WARNING on the Fed's FLIP *THIS* Week.

hey everyone me Kevin here boy oh boy

I'm a little bit nervous about the FED

meeting this week look today as of this

morning like right now we're at

62.5% chance of a 50 basis point cut at

the Wednesday fed meeting but I'm not so

worried about the 50 or 25 I'm actually

more worried about the market reaction

I'll explain this will make sense in a

moment uh but first I do think it's

worth clearing up that yes if we want or

if the FED wants us to believe that

we're going to get a 50 basis point cut

then they're not going to send their

cronies like former fed officials or

people connected to them like Nick T at

the Wall Street Journal they're not

going to send them to talk markets down

to a 25 they'll be okay with us leaning

towards 50 if anything I actually think

we're more likely to get more of the

Nick te's and the bill Dudley leaning

towards 50 because that's what the FED

wants so I think we've got another about

50 hours or so left no not for an

expiring coupon code this moment there

is no coupon code can you believe I'm

saying that there's no coupon code right

now uh and uh you've got another about

50 hours before you get to Fed decision

so you're just on standby and you've got

this time to let markets keep pricing in

more and more of that 50 BP cut maybe

you even get another piece out from Nick

t or Bloomberg or whatever that says

yeah yeah yeah 50 and it moves this even

more in that direction which should

bring Bond deal builds down bond prices

up and markets like stocks well we're

going to talk about that as well as

Bitcoin so you've got the FED likely to

push us towards 50 but there's a problem

with all of this and I want to start not

with what's going to happen right after

the FED Cuts because that's going to be

a little bit more speculative but

instead what do you have to look forward

to and this actually makes me the most

nervous I want you to think about this

for a moment everybody is talking about

the FED right now and that's always what

I try to do on this channel I'm trying

to get you to think different right see

like apple think different anyway uh we

could have a debate in the comments

about the grammar of is it think

differently like the action in which I

think is different or am I thinking of

things that are different like is the

subject different I am thinking of

different uh anyway

so after the FED because every Financial

pundit your fed your fed your fed your

fed it's like SpongeBob and everything's

on fire after is what matters because

after the FED meeting what do you

guaranteed have in my opinion pure

uncertainty because think about it

whether the FED goes 25 or 50 ain't

going to make a freaking big deal in the

long term what the FED says on the SCP

ain't going to make a big deal in the

long term it's always wrong anyway so

then okay fed meeting happens we either

get 25 or 50 we'll speculate that on the

moment we'll get a sep we'll talk about

that in a moment but then what do we

look forward to oh no we have 4 weeks

until Q3 earnings come out oh well what

if we get adobi remember Adobe was down

like 8 1 12% when it got adobi on Friday

because their software always crashes on

my computer uh it was down like

8.45% or whatever on Friday it's down

1.3% now on the day so far and bad

earnings could really start resetting

valuations lower and then you start the

trend going lower especially in an

environment where pricing power is

waning you know we've done quite a bit

of analysis on Restoration Hardware over

the past year in the course member lives

and we found that uh they've always been

very stubborn about reducing prices and

their valuation was actually very very

low now what's actually interesting is

they just had a stock market pop and

when we dug deep into the weeds of their

earnings were like wait a minute their

gross margin just fell 40% they're

slashing prices like crazy Restoration

Hardware cuz they're getting small p and

nobody wants small PP it's like you have

hard PP for a little bit you know good

pricing power because of uh you know all

the stimulus all the covid uh and uh and

then all of a sudden it just sort of

like Fizzles out and Fades away it's

kind of sad it's like you need something

to boost you up again but they don't

have that uh at Restoration Hardware

it's it's actually very bad now like it

went from being undervalued and good to

now we're like oh my gosh this is highly

not good but anyway so you get Q3

earnings then you have six weeks until

the election and then you actually have

six weeks and about two days until the

next fed meeting so all of a sudden all

you're really doing is delaying more

certainty because let me ask you this do

you actually think the Federal Reserve

today has any freaking clue as to

whether we're going to stick a soft

Landing or recession of course not it's

it's literally unknowable right now it

is it is unknowable now I know a lot of

people are like oh Kevin we already in a

recession other people's like no

everything's going to alltime high

that's fine I'm I'm I'm talking about

the FED what do we you could have your

opinion what does the FED think they

don't know and so this is the problem

with the rate Cuts this week is if you

get 25 you're going to get markets that

go yo why the hell are you flirting with

recession

ho and then if you get 50 you're going

to get people going man why you so

scanned bro like there is a bullish

scenario where it's like all right rate

cut cycle is getting started the stocks

to the Moon dude that's already what

we've seen so far like we've been

pricing in the rate cut cycle starting

for like a year and a half prob coming

up on two years we have been pricing in

rates are going to come down soon that's

why real estate market has stayed up

that's why stocks have gone up because

we've already been pre- pricing in and

we've already pre-priced in 250 basis

points of cuts who cares if it's 50 now

or 25 we've already priced in 10 25

basis point cuts it doesn't freaking

matter

in the long term but in the short term

markets want to know hey can you give us

some guidance like are we going to a

recession or are we still Gucci on the

soft Landing here I don't think the

fed's going to answer that I think

they're going to lean 60% in favor of

hey labor market is weakening we want to

stop this and 40% but we're not done

with the inflation fight so you know we

have some work to do the the risks are

tilted a little bit towards the side of

the labor market weakening further and

remember once you start getting a labor

market weakening it doesn't stop Bill

Dudley talked about this so I'm going to

go through what Bill Dudley and them

just said but if you're thinking that

you're going to get certainty after the

fed and think you're sadly mistaken

you're going into fear that earnings are

coming up and then earnings come out and

then the election and then the next fed

meeting like that oh is the okay this

one was a 50 what is the next one going

to be 50 again or is it going to be 25

oh dependent just getting more

uncertainty now In fairness we had good

news today Empire manufacturing came in

strong

uh it was expected to come in negative

it came in at 11.5 which is great you

had shipments growing significantly but

that's only New York state so you know

it's not like super useful for the

entire United States but it's an

indicator right firms grew more

optimistic they noted although at the

same time as you got that information

you heard that the Apple pre-order

demand for the iPhone 16 is uh

significantly uh lower uh than expected

uh JP Morgan thinks so meing coup or

whatever thinks so they're um apparently

a reliable Mac analyst you've got JP

Morgan thinking all all of them together

are like yeah no this one's just not

going to really push people to buy the

new iPhone okay so so that drags the

indices down you know Apple down almost

3% indices go down great what happens

when indices go down they start a

downtrend and they keep going down more

The Q's get rejected off you know 476

great now we go back to 460 then we go

to 438 you know it just

sucks so then we got that push from Bill

Dudley today where Bill Ley says the FED

should go big and I think it will okay

so he's putting his credibility on them

going 50 and he used to work at the FED

he worked at the FED for what like over

10 years uh almost 10 years it was 9

years 2009 to 2018 so uh he says the

unemployment rate uh is up

8% we're at the slowest payroll

employment increases over the last 3

months since covid wage inflation is low

under 4% PC is around 2 and 1 12% which

ain't that bad and the slight beat on

inflation readings we saw last week were

because of insurance and shelter and you

know Kevin here interjecting also some

travel and lodging which is a little bit

more volatile the problem he says is

that unemployment losses tend to be

self-reinforcing and so the way to think

about this is with inflation you don't

have this like flywheel effect where

like once you're going you keep going

with labor layoffs or a lack of hiring

you do because less hiring beets less

consumer spending which begets less

hiring that inertial movement is bad

it's not good it's like an object that

stays an object in motion stays in

motion right that really applies to the

labor market so he references that every

time we've seen more than a half

percentage Point increase uh in the lows

from the prior 12 months of the

unemployment rate the unemployment rate

has gone up at least 1.9% and we've had

a recession and so yes the labor force

has expanded but at some point you're

going to hit the tip of an iceberg

and then you're going to come down now

we've seen that tip of the iceberg

already to some extent now this is a

this one's a little bit more complicated

but basically you could look at Peak

private uh employment and then you could

look at Peak Education and healthc Care

employment and usually what you find uh

is one Peaks after the other and then

you have a recession here look on screen

here okay so this is uh from a few days

ago what was this this was like on

August 30th so I posted this chart here

Peak uh what is this the dark blue line

Peak government and private and healthc

care services sectors peaking after the

private sector has peaked has often led

to a recession it did so here here here

here uh and here so pretty much every

time it's peaked it's led to a recession

with the notable exception

of 1995 soft Landing

it's the only time we've had a soft

Landing now you know obviously if you

look at today's yield curve inversion

and you convert it and you you compare

it to

1995 the yield curve is like dude don't

even talk to me about 1995 1995 is quite

literally the opposite of where we've

been with the yield curve inversion you

can see that very clearly here because

if you go to

1995 which is right here you didn't

actually have it inverted yield curve

you didn't have an inverted yield curve

in ' 95 you didn't have one in '94 you

didn't have one in '96 you didn't have

an inverted yield curve until 1998 and

that was your signal for the recession

but look at the magnitude like this line

right here where my mouse mouse is

That's How Low we got in the 80s and uh

over here in the uh in the postco ERA

this

signals that massive rate Cuts need to

come this signals that rates might

actually have to go to

zero like 500 basis points of cuts just

to try to get us back to expansion and a

really positive sloping yield curve

where we can foster growth like for us

to get this yield curve back to positive

you know two or 3% we're just basically

going to have to turn the money printer

on you know obviously there there always

the short-term risk of like a a shock

but that's why you turn the money

printer on to solve the shock right so

uh that's not good the bond market is

like no no no no this is this is not

Gucci this is bad uh but of course EV

not every not there's no one signal

that's blurry somebody asked me this

morning like hey well is there any good

news out there yeah sure there is uh

manufacturing slowly starting to pick up

in the United States you've had cycles

of recession that didn't all come at the

same time like you had your Freight

recession although you still haven't

fully recovered from that you had your

chips recession in November of 22 but uh

you had good Empire data this morning

you have uh ASM services that are

positive you still have relatively low

unemployment you know 4.2% is still

really good

historically obviously the AI chip

spending continues to go on and you've

got pockets of pain where people have

taken on debt where they probably

shouldn't have they don't actually have

the ability to repay the debt they've

taken on yeah there are issues in the

economy are they screaming we're

definitely in a recession no and there

are plenty of things to counter that

we're not in a recession maybe at this

point we might be cuz they tell you

after the fact right we the recession

could have already started we don't know

uh but that's because for you to really

confirm that you're definitely in a

recession you need the jobs to roll over

okay well once the jobs roll over it's

too late and you know then then you're

already talking fed capitulation we know

we're not at fed capitulation yet

because the FED hasn't capitulated

anything we're just barely at the start

of the rate cutting cycle start of the

rate cutting cycle is bullish apps in a

recession it's very bearish in a

recession uh and then you really don't

want to invest until the FED fully

capitulates but um my take here is that

this fed meeting sadly is just not

actually going to help us that much

because we're not getting any new data

we're just basically getting you know

Daddy coming into the room going we're

going to wait for more

data it's like God damn it now obviously

we're going to cover it we're going to

scrutinize it and really what we're

looking for like my in my opinion the

fed's going to go 50 and lean doish and

and you know this is based on their last

messaging over the last 2 or 3 days so

they go 50 and probably lean a little on

the doish side and then they want to see

how the market reacts well what if the

market sells off because it's like shoot

the fed's already starting to panic you

know you see like the nervousness and

pow markets will freak out if markets

are like you know if JP's up there it's

like everything's great and we're going

50 then people are going to go you're a

liar sell so it's kind of like if he

goes up there and says things are bad

Market sells off you have a recession if

he goes up there and says everything's

great markets sell off cuz they're like

you're

fullish if he's like hey things are okay

you know there are RIS to the downside

we're okayish now but we got to get

moving I don't know it's kind of a

crapshoot as to what's going to happen

in the markets I think what you do and

this is my take this is what I would

lean I lean bearish I'm not short the

market but I lean bearish because you're

not going to get any certainty out of it

you know people are going to look at

that go man I'd rather you just tell me

we're in a recession I'd rather you tell

me we're not than tell me I don't know

we might be so we're just going to go 50

and be dated pendent well then people

are going to go damn it okay well what's

the next data oh okay I have to wait

until early October to get jobs in CPI

again I have to wait until mid October

to get earnings oh I have to wait for

the election to

happen

volatility has a extremely high

likelihood of skyrocketing over the next

6 weeks and frankly I think the upside

risk to stocks is very very very low so

uh you know people ask me they're like

oh but you know I I I I see the comment

you know people are like oh but Kevin

you're just gonna sit out and you're

gonna miss

out you're loser it's like okay well

first of all uh just because I go

bearish in July and I want to be bearish

until the election or like right before

the election does doesn't mean I'm going

to sit out forever it just means I I'm

taking a little break you know that's

the way I look at it it's like I'm

taking a little bench break I'm going to

sit down I'm going to chill a little bit

now how do I chill well I mean we talk

about that in the course member live

streams you know we went through some of

our price targets and some things that

uh that we find attractive right now but

uh look I'm you know I'm a long stocks

kind of guy I'm bullish the vast

majority of the time I am bullish I'm

just

unfortunately the the risks are so high

right now that markets are just not

going to be satisfied with anything the

FED gives us that frankly you're

probably just inviting a whole lot of

volatility because no like the FED

cannot give you certainty so if the FED

definitely cannot give you certainty

what are they basically going to give us

uncertainty and what does the stock

market sell off on

uncertainty and so that's the thing like

the best news I think is priced in the

worst news is not and nobody's even

thinking past the FED right now because

all Finance

media just fed okay so so then I look

well long-term view you know I mean if

I'm in this if I'm looking I've got a

you know a 20 30 year portfolio or

whatever to run I don't really care if

it's 50 or 25 20 or 30-year portfolio

I'm looking at October to buy the dip in

the near- term and then I'm looking cool

how do I position myself to be long the

best companies in the world Amazon apple

and fidia Tesla infas you know like the

good OG's right that's like but you

balance that basket like you don't go

all in on one you balance that basket

with okay now let's get some Bonds in

the portfolio let's have some cash so we

can go buy real estate let's go buy real

estate what else can we diversify into

not for the sake of diversification but

frankly for the sake of building lasting

wealth you know everybody can get rich

in a stock market bull market but then

you got to actually either sustain

income or you got to not lose a load of

money so uh anyway that's my take I

think the upside is pretty limited and

it's gotten even worse now because you

have rallied a bit right so look at the

cues so like for people asking today

specifically oh you know what what about

investing in the NASDAQ uh today well I

mean look you know at the beginning of

August you were sitting over here at 438

you've already gone up from there for 73

/ 43 from that bottom you're already up

8% so now from Peak 503 52 / 473 let's

say you're about 12% away from Peak so

then you look and go oh okay well I

think we're going to go way past Peak

okay fine I mean I think that's very

risk oops sorry I did the math wrong

you're oh no no no no sorry you're only

6 and a half% from Peak so you only

potentially have 6 and a half% to go to

Peak and I think it gets even harder as

you get closer and closer to the cues

like why would you do that again you

have to believe soft Landing

guaranteed so you've already had your

bals so now you wonder well are we just

an environment where we're going to make

lower highs like we are on the q's like

we are on Nvidia where you're making

these lower highs and you just have a

big correction coming up ahead well that

actually makes this potentially a good

place to go okay yeah I'm going to trim

a little bit I'm just going to sit out

the uncertainty for the next week fine

if there's if it's soft Landing post

election great

I don't know that's uh that that's just

me opinion anyway so uh that's my take

on the FED I I'm I'm not so terribly

optimistic that the outcome is going to

be great I'm going to go 50 because I

think that's what they're massaging the

massaging into right now the market was

pricing in 25 and then the FED quickly

u-turn on that so I think we get 50 I

think we get dovish but no guarantees

which leads to uncertainty which

potentially leads to selloff uh

especially going into the next Catalyst

now with all of that said I want to

thank you very much for being here uh

this is not sponsored but take a look at

what somebody gifted me uh and you could

also go see this stuff when I posted on

um meet Kevin on Instagram follow me at

meet Kevin on Instagram I'll post

stories you can see the kids and summer

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honestly this I'm pretty sure these were

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month uh because I got a package and I

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honestly um I I I kind of like it I like

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shop and Engraving I didn't even know

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this is really cool though I I thought

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congratulations man you have done so

much people love you people look up to

you Kevin P there final analyst and

YouTuber meet Kevin always great to get

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