MAJOR FREAKOUT Against Powell & Fed

wow this is wild most people are

cheering what the Federal Reserve just

did but I was not expecting this from

The Wall Street Journal editorial aboard

Jerome Powell says economy is strong but

still Cuts rates by 50 basis points okay

cool teas before we get into this sort

of shocker of a review by The Wall

Street Journal editorial board let's

just quickly remind you what happened

today this is not going to be the full

summary of what the FED just said watch

that other video on the channel because

it's pretty odd but basically what you

got is you got 50 basis points of cuts

yet literally he literally said these

words everything is fine and the economy

and jobs are strong that's what he said

and the fact of the matter is history

suggests that when you cut by 50

everything is not fine and so this is

leaving some wondering was this

political did Jerome Powell cut by 50

because he wants to give Democrats a

boost to prevent Donald Trump from

becoming president and firing Jerome

Powell or maybe he wants to keep his job

and not see inflation from a trump trade

War that's possible as well that's sort

of the jaded political point of view but

it could have some merits

uh then there are also the facts of

history for example consider this in the

last 21 rate cut Cycles last 21 of them

every time well I shouldn't say every

time but when we started with 50 plus so

a 50 plus basis point cut we had a

recession

follow just over 50% of the time so in

other words

if you start with 50 you're at about a

50% chance of recession because just

based on history the last 21 rate cut

cycles that have started with 50s have

followed you know a recession or have

led to a recession 50% of the time 50 50

hm interesting what's also really weird

is that if you look at a starting with a

25 BP cut you have a recession just

about one qu of the time which is kind

of an interesting and unique way to

remember this you start with 50 you get

recession 50% of the time start with 25

you get recession 25% of the time it's a

little odd but the last two times we

started with 50 we were 2000 and

2007 in fact what's honestly I think the

easiest way to just put this really

eerie and and this is extremely Eerie

is oh we're uh doing a flash sale that

expires tomorrow at noon for the courses

on building your wealth so if you want

to see how I'm repositioning after this

fed meeting what changes I'm making

going into the end of the year is it

time to go all in what is it time to

sell everything is it time to go for

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tomorrow uh meetkevin.com you get

lifetime access when you sign up no it's

actually that exactly 17 years ago

today 17 years ago today the Federal

Reserve cut interest rates by a half

percentage point to start a rate cut

cycle and look at this I tweeted this or

posted this exactly 17 years ago the FED

cut rates by 50 B basis points in a

surprise and quote bold move even though

some suggested that would mean the Fed

was acting out of desperation literally

September 18th 2 the day here's the CNN

article CNN September 18th 2017 17 years

ago Dude I was 15 years old I was I I

got my learner

permit fed's dramatic action lowers

Target on key short-term rate for the

first time in four years fed cuts by

half percentage point from literally

5.25 to 475 exactly the same as what we

have now and there's even a quote some

investors had thought that fed share

banki would take a more cautious

approach and not cut rates by such a

large margin because a half point cut

could signal the Fed was acting out of

desperation to save the economy hm

that's interesting see but that also

aligns with my thesis that you know

which we talked about in the other video

that like dude is this is weird like is

the Fed lying to us because you know

there there this is a hawkish 50 is what

we got right we really got a hawkish 50

and this morning in the course member

live stream we talked about how there

were various different directions you

could go we thought you'd probably like

the most stable results for stocks would

be a dovish 25 or a hawkish 50 we kind

of got a hawkish 50 so the problem now

with that is the federal and then we got

to talk about the Wall Street Journal

article the problem with that hawkish 50

is you just had the 10-year curve move

up seven basis points you had the

two-year move up two basis points and

what you really did is you really just

tightened monetary conditions so I want

to talk about this Wall Street Journal

article but think about that you just

cut by 50 basis points to support the

labor market okay but but what did you

actually do by being so like jubilant

and hawkish what you accomplished was

making it harder to support the labor

market you actually raised rates in

practice because I mean really the fomc

rate does doesn't really matter with the

exception of your like money market

accounts what matters is you know what

car loan can you get what mortgage loan

can you get what credit card rate can

you

get and we just saw yield curves on in

the bond market move up not down which

of course we could argue that a few

things are happening here you know why

would the yield curve go up well there

are a few reasons the yield curve could

go up uh the yield curve could go up in

part because of profit taking I know

there were a lot there were a lot of

traders that are like okay I'm taking

profits going into the FED meeting

because it's going to be a buy the rumor

sell the news on bonds so a lot of

people bought bonds before the FED

meeting and they're like oh okay I'm

going to take my profits cool that's

great some of these trades have been up

like

202% going into the FED meeting maybe

even a little bit

more but if we're truly going to

potentially price in a greater chance of

recession now that market rates are

actually going up not down which is the

opposite of what the FED is trying to

accomplish then what you're really doing

is you're setting up for not like a 20

or 30% gain on bonds but you're

potentially especially if you go with

like option contracts uh you're

potentially setting up for a double

triple or

quadruple uh on on bond related plays if

you have to start pricing in a recession

which you're actually creating a higher

likelihood of recession given that your

actions just led the market to price in

higher rates now again you could have

this just be predictable profit taking

Mak sense everybody dumps right after

the FED meeting profit taking very very

normal uh it could also be because drum

pal talked about high the like a higher

neutral rate but come on he's said that

every freaking meeting in the last year

it could be because people believe the

fed's assurances of no recession I'm not

sure about that or it could be because

of the feds talk about a normalization

in real estate you're also seeing like

an off Trend bounce here right uh and

and don't take my word for it but look

at

uh here we go uh here the market ear did

a piece on this I thought it was pretty

good and you could see the 10year they

say bouncing off Channel lows so this is

their chart right

here the market year uh bouncing off

Channel lows and then you come down here

and look at this this is the downtrend

you've had on the 10e keep in mind the

peak of this was basically when Bill

amman's like Shields are going to go way

past 5% and then they hit like 4.99 and

then they plummeted when he covered but

anyway you're literally bouncing off

that channel right here so not highly

unusual my take is that you're going to

get a lot of fed speak that's like oh my

gosh we just push yields up that

actually hurts us trying to accomplish a

goldilock soft Landing which potentially

means we need to talk this down so I

think you're going to get a lot of

fedspeak over the next few weeks that

tries to

go we might actually price in more 50s

you know because they want to talk

yields down uh because again the whole

point of this is supposed to be to make

the bond market and financial conditions

soften but listen to what the Wall

Street Journal editorial board says the

Federal Open Market Committee on

Wednesday cut its short-term interest

rate target by 50 basis points and the

question is whether to believe what

chairman Powell says or what he

does holy smokes the Wall Street Journal

editorial board is sussing out Powell

they're literally like bro this some bow

you're telling us everything is fine you

literally said the words everything is

fine like the meme and you cut

50 listen to their words Mr Powell in

his press conference said all is well in

the economy but such aggressive monetary

easing suggests he's more worried than

he

sounds yeah cuz he wants statue on the

walls he wants his Mount Rushmore you

know he doesn't want to screw up the

soft Landing so that's why he's going 50

but I think this whole idea that

everything is fine is quite frankly

fugazi uh if you look at the beige book

which he referenced as a reason as to

why they went 50 it's not good most of

the districts are in Decline yes the

Atlanta fed numbers jumped because they

use the latest retail sales information

uh retail sales data which you know

weren't great they're slowing on a

3month trend they're slowing on a

year-over-year trend and yes retail

sales popped but always remember that

retail sales are extremely lagging

Powell knows that he literally said

during his press conference oh well

unemployment claims are still fine and

the consumer is holding up he's lying he

knows these are so lagging if Powell is

literally using unemployment claims to

guide interest rate reduction

we are completely effed so it's either

he's stupid or he's lying I can't

believe he mentioned unemployment claims

but whatever I mean you could see how

the Wall Street Journal editorial

board's even susing him out Mr Powell

said the FED is merely

recalibrating policy regarding you know

as we drift towards the 2% inflation

Target but the 50% or 50 point cut plus

the rapid Pace in the fed's estimates of

future Cuts suggests a sharp tilt

towards heading off more unemployment in

other words it's like crap you know we

we should we should hurry this up

because we might actually like Miss the

opportunity to stick to soft Landing

which is slightly bullish right that's

one of the reasons probably you also saw

bonds sell off a little bit today

because it's kind of like okay they're

going for 50 they want to reduce the

odds of recession so you have to

unpriced odds of recession at least a

little bit right if they went for 25 you

wouldn't have to unpriced odds of

recession as much but that doesn't mean

it's not too late already anyway and so

obviously the data will tell over the

coming you know four to 6 weeks and and

this is where everybody has to

individually analyze is making you know

this move right for you or whatever move

right for you personally I'm going to do

a lot of repositioning over the next six

weeks and if you want to see every

single reposition Move I Make going into

the election make sure you use that fed

50 coupon we were not going to do a

flash sale it ends tomorrow at 12:00

p.m. California time we were not going

to do a flash sale unless I was right

about 50 and I was right about 50 so

we're kind of like patting ourselves on

the bat a little bit on the back a

little bit In fairness okay but anyway

yet at his press conference Mr Powell

was all sunny side up he rightly noted

that even 4.4% unemployment is low by

historical standards and he cited

optimistic notes that point to a strong

labor market labor force participation

job vacancies and clips that were uh and

quits that were all part of a strong

labor market these contradictory signals

highlight the risk the FED is taking

with its new rate cutting path Mr

Powell's bet seems to be that if

inflation is sufficiently whipped uh

whipped that the FED can ease

aggressively now to Forstall a Slowdown

that hasn't yet arrived he may be right

but obviously they're sussing this out

right he may be right but even Michelle

Bowman over at the FED first first

descent in 2 years shows that there

could be a credibility issue here or an

agreement issue and uh you've got this

note here this suggests investors heed

the message in what Mr Powell did rather

than what he said in other words that

selloff we saw into the close which who

knows we a bounce Green tomorrow who

knows we'll see what happens tomorrow

but the Wall Street Journal editorial

board here is going you know people may

have started taking profits because

they're like oh crap Pal's acting like

everything's Sunnys side up but come on

man

50 a little bit of a sign you starting

to get a little nervous anyway uh then

of course they also mentioned that this

could be a political issue as well they

mentioned this regarding Donald Trump uh

all of this actually very interesting

coming from the Wall Street Journal

editorial board so I find it very very

fascinating but uh I want to hear what

you think what do you think in the

comments down below did we just stick a

soft Landing is this the beginning of

long-term success for markets or we

going to see earnings in Q3 just blow

our socks off and uh are we good you

know are the next few labor reports

going to be good and not revise down

substantially is inflation going to stay

low is this a Goldilocks soft Landing or

are we part of that 50% chance camp

where when you start with a 50 in the

last 21 rate cutting Cycles the odds are

you're actually leaning towards a

recession you've turned it into a coin

toss when markets are starting to price

in you know maybe only what a 10 20%

chance of recession otherwise I I don't

think the stock market would be this

high if we actually thought the odds of

a recession were 50/50 it's a little odd

to me now if I look at the world

interest rate probability curve right

now we're at about a 33% chance of a 50

basis point cut in uh in November so

even the market doesn't fully believe

Jerome Powell when he says oh yeah 50

and then look at the SCP what does the

SCP say 50 25 25 okay we kind of

predicted they might go for 50 25 25 but

markets are already going n man 33%

chance of 50 now I expect soft yapping

from jpow well and everybody from the

Federal Reserve now that we're out of

the Blackout Window and I wouldn't be

surprised we're going to get start

getting some interviews over the next

few days here from fed speakers and

these interviews are going to talk

yields down again because what they

don't want to do right now is have

actually heals in my opinion stay up

because all it does is tighten Financial

conditions and ironically increase the

odds of recession this is what's so

complicated here like part of me is like

okay cool they went for 50 that should

reduce the odds of recession but wait

Market yields went up well what the hell

if Market yields are actually going up

then then this is a problem because now

you're making things worse and not

better oh man it is such a crazy

freaking Market to try to understand and

put all this crap together but hey you

know what

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