Latest / The Paul Barron Crypto Show / Rate Hike vs Sentiment📈Market Update

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Rate Hike vs Sentiment📈Market Update · The Paul Barron Crypto Show

• 0:00
  Speaker 1: With yesterday's rate hike a win, today we'll break it
• 0:02
  Speaker 1: down for you. A lot to unpack here because now
• 0:05
  Speaker 1: Kevin Warsh is queued up for maybe other things that
• 0:09
  Speaker 1: could be happening at the Fed. Before we get started,
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• 0:52
  Speaker 1: Let's just start off With this tweet right here, the
• 0:55
  Speaker 1: Fed made a very clear statement yesterday. Not only did
• 0:58
  Speaker 1: they hike the interest rate, but it was a 12-0
• 1:02
  Speaker 1: unanimous decision. So this marks the first unanimous Fed decision
• 1:05
  Speaker 1: since May of 25. And this, of course, all coming
• 1:09
  Speaker 1: while Trump is putting more pressure on Warsh, even though
• 1:13
  Speaker 1: here recently he did make a statement where he was
• 1:16
  Speaker 1: kind of giving Warsh the go-ahead, which I think is
• 1:19
  Speaker 1: kind of the audacity of it. But the point is,
• 1:21
  Speaker 1: is that We're sitting with a considerably different season now
• 1:26
  Speaker 1: with rate hikes inbound. One other point, when you look
• 1:29
  Speaker 1: at this, the question now becomes how President Trump is
• 1:31
  Speaker 1: going to respond. And clearly, the divide between the White
• 1:35
  Speaker 1: House and the Fed is widening, even with Powell out
• 1:39
  Speaker 1: of the chair, but not out of the board. And this,
• 1:41
  Speaker 1: of course, was Trump hitting in on it following the
• 1:43
  Speaker 1: Federal Reserve's quarter point interest rate hike. President Trump called
• 1:47
  Speaker 1: for rates to drop 1% or lower and suggested halting
• 1:52
  Speaker 1: trade with deficit-running nations. This, of course, has been something
• 1:55
  Speaker 1: that has been thrown around by the administration over a
• 1:58
  Speaker 1: short period of time. Peter Schiff kind of jumps on
• 2:00
  Speaker 1: the bandwagon here in what was either a shocking admission
• 2:04
  Speaker 1: or just another lie. Trump claims that Warsh would have
• 2:08
  Speaker 1: been a lone vote against, and he would have been
• 2:11
  Speaker 1: a lone vote against a rate hike, but that, he
• 2:15
  Speaker 1: personally told Warsh that he might as well vote with
• 2:18
  Speaker 1: the board because it wouldn't make any difference. So just
• 2:21
  Speaker 1: another reason, of course, in his case to buy gold.
• 2:24
  Speaker 1: But do you think that Warsh pretty much is on
• 2:29
  Speaker 1: point right now as an independent Fed? If you think so,
• 2:32
  Speaker 1: let me know in the comments. Is the Fed, do
• 2:34
  Speaker 1: you feel like yesterday's move made them independent? Or is
• 2:37
  Speaker 1: this a strategy to possibly just move toward rate cuts
• 2:42
  Speaker 1: in the near future? All right, so I want to
• 2:43
  Speaker 1: go to a clip real quick. This is Bloomberg talking
• 2:46
  Speaker 1: about having a credibility win. Take a look. I thought
• 2:50
  Speaker 1: he was remarkably clear. In 29 minutes, he did a lot.
• 2:53
  Speaker 2: He did, but he had no choice. Because if you
• 2:54
  Speaker 2: go back a couple of FOMC meetings ago, he didn't
• 2:57
  Speaker 2: give the market the message that they wanted. Treasury market
• 3:00
  Speaker 2: didn't like it. The dollar didn't like it. And so,
• 3:02
  Speaker 2: you know, if you go forward then to the end
• 3:04
  Speaker 2: of August and we go to his speech in Jackson Hole,
• 3:08
  Speaker 2: he was remarkably clear. Again, for a man who doesn't
• 3:10
  Speaker 2: like to give forward guidance, he gave quite a lot.
• 3:13
  Speaker 2: And the market's like that. And again today, I think
• 3:15
  Speaker 2: he knew... He had to buy his credibility. He had
• 3:18
  Speaker 2: to establish the credibility of him as Fed governor. And
• 3:21
  Speaker 2: he had to give a hawkish message. If he hadn't
• 3:24
  Speaker 2: done that, it could have taken a very long time
• 3:27
  Speaker 2: to try and win back that credibility. What would have
• 3:29
  Speaker 2: happened to the long end of the bond market in
• 3:31
  Speaker 2: the meantime? What would have happened to the dollar? There
• 3:33
  Speaker 2: was too much at stake. I think he had no choice.
• 3:35
  Speaker 2: He had to win his credibility. You know, credibility, like respect,
• 3:39
  Speaker 2: is earned. If he hadn't hiked interest rates today... the
• 3:42
  Speaker 2: expectation would be that inflation would have been longer or
• 3:45
  Speaker 2: higher in the long run, and therefore more interest rates
• 3:48
  Speaker 2: would have to be put on the table. By doing
• 3:50
  Speaker 2: something relatively early in the cycle, then maybe there'll be
• 3:53
  Speaker 2: less interest rate hikes overall.
• 3:56
  Speaker 1: Okay, so one thing to make clear here is that
• 3:59
  Speaker 1: it really wasn't WASH taking the rates up. It was
• 4:03
  Speaker 1: the entire governor board. So I don't know that he
• 4:06
  Speaker 1: had any control over this, whether he wanted to hike
• 4:08
  Speaker 1: rates or cut rates or pause rates. It wouldn't matter.
• 4:11
  Speaker 1: The board is essentially the one that has come in
• 4:14
  Speaker 1: to a unanimous decision on this, which is a bit rare.
• 4:18
  Speaker 1: And I think some of the impacts of why they're
• 4:20
  Speaker 1: doing that, well, a lot of it leads to oil prices. U.S.
• 4:23
  Speaker 1: oil was at 66 bucks the day before the Iranian
• 4:27
  Speaker 1: war began. And that was setting a diesel at 376
• 4:30
  Speaker 1: a gallon. Diesel now cracked 100. spread near 42, and
• 4:34
  Speaker 1: markets were pricing three Fed rate cuts for 2026. All
• 4:37
  Speaker 1: of this is happening. Today, U.S. oil is above 102.
• 4:42
  Speaker 1: Diesel is at 631, almost twice of what the average
• 4:46
  Speaker 1: price was, and a crack at the all-time high of 111.
• 4:50
  Speaker 1: So the Fed's got a lot of issues placing really
• 4:53
  Speaker 1: right before them. And I think as we look at
• 4:56
  Speaker 1: the possibility of a cutting cycle down the road, a
• 4:59
  Speaker 1: lot is going to be tied to energy going forward.
• 5:02
  Speaker 1: And that's not the end of it here. I mean,
• 5:03
  Speaker 1: we've got travel now being implemented and caused, I think
• 5:07
  Speaker 1: will eventually cause some delays or at least some cancellations
• 5:10
  Speaker 1: of some flights. Delta saying their December flights are now
• 5:13
  Speaker 1: looking at fuel costs, which means they're probably going to
• 5:16
  Speaker 1: limit those. That most likely will make for headlines all
• 5:20
  Speaker 1: across the U.S. as jet fuel now surging to 463
• 5:24
  Speaker 1: a gallon, up 105%. since the war began. So again,
• 5:29
  Speaker 1: travel being impacted quite a bit. I want to go
• 5:32
  Speaker 1: to a clip here because the cost is really going
• 5:34
  Speaker 1: to start to impact. Well, it's already impacting everyday Americans.
• 5:39
  Speaker 1: Listen to what DiMartino had to say.
• 5:41
  Speaker 3: For the layman, they're going to see their credit card
• 5:43
  Speaker 3: rate go up immediately. They're going to see their HELOC,
• 5:46
  Speaker 3: their home equity loan of credit line interest rate go
• 5:49
  Speaker 3: up immediately. You've got small business bankruptcies up 64% year
• 5:54
  Speaker 3: over year. You've got National Federation of Independent Businesses voicing
• 5:57
  Speaker 3: concern over the level of interest rates. American households are
• 6:02
  Speaker 3: doing so as well. The criticism here is that monetary
• 6:07
  Speaker 3: policy is being made for a very small cohort of
• 6:10
  Speaker 3: the U.S. economy as opposed to what is on the
• 6:12
  Speaker 3: front page of the Fed's website, which says that monetary
• 6:15
  Speaker 3: policy should be made.
• 6:17
  Speaker 1: In the broad public grid.
• 6:19
  Speaker 3: He used, I don't know how many times today he's
• 6:21
  Speaker 3: used the word trend. Charles, we've got three more payroll
• 6:25
  Speaker 3: reports between now and the December Fed meeting. He talked
• 6:27
  Speaker 3: about the seven-week period in between the last few times
• 6:32
  Speaker 3: the Fed meets. He's not going to raise rates or
• 6:35
  Speaker 3: do anything for that matter six days before an election.
• 6:37
  Speaker 1: But boy, has he got a lot of trends.
• 6:40
  Speaker 3: Ahead of him between now and when the Fed meets
• 6:43
  Speaker 3: in December.
• 6:45
  Speaker 1: All right. So a couple of points that DiMartino hits
• 6:47
  Speaker 1: on there, and that is, one, not raising rates in October.
• 6:52
  Speaker 1: End of October, it's October 28th. I'll go to the
• 6:54
  Speaker 1: Fed probability here in a second. But if you look
• 6:57
  Speaker 1: at Standard Charter, they expect the Fed to deliver a
• 6:59
  Speaker 1: 25 bps in December, a hike in December. And that
• 7:04
  Speaker 1: kind of goes to the point that Danielle was talking about,
• 7:08
  Speaker 1: and that is if you look here at the October 28th,
• 7:10
  Speaker 1: just a few days before an election, now that likely
• 7:13
  Speaker 1: after because of this credibility move that has now been
• 7:17
  Speaker 1: implemented within the Fed, it is possible that they could
• 7:20
  Speaker 1: get away with a pause so it doesn't have necessarily
• 7:25
  Speaker 1: negative impact. I'm assuming they don't want to get into politics,
• 7:27
  Speaker 1: but that is going to be an issue I think
• 7:29
  Speaker 1: that everybody would look to. And then, of course, after that,
• 7:32
  Speaker 1: you've got December, which is the next election. FOMC. And
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  Speaker 1: you can see right there the possibility of a 25
• 7:39
  Speaker 1: bits now rising to 69%. So this would be pretty
• 7:44
  Speaker 1: significant going forward in the markets. And it also may
• 7:48
  Speaker 1: start to play into this. And what she explained there
• 7:50
  Speaker 1: is the cost to Americans, rising credit card rates, rising
• 7:53
  Speaker 1: home mortgage. We've seen 7% now, another high rates, housing
• 7:56
  Speaker 1: becoming almost untouchable. It is an issue that is facing
• 8:00
  Speaker 1: dire straight level, I think, for an average American. And
• 8:03
  Speaker 1: at the same time, you've got opportunities that are happening
• 8:06
  Speaker 1: in digital assets, yield coins, or excuse me, stable coins
• 8:10
  Speaker 1: and yields within yield coins, which is what we should
• 8:13
  Speaker 1: call them, are starting to skyrocket as well. So all
• 8:17
  Speaker 1: of this, I think Robinhood's paying 7% on one of
• 8:20
  Speaker 1: their stable coins. So the point is, is there are
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  Speaker 1: some alternatives here. The problem is the costs are superseding
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  Speaker 1: and outpacing how Americans can go in and start saving.
• 8:30
  Speaker 1: Now I wanna go in and play one clip here
• 8:32
  Speaker 1: because this is the earned point of where Warsh maybe
• 8:36
  Speaker 1: got the right to shift policy just a little bit.
• 8:40
  Speaker 1: Take a look.
• 8:42
  Speaker 4: The market's reaction is, as you pointed out, the stock
• 8:45
  Speaker 4: market doesn't seem happy with the hike. I would say
• 8:48
  Speaker 4: for the viewers, the Fed, even if they add 50
• 8:52
  Speaker 4: basis points, it's not a level that's going to topple
• 8:56
  Speaker 4: the economy. And it really is showing you the economy
• 8:59
  Speaker 4: is strong enough to handle that. And I think earnings
• 9:01
  Speaker 4: revisions still go up. So to me, I would be
• 9:04
  Speaker 4: buying this dip. And I do view this as an
• 9:07
  Speaker 4: overreaction to the downside to the Fed action today.
• 9:10
  Speaker 1: So as you can see there from Tom Lee, he's
• 9:12
  Speaker 1: basically counting on the 25 basis points in December. That
• 9:16
  Speaker 1: would accumulate out to 50 basis points this year. His
• 9:19
  Speaker 1: point is that there is an opportunity here. with overreaction
• 9:23
  Speaker 1: to buy these dips. Let me know what you guys think.
• 9:25
  Speaker 1: Are you buying the dip right now or did you?
• 9:27
  Speaker 1: Because some of the market has actually corrected as well.
• 9:32
  Speaker 1: Things that we're watching right now, when you look at
• 9:34
  Speaker 1: the CFTC and the SEC putting out regulatory language, the
• 9:39
  Speaker 1: staff now issues a no action position to providers of
• 9:43
  Speaker 1: passive software. This was something that was coming. We anticipate
• 9:47
  Speaker 1: more moves that will affect digital assets and trading markets
• 9:51
  Speaker 1: in general coming out of both CFTC and the SEC
• 9:54
  Speaker 1: this week. I think things are going to heat up
• 9:57
  Speaker 1: a little bit. And this is a good statement right here.
• 9:59
  Speaker 1: And this is to the point I was getting at earlier.
• 10:01
  Speaker 1: Trading will be the single fastest growing industry over the
• 10:04
  Speaker 1: rest of this decade. And people will feel like they
• 10:07
  Speaker 1: are running out of options to change their financial situation. Guys,
• 10:10
  Speaker 1: this is something you know. who've been following our show, hopefully,
• 10:14
  Speaker 1: have been doing for years, if not maybe decades, in
• 10:17
  Speaker 1: terms of trying to outpace the debasement of the dollar.
• 10:20
  Speaker 1: And that's where we are right now, except now it's
• 10:23
  Speaker 1: much more visible, I think, to the average American. So
• 10:26
  Speaker 1: things will start accelerating into trading, I think, unfortunately. I
• 10:30
  Speaker 1: hope it doesn't go the prediction market route because that's
• 10:32
  Speaker 1: a little bit more risky. But there's a lot of
• 10:35
  Speaker 1: things happening in the market. One of the things that
• 10:37
  Speaker 1: could start to affect markets is this meeting right here.
• 10:41
  Speaker 1: You have, of course, Xi Jinping preparing for the Xi
• 10:45
  Speaker 1: Jinping-Trump summit. This is coming up next week. China's been
• 10:48
  Speaker 1: steadily reducing its holdings of U.S. treasuries, as many other
• 10:52
  Speaker 1: countries have been. They are now at the lowest level
• 10:55
  Speaker 1: since 2008, and they continue to decline on a steady basis.
• 10:59
  Speaker 2: The U.S.
• 10:59
  Speaker 1: Has weaponized its currency, and the world is trying to
• 11:01
  Speaker 1: create alternatives. I don't know that this is going to affect,
• 11:05
  Speaker 1: but one thing that will affect the global economy evolution
• 11:10
  Speaker 1: of securities and treasuries is going to be built on
• 11:14
  Speaker 1: the blockchain. Whether we look at stable coins, tokenized assets,
• 11:18
  Speaker 1: the likelihood of the U.S. getting in front of this
• 11:21
  Speaker 1: now is a little bit slimmer because of what's happening
• 11:23
  Speaker 1: with clarity. So big issues ahead right now. And it's
• 11:27
  Speaker 1: one of those things that I think we have to
• 11:29
  Speaker 1: pay attention to. Of course, we're going to be watching
• 11:31
  Speaker 1: what's happening with the Fed. But I think the more
• 11:32
  Speaker 1: important issue is how does the market respond after this
• 11:35
  Speaker 1: quarter basis point hike? and the strategy that maybe the
• 11:40
  Speaker 1: Fed is preparing for in the next few months. If
• 11:49
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• 11:52
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• 11:56
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