Is it possible the FED could pull a March of 2020.? Remember what they did in March of 2020? they came out on a Sunday and cut interest rates two percent. They didn't indicate beforehand that they were going to cut interest rates, they just did, which is somewhat similar potentially to what we could face coming up. Just consider the fact that right now the fed's got to keep the mask on of we're hiking hiking forever. Keep strong strong.

They could u-turn on a Sunday just like that and I want you to keep that in the back of your mind as you listen to me give you some updates about what. Mr Bullard Just had to say James Bullard of the St Louis Federal Reserve has flip-flopped in this video. I'm going to break down what he just said in an interview and how it builds into the FED narrative that we're being fed and told. and what should we believe? Let's Analyze This in detail: Hey, everyone meet Kevin here: I'm a licensed financial advisor I run an actively managed ETF and I sell programs on building your wealth.

Link down below. We are changing pricing tonight, so if you want to join me on a shadow day or you want to check out those programs and join me in the live streams we do every day when the market is open, take advantage of the new lectures we're releasing today or any of the existing content. Use that coupon code holidays below because we'll be switching everything up very shortly. Okay, so what did Bullard just say Bullard Just told us that he thinks 2023 will actually be a year that is disinflationary.

That means inflation going down heavily and this was shocking. He thinks that even though we're not yet at the rate where we need to get to, he thinks the odds for a soft Landing have actually greatly increased from the fall of 2022.. Now remember James Bullard used to be the hawk guy. he was the guy pounding his fist on the table going.

we need a hundred basis point hike which is shocking because that was really hawkish Back when we're like oh, the fed's gonna lift off and they're gonna give us a 25 basis point hike. Yeah boy, how times have changed. Now we're like oh God thank God we're done with the 75 going to 50. we've been through a lot.

So James Bullard is the guy who was pounding on the table for 100 basis point hike early in the cycle. Now he's actually pounding the table going. Yeah, we're We're close to there and the odds for a soft Landing have actually increased from the fall in the fall. James Bullard Told us he showed us a chart and I'm just going to simplify the chart here basically and he told us that the terminal Fed funds rate might have to be somewhere between five to seven percent.

That was before we actually got two soft CPI reports indicating that maybe inflation has peaked and maybe it's not just peaked, but maybe it's about to plummet. especially as housing inflation which makes up about 32 percent of CPI inflation or Pce inflation or Pce based housing inflation which is about 20 to 25 percent of PC inflation is also set to plummet this year. That's because we could look at leading indicators of rental prices and we see the housing market slow down and we think that massive core of inflation will be plummeting in 2023. And so James Bullard is actually now implying that he thinks maybe we need to get to here and stop.

Now This is really incredible because it's a big shift from what we've been hearing from the FED. We keep hearing from the FED. Do more raise rates more? do more more more more keep going. But Bullard's actually telling us, hey, maybe we've done enough because if inflation actually plummets the way Bullard thinks inflation is going to plummet, the FED might not have to destroy the labor market as much as they think they need to consider this.

Real wages right now, which are wages adjusted for inflation are negative. Even though people are making more money on paper, right? their nominal pay is going up. They're making less money when you factor in the inflation we've had over the last three years compared to 2019. So when we look at data and we say oh, but you know people are making more money, you know, is this going to lead to a wage price spiral? It's entirely possible that the gains we're seeing in annual pay are actually just catch up gains.

Now that's an interesting argument that kind of develops on Bullard's thesis here, because look, right now, if you stay at your job, maybe you've experienced about a 7.3 percent pay bump. If you change jobs, you might be looking at like a 15.2 percent pay bump. I'm going from a staff of about four construction guys to a staff of about 12 here. Uh, in in over the last couple months and over the next few months here as we finish out our hiring.

So I'm kind of part of the problem. I Apologize. Okay, like we have seen some real growth here in the ADP numbers that came out this morning that we weren't expecting like Business and Professional Services where I am. Yeah, I'm part of this hiring.

You know, 52 000 jobs created here. These were negative previously Leisure and Hospitality obviously exploding, but you have to remember that Leisure and Hospitality these sectors were actually negative relative to pre-pandemic levels. So really, you have catch up happening right here. and you probably have catch-up happening with wage gains because the reality is, we've had all this inflation.

But when you consider inflation next to wage gains, people haven't been making more money. So if it's true that the labor Market's price increases are just catch up, then maybe the FED doesn't actually have to keep hiking. To the point of destroying the labor market. Maybe if inflation plummets the way Bullard thinks it will, the FED can stop.

In fact, listen to some of the things he said. He said that 2023 is a deflationary or disinflationary year. There's a big difference between those two. Remember deflation as prices going down that 100 Apple iPhone that doesn't exist selling for 95 the next year.

That's deflation, right? That 110 or that hundred dollar iPhone turning into 110 10 Inflation next year goes to a hundred and say 15. approximately five percent bump rounding a little bit. There it. that's disinflation, because rather than growing at 10, you only grew at five percent, right? So he thinks this year is going to be a disinflationary year.

He thinks we're not quite yet sufficiently restrictive, but we're very close. We we've almost completed our front end loading, and he thinks the next rate hike is going to be dependent on the next inflation report. The next CPI report which comes out on the 13th and it's going to be based on or it's going to either be a 25 basis point hike or it's going to be a 50 basis point hike. Right now, the market to the tune of about 96 of the market is expecting uh, the the uh about a 25 basis point hike which is pretty nominal.

uh and I'm sorry I Want to clarify CPI actually comes out on January 12th, not the 13th. So mark your calendar for the 12th of January 8 30 a.m I'll be covering that live I'll also be live tomorrow for the jobs data at 5 30 in the morning, so you're welcome to come for that as well Anyway, for for Bullard Mr Hawk pounding the table for 100 basis point hikes to tell us hey, maybe 25 50 depending on how CPI comes in next. Really good. What he also suggests though is that we're seeing stronger GDP and what I like doing is I look like looking at the Atlanta Fed real now GDP tracker and what's really remarkable about this is It's been exploding.

This is absolutely remarkable in my opinion and it does create a risk. I'm going to tell you about that risk, but look at this latest estimate as of January 5th that's today. the GDP model estimate for real GDP seasonally adjusted annual rate of the Fourth Quarter of 2022 is 3.8 percent, about the same basically as the 3.9 percent estimated a couple days ago. Now that's actually phenomenal given that this a GDP estimate was has actually been negative last year.

and this is the consensus based on Wall Street right here. this blue range over here and you can see the Atlanta Fed data is suggesting GDP might be a lot stronger than we actually think it is. which might mean maybe the recession and the hard Parts already behind us. Now that's crazy if that's potentially true, because nobody in the stock market seems to think this the recession is behind us.

Everybody seems to think the recession is in front of us. That has to do with the inverted yield curves, right? Inversions of the yield curve tend to Signal a recession coming ahead of time. And quite frankly, the fact that rates are so high now does imply that the FED is going to restrict growth substantially. But if you've got the big hawk in the room at the FED all of a sudden saying no, no, we have a greater chance of a soft Landing What he's saying is inflation might go down GDP might stay positive, and we might not have to kill the labor market.

Let people get paid more money. They're still getting paid less than they were in 2019, So who cares, Let wages rise a little bit. As long as that inflationary number comes down, we're good. Now this is similar to a video we talked about this morning, but James Bullard hadn't come out yet this morning to say exactly this stuff that's really incredible and suggesting that five percent might end up being the peak for the FED If we get another few soft CPI reports over the next couple months here, Maybe we can get through what will hopefully prove to be.

And I Don't want to sound like a broken record, but what will hopefully be a form of transitory inflation? where? Yeah, we had two years of hell, but then it went away and as long as it doesn't come back, Michael Burry will be wrong. And so I have to say for once, I actually find myself cheering James Bullard Now, don't get me wrong, I Also agreed with him early on that look, the FED is way behind the curve. didn't necessarily want to shock the market, but uh, hey, you know what you got to do what you got to do with the Fed. The Fed was behind the curve and I think they gave us some of the fastest rate hikes that we've ever experienced.

Now to indicate that maybe the time has come to, uh, pause and a soft Landing has actually increased. Enchants Pretty bullish now. I Don't want to sell hope because keep in mind Jerome Powell tells us now which he hadn't done previously, that a recession is just as likely as not. He's actually been more hawkish.

So this is why I say even though right now the FED doesn't want to tell us that oh, they might cut rates soon if inflation plummets. All of a sudden, we're actually starting to face deflationary numbers. The Fed's gonna cut so freaking fast. Remember, they can talk dirty to us all year long up to the day they realize they've gone too far and they could just U-turn Remember when they u-turned in March of 2020 during the covet pandemic? it's on a freaking Sunday and they cut rates two percent? It's insane.

So I don't want to suggest that you go all in on stocks right now? It's a lot to pay attention to, but let me just say this is a start to a positive sign. Fingers crossed CPI affirms it.