WARNING: WSJ Says Coming Crash WORSE than 2007 | New Inflection.

well folks the conditions for deflation

are here and well now we have a really

fascinating new piece on supply chain

gluts we also have a piece from The Wall

Street Journal on Equity risk Premia

which is very very bearish but I'm going

to provide a counter argument to it I'm

going to provide both pieces of

information in this segment remember

April 12th is CPI day mark your calendar

for that tomorrow is jobs Friday that is

April 7th mark your calendar for that

and mark your calendar for prices going

up on the courses on building your

wealth for April 12th with that said

let's jump into this piece right here

it's a phenomenal piece by yes CNBC now

I rarely have CNBC pieces on the channel

but this one was just too good not to be

featured here it says inflation's

inventory gluts are here to stay and

will hit bottom lines in the weaker

economy loaded Warehouse inventories

that are expensive pressure eating away

at the bottom line of many companies and

for many the excess Supply and

Associated costs of storage will not

Abate this year in other words companies

are going to take it in a margin in the

margin but wait a minute if the access

cost of storage are still going up isn't

that inflationary not necessarily listen

it just over 36 percent of companies

expect that were surveyed by cnbc's

supply chain survey said they expect

inventories to return to normal in the

second half of this year with an equal

percent expecting Supply gluts until

2024 Supply gluts my friends Supply

gluts are deflationary yeah yeah but

that deflation occurs with a lag and I'm

going to explain that lag right after a

message from our sponsor and that lag is

very important to pay attention to so

buckle up any of you like to know where

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terms and condition applying it 21 now

say a return to normal can occur in the

first half of the year and another 15

expect a normal activity by 2024 but

uncertainty about Inventory management

is significant with almost a quarter of

supply chain managers saying they're not

sure when gluts will be worked off

remember excess inventory equals lower

prices Supply up price down simple quote

we don't expect significant decreases in

inventory levels within our Network in

2023 says Paul Harris the vice president

of operations for warehouse quote

several of our manufacturing clients are

experiencing dead slash bloated

inventory challenges due to over

ordering in the container gridlock from

prior quarters a majority have elected

to keep inventory on hand as opposed to

liquidating now that is fair but

eventually when storage price and this

is this is the 4D chess part you have to

think about okay so think about it so

far over the last maybe year or so

inventories have been rising at the same

time as inventories go up companies are

like well we don't have to Discount just

yet let's increase inventories so in

other words uh inventories go up

warehouses warehousing goes up is the

other thing that goes up right so we

hoard more inventory as Supply chains

smooth out now we fill up the silos

think about it like having a farm okay

you're a farmer and you're farming corn

and you just went from not having enough

corn to having way too much corn now you

have way too much corn and you're like

okay well I'm not going to dump it on

the market I'm not going to reduce

prices yet what am I going to do instead

I am going to fill up my silos I'm going

to take my corn I'm going to fill up my

silos and when I fill up my silos when

the price of corn is more desirable I

will slowly trickle it out into the

market that is why we have silos for

corn and for nuclear weapons but this

video is about corn and prices not nukes

anyway

what happens when the silo fills up well

you have a choice Do you want to build a

new expensive silo or just start

liquidating

it is a cycle you have to think about

this as a buffer system kind of like uh

okay nobody's gonna get this reference

except for the contractors but we have

those new pressure valves on laundry

machines now and new construction

basically it's kind of like you put a

little buffer in so if you get too much

water pressure coming into your water

system rather than getting a water

hammer like when you turn on the water

valve and you hear that against the wall

you have a little buffer it fills up

with water and then buffers and then as

the water pressure falls again it can

flow again right let's draw that in more

of a supply chain English here but you

know I gotta respect the contractors as

well so I had to use a contractor

analysis I don't know the plumbers are

probably shaking their heads right now

but I tried okay

anyway

so uh here you are you are an

outstanding farmer you know why you're

outstanding because you're outstanding

in your field like literally okay I

screwed up the joke whatever uh why is

the farmer outstanding while he's out in

his field I don't know never mind so you

got a lot of corn and now you have these

silos

okay you have a lot more corn than you

usually have you fill up your Silo

you're like hey I'm not going to lower

prices

what do I do now that the silos full

well I could build more or I could just

dump onto the market so in other words

you're going to sell you're probably

going to sell because it's going to take

time for you to build up these silos so

what does this mean folks well in

English what does it mean it means there

is a lag it means that

deflation

lags okay and when we are hearing that

prices for warehouses are going up it

means that the cost of storage is going

up because the silo is full when The

Silo is full

you have a choice build more warehouses

but prices are still expensive so

instead you sell that selling happens

with a lag okay that in American English

means price gonna go down soon folks

we're gonna see some deflation okay it's

a good thing

when do you expect inventory levels to

return to normal well here you have a

chart yay it looks like

about 50 percent of people actually oh

my gosh look at this 64 of people say

it's either going to happen in 2024

2025 or they have no freaking clue okay

64 of this pie has no freaking clue or

it's gonna happen in 2024 later in other

words that deflations come in boys and

girls a total of 90 Logistics firm

managers representing the American

Apparel and Footwear Association its

Logistics Warehouse quote and the

Council of Supply Chain management

professionals

participated in a survey between March

3rd and March 21st oh during the banking

crisis how fantastic to provide

information on their current inventories

and the biggest inflationary pressures

they are facing okay so what are the

biggest inflationary pressures which yes

they have been passing on to the

consumers but are no longer able to

that is limited now we cannot raise

prices anymore that's why companies take

you to the margin now they used to pass

it on to Consumers it used to

what's sitting in warehouses and what

companies are doing about it Logistics

experts tell CNBC that 20 of their

excess savings sitting in warehouses are

not seasonable seasonal season

seasonable whatever slightly more than

half of survey participants said they

would keep items in warehouses yeah but

what happens when those warehouses are

full prices of warehousing is going to

go up but a little over a quarter said

they are selling on the secondary Market

because inventories impact the company's

bottom line through elevated storage

prices ding ding ding ding ding ding

ding thank you uh somebody just donated

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below Harris told CNBC many clients with

perishable goods are selling them on the

secondary Market to avoid destroying

products you have to remember you can't

always just hoddle inventory that's very

important you can't only huddle

inventory the reason you can't only

huddle inventory is because eventually

inventory goes to crap it decays people

steal it or it decays

uh see if the secondary Market is not an

option they have to destroy the product

if it's consumable they're donating the

goods and taking tax deductions or they

should sell it at a at a loss and

basically lower prices investors are

worried about earnings and margin Trends

and expect Wall Street to revise lower

duh supply chain pressures and high

inventory and high costs of carrying

inventory will hurt margins duh almost

half said the biggest inflationary

pressures they are paying

or Warehouse costs Warehouse costs look

at that

well guess how you can lower your

Warehouse costs lower your prices duh

now

its Logistics told CNBC that many

clients across the industry have been

using ocean containers rail containers

and 30 or 53 foot trailers for storage

because distribution centers are full

these charges will start materializing

in Q3 Q4 results in other words the

companies are going to take it in the

margin may as well sell your product

okay basically more and more of this

approximately what percentage of your

increased costs are you passing on to

customers

well you can see here about half of the

pie says less than 30 percent

and about uh 74 says less than 50 is

being passed on to customers that means

most companies are taking it in the

margin very few companies are able to

pass it all on to Consumers these are

your pricing power companies only twenty

percent of companies are saying they're

able to pass on 90 to percent to 100 of

the cost to their customers those are PP

companies companies with massive PP if

you want to know what companies I like

with massive PP you can learn about my

ETF by going to meet kevin.com you can

also see my Affiliates and all the other

good stuff there now I'd like to do a

very brief look into what's going on

with Wall Street and what Equity risk

Premia are saying so Equity risk Premier

according to Wall Street

uh are something we're going to be able

to analyze right

let's see here here I push this button I

push this button I push as this button

to remind you about metcaven.com stream

yard so

The Wall Street Journal ran a piece this

morning suggesting that stocks have not

looked this unattractive since 2007.

basically what they're doing is they're

looking at the earnings uh yield for the

S P 500 versus the 10-year treasury

sitting at around 1.59 percentage points

a load not seen since October of 2007.

now that sounds really scary when I

first read this I'm like oh my gosh this

is terrible like that is a huge uh a a

red flag right but then I got to

thinking about it and then I put my

thinking cap on and I put my logic

together and you want to see what my

logic said my logic said the first thing

first thing my logic said is the S P 500

is trash why is the S P 500 trash

because it has a ton of top 50 companies

that lack pricing power

as a result

those companies I expect are going to

take it in the margin like Costco this

morning okay they're going to take it in

the margin and they're going to suck at

earnings so of course forward EPS looks

bad for the sap and of course the s p

looks highly valued that's why I like

pricing power stocks

number two of course treasury yields are

high now because inflation is expected

to be high now and lower soon and when

it's lower soon rates yields will

plummet just this morning Bloomberg

intelligence put out a piece and they

suggested that uh uh uh the sofr the

secure overnight funding rate

will probably the market expects it'll

go below three percent in 2024.

Bloomberg intelligence thinks it'll

actually go to two percent by 2024. in

other words rapid Cuts coming once

disinflation is proven

so that's my thesis obviously that's

where I put my head that's how I counter

but I mean this is a bearish piece if

you want a bearish piece here you go

here's the chart Bears Rejoice enjoy in

the meantime I am going to go talk about

my PP which you again could learn more

about along with all my affiliate links

by going to meet kevin.com and the

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