Forget Recession | The Fed will Crush us into Depression.

make a panic and more Panic the market

is panicking and we need to talk about

what's going on in the market and how to

prepare for it this is an important

video that will be useful for the rest

of 2022 because we're going to talk

about what we should do about what's

going on in the market but we also want

to talk about why this is happening

we'll talk about why it's also becoming

difficult to afford eggs yes literally

eggs they're skyrocketing in price so

much so that a burrito at the local

Mexican stand now cost me 14 when I add

tip I'm almost at twenty dollars for a

single breakfast burrito best burritos

in the world shout out to Corrales but

wow it's absolutely insane okay look we

got to talk about briefly what happened

today because it's somewhat historic and

then we'll actually talk about how what

happened today matters for the rest of

the year because that's the big deal so

today was just bad okay the Dow was down

1276 points the s p was down 4.32 the

NASDAQ was down 5 0.16 and you've got

volatility way

Way Red even Bitcoin was down 7.5

leading Bloomberg to make fun of a

Bitcoin saying well that's clearly not

an inflation hedge and when you hop over

here you see something that you have not

actually seen since March of 2020. every

single stock in the NASDAQ 100 was red

today it is the first time that has

happened since March of 2020 and that's

something that makes today historic add

insult to injury you've got the 10-year

treasury yield skyrocketing to 3.41

that's bad for Real Estate we're going

to talk about that in just a moment and

the two years at 3.79 which for those of

you pay attention paying attention you

might be like

wait a minute did you just say the two

year is higher than the 10-year isn't it

usually the other way around yes and

that's called the inverted yield curve

and it is getting worse which is a sign

that oh yeah the recession that is

either here or coming depending on whom

you talk to isn't going anywhere anytime

soon the Panic today was also so bad

that everybody put the stock market on

their front page again the New York

Times covering it of course we had NPR

covering it there's the Wall Street

Journal and you even had CNN talking

about the stock market and you know what

when CNN is talking about the stock

market it means the stock market is

finally more important than Trump

bashing and that is not a political

statement it's just a fact okay this was

a big sell-off and the reality is we've

got three and a half months to go and

we're already tracking as one of the

worst stock market Beginnings ever since

the Great a depression for a stock

market year and if you take a look at

the records of the NASDAQ falling more

than four percent in a day you can see

look at where we rank in terms of other

years so far we've had seven more than

four percent declines there uh which you

can see here on the bottom right right

over here and when you compare that to

all of these other years look at the

years you're talking about you're

talking about the.com Bubble the Great

Recession notice you have these worst

periods of time during recessions and

that's because we're probably in a

recession so why is this happening well

we're going to talk about exactly why

this is happening I do want to give a

quick shout out of course to all of

those of you in the courses on building

your wealth if you want to join those

use the coupon code seed via the link

down below excellent courses on

step-by-step guide it's for building

your wealth buying your first home your

first rental building your wealth in

stocks Building Wealth as a real estate

agent YouTuber or even starting your own

property management business the coupon

code for those programs is linked down

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streams every day the market is open so

I can answer your questions about uh

whatever issues you have whether it's in

real estate or stocks and you'll get to

join me in our fundamental analysis that

we do every single morning this morning

we did some fundamental analysis on the

cruise lines oh those are on sale but

are they on sale for a good reason well

you have to join the courses to find out

link down below okay folks now we gotta

seriously do a little bit of talking

about what happened here today because

the Catalyst for all of this disaster

today was of course the CP lie I mean

the CPI inflation report we had

expectations that year-over-year

inflation was going to come in at 8.1

percent that actually came in at 8.3

percent which you can see is higher the

month over month was expected to come

down 0.1 percent nope actually went up

point one percent core was expected to

be point three percent nope actually

came in at point six the problem with

point six is that works out to 7.2

percent of an annualized inflation rate

you just multiply it by 12 to get

annualized you do not compound it only

one German guy got it right out of 64

economists and it's not so much folks

that the inflation rates fell uh but

just missed expectations that's not the

biggest problem that we had here yes

look inflation this summer hit a big

peak we were over nine percent leave a

comment down below if you watched me

live on a beach in Germany doing the CPI

report live from my phone going oh my

gosh it's over nine percent this is

insane okay leave a comment if you were

there for that but folks okay this is a

problem not because yeah inflation is is

like hitting a new high but because

first of all the speed of at which it's

falling is slower than the expectations

but worse everything is still going up

sure rent and shelter went up 0.7 really

really high that has like a 33 weight of

inflation that means it's getting more

expensive as rents go up uh to rent

properties and so what happens well we

get more inflation more inflation means

the FED has to be more aggressive to us

and push the stock market down as a

consequence of this they're trying to do

this on purpose because the less wealth

we have the less Rich we feel and when

we feel less Rich we spend less money

and when we spend less money potentially

then inflation can actually really come

down but this isn't just a matter of

rent being up 0.7 on the month or used

autos not falling as much as we thought

they would it's the fact that everything

is going up in fact we can take a look

at all of the different categories right

here take a look at the different

categories we've got trimmed mean median

sticky prices uh excluding food and fuel

so core service services and

unfortunately when you plot these all of

the trajectories for these levels of

inflation are up they're actually not

peaking on top of that and this is bad

if you just exclude like all of those

major categories that I talk about and

this is the bottom line you want to know

about this okay if you take out shelter

you take out food you take out energy so

you take out those expensive eggs you

take out rent you take out cars and

trucks you take all of that out and let

me show you what you're left with okay

because the purpose of this is try to

understand well what's everything else

doing right like how about medical bills

how about window drapes how about carpet

for your house right how much are those

going up well if we just look at that

chart folks it ain't any better

inflation excluding everything is still

Rising a lot okay over six percent it's

still going up it's absolutely bonkers

it's not just gas it's not just shelter

it's everything okay eggs were literally

up 2.9 this month if you annualize that

that's a 34.8 increase for eggs okay

that's wild and so we've got this really

big issue and that is that inflation is

proving to be sticky and when inflation

is sticky the FED has to take out its

hammer and Hammer inflation down it's

kind of like whack-a-mole and the more

the mole keeps coming up the harder they

have to hit to get the mole back in the

hole problem is once the moles out of

the hole it's really hard to get the

mole back in the hole so what's likely

to happen now well the FED is likely to

increase interest rates even more

substantially than we were pricing in

just yesterday just yesterday we had

about a 60 chance that we were only

going to get a 50 basis point interest

rate hike that's about half of a percent

that means the Fed was only going to

make interest rates about half of a

percent more expensive because the FED

usually does what the market is

predicting the FED is going to do kind

of interesting it's almost like the FED

doesn't have to do anything other than

come out and talk to us about how

they're going to fight inflation then

the market prices in what the fed's

going to do and then the market or the

FED looks and goes oh okay you guys

think well with an overwhelming majority

we're going to raise rates by 75 basis

points this meeting okay that's what

we'll do that's pretty much how they

operate they kind of guide us verbally

we price it in and then they actually do

it and so this is uh very neat because

that allows us to go over and look at

the Fed rate probabilities and right now

the federal funds rate I call it the F

rate because it's like oh F it's going

up again right now we're sitting at 2.5

percent that's the upper range so we're

technically 2.25 uh all the way up to uh

2.5 right that's the range for this rate

don't worry so much about the range but

it's important for you to know because

when you look at this right here you can

see that right now we are pricing in a

65 chance of having a 75 basis point

hike but we're also which we are not

pricing in last time we are now also

pricing in a 35 chance of a mega jumbo

100 basis point hike that is a full

percent so the the F rate could go up a

full one percent and last meeting Jerome

Powell told us hey you it's not going to

be typical for us to have large rate

hikes don't worry and at this point you

should kind of know that if the FED says

they're not going to do something

they're probably going to do it because

they told us inflation was transitory

they were wrong about that at least thus

far maybe one day they'll prove to be

right they told us oh hey we don't

expect to have to do these outsized

hikes much more or more than you know

the occasional instance well now we're

about to get another 75 basis point

height following the other two that

we've had and this is because markets

are screaming at the FED saying hey

you need to get inflation down and y'all

are too late to the party to whack that

mole back in the hole so you have to be

a little bit more aggressive

unfortunately it's this aggressiveness

that makes people nervous and it also

makes markets nervous and they want to

sell and get out of the market

especially real estate which we'll talk

about in a moment not only because rates

are going up which makes things more

expensive but also the fear that this is

potentially just the beginning that

rates might actually have to go up even

higher than ever previously thought and

the reason for that goes back to the

1970s see in the 1970s we had really

high inflation because we left the gold

standard which meant the dollar was no

longer backed by gold that created some

initial fear which was then made worse

by three other things with a war Vietnam

War we had an oil shock and we had high

inflation expectations which is when

people think that inflation is going to

go up and generally when people think

that inflation is going to go up it

tends to be self-fulfilling that's

that's because people rush to the store

go buy stuff before it gets more

expensive so you kind of get that last

push of inflation that way you had all

that in the 70s and as a result of those

70s we ended up getting what was called

Paul volckert that's because the then

chairperson of the FED raised interest

rates higher than the level of inflation

in order to do that today the FED would

have to take that F rate from where it

is now two and a half percent and forget

about a one percent interest rate hike

they would have to go from Two and a

half percent to like nine percent to

really Crush inflation and the reason

they'll do that if they need to is

because if you don't rein in inflation

you could completely collapse the

economy and lose your currency it's what

happened to Germany with wheelbarrows of

cash and the Weimar Republic the entire

economy just collapses the currency

evaporates it's happened in Venezuela

it's happening in Zimbabwe and we're no

exception it could happen to us as well

that's why fighting inflation is much

more important than hate to say it but

people's jobs because they could get

laid off and that tends to be a

consequence of all this or being in a

recession and we have a lot of

similarities today as the 70s we have an

oil shock we have a war Russia Ukraine

right the threat of China Taiwan now

there is a little bit of a difference in

that we didn't just leave the gold

standard we didn't just have a bunch of

explorations of price caps and ceilings

from uh the administration at the time

but there is a bit of a difference today

inflation expectations are lower

and so this is leading some people to

say like okay well maybe the FED doesn't

have to pull volkras but unfortunately

today's inflation report is just

something that says

no you guys got to be a little bit more

serious than you're being right now

because it's taking too long problem

with the Fed

that is the tools that they

rates

slowly it takes time for those to take

effect so what are some people saying

well you get people like Larry Summers

the former treasury secretary who says

you know what it is time for a 100 basis

a point hike to reinforce your

credibility because as soon as the FED

loses credibility then unfortunately all

of their words of trying to coax the

market down won't work anymore people

just won't trust the fed and that could

actually lead inflation to Skyrocket

actually and then we really have a bad

Market to look forward to so raising the

F rate is going to happen it's going to

go up there's some debate about whether

it's going to go up by 75 basis points

there is even a fund manager who's

arguing hey you know what it should only

go up by 25 it's this guy named gunlock

and he says Ah we should only go up by

25 basis points because otherwise the

fed's going to overdo it unfortunately

the FED tends to do what the market

wants to do uh or what the market wants

it to do which right now has a 65 chance

of a 75 BP hike it's what we're gonna

get

so the Market's saying hey fed you're

gonna have to give it to us dirty and

what's this going to do it's going to

hurt stocks and it's going to hurt real

estate

now what do we have so far well we had a

lot of pain in the stock market today we

know it's because inflation isn't just

going up we didn't just miss

expectations but it's everything is

getting more expensive it's Broad and

widespread really bad we also know that

the markets when the FED hikes rates

think uh oh we have to price in a

recession and that means stocks go down

and as rates go up real estate gets hurt

as well we've already seen real estate

start getting hurt in fact we've already

seen real estate fall to the tune of

five and a half percent in just five

months and that's really bad because it

brings back memories to 2009 which is

the last time the housing market fell

more than one percent per month now one

percent per month might sound like not

that much especially when you compare it

to the stock market that just fell like

five percent as the NASDAQ right but one

percent per month in real estate is bad

because real estate moves slowly

and I'm gonna show you why it could be

even more dirty at the beginning of next

year now this is really really important

so you're going to want to understand

this because there are a lot of people

today who still argue what are you

talking about we just take time year

over year prices are higher

it's so exhausting obviously they

haven't taken the courses on building

your wealth link down below to

understand what's happening but now I'm

going to teach it to you okay here see

August on the left side August 2000 2021

see how that point is actually lower

than where I labeled August

2022 yeah over here is higher than over

here so when you compare you actually

still have a positive maybe it's

positive five percent or four percent or

eight percent whatever right but wait a

minute where are we trajectory wise oh

crap that's where we are so right now

the trajectory of real estate prices is

down and that's the problem it's

probably because purchasing power has

been evaporated to the tune of about 35

because mortgage rates have skyrocketed

since December and guess what they're

still going up it's really really bad

all of that is going to lead home prices

to fall more and next year I would guess

somewhere around March when we look back

to where that falling started we're

probably going to see negative home

reports price reports will literally

have Tucker Carlson and CNBC and uh CNN

whatever going on TV going home prices

year over year down and that could

potentially lead to fear selling by

sellers you haven't seen that yet but we

also haven't seen those year-over-year

declines yet so just wait get ready for

that if you're not part of the real

estate investing courses yet linked down

below and you're intimidated by real

estate I kid you not there's probably no

better time to enroll and study for Real

Estate by following those lectures in

the links down below and watching me do

fundamental analysis live with you the

now like Now's the Time To Learn because

you want to be ready to go in 2023 and

2024. it's actually why I'm starting

this company house hack this company

house hack is literally going to go out

there and buy homes in 2023 and 2024

because I think it's going to be a

beautiful time to buy real estate

in the meantime though consumers are

going to see their wealth likely to

continue to decline we're probably going

to see payroll numbers plummet which

means we're going to see more

joblessness and unfortunately a higher

payroll report or a higher unemployment

report I should say and even though

today Banks like Capital One tell us

that consumers are still in a relatively

strong position that they have more

savings than they did before the

pandemic uh and that bank balances are

starting to increase a little bit we

don't know how long it's going to be

until all of this decays and when it

decays that is when consumers actually

start weakening because they start

losing their jobs or whatever well folks

we might enter what's known as phase two

of the bear Market this is a Goldman

Sachs piece here they say that phase one

of the bear Market is complete and now

it's time to potentially go into phase

two of the bear Market face two of the

bear market is when you go into what's

known as an earnings recession so far

we've already seen companies downgraded

like crazy over the last two months the

green bars represent downgrades to

company estimates estimates for earnings

and when you couple those revisions to

the downside plus more negative

revisions coming from analysts which

we're seeing on this particular chart

right here

compounded with the potential consumer

weakness coming as consumer wealth goes

down

oh boy we could be in a painful painful

Market quite frankly not just for the

rest of the year but for the next year I

hate to say it now I'm going to give

some ideas and suggestions in just a

moment but this is bad again snapshot

where we are really broad inflation

fed has potentially this position of

well our efforts take time but then the

markets are like fed you suck you need

to restore your credibility and talk

tough to the market and push this Market

down and that's exactly what's happening

that's why we had a sell-off today and

you have a sell-off because

potentially going to go into an earnings

recession that's a problem so what would

I do now in this position especially

since uh there are quite a few things

that could happen in the market that

won't be so beautiful

well here's what I would do now and I

want to be very clear about this even

though I'm working on becoming a

licensed financial advisor I've already

passed my test I just have to file some

paperwork which has already been filed

once that paperwork is cleared then I'm

officially a licensed financial advisor

even though I will be that I cannot

provide you Financial advice in this

video because I cannot give you

non-personal Financial advice I just

want you to know from somebody with a

finance background who loves doing this

for a living these are some of the

things that I would consider the very

first thing that I would consider is

there are two things that could happen

in stocks and you need to know the two

things that could happen in stocks

number one we could revisit 1982 and you

could see the stock market Skyrocket

something like 20 in a very short period

of time that is entirely possible

then you could number two potentially

see and this is the second option which

isn't as great the following you could

see stocks suffering for 14 years like

they did after the tech bubble that

would be an issue okay so it's important

to go in knowing that very very very

important because when you go in knowing

that

you're Gucci because now you know what

you could potentially face you could go

to the moon or you could just have hell

for the next decade okay so now

what do I believe that you should

practically do and again not Financial

advice for you but practically number

one best time to start a business is in

this environment I started my real

estate business the bottom of the last

real estate cycle that was painful it

was really hard to start but it made it

really easy to make money in 2013 to

2019 as an agent because that was boom

time and it was freaking awesome

starting was really really hard but it

set the stage it set a really good

strong foundation for strength going

forward

second I believe that getting into real

estate or at least preparing courses or

not is brilliant the issue here is

timing there's gonna take more time for

the real estate market to actually get

to bottom before it starts trending up

again it could take years so you want to

be prepared here now I don't believe the

time to buy real estate is right now

because if they still think there's more

pain ahead of us okay I want to be very

clear about that the next thing that I

would do in terms of also preparing to

get into real estate is start paying

down debt

get educated consider becoming a real

estate agent not a bad idea as well it's

kind of combining option one and two and

get your income up you want two years of

W-2s and work experience and tax returns

so you could qualify for Real Estate now

is the time to get your credit up now is

the time to get your W-2s in order now

is the time to get your debt down all of

that's going to help you buy

third dollar cost average into stocks

that you believe in only for the long

term if you're willing to ride either

scenario which means we go to the Moon

up twenty Thirty forty percent double

triple whatever possible or we trade

sideways painfully for 14 years I don't

think either of those are really really

likely personally I think we're probably

going to bounce along the bottom until

we consistently see inflation go down

and that could take another four to 12

months and then maybe we'll get some

form of recovery but every recession and

crash is different so if we have an

earnings recession stocks are probably

going to move down even more so

potentially look for companies that

would be less affected by an earnings

recession which would be companies that

are still growing through a recession

potentially like

Tesla fourth consider getting licenses

become a white collar worker instead of

a blue collar worker when you can up

level yourself increase your income and

stay strong what am I personally doing

personally I'm taking the dollar cost

average into stocks approach that's

because I believe anytime the NASDAQ is

hitting between 280 and about 320. the

Market's kind of just bouncing along

bottom I really don't think we can go

lower than that trading range unless we

get inflation that comes in way higher

than what we saw this summer which was a

nine percent read are we going to

fluctuate a lot and very violently

between that trading level absolutely in

the meantime I'm also getting ready to

go shopping for Real Estate thanks so

much for watching and good luck