The Beginning of the END | The Great Reset.

folks is this the beginning of the end

or is it Moon time that's what we're

going to talk about in this video we've

got quite a few charts and we've got an

interviewer from Credit Suisse an

interview with Bloomberg we're going to

do some reacting to because it's

actually quite optimistic but the

question is am I getting optimistic

about this is this or is this the moment

that we're supposed to get really

excited or is this more cause for

concern let's go ahead and get started

with exactly that thesis right here

folks and yes the price goes up tonight

we did extend the coupon code until

Thursday at 8pm California time so

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price is going up for the programs on

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we go give me your year-round forecast I

know it's constructive and walk me

through why you think it's achievable

given all the risks on the table right

now

yeah I mean let's I I think that we're

going to have a double-digit

um return between now and and the end of

the year and I'll tell you what what I

think drives it and if you look at the B

if what we've seen so far this year

profits are up seven and a half percent

year-to-date and they'll probably be up

another five to six percent between now

and the end of the year so we don't have

a profit problem as much as people say

what we have is the value hold on a sec

before we get to what we have let's

think about this for a moment let's

analyze this with with a few charts and

updated pieces of info that we've got so

really what he's saying here is that hey

look we've had such a painful beginning

of the half but that doesn't correspond

to the fact that we actually had

earnings increase in the first half and

we're still expecting earnings to

increase in the second half so I did a

little bit of digging and I found this

which was interesting the s p lost 21 in

the first half of 1970. during a period

of high inflation now I I think this is

a very important and understated element

right here because we keep hearing talk

about this soft Landing right Jerome

Powell says well we've been able to

achieve a soft Landing three times

before sure but look at well not this

chart look at this chart right here

these right here are the prior periods

in which we had a soft Landing the Blue

Line represents inflation minus the

target which is two percent so basically

inflation at the time was actually two

percent higher but they're just trying

to show on the chart how far away we are

from the target so that way when you're

right here you're about five percent

away from the target where we are right

now is also about five to five and a

half percent away from the Target right

well the problem with this idea of oh

we're gonna have this soft Landing is

that wait a minute the soft Landings

dronepal talks about here here and here

all occurred during times where

inflation was at or below Target

now the Federal Reserve didn't actually

start creating a precedent of bailing

out the market until right here so sure

we've had one post-fed bail everything

out print money to save the day a kind

of bailout we've only had one situation

where we've had a soft Landing after

that

now when we look back to 1970 though

again a period of high inflation which I

think it's so important to compare to

take a look at this

first half of the year what happened S P

500 loses 21 in the first half of just

that one year the next six months the s

p literally Roars

27 which is obviously similar to what we

had in 2020 where we dropped four

percent in the first half and went up 21

in the second half well not similar in

the second half not similar in the first

but then again 2020 was the total

federal reserve bailout 1970 is a little

different because we've got massive

inflation we leave the gold standard

we've got the failure of price curbs

which the interesting thing is the

failure of price curbs and the lifting

of price caps going into the early 70s

and the late 60s actually led to more

earnings and more revenues at companies

because they were finally able to raise

prices appropriately so that way prices

would be at a level where prices would

end up matching demand but when Supply

would then supply and demand would light

up right we'd have an equilibrium of

course this ended up leading to insane

runaway inflation and insane

expectations of inflation continuing

Forever by the end of the 1970s which

led to us getting Paul volckert in the

1980s which is not what we want to see

happen right now but it's really

interesting to think that okay so here

we go we've got an individual from

Credit Suisse saying hey well earnings

are still doing great here we could have

a boomer of a rally and and potentially

rally as much as 26 by the end of the

year okay that's interesting let's see

what else he has to say let's pop back

on over here and uh and eventually I

will fix the HDMI so don't mind the

flicker anyways is a PE multiple is down

over 30 percent I think 31 on the market

and that's an enormous adjustment which

makes stocks much much cheaper okay some

on the Fly fact checking as we go along

he's not wrong here multiples measured

by the red little mountains here my son

jack calls them the red mountains okay

multiples have gone down substantially

they've collapsed we haven't actually

really seen red the news collapse yet or

therefore earnings per share

expectations really collapse yet

although earnings per share expectations

have started to inflect down after well

what happened Target and Walmart

reported see the white line represents

the Blended forward 12 month EPS

estimates but the average annulus

analyst price target has actually

started getting moved down so we still

see high EPS targets but on the right

side here this blue line we see yeah

analysts are starting to lower their

price targets now the weird thing though

about analysts and I'll tell you I hate

this is analysts just seem to move their

prices based on what the stock market is

doing so if a stock soars oh wow we're

increasing our price Target if a price

falls out we're lowering our price

Target so I pay a little bit more

attention to that white line that EPS

line we haven't really seen a

compression there yet on EPS which

actually reiterates what he says about

hey if earnings hold up

we might have a rally towards the end of

the year now I want to tell you what I'm

doing in reaction to this and there are

a few more charts that we can look at

that are extremely important but first

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here we go to the part two I think that

the earnings continue to move forward

and we think that you get a bounce in

valuation probably a couple of multiple

points between now and the end of the

year stocks will still end the year

cheaper than they started and they'll be

up double digits between now and

December so I can ask you this do you

think the FED will be happy I just want

to clarify that he said hey up double

digits by the end of the year still

negative but double digits by the end of

the year that's pretty bullish

see that

yeah I don't I really and I and I I talk

to people at the FED I don't think that

they are focused on what the stock

market is doing they what do they care

about they care about inflation and jobs

I I think you know if I yeah so I really

think that they're focused on the

mission and I think Powell may be behind

the curve but he's doing a pretty good

job of being clear what his his focus is

right now inflation is too high they

have to address that and that's where

they're going to spend time

let's just quickly reflect on that do we

actually think the FED doesn't care

about the stock market no of course the

FED does care about the stock market we

know that here's a chart of U.S CEO

confidence we're at some of the lowest

levels that we've seen since uh not only

the uh the pandemic but obviously going

back to the Great Recession so you know

this is a problem a recession obviously

right here the Great Recession uh and

we're trending towards low levels right

so when you get this CEO confidence

decline at the same time as you're

getting expectations for Price targets

going down and we're seeing credit cards

spend decline does make you wonder maybe

the FED does actually care about the

stock market because all of this has

aligned with the stock market going down

creating a wealth effect when people

feel like they have less money what

happens they spend less now I read this

crazy report the other day about how

Bitcoin yeah folks Bitcoin

disproportionately affects younger men

younger men who are disproportionately

likely to spend money on stuff whether

that's for their friends their family

their girlfriends watches cars boats you

name it they're more likely to take the

money and spend it and so if you crush

crypto

you crush the wealth effect amongst a

cohort that's very likely to spend it

maybe crypto could be the reason we

actually start seeing disinflation

because valuations have come down so

much an interesting little mind trip

there but we've also and this is an

important one to break down right here

when we look at this particular chart

right here what do we get we get

spending growth of consumers in both the

high and low end products according to

Barclays drifting lower right we see

these charts going down both the higher

end and the lower end but something

that's really important about this chart

and this is where it's kind of like ah

we get kind of data on both sides but do

we I don't know

this says growth in spent right it

doesn't say spending it says growth in

spending and as long as we remain above

this line right here the green bottom

line we're actually growing so even over

here we are still growing spending by 10

to 15 percent per year and so that's

actually very interesting

if this can lead EPS to hold up and you

pick companies that are going to grow

earnings per share this year

you could if this person's Right End the

year in pretty solid position now I

still think we've got headwinds coming

for semiconductors I'm very excited to

go deep on semiconductors and get a lot

more exposure to the semis but we are

seeing chip prices Trend down especially

if you track eBay chip prices uh and you

track supplies for chips supplies for

chips right now are blowing up in fact

right here our inventories total Tech

inventories up eight days on the usual

five year median Upstream Downstream

inventory this has to do with

subsidiaries this is all up memory

storage semiconductor inventory OEM

inventory uh everything with the

exception of distribution inventory

every kind of chip in the semiconductor

sector is up in terms of how much

inventory we have so we're thinking that

maybe in Q3 we're still going to have

like a semiconductor potential bottoming

out but maybe if we get a bottoming out

now between now and Q3 which Q three

folks starts tomorrow we start new

prices on the courses on building your

wealth as well tomorrow but Q3 starts

tomorrow so we could see a potential

bottoming here which is hopeful but then

again I don't really like to play hopium

I like to play reality and I like to

make the dalahalas okay all right let's

now hop back on over

um you know index for bankruptcies is at

record lows that's not what happens when

you're going into recession that's not

what happens when the economy is melting

down the fewer and fewer people are

going bankrupt you would need to see

that Spike if you're going into

recession if you look at people who are

defaulting or businesses defaulting on

loans or not making loan payments we're

not seeing that at all you know

um Anastasia was talking about a soft

Landing but in many ways this

environment just it there's this if you

look at the stock market you feel like

it's a recession and then you look at

these metrics on the health of of you

know the the credit market and it just

doesn't feel stationary so

um yeah I don't I don't think the FED

has been obsessed on the stock market

and blink on that they will blink if the

consumer falls apart that's a whole

different issue they care about the

consumer they care about jobs they care

about spend okay first of all I'm sorry

I gotta buy a new HDMI cable I don't

know what the heck is wrong with that

one but clearly it's got a problem okay

but folks let's talk about the consumer

then what happened this morning folks we

got the personal consumption

expenditures ratio which showed us our

first decline in real spending since

folks December so people are spending

less the consumer is spending less again

we saw that in the credit card data it's

not just Barclays who's seeing that in

their credit card data but JP Morgan is

reporting that they too are starting to

see declines and this is why they're

actually writing down a substantial

amount of of equity valuations in fact

and I'm still working through the report

but JPMorgan did this substantial Deep

dive uh into downgrades uh downgrades

for a lot of their companies uh I'm on

the Trivago section let me jump to the

front here look at this

uh here you can see the overall macro

environment has deteriorated since q1

earnings with inflation reaching a

40-year high in May fuel costs up 45

since February and Chase credit card

data indicating slowing consumer

spending and lower consumer confidence

they project a 66 chance of recession in

the next two years and an 83 chance of

recession over the next three years they

believe that the internet sector

continues to be more mature and

therefore has less ability to offset

broader market trends now that's

actually a lesson right there if a

company is less mature

you can kind of really still blow up

your growth even in a recessionary time

because there's so much demand

potentially for your product what does

that make us think of Tesla it's still

not a mature automaker it's still young

right but once you become mature

well then you are subject to the whims

of the macroeconomic cycle this is why

when we were looking at the earnings

call for not just the earnings call but

the actual earnings report for Nike

which every day in our course member

live streams we go through fundamental

analysis whether it's earnings calls

press releases uh 10ks 10qs whatever

what do we see we see a five percent

decline in net income year over year at

Nike and not only do we see a decline of

net income but we also see a decline of

revenues of one percent year over year

you know this is this is a company

that's subject to the whims of the macro

cycle because it's more mature and so I

think this becomes very important when

you're picking investments in this kind

of Market sure could we have uh you know

a great Q3 in Q4 as maybe finally we see

inflation P look I want to be the

cheerleader for that idea absolutely and

I'm going to tell you a little bit about

what I'm doing right after I say where

is our inflation chart uh we got to get

inflation ah yes here I wanted to show

these right after we start actually

seeing inflation go down right which

here's a chart on the average price of

gasoline 16 days of drops in a row this

is good we've seen oil move down there's

still people shouting that oil is going

to go to 150. I don't know if it's just

fear-mongering we've seen the a 10-year

treasury yield plummet the 10-year

treasury yield is right here look at

that plummet that we got on the 10-year

treasury yield it's under three percent

right now people are uh you know picking

up bonds again they might drink the

bottoms in for the bond market why

because maybe the bottoms or the top is

in for inflation because look at the

break-even expectations for inflation

this is the five year and the ten year

the white line is the five-year and look

at it the expectations are plummeting

here I'll remove myself for a second

there we go

look at this this is like straight down

folks if I draw a line from the bottom

we are now at least on the white line

which is the five year Break Even we're

at the lowest point in inflation

expectations for the market that we've

been in since October of a 2021 which is

incredible and the uh and the lowest

level since January of 2022 for the

10-year curve this is very interesting

the market seems optimistic at least

about this idea that yeah inflation

might be peaking here and uh we are

starting to see Commodities rotate down

whether it's gas or oil or or other

Commodities that have peaked such as a

big one obviously in the past here has

been a nickel or copper right and we've

seen some peaks in some of these

commodity prices and so this is again

leading to at least some hopium that hey

maybe just maybe

we could be starting to see a peak of

inflation now what do I personally think

I don't actually think we're going to

see a real peak on inflation until

probably somewhere around uh July to

early September and so that's I should

clarify that I don't think we're going

to see a peak of inflation until either

the July or August CPI report which

we'll we'll get those between August and

September right because they come out

the month later uh it but from there I

do think the way Commodities are looking

now the way Fuel and energy costs are

looking and the year-over-year comps

that we start having to lap when we get

to the Delta variant level of inflation

which really started picking up in

September we should start seeing drops

when we get our CPI reads for September

October November I'm hopeful but hopium

doesn't work so well right opium isn't

an investment strategy so what is my

strategy right now well my personal

strategy is no debt take whatever real

estate I can buy the dip on painful red

days in the stock market keep some cash

on the sidelines whether that's 10 20

something like that but otherwise I'm in

I'm buying this stuff I'm not going to

pass up on in my opinion the opportunity

of a lifetime to build quantity of

shares and if that means Tesla goes to

400 or goes to 900 doesn't matter just

give me give me the quantity for example

on Tesla if that means Nvidia goes to a

hundred bucks I'm buying you know trade

desk back under 35 please give me some

more and phase 130 I'm ready to go so

I'll use that cash for some other

opportunities but otherwise I'm it and

I'm excited if you want to see every

move I make remember stocks and

psychology money folks you get lifetime

access thank you so much for watching

the video and we'll see in the next one

thanks good luck