You're going to want to watch this one in full before tomorrow. Tomorrow is December 14th You're going to want to watch this before 11. A.M Because that's when we get a new Summary of Economic projections. This is going to be very critical for the market.

It's going to be much more critical for the market than this 50 basis point idea because we're going to get a new set of projections from all the members of the Fed and we're going to see if the FED is in line with which direction they're going in or if they're scatter shot their scatter shot. You could have red flags because scatter shot Fed members means a lot of contention and anything's game. If they're all game for one direction, we want to know what is that direction and what are they potentially seeing. So folks, let's go ahead and look at the last time we got a summary of economic projections going all the way back to September 21st of this year.

That doesn't sound like it's that long ago, but then again, we had October November that just vanished and then maybe like another three weeks in between that. That's wild. So it's been two months and three weeks. All right, So we're gonna go ahead and jump on over to these.

The Summary of Economic Projections Start with this very specific table and I Want to note something up here first right after I mentioned that this video is brought to you by the expiring coupon code tomorrow. PP We extended it for the program. so I'm building your wealth. Remember the most important ones in my opinion: Real Estate Investing Zero to Millionaire.

Most popular bundle is you're a millionaire, Real Estate Investing and Stocks and Psych Stocks and Psych gets you into my trading challenge as well. where we're doing volatility trading on options. It's gonna be great. Uh, at least I hope so.

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All right. so what do we have here? Well first, it's worth noting a quick may as well mention that Core Services and CPI today came in at just point one percent excluding energy and rent. This is really good because remember Jerome Powell's you know. Third, concerning area is services and so the fact that Core Services on the good side rotated down like this.

Really, really good. This comes in after a 0.4 in October a 0.8 in September a point fourth should be 0.4 Before that, we did have a zero in July though. so this is a number that could be a little volatile, so I wanted to mention that. but so it's It's good news for now because it's trending down, but you know it's been zero before.

Okay, so this is what we had last time. This is the summary of economic projections from last time, and I'm going to point out that probably the most important piece out of all of this: I'm gonna pick an orange highlighter here. We're going to use orange uh, as uh as our most important highlighter and that number is going to be right here down there at the bottom. So it is actually the Federal Funds rate projection that, uh, there we go.

That is going to be extremely important. The reason that's so important is because in June the last time we got an SCP before September, the Fed was only expecting to raise rates up to about 3.8 percent. Now we have the market anticipating that rates could go as high as five percent, and there have been murmurings that the FED might end up stopping at 5.25 maybe 5.5 Some even say oh, the Fed's going to go to six percent, although those arguments seem less likely now that inflation has kind of tapered at least in the last two reports. so we're probably closer to that five percent number.

And the Fed was very clear in November that if they had to redo the summary of economic projections, they would revise up from 4.8 So I'm going to go out here on a limb and make my prediction that if I were at the Federal Reserve what number I would expect all of these Uh factors to come in at. So I actually think the Fed's going to end up at about 4.8 Now that's practically going to be 4.75 I believe. But I think that their projection is going to be 4.8 if we get 4.8 It's bullish. That's going to be below what the market is expecting right now, which is about 4.95 If we get 5 4.9 that's going to be right along expectations.

Anything above that, it's going to be a problem. Now the next number I actually believe we could see a shift down on. That's because inflation expectations have broken down. We're not seeing this runaway aspect to inflation anymore.

We're more worried about policy lags, and I think that could be bullish. For markets to see a downshift here. my projection is 3.7 for the 2024 number. So this is 2023 in 2024.

So not really getting all the way down in the future, but it wouldn't surprise me to see this potentially move down to 2.6 or maybe even 2.5 So that way they're suggesting that they might think that 2025 might be the get back to the longer term where we want to be two and a half percent fed funds, right? So that way you have an upward revision here. But you actually have a downward revision here. And that's a way in my opinion that the FED can forecast front loading I Think that would send a very reasonable message to markets I Don't think this would necessarily move markets ridiculously up or down. or move Financial conditions in either direction.

Remember when markets rally and bond yields fall, Those those are ways that Financial conditions actually loosen. And it's a way that the Federal Reserve can can make things a little happier and get people back to spending and manipulate essentially markets. So if you're ever curious if there's Market manipulation, the legal Market manipulation that occurs every single day is over at the Federal Reserve and I mean Congress kind of gave them that authorization. So like it or not, it's what happens.

That's the game we play. So another number that I think will be very critical will actually be the expectation for up here change in Real GDP. So uh, in the last measure, they actually thought real GDP might drop to as low as 0.2 percent for the year of 2020. I Actually don't know about that.

So if you go to the Atlanta Fed real now GDP measure it's a lot higher than that I'm going to pull that up in just a moment here. Let's see, five days ago they published their last estimate. Okay, we'll look at this together. him.

So the real GDP from five days ago from for the Atlanta Fed estimate came in over here above three percent for Q4 2022. We did have a couple negative Quarters at the beginning of the year and sort of mid mid part of the year. Uh, We the third quarter we bounced a little higher, especially with the Atlanta feds real GDP We'll see final numbers and all that. but but we were positive in Q3.

A point is, even though these numbers can get revised if we have a strong Q4 like this, we might actually see the FED revise this GDP for 2022 up I I That's a sign that maybe the market actually, you know, or the economy is not doing as terribly as potentially expected. So I would think that this might actually move up I'll use my green color here. This might actually move up closer to 0.5 and they might actually be a little bit more concerned now about the lagging effects of policy. It might potentially take the economy here down to a 0.9 or maybe a 1.0 for 2023 and I'm I'm okay with the consistency here.

on the others, that's sort of below Trend under that two percent growth on uh, you know that's below Trend GDP growth. That's what the FED wants. They think that's going to drive inflation down. It also would not surprise me to see the unemployment rate revised up a little bit for next year, but not by much.

I Would not expect a big movement here. Maybe you get like a 4.5 or something to that effect Pce inflation. Obviously, this number is going to get revised up. We're probably going to be closer to something like a six percent.

Uh, for the end of the year. and it's possible that next percent next year could see something like a three. I Don't think that's going to be very, very meaningful I Think the most meaningful part out of this SCP is really and I'm going to rank these here in an order of priority: I Think it's going to be the Federal Funds rate right here. Absolutely That terminal rate.

This is a game changer. If we get something well into the fives, it's going to be a big problem because that means the FED even though they're they're slowing down on their rate hike cycle is actually suggesting. All right, let's go 25, 25, 25, 25 for a very, very long period of time. Rather than pausing and potentially March or may a March or may pause would put them somewhere probably around four and a half.

4.75 or 5 depending on when they go to 25, which we think will be pretty soon, we think they might go 50 25.25 right? Something like that uh, wage 50 would bring us to 4.25 25 would bring us to 4.75 just as an example. So uh, that's an expectation. That's a big deal though. Again, if that's like 5.5 for 2023.

if markets are gonna go to crap and this is why to answer the question, a lot of people had I answered this also in detail in my course member live stream this morning because a lot of people were wondering Kevin why did the market all of a sudden just go to crap today I I was look looking and really the only explanation was that we're getting a Sep tomorrow when we get an SCP trading volumes like people sell. Okay, people sell before you get the Sap and you generally buy after this app because you're going from uncertainty to certainty, right? Generally, people don't like to buy when there's uncertainty and generally the masses like to buy when they have certainty. This statement is good. You know you're not going to have another.

Let's see schedule. uh, Fed 2023, you're not going to have another SCP probably until March I Don't think you're going to have it in the February meeting, but I'm going to find out right now. So the February meeting is the first Feb Market calendar on that. Yeah, the next SCP is not going to be until March 22nd.

That's uh, four months in a week from now. Really? Jan Feb March No. three months? Yeah, three months in a week from now. Anyway, that's a long time.

That's a hundred days between the basically between now and the next. SCP So for the next quarter you're trading on this chart like your expectations are based on the new thing coming out tomorrow. It's a big deal, so like, is it really a surprise that stocks move down after? uh, you know, in the afternoon today when people realize, ah, crap, we got a Sep coming out tomorrow? No, not a surprise at all. Now what else is going to be important? Well, I think Unity is going to be important.

so you'll get range and you'll get central Tendencies here I think Unity is very, very important. see here. Even though 4.6 was sort of the expectation for, let me, uh, zoom in over here, 4.6 was the expectation for 2023.. the range was raising rates 3.9 to 4.9 percent.

so that's like the low end and high end. The big concern would be if this range says something, which it probably will. 4.4 I Don't think anybody's going to be in the threes anymore. 4.4 all the way to potentially six percent.

Like if you see a six handle there. Oh boy, oh boy. that could be dirty because that person's voice could get louder and louder. So I'd actually say that range is the second most important thing.

and uh, I do think this. There are a lot of clues that could be gleaned from GDP and then like big gap really but less so you know their projections here on inflation and Unemployment uh though, obviously we're going to look at them I Think Really, what matters to me more is not. They're hypothesizing on what the unemployment rate or inflation is going to do. What matters more to me is their impression of economic growth and what they're gonna do about it.

Which is the Fed funds right? right? and then the range of that Fed funds rate. Another way that you could visualize the range of the FED funds rate is called The Dot Plot dot Plot's a really big deal because look at this. Okay, this is like really, really interesting in my opinion. In in 2020, Uh, two.

and in 2023, look at what you had. Very tight 2023. Very tight. Okay, you could see those years right here.

22-23 right? Look how tight those boxes are. I mean you're really seeing cohesion around that 4.3 to 4.9 level expectation for 2023, right? Look at how nasty that gets for 2024.. they're all over the map and so I want to see how much cohesion there is. go for for this box right here.

That's going to be a critical one. and if we end up getting something like which I don't think we're going to get. but let's say we end up getting something like, you know, some people over here knocking on the door basically, uh, you know that's that's 5.75 you get something like ah, come on iPad you get something over I think it's the iPad not the cables by the way or the dongles because I've tried three dongles and three different HDMI cables iPad Come on Apple I get with it anyway. Uh, of course you take it to the Apple Store and they'll be like we cannot re-diagnose the issue Saya It's like effort.

We'll just deal with the black screen every so often. You know what? It's an opportunity to take a sip of coffee, soak in the information, and think about that peepee. you know, the coupon code expires. Anyway, Okay, so like if you got something like this okay, that right here, that would be hell.

That's hell because that tells you you're gonna go 5.25 to to nearly six percent. Very very. That could be terrible. Very very very bad.

Um, probably more likely I would expect uh, more more diffusion. So I would guess. uh so I'll use orange since that's what I've been using for my guesses for 2023. My guess is uh, probably gonna be we're gonna see some folks some doves over here.

What do we got here? We have three, three, six, six times three. We got 18 dots to plot. Okay, so I wouldn't be surprised to see something kind of like this where you really have that six. I'm gonna go with like eight eight Dots here three low.

Then that puts me at about 11. That gives me seven more dots to plot. Uh I I Do think I'm gonna get some I might see like a one over here. Uh no, not with the last two.

Inflation reads: you're probably gonna get more of a one over here. maybe two over here. That puts me at 14. Gives me four more dots.

Uh, and then I'll go five and a quarter a little heavier, and then three over here. That's kind of my assumption of what you're going to see where you have that sort of central tendency around that 4.8 roughly aligning with what I wrote on the sheet. but I do think you're gonna see some bias into that that five and a quarter range. Uh, obviously, if this skews more at the top, it's going to be a little problematic.

But but that's uh, those are some of the X expectations yourself. So what do you do? you know, Um, well, like I think the the. There are a few things you can do. Uh, number one.

this is a very interesting time for tax loss harvesting because you are running up against Uh Q4 earnings, right? So Q4 earnings reports are going to come out third week of January to beginning of February then you're gonna have a Fed meeting. and if you have bad earnings and then you have fear of the FED meeting. in my opinion, you could be in a position where you sell. now you buy back in during that fear of earnings and the Fed that really gives you this week to tax loss Harvest then you'll also have another CPI report though that comes out I believe it's on the 12th of January you could Google that one really quick.

it's either the 12th or the 14th. It's one of those uh, and uh, I'm pretty sure it's 12. that that you know could potentially set off a rally again because that CPI report is going to be like three weeks distance from the FED where I see the problem. The reason we sold off on today's rally is because you had the Sep coming out the day after.

uh CPI. So it's like even though CPI was good, you can't really rally. Yeah, it's Jan 12. Okay, sorry, yes.

uh. anyway. um yeah. so so there is that potential for tax loss harvesting.

One of the interesting things that you could do is you could potentially move from single stocks you have losses on to an actively managed ETF. So that way if that actively managed ETF runs that active ETF manager can rebalance for you without passing along tax implications to you. Check with your CPA on that. Uh, you know, obviously.

uh, it's it. depends on how the ETF manager runs the fund. But uh, but yeah, if you have large gains on a stock within an ETF the ETF manager can trade that I am an active ETF manager, right? But an ETF manager can trade that for a different set of stocks and and potentially not have a taxable event. That's really cool.

It's like trading they call them like units and baskets and the ETF. It's weird, but it's really awesome because it's a way you could rebalance a portfolio without having those taxable games gains that you might have in your portfolio or like, ah, this one stock ran so much. But dang it. I Don't want to sell it because I don't want to pay taxes at the end of the year, right? Anyway, so that's an interesting strategy right now.

Uh, another thing, obviously staying at a margin. Uh, you know, keeping up the cash, working hard or grinding more. It's frustrating. It's hard.

but like that's called recession, you know it's it. just sucks. No, nobody's having a great time, and even if you're killing it in some trades. uh, it's uh, it's so volatile it's dangerous out there.

And that's why I think our trading challenge is going to take a very conservative approach to to milking some some, uh, you know, it's technically active income, but what'll feel like roughly passive income So we'll We'll see what we can pull off anyway. we're excited about that. So uh, check out those links down below. I'm building a real thank you so much for watching and folks.

we'll see you in the next one.