CRAP! Bad News for the Fed JUST OUT.

hey everyone me Kevin here I've got some

bad news uh it's not great we know that

tomorrow is fomc day we know that we

already have expectations that we're

going to get the 25 BP hike we already

know that we already know that we expect

Jerome Powell to potentially discuss

another pause uh for September which

basically turns a 25 basis point hike

into a 12 and a half basis point hike

every meeting 25 basis point every other

right the problem that we have now is

what's happening with inflation break

evens because earnings are coming in a

little strong because oil is rising

under the hope that some Chinese

property stimulus will finally actually

revive that debt economy sorry Chinese I

love the Chinese I think they're

brilliant but I think the people are

actually very smart to save their money

because I don't think their government

will bail them out like the American

government bail them out or build our

folks out anyway

so what's the problem inflation break

evens so you all know I mean you should

know by now I've been a big fan of

tracking the inflation break evens

five-year break-even rate just ticked up

uh this is the first take up that we've

really had since about the end of

January beginning of February when we

had hot data lead inflation break evens

to assume that oh things might actually

start heating up again which could

create pressure on inflation the same

was true with manufacturing data that we

got this morning which may have also

contributed to the stabilizing of the

five-year Break Even which really shot

up over the last two days that is Monday

uh this morning it was already rising

and then really stabilized when we got

more data this morning so we shot up

from where we had been a low was like

just above two stabilized a little bit

there at about 2.2 we were trending down

at about 2.1 now we're sitting at

2.285 so we've ticked up a good eight to

nine basis points so what does this mean

well I've regularly commented that I

believe Jerome Powell is going to use

the inflation Break Even rate as a tool

for guiding when are we actually going

to cut interest rates once those

break-evens get to about

1617 I expect your own power will

actually cut rates unfortunately we're

going in the opposite direction

inflation break evens are starting to

rise right now which is not fantastic

again I've explained why that's

happening but what does this mean for

tomorrow I think there's actually a good

chance we're going to get a little bit

of hawkishness from Powell to make sure

that they continue to talk inflation

down that's a big deal this this economy

and this fed is all about over

communicating so the American Consumer

knows okay the feds even though prices

are high and even though the fed's not

going to get prices down uh the FED is

going to keep up the inflation fight and

they're going to do whatever they need

to do to make sure that inflation comes

down

well unfortunately those break-evens

reiterate that the FED has more work to

do and so as much as I was hoping for

somewhat of a dovish Fed tomorrow which

according to JPM and Goldman Sachs and

Barclays and a lot of these various

different entities uh looking into fed

expectations a lot of the expectations

are hey let's get the FED uh you know to

say something dovish because then the

market will rally and they'll say

something dovish by implying a skip for

September I don't actually think we're

going to get that I think what we're

going to get is a drone Powell who's

very clear that the September meeting is

going to be live which is just a way of

him saying we haven't made any decisions

yet we're going to be data dependent

we're going to look at PCI Data or sorry

pce personal consumption expenditures

inflation data coming out this Friday

we'll look at the labor report we'll

look at the inflation report and we are

prepared to do two or more hikes

including today's

that line two or more hikes will be

bearish for the market if he says that

where did he first say that and why

would I think that well in the last fomc

oppressor we heard uh one to two more

hikes right we had about four board

members that were in favor of one more

hike you had about 12 to 14 that were in

favor of uh well potentially two more

hikes that would be the last one uh and

uh and uh I'm sorry that would be well

let me clarify this we paused the last

one right uh and then there was a favor

of one to two more this is the one more

and then one more thereafter so almost

everybody was in favor of one more

and then you had a bunch of people like

oh we could do we could do more well so

we were thinking okay it's going to be

either one or two well when Jerome

Powell was in Portugal he said two or

more which then skewed the balance to oh

crap we might get this July one a

September one and a November one so in

other words three more hikes from the

last time he spoke so that created a

little bit of anxiety and if he

reiterates that there's a good chance

we'll actually end up in my opinion

turning red tomorrow so that's a thesis

that I have that's what I'm gonna be

watching for I'm not super optimistic uh

on the short term here but I'm very long

optimistic on the long term obviously

I'm going to give you my bottom line

strategy here just a moment but I have

to reiterate coupon code expires

tomorrow end of fomc day obviously I'll

be streaming it all day long I hope you

join me can't wait to see you there I'll

be live on Twitch and so on and so forth

email us staffing.com come Shadow me uh

Shadow me as we go look for real estate

out in San Diego today looking at real

estate after the market closes we go

check out real estate uh you know meet

us in the office beforehand if you want

uh all the courses all the person

perspective that I have on building your

wealth and whether it's going from zero

to millionaire real estate investing

remember I started working at Jamba

Juice now I'm traveling to hunt for Real

Estate that's how I became a millionaire

and I think anybody can become a

millionaire uh by investing in real

estate check that out and then of course

stocks and psychology money do yourself

Property Management all that good stuff

so now bottom line what's my take bottom

line is

I'm not worried uh I'm very bullish

still on the economy I am short-term a

little bearish on potentially what we've

got going on with the break evens which

is going to manipulate Jerome Paul's

messaging so I wanted to give a little

bit of a heads up warning on that I do

not think this will have any longer term

implications uh for uh the 10-year

treasury or real estate rates I don't

think they'll still have any longer term

implications really for the stock market

either we'll end up plowing through this

I don't think those AI revenues are

coming through as expected but again we

expected that obviously look at

Microsoft azure's not so great news

after their um earnings call although

Google doing well just and they say

they're spending on AI but their capex

wasn't Rising as much as I thought it

would so we'll pay attention a little

bit more to Google and we'll take it

from there thank you so much for

watching as always subscribe share the

videos appreciate you being here and uh

can't wait to share the house hack

updates with you as well when we're

ready to hit public on that the

documents by the way are already public

in case you are not aware you can go to

the sec.com have website search for

entities type in house hack one word and

you'll find our filing we are waiting

for the SEC to qualify that and then

we'll be able to raise money from

non-accredited investors there are some

uh you know limitations around that you

could Google what those are but they're

relatively simple I think it's something

like actually I don't even want to

speculate on exactly what they are

because I'll probably butcher it but it

basically means nearly anybody can

invest which is pretty exciting so check

those out and uh yeah stay tuned thank

you so much follow for more and we'll

see in the next one goodbye everyone