A Dangerous Warning to ALL Investors [for 2022].

today's video is sponsored by moomoo

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meet kevin here so it's usually on days

like today that i post a video like a

warning to investors but because the

market is green most people think that

i'm just trying to fudd stocks to make

them go lower because i have shorts and

well i want to make tendees off the

shorts and because i'm a shill and

bought by the hedges well then naturally

i'm losing money when the market's going

up

and the market is going up indices are

up lots of stocks are up toast is up

bitcoin's up tesla's up pretty much

everything's up well i hate to burst

those heaters bubble but i have no short

positions i'm not bought by the hedges

and i'm not wearing a suit either

folks in this video i we've sincerely

got to talk about a conservative mind

that could really start blowing up in

2022 and could be a long-term concern

for us investing going forward that what

we're feeling in the market right now

might be a temporary euphoria again but

there could be larger issues at play and

that's what we're going to talk about

starting right after i mentioned that

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code linked down below okay let's get

into this so here's the thing

we've got to talk about

inflation only just to get it out of the

way because there's a more important

issue at play that we have to talk about

inflation is

very much expected to go down in 2022 i

highly expect it to go down the fed

believes it'll go down to two and a half

percent but i expect about 50 to 60

percent of you watching this video don't

believe a word the federal reserve says

that so so that's okay the market itself

might be a better estimate for you the

market believes that inflation is going

to go down by the end of 2022 to 2.6 to

3

so we've got this alignment myself the

market

the federal reserve not that i'm trying

to align myself with being

an equal status as to one of those but

but we together there's this agreement

that inflation should go down

substantially in 2022

which is good right yes but there's a

bigger warning

see uh we're gonna finish this thought

on inflation and we're gonna talk about

this bigger problem

we do know that the one thing that is

actually expected to keep inflation

higher is something that we know is

higher than it's actually being measured

by the cpi right now

you do have a lot of people who called

cpi a scam for this but it's so well

known that economists actually already

anticipate that housing for example is

and wages are going to be lagging

indicators so see when they calculate

the cpi they use this weird thing called

owner's equivalent rents uh but owner's

equivalent rents are not aren't

necessarily what market rents are but on

top of that because it's difficult to

just go around and survey all the

properties that are on the market

because we don't know if they're renting

right away or whatever usually what

happens is people's expectations of

their rents going up goes up slowly over

time because it takes time for people's

leases to expire other properties to get

rented and then the market to go oh wow

okay that's the market value for rents

now and then rents slowly start going up

even though you might not be able to

rent a property today at what the cpi

thinks inflation is today it's

purposefully designed as a lagging

indicator and it's important to know

that so like when i look at the cpi i

don't just go off

scam fraud i i don't think it's perfect

by any means but i look at it and go

okay i understand that's going to be a

lagging win so to speak that is going to

keep inflation a little bit higher along

with wages cpi is not really good at

tracking wage price growth so both of

these things together

are going to create this this wind that

is going to keep inflation propped up or

maybe this

this foundation where we're not going to

fall below or potentially to the federal

reserve's inflation targets in 2022 or

potentially even 2023

so these these are concerns and the only

reason this matters is because if

inflation doesn't go down quickly enough

we think the federal reserve might

potentially be overly aggressive in

raising rates and this is what's going

to create a really interesting dynamic

in the market see one of the reasons

that inflation is continuing to go up

the way it is because everybody just

says yes i say just do it in other words

whatever the price is i'll pay it

and i'm not talking about wealthy people

either i'm talking about normal

americans every single day are just

paying the higher prices

nike is cheering the fact that they are

having to mark down product less they

are cheering the fact that they're

selling more of their products at full

freaking pop people ain't even waiting

for the coupon

and chipotle is bragging about how their

input costs did not go up like their

meat and their rice even though we've

seen a lot of meat inflation the grocery

store chipotle is bragging about how

their meat and their you know wheat

prices their meat and wheat price

haven't been going up

but

their prices have been going up on what

they're selling their product for

because they can

this is really important because really

what it means is prices and this

inflation keep going up and i'm not to

try to confuse this and say that all

inflation is caused by this right this

would just be more consumer price

focused i know we've got lots of

inflation and materials and other

aspects as well

certainly trucking and services but

that's more like producer price

inflation here i'm more talking about

consumer price inflation

so prices are going up because people

are saying yes and so what what i think

about this

is

at some point and 2022 could be the

beginning of this year

people are going to look and realize

oh crap

i don't have the cash flow that i had in

2020

or 2021. part of that is going to be

because uh about 80 percent of the

children in our country receive the

child tax credit well their parents do

and those are those are huge stimulus

checks i mean that's a that's a fat

stimulus check for every child that you

have on top of all the other forms of

stimulus that we've gotten like student

loan forbearance a lot of millennials

have student loans a lot of younger

families with children student loans uh

the the unemployment uh you still get

unemployment there's still a lot of

people on unemployment taking the child

tax credit and student loan forbearance

there are a lot of people who uh took

home forbearance which i actually

encouraged not initially i was skeptical

at first but then i encouraged uh and uh

you can now or or you could potentially

already have refinanced your mortgage

forbearance from a 30-year fixed into a

40-year fixed which just lowers your

monthly payment and extends how long

you're going to pay for it so all of

these things together in 2021 have

really empowered consumers and and this

isn't even like when we think about

stimulus we're like ah come on there

hasn't been a stimulus check in a long

time it's not true like people are this

this tax filing season in april between

february and april people are still

gonna get

half of their child tax credit for 2021

in a lump sum check and so some families

are gonna be getting five to ten

thousand dollars depending on how many

children they have right uh so the

stimulus is still getting pumped

but that is coming to an end this

mortgage uh extension that joe biden

just did pushing out

or sorry student loan forbearance

extension through through may that is

going to come to an end all these things

are going to come to an end

and in my opinion

people are going to stop saying yes at

some point people are going to stop

saying yes this is going to cause a few

things to happen in the economy but

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to five free stocks this is going to

cause a few things to happen in the

economy first of all

businesses are going to get nervous when

sales numbers start going down and

companies

eventually have to start providing lower

forecasts i think we're going to have

good forecasts for

q4 here i think q4 is going to be good

can be spread out spending we're not

going to have that huge spike that we

saw on black friday but people still

feel pretty lofty i think uh q1

probably going to be pretty great for

consumers people are gonna have spent

we're gonna see nice beats at companies

i'm optimistic about the next two

quarters but this video is really more

broadly about 2022 in total

i think come q23 of 2022 we're going to

see some frustration with consumers that

i just don't have as much money as i did

i'm not as flush with cash as i was

and i got to spend less and so we're

going to rotate to a direction of

frugality it took a lot longer than i

expected but i i think we are going to

go into a direction of reality companies

are embarrassed generally to report that

there's an inflection point in their

sales because when there's an inflection

point in their sales

the market doesn't look at the company

like nike and let's say nike sales

started rotating down the market doesn't

look at nike and goes don't worry it's

not your fault it's the consumers being

frugal they look and go

dude do we need a new ceo

you know what i mean like companies are

going to look at this and they're going

to get embarrassed

this in my opinion is going to force

more creative brand advertising and just

more advertising in general maybe not

immediately i don't think it's like oh

january 1 everybody's advertising more

probably q2 q3

at the same time i do think there are

going to be a lot of individual

consumers who are like crap i really got

to stop spending but i want to because i

want to keep up with the joneses you

know this is just more of a bias i i

like the feeling of spending what can i

do to spend more i could go into debt

more oh but wait if i'm already maxed

out on my credit cards what do i do buy

now pay later so i think buy now pay

later is going to be a big profitability

sector going forward but

we've got regulators

you know oh no if regulators are looking

at buy now pay later are they going to

say no stay tuned i'm going to give you

my expectation of what regulators are

going to do and how we're actually going

to potentially sow the seeds

of the next bubble not just in stocks

but also in real estate and i think

crypto will just be along for the ride

uh unless of course there's a separate

uh crypto issue maybe related to stable

coins or some other stupid fud whatever

but i want you to be aware of how we can

actually sow the seeds of the next

bubble that is right now i don't believe

we're in a bubble i do believe that

valuations are elevated but i sit behind

a computer screen or a newspaper for 10

hours a day every single day

plus all the other work that i do

and so yeah it's possible i could be

wrong but at least from what i'm seeing

right now reading everything and just

condensing everything in this one little

sentence here i don't think we're in a

bubble right now but i think we could be

sowing the seeds of a bubble and i'll

show you exactly how that'll work so

here's what happens

inflation takes longer to go down

maybe

rates then move up either as expected or

slightly faster than expected we see

interest rates of one to one and a half

percent two percent that's not going to

be that big of a deal for

mortgages because i think what's going

to happen is uh we're going to see the

10 and 15 year fixed rate mortgages stay

somewhat stable and and maybe slowly

move up but i don't think they're going

to one for one move up with the federal

funds rate uh that's because a they

don't they align more with treasury

yields than the fed's funds rate there's

a separate market for mortgage rates

right mortgage-backed securities and so

on uh and two what really can happen

when fed the fed funds rates goes up

a fed funds rate goes up is you just

have a compression in the amount of

money that banks can make the spread

goes down banks get more competitive for

lending right so you don't necessarily

have to see mortgage rates go up

substantially but you will see spreads

tighten and mortgage rates go up

somewhat

okay so what happens when mortgage rates

go up somewhat

people have less cash and maybe they're

maxing out their credit cards they're

like oh crap okay well this sucks you

can't buy as much anymore well the first

thing that naturally happens is consumer

activity goes down people reef and then

the next thing that happens well

potentially at the same time is people

refinance less which doing refinances is

really interesting see in 2020 we refine

cash out refinancing activity fell to

its lowest levels it was like 30 of

refinances were cash out what that means

is somebody goes and says to their bank

hey i have a

i don't know 500 000 house i only owe

200 000 on it can i take out two hundred

thousand dollars of cash to do whatever

the hell i want with it and then just

leave a hundred thousand dollars of

equity and the banks are usually like

yeah let's go so in 2020 we only saw

thirty percent of refinances take cash

out now we're seeing like 70 percent of

people take cash out so i think we've

already started to see this transition

where people are expanding their use of

debt already

to do whatever they can to keep that

spending going

but there's a problem and the problem is

once you get to max credit card levels

you've used your buy now pay later

and uh oh i can't refinance anymore

because either i can't qualify or home

prices aren't going up anymore because

we're we've got a little bit of a

headwind that interest rates went up a

little bit again not as much as the fed

but

now all of a sudden that puts a little

bit of a lid or a headwind against real

estate prices so what happens it doesn't

make sense for people to refinance

anymore because there's there's nothing

to tap anymore like you've already used

the money and spent it and this is one

of the sad things people do is they'll

refinance their house and then they'll

be like oh i have 200 000 all right i'm

buying a new car i'm buying a boat you

know people go spending like crazy so

anyway

this is where

at the same time as businesses

potentially start noticing an inflection

point in consumer spending

we could also see

the government

regulators and lending companies

together it generally takes

everyone together

oh

we could start seeing a loosening of

credit standards and this is where where

the bubble really begins

see the government doesn't want to see

lower spending going into an election

because it looks bad

banks want to be able to lend more money

but if they can't because the banking

requirements are too tight and nobody's

getting refinances anymore and they

complain to regulators that hey our

lending system is too tight we gotta

loosen otherwise we can't stay in

business then all of a sudden regulators

banks and lending companies get together

and say you know what

let's let people have more debt on their

credit cards let's actually legalize buy

now pay later and just require some

disclosures but let me use buy an app

later and i mean not that it's illegal

now but but look there's there are

regulatory questions around it right now

what i mean is like let's rubber stamp

buy now pay later right yep no no you're

good so loosening of credit standards

loosening of auto loan standards

loosening of buy now pay later standards

and then folks loosening of mortgage

standards

that is when we really create the bubble

because now what happens is the people

who are much less qualified to take on

more debt take on more debt from real

estate credit cards buy now pay later

and

auto loans just because

so that way they can spend more money on

stuff

to give a little bit of an extra boost

and you know what we create at that

point

that's where we create a bubble look at

lending standards

so take a look at this first it's worth

noting that right now we're not there in

my opinion one of the reasons we're not

there is because look at this household

debt service payments so what you're

paying in interest as a percentage of

disposable income we're we're pretty

dang low we are well lower than anywhere

we were between 2012 honestly anywhere

we have been in really like the last 30

years which is insane 30 to 40 years

here we're at the lowest levels ever so

watch this potentially go up but this in

my opinion only goes up as we start

seeing a a a reduction in lending

standards this here is the number of

banks tightening credit standards and so

when you have a negative number it

implies loosening or not tightening and

we've already started to see a tighten

or a substantial loosening of credit

standards and that's because when you go

into a recession the first thing banks

like to do is freeze credit lines and

freeze uh

lending right so credit standards go way

up but that's starting to plummet

already auto loans are already starting

to see a little bit of a plummet but

this could be nominal and we can

continue to see both auto loan standards

credit card standards plummet even more

so we want to pay attention to this

being a negative here

so

household debt not substantially high

right now manageable i mean according to

history very very manageable where we

are right now this is despite the fact

that margin is at record highs

then we have uh business and corporate

debt at elevated levels but we're at the

lowest levels of uh

of of uh defaults that we've seen in in

a very very long time i mean certainly

since uh before the pandemic we're at

the lowest levels that we've been seeing

so

we're good right now tentatively

on debt but once we start seeing this

inflation linger a little longer

federal funds rates getting pushed up

compressing the amount of liquidity we

have in the markets because companies

are investing less potentially because

rates are a little higher they've done

their investing already or consumers are

are starting to run out of cash the next

natural phase of a bubble is a loosening

of standards when you get a loosening of

standards what you're really doing is

you're creating an evergrand i kid you

not and it can go fast in august of 2020

uh well i should say before august of

2020 the chinese government for years

said please

real estate companies take on as much

debt as you can we need to build lots of

housing we need to build these ghost

cities to be prepared for this big

population boom please take out more

than 100 debt i don't care what you got

to do take out lots of debt uh

just build

and that's what companies did

and what that happens is as you create a

real debt bubble and now all of a sudden

asset valuations really bubble up

the dangerous inflection point is when

institutions and governments start

noticing defaults or you start noticing

banks noticing the defaults and then

they start tightening credit standards

again you start seeing that that

tightening level go up a little bit and

it doesn't take much but even just a

little bit of an inflection point is a

sign that uh oh we're potentially

heading into the ouchy period look at

this you saw the more tightening of

credit standards in 2018 2019 leading

into the pandemic a little you certainly

saw credit standards increase at the end

of 2017. they're always too late by the

way you know right before the dot-com

bubble we kind of saw credit standards

start going up a little bit

they're usually too late with how they

react

but once the tap turns off like it does

with evergrand now you have people

potentially over saturated with debt

and that is when you see a real bubble

collapse in my opinion bubbles collapse

or pop

sticking with a theme of a bubble when

people are way over leveraged

and

the tap stops

that's when we have a really big bubble

that's when we have a real estate crash

that is when we have a real stock market

crash and that's potentially where we

end up trading sideways for a very very

long time now this i don't want to

fear monger this but i want to make

everybody aware of this because it's

something in my opinion

every investor should be aware of

because everybody's always you know by

the dip and buy and huddle or whatever

look at the s p 500 okay you zoom out on

the s p 500 we are at obviously

essentially all-time highs here uh plus

or minus a few days whatever right but

we're basically at all-time highs beyond

that

we take a look at this

right here we if you invested over here

anywhere around the middle of 1999

to the middle of 2001 before the dot-com

bubble popped if you invested at any

point here let's say you invested oh

what is this this is uh march of 1999

okay you invested during this time you

would have been negative

until about

2006

and you would have that that's basically

break even so you would have been your

stocks would have done nothing basically

for seven

years

okay and then if you held on while it

was slightly green it was finally boom

time then you hit the 2008 recession and

it took you a total of

about 13 years

to basically break even on your stocks

that's insane like your options could

bankrupt you if you were just like heavy

in options through this worth noting

that of my portfolio here i'll just show

you really quick so of my portfolio i've

got

here we go we've got 900 almost a

million in crypto

we've got stocks we're sitting at about

30

uh options we're sitting at this is in

the course member uh

section by the way any course member can

just look at the whole spreadsheet

options at about 7.75 so my exposure to

options

and crypto crypto i want to bump up a

little bit i'm probably going to get

that closer to 10

uh as as i find opportunities but uh

options i'm definitely keeping a little

bit low uh and i'm trying to go long on

shares but i also got to get out of

margin i'm about three mil in margin

right now so i got to work on that i

want to get that down again uh hoping

hoping that we do have uh a nice rally

going into q1 of 2022 but uh yeah folks

look even if you invested over here in

like 2007 and you just pulled this out i

mean you were upside down for for six

years potentially so

stocks don't only always go up and when

we're at the tip of the curve here

at the same time as we're trying to

understand what what is going to happen

with inflation and the fed and all this

stuff i think it's very useful to look

at all of our markets very broadly

and say

we've got to be careful about the one

thing in my opinion that can just

destroy everything

and that is

rates

uh and uh the debt problem

mostly the death bubble if we get an

inflection in the debt bubble first

we're going to get this massive

loosening and potential bubbling and

then an explosion

and this potential loosening happens

slowly it creeps up on you and that's

where you want to be careful right like

it's easy to say oh we've got to go

through the bubble first and then it'll

pop and and i'll just get out while

we're in the bubble phase it can sneak

up on you like the

slow

inflating of the bubble can happen very

very slowly

and it could sneak up on you where all

the sudden poof and then you end up with

six to 13 years of nothingness right of

the void

but a lot of this in my opinion is

spawned by a debt bubble if we have a

debt bubble then we end up with a ray

dalio style great reset i don't believe

we're at a debt bubble now uh

looking at real estate debt uh we are at

the highest credit scores average credit

score is like 760 highest credit scores

are getting loans uh the the lowest debt

to incomes for getting loans it's very

difficult to get a real estate mortgage

right now uh the standards are tight uh

i think it's certainly become easier to

get credit card debt it's become easier

to get into

uh uh auto loan debt but i think those

standards could continue to worsen and

buy now pay later can actually

accelerate the cycle which will be boom

time for buy now paid later companies

but you don't want to be in the buy now

pay later companies when the bubble pops

because they're going to be holding the

bag of all the debt

so anyway these are my thoughts i am

optimistic for the first half of 2022 i

don't see a lot of negative catalysts

although i could be blind so i'm always

aware that i don't know and when i don't

know i'm i'd continue to hunt and i'll

continue to look but this is a very

important message i believe that

everybody should internalize

and uh take advantage of just like you

should also take advantage of that

coupon code link down below

all right folks thank you so much the

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keep that one okay thank you so much for

being here folks i'll see you in the

next one goodbye