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Fed 윌리엄스 발언과 2-10년 스프레드 확대를 근거로 경기침체 위험을 경고. 엔비디아 실적이 GDP 성장을 떠받치고 있어 중요하다고 봄. 9월 금리인하 확률 90.7%를 언급하며 금리인하 기대를 전제. 7월 고용·PCE·GDP 수치를 해설하고, 소비 선반영(pull-forward) 효과를 지적. 협찬 및 강의 홍보 포함.
다듬은 글
Fed member Williams had a few choice comments this morning about interest rate cuts, maybe even how restrictive we are, how many basis points we should be going down, and we just had a pretty big spike on the 210 curve. Is that because the Fed is setting up for rate cuts or is it a sign of something more?
Let's break it all down right now. First, Fed Williams was asked about Lisa Cook. No comment on Lisa Cook. Immediately after he says he has no comment on Lisa Cook, who comes out with a comment? Kevin Hasset. Kevin Hasset tells us that the honorable thing for Lisa Cook to do would be to step down. As in historically, usually when there's controversy around a Federal Reserve member, you end up getting Fed members stepping down.
This is what happened when Clarita had allegations against stock trading against him or multiple others had allegations of stock trading against them. uh that had maybe suspicious or questionable timing. Usually when there's anything sus with Fed members, they just step down. And I think Donald Trump to some extent knows that.
He knows, all right, if I light the fire, then maybe they'll step down. Now, a lot of people are saying, oh, it's Lisa Cook who's the first one being stubborn. But if you think about it, it's actually Jerome Powell who's really dug in his heels. And Powell benefits a little bit more from immunity than other bankers like Lisa Cook.
Keeping in mind that Donald Trump is now also honing his insights not just on the Fed board, but also the individual regional banks who aren't going to be voting members. Every single year, we have some regional bank presidents who aren't voting members. And uh Scott Besson is interviewing new Fed members right now.
And there's there's reporting that suggests the Trump administration is basically not just looking for a Fed chair replacement, but they're trying to replace as many people as possible at the central bank to get us to where we have basically a Trump central bank. And I think Lisa Cook to some extent sees the stubbornness of Powell and this change that the Trump administration is trying to force at the Fed and she's throwing up her hands and saying, "You know what?
we're gonna fight this because if I don't fight it, nobody's gonna fight it. Now, obviously, for her to fight it, she has to believe that she did nothing wrong with her mortgages. Now, her mortgages looked sussy baka, but let's just say there's a possibility that she had some kind of secondary agreement in writing that one of these homes was a second home or some kind of secondary agreement that the lenders were aware that she had two primaries at the same time.
Is possible. Now, if she had something like that, I'm surprised we haven't seen it yet because that would be just such an easy thing to put this to rest. A statement from Lisa Cook going, "Hey, you know, this was a second home and the lender knew about it would put this to rest really dang fast." We haven't gotten that yet.
That doesn't prove her guilty, but it does raise some questions. That said, a lot of people are wondering is the twos spread spreading because of this Lisa Cook drama because rates are going to normalize or is there something worse happening? When you look at the 102 spread, anytime you are above 50, you are shockprone.
Shockprone means you're closer to the potential Rword taking off recession. Take a look, for example, at just specifically the 2-year yield. And when you look at the 2-year yield, what you'll find is the 2-year yield tends to trend down and then plummet right before recession. That happened in 2000 and it happened in 2007.
And of course, it happened during co the 2-year is the first thing to plummet. That said, the 2-year also slipped down during the soft landing of 1995, although the 2-year never went below a rate of 4.3 in 1997. So 95, sure, it normalized down a little bit, but it never went low. Right now, we're sitting at about 3.6.
six. We're trending down and right now we're at liberation day levels on the 2-year. Now, is that because maybe markets are pricing in this is where neutral should be? Fed Williams tells us maybe. Fed Williams this morning suggested when he was asked about his own personal formula for where the neutral rate is.
He was asked, "Hey, you know, uh, we might be 60 to 100 basis points restrictive based on your own formula for where Federal Reserve policy rate should be." And Fed Williams replied and said, "Yeah, you're right. Like the math of that is right. The world is more complicated than just one formula, but the math of that is correct.
Maybe we are 60 to 100 basis points restrictive. Maybe that's what's moving the 2year yield down. But look at this. The 2-year yield is down 2.5 basis points while the 10-year is actually up. Now, sometimes that could be a concern that hey, you know, in the near term we're going to get some rate cuts, but those rate cuts could actually spawn some stagflation.
Usually when you see recessionary pricing in the bond market, both of these go down because markets expect that rates are going to fall rapidly in a recessionary environment, even the 10-year plummets. So when you have this divergence, it's usually because markets think, all right, the Fed might actually be setting up a stagflationary problem.
Unfortunately, that increases the cost of capital for small businesses and that could be the very thing that eventually pushes us into recession. Now, everybody's been talking about recession for a while, but remember that small businesses make up about half of employment in the country. So, when this 210 spread widens, it actually affects people.
And you'll notice that today the 210 spread is higher than it was during liberation. When we got liberated, the 210 sprite went from 30 basis points to 50, which is shockprone level. I call it shock prone because shock means we're over one. Once we go over one, we're getting into more 2007 2000 recessionary territory.
We just shot up from this level where we've been bouncing around in 50 to 63. That could be because of Lisa Cook. It could be because people are pricing in that September rate cut. or it could be that early warning sign of a recessionary signal. Now, hopefully today Nvidia absolutely spanks. That's our hope because I'm I'm going to give you a heads up on what happens if Nvidia doesn't spank.
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and join Helium. Let's put it this way. If Nvidia doesn't spank, you could potentially immediately usher in a recession. Now, I'm I'm not saying that to try to be, you know, a a recession bear or something. It's simply to say that Nvidia is probably the only thing propping up our GDP right now. What that means is uh while GDP is about $26 trillion, GDP growth is probably only about 1%.
Right? So that's about $260 billion. Okay. Well, $260 billion, I mean, that's probably just the AI sector alone. You know, spending basically a delta of an extra $260 billion on capex this year compared to last year, which means pretty much 100% of our GDP growth is coming from artificial intelligence.
And I don't know when the day is going to happen. I don't think it's going to be today. I hope it's not today. But if Nvidia shows a slowdown in AI, people are going to rush for the exits on the AI trade and that could self-fululfill a correction. A correction leads to layoffs which puts you into shock territory and there's recession.
So Nvidia is literally economically vital today. At the same time, Williams tells us this morning that the economy is going through a quote adjustment process and that he expects GDP growth will continue to slow that the whole on a whole GDP will grow 1 to one and a half% this year, but it'll continue to slow, which is not great.
We don't want to hear that. He also suggests that yeah, look, hiring isn't doing great. Part of that is obviously because of immigration uh in terms of labor supply, but yes, hiring is also slowing down. and he says the place to watch is going to be unemployment claims. Now, in my opinion, just studying history, once unemployment claims go, it's over.
Like, you may as well take yourself a DDS. That would be a poison tipped dragon dagger. Can't even get a good good shot of that in the camera here. Look at that. Poison tip. There we go. Poison tipped dragon dagger coffee mug. You know, everybody's got to get one of those. If you can actually get the camera to focus.
There we go. Look at that. So, you take one of these and just stab yourself. Uh because it's just bad. No, don't do that. Okay. No, no, self harm is bad. Um there's always hope, okay? Everything's going to be okay. But uh the point is once unemployment claims go, it's it's already too late. Like that's that's my point of view.
But hearing Fed Williams talk about it, I'm like, man, could you be talking about anything more lagging? That always makes me nervous that the Fed just ends up keeping rates higher because they look at these these data sets that are ridiculously lagging. But in fairness, Williams also kind of threw up his hands and he was very transparent about this idea of hey, like we just don't know.
Like we haven't been at a place where like we actually just close the door to immigration. Like who knows what labor growth is going to actually end up being. We we we really just don't. So, how do we know if we're at maximum employment when we don't have a precedent for this? That's not great because it just means things got even more foggy for the Federal Reserve.
In other words, more blurry, right? They they're trying to land the plane, but that now they could see even less. Uh so, uh Fed Williams also says that progress on inflation is very slow. It's hard to separate out the tariff impact. He actually thinks the tariff impact on inflation is probably around 40 to 60 basis points.
Now, that's unfortunate. See, because if it weren't for tariffs, we'd probably be, you know, a 100 basis points lower on the Fed yield curve or the, you know, the Federal Reserve rate right now, which means, you know, calls on TLT would be doing really well, but tariffs absolutely screwed it by delaying everything and causing fear of lasting stagflation and and they basically increased your your cost of time, uh, which sucks, but it is what it is.
So Fed Williams hopes that despite this tariff inflation over time, the Fed is going to be in a place to get those rates down. Uh now, uh Fed Williams does says we don't want the labor market to weaken too much, but we want inflation to go back to 2%. This is him acknowledging that, hey, we are in a restrictive territory of interest rates.
We just have to be careful because we don't want the labor market to weaken. But is what we're seeing weakening or is it because of immigration? So that's the concern that the Fed would make a mistake. And this is why I've been worried that Powell was going to stay fussy and not set up a 25 basis point cut because it just begins to kind of confirm that we're going to end up going into a recession.
Fortunately, Powell didn't do that. Powell brought back flexible inflation targeting minusing the average to, you know, cover his mistake the last time. Uh, and now we're hoping that the Fed does the right thing and sets up continuous rate cuts. Current pricing for rate cuts, we've got a 90.7% chance that we're going to get a rate cut in September.
Remember, September 5th, we have uh jobs report. That's going to be huge if we could get a positive Nvidia read. Now, we go to all-time highs. If we can get a positive jobs report and and we actually get this 80,000 jobs growth that we're expecting, we could boom over 600 on the cues. I mean, it'll be the mo we've got.
That's our latest coupon code, by the way, for the meet Kevin Alpha report. Somebody wrote this morning in the course member live. Kevin, thank you. your calls on Palunteer paid for the course I literally bought on Friday. He literally, you know, spent $1,400 using the coupon code and uh getting into a course, paid for it within the first what, two trading days of of owning the product.
That's incredible. I I I hope that for everybody. I can't guarantee that obviously for everybody, but but people have been very very happy with what we're doing. We just released uh two more of our top 10 buys for the next 10 years. Obviously, those aren't personalized financial advice for you. I don't know what your portfolio or your situation is, but they're like, you know, my 10 buys that we just buy and hodddle for at least the next 10 years.
And so, we're on number three on number four now is is the next one coming up. Uh but anyway uh then of course after the 5th we'll have uh which is the jobs report. We'll have our um you know readout of QCW numbers on the September 9th. Uh we do have a catalyst this Friday. I think it matters a little less but it is PCE PCE 530 to 2 days from now in the morning.
You've get you're expecting a 02 on the month over month and year-over-year 2.6. six core.3 core year-over-year 2.9, nobody really cares about PCE as much because even though it's the Fed's preferred inflation gauge, you could derive what that number is going to be by pulling out the components, the CPI and PPI.
So, usually we're not too far off on the estimates. Usually it's not a big shocker and uh you typically you're you're not in a place that you know it's really a big catalyst just like second quarter GDP estimates second revision of the second quarter GDP estimates for tomorrow which are expected at 5:30 a.m.
to come in at 2% for the second quarter which is actually pretty good tariff second quarter 2% that's great. Uh that's uh you know not not really a market mover or catalyst. Uh that said, you know, we could look at the Atlanta Fed real GDP numbers and uh from an Atlanta Fed real GDP numbers set, you know, there's there's no problem with the economy.
People things are still booming. Uh let's go take a peek at that. So, here is the Atlanta Fed. Our last read is 2.2% on August 26th, yesterday. And that's great. That's fantastic. You know, most people think we're trading around 1% on GDP. The Atlanta Fed's like, "Nah, man. We's doing great." Why? Because they say the now cast for real gross private domestic investment growth, uh, even though that decreased.
Where's their upside? Oh, no. Both of these are negatives. Oh, wow. That's actually bad. Look at this. The now cast of third quarter real gross domestic investment growth decreased from 4. Oh, no, no, no. Okay. Okay. Decreased from 4.9% to 4.4%. Oh, okay. Okay. I thought those were both negative numbers.
No, no, no. This is actually fine. Uh so yeah, I mean 2.2% on GDP because they still see a lot of real investment growth. Uh you know, people spending on appliances, people buying stuff for their homes. I think a lot of this, and we've seen this in the capital goods orders numbers that came out yesterday as well, that's probably why the Atlanta Fed numbers revised yesterday because we got the uh capital good orders.
It's probably because here, let me let me explain something that I think is is unique. It is a near-term bullish catalyst, but it it does create some potential issues. I'll explain. Just let me take a sip for my poison dragon dagger drink here. the uh what you probably have is a lot of people still pulling forward uh tariff concerns uh appliances like hey honey we should buy a new washing machine now or a new dishwasher now because you know we don't want those tariff prices to show up uh I think a lot of that is still happening especially with BNPL built into like everything I mean uh you know I booked uh I booked some tickets uh to take the kids on a uh on a family trip this weekend because It's Jack's birthday.
He's turning 10. Uh, it's remarkable. Jack got a Nintendo Switch 2 for his birthday. And so, a Nintendo game system. For my 10th birthday, I got the Nintendo Gamecube. So, I'm like, "Oh, this is crazy." Like, we both got Nintendo systems for our 10th birthday. And it's just weird cuz, you know, I'm 23 years older than him.
Uh, that's crazy to say. So, anyway, we'll have a we'll have a good vacation. But every single time you go check out for something now, it's like, "Hey, do you want to pay for this in 12 monthly payments?" I'm like, "No, I'm just going to pay for it." Like, I I don't I I don't want any debt. Uh other than real estate debt.
Real estate debt is good. I don't want any debt. How doesn't even have real estate debt, which is like an irony, but you know, whatever. That's that that'll change over time as, you know, rates come down. Housing, I think, will boom. Uh I think Warren Buffett is making the same bet, right? Warren Buffett throwing money into LAR or pool, you know, which is a wholesale supply company for people renovating their homes or building more pools.
You know, it's clearly a buffet bet on on real estate. But that said, uh you know, there is some pull forward here and that's probably what we're still seeing when we look at these capital good uh shipments and orders uh and uh real private domestic uh spending growth. If I look at uh orders versus shipments on the data yesterday, I could tell you yesterday we had uh let's see here.
Capital good orders actually beat the shipments. So it's like that that enthusiasm still happening. Shipments came in at.7. We were expecting 02 and then on on orders we got 1.1 which is great. like so so there are still really good signs of spending and capital investments and even though Nvidia is you know missionritical today the consensus is it's going to be just fine it's not a matter of if they'll beat it's a matter of how much they'll beat and uh uh you know until you run out of people willing to buy Blackwell chips which I don't think we'll be anytime soon seems like uh we should be okay knock on wood but Federal Reserve. Uh, and Mr. Wil.
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