Latest / The Paul Barron Crypto Show / Fed Signals NO Rate Hikes🔥Treasury Is Buying Back Debt Again

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Fed Signals NO Rate Hikes🔥Treasury Is Buying Back Debt Again · The Paul Barron Crypto Show

• 0:00
  Speaker 1: Rate hikes are off the table. Let's break it down today.
• 0:02
  Speaker 2: There's two big factors that we're going to cover that
• 0:05
  Speaker 2: will give you some insights to where the market could
• 0:08
  Speaker 2: be moving. Before we do that, I want to thank
• 0:10
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  Speaker 1: Reward to get started.
• 0:38
  Speaker 2: And you're going to have to start tax planning soon.
• 0:40
  Speaker 2: And IRAs are one of the diversification things that you
• 0:42
  Speaker 2: should be doing to set yourself up for success. One thing,
• 0:45
  Speaker 2: of course, you've got to look at is what's going
• 0:47
  Speaker 2: on with the PCE inflation. This eases down to 3.4%.
• 0:51
  Speaker 2: So it is cooling and possibly the case for another
• 0:55
  Speaker 2: Fed rate hike.
• 0:57
  Speaker 1: Is out of contention.
• 0:58
  Speaker 2: And I think one of the things you have to
• 1:00
  Speaker 2: consider is when you consider inflation and the fact that
• 1:04
  Speaker 2: we were expecting 3.7 versus 3.4, this starts to line
• 1:09
  Speaker 2: up with Kevin Warshin, where maybe this would give them
• 1:13
  Speaker 2: a little cover going into the October FOMC meeting. And
• 1:17
  Speaker 2: this gets into the point of whether or not it's
• 1:19
  Speaker 2: going to actually change their strategy on how they look
• 1:23
  Speaker 2: at rate hikes or rate cuts or pauses. One thing
• 1:26
  Speaker 2: to look at is how the Fed is trying to
• 1:29
  Speaker 2: consider the data that is coming in on it. And
• 1:32
  Speaker 2: this came in in reference and around the PCE inflation
• 1:36
  Speaker 2: of how the Fed is dealing with this. One was
• 1:37
  Speaker 2: portfolio management and investment advice, understanding that that's not going
• 1:42
  Speaker 2: to be inflation. I'll explain that in a second. Computer
• 1:45
  Speaker 2: software and accessories and then legal services. These were the ones.
• 1:49
  Speaker 2: And one of the things is if you have an investment,
• 1:51
  Speaker 2: it goes up. That's not inflation when your fees are
• 1:53
  Speaker 2: charging on the investment that's just gone up.
• 1:56
  Speaker 1: The question is right here. For software, the U.S. now
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  Speaker 1: uses a broader composite.
• 2:01
  Speaker 2: For legal services, which is an unpublished CPI series, is
• 2:04
  Speaker 2: being replaced because it had become unusually volatile.
• 2:08
  Speaker 1: So what does that mean? We don't know.
• 2:10
  Speaker 2: But this is the data points that the Fed chairs
• 2:13
  Speaker 2: are actually looking at. And they estimate the methodology alone
• 2:16
  Speaker 2: could reduce core PC inflation by up to 20 basis points. Remember,
• 2:21
  Speaker 2: we went from 3.7 to 3.4. That in itself, if
• 2:25
  Speaker 2: you add that on, this could be getting closer to
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  Speaker 2: the target of inflation for the Fed.
• 2:30
  Speaker 1: So how does this play out with the market? That's
• 2:32
  Speaker 1: the real question.
• 2:33
  Speaker 2: If you look at the polymarket on this, it was
• 2:35
  Speaker 2: an immediate flip, which just a few days ago, that
• 2:39
  Speaker 2: was a 25 basis points increase probability at 69%. And
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  Speaker 2: of course, after this data on the PCE, that has,
• 2:47
  Speaker 2: of course, plummeted down to only 37%. And the no
• 2:52
  Speaker 2: change has now accelerated up to 63%. So looks like
• 2:57
  Speaker 2: the cover for the Fed is going to happen in
• 3:00
  Speaker 2: October in terms of a no rate. And that could
• 3:03
  Speaker 2: change things around.
• 3:04
  Speaker 3: A little bit.
• 3:05
  Speaker 2: The Fed already raised rates in September. Back-to-back hikes are
• 3:09
  Speaker 2: very much on the table. This was something that was
• 3:11
  Speaker 2: still put out as to whether or not it would happen.
• 3:14
  Speaker 2: And I think this is the challenge that a lot
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  Speaker 2: of people understand is that we haven't really seen much
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  Speaker 2: in the way of rate hikes yet. going into a
• 3:21
  Speaker 2: midterm or a traditional election in November when it is
• 3:25
  Speaker 2: an October FOMC. And that has been the case that
• 3:28
  Speaker 2: the market has kind of considered. And now with this
• 3:32
  Speaker 2: PCE information, it starts to change things up quite a bit. Now,
• 3:36
  Speaker 2: Fox put out something that this is getting into how
• 3:39
  Speaker 2: investors are preparing for a hike cycle, or are they?
• 3:44
  Speaker 1: Take a look.
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  Speaker 3: For example, Michael Barr, Fed governor, says while he expects
• 3:49
  Speaker 3: GDP growth to pick up a bit in the second
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  Speaker 3: half of the year, he absolutely believes that it's a
• 3:55
  Speaker 3: danger here that we have not reached the 2 percent
• 3:59
  Speaker 3: mark of the inflation target that the Fed has wanted.
• 4:02
  Speaker 3: We're above that right now. So what does that mean?
• 4:05
  Speaker 1: I don't think investors are fully prepared.
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  Speaker 4: I don't think investors quite realize yet how entrenched inflation
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  Speaker 4: really is. And it's driven by the strong growth we've seen.
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  Speaker 4: As we sit here and look at earnings growth that's strong,
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  Speaker 4: unemployment that's near record lows, jobless claims the lowest since
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  Speaker 4: the 1960s, there's not a lot of data out there
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  Speaker 4: to suggest that inflation is going to go down. And
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  Speaker 4: I'm not sure after years of easy monetary policy and
• 4:31
  Speaker 4: zero interest rate policy and low interest rates and disinflation
• 4:35
  Speaker 4: that investors are really prepared for a higher rate environment.
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  Speaker 1: I don't think so. All right.
• 4:40
  Speaker 2: So to his point is that most of the market
• 4:43
  Speaker 2: right now has been looking at earnings season.
• 4:45
  Speaker 1: Earnings has continued to fly.
• 4:47
  Speaker 2: That has been pretty much the story for the S
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  Speaker 2: & P, with exception of the fact that it's centered
• 4:52
  Speaker 2: mostly around the AI companies.
• 4:54
  Speaker 1: We'll talk about that in a second.
• 4:55
  Speaker 2: One other thing that happens or is now starting to
• 4:58
  Speaker 2: happen is that the U.S. Treasury is planning to do
• 5:01
  Speaker 2: another six billion buybacks in longer term debt again tomorrow.
• 5:05
  Speaker 2: This is a big deal because the last time we
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  Speaker 2: saw these kinds of numbers was I want to show
• 5:10
  Speaker 2: you something here on the Bitcoin chart. That was right
• 5:12
  Speaker 2: there back in August. That's the kind of move we
• 5:16
  Speaker 2: started to see. Now, could that be the case with
• 5:18
  Speaker 2: where we are right now with Bitcoin trading around 83.8
• 5:21
  Speaker 2: as we record moving into another phase here? If you
• 5:25
  Speaker 2: do actually see rotation, coming out of the traditional markets.
• 5:30
  Speaker 2: And that, I think, is going to be the question
• 5:32
  Speaker 2: going forward. Other news happened out there. Robinhood announced some
• 5:35
  Speaker 2: big things at the Hood Summit. I'll kind of zoom
• 5:37
  Speaker 2: in on that for you guys. A lot of things
• 5:40
  Speaker 2: that you had anticipated, 24-7 stock trading, including weekends.
• 5:44
  Speaker 1: That's a huge deal.
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  Speaker 2: Robinhood agents now all lined up for research that can
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  Speaker 2: trade for you. OCU orders, Forex intratay margin. A lot
• 5:53
  Speaker 2: of things that are getting in, including Robinhood Social. which
• 5:56
  Speaker 2: is rolling out now broadly. A couple other things, but
• 6:01
  Speaker 2: I think the really big announcements might actually be coming today.
• 6:05
  Speaker 2: And I'm going to be watching for those because I
• 6:07
  Speaker 2: think there's going to be some interesting points that they
• 6:09
  Speaker 2: will reveal today. And during this announcement, they had an
• 6:14
  Speaker 2: interesting video here. I'll let you kind of point at
• 6:17
  Speaker 2: who were they targeting.
• 6:18
  Speaker 1: Take a look.
• 6:20
  Speaker 5: Is it just me or does he seem a little nervous, Q?
• 6:22
  Speaker 4: He's very defensive.
• 6:24
  Speaker 5: Brax Commander? This is your last warning. Q and I
• 6:28
  Speaker 5: have made it aboard the Vrax ship. There are no
• 6:31
  Speaker 5: life forms here. It appears to be a remote first
• 6:34
  Speaker 5: ship with the Vrax all working from disparate home planets.
• 6:37
  Speaker 1: That explains their slow reaction times.
• 6:40
  Speaker 5: And a large portion of their staff are serving in
• 6:43
  Speaker 5: middle management and coordinator functions.
• 6:46
  Speaker 1: That must be why their ship is so big. It's
• 6:48
  Speaker 1: all bloat.
• 6:50
  Speaker 5: You want to blast it out of the sky?
• 6:52
  Speaker 6: Yeah?
• 6:53
  Speaker 3: Blast.
• 6:58
  Speaker 2: One big impact on Robinhood's major competitor, Coinbase, also could
• 7:04
  Speaker 2: play into exactly here around wrapped Bitcoin. And what we're
• 7:07
  Speaker 2: talking about is Circles wrapped Bitcoin, which has already grown
• 7:11
  Speaker 2: to over 300 million in market cap, 252 million deposited
• 7:16
  Speaker 2: into DeFi. This is accelerated dramatically and it's very fast.
• 7:21
  Speaker 2: Puts a lot of pressure, I think, on Coinbase in general.
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  Speaker 1: Other things that.
• 7:25
  Speaker 2: Happened around this, and this is where the market, I think,
• 7:27
  Speaker 2: starts to trend, and this, of course, was the AI Accord,
• 7:31
  Speaker 2: or should I say the SI Accord, because that's exactly
• 7:35
  Speaker 2: what the administration is trying to do, and that is
• 7:38
  Speaker 2: the typical Trump thing. Change the name, and they've got
• 7:41
  Speaker 2: all of the people on the game, and, of course,
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  Speaker 2: that includes Sundar. We've got, out of Google, you've got
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  Speaker 2: Anthropic in here, Meta, OpenAI.com. Elon with XAI, and then,
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  Speaker 2: of course, NVIDIA with Jensen Wang.
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  Speaker 1: All of these.
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  Speaker 2: Guys are lined up into drinking the Kool-Aid out of
• 7:57
  Speaker 2: this White House. And I think the point is, where
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  Speaker 2: are we heading with AI? Are we getting into a
• 8:03
  Speaker 2: risky investment zone? And I'll show you some things on that.
• 8:07
  Speaker 2: But before I do that, I want to show you
• 8:09
  Speaker 2: a recap here on that meeting.
• 8:11
  Speaker 1: Take a look.
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  Speaker 6: And they're going to work with local communities for the
• 8:14
  Speaker 6: data centers in particular. And they're going to work to
• 8:18
  Speaker 6: make the community happy. That might be supplying oil and gas.
• 8:24
  Speaker 6: It might be supplying education. It may be helping teachers
• 8:28
  Speaker 6: along financially, helping people along financially. And they've all agreed
• 8:33
  Speaker 6: that that's a very positive— nobody really thought of it.
• 8:36
  Speaker 6: And it's a very positive thing. So you're going to
• 8:38
  Speaker 6: see data centers are going to be very popular because
• 8:41
  Speaker 6: this is the group, and they're the ones that want
• 8:44
  Speaker 6: to— and they're also the ones that want to see
• 8:46
  Speaker 6: communities that are safe, and happy. And they're going to, otherwise,
• 8:51
  Speaker 6: they'll be forced to go overseas or other locations. Mr.
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  Speaker 1: President, tell us why the world should not be concerned
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  Speaker 1: about AI, why there shouldn't be guardrails.
• 9:00
  Speaker 7: Because we have people that love our country and love
• 9:03
  Speaker 7: the world a lot.
• 9:03
  Speaker 4: But it requires more than love, doesn't it, sir?
• 9:05
  Speaker 7: No, it requires this. And they're the smartest people in
• 9:08
  Speaker 7: the world. And we had a great meeting today, every
• 9:10
  Speaker 7: one of them. We had a great Really a great,
• 9:12
  Speaker 7: great meeting. It was something very, very special. We had
• 9:15
  Speaker 7: the top, I'd say it looked like a group of
• 9:18
  Speaker 7: about 40, but whatever it was, here's one of them
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  Speaker 7: right here, Jensen and NVIDIA. And they love our country,
• 9:27
  Speaker 7: they love the world, and they came together and they.
• 9:29
  Speaker 6: Did something that few people really, it's almost like a
• 9:32
  Speaker 6: constitution in a way.
• 9:35
  Speaker 2: All right, so you guys can kind of take from that.
• 9:37
  Speaker 2: It was a bit of a cringe event. And the
• 9:41
  Speaker 2: reason that this could be playing out for the crypto
• 9:43
  Speaker 2: market is the pressure I think that it's putting on
• 9:45
  Speaker 2: the traditional markets. The companies building the most powerful AI
• 9:50
  Speaker 2: systems are already warning us that the technology is advancing
• 9:53
  Speaker 2: faster than our safeguards. This came in from Warner, who
• 9:57
  Speaker 2: basically said, hey, the president is just basically renaming this.
• 10:01
  Speaker 2: But right now, what we need to focus in on
• 10:03
  Speaker 2: is getting at least some of this in some sort
• 10:07
  Speaker 2: of framework or safeguards. Now, whether you agree in innovation,
• 10:12
  Speaker 2: destruction or not, some people would say, no.
• 10:15
  Speaker 1: You can just let this stuff go.
• 10:16
  Speaker 2: And I think the idea behind where AI is today
• 10:19
  Speaker 2: is The bigger point is how is this going to
• 10:21
  Speaker 2: play into the markets? That's the concern I think we
• 10:23
  Speaker 2: have overall. And when you look at this, Trump losing
• 10:27
  Speaker 2: the midterms could be the trigger that pops the AI bubble. That,
• 10:31
  Speaker 2: I think, actually might be in play here. Because remember,
• 10:34
  Speaker 2: you've got politics and CapEx that pretty much line up
• 10:37
  Speaker 2: as the two major pillars here heading into a very
• 10:41
  Speaker 2: destructive fall that could start to set the S &
• 10:45
  Speaker 2: P 500 in a downturn. CapEx growth only needs to
• 10:48
  Speaker 2: disappoint Wall Street. Because if it does, and we see
• 10:51
  Speaker 2: this kind of spending starting to become a bit harder,
• 10:54
  Speaker 2: you're going to be seeing a huge move.
• 10:57
  Speaker 1: In the markets.
• 10:58
  Speaker 2: And that is going to get into, I think, almost
• 11:00
  Speaker 2: every other market out there.
• 11:02
  Speaker 1: But if you look at this, a.
• 11:04
  Speaker 2: Democratic House and Senate would control committees and also could
• 11:08
  Speaker 2: increase oversight in the AI.
• 11:10
  Speaker 1: Now, would they do it?
• 11:11
  Speaker 2: I still don't think that is going to happen because
• 11:14
  Speaker 2: it is the government. So that's something that we're just
• 11:17
  Speaker 2: going to deal with. But the point is, I think
• 11:19
  Speaker 2: it's going to bring it out to the people and
• 11:21
  Speaker 2: maybe get to a point where I think you could
• 11:24
  Speaker 2: demand some things, much like what we've done in crypto,
• 11:26
  Speaker 2: because I think the crypto market has been dictated a
• 11:29
  Speaker 2: little bit by the voter. And if you look at
• 11:31
  Speaker 2: the market in general, the S & P 500, this
• 11:34
  Speaker 2: is the one that is being hurt right now. That's
• 11:37
  Speaker 2: the S & P 500 when you remove the AI majors.
• 11:42
  Speaker 2: And that's 58% of the S & P 500 stocks
• 11:44
  Speaker 2: were trading below their 200-day moving average. This is the
• 11:48
  Speaker 2: worst market breadth since May of 2025 that we've seen.
• 11:53
  Speaker 2: If we get a negative news or possibly some sort
• 11:56
  Speaker 2: of regulatory pressure coming from what could be a regulatory
• 12:01
  Speaker 2: play on AI, this could change everything in the game
• 12:06
  Speaker 2: because a rotation could start to move into crypto, which
• 12:09
  Speaker 2: is some of the things I'm watching very closely because
• 12:11
  Speaker 2: the diversification is the question. And that's the problem right
• 12:15
  Speaker 2: now with TradFi and most investors is they're not diversified enough,
• 12:19
  Speaker 2: which I think they've started to step into crypto and
• 12:22
  Speaker 2: digital assets. But I think this is just going to
• 12:25
  Speaker 2: start maybe a new era going forward. If you like
• 12:35
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• 12:38
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• 12:41
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