The Next 6 Months Will Make History.

Hinzugefügt: 2026-05-11

[00:00:00]These two lines crossing one another represents the single most dangerous shift in monetary policy that we've seen in years. This line represents the probability of the Federal Reserve raising its interest rate in 2026 based on bond market expectations. And this line represents the probability that the Fed cuts their interest rate in 2026. So what this chart is telling us is that rate hikes, which were not even on the table at the beginning of this year, are now the highest probability scenario for the rest of the year. And if these expectations are right, they're going to have massive consequences for the US economy. Because right as this is happening, we're also seeing economists left and right increasingly talking about a potential recession. One economist in particular from Moody's published this chart that went viral showing the probability of a recession happening in the next 12 months, matching the level that every single other prior recession has seen going back to the 1960s. If the Federal Reserve really raises its interest rate in an economy that is already on the brink of an economic downturn, then we may be about to witness a generational transfer of wealth take place. Investors who are able to maneuver this shift successfully have the chance to build true wealth in the market in the next few years. I'm going to show you why this is happening and how you can prepare to come out ahead of everyone else. When the Federal Reserve raises their interest rate, it raises the cost of borrowing across the economy. Banks stop lending and eventually the economy slows down or heads into a recession.

[00:01:30]It's a very simple mechanism and we've seen this happen time and time again throughout history. Whenever the Federal Reserve raises their interest rate, it almost systematically leads to a recession as highlighted by these gray recession bars. Now, you might be wondering, why on earth would the Federal Reserve be raising interest rates today if the economy is already on the brink of a recession right now?

[00:01:51]Well, you see, the Federal Reserve that, as a reminder, was founded in 1913, has a way of functioning that is completely misaligned with the economy that we are facing today. You see, the Fed has a very simplistic approach with just two goals. To keep unemployment low and to keep inflation low. Today, if we look at the unemployment rate in the US, yes, it's been rising over the last couple of years, which is one of the factors leading many economists to believe that we are inching towards a recession. But on an absolute level, the unemployment rate number is actually pretty low. It's hovering at some of the lowest levels since the 1970s and is certainly nowhere near the levels that are typically seen during economic downturns. So based on the number that the Federal Reserve is looking at, the level of unemployment is actually perfectly fine today. The problem, however, is that this unemployment number does not take into account the quality of employment. And while unemployment may be low by historical standards, when we dive in a little bit deeper, we see that the quality of jobs that people have is catastrophic. A recent survey found that only 27% of college graduates in the United States believe that now is a good time to find a quality job. This is down from roughly 75% in 2021. In fact, this is a reading that has not been seen since 2011, shortly after the great financial crisis when the actual unemployment rate was much higher than it is today. Unfortunately, this is not something that the Federal Reserve takes into account when setting their monetary policy, which is setting us up for potentially an extremely dangerous situation. It doesn't matter if the average American has a job that can actually cover his rent to have shelter or that it provides enough income to buy food. The only metric that the Federal Reserve really cares about for their dual mandate is whether or not you have a job. This is exactly how you end up with a consumer sentiment reading that just hit the lowest level in history.

[00:03:45]While hearing Jerome Powell, the chair of the Federal Reserve, say that the US economy is amazing because by the Fed's standards, they have absolutely nothing to worry about for their first goal of having a strong job market. On the flip side, there is increasing concern about their objective for low inflation. This is the core PCE which is according to the Federal Reserve themselves their preferred measure of inflation. The Federal Reserve has a 2% target for inflation and this core PCE has now been above this inflation target for 60 consecutive months now. Yes, for the last few years it was heading lower and that looked promising. But there are now clear signs that it is beginning to turn back up. And indeed, we can look at whenever inflation has turned back up for any sustained period of time throughout history and see that the Federal Reserve was raising their interest rate in every single one of these instances. And this, by the way, has happened regardless of who was the head of the Federal Reserve. In the 1970s, Arthur Burns was head of the Fed and had significant pressure from Nixon to lower interest rates, but higher levels of inflation forced him to raise rates regardless. And unfortunately, we think there's a pretty high chance that this actually takes place again today because if we zoom in a little bit closer and add the price of oil on top of inflation, we see just how much of an impact oil has on US inflation. Now, this is something that most people are very familiar with. But what's absolutely key to understand here is that we have not yet seen the full impact of the jump in oil prices reflected in government inflation prints that the Federal Reserve follows. In other words, it's very likely that the core PCE is going to continue moving higher following the price of oil. So, in other words, the Federal Reserve is about to run into a real problem as inflation data begins to get hotter and hotter as a result of higher energy prices. And on the flip side, it seems like the Federal Reserve is completely ignoring the true weakness that exists in the US economy just because the unemployment numbers look good on the surface. We think this makes it increasingly likely that the Federal Reserve will indeed be raising their interest rate by the end of 2026.

[00:05:52]Despite the underlying weakness that we're seeing in the economy, higher interest rates will make mortgage rates go up, making housing even less affordable at a moment where people's jobs are already barely able to cover their everyday expenses. We think this could be leading us to a very dark period, especially for the US consumer, that will unfortunately cause a lot of pain. Now, when you look at the S&P 500 throughout history and see what it typically does during economic downturns, it has not fared well. The average draw down on the S&P 500 index during a recession is roughly 30%, which can be pretty painful. Now, these are not moments to be panicking. These actually represent the single biggest investment opportunities for people to step in and buy the market. Buying a simple lowcost S&P 500 index fund in the middle of a recession has time and time again provided some of the greatest return on investments. And there's no reason to suspect that this time will be any different. But there is one more important factor to consider in all of this. And that is the actual timing of it. You see, in June of 1999, for example, the Federal Reserve began to raise their interest rate. The stock market only peaked 9 months later. And it was only 18 months later that the economy actually entered a recession. In this 9month window, by the way, we saw the NASDAQ 100 double in price as the technology sector was in the middle of an internet euphoria. We've seen this timeline again and again throughout history of roughly one year between the moment where the Federal Reserve raises their interest rate and the moment that it actually begins to hit the stock market and the economy. This is supported by many academic studies. So today, this means that even if the Federal Reserve begins to raise its interest rate in September of 2026, for example, it may not be until June of 2027 until that actually hits the stock market. And it might not be until September of 2027 before we actually feel the economic pain on the ground. So for us, there is a window of time here where the stock market could actually perform exceptionally well and more specifically where euphoria around artificial intelligence may continue to intensify as time goes on. Very similar to how things unfolded in 1999. We're seeing massive amounts of money pour into the space leading to meltups in stocks left and right. Right now we have roughly 50% of our portfolio at Bravos Research positioned to take advantage of this in three different sectors that are direct beneficiaries of AI. We have exposure to some incredible companies in the nuclear power sector that is increasingly being used as a source of energy to power AI. We have exposure to some energy infrastructure stocks that are expanding their operations massively in order to accept the huge increase in electricity usage from data centers. And finally, we own stocks in the base metal industry. Base metals are absolutely key components to build anything associated with this technology boom. Our investment selection process captured 129 profitable positions in 2025 with an average gain of 16.3%.

[00:08:55]On the flip side, we had 97 losing positions at an average loss of 4.6%. If you assume that each position is weighted at 3% of the portfolio, this in total provides roughly a 50% annual return for 2025. Now, we cannot make any guarantee that this strategy will continue to be successful, but our strategy team works day in day out to make sure that it does. We're doing free one-on-one strategy calls that you can book by clicking on the link down below.

[00:09:22]If you're looking to take your investment process to the next level, this is a quick conversation to see how we can help you out. These are completely free of charge, but we only have a handful of spots as me and my co-founder are going to be doing these personally. So, these calls are going to get booked out very quickly. So, if you're interested, click on the link below and book a call now. I look forward to meeting you. Thanks for watching.