8 Mega Catalysts that could CRASH the Stock Market [July]

everyone meet kevin here in this video

we need to talk about eight massive

catalysts for july if you are investing

in the stock market you need to know

about all eight of these and no it is

not that the programs on building your

wealth have an expiring coupon code on

july 28th you already know that that

would be redundant that would be just as

redundant as saying that 70 of the s p

500s market cap reports by the end of

the month at this point that's obvious

we already know that the prices on the

courses on building your wealth are

going up and we already know the value

increases exponentially with the prices

instead let's talk about catalysts

catalyst number one is gdp and boy oh

boy do we have a lot to talk about about

a gdp gross domestic product when it

comes in at a negative read for two

quarters in a row we are technically in

a recession now there is still a bureau

of economic research that technically

needs to define that yes we are indeed

in a recession they don't necessarily

use the technical definition of

recession they define a recession by a

significant decline in economic activity

that is spread across the economy that

lasts more than a few months and

generally they look at a few things like

depth diffusion diffusion excuse me and

duration and generally generally what

they're looking for is a big weight on

personal incomes and employment figures

but folks i don't know how many people

actually care about the national bureau

of economic research and their opinions

okay these suits opinions as to whether

or not we're in a gdp recession i think

what markets are going to look for is

look q1 folks q1 of 2022 we had negative

gdp i don't care what the number is i

don't care what the suits say if q2

comes in with a negative gdp read

we're in a recession we are in a

technical recession and folks are

going to

freak out mostly the mainstream media my

expectation is you're going to have sort

of the tucker carlsons and the anderson

coopers trying to figure out ways to

blame why we're in a recession you know

you'll have anderson cooper suggesting

that it's uh it's um you know mitch

mcconnell's fault and it's joe manchin's

fault and tucker carlson will say it's

joe wyden's fault you know it's it's and

of course nancy pelosi's fault you know

it'll be just the typical uh but on july

28th we're actually going to get that

gdp read so mark your calendar for july

28th that's the same day as that coupon

expiration but that's a big one

now remember the economy did shrink

slightly in q1 so again a slight

negative read over here means we're

probably technically in a recession it's

kind of tough though to to even consider

that we might be in a recession given

that we just added

372 000 jobs in june which seems pretty

remarkable but

you know it's this kind of uncertainty

that's also leading to some crazy

estimates in fact if you are a bear

you're probably already familiar with

the atlanta federal reserve's estimate

of gdp in fact if you just jump over

here you'll see that the atlanta federal

reserve

suggests that for the second quarter we

are probably seeing negative gdp to the

tune of negative one and a half percent

see where this circle is down here this

is the suggestion of where gdp is uh

based on sort of current indicators and

if i go ahead and draw a line here at

that zero percent level you can see

anything below it indicates that we're

in a recession and you can see this

really started over here in kind of uh

well q q 2 really starts right over here

and you can see we sort of bobbed at the

beginning of the quarter around

potentially negative but we certainly

felt negative here in june and uh or

rather in july right here right here we

were still slightly above it which

creates some what of a potential

argument that okay well maybe the second

quarter will actually be spared because

again if i draw a second quarter here

with a red line here and i'll draw a red

line right about here

you can see it looks like we really

turned negative with the atlanta gdp

either slightly right here

but certainly here in july now this

creates a little bit of an issue because

if we have a q1

negative read but then we have a q2

positive read and then we have a q3

negative read technically that's not a

recession that's problematic we're not

consistently growing but it's not a

recession because we don't have two

consecutive months of or sorry two

quarters of consecutive gdp declines

right now bears like to use the atlanta

fed estimate of gdp

bulls like to use the saint louis

federal reserve's estimate of gdp

which right now actually sits for the

second quarter at 4.11

so you can see how like either

manipulated or just off estimates are

given that atlanta for q2 has a sitting

over here

nearly negative

and the st louis federal reserve doesn't

even have us going negative once over

here not even presently here as of july

15th so it shows you the numbers are a

little bit skewed the the fact of the

matter though is it just highlights the

importance of

july 28th so mark your calendar for this

day it's a very very important day it's

gdp read it will determine whether or

not we're in a recession or not it's

coupon expiration day so it could be a

double sad day because prices go up and

and we might be in a recession which is

kind of remarkable uh okay so that's the

first most important catalyst

uh and and i would certainly say that is

that is by far very very important

though we do have some other quite

strong uh catalysts the second catalyst

has to do with housing starts those

actually come out today 7 19 we are

expecting 1 million

580 000 housing starts

we'll have that number around the time

that this video comes out so you'll be

able to see the headline news on this

and we'll see what what kind of housing

starts we get housing starts are really

important because they're sort of a

leading indicator as to what home

builders are thinking about the real

estate market home builders if all of a

sudden we see a big miss in this and

let's say we got a number like 1.2 mil

could be sort of an indicator that oh no

home builders are really concerned if we

get a beat

then then that could be a sign that home

builders think hey the housing market

sure we might you know housing market

may have boomed we might slow a little

bit here but we're going to go off to

the races again

and housing starts are a good leading

indicator to try to help us understand

what what do we think could happen in

the housing market

so housing starts those will come out

today pay attention to those

7

26 we will be getting consumer

expectations

quite important to see what a consumer

sentiment really is and their

expectations for business development

though probably not going to be as

important as the catalyst on the 27th

which on the 27th we're going to get

retail

inventories now this is a pretty

important number that we will also get

some insights from through earnings

right remember that you can go to the

balance sheet of any company and you can

see the uh

the inventory increase quarter over

quarter or year over year and it's it's

quite fascinating to see the transition

in how much inventory companies have

very very important because this can

become very deflationary or i should say

disinflationary remember that inflation

means that this is a zero percent line

where prices stay stable

inflation means that prices are above

that let's say a four percent increase

here so positive four percent and if we

get disinflation that means that prices

are slowing down their increase maybe

now they're only increasing at a rate of

about two percent and then of course

deflation would be a decline in prices

now do keep in mind and this is probably

one of the most important things to

think about inflation and

this is something that actually

makes inflation

somewhat difficult to stick around you

know a lot of folks like to say oh no

inflation's going to be here forever

we're just going to keep seeing these

inflationary reads it's very very very

very difficult for that to actually be

true and there's a particular reason for

that and it has to do with base effects

so what that means is

if you have a hundred dollar widget that

sells for a hundred dollars today and

next year it sells for a hundred and ten

dollars well how much was the inflation

rate well in this case the inflation

rate was ten percent if the year after

that

the uh the product was also selling for

a hundred and ten dollars then in this

case the inflation rate was actually 10

compared to two years ago but year over

year was actually zero percent

and now if we see inflation go to let's

say 105 well now we've actually had

negative uh it's slightly less than that

it'd be like negative 4.9 percent

inflation

and and so we've actually now seen uh

deflation in in this kind of example

so here you would have no inflation this

would be deflation which is prices going

down and then disinflation is another

example here where that hundred ten

dollar product the next year goes to

let's say a hundred and twelve dollars

and uh even though it's slightly less

than this just to make math simple that

works out to approximately a two percent

increase well this inflation means

instead of having 10 percent inflation

like we had here we now have two so when

you go from 10

to 2

that's disinflation when you go from 10

to negative that would be deflation

right and then obviously inflation is

continuing to see that number increase

and inflation is exactly why on the 27th

we're also going to see

massive movements in in markets because

it's fomc day on the 27th we will get a

decision from the federal reserve in

terms of how many basis points to

actually hike interest rates we have a

lot of estimates in terms of where the

terminal rate is going to be for the

federal reserve the terminal rate is

sort of the end point in terms of how

much people believe or markets believe

that the federal reserve is going to

increase interest rates be that 3.75

percent or 4 which are roughly the

current estimates before the federal

reserve begins to soften again and

brings those rates back down to maybe

more accommodative levels around three

percent and eventually closer to a

longer run average which the fed is

trying to achieve of about two and a

half percent now the federal reserve

right now is also going to likely have

to give us a lot of commentary on

whether or not we actually think that

commodity prices coming down and

inflationary costs uh coming down in

energy uh are going to

affect the the future outlook of the

federal reserve in other words put sort

of a slightly different way if the

federal reserve comes out and says hey

you know we're seeing all these

commodity prices fall we're starting to

see disinflation we're seeing

inventories build up then that could be

seen as the beginning

of sort of a federal reserve u-turn

and

that

could be priced into the market very

very nicely by rewarding long-term

investors if the federal reserve says

you know what we're seeing these

disinflationary signs but they're not

enough yet we need to be hawkish then

we're going to get a stronger rate hike

and we're going to get a more hawkish

and verbal federal reserve telling us

that the fight isn't over we might see

some prices coming down but so far

inflation is broadening which it did in

the last cpi report it's rising which it

did in the last cpi report and if

anything it's getting worse and we need

to make sure that we prevent a wage

price spiral and service based inflation

like insurance is going up for cars or

health insurance is going up because

costs for labor or whatever are going up

right now the federal reserve is

expected with a

63.8 percent probability to hike by 75

basis points

and there is a 36.2 percent probability

that we actually see a full one basis or

100 basis points or

one percentage increase in the fed funds

rate this would leave the federal funds

rate at

2.25 percent on the low end or 2.5

percent on the low end if we get that

full one percent which goes to show that

if we're trying to get to 3.75 to 4

there's still quite a bit of tightening

to do at the federal reserve and and so

this this idea that the federal reserve

is ready to u-turn anytime soon is is a

little bit hopium based but it's also

built into this idea that well markets

are going to try to price in that future

u-turn somewhere around six months

before it actually happens so even

though the fed might still have

six months of tightening ahead if

markets are already assuming that the

fed is going to loosen their trajectory

at some point in the future then markets

will potentially start a bull run or at

least a relief rally substantially

before

the federal reserve actually u-turns

although and this is important to

remember that's not actually what

happened in 1987 when the federal

reserve first set the precedent of

bailing out markets

it's not what happened in 2003 it's not

what happened in 2009 it's not what

happened in 2018 and it's not what

happened in 2020 in other words in all

of these years it actually took the

federal reserve

actually u-turning not just talking

about u-turning for markets to bottom in

other words markets did not bottom until

the fed actually u-turned and

accommodated the markets by stimulating

the markets of course many folks today

say don't worry this time is different

though the four most dangerous words in

investing are

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more

okay uh the next thing that we have is

that's on the 27th that is at 11 a.m

pacific standard time and then at 11 30

we will have comments from the federal

reserve the very next

day we'll have that gdp report because

remark your calendars this is going to

be 7 27 the next day you get gdp

reporting coupon expiration

and then on the 29th we're going to get

a number that the federal reserve very

actively pays attention to and it is the

university of michigan consumer

sentiment and consumer expectations

survey

so far we've actually seen inflation

expectations not only anchored but they

in the last read rotated down we want to

see that continuation of either

stability or rotation down because if

this survey comes in hot on 729 expect

markets to go red because that's usually

what turns the federal reserve hawkish

the last thing the federal reserve wants

is for inflation expectations to become

anchored folks frequently asked me kevin

how is this different from paul volcker

in 1979 1980 1981 the difference is very

very simple it's one word it is

expectations

that's it expectations of the bond

markets measures of inflation which are

usually the 5 and 10 year break evens

don't worry so much about that but

consumer expectations also critical

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wealth and thanks so much for watching

bye