very strange!

hey everyone me kevin here a couple

weird things happened in the stock

market today in addition to the fact

that some stocks ended up green tesla

and nasdaq ended up green so what

happened what's going on a couple weird

things happen and warren buffett's up to

his old antics again what are those well

let's talk right after i mentioned that

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to learn more okay folks what happened

today well one of the first things that

happened is we had the biggest falls in

the 10-year treasury yield in

decades any number above this zero line

here would represent an increase in

yields any number below that represents

a decrease and what do we see right here

look at this massive plummet we had the

only time we had this before was over

here in the covet pandemic

and over here in the great recession and

then the residual of the great recession

over here as we started sort of the

taper tantrum but this is quite

remarkable that we have seen such a

plummet in the 10-year treasury at a

time where the federal reserve is trying

to tighten financial conditions this is

a representation of a loosening of

financial conditions which is really

really bizarre because over here you

were in a recession you were in a

recession but you also had the federal

reserve at the same time saying hey

we're going to try to help the market

smiley face we're going to help the

market smiley face over here you've got

the fed going no no no we don't want

tighter financial conditions we want to

tighten things up we don't want to

loosen things so why is the bond market

loosening at the same time as the fed is

trying to quell inflation well it seems

to be that the bond market is convinced

that we already have a resa recession on

its way we know that the 10-2 yield uh

the spread between the 10-year treasury

and the two-year already inverted once

on april 1st and once again a couple

weeks ago but only for about 18 minutes

a couple weeks ago and for about a 36

hours

on april 1st which we thought was a joke

until it reinverted but anyway what's

really staying inverted right now is the

twos and the fives and they tend to

invert prior to a recession here we are

folks look at that we are inverted here

just like we were inverted over here

before the red bar red bar represents

recession look at that we were inverted

over here and we were inverted over here

it happens every single time it's not

magic the market's telling us bluntly

hey we're now more worried about a

recession than we are about inflation

there's a reason why every time we look

at the ten-year break-evens or the

five-year break-evens which is the

market's expectations for inflation

there's a reason every single time we're

seeing this over the last couple months

because now markets are actually

concerned that the federal reserve is

going to make a policy mistake now of

course you've got folks like bill ackman

saying hey we've got to get to four and

a half or four to five percent on the

federal funds rate to get rid of this

inflation and that might be true but

folks the markets today are reacting

that hey we're way not worried about

inflation today we're actually just more

worried about being in a recession

because what do people do when we go

into a recession is well generally they

try to flee to safety bond market if

it's paying you three percent yields why

bother being exposed to the stock market

if you could get three percent for the

next couple of years each year and boom

you're done right forget about it but

what else happened today and this was

the other thing that was weird is we

actually saw oil futures plummet during

trading today the white line here

represents oil futures so the blue line

represents the dollar as the dollar

strengthens it's usually because there's

more demand for the dollar oftentimes

more people buying bonds more people are

buying bonds and that's one of the

reasons we're seeing bond prices go up

and yields go down and so people people

want these bonds right now because

they're worried about a recession but

what also happens in a recession well we

start seeing commodities that are used

for production go down like oil oil not

only used for production but also

important for consumer spending and

travel and plastics and many other

things in our lives and so the market

today is taking the stance that folks we

don't even care about inflation right

now we're more worried about the fed

over tightening and us actually going

into a

recession now you can see that here as

well because this folks is a chart of

copper

this is a chart of copper pricing it is

a year to date chart so we've got

january 1st on the left side and then

over here we are in july and you could

see that in just the last couple months

over here we have seen oil plummet uh

i'm sorry copper plummet uh we've

obviously in the last couple days seen

oil plummet but copper one of your most

important industrial and production

metals

especially important in evs evs use

somewhere around four times as much

copper as uh gas-powered vehicles do but

we're seeing

copper plummet in price and this is

following nickel and some other futures

uh for other commodity contracts as well

whether it's fertilizer is coming down

you name it we're seeing commodities

rotate down baskets of commodities are

they're all rotating down and this is

where the market seems to be screaming

at us hey look what we really need to

understand is we're in a situation where

stocks are going to continue to go down

they might bounce around and go down

bounce around and go down we're going to

continue to have this pain until we hit

some kind of floor which who knows maybe

that floor is qqq

you know

278 which is roughly where we were this

morning right we need to hit some kind

of floor

and the only way we get off that floor

is when the market believes hey we

finally finally are actually responding

to the fact that we might be inducing a

recession because until the markets tell

the federal reserve hey we're going into

a recession y'all are tightening too

much how do they do that they do that

with oil coming down which is actually

disinflationary that's good right they

do that with commodities coming down

with copper

coming down and this is what's so

confusing about this market right

because we're waiting for the fed u-turn

uh and and there are a lot of things

that say hey fed you know we've got cpi

coming in hot cpi is probably expected

to come in at 8.8 percent uh which which

is crazy this month it's going to be an

insane read

we thought last month was bad it could

be worse this month so that's hot this

would be cool cooling would be oil

coming down commodities coming down

copper coming down hot would be cpi

coming in higher than usual again we

still got that lagging impact of owner's

equivalence rents in there but what's so

crazy

is even though we're getting all these

hot reads on inflation the bond market

and commodities markets are telling us

no no no no the recession is the bigger

issue here and the way stocks react to

this is fascinating stocks hate this

because it means the fed has to get more

aggressive

stocks actually like this because it

means the fed might not have to be as

aggressive so again the hot side stocks

hate the cool side stocks like why

because if oil and commodities come down

then input costs go down and eventually

inflation will cool and the fed might

react and say hey look if commodities

start coming down on their own and some

of these these uh items start becoming

less expensive then we will naturally

see cpi both core uh and headline cpi

come down and that could mean a softer

reaction from the fed and the market is

not necessarily in my opinion and i know

the phrase this time is different is a

dangerous phrase to use but i think

there's a potential that this time is

different and the fed

is going to have its actions priced in

well before the fed actually u-turns

usually markets bottom when the fed

u-turns but if the markets start pricing

in this cooling and a fed u-turn we

could have potentially already u-turned

to let's say here by the time the fed

actually says uh-oh we need a u-turn

that could be a 38 retracement a 50

retracement i don't think it would be as

high as like a 78 retrace but somewhere

in there right

so this

is fascinating in my opinion because

really why when we're expecting such bad

inflationary data to come up and

treasuries are falling why would we

potentially see stocks go green well

again it's because even though we think

the fed has to spank us to contract the

economy this might be doing more work

for the fed than the fed just talking up

yields however i think there are really

huge risks here and i don't want to say

that we're for sure like at the bottom

here because the big risk is the fed

says

we can't rely on this

this is a problem yields should not be

falling let's go crazy fed speak let's

hike faster and let's basically talk

yields back up to like a 10-year three

and a half percent where we were uh you

know a couple weeks ago it's crazy that

yields have fallen so quickly in such a

short period of time and to some degree

i think the federal reserve is looking

at that going uh oh uh we're actually

seeing the market loosen again they

don't think we're serious time to go

give them a spankings

so i'll give you my thoughts towards the

end of this video but i want you know

some people think it's just flip-floppy

to talk about different things but the

market does weird things that's why it's

a market but it's very interesting to

read in my opinion another thing that i

think is very interesting to read is

seeing what warren buffett is up to and

here you go folks oh

warren what are you doing oh okay well

you're buying oscidonal petroleum right

now his stake is above

17.6 ownership in this company folks

look at this he bought 30 million shares

at the beginning of the year over here

bought the dip with 18 million shares

here buys the dip again over here as we

start getting a rebound when the stock

looks like a little bit of ta there even

though we know warren's not too much of

a ta or look at these timings though

buys over here buying right now i mean

you look at the chart it's like it's not

that bad i mean we've been interesting

if you did a little bit more buying over

here right but still some of these other

timings not too bad warren buffett is a

pain buyer but it's also interesting

that if the market this is why

everything's so confusing and i mean i

hate to say it but

warren like i get it like oil definitely

surged over here and this is when you

went crazy for oil

but at the same time mr buffett we're

seeing a nice little drop-off here in

oil uh and it's it's been a pretty

sustained drop-off here i know we see

this volatility here but uh back over

here back in april and march what did we

have we had this inclining trend now

we're on a substantially declining trend

so and i mean look let's be real even

the oil companies know that these high

oil prices aren't going to last forever

this is why they're paying down debt and

returning cash to shareholders in the

form of dividends or buybacks uh to

promote equity appreciation and maybe

that's what warren buffet is going for

using cash to essentially create cash

via his investments which is what you

want during recessionary time is cash so

maybe that's the play not necessarily a

play on the price of oil so what do we

do i mean how do we play through all of

this noise well i mean there are a few

things that we can do the first thing

that we could do is we could short oil

if you do think the market's going to

continue to price in a recession we

could short oil you could do this by uh

you know shorting something like united

states oil ticker symbol uso now this is

something that i've been talking about

for the last couple weeks and would have

paid off very well today if somebody

went heavy on this i've been talking

about shorting oil for quite a while

especially since we're so high on the

retracement levels for uso however this

could also explode right back to the

upside so you have to be quick on this

one maybe set some stop losses right

number two

probably the biggest thing that you can

do if we are potentially bouncing around

the bottom is either start or continue

dollar cost averaging in and one of the

things that i'm establishing right now

which i would recommend you do as well

is and you could do this on any

brokerage platform but an easy thing to

do is go to like something like let's

say an m1 finance or public or whatever

but on m1 finance you can make yourself

a nice basket of some of the favorite

companies that that you really want to

invest in

so for example those might be companies

like nvidia or it might be n-phase it

might be some tesla

who knows maybe you want to get some

more value style plays in there

or you want to get apple whatever now

might be a time to take advantage of at

least some of the deals now again like i

said this morning that doesn't mean you

want to be a hundred percent in in fact

a lot of people are playing a 50 50

portfolio right now and i think that's

quite respectable i think

patience gets rewarded in 2022 and by no

means do i think the pain is over i

think we're going to continue to see the

market vacillating and trying to figure

out okay what's more important is

inflation more important is a recession

more important to us is earnings per

share more important to us nobody really

has the answer and that's why there's so

much confusion and that's why when you

have these weird things happen in the

market you can actually see green days

and you have things that appear to be

good happen in the market and you have

red days it's like it's super super

bizarro

but hey at least for me

my thesis right now is

80 to 90 percent in dca dca dca into my

favorite companies uh sure look i sold

in january but the only reason i sold in

january was to buy lower

that's what we can do right now we can

buy lower is it absolutely the bottom

nobody knows nobody knows but it is very

interesting to see this the market go

from inflation's the worst thing ever to

wait a minute

oh man maybe we do have to price in a

recession which forces commodities down

which actually lowers inflation and when

inflation lowers then it speeds up the

odds of the fed u-turning and ending the

recession

so it's pretty remarkable and now folks

you've been asking for it

one more

thing yes folks one more thing take a

look at this from bank of america

facebook warns employees on second half

advertising slow down

i've thought that if inventories went up

without a recession we'd be seeing a lot

more advertising that was my thesis at

the end of the year before we were

really concerned about a recession when

you go into a recession spending gets

cut and the opposite happens people

spend less on advertising and this

report just out from bank of america

tells us the following according to

various media reports a late last week

facebook warned employees to brace for a

tough second half as the company copes

with macroeconomic pressures on core ads

business we see this news as amounting

to a second half revenue warning which

may have been expected by wall street

especially how much meta has fallen

recently

and meta facebook is preparing for

another round of expense cuts after

initial reports of cost cutting surface

this might mean more employee cuts

coming also mark zuckerberg seems to

anticipate this will be one of the worst

downturns in recent history and facebook

could weed out underperforming employees

and reduce hiring for the rest of the

year

in a separate memo a meta stated they

face serious headwinds and would need to

execute flawlessly in an environment of

slower growth

wow folks okay well you got a

lot a lot a lot of talk right now about

recessionary fears less so fears about

inflation well folks this is quite

consistent with what we've been seeing

again those break-even inflation rates

the white line up here trending straight

down which is phenomenal but also those

commodity prices trending down all of

these things are pointing to we're in a

recession and quite frankly i

love saying it but the best time to buy

stocks

tends to be in a recession will things

go lower

probably anyway if you want to see

exactly what i'm doing with my portfolio

make sure to go to medkevin.com join use

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we'll see you soon thanks bye