the stagflation disaster coming

let's talk about something more

interesting like stagflation fears

intensify in signs of slowing growth ooh

gas prices up oh my gosh 135 of some

currency for regular unleaded

all right

let's see what we got supply chain

disruptions sweeping major economies

have reawakened an old nemesis for

investors stagflation

anxiety over rising inflation has been

ever present in markets this year but

with oil topping 80 a barrel global food

prices a third more expensive than they

were a year ago in other commodities at

decade highs investors say a longer than

expected inflationary surge is

coinciding with a slowdown in growth and

making it worse

hey you know this is interesting i mean

they're all right the u.n uh just put

out the report about food prices going

up 33 year-over-year that is a tax on

poorer individuals or households that

that aren't millionaires certainly right

uh it's just crazy

uh okay so uh economists investors play

down comparisons with the aftermath of

the 1970s oil shock you know a lot of

comparisons tonight the 1970s even kathy

wood has uh has compared to the 70s and

said things like this ain't the 70s this

time's different

investors say longer than expected

inflationary surge is considering with a

slowdown coinciding with the slowdown in

growth

then in the 1970s inflation and interest

rates ran into the double digits

unemployment sword and the gdp recovered

only slowly from repeated setbacks but

with energy bills now rocketing many

worry about a growth slowdown at a time

when central banks are edging towards

lifting rates in a bid to keep a lid on

longer-term inflation conversation

around inflation has definitely shifted

well yeah no kidding

okay so you got energy prices going up

you got food prices going up you've got

the economy slowing down because the

stimulant is starting to wear off we'll

see what kind of side effects we have of

all that money printing signals from the

fed and bank of england last week were

that they could have begun they could

soon begin lifting rates

yeah

let's see fueled a big bond sell-off

which increases yields of course

but in contrast to the reflation trade

at the start of the year stocks have

been unable to draw comfort from the

prospect of tighter monetary policy

that's true recovery stocks started

selling off and which were often deemed

the deflation or reflation trades

and tech has been selling off a bit

everything's just selling off a little

bit

all right ample evidence suggests that a

supply shock or reverberating around the

world combined with other outbreaks of

delta is tempering growth i'm not so

good i mean is it how concerned is

everybody about a delta i i mean i think

widening i mean there was actually a

headline i don't know if i have it here

but there is a headline in the walsh or

financial times

about how basically europe yeah yeah

yeah here it's right here okay eurozoo

zone consumer activity returns to

pre-pandemic levels and i thought this

was a really interesting piece

i wasn't really gonna talk about it

because i just read this stuff all the

time and i don't talk about everything

that's in this stuff but um it's

literally the front page page news right

here this is today's paper it says

europeans are shopping eating out and

traveling and visiting cinemas as much

as they did before the pandemic in a

sign of returning returning consumer

confidence across the eurozone data on

economic activity in september suggests

that consumers feel emboldened by high

vaccination rates despite worrying

economic news including higher energy

bills supply chain disruptions and fears

of a slowdown in china for now data

remained consistent with a decent pace

of recovery

some of the rebound is because schools

are reopening and but an increase in

leisure activities also suggest

consumers are now more confident cinema

revenues have already returned to

pre-pandemic levels i

am shocked by that because when i go to

movie theater there aren't that many

people there

let's see here

oecd weekly tracker of economic activity

which uses real-time high-frequency data

indicators rose above 2019 levels at the

beginning of september i mean that's

good that's bullish in eurozone

uh positive momentum might give the ecb

confidence it could scale back emergency

stimulus

yeah we've already talked about that

back from the brink

but not out of the woods because of

supply bottlenecks so i think the

consumers are there yeah okay

consumers are interested

uh

yeah so okay let's go back to

the ft over here

um

okay data released pointed to sharp

slowdown in chinese manufacturing

regulatory pressures a lot of the

negativity has like a reason you know

and that's a good thing it makes me feel

more comfortable it's like okay people

are

complaining about congress or

complaining about china's regulation and

and evergrand which is really a symptom

of chinese the chinese communist party

changing their regulatory stance towards

debt uh you know so so far a lot of

these things are very explainable and it

makes it really hard to consider that

oh no stocks are somehow

uh you know destined for a big mega

collapse or whatever i mean hey like you

never know i mean nobody saw the

pandemic coming

except when it started happening and

people got rich off puts when it started

happening which makes sense i mean

that's one of the first things people do

when the market's crashing i was just

spending my money buying the dip but

anyway selling activity spilled over

into equity markets this week after data

showed that u.s consumer confidence had

dropped to a six-month low

the uk found itself at a sharp end of

stagflationary concerns with a surge in

energy prices

okay so it's interesting how confidence

i personally wonder how much consumer

confidence in the u.s is based on what

the stock market is doing because even

though we've seen some economic slowing

uh there are a lot of indicators

especially europe which seems to be a

little bit ahead of us in terms of covet

that that people are spending again uh

so it's it's always weird to try to tie

this all together because on one hand

we've got more cash than we've ever had

before

on the other hand i believe we're going

to be in a little bit more of a frugal

decade because i don't think people are

going to spend themselves into oblivion

like they used to the european union

while we're having some setbacks with

energy prices is actually doing very

well in regards to consumer activity but

then you have consumer confidence

measures in the u.s a little low maybe

because of delta and all this other

congressional nonsense but i expect that

to u-turn

so we'll see

uh with revised data

show activity while advised data

while revised data show activity bounce

back faster than thought over the summer

the recovery appears to be faulting at

least the bank of england so you get

these mixed signals both of these are

from the financial times today on one

hand they're saying europe's doing

better now here they're saying the bank

the recovery appears to be faltering

according to the bank of england but

it's because of supply bottlenecks so

these are two different things right so

it's like

okay yeah supply bottlenecks are getting

worse but people want to spend money

this is more important in my opinion

than supply bottlenecks

now supply bottlenecks are going to have

a more

immediate term impact on stock prices

like supply bottlenecks are going to

suck they're going to hurt stock prices

they're going to hurt gdp growth but

consumers apparently have the

willingness to spend

and this is good recovery takes hold

leisure rebounds suggests confidence but

of course you have threats energy prices

supply chain shortages price increases

so it's like people want to go back to

normal but yeah there are some headwinds

this makes sense

makes a lot of sense i mean people want

to buy a tesla and they don't want to

have to wait until march for one but

they will because they want a tesla

consumers overgrowth are one reason the

pound is not benefited from the sharp

rise if it's stagflation central banks

are in a blind bind

hiking interest rates will reduce demand

which will slow growth but if you're

already slowing growth through

stagflation then that's bad that's if

you believe in the deflation era

stagflation narrative that's probably

the biggest argument for a market crash

right now is stagflation is that's it

the economy's going to slow down its

growth

and at the same time we're going to

raise rates and we're going to be

screwed but the only the only reason in

my opinion the economy is growing slower

is because there's this giant anchor

behind us and it's an anchor of of many

different things the rent crisis the uh

high amount of unemployment

uh as people transition to different

jobs supply chain shortages shorter term

inflation right all of those things are

like this giant anchor and consumers are

like we must move on and keep going

uh you know it'd be nice to cut that

anchor

so

uh inflation should start to ease in

2022 and the situation was still a long

way off anything like the 1970s we won't

see inflation get into the system like

we did then says vicki redwar would

would a senior economist or economic

advisor at capital economics others warn

however that there is no signs yet of

strains on supply chains easing and that

the world could be heading for a more

sustained period of tepid growth and

high inflation so that's that's really

it

it's basically what we're saying here uh

if supply chain problems continue for a

further six to 12 months while consumers

still had job security and were willing

to pay for goods they wanted he said the

whiff of stag stagflation might be more

of a stench

wow that was a complicated way to word

that okay got it so basically look

consumers

are happy

they want to get back to normal they

want to go back to traveling they want

to go to restaurants they want to spend

money they've got more money than ever

but again we've got this giant anchor

that we're dragging around called

inflation because some prices are going

up supply chain shortages making us wait

longer we either have to pay with our

time or we have to pay more money

remember you pay more money for things

like shipping costs to get the stuff on

time or you pay with your personal time

because flights are getting delayed or

hotels are booked up or whatever right

but overall

you know i don't know i'm not a big

proponent of this whole stagflation

thesis but then again i've been very

consistent on this channel that i

believe inflation is going to inflect

down

whether that's next month as a start or

or in four months from now as a start we

are going to inflect down downwards on

inflation

but uh sure supply chain issues are a

crisis and at some point they'll be up

and running again i just want to ask you

this and this is a great way to to leave

off

how do you think

with how much more productive

our markets have gotten our economies

and our businesses have gotten the cheap

credit our businesses and our markets

have gotten

how do you think our economy would be

doing right now if we had zero supply

chain shortages and literally ask

yourself that how would the economy be

doing right now with the amount of money

people have

uh the appetite people have to spend and

no supply chain shortages would we be at

all time highs on the stock market would

gdp be at the highest place ever

and so now

picture that moment

where businesses are more productive

people have more money and people have

more willingness to spend

just not now picture it at like the end

of 2022 or 2023.

that's what i'm investing for i'm

looking at 2021 as like i'm planting

seeds man i'm planting c i'm going

around going yup

buy that buy that buy that buy that so i

think it's hilarious when people like

after a week of me saying i'm gonna buy

a you know i'm gonna do a fundamental

play it's like how come it hasn't gone

up 30 percent yet it's like well

you know there are different ways to

invest it's not all

camber electric which i had tried to

short sell this morning or buy a put on

but i couldn't i'm sorry

i might do a video on them like a

standalone video but anyway

think about it all right folks

appreciate you being here we will see

you in the next one just make sure to go

to mckevin.com public to get yourself a

free stock worth all the way up to

seventy dollars kevin.com public and

we'll see the next one thanks again

goodbye

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you