The Fed has 50% More to Go | Deepening Crash & Recession - The Fed's BullShip.

do you want to know what the hell is

going on in the stock market do you want

to know why all of a sudden inflation is

falling and the FED is still being a

little B do you want to know why I'm not

effing leaving and why I'm actually

wearing the rocket ship emoji

because of the ship

the

the actual like pirate ship yeah I know

that sounds insane but it's the easiest

analogy and the best analogy I could

think of to help you understand what is

going on

so we're going to draw the ship after I

draw the ship I'm going to explain three

very important things about the Federal

Reserve to you they are critical and I

am going to show you some charts that

are very important but first I am going

to draw you a pirate ship

all right

there you go

get the little Crow's Nest up here and

we'll have a little flag okay all right

why did I do this

well it's because right here

you have Jerome Powell okay he's up here

in the Crow's Nest being like Oh damn

inflationary problems

Jerome Powell is driving the ship of the

economy and every single time we get bad

news what I want you to think of is a

crate of bad news being loaded onto the

ship

what Jerome Powell is trying to do is

load on as much bad news as possible on

the ship without sinking the ship and he

is doing that to try to get inflation

out of the economy

what I want you to know though is this

piling on of bad news like producer

price inflation data yesterday which

came in terribly low huge misses on the

producer price inflation data

huge revisions down on the producer of

price inflation data for the prior

release and retail sales data coming in

so bad that all of a sudden we're like

this is great oh wait no this is bad

that's that was basically the Market's

reaction yesterday right because the

market for an entire year has been

saying Kevin we need inflation to come

down we need retail sales to come down

because that'll lower pricing power at

companies and that'll reduce the

pressure on inflation

well that's what we got yesterday we put

more bad news on the ship

which is really good for inflation

coming down but guess what people are

worried about now now people are like

but wait a minute

Jerome Powell isn't you turning why is

he not you turning the water is starting

to get really close to the edge of the

ship because the more bad news we put on

the more the ship comes lower and the

more the water is starting to Splash

over the edge and what we're getting now

is people realizing at first yay we have

we have crates of bad news let's call it

food for the ship yay yay we get to

survive longer on the ship great

inflation's coming down but oh it's

getting really heavy on the ship with

bad news water is potentially starting

to spill over and so everybody's looking

up at Jay Powell going bro starting to

get wet down here what the f bro

and j-pal's like must get inflation down

load more food onto the ship and people

like dude we can't we're gonna start

sinking man Jay about do some must get

inflation down and so people are like

dude this this guy's blind he's up in

his Ivory Tower he's blind about what's

happening down here but he's not he

knows exactly what he's doing and that

is what I'm going to explain to you in

this video

he is playing the psychological fiddle

he is a mastering psychology right now

and you must know what he is doing so

that you could properly position

yourself in the moment this is literally

why what I'm about to explain is an

example of why I have a program called

stocks and psychology of money because

there are wild things when it comes to

investing and I have found that the best

bets are made when it is psychologically

difficult when everybody is telling you

you're an idiot that's when some of the

best bets are made but what I want you

to know is the expectations play that

Jerome Powell is making

the psychological play and it's all

defined by this chart here which I will

remove myself from this chart as soon as

I remind you that on the 30th of January

in just 11 days lifetime access to the

programs on building your wealth at this

price will be going away because the

price will have a substantial change the

coupons will be going away we're going

to something totally different and you

have a three month at least three month

price guarantee that you're getting the

best price ever for the next three

months if you joined here in this

January now I also oh oh I also have

another big piece of news uh I think

starting 5 15 a.m tomorrow or Monday

depending on when my coax cable comes in

course members have voted on this and

it's good for the public too starting at

5 15-ish we're thinking about doing from

5 15 California time to six live stream

where I cover CNBC Bloomberg News

articles and just kind of like we just

wake up and have coffee together and

kind of get a feel for what the Market's

doing in the morning and we'll start the

course member live stream at 6am and do

the Bell together in the course live but

the public will get that for free but

anyway this is the chart right here

folks

this is the chart of inflation

expectations okay and there are a few

things I want you to know about this so

This is called The Five-Year Break Even

chart and it tells you what inflation

expectations are the way it works is it

basically takes the difference between

inflation protected treasuries and

non-inflation protected treasuries you

don't have to know what that means okay

I'm I don't want to overwhelm you we're

confused here and I'm not saying you're

not smart enough to understand it I know

you are but I'm saying it doesn't matter

okay what I want you to know is this

matters is that finally we broke a new

low over here not by much though this

low right here is 216. this is 215. but

for the first time ever yesterday we

actually broke the low on inflation

break evens now you might be thinking

yourself who cares will Jerome Powell

does because remember what I said he is

playing with our psychology

if Jerome Powell came out yesterday and

said great news y'all have loaded enough

bad news on this ship we could stop

putting bad news on what do you think

everyone would do everyone would start

having a party break open the boxes

start drinking start eating and it would

effectively okay I'm not playing science

here but inflate the ship so to speak

okay I'm trying to get the best analogy

I can to make this simple here in like

actual stock market terms what would

that do

as soon as Jerome Powell comes out and

says

good job everyone we have succeeded at

conquering inflation what do you think

you're going to do what do you think

every CEO in America is going to do it's

literally what was projected Yesterday

by Morgan Stanley okay I'll pull that up

but what do you think your grandma is

going to do what is my daddy going to do

on Robin Hood again what is everyone and

their mom going to do the second Jerome

Powell says we have succeeded at

conquering inflation everyone in their

mommy is gonna go YOLO stocks everyone's

gonna buy stocks like crazy the stock

market's gonna double is faster than you

could even say double in many stocks uh

you know this is like the FED U-turn I'm

pretending right uh forecasting so to

speak uh you know fed says Hey we've

done enough we could cut rates right

like when this time comes and the

problems of the economy the inflation is

gone everybody's gonna go crazy maybe

we're gonna start taking debt again

they're gonna start buying new computers

they'll buy new iPads they'll go I'm

rich again in the stock market they'll

buy everything in and then guess what

happens

then you recreate the monster of

inflation

it's literally what Morgan Stanley

basically started warning us about

yesterday now this is actually positive

but look at this you have Morgan Stanley

talking about CEOs getting more

confidence in their economic Outlook

that when the FED pivots we're going

back to the Glory Days I'm not going to

read you all this but that's basically

what it says

this is actually good news because it

actually tells you even if we take some

water onto the ships

the banks are very very confident that

this ship will not sink

so we might have to you know start

bailing out some water on the ship but

banks are extremely confident that we

are not going to sink

so that's why you're getting so many

people starting to try to pre-predict in

the FED U-turn now a lot of people are

like but wait a minute like Kevin like

this is bad news right uh like

you know the market sold off after PPI

data came in and and I'm like stop

kidding yourself we got rejected by the

most simple trend line that everyone and

their grandma and my seven-year-old can

draw on the S P 500 big deal we got

rejected because we went over the

200-day moving average and we hit the

hardest trend line that is literally

over one year old

we got rejected off it big deal we are

still up from the bottom right so it's

like it's not that bad

and Jerome Powell knows that Jerome

Powell has a goal though and I'm going

to show you exactly where that goal is

right after I thank you for being here

really appreciate it uh you know I know

you have choice in whom you're watching

and I really try my best uh to to

provide value I just I

I want to be grateful because I you know

I wouldn't be able to do what what we're

doing here on the channel and growing

with you all if it weren't for you so

seriously like cheers if I if I could

meet you in person like I met two

subscribers yesterday in person

I cheers to you too even if you're

Mormon and you just drank Diet Coke or

regular Coke I don't care I'll cheers to

that too okay all right this is Jerome

Powell's map so if you're like Okay

Kevin he's driving a ship you have like

the stupidest analogy ever but I get it

it makes sense

um oh my God sorry I can't put stupid

line on this

um there we go uh what's your point

about this dumb chart here's my point

you saw how I said we broke the low

right on the break evens because Jerome

Powell is like we must fight inflation

right and now everybody's like damn he's

serious about this he's going to keep

loading more on this plane

or not the plane sorry the the pirate

ship uh we're gonna start taking on

water let me show you where he flips

okay

so I'm gonna take this all the way back

to 2018. Jerome Powell flipped over here

right here here I'll put a beautiful

Arrow there in December of 2018 is when

Jerome Powell flip-flopped and in

December of 2018

inflation expectations where inflation

wasn't actually really a problem we're

about 1.5

I personally believe we must go under at

least

1.6 or potentially lower before the FED

flip-flops so at least under 1 6.

uh let's see here Jan Fab March this is

about March of 2020 here you can see

this is the end of the quarter right

here so that's probably about March 23.

this is about when the fed u-turned the

last time

so it's also possible

that things have to break for the FED to

U-turn but I actually don't think it has

to get that bad

but we want this chart to go down this

again is a break evens chart and we are

nowhere near yet the Fed u-turning but

but but but that doesn't mean you don't

want to potentially be in stocks now

because a lot of people are like Kevin

why don't I just wait to get into stocks

and I'm not trying to show you to get

into stocks I don't care what you do

with your portfolio it's not going to

make a difference uh so uh look at this

downtrend this downtrend is why we're

off stock market lows because the more

this Trends down the more we know we're

getting close to the U-turn and this is

literally the market pre-pricing in the

bottom that's why it's entirely possible

that the S P 500 and the NASDAQ have

already bottomed because this trend is

moving down as painful as it is in the

short term to look up at j-pow and and

us going bro we're starting to sink over

here and him going we must continue to

fight inflation

and you know it's scary because water's

starting to come on the ship but not

only is water starting to come on the

ship you personally in your life are

like I'm getting sick

I'm getting scurvy you know he's not

letting me crack the box of of uh of the

bananas I'm not getting my vitamin C I'm

getting scurvy and and in like relative

to our actual world that is

my business income's going down I'm

doing less deals as a real estate agent

I'm selling less product in my small

business less people are coming to my

restaurant retail sales are down we

might actually be going into a bad time

like duh yes then we're going into a

recession the yield curve is the most

inverted it's been since my chart

doesn't actually go back any further

it's it's so inverted and and that tells

you you are you are going to take on

water that is what the inverted yield

curve tells you is it it screams at your

face and it says we are taken on water

and you are going to have to get off

your AWS and work harder because we need

you to help bail out the crap storm that

now we are going into but that is the

point

the FED is using that fear of water

coming into the ship

to force inflation expectations down and

by forcing expectations down he actually

achieves killing inflation because again

everyone and their mommy will go buy a

new boat or be an idiot and buy an

airplane in a recession uh even though I

think that was a great purchase okay I

don't need to justify that anymore but

anyway uh if everybody does that it's a

big problem but what do you have here

this is the inverted yield curve we are

the most inverted we have been

at Max it's not as bad as the 80s I know

that but I can't go back on the chart

because again it's it's set to Max right

now but we are more inverted on the

yield curve right now than we were in

the Great Recession or the.com bubble

and it's the re-steepening of the yield

curve that tends to be painful right

2008 and 9 were the big what painful

ones that was pain okay that's the

recession part where it's like crap my

income's down okay over here crap my

income's down you know during during

the.com bubble which does suggest yes

there is going to be more pain going

forward before we have good news but a

lot of people say the only reason it's

this inverted is because the FED is

forcing a recession as soon as the FED

u-turns it's back to Glory Days so

ironically that's why you have the stock

market not at bottom because people are

pre-pricing in that the real potentially

only pain is the Fed don't get me wrong

there could be structural issues we we

might not see them yet you could have a

Black Swan event where all of a sudden

something breaks and we get circuit

breakers in the stock market again and

we actually hit our real stock market

bottom we get the real vix Spike and

then the it forces the FED U-turn right

because then then the ship will start

sinking so in fact the sooner that

happens the better the sooner that

happens the FED U-turn happens but you

also need to make sure that inflation is

down enough because if you don't and the

FED u-turns too soon then you go back to

problem number two remember I told you I

tell you three problems about the Fed

the historic flip-flop so you go back to

the 70s and 80s the Fed was

start stop with rate hikes and rate cuts

and that actually LED inflation

expectations in part to unanchored

inflation expectations went up for

multiple reasons though and that makes

this comparison so difficult people

compared to the 1970s and 80s and say

well inflation expectations were

unanchored yeah well no duh we left the

gold standard

this was the first monetary experiment

that we ever had with Fiat of course

people thought we were going to become

the Weimer Republic again because we'd

never actually gone through an

inflationary environment before and not

seen currency collapse so of course

inflation expectations were high

and unanchored so of course we had to

crush the market by raising interest

rates to 18 to 20 percent and prove that

no this this experiment of paper money

backed by nothing other than

your trust uh uh led to substantial

breakdowns in expectations

so yes and and I I say this full well in

knowing that the words this time is

different are very dangerous those are

the four most dangerous words investing

and I say that to you clearly because I

want you to know we don't know if like

something could break and and what could

happen out of that we don't know but

there are massive differences the fact

is there are massive differences between

now and then

we have inflation expectations

plummeting and now as long as inflation

continues to break to the downside

sooner or later the FED will realize

okay we've got enough bad data

unfortunately that's where the third

problem comes in we don't actually have

enough bad data yet and this is

exemplified via things like the beige

book so let's look at the beige book

today

so here's the beige book see it's beige

okay congratulations you saw the beige

book now let me read you some boring

stuff now I'm actually just going to

bottom line to you okay so listen to

this

five districts reported slight or modest

increases in Activity six noted no

changes or a slight decrease one cited a

significant decline

this is kind of like I want you to think

for a moment go back to that ship

so imagine at the front of the ship you

got five people go

hey they still ate that bad over here

yeah cause you're at the bow okay you're

not at the low part of the ship jerk

just for analogy sake okay

six are like yeah it's starting to get a

little wet over here and one's like

damn it right

that's not enough pain yet drums allow

you know Jerome's up there and his

Crow's Nest

I need everyone bitching

sure you've got other parts of the ship

starting to smell you know the potty is

looking pretty bad and right now the

potties the housing market and it's

getting worse uh you've got though in

the labor market only one District

reported a slight decline in employment

need more pain look at the economic data

that came out this morning jobless

claims

it's not it's not screaming massive pain

to you yet jobless claims were expected

to come in at 214 000 they came in at

190.

that's good news for employment but

that's bad news for the FED being you

know wanting the U-turn uh it came in

well higher than expectations and

continuing claims fell rather than a

rose some people say it's because of you

know obviously we know this unemployment

substantially lags recession of course

everybody knows that uh actually some

people don't but unemployment

substantially lags so this is a huge

lagging indicator we're looking at but

but the point is go to the beige book

and again

hey great manufacturers in many

districts reported continued easing and

freight costs and prices for Commodities

including steel and lumber though some

remained elevated

so it's like it's not all bad yet

retailers noted increased difficulty in

passing through cost increases drums

like good put on your raincoat I want

you to get a little wet I want you to

feel a little pain you little sugar boy

uh suggesting greater price sensitivity

on the part of consumers right sure but

then again retail activity in five

districts still improving

housing market continued to cool in New

York same thing in Boston uh you have

wage and price inflation continuing to

subside but growing at a modest Pace

you've got employment growing modestly

but demand saw but but demand softening

but still healthy labor shortage is

still an issue in St Louis construction

real estate sectors continuing to

struggle so

you have a beige book that's starting to

give you red flags it's like hey we're

starting to take on water down here and

he's like I know we must take more water

on

that is the psychology the more Jerome

Powell sends us the signal that we are

not wet enough yet the more inflation

expectations actually go down because

the more people on the ship actually

start realizing

this

mfer is actually gonna make us keep

putting on more bad here and he's

actually going to make the water line go

slightly above the ship to where this

guy is actually that Brazen that we

might be steering a ship while taking on

water

to to prove a point

guess exactly he does not want the

entire ship to be underwater

but he will make it so that the waves

are cresting above this Edge and that

will force inflation down because the

worst thing that could happen is that

inflation ends up

increasing again because if inflation

goes up it's going to be nearly

impossible to get those five-year

break-even inflation rates to stay down

so what we have right now is actually

good I know I sound crazy to some degree

saying that and some people get pissed

off at me because they're like Kevin you

said negative retail sales were good

news but the stock market went down

yesterday

and and wait a minute why are you

cheering for the demise of the economy

like that's what some people say and

it's like look

we need to give drum Powell what he

needs we need to give him enough bad

news to where the world realizes

ah crap okay yeah maybe we do want to

start saving a little bit of money we

drive inflation down and we continue on

the path of lowering

uh expectations for inflation

if Jerome Powell

gets off the Crow's Nest and goes good

job guys mission accomplished PPI down

we all win

every like the ship's just gonna blow

over because there'll be so much

inflation that'll instantly hop up uh

pop up this is why you've got people

like uh Michael burry saying we're going

to have a second wave of inflation

because everybody knows when the Federal

Reserve u-turns everything's going back

to the Moon we're going on the rocket

back to the Moon

so we have to be at a place where

basically inflation gets so stably low

that we're fighting deflation

to where we can basically give the fed

the license to back down now what are

the odds of us actually going to

deflation well I actually think quite

High

I think when you look at uh housing

inflation and what we've seen with

housing inflation you are on a clear

path to massive anchors of owner's

equivalent rents and over 32 percent of

CPI in over 25 percent of pce it's the

fed's preferred inflation gauge will be

plummeting with a massive negative

anchor come around June July and as long

as that also drives down and keeps down

other services which we've already

started to see decline in the PPI and

retail sales numbers I mean when do

restaurants go negative negative point

nine percent month over month that's

over negative 10 retail sales declines

for restaurants

it's starting like all of the

deflationary numbers are coming

now we just have to get there and once

we get there maybe maybe as long as the

as long as those inflation expectations

break down we're actually facing

deflation that's when you start getting

this the pause the slow down the pause

and then you start slowly getting cuts

the only way the FED goes minus two

percent is if something breaks

they don't want that to happen they

don't want anything to break I think

it's raise another 25 maybe 225 BP

Cycles pause because the data keeps

coming in slow slowly start coming off

okay minus 25 minus 25 because they

don't want inflation to pop up again

right so they'll really slowly taper

down

it's coming we are probably in two or

three years going to look back at this

and go oh my gosh we're back at zero

I know that sounds really insane to

think about as a possibility but I

believe based on the research that we

are conducting with companies the

disinflationary trends we are seeing the

amount of excess capacity that

manufacturers have that servicers have

all this extra hiring companies have

done is extra service capacity

and then when service when when all of a

sudden demand goes down we have more

service capacity what are we going to

have massive deflation and service in

the service sector we're already seeing

it in the good sector there's a reason

you okay look yesterday we talked about

asml in the course member live stream we

did a deep dive on asml and one of the

the big red flags has a little spoiler

here we do this in the course member

live we try really hard to do a lot of

fundamental analysis also just you know

ta news everything but

one of the things that we talked about

was

a risk factor for a company like asml

who supplies chip manufacturing

equipment is a lot of the manufacturers

bought a lot of extra equipment and they

have excess equipment that they are

actually not bringing online yet because

they don't want to over Supply the chip

Market but when demand starts Rising

they could go like this

and and turn on these new machines

and so the amount of rubber band excess

capacity that companies have to fulfill

demand when it comes back is huge and in

my opinion it is going to keep inflation

down and as long as the FED is is

moderated in their declines you don't

end up getting the Michael burry second

wave of inflation and you end up getting

a stock market that just like

goes up like this and I'm making a face

on purpose though

because like it's like okay guys guys be

quiet be quiet like things are slowly

going up nobody cheer nobody get too

excited don't wake that guy up okay

and you get you get what becomes a Nike

Swoosh recovery of a three or four year

slow stock market recovery

there'll be some bounces out of you turn

hey come say hi I'm in a video

you want to say hi

yeah this is Jack where do I look uh you

look right there in that box right there

what do you want to tell the world

[Music]

um

um I like a game in Roblox that's called

base battles base battles okay is it

better than Minecraft

yeah uh what about is it better than

rust no that's awesome dude Max you want

to come say hi you generally don't want

to be on camera huh Can you like just

scream hi

no just he's just shaking his head no I

like your shirt though you got Toad and

Mario on there that's very nice

all right well there you have it my

thesis I think it is great Jack why

don't you go ahead and press that red

button press this button right there in

one sec and we'll end the video thanks

so much for watching make sure to check

out the links down below for that

expiring coupon code and take it away

Jack