holy $h*t

hey everyone me Kevin here boy oh boy I

have figured out who is capitulating in

this video we're going to talk about

exactly what the heck is going on who's

selling who's using margin we're also

going to get a bit more color from the

FED which uh adds to the video that we

talked about yesterday new information

from this morning we'll talk Walmart

we'll talk uh Target we'll also talk

about some ironic statements from Home

Depot like absolutely ridiculous uh

You're gonna laugh over this one all of

this while Tesla was just kicked out of

the s p 500s ESG index which is just

like do you need any more evidence that

it's rigged when Tesla's like the leader

in environmental efforts of course uh

you know they're complaining oh but you

know Tesla's have crashes and then

they're battery failures and stuff and

you know their corporate governance

isn't great for work-life balance or

what geez oh my gosh oh it's raked

anyway uh but first I I have to really

quickly apologize so we have a really

large announcement that we're working

really hard on coming within the next 30

days it's that series a that we've been

talking about uh if you haven't put your

info yet met kevin.com series a those

anybody who puts their email there will

be a second in line course Members First

for the uh for the series a launch so

that'll be really exciting uh but I said

I have to apologize uh I have to

apologize because uh we've been so

freaking buried with like a pitch deck

and and attorneys and all this crazy

stuff we are just logistically so buried

and I've got so many emails from people

that are like please please uh you know

help us get an answer on which bundle to

get or uh can you extend it a few days

I'm getting paid in a little bit so what

we're gonna do long story short is we're

going to extend the coupon code for the

programs before we have that largest

price increase ever sorry about that uh

to the end of the month it's just going

to be easier logistically because then

we'll be done with the attorneys and all

our paperwork and everything and we can

just go into June all set so I just want

to apologize it's it's my fault uh if I

had more staff it would be easier but

don't worry we will get that solved okay

so now I want to talk about uh kind of

what's going on in the market because

it's a mess and then we'll talk about

the other things I alluded to so first

look yesterday I made this analogy that

it's kind of like we're on this Wave

Runner right uh and uh I think the

easiest I'm kind of adapting that

analogy a little bit they got wave

Runners down there by the way but uh

changing the analogy just slightly I

kind of think that in this market you

almost want to be like a volatility

Trader I'm not but you know some people

are you almost kind of want to be a

volatility Trader where like you're on

the Wave Runner and sometimes you go oh

you get hit and that hurts uh but at

least you're kind of moving around and

dodging the waves as you can but if

you're a hodler uh just to give you a

feeling as to what it's like imagine

you've got a volatility trade or driving

your Waverunner and you're bobbing

around all the waves and you're holding

on to the back of it and you're just

you're just getting your face slapped

and pummeled in the water as all this

stuff is happening and like your legs

are flailing everywhere that's kind of

what it feels like to be a hodler right

now you know one day Tesla's up five

percent the next day it's down five

percent down five percent down five

percent up five percent it's a disaster

right so if you're a hodler it's a hard

time and so a lot of people are actually

starting to capitulate because of this

because a very hard time and so I want

to talk about who's capitulating first

of all if we look at retail you've got

retail still buying about 1.1 billion

dollars per day now that's pretty

consistent with uh the the daily buy

volumes that we've had really for the

last year so you haven't seen much of a

change there no huge decline or increase

so retail is still buying together but

there's a massive difference in how

people are buying so retail younger

retail buyers uh continue to use a

margin to buy the dip especially folks

over at Schwab they're noticing that

margin account balances are going up

while actual net account balances are

going down that's because the Market's

going down and people are using margin

to buy more stuff now this is a sign

that potentially younger more aggressive

retail investors are trying to make up

for prior losses by either using more

risky option trades or by just going

into margin to try to hopefully amplify

their gains on the upside and make up

some of the prior losses now this is the

complete opposite of apparently what's

happening to older retail older retail

and wealthier Retail they tend to use

mutual funds and we're seeing net retail

selling in mutual funds and so this is

quite interesting because it reminds me

of my family in 2008 when they're like

oh my gosh our 401ks are getting

decimated let's sell everything I'm like

thinking to myself dude that was like

the worst possible time to sell and so

it's kind of interesting that right now

you've got younger retail being in my

opinion stupid by using margin you

should not use margin to buy the stuff

that we're have patience 2022 it's going

to be a long year uh don't even March in

have patience but buying I like I think

that's a good idea I think selling by

wealthier and older individuals to

reduce their exposure to equities I

think it's stupid I think it's also

stupid so I think everybody's stupid how

about that uh no I don't really think

that but in terms of flows uh it's worth

noting that AMD seems to be having the

most retail outflows whereas Apple seems

to be having the most retail inflows

followed by Tesla Nvidia Microsoft

Amazon and then Google Facebook Netflix

Baba and Neo sort of in those in those

groups there now regarding recession the

suits seem to think some of them seem to

think it's already priced in some of

them think there's only about a 44

chance of a recession in the next 12

months others are starting to get upside

Hedges I like seeing kind of what the

Suits start saying and what they start

doing and when they start getting upside

Hedges they start getting a little bit

excited uh no guarantees I mean

obviously the nasdaq's down like 3.2

percent of the time this recording but

that's that's a way of preventing fomo

and I actually think it's a really good

strategy now it might cost you a lot of

money and it's worth noting that and

there are ways you can minimize that and

for example if you buy upside calls you

could also like sell some puts or sell

some calls but uh and then that way

you're paying a little bit uh less of a

debit right so the big thing though is

when people get upside Hedges I actually

think it's very smart because usually

upside Hedges are designed to prevent

you from taking on excessive risk when

there's still downside potentially left

in the market so for example you get

some out of the money call options where

you're like it's okay if this goes to

zero I just don't want to have fomo if

the market runs the reason you do that

is to prevent you from going like all in

on margin and then the market plummets a

lot more because you go all in a margin

and then the market plummets you get

liquidated now you go bankrupt you uh

have an upside call and the market

plummets you uh you you lose the premium

you paid okay big deal that's better

than going bankrupts and getting

liquidated right it's the same it's like

but if the market runs you'd make a lot

of money being all in all on stocks and

margin but you'd actually make

potentially the same amount of money

with your upside calls so it's just it's

just a safer strategy if you are trying

to prevent fomo to have some you know

out of the money upside calls just no

volatility is very high so you're

probably gonna get all crushed as well

so it is a risky game to play so uh you

know sell some calls and puts to kind of

offset that a little bit now uh it's

also worth noting that remember that a

bear market and a recession are

different in 1987 we had a stock crash

nicknamed Black Monday and we did not

have a recession just like in 1990 we

had a recession caused by an oil price

spike but we did not actually have a

stock crash so if you think about it

they're they're just because we might be

in a recession now or we might be

heading into a recession recessions do

not necessarily have to correlate with

stock performance especially if those

recessions are caused by things like

trade deficits or wholesale inventories

or things that are really disconnected

from the consumer so keep that in mind

uh we're pretty much you know right now

we've seen seen a sell-off that's much

more similar to 1973 and 1975 personally

I think that's a substantial oversell I

think the market is quite oversold

because I think the market believes that

there's no way inflation is going to go

down and they're winning the battle

right now personally the reason I'm

buying stocks is because I believe that

inflation will go down so you kind of

have to make that expectation right

remember if you think that we need to

get Paul volckert like I said in January

you should not be in the stock market if

you think the fed's going to pull vocals

get the hell out of the stock market uh

Charles Evans actually gave us a little

bit of clarity this morning so yesterday

we talked about how high I think the

Federal Reserve is going to go uh in

terms of above the neutral rate and what

the market was expecting so uh Mr Evans

from he's the president of the Chicago

fed he thinks that the neutral weight is

somewhere between 2.25 and 2.5 and he

thinks there's a chance we might have to

go half to three quarters of a percent

above neutral to really be restrictive

for a long enough period to get

inflation down that kind of implies

going to about 2.75 to 3 percent at the

FED funds rate that's roughly already

priced in uh the odds of uh sitting at

at 2.75 I believe we're about 36 percent

and three percent we're about 44 percent

so the Market's kind of already

expecting that this is good because when

the market already has that scenario

priced in it means even when we get to

that 2.75 or three percent we've already

seen damage in the market now we've got

to talk about some of these crazy crazy

consumer numbers that came in this

morning and the insanity the absolute

Insanity of the uh the Home Depot report

like you will not believe this but

before I tell you this we got to get to

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Titan so now let's talk about this okay

Target complete disaster so comp sales

actually beat three point three percent

versus 1.17 that's great Top Line beat

but what happened to the bottom line

well the bottom line was a disaster

Evita came in at just over two billion

dollars the expectation was two uh and

two-thirds billion dollars operating

margin is forecast to be just six

percent versus over eight percent

expected we missed on adjusted EPs and

the stock has had the worst decline of

over 20 that we've seen since 1987 in

the Black Monday crash the executives

say that their margin is being hurt by

actions to reduce excess inventory folks

that's Kathy Woody and right there when

you start seeing companies that are like

okay we have excess inventory that we

gotta dump that's Kathy woodian remember

what she says she says Hey companies are

going to see that Supply chains and

Freight are going to ease and then

they're going to end up having over

ordered and then they're going to have

to dump this stuff they're going to have

too much stuff

and so that's what we're seeing here in

addition to seeing over an excess

inventory they're still seeing higher

Freight and transportation costs and

they say quote many of these costs will

persist that's like the worst thing you

could say is that p word for the Federal

Reserve by the way

uh they also noticed a quote dramatic

change in sales mix in q1 to lower

margin items they see people spending

less money on listen to this apparel

home and hard-line goods jeez man what

have I been saying since January I've

literally been saying it since January

we're going to see people spend less

money on stuff like Nike Under Armor

clothing and all that kind of stuff uh

even household goods why because the

lower demographics get hit the worst

when we have inflation people making

under a hundred thousand dollars a year

as a household income are going to spend

less on clothing and and uh the like uh

this is why I have always felt that

Tesla is slightly more insulated because

you actually appeal to a higher income

demographic around that 140 000 range

those individuals some people speculate

will also cut back but that's not what

we're seeing it's literally also what

Target is saying Target is literally

saying that we're still seeing higher

end Goods sell really well like uh

gaming consoles but at the same time

you're seeing the lower income

demographics spend more money on private

label Goods rather than brand labels so

in other words store labels or private

labels versus brand labels this stands

in contrast to what Procter and Gamble

said in q1 Procter Gamble said hey we're

still seeing people go for the the brand

names like Gillette or this that or

whatever but no this is a red flag for

Procter Gamble if you're in it Target

and Walmart both of them are saying no

no people are starting to shift uh to

cheaper stuff and they're also shifting

from goods and from Goods to experiences

which is obviously outside of Target

they're also seeing a reduction in big

and bulky Goods which would be like

Furniture beds gazebos whatever Walmart

had a very similarly embarrassing and I

used the word embarrassing because

that's literally what they described it

themselves on purpose and they

complained about the first quarter being

a disappointment being embarrassing that

labor and fuel cost spiked that

inventories also Aid into profits listen

to that now obviously you had three

major issues by them one was expenses

number two was inventory uh and then

number three was the same thing that

Target saw Freight and fuel costs they

also mentioned that what people are

spending per cart is up like think

shopping cart but the number of items

they're buying is lower and they're

seeing a quote shift away from

discretionary more into food and

consumables and wow surprise surprise

same thing as Target less apparel less

patio less Landscaping stuff look at

that starting to see those cracks and

people actually trying to spend on

having their homes nice this makes sense

folks this is literally Playbook what

happens with inflation people stop

spending money on stuff except the

Richer people who can continue to

sustain until they can't you know at

some point if a recession lasts long

enough wealthier people stop spending

money as well too where they start

tightening their belts so we'll see uh

now uh okay yeah now Home Depot all

right this was an interesting one okay

this was ridiculous so first of all I

just want to finish there on Target in

Walmart

this is not a surprise these are your

lower end consumers that are getting

whacked we expected this to happen it's

literally what's happening I think the

same thing is going to happen with Nike

Under Armor Lululemon uh you name it

consumer discretionaries we already know

e-commerce consumer discretion areas are

Untouchable and there's a reason I have

stopped using them also uh I was asked

yesterday we did a course member meet up

here in Miami yesterday it's really cool

I post a picture of it on my Instagram

story a lot of you came out I was really

really surprised how many of you came

out it was really cool but uh one of you

asked and I thought it was a great

question yes hey well what about a firm

uh you know you had mentioned that in

the earnings call you know they say that

uh the usage of a firm actually goes up

in a recession and I'm like yeah you

know I thought about that a little bit

it's true usage goes up during a

recession but maybe that was only during

the 2020 recession see that's when a

firm's been around was during the 2020

recession and maybe usage went up

because people knew they were going to

get their stimi checks or their

unemployment checks so they're like oh

I'll just use a firm now and pay it off

later right by now pay later but what if

this recession is different what if this

recession lasts substantially longer

people are like ah I'm not going to be

getting a stemi check to pay this debt

off let me just not buy in the first

place so I'm a little skeptical because

of that and remember for me as much as I

like a firm in their business model and

their Partnerships and I think they're

great I I can't hold them in a recession

because what happens if this recession

lasts for another six months well if

this keeps going for another six months

or it keeps going for another year or

two what happens folks well what happens

is people stop paying and what's the

what's the recourse for something you

bought on a firm and then you don't make

a payment nothing I mean maybe they'll

hit your credit but if you're filing for

bankruptcy anyway your credit's gonna be

screwed anyway it's not like they're

going to come to your house and pick up

the Peloton bike you bought like they

have no recourse they can't they can't

take your plane ticket away from you

that you already flew on you know so

what they do is they hit your credit and

then they kick you out of the program

well in a recession if people are going

BK anyway who cares oh wow I can't use a

firm anymore oh well you can't even take

the stuff away I bought you know it's

like

you know it's it's it's it's not

something I could be in in a recession

anyway then we get to Home Depot folks

this was a disaster okay Home Depot they

were bragging about how good the report

was but I read the earnings call and I'm

like y'all are dumb they're like oh well

uh 90 of our do-it-yourself customers

are homeowners and most of our Pro

customers like contractors work on

behalf of homeowners okay well that's no

surprise to me but then they're talking

about hey a lot of our homeowners have

fixed rate mortgages and only like four

to five percent of homes sell a year so

we're not really worried about Home

Depot sales being affected by the real

estate market even though people have

more Equity than ever before and people

are feeling so happy about their equity

in their homes right now that they're

spending more on their homes I'm like

geez well uh Home Depot you don't

realize what you said they literally do

not realize what they just said they

literally just said hey we are really

really exposed to people's home equity

going down well what do I think is going

to happen in the real estate market I

think Equity values are going to go down

prices are going to go down it's going

to take a while it's going to take six

to 12 months for comps to actually hit

first we got to get to neutral levels of

inventory then we got to get to excess

levels of inventory and then we're

actually going to see pricing

potentially go down if we do see that

pricing Go Down Home Depot is going to

be at risk they're literally telling you

oh yeah prices keep going up so much

that's how we continue to uh you know

have more sales over at Home Depot and

how we have such strong demand okay

great well what happens when Tucker

Carlson starts talking about prices

going down and home equity evaporating

guess what happens then people ain't

that happy anymore to go spend in Home

Depot it was really moronic that they're

so blind to that and I feel like I

honestly feel like people on Wall Street

just do not understand real estate and

I'll try to Pat myself on the back here

but like I'm a ground up kind of real

estate person I didn't go to some Ivory

Tower to learn about real estate I

learned real estate you know work is

selling Quonset Huts and selling selling

the bottom end stuff that exists to

finally move up to expensive real estate

I've sold every level of real estate

that exists and every type of real

estate I've worked with industrial

commercial you name it uh real estate is

something I really feel confident about

uh and I'll always feel that way but

anyway I guess we'll see okay good so we

talked about Evans yeah wow okay very

very I think thorough update that's

everything I got for you thanks so much

for watching check out that coupon code

yes it's extended I apologize for that

it's my fault email me if you need help

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48 Hours thanks so much bye