So what did the Federal Reserves rug pole have in store for us today? Well, they started off very very quickly by making it clear, exceptionally clear that the rise in equity prices was supported by a decline in treasury yields and earnings growth expectations that exceeded the consensus and that Financial conditions reverse some of the tightening that occurred over the summer and much of the fall. In other words, the like, yo, we're got a job to do here and y'all potentially making it harder with your freaking loosening of financial conditions out here and you're pissing us off a little bit. So what did they do? What did they do to punish us to give it to us a little dirty? What they do, They removed almost all mentions to rate Cuts. They sanitized it.

It's like they took the minutes and poured rate cut bleach over the minutes just just to eradicate it. The only juice the rate cut Camp got was that maybe rates would be lower by the end of 2024. That's it. But the Hawks got a lot more attention in this one, especially since there was concern that right here many participants remarked that an easing in financial conditions beyond what was appropriate could make it more difficult for the committee to reach its goal.

Not only did we hear this, but then the Federal Reserve wanted to do a dirty dirty, a dirty hery for anybody thinking about buying the dip in commercial real estate because the fat just either gave you a green light to go shopping or gave you a green light to sit on the sidelines cuz you scared and you don't want to catch a fall in KN That's because when you pop on over to Phage five of the minutes, what you got is credit. quality remained broadly solid, but some sectors Det deteriorated further. You want to hear which one specifically: How about delinquency rates for loans and Commercial Mortgage Back Securities Which yes, the rates edged lower in October because you know they do that I Guess they Edge down in October Ready for this? The large volume of loans scheduled to mature over the next few quarters suggest that delinquencies would likely surge again. The delinquency rate for small business loans continued to tick up and was above levels observed just before the pandemic.

In other words, and you got credit card delinquency. Rising So in other words, stress is rising, the cracks of real pain are forming. In fact, the biggest uh, uh, contribution for the doves or the people trying to be bullish are the concerns. uh, that the labor market could flip.

Labor market flipping would would be your biggest issue. Uh, and this has to do with the two sides of the Fed's Dual mandate. Uh, that was mentioned right here on page eight. A few suggested that the committee potentially could face a tradeoff between its dual mandate goals in the period ahead.

That's the one really doish line you got here. You got Commercial Real Estate is about to hit a poopy doopy, including in multifam. Okay, that I thought was very interesting that they mentioned multifam right here. delinquency rates for construction and Land Development as well as multi family loans picked up.

It's a big deal, so the Doves got a little bit of a mention that hey, look, we're aware we could screw up the labor market and we're starting to see data like that. Remember what Paychecks warned? It was a massive warning from Paychecks. Paychecks like yo. Usually we get seasonal hiring.

Where the hell do seasonal hiring? This winter? Paychecks is a payroll processor. Okay, and what happened was HR Firms didn't hire as much staff to work seasonal hiring because there was less seasonal hiring, which is an early indicator of stress in the labor market and potential cracks. Problem is, you don't want to wait for unemployment to start really going up, because as we've heard and studied in history, when the unemployment rate goes up 1% it tends to go up another at least 1% thereafter. So in other words, if we want to go from 3.7 to 4.7 we're probably going all the way to 5.7 if not even worse, Because then you're on the train of unemployment.

It's kind of like once you start down that path, it's coming. Unemployment's coming. It's bad. That's mostly because one person laid off leads to the cycle of unemployment.

People losing their jobs, their homes, their cars. So when they lose all their crap, what happens? They stop spending. When they stop spending, a bunch of other people end up getting laid off. It's a bad cycle.

I Don't think the FED wants to go in that direction I Think the Federal Reserve here is really just pissed off because of this. All y'all in the freaking markets screwed up Financial conditions and you pushed Financial conditions all the way down. This is the Goldman Sachs Financial conditions index all the way down to the same tightness of financial conditions we had when the Spy was down 22% from now in June of 2022. The Red: A that's how low Financial conditions are, how loose they are right now.

Okay, lower means looser. That means lower yields higher stock market. uh in in this case. But back then we were really just starting the whole tightening cycle.

That's why we were kind of on the uptrend, then uh, as the stock market was going down. uh and and now we're loosening on the right side because rates are so high and the stock market going up is kind of pushing it down to that direction. It's it's a balancing Factor There are like seven different things that go into Financial conditions. The point is, fin.

The bottom bot line is, financial conditions are as loose today as they were when the stock market uh was going. Oh my gosh, we're just getting started with the tightening in June of 2022. Remember, we started tightening in March of 2022. See how straight up that line went right there? Yeah, so uh, this is where the Fed's like yo, what are y'all doing? You're undoing the work we're doing on inflation and this creates a risk that we might not end up keeping inflation down, specifically because they believe that supply has done most of the work so far on inflation.

And unfortunately, if supply has done most of the work on inflation and the supply levels of supply for goods and services and labor are more in Balance now, then getting the rest of inflation down or or the rest of the levels of inflation down would be a lot harder. In fact, take a look at this specific mention right here. They assess the contribution of improved Supply had come from supply chain normalization boosts to labor Supply due to higher labor force participation and immigration, better productivity growth, or increase domestic oil production. They also noted that restrictive monetary policy helped restrain growth of demand, particularly in interest rate sensitive sectors such as housing and autos and durable goods like solar panels.

Several participants assess that healing in Supply chains and labor Supply Chains were largely complete. Uhoh well. if that's complete, then what do they say After that and therefore continued progress in reducing inflation may need to come mainly from further softening in demand, which in other words means we need tighter Financial conditions. So you have a Fed that's aware, they could very easily screw up the labor market.

But not only are they aware, they could very easily screw up the labor market, they're also aware they could very easily screw up the multif family and Commercial Real Estate market. And so they're providing warnings on this. They're also warning that essentially those lower income households or those with credit card debt are facing delinquencies more frequently. So they're making it known that we we see the risks and as they address those risks, they're looking at everybody in the market going.

You know yall just shooting yourself in the foot. You're making it harder for us to get inflation down. You're undoing our work here. I Personally don't actually think that's necessarily true.

That's what the FED is trying to argue here. That's why they sanitized the minutes of rate cut. Comments: I Think they're trying to buy themselves more time and they're trying to push back the March rate cut. That's my bottom line on this: I Think they're trying to push back the March rate cut.

Because the market was pricing in with about a 68% level of certainty, we were going to get a rate cut in March That's what we were pricing in. uh, markets right now have it at about 67% So markets so far have only really un priced it by a brought a percent. That's cuz the numbers weren't really that hawkish. There's actually a 5% chance in that that we get a whole 50 basis point cut in March But I think as we get closer to the January Fed meeting, jel might kick this can down the road to May and it could mean some more shortterm pain in the stock market, especially as we wait for more catalysts to play out like CPI next week earnings thereafter and then obviously J power on the 31st.

So is the Federal Reserve Concerned about commercial real estate blowing up and the labor market going? Poopsy Doopsy? Absolutely are they though also a little concerned that the hard part of getting inflation down is still ahead of us and we don't have enough time yet to say we're done. Yes, I Think they're done again. That's the Fed. My opinion is they're done.

They've probably already gone too far and they screw up the labor market anymore. I'm selling and I'm taking a vacation. So far, with the data we got this morning on the labor market, it doesn't sound like it's time for Kevin to flip-flop just yet so we could still be okay. and if they engineer this soft Landing I remain committed to the idea of building a statue of drone Powell in my front yard because I Think that's that's what they're going for.

They they will print their way right out of a labor market pain. It will happen so fast in fact, it nobody ever said we need 50 Bas or 25 basis point. Cuts As soon as they start seeing that labor markets trash cut, cut, cut, cut, cut and print, they've already laid the groundwork to talking about slowing their balance sheet runoff via the reverse repos. Basically the the uh, the selling of bonds and then burning of that money.

Crazy. So that's my take on the Fed minutes. Even though I'm a licensed financial adviser, real estate broker, and becoming a stock broker, this video is neither personalized Financial advice nor real estate advice for you. It is not tax, legal, or otherwise personalized advice tailored to you.

This video provides generalized perspective, information and commentary. Any thirdparty content I show should not be deemed endorsed by me. This video is not and shall never be deemed reasonably sufficient information for the purpose of evaluating a security or investment decision. Any links or promoted products are either paid affiliations or products or Services which we may benefit from I personally operate and actively manage ETF and hold long positions in various Securities potentially including those mentioned in this video.

However, I have no relationship to any issuers other than House Haack nor am I presently acting as a market maker. o yeah, some big painful drops over here. a firm down another 5% Honestly, we've been talking about this one in the market open Live about it being attempting short along with Costco which I am short Costco and and coinbase upon ETF approval. but honestly, I was not expecting it to plummet on just the rumor that the ETF would not get approved anyway.

how did yields finish up? And let's get the heck out of here. Yields finished at oh down? No way down 3.7 basis points. Yep, so not hawkish enough to push yields back up. Uh, by the way, I'm going to post my entire PDF in about 2 minutes on eack.

All right, see you there. Peace. Why not advertise these things that you told us here? I Feel like nobody else knows about this? We'll We'll try a little advertising and see how it goes. Congratulations man, you have done so much.

People Love you people. look up to you Kevin P Financial analyst and YouTuber meet Kevin Always great to get your take even though I'm a licensed financial adviser, real estate broker, and becoming a stock broker. This video is neither personalized Financial advice nor real estate advice for you. It is not tax, legal or otherwise personalized advice tailored to you you.

This video provides generalized perspective, information and commentary. Any thirdparty content I show should not be deemed endorsed by me. This video is not and shall never be deemed reasonably sufficient information for the purpose of evaluating a security or investment decision. Any links or promoted products are either paid affiliations or products or Services which we may benefit from I personally operate and actively manage ETF and hold long positions in various Securities potentially including those mentioned in this video.

However, I have no relationship to any issuers other than house Act nor Am I presently acting as a market maker.