An Urgent Warning to Investors.
FULL TRANSCRIPT
oh man hey everyone meet kevin here this
market is a crazy it's nuts and no i
don't mean crazy and nuts that on
january 23rd i said in a video the
market will likely fall in an additional
20
i was wrong it fell an additional 23
before bottoming out no that's not crazy
it's just mostly lucky but what's crazy
is that on one hand you've got companies
like robin hood amazon and tesla cutting
jobs and google and facebook freezing
hiring and threatening layoffs we're
technically in a recession at least if
you use the technical definition of a
recession and not the political
definition of a recession and company
earnings while are coming in a little
bit slower are still mostly above
expectations leading to large rebounds
and stocks like coinbase up nearly 100
from the time kathy woods sold she
literally dumped about uh 1.3 million
shares and it pretty much doubled since
then the tesla up over 50 from its lows
in the last two months and companies
like uber sofa doordash and cloud fire
were all jumping 10 to 30
after their earnings even companies that
miss earnings like airbnb are seeing
their shy prices just in general rise
after short declines and yet at
all this might seem bad we still have an
unemployment report that came out this
morning that literally came in twice as
hot as expected with more hiring than
expected by the tune of a two-fold a
prior revision up in the amount of jobs
we created so we're getting still more
hiring in an unemployment rate that's
actually falling
yet things are supposed to be bad so
this is really really weird and kind of
leaves us with this feeling of like a
lack of direction are we going up are we
going down what's going on and what are
the two freaking warnings that we gotta
watch out for well we're gonna talk
about those just a side note i have
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boom that might have been a mouthful but
let's talk about warning number one
warning number one is all about data
folks between now and the next federal
reserve meeting on september 21st when
we're likely to see another interest
rate hike the federal reserve has told
us to watch for two major data points
number one jobs we have two jobs reports
between now and when the federal reserve
is likely going to raise rates again
august 5th and september 2nd and we have
cpi readings coming out august 10th and
september 13th and let me just put it
very simply if these readings are bad
the market is going to have to price in
a higher likelihood of the federal
reserve giving us a little bit more of a
spanking because what the federal
reserve is trying to do is drive
interest rates up so that people and
businesses spend less money and feel
less rich
the problem is
this is all going to get worse if the
data that comes in again august 5th
september 2nd august 10th and september
13th jobs and cpi if that data comes in
hot which could mean the economy is
still overheated or doing very very well
and companies and businesses and people
are still spending money like crazy then
the fed's going to have to talk more
dirty to us and it's going to drive the
market down because the fed is mad that
even though the fed is like we need
everybody to stop spending as much money
everybody keeps spending money in fact
according to the economist most people
when asked about the economy say the
economy is bleak and doing terribly but
most people when they're asked about
their own personal finances say
they're doing great way better than they
did in 2019
even with higher gas prices and higher
energy costs people feel great about
their own personal finances and their
net wealth is substantially higher in
many cases than what it was in
2019 right before the pandemic so
what does this tell us about watching
data well first again this morning we
had a crazy jobs report we were
expecting 250 000 jobs to come in and
what did we ended up getting well we
ended up with 528
000 jobs created that is
over two times that is an example of a
hot reading and immediately the nasdaq
went from positive 20 basis points to
negative one percent boom
instantaneously after that hot jobs
report came out but folks that's just
one out of four data sets that we have
coming up the next is the cpi report
which comes out on august 10th where
we're going to be looking for
inflationary pressures and i'll tell you
even the jobs report that just came out
here august 5th didn't help us at all
with job or with inflationary
expectations because we had an average
hourly earnings expectation of 0.3
percent that is wages potentially went
up 0.3
month over month
we missed that they actually went up
0.5
which means rather than seeing an
annualized rate of three point six
percent for job wage growth it actually
came in at six percent annualized that's
bad again telling the fed we got twice
as many jobs and wages are going up
faster than expected this is double bad
on top of that we got the year-over-year
measure which was expected to be 4.9
coming in at 5.2 percent so we literally
got three
hot pieces of data
in the august 5th report but hey we get
to look forward to august 10th next
which is when that cpi report comes in
the cbi report consumer price index this
is how we measure inflation generally
the federal reserve uses a similar one
called pce but we generally watch cpi in
in the public eye
that rhymes uh and here's what's wild in
the last inflation report we had a month
over month increase of prices of 1.3
percent however in the august 10th
report we're expecting that inflation is
only going to move up on a
month-over-month basis by 0.2
now that initially sounds good because
it's like yeah elon musk is right
inflation's going down inflation's
transitory inflation's going to go down
which i have to say i believe that at
some point inflation will go down as
well but just because i believe
inflation will go down at some point
doesn't mean that i can lie to myself or
anyone else and say that we don't have a
problem here well this jobs report this
morning was a problem and what i
personally believe is we've got a big
problem with the cpi report coming up
because if the expectation is that
inflation on a month-over-month basis is
going to be 0.2 percent and that on a
year-over-year basis it's going to go
down to 8.7 percent personally i think
there's a really good chance we're going
to miss at least one of those numbers
that means we might see inflation on a
month-over-month basis come in at 0.4
percent or 0.5 and even though that's
lower inflation than what we've been
used to because last month prices went
up 1.2 percent it's still going to be
higher than expectations it could drive
the market down so you could literally
see the market go down after august 5th
jobs the market go down after august
10th cpi and then we repeat the process
again for jobs on september 2nd and
september 13th and so you have to be
very careful of these dangers
but you also have to be careful of the
very next danger and this very next
danger is one that is probably the most
critical
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description with that said let's get
back to the video now folks the second
big danger and this one's really really
important because folks take a look at
this chart right here this chart might
seem overwhelming let's keep it very
very simple basically if you go all the
way back to the post-war era which is
like the 40s and 50s you're going to
find that there have been very very few
dates or periods of time where the stock
market has gone from
negative seven percent on the s p 500 to
positive seven percent the next month
and folks on screen here are the returns
that you could have potentially seen if
you were in the market at the time
one month out three months out six
months out and 12 months out in time
now what's wild about this is we just
had one of those occur on july 29th we
went from negative seven percent in june
to positive seven percent actually more
than positive seven percent in july
and that sets up the odds that we could
if we're at all average right here see
some substantial returns in the stock
market over the next one three six and
12 months
and this sets up the potential danger
that combines with danger number one
danger number one says if we continue to
get bad reports
we could end up seeing some of these
right here see these two instances where
we actually had red numbers where on the
one month we fell five percent or on the
three month we fell three percent that
could happen again we could see another
test of some of the lows that earnings
right now are really affirming if you
actually go and look at the nasdaq for
example via qqq you could see that we
hit a beautiful bottom on june 16th and
we've retraced over 38 percent from then
but with some of these reports coming in
hot or expected to come in hot we could
quickly see a retracement not just down
to the 318 level for the nasdaq but
maybe even down back to 299 or retest
that bottom at 268 but based on this
chart we should probably be anticipating
green
if we hold and get in and that really
sets up the big next danger which is not
being in this market yes there can still
be bad news but all signs are pointing
to
over time even if it takes a little
longer than expected inflation's
probably going to go down this economy's
still killing it earnings are holding up
spending's holding up jobs are holding
up and yeah that means the fed's going
to talk a little more dirty to us but
all it's going to do is give us more of
a buying opportunity and no i don't just
mean a buying opportunity to get in with
me on my series a or to get in on the
courses on building your wealth and
those market open live streams which
we're going to do for course members use
that coupon code down below but buying
opportunity in the market and folks if
you found this video helpful do me a
favor hit the like button share the
video and subscribe because we gotta get
back to grow
[Applause]
[Music]
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you
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