저자: Kevin · 외국인
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잭슨홀 연준 연설 앞두고 시장 긴장. 미국채 곡선 베어 트위스트(2y-10y 스프레드 확대, 금리 상승)로 인플레 프리미엄 상승. 이란 전쟁·유가($92) 재상승이 인플레 압력. 금융여건이 역대급으로 느슨해 연준이 매파적으로 놀랄 위험 존재. 과거 잭슨홀 서프라이즈 사례상 기대대로면 시장 변동 작음. 9일간 변동성 확대 예상, 조정 시 매수 기회 제시, 이후 완만한 상승 전망. Alpha 리포트로 Qs 7:15 지지 언급.
다듬은 글
Kevin Warsh is going to take charge in 9 days. And in this video, I'll break down what the baseline scenario is for the Federal Reserve's speech at Jackson Hole, which will take place in exactly 9 days, on August 27th. I will explain in detail what to look for to determine the best time to buy during the market downturn so far .
What could happen after Jackson Hole? So let's talk about it and sort it all out. The first thing we need to do is note that the Treasury bond market is getting more volatile. We are seeing a bearish curve inversion: yields are rising and the spread between two-year and ten-year bonds is widening. We are entering the shock zone.
Part of this is because we learn new truths every day. The truth is that the war with Iran will likely drag on. For example, Donald Trump this morning, at the very moment the market opened in the red , very conveniently sent a message: don't worry, everything is fine . The Strait of Hormuz is open and functioning, all sea mines have been removed or neutralized.
Hey, let's pump up the markets a little. We do n't need any falls here. What is this? Disgusting. You look at it yourself. Literally the minute the market opened, he sent this. But, be that as it may , the main thing was that no negotiations with Iran were underway or planned. Of course, this is a problem because we fear that, despite the PPI and CPI readings being good, we are seeing certain things that, according to the Bureau of Labor Statistics, tell us, “Oh, don’t worry.
"It's all good because auto insurance rates are falling, and health insurance rates are also going down." Maybe for everyone else, but not for me. But, anyway, you know, it's great. However, all this is balanced by nonsense. If the situation with Iran continues, we expect oil prices to remain high and continue to rise.
This leads to higher profitability, which unfortunately, as we see the four largest hyperscalers moving into negative free cash flow over the next 12 months, forces them to rely more on AI funding; if they are financed at a rate that has a premium to Treasury bonds, then the higher the rates on Treasury bonds, the more money they will have to spend to finance their AI data centers.
And all this damn trading basically boils down to one thing: rising oil prices mean rising risks for AI trading. That's the point , right? But how does this relate to Jackson Hole? I mean, Brent crude oil is currently worth $92. This is the highest price we've seen since... well, actually, since the ceasefire was declared, except for a brief moment about three weeks ago.
After we got the ceasefire, we saw oil prices fall from around $113. We've come down pretty well. We've gone down to $70, $ 71, $72, and that's great. We had a nice recovery in oil prices to the downside, but unfortunately, we are now effectively at the same high levels we were briefly at in July. This is not very good.
This is the inflationary pressure that arises right before Jackson Hole. So what are the expectations for Jackson Hole? Well, not much. For the most part, that's the problem. Most people expect Kevin Warsh in Jackson Hole to tell us, “Hey, it’s okay. The market is already seeing that yields are increasing.
The market does the work for me. I don't need to do anything." And because of this expectation that Kevin Warsh will simply do nothing, there is now only a 34.6% chance that we will actually see a rate hike on September 16th. So, even though we see oil prices rising and even though we see the spread between two-year and ten-year Treasury bonds widening.
So, this is a "bearish" twist of the curve. This is a bad option, okay? This means that markets are afraid of inflation, and this is not a typical "bullish" spin, where markets rejoice in growth. Markets are now pricing in a higher long-term inflation premium for risk and the fact that the Fed will do nothing.
A bullish spin, which is great, is when the two-year and ten-year rates fall, and one of them falls faster than the other. So you actually get a spread twist between the 10-year and 2-year bonds, but the yield goes down. This was when the COVID money machine started working, you know, in 2020. We have observed several such "bullish" swings.
And then we saw another nice bullish twist. In fact, the last time we saw this was in 2023 and 2024, when FOMC rates peaked, and we came to the first rate cut of the cycle in September 2024. That's when we had another " bullish" twist. But since then, under Trump, we haven't had a "bullish " inflection of the curve.
We had a "bear" twist. And this is a " bearish" signal. This is negative for risk assets because we are in a shock-prone zone where the market, the bond market, is trying to say, "Hey, Fed, you're lagging." Now many people say, " Kevin, there's nothing to worry about here ." Kevin Warsh won't do anything.
He's not even going to interfere. "Don't worry about it." Okay, but there are a lot of pressure factors creating risks in the run-up to Jackson Hole that I think could create a great buying opportunity. I'll get to the point about the purchase option in a moment, but there are a few things to note. This morning in the Alpha report, as yesterday, yesterday morning when the market was at 7:35 and in the "green zone", I took a "bearish" position for a very short term, mostly due to the events in Iran this weekend.
I did a detailed breakdown of what was happening with the nuclear threats surrounding Iran over the weekend, and I want to show you exactly what I wrote in the Alpha report this morning. A Qs bounce from the 7:15 level was today's target. I wrote: "I'm not overly optimistic and would avoid risk in the near term, but this could be an important signal." Will we hold the 7:15 level or lose it?
We barely made it to 7:35 on Monday at the premarket, and almost made it on Friday. Keep in mind, the reason I mention this 7:35 number is because about 2 weeks ago, when we were somewhere around $684, we set two targets for Qs: 7:15 as the upper limit and 7:35. We have, in essence, achieved both. We definitely hit both to within 50-60 cents, which is great.
But the problem is that between now and Jackson Hole, I wrote, " Markets could lose all this growth." A return to 675–685 is possible until new clarity on profitability emerges. So, this was in our Alpha report this morning, and you know: if you want to get it every day, you already know what to do.
You can go to meetkevin.com. You can use the j hole coupon. We are changing the terms of service for lifetime access after August 27th. So if you want to join and get this lifetime access, there will be some major changes after this month. So check it out at meetkevin.com for lifetime access to the Alpha Report.
And also to Alpha membership and courses, and this can be a tax deduction. You got it all. Okay, but what's the problem now? So, here's the problem. And this is the part that most people don't pay attention to. So, the expectation, let's call it the base case scenario. Kevin Warsh is expected to come out and say, " Well, you know what?
We don't have to do anything. The market has already done the work for us, hasn't it? That's the expectation. But what are the problems we're facing right now? Well, one of the problems we're facing right now is with financial conditions. I'm going to put this on the screen right now. Financial conditions, according to Bloomberg , are the softest they've been in three years.
And other people look at this chart and say, "No, it's actually getting worse. It seems like we have the softest financial conditions of this century, in fact, of the entire 2000s. I think the reason Bloomberg is talking about the last 3 years is because in '23 we had a slightly higher nominal point, somewhere around here.
I, you know, I honestly do n't see it. But it seems that the financial conditions were quite soft. However, it does n't matter whether it's in the last 3 years or this century, depending on how people read the graph. It doesn't really matter. You see, the higher this blue line is, the easier it is to finance.
It is a combination of interest rates, credit spreads, stock market performance, as well as other indicators such as VIX, etc. Profitability is currently at a record high, but financial conditions are at a record low. So, very, very soft. Why? Well, because the stock market is on the rise. So if the stock market crashes, financial conditions can become tight very, very quickly .
It's kind of the last prong, or, if you will, the last leg of the three-legged stool that supports us, right? So soft financial conditions are actually a risk factor. Why is this a risk factor? Soft financial conditions . Why? Well, because how can Kevin Warsh say, " Hey, the rates are restrictive. We're fine." When we have literally the softest, damn it, financial conditions we've seen in the last 3 or 20 years, depending on how, 26 years, depending on how you want to read this chart.
In other words, financial conditions are very, very soft , and it would sound ironic and lacking in confidence if he said, "Oh yeah, everything is tight." "So that's not good. Also, unfortunately, the Iran damage situation is getting worse. On top of that, we're still dealing with the baggage of what's to the left of the decimal point.
Remember the first Fed meeting that Kevin Warsh had? He's like, 'Oh, we're not going to pay attention to what's to the right of the decimal point.'" We will only pay attention to what is to the left of the decimal point "." Many people heard this and thought, "Wait, are you kidding me? You're actually changing the inflation target.
You're essentially saying that an inflation rate of 2.99 is fine with us because the number on the left is a two." This is effectively a 3% inflation target. So a lot of people were very angry about it. And so people are saying, "Hey , Jackson Hole could be an opportunity for Kevin Warsh to finally say, 'Look, I've got to take responsibility .'" Financial conditions are too soft.
The Iran oil shock is intensifying. AI deflation is a narrative that I believe in too. But AI deflation is a bit like the Inflation Reduction Act. For those of you who don't know about the Inflation Reduction Act, remember that the Congressional Budget Office (CBO) projected that this act, which was a big investment in wind and solar power, energy storage, and so on, was actually projected with a 10-year projection that inflation was going to go up first and then start to go down in the second half of the decade .
And that was the projected impact of the Inflation Reduction Act. So, ironically, yes, when you build infrastructure, you first create inflation. Then you get disinflation or deflation later. AI deflation? I think we're still at that stage. In the build-out stage, we're still seeing prices go up, not down, on compute, on chips, on bits.
That's going to change, but not yet. So it's hard for Kevin Warsh to keep postponing when you have so many big inflationary drivers . So these task forces that he's using, I think, are a good way to postponing the problem . And I'm arguing that Kevin Warsh should be the Fed chairman who's going to be the anchor, right?
He's going to keep rates on hold, not let them go up, and do everything he can to keep rates where they are , and then lower them later to fulfill his promise to Donald J. Trump. But the problem is that we have a lot more of a premise ahead of Jackson Hole that says, " The assumption that the probability of a hike in September is only 34%, may be an understatement." Now we need to really understand the history of the surprises and reactions that we had at Jackson Hole.
Uh, there were a lot of Jackson Hole meetings. I mean, they happen every year. In 2018, we had Jackson Hole, as expected. The markets didn't really react at all. So you always have to remember that the expectation- reality ratio is important. So in 2018, as expected, there was little change in the markets .
In 2019, we got a little bit of a dovish surprise, and the stock market went up moderately. In 2020, the meeting went as expected. In 2021, we got a dovish surprise. And guess what? Stocks went up. See where this is going? You can see the point. When there's a surprise in a certain direction, stocks react.
In 2022, we got "hawkish " surprise. So we got a "hawkish " signal, and the S&P 500 fell 3.4% in one day . And then it took a few more months to really bottom out. On the '23rd, it was as expected. On the '24th, it was as expected. And on the ' 25th, we really got a dovish surprise. And the market went up about 1.4%.
That was just in one day. This is just an example of the fact that if the Jackson Hole meeting goes as expected, Kevin Warsh is not going to do anything. He's not going to give any forecasts for the future. He's not going to plan any actions or anything like that. He's just going to do nothing. He's not even going to suggest that we're going to try to get ahead of inflation, right?
That's a big risk. We don't think he's going to actually give us forecasts, but he could come out and say something like, "We're going to act while inflation is still there." in the rearview mirror ." "We're going to try to get ahead of these inflation problems and these soft financial conditions." Then a reality check is possible.
So then we have to ask ourselves: If everything goes according to plan, we do n't really care. The market movement will be almost imperceptible if everything goes as expected. Do we think he's going to be dovish ? How? We already think he's going to be dovish . The market already thinks he's going to do nothing.
So he can't possibly be " dovish" because we already expect him to be that way. The market has already priced in that he's going to do absolutely nothing at Jackson Hole. So we can write off the surprises on policy easing. So the expected outcomes don't matter. The surprises on easing don't matter. The only thing left is the potential for a hawkish surprise that could knock the markets down.
Right now, the markets are inclined to try, at least try , look ahead. So I think part of the negativity that we're seeing in the stock market right now is a reaction of, " Yeah." "Do we really want to increase leverage before Jackson Hole?" Isn't that right? That's something to think about. When did we have the biggest moves in the stock market this year?
The biggest moves were after the fundraiser. The fundraiser was in February, March, and very early April. The market went down, people hoarded cash. As soon as the positive stimulus came, that money was invested very quickly for about two months. It was an incredible 10- week rally until the SpaceX IPO defined the top.
Then we had a short liquidation period after the SpaceX peak. And since then we've recovered somewhat, but we're still not at those all-time highs. So we haven't had a period of hoarding money right now where people are selling assets and getting out of positions. Instead, we're in this kind of sluggish market where people are a little nervous—or at least they should be nervous— that the Federal Reserve might say, "We're going to fix this, we're going to fix this situation and these expectations." At the same time, it could create an opportunity for us , because if the market continues behave almost as predicted, look at this.
This morning in the Alpha report we said, "Hey, the test is going to bounce at 7:15." And look what happened. This morning at 7:20 you saw it in black and white, I wrote it. We bounced in the 7:15 range. You always usually invest in the dollar from the lines. Very, very common. Look at this. The bounce at 7:15, uh, move up from there.
Holding it is great. But there is a risk that this decline that we are experiencing today will continue until Jackson Hole, which is next Thursday. I actually think that creates a buying opportunity. And there is a little tool that we can use to watch for the probability of a surprise . I think we could watch the two-year Treasury .
You see, if the two-year goes back up to 4.35, the markets actually They say, "Oh, [ __ ]. The Fed is going to be tough." But the two-year bond is actually falling right now. Which creates the opposite expectation. The markets are assuming that the Fed will be dovish at Jackson Hole. But that's compounded by financial conditions, the war in Iran, and the slowness of AI disinflation.
You actually create a real risk of a hawkish surprise from Kevin Warsh here. So in other words, you always want to ask yourself, "Where is the market doing something that you don't agree with?" If the market expects softness from Warsh, and there is a reason for Warsh to act decisively, then there is a very good preparation for a surprise.
How much of that will be priced into the stock market by then? We'll see. But the next 9 days are probably going to be more volatile because of the war, I think that's a buying opportunity. Mainly because I think we're probably going to have a slow rally in the markets for the rest of the year. I'm not set on having this, you know, 10-week rally up after April.
Everybody's been increasing leverage . I think people have become a little cautious because of margins and debt. And so we're more likely to see slow growth than this, uh, quick V- shaped recovery. But there is a real risk that we're, well, getting screwed in Jackson Hole. So we'll see what happens.
But that's my analysis for Jackson Hole. I hope that was helpful for you, and see you in the next video. Bye and Why don't we .
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