Warning: Stock Market Euphoria is Coming.

it's time to curb our enthusiasm and I'm

saying this because I'll tell you seeing

the 10-year treasury job 90 basis points

from 5 to like 410 has actually LED

people go stupid again in some real

estate markets some of the real estate

markets I'm like and we're going to

obviously talk jobs and stocks and

things in the moment as well but some of

these real estate markets people are

starting to take hard money loans on

again and they've kind of been doing

that for a while but they're taking

these 15% hard money loans and they're

speculating that if they buy something

now in December they're going to be able

to sell it for 20% more in March I'm

like that's not healthy that's like meme

stocks but in real estate uh and and

part of me is just bitter because people

are paying stupid prices on certain

properties and it's like it's fine like

I'll I'll keep buying off Market or or

other ones there plenty of deals out

there but I look at it because I see

those as signs of danger and risk it's

kind of like when you see you know mem

stock Skyrocket like uh the the favorite

one that we absolutely tore a complete

new a-hole uh into which was shot we did

an analysis on this one in the course

member live stream like two or three

days ago and we absolutely wrecked this

one I mean this is just a trash company

completely trash let me put it this way

in case you don't know anything about

this

company what does buying amusement park

supply chain vendors have to do with

women's sexual Health

Pharmaceuticals cannabis and detox

drinks yeah that's this company for you

okay it's a joke uh so anyway look

ignoring that for a moment it is very

healthy for enthusiasm to just stay

tenuous a little bit I kind of you know

I was thinking about it as a as somebody

who is bullish I actually don't want the

insane Euphoria because it makes it

harder to buy good deals like stocks or

real estate it doesn't make it

impossible it just makes it a little

harder let's be real anybody who says

it's not harder when everybody's

euphoric is lying to themselves it feels

easier because you're buying and then

then hopefully things go up and then you

feel like you did the right thing but

you're just part of a Mania

right that Mania is actually starting to

show in data we just got this morning

look at this this is the University of

Michigan sentiment uh and uh these

numbers are absolutely insane you

probably already saw them so I'm going

to save you from just repeating the same

thing that you probably have already

heard about but what I really want you

to pay attention to is just first of all

well two things number one this is the

preliminary read so there's a lot of

volatility every two weeks they come out

with either the preliminary or the final

at the University of Michigan this is

the preliminary read which is just a way

of saying hey like this is just our

initial thought right now this could

change and it does this does change a

lot but the Delta here is insane uh the

difference or or the the rate of change

that you've seen between sentiment here

uh not only popping off from last month

which we were expecting sentiment to go

up but how much sentiment has gone up is

actually really good I think what

happened is you had Israel lead people

think oh no the world's over

uh we're going to go into World War III

Bill Amman saying rates are going to

break through 5% we're going to have the

highest rates ever and that was a very

gloomy time remember October there was

stocks down for three months in a row

very very gloomy outlook on inflation

and expectations for interest rates and

uh individuals expectations for

inflation jumped to you know over 4%

they were 4 and a half% in the last read

now they came in at

4.3 all of these numbers almost

instantaneously corrected which is

incredible because a lot of the data

that we get really aligns with we're

probably more like in a 19 I'm going to

write these dates down because this

these are very important we're probably

and I want you to study these we're

probably more in like a

1952

1983

1994 uh uh somewhere around here these

are probably the moments that we're in

right now maybe even like a

2003 and you'll see that in the data if

you look you have volatility in the

unemployment numbers which you'll touch

on those uh you're coming out of a

recession you're coming out of high

inflationary T uncertainty is still high

I just don't think it's so good to go

back to instantaneous

Euphoria because then we're just going

to Bubble up again I actually think the

Catalyst for a bubble or or quite High

imagine for example the FED Cuts 1% next

year and starts cutting more because

solely because inflation goes down not

because of recession right I think we go

euphoric I mean I think there's a chance

we start getting like 2021 pricing in

again especially after inflation

adjusted mostly because the fed's going

to stop vacuuming money yields on money

markets are going to plummet when yields

on money markets start going down to 3%

or sub 3% again people are going to be

like you know imagine money market

yields were 2.9% and inflation is 2%

people are going to be like what am I in

money markets for for 0.9% they're going

to fly right back into stocks we're

going to go right back to Euphoria and

that's going to make it harder to build

your portfolio I strongly believe that

now and I've been saying this for a

while now at least a year now's the the

perfect time to build to build and to

acquire because when it goes nutty again

we're going to look back and go damn I

wish I bought during the uncertain time

remember uncertainty is an opportunity

uh but anyway when we look at these time

frames these these were actually times

where we weren't walking into a big

recession I mean there's always a

recession coming you know later in like

1955 56 you have uh uh

85 no not not so much 85 you had in 85

you had inflation expectations start

flipping uh way down which was great uh

the Fed was starting to realize that it

took years for people to get over

inflation expectations uh ele being

elevated and actually their expectations

coming down but you had you know 8789

volatile uh

1991 bubble obviously uh but you know

after 2003 you had another 5 years to go

so like there's always going to be

another recession I'm not here to say

there won't be another recession I'm

here to say that is actually coming in

so Goldilocks that there's a chance

we're actually going to set up for

Euphoria again which don't get me wrong

like I'll take advantage of the eia but

I also I I I I want to this to serve as

is almost a reminder to maybe take some

tendies off the table during the next

euphoric run I wouldn't be surprised if

when we get our first rate cut let's say

it's March or it's May it might be May

uh we'll see what inflation does you

know Tuesday's obviously inflation uh

we'll get inflation data then I wouldn't

be surprised to see some Euphoria at the

beginning of this year uh and it'll

start getting priced in very slowly and

people look back going damn that came

off that bottom real fast but anyway

these numbers absolutely incredible but

but starting to get a little almost too

optimistic makes me wonder I mean we

were looking at Delta this morning and

Delta's like oh people were spending

like crazy JetBlue wasn't that happy

JetBlue is like yeah not not for us you

know we're not seeing that kind of

spending like crazy but but Delta's like

there's no slowdown everybody's spending

spending spending okay uh so uh then uh

then let's take a look at another one

here so this is the inflation

expectations chart obviously we can see

it popped off a little bit after the

jobs report this morning the jobs report

this morning is an interesting one uh I

I do think we should understand uh

what's going on with this job jobs

report so this jobs report as we can see

the trend is clearly down on on jobs uh

the longer term trend is about 180,000

last 12 months is about 240,000 we got

199 which was a little hotter than

expected the big problem was that 4%

month over month in the uh wage gains

and there's some issues here because yes

we had 4% wage gains but we also had a

higher paid industry get back to work a

lot of those striking Auto Workers we

had an an employment attorney in the uh

live stream this morning remember I'm

live every day uh totally for free at

525 when the Market opens up you're

welcome to join on the me Kevin live

channel it's a link below but anyway uh

we had an employment law attorney that

said usually after a strike you get paid

your back wages and you go back to work

at a higher pay and so we're all

wondering and trying to calculate is

there a chance that is what skewed the

month-over-month read .1% higher than

expectations it's really hard to tell

though because of a labor force of 168

million even a 30,000 job change doesn't

change much even if you go big with

hourly change numbers you're you're

barely seeing a change so I think it's

it's probably too hard to tell in

between the seasonal adjustments and all

the other craziness that's going on how

much the Striking workers going back had

to do with uh uh these these wage gains

probably what we're going to have to do

is just look at sort of a 3 to six month

longer term average of What wage gains

are doing and a bigger tell for this

economy is really going to be CPI coming

out on Tuesday so uh keep in mind on a

month-over-month basis the the jobs data

feels very very rigged uh we also have

some pretty cool indicators we haven't

talked about this one before but there's

this one called the Sam rule for

predicting a US recession and what it

tries to do is it takes jobs data and

tries to predict a recession to where

when the Sam rule Rises uh to to a

factor uh of of essentially recession uh

with this white bar you often have a

recession almost always actually going

back to 1950 you've had a recession with

the exception of one false positive in

the late 1950s

1959 but right now or the Sam rule is

basically a way of saying hey when

unemployment goes up for I think it's

like three it's on a three-month moving

average more than half of percent

it could be a sign that a recession is

coming it's a way of trying to take the

lagging employment data and try to make

it leading data and uh this softening we

got today is actually a way of unwinding

some of that risk you can see that uh

right here here's the Sam rule a little

bit closer and see that sort of trend

down slightly there but obviously it's

it's a volatile indicator but I mean you

look at the other recessions you know

we're usually even at the beginning of a

recession coming we're usually well into

the trending positive uh it's very rare

that it actually goes down see over here

in 08 it's slowed but it's just constant

Trend up and then it accelerates as you

go into a recession that's not really

what we're seeing here in fact what

we're seeing here is much more

reminiscent to what you got right here

in 2011 see you go positive and you slow

you also got that in 2003 that's why I

was kind of suggesting you know maybe

we're a little bit closer to those other

dates that I got I gave you could look

this up by the way look up realtime Sam

Rule St Louis Fred you can look that

chart up we're much closer to that 2003

2011 which is really just post crisis

and that makes sense I mean look at that

mid 80s here these are post crisis moves

look at that 77 you had another four or

five years before recession here you get

this this increase and then it falls

again so this this going positive right

here that we've seen is not necessarily

a problem it's you know when we really

get on this trend up that it's an early

indicator and this Sam rule fired early

in 2007 and 8 I mean it was firing

starting in November of 27 and really

started going all the way for about a

year and then it just went parabolic so

you had a leading indicator there I mean

look at the dot bubble you had the

leading indicator all of 2001 almost

before you got the parabolic at the end

of 20012 2002

so uh it is it is a tool that we can pay

attention to uh so you know for me what

am I looking for well I mean obviously

CPI data is the most important this is

the best case scenario for Goldilocks

right is that you have employment that

stays strong uh wage gains that average

3% that's the goal is can we get them to

average 3% uh and then of course uh we

we want to see uh GDP stay positive

right that's the goal for Goldilocks and

that's what we're seeing right now uh

the question is can that last under the

weight of these higher interest rates

let's take a look at Nick T who also

gives us these uh aggregate payrolls and

then he gives us some beautiful charts

as he usually does take a look at this

aggregate weekly payrolls for the

private sector you get the

year-over-year numbers as well as the

3-month annualized we can obviously see

this coming back into line of where we

are pre

excuse me pre pandemic which is

fantastic that's the direction that we

want to go uh as far as uh wage gains

themselves probably going to have to

give it a few more months to actually

see okay is that 04 going to stick or

are we going to go back to a0 two we're

going to go back to a three again we

want to average about 3% on an annual

basis for wage gains wage gains at 4% is

the lowest we've seen in this cycle

year-over-year again though is that

month over month number that that uh got

people a little bit concerned uh we did

on a month-over-month basis hit

.2% last month which could be also

because of people being on strike so we

don't know how those seasonal

adjustments come into play those are all

going to be things to consider now as

far as a catalyst CPI is expected to

come in flat month over month next uh

you know on Tuesday 0% uh personally I'm

really I don't really care so much about

the headline number month over month

being zero or 3.1% headline it'd be nice

if that came in at two .9 that'd be

great but what I really want to see is

housing take more of a toll on this and

I'm pushing for a02 on that core month

over month I want 0 2 instead of. 3

that'll be much more in line with

positivity but then again does that lead

to Euphoria uh who knows some will say

I'll just look at the Magnificent 7

you've already got Euphoria but then

again when you look at the Magnificent 7

there is one in the Magnificent 7 that

isn't euphoric and that one's called

Tesla so check that one out so anyway uh

these are some of my my thoughts here uh

bottom line practical implications for

this uh I would say

look we're probably in a place where a

lot of people are going to start moving

from money markets to stocks as this

data comes in more and more benign and

we end up proving that we're in more of

like a like I said a mid 90s uh or a

2003 or 2011 you know everybody was

worried about a double dip recession

2011 was the best freaking time to buy

so uh I'm I'm not a Bayer obviously but

uh also want to be realistic that uh

betting on massive Euphoria could happen

but uh I would at least write down

somewhere like next euphoric cycle take

some profits this just my take anyway

thanks for watching we'll see you in the

next one good luck why not advertise

these things that you told us here I

feel like nobody else knows about this

we'll we'll try a little advertising and

see how it Go congratulations man you

have done so much people love you people

look up to you Kevin PA there financial

analyst and YouTuber meet Kevin always

great to get your take