Peak Insanity in Markets.

hey quick note in this video i'm going

to be introducing a new investment style

pie so stay tuned for the end of the

video for that i believe

that the supply chain shortages are

actually going to be at peak insanity

now okay why would i say that why

wouldn't supply chain shortages be at

peak insanity in november right before

the christmas holiday season because

folks let me ask you this

if you are a business owner

are you going to sit around in august

and going

oh man the supply chain issues are a big

issue and freight's taking a lot longer

you know i should procrastinate my

christmas ordering to november

no

that kind of thinking is going to lead

you to go bankrupt instead you're going

to order all your crap well in advance

and you're going to store it you're

better off buying more

warehousing space and making sure you

never run out of product again

uh and and you get rid of just-in-time

inventory because of the fragility of

our supply chain system just in time

inventory is the easiest picture i think

of is with just-in-time inventory is

let's say you're assembling a car and

the car's done the axles are in you just

need to throw the wheels on

the best case scenario for the most

efficient corporation ever

is the dude who's like okay the car's

here i'm ready for the wheels now turns

around and here's fedex going here are

your wheels sir

that's just in time inventory because

now you didn't have to store it long you

didn't have the inventory you didn't

have to deal with theft and decay

depreciation of the product right that's

just in time inventory but

uh and that's kind of what we've always

been heading to with capitalism because

very efficient lowers costs but the

problem with that is as soon as you have

supply chain issues

you know now you go i am ready for my

wheel

oh no i have to wait eight weeks for it

right that's worse than just storing it

so i believe that uh the supply chain

issues could actually be at a precipice

right now that supply chain issues while

i expect them to persist throughout 2022

will also start inflecting down along

with inflation starting to inflect down

because suppliers and merchants are

trying to stock up for the holidays

as common sense virus trends have taken

a promising turn in recent weeks

critical manufacturing centers are

reopening consumers are only slowly

returning to spending on experiences

after a huge shift in preference towards

household goods but that reversal will

continue to pick up as new coveted cases

fall and vaccines become available for

children that is actually interesting so

in addition to my argument which they

have not mentioned my argument yet which

my argument i think is very very

powerful that you're going to load up on

inventory prior to the holiday season

but in addition to that they're saying

hey look people and this is a kathy

woody an argument as well people already

bought the crap that they wanted people

already bought

their level 99 coffee mug people already

bought is it this one yeah people

already bought wait for it wait for it

people already bought their spy is

falling shirt right below where the

little video plays on your youtube

channel you can click buy on it

people already got their stuff now it's

time to spend on experiences

so uh okay let's see here many of our

savvy retailers and importers advance

let's go

see

what are we talking about here folks

come on it's common sense

many of our savvy retailers and

importers advanced their orders we're

starting we started seeing christmas

goods arrive on our shores back in june

ho ho that's even earlier than i

expected my goodness

nailed it

normally that arrival would take place

at the end of august beginning of

september nice

large retailers with sophisticated

supply chains like walmart target costco

will continue to thrive as

transportation brokers like xbo

logistics which can help level the field

for smaller companies uh what can as

will brokers like xp got it toy giants

mattel and hasbro will have a holiday

edge over smaller rivals for shoppers

xbox one gaming consoles will be easier

to come by than playstation fives video

game publishers okay whatever

inflation which has lately spiked in a

rise in bond yields from barely precipit

perceptible

levels uh to almost mentionable ones

could remain elevate okay so basically

hey look uh the 10-year treasury was

super low spiked up but it only spiked

up a little bit you know to that 1.48

level right now and maybe we'll remain

flat here but we don't actually expect

it to continue skyrocketing

uh okay let's see here labor markets

remain tight higher pay and prices for

manufacturers good manufactured goods

will stick but overall inflation is

likely to slow to unalarming levels next

year the cause for shortage since the

start of the pandemic have been many and

varied but they fall into few groups a

handful were true one-offs like the

march grounding of a ship that blocked

the suez canal which carries 12 percent

of the

worldwide trade the canal does or

louisiana factory fire that knocked out

production of swimming pool chlorine

got it oh my gosh number of container

ships anchored outside the port of los

angeles normal day one september 19 73

oh my gosh see that's what i'm saying

like peak supply chain fears now

some were actions with unforeseen

consequences okay whatever but most

causes have been direct results of the

virus that mistrip to disney with the

funds redeployed to a new patio set in

big stream stream screen tv was part of

a vast spending shift from services to

goods bolstered by stimulus stimulus

checks exports from asia where many

consumer goods are made jumped 20

relative to those from europe and uh the

united states that compares with just

one okay cool so

basically yeah it makes sense you still

want to spend your money because god

forbid people actually invest in stocks

uh but anyway

people still want to spend their money

and uh yeah so like they're saying here

instead of buying a trip to disney

you're spending it on on fixing up your

home or something oh i could finally

afford that restoration hardware

expensive piece of wood or metal junk so

that has led to runs on key components

like computer chips for appliances and

vehicles spinning up plants and

equipment to make those items is

expected to surge whatever uh oh yeah

yeah okay so remember somebody i don't

know maybe you don't remember somebody

asked me earlier in my live stream what

about cap x spending is cap x

going to

go down like

when interest rates go up right so

interest rates go up

and uh is that going to leads capital

spending or investments into companies

to go down

my argument was no because companies are

spending like crazy right now

milking the low interest rates because

they know it's like temporary cheap

money right

uh so

uh

this is interesting here spending on

plants and equipment to make those items

is expected to surge more than 50 this

year from pandemic levels pre-pandemic

levels so another thing that our markets

are real or like i think investors are

missing

is the fact that every single

corporation that exists

is literally

in my opinion

five times more efficient than it was

pre-pandemic now i know that sounds

crazy but let me ask you this okay

because people are like oh my gosh the

valuations of the stock market is so

much higher than it used to be or

whatever look

when you can go to a company like apple

or tesla or google or whatever

and or or any corporation and the

pandemic hits and you can lay off

thousands of people

tens of thousands of people can get laid

off

and then you can just happen

to hire back the good ones the really

good workers no offense the people who

weren't hired back okay that's not the

case for everyone no triggering the

viewers

but let's be real here there's going to

be an element of filtering going on at

the corporations you are making these

businesses more human efficient

now you are investing in better

machinery to prevent or or

warehouses or plants whatever you know

uh ppe is it property plant and

equipment you're investing in these

things

uh that's an accounting term but anyway

i don't know why i just said that

squirrel but uh anyway then then uh you

actually in the 10 years thereafter are

a way more efficient company the

pandemic ended up being a gift to

company efficiency that is really really

important as an investor in the stock

market because it helps push margins up

very very important

uh okay but shortages there are likely

to stretch well in the next year of

course i mean you can't build ppe that

quickly not to be confused with

personnel protective equipment plant

property and equipment

uh passenger planes carry about half of

air freight so a sluggish recovery for

air travel has added to shipping burdens

fine under normal circumstances the

ideal number of ships to drop

uh of ships to drop anchor outside of

california's san pedro complex consists

uh whatever is zero in june there were

six whatever uh now they're like 70 to

80. okay got it lots of ships stocked

outside that's crazy i should go over

there and fly my drone over there but

that would require me to drive to la

which i'm probably not going to do

i love how they put the evergreen here

that looks that's a cool picture

anyway

the ship jam will not be cleared by

christmas sure of course not uh but he

predicts a holiday of plenty says uh

someone who knows there will they were

interviewed by barons so we'll just

leave it at that there will be goods on

the store shelves not saying that

everybody who's interviewed by barons

knows what they're talking about there

will be goods on store shelves in

fulfillment centers for us to order my

only advice is maybe for the american

consumer like i'm doing shop a little

early that's prudent

trucking companies have and use a firm

trucking companies have struggled to

find new drivers

uh

this this is also true by the way in the

united kingdom which is one of the

reasons we're seeing those gasoline

issues

uh the piece of it certainly for us is

beginning or the yeah the piece of it

certainly for us is beginning to abate

uh retailers have had time to prepare

and shoppers can expect full shelves uh

there will in fact be gifts under the

trees signs of supply chain stress

remain unnerving to investors in a

recent earnings report nike lowered its

revenue forecast to account in part for

factory closures in nam

shares lost six percent that day but

there are also signs that relief is

coming new balance recently told

analysts that vietnam factories could

return to 60 to 70 of capacity by

mid-october versus 30 to 40 today

uh if there's one promising indicator on

that front it's that coveted cases

worldwide have been falling yes tony

makers sound confident mostly

barbie maker mattel confirmed that there

that it is already it has already

factored in shipping challenges good

heck yeah

also nerf

said sales might slip from the third to

fourth quarter but won't hurt overall

holiday business

cool that's great i expect this this

season to be insane uh it kind of makes

you wonder if um

you know

you can

really um

i wonder if you could start investing in

some of the retail consumer companies

would be very interesting uh that would

be very interesting

uh yeah actually jolly we've covered

this story here uh this is actually a

good one uh

this is uh

and the federal reserve has actually

talked about this as well and some

papers which i've done a video on about

but basically comparing post wars to

post pandemics it's true in wars uh

contributors to society die and

pandemics uh people who don't contribute

to society tend to be more of the ones

who who die this is also a very good

point um i'm not saying you want to

filter your society out to more

efficient people but um

and that's that sounds very harsh uh i'm

just talking about that from an investor

point of view uh

yeah anyway uh so um okay jeffries i'm

gonna just walk away from that one

jeffrey's analyst who covers mass

merchants and toy companies says holiday

goods availability could go either way

depending on whether congestion

eases over the next 30 days most years

retailers could replenish inventories

two or three times between mid-october

mid-december this year shoppers should

see healthy stock levels to start then

draw down in a small surge as popular

items run out got it

uh playstation five good luck

okay xbox one become available great as

for gamestop

uh we'll thrive and receive plenty of

holiday consoles and that the reddit

traders are directionally right but also

the stock is overvalued by a hundred

fifty dollars oh my gosh he didn't say

at 150 he said buy 150

oh

he's bullish on video game publishers

activision and ea uh take too uh

interactive but says take two is less

well positioned for holiday because it

recently delayed the release of gta 5.

oh that's a bummer among toy makers

prefers hasbro to mattel i mean this

this whole article here gives you a

whole lot of ideas in terms of things

that you can invest in that's one of the

reasons i love barons but yeah i mean

think about it hasbro uh you know with

nerf and and uh

activision blizzard which is recently

sold off uh there there could be uh

there could be an argument to make uh to

make like a a basket of like supply

chain stocks that would be interesting

supply shortage stocks

supply shortage

stocks

yeah i'll try something like that maybe

i'll put something together called like

met kevin.com supply

uh well i might do that that'd be cool

all right anyway

she adds however that online shoppers in

particular should start shopping early

okay we know about this soaring prices

inflation measures that trim items will

with outlying price gains imply that

headline the headline measure will come

down but slowly as bottlenecks ease

okay

chicago

please business is great whatever okay

this was a very good piece i like this

this was a very fascinating piece about

maybe you buy the dip on on companies

that have just been abused

by by the supply chain crises

and uh

you yolo the dip on those

that's that's an interesting idea uh i'm

gonna play with that so maybe by the

time you're watching this there'll be

something at metkevin.com supply if not

set a reminder to check it tomorrow

so cool well thank you so much for

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thanks so much for being here and

goodbye

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