Fed Rate Cut Date REVEALED (Important!)

in this video you're going to learn

exactly when the Federal Reserve is

going to cut rates and you're going to

learn exactly how to track it hey if you

want to bundle up on the programs on

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taken care of yesterday Elon Musk

replied to uh you know a tweet

suggesting Jerome Powell uh will not

lower rates for two years and that is

not what he said in fact I replied to

that chain it's it's right here uh it

says good morning everyone Jerome Powell

said the fed's forecasts have been uh

wrong on inflation in the last two years

and he actually said Economist forecasts

have been wrong the last two years but

anyway now he's saying rate Cuts aren't

going to happen for another couple of

years that's that's not what he said he

was responding to a two-year projection

statement Elon replies here he is wrong

I thought it was interesting I gave this

reply here I uh broke down the formula

again for those on on Twitter which is

probably a little too complicated for

the Twitter World Twitter world seems

like is it going up or is it going down

as soon as it gets complicated people

don't like it as much uh but anyway I

wrote I provided it anyway we know this

right drone Pals formula for reducing

rates which is actually what he

reiterated is cut as inflation

expectations fall expectation plus the

target real rate equals the nominal rate

in other words we get to the five

percent

when you add together three percent plus

the target rate that's how you get to

you know some sort of inflation adjusted

rate where we sit now to have

sufficiently restrictive policy uh and

uh when this number three Falls is is

when we expect to cut we actually if you

look at the five-year Break Even we

haven't gotten to that cut level yet uh

we've talked about this golly probably

for at least a year now but we've talked

about the five-year break even as being

this tool that'll indicate when the

Federal Reserve is likely to cut based

on when the Federal Reserve cut the last

time in the last cycle ignoring covid

and so when was that you go back five

years and you go to 2018 and when you go

to the 2018 cycle you can see what level

we have to be at on the five-year Break

Even to in my opinion expect a rate cut

from the fed this cycle or this time

around so in other words we can actually

rely on history as potentially a leading

indicator for when the FED is going to

cut and that's provided by this chart

right here on screen uh oops I made it

hide hold on one sec there we go this

chart Okay cool so let's manipulate this

chart a little bit and I think this is

very important now as I mentioned this

chart I want to remind you that phase

one of that coupon expires today

remember there are going to be four

phases of price increases uh the first

one on screen now uh starts uh tonight

and uh that's because we're getting

ready for a massive new release of a

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then on the income side we have the uh

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down below first phase expires today but

take a look now at this chart this chart

gives you your guidance for exactly when

the Federal Reserve will cut and I think

people really forget this uh but that's

okay you know if we have if we know

about it and other people don't then it

gives you Alpha right it gives you

Market Insight that other people don't

and one of the reasons I've been uh

going along the market uh certainly

since uh you know the the probably

around

mostly been along the market since about

the middle of last year uh and uh really

heavy into than chips and techs starting

in about November but if you take a look

at this this really gives you your guide

of okay well as long as we're trending

down on these the rate Cuts will come

rather than a Paul volcker in order to

get a Paul volcker you need inflation

expectations to do this which is what

they had done during 2021. this is why

going into March of 2022 everybody

feared Paul volcker so much and we saw

such lows in the market because the fear

was if these expectations continue on

forever we're screwed but the opposite

happened right expectations fail now

what level do they need to fall to to

see Cuts well let's first Mark the next

or the last time the Federal Reserve has

cut and the last time the Federal

Reserve cut was well over here during

covid right this was our emergency

Sunday to rate cut uh and you you could

see this this occurred right around the

time uh the inflation expectations were

over here in a pit but we're not we're

not going to look at this you know this

is really when covet started and over

here is when you had uh the Fed rate

cuts and unlimited bailouts and all that

happened over here Let's ignore that for

a moment and let's go over to the last

time we had some sort of pivot from the

FED which was really the end of 2018 and

so your pivot was really about here uh

let me see if I can get that to be

exactly perfect for you give me one sec

I'm just going to look uh at the data

I'm looking for uh okay there it is

it looks like it was about 1.70 let me

put that on screen for you here because

in the back end I can actually see I

when I hover over I can see what date

these are but anyway it was about

170. so yeah right about where I had it

seems to be about right so 170 is right

about where the FED last that sort of

pivoted at 170 is right about here there

you go and so you can see where we are

now where we are right now leaves uh

over here at 2.2 leaves a little bit of

work to do in fact it leaves about 50

basis points of work to do 50 basis

points is about the difference between

what we see now and what we saw during

the banking crisis about a 50 basis

point difference over here uh it's also

uh this this difference that we saw if

you ignore sort of the March crisis here

and you go back and say well how about

from today back to when did we have 50

basis points well it was actually in

September that's about nine months nine

months is quite a while if we continue

at that pace it would take roughly nine

months for the FED to get to that cut

level nine months would be consistent

actually though and it's kind of creepy

but when you align it a nine month

decline in inflation expectations would

aligned with

March March of 2024 q1 which how

interesting q1 2024 is actually where a

lot of people right now are placing

their bets for Federal Reserve rate cuts

and that's probably where we're going to

see the rate Cuts whether it's January

or March of 2024 it'll probably be

punted to then much like recession

expectations are being punted to uh to

2024

currently you have about a 34.7 chance

of being at your first rate cut by March

of 2024 but if you actually add in the

odds of those people who think you'll

already be on your second rate cut 14.6

and your third rate cut 2.2 you're at

about a 50.1 or 50.1 sorry 51.5 chance

uh of of right cuts by March of 2024

based on what the market is pricing in

now whereas most of the market uh and

when I say most of the market I can give

you the exact math on that most of the

market is actually at most of the market

is actually 75.6 thinks we will still

not have cut rates by January of 2024.

now that's actually good that shouldn't

discourage anyone or make anyone sad the

reason for that is because it means the

market has already priced in that we're

not seeing Cuts really until the coin

toss potential so let's write that down

clearly here so we can all see that so

we have a coin toss coin cost potential

of cuts by March 2024. which is

consistent with this chart that we just

explained which suggests that we have

about nine months to go now this is a

pretty bumpy chart and the volatility

will suggest that we we may get there

faster or we may get there slower but I

believe that this is really the tool the

Federal Reserve is using in the

background to guide their decisions I

believe this because if there was one

thing that screwed up the Federal

Reserve in the 1970s it was failing to

respect this chart this chart failed the

FED in the 70s because they ignored it

had they paid attention to this chart in

the 70s they would have undertaken the

correct interest rate policy much

earlier but they didn't pay attention to

this chart until about 1981.

now that's remarkable because in 1981

you can go back through the historical

Archives of the exact transcripts not

even the minutes of what they said at

the meeting but the exact transcript you

can look at the transcript of what the

Federal Reserve said and in 1981 the

Federal Reserve all of a sudden realized

they had screwed to maintain inflation

expectations they screwed up and in

order to actually control inflation

again they needed to lower inflation

Expectations by aggressively raising

rates and that's ultimately what became

Paul volcker so Paul volcker came about

by raising rates aggressively realizing

they had not killed inflation

expectations yet because they raised

rates aggressively in 1980 but they

didn't go far enough to get that chart

to come down so even though they cut

rates stupidly too early in 81 they

ended up having to hike rate

substantially again starting in late 81

and through 82 causing this near 20

percent interest rate uh fight versus in

the year 20

or 20 of near 20 inflation rate near 20

percent uh fed funds rate just to crush

inflation and create a nasty recession

that was the definition of getting Paul

volckert and again it all resorts back

to

one chart and that was anticlimactic

there we go that chart uh in this chart

I I if there's one thing you want to

look at on your trading view on almost a

daily basis it's the five-year

break-even chart you could just type

that in a five year Break Even uh it's

the difference between the tips and the

five-year treasury bond so there's a lot

of volatility since it's since it

basically moves every single day but you

can see this on trading view as well or

really wherever you want to look but I

would encourage watching this and when

this level gets down to about 1.7 which

I think will be somewhere around March

of 2024. I expect the FED to pay

attention to this chart and cut rates

but you can see we're not there are we

potentially consistent with a pause only

to the extent that this does not keep

Rising I think you can actually indicate

or use this as a tool to suggest whether

or not the FED will hike or not in July

I think that if July in July we are

still range bound so uh let's consider

that for a moment the FED let's say it's

it's the day before the Fed meeting in

July and let's say that the inflation

expectation level has been bounded

between this range right here I think

the Federal Reserve might be convinced

to

uh to hike rates again because they need

to drive these expectations down again

they need to get this to come under this

to slowly start trending uh to 1.7 and

if they aren't seeing this level come

down they might need a hike again now if

by the time we have the next meeting

over the next let's say or call it over

the three weeks before the meeting so in

other words within the next couple weeks

starting and then over the next three

weeks thereafter which would be three

weeks before the meeting since the

meeting's about four and a half five

weeks away if all of a sudden inflation

expectations are trending down and

they're within this range we're at about

a two or one point nine for inflation

expectations

I believe it would make sense for the

Federal Reserve to either to say hey

look we're going to wait until September

or

they might say we're just gonna skip

another meeting whatever right that

would make logical sense based on this

chart so far this chart has guided all

of the FED action and we don't need to

go through the history of it because you

know we know practically it has worked

but I mean you could consider this by

looking at look it's really high let's

get 75 basis point hikes okay it's

moderating let's go 50 BP hikes okay

it's moderating even more ignore the

banking crisis from it it's moderating

even more let's go with 25 basis point

hikes okay it's pretty stable let's go

with a pause okay if it if it stops or

it unanchors oh let's hike again you

know what's it going to take to get down

to that thing rate cut

uh so we'll see uh but uh I I believe

this is a a very fascinating tool that

really everybody can use and and quite

frankly many analysts I think are under

analyzing and under using but that's

okay I think when other people aren't

using those sort of tools they give you

an edge in the market finding those

sorts of edges or things that we do on a

daily basis whether it's in the real

estate investing uh chat or our uh

stocks on psychology money chat or

productivity chats that we have every

day the market is open uh in the courses

linked down below where we're going

through earnings calls we're going

through reports together we're doing

fundamental analysis so remember to

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