The Hell of Inflation is BACK | Stock Crash Starts NOW.

some folks are wondering why does it

seem like companies are talking about

how greatly they've been able to raise

prices and one of the problems where

that's coming from is a lot of companies

are reporting their fourth quarter their

their calendar fourth quarter uh or

they're reporting their first quarter

compared to the first quarter of 2022.

and so really what they're doing is

they're comparing this year over year

picture and saying hey look this is the

end of our year or this is the start of

our new year and we're able to say look

how much we've raised prices since then

but that's still understandable it's

still understandable that prices of

course increase between January to

really June July of 2022 so a lot of

companies today and earnings calls are

bragging about how year over year

they've been able to raise prices but

they're not raising prices anymore going

forward and they haven't even raised

prices quarter over quarter quarter over

quarter which is known as sequentially

they've actually either held prices flat

or just been focusing on margin

improvements now I find that really

interesting because a lot some folks are

seeing inflation expectations increase

at the same time and that creates some

problems because wait a minute if year

over year companies are bragging about

how they've raised prices is there a

potential at the same time as we're

seeing inflation expectations at least

in the one-year term based on the

University of Michigan rise and we just

had Bullard yesterday come out and

suggest hey we're gonna have to go

higher for longer and I mean it this

time the banking crisis was a whole lot

of nothing so you know what that means

we're gonna raise rates again oh and

we're gonna raise them to five and a

half to five and five eighths somewhere

around there because we gotta get

inflation down no it's wild because at

the same time as you have this weird

short-term de-anchoring of inflation

expectations long-term expectations for

inflation are still stable not only are

long-term expectations for inflation

stable but when you read any of the

yearnings calls there's no indication

that we're still seeing price increases

uh at any kind of abnormal or concerning

level a price increase around one two

percent that's normal right even three

percent to some extent brings inflation

down but this nonsense about some kind

of runaway Paul volcker style inflation

is potentially giving the market some

heart palpitations and there are a few

things pointing to that reason and I

think that's why you're seeing some of

the indices quite red at least as we go

into market open today and we'll see how

they evolve you know Netflix of course

is usually a little bit of a harbinger

of uh well what's to come and Netflix uh

you know they didn't know the customers

we were expecting we were looking at

somewhere around 2.41 million ads of

customers and Netflix is like yo yo yo

stop judging us based on our customers

judge us instead based on our free cash

flows you know it's kind of like the uh

The Wolf of Wall Street line you know I

asked my customers to judge me on my

losers not my winners because there are

so few of them

it felt like that it's like kind of like

I don't know Netflix you know adding

customers is a big deal and apparently

y'all aren't able to actually add

customers with your new advertising

supported price structure because guess

what when people watch a show people

don't want to watch ads it's simple uh

so anyway uh of course yes they had free

cash flow they had a nice net income

boost but you're seeing companies

actually struggle to raise prices look

for example at Tesla I mean Tesla's

turning into the epitome of price Cuts

now that's on one hand potentially bad

for margin Tesla Model wise are now 29

cheaper than they were a year ago Tesla

Model 3s are 15 cheaper than they were a

year ago these price Cuts come just a

day after we hear that the inflation

reduction act has been extended for most

models of Teslas except up in addition

to that extension they're also dropping

prices by as much as six percent take a

look at this the base model 3 which

actually only gets the 37 five tax

credit basically immediately got dropped

by two thousand dollars as it did lose

the 37.50 credit the model y long range

performance and standard all three of

these have the 30s or the full 7 500 tax

credit that actually got extended but on

top of that extension what happened

Tesla reduced prices anyway so I I'm

like mind blown that there's this

potential thesis that somehow inflation

is still going to be resurgent not just

because we're solely looking at a

company like Tesla but it's because

we're looking at the broader Market

disinflation is here yes year over year

at many companies prices may still be

higher but really now out the

competition is which company can

actually cut prices to compete for fewer

consumer dollars and maximize their

profits and that's actually where

pricing power comes from in a

recessionary environment you have to ask

yourself what product is still going to

attract customers as prices come down

and margins stay high and that's going

to be a big question for Tesla and their

earnings today have they maintained the

pricing power that and people believe

that they have had remember pricing

power is not simply an explanation of oh

pricing power means price goes up that's

actually highly incorrect because if you

think about it that way then what you're

really saying is in a recessionary

environment as demand Falls a company

should still be raising their price but

that would be ludicrous because if a

company we're still raising prices in a

recessionary environment their demand

would probably double or triple to the

downside and what you would end up

having is less operational leverage and

you'd end up having lower earnings per

share profits which is terrible that's

not where you want to be you want to be

in a situation where you're able to

competitively maintain margins grow

earnings per share ultimately that's the

goal of a company and that's what

defines pricing Powers the company's

ability to grow earnings per share with

positive leverage in their operating in

Gross margins so we'll see what happens

but I'll tell you to me there don't seem

to be indicators of inflation but the

market is still concerned about those

indicators of inflation right now and

that's exactly why we're seeing treasury

yields rise and mortgage rates rise once

again Redfin just reported for the first

time year over year that home prices are

down three percent I thought by now

they'd be down a little bit more on the

year over year base basis because Peak

to trough real estate was down somewhere

between 10 to 15 percent but real estate

has actually started to recover in

January and February as wraith started

coming down a little bit and inventory

still hasn't moved up at all this is

despite withdrawal requests from REITs

uh institutional investors suggesting

they're going to sell defaults and

Commercial we're not actually seeing any

kind of inventory search right now and

so even though here's the chart of

mortgage rates even though mortgage

rates are high they're certainly off

their September October even though

those mortgage rates continue to take up

there on the right or just taked up a

little bit on the right bond yields are

up uh the 10-year treasury right now

sitting at 3.63 it's up almost 30 basis

points again

somehow the market is trying to say oh

well now we're not worried about banking

crisis anymore now we're back to being

worried about inflation and I can't help

but look around and see nothing other

than deflation and disinflation I mean

maybe I'm losing it but the one place

I'm seeing prices go up is maybe gold

and Bitcoin which obviously some people

call digital gold but even after the

OPEC production cuts for oil look at

this this is the chart of a Brent crude

so we got oil production cuts that

instantly skyrocketed oil somewhere

around 10 percent and look it's been

bleeding out on the right side over here

we ran as high as 87.50 and we're

already back to 83.16. this idea that

China is going to export a massive

amount of inflation when they reopen and

and after all that inflation is exported

we're gonna see a massive Resurgence of

inflation in America is also dare I say

ludicrous because as China is rebounding

as you can see here a piece from TS

Lombard just yesterday China's Mobility

is rebounding services are leading the

recovery what's happening in China

China's ppis which is the producer price

index epic lows they're negative year

over year on ppis so are we like the

leading indicators are negative in fact

we did a course member analysis uh on

PPI versus CPI and it was phenomenal

because one of the things we were

looking at uh in the chart over here was

uh was you could see the um ppi is the

is the white line over here and then

you've got this sort of blue line of

inflation of CPI inflation where really

housing is just propping up the blue

line and so as soon as housing rules

over in terms of rents for year over

year all we have to do is go flat or

slightly down from the 7.2 percent rent

increases that we're seeing annualized

which is nutty even if you just go flat

this should roll over very soon in terms

of CPI and actually follow PPI down uh

anyway this is something we were talking

about more in the course member

livestream but let's go back to TS

Lombard here oh that does still remind

me today uh is the day before 4 20.

today and tomorrow we're doing a flash

sale uh for the programs on building

your wealth we are getting rid of the

single courses and potentially the

lifetime access as well we're going to

be doing uh something different in the

future so if you wanted to get in the

most inexpensive way now is going to be

the time to do that because it's

probably going to be a lot more

expensive and a higher barrier to entry

going forward so good opportunity to

check out those courses and that uh 420

flash sale link down below but anyway

let's keep going here on inflation look

at this TS Lombard a notable bear folks

a notable bear what are they talking

about

disinflationary drivers Prevail

inflation Outlook improving in a growing

number of emerging economies in fact

expectations for emerging economy

inflation is falling you could see that

right there this is the downtrend of

higher expectation inflations being

replaced by lower inflation expectations

this inflation prevails in Brazil India

China we're expecting it to come in

America but we just continue to

overweight how much rent affects

inflation in America China Services lead

recovery appears unlikely to boost in

exports what does that mean no Chinese

exported inflation that's a big deal

everybody's so worried about oh my gosh

China's reopening is going to create

this inflationary impulsive I hate to

say it but I've been pounding the table

for five to six months going it ain't

gonna happen and the reality is it ain't

happening like okay the Chinese are

going to spend more money on Starbucks

and local traveling but are they going

to spend money and create inflation and

more export uh you know or or they get

export inflation to us no it's just not

happening so now investors are highly

bearish right now in fact fact so

bearish that it almost makes you wonder

like for example looking at Tesla how

much could Tesla really fall after

earnings when people are already so

bearish it seems on the market uh in

fact take a look at this Bank of America

had a piece as reported by Bloomberg

that investor allocation to equities

relative to bonds has dropped to its

lowest level since the global financial

crisis investors indicated that fears of

a credit crunch had driven up Bond

allocations nearly 10 percent overweight

in other words you're you've got people

that are still so fearful about are my

autocratic garage making crisis that

they're flocking to bonds now those

people are already starting to get hosed

because bond yields are rising which

means people who bought Bonds in the

last well three four weeks are already

taking an L on their bond positions and

that's 63 percent of participants now

expect a weaker economy the most

pessimistic eating since December of

2022 and uh yeah here look at this

sentiment turns more bearish in April

most pessimistic thus far in 2023 yikes

look how bearish this is uh these these

little

um lows here I'll highlight these these

lows here show the last time we've had

this sort of bearish positioning my

goodness 2011 and 2012 that was like the

best time to buy right here so was 2004.

I mean you would have wanted to get out

by about 2007 but 2004 was a great time

to buy 2010 still had another low ahead

of it at least in housing but for stocks

it was a great time to buy 11 and 12.

everybody's worried about the double dip

recession which was total bull crap June

of 2019 things were still recovering the

rest of the year after the 2018 disaster

at the end of 2018 uh and then kovid was

a fantastic time to buy personally I

would say

a lot of these times right here were

great times to buy uh I mean I'd say may

I mean 2016 was a phenomenal time to buy

as well uh October of 2022 we're off

those bottoms and uh the stock market

technically bottomed in February of 2009

so you add a little bit more to go over

here in 08 and August of 06 is

questionable

I think it's my iPad this is incredible

this is a little HDMI thing I I can look

at this for a second okay the little

tangent little tangent

look at this

look at this I thought it was the

dongles

I thought it was the dongles so I'm like

I'm just gonna keep trying dongles until

it stops and this is insane I think it's

the iPad this is kooky

that's wild uh anyway

like dongle man over here I think I've

got like 10 of these stupid Apple

dongles and it's insane this is driving

me nuts anyway sorry tangent but you

know what like I'm causing dongle

inflation right now by buying so many of

these dongles I had a I had to return

something some of them are still closed

I'm gonna return them uh because I'm

starting to think it's not it's not the

dongles

um anyway so so people are so worried uh

about inflation coming back but again I

I'm just not seeing it and we're trying

to read Ernest calls on a daily basis to

try to understand where is this

inflation coming from and we really

don't see it uh I mean you again look at

look at the Tesla price Cuts but don't

just look at uh the Tesla price Cuts

look at the prices uh for for lithium

look at the prices for some of the

Commodities what we could even do is we

could look at the bcom index which is

the Bloomberg commodities index and we

could get an idea for a how are we doing

in terms of input prices we already know

when it comes to produce surprises we've

seen producer prices fall because

obviously we've gotten PPI reports and

and reports suggesting hey things aren't

actually that terrible but for some

reason again markets have this

impression that right now it's time to

be fearful again I think if I had to

give an explanation to this and I don't

know with certainty but if I had to give

an explanation to this I think there's a

possible fear that over the next two to

four weeks people are going to be just

solely worried about earnings and if

people are so worried about earnings

then maybe in the short term it'll feel

like there's some fear around uh

inflation but again not when it comes to

actual companies and seeing this

inflation I I don't see it I I don't see

it I don't know I don't see it at all

but again let's let's jump on over to

the bcom index okay so how's the

Bloomberg commodity index doing let's

let's look at some things here so here's

the Bloomberg commodity index I mean it

I think a seven year year old could draw

a trend light on exactly what's

happening on the Bloomberg commodity

index when you go year over year on the

bcom index you're at 107 right now

compared to

131 what do we got 107 divided by 131

that's a decline of 19

18.4 percent essentially that's what

you've got right now uh you've got uh

lithium prices let's pull lithium prices

as well let's get these over here so we

can specifically look uh at uh at

lithium China is complaining about a

glut of lithium oh my Lord look at this

this is kooky dookie uh this is the one

year lithium price index look at what's

happening here I mean you were at 46 4

per ton over here and now you're sitting

at 17 3

17.3 divided by 40 what did I say 44.1

let me double check that uh oh okay 48.3

well let's do that correctly then

48.3 yeah lithium are you serious that I

mean lithium prices in that case are

down somewhere around

um 80 that can't be right hold on a sec

18 2 is actually uh where are we right

now there we go what is that what is

this level right here 18 4

let's try that let's try 18 4 and 46 too

18 4 divided by 46 2. yeah I mean

lithium prices are down like 60 uh and

that's not even off peak that's just off

a year ago off peak lithium prices are

down even more I mean you're talking 18

2 uh from what is that

550 let's go with 55 there we go yeah

you're down about 67 it's remarkable so

everywhere I'm looking I'm seeing

disinflation disinflation disinflation

is it possible it's going to research

absolutely and I'll tell you if

inflation resurges Kevin your boy Kevin

screwed your boy Kevin's gonna lose lots

of money uh because so like yeah maybe

I'm biased but please show me where the

inflation is now every time I say that

people write these comments and they're

like but when I go to the grocery store

prices are still high and it makes me

want to pull my hair out because here we

are trying to talk about more advanced

economic data but we still have to step

back and say bro it's the year-over-year

change in the month over month change

that matters and if prices are still

high but they're not Rising then

inflation is zero you know I think

that's where people are like oh

inflation is rigged fine maybe the CPI

is rigged to some extent but look at

company data please show me companies

other than maybe pet stores and

Aerospace that are still raising prices

trying to find it and I can't see it

everyone's reducing prices and so in a

price cut environment you have to ask

what are the remaining companies that

actually are going to be able to support

the greatest margins in a price

reduction environment

here's an extreme example would you

rather spend money investing in rivian

which just lost its EV tax credit of

seventy five hundred dollars and would

you rather invest in rivian where they

have to spend 280 dollars to get a

hundred dollars in Revenue or would you

rather invest in Tesla where when they

spend a hundred dollar or when they

receive a hundred dollars they actually

have 20 bucks left in gross margin

somewhere around there maybe 20 25 uh

somewhere around there right

so those that's an extreme example of

which EV maker would have pricing power

now then you have to ask yourself well

who's going to have more pricing power

Tesla or a company like and face or

Nvidia maybe there's a flip-flop maybe

those companies end up with more pricing

power but now we're we're dictating

between really the winners of their

industry so

broad schema things here uh I I don't

see it I've been looking at the comments

here trying to find somebody who's

talking about inflation somebody here

says Job Market opening up this summer

which could create a second round of

wage price file there never was a wage

price spiral we were worried about a

wage price spiral it never happened

and what do you mean job openings job

Market opening up this summer I I like

more more job like more companies

wanting to hire this summer it seems

like companies right now we've got this

sort of mixed signal in the job market

which In fairness I'll give some

Credence to this idea that you know

we're not clearly in just a layoff

environment we're still adding jobs

every month but you don't have to look

far to see what's going on with the

Bureau of Labor Statistics and wages and

you don't even have to just trust them

look at the ADP report even the ADP

reports for wage inflation are falling

uh any indicator that we're looking at

whether it's in CPI it's in wages

they're indicating a softening uh in

hourly earnings

not any kind of uh insane wage price

spiral so uh we haven't seen it in the

past year and a half that was a concern

but we haven't seen it so uh I I don't

know about that uh yeah I think it makes

more sense to be worried about earnings

but then if you're worried about

earnings how could you at the same time

be worried about oil going up that

doesn't make sense either right in order

for oil to go up there has to be more

demand but if you're worried about

earnings going down why would oil go

down or why would oil go up rather right

because if company earnings are going

down that means the economy is

Contracting which means oil should be

coming down as well

now I I find it very difficult to make

the argument that oh oil is going to

Skyrocket at the same time as earnings

are going to go down why the only way

that would be true is if if somehow we

had additional uh you know massive cuts

to production but at some point OPEC

doesn't want to cut production either

because even at a lower price they still

want to be able to produce because

otherwise they can't fill their coffers

with cash right so there's a limit to

how much they can they can restrict uh

um

uh production so uh it's it's gonna be

really interesting uh climate change is

inflationary yeah that's a pretty

Republican argument uh we've already

addressed the Chinese reopening but you

know nobody's forcing you to go green

yeah is it expensive to put in solar

panels and a batteries for your home of

course but guess who's doing that rich

people or wealthy businesses are poor

people doing that no or mid-income

earners doing it I hope not hopefully

they're not buying solar leases now

there's this argument that okay but

maybe forcing people to adopt uh you

know or go to an EV strategy but I mean

we're worried about that for 2032 where

we're worried about people having to

maybe offer new cars by EVs and you know

that's just going to get kicked down the

road anyway when we even get close to

that I mean that's like a nine year away

concern so yeah of course to some extent

new building isn't uh is is going to be

somewhat more expensive uh and therefore

inflationary but wait a minute you have

an existing housing stock that you could

buy so see real estate single family

real estate isn't dictated by how much

it costs to build a home it's dictated

by what the market will bear which is

comparative to what all the other hubs

are selling for so this idea that that

uh uh you know climate change is is uh

and the inflation of climate change

honestly at this point and this is this

is I've been sitting here for 20 minutes

asking people to give me where the

inflation is

and the only thing that I've heard is

well the wage price spiral is going to

come back or oil is going to go up oil

is not going up the wage price spiral

there's zero evidence that it's coming

back or going up uh we've talked about

the China reopening not being an issue

we've talked about this inflation and

now all of a sudden we're reaching 10

years in the future going

but in the future things are going to be

more expensive Jesus Christ

there's no inflation uh so so I I don't

know I mean whatever whatever like and

I'm not saying there definitely isn't

any somewhere I'm sure there is all you

could look if you want to say there's

inflation go look at Aerospace there's

inflation in Aerospace go look at pet

stores they're still raising prices uh

and then of course you could look at the

volatile Goods like uh foods which which

move on a month-to-month basis or oil

should be a little bit more expensive

going uh for for our uh April reports

because for most of this month it's been

a little bit more expensive and remember

they they take the months in thirds so

two-thirds of the month is already over

and yeah Energy prices have been a

little higher but uh but I I'm not

seeing it you know

ESG is forcing to go green where where

in your life are you spending more money

on ESG this is this is a Fox News

talking point look I'm not a lot of

people who watch Fox watch me too but I

really want you to ask yourself in your

daily life where is ESG making your life

more expensive in a recessionary

environment it's not

it's not that it's that simple so anyway

that does it for Kevin's rant on

inflation

because I don't see it and it's pissing

me off because I really think the more

the Federal Reserve is concerned about

inflation or this Specter ghost of

inflation the more risk there is the Fed

over tightens and actually causes a

recession would right now

the odds of recession aren't like it's

not it's not a foregone conclusion at

this point

so we'll see

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