Bulls are resilient but the worst is yet to come....

First let me share a nice summary I just got from a friend about the key takeaways from today's Fed decision and Powell's press conference:

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The Fed does this Summary of Economic Projections ("SEP") once a quarter... This time around, the projections showed, on balance, that the central bank sees everything getting just a little bit worse over the next 12 months than what the Fed was projecting in September. Still, the central bank is planning to hike rates at least one more time after today.

While their expectations for real gross domestic product ("GDP") growth in 2022 grew from 0.2% to 0.5% and their unemployment projection remained about the same through year-end, the Fed members expect things to deteriorate next year...

They project a median real GDP growth of 0.5% next year compared with the 1.2% they thought in September. Their unemployment figure is a bit higher at 4.6% versus the 4.4% projection three months ago... an estimate that means 1.6 million Americans out of work.

Meanwhile, the Fed expects core inflation to be higher in 2023 – 3.5%, by its preferred measure – than it indicated before (3.1%).

That's not exactly a bullish picture. And yet the Fed says rates and the costs of doing business will keep going up...

Most Fed board members seem to see the benchmark fed-funds interest rate hit a minimum of 5% next year, then remain above 4% in 2024 and above 3% in 2025.

And they don't see the core personal consumption expenditures ("PCE") index of inflation getting below 3% until 2024 or close to 2% until 2025, despite inflation coming down from its peak in the summer. As Powell said...

We made less progress than expected on inflation. That's why unemployment goes up because we're having to tighten policy more... That's the idea: slower progress on inflation, tighter policy, probably higher rates, probably held for longer just to get to where you need to get inflation down to 2%.

Yet on the other hand, in its written statement announcing its policy moves today, the Fed said...

The Committee is strongly committed to returning inflation to its 2 percent objective.

It doesn't add up, or maybe it does. Fed members are committed to an economy with 2% inflation, but they're not expecting it to happen anytime soon – and certainly not next year while unemployment rises and growth slows. It's right there, written out for anyone to see.

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Here is what shared with my DW Family about a low risk trade with a 1:7 risk reward ratio today:

The SPX TA trend looks quite bearish at the moment but we are in the seasonally bullish period and bulls are fighting for the Santa Claus rally. So it is not advisable to bet heavily on either side. Low risk trades are the best way to go for now!💪✌