why the market is tanking...

why are markets selling off today is it

because tomorrow is the Jackson Hole

Symposium and people are just worried

that JP's going to talk at 10: a.m. or

is it that maybe we already got the

seeds planted of what to expect for J JP

pal speech tomorrow and markets are

starting to price in what's coming down

the pike in my opinion it's the ladder

the second part let's talk about what we

just learned and why it's so important

going forward keep in mind if we got

some big cuts here from jpow and some

really good news from jpow I might

actually be interested in going more

bullish than I am now yeah that'd be a

flip because I actually think they would

then be able to avoid a recession

unfortunately the FED appears to be

positioning themselves to do the

opposite of this and it's really bad

let's talk about both those things in

this video I do want to mention that if

you are trading I found lot better

liquidity in these options right here on

screen if you're day trading I used to

love Tesla and end phase but I found

when I was trading larger option sets

the liquidity was bad so when you were

exiting you were getting these really

nasty

spreads however if you go even on zero

days on qes very very risky but for day

trading their liquidity is excellent the

orders just fill and here's an example

of what I was playing this morning 48 to

picked up some contracts on a smaller

order for

$2.40 time 50 contracts so times time 50

time 100 uh and I was able to sell those

for nearly a double at 420 uh those did

end up popping up even more after I sold

them of course sometimes that happens

but that's okay locked in a profit we're

talking to course members about that

this morning and we've got a really cool

outline so if you want to join see the

trading rules and get some perspective

on what's going on there make sure to

use that jhole coupon code ACC and hole

expiring tomorrow okay so here's what's

going on drone pal speech is at 10:00

a.m. tomorrow but this morning we had

fed Harker mentioned that he's on board

with a September cut if data keeps

coming in as expected but he thinks the

right answer is to go with a slow

methodical approach to Cuts he says this

is an expectation game and they're

really worried about shelter inflation

that's the big one they're watch

watching and they're concerned that

there could be a boost in shelter

inflation as they slowly start reducing

interest rates they're seeing the

mortgage business is starting to come

back alive more people are writing

mortgages they specifically talked about

the mortgage industry by the way because

the long end of the yield curve is

coming down and they are wanting to

slowly see shelter prices consistently

come down but are concerned they're

going to hit a floor pop up again and we

get a second wave of inflation and so

because of that even though they think

it's time to start and they're pretty

much guaranteeing us which we saw in the

minutes yesterday anyway that we covered

on the meet Kevin live Channel if you're

not there yet subscribe to meet Kevin

live we do a free market open every day

the market is open and sometimes we'll

even do Market close or like minutes or

something less critical for a main video

but there were a few things out in those

minutes we're going to talk about in

just a moment as well that were a pretty

big deal but sticking to what said is

actually really important because he's

saying we're still worried about a

portion of inflation and this is where

we have to remember the Federal Reserve

is more afraid of inflation than they're

afraid of a recession think about that

for a moment if you have a recession the

Federal Reserve will come in at the

bottom bail out everything and swoop in

like the hero boom Federal Reserve

credibility up

if they reignite inflation Federal

Reserve credibility goes in the toilet

and they lose even more control so if

they had to pick would you rather have

more inflation or would you rather have

a recession they would rather have a

recession every day of the week they've

got plenty of room to deal with a

recession but that's actually bearish

see after this discussion from Harker

this morning and Collins which I'll talk

about in the morning this in just a

moment we actually started seeing the

market

unpr the potential for a 5050 basis

point cut in September we're going to

get a rate cut but we're probably going

to get 25 25 25 the problem is it's

going to be too slow in my opinion in

order to avoid a recession the Federal

Reserve needs to move substantially

faster unemployment is weakening

substantially worse than they suspect

and I think Unemployment uh numbers like

unemployment claims are worthless

because they're very lagging and job

openings I think a good portion of those

are probably not real job openings

because now people just leave listings

posted on the job recruiting websites

and they're not really motivated to take

them out down because they forget about

them and then you have uh you know the

companies the job listing websites that

aren't motivated to tell you to take

them down because frankly why why would

you if they keep making money off your

listing so it's really easy for people

to kind of get stuck in leaving job

openings posted but they're actually

probably dead postings which is bad we

don't want that so I think the Federal

Reserve is using pretty lagging data

here uh and unfortunately we're probably

going to uh see the Federal Reserve move

too slowly here but their commentary is

reiterating that they're committed to

moving slowly and I actually find this

bearish and I think this is why the

market is selling off today you look at

the q's down a little more than 1% you

got Nvidia down almost 3% uh Tesla's

down somewhere in that uh 4% range yeah

look at that almost 420 down 420 basis

points crazy but the the big thing that

you have to remember is fed that moves

too slow creates a jobless recession

this is actually a very different kind

of recession than what was expected in

January of 2022 see in Jan 22 we're like

okay we're going to have a

year-over-year technical recession

because 2021 was Bonkers and everything

was great and things will normalize

everybody still have their job and their

money when things stabilize people can

go back to buying Teslas because they

have the excess money they have the jobs

and everything will be okay it'll be

sort of a small recession well now here

we are in August 24 rates are obscenely

high companies that are interest rate

sensitive like Tesla are either forced

to manufacture less Vehicles which Tesla

is doing you not growing like they used

to or substantially buy down interest

rates or

both and now all of a sudden a 25 basis

point cut isn't really going to pull

forward any kind of demand because you

kind of already pulled forward demand to

May 99% offer for tasla a 25 basis

points start of rate cut cycle won't

matter and the Q3 Q4 buyers are actually

potentially more worried about losing

their job now than they've previously

has have been I mean look at what Nick T

was tweeting on X he's arguing hey more

people than ever before since the

beginning of that survey data going back

to 2014 are worried about losing their

job this is an environment where people

are going to be interested in spending

less money on larger purchases

especially monthly payment commitments

that are going to beat them up if they

end up losing their jobs and then

they're squeezed into a corner at a high

interest rate and and don't have the

ability to refinance lower because

they've lost their job this is a problem

so I think it's it's a big mistake to

look at some of the data that the FED is

looking at which is really lagging data

whether it's unemployment claims or the

uh job openings numbers which I think

are way too high or the fact that

unfortunately the FED seems convinced

that the historical long-term average of

unemployment is 4 and or 52% and we're

at 4.2 4.3 is we actually have a lot of

room to give the FED a lot more

unemployment the problem with that is it

means the fed's going to go slower and

in the short term that yields leads

yields to spike so you're actually going

to see pain in like a move like a TLT

right a 20 30e mortgage uh treasury bond

rather not mortgage you're going to see

some pain there short term because the

markets are like oh okay fed's going to

go slower got it yields higher than but

the fed's just going to do more damage

by going slower and so that'll likely in

my op lead yields to have to come down

even lower so the longer they go 25

BPS the deeper down they're going to

have to move in the future and so then

you align what Collins said this morning

so uh fed Collins said the job market is

healthy despite revisions okay well

that's not good I don't think the jobs

Market is healthy now maybe I'm wrong

I'm just a dude on the internet but I'm

not very happy about that uh especially

when we start seeing some of the deter

oration that we're seeing that they

should be paying attention to as well

because it's literally in their fed

minutes take a look at this I'll show

you some of the FED minute highlights

I've got here going to move over to

everybody's favorite microphone although

I think I've uh I've per I shouldn't say

perfected but I've improved uh this

microphone so let's let's see what we

got here uh delinquency rates on loans

to small businesses remain slightly

above pre-pandemic levels so we're

trending up now above pre-pandemic

levels not great credit quality and

commercial real estate deteriorated

further okay that's not good for the

small Banks now add to that yields not

coming down quickly enough to save the

small Banks that's not great and the

average delinquency rate for uh loans in

commercial mortgage back Securities and

non-performing commercial real estate

loans at banks are both Rising further

that's not great now the area where

things are okay oh my gosh what a

surprise Residential Mortgages if you're

a course member you know I've got a lot

of opinions on how to invest around this

but anyway delinquency rates on

Residential Mortgages remain near P pre-

pandemic lows uh though consumer

delinquency rates have increased that

would be on uh like personal loans

credit cards and Autos okay this this is

not good at the same time they also

argue that

valuations remain elevated not just for

some real estate but also broadly

markets in general which could be the

stock market for example so when you

combine these minutes with what the FED

is saying you can't help yourself but be

like man fed are you sure you're all not

going fast enough here you you sure and

they're like no we just got to make sure

we really killed the inflation demon so

anyway fed Collins says a gradual pace

of cutting is likely appropriate again

this implies 25 basis points that's why

the Market's red today in my opinion and

she says we're not seeing a red flag in

consumption data but again I think

people forget that what happens first is

Capa spending slows I was just reading

data yesterday that that's exactly

what's starting to happen I wonder if I

can pull it up uh but capex growth

spending just off memory uh is is

starting to decline uh from I want to

say it was like a 45% growth down to

like maybe 30 or 35% growth uh it may

have been this let me look at this here

it may have been this one from Barclay

cautious outlooks mostly overshadowed

decent Q2 earnings margins were

resilient and capital returns were

strong but capex intentions softened you

got to remember this is like that's I I

can't remember exactly where it was in

here but uh that is one of the most

important things to pay attention to

when it comes to especially the AI plays

is what are people doing with capital

expenditures because as soon as capex

spending slows down then you get layoffs

right so it then the consumer gets hit

so you got to get the order straight

capex spending down first that's number

one capex spending down then people stop

then you get layoffs because because

cack spending down then you get

consumers spending less money cuz they

got laid off then you get recessionary

earnings and then only a few months

after people get through their layoff

period after the war notice has been

filed they've been laid off and they

actually file for unemployment like 6

months down the road then you see the

unemployment claims go up but then it's

too late then you're deep in the

recession so so like people keep telling

me like oh but things over here are okay

unemployment claims are fine the

consumer still broadly okay okay I

understand but it's it's the the first

thing is starting to crack the companies

get less optimistic they start worrying

about margin more they lose their

pricing power then they start laying off

and as we saw in the prior video that I

made on this topic as soon as those

layoffs normalize we're going to see

that unemployment rate pop up very very

quickly because we're still below

average on layoffs which sounds like a

good thing but as soon as that

normalizes the unemployment rate will go

Boop oh wow it's up another half

percentage Point that's not

good so you have to recognize the the

markets right now are probably saying oh

my gosh the fed's going to go slower

than we think now we have to

unpr Rapid Fed rate cuts that is

short-term bearish basically all stocks

and and certainly then yield Spike and

so like you know a mortgage or a

treasury exposure will get hurt today I

actually see that as a buy the dip

opportunity on on treasuries because I

think the there's only one direction for

treasury yields going forward of course

I could be wrong I'll let you know what

my trades are though obviously in the

course member live stream uh and course

member uh alert section we've divided

them now into three sections uh day

trades and swing trades under 90 days 90

days to a year and one year plus so you

can always kind of see where my current

allocation is and I'll kind of keep that

updated I think that's very useful uh

but anyway make sure to check that out

over at meetkevin.com before tomorrow

already within 24 hours of that price

going up again uh okay so that's my take

why is the market falling today the Fed

what's going to happen the slower the

FED goes the more damage they're going

to cause and the more down they're going

to have to end up going on the neutral

rate that's my take I think it's pretty

self-explanatory and I hate to say it

but I think that's what's going to end

up happening the slower the FED moves

the greater the odds of recession thank

you so much for watching we'll see you

in the next one goodbye and good luck

adse 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 PA financial

analyst and YouTuber meet Kevin always

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