What JUST Happened to the Stock Market | JPOW CRASH.

everyone kevin here we've got to talk

about why jay powell just crashed the

market we're going to talk about the

bond dump we'll talk about commodities

real estate some of my favorite takers

and of course we got to talk about what

the heck jpow just said which jay pal is

going to be the start of our

conversation here just a note this video

is brought to you by two things met

kevin.com extra and that expiring coupon

code for the amazing programs on

building your wealth link down below

that expiration is coming up in four

days and the price goes up again okay so

speaking about prices going up we just

had prices go down in the stock market

why what happened here well we had our

usual typical retail buying at the open

the last two weeks we have seen a lot of

retail buying right at market open

followed by volatility throughout the

day usually we've been ending up higher

over the last week we've been

consistently ending up higher the

problem that we just had is at 9 30 in

the morning look at this drop right here

9 30 on the dot 9 30 right here we get a

plummet why because jpow's speech gets

released on the federal reserve website

all of its details get parsed by

computers spit out on the newswires and

the newswires did not like what we saw

in that speech which i'm going to

explain and there are some shifts that

have happened uh since then uh then

jaypal we had a little bit of a recovery

after the speech was published but after

jay pal started talking uh he gave his

speech and then he answered some q a the

market rotated down a little bit more so

what is it that jerome powell said well

here are the following

this is exactly what jerome powell said

he said quote

if we need to go more than a 25 basis

point hike we will do so if we need to

go above neutral we will do so

and essentially i'm going to keep going

through this but i want to give you

something that's going to make a lot

more sense of this as we go through it

what jay pal is trying to do is he's

trying to limit inflation expectations

yesterday i posted a video and said

there are five very important things for

you to track in this market

two out of the five things i talked

about yesterday were different types of

inflation expectations consumer

inflation expectations which we'll get

more data on at the end of this week

there'll be a new update on what

consumer inflation expectations are and

number two the market's inflation

expectations which you could track the

five-year break even chart which has

been peaking uh lately and this is a

sign of inflation expectations becoming

unanchored multiple times during jerome

powell's talk he talked about the need

to keep inflation expectations anchored

it's not so much of a matter that

inflation is high we know that inflation

is high obviously that like that's the

obvious problem but the shift in their

path or sort of the course that they

take will entirely in my opinion be

based on inflation expectations that is

as long as the market and consumers

expect that inflation will come down my

belief is that they'll stay on the

course of 11 to 17 25 basis point hikes

that's going to take us all the way

basically from zero to potentially as

high as 4.25 percent on the fed funds

rate and i think real estate is going to

see the biggest short-term impact uh

well short to medium term impact over

the next really six months to two years

because of this increase in rates the

stock market has already discounted a

lot of the fact that rates are going to

go up that we will see rates at two and

a half to three percent at the fed uh

within the next year to year and a half

and then potentially higher thereafter

by 2024 who knows if inflation stays

stubborn we could be at that four and a

quarter percent with 17 rate hikes which

is exactly what we saw the beginning of

two of the 2000s which jay powell

referenced j-power references the

beginning of the century as kind of how

they expect to raise rates and that's

what we did in 2004 was 17 25 basis

point hikes in a row the reason the

market had some heart palpitations today

is because jay powell said if we need to

go more than 25 basis points basically

go 50 we will do so and he was bluntly

asked

what's stopping you from going for a 50

basis point hike now and he said nothing

now we don't actually believe that we're

they're going to go for a 50 basis point

hike unless some of the expectations we

have start changing so what expectations

that they lay out in the federal reserve

meeting last week well last week they

told us that before ukraine they thought

inflation would peak

in march and then come down towards kind

of flattened for a little bit in the

summer come down towards the end of the

year

now and j-pal reiterated this today he

said

all of that has fallen apart their

previous expectation of a peak has

fallen apart now they believe that

inflation will peak in q3 kind of go

flat for a little bit fall more sharply

in q1 of 2023 but if that also falls

apart then they will hike more and i

think that's what the market here is

missing is the market is freaking out

because the market's hearing oh my gosh

you said maybe we're going to go for a

50 bp hike but wait a minute he said

we'll go for a 50 bp hike if the data

shows that

these expectations are falling apart and

so this is where i've mentioned in many

videos that what you want to pay

attention to is if you want to know if

the fed's going to go 50

this conversation didn't change anything

all it does is reiterate the fact that

you've got to look at the

month-over-month data for cpi we got to

see if there's a wage price spiral which

we do not have right now we do not have

a wage price spiral we want to watch

this inflect over the coming months and

of course we want to watch the five-year

break-evens which we i showed you

already as spiking which is a problem

this is a problem and then we want to

watch the uh consumer sentiment

inflation expectations right these are

the some of the four core things we want

to be paying attention to there are more

you can watch my video from yesterday

from that but jerome powell reiterated

how important expectations are here and

that inflation is high and we've got to

get this inflation down in fact here's

some of the other things that he says he

says we're at this market right now

where we cannot assume that supply

chains are going to provide relief jay

powell told us that hey we're starting

to see some relief maybe in like certain

auto sectors but we can't assume that

supply chain relief is going to be

what's going to move inflation down he

does say it doesn't all have to be the

fed that waning fiscal support like

stimulus

some progress in these supply chains and

maybe less reopening spending like less

travel spending could potentially bring

down inflation naturally but they're

going to respond to the data and if the

data continues to inflict in the wrong

direction and there is no q3 peak of

inflation then they're going to hike 50.

now jay pal didn't give us a time frame

but waller did on friday waller told us

that we could have a 50 basis point hike

potentially two 50 basis point hikes

at one of the next coming

two to three meetings so that gave the

market a little bit of anxiety but

jerome powell today reiterating that

yeah nothing's stopping us from going 50

that i think is what led the market to

be a little bit nervous today personally

i don't know that this is too terribly

different from what he told us last week

he said he's going to be very data

dependent they have not made the

decision he reiterated that today they

have not made the decision to go with a

50 basis point hike we recognize that

inflation is too high but we're just

going to respond to the incoming data so

i've already talked to you about what

data to monitor we're going to monitor

this market's a little bit nervous about

just jay pal even mentioning nothing

stopping us about a 50 right but let's

talk about some things that are really

good that he talked about so one of the

things that he was asked is wait what

are the odds of a recession and he says

quote i don't see a recession likelihood

that is elevated and the main reason for

that is the economy is still very strong

he says look at growth we're at or above

potential this is reiterating what he

said during the fomc meeting in the

summary of economic projections that hey

look we're still expecting 2.9 gdp

growth that's more than what we would

have had in any period of time prior to

the pandemic uh you know a post post the

great recession so this is remarkable

growth he said the labor market is doing

very very well and uh that ultimately

yeah well we're committed to restoring

price stability

we at the same time want to make sure we

maintain a strong labor market and these

things can go counter to each other

right for example if you go all in on

fighting inflation you could end up

leading people to lose jobs but you

can't have inflation going forever

because then then you could end up

unwinding a strong labor market right

so a lot of complicated things to

balance here right now for me i don't

think much has changed beyond this we're

just going to go 25 25 25 25 until and

unless that data starts looking uglier

which we know march's data is already

going to look ugly because of ukraine

we're going to be paying a lot more

attention to that data for the months of

april may june july and maybe this is

just the fed kind of throwing it out

there that hey just remember 50 bp is a

possibility which that makes sense when

he talked a little bit or when he was

asked about the 10-2 yield curve this is

a big one so the 10-2 continues to

flatten in fact i'll pull up the the new

10-2 right now

and it flattened quite a bit as well

after powell spoke

uh and we know that the 10-2 can be a

little bit of a signal for a potential

recession in fact any time the 10-2 has

inverted before we've had a recession

within

18 months right the current 10 2 has a

spread of about

18.8 in fact if you just look down here

under where i am right here 18.8 is the

current spread it's at the lowest point

that it's really been at and we're

seeing 10-year treasury spike

when jerome powell was asked about the

10-2 he made a very interesting comment

he said

while he looks at the 10-2 he focuses

much more on the shorter end of the

curve he focuses much more on the first

18 months and this makes a lot of sense

to me in fact in the video that i posted

this morning but then i made private

because youtube wasn't playing it it was

a disaster this morning one of the

things i mentioned in it is you might

consider looking at the

month to the 10 year and the reason you

might want to look at that spread is

because it shows you a little bit more

of of how the shorter portion of the

curve could impact the yield curve a lot

and take a look when you go really short

look at the yield curve over here it

it bottomed uh at uh just after the

invasion here in ukraine 224 we saw a

collapse of that curve and it's really

started steepening again here why would

the yield curve start steepening again

on these when we look at the shorter

ones like the three month to the 10-year

well in my opinion as markets get less

fearful about the fact that yeah

inflation's high yeah we're at war with

ukraine yeah oil prices are high uh yeah

gas prices are high yeah food prices are

high what the more we become comfortable

realizing okay we've got a bunch of bad

news got it what happens well people

start dumping their hedges in bonds so

they start dumping the three-month bonds

they start dumping the one-year bonds

and the two-year bonds they start

dumping these and that leads the yield

on those to actually go higher faster

why because

when you get these uh moving when you

when you dump the shorter term bonds you

increase the yield of the shorter term

uh bonds that makes sense price goes

down yield goes up

so uh it's interesting to me that j-pal

says hey we like to look at the short

end of the curve like that 18-month

curve because in my opinion what he's

trying to say here is hey we're looking

at how the market is reacting to fear

when markets are fearful people go by

the short-term bonds well they're less

fearful they start dumping the

short-term bonds so for me i had a

similar kind of reaction to jay pal just

had this morning in my video which i

wish was still available for you but

anyway in the video that i posted this

morning i said i've kind of gotten tired

looking at the 10-2 yield curve because

i think it's totally manipulated because

of the disaster that's happening in

ukraine and people using bonds as hedges

j powell kind of said something similar

here he said look we're not looking so

much at the 10-2 it's a weird phenomenon

it's just one of the things we look at

we look at a lot of things we look at p

e multiples risk spreads uh a bronze

broad range of conditions he says uh and

the focus really right now is hey we do

have to focus on inflation and those

inflation expectations that's a critical

piece that he talked about and i think

it's one that it's very easy for market

or inflation expectations are one that

are very easy for

markets to kind of sort of just like

bypass because if inflation expectations

and this is such a weird thing if

inflation expectations are really high

then what happens inflation becomes

self-fulfilling this is really like a

bizarre phenomenon but basically the way

this works is if you think inflation's

going to be 10

this year 10 next year 10 the year after

what happens well you as a consumer are

more likely to buy things today rather

than next year if you think inflation's

gonna stay around for let's say the next

four years ten percent every single year

you're more likely to buy a computer

today you're more likely to buy a car

today because you think those things are

going to continue to get more expensive

just like when we increase the price of

the courses which the next increase

happens in four days you're more likely

to buy before because you want to have a

lower price this makes sense but what

that actually does is it reiterates it

sort of self-fulfills inflation in

broader markets when people know that

prices are going to go up they move

their purchases up and what happens well

now the market overall sees more

inflation and this is why the two

massive things the fed pays attention to

are not just what actually the inflation

rate is write that down so what is the

current rate of cpi but it's also those

expectations and we have those two ways

which we talked about earlier in this

video to measure those expectations and

those are things like looking at the

five-year break-evens and of course the

consumer sentiment inflation

expectations right which on friday will

get new numbers on this the five-year

break even you could just watch the

chart on every single day and and that

is a chart that has been steepening so

when powell comes out and we have these

fed speak periods which we talked about

this in the course member live stream

this morning

there are a lot of there's a lot of fed

speed coming up i'll give you the

calendar really quick here it is oh it's

on this phone

when the fed comes out to speak what

they're really trying to do is they're

trying to manipulate expectations down

to make sure that

people don't basically let these

inflation expectations get unanchored

because once inflation expectations go

unanchored what happens you end up

having to force a recession the federal

reserve remember this can wave a wand

and force a recession unfortunately that

comes at the cost of high unemployment

so it hurts poor people even more which

is a problem or even even medium income

people but look at the schedule that we

have

uh bostic spoke this morning

powell just spoke we've got daley

speaking tomorrow mester speaks tomorrow

bullard speaks on wednesday he's he's a

pretty big hawk uh kashkari speaks on

thursday evan speaks on thursday and

then we get our consumer expectations on

the 25th which is friday and barkin also

discusses inflation on the 25th so

you've got a whole week of the federal

reserve coming out and giving us this

kind of nonsense so expect a lot of

volatility this week which previously i

wasn't expecting i thought this would

have been a little bit more of a calm

week but with this fed speak schedule

it's just going to be more and more of

these fed headlines

so okay so we talked about j-pal we

talked about the bond dump we talked

about oh now we got to talk about real

estate commodities and some stocks so i

want to touch on real estate this this

rise in the 10-year curve is a problem

for real estate remember i've previously

and many times before on this channel

said that i believe the 10-year treasury

bond is going to run

up to 3 percent and let me tell you

about what that means for real estate

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let's talk about real estate well you

got to look at the 10-year treasury and

this morning when i woke up i look i go

oh gosh man the 10-year went to to 2.24

remember i've been shorting the 10-year

treasuries i've been shorting them since

under 2 because i'm like these things

are going well over 2

now i closed my short on the 10-year

treasury i should have closed it today i

would had

you know a little bit more profit on it

maybe another one or two percent big

deal but the point is like directionally

these 10 years keep going up look at

them now they're two point almost three

percent this is insane

tomorrow we're going to see the highest

mortgage rates

that we have seen since 2018 and i tell

you i think this is just the beginning i

think we're going to go back to that

three-year 10-year treasury yield i

don't think it's all going to happen

immediately in the short term i wouldn't

be surprised to see this 10-year

fluctuate between 2.1 and like 2.5

percent fluctuate around but over the

medium term which is like 6 to 18 months

it wouldn't surprise me to see us go

back to that three percent which would

be equivalent the equivalent of about a

five to five and a quarter percent

mortgage rate and i think we're going to

see headwinds against the real estate

market probably in the neighborhood of

twenty twenty five percent is in sapped

purchasing power that doesn't mean

prices will go down that much i think

that'll just offset all of this excess

demand that we have in real estate and

maybe we only end up seeing like a sort

of a soft move down in real estate

prices somewhere in the direction of

five ten percent until rates start

coming down again which we expect rates

will start coming down again probably

end of 2024 maybe 2025 something like

that uh so that's something to keep an

eye on remember j-pal tells us no risk

of recession uh we've just got to make

sure we keep those inflation

expectations anchored but yeah we are

going to go up just like we did at the

beginning of the 2000s many rate

increases over time and so this is a

headwind that i definitely see for real

estate okay so we talked about j-pal we

talked about the bond dump and how

complicated these bonds are being right

now talked about real estate i do

briefly want to look at some of the

individual charts that we're seeing here

so this is the nasdaq obviously we were

having a pretty decent day sitting

around that 38.2 percent fibonacci until

jay pal started talking and he really

pushed us right back down uh we're

sitting right now about 348 still nicely

above that uh well actually we're just

barely below the um

38.2 fibonacci here so we're still

moving nicely up and for me a lot of

folks are asking me kevin when would you

short in this market again i'm not

really interested in shorting or hedging

to the downside until i see the indices

get back to about that 61 to 78

retracement when we get back into this

territory or imagine we get some crazy

euphoric week or something and we get

into this territory over here this is

when i think it's going to make sense to

to short the market uh or to at least

hedge because i don't really like it's

going to take a lot for us to get back

to this 318 qqq in my opinion we've

already got so much freaking bad news

priced in

uh that that it's going to take a lot to

really push us down and keep us down in

my opinion and that's why i think also

today

you're yeah we saw a little bit of a

push down but we're no lower than where

we were this morning on just typical

trading uh and and no news from the fed

right

so really we've we've gone nowhere is

really what it feels like here which is

fine so where are the opportunities well

if you believe a recession is coming you

do not want to be in the stock i have

said this since i originally started

talking about this stock you do not want

to be in a firm holdings if you think we

are going into a recession however

if you think like jerome powell that the

odds of a recession are low in an

inflationary time a company like a firm

could actually do quite well the reason

a company like a firm could actually do

quite well is first of all we've barely

retraced anything off the bottom here

which if anything gives you a greater

potential fear factor that doesn't mean

that we've actually hit a bottom here on

a firm right could a firm go even lower

it absolutely could especially if the

market price is in more of a risk of a

recession but

i have a belief that in an inflationary

time absent a recession people are going

to be more likely to want to use things

like the affirm debit card and do

essentially use buy now pay later

services on things like

you know their general purchases which

you could then apply using the the firm

debit card to a sort of buy now pay

later plan uh now i don't recommend this

but i also don't think the people who

use this stuff watch my videos i really

don't recommend people spend money they

don't have ever uh you know some people

like hey kevin i really like the fact

that i could check out for your courses

with paypal and do buy and you know pay

in four or whatever i'm like

whatever i don't recommend it but if you

want to use that you can

so uh i think if we're in an

inflationary time absent recession there

could be an opportunity to invest in a

company like a firm and probably see

them come back to this 38 to 50

fibonacci here no guarantees certainly

not this insane euphoria that we had

over here at like 177 143 i was a seller

of a firm over in this area here because

it was just pure euphoria but somewhere

this midpoint uh retracement i see that

we're kind of already seeing those

midpoint retracements in stocks like end

phase already above the 38.2 we're

seeing that sort of midpoint retracement

on stocks like tesla also already over

that 38.2

and so there is some argument that maybe

it makes sense to look at other

companies like even roblox or firm or

whatever that just still haven't even

gotten to their first level of

retracement just be careful with these i

would i would keep these at lower

portions of your portfolio a bigger

concern that i actually have though is

this the consumer discretionary spend in

general and that would be like your

shopify so shopify is another one that's

really struggling

uh to to go anywhere and the reason here

in my opinion just like j-pal said is

people are probably more likely to save

money or spend less money just like the

chinese are doing

why because

we're at a very uncertain time gas

prices are high food prices are high

everything's getting more expensive and

so it's likely that you would spend less

money on shopify or etsy right and see

look this is why etsy continues to get

rejected by the 23.6

consumers are going to be a little bit

weaker the same is going to be true of

the lending platforms to some degree

that includes uh square and paypal but

probably to a more greater degree it

includes the uh student loan company and

mortgager

sofi uh you know they've also got their

brokerage division which all three of

those things mortgages student loans and

brokeraging like robinhood kind of stuff

right trading i think all three of those

are have huge anchors on their business

which is not great people who have made

new accounts for savings

via sofi or paypal or square probably

already did so during the stimulus era

now it's really tough people are

spending even more money to try to get

more customers here and this is why i'm

purposefully trying to stay away from

some of the lending companies i'm trying

to stay or at least limit my exposure to

them uh because i do have a little bit

of sulphide just like i have a little

bit of palette here but i'm trying to

limit my exposure to them and i'm trying

to go heavier when i get little dips

especially if i get under 60 on trade

desk i'm really trying to pick up a lot

of trade desk under 60. the reason for

that is because i really think we're

going to see a big move into advertising

and

as as companies try to spend more money

either partnering with companies like

affirm for buy now pay later or

advertising companies to fight for the

consumers who are willing to spend so

these are just some ideas that i have in

terms of stocks that i'm watching

obviously i'm also keeping an eye on

what's happening with uh occidental

petroleum here it is now at another

all-time high over here uh i mean i

shouldn't say all-time high post uh post

2018 kind of high

and uh

this this in my opinion has a lot of

retail momentum in it in fact it's not

even just my opinion i can tell you what

the most popular retail stocks are right

now

they are yep okay so retail

trading flows alibaba neo accidental xle

uh you're actually seeing some expansion

over some by the dip on jets which i'd

be a little bit more careful about that

one one i do agree with personally would

be like a taiwan semiconductors talked

about them on my video yesterday but i

do think that commodities like uso wheat

corn occidental these are going to see a

peak at some point

i've got a fibonacci drawn over here on

uso and i'm looking for an opportunity

to probably short

uso if we end up somewhere between the

61.8 to 78.6 fib over here

because i i don't think we're going to

get to the same sort of peak fear moment

we had up here but certainly somewhere

in the 80s for uso is going to be a

potential opportunity short unless of

course you expect commodities to keep

going keep your shorts small though uh

because you know

shorts could get it can be very

dangerous but again in terms of real

downside protection i'm waiting until uh

the qqq and spy get a little bit more

euphoric

today's sort of hemming and hawing here

not a surprise to me that the market's

taking a little bit of a breather after

uh jay pal comes out and just even

mentions hey nothing's stopping us from

doing the 50 bp hike but really in my

opinion this is his way of trying to arm

wrestle those inflation expectations

down that's the whole point of him

coming out and yapping is to try to make

the markets price in less inflation so

that way they don't actually have to

hike 50. so that's my thesis anyway if

you found this video helpful consider

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kevin.com join also link down below and

uh thanks so much for being here we'll

see you in the very next one thanks

again goodbye