Why the Stock Market is Falling

hey everyone we kevin here the

functioning of the market has a

flip-flop so we've got a very weird

thing happening in the markets i am

going to show you what is happening and

then i'm going to try to explain what is

happening i am also making trades so if

you want to know every single trade that

i'm making whether it's a buy a sell a

crypto an option a short term yolo i

label my trades as either trades longs

yolos high risk low risk all of it in

the stocks and psychology of money group

link down below get that 40 off coupon

before the price goes up thanks to

inflation by september 24th use that

link down below okay let's get into

what's going on so first thing we're

going to do folks take a look at this

you should be extremely familiar with

this chart by now this is the 10 year

treasury yield it is extremely important

to follow this chart because it's really

weird what's happening right now so

here's what's going on

first

remember what happened at the beginning

of the year we rallied in january when

the 10-year treasury was at its lowest

point we had a rally over here

then as soon as this chart went up so as

soon as these bars went up stocks

started plummeting we had a plummet

around february 19th which is right here

where my mouse is

in the stock market because all of a

sudden it's like oh my gosh look at what

treasury yields just did and then they

kept going up up up up up march was ugly

and may was ugly too as 10-year treasury

yields stayed high

this was because the market was fearful

of inflation when the market feared

inflation treasury yields went up

because people didn't want to own bonds

when people don't buy bonds the price of

bonds falls and the yield goes up so in

other words this line going up was bad

we did not like this line going up

because it was bad inflation dues not

good up bad okay so the reverse would

then make you assume that well down is

good and when we were falling into april

the market actually recovered we went up

when when the yields fell the stock

market went up this was true over here

february through may when rates went up

again the yields went up again the stock

market fell again in fact look right

here february 12th is the peak right

here february 12th is a day that i put

about one and a half to two million

dollars into the stock market because

everything was at insane lows obviously

every time buy sell i send alerts on

these things but look at this you go to

february 12th i mean or not february

12th may 12th this was a low period

right here look at this end phase closed

for a hundred sixteen dollars it's uh

you know in the 160s right now tesla on

fed on may 12th was somewhere around

599 was the closing that was a big low

look at almost any tech or larger cap

stock or even smaller cap stocks almost

everything was low on on the 12th of may

it's crazy okay but

there's something really weird that

happened because so far we understand

this line up bad we saw the line go down

in april good line up again in may

really bad like the peak here literally

lines up with the bottom of the market

right so this should be really good

right the 10-year going down that'd be

good right

well

not necessarily because something really

bizarre and freaky has been happening in

the market and it's easiest to see it

when i go to the one month chart because

i finally found it i have finally found

it

take a look at this go to the one month

chart take a look at what's happening

here

so there's a pattern here and it's very

very bizarre

look at the two points where this chart

is at its lowest

that would be today roughly we're close

to a tie here on the 30th but that's

roughly today so maybe call it three

points roughly today

and clearly august 18th 19th and 20th

which if you look at a lot of stocks for

the 18th 19th and 20th

go to let's say let's type in end phase

here

go to the day chart zoom in over here go

to the 18th 19th and 20th and you're

actually at a low just like you kind of

are now

go to neo for example

neo

same thing 18th 19th and 20th red

similar place today let's go to square i

haven't checked square let's see square

not we're lower now but these were also

low days over here 18th 19th 20th these

were low periods maybe not necessarily

the lowest but they were low periods

and so the point is to show that

something interesting is happening when

the 10-year treasury yield falls

the stock market falls look what

happened today

10-year treasury yield falls

but wait a minute

the 10-year treasury falling is supposed

to be good for stocks that's what we saw

throughout the year but that's not

what's happening now and there's a

reason for this i'm going to explain

that but first why did the 10-year

treasury yield fall well the 10-year

treasury yield fell

because we got inflation data today big

inflation data came out today for august

that is not september october yet i just

want to be very clear i've always said

that i believe we're going to get a nice

inflection point down in inflation in

september and october

i could be wrong but september october

readings do not come out until

october and november they lag a month

right so hopefully we see that

inflection point down we've already

though in the august reading seen a

flattening and a slight curve down like

the curve is starting we're on the right

trend of inflation inflecting down we

had a year-over-year inflation at 5.3

percent instead of the expectation of

5.4 we had month over month inflation

coming in at 0.3 percent rather than 0.4

we did not see rents increase

larger than we thought annualized rate

of 3.6 that's not a big explosion we did

not see wages and and service prices go

up as much as we thought in the

inflation report which is good we saw

used cars go down we saw airline

airfares go down we saw lodging go down

we saw a lot of segments in the cpi

report that have been high go down like

used cars

these things have been skyrocketing

right so this inflation reading led the

treasury yield to fall

now remember early in the year treasury

yield fall means stocks go up

and and this sort of last month treasury

yields go down and stocks go down and so

now it makes sense

that all of the indices are virtually

red and i say virtually red because when

i started filming this the nasdaq was

red but now the nest egg is of course

green when i'm filming it but it's

barely green it's like it's basically

red it's like embarrassingly green it's

like you may as well be in the toilet

nasdaq come on get with the program

follow the other ones but anyway

why folks why why why why why what

changed what shifted the market to all

of a sudden have stocks go down when the

10-year treasury goes down well here is

the answer for you

and it has to do with short sellers and

this as well i'm not going to re-explain

the short sellers here shorting 10-year

treasury yields and getting out of their

short positions i'm going to go a little

bit more broad i'm going to get out of

the bond discussion here we've talked

about short sellers in another video so

if you're thinking about that yes that's

related but that's separate i'm gonna go

a little more broad here

what's happening is the markets are

finally

baking in

fear again they're baking in valuation

fear they're doing that because we're

getting slower growth forecasts the imf

the world bank the eu america economist

goldman sachs morgan stanley whatever

for the last two weeks they've all been

whining and complaining like little

weenie baby pansy babies going

i kind of wonder if growth has topped

out and if growth has topped out then

stocks might not perform that well

anymore so in other words

treasury yields now falling

is just become a rebranded sign of

rather than oh few inflation's not going

to be here rather than that the market's

now rebranded inflation or treasury

yields falling as oh well wait a minute

that means growth is slowing that means

wait a minute maybe we actually need the

taper to continue because the economy is

not as strong and stable as we

previously thought and wait a minute all

this money that consumers had and the

personal savings rate skyrocketing wait

a minute now we're realizing it was

mostly due to stimulus from congress the

three stimulus checks unemployment

payments all of these things were

propping up the market with this fugazi

fake printed money that's temporary and

the market was essentially pricing in oh

my gosh everybody's spending money like

crazy this is this is never gonna end

everything's great and the market's

pricing in these like perfect growth

patterns for all these expensive

companies these high earnings companies

or or high p e companies price to

earnings ratio companies right uh you

know tesla apple what what i mean apple

not anywhere close to the the price

premium that you have to pay to get into

tesla but the point is people are

pricing in oh my gosh people have so

much money people keep spending but now

it's like wait a minute no no no the the

well of cheap money has stopped from

congress we're not getting stimulus

checks anymore yeah we've got the child

tax credit but we're not getting the

unemployment payments anymore uh and and

so a lot of the money that's being

injected in the economy increasing that

personal savings rate has now evaporated

the latest reports show that the

personal savings rate now is almost flat

compared to prior to the pandemic which

implies that growth might slow down then

we look at air travel slowing down sure

delta is having an impact but it's not

just delta it's the fact that the

economy is slowing down which is

actually something that jerome powell

predicted jerome powell said we would

have a burst of inflation when the

economy reopens and we would have a

burst of spending when the economy

reopens but then we'll probably go back

to normal and we'll see that burst of

spending go away and that's why

inflation might be transitory because

people aren't going to have all that

money forever to continue spending

remember folks to have inflation

continue you can't just say prices went

up 10 oh my god hyperinflation

no no inflation has to be persistent

our airline tickets going to go up 10

from 100 let's say to 110 and then

another 10 to 122 and then another 10 to

you know whatever 134 or whatever is is

that just going to continue on and on

and on and on

probably not you're going to see prices

go up to 110 oh my gosh 10 percent

inflation and then 108. oh two percent

deflation approximately right amounting

uh and so that's what's happening and

part of it is happening because people

and i think the market is starting to go

wait a minute

jpow was right

not only is inflation likely to be

transitory but that burst of spending

was just temporary which means those

insane growth rates that we're pricing

into all these consumer product

companies are now going to slow down

because people don't have the

discretionary spending anymore and

people aren't going to be buying

pelotons like crazy anymore they're not

going to be buying all this clothing

like crazy anymore they're not going to

be buying uh computers and iphones and

ipads and all this junk because a

they've already bought it kind of like

kathy wood says they've already bought

their refrigerators they've already

bought their cars they don't need

another one

right uh but in addition to that they

have less money

so now we re-brand and it's weird how

the market flip-flops but it's just

worth identifying why is the market

falling well it's because this chart

going down is actually a symbol of

weaker growth

so if i go back to year to date

it's so weird but over here at this half

of the chart

inflation was the big concern which we

knew that inflation was coming it was it

was like everybody look i made videos at

the end of november and december of last

year going just a heads up we're going

to get a lot of fun about inflation

we're going to hear non-stop about high

how high inflation is go on my tech talk

scroll down to my bitcoin prediction

video and you will literally hear me say

it on january 6th we're going to get a

lot of fun about inflation boom that's

what we got it's also around the same

time we have this insane crypto rally

which might according to my latest

twitter poll of of those of you who

follow me at real meat kevin on twitter

48 of you invest in crypto as inflation

hedge makes sense inflation was the fear

here crypto goes to the moon

now the chart has changed the chart goes

down uh oh the economy's weakening wait

a minute we've overestimated earnings

for companies oh crap

and crypto's kind of trading sideways

you know it's recovered from its lows

but it's kind of trading sideways so

what does this mean for investing going

forward well i'm looking for

opportunities as usual but i'm very

interested in covered calls i love

selling options in this market i am

selling options into this market i'm

interested in selling puts i'm

interested in selling calls i am

interested in in buying cheap

opportunities when i find them uh

personally i'm i'm keeping an eye on win

i've not bought anything here yet i'm

watching uh the momentum stocks we're

getting like these these day trader

momentum stocks like um a tyrion like

just getting destroyed today down 28

makes sense it's a momentum stock uh you

know dave and buster's down four percent

uh amc down three percent no no i don't

see huge opportunities here poshmark is

one that has just been getting

devastated i'm curious if there are

opportunities there that's another one

that i'm kind of keeping an eye on as

well as wayfair uh but uh looking at uh

looking at some of the other stocks here

i'm not necessarily seeing an

opportunity in etsy at 217 right uh

matterport at 8 15 or 8 50. too

expensive to me uh a square at uh 250

too pricey right now peloton my goodness

sell like too pricey at these prices

uh tesla

at 750.

okay but i mean i'm not buying it right

now over 700 apple 150 not buying it

right now i'm kind of on standby i'm

looking for those individual

opportunities kind of like when hippo

was at you know four dollars and ninety

cents that was exciting to me when uh

and and i still think hippo is exciting

536 okay so what's up what is that 10

percent 10 15 percent some of the other

fight uh ran up to about seven dollars

that's too rich do i think hippo's worth

536 yeah i think it's a good deal here

under six dollars i think it's a good

deal uh it is an older spec though so

expect spock respect volatility right uh

a firm at uh at these prices here very

expensive to 112 very expensive in my

opinion uh especially with no amazon

revenues

to be seen yet probably not seeing them

for another three or four months before

we actually get amazon revenues no

thanks this would be something that in

my opinion i'm more than happy to sell

calls on on a green day like today

uh which remember anytime you want buy

sell alerts check out the program's link

down below where am i looking for

opportunities well i'm looking for

things that are beaten down and

depressed that i think have the

potential of running you know red redfin

for me is very interesting but uh and

it's gone down substantially about fifty

percent from its peak here i bought a

lot of this company between ten dollars

and thirty dollars so my cost basis is

very low but it's nowhere near what it

used to be

and so it makes me wonder okay is this

going to come back or is it just going

to be kept down because of potentially

this fear of slower growth the slowing

real estate market and potentially

interest rates going up or all three of

those could be weighing that stock down

docusign has fallen off of its 300 highs

271 still a little bit rich but these

are ones where i'm looking at okay we're

selling down a bit 269 on wayfair

despite the fact that the cpi report

today showed inflation and furniture

that's interesting to me those are those

are individualistic opportunities here

look i have the cpi report right here

bedroom furniture up 0.9 percent living

kitchen dining room furniture up 3.8

other furniture 1.7

it would be worth looking at the

earnings call for wayfarer and seeing

what kind of pricing uh issues they're

potentially seeing uh with with their

products or you know in the inflation

side uh in fact let's just go do it

really quick let's look at it together

quickly so let's go to wayfair and and

pull it up these are the kind of things

that i'm doing and when i see

opportunities that pounce on them uh

obviously you can't expect that i'm

always right uh and and i don't expect

myself always to be right i make

mistakes too but i'm looking for those

opportunities most of my portfolio about

80 of my portfolio is in long positions

so i just don't play with that 80 plus

percent but the other percentage uh cash

uh

crypto

and uh and just money that i'm that i'm

kind of bouncing around or trading

between stocks hey uh i like doing that

it helps me keep tabs on the market

and uh it helps me understand where to

place long positions and long bets too

take a look at this so here's wayfarers

earnings called

these long lasting supply chain issues

have also resulted in inflation yeah no

kidding we see that in cpi report too

see this actually predicted inflation

right here this earnings call here this

earnings call by the way is from august

5th

so you know that's over a month ago

that's five weeks ago we're working with

suppliers to pass through some of these

higher costs while paying close

attention to consumers reactions to

higher prices so in other words how much

can they pass on to consumers creating

that inflation

so far we believe customers are

generally absorbing the higher prices

reasonably well though operating the

operating environment is very fluid yeah

maybe

consumers are paying those higher prices

a month ago while they were still

getting stimmy

now the stimmy's up are they still going

to be willing to pay these higher prices

or is this going to be a a potential

issue for wayfair going forward

where we have a view of cost pressure as

being more transient we're being

thoughtful

as to how to reflect that to the end

consumer

okay so they're starting to already be

sensitive to like oh we're starting to

see elasticity and demand shrink here

you know people are less interested in

paying higher prices uh and so they

can't pass it all along which hurts

profitability for a company like wayfair

but uh you know those are the things

that i want to pay attention to uh do do

we think they

you know can we go to their website what

are their website analytics like what

are their pricing uh you know what's

their pricing like online can i call

their call center and figure out like

hey you know uh you know what what's it

been like working here the last few

nights things uh the last few weeks have

things been slowing down or picking up

you know little things like that are

always things that you could do when you

do market research

all very very important these are the

kinds of things that i do but i am

looking at i'm looking for dips hippo's

got the hippo the last three days has

had a nice dip uh i still think 536 is

is a bargain of the company

i've got a covered call when this thing

ran up to seven dollars i sold a call

uh for seven dollars and fifty cents

like way out of the money and i got a

fat credit for doing that

and uh those are the kind of things that

i like doing when stocks run

euphorically and seven dollars was way

too high a nice little you fork run but

right now that call option gave me

a

here it is

that call option gave me a credit

of 32

500

and if i wanted to

uh

buy that back right now

i would be up profit right now if i

close that 20 grand on that covered call

but i'm going to hold on to it

so

that's awesome i love having those

covered options especially since it's a

30-day contract uh it's only got 30 days

left on it so that's 30 grand in 30 days

that's that's a thousand bucks a day

like that's awesome

i'd love to covered calls especially if

i'm will like 7.50 cents golly if it's

at seven dollars and fifty cents why

would i not sell it you know so anyway

that's great love that so uh yeah great

awesome well that's my update on kind of

what's going on market

what i'm looking for what opportunities

i'm hunting for

and uh hey stay tuned subscribe to the

channel if i see a big opportunity

obviously if i trade on it right away i

send alerts uh and then if there's

something bigger that i love i make a

video about it i've made videos about

hippo and affirm love them a firm's a

little rich right now not buying more of

a firm right now

uh bought most of my shares in the 80s

bought a little bit at 108 and on pause

right now willing to sell covered calls

or to sell covered calls

in terms of uh hippo

cheap cheap right now uh but uh there's

also downside risk because it's a spec

spax get rubber banded down so keep that

in mind but anyway folks thank you thank

you for watching this video and we'll

see in the next one thanks bye

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