Welcome back to another day where the Federal Reserve controls everything. That's because at 11 A.M Pacific Time 2 P.m Eastern time, we get the Federal Reserve minutes for their December meeting which was actually a very important meeting because it signaled a bit of a counter flip-flop. Remember, back in November, we started seeing the introduction of phraseology like hey, the Fed's starting to have concern about the monetary lags that could come from having raised rates as quickly as they had and that sent signals to markets leading to Market rallies that, hey, you know what? The Fed was actually cautious about the risk of over tightening the risk of overdoing it. In fact, the Federal Reserve has in the past told us in press conferences like those by Jerome Powell that, hey, you know what if we over tighten no problem, we could always just turn the money printer on again.

But in that November meeting, Jerome Powell told us ah, but we don't really want to do that because that has tremendous human costs, right? We don't want people to lose their jobs if they don't have to. But all that kind of flip-flopped in December And it was not like a huge flip-flop, but it was enough to really kill any hope with the Santa Claus rally and well lead to the further collapse of a lot of stocks even Apple now below the two trillion dollar valuation. leaving that tea two tea Club so to speak. So this at the same time as this morning, we hear that smartphone shipments a year over year are down to 34.1 percent out of China and Salesforce says they've hired too many people for their software business and they're cutting a 10 of their staff as well as reducing some big real estate holdings.

Interesting, especially for House Hack to pay attention to these job style changes, but what are we looking for in the minutes today? Well, we're looking for the Fed's rationalization for their U-turn Why did all of a sudden we see see this counter flip where all of a sudden Jay Pals More seemingly concerned about the jobs market and how sticky wage inflation is going to be than actually being concerned about that human cost he said he was concerned about. But apparently ain't that concerned about now. We will get a little bit of clarity today because at 7 A.M California Time: 10 A.m Eastern time we'll be getting the Jolts report. That's the job openings and labor turnover survey.

We're expecting 10 million openings, a number less than that would be bullish. We want less job openings because it does seem like the Fed's really worried about jobs inflation and the potential for wage price spiral where wages are accelerating at a pace faster than what inflation ends up falling to because he remember in the December meeting drunk I was like ah yeah, we had a couple good inflation reports, but we've been expecting those. We're just now worried about jobs so that Joltz report should help us as we go into these Fed men minutes to try to glean and understand why were they so darn fussy to us? This right here is the summary of economic projections that we last received and what was remarkable here was I had personally been projecting a 4.9 percent terminal rate on that on that, uh, Fed funds right here. We got that 5-1 and that was a hit.

Not only this sort of pivot from ah, we're worried about lags. All of that seemed to go away in December And all of a sudden we got a fed That's like no, no, we're gonna be more aggressive here and we're already anticipating that inflation is coming down and at the same time we're basically going to hold our feet to the recessionary fire, not just for 2022 but also 2023.5 Here is a pretty low estimate: They're knocking on the door of recession, especially when we were sitting at a GDP estimate of 1.2 percent, which they then revised down from their September summary of economic projections to 0.5 percent. So this is sending real concern to markets that, oh, the FED is starting to realize. the only way we're actually going to solve this inflationary crisis that so far is or maybe isn't transitory.

So far, it seems like not is by actually having a lot of people painfully lose their jobs while being on the brink of recession. That's exactly what at least we see here, right? We see higher terminal rate, higher unemployment rate, and lower GDP and so hopefully, hopefully Okay, this is the hopeful and then I'll talk to you about the danger. Hopefully what we see in the minutes is that hey, the FED overall realizes there are risks to a wage price spiral, but we're not seeing any signs of that wage price spiral. And you know what? It seems like things are moving better than expected.

Uh, based on the last reports that we've been getting in as long as we stay on this path. hey, maybe that does open the door up to an interest rate cut in 2023. that kind of verbiage in the minutes today would be so amazing. But there's also the risk that we end up getting the opposite, which would be the bad news scenario.

A reiteration that no, there will absolutely be no interest rate Cuts in 2023 that instead of inflation being transitory, instead disinflation might end up being transitory until the labor market occurs. Yeah, I You heard me say that, right? The FED could make an argument today in the minutes that the disinflation we've seen in the last few reports, which just means inflation coming down right deflation is inflation being negative. Price is actually coming down. Disinflation means prices are going up at a slower rate.

There's the potential that the FED says, hey, um, you know the progress we've made on inflation so far. The disinflation could be transitory. In other words, higher inflation could come back and we want to be cautious of that. And we don't want to make the mistake of the 70s where we loosen policy too soon and started cutting rates too soon without making sure that inflation was for sure dead.

Unfortunately, this point of view is a little bit more. Michael Burry. remember yesterday Michael Burry warned of this idea that the Federal Reserve could cut rates in inflation, could have a second Peak and then the FED would really have to rug pull us like Paul Volcker did in the early 80s. Well, if we have the minutes, that point towards that kind of fed.

Unfortunately, there just might be more pain to come in the stock market. And honestly, I don't think anybody really needs any more news that there could be even more pain coming. But we'll see. We'll also see in the minutes whether or not the December CPI report was actually Incorporated Jerome Powell Kind of suggested during the press conference that the better than expected CPI report for December was already something they considered, but if they already considered that, then that really means we got two reports that were pretty good for CPI inflation and we still ended up getting a pretty aggressive summary of economic projections.

In which case, what gives man, how deep of a severe recession do you really want us to have? Bill Dudley the former New York Fred Fed President mentioned in an interview with Bloomberg surveillance yesterday. Yeah, look, a recession is in the cards. It probably won't be a severe slowdown, but the goal of the FED right now is to drive up the unemployment rate. And unfortunately to me, that kind of implies a problem because historically the unemployment rate does not actually rise until the late stages of a recession.

That means the FED doesn't just only have to induce a recession, but they have to kind of hold the boot on her neck and our face in the mud of the recession for a while before the unemployment rate actually goes up. That creates a delay in when the FED can respond. And if that's what the FED indicates that, hey, you know, we gotta basically keep our boot on even all the way through potentially you know, or 70 80 percent through a recession to see that. UI Well, unemployment rate go up.

It's gonna suck. So that's what we're paying attention to today now. I'll be streaming live at 11 A.M and I'll be reminding you about those coupons linked down below. We're changing the pricing tomorrow for the programs.

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