…this is very bad

i can't even go on a run without tesla

and elon musk doing something to ruin

the day tesla just fired 200 people on

their autopilot teams the ceo of

pinterest just quit and all the indices

dropped like a rock today giving up the

minor rally we started having it towards

the end of last week nasdaq 100 down

2.98 almost a full 3 leading to plunge

so what happened what's happening and

why are there dangers that are becoming

more apparent now that we've got to pay

attention to well on this video we're

going to talk about that just remember

if you want to get 200 for free

met kevin.com tasty to get 200 totally

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their trading platform all right folks

first let's get some background on

what's going on this is important right

here this chart this is the consumer

confidence chart i'm covering up exactly

where we went on this consumer

confidence chart and i've been listening

to some of the complaints of some of you

telling me that i need to get myself out

of the bottom right corner so

that is exactly what i am now going to

do i'm going to put myself

yeah i'll put myself right

here how does that look i think that

looks good all right yeah anyway okay so

what do we have here look at that near

decade low on consumer confidence here

the white line is the index of consumer

expectations uh and uh the the yellowish

line is the index of consumer confidence

so

these are two different things consumer

confidence interest in in their own

personal willingness to spend money

right and then consumer expectations are

a little different they're kind of like

well what do you think is going to

happen in the market see like sometimes

consumers themselves can be confident

because maybe they have more savings but

then when they're asked about the

markets they're like oh no no but the

market's on the other hand big problem

and you're gonna see why this is

actually starting to become a real

danger in the stock market and no i'm

not just talking about that earnings

recession that's looming

that's already starting basically at

nike we're halfway there but uh towards

the end of the video i'll be telling you

this particular danger that is in part

being caused by this consumer confidence

drop that we got today pretty bad

obviously it's also being you know

we're seeing consumer confidence fall

because well inflation didn't peak when

we thought it would over here instead it

you know now this is our forecast is

that inflation is actually expected to

potentially still continue to tick up a

little bit before we actually start

rotating down but even when we get to

2023 over here we still expect to be

over six percent in terms of inflation

look at that now i'm covering this area

whatever we'll zoom in there you go

still expect to be over six percent uh

you know by the end of the year and this

is a problem inflation is becoming very

very sticky it's hard to get it down now

something that's very good that's

starting to be a sign that okay maybe

we're going to get this actually down is

we are seeing inventory skyrocket right

this is a chart of inventory to sales

ratio so the way that works is if you

sell a hundred dollars and you have 140

of inventory you would have an inventory

to sales ratio of about 1.4 well take a

look where this inventory to sales ratio

was in 2020 it was always over here the

uh orangish line it was always in for

general merchandise stores in this sort

of 1.2 to 1.3 region here it's exploded

over here towards the end of 2021 and

into 2022 and hopefully this finally

starts adding to some like downward

pressure for inflation but again when we

combine this terrible consumer

confidence with how long

it's actually going to take for these

inventory levels to push inflation down

people aren't really happy about what's

going on and it's taking too long for

even ppi numbers to come down first of

all here's ppi it hasn't moved down at

all yet sure we've got prices paid

somewhat stabilizing here the pink line

we've got supplier delivery delays

slowly starting to inflect down we've

got backlogs slowly inflecting down but

price is paid the most important one we

don't have the actual inflection point

yet now people are still believing that

inflation will come down the problem is

at what cost and that's why consumer

expectations are getting devastated and

i'm going to show you exactly why this

relates to big problems for the stock

market we'll explain this and i'll tell

you the big danger right after a message

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right folks this is the breakevens chart

we've seen this before the five year

break even is generally the market's

predictor for what the market thinks

inflation is going to do you could

survey consumers to see what consumers

think inflation is going to do and you

could look at the bond market this is

the bond markets version this is at the

white line the five year break even the

blue line the ten year break even we've

got a very very powerful trend over here

like this is phenomenal in fact if you

take a look closely here you can see

that where we sit right now on the

five-year break even right here around

that 2.8 level we have not actually seen

since before the war in ukraine that's

very very very good and we had a slight

spike after the delta variant over here

where we were higher and we're actually

lower than all of these spikes right now

this is phenomenal this is very very

good so we like seeing these break evens

come down so if the breakevens are going

down people's inflation expectations are

down

why why is confidence so low well

because we think we might end up having

to push our markets into a recession

whether it's an earnings recession or an

actual recession by a gdp to get there

and so what are people finally doing

well folks

this right here i hate to say it but

this is a dirty chart this is a dirty

chart i don't like this chart i'm gonna

put myself over here and this is the big

danger this is the point of this video

take a look at this when we had our dip

in january what did people do

we threw

5.5 billion dollars into etfs these are

etf inflows whether that's qqq or vti vt

sacs whatever right 5.5 billion dollars

of inflows right here on the first dip

in january that's back when i'm like

sell get it out right i bought uh a

chunk

here obviously things kept going down

since then so i mean i did uh did do

some saving over here because i also

repositioned my portfolio which

obviously you can get every single move

i make in my portfolio by checking out

the stocks and psychology of money group

linked down below and you can get a

little picture of it right yeah right

behind me anyway so

uh so right here in march we had 42

billion dollars of inflows very very

important okay this is when people

really went into buying the dip right

that's great we also then had that end

of march rally which people also bought

not so good that part unfortunately now

we're down at these lower levels here

which i've also been buying these lower

levels but there's a there's a

difference between me

and everyone in the market

and that folks is that well now all of a

sudden people are starting to pull money

out of the market yes folks take a look

at this even though at the end of may we

had 30 billion dollars of inflows into

etfs for the first time we sold this

rally off this last little six percent

move up from the bottom that we had in

the s p 500

that rally got sold we sold the rip and

it was a minor rip but we sold the dip

instead of buying the dip and 10 billion

dollars

left the etf market now that's sad

because if you

if you had you know obviously a crystal

ball the best way to actually have done

this is the outflows should be here

right you would want the outflows to be

here and then we want to see lots of

inflows

over here because the prices are lower

right but no people are finally saying

look can't take it anymore consumer

confidence is too low inflation is too

high for too long we are no longer

interested in investing in this market

we're taking our money out and you know

what this is folks this is the beginning

of capitulation when we start getting

outflows like this it is the beginning

of capitulation and it's actually

really bad news in the short term but

it's also really good news because we

need to finally just

get people out when we're going to be

the little paper hand in weenie babies

and look i know i paper handed in

january but i i got back in okay got

back in about 60 days later do i wish i

waited 90 or 120 days of course but hey

point is rebalance my portfolio i would

have been down another eight million

dollars had i not made that transition

so i'm extremely happy i did okay

it worked out really really well uh now

this though for those of you with cash

on the sidelines

this is good okay i'm probably in about

two weeks i'm gonna be sitting on about

15 of my portfolio in cash

and if this capitulation comes within

the next few weeks right around

hopefully we get peak inflation over the

next two or three months

that could be the juiciest buying

opportunity who knows who knows you

still got wall street suits saying oh

you know we could see a potential bounce

before the next earnings season

maybe we'll get a 38 to 50 retracement

or that's wishful thinking over here i

think this is very interesting this is

the atlanta fed gdp now estimate you

know that's this is another potential

reason for for the season good news

actually and what we have over here if

you look at this green line over here is

this here is the zero percent line a

little bit above that what i drew there

and over here we went slightly negative

with uh you know real gdp estimates but

we're actually bouncing up off that

floor there a little bit which is good

maybe some signs for optimism but we

have to balance like these nominal signs

of optimism along with these

capitulation signs of optimism we have

to balance that with the fact of the

matter that we still have ridiculous

consensus estimates for earnings and

that earnings recession is going to hit

margins at a lot of companies and this

is something

it's going to be tough it's going to be

tough to find companies that aren't

getting eps

revisions to the downside or guide to

the downside personally i'm looking at

sas

and obviously tesla but that's you know

more of a demand-driven thing that they

have so much demand and they're so early

in their growth curve their eps is going

to grow

but sas companies could be very

interesting

during this time where maybe you don't

actually see big eps misses at some of

the sas companies so those are some

things i'm going to be paying attention

to cyber security sold off a lot

communications uh have sold off a lot so

i think there's some opportunities out

there we've been talking about some of

these in the course member live streams

and such but uh i'm very like i'm i i

want to be as clear as possible because

i think sometimes people get confused

they're like well kevin a lot of what

you're saying sounds like bad news yes

and i'm not going to try to profess to

perfectly time the bottom

not happening okay i not this kind of

market very difficult to time so my

thing is just a little bit at a time as

i get cash a little bit at a time bye

bye bye bye bye

now did a little bit of buying this

morning and a little bit of options

playing this morning check out those

alerts if you haven't seen them yet and

uh yeah some straddles we'll see what

happens i'm kind of excited but anyway

if we get capitulation in the next

couple months here i mean hopefully

sooner than later that'd be nice

things are gonna get worse before they

get better but boy oh boy it's gonna be

a good old fight opportunity

my take at least anyway thanks for

watching folks we'll see you the next

one goodbye