The Coming Stagflation Hell | -87.5% Stock Destruction [WARNING]

now we're talking stagflation light yeah

like Miller Lite not Bud Light because

no uh you know maybe like a Diet Coke

kind of like a diet version of

stagflation and how does that

potentially lead some stocks to fall as

much as maybe 87 if we end up in that

sort of environment well in this segment

we're going to break down two pieces

we're going to go through what the

European Central Bank just said

specifically Christine

and then we're going to compare what she

said to an estimate that just came out

on speculation light and we're going to

compare that to what has happened

historically in periods of diet

stagflation it's not great now so far

the Atlanta GDP measures our economy at

growing in about a two and a half

percent Pace right now which is great it

doesn't feel very stagflationary and

we've certainly got some incredible

numbers coming up of the travel segment

especially with that wealthier cohort

but what if that last remaining leg

supporting the table Falls away and the

table Falls over and we plummet into

stagflationary environment of faltering

growth and then we're left holding the

bags on mispriced assets like stocks and

real estate it's possible and Christine

like God gives us a warning as to how to

potentially prevent that and then we'll

compare if the governments fail and

Christina God fail

what we should be preparing for so first

Christine lagarde's piece she wrote a

piece on essential banks of fragmenting

the world which initially sounds like

okay like why do we care about this who

is this lady anyway well she's kind of

like your Jerome foul except she's the

Jerome Powell of Europe remember

Europe's like the number two currency in

the world so it's a big deal we want to

pay attention to what they're saying

because well hey sometimes they can give

us some insights on potential red flags

that we ought to pay attention to

and her biggest warning in the vision

she has for a changing World economy is

actually quite the following

boom stagflation a changing global

economy in a time after the Cold War the

world benefited from a remarkably

favorable geopolitical environment under

the hegemonic leadership of the United

States okay in English yo things were

great when the United States was running

the show everybody was getting along

just peachy after the Cold War we didn't

really have that massive of issues yeah

we had Regional conflicts in the Middle

East but you know what things were

generally pretty good China was still a

baby and they were growing up and look

how oh uh yeah anyway so as a result

Global Supply became more interconnected

we had relatively low and stable

inflation along with long periods of

growth that was wonderful oh no but that

period of relative stability uh oh what

is this may now be giving way to one of

lasting instability resulting in lower

growth higher costs and more uncertain

trade Partnerships instead of more

Global Supply growth and flexibility we

could face the risk of repeated Supply

shocks recent events have laid bare the

extent of which critical Supply chains

depend on stable Global comma conditions

today the United States is completely

dependent on Imports for 14 critical

minerals and Europe is dependent on

China for 98 percent of its Rare Earth

Supply One recent study Based on data

since 1900 finds that geopolitical risks

lead to high inflation lower economic

activity and a fallen international

trade which again Lower GDP would be

recessionary or stagflationary right

stagflation is an environment where

inflation is high but growth is actually

potentially turning negative I hate to

say it but you could look at potentially

some Americans favorite electric vehicle

company and go oh damn I see some

negative growth over there because after

all year over year earnings per share

for Tesla just went negative you look

year over year at even other growth

companies like Nvidia and what do you

get negative I hate to sound like a

negative Nelly but numbers are not

looking fantastic for massive growth and

unfortunately there's one thing a growth

stock hates it's no growth

that's really bad so anyway uh Christina

guard him suggests that their analysis

comes to similar expectations for the

future under geopolitical risks that we

could face High inflation lower economic

activity basically basically stagflation

if the global value chain fragments

along geopolitical lines which is a

fancy way of saying

yo if all of a sudden China Russia Saudi

Arabia and Iran and maybe North Korea

are all buddy buddy and friends and they

don't like us anymore and then all of a

sudden we're stuck with Ukraine we're

screwed that's basically what she's

saying

the ECB analysis a recent ECB analysis

suggests similar outcomes may be

expected for the future if Global Supply

chains fragment along geopolitical lines

the increase in global level of pro

consumer prices could range around five

percent in the short run what she's

saying here is sticky inflation is

possible followed by lower inflation in

the future that's a problem because

sticky inflation means higher rates for

longer than people expect that's

potentially bad for company earnings

today now there's a way to solve this

and prevent this now before we continue

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right now if we continue through this

fragmentation path which again is kind

of like we get Ukraine you guys get

China okay we continue in that sort of

path and we enhance these trade Wars

that we're facing I mean just today

literally just this morning there are

headlines that the Biden Administration

is considering cutting off all exports

to China or sorry to to Russia not just

what we've already limited going to

Russia but literally everything well

guess what literally happens every time

we sanction something in Russia turkey

and Kazakhstan just end up buying the

crap from us and then selling it to

Russia at a profit so in other words

Russia still gets the crap they need

their economy is still marching forward

but what we do is create more

divisiveness between countries in the

global sphere and we create more

inflation just like Christine Lagarde is

warning five percent inflation in the

short term is a bad thing I don't know

why all of a sudden she turned Italian

but it would be a very bad thing because

we don't want more short-term inflation

because again meets higher rates for

longer higher rates for longer hurts

poor people more because food becomes

more expensive energy becomes more

expensive uh wages potentially stagnate

and then on top of that what are you

stuck with well you're stuck with like a

tighter consumer lending not for the

rich people but guess what for poor

folks subpride loans for Autos are

already getting cut off and that kills

earnings for a lot of companies as the

lower tier of customers becomes

basically less capable of being able to

operate in this environment this is why

they always say the rich get richer and

the poor get poor yeah

So Christine the guy goes on to talk

about this multiple world and these new

trade Partnerships that can lead to new

alliances and blah blah blah blah and

she talks about China and Russia and the

new monetary regime all right I

basically already summarized all that so

how do you potentially stop this how

could you prevent this well fortunately

she gives a solution she's not just that

kind of jerk who shows up at the office

meeting crosses her arms and goes nah

nah nah nah it's not gonna work nope

nope not gonna work well do you have

another idea nope nope nope but that

that idea definitely not gonna work

right she's actually got a solution and

her potential solution is that

government has to step in to make sure

we do everything we can to remove Supply

constraints created by the new world

that we have the new world order this is

a way of suggesting what we're doing is

go going through a phase of

re-globalization and in order to secure

resilient Supply chains we need

governments to invest in making sure

that the higher costs of creating these

new Supply chains are offset basically

with stimulus checks now that

unfortunately could in the short term

lead to slightly higher inflation but in

the long term tends not to lead to

stagflation notice how now in both

scenarios in the short term you have

more inflation in stagflation you have

more inflation and if you fix the supply

Problems by having government invests

who tend to create inflation a short

term but in the long term you end up

creating less volatility lower inflation

higher investment and higher growth

which fortunately that's roughly what

our governments are trying to do now at

least in America that's what we're

trying to see we're trying to see via

the chips Act 80 billion dollars which

would probably be 3x the size according

to Goldman Sachs same thing for the

inflation reduction act probably instead

of being a 389 billion dollar plan will

be more like a 1.2 trillion dollar plan

to basically support the building out of

manufacturing in America for advanced

chip making sets for a green energy

projects for uh electric vehicle

chargers for electric vehicles in

general whatever it may be the

government is running the money printer

essentially for stemi checks for these

industries that's what the government is

supposed to do during this time

according to casino of course

everybody's going to have their opinion

on this and we might still follow the

stagflation which we got to talk about

how that could potentially lead to a

certain segment of stock dropping 87

we'll talk about that in a moment but

first we gotta stop

because they're finished with this

Christine like ah the peace

less volatile growth and inflation will

be key to continuing to attract

International Investment and this is

where she talks about how important it

is that central banks coordinate to

provide stability for the US dollar as

well as for potentially a digital Dollar

in the future that is potentially starts

a totally different video where

everybody starts freaking out over the

idea of a Fed coin or recently there was

an announcement of an IMF coin

potentially in development and here the

ECB suggests how central banks navigate

the digital era such as innovating the

payment systems and issuing digital

currencies will also be critical for

which currencies ultimately rise and

fall an important reason why the ECB is

exploring in depth how a digital Euro

could work best if lodged oh the digital

money is coming enjoy the paper while it

lasts because then they'll be able to

digitally print some more money but

anyway how can all of this lead to

stagflation and is gold Gonna Save you

or is gold gonna get whacked in a

stagflationary situation and what stock

sectors could do well Tech growth growth

at any cost what about Staples we're

going to talk about exactly that by

presenting to you a chart now before I

explain this shot and then the result of

what it could mean I must remind you

that today is 420 which means the price

is on the courses on building your

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words they'll probably be a really good

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tonight on for 420. so staticflation

light regime we've got to talk about

this and what it could mean for

particular stock segments so first it's

worth noting that we're already in an

era where growth is starting to falter

though there are some indications that

growth may actually be holding up the

Achilles heel to everything right now is

obviously inflation if we don't have

inflation we don't have stagflation

because you don't have deflation part

you just have the Stag okay so it's

really important that inflation goes

down as soon as possible Kevin's

Achilles heel for his Nike Swoosh

recovery is inflation staying hot for

too long we don't want what Christine

lagad talked about which is stakey

inflation we do not want that we can't

have that at any cost it would be very

bad we need massive disinflation so we

could support the Nike Swoosh recovery

it's going to be volatile it's going to

be painful but hopefully it is higher

and higher rather than and lower and

lower

so what do we know about what's going on

in the economy right now well once again

like I alluded to earlier the rich are

still doing just a fine American Express

just announced that spending volumes

skyrocketed 14 in the first quarter when

you consider foreign exchange that was

actually 16

growth in spending volumes in the first

quarter

according to American Express which

Services a more premium customer quote

our customers have been resilient thus

far in the face of slower macro growth

gain the lead yeah so travel and

entertainment according to American

Express in other words what are the rich

people up to travel and entertainment

grew by

39

this is insane it comes at the same time

as companies like synchrony are saying

more pain for lower credit to your

customers you've got companies uh like

smaller Banks like or even bigger Banks

like Citibanks starting to cut off

subprime Auto Lenders because they're

worried about defaults from Guess whom

poor people and the rich people are

still spending like crazy fueling

spending like this is potentially

inflationary but it is potentially a way

to guard yourself from the Stag part of

stagflation you do not want companies

that are stagnating a lot of companies

though will go through a period of an

earnings recession where you will see a

couple quarters of negative

year-over-year growth in earnings and

then hopefully from there the companies

pick up the pieces and return to growth

Nike was one of the first to go through

it Nvidia has gone through it and quite

frankly now Tesla's going through it but

what do we know about the history of

stagflation light and is it possible

that this earnings recession stays in

Anchor at the same time as inflation

remains High much like Casino

warn well if you look over here you

could see some of the historical periods

where we've had stagflation light before

and this is going to lead us into what

kind of stocks usually experience the

most pain in this sort of environment so

stagflation light environments here show

you that you've seen these periods of

stagflation in other words higher

inflation which is the white line here

CPI along with anemic growth in around

the 1990 to 91 era of the early 80s Paul

volcker era and the second oil rush the

first oil rush of the 1975 era and then

the loose money printing era uh of uh of

the late 1969 era so we've had this sort

of stagflationary environment many times

before and there are some stocks that do

well in this environment and some that

just do really poorly and so what I've

gone ahead and done is broken out a

chart showing you exactly this

stagflation light fear which stocks tend

to do well and then what we're going to

do is we're going to compare this

particular chart

to what that might mean for the returns

we've already seen so far this year

because so far this year we have not

seen stagflation like pricing but if we

end up needing to see stagflation light

pricing let's just say it's going to be

an sh9t show and you're going to want to

have life insurance paid sponsor on the

channel by the way that you could get in

this wrong button that you could get in

as little as five minutes by going to

metcava.com life because it's going to

be quite painful and there's a

particular category that gets the most

pain in stagflation and it's not good so

first

median asset returns in stagflation

regimes here you go in an era of

stagflation which is not my base case

and would destroy my Nike Swoosh

recovery you can see

Staples tend to return the largest

benefit that's your Procter Gamble your

Johnson and Johnson your L'Oreal

whatever uh these These are the

companies that perform the best Staples

followed by retail clothing and value as

well as foods and inflation-protected

securities and treasuries

that compares to the ones that suck in a

stagflationary regime this was a shocker

look at the bottom here of what sucks in

a stagflationary regime uh-oh gold info

tech technology Machinery Commodities

and cars that's not great so cars

technology well that's two categories

that says middle finger to Tesla and a

stagflationary environment gold 15 to

the downside seems crazy gold

it's supposed to be a hedge against Bad

Economic Times and it's supposed to be a

protector against inflation but

according to this Bloomberg piece gold

actually performs poorly in a

stagflationary environment that was in

my opinion somewhat shocking gold

apparently does better in a um what

should we say a uh

in in an environment of uh of basically

depression or recession rather than

stagflation now stagflation can still be

recessionary problem is we're just

fighting inflation more so interesting

now what happens when we take that chart

and we annualize it

responding basically to the numbers that

we've already seen so far this year in

other words how much of a correction

might some of these segments have to go

through well I hate to say it but look

at this this chart is scary as hell

this chart says oil could rise 23.6 from

where we are now financials could rise

17.8 percent good old Steve and his

Commodities and his rocks could end up

seeing a 7.3 17.3 rise

REITs are basically flat along with

chemicals uh oh but what do you have

down here

gold down

42.6 percent technology down

87.6 and even worse cars oh negative

176 and I don't know what

Tesla screwed

so in an environment of stagflation

which is one that Christine just told us

about uh you are um gonna have a bad

time you're not gonna like stagflation

and you could think her for warning you

about stagflation and stagflation light

now maybe maybe we won't end up seeing

stagflation maybe we'll have a little

bit of an earnings recession

companies will end up uh you know coming

out of this earnings recession as

wealthier people continue to spend and

inflation magically goes away like the

Goldilocks scenario we're all praying

for so in other words maybe we just

won't have any inflation and maybe just

maybe the government's stimulus checks

won't hurt inflation in the short term

and instead will help prevent the global

Supply disaster that we're seeing in

this mode dibolo world and the fears

that we may have of a multiple world and

maybe we just don't end up having all

the pain but if we do end up having the

pain of stagflation let's just say cars

gold Tech Tesla Tech Tesla Tech all

sucks and the Nike Swoosh dies so if you

want the Achilles heel for the Nike

Swoosh don't worry it's just stagflation

and the nice thing about stagflation is

really if you look at history it's not

like there have been any blue bars and

this has happened before it's not like

it can happen again or maybe it's

already starting to happen yeah anyway

uh that's where I'm just gonna go ahead

and end the video

because that sucks and I don't really

want to talk about stagflation anymore

oh yeah at T shares slump on q1 results

one billion dollars of free cash flow

and still missed estimates hmm

still twice the free cash flow Tesla at

last quarter

not bitter

coffee stuff

cooked that too long

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