My FINAL Warning: Prepare for the Fed Tomorrow.

Some members are super loud at the Federal Reserve calling for the Federal Reserve to hike rates immediately that now is the time to hike. In fact, that's a banner flashing across CNBC. Hammock says now is the time to hike. But are we actually expecting a hike? What are we realistically expecting? And what seeds did Myron just plant to give us a heads up of what is likely to happen? Not just at Jackson Hole tomorrow, which is Jhole, but also at the Federal Reserve meeting coming up on September 16th. Mind you, we've got three Federal Reserve meetings left, concluding with the December 9th Federal Reserve meeting tomorrow. Of course, there'll be some nervousness between now and tomorrow because of the Jackson Hole meeting. And we have been rugpulled before at Jackson Hole. And that's of course why we have aptly named a coupon code Jackson Hole that does expire tomorrow. This is by the way a picture of Jay and uh he is advertising Jackson Hole for us. Anyway, go take a look at that over at me.com. For now though, let's focus on what's actually going on with these projections from the Federal Reserve and what Myron just said. First things first, going into this, we need to know what the rate hike odds are. And because once we know the expectations, we can know, okay, do we think we're going to beat those expectations or miss those expectations? How's the market going to react? Market function right now is pricing in for December, a 71.8% chance of one uh or multiple rate hikes, at least one or. Uh so the way we do that is we just look the odds of staying at 350 basis points here keeping rates on hold are just 28.2 one minus that and there you go over 70% chance that we get at least one rate hike by December. For September the odds are more in favor of a hold by quite a lot by about a 2/3 to you know 1/3 ratio here only 33.9% chance of a hike. What did Myron just lay out for us? And how does that compare to what some of the other folks at the Federal Reserve are saying for the potential of a rate hike? And how could this affect markets uh in the short term? Well, since markets know that there's always the potential of a rugpole at an event, usually anytime we have an event, and it often doesn't matter what happens at the event. In this case, it subtly does. But usually what happens after an event is if once events occur and we clear the event, markets usually go up after an event or a moment clears because you have certainty. Even if it's bad news, we could digest that bad news, deal with it, and then human optimism sort of takes over. Market optimism, animal spirits, whatever, take over. And markets usually go up. So, usually after a clearing event, we go up. There are rare times where after something like Jackson Hole where we get a real rug pull that the event is so bad and and in a surprising way to the downside that markets actually move down. But if we get our base case or even a dovish bull case, then markets should really clear to the upside here. So, the the odds are we're going to clear to the upside after this event tomorrow. Jackson Hole. The only way we really get a down after tomorrow is we get some kind of rugpull, which we did get in the past. The last time we got a rug pull that ended up giving us a hawkish surprise, was actually in 2022. You can see that here in the meet Kevin app. I've broken this down under the Fed category. Anytime we were as expected on Jackson Hole, Jhole, we basically had no change in the market. Slight dovish surprise in 2019. Modest rally as expected. No change in markets. As expected. As expected. As expected. You really don't get a change in markets. What changes markets is when you get a dovish surprise and markets rally even more afterwards. We'll get event clearing which could justify some market movement up. Uh but the worst case scenario would be right here. A hawkish surprise in the case of 2022. markets ended up taking another two to three months to actually bottom. They bottom closer to October, November of 2022 after Jackson Hole and the S&P 500 fell 3.4% on the day, which is a lot. That's that's a pretty big move. So, what did Myron just set up for us? Well, Myron, in my opinion, actually just set up that Jackson Hole is going to be a kick the can down the road. Why? One, Myin discourages a rate hike. He says it would be weird to hike rates because we didn't hike rates in June and we didn't hike them in July and the last CPI report came in better than expected. It's probably rigged, but because it came in better than expected, it would be odd to hike now on a better thanex expected CPI report and not have hiked in June or July. Okay, the logic is fine, but we have to remember my is basically a shill for Donald Trump. Duh. He was placed at the Federal Reserve to be a shill for Donald Trump and now he's not at the Fed anymore because Kevin Worsh has been placed there. Uh Myron was sort of the placeholder for for Walsh. Okay, fine. So now Myron's back at his former job still shilling for Trump. That's fine. He's appointed by Trump. Of course, that's what he's going to do. That's his job. Okay, so we just have to read that uh clearly. But remember, Worsh was also placed to be a Trump shill essentially. What does that mean? Do they really want to raise rates before the election? If the market's pricing in a 70 plus% chance of one rate hike before the end of the year, and if we really need it, then then the time for a rate hike is after the election. So you can make your boss happy. Come on. Obviously. Now, Myin not only said it would be weird to hike rates in September, which means we shouldn't really expect any kind of Jackson Hole rug polling, which is good, right? that helps us get that event over with and then everything's fine and we move on and we're happy. But he also said that it takes 12 to 18 months for rates to hit the economy. This is the typical long and variable uh lags that it takes for interest rates to hit the economy. And he suggests that if we're forecasting 12 to 18 months ahead, we have to ask ourselves are the things that are affecting inflation now, Allah, uh Iran, uh AI supply shocks, are those still going to be creating inflation next year? Myin says, "No, I don't think that. I don't think they're going to create uh inflation uh you know, in 12 to 18 months, and therefore it'd be weird to hike now because you'd be hiking to resolve problems that you really don't have." Okay. Now, the next thing he sets up, so not only does he say it would be weird to hike on this low inflation report that we got on the last one, it'd be weird to hike for things that probably won't be an issue in 12 to 18 months, but he also says that he sees measurement error today in CPI that should be resolved in the future. Huh. Sounds like a task force setup to me. But what he's really saying is CPI tends to run about 50 basis points hotter than PCE. And we're going to fix that by coming out with new data. Now, he didn't use the words, but we know who's working on the new data, the task forces, which of course by no means will be rigged in their favor, but what do I actually therefore think Worsh is going to say based on what Myron just teed up. And then how does that compare to what everybody else is saying at the Fed? Because that's also pretty important. Well, let's break it down. My prediction for Myron is he's going to say something like inflation is currently too high, but it depends how you measure it. Measurement error is consistent in our CPI data collection efforts. We'll be fixing those. We have task forces dedicated to fix those. Transient shocks have affected our economy. Iran, right, the Claude code moment. Uh and we also still expect AI could have significant productivity enhancements and AI could actually provide disinflation to our economy. Uh therefore uh whatever right basically um he'll say those things our CPI sucks don't trust it which nobody will. We've got transient shocks which means we don't have to hike we don't have to hike on the back of errorprone CPI data because you know it could be too high. And then of course we expect disinflation. If those are the things that he kind of presents at Jackson Hole and he's like but we're not going to provide any kind of uh forward guidance. If he sort of does that then really you have a base case scenario tomorrow. Stocks honestly should just go up. They should go up on that. None of that is a bad thing. That's what we expect. And the shorter his presentation the better. If he goes up there and he yaps for about four minutes then we're good. That's it. Okay. Great. Fantastic. Then shortterm markets can still go up. We could still bubble off of the uh AI enthusiasm coming off the back of the circular spending that we're seeing from SpaceX and Google raising money and throwing money into uh the the artificial intelligence economy. Of course, there is the question about what other members of the Fed are saying and also what's going on with financial conditions. And in fairness, financial conditions are kind of telling you that if you go out there and raise money for the Nvidia circular financing deal, you are not necessarily going to be rewarded for that. Take a look at Google stock for example. We broke this down uh live together and we found that Google issued a $ 32 billion bond offering which included a 100year bond offering in the United Kingdom which has not been seen since the dot bubble. Don't mind the comparison. But anyway, uh this right here uh was done in February which then Google stock fell on. Then we got hardware rally 1.0 which came after the ceasefire with Iran. A lot of highly leveraging occurred right here. Massive remarggining and leveraging up. That's how Leopold ended up getting Leo folded. Of course, then we got the Google money raise again plus the SpaceX money raise. You know, SpaceX raising over hundred billion. Google raised $84 billion. 10 billion backed by Birkshshire. 30 billion of public shares probably sold right away. Uh and then $40 billion of at the money sales. zero of which happened before June 30th. And those sales are probably, in my opinion, why why we're seeing some pressure over here. But in my opinion, this is actually a tool for indicating that financial conditions aren't that loose. That you could go out there and raise a bunch of money in a 100red-year debt and expect your stock only to go up. If Google could raise all this money and were skyrocketing, then the markets would be condoning all of the circular financing and the money raise. And that would be a sign that maybe financial conditions are indeed too loose and the Fed needs to hike. But because Google stock is falling and what my just set up, I really don't think Kevin Worsh is going to rug pull us tomorrow at Jackson Hole. And I don't think he's going to hike rates in September. Now, in fairness, some of his decision in September could come down to the August CPI data. My base case going into the July CPI data was that July CPI data would have a 45% weight. August CPI data would have a 45% weight on the rate decision for September. And jobs would have a 10% weight. The first 45% were already in favor of not hiking. Jobs are in favor of not hiking. And this next CPI report will probably also be in favor of not hiking. So I don't think we'll get a rate hike. That said, some members of the Federal Reserve are clamoring for a rate hike. And so we should break down what some of those Fed members are saying, but we should also place where they are like, you know, where they sit in terms of the Federal Reserve's voting uh, you know, pool kind of matters because we have three denters. The last time we wanted or were potentially, you know, talking rate hikes, we had three members of the Federal Reserve on a 93 decision who said, "Oh, you know, we should hike rates." Those three people were Lori Logan, uh, Beth Hammock, we'll just put Hammock, uh, and then Neil Cashcari. Neil cash and cash. Yeah, he knows how to print money. Uh anyway, when you hear any of these three people talk about rate hikes, it doesn't really matter. We already know that they want hikes because that's how they voted. What matters is if these people start changing their decisions. Hammock just came out and said, "Now's the time to act. We have persistent inflation and we're worried the market is going to lose confidence of inflation uh or on our inflation trajectory." And you'll know neutral when you see it. We're looking at financial conditions and we're worried about losing public confidence. Okay. Does that matter? No. She already wants rate heists. We already know that. So, it doesn't freaking matter. What does uh Beth Hammock say? Sorry, we just did Beth Hammock. What does uh Neil Kashkari say? Neil Kashkari says he's not confident that inflation is actually going back to target. Okay, none of that matters. These people we already know they want hikes. So, what do people like Goulsby say? Well, tariffs are complicating inflation. Three-month inflation doesn't look that terrible. His words, doesn't look terrible. We're currently in a unusual low higher, low fire environment. Schmid comes out and says, "Maybe we could have fewer meetings. Maybe we could do six meetings instead of eight. Uh, but policy is not really restrictive right now." Okay, that's not really a direct call for rate hikes. little implication, but not like severe rate hikes there being implied. Collins comes out and says, you know, without more disinflation, it could be appropriate to hike rates soon. Okay, that basically hinges then on the next inflation report, right? So, Collins's vote is probably like a h well, let's see how inflation comes in uh you know, for the August read. And if that comes in, okay, great. Then you get um I'm going to screw up his name, but it's Mel Mousum Mousm, whatever. Okay, this dude who says, "Yeah, I want inflation back down to 2%, but I'm going to wait 18 months." So, they're on a wait and see. So, that's no major rush on inflation. Uh and then Mary Daly from the Fed comes in and says, "Ah, you know, the labor market looks stable. We're paying attention to inflation, but we're kind of looking for more signs that inflation is becoming worrying, and we're not really seeing those. And so, we're kind of in a good place right now. Okay. So, basically, the only people who are really hawking for hikes are people who have been hawking for hikes. So, it's no different. The market is telling you, we don't really need the rate hikes right now because you're already getting a punishing for the money raise, which is a form of tightening financial conditions. You know, if companies are like, "I don't know, man. If I raise money, my stock's going to plummet." You know, that basically tightens financing. Okay. Then you have uh Kevin Walsh and Myron setup, which both suggest that neither of them want to piss off Donnie T. So, you got the political aspect that says no rate hike. I think that Jackson Hole will be a clearing event and we could actually help pump this market a lot more. Now, does that change the fact that I think it's, you know, potentially bubbly? No. You know, and this is, I think, sometimes what people forget. Oh, by the way, Nvidia is testing the 227 line. Come on, baby. Breakthrough. I I feel like I have to include this like at the end of every video because sometimes people were like, Kevin, how could you be bullish and be buying stocks, but then but then, you know, you'll you'll make a video that's like the AI bubble. Well, it's because both can be true at the same time, just with a different time horizon. Uh, and so maybe I just have to be even more like crystal clear about this, but my thesis is that the long-term like the the 10-year horizon for uh the foundations that Nvidia is building its revenue on top of, which is really like this triangle of open AI and uh anthropic, you know, they really hold up the whole foundations of this sort of triangle. angle of Nvidia spend. Uh obviously Elon Musk is is part of the tool of this infrastructure build for pumping up Nvidia spending, right? And so is Google with Google Cloud and so on. That's really built up by these high margin frontier labs. I think these are unstable foundations. And so that makes me nervous about the sustainability of the spending that we're seeing. I don't think it's sustainable. I do think that, you know, this is going to come down pretty gloriously at some point in the future. But, you know, between now and like the next 6 months, a screw it, who cares if it's a bubble, bullish bubble, baby, I think we could have a hardware rally 2.0 that ends up pushing the cues to all-time new highs. And I also think that software uh regardless of what happens here, like on the other side of the whiteboard, if you will, I think software is bottoming. You know, we've been calling a Q3 Q4 software bottom uh since uh since well before the SpaceX IPO. Uh and you know, we forecast that hey, SpaceX could mark a temporary top in the market. It did, but that spending is going to come through and markets will have a second hardware rally because it's all going to show up in spending. All of that money raise shows up in spending. And that's exactly what's happening. So now you add to that sort of six-month forecast of a hardware rally 2.0. Add to that that the Fed is going to kick the can down the road on uh rate hikes that we don't really have to worry about rate hikes. That makes for quite a bullish near-term outlook. So there's money to be made on socks, right? And I think when you reconcile it like that, oh that makes sense. You know, of course then every so often and it frustrates me. Hopefully, you know, people who who watch in detail understand that and appreciate that. But I do feel like there are some people who uh who just like, wait, yesterday you were bullish, today you're bearish, and then you're bullish tomorrow. And I'm like, man, how are you? like, do I really have to break this down? Uh, so elementary, if that's even a word. Apparently, I do. Uh, so there it is. But, uh, I think that's been exceptionally consistent all year long. Like the people who have been kind of watching, uh, daily see a very consistent arc of exactly the calls we've been making. So anyway, uh if you want more insight into obviously the fundamental analysis that we do and the calls that we're making, uh obviously make sure to join us uh over at meetke.com. Tax professionals say it could be a tax write-off to join. You could use that coupon code Jhole uh to join. It's for Jackson Hole tomorrow, expiring tomorrow. You get all the courses, every trade alert, uh every private live stream, every alpha report that's all bundled into the Meet Kevin membership here. You get all of that, which is pretty awesome. Separately, we have uh meet reinvest.com that also has a coupon expiration J-hole. This is a separate product. Lifetime access is going away for this unless you've already bought it. So, if you buy lifetime access for the homes AI before Friday, August 28th, 11:59 p.m. You'll maintain lifetime access. Like, nobody's lifetime access is going to ever get taken away. But this product will be moving to a sort of a monthly subscription or annual subscription model, especially now that it's it's starting to get really good and I'm very excited about it. So there's a sort of a last opportunity to get in and get that lifetime access before Jhole. If you have questions on this, you could always email us at staffmeke.com. We'll hook you up, help you out with your questions. If you are a course member, you can also bundle up the two and you'll get a special deal for the Reinvest Homes AI if you join uh before the 28th. So, uh pretty exciting. Uh okay good. >> 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. You have done so much. People love you. People look up to you. >> Kevin Pra there, financial analyst and YouTuber. Meet Kevin. Always great to get your take.