The Fed JUST Rugged.

Well, the Federal Reserve is uh

continuing to poop on the expectation

that markets should get three full rate

cuts uh including the one that we just

got. And now we're pricing in just one

and a half rate cuts. Why? Well, because

past data is pretty good. And most

members at the Fed are telling us we

good. We don't need to rush down. But

there are some calling for emergency

cuts. And it's not just my or at least

calling for more rapid cuts. We got to

talk about that and sort of balance all

of this out with companies still laying

off. Bosch cutting 13,000 jobs though

most of that is happening in Germany.

The economy is still globally connected

and it makes you wonder what's going on

because you've also got CarMax

plummeting off a cliff. Starbucks

announcing a billion dollars in

restructuring store closings and about

900 corporate layoffs. on top of the,00

corporate layoffs they just did. And

it's starting to make people wonder, is

the economic data good because of a big

old pull forward earlier this year or

like is this a continuation of hopefully

a soft landing? Because when CarMax is

down 23%

on top of already being on a massive

downtrend, I mean, look at this. This is

like this is literally like the, you

know, meme where it's like and it's

gone. Like this is like a rugpull on

CarMax is what this looks like. It's

terrible. So, how do we reconcile all of

this? What's being said in that earnings

call? What are they talking about? And

what is CarMax doing with consumers

right now? Is there potentially a red

flag there? Well, we got to touch on all

of that. Uh, I do want to make a quick

note that in the course member live

stream this morning, we killed it. Okay,

we called this double bottom and said go

bullish. It's why I was late to the

public open live stream this morning.

Uh, and you've got folks uh in the chat

uh who are saying things uh that uh that

are very nice. So, I appreciate y'all.

Uh so, some of you saying things like,

"Hey, the course pays for itself at 10x.

Uh you know what you said this morning

on the bottom? nailed it. My calls are

printing here. Wayne says, "So worth it.

Course is on point today in conjunction

with what he said uh where the market

seemed to be done with the big dump this

morning. I bought coals and they're

still printing." Thanks for saying that,

Wayne. That was really nice of you. So

really cool. I mean, you know, it was a

great day for the meet Kevin Alpha

Report. And keep in mind that's

something we've been doing over the last

few days is we set up sort of the

expectations for the day. But then this

morning we actually I I walked everyone

through this drop and my expectation was

the worst we were going to go was

negative 100 basis points and when we

pulled through that I said volume watch

volumes we rejected VWAP and you can

watch this. This is recorded like I'm

not just like rewriting history here.

You can watch me say this. go. This is a

very weak rejective we VWAP. I bet you

we will have another stab up and we will

be breaking straight through to the

upside. And sure enough, we formed a

double bottom and it was straight up. We

did all of that technical analysis live

and we even bought the dip. So, we're

down in this area. So, if you're not

part of me Kevin membership yet, check

it out. Remember, you get all the top 10

stocks to buy, the private live streams,

the alpha report when I send trade

alerts, the the you know, everything,

pay once, you get lifetime access. With

all that out of the way, let's get into

this data. So, look, we we have a list

of Fed members who spoke this morning.

Note tells us that inflation is still

too high and the labor market is still

in balance. That is probably the worst

thing the Fed could say right now

because obviously the labor market is

weakening, but they're choosing to look

at signals uh that are,

how should I put it, less less desirable

because they're looking at just broad

unemployment rates and unemployment

claims. That's what the that's what

markets are doing right now. Markets are

saying, "Hey, but Kevin, unemployment

claims this morning came in fine and

continuing claims were fine." This is

true, but this is also some of the most

noisy data we could look at. And this is

where the concern is that the Fed is

going to make a massive policy mistake.

Initial claims this morning 218 versus

233 expected, 232 on the prior.

Continuing claims were down 6K, although

the prior was revised up 8K. So, you

know, this is noisy, noisy data. I mean,

two weeks ago we had horrible

unemployment claims and then the state

of Texas, who's basically a Trump shill,

is like, "Oh, you know, that was only

because of fraud." Oh, okay. One time

out of nowhere, all of a sudden, that

one week, oh yeah, that was only high

because of fraud,

whatever. So, the data that people are

paying attention to, specifically the

Fed, a lot of the Fed members, I worry,

is going to prove that the Fed will end

up being too late. And the biggest thing

that I pay attention to regularly are

updates to that 27 weeks long-term

unemployed level because it says that

these people have been unemployed so

long that they're not even being counted

as unemployed anymore. If you added

these people to the long-term unemploy

or to the current unemployment rate, the

current unemployment rate would be

substantially higher. In addition to

that, we've actually seen uh the labor

force participation rate come down. And

if the labor force participation rate

stabilizes back up and we get higher

layoffs, we're going to be in a very

rapid 5 to 6% unemployment rate almost

overnight. And the Fed is going to be

blind to it. This is the labor force

participation rate. You can see that we

did have a downtrend post uh the

financial crisis, but look at what's

recently happened here postco. you had

this big push up in the labor force

participation rate and since 2025 the

end of 24 beginning of 25 you've seen

this drop. I think this drop is a little

easier to see if we go to the quarterly

data just cuz it's going to smooth this

out a little more. See this drop right

here? If this drop normalizes back up to

where we were over here,

we're going to see the unemployment rate

skyrocket. And this is what in my

opinion the Fed is blind to right now.

Again, you had Schmid this morning tell

you, "Hey, the labor market is in

balance. Inflation is still too high."

Goullesby says, "Hey, hey, whoa, whoa,

whoa. You know, we got to be careful

about front-loading cuts because we

don't want inflation to to, you know, uh

uh to take off and end up proving to be

more persistent and uh we're optimistic.

We're on a golden path here." Oh, that's

great. Now, the Fed is talking about a

golden path. Like, everything's gilded.

I guess everything's fine. But labor

market data shows per Goulsby moderate

cooling. But Daly clarifies this and

she's like, "Look, we don't really see a

recession right now. Stagflation doesn't

seem like it's around the corner, but we

don't really want any more softening in

the labor market. We just want it to

stop." We had literally like four

speeches this morning. It was insane.

So, I'm giving you the TLDDR here.

Bowman says tariffs will have a one-time

price impact, but it's appropriate to

shift to focus on jobs versus inflation

because we're within the range, the

flexible inflation range of 2%. And the

labor market might be more fragile than

expected and therefore we should justify

more cuts now, but she's in the

minority. see Bowman and Myron, they're

in the minority of emergency cuts uh or

or at least rapid cuts now, not going to

zero, but get rapidly off of that

restrictive level so you stop causing

more damage to the labor market. I think

they're both right. I think Bowman and

uh Myron are right that we should be

lower. We should be at like maybe a two

or two and a half% rate uh for a Fed

funds rate instead of a four where we

sit now. So we can hope to minimize some

more of that damage of the labor market

because remember what you're seeing at

CarMax and this is really important. So

go back to dude the freaking Q's calls

keep printing. That's what we called

that double bottom line in the course

member live stream this morning. I'm so

happy about that. I'm so happy about

well I'm not I mean I bought the dip too

but I'm I'm so happy that we were able

to pull that off in the meet Kevin

membership this morning live. I'm like,

watch watch it go straight up from here

and and it did uh on a double B. It's

this is great. So, congrats to all of

those of you in the meet membership. But

anyway, understand what CarMax said this

morning. Sar said that

in in their analyst earnings call, we

looked at sort of the live trans grip of

it because the earnings call was going

on this morning during while we were in

the meet membership and CarX was saying,

"Hey guys, listen. Um, yeah, we know

we're getting into more subprime loans,

but uh we're trying to remain

competitive here, guys." Okay, hold on a

second. Hold on a second. Hold on a

second. Hold on a second. That's really

bad. Okay, that's really bad. I mean,

yesterday we did a video talking

aboutricolor and, you know, the the auto

the other auto group, these bankruptcies

coming in in the autos. That's not good.

But it could be because, you know,

people are getting deported and and

they're the companies could have just

sucked, right? But now CarMax is telling

you guys,

uh, look, uh, we're going to cut SGNA to

get margins up. Don't worry, it's not

going to affect our advertising, but uh

we are uh we're not as competitive as we

would like to be. So, we've got some

repositioning to work to try to get

better. And then, you know, one of the

analysts is like, "So, you're going to

do uh more shitty loans, like more

subprimes?" Like, isn't that bad going

into a potential recession? like

well you see

so it's like it's not good and so the

car situation today begs the question is

the data that we're getting this GDP

data that came in so hot this morning is

it saying that the economy is strong or

is it saying that the economy has been

strong because a artificial intelligence

almost certainly because of artificial

intelligence. Deutsche Bank this morning

suggested we would have been in a

recession in Q1 had it not been for the

AI buildouts. Okay, great. Uh but

you and then you look at capital good

orders, you know, capital good orders

coming up 6% today versus the zero

expected. Uh and that's that's on top of

the 08 which was slightly revised down,

but it's on top of the 08 we got last

month. That's really good capital good

orders numbers. really good. So people

are like companies are investing in

infrastructure. Uh but is it potentially

is CarMax potentially the sort of

leading indicator that now we're getting

so much stress amongst the consumer that

is bubbling up. You start getting the

subprime lenders go bankrupt. you start

getting Starbucks, the Chipotles, the

regular kind of consumer stocks start

having stress and start bubbling up and

start laying off more people, which just

leads to lower sales. You know, the

cycle begins. The thing that's booming

again, that AI buildout, but is it also

possible we had a really big pull

forward of people blowing money on

stuff? So the idea here is that you know

especially with CarMax which they

reference as well maybe people were so

worried about the impact of tariffs they

bought a car in Q1 or in Q2 during the

pause they're like let's get ahead of

tariffs let's buy a car now they buy a

car and then what ends up happening

nobody's buying a car in Q3 because well

technically their Q2 their Q2 is funny

their Q2 ends August 31st so it's June

July August so you get this this you low

because there was such a pull forward.

You're going to get that by the way with

Tesla as well. Like I think Tesla's

going to have a a record delivery number

here in the third quarter for Tesla. Uh

you know with with deliveries that are

coming out I think next week. We'll get

those next week or the week after that.

We'll get delivery numbers you know

first part of October here. And those

numbers will show how many deliveries we

were able to get with an expiring $7,500

coupon code. It is literally like, you

know, Kevin saying, "Hey, the Me Kevin

membership price goes up tomorrow uh

night," which that is what it's

scheduled for. You go to meet Kevin.com

and you can see that. But that's

extreme. I mean, like, we raise the

price of the Me Kevin membership over

time because we think we keep adding

more value, especially a day like today.

We just freaking killed it with the

calls. But, uh, and buying the dip at

like the perfect time, but you go to

Tesla, this is a $7,500

coupon code that's expired. That's

insane. Now, Tesla will probably have to

drop their prices to be competitive in

Q4 and Q1, but I don't think they're

going to drop their price to 7,500

bucks. You know, the credit will go

away. Tesla will drop their prices, you

know, 2 or $3,000

or they'll give, you know, I mean, you

can't really buy down rates anymore

because you're already buying them down

to zero. So, uh you will see price drops

on Tesla in Q4. And there is a potential

negative sentiment that will come with

that. like you'll get price drops in Q4

uh uh only part of what the credit goes

away and then you know everybody will

about the pull forward to Q3 with

Tesla because people will be like oh my

gosh like nobody needs to buy a car in

Q4 that's a Tesla because everybody

bought it in Q3. That's kind of exactly

why I think we're going to lose the 414

line and I you know I I've got exposure

to Tesla stock. Uh, so you know, like

I'm I'm saying it as somebody who's got

exposure. Q4 and Q1 will probably suck,

but Q3 should be really nice, but but I

don't think it'll that'll that'll that

will be enough, right? Okay. So now,

like reconcile this at the same time as

you've got this weakness of the

consumer, you have a Federal Reserve

that's like things are good. you know,

labor market data. It's fine, guys. It's

it's fine.

Okay. So, great. But what happens when

all of a sudden we end up getting an

increase in layoffs like what you're

seeing announced at Starbucks, except

it's more ubiquitous, right? What

happens is we will go back to zero

interest rate policies because the

Federal Reserve is basically sitting on

a button there. It's basically like,

hey, as as soon as we see those layoffs

spike uh and and the unemployment rate

skyrockets,

zero interest rate policy. Who's going

to win when that happens?

Lenders, real estate companies, house

hack, knock on wood. Uh and and and but

but the economy is going to suffer.

And people think, well, I mean, if we go

to zero interest rate policy, won't that

be stimulative? Not enough.

You you don't stimulate until the

Federal Reserve actually turns the money

printer on. And so, not a single member

of the Federal Reserve is prepared for

it. I kid you not, there is not a single

member of the Federal Reserve that is

prepared for it. Why do I know this?

Because Myron is the most doubbish out

of all these people. And my says, "Even

though I'm more sanguin on growth than

others at the Fed, and I think that

shelter inflation will come down, and

the longer we stay restrictive, the

greater the risk, I don't think the

labor market is about to fall off of a

cliff."

Okay? So, in other words,

even the most doubbish of doves is like,

"Labor's not going to fall off a cliff."

Fine. Maybe that's true. Maybe the

Atlanta Fed real GDP is right and you

know the economy is booming at these

levels. That's fine. Of course, it's

going to boom at these levels when we

haven't seen the unemployment yet. But

if for some reason we get that spike in

unemployment, the GDP will come down as

a lagging indicator

because spending will drop, earnings

will plummet, and then you'll see GDP

come down and then it'll get revised

down too. So none of the Fed members,

even the most dovish, are ready for it.

So that's this balance that we're

running into. Now that actually creates

some interesting, you know, you know,

potential investments for gold or the

dollar. While we're higher for longer,

the dollar does well. So the dollar goes

went up today because we're only pricing

in 1.57 cuts. Uh gold is flat but

realistically should be up because

there's a greater chance in my opinion

of the Fed making a policy mistake and

gold loves being a safe haven in the

event of a policy mistake. Now you've

even got people like Jeffrey Gonlock who

are saying you should have a 20 up to a

25% allocation in your portfolio to

gold. That's insane.

That's like such a massive exposure. But

uh you know that's because he he views

uh stocks as expensive and uh and gold

as a great hedge. May maybe it's not

insane. Uh you go into a recession once

you're in a recession, gold usually

doesn't do that well. Uh gold usually

does well with the fear of a recession

potentially coming. It's very

interesting. But uh this breaks down for

you what happened this morning with

data. this this hot data that shot

yields up, unpricing Fed rate cuts, and

then you get more neutrality from the

Fed, a Fed that's basically like this,

hey guys, you know, I mean, really what

you have is you have the Fed like here's

the range of the Fed funds rate, right?

And all of them are dancing around the

middle. They're like, uh, we might need

to vacasillate down a little bit. Oh, we

might need to vacasillate up a little

bit. You know, they're kind of here. And

I'm like, bro, if the labor market

falls, you all aren't going to be

vacasillating around here. You're going

to be like, oh crap. Yeah, rates going

to come down so dang fast. Uh, and so

rates going yields going up today

increases the risk of a policy mistake.

Now, why why and this is just education

for you. Why in the meet Kevin

membership this morning did I think

markets were going to go up after the

selloff this morning? Why did I think

that? I thought it because

we are not going to fully price in a

recession today. The data today like

unpricing you know 40 bips or 30 bips of

interest rate pricing for the year is

not enough to get the market to

sustainably sell off. It's not that bad

of news. If anything, it's decent news

and the Fed's just being neutral. So

yeah, the market is responding to the

Fed's neutrality here, but who cares?

Who cares? They didn't justify the Q's

being down 130 basis points. I literally

wrote this morning in our Meet Kevin

membership, I think the Q's at most

today deserve to be down 100 basis

points because the news isn't that bad.

And then we watched it live. We saw it

go to 130. I called it. I said, this is

extended. We called it the double bottom

and it was up from there because it

doesn't it doesn't deserve on this what

we got today to be down that

dramatically. This is just weenie babies

waking up in the morning hitting the

sell button. That's all that was. Uh and

then we we saw in this double dip that

sell volume was actually falling. Mind

you, if if you join the ME Kevin Alpha

reports, you could literally watch me

say that recorded this morning. Oh, you

know, volume lower volume on the

downside here. It's not going to last.

We're going back up

saying meet me Kevin.com got you got to

be part of the Mec Kevin membership you

know we got like what is it on a regular

like on a live I think we've got like

1500 of y'all watching uh and then you

know when you include replays it's like

three or 4 thousand of y'all uh in the

meet Kevin membership so thank you for

those of you who are there but uh yeah

so so this breaks down exactly

what went on today and it's useful to

know for the future. Uh so so I'm a big

fan of that. Somebody says too damn late

drone. Oh yeah. Yeah, exactly.

Sean Moon says gold up, bad job, gold

up, rate cut, gold up, recession.

So, it's not true that only hot

inflation uh hurts gold in my opinion

because I actually think hot inflation

helps gold because people see it as as a

hedge, right? And they see it as as um

uh a a wealth protector during

inflationary time. Uh but what I do

think you have wrong is I do think in a

rec uh in a in a recession, gold

typically falls. gold rises going into a

recession because people use it as a

fear product, but once people are in a

recession, it also gets sold. So, it's

an interesting duality on gold there. Uh

but uh but yeah, no, I mean like at the

moment, sure. Yeah, it it certainly it

makes sense that uh uh gold's

interesting. Somebody Russ Moment says

buy McDonald's. McDonald's does

typically uh do well. Like the thing

about McDonald's is

it loses less in a recession.

Historically, I've studied this.

Historically, it loses less in a

recession, but it still doesn't mean

it's a moon, right, in a recession. Uh,

anyway,

>> knows about this.

>> We'll we'll try a little advertising and

see how it goes. Congratulations, man.

You have done so much. People love you.

People look up to you.

>> Kevin Pra there, financial analyst and

YouTuber. Meet Kevin. Always great to

get your take.