. That's where the Feds also now starting to talk about look recession might get delayed until 24 25. that's interesting to see them mention that here, the level of real output was expected to move down uh wow, to the estimate of potential near end of 2025.. the level of real output was expected to move down to the staff's estimate of potential near the end of 2025..

that's interesting. So really, they see this is a way of them really teasing that this process is going to take a little bit longer. Let's set up here if you don't mind for a second just because it's getting a little chilly. Sorry.

Christian Uh okay. so uh yeah. Okay, let's see here. Total that's totally seed.

That's fascinating that they're talking about getting to a natural rate at the end of 2025, where we're really matching Fed policy with their expectations of the economy. This is the first time I've actually seen them talk about 24 25 with the effects of well, other than the summary of any kind of imperfections with the effects of the supply and demand imbalance is a good A Goods Market Projected to become less tight. The staff continue to forecast that inflation would decline further over 2024 2025 On a four corner change basis. Corporates inflation was projected to move down further this year.

that remained subdued. Housing Services Inflation was expected to pick up later this year and then move down Or that's right, later this year and then move down. It's interesting. So later this year for housing, a lot of folks have been estimating Q3 By the way, Q3 for housing and then core non-house Services Inflation was forecast to slow as nominal wage growth eased.

With steep declines in Consumer Energy prices and substantially moderation in food inflation expected for this year. total inflation was projected to step down markedly for the year, and then track core inflation or the following two years fine. I mean so far, this is all relatively expected. Here's an interesting tidbit from Wall Street Wall Street Saying here: the Staff Judge That Uh.

notable. In particular, the staff noted that measures of valuations of both residential and Commercial properties remain high. Yup, that's exactly what I think the FED wants to do. They want to crush housing.

They don't care so much about the stocks, they want to crush housing. Uh, and so they're noting that both commercial and residential properties remain high. That's why we're going to be very, very patient with my startup House act. Property prices? Okay, and that the potential for large declines in property prices remain greater than usual.

Whoa. Oh, that's in line with 10-year treasury yields moving up, basically giving you a big middle finger to real estate right here. Let me let me add again. so you have this word for word from them: the Staff Judge That asset valuation pressures remain notable.

In particular, the staff noted that measures evaluations in both residential and commercial property markets remain high and the potential for large declines and property prices remain greater than usual. In addition, the forward p E ratio for the S P 500 remained above its median value. despite the decline in equity prices over the past year. this is a lot of what we've been talking about on the channel about potentially those, uh, those Consumer Staples not actually having declined substantially I mean you look at McDonald's here over here.

you're positive. Was it yeah. Let's get back out of the plane and we'll fix the audio. Okay, hold on.

we'll go inside a little bit. We'll make it better. we can fix this. Okay, here we go.

Uh, there. No wind out here. Okay, a few more minutes. This is okay.

so that's really interesting about valuations. But remember, consumers, consumer, excuse me. Consumer Staples Kept the cost or kept the valuations of these of these companies pretty high. Look at McDonald's year over year, right? You're positive.

Uh, and that's crazy. I mean Tech and growth from the companies with big earnings. They're the ones that, uh, that had the big ball. especially some of the SAS businesses.

It's insane. Look at Cloudflare for example. Uh, but you already know the Market's been pretty crazy so we don't have to talk about that. But uh, I think Staples are what are actually propping up the valuation of the S P 500 right now And I think that's where the dangers sluggish growth in real private domestic spending expected is lagging pretty bad again.

Oh, let's go outside. we'll go outside, we go in the metal tube and the internet gets bad. I Mean that kind of makes sense anyway. Uh, so uh.

The discussion of current economic conditions participants noted real indicators pointed to modest growth in spending and production. Nonetheless, that job Gaines have been robust the recent month. Inflation is East somewhat but obviously elevated. That's why the Soul We know that average number of hours worked called Okay, oh fell.

Okay, here we go. Let's look at this: This is, uh, probably the last fourth piece right here. We're almost done with the minutes. Anyway, a few participants remarked that some business contacts appeared Keen to retain workers even in the face of slowing demand for output because of their recent experiences of Labor shortages and hiring challenges.

That's actually a really interesting note from the Fed. The Fed's basically saying, hey, look, we realize maybe job openings are staying high and unemployment is going to be even more of a lagging indicator because people are frustrated that it took so long to find the folks in the first place. Nevertheless, participants note attentive signs that imbalances between demand and Supply in the labor market were improving. With some job vacancies writing someone from high levels, the average number of hours work fell or falling.

But that was before the last Jobs report because they popped right back up. So that's already outdated news right there. Some participants commented on the recent reduction in temporary employment, which previously had often preceded more widespread reduction in labor demand. That's interesting: recent reduction in temporary employment.

So in other words, if you have less temporary workers, that could basically be a leading indicator to more unemployment. uh, essentially occurring Less Jobs growth, right? Uh, And that's actually kind of what we're seeing in the earnings calls as well companies as less wage pressures, more wage availability. Just go read the earnings calls for Lyft If you want to read one earnings call, go to Seeking Alpha Right now, type in Lyft go to transcripts. Boom Read that you'll see labor Supply is exploding under appropriate monetary policy.

Participants expected a labor market demand and Supply to come better balance over time, easing upward pressure on nominal wages and prices, right? Remember Jerome Powell Talked about no expectations of wage price spiral. Participants noted or good prices are declined. Notably, that's fine. Downward pressure on Goods prices resolved from resolving supply chain bottlenecks.

That's fine. Smaller inventories leading to? well, yeah, that's actually interesting as well. as a lot of companies have been really setting up smaller inventories putting less Demand on those Supply chains, but now you're seeing potentially less discounting because inventory is built up less. A couple participants remarked about the poor performance of Labor productivity.

Sure, but we're still rebalancing. Let me look at Wall Street here and then we'll wrap this up. So several participants highlighted the Fed and now has standing facilities that allow for the injections, which our result is collateral, but it seems there's no consensus that these facilities are necessarily sufficient. There's no specific link to the disruptions caused by the debt limit, but we know independently that that is what potential source of the huge disruption later this year, of course.

Okay, so bottom line, like debt ceiling is not something we're going to worry about right now, but it's obviously bad. The minute specifically mentioned the closely watched BCE Core Services less housing housing numbers AKA Supercorp often monitored by the FED on a six-month annualized basis. Here, we can see the CPI version of this. Okay, A little chart on this Fine, no problem.

So in other words, we're basically just seeing Supercorp. Someone rotating I mean rotating down quite a bit on a six-month annualized basis when you take out. Uh, um, when you get to essentially Super Core. However, a tiny little uptake here recently.

Obviously we just need more data. Okay, look here's my bottom line on this: espresso distance. Stocks are taking a like higher I mean that's kind of what we expected. We expected this to be mostly nothing.

Oh, now just in the last minute, the S P dropped a little bit. That's interesting. Uh, let me see if there's any note. Why? Because there's even more just moving.

Yeah, now actually it's spy. Just went negative. That's really interesting. It's nothing scary in this.

Uh, and just I don't know that was about seven minutes. Stocks are taking like higher now, but seven minutes ago has now turned to spy going negative. Fascinating. You know.

I Can't really say what's going on with the short-term speculation. Maybe people are expecting this to be a nothing Burger of a report. that and we're making foolish calls on it. but uh, my.

Takeaway on this. Okay, we're gonna have some lingering effect circulating through Wall Street around the states. number One: Wait a minute. You know you've got you've got potentially a few members of the FED talking 50.

we're not going to get 50. it's going to ruin their credibility. They would have never down leg from 50 to 25 if they thought that we're going to go back to the 50. it's going to make them look even more loony and less credible than they already are.

We'll just get 25 longer and and for more. We've already been expecting them for March May June No. Cuts This year it's really not that big of a deal. but I don't think we're going back to 50.

That'll make for good clickbait though and a lot of news agencies. The second big thing I got out of this was them talking about valuations. They'll be substantially High Specifically mentioning the S P 500.00 right now, but also specifically housing commercial and, uh, residential real estate specifically outed as uh, still a relatively High valuation. So Speaking of which, I Got to go look at some real estate right now for a house hack.

So thank you so much for enjoying the iPhone C minutes with me, in my opinion. Overall, the fact that they scrub disinflation out of the whole report uh, that's not that big of a deal with some of these things. I I don't know how much it will really matter. Those two notes, though, could drive heals up a little bit higher.

Uh, both the housing note the S P 500 note and the donuts on a few uh, fed folks looking at potentially 50. But beyond that, really nothing scary here. I'm not terribly worried about any of this. This doesn't change anything for me at all, but I do think it's very interesting.

the bed is specifically targeting housing because that's been my expectation that they don't care if stocks go up as long as the 10-year treasure yield stays up. So if you want stocks to go up, you actually in this weird Twisted way, want to see the, uh, 10-year treasure? You'll stay high. That's what the Feds tried to engineer. That's my opinion.

Thanks so much for watching. Check out the program link down below. See you later.