Oh, it finally happened. and the Federal Reserve has realized that they're being played by the government. Wait, what isn't the Fed? the government? No, the Fed's actually supposed to be independent of the government. They just operate on the authorization of the government.

They're still all suits. Either way, how did the FED just realize that? Oh man, we're getting played. And why is that a big deal? Well remember, the Federal Reserve tells us there are three things that we need to see fall for overall inflation to go down. We need Goods inflation to come down.

We got that. That's already happening. We need housing inflation to go down. That's already happening.

Not in the owner's equivalent rent side, which is the lagging indicator, but on the leading side. The Fed's so far willing to accept that. But that darn wage inflation seems to be propped up propped up by something. uh, maybe politically motivated? Who knows.

It certainly looks a lot better to say jobs were growing under my Administration than to actually tell the truth. But it is possible that yeah, maybe stemi checks from some states specifically California sending stimulus Inflation relief checks to people making up to five hundred thousand dollars could have propped up some jobs. We also know that the Bureau of Labor Statistics has given us a really misleading read on jobs. If you remember about 13 days ago on December 2nd, I made a video when I talked about how isn't it odd that between March and November the Household Survey of Employment which doesn't double count, employees only grew by 12 000 jobs.

But the establishment Survey grew by 2.5 million jobs. How could that be? Maybe because one of the surveys is actually reporting the potential payroll count that companies have where the Household Survey counts people employed. So if one person has two jobs, they get double counted right. And so so That has led to this sort of annual graph with a massive Divergence.

This is a Zero Hedge chart here, giving us a nice little graphic and they show this Divergence between the surveys. It's almost like something broke in March also conveniently somewhat right before the election, but either way, no tinfoil had necessary. There's obviously a problem here. Something's changed.

for some reason the surveys are no longer aligning the way they used to, Possibly because starting in that time people started getting multiple jobs just to pay the bills because inflation was running so hot right and and people are starting to have a harder time getting a new job. Okay, all right, to some degree. Maybe that makes sense, but so far the Federal Reserve has not acknowledged this problem. The Federal Reserve has instead said yeah, wage growth is still going up, employment is still tight, and we just have to keep being aggressive and keep hiking until unfortunately that goes down.

There's is gonna be joblessness. You know, probably over a million and a half people are going to lose their jobs, and we wish there was a less painful way. but this is what we have to do. That's what Jerome Powell told us in the meeting yesterday.

Well, what did we actually just get from the Philadelphia Federal Reserve which Jerome Powell may not have actually seen yet before his meeting, but just came out. Take a look at this early Benchmark Revisions of State Payroll Employment by the Research Department of the Federal Reserve Bank of Philadelphia And what does this Bank tell us? Well, they tell us. the following estimates by the Federal Reserve Bank of Philadelphia indicate that employment changes from March through June Keep this in mind, that's March through June We're in December Okay, so they're just now realizing that. wait a second.

Why is there such a Divergence in March through June is just this section highlighted here right? This is a March through June chart. Wanted to make that clear to you because remember when I said March through November we were at like a 2.7 million job. Gap. Okay, just in the March through June section, we're sitting at a 1.5 million job differential.

Approximately Okay, the point is not exactly that the numbers are perfect. it's just to show that there's a huge gap between the two. and and the Philly Fed is going. Hey, we just did our analysis of the March through June numbers and they are significantly different than the estimates in 33 States and in DC compared with estimates from the Bureau of Labor Statistics Current Employment Statistics Report.

In fact, our early reports estimate that there are higher changes in four states, but lower changes in 29 states. Where essentially our estimate, our estimates now incorporate more comprehensive, accurate job estimates released by the Bureau of Labor Statistics quarterly report along with their own data versus their monthly payroll report. So in other words, the Philly Fed is saying look the month over month data. We're not really trusting these BLS reports right now.

Let's look at the quarterly data and include some of our own data in it together so we can interpret this right. This is their methodology. I Won't believe what they found. The difference was.

So in that initial estimate chart, we saw that there was this weird difference of potentially as much as 1.5 million, but it certainly was a big difference. It certainly seemed like the Household Survey was saying very few jobs if any jobs were actually created, so ignore the difference for a moment. We just know it's huge, and we actually think that basically nearly no jobs have been created. That's because you kind of go from March over to June and you're roughly at the same level.

So no jobs have been created based on the Household Survey, but the Payroll Survey says over a million jobs were created well. What did the Philadelphia Fed just search and find out Per their methodology? Well, the following: They say that in aggregate, in total, we believe only ten thousand, Five hundred net new jobs were added During the period of March through June rather than the 1.1 million jobs estimated by the sum of the states. In other words, the Philadelphia Fed is saying we think there was Zero jobs growth. Basically, that's what they write here: zero with ten thousands.

Pretty dang close to zero in in the case of this jobs report relative to a million to a million and a half, right? So they write here. Based on our research, we're actually sitting at about a zero percent jobs growth solely for March through June. And by the way, because it takes us so long to figure this crap out, it's gonna be another three months before we can let you know what the actual job gains were between June and September. So in other words, we're probably going to be in February towards the end of February before we actually have real data for June through September for the jobs report And this June through December jobs information, which seems terribly wrong, is what the FED is using to justify continuing to hike, hike, hike hike hike.

In other words, we need to ask ourselves, when is the Fed actually going to wake up and realize that they are hiking rates? Based on this expectation that the establishment survey is growing between March and November 2.7 million jobs. when we only look at the household survey, we're actually growing 12 000 jobs. which is basically for this purposes. Here, when we're looking at 12 000 versus 2.7 basically zero.

When is the Fed actually going to wake up and realize this? And that's actually very interesting because as soon as the FED realizes uh oh, we should probably be using the Household Report, what do we have? Well, what were the three things I mentioned Goods Inflation check Going down Housing Service inflation makes up about 45 percent of Pce going down. We see that with new lease signings plummeting Lennar writing down their backlog by over 23 24, seeing potentially over nine and a half percent sequential quarter over quarter real estate price declines, expecting no appreciation in 2023, Huge numbers, right? What's the third thing? Just regular service jobs make up the other about 55. And if we're actually creating way fewer jobs, then wage growth should also be plummeting. Which actually means we should be seeing not one down arrow for inflation, not two down arrows for inflation, but three down arrows for inflation.

The Fed's gotta wake up and actually realize, wait a minute. Not only do we need to stop the most aggressive interest rate hiking in 40 years, and not only do we need to conduct that pause, but we're probably not going to be able to pause for more than a meeting or two without risking the US economy dropping into a deep, dark, dirty depression. So we're gonna actually have to U-turn fast because the data the FED is using once again is looking in the rearview mirror or is just straight up wrong. Whether it's wrong for political reasons or speed reasons or incompetence.

Who knows. But this is the same thing that happened in reverse when inflation was starting to rise and the FED called it initially transitory, the FED needed to act sooner. I Think everybody can say that in hindsight, now, the FED needed to act sooner. to get inflation down.

They waited way too long. They were still printing money. This is like the most offensive part to me. Okay, I I Get it Like there was a belief that inflation was going to be transitory for a while.

and I think in 2030, when we look back, we'll look back at 2021 to three. Maybe three and a half, right? As a period of transitory inflation, right? But saying that used to be an excuse for the FED to not do anything. and instead they were still printing money. And they were still printing money in March of 2022 when inflation was over seven percent.

How could you imagine that today Still printing money? That'd be like sending stimulus checks like California Very stupid. But that was what they were doing. So they stopped way too late. So we're dealing with this garbage now.

they're overdoing it in the other direction. They're going too far and they're causing too much pain for too long. And the more they do this, the more they'll actually have to reduce rates and potentially turn the money printer right back on. And at some point they find an equilibrium.

But right now I can tell you it certainly feels like based on the data we're seeing, the FED is over doing it and that could set the stage for substantial rate Cuts in 2023. And we believe just like the Bond market believes, that the FED is bluffing when they say we're not even thinking about rate Cuts in 2023. Now that could be true. They could be saying yeah, let's not talk about rain Cuts just yet.

We don't want any leaks around here. Let's keep markets down a little bit longer. A little bit more time to buy the dip, Huh? Rate cuts are coming. Prepare.