the final market crash catalyst

hey everyone meet kevin here in this

video we're going to talk about cpi

expectations as well as expectations for

the federal reserve's action at the

beginning of november which i believe is

pretty much going to get nailed this

week as we lose our last remaining

negative catalyst for the market that's

right this wednesday at 5 30 a.m pacific

time which i will be live streaming we

will get the consumer price index

inflation readings this is the last

negative catalyst that we have for this

year

that is of course following the drama

around the debt ceiling the inflation uh

where the infrastructure package the

budget all of these things of course

kick down to the road to december which

means there'll be plenty of time to get

these things handled because the

infrastructure packages will be passed

before debt ceiling issues and the

budget come up again those are going to

be a nominal benign catalyst before the

holidays the lawmakers will pass these

and it'll be an eye roller if there's

any kind of delay but the ever grand

crisis look it is still a crisis but

contagion fears have really evaporated

and uh fears of the federal reserve

tapering have really evaporated as well

because we already have the time frame

we know that the federal reserve

believes they're going to start tapering

at the beginning of november and finish

their taper by the summer so uh what i

want to talk about now though is i would

just briefly want to start by touching

on the jobs report uh some more detail

of what happened around this and is it

really as bad as it seemed then we're

gonna talk a little bit about inflation

and uh yeah we'll take it from there but

i gotta take a bite of this because

wow all right

so where were we oh yeah

so here's the thing

the jobs data has the potential of

throwing a wrench in the pace of the

taper in my opinion with the federal

reserve so that means that even though

the market was anticipating the fed

would taper the beginning of november

which i still think will happen

the market was anticipating the fed

would continue to taper all the way

until about the summer and then raise

rates at the second half of 2022. this

jobs report and if we continue to get

weak jobs reports like this which i'm

going to delve into why these jobs

reports are coming in so poorly it is

very possible

that we're going to

extend tapering to a normal 12-month

taper cycle because usually historically

we've tapered over 12 months

and the current trajectory is about uh

nine months and i think the fed's going

to update this back to 12 months which

means we could be tapering throughout

the entire 2022 year which means

potentially no rate increase in 2022

which is i think very good for markets

and also good for real estate real

estate is not going to like interest

rates going up at all now i'm the idiot

who's still buying but

i also keep finding good deals so that's

just what i do but anyway uh so jobs

data uh so the biggest issue with the

jobs data is low labor force

participation this is something that

we're seeing yeah we're filming a video

right now but it's a pokemon event

yeah so uh low labor force participation

is the biggest issue and uh this is

something that before the recession was

a 63.4

now we're at um a level of about 61.6

that's down from 61.7 last month now why

does that matter what matters because as

less people go back because it sounds

like oh come on that's just one or two

percent but think one or two percent uh

you know one percent of our labor force

is like one and a half million people

which could be a hundred thousand extra

jobs give or take uh every single month

every single time we get a labor report

so it's a big deal that labor force

participation rate and one of the

reasons it's down is not the stupid

helicopter but one of the reasons it's

down is because we're seeing a lot of uh

or a seasonally adjusted loss in how

many women

and men are applying for educational

jobs but we know those are mostly women

disproportionately women and that's

potentially because of not just covet

fears but probably mostly because of

child care issues that is a lot of

children aren't able to get the vaccine

so you have a lot of people who are

fearful of covet who don't want the

vaccine aren't sending their kids to

school or

taking care of their children at schools

uh we're not sending their kids to

schools or taking care of them at home

which means now all of a sudden there

are less women who can fulfill those

jobs

who would ordinarily be taking those

jobs but also

those who do want to take the vaccine

can't give the vaccine yet to children

because we're not approved yet now we do

think we're going to get pfizer approval

for 5 to 11 year olds soon which is good

but uh this ended up being a big hit to

this last labor report private sector

labor jobs uh you know

the increase in private sector labor was

still very good uh still strongly on

pace

with uh with expectations this is why

the wednesday last wednesday adp report

for private sector jobs came in very

strong but the actual government labor

report came in so weak that's because we

included the educational losses and and

the lack of um

of workers we saw in the sector so there

is right now a lot of demand for workers

but again we're seeing a lot of people

stand on the sidelines despite the fact

that this is against expectations

despite the fact that the unemployment

boost is over right in september the

unemployment boost went away and we

thought a lot more people go back to

work so this was a big negative surprise

and uh delta is not as big of a fear now

as it used to be so we thought more

people would go back to work so there's

a little bit of a negative shocker and

this has a lot of people believing that

the federal reserve is going to not

delay the taper but extend the taper

that way politically even though they're

supposed to be a political but we know

that's full of crap

we know that politically the federal

reserve is going to then be able to say

hey we're tapering

we're just going to take longer doing it

that's my expectation but i think really

the big nail in the coffin here is going

to be what happens with the cpi report

so this wednesday we get cpi that comes

out and cpi is going to come out we're

expecting a cpi to come out at a point

three percent increase month over month

point two percent once we take out food

and energy point three percent by the

way is an annualized three point six

percent which is good we we really wanna

pay attention to that month over month

number

uh year over year is going to come in

still probably scary the expectation is

five point three percent that's high uh

this is that click bait inflation we

talked about as early as november of

last year on my channel we've regularly

talked about how we are going to get

this insane clickbait inflation

figures and and the reality is they're

not really clickbait they are very high

but we do expect at some point them to

inflect down we thought they would

inflict down at the end of this last the

end of this year they still might this

october report is uh going to be

inflation for september so my talk about

september and october you know my

original expectation was we would see a

downward inflection inflection and

inflation september and october report

come out reports come out october

november

so i could still be right

but i'm already softening my position

not to flip-flop but because i'm reading

the data and i have a fluid state mind

i'm willing to adjust if data data's

coming in worse and we're seeing data

coming worse commodity prices we thought

they would come back down they're

inflecting back up like lumber and oil

inflecting back up used car prices

inflecting back up uh the labor uh

shortage isn't debating as quickly as we

thought so there are a lot of things

that reiterate why we're going to see

this temporary inflation longer

and larger than expected so i think uh

market wise

we're expecting a 0.3 month over month

read if that comes in at less that's

gonna be wonderful i mean ideally that's

where we see the inflection point is not

in the headline number it's going to be

the month-over-month data ideally we see

something honestly if we saw something

like 0.1 oh my gosh i think tech stocks

would rally the market would rally be

great potential negative catalysts for

crypto though because i do think about

50 of crypto investors are deathly

fearful of inflation

and that is based on surveys that i've

done on my channel and just other

research my channel i think could be a

little skewed though so i have to keep

that in mind as well uh if we end up

getting a a surprise to the upside on

inflation it's not going to be good

treasury yields already right now

sitting at 1.62 percent we're heading to

that 1.75 basically the highs that we

saw around february february march was

not a good time for the tech sector at

all

now i'm still staying strong on

believing that

the best way to get through this

disaster is to buy real estate to hedge

yourself with real estate uh that way

you're locking in low interest rates and

that way even if prices fluctuate it's

cheaper for you to pay off that long

30-year fixed rate debt over time

and then take advantage of being able to

buy dips on supply chain challenge

stocks as well as tech stocks so supply

chain challenge stocks would be things

like shift the used car company end

phase any anyone who has to deal with

chips a lot of the automakers uh neo uh

you know even xsping but that

also includes a china risk so you have

to consider that but even honestly uh

well i already mentioned end phase but

tesla to some degree is is held back

substantially especially with the new

product launches by some of these

shortages so i actually did buy and i

rarely do this especially since i'm

pretty anti-buying calls right now i

actually did buy a call on tesla which

remember if you want to know all of my

trades why i do them

join the stocks and psychology and money

program link down below and get that 41

off coupon code coupon code diamond

hands

so uh yeah look if we end up getting a

beat on inflation it's gonna be bad

nobody's gonna be happy about that uh

month over month number comes in at like

a point five point six point seven bad

day bad day for the markets not gonna be

very happy about that imagine we get a

0.7 or something like that uh i mean now

you're talking like an eight point four

percent annualized inflation that would

be horrible it'd be such a horrible miss

uh the market i think would plummet and

uh you'd have a really nice buy the dip

opportunity there but then you'd also

want to go through the data to see what

went up and that's very important as

well which is something we're going to

do because if what went up was something

like women's dresses and used cars which

is something we've seen in the past okay

big deal but if things that are going up

or rent and services that's going to be

more long lasting that's going to be

more structural

and structural inflation lasts longer

whereas like again used cars dresses

those things are temporary but rents

services

wages those are a problem and we've

already seen wage-based inflation come

in a little tick higher in this last

labor report that came out on friday so

uh long and short of it if we get a big

dip which is very possible based on the

sticker i'm gonna buy uh and and i think

a lot of folks are gonna buy that dip we

know that uh

the repo markets are so full of cash

that's because so many institutions have

so much cash they don't even know what

to do with it

and if we get a big dip the banks will

step in and start buying this dip that's

my belief and i actually think that's

something that's going to keep the s p

really from falling more than 10

i could be wrong uh in some sense i kind

of hope i am because then again we get a

nice little shopping spree but i'm not

keeping as much cash on the sidelines uh

as i had before this september dip

because i spend most of my cash on this

september dip so anyway if you like this

kind of content subscribe i'm gonna get

back to this pokemon event we'll see you

next one thanks bye