저자: Kevin · 외국인
요약 보기
3월 FOMC를 앞두고 점도표 중간값(중앙경향)과 연말 금리 전망이 3.6%를 넘어 금리인상 가능성이 반영되면 시장에 부정적이라고 주장. 연준 총재 파월이 '일시적(transitory)'이라는 표현에서 거리를 둘 가능성이 높다고 봄. 근거로 5년 기대인플레이션 상승, 근원 PCE 1개월 연율 4.5%, 고용 3개월 평균 6천명·6개월 평균 -1천명 등을 제시. 자체 파악한 바로는 연내 인하 1회 정도가 시장 기대라고 설명. 회원 전용 종목 및 구독 프로모션 홍보 포함.
다듬은 글
Reminder Meet Kevin coupon code expires tomorrow at 11:59 p.m. which means prices are going up bigly tomorrow night. It's time to prepare for the Federal Reserve meeting which is tomorrow at 11:00 a.m. Pacific time. That's when we'll get the statement and then of course the press conference will be at 11:30 a.m.
We'll be covering it live on the channel. Here's what you need to prepare for the dots and potentially rate hikes. No, not actually rate hikes happening tomorrow for the grasshoppers who are watching who have absolutely no patience to get through the whole video. I'm not saying rate hikes are coming tomorrow.
Probably nothing is happening with the rates frankly for the next 6 months. But instead, we need to keep an eye out for potential hints at rate hikes and I'm going to show you exactly where you can identify those at 11:00 a.m. instantaneously so that way you know what markets are most likely to react to and exactly where to find it.
So, on Federal Reserve Board website, you're going to be able to get the summary of economic projections. Right at 11:00. I'll be covering it live. So, if you don't want to go hunt for it, don't worry. I'll read it off from the news wire services right away. What's going to matter really heavily on these particular dots are the following numbers right here which I've put in my projections in red.
So, my projections are red and these are my guesses for what the Federal Reserve is going to give us for 2026. So, previously in December, the last time we got this report since they you know often skip a meeting for the summary of economic projections. Uh the last report we got, we got a change in real GDP for 2026 of 2.3.
I think the Fed is going to maybe write this down a little 2-2. Not a big deal for rate hikes. No big deal here at all. I do think they're going to adjust the unemployment rate up slightly but maybe only to 4-5, 4-6. Nothing big here. I do think the biggest place we'll see an increase is likely going to be in the PCE and headline inflation number at the probably come in at something like 3% frankly due to the war and oil prices.
Now, this assumes we're going to have some lasting impact of higher oil due to shutdowns by the end of the year. Uh and and this is very likely going to be considered shorter term. I hate to use the word of transitory. Powell's going to walk away from that. I'll talk about that in just a moment. But this is going to be a number markets are already expecting.
Like none of these I think will be a shocker because markets are already expecting this. In fact, I actually think this core PCE level just because core good prices have started moving up. We'll look at those charts in just a moment. I actually think that'll probably be closer to 2-6. Now, if we look at the Wall Street forecast for rate policy, this is where you're going to find out if markets are going to poop the bed.
And I mean a poopy doopy. It all has to do with the Federal Reserve's rate projections. Wall Street is forecasting a 3.4% rate by the end of the year. That represents about one more cut by the end of the year. We've got about a 70% chance of that one more cut by the end of the year. In addition to that, Wall Street sees one more cut thereafter bringing us down to about 3.1 for 2027, 28 and the longer term.
In other words, what you'll notice here are no rate hikes. However, this is where you potentially get markets to poop the bed. And first, I think that the federal funds rate projection for the end of the year is actually going to get written up to 3-6 which implies that more than half of the Fed board members who are voting actually think we're going to see no rate cuts this year.
But even though Wall Street is still pricing in that rate cut, I don't even think that this will be that big of a deal tomorrow. I really think where markets poop the bed is if we get anything over 3.6. So, for example, if this said 3-7 or worse 3-8 which I think is unlikely but let's say it said 3-6 3-7, that would be a sign of a potential rate hike getting priced in.
That would be very bearish for markets tomorrow because it would mean that interest rate cutting regime is likely ending as the Federal Reserve strikes a preference for controlling inflation expectations. Here's another place you're going to be able to see it. Right here, this is called the central tendency and then over here we have the range.
So, the central tendency is basically your median. You could see in the median no rate hikes are priced in between 26, 7, 8 and the longer term because the central tendency is always at the rate level where we are on the high end. Now, we do over here in the range which means there's one hawk at least.
You know, someone's being a hawk. Have this pricing all the way up to about 3-9. I wouldn't be surprised to see this potential range go to the four plus range. So, this goes four plus on the upper end range of that. If if 3-6 on the central moves, that's a poop emoji problem. That's I'll just call it that's poop.
So, in other words, the first place we're going to look is we're going to look right here. Anything above 3-6 is bad. You can write that down on a sticky note. Anything above 3-6 right here Federal funds rate projection for the end of 2026 bad implies rate cuts. Or sorry, implies rate hikes. Anything above 3-6 on the central tendency is even worse.
Even worse because it means that median has moved up, right? More than enough dots have moved up to where the middle dot is now higher. That means many people on the board are suggesting rate hikes. This is not so bad because it could just be one loony tune who is going to go you know four five for example.
The the range is really not going to matter as much as the central tendency. It'd be the same reason why you end up having somebody like Kevin Warsh come in and say, "Hey, well we need rates at 2% like a Myron or whatever who's probably this dot over here." Nobody cares. We care about that middle number because this is a voting board.
Now, the next thing that you need to know is what Powell has a 90% chance of saying and a 10% chance of saying and then we're going to look at some charts and graphics. Very important. I also want to shout out a stock we've been fundamentally buying since $68 uh in the course member live streams and our Alpha group.
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Uh and so the stablecoin issue here, I just want to give this one a shout out. It's really been rocketing the last a few weeks here and it's it's an impressive one. If you haven't done fundamental analysis on it yet or you haven't seen my research on it yet, remember you can always join the Meet Kevin group.
Uh just go to meetkevin.com. You can join the uh Alpha membership. You get all the courses. You can probably get a tax write-off on buying the course as well. You get the Alpha membership, all nine courses in one bundle. You get which we do every morning uh in the fundamental analysis every single morning.
Entity protection, real estate, property management, sales, uh how to get stuff done, Trumpanomics, wealth plan library, you name it. And of course that daily Alpha report. Get that before the coupon expires tomorrow. Now, going to Powell, I think Powell has a 90% chance uh of saying um well, distancing himself from the word transitory.
Right? He's not going to want to keep saying, "Oh, we think this oil shock is transitory." because we've dealt with transitory over and over again. We had the game changer were his words for Russia-Ukraine. Then of course uh we had the tariff shock of liberation. Now we've got the Iran shock. There have been a lot of shocks that have just created inflationary pressures and these are problems and they keep coming up.
They're not going away. So, it kind of feels like inflation is becoming more than just transitory because this transitory thing's been going on for many years. And the danger is that the Federal Reserve loses people on inflation expectations which so far are anchored but we're starting to see those inflation expectations start ticking up mostly because people say, "Hey, wait a second.
Wait a second here. Higher oil prices, that's going to feed into inflation." Duh. So, the Federal Reserve's going to have to really work hard to fight inflation expectations. That's my opinion. This means I think there's a 90% chance Jerome Powell is going to distance himself from transitory and focus heavily on hawking against inflation.
Uh we need to get inflation in control. We need to focus on prices. Now of course people are going to counter this and say, "But Kevin, what about jobs?" Right? This is where the data is useful to pay attention to. Yes, there are problems with jobs. We'll look at that in just a moment. But I want to mention the five-year break-even rate of inflation right now is at the highest level that we have seen since liberation day of April 1st of last year.
Since then inflation expectations came down but because of this war, they've skyrocketed again and they're trending up which is bad for the inflation direction and we know Jerome Powell pays attention to the five-year break-even because he said himself that he does. Now, regarding the labor market, yes, there are problems in the labor market and we had a very weak -92,000 report.
Negative reports are usually you know, your early warning sign that a recession is near. We had a pretty bad report in February, but it came after a very strong report in January. So, the three-month average job gains sits at 6,000 and the six-month average sits at -1,000. That's pretty bad. It's pretty damn close to zero, especially since Jerome Powell tells us we're probably overstating these those numbers right there, 6,000 and -1,000, by 40 or 50,000.
So, in other words, we're probably going to be consistently negative, especially when we get those revisions, which is bad. Now, the question that I think the power Powell pull off is he will say something to the effect of one report doesn't make a trend. It's possible that February report was just the opposite of that really strong January number and we'll have to wait for more data to verify that that downward trend, even though we know that downward trend is happening.
It's probably why the Fed's going to end up being too late. Any talk about hawking isn't going to help and hiking is not going to help. Implying hikes is not going to help. But, I think they have to to control inflation expectations. So, on one hand, they have to hawk because of inflation, but on the other hand, the job market is not growing.
It is almost certainly shrinking and it's bad. But, e labor market and just say we need more data because we don't know what the break-even level of jobs is. The break-even level of jobs used to be 150,000. If we didn't get 150,000 job gains a month, it was a bad report. Now, because of the lack of immigration and the number of deportations we've been getting, it is likely that at least 2/3 of that has collapsed due to immigration and deportations.
And then maybe the other third of that is because of artificial intelligence or you know, whatever. Remember, we showed this a few weeks ago on the channel. I don't think I have it handy now, but there's this belief that we are going to see job losses for the next few years until about 2028 and then that's when artificial intelligence might actually start showing job gains.
And I think it's easiest to show this on the whiteboard anyway, just because we can blow it up a little bit and make it a little bit bigger. But, basically, there's this indication that if this is the sort of normal trajectory of jobs that we would expect, artificial intelligence is somewhat creating this sort of environment where right here, this is this is the danger zone.
That danger zone. And that danger zone is between 26 and 28. So, in other words, 2026 and 2028, right? Where it's going to take time until maybe 2028 where we actually generate net more jobs than we would have otherwise. Usually, technology does generate more jobs. I don't exactly know how yet. So, this is why all while all of that is still pending and an idea and theoretical and concepts, we know that inflation issues are a real issue now.
And when issues are a real issue now with certainty like inflation, we know that Powell is going to yap about them. We've seen Brent crude go up a buck so far today. It's only about 75 cents today, which my argument was that if oil started trending up, we would not break 607 on the Qs today. In fact, this morning in the Alpha report, I'll just pass this out to you for free.
This morning right here, when we were trading at 603, I said, "Folks, we are sandwiched. The upside today is very low because you're going to reject before 607." And sure enough, we did. So, there's no reason to play calls on the Qs today. This is what we do. We talk about day trading. We also talk about swing trading and we talk about long-term investing.
We hit all of them in the Alpha membership in the morning. So, it's very undesirable to go super optimistic here in in the morning. And and sure enough, we're seeing a lot of this sort of sell-down continue as Brent is slowly inching up. But, what matters here are some of these other charts. So, let's go back to Nick Timiraos for a moment and understand the following.
Take a look here. Core PCE on a six-month average sits at about 3.1%. But, if you annualize out the three month, you're at 3.7%. That's that lighter blue line. It's skyrocketing. See how it's all rocketing over here on the right? And if you look at the one-month annualized, you're actually at 4.5%. That's really bad.
That's not even charted the one-month annualized. So, the core levels of inflation are actually rocketing. Part of that is due to consumer goods rocketing because of tariffs. So, this is where there is no question that tariffs are creating inflation because we could see COVID inflation over here. Then we had deflation in consumer goods and you know, only for a very short period of time.
Then we got tariffs, which just rocketed inflation again. You can see this here. 12-month goods inflation excluding food and energy, which means it's core goods. This is something that the Federal Reserve has to fight. Unfortunately, the very tariffs that Donald Trump implements are the very things that are going to keep the Federal Reserve from cutting faster, which is what Trump wants.
And I actually think that there's a 20% chance that Powell comes out and says, I guess I thought I wrote this as 10%, but whatever. It's I think 10%. 20% is more likely anyway. 20% chance he says if the war goes on for longer and inflation expectations unanchor, rate hikes are not only possible, but probable.
In other words, that comment alone will make markets poop. So, any comment on rate hikes, bad tomorrow. Any move in the central tendency from 36, very bad. And of course, any move above 37 over here or sorry, above 36 over here on the Fed funds rate, also bad. Those are the points that you have to pay attention to.
Again, right here, here, and then commentary. That's it. That's all we're going to do tomorrow. So, hopefully, this prepares you. If you like the education you get here, consider subscribing, sharing, and checking out the programs at meetkevin.com. Coupon expires tomorrow evening at 11:59 p.m. .
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