i was wrong...

I was wrong two quick notes I'm gonna be

in the air flying today so you can

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anyone else 69 off largest percentage

basis sale for the programs I'm building

it up link down below I was wrong about

individuals perception and Market

responses to what would happen with

Market data and I'm really surprised

because I think there's a shift

happening and I want you to think about

the shift with me for a moment and I

want you to see if you're seeing this

same shift okay ready for this this is

really fascinating in my opinion all

right so first remember when all of this

crisis started in January of 2022. one

of the crazy things about Jan of 2022

was that basically every bit of news in

January of 2022 which is one of the

reasons I sold I sold out of almost all

I actually I actually sold out of

everything went to 100 cash and then

started buying into what I thought would

be more recession resilient stocks later

but anyway the problem you had in

January of 2022 was that good news was

equal to bad news so in other words

strong earnings strong PP earnings uh

EPS growth all of that equaled bad news

good economic news equaled bad and the

reason for that was everybody was

worried about the boogeyman of inflation

how bad was inflation going to get right

that's what everyone cared about

inflation inflation inflation now

something really interesting happened by

December of 2022 we got a retail sales

report that came out which is funny in

some regard because today we also have a

retail sales report coming out but

mostly I want to talk about this this

change here and I want to see if you're

seeing this change in the market as well

when that retail sales data came out

it came out bad December retail sales

were bad like the actual numbers were

bad and the thesis of 2022 was well wait

a minute

the opposite of what was going on in

January should be good right so bad news

should be good for inflation right it's

obviously bad for for earnings or bad

for certain companies but bad news

should be good for inflation

the soap but what you had in December

was we got retail sales numbers that

were actually bad and something really

changed in December in December all of a

sudden you had people worried about a

recession the idea that inflation was

the boogeyman went away inflation was no

longer bad what was bad was bad news so

bad news was truly bad because it meant

potential recession right it meant that

we were getting pushed into a recession

nobody cared about the idea of a

recession in January of 2022 because

everybody's like things are so great the

fed's gonna rug pull us with with

massively High rates So What mattered in

January was rates mattered inflation

mattered This Is What mattered in

January of 2022 big difference all of a

sudden in December in December inflation

didn't not matter anymore and this is

going to be interesting because

obviously we just got a CPI report run

with me on this all right so inflation

did not matter in January of 22. What

mattered was a recession mattered in

fact I would go as far as saying rates

mattered less as well

and then when you get over to January of

2023 you

and I'll say early uh February of 2023

you had another interesting thing that

happened

you had the fed's terminal rate move up

from about 4.9 percent Market

expectations to as high as 5.3 percent

so you had I'll write that down clearly

you had 4.9 expectations cut 1.7 percent

by end of 2023 turned into

5.3 percent expectation no Cuts in 2023.

but what was crazy was the market

actually did well in fact we got a CPI

report that was bad it showed inflation

on a core level was still sticky

core Services still showing a strong

element of stickiness well above two

percent yes if you take core Services

minus housing you're at an annualized

rate of about 3.48 3.5 percent which is

better than it has been but it was still

a bad report in the sense that uh oh

well what if those used car auction

prices start coming through and we start

seeing an increase of getting used car

prices what if that Goods inflation

slows down relative to when housing

inflation might slow down right and so

what you ended up having was a report

that missed on the headline numbers

right we had a report that missed on two

out of the four numbers and then two of

the month over month numbers match so

you actually got a report that I would

say was hot I should call it a hot

report and what ended up happening the

market rallied and that's because in my

opinion

what did we learn in December of 2022

inflation doesn't actually matter

anymore and rates don't actually matter

anymore what matters now is EPS fear

that's what matters right now what

matters is not a recession or inflation

or rates what matters now is the fear of

eps now earnings per share fear is very

interesting because what you're actually

seeing happen is companies are waiting

like the market the market is waiting

for the Catalyst moment of earnings and

so what you end up having is you have

stocks that are trading like this you

get this sort of sideways trading and

then all of a sudden here you get

earnings

and what's been happening as of late for

many companies is as soon as earnings

happen you get a massive move either up

like Airbnb uh you get a trade desk

Tesla right or you get a massive move

down think lift so in other words look

at how how markets have evolved here how

things have changed and it's really

important to think about this because if

you're making bets on the market

actually giving a crap any more about

inflation even though that's what

everyone's talking about it doesn't seem

like what that's what the market cares

about the market used to care about

inflation January 2022 all you had to do

was go short the market because

everybody cared about inflation which

was getting worse worse worse worse now

that inflation is getting slowly better

even if it takes more time the markets

are not reacting to inflation as much

anymore so the the economic sensitivity

of inflation Has Fallen and What

mattered more was this idea of a

recession but the reason a recession

mattered is because of what it would do

to company earnings and that's why in my

opinion when we got our CPI report

markets are kind of like whatever man

like even though it's hot we don't care

we got that Catalyst out of the way even

though it's hot we don't care so much

about inflation anymore we got cash to

deploy let's deploy that cash

so while it was still a catalyst moment

even though the news came in hot it

ended up being a good thing for markets

which kind of feels a little clownish

right it's like how can inflation come

in hot and the market rally it's because

people don't care about inflation

anymore Market wise and when I say

Market I'm talking about stocks right

stocks don't care about that stocks care

about earnings per share right now look

at all of the companies that have

reported over the last uh two months and

see what happened after earnings usually

you had pretty violent moves well above

the expected moves for those companies

and whether even if even consider and

face uh you know whatever there are

plenty of companies that we could look

at but the point being here is for some

reason EPS has become this substantially

greater Catalyst and when we look at uh

our expectations we have to adjust them

because when I say you know in this

topic I was wrong what I'm saying is I

thought inflation disinflating improving

the disinflation mattered the most right

now I thought the federal reserve's

terminal rate mattered the most now I'm

realizing this I think relatively

quickly because this is something that

has just transitioned within the last

month

uh and yesterday really reiterated that

to me where I'm looking going why this

doesn't make sense what has changed the

market is not behaving the way it used

to behave in 2022 it has changed and the

reality is when the facts change you

should change your mind and you should

change your strategy and so I think

especially if you're trading in this

market or you're looking at Catalyst

something to know is it doesn't seem

like inflation is the big one right now

obviously if inflation doubles up it's

going to be a big issue right but if you

look at EPS that seems to be the big

deal and that seems to be where uh

whatever ends up happening you get the

massive moves in stocks after earnings

per share especially once those

catalysts are over because people are

looking going hey what's the forecast

what's the outlook for the companies

that I'm most interested in and

companies that are saying hey look we're

getting through this like trade desk or

Airbnb despite potential red flags that

have been seen and feared in the fourth

quarter what you end up having is big

old moves big old moves so that's my

take on on this massive shift that's

happening I think it's important to pay

attention to and we'll see what you

think let me know in the comments down

below