Everyone means well. Pie chart: How much is a few politicians the two-year for you? Pardon me You said you never touched a two year before in your whole life. Yeah, but I've moved cash and and I've gotten some liquidity and moved it into six months. One year and two years for a while.

I'll come out of it as soon as I think the dust clears as soon as people feel like the FED is done I think spreads will come in. that will help you're getting paid too much for Triple A's today and then he'll He will have to lower base rates because the economy is going to show. Its all right. You know what? what? I believe and I just want to be so clear.

We just heard this individual say hey, I'm waiting for the dust to clear I've allocated a little bit more to cash I I really believe this and I have believed this since January of last year. It has been a year of of believing this I really believe and I could be wrong so it's not a guarantee. but at least I'm taking a position. Okay, hey, I really believe there's a chance the stock market cycle has bottomed or will bottom rather before the Federal Reserve officially signals the policy of having U-turned and the reason I believe that is I Believe the market is so highly expecting the Federal Reserve and their U-turn to Mark the bottom of the market.

but if the Federal Reserve gradually u-turns and the market gradually goes up, a lot of people are going to be sitting on the sidelines waiting for the dust to clear and there's not actually going to be a big signal of okay, now it's my time. We know, we know that history told us the best time to buy was when the FED u-turned when they set the precedent of bailing out markets in 87. And I'm not talking about a nominal like fed pivot like reducing rates or flattening rates. although pivots the whole like I've made so many videos on this.

If you, if you think markets crash after the market pivots, please just type into YouTube meet Kevin fed pivot crash and I pretty much destroy that argument. But what we know and pivot again like a slowing down or slight reducing of rates. That's not a big deal. What a big deal is is when the FED breaks something and then the U-turn kind of like they did in 87.

Uh, and they set the precedent for bailing out markets March of O3 uh, Feb of 09, December of 18 and March of 20. these were like bat signals to buy. These were the best bat signals that are like bye bye bye bye and you would have bought the bottom of the market almost perfectly. You would have bought the bottom of the market.

But what happens if we don't get the bat signal this time and this was one of the things I've been thinking of for a while is that those bat signals are so well known and you have a Fed that rather than Breaking something in you turning might end up doing something more like this. getting slightly less and less hawkish over time and there's no giant like bailout v-shaped recovery. It's instead you get this very, very slow gradual Nike Swoosh People on the sidelines don't get the signal, they don't get the memo. and so all of a sudden then they look back.

You know, six months later and they're like what the hell I missed out. You know, basically the Federal Reserve is key to what's going on in markets and we expect that the Federal Reserve at some point will be forced to U-turn Uh, but it is going to require inflation coming down. So what happens in the event inflation does fall faster than expected and what kind of signals has the Federal Reserve just potentially sent to us? Well, in order to find signals from the Federal Reserve I Personally like to visit our favorite Federal Reserve mouthpiece and that is Nick T Over at the Wall Street Journal Nick T at the Wall Street Journal Seems to be the guy who gets text messages from the Federal Reserve and seems to get some pretty interesting insights from the Federal Reserve And just about two hours ago he tweeted a piece that was actually put together by John Roberts Uh, who used to be a Fed Economist and the piece was titled what if inflation comes down faster than the Federal Reserve expects Now this is actually quite an incredible piece because it provides us a little bit of insight into a Federal Reserve Economist base case for what the FED is going to do and a potential future case of what if inflation Falls faster than expected. Now what's really remarkable about that is given that Nick T from The Wall Street Journal retweeted this.

Some say it is possible that Jerome Powell or somebody at the FED could have sent a little message over to Nick T and said hey, would you mind sharing some light on how we might potentially U-turn and actually cut rates sooner than we're saying. we're going to cut rates just so we could kind of deal out how the market responds because certainly we don't want to say it. But if you say it, it's okay. This is literally how the FED plays their communication game.

They kind of just talk. They talk talk talk talk. They talk the market kind of in the direction they want. And the fact that Nick T is sending this out this or is posting this.

this uh, John Roberts piece gives me a little bit of Hope and Hopium is not investing strategy, but gives me a little bit of a hope that we're actually going to get a little bit more of a dovish Jerome Powell at the next Fomc press conference. But let's go ahead and take a look at this piece because it is fascinating and as usual I have done the highlighting for us. I Actually really? I don't know why I tell Lauren I go Oh my gosh, there's a new piece on the fan I gotta go read it. she's like dude.

Anyway, so um now uh John Roberts did post this uh at the end of Uh 2022, but it was just retweeted uh by Nick T two hours ago. So for the sake of uh, our purposes this is this is fresh uh from the signal in my opinion that it sends and it really sets a very interesting path because initially they say this is sort of your intro here. If inflation comes down more quickly than the Fed anticipates, the FED would likely cut interest rates sooner sooner for example, than their most recent economic projections when they cut when where the first cut was actually being priced in in 2024, and the FED has been saying we won't cut rates in 2020. uh, three at all.

However, if inflation Falls faster, what could that scenario look like? And is it possible that the FED could actually then reduce the pain on unemployment Now I have to just take a moment to Pat myself on the back and no, I'm not trying to do that to Pat myself on the back, but I am patting myself on the back yesterday. I actually talked about this Uh, about the Federal Reserve and the Mike Wilson fud pieces and I said look, nobody is pricing In the fact, in my opinion, that the FED can actually slow down the pain they cause to unemployment, the FED has a dual mandate maximum employment and stable prices. and if prices are stable, they will take the foot off the the sort of economic breaks and stop with the pain they're causing to unemployment because they don't want people to lose their jobs. People employed is actually a good thing and it's part of their mandate.

So as long as prices are stable, they'll stop crushing jobs. We talked about that idea yesterday. So with the base case Mr John Roberts from Uh or the former, Federal Reserve Economist assumes on his base case that the FED will actually reach a terminal rate of 5.1 percent. Uh, now that's the base case scenario, and at the same time, we'll probably see some form of increase in the unemployment rate, especially as we hit a recession since the smallest increase in the unemployment rate in a recession was in 1950 and it was around one and a half percent and you usually tend to see at least a one percent increase in Unemployment uh, one to one and a half percent increase in unemployment at least expectations are such in history as such, in a recession, so there is a likelihood of getting to about that 4.6 percent unemployment rate in 2024, unless of course, inflation happens to fall faster than expected.

And this is where John Roberts gives us the case for a low inflation alternative. I Now consider an alternative scenario in which case, inflation Falls faster than Baseline inflation might be lower than most forecasts expect for a number of reasons. To be clear: I assume or consider lower than expected inflation to be a risk. In other words, that is not the Baseline scenario.

It is sort of a you know more other scenario. It's like if your Baseline scenarios I think something is 60 likely to happen then you have what are called tails. You usually have a left tail and a right tail. Those might be 20 chances.

higher inflation, lower inflation, right as an example in this case. So uh, Supply conditions. And here are some reasons why inflation could come in lower Supply Conditions could improve more quickly than expected. Now this is what I believe, right? I I We mentioned this sort of as we just went through our supply and demand curves and I suggested that as as we see here, it's entirely possible that we could see the entire supply and demand curves shift to the right or quantity demanded actually goes up, but prices paid actually stays stable or go down and continue that path of disinflating or potentially deflating.

That is entirely possible if Supply chains are or have improved the way that hopefully they are expected to have. Now John Roberts Goes on to say prices could prove especially sensitive to reductions in aggregate demand, especially among Goods that were in short supply during the pandemic. The latest Consumer Price data suggests that might be happening amongst core Goods already, and that could end up happening in Services as well. The very late labor market could rebalance more quickly uh, than the change in unemployment rate would typically suggest reducing pricing pressures in unemployment In these scenarios.

with lower inflation. In both scenarios, with quarterly core inflation in the first quarter of next year falling to or 2023 already falling to about three and a half percent and potentially two and a half percent by the second quarter, then the Federal Reserve could come become convinced by the second quarter of 2023 about the durability of lower inflation, and then begin cutting rates by the second quarter. That's pretty remarkable. Nobody's expecting the FED to start cutting rates by Q2 at least some of the bond market yes, is expecting some rate cuts by the end of the year, but the bond Market's really only seeing those as soon as maybe the third or fourth quarter, but not the second quarter.

And this is a case where John Roberts a former Federal Reserve Economist is saying: look, if inflation ends up proving itself to be more stable and lower than what the Federal Reserve is expecting by the first and second quarters of 2023. now, then we could actually end up seeing the Federal Reserve cut rates by Q2. That's as soon as getting Cuts That's basically getting a pause in March because I think we're going to get 25 in February I think we get a pause in March uh And then it's possible we start getting cuts by May or June and that's basically what uh John Roberts here is suggesting not as a base case, but as a potential case. As a result, Financial Conditions ease.

This would mean stocks up and treasure yields down. With the 10-year treasury yield potentially dropping 60 basis points, that would be the 10 you're sitting around. Uh, potentially 2.9 percent. That's where we're going to start getting into territory where it's going to be.

We're going to start looking at by the dip time for Real Estate Especially as inflation Falls quickly. the real estate market will will probably recover quite quickly and so I'm very excited to prepare for our dip shopping. But anyway, the unemployment rate is 4.2 percent in the scenario. In this scenario, only slightly higher than uh, when uh, uh uh, basically uh.

The forecast by the end of 2024, the Improvement is still larger with the unemployment rate at about four percent uh versus the 4.6 expectations. Inflation averages 2.75 in 2023, and it's close to the Fed's two percent Target From 2024 onwards, Could a still more aggressive policy response lead to a better income? In the simulation shown with green dots dashed above the FED Cuts rates by one percent by the middle of 2024, or Sorry by the middle of 2023, after which it rises gradually. uh, or sorry. After after which it rises gradually, the 10-year yield Falls to three percent.

such a policy would eliminate any increases in the unemployment rate. Okay, so essentially he's going through these different potential scenarios here where you could actually see the FED Look at that, you could actually see the Federal Reserve take two stances. In the event, and inflation comes down more quickly than expecting expected, they could actually end up cutting rates from four to five percent down to one percent, and then slowly raise rates again to two and a half percent. Or they could cut rates to about two to two and a half percent and then essentially keep them there.

So John Roberts actually goes through two scenarios where if inflation comes down faster than expected, the FED is actually going to prioritize saving jobs. He's basically saying the Fed's going to flip flop and they're going to do everything in their power to save jobs. even if that means aggressively cutting rates and then raising rates again. Now, there's a big concern on Wall Street that while the FED doesn't want to repeat the mistakes of the 70s, cut rates and then have to raise rates again, However, if inflation proves to stay low, then that's not actually a problem.

The problem in the 1970s was that the FED started cutting rates before they were convinced that inflation was actually down or would stay down and inflation break evens hadn't actually come down uh at all. Expectations were that five-year well I mean they'd come down somewhat, but not to to low levels. um, inflation break evens were substantially High uh in in the 70s, mostly because it was the first time we were fighting inflation on a currency backed by nothing other than air and Trust That's because we left the Gold Standard in the early 70s. So you do have a lot of elements that are different about this cycle.

but then again, suggesting this time is is different is is generally dangerous. Now keep in mind this is not a base case, right? This is. this is just a like what if inflation comes down faster. But the fact that the Fed's mouthpiece Nick T over the Wall Street Journal is retweeting research about how the FED could potentially dramatically cut rates In the event inflation Falls quickly by the second quarter of 2023 is actually, in my opinion, quite remarkable because it shows that the FED is starting to think about uh oh, what do we do if inflation plummets? They're starting to think about that And that I think is quite interesting Now of course, that does leave us to where markets and the FED still disagree and it has to do with wages and the wage inflation problem.

Now we actually did just have Walmart increase wages. Uh now I Want to give you a little bit of insight into Walmart Okay, because initially, this makes us concern Walmart Just announced that they're raising wages from 12 to 14. Some folks suggest that this is possibly going to uh, indicate to the FED that workers still have pricing power Wage pricing power. uh and that ultimately, this could lead to some form of wage price spiral I Disagree Here's why I disagree.

First of all, Walmart raised wages to 12 in 2021. However, Target raised wages to a minimum of 15 dollars in March of a 2021. Uh, actually. oh sorry, it was March of 2022.

that uh, that came briefly after Walmart raised wages to 12. It took Walmart almost an entire year to go from twelve dollars to fourteen dollars. Still not as high as Target Took them almost an entire year to try to compete with Target And this is possibly because Walmart actually lost money in the third quarter and their free cash flow is is trash. Don't get me wrong, in the second quarter of 2022, Walmart had 2.1 billion dollars of net income.

However, they spent 4.7 billion dollars on inventory. and if you look at their cash flow statement, they actually ended up with negative 3.7 billion dollars in operating cash in a quarter where they actually had net income. Well, unfortunately, then if you go to Q3 because of their opioid lawsuit settlement where they had to write off 3.6 billion dollars or spend money on this opioid settlement, they actually ended up with a loss in Q3. So Walmart actually hasn't been in a great position to be able to raise wages because they don't have that much freaking money.

Which is insane because Walmart's stock has actually not performed terribly over the last year. But that's not because of fundamentals in my opinion. I Believe Walmart Stock has done well over the past year because it's the most stupid proof trade ever. Oh my.

God We're going into a recession. What do you? you do? You shift to Staples What are Staples Walmart Costco It's simple energy, right? It is the most simple and stupid proof tactical trade you can make. recession. Uh, Staples That's literally what institutions and Wall Street suits do.

It's stupid in my opinion though, because it ignores fundamental realities and that's that. Walmart has a cash problem. I Know Again, that sounds insane to say. but if you look at their cash flow statements, if you look at their earnings over the past few quarters, they are massively negative in free cash flow.

It's scary. Uh, and now part of that again, because the inventory build up. But consider this. I Did some very quick math and assumed a two dollar wage increase.

Well, I mean they said they're raising the wages two dollars, so that's not actually an assumption. Uh, and we believe that is actually going to affect about 340 000 of Walmart's 1.6 million employees. And if you take 304 and that's not even a considering the effect that it might have on all the upper individuals planning to get more pay then as well. But anyway, a two dollar price increase on three hundred and forty thousand workers assuming 20 hours worked per week at just 46 weeks per year.

And the reason I do that is because of paid time off or whatever. Uh, that could potentially or just even unpaid time off. That could increase Uh Walmart's costs by 625 million dollars per year. 625 million dollars per year of cost is about 156 million dollars of cost per quarter when they're already free cash flow negative per quarter.

Then you look at a potentially uh, A A A A A, You know, maybe 25 hours worked per week At 52 weeks per year, you're sitting at somewhere at Uh, at closer to 200 million dollars per quarter or 885 million dollars. almost a billion dollars in higher costs just because of a two dollar wage increase. So it's no surprise that Walmart has so substantially lagged Target in raising wages. In my opinion, it's because they don't have that much money.

You know people like to say how great Uh A Walmart is doing, but personally, not that enthused by that. Now this is expected to increase the average hourly wage at Walmart, but to about 18. Uh, sorry, 17.50 And uh, this is actually according to a piece put together by The Wall Street Journal So I'm not kind of pulling this on the thin air. I always like to provide sources so this uh that we can actually see that on screen here.

Take a look at this. starting next month Walmart will increase wages to 14 up from twelve dollars. Uh, that is to try to compete with competitors like Amazon and Target with a 15 minimum wage. This will push the company's average hourly wages to Uh around.

Well they say over 17 and 50 cents a per hour. uh Walmart uh suggested that the average would be around 17. This is also where we see uh around 340 000 individuals at Walmart expected to get these pay bubs despite recently announced layoffs and they would see this raise on their March paycheck. So if you work at Walmart marches when you expect to see a difference here.

Now what I thought was actually very interesting about this because there is this concern of okay well what does this have to do for the FED Like is this potentially going to send negative signals as as like a wage price spiral right? Uh Well so what I did is I I Thought to myself Okay, well where where do we measure average hourly earnings for the United States and and maybe where can we get some insights and then I'm like oh well, there happens to be this thing called The Bureau of Labor Statistics Labor Report. But by the way, this is the kind of stuff we do in the office all day long. We just sit and look at charts and data and research. and in a weird way, we kind of love it.

But anyway, we're like, oh, look how convenient we have payrolls data And what does payroll data tell us for December of 2022? Well, it tells us that the average hourly earnings in the United States are actually 32.82 cents. Which means the average Walmart worker is still working for somewhere around 40 percent of well I I Guess yeah, No, that's true. Average pay is 17.50 That means the average hourly worker at Walmart is making just 53 of what the average worker in America is making. So if you want to make more money and you're working at Walmart be average somewhere else and you'll nearly double your in cup.

It's kind of crazy. Let's see which particular areas you could make more money. Look at this. You want to become a miner.

Look at that or a logger. Miners And loggers are making an average of 37 bucks an hour. Go into manufacturing, you're making about 31 bucks an hour. Go work for Tesla Uh, You want to go work in? uh, in retail trade? Oh wait, that's what Walmart is.

No surprise, it's the lowest category actually. sorry, Leisure and hospitality is actually the lowest category. So if you want to make the least amount of money, go work in Leisure and Hospitality want to make the most amount of money? Go be a miner or a logger now. I That might sound crazy.

Or look at this: go work in utilities. Be alignment for the utilities. or wow. go work in financial services.

42 bucks an hour, 48 bucks an hour for utilities. That's really impressive. Get yourself a license in something and get into professional business services. 39 bucks an hour.

You can't make this stuff up if you work in retail or in Leisure and Hospitality you're probably making substantially less money than the average worker in America. So if you want more money, be average in a different industry. Something fascinating to think about. But anyway, Um, you know this is sort of my response to this idea that this this Walmart price increase is is really going to be indicative of some kind of wage price spiral I Don't think so.

Uh, However, we do have this Barons piece that I want to go through as well. Uh, and this talks about. you know, the Fed and Market sort of diverging here a little bit. a consumer demand falling evidence by slower retail sales, wholesale prices are cooling, suggesting further inflation relief on the horizon.

Uh. However, because of uh, despite these signs of economic slowing, uh, the FED is still pledging interest rates hikes. You know we've got a lot of communication that we're expecting this 25 BP hike. and uh, and then the FED wants to get over five percent.

You know they. They've said that probably 300 times in the past week alone. Okay, I'm obviously exaggerating, but they're pretty clear. At least at this point, they want to get over five percent.

That's because they have to lie to us. Okay, I'm not trying to be tin foil hat here, but the FED cannot come out too early and say well, things are looking great with inflation the second that happens. I guarantee you S P 500 is up 10 Any kind of uh tech stocks up 20 to 30 percent. The the market move would be so violent.

To the upside, you probably get circuit breakers going off. to the upside, it'll be insane. That's why they have to do that slowly. That's also why the stock market is coming off bottoms.

But anyway, uh, uh, okay, let's see here. Wall Street and fan path forward. Okay, what do we have over here. Fed officials laser focused on ensuring that the core Services sector inflation slows uh other and we're starting to see that certainly in housing, but we've got to make sure those come down.

The Fed's concerned. Uh, is that even as good prices, uh, deflate housing costs, slow inflation will hit a floor well above its two percent? Target That's the concern due to persistent strength in what's known as these super core Services These would be things uh like Medical Services uh transportation services. These are things that we want to pay attention to. certainly wages right? Uh Leisure Hospitality Services those are some of your more Super core uh Services Generally you take out um housing and I believe you take out auto insurance and repairs for Super Core.

but I have to double check the Auto One Certainly housing comes out because it represents like 30 something percent of CPI. But anyway, recent progress on average hourly earnings was a good sign that the economy was Cooling in terms of the inflation fight. Obviously bad sign for the overall economy Fed still isn't convinced the longer Market discounts the importance of the FED places on wages. So really, you've got a a Barons piece here saying look, the FED wants to prevent the unwarranted easing of financial conditions which would complicate the path forward.

This is what I was talking about with the FED having to keep that hard face on. so a little bit of a piece here from Barons on on. this from the Federal Reserve I Personally think that Walmart information is is quite fascinating. Uh, and it's It's worth noting that really here.

uh, blue collar is what's actually holding ground I Was thinking about this actually a lot for a house hack and I think maybe over the next couple years Blue Collar areas for Investments for house hack could actually be quite interesting because there will be a lot more reshuffling in white collar and a less reshuffling in Blue Collar Where wages are going up and people are are you know, making more money at their jobs which is great GDP Numbers annualized quarter over quarter or four. The fourth Quarter now GDP comes at 2.9 better than expected. 2.9 is the GDP annualized quarter over quarter number for the fourth quarter. Advanced Goods Trade Balance: Negative: 90.3 Bill versus the 88 expected.

That's for for the balance of trade wholesale inventories. Again, a Miss on wholesale inventories actually not Rising As much as expected only Rising 0.1 percent versus the point five percent expected and a revision down on the previous wholesale inventories balance from one percent to point nine percent retail inventories uh up 0.5 versus the 0.2 percent expected personal consumption coming in at only 2.1 percent versus the 2.9 percent expected. so individual consumption missing. We've got uh, core Pce Q over Q 3.9 percent continuing claims coming in hot uh at 1675 versus the expectation of 1658 and an upward revision of the prior data so more people filing for unemployment claims over the continuing basis.

However, less this week we were expecting again 205 000 claims we got 186 000. Capital good orders Uh, negative. Point: two percent. Uh, non-defense excluding air, we've got Cap good orders at negative point four percent versus the point.

Four percent expected. Durable good orders 5.6 versus the 2.5 percent expected for December. So, uh, okay, these numbers actually not like super dark recessionary, which is fascinating because it makes you wonder: is it possible that less individualists expending given that the consumers 70 of the economy could help continue to drive inflation down? Uh, while GDP actually stays positive, that actually is a very Goldilocks result? Uh, now NASDAQ up about point six percent so slightly shaving off about uh, you know, four tenths of a percent there on these results I Personally, not exactly sure why they would be uh, you know, sort of negative about this. To me, this seems a little Goldilocks-esque but let's go ahead and take a look at what markets are thinking uh about from a perspective of Wall Street So we have here the Bloomberg dollar Index Rose to a session high after the fourth quarter.

GDP came in better than expected at 2.9 versus 2.6 jobless claims coming in below their estimates. Again, a little bit hot there, right? and maybe uh, markets are suggesting well if jobless claims are continuing continuing to come in hot in other words, fewer jobless claims than we expect, then maybe the FED is going to have to Hawk for longer and I think that's the longer the FED Hawks the more the dollar goes up. I actually move from my dollar short position to more of a long growth and Technology position. The reason I did that was I thought we kind of I thought I kind of started maxing out my dollar short position and I wanted to catch more of potentially the bottom and growth and tag and so I'm glad I made that positioning move at this point.

But yeah, the 10-year treasury yield moving up to about just now over about three and a half percent so yields moving positive on this oil moving positive about one and a half percent on this information here yields on Euro dollar future slightly higher as well. Stronger economy pushing yields up as potentially central banks might be forced to stay with those 25 BP hikes for longer we have uh, this is inside here now from Wall Street I want to get a little bit more Wall Street Inside trade was a significant contributor to GDP at 0.56 percentage points of the overall Uh 2.9 expansion in GDP government spending accounted for 0.64 percentage points. So basically consumption, trade, and government are all kicking in consumer spending. Uh, within consumer spending.

Uh oh, it was services that once again propelled growth with positive purchases. Services spending made up 1.16 percent of the overall 2.9 percent annualized quarter growth. This is the other red flag that you have this potential that Services Inflation is going to remain higher for longer, forcing the Federal Reserve to hawk more and for longer. Uh, we have uh, if I look at the breakdown of this release.

it looks like the only negative sector was residential investment. Red flag for your solar companies for end phase Generac solar Edge However, the other positive sectors here: Big positive from uh. personal consumption expenditures on Services minor positive on Goods change in private inventories minor positive Government spending was a positive Net exports was a positive recession. Fears are everywhere.

Uh, however, GDP Positive, Uh, a lot. A lot of you know it's going to be the biggest irony ever if we end up getting no recession like no official recession. the one last year ends up getting revised away and then we don't get a recession this year. and uh, and and we don't ever end up getting the recession in this cycle.

and then everybody, all the economists are just going to take the Big L on. Oh, the most productive recession ever. and it just doesn't happen. Consumption coming in a bit weaker than expected.

Again, with that 2.1 percent growth, but again, still those Services representing about that 1.2 percent gain of that GDP move. So uh again, these are. There are definitely some things in here that might make the Fed's antenna move up a little bit, right? Uh, more pressure and services. Okay, but still, it's lower than expected.

Overall, Uh, it's not a recessionary read. It actually builds the case for a soft landing and in my opinion it it like this is expected. Of course, services are still the hot sector. Uh, the question is are those Services going to wear down I Think as the markets are are realizing that you know what? Maybe maybe, uh, this is actually more good news than it is bad news.

Yes, we know with continuing claims or jobless claims didn't come in as high as expected. but whatever. Maybe we don't have to crush the jobs. Market to prevent a recession.

Uh, and to get inflation out. if inflation plummets, the FED does not have to worry about Services spending and the FED does not have to worry about killing jobs. If inflation goes away, they actually have to go back to their other mandate which is maximum employment. Which means the FED does not actually have to destroy this economy and does not actually have to force joblessness.

And I think that's where we can get to not only looking at the numbers, but looking at the Canadian uh report? Uh, the Canadian Monetary Policy report. Now you might think I'm crazy to say we should look at the Canadian Monetary Policy report, but you know what's fascinating. They give us insights about the United States They talk more about the United States than they talk about Canada A few things that I want to point out in the Monetary Policy Report from Canada that came out uh, just recently here was that they actually don't force themselves into the two percent Target like the FED does. Although the FED does have flexible average inflation targeting which I expect, they'll be talking about a lot soon when they're ready to U-turn they will use that to maintain their credibility.

But look at this very similar to the idea of being flexible to Canadian Central Bank in their Monetary Policy report talks about inflection inflation targeting approach which is flexible. Oh boy, does that not sound familiar to fate. Flexible average inflation targeting which is a policy our Federal Reserve has. But then take a look at this uh High Inflation Inflation is high and declining inflation and services prices has remained strong and broad-based It will take some time for high interest rates to bring this down.

I Actually think this is fantastic news right here. Think about it, you have the Central Bank of Canada telling you. hey guys, look, we know Services Inflation is hot. But we also realize the lags for services inflation or even longer than the lags for goods inflation.

If our fed thinks the same thing, that's good because it potentially reiterates the car, the uh, the the uh. It reiterates the the goal of Rise geez, I Can't get my words out. Now it reiterates the goal of raising rates to a certain point, pausing and holding them there for longer. and this is uh, this is probably something that the Federal Reserve is considering as well, especially especially as we see inflation in shelter costs uh, potentially easing substantially and the rest of the services sector slowing down over time now.

Uh, what do we have here? Global Supply Bottlenecks are resolving massive reduction in Global Supply bottlenecks Transportation Costs plummeting I Mean you don't even have to be an expert to analyze this chart to just see it's basically straight down on these charts as provided by the Canadian Central Bank Continued Monetary policy tightening. Headline inflation is edging down from its peak, but the risk of over tightening is actually decreasing. And when they look at the United States which this is where they talk more about the United States than they talk about Canada I Find this interesting: The bank projects U.S activity to remain relatively flat through 2023. recent strength and consumption spending is anticipated to slow, and that's exactly what just happened in the GDP report.

We saw that consumption came in a lot weaker than expected, the Boost to growth coming from high demand and in-person services exactly where we saw the Boost in the GDP report this morning and a catch-up in Motor Vehicle sales should diminish over time. Look at this. The Central Bank of Canada is basically sending a big signal to the FED saying look, yeah, you've got some Services inflation but we think that's going to go away. We we are going to see a little bit more of a pickup in that and then we're gonna peek out and it'll go away.

And it's going to take longer for those interest rates to actually push that down, But when it does, it'll go down. uh, and And eventually we'll see a rebound in residential Investments But right now we're expected to see declines in residential Investments Goodness gracious, it's almost as if the Central Bank of Canada saw our numbers this morning before we saw our numbers. Uh, this report was actually incredible. You know they talk about the property sector expected to continue to slow in China and that the property Market Outlook for China remains highly uncertain.

They talk a lot about lower energy prices and they talk about spreads uh between Russia and Uh and and Canadian and United States oil prices. However, the trend being very clear for oil prices down the trend for gas prices being very clear down, especially with the warmer winter that we've seen base metal prices rising after China announces its property sector support, but overall expecting to see commodity prices remain stable in 2023. And yes, for the Canadian economy growth is projected to slow low at the end of 2022 and maybe stall through the middle of 2023, but if as tightening really starts biting. But really, uh, you know, a return to growth coming thereafter with again the biggest risk being inflation for services excluding in a shelter sort of your super core to potentially be the most persistent.

but eventually as higher interest rates by we expect to see that come down and look at this even Canada saying large price increases are now a little less widespread for wages. Uh, this is Uh, I Believe this is for uh no, this is uh no. actually no, no CPA Nope, This is this is just regular inflation Seeing that inflation come down for price increases? Okay, good, so fascinating report. Honestly, from the Bank of Canada and in my opinion, this Bank of Canada report actually really works with what we're seeing from the GDP numbers that came out this morning.

But there's even more data on this and I think it's very fascinating because you have to think about inflation, right? You have to think that inflation cooled in December to its slowest. Pace In over a year, you have a five percent annual PC Pce expected. Uh, but it actually came and core expected to come in at 4.4 percent. These are expected on the Pce.

numbers are expected to be some of the lowest advances since late 2021. This is great. and remember, the personal consumption expenditures numbers come out on the morning of the 27th, which is just three days before the expiration of that coupon code. The final coupon code, We're doing the best price you're going to get guaranteed at bare minimum for the next three months, potentially Forever on any of the programs I'm building with or even shadowing me.

Now, what's fascinating about the shadowing is we that has been so popular we might have to turn off people's ability to book the shadowing soon because, uh, my plane is undergoing an upgrade for about another week, but that is really started to to fill up how many slots we have available. Uh, so we are adding days where we're going to be flying. Uh, where you can Shadow Me, We're going to be doing weekend days. we're going to probably be adding Mondays and Tuesdays Uh, so that way we can fulfill the demand.

Uh, but we we might be getting to the point where we have to stop taking sign ups for that. So uh, if that is interesting to you, check that out down below. If you want to bundle up with some coupons uh, for some of the other programs you've already bought or your course member already and you're looking for a bundle price. or you want to bundle out of the gate, a course and maybe shadowing, email us at Kevin.com.