Okay folks, danger incoming in this video. We are going to start by talking to you very violently about the market blood bathory that we are seeing. Quite frankly, there is warning sign after warning sign that this is getting worse. If you came here hoping for a Charlie in peace mongering mode, you are sorely going to be let down.

Then for the main entree we will discuss what you need to know about what's going to be happening in roughly 72 hours. Let's get right to work time stamps down below and this video is brought to you by the up to 15 free stocks that you will get when you sign up with Moomoo. Using our link down below, I told Moomoo13 that's far too many free stocks. We can't handle that many free stocks and you know what they did.

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Markets are back in dumpy Mcdump mode, experiencing a pretty abrupt U-turn after the Cpr report came out and screamed from the heavens that inflation is going to stick around a lot longer than markets had hoped. Markets want so bad folks to get out of this constant doom and gloom of central bank worries and inflation that they are willing to say, you know what? Let's just look the other way. Let's ignore those two things and let's just focus on the low unemployment. They're looking at all the data they're like.

Okay, well, if we pick and choose only the bullish argument and we completely cast the slide. All the bearish points. Well, there's no reason to be bearish anymore. But what they forget, folks, is that markets have not been questioning.

They have not been questioning unemployment. In this current cycle, they have been questioning what is going to happen to unemployment and other related variables. Once the Fed does what they need to do in order to actually get inflation under control. it's great that we have record low unemployment.

It's terrible that we have record high inflation. I know it's down slightly from highs, but come on folks, to use a popular metaphor. It's sort of like if you're in a literal room with a massive elephant and everyone is focusing on how nice the wallpaper on the walls is or how nice the artwork is. Oh, the decorations.

They're just so nice. Okay, great. The room is fantastic. But how do you get the elephant out of that room? How do you get it through that really, really small door? You have to break something to get it out.

You can't just ignore it, but the markets have wanted to look the other way. They've wanted to avoid looking right at the elephant because everything is fine and dandy. If we just ignore the massive mammalia in our room and the higher and more stubborn inflation is, the more aggressive and more stubborn the Fed's measures to control it will be. And the more risk there is going to be.

for the broader economy. How many times have you heard? Oh, we can't have a recession because unemployment is at record lows. Okay, wait. but what happens when we have to get inflation down to pay for those record lows? Obviously, unemployment is going to be super low if you've printed trillions and trillions of dollars and throwing it all around the economy.

But what happens when you actually start trying to get rid of the ramifications and the consequences of that on a global scale at the same time? Where guess what? All the other countries are having the same problem because they made the same mistakes. And on top of that, you have massive, massive supply chain shortages that even if we didn't print tons of money, we'd see huge inflation. And so when you have a stock market that has increasingly tried to avoid looking at that elephant, well guess what? It rallies, it does a little ralito. And when you get this kind of run-up right before a crucial inflation report, this is a market that's in denial.

It's in denial. It does not want to see the writing on the wall. It wants to believe that inflation is no longer a problem. It wants to believe that it can just focus on anything but inflation and central banks.

Unfortunately, that is not the truth. There is a big stinking elephant in the room and somebody has got to figure out how to break the room down, break the walls in so that the elephant can come out safely, and you pull up the one month return on the S P 500. You have Microsoft down almost 16, Apple down almost 14, Alphabet slash Google down 14 Amazon 13 Adobe Adobe down 31 Oracle down 13 Semiconductors all down Huge financial segment getting bludgeoned with Visa, Mastercard, and more down around 10. Pretty much every segment down across the chart except for Energy.

This is the monthly return. This isn't the weekly return, this is the monthly return. This is not a recovery market. This is a market that looks very similar to markets that we saw in Q1 and Q2 where the market just continuously went into bloodbath mode.

But if you really want to get a feel for what the market was thinking into close on Friday, you want to look at this Fedex ordeal. Fedex, one of the biggest and most well-known package transportation companies in the Us, comes out and gives a dire a dire pre-earnings announcement and they just get completely destroyed 21 in a day. They withdrew their full-year guidance and are warning that global volumes have significantly worsened and are likely to decline even further. They also announced significant cost cutting measures, including yes, layoffs, and closing down of numerous corporate headquarters.

Fedex expects their first fiscal quarter earnings to come in 30 below market expectations 30 percent Deutsche Bank Yaya. Deutsche sums this up very nicely. Quote: Fedex Pre-announced the weakest set of results that we've seen relative to expectations in our 20 years of analyzing companies. Deutsche Bank Yaya Deutsche analyzes thousands and thousands of tickers every single year, and for them to say that this is one of the worst in 20 years is insane.

And it's mind-blowing, especially considering how closely intertwined Fedex is with everything else in the global economy. And you have the Fedex Ceo himself coming and literally saying hey, I expect there to be a worldwide recession, which by the way, I love how Fedex can tell us when we are heading for a global recession, but they can't pinpoint when my damn Amazon package is going to get to my house. Oh, it'll get there between 8 a.m and 12 p.m midnight. Don't worry, we only require three signatures.

But here's the thing. As the Ceo said, we are a reflection of everybody else's business, especially the high value economy. Shipping companies like Fedex that are responsible for shipping goods can often be the first to report signs of a slowdown in demand for those goods. Right? If we are seeing shipping companies report massive reductions in volume of things being shipped, what do you think we're going to see When companies that are actually selling the things that need to be shipped or reporting? Well, you are going to see a bloodbath pretty much everywhere.

Earnings is going to be very, very rough. Okay, moving on, the Fed. So the Fed's next Fomc meeting and rate hike decision announcement is going to be this week. The meeting starts on Tuesday and the announcement and Jerome Powell press conference should be on Wednesday.

And as the original reaction to the Cpi has subsided, the Fed futures rates have actually moved to once again pricing. In the most likely scenario being a 75 basis point hike to a new target rate at 300 to 325 and just an 18 chance of a 100 basis point hike. Here's the thing though. this is an incredibly incredibly sensitive point of time in the inflation battle.

We have just reaffirmed that inflationary pressures aren't trending down in the most crucial line items. Despite energy prices taking, this wasn't supposed to happen. We were told, hey, energy prices are down, everything's going to go down. Guess what? That didn't happen, They were wrong.

So now is the time for the Fed to step up their game and come in more aggressive than markets are expecting And some folks say, hey, you know Charlie, You say the Fed needs to be more aggressive. 75 basis points is pretty damn aggressive. And yes, sure, a 75 basis point hike sounds aggressive, but it's not aggressive compared to how crazy out of control this inflation is. You have to remember that real rates are still well below zero if inflation is at eight percent, but the Fed's target rate is at three percent.

You are still getting paid to borrow money. If the rate of inflation surpasses the interest rate it costs to borrow money, then you have negative real rates. This is a dynamic that a lot of people forget, but it's crucial to understand the situation. The reason that Mr.

Paul Volcker had to raise rates so high back in the late 70s and 80s, where inflation was comparable was because he needed to counteract inflation that was causing real interest rates to be below zero. once real rates were actually positive and actually restrictive. Again, inflation got under control. This time around, we're trying a much slower and less aggressive method and hoping that it all works out.

But a lot of that, whether it works out or not, is going to be based on inflation expectations. If people expect inflation to stay entrenched at five, six, seven, or eight percent, then they are in complete understanding that. well, it kind of makes sense to take out more debt because the real rates are still less than zero. But if people think that inflation is indeed going to start plummeting, then all of a sudden people are like, okay, maybe I don't Maybe I don't want to take out loans at these rates.

Maybe right now the real rates are negative, but over the long run, maybe not. So a lot of it has to do with inflation expectations. As long as inflation is expected to be high, well, people are going to be incentivized to number one, take out debt at even higher rates, and number Two spend their money as fast as possible, causing prices to go up even more so that they can preserve some of that buying power by enjoying it now instead of having it eroded year over year. So I think from the Fed's perspective right now is such an incredibly important moment, because it is the Fed's biggest opportunity to say hey, look, we see that inflation is getting hotter again, so we have to go even more aggressive to preserve the future of this currency to make sure that we cement a win on this inflation front.

Because if we don't, and all of a sudden, energy costs just go up again into fall or winter, all of a sudden boom bloodbath. So my thought process okay, this meeting is probably a done deal in the sense that we're gonna get that 75 basis point hike. But the rhetoric, the rhetoric that comes in the announcement and the press conference after the hike decision is very, very important. I think that the Fed is going to go with the 75, but they're going to say hey As we head into the end of the year.

As we head into the beginning of 2023, we have to up the ante a bit. We have to come and show up to hit this inflation where it hurts. The Fed has been wrong and underdoing it on Inflation Meeting: after meeting after meeting the last year. Plus, as of recently, the Fed has signaled pretty damn clearly that they do not want to be behind the curve anymore, and I believe that this is going to be a huge opportunity for them to showcase to the market to yell out and clear that we are going to do what it takes to get inflation down.

And as a result, they're going to try to plummet inflation expectations again by saying hey, we're going to be hiking a lot into 2023 and it's not gonna go just back down afterwards like you thought it was. And the Sacks over Goldman have a similar sentiment. Goldman Sachs just raised its Federal Funds rate forecast by 75 points over the last two weeks for a terminal rate forecast of 4 to 4.25 by the end of 2022.. they also downgraded their growth outlook alongside this quote.

This higher rates path, combined with recent tightening and financial conditions implies a somewhat worse outlook for growth and employment next year, But you also have an increasing amount of folks expecting the Fed to overdo it. Bloomberg reports the Fed is probably going to overdo it. The global head of U.s rate strategy at B of A told Bloomberg Television Tuesday Watch. we have seen them turn very hawkish with the labor market strength.

We think that the Fed will try and stick to this higher for longer mantra. that's probably going to result in a recession again. Markets had rallied expecting the Fed to go aggressive in front load hikes this year and maybe the first meeting in 2023, but markets are increasingly waking up and this B of a talker says, hey, no Actually, the Fed is going to stay on this higher rate for a longer mantra, this more hawkish policy for a longer stretch of time period and strategy. the Fed is unlikely to back down on that as long as unemployment is still low.

The lower unemployment is the more wiggle room. The Fed has to quite frankly destroy the economy in the name of getting inflation down, of course. Anyways, that caps off today's video. make sure to hit that ravishing like button and subscribe.

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