The Fed's Plan to DESTROY Stocks [-60% Crash Coming].

hey so the fed's about to rug pole us

and what happened in Japan might happen

again but I wanted to thank you for 2

mil Subs y'all are amazing and mean the

world to me thank you so much now let's

get into the world ending could there be

another wave of the collapse of the

Japanese stock market that takes the

entire global economy with it much like

the stock market on Monday into the

United States where we had Jim Kramer

freaking out and pretty much everyone on

Wall Street freaking out you've got to

know could history repeat itself and

that is what we are going to address in

this video because quite frankly UBS

believes this carry trade we talked

about a couple days ago is only quote

50% Unwound which means we may have

another Black Monday ahead of us in this

video I'm going to address why this

Black Monday happened and I'm not going

to explain the carry trade because we

already did that in the last video I'm

going to explain specifically why the

United States stock market was not able

to stop the bleeding as a result it

doesn't even matter if it's the Japanese

carry trade that collapses or something

else falling over this stock market here

in the United States as well as

elsewhere throughout the world is on

fragile foundations and in this video

I'm going to explain why but first

before we talk about the stock market

you must understand a Tinder Box that

exists right now in the Middle East and

no I'm not making a reference to the

fact that it's going to be 107 degrees

outside in Iran tomorrow I'm referencing

the fact that Iran is using that Tinder

Box as an excuse to close government

buildings and Banks tomorrow no mention

of closing schools just government

buildings and Banks which interestingly

could be the perfect targets for a

Counterattack or preemptive strike from

Israel this comes after the state

department argues the United States just

had a base struck in Iraq where several

US service members once again have been

injured we have been attacked on our

bases over 200 times and have not

responded to these Iranian backed Rebels

a lot of this might change as Iran is

expected to invade Israel soon in fact

Iran just got its shipment from Russia

of air defense mun misss and weaponry

Iran may be preparing to strike and

preparing its

countermeasures but this video isn't

about that Tinder Box this video is

about the rest of the fragility of the

US Stock Market and whether or not we

are trending towards a recession we're

going to dive into earnings what

professionals believe and the Federal

Reserve first Cathy wood who studies a

lot of microeconomics believes we are

almost certainly in a recession now TS

Lombard Isn't So convinced TS Lombard

argues that this rut will blow over that

this carry trade might be one and done

because the Federal Reserve has the

right tools this time to fight a

recession however they do acknowledge

that Powell could mess this up but

what's there to mess up if if this is

Japan leading to potential crisis in the

US Stock Market well the reality is the

US Stock Market is so fragile not just

because of what's happening in Japan and

selling pressure what's happening in

geopolitics but what's happening in the

underlying Realm of the US consumer and

US businesses TS Lombard says bouts of

volatility are usually over between 5 to

6 weeks after a Monday like we saw which

suggests we still have a very fragile 5

to 6 weeks of pain potentially ahead of

us they suggest that recession is not an

option for the Federal Reserve and

they'll bail us out but this is where a

lot of people disagree they argue that

the election is likely to extend that

volatility for the next 13 weeks double

the usual volatility you would get after

a Black Monday this idea also that a

recession is not an option is also a

giant trap remember this it took the

Federal Reserve 2 and 1/2 years to bail

us out of theom bubble it took the

federal res Reserve 6 to 10 months it's

because we had a double bottom that's

why there's a range to fully bail us out

in the Great Recession of

2018 only during covid did the Federal

Reserve respond rapidly but then they

contributed to the highest inflation

we've seen in the last 40 years which

high inflation is known to destroy

countries ironically recessions are

considered healthy they don't destroy

countries inflation does this leads a

lot to say that the Federal Reserve will

not make the same mistake again so

unless you think this time is different

the Federal Reserve is probably likely

to wait until the very last moment to

capitulate and fully bail us out if we

have another Japanese crisis or for

whatever reason a stock market selloff

especially in the face of stronger ISM

Services data that we just got on Monday

suggesting prices are potentially Rising

rather than

Contracting this makes the stock market

quite risky

uh in fact TS Lombard goes as far as

suggesting that investors today during

these periods of volatility like what we

saw as a result of Japan will lead

investors to do something known as

selling into strength this means they

won't necessarily sell on the day that

everybody is panicking but instead

something much like what we saw today

will happen there are two very important

things that happen today and you should

pay attention to these maybe even put a

sticky note on your computer

first thing that happened we had the

NASDAQ recover after we have a Thursday

sell-off a Friday selloff and a Monday

selloff the vast majority of the time

and on average we are green on the

following Tuesday it's a phenomenon

called bounceback Tuesday it's not a big

deal it's very highly predicted and

bounceback bounceback Tuesday today in

the NASDAQ occurred with volume that was

really light in other words the nasda D

100 Technologies index Rose almost 22%

at one point actually slightly more on

very very low volume which suggests

people are slowly nibbling buying and

then what happened right around an hour

before the closing bell volume increased

and the stock gave up over well the

index gave up over 1 and a half% a

massive movement in the span of an hour

for the NASDAQ 100 this is likely

because institutional investors as TS

Lombard warns sold the strength this is

really bad because when investors sell

the strength it means you don't have

buyers and when you don't have buyers

you exacerbate the potential of another

Japan really destroying our stock market

but there's another thing that happened

today we had super micro computer that

reported earnings and super micro

computers as soon as their revenue beat

and guidance came out skyrocketed from

about

$616 all the way up to

$729 that is an increase of over $1

18.1% it's an insane explosion and then

just like TS Lombard warned us almost as

if on Q investors sold the strength take

a look what happened afterwards after

that runup the stock collapsed

significantly lower than where it was

now sitting around

$540 which is substantially lower than

where we were at the closing it's 12.3%

lower so in other words we literally had

a 30% swing in this stock from top to

bottom in after hours because we got

strength and we sold it off and what's

sad about this company is if you

actually zoom out and you look at thisan

broadly the company is already down from

$1,229 now all the way down to

$540 ask yourself how scary that is for

a moment by doing the math on that

$540 divided by

$1,229 is a

56% drop in just one stock in a matter

of uh less than 4 months which is less

than the time it usually takes for the

Federal Reserve to bail us out of a

recession so if you think the recession

is over because the stock market

corrected 15% and today the stock market

was almost up a percent you might be

sadly mistaken we might be experiencing

a dead cat bounce which is kind of like

when you drop a cat that's dead it

bounces up off the floor you get a

little bit of back a little bit back and

this isn't to be morbid it's just to say

it's very normal even in a recession to

have green days and we understand this

uh in fact because of this crash that

happened on Monday and because of the

fear that we have that another crash is

going to happen like this we are going

into almost every single day with shorts

at the end of the day just in case some

crazy stuff happens overnight we did

that on Friday and when I say we I shout

it out in my course member live streams

I don't say that you should copy exactly

what I do I just give you perspective

but what I want you to know is on Friday

I went in with a 30 C option I spent

about $30,000 on an option and that

turned into roughly

$120,000 it was actually

$118,000 a massive gain on one contract

that I was using to hedge my portfolio

now I don't encourage you copy me I

can't guarantee you're always going to

make money off every single trade that I

make but a lot of my course members they

say Kevin you give perspective that

other other people don't see until it's

too late and if you want that

perspective make sure you join us in the

stocks and psychology of money group all

you have to do is go to meetkevin.com it

is our sponsor for this video that's

right I'm My Own sponsor for this video

and I'd appreciate it if you joined

we've got a flash sale going right now

because a lot of people have been asking

for a coupon to get in so check it out

before that flash sale ends we expect to

end it within the next 24 hours maybe 30

hours just sort of depends on when we

get to it

because a lot of people have been asking

look at this nice email I got as well

somebody wrote here I was just reading

the Discord notices from today and Kevin

I have to say Kevin is often more right

than not in the market only constructive

criticism I have for him is he is just

early to his moves I've been an avid

watcher with him since early 2020 and he

has a nose for the moves before the

market does anyway these are the sort of

things that course members say now no

guarantees again but do check it out

link down below for now we got to

understand why could selling the

strength lead to potentially another

Japanese selloff well again we have

another 50% to go in the Yen trade so I

mean I'll give it to you straight on

that one if you just look up and you

could make this very very easy on

yourself uh and it's just part of what

you want to pay attention to all you

have to do is type into Google yen2 us d

That's yen to USD and I want you to

track this go to the 5day when you go to

the 5day you're going to do something

very very carefully when you see this

Spike expect the carry trade to send

pain to America and then you have to ask

ourselves are investors in America going

to sell the rip or are they going to

keep buying the dip well on Tuesday the

Japanese stock market recovered as the

Yen actually depreciated but look what's

happening now it's appreciating again so

be careful this spike in this carry

trade is not over yet bounce back

Tuesday May certainly have made it seem

like this is oneand done my take is it's

about to get worse now let's understand

For a Moment how things could get worse

first consider super micro computers

they announced that 10 for one stock

split and yes they announced record

revenue revenue well above expectations

18% over expectations in fact but their

margins came in weak now why would their

margins come in Weak well I believe that

their margins are coming in Weak and I'm

going to tell you what actually happened

because we heard about it in their

earnings call but I initially wrote that

I believed their margins came in Weak

because you've got someone or the market

in general demanding price cuts and so

super micro computers propping up

revenues because they want to send a

growth signal to the market so they

could get their stock back up from being

down

50% so hey let's prop up revenues by

cutting prices cutting prices is bad

because it destroys margin and so what

did we learn in their earnings call well

in their earnings call they told us

exactly that they blamed a very large

Enterprise high quality large scale

customer and said because of them they

had to lower margins in other words they

had to offer them large discounts this

is really simple because it starts with

the

following it's Amazon we have a$1

billion contract with you you need to

cut your price 10% right now otherwise

we're canceling all of it and we're

going somewhere else now I'm being

hyperbolic but what power does Super

Micro have to say no now you might say

oh they'll send it to somebody else oh

but what have manufacturers across all

of America and super micro been

doing they have as super micro said in

their earnings call quote expanded

Supply and their large customers know it

so they demand discounts because they

can and then investors sniff that out

and they sell the rip see now they argue

they have plenty availability they have

plenty of product and you might think

their profit margin would guide back up

but no they're having trouble getting it

back up to where it was they're going to

work very hard they say to get it back

up to the prior range it's probably not

going to happen but this isn't just

about super micro computer this is about

how does selling the strength affect the

entire Market well think about this for

a moment the way stock markets crash is

somebody cuts spending it could be as

simp simple as capex spending pressures

margins at Super

microcomputer this is literally what we

just saw then somebody cuts capex

spending Dell and Intel just did that

after their stock

drop then jobs get cut which increases

margin to try to make the investors

happy but when jobs get cut the consumer

gets hit which then creates a

self-fulfilling Doom Loop of less

consumption by consumers and consumers

are 70% of the economy if AI spend

Fizzles the one thing actually propping

up drops right now in spending

disappears then the economy sees worse

earnings Boom the recession is in full

swing then try to deal with the other

50% of the Japanese carry trade you're

not going to be able to it's going to be

very disgusting but hey it's not just

super micro who reported today it's

Airbnb ah yes Airbnb down 16.3 3 %. they

beat in the second quarter but in the

third quarter they signaled quote softer

Outlook they called it a broader

moderation softness due to slower lead

times some hesitancy they said they're

seeing they said this in their earnings

call by the way I already went through

these earnings calls they said we're

starting to see hesitancy in how quickly

people book we've seen some movement in

lead times they say people are booking

later they might be booking one to two

weeks out we're not seeing the two-month

Bookout anymore like we usually

do then they're asked hey will you

provide 2025 guidance nope will you

provide Q4 guidance nope what about Q3

guidance oh that's

lower not good but that's just Airbnb

well what about Trip Advisor oh yikes

you missed and you're down 11.7 6% okay

okay okay but it can't just be the

travel sector can it what about Celsius

remember that energy drink that

everybody went nuts over by the way we

did a huge Deep dive analysis in our

course member live streams and my course

members were asking me Kevin why don't

you invest in Celsius and I said there's

too much competition in this space and

they're going to lose all their pricing

power as soon as we go towards the

recession and so what did Celsius warn

right here in their earnings

call they said said that they saw their

product in the convenience Channel

selling

43% more year-over-year earlier this

year but what just happened let me read

it to

you we also began to feel the effects of

the same macroeconomic factors that are

pressuring same store sales and

affecting consumer purchasing habits

just last week one of the largest

convenience chain

noted their same store sales were down

more than

4% so you went from 44% growth to now

being down 4% and this happened just

last week which would be the end of July

which is the same thing that Airbnb said

that oh my gosh we hit a wall in July so

all these earnings we're getting are

like oh July's really good holy crap

what just happened in quarter 3 again

this is why that carry trade is so

impactful folks the carry trade can

happen again the Japanese carry trade

can happen again why because nobody

wants to buy stocks right now okay maybe

people want to buy stocks but they're

fully deployed remember this folks this

is so so important right here cash on

the sidelines for us retail investors

and investment firms subtitle aggregate

investable funds as a percentage of

equity market cap record low we have not

seen investable funds amongst households

and investable or investment

organizations this low quite frankly

since the dot bubble and Co in other

words people are out of Moola to buy the

dip so if there's no buyer what happens

the order book collapses when you get a

Japanese

Liquidator that's why stocks collapse

and that's why it can happen again

because weak earnings across the board

look at this after hours Tesla down 2%

redin down 4% Reddit down 4.8 rivian

down 67 Trip Advisor 12 Airbnb 16 super

micro almost 13 Nvidia 2 uh uh NASDAQ

100 down 63 why is this happening

because people are realizing the cracks

of the consumer are serious they're not

getting

better now Celsius says don't worry

we're going to keep growing and we're

going to fight to regain the market

share we lost how are you going to do

that oh with better pricing and

promotions in other words you're going

to lower prices that is called deflation

which is really good for the consumer

but not if you lose your job now you

might say but Kevin upstart beat for Q2

and they gave a better guide for Q3 and

that's true they did upstart is up 18%

in after hours but what does upstart do

upstart helps you consolidate your debt

it's literally the last thing you want

to be doing well because it's a lender

people are so out of freaking money that

upstart is doing well upstart a stock

that's currently trading at $28 when it

once was trading for

$41 this is the company people want to

cheer over it's a joke it's a bad

sign so what should really scare you the

selling pressure coming from

ctas now a lot of people aren't familiar

with this because a lot of people are

like but Kevin what about all this money

on the sidelines in money markets a lot

of that is called Cash and cash

equivalents on corporate balance sheets

or bank balance sheets these aren't

investable funds but what should scare

you is the CTA cheat sheet brought to

you by the market ear look at it here

ctas if the market is up over the next

week plan to sell $50 billion in total

if the market is flat sorry that's if

the Market's flat the next week if it's

up the next week they plan to sell $33

billion if the market is down they plan

to sell $77 billion so in all cases over

the next week uh commodity trading

advisers which have a lot of equity

exposure right now are sellers in the

next month if we're flat over the next

month they'll sell nearly $100 billion

and if we're down the next month they'll

sell $211 billion

if we're up they'll buy just 40 which is

one of the smallest amounts on this

chart here's another way to visualize it

the upside right here is maybe

15% but the downside is 15 to

45% this is

massive so you have to ask yourself do

you want to be if we're this little blue

line do you want to invest for this or

or do you want to protect yourself from

this again I don't want you to lose

money and lose the potential on the

upside I I really don't like I want to

be a bull I want to say everything's

going to the moon but I don't want you

to be the person that this happens to

and then you lose your job and then you

go bankrupt and then you say why didn't

anyone warn

me okay fine Kevin fine what else what

does Mike Wilson of Morgan Stanley have

to say because I heard small caps are

going to Rally right small caps well

I'll show you exactly what Mike Wilson

has to say right here in his latest

piece Mike Wilson

says you should be careful and you

should get defensive he says that the

consumer booed growth last year and

fended off that hard Landing but if

consumption is now fading more than

expected investors should be very

careful because if we get a further

deterioration in growth that

materializes Beyond just an expectations

Miss valuations would likely be more

broadly challenged in other words stalk

down and he argues that you should be

careful investing in small caps because

they are the most economically sensitive

but this is not the only thing he

suggests he argues the FED is not going

to come bail you out the FED is prone

not to overreact at this point and we'll

have more to talk about at the FED in

just a moment but what I'd like you to

see is the following

first I sent I actually gave a preview

of this because I mentioned this on uh

Twitter but take a look at this right

here this is the spread in other words

the difference between the 2-year

treasury yield

and the Federal Reserve uh uh fed funds

rate that spr red that difference right

now sits at

about 163 at the time the screenshot was

taken it's probably about 144 is right

now so it's tightened a little bit but

the point is the last times we were at

these levels let's just say we're not

very happy times look on that chart and

see if you can spot when we were last at

those levels and then I'm going to give

you the cheat sheet by showing you my

Twitter follow me there if you haven't

yet oh and I'm blurry at real meet Kevin

take a look at this the last time this

level happened was June of '89 right

before the 1990 recession January of

2021 right before the dot recession and

December of 2007 right before the 2008

recession that's not good Wilson

suggests we should be very careful

because the past several weeks have been

more about deg grossing than anything

else in fact he says it right here now

what does that mean well deg grossing is

a fancy way of saying drisking he even

says here as regular readers no we have

remained steadfast in our view that

small caps so smaller companies are not

the place to be in a late cycle economic

environment like today going into the

first cut in other words be careful with

smaller companies the Micro Data is

warning us that the forward trend is

weaker this is the same thing that Cathy

would argues this is not an isolated

slowdown he says restaurants Airlines

hotels Autos credit card companies

they're all warning of a Slowdown with

the exception of some of the wealthiest

consumers but this makes

sense they got money to burn now the

next thing that Mike Wilson argues is

really dangerous is that the market last

capped out on July 11th which was the

same day that we actually had a CPI data

release and what he thought was really

interesting about this was low inflation

all of a sudden became bad news that's

because slowing inflation while it's

supposed to be good news is actually

signaling that earnings are going to

come in weaker in that pricing power is

waning the pp is getting small the pp is

fading and that's not good we like big

pee around

here in fact take a look at this

picture this photo right here will show

you exactly little p

PE all of these 12 Industries with the

exception of clothing and Footwear which

I found weird because I don't think that

these are actually going to keep doing

that well with the exception of clothing

and Footwear every single sector has

slowing or falling pricing power and

it's very very

bad now something else that you should

be paying attention to is what happened

the last time the S rule was triggered

in fact what has happened historically

every single time the S rule has

triggered well we have data on this in

fact it's right here history shows when

the Su rule is triggered and

unemployment Rises by 50 basis points we

should expect it to rise a full full

2% in fact the history is right here

look at all of these different years

where when the S rule has triggered we

have seen unemployment Rise by an

additional there I'll hide myself for a

second by an additional

2% well 1 to 2% now you might ask

yourself but Kevin what about that

question mark you drew right there on

that one year there was an exception to

this rule that un employment skyrockets

basically after the S rule is triggered

it happened in all of these years all

years that weren't exactly particularly

juicy well there was a reason for that

and I'm going to give you the rationale

on it and the history on it and then you

could decide what the S rule being

triggered within the last week means for

us going

forward in 1959 which is where that line

was that one line that's under there

where unemployment fell after the S rule

was triggered something very unique

happened 1959 was a second trigger it

triggered after the 1957 trigger during

the UN during which unemployment did

rise those 200 basis points the market

fell

17.4% like the Dow Jones Industrial in

25 months from the 1956 Peak you

literally bled for 2 years in the stock

market and that's the Dow that means a

lot of the components got hit even

harder the FED then decided to

drastically cut rates from 3.5% to

63% but then they ignited inflation they

didn't even over ignite inflation they

barely ignited inflation but because

they started igniting inflation by

cutting

rapidly they actually raised rates back

to

4% triggered the S rule again in 1959

and caused the second recession in 19 60

where the market then declined

15.7% in 10

months this paved the way for the 1970s

where the Federal Reserve reacted in up

and down patterns leading to the lack of

confidence at the Federal Reserve and we

ended up getting a runaway of inflation

this is a really critical note because

if the FED screws this up again with

inflation whatever little faith people

have left in the FED will lead the FED

to absolutely C collapse markets again

in a stagflation scenario the FED cannot

afford to do that the FED cannot afford

to save the day too early inflation is

unforgivable they cannot reignite

inflation so they won't have an

emergency cut in my opinion and they'll

probably cut rates too late they don't

want to repeat the mistakes of the late

50s or the 70s people ask oh but but the

FED wants to avoid a recession you have

to ask yourself what does the FED want

more to beat inflation or to avoid a

recession most people are going to say

the FED wants to avoid a recession but

it's actually the wrong answer a

recession is curing a recession kills

inflation it helps them a recession

crushes businesses that should fail a

recession cleans out existing businesses

a recession creates healthy foundations

the FED knows this they're economists

they're theorists they study this and

they say yes recessions are actually

good although they could be painful

we'll cut rates when we need to well if

we go into recession you don't want to

invest again until they

capitulate but reigniting inflation is

not an option here now I know some

people say but Kevin we might have a

soft landing and they refer to the 1995

era where the Dow Jones Rose to 2.2x

from its 1995 level it's pr.com

Peak but to this I say the NASDAQ is

already up

1.93 X from Q4

2022 I understand I'm using a different

index but the point

is we have already seen a substantial

run in mega caps the mag 7 and some of

the biggest businesses in our world

today which we measuring Meed then by

the Dow and are more heavily measured

today by the NASDAQ so you might say I

don't know Kevin this time's different

we've got another 2x ahead of us but

unfortunately it seems like the data

doesn't

agree in fact Bank of America goes as

far as suggesting that recent growth is

slowing faster than expected they also

say and and so do others say that

investors are becoming too greedy

relying on the assumption that the

Federal Reserve will bail them out the

next time there's a Japan oopes in fact

Robble Bank went as far as saying when

things flip bad we demand rate Cuts

heads I win Tails I lose but taking the

froth out of stocks is exactly what the

FED wants they

say this then Loops us back to Iran

suggesting an attack on Israel is

imminent which unfortunately Robo Bank

says a war with the axis of resistance

could lead to a volatile oil shock so

then you'll have a shock in our economy

a recession an oil shock and potentially

War this isn't just about Japan it's the

fact that nobody wants to buy right now

because they already bought and this is

why you're seeing profit taking and why

at the very least between now and the

election you should probably expect

profit taking to continue so could there

be another sell-off on another one of

these Japanese carry

trades the answer is no if you think

there are buyers if there are a lack of

buyers again the answer is yes then you

have to ask yourself what is investable

cash right now it's very low and so

where do I stand on the bare bull scale

I stand at a 2 and a half which is

pretty bearish I'm not full dirty bear

yet but I'm starting to get

there unfortunately

we may be trending right towards a

recession and I have no faith that the

Federal Reserve will respond early

because when you study history you see

that the Federal Reserve has screwed up

every time they respond too early and

besides if they cause inflation everyone

will hate the FED if they cause a

recession and the FED comes in on their

white night and capitulates and cuts

rates to zero and starts QE again

they'll love the Fed

the FED only loses by cutting too early

and once you recognize that you'll

probably become one of the sell the

Rippers and you'll start protecting your

portfolio if you want more of my

insights make sure to use that flash

sale we have on the programs on building

your wealth I wish you the best this is

a very scary time and if you like this

video please consider subscribing the

last time I asked y'all helped me get to

2 million subscri subscribers and I

really appreciate and thank you for

that just know this video took two days

of research to put together for all of

you and I do it because a I love it and

B I'm really worried there's going to be

a massive amount of job loss I would

rather be wrong I would rather people

not lose their jobs the stock market

boom and everybody be happy but I don't

want you to go into this unprepared

thank you so much for watching goodbye

good luck and we'll see you in the next

one go to meetkevin.com to check out

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congratulations man you have done so

much people love you people look up to

you Kevin pafra there financial analyst

and YouTuber meet Kevin always great to

get your

take even though I'm a licensed

financial adviser licensed real estate

broker and becoming a stock broker this

video is not personalized advice for you

it is not tax legal or otherwise person

personalized advice tailor to you this

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