Well, China is going through heck and back and the Federal Reserve has, uh, well, another little Nikki leaks a leak and we'll talk about both in this video as well as a few other things. So uh. first, what's interesting that's going on in China is that China has kind of ripped the bandage off on Covet Zero policies. But this is really fascinating because China didn't really prepare as much as they should have for Covid.

At least this is what we're hearing from not just U.S based reporters, but also Chinese-based reporting firms which usually it seems like the Chinese government has a pretty good control of Uh Chinese media. But let's put it this way: people are so fearful because entire offices and families anecdotally are staying home because everybody's sick, that people are lining up at pharmacies to buy flu medication and fever medication. and they're starting to ration this in China which is a complete U-turn from nearly three years of Covid Zero policies in China. Some are now saying that cold and flu medication is totally sold out, that you know if you don't look sick, you're only allowed to buy one box you can't stock up on flu and cold medicine and that now Pax Lovid was put up for sale, which is an antiviral covet drug that was put up for sale in China and within 30 minutes it was completely sold out online.

There are a small note on pack slavid some people talk about like a coveted rebound after taking pack slow, but other people say no. Any potential person who gets coveted has the potential for coveted rebound whether you take that or not. Who knows. But the point is, China has only about uh, half of its population over 80 vaccinated.

They also use Chinese vaccines, which we have lots of data on on the efficacy of those. They also waited way too long to build and staff new Icus. So now you've got organizations like the economists suggesting we could see one and a half million deaths in China from Covid and potentially a peak in January. And consider this: We already think that China is in a depression and that's scary.

We already think that China is misleading us. On economic data. You've got three huge pressures: You've got demand, dropping off a cliff, more people working from home because they're afraid of getting covered, or everybody's already got all that around them. You don't really have heard immunity in China yet because you've got three years of Sheltering people, uh, and uh, Which by the way, all this work from home and Contracting demand is definitely not good for auto manufacturers.

I Mean, no surprise, it's not good for anyone really in China Supply shocks are another issue because can't make stuff out of Factory from home. And then of course now we're expecting weaker uh growth in China in 2023. especially as we go into 2023 with basically letting covet rip which probably should have adopted what other countries did earlier which was let's prepare, let's get our hospitals ready, let's get our doctors ready. Let's stock up on cold and flu medication.

Let's stock up on everything we need and then let it rip. China's kind of just like yeah, uh, Covet Zero is a little exhausting. Yeah, just forget about it. and this was on December 7th.

They've kind of started pulling back on a lot of these restrictions and it's kind of like yeah, go for it, whatever you want, and people are like I'm gonna stay home because everybody's got covered. So they're like self covered zeroing. Although that's not really working because everybody's getting sick. Uh, they're even like apparently running out on on simple things like dexamethasone.

This is a low-cost steroid. I Remember when Donald Trump was sick? Uh, he took this and that there were headlines talking about how he was taking a powerful steroid. Uh, you know. and then you had flip sides of nurses going.

Yeah, we've been using that on everybody you know. And this was back in the early days of Covid, where it was sort of like nobody really knew hospitals, didn't really knew. They're kind of like, let's try this. let's try this.

So uh, World Health Organization says that China lacks herd immunity, low vaccination rates for the elderly again, only half of those over 80. and uh, you could end up seeing very tough times ahead. The IMF is calling for a 20 drop in real estate prices next year. Yikes.

So then we've got to talk about the Federal Reserve. So yesterday we talked about the Federal Reserve in a video that I think is very important. It's the the Federal Reserve was duped video Very very important if you haven't seen that yet. Uh, in fact I tweeted a little bit about uh, how the Federal Reserve was being due and uh Kathy Wood uh retweeted part of it which I thought was really cool.

I'll pull up that tweet and show you. But but basically and I encourage you to watch the video so you can really internalize it. But basically the Fed's looking at BLS data which the Philadelphia Fed is coming out and saying, wait a minute this data we're getting is just wrong. Uh, now we don't necessarily want to go tinfoil hat and say, oh, it's definitely rigged for politics and political reasons or whatever, right? the difference between the establishment and household surveys, but we're not actually creating as many jobs as we think we are.

When the Philadelphia Fed is saying that, it's kind of like wait a minute. This is really interesting, right? Because this could potentially, uh, be an indicator that if the Fed's starting to realize, oh, that's uh, that's that's maybe a sign that uh, uh, maybe they'll relax a little bit. Um, who knows though. Uh, okay, so uh, let's let's um I'll show you Kathy what's tweet in a moment, But hold on a second.

This is this interview is just starting here. Let's hop on over this for a moment. You know the move up in the to the restrictive rate. That was even more.

This is a Federal Reserve person by the way. bedspeak. Starts Now Just a few months ago with these dots with this position. now do you think you finally caught up to where you need to be? Well, I think we're well on our way there.

and I think when you look at, uh, the kind of the central tendency of the Dodsa, my colleagues expect the FED funds rate to get to say five to five and a half percent. Uh, next year I Think that's A that gets us, uh into that hopefully sufficiently restrictive stanza policy that will bring inflation back to two percent. So I am getting increasingly confident, uh, that we're getting uh, closer to that point. Uh, but obviously we have to watch the data.

Uh, the inflation and other data have surprised us and we we need to be on the lookout for that. But I do feel we're in a getting to a better place now. Just about two weeks ago, you said that the FED funds rate has to get above the inflation rate to bring down inflation. Uh, how far above inflation does it have to get? Well, that's that's the question right in Way we talk about this is in terms of sufficiently restrictive to bring inflation back to two percent.

So to me, it's really about getting them high enough and of course, keeping it high for a while for enough time to really see clear signs. Inflation moving back down on, uh, on the way to two percent. You know my view is you have to think about real interest rates. As you said, if you look at again, the median dots if you will in the in the economic projections we just put out, you see the real Fed funds right? say the FED funds rate minus the core PC Inflation around one and a half percent I Think that's a reasonable view of, uh, restrictive.

Again, whether it's sufficiently restrictive, we'll have to watch the data and see. but I Think that's to me. Uh, basically where where I'm thinking right now now there's many top economists, former Fed officials, even who are saying here, look, it's looking more and more like you are going to have to go higher even than where you are now. Maybe something like six, maybe something heading towards seven percent.

Uh, can you see that happening and and what what circumstances, what would be happening for that? You have to go. That'd be bad. Well, that's definitely not my Baseline as I just indicated I Don't think we'll need to get real interest rates that high, but of course things could happen differently uh, than than we expect and would have to. especially around inflation.

but also house for how strong is the economy, even with higher interest rates, does he do? We still have these imbalances between supply and demand right now I mean PC Inflation is six percent or the last 12 months and we have clear signs the demand exceeds Supply in our economy and our labor market. So to me, the question of How High we have to get to is really get it. depend on what we see in inflation and the supply and demand imbalance. Again, my base case is we don't have to get that high.

I Think we have some favorable developments uh, underway things that we've been talking about for a long time. Supply Chains definitely are getting better around the world. We're seeing that in a lot of different data and we're also seeing you know some of the goods, prices, and import prices come down a reversal of some of those pandemic era uh, things that pushed up inflation. So we've got a few factors I Think are going to bring inflation down to three to three and a half percent next year? Um, but then the real issue is how do we get it all the way to two? Of course is.

but right there though, the message Wednesday and this ties in with are you maybe we might have to go higher is the message that if it's not coming down as we expect, then we are clearly open to going higher. Taking the next step. Well, we're going to have to do what's necessary Again, sufficiently restrictive to bring inflation down to two percent and it could be higher than what we've written down. and we have had to increase our interest rate projections As the data come in.

Inflation has been stubbornly high as you know, many people have said, and we've seen the economy remain very resilient to higher interest rates. Remember, the unemployment rate is 3.7 Some signs are slowing demand for labor, but still a very, very strong, uh, imbalance between supply and demand, right? Yeah, you know. There were two surprisingly good CPI reports going in to this meeting and so a lot of people thought, Well, that good news for the Fed. You know, maybe they're not going to be quite as aggressive.

Um, but at the same time, what happened? 2023 Inflation forecast? Boom goes up. What? How did this happen? What's guiding you? Your view on inflation? Again, two good surprises on CPI And yet the the PC core and PC Overall still can expect to rise right and again relative to say our earlier projections in September The You Know I Think that you really have to think about what's happening in the inflation data. so we are seeing good news. I Like good news on inflation reports, a lot of that's in the goods areas of some of the areas.

We've been long expecting those inflation rates to come down, so that wasn't So you know that's something that we've been expecting to see is part of the Baseline forecast. Where inflation is still high is in these core Services areas. The areas that you know are probably going to be more persistent and really reflect the imbalance between supply and demand in the labor market and our overall economy. So sure we are seeing some good signs on goods and some other categories.

I'm also seeing some good signs in the in the rents for new leases of apartments and houses, so you know that inflation should eventually start coming down later in the latter part of next year. But again, in these other core services, that inflation rate is still high and that really gets to how strong the labor market is. So sure, some good news, but the underlying issue of core core Services inflation is still very much there. Well, you know your your forecast for unemployment next year is a big jump, right? You see it much, much, uh, weaker up to almost full percentage flight from what you're looking at in September 4.6 percent.

Uh, you're looking for GDP uh to be much weaker than you thought three months ago, down to 0.5 percent. Um, so is this the kind of forecast that is consistent with uh, a soft Landing Is it consistent with something, maybe not quite that good? Well, I Think it is a it's a economy that's continuing to grow. As you pointed out, the median dot uh is around half a percent growth for this year and for next year. So as economy that's growing uh, it's an economy where the unemployment rate is is is is rising somewhat.

As you mentioned, the the meeting will be at 4.6 percent of the end of next year. So I don't see this as a recession. We're clearly not in a recession right now. Based on the data.

It is an economy that is growing only modestly and I think it's an economy that's really seen uh, the imbalance issues between supply and demand diminishing and inflation coming down. Is the retail sales were were weak across the board. Pretty much uh, is this a canary in the cold mine for where the economy is heading In a part of the economy you want to get final demand down, right? Is this maybe an early sign that you're succeeding? Well, we have to look at all the data on that. and obviously, where we're seeing the science of the economy, slowing is in the housing sector and now in manufacturing.

consumer spending has been kind of jumping around a bit months and month-to-month quarter to quarter. It's actually been more up until this latest data. more resilient perhaps than I was expecting. So we just have to, you know, go through all that data and really see kind of the underlying strength in the economy.

That data doesn't change my basic view that we're going to have in economy growing modestly over the next year. You're talking about the Uh, the Uh Services X Housing right Core Services Sex Housing is that Your Seems like it's a key indicator? Now we have to see that Uh coming down for the FED to be convinced that inflation's moving in the right direction. Well, I think that is. It is most closely related in many ways to the state of the labor market.

and you know, domestic price pressures. at least some of these other categories, which of course are part of the inflation index. We don't ignore any of them, but they really are about the special factors of our prices that skyrocketed. Uh Transportation costs and things like that and then the I Think the housing market.

We're always seeing some good indicators eventually of that coming down. So this is the area that that's not coming down, and we definitely needed to see it coming down to get to that two percent inflation call. So a lot of focus on labor and wages in that part of it, right? That's that's what's important. That's what Chair Powell pointed out this week.

So uh, do you think that there are signs of a wage price spiral right now? Is that one of your concerns again? And when you look at bad phrase very bad, that's good news. But boy oh boy, the the trend is still too much up for us. Yeah, so I don't see any signs of a wage price. A spiral of the kind that we saw in the 70s.

A couple data points had 0.21 Is inflation expectations have been coming down? They've been really well anchored for longer run expectations, but we've also seen in our New York Fed survey and in the Michigan survey shorter term inflation expectations coming down. So I think that we're not seeing that kind of dynamic kick in of people expecting higher inflation demanding higher wage increases because of that. The other is, you know I Really see, wages is kind of the barometer, one of the barometers and the strength of the labor market about demand. And Supply I think wage growth has been very high because labor demand has been really strong relative available available.

Supply is labor demand and Supply get better in better balance. I Think you know the wage gains will be more inconsistent with will be more consistent with longer terms and or two percent. What do you make of the Uh? the Southwest Airlines uh contract that was just signed? They're going to get a 24 increase in wages over the next Uh, what is it? Five years, four years? Excuse me? Uh, Is that a concern? Well, you know we're seeing a lot of adjustment in wages for around the country. I'm not going to point to any specific one.

I mean again, wage increases right now given where inflation has been given, where the labor market is are are still quite high and so we're watching those indicators. To me, it's really about tracking how the economy does over the next year. Labor demand is Supply and wages I Want to focus on Financial conditions. chair Pile: Noting that the markets and the FED are seem to be working at Cross purposes all the time.

Lately Are you concerned about this push-pull between the Fed and where is trying to lead? and uh, where the markets want to go? Well, I You know I Think we need to be and we are being clear on what we're trying to, what we're going to achieve uh, and how we're going to achieve it I Think that you know the economic projections of the dot Pot we put out provide a nice road map of how we're seeing the economy in Monte policy over the next couple of years. Uh, and obviously Financial conditions depend on a lot of other things and than just monetary policy. So I always look at a broad set of Monte pulse uh, sorry Financial conditions understand how that feeds into our Outlook right now I Know that you know a lot of some Market Participants clearly are more optimistic about inflation coming down. I Look at the real interest rates implied by that I Think pretty much everyone understands that real interest rates need to get restricted and stay.

There Is that an issue for the FED though? when you're trying to, um, you're trying to move policy in a certain direction, right? Uh, you want to tighten and if the markets rally and then the financial conditions soften for whatever interpretation markets are taking, is that an issue? Does that make the job harder? It doesn't make the job harder, but it's just another one of those factors like the you know what's happening in the global economy. a lot of things that have to feed into our view of where the economy is going and and then what we need to do clearly to the extent that you know. Financial Conditions have tightened quite a bit consist over the past year consistent with our moving towards a restrictive order to a restrictive stance of policy. That's an important part of the transmission of monetary policy of the economy Institutionally thought I Want to ask you one last question? Uh, because there's this.

We're hearing this a lot, that the FED let inflation get out of control for whatever reason and that this may have eroded The credibility of the FED with the markets. How do you respond to that? Well, we're absolutely committed to getting inflation back to our two percent goal. Uh, and we're acting in that way. I Think we're communicating in that way.

So I Don't think we've lost the credibility of course at all. I Do think that you know we are completely United in our focus on getting inflation back to two percent. We've taken extraordinarily strong uh policy actions over the past year and as we've shown we're going to continue to take the actions are needed to get inflation back to two percent. Price stability is absolutely essential for a strong economy in the long run.

We need to get that done and we will. All right. Well, 2023 here it comes. President John Williams Thank you so much for joining! Yeah, just so you know that's the New York Fed building by the way you know I Saw some comments people were like what are they in the hallway uh yes they are.

That's the bottom of the New York Fed building which is actually a really difficult building to get into. It's pretty glorious. So this is the beginning of uh Fed speak here and uh, really, you know one of the things that that uh the biggest highlights I got out of this year were look I Love hearing no signs of the 70s level wage price spiral. Uh, and and one of the reasons the FED believes no wage price spiral is this idea that expectations are coming down for inflation.

But unfortunately I think what the FED is doing now is they're not actually purposefully suggesting oh hey, look, reports are coming in good. This is great. We're on our way to getting inflation done. Instead they're like we're gonna keep going.

Keep going, keep going. I think they're doing that because they don't want expectations to run up all of a sudden and by kind of keeping their foot on the back of the neck longer than they should so to speak. They're really sending this message to markets that, uh, see, we told you we go to two percent and so like expectations are falling and now they're falling faster because markets are like, oh oh my gosh, they're not going to stop. We thought they would let up.

They're not going to stop. Well, then inflation's definitely going to go down. We could go to deflation and so they want to see these inflation expectations plummet. Remember, they've come down.

We're at the second lowest point on the Bond markets expectations of inflation all year. But when you look at today's low and you compare it to 2018's high, we are higher than that high. Like, So 2018's here. We're like here.

We're above it. Uh, so we. We're still up on expectations when you go all the way back to 18. And what were they doing in 18? They were hiking now In Fairness, they only hiked to two and a half percent and markets basically had a pissy fit.

Uh, but it's It's somewhat interesting to see how they they sort of have to play this game where they're purposely staying a little aggressive for longer even though the data is finally moving in the direction. To reiterate the nature of of transitoriness of of, uh, inflation. where I should say the eventual transitorianist. Now you know something that I like looking at is they're talking about core services and and getting core Services down.

Uh yeah. and and look, you know we've got some work to do here. You've got miscellaneous personal services still up at a six percent annualized. Rate Financial Services are down Goldman Sachs Just announced laying up 4 000 people.

That's like 10 times as much as was expected. Personal services still running here at about 4.8 percent on an annual utilized basis that actually has a decent weight here. 1.3 percent I mean it doesn't hold a candle to real estate at like 32 percent, right? Education Services Five percent weight only 1.2 percent annualized. That's not bad.

remember I'm multiplying by 12 to get that. Telephone service is actually negative. Delivery services negative although Postage and delivery so postage running hot here at 3.6 That's a little high, but uh, you know you get fluctuations like that I Mean, look at that. Why is it up 3.6 in a month? But over here it was only up tens of percents.

Uh yeah. so you get these fluctuations, especially around the holidays. Probably fewer postage workers. so they raise prices.

Uh, transportation services here point eight percent I Kind of expect these things to start plummeting. Just look at the uh, A Baltic Freight index here. you can't because I'm in the way. But here here's a chart of Baltic Freight And and look at these prices to ship a container I Mean look at where we were we were at.

You know, fifteen hundred bucks? 12 300 bucks to ship a container. Right now, we're still at 2100 so we're still elevated. Like if you invested in container shipping pricing, you know, over here March 20th at 13.77. today? Uh, you'd be up at uh, you know you'd be up 54 at 2100.

That's not bad for investing in container shipping prices, right? If if that was something that you could invest in what you, you know you can with contracts and stuff like that. But it's not like there's a there's a ticket for that. Uh, of course there are companies. But anyway.

uh, this is really interesting. Uh, you've seen this collapse from from well over ten thousand. Well, when we had Mass massive shortages I mean you had companies chartering their own ships because it was so expensive to ship goods to to now? just uh, something that's plummeting. And and this plummet is great.

Like this is what we want to see. We want to see this continue to happen. Uh, you know. Medical Care Services shifted down? That's great.

Medical Care Services Almost 7 percent weight there. Awesome. So we want to continue to see that. But I mean nothing compares to that rent of shelter weight that 32 percent on CPI 25 on Pce.

Uh, pretty pretty critical. So uh, before we started with Fed speak, uh oh. actually, you know what. Let's actually finish with that speed.

Uh, first, let's wrap up Fed Speaker, that is. uh Nick T Posted an article again on Fed Speak and uh, let's go ahead and grab some Nick T information here. So uh, one of the things. Okay, what are a few things here? So Nick T from The Wall Street Journal I Love it when he posts because I feel like he's basically the mouthpiece of the FED uh and uh, you know we've got here.

No decision yet on the upcoming meetings For whether we're going with a 50 hike, uh, 50 basis point hike or even a 25. there were some hints that maybe a 25 could come. although I think the big thing that really hit fear was this idea. Oh no, no.

talk about rate Cuts in 2023 and uh, waiting until 2024? I Think that sets some nervousness off in the market? Yeah, especially since you know data's coming in pretty starting to come in pretty weak and we're like, wait a minute, you are going to push us into a recession. You're going to force a recession to destroy those inflation expectations and that appears to be exactly what they're doing. So uh, we look at the Nick T article and I think the most interesting part was uh, the talk obviously certainly a about Core Services Core. Uh, Core prices.

Rather, not just Core services, but Core prices which include Core Services increased at a 4.3 percent annualized rate the lowest reading in more than a year. So this is good. We're actually on the right trajectory here, which is great. Another thing for the real estate market and I've been talking about this in some real estate videos is people are like, oh my gosh, there's a shortage of houses still I'm Oh, hold on a second sharp slow down in the growth of new households.

People aren't going out leaving their parents, homes, or elderly people are moving in with their family, right? Not good. Look at Lennar's earnings. Terrible. I mean this: this: 30 or 23 23 to 24 Right down in in backlog pricing: 9.6 quarter over quarter? Uh.

cut in prices? Uh, I mean that's huge. It's a huge quarterly drop. Wage growth say here has not shown any meaningful signs yet of a Slowdown particularly as companies offer higher wages to attract new workers. And so what I wrote here is we've just I mean I'm talking about within the last two days seeing an airline rotation and a red flag in In Airlines potentially ending up weaker than we expect.

What's this guy saying about real estate? Hold on a second demand for all kinds of goods. And and Rental housing or or even homes for purchase. There was always an element of seasonality, so rents and home prices usually go down in the back half of the Year. Our data shows over 10 years, almost all of the rent growth is in the first half of the year and that's because most people either buy a home or rent a home in advance of the school year.

Now that being said, we are seeing a deceleration compared to the very Torrid rent growth and home price appreciation earlier in the year. But I Do want to point out because you reference job losses? Uh, is that job losses and the fear of recession which is in the the media and the News every day is probably having a dampening effect on household formation. But when we look at the long-term fundamentals, because we're not trading these homes, we're investing in them long term. Those fundamentals look really great.

as the Millennials move into the peak household formation period, they over overwhelmingly want a single family home as you raise. Capital you think about when to deploy. Yeah, well, that'll be in the future after this crash. I Mean, think about it.

Who is going to buy who? Like what Millennial is going to say in April of 2023. Honey, let's go buy a home. Home prices are only down 15 year over year. It ain't happening.

People like I Think One thing people have to remember is real estate is not like stocks. I Don't care how much you know about stocks when a buyer walks into an open house, they're a Gen Z a millennial. They're 40. They're 50.

They're 60. I Don't care who it is if they've never bought a house before, they are scared in an appreciating Market they're scared. Imagine how first time home buyers are going to be What it's terrible when prices are plummeting year over year and then they've never bought a home before. Dude, people will talk themselves out of buying so fast that Pain's gonna extend next year.

I Really believe it? so we'll see. Uh anyway, it's not like stocks where where you do have retail dip buying, where it's like oh, prices are gone. Okay yeah, the smart thing to do is buy the dip. uh you know, All right, Fine, that's but that's it's.

real estate isn't like that so it's gonna be very interesting. Yeah now uh. one last thing on the FED It is very interesting to me that the Fed's talking about uh how how much these inflation expectations have come down I Really think they almost want to overshoot and before they U-turn they want to see inflation expectations or below those 2018 levels. So I think that's fascinating I Do think that wage growth uh you know the the expose by the Philly Fed that we pointed out yesterday is a big deal.

but I Also think this: Airline Rotation by Delta JetBlue Uh, this concern about forward demand is is a big deal for helping us bring down, uh, some of those uh wage inflation concerns. We do have massive options expiration today in the market so do expect a lot of volatility. Four trillion dollars in option expiration is expected today. Quad.

Witching. This only happens four times a year. basically once every quarter. Uh, and you're you're doing it.

You're going through this options expiration today. Uh, going into one of the lowest liquidity times that we've seen in quite a while. So expect some, uh, some extra volatility today. And so if you're playing some volatility plays like we are in stocks and psych, probably have to wait until Monday or Tuesday to actually see Vol fall.

But if you want to play some high ball plays today, hey, could could be interesting. We'll look at the charts when the Market opens. So Kathy Wood by the way, wanted to talk about this Kathy Wood liked and retweeted uh, a tweet of mine and that's that's awesome. I'll take both anyway.

Uh, shout out to Kathy here. So let me give you the thread here. So I'll go to tweets and replies and I'll give you the whole thread. I I Think it's a it's quite an important thread.

So here we go. Uh, right. this is. um, where is it? you know Twitter threads are annoying and there it is.

here we go: Massive Raid Cuts Coming: the FED is likely to cut rates starting in Q2 Q323 Under the 2020 policy of Flexible average Inflation targeting, that's called Fate. Kind of ironic that they came out with something called Fate right before. Uh, you know, one of the nastiest uh uh, stock market pullbacks uh and uh, and and worst experiences of monetary policy over Printing and then potentially over tightening, but whatever. Uh, and Via This policy of Faith the FED can allow inflation to take until 2026.

So these are numbers that I put together on Pce: Headline can take until 2026 to fall to two percent and still have average inflation of 2.18 over 2010 to 2020. uh, 30 Actually, So over that 20-year period, they could say, look, we've achieved average two percent headline PC inflation even if they take until 2026 to bring inflation to two percent. In my opinion, that's actually something that's bullish. It's Fed obviously has three conditions.

We've talked about that before: Goods and deflation leading rental deflation, wage growth stability. Fed in, you know, talked about the Philadelphia Fed survey over here. Unfortunately, the Fed's likely to keep pressure on the wound longer. Uh, Sadly, much like the Fed was still printing money while inflation was eight and a half percent in March, How insane is that that? they were still printing money while inflation was eight and a half percent in March and uh, and they'll likely keep rates too high.

Too long. Too high, too long. Uh, Therefore, Elon Musk is likely right when he says a deepening recession, right? So I give some ticker symbols here and and I Talk about how calls for the FED to change their inflation Target to three percent are really unnecessary, especially because their credibility I think is at stake. You know we just saw Fed speak John Williams over here.

Talk about how, oh no, we haven't lost any credibility. Yeah, right, they've got some credibility work to do anyway. This is what: Kathy uh uh, tweeted and and uh, retweeted and liked I Believe the FED will most likely begin cutting rates for fear of actually underachieving two percent average headline Pce inflation given the deepening synchronous Global recession, unofficial depression and unofficial uh depression in China I support Kathy's argument of substantially declining prices. Yeah, so that's kind of cool.

Uh, but um, but yeah, I mean it's it's uh. I I Think there's there's a real, there's a real potential for that, so that doesn't mean you know. Oh YOLO all in time to go up in margin, right? I Think like what I Mentioned this yesterday in the comment section. Honestly, sometimes I wonder like why do I go down there but somebody's like, you know, this is like the 2747th flip-flop and it's like no, this is actually if you watch the video This is actually like a really long chapter book and while like the headlines of the chapters may have really like exciting titles, this is all like one long story, right? This is all one long story.

Fat Nasty U-turn uh to the dark side in January and and December of last year waiting. now for the positive: U-turn early signs coming that the FED is ramping up for that U-turn This is all one story and we're gonna look back at 2030 and go. Yeah, that was. That's a good book.

It's gonna be really cool. So I'll welcome aboard here as a new member. Appreciate that. Glad to have you here! Okay, so we talked to Options Exploration.

We talked to Kathy Wood and we talked China Uh, I Can't understate how dramatic it is. Uh, what's happening in China and one of the things that we have to remember is you if you have exposure to the Chinese market which you certainly do if you're in the Chip sector or in the Uh in the auto sector is, you know we. We could see some some really rough months over the next two to three months here as China finally starts getting to some semblance of covet immunity. I Mean, listen to this quote.

When I realized 11 out of my 13 colleagues were infected, my feelings were mixed. I Actually hope I catch it this week because my work schedule is very full for the next two weeks. Oh gosh, that's terrible. but you don't want to go to work? uh I guess I I Guess people don't want to work all right? uh China Oh yeah.

So another thing that China is doing now is they are also changing how they're reporting covet cases. They're now only reporting covet cases if you've been tested at a government Cova testing facility and you're symptomatic. So if you are not symptomatic and you are an Ori or you are not tested at a government facility, you're not going to get counted. uh I Guess in theory, if you're symptomatic and not tested a government facility as well, you're not getting counted.

So maybe it is. And yeah, in order for you to be counted, it has to be at a government facility and you have to be symptomatic. So expect the like covet to rage in China But the numbers to look low now. Uh Subway Traffic is actually plummeting.

Uh, kind of like what we saw in April to June red flag. Remember the Shanghai shutdown we saw Shanghai is just now starting to see a plummet in Uh Subway rides. You've already got some other areas like Beijing at basically April May levels low levels plummeting. So a Subway ridership is a tool that's used for China as sort of a gauge of economic activity as well as Mobility data to work could be uh, garnered mostly because nobody really believes the official uh Chinese figures on what's going on.

so that's uh, that's quite interesting. Yeah, so uh yeah, those are. those are some of the big things to pay attention. today.

Again, you've got quad witching. China's covet story is a big deal and obviously the potential for the large fed U-turn eventually coming a big deal. Let's go ahead and take a brief look at the pre-market here. we've got about 30 minutes to the opening bell.

Uh, the big thing that I like paying attention is to is is those bond yields. And very interesting that today actually the 10-year bond yield is sitting at about 3.5 percent. Uh, you're you're You've kind of been vacillating here. We've gone to like three, four, three six, but we keep bouncing around three five over the last week.

No matter really what the stock market does, you're getting a lot of mixed feelings over here around that three and a half level. Do keep in mind that this number staying higher is actually a good thing to some degree because it lets the FED feel like Financial conditions are tight, right? If you start seeing treasury yields plummet and they go to like two and a half percent or whatever, you're not going to have very tight Financial conditions, it's a problem. So what do we got here in the AM we've got Uh, looks like uh, Tesla is up about one percent in the pre-market Activision Blizzard Roughly flat exact Sciences up 22 AMC up two metas up about two D whack down about 4.6 really after that Nft release? Really? Not not that that has much coordination, but it could bring people over. The truth.

Social open door rough day yesterday along with Redfin and square down five to seven percent down. Uh, about one and a half to two percent Here in the pre-market did look like Adobe uh released some decent numbers this morning. It's up five percent in the pre-market which is interesting because you've been seeing a big SAS slowdown. although uh uh.

I Personally believe that Adobe is another stock that still maintains pricing power. Gotta get that paper up. So anyway, good luck today. Good luck on options quad witching expiration day.

Hopefully you found this video helpful and we'll see you in the next one. Goodbye and thanks for being here.