저자: KevinPaffrath · 외국인
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연준(Fed)의 금리 인하는 역사적으로 경기침체 진입 신호인 경우가 많고, 시장 바닥은 금리 인하가 아니라 연준이 돈을 풀 때(QE 재개) 형성된다고 주장. 10월 10일 역대 최대 옵션 거래, 10월 1일 SEC 인력 축소 발표 직후 바이낸스 관련 암호화폐 급락 등을 수급 이상 신호로 지적. AI로 인한 감원(아마존 HR 15%, 네슬레 약 1.6만명), 기업 설문 지표 악화, 금 급등과 10년물 금리 4% 하회 가능성을 경기 경고로 제시. 개인적 포지션은 중립(4.3/10)이며 일부 차익실현·세금 대비를 권고.
다듬은 글
Well, we're back in no man's land when it comes to data because everybody's waiting for actual data the market might respond to. But what we're really responding to is Myron freaking out now calling for even more rapid cuts. Waller confirming the October cut while at the same time we've got business surveys that are saying we've got issues and Citadel the glorious suits are having a party.
Now, why do you think Citadel's having a party? Well, folks, it has everything to do with a little bit of basic fundamental analysis at Robin Hood. If you ever do any kind of fundamental analysis at Robin Hood, you'll find that the most profitable portion of the Vlad business is options trading. It's where they make so much money off of you that they love your options trading.
And who provides the rebates? none other than your homies over at Citadel, your favorite Ken Griffin suits who love GameStop. Oh, wait. I read that backwards. But anyway, Friday, October 10th, listen to some of these stats. Friday, October 10th, marked the largest options trading day in market history.
Never before, nobody knows options trading quite like Citadel. And never before has the market seen 108 million option contracts traded in one day on October 10th. That was when we had the Binance scam rug pull. I mean that's just an opinion. Don't sue me, bro. Uh the um the the crypto shocker that nobody could have seen coming.
There was there was absolutely nobody nobody could have seen the crypto scam coming because after all we have the Security and Exchange Commission that watches what's happening, right? Oh, wait. SEC October 1st announces that until further notice, the agency will have very limited number of staff available.
Huh. And then in, you know, just the 9 days thereafter, we get a $19 billion rug pull. Would be crazy if some whales happened to time some insider trades just, you know, minutes before such announcement that would end up minting those whales hundreds of millions of dollars. That that'd be crazy. But anyway, so largest amount of options ever traded in market history.
This is uh the second time ever that we've crossed 100 million option contracts. The first time being on liberation day, which is wild. Uh where we first topped 100 million option contracts traded. Optionwide flows are currently exceptionally high with Friday's surge epitomizing the buy the dip me mentality.
So institutions are hedging, but retail is going absolutely ape for options and stocks. Retail is like, "Bro, I'm all in. Shove it up the butt even more. Go deeper, baby. I want more. More margin, more contracts, more ETF, more everything. ETF flows have, by the way, been positive for, I want to say, 205 out of the last 207 days.
Uh, and even though you get institutions that are degrossing, retail is not. Retail is legit all in on this. And I wrote over here that the value of equities held by the final 50% of households increased by, you know, 542% since 2020. I wrote this little red mark here. I said if the stock market crashes, we screwed.
So, we really cannot afford a stock market crash at this point. Now, you know, are we going to get like a really bearish scenario four where we get some kind of, you know, long and highly aggressive fight against China? Probably not. I don't think that Trump or Besson are going to go for this. I think we're more likely to be in like a scenario three or two, which is where you get these little tit fortat retaliations and the trade war just goes on for like years.
This is exactly what happened in 2018. And it led to a lot of uncertainty in 2018. It actually led to a bond market crisis at the end of 2018 that led to the Fed bailing out markets by promising not to raise rates anymore. You know, we went all the way up to a to a rich 2 and a half% on yields or rates rather, the FOMC rate.
Which then begs the question of like, well, what did the Fed tell us this morning cuz, you know, it kind of matters what the Fed and Myin and some of these knuckleheads are saying. As much as we don't really want to have to pay attention to it, it matters. So Myron this morning said that 25 basis point cuts are too slow to save the economy which isn't great.
So Myerin is here advocating that we should really like as soon as possible be cutting cutting cutting cutting more. Uh this makes me nervous now. I mean you already know that I've like we actually made a little chart here uh on uh if you go to this isn't a pitch me.com/data. So, if you go here below the pitch, you see this little chart, uh, I put bearer bull scale, right?
I still want to adjust this a little bit to actually make this slightly more to the left here, but I put myself at 43 out of 10. And people are like, man, Kevin, you know, why are you not more bullish? Like, the Fed cutting the Fed cutting, you know, even Paul Tudtor Jones this morning, he's like, yeah, I mean, like corporations don't have massive debt yet and the Fed's cutting, rates are going to be lower, so you know, stocks are going to be higher.
And it's like, yeah, that is like the most basic analysis that you could possibly do on the market right now. Oh, the Fed's cutting. It must be a good thing, right? Not necessarily. See, typically the Federal Reserve cuts going into recessions. The Federal Reserve panics when they realize the cuts don't do anything.
And it's when they turn the money printer back on and they actually like, we just turned off the vacuum cleaner. Okay, we were just vacuuming up money. We just turned Well, we we're just announcing that we're getting ready to turn off the vacuum cleaner. Technically, a vacuum cleaner is actually still running.
So, we're just barely getting ready to turn off the vacuum cleaner. Okay, the markets don't bottom until the Federal Reserve panic so much that they're printing like crazy. So, this idea that people are like, "Oh, the market's going to go up because the Fed's cutting," it's just not historically how it works, especially since there long and variable lags between when, you know, cuts happen and when the markets actually see that.
But anyway, it's one of the reasons I've been kind of stuck in this this midpoint because I actually I think Myron's on to something. And the fact that today he's like, "Dude, you know, 25's too slow, man." Waller did tell us this morning that we are going to get uh well, in his opinion, the 25 basis point cut in October, which is basically a foregone conclusion anyway.
The market's pricing in like a 98% chance that we're going to get a cut in October and like a 97% chance we're going to get a cut in December. We're going to get our two extra cuts, right? So, this is fair. We see this. So, while Waller can't confirm it, it's pretty dang likely we're going to get that extra 25.
Myron's pushing for 50. We're not going to get that. Why is he pushing for 50? Because, frankly, even Waller reiterated what Myron's worried about, which is jobs are going to get cut because of artificial intelligence. We know that. The problem is the lag between when people lose their jobs and when people get jobs because of new opportunities that come out of AI.
Nobody knows. Waller thinks it'll be over two years. So, in other words, Waller thinks we're going to go from job losses now to maybe in two years we'll actually see jobs come back. Nestle's cutting off 15% or they're cutting 15% of their staff, like 16,000 people or whatever. Actually, I think that's closer to 17% or 7% of their staff.
Sorry, I think I screwed that off. I think it's they're laying off about 15 to 16,000 people and it works out to about 7% of their staff because they've got over 200,000 employees. So, that makes more sense. But anyway, they're cutting a bunch of their staff and the CEO is literally saying the world is changing.
In other words, it's just a euphemism for AI is taking your routine, boring office job. I mean, I see that like I've mentioned it before. We see it at Houseack, too. You know, at House Hack, we're like, "Bro, we could do so much more uh with fewer people now." It's it's amazing. But anyway, uh Amazon 15% of HR staff just announced that they're getting laid off.
That's big. Waller sees rates 100 to 125 basis points lower. He's trying to confirm the October cut. Obviously, he doesn't have the power to confirm it, but he's trying to. And I wrote this all on the October business manufacturing survey that came out this morning, which suggests that current activity fell significantly and turned negative, more than offsetting last month's increase.
This is the Philly Fed uh index. And while the new orders index rose, we did see employment tick down. So, not a great read from the Philadelphia Fed, definitely came in below expectations. Another one that came in below expectations was the New York Fed survey where they say that business activity declined substantially in the region in October.
Now, we have to be careful like these surveys can be volatile but on a month- over-month basis, but it's worth reading this. The survey the surveys headline business index fell to a multi-year low. Business climate remained worse than normal. So, like this is why I think the Fed is starting to wake up and go, "Crap, man.
We need to stop being neutral. We need to prepare." That's what keeps me nervous about debt. And and this is like I don't want to sound redundant. Like I I really want to hit like the news and stuff here, but I I don't want to sound redundant, but there is a real opportunity to look at your situation and say, "Are you ready to pay your tax bill that's coming up this year?" here, whether you pay your taxes quarterly, April 15th is coming up or in April, you know, are you ready to pay off those buy now pay later debts?
Are you going to survive a larger downturn, like you don't want to get caught with your pants down or, you know, with no pants on? Uh, anyway, so so keep that in mind, you know, by I I put I send out little notes like this totally for free, by the way, in the um uh in the Meek Kevin app. If you download the Meek Heaven app and you get the uh you go to the daily wealth tab, I send little productivity and happiness and and like daily wealth hacks.
I send them every single day. So, if you want that for free, you can download the Meet Kevin app. You get my data and all that sort of stuff and then you can get the daily wealth as well, which I think is cool. But anyway, right now you're seeing the market slip. And so, a lot of people are like, "Have it, you know, why is the market slipping?" Well, it's probably because we just had another continuing resolution fail.
Uh Donald Trump is talking to Putin because Putin's trying to walk Donald Trump off the cliff of sending tomahawks to Ukraine. I don't think that is like necessarily leading to the market selloff regarding Putin though or sort of a relaxation here. I think people just realize like look earnings for Q3 are good.
Taiwan Semi just reported great earnings but people are starting to use that as an opportunity to profit take. Taiwan Semi literally told us, "Hey bros, we thought we were going to have uh 30% growth in sales next year." Uh, we were wrong. Sales growth is actually going to be more like 35%. So, we're kicking butt.
So, ASML's kicking butt. Taiwan Semi's kicking butt. Like, they're all kicking butt. They're doing really well, which is fantastic. So, then why are companies selling? Well, part of it is seasonal. October sucks. In fact, Citadel goes as far as saying that October is seasonally bad, but it usually leads to an endofthe-year rally.
So, if you get a sell-off in October, it can lead to an endofthe-year Santa Claus rally. I don't know about you, but I personally have heard about Santa Claus rallies. I feel like every year for the last 5 years, and every time it feels like around Christmas, the market's actually red. Maybe that's just a feeling that I have.
Wells Fargo thinks consumers are going to continue to spend. They see for they they forecast holiday sales rising 3 and a half to 4% uh you know year-over-year. I also though I can't help but be skeptical that not only do I think companies are starting to like go into profit taking mood where like you could see no news and you could see a stock down substantially.
Like you know yesterday I thought this was really interesting and this is just another example of you know some of the things that we're trying to add to the Meet Kevin app which I think is really fun. But yesterday, somebody posted uh they they wrote, "Hey, there's a dip on Axon." And this is this is what the Me Kevin app looks like.
And so I posted some screenies. I'm like, "No news. Kind of weird." And I also said, "Oh, wow. Axon launched a mini for healthcare, which is kind of cool. They launched a body camera for health care, the healthcare industry." I'm like, I don't know what that's going to mean for privacy, but um people are really excited about a potential healthcare vertical at Axon.
It's a great company, by the way. Do I still have my taser here? I know. Oh, no. I gave my taser to Lauren. Darn. I love taking that thing out and showing it off on uh uh on videos. But anyway, then I posted that. This was crazy. This was a crazy headline. I posted that. This is in the community tab, by the way.
Course members get the community tab. We're just now building it out. It's like in alpha alpha. But anyway, just keep trying to add more value. But listen to this. China is adding 14 foreign entities to some of its unreliable entity lists. And that includes Done by Axon. So this is actually kind of scary in my opinion.
Uh oh, and then by the way, we looked at volume because, you know, we're we're I was working to align insider sales on Axon with and you could see that on the 24th over here. Uh and then here recently yesterday. But anyway, those are just some of the things I was posting. Done is a company that Axon bought and it was designed to fight enemy drones, whether those are um military drones, whether those are just like, you know, consumer drones and you know, some losers doing things they shouldn't be doing with the drone or whatever.
And they want to sell these D- drone products to countries like you know, whether it's the United States or Germany or whatever to take down these drones. And I think it's very interesting that China is like, "Oh no, we don't like this. We are a massive drone manufacturer. we are now going to add the company that wants to take down drones to our list of unreliable entities.
To me, that's like that's a little bit of a war threat. You know, I didn't like seeing that. I'm like, man. Yeah. I mean, think think about like the by line you could run with that. I actually wrote it here. China bans American company fighting hostile drones while China is a massive manufacturer of potentially hostile drones, right?
I mean, they they manufacture Well, so does Iran. Iran manufactures hostile drones as well, but we know DJI is a massive manufacturer of drones. They're actually really good, too, which in part is also scary. But anyway, I think broadly what's going on is you you don't have this foregone conclusion that the Federal Reserve freaking out with rate cuts definitely means market up.
Uh I know I think that is like a belief by retail, but it's just I as somebody who studies the Fed on almost a daily basis, I just want to remind you and this is not to be bearish. I I feel like I'm more in like the neutral camp. I'm like we can teeter either way here. But as somebody who studies the Fed, I just want to remind you the Fed cutting especially when they start getting nervous is a warning sign.
I will explain that briefly. Uh but I also want to mention MP material. Shout out to the alpha report because yesterday in the me alpha report I shouted out that MP material was likely to reject 100 again and sell down from there especially as the sort of recent momentum starts fading. Dude, we went to pre-market 104.
That's it. Once we rejected 100 three times, over triple rejection down. So, if you want these sort of . I think it's really good and and it also keeps us level-headed. Like we were talking about, hey, like there's some profit taking coming even this morning. But anyway, uh and we did fundamental analysis this morning as well.
But understand that the Fed cycle which we could really analyze by just look at FOMC St. Louis Fred rates. Okay, let's look at the uh FOMC effective Fed Fed funds rate. Okay, so when you look at the effective Fed funds rate uh and we we look at the business cycle. So let's just zoom in over here. We'll go to uh the 60s for a moment.
You can see that you have to know that recessions are painted in the past. So most people probably didn't know in the '60s that we were in a recession until like August or September of 1960, right? Because these lines get painted in the past, the big gray recession lines. So the Fed was cutting into recession.
That's very very common that the Fed cuts into recession, right? Uh and so let's look a little more granular into some of the recent numbers over here. So we know COVID obviously. Let's look at 2008. Okay, the Fed started cutting in July of 2007. Okay, we didn't realize we were in a recession until September of 2008 with Lehman Brothers.
The Fed had already been in a cutting cycle. The market didn't bottom from cuts. The market bottom because we turned the money printer on. Every time we run the money printer, that's the bottom. It's not the cuts. Oh, that happened again. That's interesting. I think when I bang on my computer, my on my keyboard that happens.
Uh, let me lock that so that stops happening. That's funny. Uh, but you know, let's do another one. I think it's it's a worthwhile experiment. Let's do another one. Let's look at 2000 and the early '9s. Look at this early 90s. You cut in '89 going into the '90s crash. you cut going into the.com recession, right?
Uh let's do it again. Let's go let's go to the 80s and 70s. So 80s and 70s, you're cutting going in. You're cutting. Now this was actually interesting because of all the inflation in ' 74. This was the Arthur Burns era. This is where the Fed lost a lot of credibility. We actually hiked during the recession.
Uh Fed was all over the place in the 70s. So this is probably not the best example. Uh and then of course we had the Paul Vulkar double double recession over here. Uh but this was also to fight the inflation disaster of the 70s. So this is a little harder to utilize. But I would say before the 1970s disaster where they removed price controls, you know, price inflation went went crazy.
Uh the Fed had to, you know, fix the Arthur Burns mistakes by pull Vulkering and actually putting the pants on at the Fed. Typically, you see rate cuts as an intro to a recessionary environment. And that's not to say we don't want to be bullish. Trust me, I want nothing more to be bullish. I was literally literally sitting yesterday uh saying, "Hey, I I don't want a recession to happen because I think the AI that we're going to launch is going to be freaking awesome." And I think we could sell a lot more of it, you know, if there's no recession.
Although I think honestly we probably do really well during a recession anyway because well we have no debt. Uh no so no bank debt and um you know people there going to be a lot of deals to go pick up in real estate. So you know I guess who knows maybe maybe we'll be fine either way. But uh you know it's just bad for a lot of people.
If household wealth gets crushed man because of profit taking or whatever or some kind of down cycle that's going to suck. But look at the consumer stocks. Briefly touched on this earlier. Look at Dave Busters for example. David Buster is just sort of your classic consumer stock. We're we're knocking on the door of Liberation Day lows.
And if you zoom out even more, we're at almost COVID lows on Dave and Busters. I mean, not quite. I mean, CO we got really low. It's like CO post CO shock stabilization lows, you know, and then you've got restaurants that they're not doing the best either. I mean, you could see Cheesecake at a nice little rally here, but we're starting to see this slowdown in consumer place.
And it sort of makes some people wonder like, hey, is this is this a red flag that, you know, the consumer while they're hopeful once these layoffs hit, which now we're starting to see, we're getting these announcements again of thousands of layoffs. That's actually something that's making people nervous too is you look at you go like lately what a lot of the companies have done like Salesforce is they've actually just said, "Hey, um, everybody's got to come back to the office." And when you fundamentally analyze Salesforce, you see that Salesforce is growing, uh, its operating leverage, which basically means their revenues are growing at one pace, uh, but their operating expenses aren't growing as much, which means they're making more money, their margins are going up.
One of the ways they're doing that is they're requiring everybody to go back to the office. But requiring people to go back to the office is basically a way of sort of encouraging layoffs through attrition. So then people leave and they quit their job because they don't want to go back to the office, whatever, and they don't rehire.
But the fact that Amazon is now bluntly going, "Ah, we're laying off 15% of HR." And Nestle's like, "Ah, we're laying off 16,000." When we get those larger waves of layoffs that we've kind of been insulated from since 2022, we had a lot of layoffs in 2022. uh if we start seeing those large waves continue, just know the bev the beaverage curve, beverage curve, however you want to say, will normalize very quickly and that will shoot the unemployment rate up and and then the Fed will have to continue to frantically cut.
So, you know, it's is somebody was asking me yesterday, they're like, "But Kevin, you know, the Fed's cutting. They're they're shifting dovish. You said that's what they should be doing. That's bullish, right?" They're like, "Yes, that is what the Fed should be doing, but is it bullish because they're doing what they should be doing, or is it bearish because they're realizing they're too late?" So, it's like, yes, they should be cutting, but are they cutting because they're too late?
Are they cutting because they want to get ahead of it? All right. I mean, look at this. United Airlines was t talking up their premium revenues yesterday, right? the they they were literally talking up all of their premium revenues and how great they're doing and and how much money they're making. Uh and and mind you, when you actually look at their earnings, their capacity was up.
So that was one of the reasons their earnings actually went up. Their pricing power actually went down for normal seats. Pricing power went up for for you know expensive seats like premium class tickets. But lower class tickets or normal class tickets actually fell. Like their pricing power is non-existent.
The only reason revenue popped is because they added more planes basically. But they actually had decent earnings. You know, people were cheering this company's earnings yesterday. In fact, if you look at the post market, you could see post market they initially ran. You know, United Airlines, yay, the stocks.
Look at it now. It's tanking. Uh and and part of it is is probably this fear that wait a minute, are we do we need to take profits now? Are they only going up because they're adding volumes? Are consumers really under pressure here? Uh you've got uh United Airlines also, by the way, announcing that they're going to shrink headcount by 4% in 2026.
United says many competitors lost money during the summer. And United expects to hire pilots and flight attendants in 2026. This is kind of interesting because they're kind of like, hey, we're going to hire operations staff, but they're probably talking more layoffs in like the human resources side because of AI or otherwise.
Uh but uh but again, I mean, they had revenue per passenger mile that beat expectations and their earnings forecast beat expectations, but the stock's down 9% now. That's huge. Even though they beat uh and so who knows again, maybe it's just that seasonal time of the market, you know, where people are like, "All right, time to take some tendies." Uh and I get it.
Like I I totally get it. Again, I say this just to be like a a reasonable person. I don't want to just, you know, shill one argument, but I don't think if you have like if you've made good money this year, remember, you're going to have to pay taxes. If you're a trader, you've made good money this year.
If you're running a business, you made good money this year. Dude, I got a massive tax bill coming up. Thank you in part to so many of you joining the Me Kevin Alpha Report. Honestly, I think we're hitting it out of the park with the Alpha Report. Like people were emailing me going, "Dude, like Kevin's on a like in this groove we haven't seen in years." And I thought it was really nice.
Well, partly I was like, "Oh, you saying I've been out of my groove a few years ago. Maybe I was." Uh, but now they're like, "No, now it's on it with the community updates, the videos, the live streams, the alpha report, whatever." So, I I really appreciated that. I thought that was nice. But I have taxes to pay.
And so, like, you know, I'm at that that place where I'm just like, I'd rather not gamble my tax money at on some of these valuations because this is a common thing that we do as investors. Like, we know we have a tax bill coming due next year, but then we're like, ah, but just just leave it in the market a little bit longer.
Just just a little bit more, man. Just a little bit more. And and you have to remind yourself that is the definition of greed. uh you know and that's like a biblical sin. So, you know, part of me is like h you know, you you don't want to sell anything cuz you want to keep going on the ride, but then on the other hand, it's like h well, what do you want?
You want to be safe, you know? So, I I I don't know. It's it's a balance. I think that's the way to put it. It's a balance. Like, nothing says you sell out, but drisk. Nobody should fault you for nobody should clown you for d-risking, right? Uh that's kind of interesting, you know, and then obviously gold like it the fact that it keeps rocketing is is a warning sign because it could also be indicative of you know the economy just I mean part of it is just momentum because when when it goes up it just keeps going up.
Uh this like 2% again today dude for gold gold 2% in a day. I mean we're now at 4,300 basically on gold. it it is becoming less of a good investment and more of a red flag because it's exactly what happens leading into recessionary environments. What'll probably end up happening, not yet, but eventually what'll probably end up happening is I do think the government shutdown will end before the end of the year.
My rationale for that is uh you're going to end up having Democrats that are like, "Bro, you guys said we would be able to negotiate healthcare subsidies before the end of the year. Now we're at the end of the year and then they'll have some kind of deal around healthcare subsidies and the end of the year, you know, reopening of the government or whatever.
Then you're going to get like two or three jobs reports all piled into like one day and people are going to be like, "Oh my god, we're in a recession." That's a real risk factor, right? Hopefully we confirm a soft landing, but people are going to go, "Oh my god." Typically gold sells off once you acknowledge like, "Oh my gosh, we're in a recession." And bonds skyrocket.
like people go from gold, the horde just like stampedes over to gold or sorry to bonds and bond deals tank. Uh and the side where you tend to make the most money in that sort of scenario is the longer end. So the 10, 20, 30-year end of the curve, the shorter end of the curve moves larger, but the actual underlying price movement is is very little.
Uh so cuz there's no duration but anyway you know the 10 year is about to break under four that's a big moment because once we get under probably 396 that's when you could get sort of that escape velocity to the downside upside on on bond prices right uh so we'll see we'll see but uh it's we are in a wild time of uncertainty uh and it it's sort of those times where I'm like it does it pays to be just a little bit safer.
And remember if you want to see what I'm doing like where I'm putting money or where I'm trimming money, join me in the meal alpha board. You see it all the time. So uh you get just like 20 minutes ago I sent out a trade alert and you know and it's not designed to be copied. It's not personalized financial advice.
I can't guarantee I'm perfect. Definitely not. But uh yeah, that's my take on what's going on in the marke.
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