Major Fed Warning & Market Crash.

all right stocks are pissed again today

in just a moment I'm going to talk about

the Federal Reserve and an important

warning that somebody from the Federal

Reserve gives us we'll break that down

in just a moment I do want to give you a

heads up this morning's PPI numbers were

fantastic the problem was the ones from

last month were revised up and the

components that feed into the fed's

preferred inflation gauge weren't as

ideal that might be contributing to some

of the selling today though I actually

think some of the selling today yes it

could be because of these 200% tariffs

on wine and alcohol with the EU and the

ramping up of the EU trade War I think

some of it could be due to what JP

Morgan told us two days ago which was

institutions might consider fading

rallies this is basically a way of

saying that institutions might be of the

impression that the next 6 months to

maybe even a year or two years or longer

could be less ideal for stock market

returns and there might be better

opportunities in the private space in

treasury bonds or just in Opportunities

see you have to also give a value to

opportunity let's say you have cash

because you got out of margin and you

raised a little bit of cash on green

days it gives you that opportunity for

when and if there's an oopsy dupsies in

the economy maybe you can make an

acquisition at a cheaper price and that

optionality creates value maybe more so

than we can get just on sort of the

daily buying the dip and I'm not saying

don't buy by the dip I'm simply arguing

I think this is what institutions are

doing and some of that sell-off that we

saw this morning I think is driven by

that but for now let's talk about some

facts and data unemployment claims came

in a little bit better than expected

this morning but there's a little bit of

a risk factor here and that we're still

above 20% of States signaling quote

significantly Rising unemployment claims

and usually what you see sort of the

suits on Wall Street say is when you get

over 20% of states with increasing uh

unemployment claims you could slowly be

leaning towards a recession while

masking the risk with the overall number

seeming like it's stable actually coming

in 5K lower than expectations this

morning and seeming stable but then that

underlying state-by-state data creating

potential risks now In fairness though

we've seen those risks for over the last

about 18 months of sort of those

elevated underlying states with higher

levels of unemployment so maybe that's

not as great of an immediate metric but

then again unemployment claims usually

aren't a great leading indicator of

recession it's usually after a recession

like when the recession is over that

they tend to Peak out so using it as a

leading indicator is messy at best uh

and at worst is just plain downright

wrong and that's why instead I'd like to

just focus on what the Federal Reserve

is warning us about about because we've

got the FED meeting next week that we

got to pay attention to so let's get

into it hey so I just read an opinion

piece from Bill Dudley of the Federal

Reserve I think it's worth going through

and understanding where his POV is on

the Federal Reserve bailing out the

Trump tariff stock market if you will so

let's get into his details quickly all

right so first thing Bill Dudley he is

the former president of the Federal

Reserve Bank of New York he actually

thinks that the Federal Reserve is going

to end up being too complacent to stop

the damage of tariffs now every time I

say something negative about tariffs

there are people like well we should

equalize with other countries and uh you

know why didn't you complain about

tariffs under the biiss I'm not trying

to be political it just doesn't really

matter the point is tariffs equal more

dead weight loss of government

intervention it's that simple there

should be no tariffs at all we should

have free trade all sides should have no

tariffs do I think that us implementing

tariffs to try to get the other side to

get rid of them is a good

idea not necessarily because I kind of

think you're fighting a fire with

fuel you know it's not fighting fire

with fire it's literally just worsening

it I think there are other diplomatic

ways to handle it but but I understand

the marketing POV because it's oh if we

tax somebody else we can give tax breaks

to Americans sure and it's possible that

we're actually going to pull off those

tax breaks to Americans because I think

that Republicans are sort of holding on

to the continu or the um budget

reconciliation measures which they

generally get you know one to three of

per year depending on how they divide uh

you know Revenue spending and debt limit

bills and I think they want to use

budget reconciliation to pass Trump tax

cuts so yeah we expect Trump tax cuts to

come as long as you know we can actually

get to that point right now we got to

get through preventing the government

from getting shut down Schumer as we

know is trying to get uh an extension

push to try to get individual spending

bills considered he only wants to extend

the government budget for you know

somewhere around 29 days sort of echoing

more of a Thomas Massie Republican like

we shouldn't pass a budget extension for

seven months here but if we don't pass a

budget here by Friday then the

government will shut down and we'll have

all that drama to deal with on top of

the Tariff drama uh and that also kind

of reiterates that the Federal Reserve

probably won't step into get involved

with stopping the damage of about

government shutdown either though those

tend to be

overblown the drama around those what

matters here is Bill Dudley suggests

that the Federal Reserve themselves will

be very worried to dare make the mistake

again and call inflation transitory see

a lot of people want to say oh you know

well if we have some inflation shock

again from tariffs they'll just it'll

just be sort of a one-time shock in

other words it'll be transitory but

because the Federal Reserve has made

that mistake in the past they're

unlikely to want to risk repeating that

same nonsensical mistake calling tariff

inflation transitory that he believes

Bill Dudley that is uh could end up

leading the FED to react too slowly in

addition sticker shock from tariffs

increasing supplier pricing which could

show up in some consumer pricing might

lead consumers to recoil and then

consumers don't buy it and then

retailers are forced to lower prices and

margins go down and blah blah blah blah

blah this is all worsened by retaliation

which you know we already talked this

morning about how Canada had the very

nominal energy tariffs to which Donald

Trump freaked out uh and then uh Canada

quote unquote folded and got rid of

those energy tariffs but today came up

with probably 2x the tariffs that they

had uh that that Trump implemented on

them yesterday with you know now over

$20 billion of product exposed to 25%

tariffs from Canada steel aluminum iron

computers and

otherwise all of these retaliatory

tariffs are likely to be met with more

retaliatory tariffs from Trump which

were then likely to be met with more

retaliatory tariffs from countries like

China who is now allegedly wanting to

buy more beef from Canada instead of the

United States because well that's what

happens in trade Wars in a trade War the

only thing you usually accomplish is

anti-americanism and other countries

just go well the enemy of my enemy is my

friend so you want to partner up this is

just normal this is why I'm very

anti-terrorist but that's okay I I'll

tell you when I give you my opinion and

when I'm just kind of giving you data or

facts generally I just stick to facts

here uh and so Bill Dudley says markets

are actually pricing in three cuts by

mistake right now because markets are

assuming the FED is going to view rate

or tariffs as transitory inflation and

therefore they're pricing in three rate

cuts which is true we just talking about

that yesterday three rate cuts are

priced in through January

2026 however Bill Dudley says this is

probably going to be wrong partly

because as we see a Slowdown in markets

markets right now and in business you

know get Walmart some of the warnings

that we're getting Airlines the Slowdown

isn't dramatic enough to trigger real

slack in the labor market and with a

lack of immigration and deportations

you're likely to see elevated wages

which elevated wages keep service

inflation

high in

English you're going to have a fed

that's not going to react quickly in the

face of quote unquote transitory

inflation from tariffs because they're

not going to believe that so they'll lag

on that and they'll lag on responding to

the labor market moving down slowly

because you might not see labor market

stress until later obviously if

unemployment falls off a cliff well then

we're probably in a deep doooo recession

anyway and the best time to buy the dip

is when the Federal Reserve comes in

bails everything out and fully urns

which I fully expect the Federal Reserve

will U-turn the future problem is we

don't know when and people like Bill

Dudley are saying it's probably going to

take a lot more

time he makes it clear tariff inflation

is still inflation fed can't disregard

it especially if inflation expectations

continue to rise which if you look at

the last UFM reports inflation

expectations are rising it's not good he

also suggests that uh the FED being

reluctant to cut hurts bonds for now so

keep that in mind it actually keeps

yields higher for longer which is also a

problem because higher yields for longer

create higher costs for businesses for

longer and actually exacerbate the

problem so higher wages for longer

meaning higher service inflation the

Tariff inflation won't be viewed as

transitory and potential pain for bonds

still in the near term as the FED is

reluctant to cut means it's really

things are really going to have to go

do-oo for the FED to cut now people

think that next week jpow on the summary

of economic projections is going to

forecast three Cuts he says markets may

be disappointed and that you might want

to be warned for warned not to expect

three cuts from Powell and instead

expect the tight lip Powell going

everything's fine yeah there's more

uncertainty but that hasn't materially

affected the economy yet and therefore

we're only penciling in to rate Cuts so

that could be a risk along with

obviously next week we'll have the this

whole budget Showdown again we'll see

are we actually going to be able to pass

a budget next week uh or by the end of

this week or not you know Democrats are

freaking out about potentially

entrenching benefits for Elon Musk with

the White House and they want amendments

and this more all this drama for a

different video so this is an update for

you on what's going on with Bill Dudley

and the warning that he provides which I

think is useful uh let me know what you

think in the comments down below as

always subscribe to the channel and

folks we'll see you in the next one all

right goodbye and good luck why not

advertise 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 Go

congratulations man you have done so

much people love you people look up to

you Kevin P there financial analist and

YouTuber meet Kevin always great to get

your take