WHOA Total Fed Game Changer Pre-Jackson Hole [WARNING]

Well, the odds that the Federal Reserve

is going to cut interest rates are

plummeting. We have gone from over a

100% chance that we're going to get a 25

basis point cut, basically a normal cut

from the Federal Reserve on September

17th, down to just a 75% chance right

now, which is a really big adjustment by

markets. It's one of the reasons why

markets have been a little tenuous this

week. though. Is it possible that some

of that, you know, trimming and hedging

is now over because we actually got some

really sexy and delicious data that

suggests maybe the economy is doing

quite well. One of the things we said to

course members this morning in the alpha

is if we get good data here, we could be

bullish and nice recovery on the cues

today and actually end up solidly green

even before Jackson Hole tomorrow. It's

usually what happens. People start

hedging and panicking on a Monday,

Tuesday, Wednesday. Then the day before

they're like, "Ah, we're fully hedged."

Then they look at data sets and they're

like, "Oh, this isn't that bad." And

they go into buy. Now, not always, but

it's worth knowing what positive data we

got this morning. Quick reminder, yes,

the Alpha Report membership does go up

in price tomorrow. So, make sure you get

into that Meet Kevin membership before

tomorrow. Remember that Meet Kevin

membership gives you all the courses on

building your wealth. Also, new lectures

coming out in property management as

well. You get this. So, if you want to

rent uh renovate a property at some

point in the future, we're adding new

lectures in the section because I'm

working with Lauren on our new design

sheets, which are great. Like, you get

that included. You might not even know

you needed that. You know, people who

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nobody talks about this on YouTube?"

That's in addition to the trade alerts,

uh the next 10 buys for the next 10

years, the eight courses, every alpha

report every morning. So, things to pay

attention to. So, what happened with

data this morning? We got good data this

morning. Why did we get good data this

morning? Well, it's not bullish for a

rate cut, but it has to do with our S&P

numbers. Look at this S&P global flash

PMIs. Now, these are nationwide. These

contrast with your Philly Fed numbers.

Uh the Philadelphia Fed numbers came out

this morning as well. They weren't as

ideal as those S&P numbers. both of them

by the way flashing problems uh in price

as in inflation. Now, this really begs

the question of what is the Federal

Reserve going to do when they get stuck

between a rock and a hard place of

falling unemployment or falling

employment uh and rising prices. It's

basically stagflation, right? Quick

note, the uh uh Fed business outlook

survey this morning came in negative

at.3

versus the 6.5 on expectations.

Part of that because of tariff impacts.

A lot of people don't like talking about

tariff impacts because they see it as

anti-Trump, but the reality is the data

is what the data is. Uh so let's go look

at the Philly uh or sorry the um S&P

Flash PMI number so you can see what's

happening here. Growth in hiring

accelerated in August while selling

prices hit a three-year high. By the

way, Walmart reported earnings. What

you'll notice with Walmart is that their

net sales increased 4.8%.

But they missed on the bottom line

somewhere by about 8 cents on EPS. Now,

why would the top line go up and the

bottom line go down? Well, usually it's

because companies are able to pass on

the cost of tariffs. So, they increase

their revenue. Their margin, their gross

margin didn't actually change on

profitability for their merchandise

because they're basically passing on the

cost to the consumers, but their bottom

line came in lower than expectations

because they have higher costs in their

operating side. Higher cost for

employees, higher expenses for employee

health insurance, higher cost for

payroll, you name it. Inflation is not

just a matter of those goods at the top

line. It is a flowth through of

everything. And that's why Walmart was

getting beat up today. Oh, wow. Look,

the Q's are almost green just like we

expected this morning. We'll see how

that goes. Now, we're not always right.

Uh Walmart down about 4 and a half%.

We're not always right this week. We've

been killing it with our predictions.

We've been talking about Tesla going

back down to 318. It has. We've been

talking about opportunities in the real

estate sector, but we've also been

talking about the timing of when to pull

the trigger on some of those

opportunities, including actually buying

real estate and updates for the House

Act and what's going on with the cues.

That said, let's go to this S&P PMI

sheet here. Look at this. US business

activity grew the fastest rate recorded

so far this year in August. Hiring also

picked up. Job creation reached one of

the highest rates seen over the past

three years as companies reported the

largest buildup of uncompleted work

since May of 22. This is extremely

bullish. Like I you can't really be

bearish on this report. Now it's a

survey. So sometimes these surveys are

not accurate. Sometimes these surveys

have problems in them. They're not

necessarily foolproof uh in terms of hey

what's actually going on in the economy?

And generally you end up seeing people

like Powell say, "Eh, we're going to,

you know, take survey data with a grain

of salt. We're going to wait for actual

things to show up in data." But when you

actually look at estimates of what's

going on in the economy, GDP now is

indicating that GDP right now is growing

at 5 point sorry five gez uh is growing

at 2.3%.

Which is bullish. Uh now

what does the Philly Fed survey say

about a 2.3% GDP growth? Well, they

happen to give you an an exact answer to

that. A strong flash PMI reading for

August adds to science that US

businesses have enjoyed a strong third

quarter so far. The data are consistent

with an economy expanding at a 2.5%

GDP annualized rate, up from the average

of just 1.3% over the first two quarters

of the year. In other words, both the

Atlanta Fed numbers and the S&P

manufacturing services composite, so

altogether uh reports are telling us

that GDP is actually doing really well

right now. Now, does that mean the labor

market can't still roll over?

Oh, of course, labor market could

totally still roll over. We could still

run into a stagflation situation, but so

far, this is bullish the economy. I

mean, I look at just like one of our

Segways broke. Uh, you know, those like

standup Segways right here. One of these

broke. And so, what we did is, you know,

we we were looking at uh how much the

self-balancing scooter is right now.

It's $599.

And what I found was remarkable was that

Amazon does not actually have it. They

just don't carry it right now. The Segue

9bot S2, which is weird. They carry a

bunch of scooters, but they don't carry

the self-balancing scooter or or um

Segway other than this refurbished one

right here. Now, why is that? Well, part

of that, I think, is because pricing has

picked up so much people don't even want

to have them stored on Amazon warehouses

right now. Take a look at this. $5.99

for the self-balancing scooter. If you

go into the way back machine, which I

have right here, December 20th, 2024,

this same scooter. It always looks like

crap. The Wayback Machine, like how how

the quality looks over here. If I can

find the darn thing. Look at this. $499.

So that's a $150

increase in the Segue 9bot S2. No change

in quality, no change in the product.

Yes, I know the way back machine always

breaks how websites are formatted, but

these are signs that companies are

saying, "Hey, Trump wants tariffs on

China. No problem. Consumers going to

pay for it. You'll have less optionality

for these especially heavier items like

a Segway on Amazon. And if you really

want it, you're going to have to pay for

it." That's what Walmart's doing. Their

gross profit moved zero. their bottom

line got hit, but it's a sign that

they're moving prices to the consumer.

Now, they brag about how they're

reducing prices. In fact, if you look at

CNBC, they have a great argument here

because they say that they're looking to

do more roll backs. And here, we're

trying to keep prices low, including

speeding up imports from overseas and

stepping up the number of roll backs or

limited time discounts we're doing. But

CNBC did a great job here. They actually

fact checked them with a basket of about

50 goods. Uh there it is. According to

an analysis by CNBC of about 50 items,

some of those price increases have

already hit shelves. Items uh that rose

in price at Walmart over the summer

include various things like certain

clothing items, car seats, frying pans,

blah blah blah. So CNBC in their article

is basically arguing, hey, you guys are

talking about cutting prices, which is

great marketing, but are you really?

According to your gross margin, you're

not. And according to our basket, you

guys are raising prices on things,

passing these on to the consumer. This

is exactly what we're seeing in the

flash PMI reads as well. Take a look at

this. Business confidence. Uh what do we

got here? Business confidence. Uh let's

see. Job creation reached the highest

rate of the past three years, which is

very bullish. Business confidence up,

though not as high as earlier in the

year. Note, we did get slightly higher

unemployment claim numbers this morning.

Those unemployment claim numbers are so

lagging. I I I really don't like paying

attention to the unemployment claim

numbers. Uh you know, once they turn,

it's already over. But take a look at

this on inflation. The resulting rise in

selling prices for goods and services

suggests that consumer price inflation

will rise further above the Federal

Reserve's 2% target in the coming

months. Ah crap when I apparently when I

change the zoom my little highlighting

goes away. Uh that's okay. So it should

come back here just but anyway take a

look at this. Uh above the Fed's 2%

target. Indeed, the combined upturn in

business activity and hiring and the

rising prices signal rate hiking rather

than rate cutting. This is where I think

that Jerome Powell is probably going to

take Boston's lead and set up for a

oneandone. In other words, he probably

will condition a 25 basis point cut in

September based on weaker data data in

August. If the data comes in stronger,

the Fed might actually set up for a rate

hike, not a rate reduction. PMIs right

now really question even the need for a

one-time rate reduction. Even though you

do have the minutes suggesting that, you

know, rates are modestly above neutral

right now. You have Schmid saying we're

modestly restrictive over at the Fed.

You also have Bostic saying more clarity

will come, but we're really only setting

up for one rate cut this year.

New order inflows picked up in August,

highest level since 2020 uh February of

2024. Problem though, that we have now

reported the steepest increase in input

prices since May and the second largest

increase in prices since January of

2023. But it's not just the good side,

it's also services prices. Services

sector price inflation has now increased

at the sharpest rate since August of

2022 with job creation hitting the

highest level since January. This is a

sign of not an economy that's

stagnating. This is actually this PMI

report is a sign of almost an

overheating economy. This read right

here is one of the reasons why we saw

another 10% chance cut off of the odds

of us seeing a rate cut. Uh so not

great. Uh but I mean you can see here

look at what the track trajectory is

over here on the right. These are

manufacturing input prices,

manufacturing output prices, all of them

over here rising in 2025. You can see

the same thing on services input and

output prices all of them rising. Like

people make this argument that oh but

Kevin, you know, rental inflation isn't

going up yet and that makes up a core

component, you know, a big part of CPI.

Who cares?

the underlying

items that people spend money on,

whether they're hiring companies to do

services or they're buying things, those

prices are rising. When those prices

rise, the Fed risk screwing with our

inflation psychology, and that's the

worst, especially since the minutes. If

you read the minutes, they talk about

elevated asset valuations. Now, that

doesn't mean the market is going to

fall. In fact, the Fed has regularly

talked about elevated asset valuations.

But when you talk about regular or these

these elevated asset valuations, the

reason it matters is because the Fed's

basically saying financial conditions

are loose. And when financial conditions

are loose, they they actually feel like

they have to raise rates rather than

reduce rates because the economy is

doing well, booming, so to speak. So

future sentiment by the way here uh

dipped a little bit from July and again

this is just a sentiment kind of survey

of what businesses are saying. Uh you

know it's not necessarily hard data.

This is a soft data report but this

report really signals look at this a

renewed improvement in factory business

conditions after a brief deterioration

in July. Highest read since May of 22.

Productions rising. factory employment

rebounded after a decline in July. Go to

the Philly one. Here's the Philly

manufacturing outlook. This again, you

know, you got this is just for the

Philadelphia region. So, you had a

little bit of mixed info here. One place

we know that we have uh a uh you know,

correlation between these two surveys is

that firms were asked for a forecast of

price increases and the median forecast

was a 4.1% increase in prices. So you're

seeing that inflationary impetus and

despite this, you're still expecting

growth. This is a regional survey that

in the Philadelphia area did weaken. So

it does soften some of what you're

seeing here on that Philly Fed number or

sorry on on the um S&P, you know, global

for the entire United States number.

Even though it's called global, that's

the nature of the series because they do

them for each country. This was the US

nationwide one. And Philly did see a

little bit of a weakening again though.

these survey indicators up and down. The

one thing that's clear though is an

increase in pricing. So, not good. So,

so again, you know, JPAL really has to

confront what right now appears to be a

pretty strong economy. GDP growing at

2.4 uh 2.3%. The S&P data reiterating

this. The S&P data, by the way, for the

first time in years, saying maybe we

should be hiking rates instead of

lowering rates, contributing to now a

decline in uh that uh that classic, you

know, uh uh rate cut odds for set for

September. By the way, literally, you

know, as a note at the bottom of my

alpha report this morning, I gave a

heads up. Hey, if we get strong PMIs

this morning, we're going green and

we're going towards a certain place on

the cues. That's exactly what's

happening right here. In fact, you could

look at the timing as to when this

survey came out and it just aligns with

our expectations. Uh so hopefully this

continues because it signals a rebound

going into uh Jackson Hole and it really

signals that hey, you know what, maybe

we're overblowing Jackson Hole. Maybe we

don't have to worry so much about Jhole.

Maybe what we need to worry about is,

hey, nothing. The economy is doing fine.

At least that's what the surveys are

suggesting right now. Could there still

be an unemployment boogeyman?

Absolutely. And that's why it's

important for us to pay attention to

this jobs report that comes up. I mean,

just like you've got over here, you've

got Bostic telling you, you know, if you

search for Jhole, you see that even

Bostic says, "Hey, make sure to take

advantage of me Kevin's coupon code."

Okay, that coupon code. The price goes

up bigly tomorrow and you get lifetime

access. You pay once for that meet Kevin

membership. You get my setups on

strategy not just for the day but for

the weeks. You get my guidance on what I

think is going to be the next sector. I

don't like, you know, chasing trends. I

like being ahead of the trends. And you

want to get that alpha and be there

before other people are there. But

anyway, take a look at this. Bostic

telling you that the labor market

trajectory is still potentially

troubling. And then he uses the word

bears. Bears watching. Uh yeah. Uh this

is definitely something to keep an eye

on. Uh so that though not until

September 5th. Jackson Hole might end up

being one of those like forget it

meetings where we end up getting J-Hold

then we forget about Jhole. Nobody

cares. Like it comes and goes. JPAL says

be data dependent and then we'll decide.

And so what are the next data sets? Next

data set, September 5th. If you have not

marked your calendar for September 5th,

please, please, please be here September

5th. I will be covering it live just

like I'll be covering JHole tomorrow.

And I want you to be there cuz September

5th at 5:30 in the morning. It's going

to be an early early stream. Uh

especially uh for those of us with the

alpha report. you want to uh you know

get get your trading ready for

potentially a rebound in the jobs market

data. If we get another bad jobs report,

that's bad. That'll guarantee our 25

basis point cut. But ironically, that 25

BP cut will be bearish. It'll be a

bearish cut. If we get a strong jobs

report, we might look past the last

three months of weakness and go straight

back to all-time highs. So, if I look at

the economic data estimates now for

November

5th, I'm going to pull them for us.

November or sorry, November September 5,

we are looking Whoa, they just revised

it up again. 90,000.

So, I think after this PMI report came

out this morning, they actually revised

up how many jobs we think we're going to

get uh next month or or you know, in

August here. So, reported next month

revised up to 90K. the unemployment rate

to hold steady at 4.2%.

I mean, you got to hand it uh to the US

economy. That is bullish. Just can't bet

against Train America. No CPI or PPI

estimates yet for next month. Though, we

do have PCE numbers that come out on the

29th, which will be uh at the end of

next week. nothing exciting to really

consider now especially since the sorry

PCE numbers are uh calculatable from PPI

and CPI which we already have. So really

nothing to pay attention to there. Uh so

broadly I have to say bullish on the

data sign. Uh PMI only puts growth in

line with Atlanta Fed GDP. Here's what

the doomers are saying. Yields after

ignoring PMIs for much of the past

couple years seem to be taking the rise

in the flash estimate for August more

seriously. rising a couple of basis

points since the release.

Uh let's see. This brings the survey in

line with the Atlanta Fed

and their expectations. They actually

write here the S&P PMI shatter

expectations. Whoa. They wrote this S&P

PMI shattered expectations particularly

on the manufacturing side returning to

growth. raise this this report raises

the question of the urgency of monetary

easing employment new orders output in

prices all up. So a bump in yields at

the moment looking justified. Yeah, no

kidding. So uh yeah, there you go.

Somebody here in the chat writes, "When

is a cut bullish?" Um, the only way a

rate cut would really be typically

bullish is when you have the economy

booming and you have inflation turning

negative, which frankly inflation would

be turning negative if it weren't for

all these tariffs. People think when I

say that I'm trying to be like bearish

Trump. I'm just telling you fact. I'm

telling you reality here. Reality is

inflation was trending down. Uh, and we

were probably going to go negative on

inflation reads. Unfortunately, tariffs

have pushed that up to now where we're

averaging 2%. It's going to be much more

than that. We're probably going to be

three or 4% inflation. We're gonna have

a whole second wave of inflation thanks

to this uh tariff crap. So, it sucks,

but as we said back in April, it's going

to take until July and August to

actually start seeing the inflation. And

look, sure enough, that's exactly what's

happening. Anyway, uh so there you have

what's going on in the economy today.

Hopefully, that's a good catchup for

you. 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.