Why the Stock Market is Tanking.

holy molies why is the stock market

taking a Poopsy doopsy dumsy doodly well

we have multiple reasons for exactly why

and we're going to break them down right

now first there is this delicious chart

right here on the reverse repo facility

in this morning's course member live

stream we were analyzing why potentially

this could have seen a spike followed by

a draw down well first of all we know

that on a monthly basis we tend to get

draw downs from the Federal Reserve

trying to vacuum up money this is very

very normal for the Federal Reserve they

can sell off their Holdings their bonds

and when people send the money to the

FED in exchange for the bonds the FED is

selling the FED burns the money

effectively removing money from the

economy so it's very common to see a

downtrend in the reverse repo facility

because after all the Federal Reserve

has a very clear Mandate of reducing the

amount of money that's in this reverse

repo facility or cash part at the end of

the year though what's more interesting

is we got this Spike leading right into

the week of the 29th which implies

potentially more cash

deposits by companies like big Banks big

banks with trading desks that very

frequently leave close their trading

positions and then when they come back

the first week of January they take

their cash and start executing trades

again and what kind of Trades make sense

when you're potentially at all-time high

in the stock market for the q's the S&P

500 ndaq 100 obviously uh and

miscellaneous well actually lots of

other stocks including small caps which

have started rallying again shorting

shorting is not necessarily a horrible

idea when things are at elevated levels

especially as you are walking into

massive catalysts not only the jolts

data that we got this morning the ism

prices paid numbers which we'll talk

about in just a moment uh but also Fede

the fomc minutes the Federal Reserve

meeting at the end of the month on the

31st their uh projection for potentially

rate Cuts uh what the market is pricing

in for rate cuts and of course earnings

as well as CPI next week why would you

go long at the beginning of the year at

your trading desk or for your fund or

whatever well if you're a Trader why

would you go long right before all of

those

catalysts and coming into a new Fresh

year sitting at alltime highs you don't

so a lot of this is very likely traitor

momentum because after all the data is

not that bad in fact it's kind of

exactly what you would want consider for

example jolts this morning we're at 1.4

uh job openings per unemployed person

we're coming back into balance even Nick

T is talking about us coming back into

balance balance our fed Wikileaks nikkil

leaks uh Whisperer so to speak so jolts

coming back into balance not any kind of

aggressive explosion in job openings but

also not a massive softening which if

you remember in the video that I said

prepare for the jolts where we talked

about what you wanted you wanted a

number that comes in roughly in line I

said maybe a smidgen to the soft side

what did we get we got 8.79 versus the

882 so in other words a smid to the soft

side that's what you want you do not

want the economy to fall off a cliff

especially not jobs numbers the worst

case scenario is not getting a weak jobs

report and then the FED reducing rates

faster uh and and then the market being

happy because rates are going lower the

worst case scenario is a

joblessness recession that induces

deflation not inflation straight up

deflation which we're already seeing uh

and then massive joblessness and layoffs

not just corporate right sizing like

paychecks told us about but straight up

Mass layoffs that's how you go into

recession depression massive earnings

Cuts then the inverted yield curve bears

are like see told you

okay but that's not what the data said

today the data said today we're actually

relatively stable on jobs not only did

the ism data say that hiring was

essentially in line with expectations if

anything higher than expectations

expectations for ISM employment 46.5 we

got 48.1 that's a beat that's good ISM

Manufacturing was expected to come in at

47.1 we got 47.4 that's a beat that's

good now both of the numbers are under

50 so we're still in

contraction but we're Contracting less

than we thought we would be and then of

course we got prices paid led by the

energy sector but price is paid for

ISM we were expecting

49.5

49.5 the expectation would already

incorporate publicly available data like

commodity prices falling or oil prices

falling but what actually ended up

happening expectations missed massively

45.2 with prices falling more rapidly

than expected Winnebago is complaining

that their towables are down 8 to 15ish

per in

price ol of garden doesn't see any price

increases for what they sort of implied

was the next two quarters in their

earnings

call they see or saw year-over-year 5%

inflation but going forward maybe two

maybe

3% that's a restaurant that's Olive

Garden you look at any company otherwise

that's producing Goods we're almost

straight up in deflation just look at

the earnings calls no wage price spiral

these are actually the elements that we

want want to see we've got Barkin this

morning suggesting a soft Landing is not

inevitable however his argument that we

are long away from Cuts did end up

moving markets down why because

yesterday we were pricing in

75% uh with 75% certainty six rate cuts

for

2024 last week we were pricing in 84%

today we're pricing in 68.1% so you can

see straight down in what kind of rate

Cuts we're pricing in but again you

don't want the economy to go into

recession because then all your earnings

for all your companies are going to go

to straight up

trash no bu you don't want that and bad

earnings low EPS doesn't matter you

could have valuation expansion but if

that EPS number goes down stock go down

you know unless you could look through a

short-term recession like uh oh getting

thumbs up uh like uh like Co where you

got Larry cuddo every day we're going to

have a v-shaped recovery I don't know

why he sounds like a de to Trump but

whatever while else so we got the short

reload which is the same reason why we

have the bond retracement short reload

uh and that's why we're seeing

resistance at a 4% yield on the

10year you've got uh so short reload

Bond retracement stocks at all-time

highs massive Catalyst coming up a

little bit unwinding in yields or sorry

in in rate cut expectations because that

is not that bad but let's be real we

don't want bad data because we don't

want to go into recession look at niiki

T over here so if we jump into x what is

niiki T telling us uh latest jolts

report ratio of job openings to

unemployed trying to get back to about

that 1.25 is level where we were

previously drone Pals walked back the

idea that we need to go to 1% so or one

ratio 1: one ratio so uh getting closer

to that 1.25 and you can see the N we've

now on a 3-month moving average move

below 9 million although that drawing

does not really look below 9 million boy

that's got to be like a hair below 9

million oh come on look at that's

ridiculous that's like one of the the

capacha pro or what how do you call it

cap capap I don't whatever where like

pick all the staircases oh those things

are so horrible I hate those things uh

meantime other measures of Labor Market

tightness have returned to pre-pandemic

levels all workers private sector

Leisure Hospitality workers who quit

their jobs remember quits uh going down

is a relatively good thing because

people quit less uh when they don't

think there's a better opportunity which

is not I'm not saying that people

shouldn't have better opportunities I

think that it's wonderful if people can

quit and go to a better opportunity but

it's a sign of uncertainty that well if

I leave here I might end up with

something worse so uh generally you you

don't want an elevated level of quits

because that could be a sign of more of

a wage price spiral uh newly hired

workers as a share of total employment

also plummeting here actually low lower

than levels where we were in 2018 Nick T

here talking about these all returning

to around their pre-pandemic levels

fine so what do I make of all this well

again look we looked at the ism prices

paid Index this morning it reiterates

what we're seeing in earnings calls on

almost a daily

basis deflation is essentially coming to

goods and services unless you're Roku

and you have some like mental dis ility

thinking that people are going to pay

you $1,500 for a 75 in TV that you can

get for

$569 on Amazon th you know whatever TCL

uh uh 4K Smart TV for you know $1,000

less but then again that's Roku they

they burn money like it's like it's

candy I mean that's not even a good

analogy but just I don't I went off on

Roku this morning in the stock market

open live stream I mean they are burning

over a million dollars a

day on research and

development actually it's probably even

higher than that anyway it's terrible

and I'm like what are you guys

researching anyway so um yeah it's all

that stock cop they got to pay out $277

million in stock cop they just paid out

anyway uh so let's focus broadly

here I think the strongest uh uh leading

indicator you have here which which you

have a problem as well because if you

have a bad start to the year over the

last 5 years that has been indicative of

a bad year so if your first week not

your first few days but there only two

trading days left after today if your

first week ends up negative in the last

here it is I got the screenshot right

here I'll get out of the way you steal

it go take a screenshot anyway uh here

you go what do you got last five years

here last 5 years if your first five

days ended up negative you the full year

ended up up negative so you really want

the first 5 days on the S&P 500 to go

positive let's just say the first two

days have

sucked so we need some kind of rally to

to to push us for the full year here uh

but anyway I think the biggest concern

here is uh a reloading of shorts as

Traders are coming back uh and there is

no reason to be buying stocks right now

leading in when things are at all-time

highs going into earning season with all

the Catalyst that we've talked about

tomorrow we ADP numbers coming out

Friday we've got the jobs

report we've got CPI next week the FED

minutes today uh there's a lot why why

would you buy so it totally makes sense

things High short why would you buy you

wouldn't you wait for the Catalyst you

wait for

earnings so is this really a fundamental

shift in the economy or all of a sudden

we going into recession no are people

going to go that's it this is evidence

of a recession yep yep here's our

recession no it's not with the data is

saying either oh but the DT is lagging

that's true and there are warning signs

that's why we should be cutting

rates so we'll see what happens but we

are starting to unpriced a little bit

although First Rate cut is still priced

in at

67% for

March anyway go learn more at ec.com

thank you so much for watching and we'll

see you in the next one goodbye why not

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this we'll we'll try a little

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congratulations man you have done so

much people love you people look up to

you Kevin PA there financial analyst and

YouTuber meet Kevin always great to get

your

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