Watch Before Tomorrow: The Fed Rate Meeting [FOMC]

tomorrow jome Powell will face serious

questions about the state of the economy

and what the federal reserve's

trajectory is for interest rate Cuts

they'll also be providing us a new

summary of economic projections and

they'll likely be asked questions about

put this on your Federal Reserve Bingo

board why was the Atlanta fed real GDP

report so low now there are some reasons

for the Atlanta fed real GDP report but

in this video I'd like to give you my

opinion on what Jon Powell is going to

say tomorrow and how he's going to

address some of the concerns that

markets have first and foremost I

suspect drum Powell is going to very

clearly be asked about hey the Atlanta

fed real GDP numbers had fallen to -

2.4% and now at-

1.8% for the first quarter is this a red

flag that the economy could be heading

into recession I quickly expect that

drum Powell is going to turn this

question on its head by responding with

what the Atlanta fed has actually put

written on their stat LinkedIn pages

though not incorporated into their model

now that sounds a little confusing why

they're comp you know communicating

through Linkedin I don't know but they

are in fact what they say is we're in

the FED blackout period so we can't make

big adjustments to the way the formula

Works blah blah blah but on LinkedIn

they say hey we don't actually

distinguish from gold Imports and

because of gold Imports GDP numbers

probably aren't as bad as they seem and

if you adjusted these figures that we've

been getting for gold you'd actually see

GDP sit somewhere closer to 4% on the

positive side okay now this remember is

all based on the Atlanta fed real GDP

data which is very volatile when we get

a bad ISM or PMI read the number can

drop very quickly because the model is

designed to be sensitive to the most

recent reports to try to give you an

idea of how fast is the economy

expanding or Contracting the way I think

about it this way is sort of like this

let's say you're driving 100 miles on

the highway and you're going from you

know point A to point B on the highway

you've got a 100 Mile Stretch to drive

and at various different points along

the way somebody is checking your speed

and let's say at the first intersection

where where they check your speed so not

really an intersection but but scanning

point they say you're going 100 mes an

hour all right it should take you an

hour to get to the end of this road but

then maybe there was a car in your way

or something weird happen at the next

checkpoint they're like oh all of a

sudden you're only going 30 mph what's

going on and at the next checkpoint

you're going 100 again the next

checkpoint you're going 80 next

checkpoint you're whatever the point is

you can actually average over that

entire path or quarter uh growth or in

this case speed that's maybe 80 M hour

but at various different checkpoints

have these sort of like shocking data

sets like oh my gosh they're speeding

they're going 100 oh my gosh they're

speeding they're going 80 on average

still technically speeding

uh or oh why are they going 30 here this

is really bad it's very sensitive to

that recent

snapshot I believe Jerome Powell is

going to tell us tomorrow hey you know

once we adjust for these gold Imports

yes we've noticed a slowing but it's

heavily based on recent data and frankly

it's too soon to tell that there's any

material shift in the underlying

dynamics of the economy instead it's

much more likely that what we're

noticing is a response by markets to

uncertainty as a result of tariff policy

and business decisions that could result

from that see frankly if we didn't have

political uncertainty the stock market

might not be falling the stock market

and the political uncertainty didn't

exist then we probably wouldn't have

consumer sentiment or business sentiment

uncertainty and then we wouldn't have

those negative numbers and then we

wouldn't necessarily have a negative or

I should say slightly positive 4%

Atlanta fed real GDP number and I think

Jerome Powell in the position that he's

in he must take an average approach to

this and

to make sure that he's not responding to

noisy data imagine for example if they

said oh my gosh Atlanta fed is so bad

they didn't account for some of the

noise that comes with these snapshots

and they cut rates sure things might get

enthusiastic very rapidly but if we

truly do have an inflationary issue then

they would be failing that side of the

Mandate they'd actually then potentially

be forced to raise rates again which

would basically reinvite the 1970s where

the Federal Reserve last truly lost

confidence of the economy even though we

kind of laugh about the fed and their

transitory stuff they have way more

confidence and yes trust me I know we

have little confidence in the FED but

markets have way more confidence in the

FED today than they used to through this

policy of clear communication that said

what we heard from Dudley last week was

that the Federal Reserve might not

actually want to communicate very nicely

to us because remember the Federal

Reserve is stuck between Iraq and a hard

place if they say things are worsening

markets could fall off of a cliff and

therefore they're likely to want to stay

the course since public markets are

trying to price in three rate cuts the

Federal Reserve is likely to only tell

us expect two rate Cuts because they

don't want to signal that this noise of

some of this latest data that we've

gotten is what they believe to be a

long-term issue and so to prevent

signaling that this noise is a long-term

issue they'll only give us two rate Cuts

tomorrow on the forecast for the entire

year

what could that mean well that could

mean that stocks could sell down or I

know this sounds crazy stocks could go

up I know but the bond market is more

likely to get hurt so in other words we

don't really know exactly how the

Market's going to respond to Powell

because on one hand fewer rate Cuts

means uh you know less cheap money but

fewer rate Cuts also mean less concern

about the economy and so that's where

it's kind of a hit or miss there in

terms of how stocks are going to move

but certainly I expect the bond market

probably not going to be happy having to

unpriced two now that said if this is

the interesting if if the Federal

Reserve has become convinced that this

data is more than just noise then what

you really want to pay attention to is

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Slevin that's me t f a b r i

c.com Slevin ke V that this data is more

than just noise then what you really

want to pay attention to is do they

align with the market and go for a third

cut going with a third cut would align

with the market but it would signal that

some of this concern is starting to

Bubble Up so consider some of these

scenarios here right so scenario number

one two cuts signals pain for bonds

signals confidence in economy and uh

this could be faux confidence right they

might be faking it because remember they

have this weird downside bias that if

they said something bad everything would

rapidly sell off and crash if Powell

goes up there and says things are

getting back the market will sell off

like you've never seen a market sell off

before so he kind of can't be honest I

hate to say it he's this is why they say

he's between a rock and hard place one

way they could start signaling some of

that Honesty but it also risks sending a

negative signal is three Cuts or or more

right I mean if we get if you got uh uh

four or more Cuts you could induce panic

because people would be like holy smokes

what is the Federal Reserve seeing that

we're not seeing this is bad and this is

unexpected uh that's a possibility it's

not necessarily a possibility that we

want to deal with but it's a possibility

that could occur

now unlikely I'm going to say this is

probably less than 5% likely I'd say

this is probably 30% likely and as a

result this is probably about 65% likely

here so you get two cuts it signals pain

for bonds it signals confidence for the

economy but it could be bull confidence

right it could be because of the

positioning that they're in so as far as

Atlanta Fed so this is what I think

we're going to get in terms of cuts as

far as the Atlanta fed I think they'll

wash this as noise and gold noise we'll

almost certainly get that explanation uh

then when they're asked about future

Cuts they're going to be kind of boring

tomorrow I hate to say it I hate to poo

poo on it because I'll be live streaming

it I'll be covering it but I think

you're kind of GNA Get a Kick the Can

down the road mostly tomorrow we get

Kick the Can down the road the economy

is fine right

now uh a lot of noise around politics

and it will take uh months to determine

uh you know if anything is meaningfully

uh changing now I want you to think for

a moment right now the data that we're

getting data now we just got jolts and

guess what it was from January okay the

data we're getting right now some of the

data that we've been getting like

Challenger job Cuts reports or import

export prices inflation data all of this

so inflation pricing you know uh outputs

exports all this a lot of this is

February data okay well it's already

March 18th we just had our Mastermind

meeting on the eyes of March like the

eyes of March already came when it's

crazy so when would we actually get the

largest impact of negative data well

consider this the Trump admin is trying

to be a little bit more clear and

somewhat Cavalier over this idea that

the economy is fine don't worry about

the economy uh okay yall want a little

bit more clear communication no problem

April 2nd how's that for Clear

communication so now all of a sudden

clear communication is April 2nd this is

by the way on the face of us not really

getting too far with the Russian Putin

Trump talks today which I talked about

in the meet Kevin report this morning

I'm like I don't think Putin's going to

roll over here I wouldn't be surprised

if you don't actually get anything today

and most of what you got today was a

talk you know which is a start you know

I'm not trying to like poooo Trump here

I'm just saying like I don't think

Putin's going to roll that much but uh

you basically got an agreement to

continue to negotiate so it was sort of

like a negotiation phone call to agree

to continue to negotiate in legal terms

you got a continuance for normal people

They Kick the Can down the

road okay like that's just sort of the

way politics works unfortunately

politics it's so freaking slow I want

you to take that from me as as you know

from the point of view of somebody who

ran for governor in California like what

just the things that I've learned in the

process of politics you know many years

ago it's way slower than people think

even when you have the appearance of

control like party control like Trump

does anyway so this clear communication

deadline of uh April 2 tariffs well

let's think about that for a moment so

April 2nd

tariffs when those actually hit first of

all you have to think about the front

running front running could basically

continue through the end of March okay

so the end of March data doesn't do us

much good when does the front running

end well obviously when you can't front

run anymore which would be like April

2nd so April 1st would be the end right

okay so when are we going to get nearly

a full set of data for April well April

data uh will come out early to late May

some of it won't come out until mid June

like we're literally getting data right

now in midm March about February so when

in other words we might not have a full

clear picture of the impact of these

April 2nd tariffs until mid June and by

mid June I would expect a lot of the

inflation uh fears will evaporate the

reason I say that is there's so much

front running right now you're building

up inventory at today's prices putting

more strain on shipments today to try to

use that inventory while the tariffs

hits so you could get through the

hopeful April May June July August

whatever the tariffs are in effect for

and then when the tariffs go away I

don't know when they're going to go away

but at some point the tariffs will go

away it could be months it could be

years at some point you'll have to start

either buying new inventory or the

Tariff goway I think there'll be a new

free trade agreement at some point like

I see a future where Trump goes make

trade free and great again something

like that I I I I don't know you know

make free trade grade again like it's

going to happen and if it's not him

it'll be the next president like

somebody that is such a lwh hanging

fruit to bring back free

trade so it'll come back but for now

people are trying to basically buy time

and get through those tariffs so the

downside is April will probably be the

worst month April is the month where I

think a lot of the inflation fears will

evaporate but in addition to that I

think you could end up still seeing

uncertainties from businesses and people

but on top of those uncertainties sales

Fall and then that's when you're really

going to start getting the

Q2 and Q3 forecasts uh that look poopy

dupy for

businesses at that point I'm not sure

the market is going to be talking about

all-time highs I think the Market's

going to be talking about lows relative

to 2022 which isn't great now and like

you know me I've been very transparent

I've been a 2 and a half on the beable

scale for a very long time now it Bobs

up and down but it hasn't been above a

five in a very long time and I get

bearish when markets sell off at the

beginning of the day and the end of the

day uh I don't know yet what's going to

happen today but at least what I who

knows maybe it'll rally today but what I

saw yesterday is a giant plummet at the

end of the day after a midday rally this

is usually retail this is usually

institutional uh and so when you look at

the beginning the end of the day

yesterday the beginning of the day today

you have a little bit of an

Institutional self flow coming

in I am starting to see more and more

people that are saying do not expect a

trump put and do not expect a fed put so

basically uh the death of the Trump and

fed put those are two puts two puts gone

those are your insurance policies gone

okay that's bad because when those are

gone you're now likely to face

institutions who say you know what let's

just sit on the sidelines why don't we

just milk some treasury yields for a

while let's hedge let's get out of the

noise of the market for a while until we

see what's going on as a long-term

investor do I think it makes sense to

flee and sell everything no I I I never

I never think that is the best for a

broad sector of of individuals uh

personally I'm putting a lot more money

into what gives me a 5% yield downside

protection and upside away from the

equity Market but that's also a product

we created at house Haack and the reason

I created that product is because I'm

frustrated with the equity opportunities

that exist and you've seen this for many

months I've been like I don't know and

I'm not saying there aren't other deals

like you could look literally look at

the two-year treasury for example or

even honestly a six-month treasury

two-year treasury right now yielding you

4% how about a six-month

treasury right now my my take is equity

valuations while they're slowly coming

down still a little on the rich side I

think you'll get buying opportunities

but you want to be careful that you're

not buying into weakness you want to buy

into strength where people aren't seeing

it yet uh and so while I like some of

the corrections that we're seeing I

think there's a lot more pain that could

potentially come once people realize

Powell's not going to be here to to bail

us out now hopefully the market recovers

and everything does well because really

nobody wants to be in a place where

they're worried about job loss or

whatever I personally think one of the

best things you could personally do

right now is hedge Yourself by thinking

about how can you go buy the dip when

the dip is really bad if it happens how

do people do that some people like

buying like a six-month treasury bond

they leave money in cash that yields

about 4 and a qu% right now and when the

Federal Reserve starts panicking that's

when you want to be a buyer like you

want to be the person that has a job has

income has cash and you're able to buy

when jpow is like we will secure any

credit credit all of a sudden froze

nobody's hiring we will secure all debts

we'll start buying stocks we'll do

whatever we have to do to stop the pain

that's when you want to be buying but

what you're getting from the fed and

what I think you're going to get from

the FED tomorrow

is everything's

fine don't

worry nothing to see here I don't

believe that call me skeptical call me a

bear call me names in the comments it's

fine that's what the comments are for

you can say nice things too I suppose

but uh from an honest you know just like

human point of view I can't be the

person that's just going to tell you to

your face hey I'm buying you know more

Nvidia today and I'm buying like two

shares of Nvidia just to make it seem

like I'm always a buy the Dipper I think

it's ludicrous I think it's a lie I

think it's disingenuous I can't do that

and I'm not like pointing the finger at

people I'm saying the industry does that

and it's as a way to manipulate hope

people like to buy into hope well I I

don't have much hope for the equities

right now so sorry it's not me but I

will tell you there will be a day when I

flip and I'm really bullish on equities

personally I think there are great

opportunities for you to raise cash get

some yields get some cash flow if you

get some dividends that are safe be

careful there are a lot of risky

dividends out there get get something

that gives you upside away from the

equity Market go buy a house yourself I

will never be the kind of person that

says Don't Buy real estate yourself just

be careful which Market you buy in you

know you got to look some markets are

bottoming some markets are still doing

well so you have to sort of evaluate

that very carefully but uh I hope this

is all useful and insightful for you

because jpow is probably not going to be

nice to us tomorrow he's probably going

to be mean to us tomorrow and I just

want you to have a warning that it's

coming so we'll see if we're pleasantly

surprised then I'm more than happy to

say wow what a shocker we got an honest

j-pal I'll call like I see it and I hope

you subscribe to the channel knowing

that I'll always tell it to you like I'm

seeing it thanks for watching we'll see

you in the next one goodbye good luck

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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 take