---
title: 'The Fed is PISSED.'
source: 'https://youtube.com/watch?v=qISyErK8cd8'
video_id: 'qISyErK8cd8'
date: 2026-09-16
duration_sec: 1393
channel: 'Meet Kevin'
---

# The Fed is PISSED.

> Source: [The Fed is PISSED.](https://youtube.com/watch?v=qISyErK8cd8)

## Summary

The video analyzes the Federal Reserve's recent rate hike and the accompanying press conference by Chairman Warsh. The creator expresses disappointment over the lack of forward guidance on the neutral rate, while noting the hike itself was expected. The summary of economic projections (SEP) shows a higher long-term terminal rate and a second hike priced in for 2028, signaling confidence in the economy and no inflation concerns.

### Key Points

- **Rate Hike Expected, Wording Disappoints** [00:00] — The hike was expected, but the lack of clarity on the distance from the neutral rate was disappointing. Warsh stated he is not convinced financial conditions are restrictive, which the creator interprets as a signal for potential further hikes.
- **SEP Shows Higher Terminal Rate** [01:46] — The long-term terminal rate increased from 3.1% to 3.2%, the highest in about a decade. The SEP also shows a shift from one hike and one cut in 2027 to two hikes and one cut in 2028, indicating a more hawkish stance.
- **Hike Signals Economic Strength** [05:11] — The rate hike signals economic strength, credibility, and no inflation or labor market concerns. Inflation ranges were tightened, and the most bearish unemployment forecast improved from 4.6% to 4.5%.
- **Short Press Conference** [10:46] — Warsh's press conference lasted only 29 minutes, much shorter than usual, leaving reporters unprepared. He used a pocket notepad instead of digital devices, and avoided giving forward guidance on the neutral rate.
- **10-2 Yield Curve Flattening** [11:56] — The 10-2 yield curve has flattened, which is seen as positive. A bull flattening would signal market confidence in inflation control, but the 10-year yield hasn't moved much, suggesting the market is still uncertain.
- **Potential One-and-Done Scenario** [13:02] — Rabobank warned the Fed might be a 'one-and-done' hiker, pausing after this hike. The creator agrees, noting the market's pricing of 3.6 hikes is overdone, and he personally expects one to two hikes.
- **Warsh Dismisses R-Star** [14:07] — Warsh called the neutral rate (R-star) 'not important,' a departure from previous Fed chairs. This lack of guidance creates uncertainty about future hikes.
- **October Hike Unlikely** [15:16] — The market prices a 53% chance of a hike in October, but the creator thinks it's unlikely before the election. December has a 130% chance of a hike, but that seems excessive unless inflation data worsens.
- **Trend-Based Approach** [17:35] — Warsh emphasized looking at three-, six-, and twelve-month trends rather than single data points. He noted that over 50% of CPI components are above 3%, a risk factor, while labor market indicators like weekly hours are strengthening.
- **Inflation Expectations Drop** [20:22] — The five-year inflation expectations chart showed a sharp decline after Warsh's comments, indicating the market believes the Fed is serious about controlling inflation.

### Conclusion

The Fed's hike and Warsh's comments signal a credible, hawkish stance aimed at controlling inflation, but the lack of forward guidance on the neutral rate leaves uncertainty. The creator sees this as a potential buying opportunity, expecting the market to stabilize after the election.

## Transcript

All right, we got our hike. We expected this. That was the easy part. The harder part was the wording that followed. And I have to say, I'm a little bit disappointed. We didn't get clarity on where we stand in terms of distance from the neutral rate. We have estimates from
the summary of economic projections, but if we look at what we had at the last summary of economic projections to now, we know they can move a lot. I'll show you all the changes in the Delta in just a moment, which is important, but one of the most important takeaways from
here is that we got Walsh telling us, I am not convinced that financial conditions are restrictive. My colleagues are not convinced that financial conditions are restrictive.
My opinion was that the market would have been happy if he said we are close to restrictive conditions now that we've hiked. We didn't get that.
We just removed a dose of accommodation. Damn! That doesn't tell us how many more doses he's got to take out of our butt. Like, how much more accommodation are you going to remove from my infant?
I can only take so many great hikes. That said, summary of economic projections was a little bit more chill, but Wurst drives the show. He's the chairman.
Summary of economic projections? He didn't even contribute to. Once again, he said, ugh, to your summary of economic projections. Which means, I didn't really feel like it was a good day.
Now, why do I say that? Because he opened up with good day instead of good afternoon. Like, what, are you going to come out with a frickin' top hat next? Good day. Well, it wasn't. Thanks, bro. Okay.
Let's get into summary of economic projections and we'll keep talking about what Warsh said because there's a lot more detail in terms of what he said. All right, summary of economic projections. First things first, we found Donald Trump. Donald Trump is right here in this little orange circle,
the only lowly person who actually sees rates getting essentially lower than where they were before today by the end of 2027. There's only one person, and it must be Donald Trump.
Okay, obviously, this is somebody Donald Trump would have to buy because Donald Trump is not on the board. That said, we can see the trend over the long term is still consistently down. However, we have quite a few two hikers in the box over here.
What I do think is interesting is we don't, and this could actually be considered a three hiker. You would probably call this two to three hiker, actually, because that's going to take you to about 4.25, right about here.
So you got your two to three hikers up here. The majority for 2026 still sit in the two hike box. But we do have quite a few two to three hikers. And this will become a little bit more clear when we actually look at the range of estimates that we got here.
I do want to give an honorable mention to the Japanese carry trade. The Japanese carry trade gets worse when the Federal Reserve keeps rates stable when people are expecting them to hike,
or we cut, and Japan surprise hikes. So that's not what we had here. We're going in the same direction with Japan. We're going up. We're going up 25. They're going to go up 50. We're going together.
okay the spread is staying the same 25 basis point difference between the two countries that's not a carry trade shocker that's not something to worry about there you have to go back to august of 24 and if you have big balls like warsh just suggested he has he's not a eunuch
apparently he actually has balls that's why we had the coupon code warsh's balls because we thought he was going to show us his balls he basically did anyway uh you know if you go back to august of 2024 before, you will realize that we had a labor market that was weakening.
We had cut rates and Japan's supply height. So we went in opposite directions. Today, we basically just did this. We're moving in the same direction here.
So it's really not that big of a deal. Okay, so small honorable mention there on the carry trade. Not a big deal. This is much more interesting. So let's understand a few things here. First thing, that was bearish right here.
This was bearish. We actually saw an increase, and this was not on the bingo board, literally. We saw an increase of the long-term terminal rate from 3.1 to 3.2.
That has now created the highest terminal forecast that we have seen in about a decade for the Fed rate. This is the terminal forecast for this, and so it takes us back to, yeah, 2015.
The end of 2015, and we were plummeting off a cliff at that point. So this is the highest point we've seen for the terminal Fed funds rate in the long term. So when I say terminal, I want you to think about like post-2030.
That's a big deal. Speaking of which, we're also going to talk about the reinvest terminal in just a moment. But we'll save that because right now we've got a lot of important things to talk about. You can see it over at meetreinvest.com. Really cool product coming out in November.
And you can get some free access to it if you join as an alpha member with coupon code WASHESBOWS. Really professional, I know. But so is, well, talking about some of the things we talk about on live stream. Anyway, what did this signal?
The rate hike today signaled economically strong. They signaled credibility. They signaled no inflation concerns. I'm going to show you how that was. No labor market concern, no economic concern. And in fairness, they are already forecasting cuts.
Let me show you those details. First, I want you to look at the ranges over here. Almost zero movement in the central tendency for inflation in 2027. And basically, well, no movement.
Zero movement in 2028. And 2029 is even lower. And this is the first time we gotten a 2029 estimate in the September SEP right So what do you have right here Zero long movement in 2028 inflation They got 0 to 0 increase in 2027 numbers
Well, I'm sorry, 2027 numbers. That's only compared to over here. 2027 numbers only moved up 0.1 on the low end right here. So basically, this number right here where the arrow is, is the last SEP. This is the current SEP.
So basically, they're not concerned about inflation. This was a credibility hike. This was not an inflationist out-of-control hike. That is a good thing. That is bullish.
It's only bearish because we didn't get color on how far away we are from the neutral rate. That pisses people off. That's unfortunate because we're not getting that forward guidance that we are used to.
When we look at GDP and we look at the labor market and the unemployment rate, we could see the most bearish read on the labor market actually got less bearish. The most bearish position went from a 4.6% unemployment rate to 4.5%.
So literally nobody at the Federal Reserve is expecting unemployment to go up because of a labor force participation issue or otherwise. When we look at GDP, we have the doves at 2.1%
and we have the most hawkish at 2.7% for GDP. I was actually expecting them to revise that up even higher. They didn't. They forecast GDP, oops, sorry, GDP is the top one, 2.4.
Oh, that is interesting. I did just do that upside down. I apologize for that. It doesn't make much of a difference because over here, we can see the estimate actually tightened for inflation.
This is the inflation line. The number I mentioned over here, which is stable on GDP, that's the GDP number, stable over here. But it's actually even more along the bottom line of what I said. They tightened the inflation range.
The inflation range went from 2 to 3 to 2.1 to 2.7. So they tightened it and they reduced it for the longer term. Sorry for the mistake. That happens sometimes. Kevin, you're a little retarded sometimes.
It's okay. It's okay. We all make mistakes. Don't sue me, bro. Thanks, Halo announcer. Okay, what else did we learn? Delta, the prior SEP.
reported the following. This is the prior. The prior FEP said that we would see one rate hike and then a rate cut in 2027. This is the prior FEP right here. This is the current one. What
did they have now? So the prior was one hike and one cut in 2027. What we have now is we have two hikes with one cut in 2028. So they kicked the can down the road. That's this arrow right here.
They kicked the can down the road a little bit, and they priced in a second hike. Now, market expectations longer term for a 3.6 rate hike did reduce down to now expecting an additional maybe like 2.4.
So we've come down a little bit on the expectations, because if you have one cut, obviously you'd go down to 2.6, 2.7 in that range. We're a little bit below that right now. Okay.
Now, that's the SEP. That's the summary of economic projections. Overall, Warsh is not part of this, but to me it signals no inflation concern, no concern about the labor market.
This means that this unanimous vote on this rate hike was not a sign that they're losing control. No indication that they're losing control. You might not like them or whatever, that's okay.
I'm not saying you should love the Fed. I'm just saying this whole rate hike was literally, quote, I have balls this was that that's it and they had to do that because after all at the last you know at his initial meeting
he talked about focusing on the left of the decimal people are like this guy is is a loony bin then at Jackson Hole he tried to put the pants back on he said hike three times
as a forecast remember that three times he used the language hike now it was in reference and disguised as I'm going to go for a hike because they have beautiful mountains out here.
You saw my last video on this. We don't need to rehash all that. But that was the forecast. It's basically what he told us when he put the pants on at Jackson Hole, and that's what he's doing here. He says that he does not see looseness in financial conditions.
He sees an improving economy and credit flows, capital expenditures, employment, spending. Financial conditions are hard-pressed to be described as restrictive. He does indicate, though, that they're going to basically wait and see
to see what their next decision is. So we didn't get that bearish forecast that, oh, we're definitely going to hike again. We, as usual, didn't get a forecast. That's his MO. I did think we were going to get commentary on the neutral rate,
but he literally only talked for nine minutes, which was a little bit surprising. Usually the market anticipates more talk, and the reporters in the room honestly felt shocked. Like half of them didn't even feel like they had their questions ready yet
because they're like, what, what, what? You're done already? It was so short. Whatever. And usually this press conference would honestly be going into like, it'd probably be like an hour, 55 minute press conference.
Dude, this guy was cooked and he was done and out of there in like 29 minutes. Something else that's interesting, just some small notes that I tweeted. He uses a notepad, a pocket-sized notepad to pitch AI disinflation.
No Dell no iPad you know no MacBook a pocket notepad Boy I haven seen one of those in a while And then I do think as an honorable mention we should make a note here that wash proof he had balls
Grant Cardone, who said the Fed won't raise, on the other hand, questionable. Okay. Now we need to look at the 10-2. The 10-2 has fallen off a cliff. This is good.
This is a good thing. This is what's called a, well, generally, depends how yields move over the next few days. But if this flattens, that's good. We want to see it flatten. We want to get away from 0.5.
That would be shock territory. That's when the economy starts coming under undue potential black swan risk. We want this to be lower. Bold flattening would be if the 10-year and the 2-year maintain or come down from 5%.
Right now, we're basically at 5%. We've essentially gone nowhere on the 10-year bond. somewhat surprising that we've gone nowhere on the 10-year bond because the Fed did just indicate, hey, we're in a privacy, we're going to control inflation.
Somewhat surprised that this has knocked down more. So I don't think we can call this a clean bull flattening, but a bull flattening would usually signal as rates come down, which maybe they will over the next few days, that inflation will be gotten under control.
And it signals that we have a path to commit to getting it under control and the market believes us. This could mean a thing that the market's still like, I don't know, man, are you going to be one and done?
Remember what Rabobank warned this morning, and I think they have a point. Rabobank warned this morning that the Federal Reserve is potentially going to be a one and done-er. That they hike now, and then they call for patience.
They don't end up hiking one week before the election, and that they end up being one and done. I actually agree with that. I think it's bullish. But I think the bond market is saying, I don't know, like, are we comfortable with that?
Is that going to be enough to solve this issue? Market is pricing. The market pricing is overdone, and we will put only one hike in our forecast for 2026. Personally, I'm at one to two hikes. The market, 3.6.
Too many, in my opinion. Fine. What else did he say? He said underlying growth is stronger in our economy. That's why he changed his mind, because Nick T put him on blast. I actually thought it was kind of cool Nick T put him on blast.
And Nick T's like, hey, man, you know, last fall, you're like, you know, the Fed's making a mistake not cutting rates, and now here you are hyping. And I'm like, oh, mic drop, loaded question, Nick T. But in fairness, Warsh did respond respectfully and said, hey, man, look, the economy's just gotten that much stronger.
He also told us that he calls the R-star, the Wixilian rate, not important. That was a little weird. I will give you that. That was odd. That was not expected.
Every Fed chair I've been covering so far has been talking about how important that neutral rate is. And he's essentially saying, no, we don't care about R-Star. Okay, so are you going to hike again or not?
That lack of guidance creates uncertainty. He did also bring up geopolitics, that there's no hiding from the oil shock. A lot of people thought the Fed's just going to look through the oil shock.
But no, the Federal Reserve leaked this to us. We covered this. We covered this on, like, three different videos. The Federal Reserve, I mean, they already leak it, but nobody pays attention to this crap. But the Federal Reserve released a document that was very clearly intended to signal
that the best thing to do, even in the face of a supply shock, is hike. And the reason for that is maintaining inflation expectations. We covered that. We pulled up the document. We showed here's exactly how they're saying conventional wisdom is to hold in a supply shock.
That is outdated. The Fed should hike. That paraphrased exactly what they said. Here we are. We got our hike. Current expectation for a hike in October,
so right before the election, coin toss. 53%. I don't think they're going to hike right before the election. I don't think Walsh is going to do that to Trump. I do think that Donald Trump is going to come out and go, well, I don't like it, but we had to do it because of Iran.
We can't let them have a nuclear weapon. Tweeted that as well. So we are setting up, though, with basically a 130% chance at this moment of getting a rate hike December 9th.
So that's pricing in a little bit of a second potential hike. So a hike in October and December. I don't think that's likely unless inflation data really comes in poopy-doopy. Now, what else did Warsh say? Okay, you're going to hit that.
I'm just going to make a quick note about the reinvest terminal. So when you go to meetkevin.com, you can now click on the Meet Kevin membership or the Reinvest Terminal. If you join the Alpha membership, you get the Alpha report.
You can probably write this off on your taxes. You get the trade alerts, the buy the dip alerts, the positioning, the long-term thesis. Probably had, in my opinion, one of the best course member live streams this morning on long-term thesis building. So you get those course member live streams every day.
The market's open. You get all nine courses in this Alpha membership, and you pay once, you get lifetime access. if you join now and you get that pay once lifetime access for the alpha membership you will also get what we are building and is releasing in November
the reinvest terminal you'll get six months of this which will probably cost somewhere around 125 to 150 bucks a month you'll get that and eventually it'll be like 200 bucks a month so people are subscribing to that sooner
are going to get to lock in their pricing subject obviously to little inflation adjustments which probably shouldn't be much if we get AI disinflation but anyway This is really exciting, and this is going to be my brain on valuations for stocks and real estate
provided to regular people like you and me who don't want to pay $2,500 a month for something like the Bloomberg Terminal. And it is going to be amazing. And so that launches in November I very excited about that The one launch in November So anyway you can join that alpha membership over at vkevin Now what else did Warsh say Well he said that trends matter that we can be a data guy
This is a slam on, well, data-dependent. Not only the data-point-dependent. He basically says he's a trend-based guy. He's looking at the three- and six-month trends. He's looking at the 12-month trends.
And he sees that inflation, in too many categories of inflation, are above 3%. This is an interesting thing that he does, is he looks at the basket of what's going on in CPI components or PCE components,
and then he says, hey, how many of these, what percentage of these sit above 3%? And what he told us at J. Cole was that over 50% of them were over 3%, and that it's too broad, that we can't go in there and cherry-pick out components,
that there's just too much dispersion above 3%, that is a risk factor. While at the same time he refers to unemployment claims being consistent with full employment, he says job openings, weekly hours, all of this are, weekly hours are increasing.
That was in the Empire Report. We covered that yesterday morning on the live stream. We said, this Empire Report, they are reading this at the meeting right now, and it showed that weekly hours worked, are increasing. And we pointed it out and said,
Bet you the Fed references this or at least reads this, and they did this one better. They essentially literally referenced it by saying, hey, weekly hours are rising. Okay, where did that come from? It came from the, right here.
Look at this. The Empire Manufacturing Report. This is why we go through this data to provide you this insight. Look at this line right here. Supply availability continued to worsen. employment increased at a solid pace and the average work week rose considerably.
The pace of input price and selling price increases accelerated from already elevated levels. This is critical. This is so critical. Okay. Then we have this, anyway, yeah, okay, so then I wrote some notes on the actual report.
So I think this is overall so clearly forecast that now we're going to look at the trends over the next few months. I think they're going to be patient in October. And the markets, they're going to do their thing.
September sucks. Markets are going to be, whatever, probably through the election. That's okay. I find it to be a giant buy-the-dip window. I'm not afraid by this. I would actually be more afraid if they ushered in a period of stagflation
by not controlling inflation expectations. And the five-year trend on inflation expectations was starting to take off. If I now look at the five-year break-even, I don't know, but I'm expecting that we would get some kind of honky-stick back down.
Let's see, I'm going to pull up the sheet right now. I could be wrong, but let's see what we get. I'll just let you look at the chart. You heard me say it. I didn't look at it beforehand.
I just pulled it up, and I'm going to teleport it to this other computer. You look at yourself. You look at yourself what Warsh just did to five-year inflation expectations. This is exactly what he needed to do.
He put the pants on. He had the balls. This is why the coupon code is Warsh's Balls. He did indeed have the balls. Now, if we hop on over to the iPad,
we actually didn't get bingo, even though we hit so many of these things. He had the balls. We got the rate hike. Clear majority hike was what we predicted. It was unanimous. We had Trump blames Iran.
If Trump ends up blaming Iran, we will get bingo. Okay, so that's a wild card right there, because that would give us bingo. Asked about the bond market moves. Yes, words only do so much, talk is cheap. He didn't talk long enough to get to that.
We are results-driven. I could probably give myself that, but it wouldn't matter. Consumer is resilient was one of the first things he said. Complete consensus to know inflation is number one priority. They got that. We think this is controllable. We got that. asked about Trump and he'll punt, literally exactly what he did.
He got asked about Trump, fully punted on him. Implied we're in control or said we will handle inflation. Did both of those. Can't affect supply issues. We got that. AI disinflation got an honorable mention. Got that.
We didn't get housing. Didn't get this talk about being relatively close to neutral. That would have set the market up, man. He only mentioned his task forces once. He did not mention that they didn't have to have a family fight.
I thought he would say that. No poor guidance. We got that. Inflation expectations, we got that. We also just saw that on the chart. And this will contain inflation. He will exude confidence, arrogance, and commitment.
Yep, did that. Labor market is stable and strengthening. Yep, got that. So a couple things were missing there, you know, in the inconvenient location. Donald Trump can still save us. See, that is a weird thing to kind of leave this on.
it's almost like what I actually left the cliffhanger on when we were talking about sticky sweet but that is not the point of this video we should have probably had sweet as the coupon code
instead of it worship ball free in hindsight the alignment of that probably isn't as good as it should be and so with that I have just one thing left to say
Oh, man. Oh, that's okay. I am with you. I feel like nobody else knows about this. We'll try a little advertising and see how it goes.
Congratulations, man. You have done so much. People love you. People look up to you. Kevin Passer, financial analyst and YouTuber. Meet Kevin. Always great to get your take.