Folks, The FED gave the market and the entire economy a certain finger today and let me tell you, it wasn't the pinky finger. Today was a complete and utter disaster. Even some of the biggest bulls that were saying that the FED could go up and it wouldn't hurt the economy even they flipped today. The FED re-declared loud and clear that they are at war with inflation and that if you are a holder of any sort of stock within the stock market or you have any kind of asset, well they are going to Martyr You You are going to be collateral damage in this massive war.

your 401ks will turn into 401 cries, your IRAs will turn into good buyers. If you have a pension, you will be lucky if they pay you out in biscuits. So I watched today's conference and I have to say my immediate thought was jeez, all of the people The last few quarters that kept saying we've bottomed, we've bottomed, we've bottomed, You will never see another sell-off Well, they were very very wrong and the FED just screamed and punched them in the face. I think the FED actually punched all of us in the face in one way the other.

but they really punch the long-term Bulls in the face here and I was somebody that at least believed in a bear Market rally, but the feds seemed to do whatever they could to stop that. Today we got the 75 basis point hike as expected, but Powell used everything in his power to give the most hawkish rhetoric that I have seen in any of these meetings. Howell talked about overheated labor markets. He talked about entrenched inflation.

He talked about further Corrections needed in key asset markets like real estate. he says he doesn't think they've gone anywhere near over tightening. He set the window for a soft Landing has narrowed. This is the window that he's talking about I agree if he can get the entire economy in that small window I do think that we can land pretty softly.

At one point, the holy Pow Pow even suggested that a big problem right now is that Americans have too much in their savings and thus are able to keep up with demand. which is something that other Fed members have suggested is a problem in recent reports. As Long As Americans are continuing to keep up the spending because they're depleting their savings or they are taking out more personal loans which is what we saw from Sofi Well, that's a massive problem. But most importantly, and the main reason that this press conference was so bearish was because Powell suggested that the ultimate level of interest rates will be higher than previously expected and previously indicated at the last meeting that we just had.

Which means the two holy keywords trajectory and terminal rate are both higher. I mean if Powell wanted to activate as many stop losses as possible today, he did a great job at that. Stop losses may be transitory, but inflation sure as ain't now. That being said, I am seeing a lot of analysts go over what the FED released this morning and suggest that one area is dovish and thus bullish for stocks.

But I actually don't think it is. If you go over to the FED statement, it says quote In determining the pace of future increases in the target range, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation and economic and financial developments. So this is a key change because it's saying hey, before raising rates further. In future meetings, Vfat is acknowledging the need to take into account the tightening that they've already done, and the fact that that lags quite a bit, usually by six to nine months.

So if the FED doesn't acknowledge that it's lagging, they might go ahead and raise rates a lot faster than they otherwise would. This acknowledgment is only dovish if it comes with. if it comes with the statement that the FED thinks that inflation is coming down. If you watch the press conference, Jerome Powell Basically said Point Blank We don't see evidence that inflation is coming down.

Even the rates that we Rose to today are still leaving real rates in the Deep negative. When you compare them to inflation, a 375 to 4 range is still substantially lower than eight percent year-over-year inflation. And if you don't use the CPI, which should be called the CPI of course, then you have a much higher inflation rate than even that. So your real rate is still deeply negative, Deeply negative.

You're getting paid to borrow money even at these current rates, which is why a lot of people argue that interest rates have to go above inflation rates in order to get inflation down. And Powell was asked about this, he was asked if this needs to happen if policy rates need to go above the inflation rate, and he hinted that yes, but you have to look at the forward inflation rate. He's saying that you want to look at inflation over time, and this is the closest hint that we got today for when the FED is going to Pivot or even think about pivoting. When real rates go above medium term inflation, what does that mean exactly? Well, take this, for example.

Let's go ahead and say that you take out a loan today at a rate of six percent and this is a five-year loan and that rate is fixed well. Right now, your real rate is negative two percent because inflation is at eight percent. But let's say that your expectation is that in year two, inflation is going to go back down below eight percent and down below seven and six. And thus your real rate after next year is going to be what? positive Again, Well then that means that throughout the entire loan term, you're going to have very, very, positive real rates even though the first year is negative.

So in that sense, inflation, expectations, and what inflation does over the long run or rather than medium run is very, very important for how high the FED has to go. So in that sense, according to Powell, the FED has a little bit of leeway because they don't have to beat short-term inflation rates. they just have to to beat medium term once. But at the same time, if inflation becomes entrenched and plateaus at really really high rates, well, the FED is just going to have to keep raising rates until it stops with that plateau.

And if that happens, the FED will quickly lose what's left of the Public's trust that it can even bring inflation down. Which means more people are going to expect the long-term inflation rates to be very, very positive and thus are going to borrow more money and spend more money because they want to get the cash out before it loses its value or they want to borrow money so that they can benefit from negative real rates. I Get it? We've been talking about the FED for really the last 12 to 18 months and it's been getting worse pretty much every single meeting. Maybe you had a little bit of relief here or there, but it's been getting worse every single meeting.

And when we make Fed videos you get a lot of people are like oh no the FED raising rates doesn't do anything bad to the market, it's all just fear-mongering I Just do not believe that as the FED continuously goes and sweeps Capital out of the entire Financial system that you will see a bottom I Do not believe it I've said that since the FED has pivoted away from the transitory narrative and I continue to believe that throughout history. if you look back, you have never seen a bottom in stocks and Bear markets on stocks. When the FED is tightening only when the FED signals they reversal and even then sometimes it's lagged. As the overall trajectory goes up more and more and the terminal rate goes up, more and more things are going to get worse as relatively risk-free returns and savings accounts even and in T bills increase.

Well, people have less and less incentive to invest in stocks In an economy that is being destimulated and kicked to the ground as fast as possible, you're going to see a lot more deleveraging in the coming months. Financial System overall is going to get Tighter and Tighter money will evaporate. companies with tons of liquidity will evaporate that liquidity companies that are doing BuyBacks are going to start saying hey, you know what? we don't have any Capital left to do BuyBacks We have to use this to survive and I just cannot see a bottom I Can see a lot of bear Market rallies when people stop paying attention to the data. but I cannot see an overall bottom until the FED allows it to be found.

I just cannot. And the FED indicated today that this is going to be a long and painful and drawn-out process. So for folks who say that's fear mongering I guess it is is. But I mean it is what it is.

The Fed is in control right now. the FED is the central planning authority of the U.S economy and really the overall Financial system on the overall planet. And they are saying that we are going to do everything in our power to get inflation down at two percent And that means destroying wealth at a pace that the world has never seen before. And a lot of people say Hey You know, four decade High inflation and four decade high and fast tightening that has no negative impact.

That means that you should buy a dip that's five percent down or twenty percent down. No folks, the FED is saying that it doesn't mean that it simply does not. And if you disagree, that's fine. Give us your reasons down below.

But it is my job to give you the cold hard truth as I see it and this is how I see it.