The Danger in Stocks NOW | Prepare.

we've definitely had some pain over the

last few days all starting with the

Polish disaster but that then turned

into a retail sales disaster what's

happening in the markets how does it

change our outlook for the Federal

Reserve and are the numbers we're

getting right now what we think they are

a sign that consumers are just still

spending like crazy and the worst is yet

to come from the Federal Reserve maybe

let's break all of this down so first we

got a very weak CPI report I still Pat

myself on the back a little bit for

nailing exactly the year over year and

the month over month numbers but this

video is not to brag this video is to

talk about we had a good report we had a

good report we should celebrate that

together on CPI hopefully that's the

beginning of a trend then yesterday we

got a really good PPI report so you've

got the buyer's version CPI of inflation

coming in low lower than expected still

high of course and the seller's version

the producer price index level of

inflation coming in lower than expected

okay great wonderful and we've also seen

that you know obviously if you strip out

shelter you're a negative month over

month inflation we've been on that trend

for about four months if you just look

at services from the PPI we're at our

first negative read since November of

2020 on a month over month basis it was

like negative it was negative one point

one percent so those are great things

but this morning things got screwed up a

little bit with what looked like a

strong retail sales report and there's a

lot of talk about oh nope see the

consumer is still too strong inflation's

gonna go right back up in December it is

a way too early to get excited about

that's it Peak inflation is in no no no

the FED needs to crimp even harder to

crush that consumer and make sure they

stop spending money because I'll tell

you the number of people signing up and

this is what I'm making all these videos

while I'm on my cruise here make sure

you all know it because the number of

people signing up for that Elite

Hustlers course is really impressive

y'all want to make more money it's

really really good at use that Black

Friday coupon code link down below black

Friday's around the corner but even

people bundling up or emailing us for

custom bundles at Kevin meet kevin.com

looking to build wealth in real estate

or stocks really incredible sign up so

yeah the consumers are still spending

but uh not not that I myself am a

perfect example of a consumer uh

spending gauge in terms of how many

people are signing up but it's worth

noting uh I think people are investing

in themselves maybe so maybe a little

bit different but we did get this retail

sales report that was a little bit hot

this morning and we should touch on that

a little bit so this report obviously if

you look at it from a year-over-year

basis and you're like oh things are up

eight point you know retail sales are up

eight point three percent uh from

October the first thing you should say

is oh well come on man that's just

inflation yeah it pretty much is Just

inflation but why then are we seeing

stocks red across the board but at the

same time as we're seeing stocks right

across the board we're actually seeing

bonds rally and bond yields are coming

down which is kind of interesting so at

the same time as that we're also seeing

the terminal rate for the federal funds

rate on the markets projections move up

about 10 basis points from about 4.83 to

4.93 so kind of a little bit of a head

scratcher if these retail sales numbers

are coming in hot suggesting that

consumers are still spending that

implies the FED should have to raise

rates more we're seeing that with the

FED terminal rate expectations being

moved up even Goldman Sachs moved their

terminal rate expectations up another 50

basis points so we're seeing

expectations go up there but at the same

time we're seeing the bond market rotate

down the inversion of the yield curve is

the steepest it's been uh I want to say

in in actually since the.com bubble it

was since 2000 I looked at that this

morning you look at the ten twos it's

scary how deep the inverted yield curve

is on the 10 twos but those treasury

bond yields continue to collapse so if

people really thought this retail sales

report which is hurting stocks right now

would contribute to the FED hiking more

then bond yields should be going up so

it's a little weird it feels like

cognitive dissonance and this is where I

actually think

that what the market is doing is

something very very different

I think and then we're going to look at

these reports and I'm going to show you

some supporting data I think what the

market is doing is it's saying we need

to reprice stocks because these high

retail sales numbers won't last and now

is the time to take attendees where

there still are some to be had if you

have any left to take or do some tax

loss harvesting now because earnings at

these retail sale companies any company

that's selling stuff probably going to

start suffering so let's get out while

we still got an opportunity here on some

potentially good numbers sure does it

mean the FED potentially has to be a

little bit more aggressive for longer

yeah maybe more aggressive for longer

but does it increase the peak in terms

of How High the FED is going to go no

CPI and PPI put a lid on that I think

that's why we're seeing the bond market

move down people are saying all right

look Now's the Time you know take some

profit do some tax loss harvesting if

you need to take some attendees if you

need to on stocks let's move on over and

hop on into bonds let's get what yields

we can we can get some great yields on

corporate bonds you know Triple A rated

corporate Bonds in excess of a five

percent you get some treasuries that are

risk-free still at that four and a

quarter percent level so some pretty

incredible opportunities so let's get

out of some of these retail names well

maybe this is the last hot report that's

sort of my thesis now why do I think

this potentially is the last top report

and let's look at the actual report well

first of all I I don't think this hit as

much coverage as it really should have

but remember California just sent any

household making less than five hundred

thousand dollars inflation relief

stimulus checks

yeah I'm pausing here because you should

be face palming right now like you've

got to be kidding me but it's true now

you sent stimulus relief checks in

October

to households in California remember

California has about 12 of the entire

country's population that means

potentially one in 10 Americans got a

stimi check in October

that could actually help prop up some of

the retail sales data that we saw in

October because it actually came as a

surprise we were seeing week sales in

September and all of a sudden they

popped up now keep that stimulus

argument in your mind and now let's zoom

in and see okay more stimi money got it

where's money going on a month over

month basis where are we seeing that

increase in sales well the biggest

increase in sales we're seeing is gas

stations 4.1 percent that's a huge part

of this okay not so much of a surprise

though because prices became a little

bit more expensive month over month but

they fluctuate so terribly we always

like to try to exclude those but even if

you do if you exclude gas stations we're

still at that one percent read month

over month that's not so good so where

did it come from well it didn't come

from appliance stores and electronics we

already know that durables have been

suffering PC sales are down 19

year-over-year we already know that food

yeah food continues to be something

expensive 1.4 percent grocery stores

that's a big deal Food Services and

drinking places I know this one really

well 1.6 percent that's that's a lot but

again we know that people are spending

more on going out this is actually a

good thing we want people to go out and

travel and spend money it's a good

underlying Force for the economy but we

weren't expecting some of these numbers

but then again if you looked at the

airline reports kind of like okay yeah

that makes sense still not seeing

weakness in the airlines

non-store retail right here 1.2 percent

that's like online personally I think

that's probably stemi right there that's

probably your stemi because look where

you're seeing the minuses department

stores down 2.1 percent Sporting Goods

down point three percent and what's

really interesting is well not only you

of course also seeing that decline in

electronics and uh but you're also

seeing building material and garden

stores still puffed up look at that one

point one percent but now what's the

other interest thing about why this

retail sales report could potentially be

a peak bad number well one was because

of stemi but two the lag effect if

non-store could be explained potentially

by retail stimming what about that

building material sector and what are

some of these companies telling us well

they're almost all telling us the same

thing whether it's Best Buy who's doing

layoffs FedEx who's doing layoffs and

we're seeing cardboard prices collapse

Target who's seeing 400 million in

thefts but also relaxations in their

guidance that's why they were down

double digits today in the stock market

but what else are you seeing both Home

Depot and Lowe's suggesting that all of

a sudden they're seeing an inflection

point and they expect weaker sales going

forward into next year a lot of this has

to do with the fact that it takes a

housing market slow down to really start

slowing down down retail sales so if you

put all of this together sure we're

going to have month over month gyrations

partly because of this massive stimulus

check in California going you know let

California is so stupid they don't teach

Financial education in the schools so

the state is run by by people that

obviously don't understand economics and

they're sending inflation release

stimulus checks I mean it's just it's

just completely pathetic but but you

can't run against the governor it's a

democratic Mafia out there anyway so

oh my gosh what happens when you have

companies and a housing slowdown

suggesting that at the beginning of q1

and the next few months going forward

we're expecting a Slowdown I think we're

going to end up seeing a substantial

decline in these retail sales reports

going forward that we might be in a

position where this could be a peak

retail sales report and take a look at

some charts here you see consumers cut

back as mortgage costs rise that's not a

surprise but this is an interesting one

consumption will be further hit from

tight lending bank's willingness to make

Consumer loans plummeting and usually

when you see a decline in bank's

willingness to make loans you tend to

also see retail sales trough right after

that we've already seen credit card

spend go through the roof as it seems

like people are just trying to sustain

for a little bit longer I really think

there's this disbelief that oh we can't

be going through a recession let's just

borrow and spend our way through it and

hopefully by then the federal U-turn and

things will get better so how do we put

all of this information to together in a

simple summary so my simple takeaway

from this is this retail sales report

throw it out the window the

year-over-year numbers don't matter the

month over month fluctuations are in

things that are totally skewed by energy

and if not by energy they're totally

skewed by stemi effects and they're not

forward-looking they're rearward looking

but if you actually look at what's

happening at companies again Best Buy

layoffs cardboard down FedEx freezing

corporate hiring and laying people off

Amazon laying people off wanting to hire

less people for seasonal work laying on

people at the corporate level uh Target

terrible sales guidance at Walmart

saying more people are going to Walmarts

to try to save money you know I think

that's a good sales pitch obviously but

it's interesting to note and lows and

Home Depot both warning about the

Slowdown just now starting I think you

take this report throw it out the window

when you take this report you throw it

out the window what does it do it says

in the future we expect earnings per

share at companies to go down for

companies who are going to be affected

by retail sales maybe for example a

company like Tesla is saved because they

might not be affected so much by this as

long as they can sell every single car

they produce that changes Tesla

collapses but it also reiterates to the

bond market hey get the yields while you

can because that retail sales report

isn't going to be what pushes the FED to

higher levels it's going to be any kind

of inflationary read pce PPI CPI and so

far two really good reports pointing to

the downside

this retail sales report not very

meaningful some of the insights are I

think it's a warning if you're exposed

to retail stocks also if you're exposed

to borrowing stocks right transaction

based stocks I was thinking a little bit

about American Express Visa well you

know even Sofi or or a firm what's going

to happen when people finally say you

know what I'm I'm maxed out I just have

to pull the reins back I think this is

potentially a peak retail sales report

and it's a peak that uh

is getting hurt earnings so buckle up

thanks for watching we'll see the next

one bye