Warning: The Fed’s SECRET Plan to DESTROY the Economy

we're going to cover a ton in this video

including what is the Federal Reserve

going to do on Wednesday are they going

to go for a 50 basis point hike are they

going to go 25 are they going to go zero

what does it mean for you are your

credit lines going to get Frozen we're

going to talk about that in this video

we're going to start by talking about

Shadow

tightening what does that actually mean

for you as an individual investor what

does that mean for the greater economy

are there any stocks that could

potentially get through this era we'll

talk about that as well let's get

started remember this video is brought

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free stocks link down below let's go

well folks we gotta talk about the

shadow tightening that is happening by

the Federal Reserve and how the Federal

Reserve could actually lower interest

rates while Financial conditions are

still so tight that we could potentially

be pushed into a recession while the

Federal Reserve is still cutting rates

that would pay homage to those

individuals who say ah see Fed pivots

when they break something and then

things just get worse now it still

remains to be determined whether or not

what the Federal Reserve is doing now is

a a pivot via the buy the FED pivot

facility the 300 billion dollars they

basically just pivot printed is that a

pivot or is it a U-turn because

generally pivots are bad u-turns are

good well we'll probably know on the

22nd when we hear from Jerome Powell but

for now we get a study the potentially

dangerous implications of Shadow

tightening and Shadow Federal Reserve

policy that's what we're going to talk

about in this video now

two things that you have to know before

we go into these pieces from Barclays

number one is you have to understand

what this chart is this is a chart known

as the financial conditions index it is

a chart that is put together by Goldman

Sachs and because it's an index it means

it has different components in it one of

the components is stock prices one of

them is bond prices then you have

lending tightness and and other

variables that basically combined tell

you how tight

are Financial conditions in America

right now and it's very useful because

it gives us a heads up on what is the

Fed potentially likely to do on the 22nd

of March or going forward

see the Federal Reserve loves looking at

this chart because when this chart goes

down like it did over here in January

and the financial conditions start going

down while inflation is not falling as

fast as it should what is the Federal

Reserve do they come out and Hawk they

start talking about how hey you know we

need to tighten more now sometimes the

market does this themselves sometimes

it's driven by the fed's commentary when

we add Jackson Hole we saw a massive

burst of Goldman Sachs Financial

conditions index or the index here and

that's because Jackson Hole was really a

time where Jerome Powell ended up coming

up and saying hey Financial conditions

are too weak we've got a lot of work

left to do on inflation and so we're

gonna have to hike higher for longer and

guess where on this chart where do you

think Jackson Hole was at where Jerome

Powell basically told us we got to do

more where do you think it is it was

August 26th which is basically right

there so you could see how either Jerome

Powell can verbally tighten Financial

conditions with what he says or the

markets can tighten Financial conditions

when we got the January jobs report

retail sales report and all the reports

that were really hot for January look

what happened Financial conditions went

from here

straight up

this is what the Federal Reserve is

trying to manipulate because the higher

this chart is the lower inflation

expectations go this is the inflation's

expectations chart

and look at what's happened over the

last few days as uh Financial conditions

have remained tight

and

as banks have started to fail look right

behind me there look at that massive

plummet

hugely plummet and break even inflation

rates this is the five-year Break Even

chart which is fascinating because this

is exactly what the FED wants the FED

wants this chart going down and in

addition to this chart going down what

do they want they want this chart

staying elevated as long as those two

things are true they could actually

reduce interest rates

and that's interestingly interestingly

interest rates what we're going to talk

about in these pieces now these pieces

are phenomenal two really good Barclays

pieces here on Shadow tightening I'm

gonna go through both of them because

they're really really important and

you've got to understand these shadow

tightening aspects if you care about the

FED at all which I think most of you do

and if most of you care about the FED

then you'll love

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adjustment although generally the price

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who buys keeps getting that lifetime

access to Value so what do we have here

rate investors are worried that credit

will be curtailed which could be a drag

on growth with this inflationary

impetuses

okay so let me actually you know what

let's go ahead and start with this

Shadow inventory piece because the other

one gives us a little a sort of more

additional commentary let's start with

this one this one explains a little bit

better so uh this is the risk of Shadow

tightening and they start with this

commentary they talk about how uh how

crazy the market has shifted they say

one week ago following hawkish

commentary about Powell a 50 basis point

hike was basically seen as a foregone

conclusion a done deal along with much

higher terminal rates I mean we were

talking about going to six percent now

all of a sudden all of that has u-turned

and uh hedge funds and systemic

strategies were short bonds and they got

f'd over the last two weeks like really

badly they were super unprepared for

what ended up being one of the biggest

and quickest Bond rallies on record bond

prices up as people flee to safety bond

yields down remember when we saw bond

yields Crash from like uh you know 4.5

percent on the two year to like 3.8 it

was insane and when we were watching

some of this live it was just insane how

quickly some of these yields were

falling the 10-year went from like 4.1

to 3.4 that's like an 80 BP plummet it's

insane massive changes right so huge

volatility

so what do we have over here while all

of this volatility was happening and I

thought this was actually a fantastic

point for the stock market they say here

looking at sector flows they say that

falling markets rarely bring good

returns uh for for Equity investors

however because Equity investors have

such low risk exposure right now which

is a fancy way of saying so many people

right now are so heavily exposed to cash

and bonds and not the stock market you

actually didn't see that much pain in

the stock market and I wrote good point

on this because really if we look at

some of our stocks this last week should

have been absolute hell with this

banking disaster and look at QQQ the

technology index what the hell it's like

on the average candlesticks up the last

four day trading days look at that we're

totally holding Fibonacci support we're

holding 200-day moving average support

because why well because people are so

bearishly invested you can literally

have five bank failures in a week and

you still hold support on the NASDAQ why

well because a potentially QE but B

because people are so bearishly uh

positioned

but now they talk about a new set of

systemic risk concerns being introduced

banks will no longer be looked at as the

pure and simple beneficiaries of rising

uh yields and potentially the only

winners of sticky inflation instead uh

they could basically be

failing and and you could see the

banking sector continue to trade down

but what's more important than just

worrying about the banks

well the potential for this Shadow

tightening and before they they go into

this idea of Shadow tightening they just

quickly uh give you this this sum up

here to say hey look central banks right

now uh are very concerned about the

contagion that could occur from these

Banks right in potential bank failures

and the first thing they tell us is

right here this is where we get into

Shadow tightening

one corollary of the volatility in Banks

is that lenders May tighten lending

standards even further in order to

protect themselves this would act as a

de facto tightening of policy helping

slow the economy and raising the

likelihood of a recession so think about

that for a moment

as fears are established of banks

failing and people are positioned pretty

bearishly already what you have is

people pulling on their purse strings

more that is a form of tightening yeah

we don't want to be in stocks anyway

again if people were in stocks heavily

in stocks there's no way in hell over

the last two weeks the NASDAQ should not

have broken these supports but it didn't

because people are so bearishly

positioned right now the people who are

in stocks are like

give me more come on I need to I need

another buy the dip opportunity so

which is fantastic I mean I I increased

my exposure to end face like three times

this last week it's almost at my load

the truck price Target by the way when

this sucker was 300 and who knows when

this sucker was 330 I'm like way

overpriced this sucker's going down it

could go as low as 160 bucks it was like

180 yesterday I'm like yes yes yes we're

getting closer

great company it's just a bad time for

for them but anyway

so people pull on the purse strings of

their cash but it's not just them it's

also Banks who potentially tighten

lending standards and now that's

actually interesting because remember

Silicon Valley Bank gave a lot of loans

to startups with loose terms well that

made it easy for them to hire people and

spend money well that's fantastic but

it's also inflationary well that bank

has now failed so who picks up well

maybe the big Banks but the big banks

have substantially tighter lending

requirements and they're likely to

tighten their lending standards meaning

less inflationary impetus instead more

deflationary impetus take a look at this

here's a piece that Zero Hedge tweeted

out they wrote banking crises are

followed by tighter lending standards

duh tighter tightening lending standards

for small businesses versus the FED

discount window usage okay so simple

blue line goes up means banking pain

uh oh dark blue line dark blue go up

more banking pain light blue line go up

more tightening of the economy

what do we have well you have that

tightening of 2008 you have the

tightening of 2020. and now you're

starting to see that Titan here but

notice how quickly that discount window

usage has run up

it's possible that these lending

standards will tighten substantially

soon this by the way is guess what

practically happens in a shadow

tightening environment you've heard me

say this before during Financial crises

but if you have a HELOC a lock uh like a

margin line something that you want to

preserve Capital to all of these could

end up getting Frozen when we go into

these sorts of banking crises

environments credit lines can tend to

get Frozen and so what do

sophisticated investors tend to do in

these sorts of environments

they take them out and leave them in

cash

you have to be careful especially with

margin this is the one that I would be

very very cautious of

what will people often do is they say

look I'm going to prepare by taking out

as much cash as possible so everywhere I

could take out cash I'm going to take

out cash and I'll leave it in cash

even on margin lines sometimes people

will take out cash and they leave it in

cash the cool thing is when you have

margin taken out in the form of cash you

have that backstop right so it actually

reduces your risk of getting margin

called with a HELOC or line of credit

there's generally no Margin Call I

really recommend staying away from

margin debt

but some people will take the risk I

just caution to leave it in cash because

you want to be able to survive

potentially the really bad times right

so what a lot of people do is when

lending standards tighten is they take

out their home equity lines of credit

they Park them in a different bank so

think about this way if you have a home

equity line of credit at Chase you take

the money out of Chase and you put it

into like Bank of America so that way

you have the cash and Chase camp like

pay off their credit line so you might

not necessarily have to do that you

could potentially just move that into a

different bank account a Chase but if

that credit line gets shut down

if you already have the money out

they'll just keep charging you interest

that's okay they're not going to call

your loan doing payable on generally a

home equity line of credit read

obviously your loan terms

uh on a margin line they could they

could call the cash back but consider

that uh a tightening lending environment

uh could be occurring and then there

could be some real practical

implications to you but in addition to

this

when you see a tighter or sort of de

facto tightening environment you could

potentially actually see the Federal

Reserve cut rates this is why you're

seeing central banks start lowering rate

expectations in fact they say here we

find that fear oh well they say that so

repricing lower and Central Bank rates

expectations is understandable but

Barclays thinks it's too aggressive at

this point in other words this idea that

the FED is going to cut rates 100 basis

points by the end of the year they think

it's too extreme because they actually

think a lot of these fears are overblown

but it is likely that banking Financial

standards are going to tighten

so they say hey look we're looking at

Classic indicators of mainstream bank

stress like Ted spreads or fra ois

overnight interest rates swap spreads

we're looking at these and we're not

seeing any kind of massive systemic

failure red flags much like what we've

seen in past episodes now who knows

everybody always says oh don't see it

yet don't see it yet and then everything

sort of blows up in your face right

but the point is

lending standards could tighten

significantly basically doing the

federal reserve's job for them when the

Federal Reserve has tight lending

conditions the FED could cut rates and

we could still walk into a depressive

environment and that's because people

just don't have access to credit anymore

remember American Express is saying

people are using their credit cards to

basically spend through the recession

great but what if those credit lines get

limited and they can't spend through the

recession anymore

it's going to be really interesting but

keep in mind the shadow tightening

that's happening it could actually lead

to an equity rally in my opinion much in

the shape of now there is a there is a

bare side as well so I'm not always

giving you a bull side here but in for

this for the purposes of Barclays

opinion I think what they're describing

is very consistent with this form of a

Nike Swoosh style recovery extremely

quick Down super volatile and extended

long-term up that's my take that's why I

think equities continue to Trend up

because there's so much bearish

positioning right now already is it

possible the bear story could take over

where we have a multi-year-long

depression yes and we're going to cover

that in a different segment because this

segment's gone on for too long but pay

attention to the Goldman Sachs Financial

conditions index as long as that level

stays High the FED is likely to be

willing to lower rates or give us a

lower path forward

consider that the Dot Plot of the

Federal Reserve comes out on the 22nd

now that's actually fascinating because

the Dot Plot could end up coming in soft

look at this Barclays in their second

piece says here we would expect the

Federal Reserve to downplay their Dot

Plot citing heightened uncertainty about

the path of monetary policy and

investors want to gauge how the FED is

going to Balance Financial stability and

ultimately the risks of inflation this

is why they suggest hey look we know the

market is pricing in a lower term rate

but this could really create a credit

crunch which ultimately becomes a big

drag on display disinflation right or

creates a drag on inflation I should say

it creates disinflationary impulses

and in other words this Shadow

tightening really just amplifies what

the rate is of the Federal Reserve so

the Federal Reserve rate could be four

percent but with Shadow tightening it

could feel like

eight percent and this is fascinating so

do consider that they mentioned Barclays

uh ends up writing this bottom line

suggesting Shadow tightening policy is

likely being seen by investors as likely

the equivalent of a few 25 bips of hikes

in the future I actually feel like it's

more I think if we're at maybe four

percent Shadow tightening could make it

feel like eight percent uh but this is

that's going to be something of high

debate what do I think the Federal

Reserve is actually going to do this

coming Wednesday on the 22nd not only

coupon expiration day but also fomc day

I believe the Federal Reserve is going

to go for a 25 basis point height the

reason I think that is because they are

going to send enough signals to the

market with what is going on with not

only their statement their speech but

also the summary of economic projections

the market is pricing in a 25 BP hike I

think we're gonna get that 25 BP hike we

don't need every level of shock we're

not going to get 50. I think there's

zero chance of that uh I mean if that

happened it'd be crazy then that would

mean the FED is so worried about

inflation they don't care about crashing

Banks I think we're going to get 25.

we're going to get forecasts that

actually show sooner cuts from the FED

we're going to want to dive through

those forecasts I don't think we're

going to get zero because that would

also send signals that the banking

crisis is way worse than we think and

everybody should Panic so stick with the

25 give us the steady Eddie we're

expecting let the markets digest all of

the Nuance in the next fomc meeting in

May when we don't get another summary of

economic projections then you could go

zero and pause and then let the market

digest that that's my take and there is

also the depression the Great Depression

scenario out of all this tightening

which we'll again we'll talk about in

another segment but I think the bottom

line for this segment here is the

Federal Reserve could actually reduce

rates going forward and we could still

see a down drag in markets driven by

lower earnings because of the lack of

available borrowing so how do you

position yourself for that bottom line

for you is twofold number one consider

what this means for your credit lines

is it does it make sense to draw down on

your credit lines now before lending

standards tighten and your credit lines

get frozen number two if you are

investing you probably want to be

investing in what I call inflation

resilient stocks so you want to be

looking for companies where people are

still going to spend money even if they

don't have easy access to debt in other

words where is that wealthier segment

that might continue to spend through

this recession where are they spending

money is it going to be

businesses spending on artificial

intelligence is it going to be consumers

who have a lot of money maybe left over

who still want to invest in energy or

electric vehicles

solar panels or cars for their homes I

don't know usually when the housing

market slows down the first thing people

do is they stop investing in their homes

which is bad for the solar industry

something we've been talking about for

about a year

so consider that if you are investing in

stocks I think the big thing is look for

the recession resilient ones that's my

take things with pricing power uh

consider that credit lines could be

getting Frozen and you might want to

start putting away some cash from those

credit lines yeah you'll be paying

interest in the meantime but it's a

consideration uh and and realize that

even when the FED begins to cut rates it

doesn't necessarily mean we're going

straight up to the Moon uh for for the

stock market that volatility will still

be here especially as we wait for what

this loosening ends up meaning for the

financial crisis the actual recessionary

impulse for earnings at companies

and then of course uh the actual ability

of individual companies to survive sell

solar and we're having record numbers

every month I think you're wrong here

I'm selling more than I ever have in my

life so many homeowners are going solar

so solar is very interesting

because

and this is why I'm not betting against

it I'm just cautious

uh for example I still have an end phase

position that I'm actually building up

and so there are two sides of this coin

coin number one is

people spend less on their homes when

values go down okay does that mean solar

well it probably almost certainly means

Home Depot and Lowe's would have lower

earnings because people might be doing

fewer

discretionary style remodels right

but addition in addition to that you

also have this

potential idea that if you buy solar

you might save money on your electricity

bills and maybe that is the right thing

to do in a recessionary environment

because you're investing and lowering

your monthly overhead

so solar is this really interesting

space

where I actually think while you have

this down pressure of people wanting to

invest in their homes less you also have

this up pressure of people going well if

we're in a recession we want to save

money so let's buy solar

so you have this really weird Balancing

Act which makes solar very unique and we

have not been through a recession before

other than covid which doesn't count

where people have had to make that

analysis like well if this is longer

term pain maybe we want to lower our

electricity costs and buy solar and

maybe we don't remodel the bathroom and

so that's something where I think what

you're saying is actually a very fair

point and potentially real scenario that

people might forego on the kitchen

remodel people might forego on the

bathroom remodel or forgo on whatever a

remodel in their home new flooring or

whatever and end up buying solar panels

now uh I would like to uh sort of just

give a quick recommendation on solar in

my opinion you all know I'm a licensed

financial advisor but this is not

personalized advice I don't know what

your situation is right so you always

have to evaluate ultimately these

decisions yourself but but my opinion is

that if you're going to get solar panels

you should buy them I think uh Power

purchase agreements and leases are very

risky because they limit your liquidity

in uh in uh

uh sale selling your property and so

that's not good selling selling a

property with solar is very difficult

because you're relying on somebody else

to want to take over that contract and a

lot of people don't understand that

liability they're signing up for so I'd

rather see own solar panels so I

personally have solar panels on my

property I've got as many as I could

possibly have on here uh I I have a I

have an end phase battery as well I've

got the end phase micro inverters big

fan saves me a lot of money was a

fantastic investment

somebody else here writes with a five

dollar donation don't forget solar is a

is big in the prepper Community I have

it for that you have it for prepping but

living in Southwest Florida there are

Savings in immediate Roi nice well yeah

there's your World War III argument as

well how about financing them yes that's

okay that's okay that's buying right so

financing is buying uh that's that's the

equivalent of buying uh and so I'm okay

with that you want to buy for the panels

cash pay firm with a credit line pay for

them with financing with with your

company or whatever

totally fine with me it's the leases and

ppas that I generally caution people

about uh so so a fair fair game there

exactly if you buy solos you have your

own power grid goes down so you have to

be

careful about the idea about having your

own power if the grid goes down

uh and uh the the idea here is

you need to have the end phase iq8 micro

inverters which I don't even have and so

most solar panels actually won't work if

the grid goes down uh is they need to be

connected to the grid to actually get it

working which is kind of annoying uh but

uh the iq8s will work

with sunlight only exactly so okay

that's a good little append there on uh

on on solar so uh that but it's one of

the reasons I'm also so bullish on end

Faith but anyway or get a Generac whole

home generac's a good one too I like

Generac

yes end phase is set up to work off the

grade through the new iq8s not the old

micro inverters