The Fed WILL NOT Pivot! – GDP Is “Too Good” To Stop Hiking

The Federal Reserve isn't done yet rate Hikes are coming they are not finished By a long shot so Q3 GDP looks good it Is positive 2.6 and a lot of people they Are cheering on the streets we even have President Biden declaring Victory saying That this is evidence that our economic Recovery is continuing to power forward Yes this GDP report has reset the Recession clock but we need to Understand what this means for the Economy in the months ahead more Importantly the message and the green Light the Federal Reserve is getting From this piece of news now let's Remember the number one enemy for the FED is inflation and the only two they Have to solve this problem is rate hikes Nothing else they can't control Supply But they can influence Demand by making Everyone poorer and when we have a piece Of good news this tells the FED one Thing you need to keep hiking the Economy is still growing it is strong And people still have money left to Spend even though we know the economies Of really circling the toilet now in Fact the markets are already pricing in A 81 chance of a 75 Point hike and a 100 Chance of a hike in general this is Going to add more stress to the economy Which is on the verge of cracking so Let's go through the GDP numbers and Break down if this recovery this

Economic growth is truly genuine or if It is just something temporary now on The surface the numbers look good we had Two negative quarters and then a Beautiful Spike up to 2.6 for Q3 but the Devil lies in the details if we break Down q3's GDP we see something very Interesting here the biggest boost in GDP come from a narrowing trade deficit And that contributed to a huge 2.7 Growth in GDP and if you weren't sure Where that money came from just remember That the US is exporting an insane Amount of oil and gas to Europe the Price differential for gas between the US and Europe is just so high we are Talking about seven times difference so Energy exports are helping to massage The GDP numbers but I want us to focus On the main driver of the US economy Which is domestic consumer spending and This contributes to around 70 percent of The total GDP so if consumer spending Creators that is a big problem which is Exactly what we are witnessing today we Can see back in early 2021 consumer Spending contributed to over seven Percent of GDP growth easily but it's Crashing year after year and it's just Around one percent of growth in Q3 and Not to mention we have 0.4 percent from Government spending so I wouldn't call This genuine economic growth now the GDP Might be positive yes but if you take

Away all these exceptions it is well Below 2.6 and economies they all know This traffic is temporary and according To one exports will soon fade and Domestic demand is getting crash under The weight of higher interest rates we Expect the economy to enter more Recession in the first half of next year Now I agree with the domestic demand is Going to get crushed further but let's Quickly address the part on U.S exports Now I expect energy exports to continue Staying High staying strong for quarter Or two more at the very least because The situation in Europe is dire and Winter is coming because Russian gas is Offline the US now supplies 40 percent Of Europe's gas and this demand from Europe is going to stay strong all the Way into 2023 we can see how LNG from The U.S and abroad won't be enough to Make up for Russia's shortfall and that Means Europe's demand will be strong for U.S LNG at least for the next six to Nine months plus you have Morgan Stanley Calling for higher LNG prices for the Next two years because of Europe's Demand so we can expect U.S GDP to be Supported by these gas sales to Europe But in reality U.S consumer demand is Actually dying but understand what the FED is seeing today right their door Mandate is all about ensuring maximum Employment and stable prices now

Obviously prices are out of control we Know that but employment data seems to Be extremely strong number one we have Payrolls Rising by over 260 000 and Unemployment is down and to power this Means a job market that is expanding and People are still spending this is why Inflation is high and we can see that Unemployment is at 3.5 percent matching The 1969 levels but we all know better Right we know people are working two to Three jobs to stay afloat but to the Fact the economy looks great and number Two the fat strategy for Global demand Destruction is working the feds rate Hikes are working to create a domino Effect across the world to high interest Rates as well or face a currency Devaluation we even have the ECB hiking Rates from 0.75 to 1.5 percent and this Is very significant because Europe is on On the front lines of a recession with Its energy crisis they are going to get Squeezed but inflation is still a bigger Problem the ECB had no choice but to Hike rates and to the fact this means The world is getting the message if we Hike you have to hike as well so the FED Is not going to stop hiking until Inflation is crushed it's all going According to plan and they have the Green light yes the FED is very likely Going to high to five percent and that Could trigger a global recession we have

Economies all predicting the FED hitting Five percent as early as March in 2023 We can see in blue estimates hitting Five percent in March Staying High till June and then red cards coming in by December 2023 and staying at three Percent till 2025. now cutting rates Essentially means a fat pivot which is Going to be unlikely until something Breaks in the economy the inflation Giant in the room is still too big and All official signs are pointing towards Recovery and a robust economy but big Problems are happening guys they are Building under the surface and we are Going to enter earnings recession very Soon in fact it might already be here We've talked about how technology Companies and how they're Cannery the Coal mine and this time they are showing Us that consumer demand is circling Around the toilet I want us to focus on Google because this is perhaps the Biggest online advertising space around They earn their revenue to Brands and Companies advertising on their platforms And we are seeing Google stock getting Hammered down by 10 when earnings came Out Google missed earnings estimates by Crazy 15 that underperformed Revenue Estimates by over two percent which is a Big deal and why is this happening Because companies are scaling back on Their advertising money they know

Consumer confidence is low they know Spending is going to create up and this Is going to be a very dark Christmas we Have Google's YouTube business taking a Hit with advertising Revenue dropping by 2 percent year over year to seven Billion dollars now this is not good News for the economy because as a whole When companies cut away their Advertising budgets this is going to Feed into an earnings recession and Cause spending to crash even more and Now we also have Facebook facing and Earnings crash causing the stock to Fall By 25 and if we add up all these warning Signs we are going to see real economic Growth actually crash thanks to consumer Spending cratering and that's why we Need to be very careful about all these GDP numbers going forward because the Data is becoming very skewed the true Domestic economy is shrinking but it Looks like everything is okay right Rainbows and sunshine everywhere now the Energy sector is definitely booming Selling oil and gas to Europe but the Economy as a whole is suffering we have Exxon Mobile posting record profits Tripling to 20 billion dollars but we Are seeing big tax starting to crash Horribly so this recession is not going To be an even one now right now we are Seeing very conflict editing messages in The economy we have a rise in U.S

Consumer spending and wage inflation is Still going up and as we said this is All the fat needs to know about hiking Rates even further they have not Achieved demand destruction yet now if The FED decides to keep hiking rates as I believe they will this is going to Break the system sooner or later and Let's quickly go through the severity of How bad this situation can get now the First is an earnings recession companies Are going to bring in less revenue and Profit margins are going to get squeezed Remember what higher interest rates mean Consumers are going to start paying more For their other expenses including their Mortgage payments mortgage rates have Sought past seven percent for the first Time in 20 years and this is going to Take a huge chunk of cash away from People's budgets and after you deduct Food and fuel there's truly nothing left To save or spend on discretionary and That's why we can see the personal Savings rates near the lows of 2008 Recession and this is not good news it Is an insane in dropped from over 26 Percent to 3.1 percent in slightly under Two years and guess what this is the Good ending a recession in reality even As GDP numbers stays strong thanks to Energy exports but the real risk is the Second scenario which is the bond market Breaking we are seeing many dangerous

Things happening in U.S treasuries right Now the problem with Rising rates is how They will continue to crush Bond values And this is making it a sure loose Investment in the immediate future we Have JP Morgan worried about who's going To buy all of these U.S bonds we can see A mixture of commercial Banks foreign Countries and the FED all haunting their Bond purchases and the only time when Money will flow back into bonds is when Investors believe a pivot is coming and Right now Bond liquidity is drying up in The market we even have the U.S treasury Asking the big Banks if they should buy U.S bonds and this is a desperation move Because the world's biggest bond market Is becoming illiquid even Janet Yellen Is hinting at a potential treasury BuyBacks coming so the U.S government is Going to buy back the same bonds that They issued in the past and this opens a Whole can of worms yes you get rid of The older and less liquid treasuries Whose prices have crashed to Hell However to finance this purchase the Treasury has to raise money by selling More bonds at higher interest rate which Is dangerous remember the Federal Reserve can't buy bonds from the Treasury at this moment printing money Is not possible Janet Yellen has to sell More bonds to the public but who's Buying so for example the treasury will

Buy back a bond that yielded two percent In the past at maybe a 20 discount but To fund that purchase they now have to Sell new bonds at a yield of four Percent and this is going to add Additional strain to the national debt And if these new bonds at four percent Aren't being sold no one wants to buy Them this will just push up bond yields Even further so I want us to understand The truth behind the GDP numbers it Looks good on the surface but it is a Bloody graveyard underneath with Consumer demand dying but to the Federal Reserve the metrics looks good and they Will continue to hike rates because Inflation is still the number one crisis The United States is facing now Recession in 2023 is going to be Inevitable no matter how the FED moves They cannot save the economy now if the Fat does nothing and allow rates to sit At three to four percent for extended Period of time we are going to enter a Stagflation hell we will see inflation Stay elevated and Crush consumer Spending and savings even further and if They choose to do the unthinkable and Pivot we will see another search in Inflation yes there will be a temporary Euphoria rally but reality will strike The market sooner or later and we'll be Back at square one and that's why I Believe the FED will continue to hike

Rates until something breaks I believe Their hand will have to be forced by Either the bond market collapsing or Unemployment really spiking hard and if That happens Paul will do a bank of England and turn on the printing presses And that's why I'm building a mix of Cash and gold especially as we head Towards winter I do not know when the Markets will break but if a collapse Happens I will have dry powder to jump On cheap equities and my stockpile of Goal is to hatch against the event if Paulo loses his Minds he goes crazy and Then he pivots early so don't take the GDP numbers at face value guys there are Still big structural problems in the Economy but to the fact the economy is Looking strong and rate hikes are still Coming so let me know what you think is The fat actually considering a pivot Soon or will they keep hiking until Something breaks let me know in the Comments below stay safe be sure to Smash that like button and subscribe as We navigate through these crazy times