Prepare for the Coming Global DEPRESSION.

complete disaster talk about alternative

SC oh just wait until you hear about

alternative see concerns about how much

the Market's going to fall how are we

going to handle the triple threat of an

energy crisis in Europe Chinese

lockdowns and aggressive tightening like

here in the US are we getting 100 BPS or

75 what do developers have to do with

the Federal Reserve and what new issues

does that bring up and what's all this

talk about fed 2025 as well as are we

going into a recession are we in one are

we going into depression we are in a

synchronous Global slowdown even to the

point that FedEx is now warning of a

global recession with prices of

cardboard plummeting so much so that

homeless in California are finally

finding shelter and no while that is a

bad joke the bad joke is actually

California but this isn't political

video this is a critically important

video for you to consider regarding the

Federal Reserve we're going to talk

about a lot of what I just teased three

very quick notes and we'll get started

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brought to you by MooMoo but more on

them later now let's get into some new

information earlier this week we

received news that inflation had been

expanding significantly more broadly

than expected and this is leading to new

calls for the Federal Reserve to take an

approach known as shock and awe

basically to many Paul vulcros don't

worry if you don't know the Paul volcker

reference the point is to basically beat

us up and raise interest rates more and

cause more pain in the markets and pain

in the markets is exactly what we're

seeing and the best way to measure that

everything is rising that prices are

broadly going up which is very dangerous

for the Federal Reserve will is by doing

this you get a chart that base basically

subtracts food shelter energy used cars

and trucks basically almost everything

right but then it leaves all of the

miscellaneous items and what do you have

you have inflation that is still rising

and that's kind of scary and so it's

leading to a lot of talk of that on

September 21st the Federal Reserve is

going to beat us up with a 100 basis

point hike a 100 basis point hike in

interest rates is a one percent hike and

it has not been done since the 1980s

when fed a chair of volcker essentially

rug pulled markets and raised interest

rates above the level of inflation right

now we're a two and a half percent in

interest rates and inflation is 8.3

percent imagine bringing rates above

that it would cause massive panic and

panic is exactly why a lot of folks are

saying there's no way the FED is going

to do a 100 basis point hike see you

have to remember this the Federal

Reserve Works through words they do very

little in the way of action that is

unexpected in other words when they want

to do something they send a quick little

text to the Wall Street Journal and leak

it and they'd use words or speeches or a

TV appearances to basically coax the

market into expecting what the FED wants

so if the FED wants to pause they start

leaving those hints the market picks it

up the market rallies If the Fed wants

the market to cool and relax they start

leaving hints that more tightening is

coming and that's exactly what we've

gotten because as this last inflationary

report showed more broad levels of

inflation we're now expecting with

almost certainty that we're going to get

at least a 75 basis point hike presently

markets are pricing in at 83 percent

chance we're going to see a 75 basis

point hike but what about this idea of a

shock and awe that what we really need

to do is just rug pull the market and

make sure we raise rates immediately

with a one percent rate hike so that way

the FED can finally restore or some of

its credibility because clearly they've

fallen so far behind inflation that

anything they do is too little and there

are individuals who argue this on both

aside ad nauseum in fact you have

individuals like Kathy Wood and Elon

Musk are chiming in on this and this

gets quite interesting here Kathy would

replied to Elon Musk who six days ago

wrote a major Fed rate height risks

deflation and now this is a really

interesting argument because clearly

we're in a situation of broad-based

inflation right now why would Elon Musk

say we risk deflation and where's

Kathy's head on this well first the

reason Elon suggests that we might risk

deflation is and this is really really

weird but every time the FED does

something it's kind of like they're

taking a rope and whipping that rope and

so the motion of them whipping the Rope

by raising interest rates looks very

small at this end you know it'd be about

you know maybe a 12 inch move here right

that looks relatively small

but at the end of the rope that could be

whiplashing at you know a three foot or

six foot distance the point here is to

say that over time the impact of the

federal reserve's actions are really

Amplified so they if they want to have a

small impact at the other end they got

to do small Strokes right and this

becomes really important because what

Elon is alluding to is the fact that if

the FED goes too shock and awe-ish in

the short term because they're trying to

convince markets no no we still have

credibility don't worry we're over

inflation is transitory it's okay it's

okay we realize we messed up you know

it's kind of a mix of Janet Yellen and

someone else I don't know leave a

comment down below but anyway then then

sure the FED would get credibility now

but they they would cause so much

tightening over the medium to longer

term the next six to 24 months that we

could actually push our entire United

States economy into a depression at that

point you would forget about recession

you would be in a depression and if

you're in a depression well now guess

what the FED has to do again

take out the money printer again burn

send stimmy checks again because they've

over tightened on the economy and it's

really important to know that we don't

want the FED to go hard now because

they're going to wreck us in the future

and this is why we haven't seen the Paul

volckering yet right raising rates to

the level of where inflation is because

we expect inflation is trending down and

this is it exactly what is typified or

exemplified I should say by Kathy Wood

who by the way follows me on Twitter

follow her as well shout out to Kathy's

super honored but when we got here

deflation is in the pipeline it says

Kathy Wood she says that the heading for

both the producer price indices the

Consumer Price Index the personal

consumption expenditures deflator which

is basically the CPI version that the

FED uses it's pretty similar small

differences anyway uh from post covet

Peak prices have resulted in Lumber

being down 60 copper down 35 percent

which is an industrial metal when this

Falls we tend to indicate that we might

be going into recession oil down 30

heavily because of China iron ore down

60 also heavily because of China less

real estate development in China means

iron ore goes down dram down 46 that is

an index that tracks chip prices for

memory cards corn down 17 Baltic Freight

rates down 79 this is true container

prices have collapsed but they're still

way higher than they were before the

pandemic even though we went from like

twenty thousand dollars a container to

like six thousand dollars a container

from China to the United States to like

California or Long Beach uh you know

it's still like 3x what it used to be

which would be like two thousand dollars

so even though 79 sounds like a big drop

it's still kind of like oh dang we still

got problems hey gold down 17 silver

down 39 okay got it okay now Kathy Wood

does continue uh her discussion a little

bit so we'll just quickly take a look at

this as measured by the Manheim used

index we see used car prices down uh

four percent that's about a 50 annual

rate what she did there she just

multiplied four percent by 12 right and

they've dropped 10 since peaking in

January uh now she is you using this as

a way to suggest that electric vehicles

are causing this disruption when in my

opinion the reality here is that used

car prices just exploded because there

was a shortage of cars after we started

reopening in 2021 shortage of chips to

manufacture new cars so used cars became

more expensive so I can't really pin

this only solely on electric vehicles

even though I want to okay and then she

talks a little bit more about this uh

which of course Elon Musk replies to

exactly this is neither a subtle or a

secret all of this happening here so

anyway okay so all of this is to say

that on one side yes you have people who

say fed be credible but on the other

side people say but if you're too

credible you're going to wreck our

economy don't do it our economy in the

United States is still really strong

don't destroy that retail sales numbers

were just revised up for last month the

consumer has more money than they did

before the pandemic yeah Consumer Credit

expend is going up but consumer savings

are also Rising again following a dip in

the summer so you're kind of in this

really remarkable place where America is

actually really really strong and we're

not not really facing this potential

apocalyptic crisis in the United States

but we do face this massive anchor of

both Europe and China likely going into

a very deep and extended recession if

not depression which on one hand is

actually good for inflation because less

spending over there whether it's on

Energy Products or just materials in

general will help bring inflation down

it's actually kind of like Europe and

China Could Be the Anchor to bring

inflation down to the United States

think about that for a moment pretty

remarkable now there are some really

important things that we have to

consider about this 100 basis point hike

including something that has to do with

developers and we're going to talk about

that because it's so so critical right

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let's talk about the fed and real estate

developers okay this is a new one and

this is really really cool so here's the

thing that happens when the FED raises

rates very aggressively what they

actually do is they increase the price

of wholesale credit lines for Real

Estate developers basically it gets

harder for Real Estate developers to

build stuff okay that reduces building

starts which what numbers have been

coming in under expectation and poorly

recently building starts in other words

Builders are building less homes and

when you build less homes you reduce the

availability of the housing stock this

has a double effect for the FED which is

extremely important the SE obvious and

the second one is more important let me

just get the first out of the way okay

because I know what you might already be

thinking the first is that obviously if

you reduce inventory for sale of housing

you could potentially increase prices

for housing right

potentially but this is more than offset

by the fact that mortgage rates have

risen and removed about 35 percent of

buyer purchasing power from the market

and it's why home prices are actually

trending down now not up we're already

down five and a half percent nationally

we'll probably be down 10 to 15 percent

or more by March and April of 2023 and

that's probably when the real fear is

going to happen in the housing market so

be prepared for buying deals in the

second half of 2023 and 2024 and that's

exactly why I'm launching house hack

which is expecting to scale my famous

wedge deal model and to hopefully a

multi-billion Dollar business to compete

with the likes of American homes for

rent Open Door Redfin and Invitation

Homes and I have good news for whether

you're accredited or not if you're an

accredited investor you can invest today

at househack.com and we're starting the

process to make sure we can get

non-accredited investors involved as

well so if you're not accredited don't

worry just stand by I'm listening to all

your comments I want to get you involved

on this so just stay tuned that's about

a five month process really hard with

the SEC but we're working on it but the

more important danger out of all of this

is actually what happens to potentially

rents with developers see when

developers build less homes and there's

less available rental property stock

then we push inflation on to rents not

only do we push inflation onto rents

when developers are able to build less

homes and so we're pushing up rent

prices but you also push up around

prices when less people can buy homes

because now they're renting so you have

less people buying more people renting

and then less homes available for rent

another reason prices for rents go up

and this actually drives inflation up

inflation or well inflation by rents

right and the biggest contributor to

inflation is housing anywhere between 25

to 32 percent depending on which measure

you're using CPI PC

it's a big problem so rental inflation

going forward is a big deal and because

of this developer credit line issue you

potentially

have the FED looking and saying you know

what we need to stick with 75. let's not

go for 100 because if we go for 100 it's

going to be too big of a whiplash and

we're going to push us into depression

and we're going to be causing other

problems like the rental problem now

keep in mind the FED could make the

decision that at some point in the

future they have to restore that

credibility inflation is just not

trending down and they'll give us the

big one in fact remember in January we

were talking about oh man is the Fed

gonna do 0 or 25 in March we got 25 then

50 became the new 25 then 75 became the

new 50 and then now we're talking about

100 as if it's going to become the new

75 so while anything is possible we've

not had 100 basis point hikes since the

1980s and uh I don't really think it's

likely at least not at this point it's

only about 17 likely but markets are

already starting to price this in and

this brings us to part three retuning

the curve see the Federal Reserve has a

terminal of federal funds rate uh

expectation right now of about two

points or sorry 3.75 to 4 that means at

some point in 2023 we expect to get to

about

3.75 to 4 percent

well what if that ends up being higher

when the Federal Reserve next releases

their next summary of economic

projections which is coming out on

September 21st and guess what in that

summary of economic projections we're

going to see what the Federal Reserve

thinks their terminal rate is going to

be that new sep will also project all

the way into 2025. it is the first step

that projects into 2025. right now

markets think the fed's going to be at

3.75 to 4 however if that terminal rate

comes out to be higher

we could see some depression in stock

prices if the terminal rate ends up

coming out to be something even higher

in the long term we could see even more

pain to stock market pricing in fact let

me give you a little bit of a guide and

clarify a little bit of what I mean by

just showing it to you so this is a

chart of the NASDAQ and what I believe

is that where we sit right now with this

temporary pain is markets actually

starting to price in the potential risk

that the FED is going to increase their

terminal rate so I think where we sit

right here at QQQ 288 is roughly equal

to about a 4.25 to 4.5 percent terminal

Fed rate I think over here was an

overextension this 270 level-ish for QQQ

NASDAQ right I think that is more

similar to like a 4.75 to 5 terminal Fed

rate and I think that this yellow line

over here is representative of a Fed

wanting to be around 3.5 to 3.75 and

then you turning down soon into the

future now the problem with the Federal

Reserve you turning and this idea that

they're going to pause and U-turn is

that I actually personally don't believe

that the Federal Reserve is going to

U-turn anytime soon keep in mind when I

say personally I say that because even

though I've passed the financial advisor

test and I'm going to be a licensed

financial advisor within the next few

weeks or at least I expect to be I can't

give you Financial advice so when I say

something's my opinion it's coming from

in my opinion a great place but it's

just an opinion I could be wrong right

so what do we have right here well this

right now represents the expectation of

the market today and it's that the

market thinks that we are going to see

the terminal rate be about 4.5 percent

right here for the federal funds rate

four and a half percent and that the

Federal Reserve will start reducing

interest rates in May of next year

I personally do not believe that'll be

true I personally believe the Federal

Reserve will actually maintain this

position for much of if not all of

2023 and even if that extends to

November this difference that you see

over here in purple on the right side

there that difference will mean there's

going to be some more pain that we have

to price in so we'll have to flatten

this out you probably send more pain to

the market so very quick summary okay

market right now is expecting a terminal

rate of 4.5 I want to update that from

making sure I clarify that from what I

said earlier 4.5 is the current terminal

rate you could write that down the

terminal rate goes up expect the QQQ to

go back to 270. 4.5 percent terminal

rate QQQ 290. four percent terminal rate

QQQ maybe 320. you can write those

things down you can't take them to the

bank because they're just words but you

could write them down because I think

they're a useful guide for what we could

be faced with but what's most important

going forward here sure we're going to

get this SCP we might even get some

phraseology that says things are going

to be higher for longer some signaling

from the FED then things are going to be

restrictive for some time

but what's most important are the

following two things

markets expectations of inflation

measured by these two charts number one

is this this is a chart of the five year

Break Even which gives us a chart of

people's emotions their expectations of

what inflation will do in about four

months notice how this peaked in March

and we got peak in about June and July

in terms of inflation so you can see

that Peak was correct it's just it shows

up in the reports later well if that

remains to be true which historically it

has been then we should see inflation

Trend down very very nicely in fact I'm

just going to hide myself for a moment

look at this

even with the latest drama over the last

few weeks that five-year inflation

expectations are going down not up

they're volatile they're bumpy but

they're going down and not up and on top

of that we just had a University of

Michigan release this morning that

suggested that inflation expectations

for one year stayed stable at 4.6

percent as expected but we had an

unexpected drop from 2.9 percent for 5

to 10 year inflation expectations down

to 2.8 so if you're an investor who's

investing based on expectations of

inflation which are very very powerful

you don't have to in my opinion worry so

much about alternative C alternative C

is the presentation that is known as the

hawkish presentation that is given to

the Federal Reserve at their meetings a

is generally dovish B is generally

neutral C is generally hawkish right now

alternative C appears to have a 17

chance and if you believe in

expectations as the FED does we're

probably not going to have to worry

about alternative C instead in the

United States at least we're going to be

dealing with a paper recession now you

know me I've been talking about this

potential for a paper recession since

January and while I don't do things

perfectly I've been talking about this

paper recession coming and talking about

how in my opinion when we look back in a

couple years we're gonna go dang wish I

invested more during that recession into

the stock market but don't worry you'll

have time to get into real estate

because that Pain's coming in 2023 and

20 24 maybe even into 2025 and while

this is not a solicitation the PPM is

make sure you go to househack.com to

consider investing with me and click the

link at the top of the comments and the

description down below to sign up for

the investor q a live stream we have

coming up this Sunday thanks so much

goodbye