last-minute Fed Warning

All right, we've got to do a short and

quick and sweet preowell prep meeting.

Here's the scoopy doodly. We know we are

lacking data. Nick T is saying this is

going to be a great opportunity for the

Fed to just go 25 BPS and kick the can

down the road and not actually give us a

lot of forward guidance because they're

just going to say we don't have a lot of

data. But I actually dispute that. See,

you already know this. Today is coupon

code expiration day. Contumer siesta for

the meet Kevin membership and the alpha

report. This morning in the alpha report

I I these are the things I like to point

out in the morning. I'm going give you a

spoiler right now but something has just

shifted and the Fed would be dumb not to

talk about this and I think they will.

Look at the Atlanta Fed real GDP. We

already know that the real GDP estimates

are mega high. 3.9% is phenomenally

high. This is like forget soft landing.

This is like mega boom level GDP. Now

that doesn't mean that it's going to be

accurate. But what you have to see

that's changed is this. For the last two

and a half years of us looking at the

Atlanta Fed real GDP levels, we have

always seen the blue chip consensus

around 1%. It has consistently been

around 1%. That means blue chip American

companies have really only been telling

us that GDP should be moving somewhere

around 1%. And what did we just get? We

just got a massive inflection point to

the upside over the last four weeks.

Now, how do we reconcile this with

employment break evens? Well, this is

obviously what's critical today is I'm

going to make you a menu of what we want

to pay attention to when it comes to

Powell today. So, this is sort of our

last minute little menu here. Okay. So,

the first thing that I want to pay

attention to is economic strength uh via

GDP references. Okay, these are going to

be bullish stons. It is very normal, in

fact, we talked about this in the alpha

report because that's what we do in the

mornings. We set the stage. It is very

normal to get a selloff between now and

Powell talking. Very normal uh very

normal to see a preowell selloff. But

what we need are the longer term

signals. And the best signal that we

could get is color on what this is

probably the most important question. I

don't know whether we're going to get

it, but what is the labor break even

rate?

I believe uh the Fed thinks it's 20K. Uh

if they say it's 20K and ADP right now

is showing 14K, we're actually decently

in alignment. If they say break even is

zero,

that's actually bullish because it means

without immigration,

we don't actually need much labor growth

to keep the unemployment rates stable.

Now, what matters for recession is the

difference between the break even rate

and uh uh and the actual jobs report. So

if immigration high and break even rate

is 150,000 and we have 50k jobs that's

recessionary.

Usually around 50k jobs is recessionary

because it revises to negative right

once we actually get the revisions we

tend to go negative and then we're in a

recessionary environment. But it all

comes to what the break evens are. If

immigration is negative and break even

rate is -10, you know, to 0K and jobs

are 14K, yeah, we could see all these

layoffs, but it's actually bullish

because it means the unemployment rate

ironically goes down. So Powell color on

the break even rate is critical. This is

where we talked about yesterday. If we

hear uh a you know the uh bev beverage

curve is steep that's bullish that's a

complicated way of saying it but it

basically means as job vacancies are low

we can actually normalize at a low

unemployment rate creating a steep slope

of the line. I really don't want to get

into like slopes and lines of all that

kind of stuff right now but it's just

important to understand if we hear

anything about a steepening it's

bullish. the lower the break even we

hear bullish. So like if you're making

notes on a notepad and you're looking

for like how to day trade or whatever,

in my opinion, the lower the break even

we hear from him, the more bullish. The

steeper the beverage curve, bullish. Any

GDP references about economic strength,

especially that blue chip consensus

moving up, bullish. Is it normal to see

some kind of sellown before the Powee

Wowee meeting? Every single time. Every

single time it happens. Is it possible

that if we get a bullish POW, yields

actually end up going up? Yes, it is

very possible that we end up getting a

rate cut and the 10-year Treasury goes

up to like 4.05 and goes up and and

interest rate sensitives get hurt. Now,

the the crappy dappies. Okay, this would

be like it's so unlikely to happen, but

there is a crappy dappy scenario

where Powell basically SH9's the bed.

Okay, it's very unlikely. Very, very,

very unlikely. But let's say he poops

the bed. Okay, hooping the bed is NQT 25

BP signal multiple more cuts. Um, uh,

spends a lot of time focused on credit

uh, distress uh, private credit and uh,

layoffs.

Those are all bearish signals. All

bearish signals and they are

economically bearish. Yesterday we had

the worst day since 1990

on stock breath. Now that's not like

meat breath because you just had a big

sandwich and you've met Kevin and you

had a bunch of, you know, pastrarami on

it and you got stink breath. No, breath

is a the difference between how many

stocks are rising versus how many stocks

are falling. Here you go. Yesterday we

had the worst up day for the S&P 500

since 1990. So basically what you do is

you say we had 200 stocks that went up

and we had you know 300 that went down.

Let's just say uh in in that example you

would be at net uh -100, right? But what

we actually had was we had a -300.

Uh which that means the vast majority of

stocks in the S&P 500 were negative

yesterday. Uh, and so when we take the

advancers, the out of the 500, the

number of companies that were positive

minus the negative, we had a whole lot

of companies that went down yesterday.

Now, part of this could be because of

this sort of weakening consumer

situation. And I'm still having trouble

digesting what's going on with FServe

because Fiserve is a payment processor

that does as many as 25,000 payments per

second. This is a financial

infrastructure play. If Powell talks

about this, it's actually somewhat

concerning because financial plumbing

breaking is what leads to financial

crisis. And Fiserf tanking to COVID

lows. I kid you not. Look at this. March

of 2020. Prices in March of 2020 were

higher than they are today on Fiserve, a

financial plumbing company. It raises

some red flags. Most transactions that

Fiserf handles are e-commerce stores

like Macy's. They're basically a payment

processor. When you go to pay, they own

Clover, which you might see at

restaurants. Uh or you go to Macy's and

you go to swipe your credit card on

those terminals. These a lot of these

are backed by the plumbing of Fiserve.

And to see their adjusted EPS miss by

over 20%.

which is an insanely disastrous miss

along with not just their their forward

like their current adjusted EPS fell but

their forward guidance on EPS was down

17%. They missed estimates across the

board across the board by like 7 to 9%.

It was like every part of the business,

forecast, existing business, different

components of the business. This was a

broad-based disaster at Fiser and it's

taking down consumer stocks. Look at

this. Uh uh Dave and Busters is

basically uh at the lowest lows we've

seen since Liberation. Looks like it

continues to trickle down. Six Flags is

now losing its momentum. Red Robins

going down. It's actually a miracle that

Macy's is positive. Cheesecake factory

down 5%. Cheesecake's been doing

decently, but this is a sign that people

are nervous like, "Oh my gosh, well, if

payment volumes or transactions are

getting tanked or payment processors

losing this much money, what's actually

going on with the consumer?" Any kind of

concerns around that would be, you know,

would create some heart palpitations for

the Powell meeting today. Uh, so watch

for that. And this this declining

breadth is a little bit of a sign that

yeah, our market is really concentrated

and rightfully so. Like Nvidia's pricing

power is so large. Like I mean I have

over seven figures in Nvidia. So I

absolutely love this. Like don't get me

wrong. I love seeing green in my

portfolio. But I also have to like I

have to be an analyst and I have to look

at this and go this will not last. Like

these growth rates for Nvidia with how

much money they will make. They will hit

a peak and when the decline comes it's

going to suck. That said, I love how

much money Nvidia is making right now.

And I understand why. The margins are

insane. I don't think you can find me

another company that has better margins

than Nvidia because they don't even make

the chips, dude. They just design the

chips. And when people like realize

that, they go, "What? They're

just the middleman."

I I'm not trying to like water down how

critical Nvidia is. The CUDA mode is

incredible. What they're doing with

automotive technology is incredible. It

is a real risk to Tesla. And people

don't recognize this. People, the cult

gets so mad at me. And yeah, I'm

responsible for helping build the cult,

but at least I have the balls to tell

you when the facts and circumstances are

changing. But the cult gets really mad

at me when I say that Nvidia's fusion

technology built on a blackwell

infrastructure for inference

inside of actual vehicles SOC system on

chips inside of actual vehicles that can

fusion radar data vision data lar data

all of it with very low latency for

real-time applications. It's a game

changer. It's a game changer. People

don't see it. Uh but anyway, uh so so

this is this is sort of our preowell uh

rep. Now, does it matter if we get QT

today? Not really, because even if we

don't get QT today, what we'll end up

getting is a setup for a time frame for

QT. So even if we get 25 BP and like,

hey, we're going to end QT in a month or

two or whatever, that's not that big of

a deal. Uh but what I care more about is

obviously the commentary. So we'll be

covering Powell very closely. Yes, we

know it's coupon code expiration day.

But what I also want to know is

well actually I guess I know the answer

now because I ran a poll and I I want to

just memorialize this. I ran a poll and

I asked you who's your boy, April Kevin

or October Kevin? And the poll results

are in. So thank you for voting in the

poll. But the poll results are in. And

somebody says, "You mean QE?" No. Ending

QT is not QE, right? Like you're turning

off the vacuum cleaner. So QE,

quantitative easing is running the

printer. Yes, we know the Fed doesn't

actually print money, but practically

that's what they're doing. Uh

quantitative tightening is vacuuming up

that money. And pausing QT is turning

off the vacuum cleaner and the printer.

Like the printer and the vacuum are off.

But anyway, I'm going to end this poll

here.

The poll says that 68% of you say that

uh your boy nearly what we're like a

thousand votes in a couple minutes here.

Thank you for voting. But um nearly out

of out of nearly a thousand of you 68%

I'm only disappointed it's not 69. Uh

say that Jose Bond uh is your boy. So we

went from James Bond to Jose Bond. So I

appreciate y'all. Uh, and to that I say,

thank you. Me amigos. Meet Kevin will

always be here to give you perspective.

Whether you like it or not, I'm going to

give you my perspective cuz I ain't

never going to bend the knee.

>> 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. [music] You have

done so much. People love you. People

look up to you.

>> Kevin Praath there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your take.