The Fed *JUST* Issued a New Monday Warning.

well the Federal Reserve is being

flippant again hey everyone meet Kevin

here I just listened to an interview

that Bloomberg held with Federal Reserve

president Barkin and he gave his

commentary on his thoughts after Jackson

hle a lot of the interviews from before

Jackson Hole I don't think are greatly

useful right now because we got a jpow

that was very enthusiastic about the

time has come for rate Cuts but how many

rate Cuts in fact some have been spec

cating that heyy you know the FED will

probably want to go 25 because when we

went up in rates we went 75 75 75 75

then 50 then 25 so we went up quickly at

first and sort of slowed down and

tapered now people think we should do

that in Reverse where you slowly hit the

gas on rate cuts and you go 2550 and so

on like that but you have JP Morgan

suggesting ah no we're have 250s and

then a 25 so a lot of these enthusiasms

and I wanted to listen to what Barkin

thinks because he's more of a hawk than

Powell is but he's going to be a loud

voice at the fomc in fact what we should

do is we should do a quick check fomc

voting members you could always Google

that just type into Google fomc voting

members and you could see which members

have the loudest voices for 2024 the

first potentially three rate Cuts Barkin

is on so I think this Insight from

Barkin is quite useful so Barkin starts

out by saying that if the numbers we get

are pretty good on inflation but not

really good there is a risk that we

Plateau at a level of inflation above 2%

now I personally don't think there is a

risk of plateauing above 2% I actually

think there's a greater risk of dis like

deflation frankly of us going way below

2% but what's fascinating is you're

getting this bark in who says there's a

large part of the economy that's

standing by waiting to start spending

both in the housing market and business

fixed investment so businesses spending

on their businesses basically investing

in their business and he says both of

those are actually real risks to

inflation because right now they're

trying to push down shelter inflation

one of the lingering levels but if if we

now lower rates while we haven't built

more housing is it possible we actually

drive up housing costs and drive up

shelter inflation again and so Barkin

yeah well let me let me rephrase this

Powell when we hear Powell he's like hey

hey hey the time has come for rates and

everybody's like moon but now you've got

Barkin who's at the fed and he's he's

got this more moderated pitch here which

in my opinion means if you average these

two you're probably only getting 25 but

you're actually getting a fed that's

going to move more methodically and more

slowly than Powell implied or suggested

see his concern barin's concern is that

inflation could re accelerate uh of

course that's everyone's concern but his

thing is how much change are we going to

get from people when we start seeing

rate Cuts in fact they're already

starting to see the mortgage industry

pop off again not like it used to be but

they're talking to Mortgage Bankers and

and frankly Banks uh uh you know

mortgage brokers Mortgage Bankers

whatever uh and they're seeing more and

more people apply for mortgages be not

because they want to but because they

have to either move uh downsize upsize

or they have debt to reconsolidate so

this is why some of the mortgage

companies you know the ldi the more

risky one the rocket mortgage the United

Wholesale Mortgage code it's one of the

reasons these companies have really come

off some of their bottoms and a lot of

folks think they can kind of Nike Swoosh

up uh but what's especially as rates

continue to come down but the problem

with that is he doesn't see more housing

being built so he sees it as

inflationary so you've really got this

sort of balanced voice to Powell over

here that's like I don't know I don't

know now also he does talk labor now he

says that labor seems to be in this

place right now where companies aren't

really hiring but they're not firing and

he's like we're on this teeter totter

where we could kind of get blown over in

either direction and we'll see soon

which way we go and he says hey if

inflation's still high and unemployment

starts Rising we're going to have a hard

time but if inflation does come in

meaningfully lower then we can really

fight the unemployment problem so he was

pressed hey like what would a bad

unemployment rate be keep in mind we're

at 4.3 right now he said that it's hard

to predict but if we were at a 4.8

unemployment rate that would be higher

than neutral in our assessment in other

words they would want to fight to bring

that unemployment rate down which is

actually good I was concerned that they

were going to wait until the

unemployment rate got to like 5 and a

half% or something like that because

historically the unemployment rate has

been there uh so seeing them say Hey you

know 48 would be higher than we want

it's actually a good thing uh he does

also see de globalization as a risk I I

personally don't I think uh

reglobalization is what we'll see uh but

you know I I suppose you can mention

risks without thinking that those

actually have very high level of risk

but anyway uh then uh he does say that

in discussions with businesses and uh

you know researchers or whatever he

thinks there are a lot of people making

choices right now based on the direction

of raid trajectory and this could mean

that he's waiting for that first meeting

to see that first cut to see how

quickly people were going to move in

reaction to that spending again in other

words let's get our September rate cut

25 BP and then what do retail sales look

like in October and November for Black

Friday are people going ham again so I

personally think that's going to lead

the FED to 2525 which I actually think

is unfortunately somewhat bearish for

the market going into the election not

just because we're going into the

election you know the first debate is

September 10th that'll be a big deal

obviously I'll be covering it uh but

also because you know markets are right

now pricing in uh 1 Point well actually

wow that's interesting this morning they

were pricing in 1.32 rate cuts for the

September 18th meeting now they're only

pricing in 1.28 so it's gone down a

little bit probably because of this

barking information and otherwise uh but

what you're also seeing is that that

yield curve I think this is one to pay

attention to your 11 basis points

inverted right now and uh we are at the

highest level we have been absent the

first two weeks of August so remember

when we had that craziness in the market

we're the highest level or or closest

level to uninverted

I'm not highly enthusiastic I know a lot

of people are really excited about

Nvidia

earnings I'm not uh and I'll tell you

why because things are quite the

opposite of what we've previously seen

with Nvidia uh so some differences that

we talked about in the course member

live stream this morning uh volatility

is at the highest level going into

Nvidia earnings that it has been in the

last

four we're instead of talking about a

Blackwell announcement and Blackwell

being in production we're going to be

getting a Blackwell delay we'll talk

about that commentary on that although

we could water that down uh this is the

first earnings report post split and

skepticism about the stock market right

now is a little on the higher side so

I'm a little nervous that this slower

more methodical fed at the same time as

a nervous stock

market could lead to unfortunately the

FED overdoing it in the bearish

direction in other words moving too

slowly and put pushing us into a

recession it's obviously too early to

tell nobody knows obviously if you think

the risk rewards are are are great for

investing in stocks right now great by

all means for me cash

treasuries uh and and then uh there's a

particular industry we talk a lot about

in the course member live streams that I

think will do well soft Landing or

recession uh so we'll see uh but anyway

take a look at those courses link down

below over at me kevin.com and folks I

love you all we'll see you in the next

one goodbye and good luck if you have

any questions email us at staff atme

kevin.com interesting little insight

here from uh Barkin oh uh and I guess

it's also worth quickly notti noting I

think there was one other thing I wanted

to touch on quick Catalyst Thursday

we'll get well Wednesday we'll get

Invidia earnings Thursday we'll get GDP

quarter over quarter Thursday we'll also

get retail wholesale inventories and

unemployment claims uh and then we will

get University of Michigan on

Friday uh we have Dural good numbers

this morning morning kind of mixed like

year-over-year negative but month over

month positive with the seasonal

adjustment so I'm a little confused by

that and extra detail the historic

unemployment rate is roughly uh

5.5% so it looks like they would be

uncomfortable even getting close to that

which is good and I am grateful that

they're focused on the jobs Market

because I think that's really where

they're going to screw up though they do

seem to think that immigrants coming in

are pushing uh you know up this um labor

participation which kind of goes in hand

inand with what TS Lombard says that the

reason it looks like the unemployment

rate is going up is participation is

going up you know more immigrants are

willing to look for work but they're not

finding it as quickly I don't know I

guess we'll see it anyway thanks for

watching see you in the next one goodbye

and good luck adver these things that

you told us here I feel like nobody else

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 PA there financial analyst and

YouTuber meet Kevin always great to get

your

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