Folks, go ahead and sound the alarms because we've got two major things to discuss. Number one: Fed President Bullard Projects rates may have to climb as high as seven percent. What is his reasoning behind this and what do you have to know? how many other Fed members are In agreement with this Number two, there is a massive crime wave completely destroying profit margins of companies across this country at the same time where they're also struggling with pretty much everything else. Targets specifically put out a dire warning and we need to cover the stats and how this will negatively impact most companies heading into 2023..

we will get right to work in a few moments. Time stamps down below and today's video is brought to you by zip Trader you and our Black Friday Black 60 coupon code that will get you sixty percent off our program walk-in lifetime access today to our step-by-step lessons, private chat, daily morning briefings, full price Target list and all other trading resources Black Friday is of course right around the corner, so if you are interested in joining the team, make sure to give it a look before then this is indeed the best discount we've ever offered on the program. Okay, so Fed President James Bullard comes out, gives a massive conference, and drops several critical Bombshells that really rattled markets today, especially towards the beginning of Open. Now, of course, Bullard is known as being one of the more hawkish at the FED, but he also tends to lead everybody else in that direction.

As an outlier, people complain. oh, he's too Hawk if she's too hawkish, he's just saying too much. And then what happens? Like four months later, the rest of the FED has adopted his stance. and so it's incredibly important to pay attention to what he says.

So he comes out and he starts his talk today with this idea that we aren't in a sufficiently restrictive policy Zone You look at the current policy rate. We are here at just under four percent, but according to his cited Taylor rule, we should be somewhere around the five to seven percent region, which is a range that shoots well above even the current consensus predicted terminal rate, which is like at five percent. If you look at that upper range, seven percent is territory that few analysts have even considered so far. In fact, there's a minority of analysts that think even going to head into six percent.

but Charlie what the hell is the deal with this Taylor rule? Well, this is a no BS straightforward Rule and formula that has been used in monetary policy decisions and discussions over the last three decades. It ties in inflation, numbers, economic growth, and a few other variables and spits out a direct recommendation on where policy should be at. And it gives a range like you can see hither with more or less generous assumptions, and policy is supposed to be set within the range between them, so you have a bit of wiggle room for policy makers to make a decision, but at least you have a range to fit in. whereas with the Powwow rule, you have your own power going and eating his breakfast cereal and based on the number of Cheerios left in the bowl after he's full, well, that's the level of rate hikes you're going to get at the next meeting.

Seven and a half Cheerios left, well, 75 basis points and then when it comes out the other end, hey, that's time to Pivot Now unfortunately, digestion gets slower as you get older I Don't want to get too much into that. But the point is, there is a big difference between the Powell Rule and the Taylor Rule And specifically, the Taylor rule takes into consideration major items: Number One, the value of short-term real rates of economic output was at potential and inflation was at Target. Number Two, the difference between the current inflation and the inflation Target at two percent. Number Three, a value describing how strong the Central Bank wants to react to deviations of inflation from the target.

Number Four, a value for the size of the output Gap And you plug in each of these and you consider that the Fed's inflation Target is again at two percent and they use the Pce, which registers inflation as likely to be at six percent for all of 2022.. you plug all that in and you get a policy range recommendation that looks like this: five percent on the more optimistic and generous Edge Seven percent on the less optimistic and generous Edge Now it's worth mentioning that if the FED hadn't followed the Powwow rule in 2021, but instead followed the Taylor rule back in mid 2021 when it was suggesting a liftoff in rates. while inflation likely never would have accelerated as fast or as high as it did, but a lot of analysts would argue that because the Fed waited an extra year before attempting to raise rates, while it put us on this massive uphill battle where the FED has had to cause a lot more damage or rather will cause a lot more damage. When all said and done, and by emphasizing the Taylor rule at his press conference today, Bullard is saying hey, we don't want to make the same mistakes again, we need to do the hard work and at least get us into the Taylor range right now.

In the conclusion of his talks, he says, according to the calculations presented here, the policy rate is not sufficiently restrictive, even under the most generous interpretation. The most generous interpretation here being this line right here, that's about five percent. So he's saying, if you were to assume berries and roses, roses, and berries and everything was as good as it could be based on the data that we currently have, well, we still need to move a decent chunk higher to be insufficiently restrictive zones. And in terms of how effective the current policy rate is, he says this: Thus far, the change in the monetary policy stance appears to have had only limited effects on observed inflamed Nation But market pricing suggests disinflation is expected in 2023, So obviously we know that when you raise rates, it takes about six to nine months for those rate hikes to be factored in to prices and actually cause prices to come down.

So when you're seeing a little bit of down training that we're seeing right now, hey, maybe some of that is due to the beginning of Fed policy back in March But for the most part, he's arguing that a lot of those impacts aren't even going to be felt into 2023, and we won't even know how effective they are until you start really feeling them, right. And his talks today gave the financial media a lot of different headlines. Feds Bullard says raid hikes have had only limited effects on inflation so far. Bullard says Fed should raise rates to a minimum of five percent to 525.

Feds board says Benchmark Interest rate in five to seven percent range may be needed to bring inflation down and most ominously, you have Market Watch reporting U.S Stocks slump as Central Banker Bullard Hence, at Fed funds rate as high as seven percent. He said seven percent was the top trajectory, But hey, you know what it gets clicks right? And by the way, the this kind of clickbait is unacceptable And cringy and it's almost as bad as some dumb YouTuber in a suit going and titling his video. oh, insanity and coming seven straight weeks in a row like hasn't Insanity already? Come, haven't we already had enough of it? Stop with the damn. Insanity Incoming Oh I guess I Gotta watch it before more could open too don't I I Just can't believe some people these days the Nerf But anyhow, I love to read Twitter reactions to these news stories and these fed conversations and people always say oh, these fed members that are talking in this case Bullard they should keep their mouth shut.

It's Sven Heinrich who almost has half a million followers on Twitter Said quote Bullard Even mentioning seven percent is so overtly dumb and disconnected from the fundamental reality, it hurts blah blah he's not a serious person or Economist Ross Gerber who is very popular amongst the retail crowd says here they go again below hard Bullard Fed members need to keep their mouths shut, but they just can't go a week without attention. Here's another one super Bullard Gets to run his mouth again and if you go across Twitter you have tons and tons of folks going and criticizing Bullard for talking about what a restrictive rate could be, Acting like he's ruining their rally, he's informing people that the FED may have to go a little bit higher and so everyone's like, oh, he's a blow hard oh you know he's just coming out and ruining everything. But folks, this is Deja Vu. We've seen this over and over and over again this year and last year and really throughout monetary policy history.

This is one of the ways that the FED exercises its monetary policy. They have their soft way and they have their hard way. The soft way is through conversation is through setting Market expectations. The hard way is by tapering is by actually penciling in higher rates.

And this wielding of soft power is what we warned about. Two days ago, we said word for word about 48 hours ago that the FED now has a new crisis where markets are loosening on their own and expecting the FED to Pivot. So what does the FED do? Well, they do what they've done the last five times this has happened. they send out Hawks like Bullard to make headlines and freak out markets and allow them to tie fighting on their own and make their own job easier before the next meeting and people act like this is just random fed speak and that the FED just wants attention or they're concerned with being celebrities.

No folks. It's pretty obvious to me that when the FED wants to influence how financial markets are trading, how credit markets are trading so on and so forth, they send out certain members that drop certain Bombshells to push it in the right direction. And quite frankly, it is worth mentioning that Bullard has actually been one of the more right people in this inflation battle. You go back at your plus: he was one of the only people that said inflation was in transitory and he was crucified for it by many of the same people that are crucifying him now.

And moreover, do you think that the FED actually has the macadamia nuts to get to a seven percent policy rate? Hell no. Bullard is an outlier and he won't even have a vote next year. And if you look at the rest of the fed, the other members won't consider a six percent rate let alone a seven percent rate unless inflation was put in a stick to their necks. Now with the current inflationary data, that stick just isn't there.

So yes, Bullard is Right In that the FED will get into that Taylor rule region into the fives, but they'll hit that lower Baseline and they'll stay there unless they are forced to go higher. And we are yet to see if they're going to be forced to go higher or if they're going to have the macadamia nuts to do it. Okay, the next story I have for you today is over at Target or as the pedestrians call it, Target Not only are they seeing a profit margin crunch, but a big reason for that is they are dealing with massive, massive retail crime Target Stores are getting looted and it's taking a huge bite out of profits. The discount retailer told reporters on a call to discuss its third quarter earnings results that inventory shrinkage or The Disappearance of merchandise has reduced its gross profit margin by 400 million dollars so far in 2022.

compared to 2021, They expect crime to be the cause of 600 million in total gross margin reductions by the end of the year. So as if the economy slowing down and inflationary pressure is putting up input costs and and labor costs weren't enough, Well now companies have to deal with massive losses because of crime waves and Target says hey, we're not alone here. We know that we're not alone across retail and seeing a trend that I think has gotten increasingly worse over the last 12 to 18 months. So we're taking the right actions in our stores to help curb that Trend where we can.

but that becomes an increasing headwind on our business and we know the business of others and they are right, others are seeing the same problem. CVS says they experienced a 300 percent increase in retail theft Rite Aid says it suffered 5 million in losses due to theft and NYC in the most recent quarter alone one quarter one city five million in losses. You imagine how much Advil and NyQuil and Tylenol you have to steal and little other merchandise that cost five to ten bucks that you have to steal in order to add up to 5 million in losses. And when employees at Rite Aid are asked about this and what is happening with these looters, they said they come in every day, some times twice a day with laundry bags, laundry bags, and just load up on stuff.

An employee at the store told the New York Post they take whatever they want and we can't do anything about it. It's why the store is closing, they can't afford to keep it open, and there is no shortage of stories out every single week of retailer after retailer experiencing the same thing. But when you're starting to see major companies like Target report losses in the half a billion dollar region nationally, it's like, uh, well, now we have to start factoring crime in as a major line item expense, an expense of doing business if you operate a business in the US Well, a major thing that you're going to have to pay out for is crime more and more people every year. Look at a business and they say hey, that's not a business, that's a place that we can go to loot.

That's a place that we can get free stuff and they can't do shite about it. If you are a business, you are operating in hostile territory. Businesses just keep getting forced to take massive L's after forced closures and shutdowns during the pandemic. Now they're being looted like never before.

You have Amazon's Whole Foods sloshing store hours due to high theft and hostile people in certain regions like San Francisco major metropolitan areas and all see people on Twitter saying oh, screw these corporations, Screw them. Let them take the L But it's like wait, let's back up for a second if they are going and they are cutting hours Who also gets hurt by that? Well, the consumers who can't get their products and can't get their shopping in when they want to. and of course workers who are getting paid to work while their hours are going to get cut because the store's not going to be open as much. And by the way, corporations aside, what really matters here If these corporations are seeing these kinds of profit reductions from theft on a national level.

Well, you've got to imagine the small businesses that don't have as much of a voice. Well, they're getting destroyed at a much faster clip. High crime destroys small businesses a lot more than it destroys big businesses. Target isn't going to go under because you have this crime wave, but your mom and pop store will.

This is bad for everybody and it's horrible for the overall economy. Me you think about businesses that are all having to reduce hours of operation, having to write off losses from theft, having to spend a ton more money on security, and at the same time are seeing a reduction in customers coming in because people are scared to even go into the store in the first place. And then what happens when businesses no longer want to invest in those communities? Those communities start dying and people concentrate into the areas that are better run. usually the wealthiest of the wealthy areas.

And if you can't afford to get into those areas, well, you're screwed. This is how you create an economy where only the wealthiest corporations survive and everybody else. you get the middle finger. I Don't actually want to show the middle finger because then YouTube's going to give me the middle finger.

But you get the point. A lot of people like to say oh the U.S don't worry about it, it's the best place to do business. always will. but this is becoming less and less accurate year after year after year.

especially if you look in major cities. And if you think this isn't going to have an impact on literally 90 of companies who do business with customers in person, then you have another thing coming. According to to the National Retail Federation, the top five cities for organized retail crime in order were: Los Angeles Chicago Miami New York and San Francisco. You look at monthly closing store crime reports in Los Angeles From January 2018 to 2022, it's skyrocketing.

Many stores operate on a very thin profit margin. If you have a two to three percent profit margin and you are getting looted left and right. Well, your profit margin's gone and your store closed, the jobs are gone, The access to that business that local community all destroyed. Not to mention in most of the cities with the highest crime rate, you also have the highest regulation and the highest taxes and the highest fees and the highest overall burden of doing business in that area.

Yet when you ask for just a little bit of protection in return, you know what the government says the government says Fu That's your responsibility and in fact the government in many cases makes it hard to enforce your anti-theft policies. The National Retail Federation says this is a 100 billion dollar problem across the country I Understand that crime is a big hot topic here in the US and especially as we just had midterms. but all I am saying with this is that if you ignore the crime wave and you assume oh the U.S is a friendly, not hostile place at all to do business, well you are going to get destroyed. You are going to miss a major line item that is going to grow for companies in the next couple of years.

Right now we look at companies and if you want to analyze for the long term you have to look at. okay well how much is that company spending and some of the biggest expenses that you look at are things like taxes, their payroll costs, cost of property, or cost to rent property. But a new major line item that you have to factor into the prices is the cost of crime, right? The cost for substantially increased security measures, the cost for the losses that are going to be inevitable, cost of a reduction of consumers because they don't want to go in person because they're scared. All of these things are just the reality and another headwind along with a lot of other headwinds that companies are going to be facing in these upcoming years.

And if you think the economy is going to be destroyed and crime is just going to go down during that period of time, well, you got another thing coming. So anyways, folks, that is my thought process. On the latest reports let us know your thoughts down below: Is crime good or bad for companies doing business in the US Will crime destroy a lot of the small business competition for corporations? Is that good or bad? Let us know your thoughts down below. If you appreciate videos like this, make sure to hit that ravishing like button and subscribe.

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