The Fed is DELUSIONAL | **PREPARE FOR THIS.**

oh it's been a while since we've heard

from Chris Waller over at the Federal

Reserve but we just got a heads up from

Chris Waller about what their intentions

are and let me tell you I think the FED

is absolutely losing it this is this is

not this is not realistic at all Chris

Waller just said the US should take a

cautious and systematic approach when it

begins cutting interest rates a process

that can start this year ABS in a

rebound in inflation okay that's fine

like that's what we expect we kind of

expect that mostly because we've kind of

been ticking up it sort of feels like

we're ticking up this roller coaster uh

and we're ratcheting up like da da da da

da da right like those are sort of the

interest rates uh it kind of like here

see this this is the edge of the chart

over here on ec.com you can see

this right like the slow increase of

rates the problem is Chris Waller is

suggesting yeah we could just slowly and

methodically lower rates the issue with

that is that is not happened at all ever

in recent history the FED has always had

to rapidly and massively cut because

they were too freaking late always now

they've tried don't get me wrong they

have tried they've made it about n

months in a row of slowly tick tick tick

tick which what's really interesting

about that is roughly 8 months after

March where we could get our first cut

happens to be the election and so I

wouldn't be surprised if all of a sudden

you start getting a slashing right

before the election now why do I say

that it has nothing to do with political

Jade despite the fact that I ran for

governor in California and trust me I

think I got a right to be politically

jaded okay I worked hard on that one but

anyway look at this look at the fed's

history of the effective fed funds rate

you ratchet it up in the 50s d

d

crash right and like generally you kind

of trend up as the economy expands you

could get rapid Cuts again but it's

always rapid like the cuts are rapid

even if there's no recession signified

by a gray bar even absent a recession

when rate Cuts come down they're usually

Rapid or you get this where you have

like 6 months down and then JK we're

going to go way up right and then when

it comes to down it's pretty much always

a very rapid decrease here's a period of

time maybe you could argue we had

sustained cuts for a while but this was

Arthur Burns this was like we're going

up JK we're going down we're going up JK

we're going down JK we're going up a lot

like what is this right so no

consistency of the FED at all you could

argue maybe like okay well there's some

lowering over here but that's only off

the backs of big cut big cut and then

that's already up so the fed's really

historically never done these big like

like gradual Cuts You could argue 89

this is probably the best period of time

where you actually had the FED go down

down down down but then it just turned

into oh God we were too slow again boom

I kind of think that boom is going to

like that's us right here okay boom now

the good news about that if we could say

there's good news in getting like these

massive massive crazy rate Cuts is I

think the worst of the stock market is

probably behind us now I'm not trying to

be like some Perma or whatever about

this it's simply to say if we scroll

back to that 89 uh period of time and we

do like uh like we'll do a quick Google

like Dow Jones 100 100y Year history

right so you just look at the 100y year

history charts macro Trends Trends

excuse me has a good chart of this and

what we find is that yeah the 80s like

that era of 82 is to about uh quite

frankly the bubble was pretty volatile

but it wasn't Mega painful like consider

this if you could have invested here in

February of 82 which was right around

the time the FED hit Peak rates which

would be kind of like this summer for us

when we hit Peak rates the market was

volatile but it was basically a Nike

Swoosh right here's the tip of your Nike

Swoosh and there's your swoosh hm have

you ever wondered where I came up with

the Nike Swoosh from was it maybe

history Maybe Kevin's reading the

history books oh my God I thought it was

just a YouTuber anyway

so what's what's fascinating though is

look at 89 look at the drop in the 8990

recession in the Dow folks nothing that

like that was not even you didn't even

feel that let's zoom in not into the 70s

let's go into 89 there we go this was

your 89 drop you went from 6,800 on the

Dow to 5600 that's like what at 8% %

drop 400 points it's more like a 5% drop

it's like 5 6 7 8 9% somewhere around

there it's super super nominal so when

you zoom out and you look at like the do

drop uh which was over here which was

three years of pain that was painful

then you look over here and you go 08

recession that was quite painful and

that 08 recession was very very rapid

which honestly I kind of would rather

rapid and really painful than how long

uh this kind of like cycle has been and

it depends I guess what you're investing

in because if you look at this cycle

like most of the pain happened between

December of 2021 and then over here

probably around the beginning of 2023

right so we're really talking about a

13mon downtrend cycle but it really

depends what you were invested in

because some stocks I mean you look at a

company like Tesla it's been a lot more

volatile and you've had a lot more of a

percentage based draw down and less of a

recovery that's okay though that comes

with these volatile stocks zoom into

Apple 20 years ago and you've got even

more volatility than this I know it's

seem crazy to think about how stable

apple is now but the point with Waller's

comments that I think are delusional is

that Waller is suggesting oh we're going

to be able to methodically cut because

we're starting to see inflation and the

labor market come into more balance in

fact he literally said the Focus right

now is not on pushing inflation down but

rather maintaining a balance between

inflation and jobs that's actually a

pretty big shift now he's concerned that

we're going to get some big revisions in

February for CPI data and we might those

revisions last year washed away some of

the inflation benefits that we had which

isn't great it's going to lead to more

volatility and obviously now we have

supply chain concerns around the Red Sea

everybody's talking about how Germany is

basically bogged because of well the Red

Sea like a lot of material comes up to

Germany through the Red Sea just like we

saw in uh for Giga Berlin you know

they're having to shut down for almost 2

weeks actually might be a little bit

more than two weeks because they don't

they don't have the materials they need

so so they can't make Teslas because of

material that should be coming from

China through the Red Sea so it has to

go all the way around uh the Cape of

Africa it's adding basically 30% of your

commute time but anyway uh Waller here

suggesting that the risks are more

balanced and that they do not want to

harm the economy as as long as inflation

doesn't Reverb is in my opinion actually

a bullish sign that they're starting to

realize okay we've done a lot of damage

we don't want to go too far the IMF just

reported that 75% of the rate impacts

have already hit us like the lag has

already hit us and uh Waller's like yeah

we had a strong jobs report in December

but that's mostly noise like they're

literally downplaying the good data and

they're like inflation's good so it's

like the good the hot data is like oh no

no no that's just noise then inflation

data okay we're good over here uh now

let's make sure we don't go into a

joblessness recession that's what I'm

wor worried about and they're seeing it

as well but this this idea that we're

going to get slow and methodical rate

Cuts it's delusional I do not think this

time will be different so I actually do

think that'll be bullish for stocks I

know that's weird but I think we're

going to get a slashing of rates really

really quickly this year I I don't know

when it it could literally be December

of this year okay I don't know what but

I think we're going to get a slashing of

rates and what'll be really weird about

it is the interest rate sensitive

sectors in my opinion will explode so

quickly people are going to Blink and go

oh damn I thought I had exposure to the

interest rate sensitive stocks I guess I

didn't and then all of a sudden they

were like wait I can't guarantee that I

don't know that with certainty that's

just my opinion I think the FED is

delusional I'm glad that there are no

nowhere near talking about more rate

hikes they're talking about being

restrictive but this slow and methodical

rate Cuts I just want to be I just want

to say one thing Crystal Clear it's

never ever happened before they always

end up in fat rate cuts and we know the

FED knows how to cut rates and I promise

you as soon as it starts becoming

painfully obvious that we're losing jobs

and the economy is losing jobs they're

not only going to cut but they're going

to go into their

drawer 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 Go

congratulations man you have done so

much people love you people look up to

you Kevin PA financial analyst and

YouTuber meet Kevin always great to get

your

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