This is WORSE Than 2001 | Prepare for a 50% Meltdown.

now we got to talk about similarities

between the 2001 recession and today in

The Uncanny warning that the 2001

recession gives to us today and why you

should probably pay for hand a very

specific part of your portfolio though

even though I am a licensed financial

advisor run an ETF sell programs on

building your wealth link down below and

run what I hope in the future will be a

TENS of multi-billion dollar real estate

startup hashtag no guarantees I cannot

provide you personalized Financial

advice telling you to sell what you're

about to hear a massive warning on but

what we're going to do is we're going to

jump into BC Alpha's research

hold on the recency bias and comparison

to the 2021 cycle I tell you this is a

very very unique report and so we're

going to go through this report uh and

uh and then we'll summarize it so ready

for this here we go

all right so first the market has

disappointed both bowls and bears and

the reason the market has disappointed

both bulls and bears in the opinion of

BC Alpha is because the Market's kind of

trading sideways like we're not making

new lows so the Bulls are disappointed

and we're not rallying anymore or sorry

so the Bears are just we're not rallying

anywhere so the Bulls will disappointed

yeah the market so the market has

disappointed both groups and the S P 500

has been in a trading range since

basically May of 2020

22. now that's actually kind of

remarkable to think that the S P 500 has

essentially been in a trading range

range since uh since March or I'm sorry

May of 2022. let's go ahead and zoom out

and look at May of 2022 on screen here

this is Weeble and if we go to May of

2022 that is kind of eerie uh so if you

go ahead and jump over here and just

draw a couple uh trend lines over here

let's draw uh let's just get a parallel

trend line over here uh okay we'll just

grab this over here so we go over to May

here's essentially your top in May and

we'll just draw something that's mostly

flat I should have just grabbed the

horizontal line but whatever uh and

let's do it again over here we go to

roughly about our bottom in June oh yeah

I mean we're well well off of that right

but I think this is roughly what they're

trying to suggest that this is the

trading range that we're in very well

okay what warnings do they have for us

we believe that many investors suffer

from recency buys and they're using 2008

to 2021 as a guide for their Equity

Outlook the Bulls assume that any

considerable drawdown would be followed

by a large rally as this is exactly

what's happened since 2009 this is

basically the buy the dip mentality that

has worked extreme really well since

2009 Bears however presume that poor

fundamentals should produce a crash in

share prices just like they did during

the Great Recession however this report

suggests that the Market's trajectory

this time will likely be different

instead of a one-off collapse in share

prices like in 2008 the S P 500 will

probably be in an extended bear market

for the first time in 20 years in fact

the s p 500's pattern and trajectory

have so closely so far closely resembled

the behavior of equities in 2000 and

early 2001. first the U.S bull market

peak of 2000 occurred after a

decade-long exponential rally in

technology media and telecom stocks TMT

the same is true for the 2021 stock Apex

here you go here is that chart on the

right side you can see this drastic peak

in TMT market value as a percentage of

sort of the total market value the msci

total Equity market value basically the

entire Market uh and then on the right

side you see that similarity

interestingly at the Zenith of the

bubble in 2000 TMT stocks accounted for

about 40 percent of total market cap the

same was true last year

okay over here historically massive

retail investor buying occurs prior to

Major Market tops that are Then followed

by large bear markets and the latest

retail frenzy occurred in 2019 and 2020.

this is very similar to what happened in

the 2000s recession and then the

subsequent 2000s crash and they talk

about this decoupling between no new and

old economy stocks temporarily during

the initial 2000 to 2002 bear Market as

it became clear that the U.S economy was

in a major downturn basically everything

ended up rotating down and they believe

that today we see a lot of those

similarities in other words non-tmt

technology media telecom stocks and TMT

stocks first decoupling and then

basically everything crashing so let me

make that clear in English they're

basically saying in the.com Crash first

you saw TMT stocks fall and then

everything fell

and they think that's the same thing

that's actually happening this time is

First you've seen a crash in a lot of

SAS companies and tech companies and the

next leg down is basically the S P 500

because the same thing that happened in

the.com Crash is going to happen now

that the Spy is preparing for a massive

leg lower and this is a very large

warning they make another correlation

and say that there was a correlation

between stocks and bonds and basically

usually what you find is that in early

January until October 2000 the S P 500

exhibited a negative relationship with

10-year treasury yields in other words

stocks up yields down

and that negative correlation was still

exists today but is weaker in 2000 than

it is today and that's probably because

we have a substantial set of inflation

today however what ended up happening

was in the first phase of the market you

had a negative correlation let me just

say this in English to simplify this

okay so basically the first phase of the

crash in the.com Era yields up stocks

down

in the second phase you actually had

yields up stocks up and that was seen or

yields down stocks down so you had a

correlation positive correlation means

they're going in the same direction

yields up stocks up

yields down stocks down that's positive

right negative is the opposite and what

they're saying is at first we had a

negative correlation and then we went to

a positive correlation as the crash

worsened well guess what's happening

today folks we were negatively

correlated yields up stocks plummeted

now we're turning positive yields up

socks up

that is actually what they're saying a

massive red flag and potentially a sign

of a massive crash to come

they also talk about how profits often

lead employment they talk about this

idea of basically employment being a

lagging indicator look we've known that

employment was a lagging indicator

forever I've regularly talked about it

even as early as January of 2022 and it

was actually one of my reasons for

selling that the conditions of a wage

price spiral existed in January of 2022

they don't exist today that's good but

it takes a while for all of that

information to show up in data anyway uh

so that's how they see similarities so

they see massive similarities in the

correlation of bonds

in the peak of TMT and uh in employment

they see very very similar large

similarities to 2001 and they think we

shouldn't be focused on a 2008 style

crash we should actually be looking at

an S P 500 bear Market

just like in the 2001 crash so big

warning now they do give us some

differences they say that even though

there are massive similarities to 2001

obviously today the genie of inflation

is out of the bottle and it might be

very very difficult to put the genie of

inflation back in the bottle

uh and so they make some arguments here

that we've had this massive rise in

productivity uh during uh during the.com

era but today we actually have a massive

plummet in productivity now some of that

could be explained Away by uh you know

the changes of the pandemic leading to

sort of this misallocation of resources

and a lack of prime of productivity

however the employment costs index today

has basically looked much more wage

priced spirally than what we had in

the.com Era now let me just explain the

left side of this chart is 2001 the

right side is today I wrote the words

higher triangle

let me explain that in English

well first that means higher Delta and

in English that means stuff is going

much faster today than it did back in o1

in other words stuff getting worse today

faster than it did back then we are

accelerating faster today than it was

back then right higher Delta higher rate

of change the derivative is higher

whatever

same thing for labor costs although it

does look like the employment cost index

has peaked now we're waiting for labor

costs to Peak and the leading indicators

are that they are but these are actually

differences that don't make today more

bullish they actually say what this

report is trying to say is look the

similarities are bad news

for the s p 500. the stuff that's

actually different today is just more

bad news for the s p 500. okay so here's

the bottom line

the cause of the bear Market of 2000 to

2002 was a large drop in corporate

profits the same will probably be true

in coming months

so when we talk about a hard or soft

Landing our bias is that the economic

recession in the U.S will likely be a

mild one however the market will

experience a large drop look at the

confidence they have in this I don't

know if they're just like a frustrated

bear but they're really confident that

even a small decline in GDP will lead to

a massive compression of the s p 500.

during the 2001 recession real GDP

barely contracted and household spending

was actually positive

interestingly the measure of real

private demand then was almost as weak

as it is today even though you barely

had contraction you ended up seeing a

massive collapse in prices because

earnings per share were down about 60

percent

and so they say in a nutshell the S P

500 dropped 50 in 2000 to 2001 even

though nominal GDP never contracted that

basically means the recession was so

shallow it took even like one or two

percent inflation to make it negative

right

the latter will likely suffer

considerably more than the former and so

what does that mean corporate profits

are likely going to substantially suffer

and we're going to see a massive margin

squeeze at S P 500 companies in other

words companies are going to take it in

the margin and the problem here is that

if consumers accept higher prices so

that companies can protect their margins

well then inflation goes up and stocks

go down

if companies push back against higher

prices so inflation goes down then

stocks go down because earnings go down

and so even though they think bond

yields are going to roll over and bond

yields will come down which will be good

for the real estate market they think

that s p 500 companies operating EPS

will contract by 21 from a year ago and

the S P 500 risks a 50 percent Decline

and so this Equity bear Market will

likely be drawn out much like the 2000

to 2002 period and in short despite the

healthy balance of consumer balance

sheets and a robust banking system you

are going to see a profit margin squeeze

that will destroy S P 500 companies by

about 50 percent and we're facing a

major sell-off ahead of us in global

stocks and another spike in trade

weighted US dollar basically the

Emerging Market outperformance still has

another leg down that's basically what

they're saying so what says Kevin

says this is exactly why I think the S P

500 is a bad investment hashtag not

personalized Financial advice

it's also exactly why I think pricing

power PP stocks are a very good

investment right now I think that

pricing power stocks companies that

actually have the ability to maintain

the strongest margins and even in the

face of price Cuts can expand revenue

and continue to show EPS growth I

believe these stocks will perform the

best

this is why I think personally investing

in the S P 500 is a bad idea right now

and I think focusing on pricing power

stocks is the best idea because they've

sold off the most and in my opinion have

the most resilience in the face of this

uh basically margin crush the taking it

in the margin that we're expecting here

this piece in my opinion is basically

and this this just came out a couple

days ago here uh is is really just a

selling piece for the idea that get out

of the S P 500 find yourself some

pricing power stocks

uh and like I think maybe they're being

a little bit more bearish than they need

to be because I personally think still

think we're in a Nike Swoosh style

recovery but uh so I'm not as bearish as

these folks but you know if we're going

to look at the S P 500 which is heavily

weighted too yes some technology but

also substantially Staples

yeah I think Staples are going to take

it in the margin hardcore retail Staples

restaurants hotels they're all going to

take you to the margin

so yeah I'd be very very concerned for

that and I completely agree this is the

kind of stuff we also talk about in the

course member live streams when we do

our fundamental analyzes we look for

large PPS like we want to find large

pricing power stocks that's very very

important buy take see what you think

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