Rate Hike vs Sentiment📈Market Update

0:00This is Matt Rogers from Lost Culture East. It's with Matt Rogers and Bowen Yang. This is Bowen Yang from Lost Culture East. It's with Matt Rogers and Bowen Yang. You know when people try a new food and suddenly it's like, OK, hold on. I got a new favorite food. That's the reaction a lot of people are having when they first try Cupid Mayon. Yeah, it's the one with the red cap and the little baby on the bottle. You've probably seen it at the grocery store. And this mayo is different. Mm-hmm. Most mayonnaise uses whole eggs. Cupid only uses egg yolks, which gives it this rich umami flavor. It's smoother, deeper, almost buttery. Once people try it, they start putting it on everything. Egg sandwiches, fries, burgers, chefs use it, restaurants use it, people who really care about flavor use it, put it on just about anything. Then you'll understand Cupid, the original Japanese mayonnaise. With yesterday's rate hike of win today, we'll break it down for you a lot to unpack here because now Kevin Warsh is queued up for maybe other things that could be happening at the Fed. Before we get started, I want to thank our sponsor and that's EtherFi, where you guys can earn cash back

1:00as well as doing tokenized stock trades. All of this is available over on ether.fi, be smart money. A ton of features built for every asset. You get to spend on this. There's a whole slew of personal and business core platforms that you can use, whether you get into making it kind of your own new bank or whether or not you want to use this as a business platform or even lux up and get into some of the better yielding platforms that are out there. Check out ether.fi. All you have to do is visit ether.fi.com. Use our link down below. It's going to get you set up and you guys can get started where you can get away from the banks. Let's just start off with this tweet right here. The Fed made every very clear statement yesterday. Not only did they hike the interest, but it was a 12-0 unanimous decision. So this marks the first unanimous Fed decision since May of 25. And this, of course, all coming while Trump is putting more pressure on Worsh, even though here recently he did make a statement where he was kind of giving Worsh the go ahead,

2:02which I think is kind of the audacity of it. But the point is is that we're sitting with a considerably different season now with rate hikes inbound. One other point when you look at this, the question now becomes how President Trump is going to respond and clearly the divide between the White House and the Fed is widening even with Powell out of the chair but not out of the board. And this, of course, was Trump hitting in on it following the reserve, a Federal Reserve's quarter point interest rate hike. President Trump called for rates to drop 1% or lower and suggested halting trade with deficit running nations. This, of course, has been something that has been thrown around by the administration over a short period of time. Peter Schiff kind of jumps on the bandwagon here in what was either a shocking admission or just another lie. Trump claims that Worsh would have been a lone vote against, and he would have been a lone vote against a rate hike. But that is personal. He told personally, he told Worsh that he might as well vote with the board

3:03because it wouldn't make any difference. So just another reason, of course, in his case to buy gold. But do you think that Worsh pretty much is on point right now as an independent Fed? If you think so, let me know in the comments. Is the Fed, do you feel like yesterday's move made them independent? Or is this a strategy to possibly just move toward rate cuts in the near future? All right, so I want to go to a clip real quick. This is Bloomberg talking about Worsh having a credibility win. Take a look. I thought he was remarkably clear. In 29 minutes, he did a lot. He did, but he had no choice. Because if you go back a couple of FOMC meetings ago, he didn't give the message that they wanted. Trojibond didn't like it. The dollar didn't like it. And so, you know, if you go forward then to the end of August, and we go to his speech in Jackson Hole, he was remarkably clear. Again, for a man who doesn't like to give forward guidance, he gave quite a lot. And the markets like that. And again, today, I think he knew he had to buy his credibility. He had to establish the credibility of him as a Fed governor.

4:06And he had to give a hawkish message. If he hadn't done that, it could have taken a very long time to try and win back that credibility. What would have happened to the long end of the bomb market in the meantime? What would have happened to the dollar? There was too much at stake. I think he had no choice. He had to win his credibility. You know, credibility, like respect, is earned. If he hadn't had interest rates today, the expectation would be that inflation would have been longer higher in the long run. And therefore, more interest rates would have to be put on the table. By doing something relatively early in the cycle, then maybe there'll be less interest rate heights overall. OK, so one thing to make clear here is that it really wasn't wash taking the rates up. It was the entire governor board. So I don't know that he had any control over this, whether he wanted to have high rates or cut rates or pause rates. It wouldn't matter. The board is essentially the one that has come into a unanimous decision on this, which is a bit rare. And I think some of the impacts of why they're doing that. Well, a lot of it leads to oil prices.

5:07US oil was at 66 bucks the day before the Iranian War began. And that was setting at diesel at 376, a gallon diesel now cracked spread near 42. And markets were pricing three fed rate cuts for 2026. All of this is happening. Today, US oil is above 102. Diesel is at 630, one almost twice of what the average price was and a crack at the all time high of 111. So the feds got a lot of issues placing really right before them. And I think as we look at the possibility of a cutting cycle down the road, a lot is going to be tied to energy going forward. And that's not the end of it here. I mean, we've got travel now being implemented and caused, I think, will eventually cost some delays or at least some cancellations of some flights, delta saying their December flights are now looking at fuel costs, which means they're probably going to limit those. That most likely will make for headlines all across the US as jet fuel now

6:08surging to 463, a gallon up 105% since the war began. So again, travel being impacted quite a bit. I want to go to a clip here because the cost is really going to start to impact. Well, it's already impacting every day Americans. Listen to what the Martino had to say. For the laymen, they're going to see their credit card rate go up immediately. They're going to see their, their, their, their home adequately, equity loan of credit line interest rate go up immediately. You've got small business bankruptcies up 64% year over year. You've got national federation of independent businesses, voicing concern over the level of interest rates. American households are doing so as well. I mean, the criticism here is the, is that monetary policy is being made for a very small cohort of the US economy as opposed to what is on the front page of the Fed's website, which says that monetary policy should be made in the broad public grid. He used, I don't know how many times today he's used a word trend. Charles, we've got three more payroll reports between now

7:11and the December Fed meeting. He talked about the seven week period in between the last two times the Fed met. Fed meets, he's not going to raise rates or do anything for that matter six days before an election. But boy, he got a lot of trends ahead of him between now and when the Fed meets in December. All right. So a couple of points that D Martino hits on there. And that is one, not raising rates in October, end of October, it's October 28th. I'll go to the Fed probability here in a second. But if you look at standard charter, they expect the Fed to deliver a 25 Bips in December, a hike in December. And that kind of goes to the point that Danielle was talking about. And that is, if you look here at the October 28th, just a few days before an election, now that likely after because of this credibility move that has now been implemented within the Fed, it is possible that they could get away with a pause. So it doesn't have necessarily negative impact. I'm assuming they don't want to get into politics, but that is going to be an issue.

8:13I think that everybody would look to. And then of course, after that, you've got December, which is the next FOMC, and you can see right there the possibility of a 25 Bits now rising to 69%. So this would be pretty significant going forward in the markets. And it also may start to play into this. And what she explained there is the cost to Americans rising credit card rates, rising home mortgage. We've seen 7% now, another high rates housing becoming almost untouchable. It is an issue that is facing dire straight level, I think, for an average American. And at the same time, you've got opportunities that are happening in digital assets, yield coins, or excuse me, stable coins, and yields within yield coins. This is what we should call them. Our starting to skyrocket as well. So all of this, I think Robin has paying 7% on one of their stable coins. So the point is, is there are some alternatives here. The problem is the costs are super seeding and outpacing how Americans can go in and

9:14start saving. Now, I want to go in and play one clip here, because this is the earned point of where Worsh maybe got the right to shift policy just a little bit. Take a look. The market's reaction is as you pointed out, the stock market doesn't seem happy with the hike. I would say for the viewers, the Fed, even if they add 50 basis points, it's not a level that's going to topple the economy. And it really is showing you the economy is strong enough to handle that. And I think earnings revisions still go up. So to me, I would be buying this tip. And I do view this as an overreaction to the downside to the Fed action today. So as you can see there from Tom Lee, he's basically counting on the 25 basis points in December. That would accumulate out to 50 basis points this year. His point is that there is an opportunity here with overreaction to buy these dips. Let me know what you guys think. Are you buying the dip right now or did you, because some of the market has actually corrected as well, things that we're watching right now, when you look at the CFTC and

10:20the SEC putting out regulatory language, the staff now issues a no action position to providers of passive software. This was something that was coming. We anticipate more moves that will affect digital assets and trading markets in general, coming out of both CFTC and the SEC this week. I think things are going to heat up a little bit. And this is a good statement right here. And this is to the point I was getting at earlier. Everything will be the single fastest growing industry over the rest of this decade. And people will feel like they are running out of options to change their financial situation. Guys, this is something you have been following our show, hopefully, have been doing for years. If not, maybe decades in terms of trying to outpace the debatement of the dollar. And that's where we are right now, except now it's much more visible, I think, to the average Americans. So things will start accelerating into trading, I think, unfortunately. I hope it doesn't go the prediction market route because that's a little bit more risky. But there's a lot of things happening in the market.

11:21One of the things that could start to affect markets is this meeting right here. You have, of course, Gigi Ping preparing for the Gigi Ping Trump summit. This is coming up next week. And China has been steadily reducing its holdings of US Treasuries and as many other countries has been, they are now at the lowest level since 2008. They continue to climb on steady basis. The US has weaponized its currency and the world is trying to create alternatives. I don't know that this is going to affect, but one thing that will affect the global evolution of securities and treasuries is going to be built on the blockchain. Whether we look at stablecoins, tokenized assets, the likelihood of the US getting in front of this now is a little bit slimmer because of what's happening with clarity. So big issues ahead right now and it's one of those things that I think we have to pay attention to. Of course, we're going to be watching what's happening with the Fed. But I think the more important issue is how does the market respond after this quarter basis point hike and the strategy that maybe the Fed is preparing for in the next few months?

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