Fed Close to PANIC RATE CUTS | Emergency Cuts

Shell Bowman just joined Chris Waller in

calling for rate cuts as soon as July,

which is really not being priced in

markets at all. Most market participants

believe that we're not going to see rate

cuts until September. And frankly, a lot

of people are very confused because last

year when we had rate cuts right before

the election, we saw 10-year Treasury

yields go up over a percent as

short-term rates fell 1%. Now, the

reason for that could be because markets

lower the odds of a recession, which is

exactly what Michelle Bowman is implying

along with Chris Waller when they say,

"Hey, maybe we should consider cutting

rates sooner." Take a look at this. Nick

T quotes from Michelle Bowman's piece

that she describes the labor market as

solid and near estimates of full

employment. however, says that there's

evidence of fragility, reduced labor

market dynamism, slower economic growth,

and narrower concentration of job gains,

warranting that the Fed put quote more

weight on the downside risks to our

employment mandate going forward. Okay,

in English,

the labor market just isn't creating as

many jobs in as many places as it used

to. And given how few vacancies there

are, any little increase in layoffs

without those people being able to

actually find new jobs could skyrocket

the unemployment rate. Michelle is now

the second Fed member to say, "Hey, we

should actually start cutting in July."

And their argument is that, "Hey, we

don't actually think we're going to see

a lot of inflation over the next uh you

know, few months." Even though Powell

says the next quarter is going to be

important, June, July, August to see

what kind of inflationary impacts

they're going to be from tariffs,

Bowman and Waller say no, not so. Now,

in fairness, if you look at the S&P

global flash PMIs that just came out

this morning, this information actually

supports one side of this equation.

In the flash PMIs that came out this

morning, we beat on all three

categories, manufacturing, services, and

then obviously when you beat on those,

you beat on the composite, which is the

joining of the two. They say even though

the overall rate of expansion lost a bit

of momentum from what we saw last year,

what we're seeing is people are still

building up inventory and it's leading

to more hiring. Now, this is interesting

because in the short term, it means a

few things. It means we're seeing prices

go up and job gains. But are those jobs

going up and those prices going up

because of the temporary impacts of

tariffs? And then what happens if prices

go up and and jobs go up in the short

term because of tariffs and sort of the

front running of demand, you know, as

people try to build up inventory? What

happens if that catalyst goes away and

now you don't have to build up stock

anymore because your shelves are full?

And so all of a sudden, you take away

the need to hire to build up that

inventory and you take away the

inflationary pressure. Crap. Now you're

left with a broken jobs market. Which is

exactly what Chris Waller and Michelle

Bowman are saying. They're saying,

"Look, the price increases that we're

seeing, like even the flash PMIs from

just this morning are talking about,

they're going to be one-time increases."

See, you see it here. Tariffs were also

blamed widely on higher prices. These

rose at an especially sharp rate in

manufacturing and continued to rise

steeply in services. Uh and even though

confidence deteriorated slightly, firms

were taking on more staff because

companies right now are struggling to

meet their workloads. And those

workloads could be because of inventory

building at companies linked to tariff

concerns. So, in other words, is the

boom we're seeing right now a boom

that's inflationary, or is it a boom

that's happening because we're trying to

get ahead of this tariff problem? Take a

look at the rest of the flash PMI report

because it's fascinating. Price

pressures rose sharply across

manufacturing and services in June.

Selling prices rose at rates not seen

since July of 22. When you look at this

kind of data, you look and say, "Oh my

gosh, why would the Fed cut right now?"

These these this is like the worst case

scenario for the Fed. In fact, in the

flash PMI report itself, look what they

write. The data therefore corroborate

speculation that the Fed will remain on

hold for some time. So you have this

really weird situation where the data is

telling you, oh, businesses are booming

and they're hiring. But if they're only

booming right now because of the

temporary pull forward of tariffs, then

that actually means we're covering we're

masking how strong the economy actually

is. And that's where Waller and Bowman

come out and say, "Listen, if you look

at this data and delay cutting rates,

what you're doing is you're falling

victim to masked data that the economy

is actually weakening in the underlying

environment. And as soon as we get an

increase in layoffs, it's over. We're in

a recession. And if we follow this

masking data where the data looks good

and we see, oh, look, everything's fine.

Well, then we end up risking recession,

which is exactly what you don't want to

do. So, you've got people like Bowman

and Waller saying, hey, we think the

tariff increases of prices will be more

one-time in nature. uh and then we're

back to an economy that's sort of like

okay well you know where where do we sit

uh and in that case we're in an

environment of uh oh now we're stuck

with a crappy jobs market and it's too

late to cut. So this is why Bowman and

Waller say, "Hey, let's start cutting

now." Again, though, look at the flash

PMI. The rise in prices charts for goods

and services was the second higher

highest since September of 2022. Not

great. And a 12-month high rate of job

creation in manufacturing was

accompanied by a 5-year peak in

services. So on one hand in fairness to

Powell the hard data is still doing

really well and the survey data is now

doing really well. So the survey data is

usually considered soft data uh and

actual unemployment numbers would be

considered hard data but this PMI survey

suggests that the economy is actually

doing quite well. It's actually I would

almost call it a very soft landingesque

uh PMI report where you have employment

rising and uh you know you have prices

accelerating a bit because the economy

is expanding but again is it simply

because people are getting ahead of

tariffs and that's also where we don't

even know where tariff policy is going

to end up. So, something to remember is

that not only does Powell testify in

Congress this week before uh the House

and then the Senate. Uh so, we'll hear a

little bit more from Powell, which will

probably be him digging in. He might

even reference this S&P manufacturing uh

and services report, which is the

preliminary report for the first two

weeks of June. Uh but might dig in more

and say, "Hey, we're just going to wait

and see." Right now, the odds of a cut

in July have risen. They've risen to

22.7%.

And the odds of a cut in September have

risen to 73%. At a low last week, we're

at about a 65% chance of a cut in

September and closer to like a 5% chance

of a July cut. But after the Fed meeting

and that Fed blackout window shut, uh,

in other words, we were done with the

Fed blackout period. Thanks, Mr. Jack.

We ended up getting odds for rate cuts

in July skyrocket now to about a one in4

chance. So, it's possible, but it's

really going to take Powell moving here.

Now, a lot of people are saying, oh, you

know, people are just looking for

Powell's job and that's why, which makes

sense because, you know, we're probably

going to get some kind of decision on

who's going to be the next Fed

chairperson next, you know, uh, for next

year this year. So, you know, in May,

Jerome Powell's job is done in 2026 and

somebody else will take over. These are

the current polyarket betting odds.

Notice you don't see Michelle Bowman on

here. In fact, technically Elon Musk has

a higher chance of uh being fed per the

Fed chairperson than Michelle Bowman

right now, but people think she might be

trying to apply for the job as well. Uh,

and in the meantime, it's also worth

looking at the calls that we had this

morning on the Meet Kevin Alpha report.

This morning in the me alpha report we

said shortterm look at circle and Tesla

and that was pre-market. So be and the

Q's circle Tesla and the Q's. We're like

geopolitics are by the dip. Tesla might

break out to the 347 line. Look what

happened. Straight to 347 straight up.

Look at that 8% day circle momentum

likely to continue and the Q's likely to

run. All three of them hit which is

pretty impressive. So, if you're not

part of the alpha report yet, make sure

you're part of that uh at uh at

meet.com. I also was asked about AMD and

suggested that I was less enthused about

AMD, though it's doing well. You know,

3.6%. It's nowhere near what Tesla and

Circle are doing today. Tesla now

breaking out of the 347 line. Fantastic.

That said, even just holding 347 today

is a big deal. Okay, so what what else

does this really mean? Well, when we

look at what Nick T says, let's take a

peek at some of his commentary.

Nick T uh says, "Should inflation

pressures remain contained, I would

support lowering the policy rate as soon

as our next meeting." Now, it's worth

remembering we are going to get another

CPI report next week. We get PCE this

week, which is really just sort of the

combination of PPI and CPI from uh May,

but we will get a PPI and CPI report uh

next month. So, early next month, we'll

get that within the first two weeks. And

then we have Bowman has been very

focused on inflation risks through last

year. She says she sees tariffs likely

to present a quote small and one-off

increase in prices because she expects

increased economic slack later this

year. So this is a really weird balance

where Powell's trying to fight inflation

but then you know others are trying to

fight recession. That's where Jerome

Powell says the economy could really

break in either direction. So TBD where

that ends up going. Uh so that sort of

leads it to you know does it really make

a difference in the near term? We could

get a 25 basis point cut in July. Will

it really make a difference? Probably

not. I actually prefer Nick Te's post

last week where he was talking about

these preemptive 50 basis point cuts

that we were doing back in the dot

bubble uh and how those ended up being

essentially designed to support the

labor market. But the problem was even

then it was too late. We took these 50

basis point cuts multiple times in 2021

uh including twice in intermedating

cuts. So intermedating cuts are like you

don't even have a Fed uh meeting and

they just come out and say, "Oh, by the

way, we're reducing rates 50 basis

points." There's a Fed that was really

starting to panic because of the labor

market. It's entirely possible that sort

of activity could happen again where the

Fed starts trying to preemptively get

ahead of the Fed easing. The question

is, will that matter? Once unemployment

data starts ticking up, that's only when

markets will really start to care. for

now markets don't care because well

labor market is fine as we even saw in

the PMI report this morning like right

now things are fine why would you talk

about recession when you know you're up

8% on Tesla in the day or 14% on circle

now does that mean these valuations are

sustainable in the long term like should

you know circle that IPOed for you know

60 to 80 bucks when it opened be trading

for $274 as a future commodity uh as

stable coins become somewhat ubiquitous

amongst not only large banks but small

banks or corporates like Walmart or uh

Amazon? No, probably not. But in the

near term, is it a really great momentum

play? Hell yeah. So, we'll see. But this

gives you a little bit of color on

what's going on with Powell, some of the

data that came out this morning. Do pay

attention to PCE later this week. I

expect it to be relatively benign,

though I can give you a quick outlook on

uh what the numbers are supposed to be.

So market expectations of PCE are month

overmonth 0.1 year-over-year 2.3 and

core 0.1. I expect that to hit. So it's

going to be really, you know, I mean

kind of nominal. Like this is just not

going to matter at all. Uh then we'll

get into July 4th. Uh and we'll get

Jolts on July 1st. We'll get uh the

employment report on

July 3rd. We're only expecting right now

115 private payrolls. So if we get

115,000 private payrolls and we get a

miss on that would be bad. We had

140,000 the last with some nasty numbers

for the um uh for the households data.

So you know what happens? Well July 3rd

is in a weird way already around the

corner. It's kind of crazy how fast

things are going here. Then we have

let's see we are going to get to initial

okay FOMC minutes come out July 9th

don't care CPI no estimates yet CBI

doesn't come out until July 15th which

is somewhat late I feel like in the

cycle uh July 15th but whatever in the

month PPI comes out July 16th retail

sales on the 17th and then you have the

Fed meeting on I want to day. Was it the

20some?

Uh here, I'll find out. I think it was

27, but let me see. Make sure I get that

right. Uh oh, sorry. July 30th. So, the

last day of the month is when you'll get

the actual Fed meeting for uh for the

Fed July policy decision. Again, right

now sitting at it's actually just ticked

up while I was filming this. Uh it's

almost it's basically 25% now. 25%

chance of a July cut. So you're seeing

kind of traders build in that that cut

uh for July. So very very interesting.

Powell can print his way out of a

recession much harder and unpopular to

tighten during inflation. Um I don't

know if that's true because remember as

we said in this video in in 2001

we were cutting the rate, cutting the

rate, cutting the rate and we still hit

a deep recession that lasted two years.

I mean the stock market was down for two

and a half years, right? So, it's it's

they lower the rate first, and they

really don't turn the money printer on

until something really collapses and

breaks. Uh, and and even when you turn

the money printer on, it's very rare

that it's overnight. Yes, during COVID,

it was like a V-shaped recovery

overnight. But you look at, you know,

what the what the Fed did in the late

80s, uh, the 2002 to 2003 pivot, the

2009 pivot. It took time for that Fed

pivot to and and the money printing for

really to flow through into the economy

because people didn't believe it. People

believed that oh don't worry this time

the money printing you know won't

actually save anything. Things are so

bad that that sentiment gets so ugly and

nasty. Uh so this idea that ah the Fed

will just print and there'll never be a

recession again I think is is a little

bit delusional but that's okay. Somebody

says these times are different. Yeah

that's what everybody says in a bull

market.

Uh so let's see here. Somebody says the

constant printing our way out of every

possible recession is why we have

inflation. Yes, it is. Otherwise, we

would have deflation. You're right. It

it keep the the the ponzi of fiat keeps

the the game going because if we

constantly had deflation, people

wouldn't be motivated to spend money. So

you're actually motivated to spend money

because of some nominal inflation helps

sort of inflate away the debt. Yeah.

It's a giant Ponzi of of course you just

look at history and and and see how it

functions and then you understand. So

yeah, there you have it. So anyway, make

sure you get the alpha report over at

mekevin.com if you want to diversify. Uh

oh, dude, 17% now on Circle. These were

some sick calls in the Meet Kevin alpha

report this morning, bro. 9.4% on Tesla.

Freaking called it. That's awesome.

Alpha report today killed it. Three

ways, four ways. Q's circle Tesla calls

killed it. And then in the course member

live, somebody asked me about AMD and I

said the other ones were better options

today. And it was right, too. Let's go.

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 goes.

Congratulations, man. You have done so

much. People love you. People look up to

you. Kevin Pra there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your take.