Huge Wall Street Firm: We're 3 Weeks from Recession - Fed about to SCREW Up AGAIN.

Summary

In this video, Kevin discusses Federal Reserve expectations from TS Lombard and Deutsche Bank, evaluating whether the Fed will opt for a 25 or 50 basis point rate cut. He analyzes recent economic data, including employment surveys and inflation concerns, highlighting red flags for the Fed. Deutsche Bank suggests a 25 basis point cut is likely, while TS Lombard warns of a potential recession if the Fed is too cautious. Kevin also shares his views on market movements, the impact of AI on earnings, and provides a personal take on Halloween Horror Nights. Additionally, he announces the launch of Stock Hack's financial advisory service.

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Q & A

What are the two different expectations from TS Lombard and Deutsche Bank regarding the Federal Reserve's decision on interest rates?

Deutsche Bank expects the Federal Reserve to cut rates by 25 basis points, while TS Lombard suggests a more aggressive 50 basis point cut might be necessary to avoid a recession.

What does the household survey of employment indicate according to Deutsche Bank's analysis?

Deutsche Bank notes that the household survey of employment was more upbeat than previous data, with an increase of 168,000 jobs and a decrease in the unemployment level by 48,000, leading to a drop in the unemployment rate to 4.2%.

What is the difference between the household survey and the payroll survey mentioned in the script?

The household survey and the payroll survey are two different methods for collecting employment data. The household survey is based on interviews with households, while the payroll survey is based on employer records. In the script, the household survey showed more positive results compared to the payroll survey.

What is the significance of the 50 basis point cut discussion in the context of the Federal Reserve's decisions?

The discussion around a 50 basis point cut reflects the debate on how aggressive the Federal Reserve should be in response to economic data. A larger cut could signal more concern about economic conditions and a desire to stimulate the economy more quickly.

How does the script suggest the Federal Reserve might adjust its policy in response to inflation data?

The script indicates that if inflation data shows that price pressures are not subsiding, the Federal Reserve might opt for a 25 basis point cut with dovish expectations in the Summary of Economic Projections (SEP) to balance the policy stance.

What is the concern regarding rental inflation and its impact on the broader economy as mentioned in the script?

The script expresses concern that an increase in rental inflation could lead to higher shelter inflation, which is a significant component of the CPI. This could potentially push the Federal Reserve to slow down rate cuts, increasing the risk of a recession.

What is the significance of the West Coast's real estate market in the context of the discussion on inflation and construction?

The West Coast's real estate market is highlighted as a region where underbuilding has led to higher rents and potential inflationary pressures. The script suggests that the supply constraints in this region could contribute to persistent inflation.

How does the script analyze the potential impact of the Federal Reserve's decisions on different sectors of the economy?

The script suggests that interest rate-sensitive sectors like housing and technology could benefit from emergency rate cuts, but it also expresses concern that a white-collar jobless recession could negatively impact these sectors.

What is the 'S rule' mentioned in the script, and how does it relate to the Federal Reserve's policy decisions?

The 'S rule' is a monetary policy tool that suggests adjusting interest rates in response to changes in inflation and the unemployment rate. The script implies that the rule might support the case for more aggressive rate cuts to counteract economic slowdowns.

How does the script evaluate the current state of the labor market and its implications for a potential recession?

The script suggests that while there are negative signals from the labor market, such as declines in construction jobs, the overall job market remains resilient. It implies that the Federal Reserve's actions will be crucial in determining whether the economy enters a recession.