The Truth About FED HIKES.. (Watch Before September 16th)

Give me the next 60 seconds of your evening and I'm going to make you a lot of money. Following today's much better than expected jobs report, everyone's big question is, one, is the Fed going to hike on September 16th? And what's going to happen to stocks in September? Are we going to have this correction or is September going to be a strong month? What I did is I went back and I looked at history at prior Fed meetings and analyzed the data. What happened to the stock market when the probability of a Fed hike was basically 50/50? And how did stocks perform in the hours and days after those Fed meetings? And what I found might shock you. Ladies and gentlemen, the only thing that I ask you to do in exchange for today's video is to hit the like button for the YouTube algorithm to help push this video out to more people that need to see it. Now, give me the next 2 minutes of your evening to explain this and it's going to make the rest of this video make a lot of sense. The reason why the Fed basically always does what the markets are pricing in is because the stock market can have an effect on the economy. The last thing the Fed wants is to completely surprise the markets and cause a problem for the markets, which in turn can cause a problem for their dual mandate of price stability and maximum employment. That is the long story short version of why the Fed basically always does what the markets are pricing in. That is the whole reason for forward guidance. Right now, we sit at about a 60% probability of a Fed hike on September 16th. And we really only have one catalyst on the schedule, at least, that could prevent a hike. And that is CPI. But you need CPI to come in lower than expected. Even if CPI like meets expectations or is a little bit on the cool side, you're still going to be sitting at like a 50/50 probability of a hike. It's still going to be really close unless CPI just absolutely plummets. Now, the other potential catalyst that could give us a pause, that could kill the probability of a hike, would be if the war with Iran were to end and oil were to fall, some kind of ceasefire, something like that, but most people don't expect that to happen over the next 12 days or so. So, here's the problem. If the Fed surprises the markets, you can have some pretty severe consequences in the markets. The last time this really happened in a negative way was September of 2018. Wall Street was confidently pricing in a slowing dovish Fed cycle. Instead, Fed Chair Jerome Powell ignored the markets' expectations and stated that interest rates were still a long way from neutral, signaling aggressive hikes ahead. The market suffered a violent correction through the entire fourth quarter because it was caught completely off guard. This, if you were investing at the time, was when the markets literally fell 20% into Christmas Eve on 2018. Now, there were other things happening at the time. There were some tariffs on China. There was some some noise going on, but this was a big part of it. The other moment in which the markets were kind of surprised was back in March of 2023. The Fed was aggressively signaling a 50 basis point jumbo hike to fight inflation when Silicon Valley Bank unexpectedly collapsed. The market instantly repriced the decision down to a 25 basis point hike or a complete pause. The Fed ultimately blinked, abandoning the 50 basis point jumbo plan, and delivering the softer 25 basis point hike to avoid breaking the banking system. And this is why over the last decade the Fed has achieved an incredibly high alignment with short-term market expectations, delivering exactly what futures markets predicted roughly 85% to 88% of the time within 30 days of a meeting. So, I've seen before the probabilities can change just a couple of days before a Fed meeting and they will go with what the markets are pricing in. Like the Jerome the Jerome Powell Fed would literally send somebody out a Nick Timiraos article or something to change the probabilities in favor to what the Fed wanted to do a day before the Fed meeting. I don't know if this Fed is going to do the same. And that potentially means that we might head into September 16th at a roughly 50/50 probability of a hike or a pause. And to make matters worse, you have new threats from Trump today that if the Fed hikes rates, Trump's going to stop doing business with countries that have a trade surplus with America, which are like China, >> [laughter] >> select few countries, but notably China. And this is all happening as we are heading into a midterm election. And historically, the Fed has not hiked rates right before a midterm election or an election in general since the '90s. So, it would be very unprecedented. And long story short, assuming we don't have some kind of really high or really low CPI number, half of the markets are going to be offsides depending on a hike or a cut. Like there's going to be good chunks of the market that are potentially surprised. And surprising the markets via the Fed typically is not a good thing. Again, we only had one negative surprise in the past 10 years, multiple decades now from the Fed, and that was 2018 and the stock market fell 20%. But here is the really interesting part. After these surprises, okay? From the Fed. On or in September of 2015, the S&P was up 1.2% that day of the surprise. It was It was down 1.6% the next 2 days. But then it was up 5 and 1/2% over the next month. In March of 2023, you fell 1.6% initially, then you bounced a little bit the next day, and then you were up 4.8% over the next 30 days. The markets tend to get over it relatively quickly. As long as we are not heading into a hiking cycle from the Fed, we're going to be just fine. And I don't think that's what's happening. Now, if you ask me, I don't think the Fed is going to be hiking rates. I think if it is a coin toss, the Fed is going to take the less disruptive route and hold rates. Because really, how confident are they right now that you have to hike rates into an oil supply shock event? That just seems like a low IQ move. And really, what is one rate hike going to do? Virtually nothing. It's the signaling that is more important. And even as Kevin Warsh has said and Fed Waller, if you look at the real economy outside of the stock market and AI and financial conditions and literally the some of the best companies in the world that are borrowing all this money, the economy has a lot of restriction. And even though I think you're going to have the same three or four Fed officials that want to hike rates at this upcoming Fed meeting, I don't think you're ultimately going to get a rate hike. So I do think there is a a risk as we head into September 16th, especially next week, if we don't get a much better than expected CPI report. If it's kind of in line with expectations, the markets are going to be nervous about a hike. But, once we get to September 16th and actually see the Fed is not hiking rates, then I think stocks are going to rally. Vice versa, if we get a hotter than expected CPI report or it's just not good enough. And if the markets are pricing in a 55% chance or more of a hike, and then the Fed does actually hike, September's going to be rough. And that's what I think is really difficult about this market right now is you have a new Fed chair, you have a lot of different opinions, you have you know, weird economic data. I think we can put it like that. We have a supply shock in oil that the Fed really shouldn't be responding to, but they feel the need, they feel the pressure to finally start responding to inflation that they've missed target on for 5 years, and it's creating this really weird dynamic. And from a structural market perspective, if you're a fund on Wall Street, you have to hedge this event, especially based on the CPI report and what that looks like on September 11th. I mean, if CPI is, you know, better than expected or worse than expected, that's going to be an outside move in the markets. A lot of funds are going to have to hedge for that. So, don't be surprised if you do see the volatility pick up here over the next couple of trading days heading into the CPI report itself. And then from there, well, you could see the volatility pick up even more. And the number one variable of all of this continues, and that is the war with Iran. If the war with Iran were to end, problem solved. Like it's done. We don't have a problem at that point. Bull markets, you know, stocks are going to rip higher. The problem is the war with Iran is not ending. It's just continuing. Now, the historical pre- precedence is after a midterm election, the stock market literally goes vertical for about 9 to 10 months. I think whatever volatility or potential correction we get between now and then, you want to be taking advantage of that in your portfolio because I do think we are going to have a very strong 2027. I do think the stock market is entering into a new bull market. I think the AI hardware trade is slowly coming to an end. Areas like robotics and automation, AI software, and cybersecurity, while a lot of those areas have rallied in the last month or two, some of those stocks are up quite a bit. I think that is where the opportunity is at this moment. Wall Street is still very underweight these areas. Nobody's really talking about them, and retail still is not on board. So, all the checks I'm doing out there show me that you're still very early in this next AI trade. And this is actually going to benefit from real-world real companies adopting AI. I do also think buying cyclicals and non-AI industrials and non-AI financials makes a lot of sense as well since if the war with Iran does end, or when it does end, inflation's going to plummet like a rock. I mean, you're not going to get any rate hikes. Hopefully, the consumer can stabilize at the bare minimum, oil prices, gas prices coming down is going to allow consumers to spend more money, and those are areas that benefit from that. I do think you want to stay away from the hypie stocks, the stocks that are overcrowded with very high expectations. And yes, even some of your AI software stocks or cyber stocks have recently went through some of that as well. Not nearly to the same extent of you know, AI hardware like you know, some of these AI hardware stocks, they literally cannot impress you even with impressive numbers. Like it's not enough to drive the stocks higher. Software is not in that arena. A lot of the new AI trade is not there. Um but I do think if you have huge profits in even some of the new AI uh trade like some cyber or you know, AI software or whatnot, it could make sense to take a profit in some of those names. Sold a little bit of Zeta Global today. The rationale behind this is simple. I was buying the stock in the $14 to $18 range heavily. Earlier this morning, it was about $32 per share. It's up 40% in the past month. It is up 76% in the past 3 months. The stock is no longer in the bargain bin arena. I was sitting on like 80% gains in the stock over almost $200,000 worth of shares. 100,000 almost $100,000 worth of gains. I sold about 30% of this position to because other stocks have kind of come down, Zeta's went up. So, it became like 50% of the portfolio. Risk management says I had to sell something. I had to sell a little bit, right? I can't have my whole portfolio in Zeta. And look, in the trading community, I like to own between five to eight different stocks. I love to be heavily weighted in stocks, but 50% in one stock is just a little too much for me even personally, right? Um so I do think right now is a moment you might want to look at your portfolio and say "Hey how how have things changed? What is the opportunity look like in this stock versus this stock or that stock versus that stock? And look, I'm I'm very bullish on Zeta Global. Like, fair value is like $45 a share. It's It's $31.45. Like, I still own over $100,000 worth of the stock, okay? I sold a little bit versus um, you know, what I owned yesterday but the situation changed. Okay? From a tactical perspective. Not a fundamental perspective, but a tactical perspective. Expectations are a lot higher when I was buying Zeta at $14, 15 16. It had a PEG ratio of less than 0.5. Today, the PEG ratio is 0.95. It's still a little bit undervalued from a PEG ratio perspective, but not the same, you know, trade idea it was in the low teens. And that is just simply risk management. That is it. And I do think especially if you do own a lot of these stocks that are up a lot, and we do have a volatile period coming, you might have a better buying opportunity to buy something else that might look a little bit better or just have a better buying opportunity to buy the stocks that you already like. Now, this is not a recommendation. It's not financial advice, but I do hope you find some perspective out of the decisions that I make in my portfolio. If you guys want to come trade and invest alongside of us, where our only objective is to find big winners before Wall Street does. The fact of the matter is, the only way that you can actually get rich in the stock market in 2026 and beyond is to be early. You have to be early to big winners. If you're not early, you're late. If you're not early, you're buying the FOMO. I want to buy these stocks before Wall Street notices them. Hence, again, Zeta Global. Buying that stock in the $14 to $18 range. It's $32 today. Does everyone know about Zillow? No. But is it more loved today than it was before? Are expectations higher today than before? The answer is yes. And I don't like to sell stocks completely because of simply for that reason. But I am going to de-position from stocks that double in two or three months when there are other stocks that are cheaper. And generally right now, I don't think you want to be super convinced on anything to happen. Like theoretically, I have my own opinions, right? I don't think we're going to get a hike. But logically, looking at the facts here, it could go either way. You don't want to be in a position to blow up your portfolio or gambling heading into something that literally could go 50/50. Especially when you know such a massive opportunity is coming with the post-midterm rally. I do think you want to look at your portfolio and right right now and say "How has things changed? How much am I up in this stock? Am I a little too positioned in this stock now? Is it 50% of my portfolio?" and make the appropriate decision. And look, I'm the guy that will comfortably put 20, 25, 30, 35% of my portfolio in one stock. But 50, 55% you probably want to re-evaluate things at that point. And I do think right now you want to have a shopping list put together for stocks that you want to own if we do go through a correction or some kind of volatility event, which with everything going on right now is not a far-fetch at all. So, ladies and gentlemen, I would categorize myself as cautiously optimistic. I am optimistic that we're not going to get a rate hike, that September is going to be a good month. If I were to put my chips on it, that's where I would put my chips if we were at the casino or I had to, you know, risk something, right? I don't think we're going to get a hike, but I am smart enough to know that I don't know. That it could go either way. So, be positioned for that. Invest accordingly. Ladies and gentlemen, hit the like button. Consider subscribing to the channel if you made it to the end of today's video. If you guys want to come trade and invest alongside of us, we are outperforming every single hedge fund or institution this year. We are up 98% year-to-date in the trading community. We find opportunities before Wall Street. That's what I do all day, every day, outside of making these videos and the research and work that goes into that, I'm looking for opportunities. That's what I bring you in the trading community. It's not a recommendation. It's never financial advice. I say, "Look, this stock has a PE multiple of this and a PEG ratio of this. They are benefiting from AI because of this. Management is doing this. They're buying this, right?" I give you all the facts. I share, "Hey, I bought 100 shares of this." That's be- that's the reason. It is up to you to verify due diligence to come to your own conclusions. But we do have a strong track record of finding stocks before Wall Street does. That link is down below in the description of today's episode or in the pinned comment in the comment section. Have a great rest of your day and I will see you in the next one.