Why the Fed is about to EXPLODE Markets UP

mark your calendar for Wednesday of next

week that is September 18th specifically

at 1100 a.m. California time that is

when we were going to get a new summary

of economic projections and boy oh boy

the FED might actually be interested in

Pre bailing out markets here leading

markets to pump so that they can avoid a

recession think about the 40 chess move

here Kevin's been saying for a long time

well since like mid July ooh you know

valuations are a little Toppy and we're

one market correction away from Mass

layoffs we did in the course member live

stream this morning we're looking at

Cheesecake that can basically not even

afford its bills this year uh you've got

in other words too much debt compared to

the assets they actually have they'll

have to issue debt or uh new shares you

look at Red Robin losing money they're

probably going to go bankrupt under the

weight of how many expenses they have

these are normal everyday restaurants

you'd think that they're profitable

they're not then you're like oh you know

well oracle's doing well and then you

look at oracle's balance sheet and

they've got 100 billion dollars of debt

they financed all their Nvidia purchases

on debt like a reckoning could be very

very very close and the FED knows that

and ironically the FED might try to

prevent that or I suppose unironically

the FED might try to prevent that and

how could they do that well with

messaging next week and I think the

message is going going to be really loud

and really really clear and I think it

might be worth thinking about betting on

uh if you're a Speculator or thinking

about hm this is interesting is it

possible that if this happens markets

might try to turn bullish so that fed

can

avoid a recession let's think about it

by looking at the last summary of

economic projections and what we're

going to look for is messaging the first

and most clear messaging that we get

from the summary of economic projections

that I'm throwing up on screen now is

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email us at staff atme kevin.com if you

have questions but anyway uh so let's go

to this so there are a few things that

the FED can do here and the first thing

that I like to note is what the last

summary of economic projections were and

then what markets are pricing in versus

what my expectation is and then what the

FED might do so look at this the black

numbers here are the the fed's last

projection so they actually think in

2025 that GDP is going to be 2% well

markets actually think that GDP is going

to be

1.7% which means the FED might revise

down GDP for 2025 and I agree with

markets I think the fed's going to go to

1.5 on GDP for next year as a way to

justify why they're starting to be a

little bit more dovish I personally

don't think that the Federal Reserve is

highly concerned about inflation anymore

the numbers we had for PPI and CPI over

the last two days have shown us that the

leftover inflation on a month-over-month

basis was just a little uptick in air

travel and lodging both PPI and CPI

showed the lodging uptick but the last

two months it was in the hole so that's

super volatile I think they'll look past

that owners equivalent rents we already

know with leading Market data that rents

are falling so I don't think the FED is

terribly worried about inflation and as

a result I think they're more likely to

Signal a week of

2025 as a justification for why they

want to start accelerating some of these

Cuts uh and so that's why I think

they'll show us a weaker GDP next week

by showing us a weaker GDP next week you

might see markets get a little nervous

about recession but the FED might offset

that by coming in with a Fed funds

projection similar to what they had in

March now this summary of economic

projections uh is from a few months

later in June and here we have the last

uh fed projection of uh 4.1 for the FED

funds rate which uh for 2025 and only

pricing in about one cut for

2024 now I think they're going to go

back to what they had in their March

projection which is three Cuts this year

and then getting us just under 4% for

next year so another you know basic

basically total of six to seven

Cuts this is a way that the Federal

Reserve might be able to Signal hey look

we recognize things are weakening we

recognize GDP is weakening we recognize

that yes the unemployment rate which

markets think is going to go up to 4.3%

I think they'll show 4.5 in 2025 I think

the fed's going to be able to message

and say hey look you know don't worry we

acknowledge that the unemployment rate

is ticking up a little bit we

acknowledge that GDP is slowing a little

bit and as a result we're going to go

ahead and fight that ahead by coming in

with lower expected rates for next year

in other words we're going to price in

some more Cuts now if they come in and

they really want to be dovish and they

really want to bail out markets and I'll

tell you why they might want to do that

then they'll come in lower than 4.6 here

like if they come in at 4.5 or 4.4 for

2024 that means they're including a 50

basis point cut not necessarily in

September but potentially uh in the

November or December meeting now what

does that potentially mean well uh that

means the Federal Reserve is trying to

get ahead of a recession happening it

means the FED realizes okay we're not

maybe in a recession now I know a lot of

people do think we're in a recession now

but maybe we're not in a recession now

but we might be if we get one market

correction and so how do you prevent a

larger sustained Market correction from

creating layoffs at companies like

cheesecake or companies like Red Robin

how do you prevent that well one way you

prevent it is by signaling your

willingness to have more Cuts not

necessarily doing the cuts right go with

the 25 BP cut don't signal more or and

then just talk about how in the future

you're open to doing more cuts which you

could always revise they just

projections right but you're signaling

to markets hey rally rally rally and

when markets rally rally rally guess

what ends up happening well people end

up not losing their jobs because other

people keep spending money the consumers

keep spending money because of the

wealth effect of the stock market and

housing market not crashing you know and

you're in a recession the wealth effect

hurts everything so the FED kind of

wants to prevent this correction and if

you prevent this correction from

happening especially before the election

by being

dovish and as the buyback window period

ceases before Q3 earnings come out in

October

then the FED kind of propping up markets

in this normally volatile time could be

the perfect way to avoid a recession

which the Federal Reserve might still be

able to do see I've been concerned that

if they go with a 25 BP cut that they're

just delaying the inevitable that

they're behind the curve uh and and that

you know they're going to cause a

recession well if they avoid that stock

market induced recession uh by having a

selloff great so here are the scenarios

that I see you know the Fed go with a 50

basis point cut which would be larger

it's not expected right now you get a

177% chance market-wise of that

happening uh and there's basically a 0%

chance of them going with zero so I

don't really see these happening I do

think that the FED is not going to go

with a 50 uh because they could go 50

and go hawkish but again 177% chance

based on Market expectations now this is

really killed by CPI PPI over here uh

and uh because we're on the edge of

employment layoffs and restant on

bankruptcies I do think we'll get a

dovish 25 so that way Powell can prop up

that market now that's actually

interesting because then when you think

about that from sort of a trading point

of view or an investing point of view a

doish Fed could mean that you could see

a bond yields come down and B stocks go

up Now Stocks could get reset by Q3

earnings and so that's the red flag with

stocks if Q3 earnings come out in

October and they forecast weakness well

that's not good we're already seeing a

lack of pricing power at companies and

so the question then is when the lack of

pricing power lasts for too long at some

point the layoffs will come now you

might say oh but Kevin there are no

signs of layoffs now true but that's by

Design because I imagine this imagine

Amazon said oh we're doing layoffs

because of weak demand the stock with

tank imagine Walmart's like which I

don't think Walmart would but imagine

they're like we have to do layoffs

because of weak demand tank okay what's

another one Tesla oh we're going to do

layoffs because of weak demand tank

nobody wants or a restaurant you know a

restaurant like Red Robin gourmet

burgers is trading for like $3.50 or

whatever it is right now you know if

they came out and said yeah we're going

to have to lay off staff and close

restaurants because demand is so poor

the stock would just go to a buck 50 and

have and they'd go bankrupt so in other

words if companies start laying people

off now they would be self-fulfilling

their own stocks demise so you don't lay

off people when the stocks are going up

and the fed's like okay well if we can

prop up stocks a little bit maybe we

don't end up getting the layoffs but if

the stocks

fall and then everybody starts doing

layoffs well then it's too late then

you're already in a recession because as

soon as as soon as stocks go down and

people have to they get forced to do

layoffs then everybody does everybody

jumps on the bandwagon it's kind of very

like Hursh and so I think that's one of

the reasons we're seeing that labor

hoarding right now it's kind of a weird

thing to think about but I do think that

actually bodess well for being bullish a

doish Fed here uh I I think you get a

bullish statement I think it's going to

lower yields and potentially prop the

stock market up now the stock market

could falter on Q3 earnings but I think

those yields will move down down after

this fed meeting so that's my take uh

and uh I'm putting my money where my

mouth is I've got a a trade that I think

uh is well positioned again for soft

Landing it's well positioned for the FED

next week and it's well positioned for

recession now keep in mind if we get a

recession it won't do as or sorry if we

get a soft Landing it wouldn't do as

well as if it we had a negative shock

but that's okay it's it's still a

bullish thing it should still be great

uh in a soft landing and be exceptional

and amazing in a recession that's why I

sort of call it a larger hedge trade but

uh yeah anyway that's my take if you

want to learn more about it join the

stock of site group flash sale expires

at 6 p.m. today and folks we'll see you

in the next video thanks so much for

being here 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 analyst and

YouTuber meet Kevin always great to get

your take

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