Fed's Dovish Pivot & Iran Deal Hints — Full Breakdown & Transcript

[00:03] line of the Federal Reserve press conference. I pulled it up specifically right here. It has everything to do with oil. At this point, you should know that oil has everything to do with the Iran war. I don't think it was a coincidence

[00:19] that the minute the Federal Reserve released their decision to hold because they wanted to wait for more data, an Axio interview with Donald Trump talking about a deal with Iran drops. I don't think that was a coincidence at all. But

[00:35] this question right here makes me even more convinced. We are about to get a deal with Iran. I don't know when, but this makes me think it's happening before the next Fed meeting. Take a

[00:50] break down everything the Fed just said, including why they said they held. But this is the most important part for you to watch in context.

[01:04] change the audio, I could tell you to go one.com because that does expire on Friday. We had a great sold put that was up 41%. We just traded that and uh we'd love to send you some more insights into

[01:17] what we do every single day in the alpha report. Go check it out. Fundamental it. All right, here we go. >> Engage in hypotheticals, but I can look out look out our window and see what's happened. Um there had been a stable

[01:31] correlation between oil prices they've moved up this year generally and interest rates not the interest rates that we control but interest rates set in the market. That correlation has been quite strong until

[01:47] very recently. We've seen oil prices continue to move up largely due to geopolitical events. We've seen crack spreads between oil and refined products continue to stay elevated. But what's happened? Interest rates have rolled

[02:03] over to the downside. Um I not a Wall Street newsletter. I'm just telling you when I look out the window over the last uh several months, that is over the last uh several months, that is what we've seen to the extent that oil

[02:16] what we've seen to the extent that oil prices were to move lower again probably something. >> Just I want you to hear that. That line right there. Why would he say that? Why all of a sudden, hey, you know, just in

[02:30] all of a sudden, hey, you know, just in case hypothetically if oil prices were to all of a sudden tank. Listen to that and I'll play it that little line there again while he talks about looking out the window. what we've seen to the

[02:45] extent that oil prices were to move lower again probably due to geopolitical going to have to interrogate. What are the effects on the Fed's dual mandate?

[02:58] prices and what are we going to do about it? But that's a hypothetical. And in fact, if we look at financial market prices, um, uh, futures prices for oil, they've moved up over the course of the last

[03:13] several weeks. And I can't. So, basically, hey, you know, uh, the market, it's been doing some interesting things. Interest rates are really associated with oil prices. Then they do we weird things like all of a sudden

[03:25] interest rates come down and oh, recently they've been going up. All of recently they've been going up. All of that was the noise. The key line he said was not, you know, if interest rates skyrocket, you know, we're going to

[03:38] probably have to move because uh, you know, if oil rates go up, oil prices go know, we're going to have to get pretty aggressive here. He didn't say that in his analogy. He said, hey, you know, if uh largely due to geopolitical issues,

[03:53] all of a sudden oil prices came down a lot, you know, we're going to have to lot, you know, we're going to have to evaluate that. That was a blunt hint. And it wasn't just that. I was live blogging it uh on our Meet Kevin app uh

[04:08] while the event was going on. There are a few other really key lines. One was he a few other really key lines. One was he says he is quote unwilling and unable to call financial conditions tight right now. This is the opposite of what he

[04:22] said in the last meeting. He also brought back, you know, we're going to look at the left of the decimal. Dude, I almost vomited when I heard that. The left of the decimal, everybody thought this guy was a clown that he wouldn't

[04:36] actually put his pants on and hike rates and he had to spend the next three Fed because people are like, "Oh my god, he doesn't care if inflation is 2.9%. There's a soft target of 2.9% inflation."

[04:54] softness back while at the same time you want to see the other critical line critical stuff up front. Okay, the other critical line. We'll have a better critical line. We'll have a better understanding by December. We might

[05:06] learn a lot by then. In fact, we will be better positioned to determine policy in December. Why? Mr. Worsh, what's going to change between now and December? Oh, Donnie called you. Okay, obviously

[05:24] I I am so convinced that he just dropped every damn hint he could have possibly dropped to us. Remember at Jackson Hole, he says the word hike three times. Three times we get the word hike and then we get a hike. What happens now? We

[05:41] just got major hints in my opinion that he got a call from Donald that there is a good chance something's going to happen very soon. Now, I'm now going to remove my bias for a moment, and I'm just going to tell you what the hell

[05:54] happened because I always like to separate when I'm saying something that could have bias in it or or I'm telling you something that's just fact. I think you something that's just fact. I think that's important because I am humble

[06:07] perfect. All right, that said, we had a hole All right, that said, we had a hole today. It was a 10-2 decision. This is not my well the red part is a little bit my bias here but they wrote

[06:20] accumulation of more information will help the committee determine the policy stance to appropriate a timely return to inflation. In my opinion that's them buying time. That is bullish. They did not change their labor market comment.

[06:33] More on the labor market in just a moment. And they mentioned that the rather than a solid pace. and they maintained on a 10-2 decision uh with uh I think it was Cook and Hammock uh yeah Cook and Hammock voting for a hike. So

[06:49] what do we have? They say uncertainty remains in part due to ongoing political issues. I kid you not, there's no bias in that. The very first thing he said is good day. Uncertainty remains owing in owning in part due to geopolitical

[07:05] issues. How interesting. Yet another hint. Sorry, there's my bias leaking changed little, but inflation remains elevated. More accumulation of appropriate stance of uh monetary policy. Again, I think he's buying time.

[07:20] Economic growth has strengthened. Tech leads in inflation, but other categories are leading as well. Payroll growth is above last year's level. Payroll growth was in the freaking toilet last year, so bragging about that is not useful, but

[07:33] whatever. conditions are positive on on the unemployment side, he says, because with that is we know that unemployment claims are a massive lagging indicator and it's stupid to look at those. What instead he should be looking at are

[07:46] future indicators. And he actually admitted that that is what they are going to do. They are going to quote on November 16th preview the task force on the jobs task force. Are we going to experience a productivity miracle or

[08:01] something else? remember my two canaries in the coal mine. Number one is the kaput because of AI because it's too damn good. We're all screwed. All these anyway, he says our responsibility is to get inflation down. That's why we're

[08:16] focused on price stability. He says financial conditions have tightened for some businesses and households and market participants are getting more talking about what's been going on with credit default swaps which peaked two

[08:29] because he's talking about not only credit spreads, but he's also talking about uh credit default swaps at like Oracle and uh Meta or whatever. Coreweave is another one. And the reason it's really important to consider this

[08:43] it's really important to consider this is it's old news to say that they're up because they've started to come down in the last two days. That's really important. Picking up on those inflection points matters. Uh now he

[08:56] unable to call financial conditions tight. That's a good thing. That's a way of him saying, "Hey, maybe we don't have to hike at all because the market itself is starting to punish some of these companies for the debt that they're

[09:10] taking on." That is a form of a tighter financial condition. I mean, just like two hours ago before the Fed meeting, maybe an hour ago, CNBC is like, "Oh, oh yeah, credit spreads are rising. They're spiking." I'm like, "Bro, old

[09:23] news." CNBC, get your facts straight. Look up what's going Look at Core Weeaves. This is Core Weaves, okay? We called the peak on it two days ago. Uh peaking, right? And then it comes down yesterday. I'm like, this is great. This

[09:36] gets sustained down. Look at it even more down today. That is a bullish thing that some of this peak CDS drama, credit default swap drama, that momentum and CDS list is out. These traders are going to start getting trailing stopped out of

[09:50] these CDS's. The momentum, the GameStop moment on GME is over. It's happening on Meta as well. All the CDS's are now coming down. That's bullish. You get an Iran deal on top of this. Sorry, there's that bias. I I really apologize. Okay.

[10:04] Yesterday I had my little musebot tell me that, you know, it's very sad that I so I'm still a little bit bitter about that, but we don't need to rehash that that, but we don't need to rehash that old news. So uh then he says we

[10:19] discussed collectively geopolitical developments. Oh another hint real activity he says is pointing in the right direction and inflation data we right now we're going to change our meetings to go from having eight

[10:33] meetings focused on uh rates and policy to seven meetings that focus on rates and policy and one that just talks about broad uh policy rather than a policy just talk sort of broad market commentary and direction by the Fed. And

[10:49] then in 2028, they're going to go down to six meetings for rate decisions and two meetings for just broader commentary, which actually makes each of impactful because you're more likely to get double hikes or double cuts because

[11:04] there'll be more time in between meetings. Not sure how I feel about it, but it is what it is. Uh, okay. Then he brought the left side of the decimal says at the beginning of his speech, he says, "Inflation expectations have gone

[11:16] the hell are you talking about? Inflation expectations, the five-year break even just shot up. It shot up to the highest level since your September 16th hike." And then later, like 20 minutes later, he goes, "Inflation

[11:30] expectations have gone up in the near term. Uh, but in the longer term, they show confidence." And I'm looking at him right now and I'm like, man, I don't know what you're smoking. Because after that talk, the market actually looked at

[11:44] it and said, yo, our expectations of inflation are now worse. Look, they've gone up even more. So, this over the last two days was where we went. And After his talking, they've gone up even more. People are like, "Here he goes

[12:00] again with his left side of the decimal talk, you freaking idiot." Ah, then he says our medicine is starting to work and we need to take stock, evaluate and interrogate. Oh, shut up. Anyway, then he says, uh, the period ahead is

[12:18] going to provide more clarity. H, interesting. So, another damn hint, the period ahead is going to provide more clarity. What if oil prices plummet clarity. What if oil prices plummet suddenly? Inflation is driven by

[12:32] geopolitical developments. We talked about geopolitics. How many more hints do you want? The guy just got off the phone with The guy just got off the phone with Trump and he's doing Trump's bidding

[12:45] preview. Okay. Then we talked about the uh task force coming on jobs. He says that no, don't be confused. There is no soft inflation target. We got to see you know, is the labor market going to roll over because of SI or AI, whatever

[12:59] them, which I was surprised by because at one point he's like, "Oh, it depends then labor he called later he called it super intelligence, which people associate that a little bit with right leaning. Uh I don't really care. I feel

[13:12] like the AI phrase is a little overblown. So honestly, we use it because we I kind of like it. Um, and you know me, I don't lean left or right, but I borrowed it, you know, on Reinvest One, which we borrowed Reinvest One

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[14:06] 2027, well then you lock in lifetime access. I think in a year from now a lot of people are going to be like, "Oh my gosh, I can you open up lifetime access then. Would have, could have, showed up. But anyway, that's at reinvest one.com.

[14:19] always email us at staffreinvest one.com. But uh he says that he doesn't believe that growth is causing inflation and he doesn't want to throw people out of work. See, that's also a very interesting line because Kevin Walsh is

[14:33] saying, look, if we get too aggressive and we hike, then there's a risk we end up punishing the labor market, we throw people out of work, that would be bad. people out of work, that would be bad. But the reality is overall this is good

[14:50] because we get a deal, rates come down, oil comes down, it's all good. And then better. If we go back to war and everything's poopy dupy, yeah, they're going to have a lot more clarity by December. So he's not wrong. And he

[15:03] labor force because frankly that's probably the weakest part of this economy is what happens with the labor market. So if you could blame inflation on Iran and you could focus on not crushing people's jobs, this is actually

[15:16] crushing people's jobs, this is actually a closet dovish Fed. And that's why inflation expectations just went up because the market's like, "This guy sounds dovish. This guy's gonna screw us on inflation." And then what's going to

[15:29] happen? You get a deal and then all of a sudden people go, "Oh, you like that you're going to love it. >> Why not advertise these things that you knows about this. >> We'll we'll try a little advertising and

[15:41] >> Congratulations, man. You have done so much. People love you. People look up to >> Kevin Pra there, financial analyst and YouTuber. Meet Kevin. Always great to YouTuber. Meet Kevin. Always great to get your take.