The Fed JUST Said "Recession is Unavoidable."

I am absolutely getting tired of the

FUD, man. I'm getting so tired of the

FUD. I'm going to break this crap down

for you and I'm give you my opinion on

this because when Bloomberg starts

running stories like this, recession is

unavoidable without Russian oil. Dallas

Fed study says, "Oh no, the Fed is now

telling us about a recession coming."

What? It certainly grabbed my attention.

It didn't surprise me that you had

Bloomberg picking up on FUD, but hey,

you know what? That's why you get the

beautiful opportunity of of course

listening to me give you the perspective

that I think is useful to have and of

course letting you know that you could

sign up for the we got to take a dive

into this. Before we take a dive into

this though, it is also worth noting

what the 102 treasury curve is doing

because this is uh probably JPOW doesn't

like it, but JPA doesn't like anything

that says he's doing a bad job. So uh

this is the 102 yield curve right now.

Now, if we zoom all the way into March

here, it's obviously fallen from the end

of February all the way down to about

20. Now, yesterday after JPAL started

talking about, oh, nothing's holding us

back from a 50 basis point hike in the

market had some heart palpitations. We

went down to about 18. Now, we're

sitting about 20.4.

Uh, break evens for inflation estimates

are still quite elevated over here at

about 3.6. This is the 5-year break even

chart. It's a problem, but honestly,

more and more it just seems like uh the

market, I mean, look at this. This is

the NASDAQ. It's up at 356 right now.

It's absolutely insane. We're almost at

the 350 Fibonacci line over here. I'm

sorry, the 50% Fibonacci retracement

line, which is 361. Uh, it's really

incredible. I mean, the market is just

totally brushing this off. I think we're

up, 1.8%. Yeah, 1.87% on the QQQ. It's

crazy. So, so why then are we getting

this FUD? And is this FUD something that

we should actually be worried about? Is

this just a bare market rally? Is, you

know, what is this nonsense? And does

the Fed have a point here? Well, you

know me. I always like to go to the

source. So, of course, uh this is not

the source. This is not a primary

source. This is a secondary source,

right? Because they're referencing

something else, right? And they talk

about how without a resumption of

Russian energy exports this year,

according to the Dallas Fed, it might be

difficult to avoid a recession, right?

Uh and they talk about how their

comparisons to this and 1991 and how

when we have prior oil peaks, we often

see recessions and that this oil peak uh

was was unexpected because originally we

weren't going to sanction energy. But uh

you know, unless we have some sort of uh

sudden supply response, we're going to

see some crazy demand destruction and

that demand destruction is going to lead

to a recession. Look, entirely possible.

Look, we had some crazy spending last

year. Wouldn't surprise me for us to

have some negative comps, especially at

companies. But wait a minute, let's just

isolate this in two ways. First, we're

going to look at what the Fed actually

said. And second, we're going to look at

this chart, which is a little blurry up

here. We're going to just look at this

right here. Okay, so their argument is

that, hey, over here, this is the the n

Oops, that's definitely not a

highlighter. Uh, you go over here,

there's your '9s crash, and look, oh no,

spike led to red, which was crash,

right? That's not great. Oh no, we had a

little spike over here and then crash.

That's not good. That's that's, you

know, also that's bad. Oh, and look at

this massive oil price spike over here

in 2008. That's not that's not good. Uh

and then, oh no, look at where we are

now. Big old spike, right? Okay, fine.

I've heard it many times before. I've

even said, hey, you know, it's not a

good sign to have oil above 100 because

of course it does increase fears of a

recession specifically because of demand

destruction, right? The less people have

to to spend on consumer goods like Nike

stuff or Under Armour stuff or whatever.

Even though Nike reported a great

quarter, remember that was the end of

last year, right? No, no Q1's forecast

yet here. Uh, take a look at some other

things that I've actually seen on this

chart. Look at the green highlighting.

So, which I'm going to reiterate here

with yellow. Look over here. Okay, so we

had an increase in oil prices here, but

that was kind of nominal, right? Okay,

didn't have a recession there. Look at

this. I mean, we sat here with this oil

runup throughout the entire early half

of the 2000s. We didn't have a

recession. And neither of these were oil

induced. This over here was a tech

bubble. This over here was a housing

crisis.

We had a massive oil price surge right

here, 2012, 2014, this was a disaster.

And it wasn't until uh we we started

having a lot more fracking in the United

States and rebuilding our oil production

at home. Imagine that. Uh, some of the

cleanest oil in the world is in America.

Jeez, fre. Anyway, uh, no recession. No

recession here. A lot of people freaking

out about going to be a double dip

recession. Didn't have one. Didn't have

one in 2018 either when oil spiked.

Didn't have one. Had a little bit of a

taper tantrum, but that's it. No

recession. Oh, no. Rates went up, but no

recession. So, I don't know. I mean,

looking at the chart, it seems a little

overblown, but okay, fine. Let's go

ahead and go into their actual research.

All right. So, let's let's see what they

say here. So, they talk about how Russia

essentially has the potential of uh

supplying 3 million barrels per day of

petrol production within America. And

over here you've got Russian exports

representing about 8% global petroleum

exports excluding Russia about 92%.

Okay, got it. And uh what we see here is

that uh the Fed actually reports that

one of the things that's happening right

now is potentially even though this is

illegal, trading houses are actually

buying the Russian oil, storing it in

Europe, and in the future they might

just resell it out of Europe. Basically

gambling on that Russian oil, rebranding

it, maybe slapping a different label on

it and then introducing it into the

market. Because the Fed here says recent

data from a data aggregator, energy

intelligence, says we we so far have not

seen a full 3 million barrel per day of

oil decline in markets. So something's

happening like this oil is still somehow

making it to the markets even though uh

you know generally this is frowned upon.

I want to clarify uh it actually in

according to these sanctions it is not

prohibited under current sanctions. So

oftentimes it's frowned upon sometimes

it's even illegal. In this case it is

actually not. So I want to make that

crystal clear. So the feds actually

notice by the way I want to mention

this. The fudster Bloomberg article did

not mention anything about this

potential 3 million barrels per day

somehow still making it into the market.

And I mean like let's be real, okay? Let

me just pretend I'm an oil baron here,

okay? And I'm not. I'm not an oil baron.

I'm sitting in an office with a freaking

Hello Kitty cup and for some reason you

decided to listen to me. I don't know

why, but anyway. So, pretend we're an

oil baron. We put our our oil baron hat

on. We're like, Russian oil is tough to

sell right now because a lot of

countries aren't allowed to buy it.

Barus and China, they got a lot of

Russian oil, but they got enough of it.

So other countries like India are like,

"hm, we'll buy your oil for a discount

because hey, why would I buy the

American crap at $100 per barrel if I

could buy yours 30% off? It's like a

Black Friday sale. 30% off. Huh, that's

a good deal. That's like That's like

getting 41% off on my courses on

building your wealth linked down below

with a coupon code expiring in 3 days.

Why would I not buy as many of those

courses I mean barrels of oil as

possible? It makes sense. that somehow

the free market still seems to work,

especially since it says here buying oil

for storage is not prohibited. Now,

probably buying Russian oil is probably

illegal, right? That's where there's

going to be some confusion, but come on.

Like, if you can figure out how to skirt

this and make lots of money, you know,

you buy it for 70 and resell it for 100.

I mean, come on. Anyway, there are some

differences between Russian oil. It's a

heavier grade versus the lighter kind of

shale uh that that we have over here in

America. That's okay. There are some

some differences, but some it seems like

some of this is still getting into the

market, which is actually a good thing,

right? Uh and there's also talk about

maybe Europe finally getting off their

behinds and uh not only are they working

deals with other countries like Germany

is has just announced a large deal uh

for liqufied uh petrole liqufied natural

gas, I'm sorry. And they're making new

deals all over the world. Uh other

countries are coming out and suggesting

uh whatever support they can. Uh there's

also pressure that maybe Germany and

Europe will be able to finally bring

some of their coal and nuclear plants

online again to reduce their reliance on

natural gas. So there are ways that we

can offset the impact of Russia without

having to go in a recession, right?

Especially since a lot of that Russian

oil is literally again between us

probably still getting into the market.

They do talk about some issues though.

They talk about the fact that Saudi

Arabia is not interested in increasing

their supply. The UA UAE is not in

interested in uh increasing their

supply. These are OPEC members, right?

And this is a problem. If if some people

or some countries are not interested in

providing additional supply uh then then

obviously you have a problem because

eventually you need this extra supply. I

think one of the reasons we're seeing

this lack of supply issue is uh the

following. Likewise, producers in the

United States are constrained by three

things. One, supply chain bottlenecks.

So, it's harder to actually pump more

because you don't have the products to

do so. You have labor shortages. We

talked about this in a video the other

day. We got 12,500 less oil workers in

America than we've ever had before. This

is a big problem because how are you

supposed to bring more pipe, you know,

rigs online? Assume 100 people per rig.

That's a lot of rigs. That's 120 rigs in

America we can't bring online because we

just don't have the workers for that

anymore. And how many people right now

are going to college trying to get a

degree in oil pumping or or whatever you

would get it in, right? So that's a

problem. A good news maybe is that uh

you got Biden. Biden's great at striking

deals apparently. I probably not. I

don't know. Uh negotiating with Iran and

Venezuela, which is something that a lot

of Republicans are obviously decrying

because like dude, come on. Like why

don't we just pump more here? Hey, ever

heard of the Keystone XL? You remember

that remaining uh you know extension leg

of the Keystone pipeline? Whatever. Uh

and then of course we had the strategic

oil reserve which even if we released

all of it, it would help us for about 3

months offset all of uh Russia's oil.

And so you you've got a lot of this what

I call noise. You got noise about Iran,

Venezuela,

OPEC, and production in America,

reducing reliance on oil and natural gas

in Europe and Germany and and

partnerships and this that and they

finish this whole piece with if Russian

energy exports are off market for the

remainder of 2022, a global economic

downturn seems unavoidable because of

demand destruction, right? Not enough

money circulating to keep our numbers

higher than where they were last year.

So, we have a recession with two

quarters of negative negative GDP in a

row, right? But I think the big thing

that is entirely missed by Bloomberg and

doesn't even show up in the bottom line

on this Fed economist piece here, which

bothers me, is literally what they said

upfront right here. What changed is much

of the Russian oil that continues to be

exported from the black Baltic and Black

Sea ports at steep discounts is not

delivered to refiners. Instead, trading

houses are buying it and putting it into

commercial storage in Europe from where

it may be potentially resold, bypassing

financial sanctions. In other words,

when the energy intelligence group tells

us for some reason we're actually not

seeing that 3 million barrel per day of

oil decline is probably because it's

actually still finding its way into the

market. That Russian oil is still making

it in. So sucks for the point of view of

trying to sanction Russia, but in terms

of avoiding a recession, that's what I'd

be watching. I would be watching the

fact that this oil somehow still makes

it to the market and all the other crap

for me for now is just noise and I'm

also keeping my fingers crossed on a

negotiated deal with Ukraine. So, we'll

see what happens. This is something I'm

keeping an eye on and this gives me

optimism. I like this a lot. I'm going

to look one more time really quickly

just at their conclusion here. You could

go, you could click out of this video

already. There are three main

implications for the global economy.

First, Russia's invasion of Ukraine will

have far-reaching implications for

renewables. Of course, we know this.

food, fertilizer, wheat. We know that uh

the food prices, supply chain

disruptions caused by Ukraine, blah blah

blah, sustained inflationary pressures.

We know that uh the uh oil embargo

against Russia may cause a political

response in Russia. Okay, big deal. Uh

and again, third, the bulk of Russian if

the bulk of Russian energy exports is

off market for the remainder of 2022.

Well, so far so far based on the data

they gave here themselves is that that

if is actually not happening right now.

Yet, of course, you've got Doomberg

running these headlines.

I need a Tesla tequila. I'm freaking

tired of this.