Prepare for the FORCED Recession | The Fed's Great Reset.

oh if there's one thing that could push

us into a recession it's this we're

going to talk about a realistic bear

piece from Nick T and the Federal

Reserve which really outlines exactly

what our risks to our economy are which

means if you're invested in Risk assets

like stocks or even crypto or to some

extent real estate you probably ought to

pay attention to this video and if you

make it to the end I will give you a

beautiful drawing that Max made on my

notes as well as a small little update

for the channel which will be pretty

exciting for some of the regular viewers

with that said let's get into the bear

talk so Nick T just reported on another

two very interesting pieces one was Wall

Street Journal piece hero he's of course

our fed mouthpiece in case you're not

familiar with him he's the guy who tends

to be the FED leaker of information and

after he posts something people like

okay that's basically the FED trying to

Prime markets for what the FED is up to

and so one piece was the Wall Street

Journal uh an article he wrote there and

then a second piece was from the San

Francisco fed that he retweeted I'm

gonna look at both of these in

conjunction now a lot of people wonder

Kevin why do you bother looking at Bear

pieces why can't you just be happy that

stocks are green or things are going

okay your Nike Swoosh recovery is

playing out why pay attention to the

bear pieces well I'm a big believer that

if you're not aware of what your

Achilles heel is then you won't see the

attack coming and you'll get be you'll

end up being caught blindsided it's kind

of like you don't want risky profitless

companies going into a recession you

have to Pivot and dump those or if

you're a fighter and let's say You're

really weak handed with your right hand

well then you want to make sure that

you're in a position to fight with your

left all the time okay bad fight analogy

probably that's maybe why I should have

just stuck with the Achilles heel

analogy of if you actually get stuck

there you die but whatever point is you

got to pay attention to what your

weaknesses are so you can position

yourself appropriately and I hate to say

it but a lot of the content that I see

on social media is a string of nonsense

I saw it again yesterday I didn't have

any juicy Goldman Sachs pieces to read

because it was Sunday so I watched a

video and what did I see in the video

you know um

inflation's at a 40-year high

that's bad

and then this one was even more almost

criminal you ready for this let me give

you this one this was criminal in my

opinion somebody made a video going U.S

banks are abruptly freezing bank

accounts and it was this is basically it

enticing headline of like oh my gosh

they're they're freezing bank accounts

and I thought the Creator would

potentially look and go okay look you

know here's really what the story is but

no it was literally title of a video U.S

banks are properly freezing bank

accounts and then the content of the

videos this is why you can't trust the

banks this is why you should only trade

this is why the economy is doomed and

I'm like good Lord okay what

what's going on so we do a little bit of

looking and yeah it is true that Bank of

America

has had an increasing number of accounts

Frozen recently but why is the part that

matters and Bank of America well first

of all the Articles and the journalists

quote that oh well Bank of America says

it was shut down you know their accounts

were shut down and they refused to give

the customer an explanation basically

saying the customers stuck at the bank

with no access to their funds and now

they're enforced poverty which sounds

really bad but it's not until you

actually get two-thirds into the article

that you hear that they're actually

banking policies that require Banks

follow up on suspicious activity reports

and freeze accounts that may be the

subject of fraud but it gets even worse

when you actually get to the bottom of

the story Bank of America told the news

outlet that this particular complainer

that his bank was frozen actually

submitted at a fraud report to the FBI

why the F suggesting that a scammer was

impersonating them and then the bank got

that report from the FBI and the bank

froze the person's account

but the person who made the social media

video suggesting thanks for phrasing

people's accounts this is a sign the

economy is going to collapse didn't

bother reading past probably the first

third of the article I was thinking

myself oh this is a disservice to social

media

it's embarrassing uh anyway look I

wanted to start with this preface I know

it's a little bit of an elongated

preface but I think it's really

important because it shows us that you

know headlines and the things people

talk about you know they go for beer and

they're like hey man you heard yeah Bank

of America has been freezing more bank

accounts it's like hey man did you read

the rest of the article no but but

people do that all the time I hear

headlines all the freaking time even

from people around me and I try to

minimize them I always fight back but

it's hard because it's just the world we

live in is just so so headlight driven

okay anyway so let's get to the Nick T

piece hopefully you appreciated that

extra free bit of a perspective in

Psychology if you do like that remember

I've got a coupon code expiring in the

next two days for the program so I'm

actually building your wealth with

actual psychology for not just investing

in stocks investing in companies and

researching companies but also the same

thing for Real Estate going from zero to

millionaire real estate it's very

possible I did exactly that and you can

too uh so let's get started with Nick T

finally after like five minutes although

I think that was very productive so Nick

T is lamenting that there are two sides

of debate right now one where economists

are concerned that easing inflation will

be temporary that basically prices are

going to start skyrocketing again and

inflation will rise again and the others

say that the FED is looking in the rear

view mirror and they're totally ignoring

that price pressures have already

started to subside now this is

interesting because it sets up a very

casual debate but there's actually more

to this and I want to show you where the

real red flag is that could drive us

into recession so the real red flag

actually comes from okay not that

earnings piece hold on a sec that's the

earnings call we broke down it actually

comes from this Federal Reserve Board of

San Francisco economic letter and what I

think is really incredible about this

and there's a lot of technical wording

in this we're going to simplify it is

they make it a very very clear what the

real fight actually is and I'm going to

simplify that because if I read all this

out I'm going to lose you so let's start

simply first we know that the prices of

oil gas natural gas energy and a lot of

things have been growing at a slower

Pace or just outright falling that's

good we've also been seeing rents start

declining that's good well I mean let me

clarify that rents haven't actually

started declining whereas inflation has

started declining very different things

right right rents declining are like yay

my rent went from 1900 to 1850. rental

inflation declining is like yay my rent

only went from 1900 to 1910 as opposed

to from 1900 to 2000 right anyway so

we've expected and have been watching

rental inflation come down that's great

the part that's left is the non-housing

super core Services side we've already

heard that that's old news but here's

the new part this is the concerning part

okay so remember three parts of

inflation we're good on Goods so far

we're good on housing maybe asterisk

we'll come back to that and number three

non-housing super core services

and the San Francisco board piece which

Nick T references talks about two

problems

one could be good one could be bad

number one if you have super core

inflation based on what's going on with

how much people are being paid for wages

and therefore how much the cost of

services are going up like hotels air

travel very labor intensive or medical

services financial services whatever

when those wages go up those prices tend

to go up as well at least so we thought

the San Francisco Federal Reserve here

board they suggest well we find that

core service inflation actually goes up

the most with rent inflation this is a

high sensitivity environment so in other

words rent goes up and all of a sudden

like all of the doctors and maybe the

hotel folks or whatever everybody's

raising their prices not because of

wages but actually because rent

Skyrocket that was a weird crack but

anyway that's crazy because pause for a

moment

we've regularly been thinking it's wages

that cause inflation to go up I in fact

I just started by reiterating that idea

but the board of San Francisco actually

thinks no it's rents going up Okay cool

so if that's true that rents Drive

Services inflation then as long as we

remain highly sensitive to rents driving

inflation for core Services inflation

should plummet because rent inflation is

falling that would be good that would be

called the high sensitivity scenario

that would be very very good

however there are two really big

problems that could come first as we go

back to what was historically normal and

that was going back to 2019 where we had

low sensitivity of rent inflation

affecting Services inflation

this could potentially not be so good

because it could mean that even though

rent inflation is falling core Services

could keep going up so in other words if

we want to draw the uh sort of a couple

little sad faces here a sad face would

be either number one rent inflation

falling not really affecting so we'll

put a equals does not not really

affecting core inflation that would not

be ideal and this unfortunately is

possible

the other thing that is possible as well

and this is a danger that all of us can

track we could look at leading rental

data from apartment list Zillow Redfin a

core logic every month they give you

rental price increase data and that data

suggests that rents are slowing in their

growth which is good but if for some

reason rent inflation goes down and then

pops up again it's going to be a problem

given that housing is rebounding in

terms of housing prices it is possible

that rents could go up again and so that

would also be really bad because either

rent inflation keeps going down but it

doesn't affect core which is bad or rent

inflation actually goes up and it does

affect core which would also be bad

right so really what you want is you

want rental inflation to keep falling

and it to affect core okay there's a lot

there let me simplify that a little bit

and we're going to get back to the Nick

T piece here because there are more

insights to go

simplifying this

we need to see core inflation fall we

already know that we need to see rent

inflation stabilize now anecdote which

means it is from my personal research

there is more competition coming for

rentals in every single Market I go into

but it's not just more competition for

rentals it is also more competition for

houses we are finally at least in the

areas that we are searching for Real

Estate

noticing that finally the supply of

homes is starting to rise that's good

even though transactions are down and

that has part of the equation of it four

months Supply we are starting to hear

more Realtors talk about hmm it seems

like inventory is slowly starting to

rise now is that enough to make for any

kind of housing crash where everybody's

going to be able to buy the dip on real

estate for pennies on the dollar

no

no that's very unlikely however will it

potentially create a more balanced

environment where you could finally go

buy some wedge deals like I teach in the

courses on building your wealth link

down below step by step a lot of people

by the way lately have been bundling

zero to millionaire real estate

investing and I was surprised by this

but they're bundling zero to millionaire

real estate investing and the income

course which features AI the how to make

more money and get sh90 done faster with

AI

then I got to thinking about it I'm like

but wait a minute if you actually

increase your income before you go into

an opportunity to buy real estate you

have more income to buy more real estate

and maybe that does make sense so I

thought that was really cool uh anyway a

little other anecdote

so keeping that in mind that we want to

track what's going on in rental world

right now the good news is it appears

housing inventory both for rentals and

for sales is rising which should be a

leading anecdotal indicator

that rent inflation will stay low that's

what we want but it doesn't mean that

low rental inflation is definitely going

to

solve core inflation for the fat

and that's where we get to the rest of

what Nick T talks about

so before we talk about that debate

let's give you a quick update right now

we have no SCP coming for the FED

meeting in two days

we also know that there's a 99.2 percent

chance of a 25 BP hike on Wednesday

I know this is a little weird psychology

but the FED is basically explaining this

away by arguing they kind of just

extended the time frame of doing a 25 BP

hike it's kind of like arguing we did to

12.5 hikes we didn't stop and start

again like we had the problem of doing

back in the 70s which is really bad

that's at least what they're trying to

excuse fine September actually has an

81.5 chance of remaining flat there's

about a 17.9 chance of getting 5.5

percent so another 25 PP okay fine so

now we're caught up we want to see

rental inflation grow fall we want to

see core inflation fall we want to see

rental inflation effect core

we are kind of separated from wages a

little bit and this is interesting

because that's what the San Francisco

Federal Reserve board suggests is that

it's not really so much wages right now

and this I thought was really sneaky

what's on screen now

the last time we heard Jerome Powell

speak he actually suggested that three

percent wage growth would be consistent

with two percent inflation

that was incredible and then when we

looked at the research we saw that over

the long term we generally had about two

percent two point seven percent wage

growth and it did equal actually less

than two percent inflation so

historically that has been true but what

I thought was interesting here is it

looks like they just moved the goal

posts

look at this Nick T just wrote officials

are likely to see 3.5 percent annual

wage growth as consistent with inflation

between two and two and a half percent

huh wait a minute why are we talking

about two and a half percent for

inflation

why are we talking about three and a

half percent for annual wage growth

keep in mind that wage growth over the

last year has been 4.5 percent

Junes in inflation rate for wages was

actually 0.4 which is more than what

we've been growing the past year which

annualizes out to 4.8 percent so so far

wage growth isn't actually going in the

right direction and instead the FED is

moving some of the goal posts

but that's not necessarily terrible

because maybe wage growth isn't what

matters as much I based on what the San

Francisco Federal Reserve board is

saying is this is actually

rental inflation and the leading

indicators of that are positive that's

good as you can see a lot of thought so

far went into this like I really try to

find those Achilles heels or those you

know weekends

Okay so

uh this then talks about okay this you

know these different views on inflation

this was a little boring uh we talk a

little bit about how here wages and the

wage Market is starting to slow although

I just said this maybe doesn't matter so

much but there's some talk about how uh

wage gains seem to be slowing the number

of new jobs filled seems to be slowing

the number of openings is slowing

everything is suggesting we're getting

into sort of a smaller or or more calm

labor market and we just have to watch

now what happens with the rental market

so what I like to do is set the game

plan

fed right now has a weird license to

wait in other words we have some signs

of softening unemployment though we're

not sure how much that's going to hit

inflation we have signs that inflation

is moderating

but we're not sure if core is being

sticky

we know that the next Labor report is on

August 4th write that down on your

calendar next CPI report is August 10th

write that down on your calendar because

it's Lauren's birthday and it's a CPI

report and then we'll find out in the

September meeting are we going to get

another hike or not probably based on

these two reports uh we'll also have a

summary of economic projections in

September now I promised you a picture

and some scenarios to bottom line all of

this first this is Max's picture he

started drawing me a house I kind of

like it with the exception of the fact

that it looks like a guy with really

short hairdo uh droopy eye and a sad

face so I'm gonna have to have a

conversation with him about the meaning

of this house that he's drawing here

because yesterday we went tubing in Big

Bear Lake and I have to say he hit a

blast he's five and he goes faster uh or

or you know tells the driver of the boat

to go faster than Jack does who's seven

like Max is like the little brute Jack's

the kind of one you kick in the butt and

he'll go oh Dad why'd you do that Max

who kick in the butt and he'll turn

around I'll fight you he's like that

little Chihuahua that's kind of crazy uh

anyway we'll have to talk to him about

what what he's trying to create here

uh before I talk about these scenarios

as well quick thing I'm gonna try

something uh

uh this is this could be a little wild

but I'm gonna try something

uh I what I'm thinking about doing is

having this interesting schedule where

we basically go we do like a 520 maybe

earlier uh Public Live and then about 6

25 we do the course live okay ready for

it around 8 or 8 30. I go live again and

we'll do Market

reactions uh commentary maybe Politics

as well so it'll sort of be like the

midday stream and I'll actually likely

do a lot of this on a different set uh

it'll give me a little bit more

flexibility because I'll actually be in

the office with the team while we do

that and then we'll probably Fly For

Real Estate uh after the Bell which

remember the Bell here is 1pm so it

actually gives us a really cool time

zone hack to still have the second half

of the day so we'll see I think that's

kind of cool all right now let me know

in the comments what you think about

something like that but anyway

here are the scenarios

so bad news this is what the Bears are

going to say is that we stay with a

strong poor a core and rent inflation

doesn't happen either it doesn't happen

or just doesn't affect core this would

be bad however I wrote house hack my

real estate startup finally submitted

for that reggae by the way so stay tuned

we'll be able to raise funds for that

very soon we're still doing the

one-to-one valuation you can already go

to the SEC website and start looking at

the filing there though it still has to

be qualified for the by the SEC so stay

tuned for that

uh and then uh you'll see here that wage

inflation does not uh you know moderate

more could potentially be an issue

though people are still up in the air of

what inflow age inflation is going to do

obviously the mid scenario here is

moderating core rent inflation occur or

disinflation occurs but it you know

stabilizes however you look at it around

two three ish percent the grade would be

that core just starts plummeting and we

can keep a strong economy my guess is

that usually things tend to just work

out with a middle bias so we're probably

not going to get the best case scenario

we're probably not going to get the

worst case scenario and we can find this

you know we will see this at house hack

if we start going in this bad scenario

we will see the rental inflation at

house Act not only that but we'll

obviously see those those core numbers

really destabilize so we could we have

the indicators to watch for that so

overall I'm optimistic but there's

definitely stuff to pay attention to

when it comes to the fed and this is a

full outline for you so if you found

this helpful consider subscribing to the

channel share the video with anybody you

think uh would find this useful and

folks we'll see in the next one thanks

so much and goodbye now I want you to

know this when it comes to AI

time is what's going to make you money

and if you can prove that value to an

employer you'll always be able to be

employed so this is another way of

making sure that you don't get replaced

but