What Cathie Wood JUST Said | The Biggest Danger.

Kathy Woods thinks we could be heading

back to the Roaring 20s as inflation

potentially goes to negative 15 let's

talk about the latest update and add my

commentary so Kathy would suggests that

if inflation is unwinding as we believe

we could be heading back towards the

future The Roaring 20s just like we did

in the 1920s now this is a belief that

I've held as well that if we can

actually prove that inflation is indeed

transitory we could have a phenomenal

era of stock market booms going forward

for the rest of the decade really as

companies have laid off their their

slush or their fat so to speak and

maximize their profitability and their

margins while amplifying their ability

for technology and green technology to

really take over which in the future not

only it costs more in an inflationary

way but leads to substantially more

profits or four companies so Kathy Woods

goes on to say that the last time

several General Technologies evolved at

the same time the telephone electricity

and the internal combustion engine we

were in the 1920s and prior to the

Roaring at 20s then the world was at War

World War one and suffering a pandemic

the Spanish flu while both of those had

a much more serious impact on the global

economy than what we're seeing today in

other words covid and Russia Today

aren't impacting the economy as much as

the Spanish flu and World War One did

today's combination is a strong Echo

that could result in much lower than

expected inflation and a boom in

Innovation says Kathy Wood during World

War One and the Spanish Flu a supply

chain and other shocks pushed inflation

to 20 percent at its worst in June of

1920 inflation peaked at 24 but then

dropped precipitously in just one year

to negative 15 percent in June of 19 20

21. now that's remarkable because if in

one year we end up going into negative

inflationary reads negative CPI rates

which is possible if we actually see

owner's equivalent runs Trend down then

we're actually seeing prices across the

board go down which we are seeing that

in some sectors already Freight is

trending right towards levels that we

saw before the pandemic and it's

entirely possible we could actually go

negative it's possible that we could go

negative on things like chips as well

certainly PC demand down 19 the

exception of Apple they're still pulling

off uh Positive Growth year over year

but anyway founded in 1913 and

challenged by the first bout of serious

inflation kind of weird to think that

the Fed was founded in 1913. the FED

raised interest rates less than two-fold

from 4.6 percent to seven percent

between 1919 and 1920 to fight that

higher inflation faced with much lower

inflation this time around right peaks

of around eight to nine percent the FED

has increased interest rates 16 fold now

I personally think it's a little extreme

to suggest that inflation has been

raised 16-fold mostly because what she's

doing is she's comparing okay well rates

were 0.25 and now rates are nearly you

know knocking on the door of four

percent oh there we go nearly uh nearly

a a 20x increase in the exact math 16

fold I personally think this is just a

comparison of a small number growing to

a larger number and then a relatively

already large number doubling so I don't

necessarily think that's that's

something to be so impressed by uh but

anyway she she does really what she's

trying to convey is the difference in

rate the shock to the economy right is

it possible that the shock we're

experiencing today could be

substantially greater than than what

we've been used to in the past and yeah

that is a possibility in fact Susan

Collins she's the president of the

Boston fed she came out today and said

that I think that as quote as we have

raised rates that the risk of over

tightening has increased that's what uh

Susan Collins just mentioned and she

says that there is though a risk that

inflation expectations become entrenched

and that ends up becoming a problem so

uh ultimately if uh the FED okay so this

is interesting because it talks about

the transition here of uh inflation and

the FED but I gotta check in here hey

what's up man we checked in last night

we're back

we're Kevin and Lauren good to see you

again okay get them on video he wants to

be on YouTube show him Sean no it

doesn't always I appreciate it man have

a good night all right

thank you

uh all right so uh if inflation drops

below the fed's two percent Target and

economic activity disappoints then

interest rates are likely to surprise on

the low side of expectations next year

ushering in this Century's rendition of

the Roaring Twenties now this is a

really interesting argument because

she's essentially suggesting that hey

next year if we go negative the way we

did between 1920 and 1921 and we do that

this time from 2022 to 2023 we can

actually see a Fed that essentially has

to print money and Usher in as she says

the Roaring 20s of the 2020s and Jerome

Powell has alluded to this before he

suggested that look you know we can over

tighten if we need to because we don't

want inflation to become unentrenched

that is as soon as expectations break

and expectations rise which fortunately

right now they're starting to plummet

not the consumer expectations though but

remember the consumer bases their

expectations based on the last CPI

report so I think that measure is kind

of rigged the important one that I like

is the bond Market's expectation of

inflation what have we seen without one

hey Lauren would you mind take in this

in my bag right there what have we seen

with that one we've actually seen it

decline substantially hey thanks so much

hey have a good night

yes thank you

yeah great conversation five stars hey

thanks

so uh you know inflation expectations

measured by the bond market I think are

much more reliable than the Consumer

expectations of inflation which you see

through the Michigan surveys Lauren

would you mind holding this again

perfect so and then I'll take the phone

back there we go I'll take this back so

uh that's really important to pay

attention to now uh is it possible that

the FED oh yeah what did Jerome Powell

suggest well Jerome Powell suggested

look the risk of over tightening is is

that all we have to do is turn the money

printer back on but if we under tighten

inflation could become unentrenched and

then we have bigger problems right that

would be crazy so anyway now Kathy Wood

goes on to say as inflation dropped to

negative 15 in June of 2021 the FED

lowered interest rates from seven

percent in May of 21 to 4 of July of

2021 almost to having tripping the

switch for the Roaring Twenties from

August of 1921 to September of 1929 the

Dow Jones Industrial compounded at an

average annual rate of 25 think about

that 25 on the Dow crazy anyway Kathy

says If the Fed does not pivot the setup

will be more like

1929. oh this is where she's giving it

contrast right there's this bullish

potential of the FED realizing as Susan

College Collins has said oh there's

actually a risk of over tightening here

maybe maybe we could overdo it which

would be a problem and if we overdo it

well then we have problems we need to

turn the money printer back on but if

the FED doesn't pivot because inflation

may be in December mark your calendar

for December 10th I'm sorry December

13th the FED meeting is on December 15th

the last inflation report was on the

10th of November anyway if the FED does

not pivot she says the setup will be

more like 1920. now line the FED raised

rates in 1929 to squelch Financial

speculation that sounds a lot like

the.com era and the crypto error oh did

I say it oh just gonna come out and

listen if somebody remembers the hex

interview I did okay

go back to it just type in meet Kevin

hacks into YouTube

just would you please come back into the

comments there or hear and count for me

how many red flags you saw in that

interview that suckers down like 90 year

today it was spam Bots here they come

anyway

the FED raised rates in 1929 to squelch

Financial speculation dude we have so

little left over speculation I feel like

now if speculation has been crushed

anyway in 1930 Congress passed the Smoot

Holly uh act putting 50 plus tariffs on

more than 20 000 goods and pushing the

global economy into a Great Depression

ooh bad contrast and we have seen some

more tariffs from the Biden

Administration on things like Chinese

Chips although you're already seeing

companies like Nvidia announce oh don't

worry we have China compliant chips that

we're going to be selling which is

really important because 25 of nvidia's

Revenue comes from China kind of wild

anyway Unfortunately today uh has some

Echoes of the same she says the FED is

ignoring deflationary signals and the

chips act that's the one I just talked

about with the Biden Administration

could harm trade I think that's extreme

to suggest that just the chip sack today

would be anything like uh the 20

000 item 50 Tariff of the 1929 so I

think that's a little extreme and I will

say I don't actually think the FED is

ignoring deflationary forces I think

they're just waiting for the lagged

numbers to catch up which does mean

they're responding to things with the

delay they responded to substantial

inflation with a delay calling a

transitory for too long and they respond

and now I feel like they're over

responding waiting for that owner's

equivalent rent to actually drag

inflation down remember CPI minus

shelter inflation is actually negative

one percent so everything in CPI

inflation minus shelter inflation

negative one percent it's remarkable so

I don't know that they're ignoring it I

think they're aware of it I think they

just really want to confirm okay yeah we

definitely are on a downtrend you know

as Barkin mentioned last week he thinks

we're on the back half of the inflation

curve coming down so I think they're

well aware I don't think they're

ignoring but uh then again you know

Kathy uh is also having to come out to

justify the performance of of the arc

fund uh and and uh this is an easy

scapegoat you just always blame the FED

don't me wrong I like Kathy I highly

respect Kathy

but I think the FED is probably going to

U-turn in 2023 I think she's right about

that do I think she's also right in

suggesting we're going to have a roaring

20s yes probably do I think inflation is

going to go negative 15 probably not but

even if prices just go flat inflation

goes away which is great so um hey what

do you think let me know in the comments

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