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Morning Commentary


By Charles Payne, CEO & Principal Analyst
12/15/2022 9:45 AM

It looks like it's steady as he goes with the Fed policy. However, yesterday, Jay Powell & Company still wanted to have their assumption cake and reality, too. Look at the changes in economic projections. A few things immediately come to mind:

Table 1. Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents,

under their individual assumptions of projected appropriate monetary policy, December 2022

Powell’s Quandary

1.       No Recession.  The Fed sees the 2023 Gross Domestic Product (GDP) at 0.5% for the year, down from 1.2%.

2.       Unemployment is problematic if the goal is to get unemployment to 5.0%.

Extrapolating the changes in the GDP and unemployment, a move to 5.0% in the unemployment rate would correlate with an -0.25% GDP. I’m not sure if the Fed has ever projected a recession, which

would correlate with victory over inflation in this case. The bottom line is the Fed is winging it.

An interesting twist was that the Powell presser began by acknowledging how Fed policy impacts all Americans. It’s a line put in not long ago that usually wraps up the Federal Reserve opening statement. This goes to Powell 2.0, the man who discovered real misery in the market outside his old Wall Street crowd and the halls of the Federal Reserve. 

Connecting the Dots

The infamous Fed Dot Plot, which reflects the results of polling nineteen Federal Open Market Committee (FOMC) members (including current non-voting members), shows all but two members see the Fed funds at 5.0% or higher. Right now, the Street is modeling for the Fed fund rate to peak at 5.0%. That could be a problem.


But if you try sometimes, well, you might find

You get what you need – Rolling Stones

Although there was the same level of fireworks from the prior FOMC decision-day, investors didn’t get what they wanted. Interestingly, the Fed isn’t getting what it wants, either. The grind is still on, I’m sure the market will get what it needs at the end of the day.

What Does the Economy Need?

Looking at the table of inflation in November versus October, it’s hard to see the hopelessness conveyed by Powell on inflation. His biggest grip was about labor, but I think he is laying that on too heavily.


The market slumped but didn’t panic like last time around. But it was an ugly day for Financials (XLF).

The market didn’t go haywire, but it was another tense session that was par for the course.

Make sure to catch my Small Business Survival Special today on Fox Business 2 PM.

Portfolio Approach

We are suspending our current buys this morning in our Hotline Model Portfolio until the dust settles.

Today’s Session

Equity futures have been under pressure all morning; although, I do not get a sense there is widespread panic.  Disappointment?  Yes. But the fact is Powell has painted himself into a corner and I’m not sure he knows how to get out. This might be the biggest risk here. The Fed has gone from paint-by-numbers to play-it-by ear, and now, the guessing game.

Keep watching bond, which are less emotional than stock traders trying to get some of it back before the end of the year.

Lots of economic data to chew through this morning/ For the moment, investors are lamenting a rudderless ship.

Retail sales -0.6 consensus -0.2

Retail Sales

Manufacturing Data

Empire State Manufacturing Survey



General Business



New Orders






Empire State Manufacturing

Philly Fed Manufacturing

-13.8 consensus -10.0. Take a look at new orders…ouch!  Does Powell look at this and see strength?

Philly Fed Manufacturing

The way the market is reacting to these big economic data swoons points to greater chance of recession. People are trying to navigate through this and any kind of ambivalence at the Federal Reserve to get a true sense for the state of the current economy.

The good news is this means stocks we are spying could get even cheaper.  Over the next week as tax loss selling is completed, there could be an optimal window to pounce.


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