Hey, so the Fed's minutes just came out from the November meeting and there's a big shift in. One particular thing that was just said by the Fed and we got to break this down along with some of the other items that we'll break this all down in a quick summary here: I'm only going to mention it once in this video so we're going to keep it to right here: Yes, Black Friday is in two days. Yeah, there's a 60 off coupon code. Yeah! I keep adding content. you get lifetime access. There are no monthly fees you get live streams if you join Elite Hustlers which is to increase your income. You're going to get the live stream access to the Hustlers live streams and the exclusive content there and the course member live streams if you joined before Black Friday and all the other courses get the course member live streams as well of course for stock and real estate analysis. I will also be ringing the bell of the stock exchange on December 9th for Market close. We'll do a public Meetup outside at about 4 30 depending on on when things wrap up inside and we'll be ringing the bell at 4pm. If you're a course member, you can submit a little thing in Discord the little form and uh, you could come potentially for free. we'll be doing a raffle. Okay, let's talk about the Fed: the biggest shift from the Fed and I'm surprised how few are picking up on this in the mainstream media, but it was the first thing that I noticed and tweeted about. and I'm like, this is a big deal. This is a big shift is right here. This paragraph is critically important with inflation remaining stubbornly. High The staff continue to view the risks to inflation projections as skewed to the upside that's not new, that's old. Okay, they've always said that the risk is inflation goes to the upside. fine. That's the old part for real activity. Sluggish growth in private domestic spending deteriorating Global Outlook and Tighter Financial conditions were all seen as Salient downside risks to the projection for real activity. Remember, the more real activity goes down, the less the FED has to hike and there is the possibility that persistent falling inflation could require a greater than assumed amount of tightening. Okay, so this is a backwards way of saying it is possible we have to raise rates more to get inflation down because of that risk. We are now saying and folks, this is the first time the FED has said this. They're now projecting that real activity risks on their Baseline are equal to the potential chance that we enter into a recession sometime over the next year. We've also had the inversion of the three month tenure usually a really good indicator that a recession is about nine months away now. I did translate that in English here. Basically, the FED just told you we think it's just as likely for us to have a recession which means negative GDP and slower growth. And we think that is just as likely as our Baseline forecast which is no recession positive GDP but below Trend growth. Remember if trend is three percent GDP and we're growing at two percent, that's below Trend If we're growing at negative one percent so shrinking then we're in recession with two quarters in a row, right? Unless of course you're the White House Then you don't believe you're in a recession when you have two quarters of negative GDP But we don't want to get political. We want to focus on the commentary here from the Federal Reserve Looking at some of the other notes, by the way: I Encourage you to look at this page. Very important. Page six of the Fomc notes: you get a Federal Reserve.gov So here we notice the Federal Reserve is recognizing that one of the most important indicators in labor market conditions is showing that employment costs are beginning to fall. The ECI is known as the employment Cost index. It tracks hourly compensation and benefit costs and it fell. Or I should say, wasn't it grew at a slower Pace It uh, was noticeably lower than the average pace seen over the first half of the Year. This is very good and helps offset some of that risk of a wage price spiral. Now, the wage price spiral comment was added in the last minutes of for the September meeting, and these notes have not changed. That wage price spiral argument is still here. They haven't made it worse, they haven't added to it, They haven't changed anything. They also two or three times mentioned this phrase that they added here in the Fomc statement that came out on November 2nd and now was the statement that in determining the pace of future increases in the target for the Federal funds rate, the committee will consider the cumulative tightening of monetary policy, the lags like unemployment and and businesses slowing down, and that how long it takes for that to filter through the economy and economic and financial developments. This is really important and they mentioned a few times in this report that especially with this paragraph here and you could pause the screen here if you want to read this. But it's very important to realize the FED does not have a historical record to tell us how long the lags are and and the FED is being very cognizant of this. Not only are they being very cognizant of lags, but they're also saying hey, look, we realize that prices for things like some Commodities are coming down. We also realize that rents on new properties on new leases are coming down, but we recognize that those show up with a lag. So Commodities coming down, rents coming down. those take a while to show up in our favorite measure of inflation, which is Pce. That's their version of the Consumer Price Index. This is actually the personal consumption expenditures. uh report. So the FED is being very aware that we have risks and I think one of the things to know is Jerome Powell realizes he has the power to change his mind. a Powell has the power power to flip and so what does that mean? Well, it's very simple. we can slow. Now this is my opinion to 50 basis points. If things get worse, we can always hike more. say inflation gets out of hand. They could just rug pull us and go. That's it. We're raising rates two percent. They know they have that flexibility, but they also know uh, but we can also freeze hikes or reduce rates if we want when we want. and a lot of this is going to be dependent on the December CPI report. and so if there's anything you do now, in addition, well, I'm not going to mention it again. I was going to mention I was going to mention it but I didn't I'm being a good boy. What you do want to write down and and take advantage of right now is December 13th CPI report The CPI report comes out 5 30 a.m on December 13th and then at 11 A.M on December 15th All these times. By the way, Pacific Standard Time on December uh, uh, 15th at 11 A.M we will have the Fomc rate meeting. Uh, this is where the market right now is wildly uh or I should say widely expecting interest rates to go up by 50 basis points. That means we would see an increase from the present range of 3.75 to 4 up 50 basis points 50 BPS all the way to Uh, just so you could see this visually. 4.25 There we go. Uh, to five? Yeah to 4.5 I can't write well. Today there we go. That's terrible. Anyway, Uh, right now the expectation is that we are going to see this 50 basis point hike with a 75. Geez man. Kevin 75.8 percent likelihood. We've also seen the Federal Reserve's terminal rate from this morning go from 5.24 as a market implied terminal rate down to about 5.15 What else did the FED tell us? Well, they told us that they saw that inflation expectations were relatively still anchored. We did see an increase in near-term inflation expectations, but that was likely due to CPI coming in higher. Do also keep in mind there are quite a few bullish things in this. or should I say dovish things in this like hey, let's not go too hard. Let's realize that ECI is coming down the employment cost indicator. Let's realize that things operate with a lag like commodity prices come coming down. the economy is starting to slow. We could always hike more in the future if we need to, but a lot of dovish things in this. But what's remarkable is, even though we've got a lot of dovish things here, what do we have? This report actually came or was was established. This meeting happened before the last CPI report which is really, really incredible because the last CPI report we had uh, substantially below expectation uh, release of the CPI report and PPI thereafter. about a week later came in also below expectations. So very, very good. I still Pat myself on the back for nailing that CPI it's I'm set in a high bar on the few for the future though. that's that's gonna be tough to nail that again I was way outside the average Economist estimates and still nailed both of the numbers. Damn. Oh, I should have played the lottery for that billion dollar lottery that week. uh, for substantial majority of participants a judge that slowing the pace of increases would soon be appropriate and uh oh yeah uh. some of them are saying look, we probably need to slow down because we don't know what could happen. We don't know how we could affect financial stability. Remember that uh, the United Kingdom had a financial stability disaster in their guilt Market which actually ended up leading the federal Reser the Central Bank of England uh and um Mr Bailey the governor of the Bank of England you turning and basically having to print money they printed it. ended up only printing 20 billion dollars to bail out the bond market. Uh, but uh. they said they would bail out the bond market by an infinite amount and that was enough to stabilize the market again. which was very, very interesting. Yeah, you are seeing the 10-year treasury yield Bob around the lower end of about 3.7 I'm also curious is how inflation expectations have moved. Remember the five-year break-even inflation rate is some somewhat of a daily tool that we can use to analyze what inflation expectations are. and uh, that rate has ticked down a little bit this morning? I'll go ahead. Uh, after these these minutes came out. I'll go ahead and throw that on screen in a moment here. Uh, well. I'd like to. uh, there we go. All right. Inflation break evens on screen now. and uh, oops, I think I used the wrong one because that was this morning's my bad. I did I did there? it is. there's the appropriate one. Well, it actually shows you the difference now that I showed you both I have both of them on my desktop. This is a zoomed in of the right. You can see that this morning we were kind of ticking up a little bit and now we're actually ticking down a little bit. This is a big deal I Know this sounds like stupid. It's like come on man. it's just it's like one chart. This is important. Okay now. Uh, I guess since I told myself and you that I would not say anything else uh I'm just gonna thank you for being here. Consider subscribing I hope you found this useful. Oh I should talk about the market really quick. Sucks for anybody who clicked out already. I think this is bullish I think between now and CPI week, we're probably going to see a lot of Institutions start moving money into the market. A lot of them are in a holding pattern, they're sitting. but I do think CPI week and fed week is going to create a lot of anxiety and so I wouldn't be surprised for you to see a sell down closer to the CPI uh period of time. Anyway, there you have it. Enjoy Thanksgiving tomorrow! Thank you so much for being here I do appreciate you as a subscriber. We'll see the next one. goodbye.