I'm Shocked | The Fed's Great Stock & Real Estate Reset.

hey everyone me Kevin here in this video

we've got to be real about the direction

that our economy is facing what it means

for the housing market what it means for

the prices of things around us and what

it means for the stock market let's be

crystal clear in this video with exactly

not just what I believe but why I

believe it also to clarify why the

lights are a little

different the power went out as you can

see right here on my iPhone not only is

the power out but they keep kicking back

and down the road in terms of when

they're actually going to fix this

problem so I'm running on battery power

which I'm grateful we have it and the

sun is shining for solar which is great

they say the repair crew is on their way

but it took them 12 hours to determine

the cause so I'm not too optimistic that

I'm going to actually get full power

back anytime soon with that said let's

actually talk about what's going on in

the market so we've got obviously

catalysts coming up here in the near

term which we're going to touch on those

catalysts in the very near term but what

I think think is much more important is

starting with the

reality the reality of the Federal

Reserves dual mandate there are a lot of

folks first of all who are extremely

pissed that there is a chance we might

not have a deflationary recession that

housing prices might not crash that the

good price of goods and services might

not crash now I'm going to be clear what

my opinion is on this but let's first

actually determine what the facts are

and then after the facts we'll talk

about my opinion and the next catalyst

so the first fact we have to understand

is that the job market is coming into

more balance not only are wage gains

positive real income has turned positive

but we're not seeing a wage price spiral

which is just an economic nightmare we

we don't want that we want to see wages

going up slightly positively and above

the rate of inflation and right now they

are real wages are positive but in

addition to that we're seeing job

openings come more into line with our

pre-pandemic balance prepandemic balance

put us at a right around a 1.6 million

job openings that puts us slightly above

at just over 1.9 million job openings

right now and what we're finding is the

spread between the two is actually

narrowing a look at this piece right

here from TS Lombard who's actually

generally our resident B

they suggest that the Federal Reserve is

75% of the way towards an ideal soft

Landing where inflation compresses about

to 2% which would be represented by the

blue bars and the gap between

unemployment and available jobs Narrows

back to prepandemic Norms both of these

things compressing on the right side is

exactly the fact of what's happening now

I understand a lot of us look and we say

well I mean the data is not accurate and

in many regards you're right it's not

not only are survey responses the lowest

they've ever been but they're also

likely skewed by the fact that we're

trying to make adjustments in reporting

to account for a postco world which we

don't really have a precedent for unless

we want to go Spanish Flu depression

crash of 1920 and

2021

but we're not seeing the type of

unemployment yet at least that we saw in

1920 and 21 and we don't have the

Catalyst to suggest we will see I know

because I've said I've said this since

January of 2022 that unemployment is

lagging but so does the Federal Reserve

and so what actually caused that

unemployment surge of 1922 because

obviously if I said oh it's not going to

be like 1922 then that's playing the

this time is different fiddle but the

reality is the surge of 1920 uh 1920 to

2022 in availability of labor was

because of the end of World War I and

all of a sudden a bunch of veterans

being available for the workforce and

our economy not having enough room to

support them the job growth we're seeing

is still getting us back to the

unemployment we had before the pandemic

so yes of course jobs unemployment like

people losing their jobs

lags but we're also still catching up to

where we're supposed to be which we're

going to talk Catalyst because there are

a big catalysts coming up here in the

near term but the point of this is to

say not only are we playing catchup

still but the Federal Reserve also knows

unemployment is lagging which means

they're very likely to print money well

before we have a 1920 style dep

depression depression again excuse me

remember that was a depression that

wasn't a recession that was a depression

it was bad people were miserable very

miserable at the beginning of the 1920s

the end of the 1920s and if you actually

study it a lot of people say well the

cultural revolution of the 1920s created

as Roaring 20s actual poverty was very

very high a lot of people were very very

poor so then we look at the next thing

this right here is just Nick t two of

Nick T's favorite charts which again

show this ratio of job openings to

unemployment that's about the same thing

as we see here and it's really just to

say Okay so we're trending in the right

direction on jobs but what about the

inflation mandate well the same thing is

true on the inflation mandate uh not

only on the inflation mandate have we

had this large sort of explosion of

inflation but we've seen a substantial

decline in inflation one of my favorite

tools to look at in addition to Nick T

right here this is Nick T's uh pce chart

showing us uh the trend of inflation

what I like to do is pull out

specifically multivariate core trend

pce multivariate core Trend pce you

could grab this as well by going to the

Federal Reserve Bank of New York and

what we find over here if we go to the

multivariant core we could actually play

with this chart and we could rip apart

the pieces of it which is fantastic

let's just take everything off for a

moment and try to understand what the

facts are saying might happen in our

economy well right now Goods inflation

is zero zero no movement in Goods prices

so Goods prices are not going up I

actually do believe this is my opinion

that this will probably go negative that

companies like Walmart warning about

deflation are correct that the company

earnings calls we are hearing in them

suggesting we have to be more price

competitive we have to provide more

value we have to be more efficient those

are all red flags that deflation is

coming on the goods side and I 100%

agree with this and I 100% believe we

will see this again that does not

necessarily mean though we'll have to

have a recession in fact if we jump back

to 2009 I want you to look at how deep

of deflation we had a lot of people

compare back to 2009 they're like oh we

had massive deflation back then but look

at how nominal it was we were looking at

maybe 4 to9 basis points at a time per

month that's like maybe 1% deflation

over the year who cares folks I hate

this too but look at the inflation we

had we had if if you add up all of right

here we had somewhere around 18%

inflation if not more in Goods we did

not see that kind of deflation even in

the 2019 crash in the dot bubble we got

closer but even if we add up all of this

in the dot bubble maybe we got to about

4 to 5% deflation not

18% now technically if we go up 18% we

don't need a full 18 to go back down but

we'll certainly need somewhere around 15

right just think about the math of that

118 time 085 brings me right back to

about 100 so you need 15% deflation we

haven't seen that kind of

deflation really ever at least not in

the measure of multivaried core unless

of course you want to go back to the

Great Depression which quite frankly I

don't think anybody does that would be

more of a punch in the face than being

Paul vulker look during Paul vulker we

still had inflation for 20 years we

didn't get Goods deflation until the the

early

2000s well that was all part of the

opportunistic disinflation goal anyway

so now let's try Services X housing even

this is rolling over now Services we

might actually expect to get some more

deflation from but again if you go into

2009 maybe you're looking at 2 or 3% but

again same problem we had about 18% of

an explosion in Services inflation we're

probably and this is unfortunately just

the sad reality we're probably not going

to see prices go back to pre-co why

because again the FED knows that

unemployment is lagging they are going

to print they are going to print that is

my expectation it is exactly what the

Federal Reserve of Futures are pricing

in that the Federal Reserve is going to

start running the money printer again

not only are they going to run the money

printer but first the F very first thing

they're going to do is they're going to

drop interest rates substantially next

year followed by this we

expect them to stap with quantitive

tightening right around the summer of

next year I would say probably between

July and September is when we should be

done with quantitive tightening but as a

result of the Federal Reserve indicating

they'll probably turn off the vacuum

cleaner the money vacuum cleaner and

they'll cut rates again you would

probably expect that inflation

expectations would rise in the market

right they're not and that's the thing

that has a lot of people scratching

their heads is most people believe that

as soon as the Federal Reserve starts

printing money again inflation will come

right back up but that was not true for

the 40 years post Paul vulker it wasn't

true then and it's unlikely to be true

now and you don't even have to take my

opinion for it take the Market's opinion

for it what is the market saying about

inflation keep in mind we're now pricing

in as much as 1 and a half% of rate Cuts

next year so if rate cuts are going to

equal inflation well then we should see

inflation expectations Skyrocket right

wrong it's just not what we're seeing

inflation expectations right here as

measured on a 5-year inflation

expectation path are actually the lowest

they have been all year long they are

plummeting inflation expectations are

absolutely plummeting so what is next

for us to determine what direction to go

and then what should we do about it well

the first thing that we should consider

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but here's the reality we can forget

about my opinion let's consider data so

what's coming in the way of data well

data tomorrow we're going to get a jobs

report we're expecting 185,000 jobs

that's actually more than we have last

month last month 150,000 jobs now we're

expecting 185 even if it's rigged the

inflection is

up so it's probably all rigged but it's

all rigged up which is wild now I know a

lot of people are like oh it's because

we're going into an election here that's

fine it doesn't matter what we think it

matters what the markets think and the

markets are going to cheer a labor

report that is close to expectations we

want close to expectations if we get a

report that's over 200,000 jobs the

market will probably tank yields will

rise and that'll be a sign that the FED

has to do more you do not want to see a

two in the front if we get a number that

doesn't even have a one in the front

that is we have like a 50,000 jobs

report interest rates will instantly

plummet on the 10e I expect to 3 and a

half% and the market I actually don't

know if it'll Rally or if it'll be upset

because it could be a sign that we're

walking into real recession the data

will dictate the path for us if we get

at

expectations maybe just maybe the

Atlanta fed is right you look at the

Atlanta fed GDP now index which was

correct for Q3 that's not to say it will

be correct for Q4 but it was correct for

Q3 so what is it saying now well right

now the Atlanta fed estimate suggests

1.2% that our economy is growing at

about 1.2% which is roughly what the

stock market is pricing in there's for a

while been quite a gap between these two

and the stock market and the Atlanta fed

are pricing in about 1.2% for GDP which

means the FED is actually succeeding in

starting to crush the economy we don't

want to go negative here because that's

really going to drive

joblessness and we actually probably

want this to go up which is why I think

the fed's going to cut rates very

soon but the next thing we're going to

look at to reiterate what the Federal

Reserve is going to do is CPI CPI comes

out uh oh well in addition to the

185,000 jobs we'll have average hourly

earnings we expect those to be up about.

3% month over month that's roughly in

line with the go fed's goal of 3% the

FED is a 3% Target for wage inflation

not 2% they want wages to grow a little

bit above and that is consistent with 2%

inflation because wages make up and and

the consumer makes up about 70% of the

economy now now now now now what's the

next big Catalyst well oh keep in mind

you could also go 3% times 7% and you

get about 2.1% fun math next Catalyst on

the 12th next week we'll be covering CPI

we'll be covering these live on the uh

meet Kevin live channel uh every single

day the market is open by the way I am

live at 5:25

a.m. uh on the me Kevin live Channel

I've been on time every single time with

the exception of this morning because my

battery was dead uh like my whole

House's battery was dead I'm like oh

dear this is bad anyway CPI is expected

to be 0.1% core CPI expected to be 3%

I'd actually like to see that com in at

0.2 but whatever uh and then we've got

core year-over-year expected to be 4% be

nice to see that at 3.9 with

year-over-year expected to be at 3.1 uh

then we have the FED meeting which is

kind of crazy we are going to Fed rate

decision the very next day after CPI

comes out which is also the same morning

that PPI comes out so PPI comes out it's

expected to be 0.1% month over month

core 2% and then the Fed rate decision

that's all on the 13th so we have a

massive set of catalysts coming up and I

can't wait to cover them live so what is

my opinion like what should we do about

this this is not personalized Financial

advice for you but let's be clear I am a

licensed financial adviser I'm becoming

a stock broker I'm a real estate broker

been a licensed contractor license

lender I've done a lot of different

things I teach everything I know about

entrepreneurship and everything in my

courses I'm building your wealth link

down below the gold course is a massive

hit right now everybody's trying to get

into that because as we add more content

the price will go

up what do I think well I

believe that we are going to

have again this volatile Nike Swoosh but

what does that mean I believe that means

we should allocate to

Quality see in the housing market we are

seeing this same kind of

recovery the last 6 weeks have been very

hot for the housing market people are

writing uh multiple offers over comp

value again competition has exploded as

mortgage rates have come down about 1%

which isn't a problem we're still

getting plenty of deals but there is a

clear difference in sentiment now than

what we saw in October which makes me

grateful for what we bought in September

and October and

November but exposing yourself uh to Too

Much dare I say negative Nelly bearish

sentiment without considering the fact

that we could be hurting ourselves if we

take all of this in and say yes yes yes

everything's definitely going to crash

I think there's a real chance we're

going to be sorely disappointed if we're

waiting for a real crash I think the

reality is we got

dips we got dips in the stock market

last year we've had dips in the stock

market this year we've had dips in the

real estate market at the end of last

year and we've had dips in the real

estate market at the end of this

year we've taken advantage of those dips

myself my companies we've taken

advantage of those dips we've had dips

in treasuries we've taken advantage of

those dips every dip there has been we

have done whatever we could to take take

advantage of while at the same time

building out the best possible teams we

can to scale and grow because I think in

a recessionary Time the best thing you

should do is actually invest in yourself

and do everything you can to grow so

that when things go bullish again you

are most prepared to

win I think it's quite likely that in 3

weeks from now sorry in in 3 years from

now we'll look back and go wow we should

have been buying assets I don't know

that with certainty but I believe

that'll be highly likely so that's my

take on what's going on with housing

market the near-term FED situation stock

market it's slow up from here now it's

just on you to pick real estate in high

quality areas and stocks in high quality

companies that are going to survive in

the long term thanks so much for

watching we'll see you in the next one

good luck and goodbye why not advertise

these things that you told us here I

feel like nobody else knows about this

we'll we'll try a little advertising and

see how it goes 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

take