FINALLY!

hey everyone me kevin here boy oh boy we

finally got some good news because we

have had nothing but bad news uh lately

which the bad news lately has made it

kind of enjoyable to go shopping for

stocks at lower valuations which is part

of the good news we're also going to

talk about in this video in fact if you

can believe it there are two really good

news pieces in this video one has to do

with a very important piece of data to

the federal reserve and the second has

to do with valuations which we'll talk

about both of those uh and that doesn't

even mention the fact that you still

have an opportunity to check out the

courses on building your wealth before

the price goes up later in the day uh

today which by the way somebody asked me

hey how could a bigger investment into

our studio help uh provide more value to

lectures this was actually a very good

and fair question because like what does

it matter to you if i'm recording on an

iphone or camera well the answer to that

is we are investing in a new piece of

visual technology that'll actually be

between me and you and it's gonna be

really awesome so stay tuned on that

okay so uh first we need to understand

this this is really important this is

from goldman sachs and they say

something that we already know but i

just want you to see it in writing that

listen to this line here the jump in

long run inflation expectations last

month was uh or earlier this month

rather rather i thought not in july yet

kevin earlier this month was the main

reason why the fomc hiked by 75 basis

points in june and that's true we saw

consumer expectations for inflation rise

and that was on the same day as we got

cpi data which ended up being a problem

just a couple days before the federal

reserve ended up having to hike rates

because the fed does not want the

consumer expectations for inflation

for inflation to become unanchored

because if these expectations become

unanchored we're screwed then we've got

really big problems then we go back to

the late 70s and early 80s where

inflation expectations were unanchored

and what do we get well we end up

getting paul volcker

so we had a few things in the sentiment

release this morning in a sentiment

released this morning the first thing we

saw which wasn't the greatest was that

consumer sentiment suffered one of its

steepest declines in the year ahead

outlook for the economy that means hey

how do you think the economy is going to

do in a year from now and we saw a 24

decline in that reading which that's not

such a good news part you can kind of

see that visualized here in the chart uh

may being the top red box and presently

being the lower red box so people feel

like crap right and this makes sense i

mean all you have to do is look at the

comments since you see people relatively

frustrated about the state of the

economy and the state of uh the bad news

that we're getting but let's get to the

right report over here i've got so many

reports up let's get to this one over

here this is what i want you to pay

attention to that's not the best news

the sentiment but

this right here is good first we know

that and they're reiterating here that

inflation continues to be of paramount

concern to consumers this is important

by some accounts people talk about

inflation now as much as they actually

talked about covet which is pretty

incredible the researchers are even

making that kind of comparison but still

kind of neat but anyway

now listen to this the final read for a

june

expected that consumers

thought that inflation in the year ahead

would be 5.3 percent that's actually

back down from that higher level

where we thought inflation expectations

for the year out were going to rise this

has been pulled back down to 5.3 that's

good we've seen this re-anchor

and longer run expectations

had a reading of 3.3 percent at the

middle of the month and they've settled

back at 3.1

which is that good range that we've been

in for literally the last 10 months 2.9

to 3.1 percent so think about that for a

moment for the last ten months despite

all of this inflation insanity consumers

longer run inflation expectations like

five years out three to five years out

are anchored in the 2.9 the 3.1 range

now that's still above the fed's target

of 2

but it's way better than these numbers

becoming unanchored and it's good that

we saw both of these numbers come down

especially after as we saw goldman say

the last sentiment read was probably why

we saw the fed raise rates by 75 basis

points in fact you see it here since the

preliminary reading the fed hiked by 75

basis points they're even mentioning it

and that was higher than the 50 basis

points they telegraphed now a downside

potential risk for this going forward

and this was really weird i had never

thought about this one before but look

at this one here

a key upside risk so an upside risk to

consumer sentiment is actually a barrage

of political advertisements highlighting

high inflation ahead of the midterm

elections

and they say that inflation expectations

have historically been quite sensitive

to political outcomes however we don't

actually have a lot of data of elections

and political advertisements and

people's inflation sentiment because we

generally in the last 40 years have had

pretty low inflation but if inflation is

a core issue going into the midterm

elections

what happens if all of a sudden all we

get are a barrage of inflation uh style

ads everybody's complaining about

inflation especially republicans who

have much higher inflation expectations

than democrats take a look at this you

can kind of see you've got republicans

over here with the expectation that

inflation in a year is going to be

around seven percent where democrats see

inflation as only around three point

nine percent in a year and then

independence right here in the middle so

you could see there's an uh an element

of democrats thinking inflation is

transitory and republicans thinking

we're screwed right

and an election cycle with everyone

talking about inflation could actually

lead people to have more salient present

information about how bad inflation

really is and how to fight it and it

could actually make people feel less

faith in the political process to

actually solve inflation as they should

because congress doesn't get anything

done anyway

neither does our administration really

at this point but anyway oh not going to

get political here anyway point is

inflation

expectations could actually turn ugly

towards the election cycle and goldman

sachs believes that the fed might feel

compelled to respond forcibly to those

increases in expectations which might

just be temporarily fueled by election

ads how crazy is that like i would have

never considered that oh yeah political

ads are all of a sudden going to screw

our inflation expectations but it kind

of makes sense it's pretty wild

anyway folks remember now we've got

something else important to talk about

as well as valuations but remember folks

yes the coupon down below

no no okay remember uh i think these are

all opportunities to buy uh and so i'm a

big fan of of buying when there's pain

and stress

i'm not a big fan of margin though right

now stay away from that so i do want to

take a look at this though i wanted to

show you this look at the forward p e

ratios just as this is the s p 500 the

large cap index and take a look what

we've got over here

this is where we sit right now

and uh that's a p e ratio of about 15.8

a forward p of 15.8 you can see that's

still above some of the lows that we saw

during the pandemic lows in the end of

18.

if you go over to mid cap at 11.3 we're

actually kind of in line with what we

saw during the pandemic and what we saw

well 2008 was still lower

but look at small caps over here folks

small caps they seem to have hit a

historic bottom in small cap pes

measured by you know the s p 600 is your

small cap uh s p 400's your mid cap and

500 is your large cap but anyway uh for

for the best potential deal it seems

like the s p 600 is is an interesting

potential play

maybe for uh even like an upside hedge

or something like that so i thought that

was fascinating and we'll be talking

about that a lot in the course member

live stream later today so i look

forward to that now uh if you need a

ticker symbol for that the s p 600 can

be traded with v i

o

o

that's your uh vanguard and uh vio let's

see how it's done here today let's see

v-i-o-o stock year-to-date down 18.44

which actually i think that's less than

the spy is down yeah spy's down 18.93

so really interesting but anyway v-i-o-o

that uh that's you know valuations have

gotten quite depressed there it's up

about five percent from bottom right now

but still nominal given that you're down

18.4 percent on the year anyway just a

trade idea thank you so much for

watching folks check out the programs

link down below with that expiring

coupon code folks we'll see in the next

one thank you bye