Watch BEFORE Tuesday | Stock Market Warnings.

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sales hey everyone me kevin here okay so

we gotta give an update in terms of this

whole recession noise that we keep

hearing about because this week we're

going to finally start getting a lot of

clarity which is really important we've

got quite a few important things coming

up this week let's talk about those now

but first a look back at this last week

we just lost six percent in the s p 500

in one week we are up eight percent from

the lows but we basically almost gave

back half of that right there's a lot of

uh confusion because there's no clear

signal i mean we've got the inversion of

the yield curve then it uninverts and

then it goes back it's back and forth

you've got a 10-year yields that are

going absolutely ham i think we're at

over 2.7 now

and of course you've got a lot of people

maintaining higher shorts on

on all sorts of equities right now why

because there's fear there's fear that

the market is going to fall further and

that we will fall into a recession right

now our sessionary odds are at 27.5

percent the biggest thing to prevent

that is going to be the consumer so

we're going to talk about that but first

let's talk about what's coming out and

the clarity that we're getting this week

on tuesday we're going to be getting our

cpi report economists again boosted

their inflation forecasts for this cpi

report and for inflation expectations

for the rest of the year get this we

were at the beginning of the year

expecting inflation would be about 4.5

at the end of 2022 that means a nice

kind of curving down well now economists

are forecasting that inflation will be

5.7 percent in the last three months of

2022 pretty high

and they've downgraded growth

expectations for the rest of 2023 which

is also wild because now we're thinking

this is going to last not just 2022 but

also throughout 2023 we do have the cpi

report that comes out tuesday and that

cpi report because i just referred to a

survey leading up to the cpi report cpi

report is expected to show

month-over-month inflation of 1.2

percent which is absolutely highest

month-over-month number that we've had

in over 40 years which annualizes to

14.4

of inflation that's wild however the

core inflation year over year is

expected to be consistent somewhere

around five and a half percent i think

everybody's going to be looking at that

core number not so much that headline

number which is probably going to be

eight and a half to nine percent

bloomberg forecast right now sitting at

about eight point five percent that core

number strips out gas and foods which

obviously are extremely volatile because

of what's going on in ukraine uh so

what's the market going to look for

tuesday hopefully hopefully hopefully a

stable core inflation read if that

inflation read comes in hot and we get

something like a core of six or six and

a half percent the fed's gonna have all

the ammo they need to keep crushing this

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stock advisor and that's ultimately what

they're doing is with their words and of

course their actions which will be to

follow they are stripping demand out of

this market driving that 10-year

treasury yield up driving up mortgage

rates and reducing the consumer's

ability to use their homes for cheap

financing increasing the cost of housing

increasing the cost of cars not yet

increasing the cost of credit cards

though which is really interesting

credit card interest rates were an

average of 16.3 percent january first

right now they're at 16.4

they haven't moved at all so that means

that shock of higher credit card

interest rates are still to come and

that could strip out some more consumer

demand so we got to pay attention to

that uh so core cpi that credit card uh

shifting in interest rates and of course

it's gonna take probably six months for

us to actually see the consumer react to

these higher rates especially with real

estate that takes time though we're

already starting to see the impact now

another thing that we're going to look

forward to this year earnings or this

week rather earnings on wednesday on

wednesday jpmorgan reports earnings this

is going to be a big one because what

does jp morgan tell us they tell us

everything about the consumer they tell

us about commercial spending capital

investment great but most importantly

the consumer how are credit card

transactions going how are bank balances

going are people still flush with cash

or not are they out of money those are

going to be really important things to

look for in that jp morgan's earnings

call on wednesday really excited for

that and i'm going to be doing a dive

deep into that earnings call so we can

see what jamie dimon thinks about the

market going forward jp morgan as of

about two months ago had the recession

odds at about 20

right now economists are sitting at 27.5

percent so we want to see is jp morgan

going to exceed or come in under that

27.5

market expectation if they come out and

say hey the consumers are spending less

already and we're at 40 odds of

recession big red flag it's our first

part of the earnings season really bad

indicator for the rest of uh the

earnings season and you're probably

going to see a lot of hedging and when

you see hedges increase what happens

short interest goes up and that puts uh

put selling pressure on stocks bringing

those prices down right so big big big

report jp morgan's gonna set the stage

here the banks always do now flip side

if they come out and say hey don't worry

so far it seems like the consumer is not

reacting the consumer still has high

balances uh in their savings accounts or

checking accounts or whatever they've

got plenty of money they're still

spending money like crazy which it seems

like they are i mean we're here at this

disney resort shout out to disney

phenomenal company i'm a big investor in

disney as well their margins are

absolutely wonderful i think q1 is going

to be fantastic for disney it's going to

be another important earnings call we

want to look into but uh if if uh if we

get positivity from the banks then i'm

going to continue to expect positivity

from the consumer brands as well so

we'll see

uh then of course uh something else

that's quite fascinating now is the

10-year real rate which is the uh we

measure the real rate by looking at the

inflation-protected tips version of the

tenure just went positive this is

actually really interesting because

anytime you get a positive real rates

you reduce demand for riskier assets so

uh when you know the last two years

we've been like negative 1.5 percent on

the 10 years real rate and that drives

people into riskier assets especially

tax stocks you get real rates going

positive people like hey if i can get an

actual yield risk-free well that i don't

need to be in risky assets especially

during a time where people are talking

about a potential real estate housing

bubble which could uh substantially

affect consumer demand people are

talking about uh just recessionary odds

across the board as consumers spend less

money relative to the end of q4 uh 2021

you know coming up at q4 2022 we'll have

that year over year comparison of course

now we'll be comparing to the beginning

of 2021. it's gonna be really

interesting uh i'm not so worried about

q1 compared to q1 of last year in terms

of recessionary odds me i'm more worried

about if we're going to see a recession

probably we would see that negative gdp

era

q4 of 2022 but here's the thing

stocks do really well

usually leading up to recessions and

coming out of recessions it's just a

weird kind of in-between moment where

stocks can really get hit hard i get

some good buying opportunities which is

why i'm encouraging patients and saving

cash right

and spending less which is ironic

because then if everybody saved less we

would just self-fulfill a recession

right

but the other thing to keep in mind

about uh about stop about the yield

curve actually

looking at the yield curve it was

looking at

when the yield curve says we're going to

see a recession most people say within

18 months of an inversion well guess

what the historic fact is

seven months to four years it's like

what are you gonna be out of the market

for that whole time it's crazy anyway

this is my update for this week coming

up thank you so much for watching make

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