The Coming "Liquidity Crisis" | Stock Market Danger.

next price increase for the courses is

June 1 11 59 PM check the link down

below real estate investing Stock

Investing and of course making more

money as an employee or entrepreneur

with those AI lectures coming out soon

to catch you up to speed with everything

you need to know about how to be more

productive and make more money using

artificial intelligence I just can't

take it anymore it seems like non-stop I

don't know correct me if I'm wrong here

okay but it just seems like for the last

three weeks

all the news stations could talk about

every single day every single day is

it I feel like we've been around the

block long enough to know that the debt

ceiling was going to get passed we said

this with yeah people ask me about

evidence seems like we're getting closer

to default this time or or I mean even

course members are asking me and I get

it because it's all over the news it's

just constant God daily and I'm like

we're raising the debt ceiling it's

going to happen it's going to be

dramatic but it's going to happen people

are like well what odds would you assign

to it come on and I'm like

fine

99.9 chance it's gonna get raised but

there's just gonna be a lot of drama

between now and then

and it's just so exhausting because I

think the last three weeks every single

time you turn on the news whether it's

fox or CNN or at CNBC or it's Bloomberg

it's non-stop it's just dancing dancing

the United States is never defaulted

it's your first time in G5 we're going

to do a Great Depression this could be

so much joblessness and the FED can't

save us and it's the same crap over and

over again honestly I think I I've

become convinced

that the mainstream media is driven by

uh nothing other than okay what is the

next big fear Catalyst and okay fair

like it to some extent especially if

we're trading we want to know what the

next fear catalysts are and we can go

through some of those fear catalysts

right now uh but really the the

exhausting nature of just this incessant

fear over nothing drives me nuts uh I'm

a big fan of like real catalysts like

give me some actual real fear uh and for

me uh I actually agree with this uh this

survey that was done over the weekend

over okay what are the realistic next

levels or or rather the next fear

Catalyst that we should actually care

about like what are things we should

care about uh and the biggest response

uh in the survey came from well a

potential reignition and this is a

reasonable one of inflation and I

thought okay well finally like this this

is actually like a reasonable point of

view uh because we don't nobody really

expects that the next fear catalyst is

is going to be the actual debt ceiling

because at this point so 41 of

respondents were convinced uh that the

next fear catalyst is inflation uh and

uh maybe not necessarily that we would

end up getting a reignition of inflation

but that 41 of people believe the

biggest worry the market should have is

inflation and and that's fair because

quite frankly if we do get a reignition

of inflation then we do actually have

problems to worry about now we've got

more to fall in the stock market because

it's rallied more uh we have the

potential risk of being Paul volckerd we

have the de-anchoring of inflation

expectations and by far I I agree that

probably the biggest risk to markets

going forward is inflation now that's

remarkable because

there really is a there's really scant

evidence of reigniting inflation natural

gas prices in Europe for example are at

the lowest level they've been since uh

right before the invasion of Ukraine

it's insanely low uh you've got uh

shorts piling up on OPEC uh well

basically on oil uh and opec's like you

better not start shorting because we're

gonna cut production meanwhile they're

talking about cutting production

but so far we haven't gotten an

announcement on cutting production so in

other words they're just trying to like

manipulate the market of course that's

that's just what they do uh so uh you've

got you've got that many people worry

about inflation uh and then the next big

fear is is was recession and this idea

with recession is that okay well all

right fine but here's the thing Kevin

liquidity is going to kill the market

that was the next big fear Catalyst that

a lot of people were driving and this

idea is okay well here's what's going to

happen the treasury Department is going

to have to reissue uh bonds as they kind

of run off and then the markets might

have to absorb these uh and and we're

going to see all of this happening at

the same time as you see quantitative

tightening and and that's just gonna

suck all this money out of the economy

and then the economy is going to

collapse this this is sort of the second

like bear thesis so one bear thesis is

okay well inflation and then the second

bare thesis is ship and liquidity crunch

what's crazy is first of all nobody

really knows what's actually going to

happen but the odds are uh things are

probably not going to be as bad as

feared and a lot of uh the the sort of

more moderate people who are just trying

to understand the economy rather than

like push either a bull or bear

narrative a lot of folks are looking at

the reverse repo facility and saying

this is probably the best speed Governor

we have to suggest that even in a

quantitative tightening scenario we

don't necessarily have to be that

horribly worried about what's going to

end up happening with liquidity because

quite frankly we've got plenty of it

this right here on screen is the amount

of money sitting in the reverse repo

facility now now this gets a little

confusing usually when I mention this I

feel like people shut down and I think

there's a very easy way to explain

playing this and think about it like

this okay if if you were a bank let's

say you're a bank and you're responsible

for holding on to one million dollars

let's just say uh and you have a choice

you could take that million dollars and

you could lock it up into uh six month

or one year or five year or ten year

treasury notes and you could lock that

money up and then you could earn let's

say four percent on that money but you

have a lock up right this is your choice

you earn four percent maybe you even

earn five percent on your money but you

have to lock up your cash okay remember

you're the banker now well what could

what risk could that pose if you lock up

some of your cash as as a banker

well we just all learned that in the

last two months you could suffer a bank

run and then go bankrupt right uh

interesting where the phrases came from

so then you have this other option like

that if I have five million dollars you

could just take that money

and what if I told you this instead of

locking it up for six months plus you

could lock it up

overnight oh well how much are you going

to pay me to lock it up overnight

instead of longer term

what if I told you you could actually

earn the Fed rate

of five percent obviously on a banker's

year divided by 360 days so you're just

going to earn one 360th of five percent

but you'll earn it every single night

which is the same as really holding

treasuries because you're also earning

interest essentially your accruing

interest on a daily basis uh so where

would you rather put the van million

dollars well obviously if you're a

banker to some extent you're having some

money in treasuries because they all do

uh but to the extent that you're allowed

to because there's a limit here you're

gonna put as much freaking money as you

can right here in this overnight

facility and this

overnight facility is

this it's the reverse repo facility and

that reverse repo facility is sitting

here with lots of money over

2.1 nearly 2.2

trillion dollars that's a lot of money

and so what I'm finding is that the more

neutral individuals who aren't trying to

push a bear narrative or a bull

narrative they're saying look yes we are

going to go through a massive phase of

quantitative tightening but you have

what you have to consider is the Federal

Reserve is just allowing treasury bills

and bonds to expire at the rate of 80

billion dollars per month

now that's fascinating because the

reverse repo facility itself during the

beginning during this first year and two

months of quantitative tightening that

we've already gone through because this

started in March of 2022. we've already

been at this now for 14 months it's

basically stayed stable which is insane

because a lot of people look at this as

basically a parachute and they say okay

well if you could take 2.1 uh and divide

it by 80 billion dollars per month well

how many months do you have you have two

years you have about 26 months of money

sitting right there so in other words if

all of the money the Federal Reserve

tightened on a monthly basis simply LED

Banks to basically replenish those

treasuries as and that's going to happen

as rates start falling

uh now all of a sudden you could

actually delay the effects of

quantitative tightening for another two

years which is insane but again

generally to make this happen you're

going to start seeing interest rates

come down this is why because now you're

seeing that overnight rate go down

there's more of an incentive on

treasuries long and short of it

there's this massive buffer against this

liquidity fear that people keep talking

about but I do find it very interesting

because there is this there's this

almost desperation I feel like amongst

uh the bear narrative right now to find

another reason why this economy has to

collapse

and the reality is there isn't a good

one so now I'm seeing this constant talk

about but

maybe the debt ceiling isn't the issue

but it's it's liquidity

like okay all right here we go what's

that what's the next argument going to

be and it's falling I'm not here to be

permeable you know somebody left me a

comment the other day that easy for you

to say you're just a permeable I'm like

no I'm the dude in a Hello Kitty Cup

who's going to sit here and flip-flop on

you immediately and tell you about it

immediately

when poopy doopy hits the fan and it's

time to flip-flop

that's it I I I like I'm not here to say

I'm 100 perfect with my timing uh I wish

I originally sold earlier like January

2022 was great wish I originally sold

earlier and maybe I wish I got into the

market a little later but I went from

being completely out one of the first

Finance YouTubers completely out

to basically being completely back in uh

uh you know before before this sort of

Nike Swoosh recovery uh and so the point

is obviously facts are going to change

and I'm looking every single day trying

to study what's the next negative

Catalyst and quite frankly the biggest

negative Catalyst that I see is China

for for people who invested in China uh

you know I've regularly said I'm afraid

of investing in China because I I don't

personally fully understand what's going

on in the government there and I'm not

going to profess to but I also

understand that the consumer is a very

different mindset because they need to

have a different mindset remember during

covid when China got locked down for

like three freaking years guess who got

the stimulus money it was businesses it

wasn't people in China that's why people

in China ended up getting somewhere

around 1 12 the amount of stimulus money

that that we did here in America it's

remarkable

so uh okay so back to this this bearish

uh this idea so inflation which we have

very few catalysts for suggesting that

it's taking off again uh the the

argument that bears like to make when it

comes to suggesting okay well we're

definitely going to have more inflation

is this idea that it's going to be

sticky that inflation is just going to

stay higher for longer basically uh and

the historical context doesn't play well

for the Bears here because the Federal

Reserve is in a position where they are

required

to get inflation down ridiculously

quickly there's there's there's no

mandate that says oh we need to get

inflation down to two percent

immediately that that doesn't exist

instead the Federal Reserve can embark

on something known as opportunistic

disinflation which is exactly what they

did in the early 80s uh through mid 80s

through the 90s and the early 2000s as

long as inflation expectations remain

anchored and after this debt ceiling

deal was reached what did we get oh look

inflation expectations uh rotating right

back down again you can see them here on

the Market's expectation of inflation

it's the five-year break even and we're

at 2.14 we're not that the super lowest

level we've been but you could see the

downtrend over the last year if you zoom

out there you go uh pretty pretty good

downtrend we've hit this lower area a

few times uh we're hitting some of the

lowest levels now this is a really a way

of saying inflation expectations have

been anchored since September which is

phenomenal worst case scenario you see a

skyrocketing of inflation expectations

here kind of like what you did in

February but this was really due to

January data coming in pretty hot thanks

to potentially a warm winter uh then

you've got these year-over-year seasonal

adjustments big mess sort of in February

in terms of the data but a lot of that

ended up being nonsense so yes people

are real bad cabin it's not falling as

fast as expect that's fine though and

that isn't necessarily to suggest that

the Federal Reserve has to act in such a

way that uh uh you know they just

continue their March up uh we could sit

here for for longer essentially that's

the higher for longer argument now what

the market is pricing in right now is a

25 basis point hike uh in uh June with a

56.1 probability so you're basically at

a coin toss for a June hike now Jerome

Powell has said we are at a sufficiently

restrictive level of of interest rates

uh Neil keshkari who turned into to one

of your Hawks which was crazy because

during covid he was super like print

preprint uh and anyway

so he's become a hawk and he's under

this impression like I've been convinced

that we could pause in June and maybe

hike again in July if we need to anyway

Market despite all this is pricing in a

50 chance of a pause here well basically

56 chance of a high uh 44 chance of a

pause in June uh by July interestingly

the market is pricing in a 22 a chance

of two hikes uh and then you really

don't get to a uh uh one-third cut

one-third hold or one-third you're at

5.25 hold being five uh until January

uh sorry that's until uh December and

then you can pretty much confirm a cut

by January so anything 2023 is

relatively uncertain for uh for the

market pricing in Cuts uh as of the

latest read which is fascinating because

that was actually another one of the

bear arguments another bear argument was

but Kevin

as soon as the market starts pricing out

these rate cuts that the market has been

pricing in well then the Market's going

to crash

and it's fascinating because once again

so far that has not been happening and

maybe it is just AI That's driving that

may maybe who knows but it's fascinating

because if you look at the work the

world interest rate probability this is

what you're looking at right now you're

looking at uh the the peak rate being

priced in here for July and you're

looking at being above five percent

until basically December that's what the

market is pricing in right now so all of

a sudden all of this oh the first Cuts

coming in July or September or whatever

all of that has already been priced out

of the market and what has happened in

the last few weeks the Market's done

nothing but go straight up and so it

goes to show that interest rates really

aren't the biggest driver of fears right

now so the biggest drivers of fear are a

second wave of inflation

followed by a recession uh a fear and

this recession fear is is probably more

appropriate than even the inflation one

just because there are so few

indications of inflation skyrocketing

and recession one argues that well come

Q3 Q4 companies uh and and consumers are

going to be in a position where

everybody's just magically going to stop

spending uh and uh and and we're going

to go into an earnings recession and

what I find remarkable about this is

Nike had its earnings recession Nike was

the first company to have its earnings

recession in 2022 the chip stocks had

their earnings recession and Q3 in Q3 to

q1 look at their earnings negative

year-over-year earnings uh the the

consumer staples are just now beginning

their earnings recession you look at

Home Depot you look at Lowe's you look

at Costco the the earnings recession

wave has already been happening for a

year now

and so this idea oh whoa whoa Kevin

we're going to go into an official

recession

okay maybe that that is a risk factor

but then we have to ask ourselves but

does that necessarily mean all of a

sudden the stock market collapses and

the question here is well that depends

what is inflation doing see if we go

into a recession and inflation is

soaring again in expectations of

inflation have unanchored we're screwed

then we get Paul volcker then I turn

into a bear again and I have to

flip-flop again

but if we are in a uh you know a

technical recession much like Germany is

right now

well then all of a sudden you look and

you go okay so Germany is in a technical

recession but remember what that

actually means and I think

when we look at the basic concept of

what a recession is it's actually not

that scary because think about this for

a moment if I told like what would you

prefer okay would you would you uh

rather grow like this okay or uh would

you prefer

uh this kind of growth

and then a little bit of this and then

you continue okay so so obviously this

one has substantially more growth and

just sort of this example I made here

and I'm just being extreme

but the point of this is to say that see

this right here that could technically

be a recession because maybe you've gone

negative for two quarters in a row

now it's fascinating because your growth

is you know what you're like your output

is substantially higher than what it was

previously

and what I think is so interesting is

that as Germany is technically into a

recession and people like but Kevin if

we go into a recession the stock

market's going to plummet really

okay well let's look at Germany's

recession you ready for what Germany's

recession looks like there's an index

that's kind of like the Dow Jones in

Germany it's called the docs

it consists of 40 German Blue Chip

companies okay do you want to see what

recession looks like in Germany just

Google Doc's stock market and what are

you going to get you're going to get

all-time highs over the last year baby

so wait a minute wait a minute well I

thought if we go into a recession the

stock market was supposed to crash

and now this is the argument that as

long as inflation is gone

nobody's going to give a crap if we go

into a technical recession who gives a

oh Q3 Q4 recession oh look at Germany

why does nobody care because there's no

like there's no leading indicator that

suggests we're going to see this massive

second wave of inflation if anything a

slight technical recession reiterates

that we will

so then you really end up with the last

big Catalyst which is policy and I this

is just what's been so exhausting on the

mainstream media is that oh well it's

politics oh just wait just I've already

I'm already seeing it now I'm already

seeing it now people going oh but Kevin

there's an election coming up

oh

like that that's that's just when you

know we've run out of bad news now again

I'm not saying we can't get the more bad

news in fact we've got a quite a few

catalysts coming up consider some of the

catalysts coming up the first big

Catalyst that you've got coming up uh is

a price increase for all the courses on

building your wealth link down below

whether it's investing in real estate

investing in stocks you learn everything

that I know over my entire career about

investing in real estate getting wedge

deals building your net worth buying

below market value real estate

everything I know about stocks and

psychology money and then everything I

know about making more money that is

running a business insurance being an

entrepreneur or being an employee how to

get a promotion how to make more money

how to be a model employee and provide

more value like how do we do that and

the AI lecture is coming soon all of

those courses get a price increase on uh

uh June 1st at 11 59 PM so join before

that that's actually in like two days so

in two days we have an expiration coming

up keep in mind there are various

different courses you could bundle them

up you can bundle them up on the website

or email staff at mekevin.com if you'd

like uh to talk to us uh and um keep in

mind they all come with lifetime access

to the course member live streams which

is pretty cool because every day the

market is open right around the time the

Bell Rings we we go through analysis

fundamental analysis on either real

estate or stocks or whatever and and we

chat which is great so check that out

all via the link down below

so now yes there are Market catalysts as

well like for example tomorrow morning

we're going to get the jolts the job

openings and labor turnover survey the

last time we got surprised to the

downside that these were starting to get

absorbed tomorrow we're expecting about

9.4 million uh job openings we'll see

what happens this slips down more it's a

good sign that we're finally bringing

the labor market back into balance and

eliminates these fears about a wage

price spiral uh tomorrow uh you're also

going to be getting

uh let's see here we'll get a beige book

from The Fad that's going to be

relatively boring uh and then you're

going to wait for about a Thursday which

is June 1st price increase day you're

going to be getting the ADP jobs report

uh that is going that's actually going

to be quite interesting we're looking at

165 jobs 165 000 jobs uh on Thursday as

well we'll get the ism prices paid

survey and then we will also on Friday

we'll have a big Catalyst we'll have the

jobs report coming out which is

fantastic jobs report will be a big deal

we're looking for average hourly

earnings on a month over month basis

moving about point three percent and

you're going to be looking for the

change in private payrolls to be about

173 000 non-farm payrolls to be about

190 000. then we're going to get some

pmis and ISM numbers this is where we'll

get the sort of individualistic reports

on prices paid which are relatively

useful for understanding okay what are

some leading indicators of inflation so

far those leading indicators of

inflation have been relatively soft so

I'm not going to go through all these

really the next big Catalyst you want to

pay attention to is of course June 13th

which will be CPI day we do have a

forecast already we are looking at wow

that's oh my gosh that'll be remarkable

well we are looking at uh first of all

the non the more basic part month over

month CPI expected to come in at point

three we're looking for CPI core to come

in at 0.4 core 4 little sticky uh but

again as long as inflation expectations

are low it's not actually a horrible

thing as long as things slowly start

trending down and we start seeing that

housing roll over as well as Services

roll over and we're not seeing some kind

of new lift off uh year over year though

we're looking at CPI coming in at going

from 4.9

to 4.1 a massive drop I mean that's an

eight point drop right there on uh the

CPI year over year a lot of that though

will have to do with energy given that

our core year over year will still be

sitting at 5.3 but that that will be

good uh the next day you're going to

have a PPI coming out producer price

index along with the Federal Reserve uh

Open Market Committee uh expectation for

either a rate hike or pause the present

forecast by by surveyors even though the

market is pricing at about a 56 chance

of a 25 BP hi economists are still

pricing in a pause so we'll see what

happens uh from The Fad but but those

are probably your your catalysts here

and and quite frankly I I'm just not

seeing a big reason for massive

volatility in in these numbers obviously

we're going to report them we're going

to review them in detail but

I don't know maybe I'm just missing like

the the bear thesis but it's just been

very weak I guess that's just the

easiest way to put it uh and I I really

don't think there's anybody who reads

more earnings calls or Economist letters

or their pieces from Goldman or Bank of

America or Morgan Stanley than me

because that's just what I do it I sit

around and I read this stuff all day

long I actually find it incredibly

interesting and the arguments have just

been really weak uh I mean again it goes

back to sort of like

when you start having the Bears uh have

to either lie about data or make up data

that's when I start going really is

there that little bearish news

uh and and so some of sometimes I see

that uh and I've called it out on

Twitter before as well when I see it or

here on the channel but again if I get

some bearish news I'm happy to report it

but but so far I think um you know I I

um you know this this is not the market

to sit out on uh in fact I hate to say

it but I think this is quite potentially

the greatest uh

potential mispositioning

that that our generation will have ever

seen uh or I should say that people will

have ever seen the generation since I

know people of various Generations watch

me uh I think this could be the greatest

mispositioning you know and I'm not here

to to like say somebody you know did

something wrong or whatever like

everybody everybody makes mistakes and

everybody does things great right and

and your goal is just to do more things

correctly and less things wrong that's

that's always everything any human could

could hope to do is just so make less

mistakes that's everybody's goal

and I I unfortunately I really worry

that the the the carrot of oh well put

all your money in you know Robin Hood

five percent wealth front five and a

quarter percent so five five percent

like all this noise has potentially

created some of the biggest

mispositioning in over a generation

and uh it'll be really remarkable uh to

see what happens when and if we start

getting a that money flowing back into

the economy think for example what the

Wall Street Journal is suggesting The

Wall Street Journal suggests that what's

driving the stock market right now isn't

retail investors because they're mostly

positioned in mutual funds that is at

least with the Wall Street Charles says

it's actually just funds like

institutions Quant funds uh there's a

page on their um

homepage talking about this and I was

reading through it and I'm like my gosh

this is this is terrible for for average

Americans who once again will get

screwed missing out now I want you to

know this when it comes to AI time is

what's going to make you money and if

you can prove that value to an employer

you'll always be able to be employed so

this is another way of making sure that

you don't get replaced