What Cathie Wood (Ark Invest) JUST Admitted about Inflation.

that 40 off coupon code is expiring

within approximately the next week check

it out link down below for the amazing

courses on building your wealth hey

everyone kevin here let's talk about

what kathy would just admitted regarding

inflation and i have to say

this is something i haven't thought of

before this is actually something that

adds to what we've been talking about

inflation this is why i always try to

read

everything i can about inflation whether

i agree with them or disagree with them

because folks

have very different perspectives and i

love it

now many of you who watch this channel

already know that my belief is

that come september and october we are

going to see a downward inflection

in inflation because we're going to be

out of base effect period and we're

going to start seeing companies say hey

it looks like supply chain issues are

starting to let up now don't get me

wrong supply chain issues are going to

last in my opinion

for two to three years and we have some

big benefits

starting in september and october that

reiterate my belief not only do we have

q3 earnings coming starting in october

but we have unemployment ending in

september which should create more labor

supply less wage pressure

and we have schools reopening which

again more labor supply

less wage pressure and overall we should

be in an environment where we are

so distant from the madness of covid and

from the madness of very very high

year-over-year inflationary data and

inflationary

reopening data that's been happening

over the last few months including

massive price increases in

month-over-month data and used cars

a seven percent uh jump in airline

tickets a month over month i mean you've

got some insane

price increases a lot of these things

will subside by september and october

and they're already starting to show

their well the fact that they're

subsiding

so this is why i personally have

believed that we're going to see this

september october kind of inflection

point to the downside in inflation

but what does kathy would say because

this video isn't about my opinion

that just kind of catches you up to

speed a little bit this video is about

what kathy would just

add to this the discussion and

specifically what she said

or what her company said that we have

not considered before

at least on this channel because i

haven't mentioned it yet and i always

like to add to things

uh that that i'm talking about because i

think that's how you get depth

so here's well here's the chart of

weeble and the poison bitcoin which is

not exactly what i was planning on

showing you

and that's because my ipad is unplugged

sorry about that but while we're here i

may as well mention that if you deposit

a hundred dollars

with the weevil by going to bedkevin.com

weeble

you will get yourself up to two free

stocks uh worth all the way up to

eighteen hundred

and fifty dollars okay now that i uh

accidentally plugged that

let's go ahead and jump on over here so

this is ark's investing letter

number 275 the big thing we're going to

talk about this is

is inflation or deflation the bigger

risk to

or opportunity for equity equity being

stocks of course

so i went ahead and highlighted the main

parts here and i'm going to show you

exactly

what the big wow factor was for me so

take a peek at this

during the last nine months in response

to the v-shaped recovery hey it's larry

kudlow's v-shaped recovery

global equity markets are rotated away

from growth stocks

toward value stocks this is true and

they give us a reason why which i think

the reason is pretty

interesting as well touch on that

commodity prices soared increasing fears

of inflation and higher interest rates

while

earnings growth from cyclically

cyclically

sensitive companies offered stiff

competition to that of growth companies

this is actually this is not the big

part but this is something to consider

is like hey when

when does like a cheesecake factory

offer you the growth

that uh that like an apple or tesla does

right

that's pretty rare it's pretty rare that

you're going to see

that kind of uh of movement

uh in cyclical stocks in this case we

call them recovery stocks because

these are retail stocks that have

recovered from the pandemic so

good point you know you had good

competition there and quite frankly over

the last eight months

you would have made a lot more money

investing in those recovery stocks than

you would have

in tech stocks and so this is what

they're acknowledging here that stiff

competition

given the short-term horizons of most

investors in the public equity market

nice slam here at sort of most investors

here calling them short-term investors

but

quite frankly they're not wrong most

people are short-term investors

dramatizing these dynamics so during the

three months ending march

the 10-year treasury bond yield doubled

to 1.74

this was a record-breaking increase for

such a short period of time

but also while others extrapolated the

trend in the future

arc has maintained that inflation would

prove temporary okay that's not really

the bomb there

uh i want to show you though quickly

something that they say here that is

very interesting about the 10-year

treasury bond

so i'm going to pull up the 10-year

treasury quickly this is from bloomberg

so thank you very much

for allowing me to show this bloomberg

take a peek here

so uh what they're talking about with

this extrapolation

is actually something that's very very

good to consider is this is the trend

of uh the 10-year treasury which this

was sort of a reaction to oh my gosh it

looks like big

inflation is coming and this kind of

corresponds with the sell-off in tech

which really began over here

when people started realizing oh my gosh

treasuries are selling off

uh which when treasury sell-off yields

go up treasury yields are going up oh my

gosh

inflation fears whatever tax starts

selling off uh pretty much over

this period right here you have tech

selling off but what you'll notice is

we have this massive slope here of a

rising trend a big inflation fear

they're acknowledging that people

extrapolated this in the future that

we were going to the moon i mean pundits

were coming on cnbc going oh my gosh

we're going to have 2.25

10 years uh no we barely hit 1.74 at the

peak and then we've been down since then

in fact if you draw the trend line down

if you draw the trend line now from the

peak

you can actually see the trend is pretty

well to the downside here

we've got a solid downward trend here

certainly not as fast as the uptrend

that we had here to the downside

but we have a downtrend and we're seeing

that downtrend even more recently here

with treasury yields for the 10 years

sitting around 1.47 right now

okay back to the letter here while

others extrapolated those trends into

the future arc has maintained

that inflation would prove temporary

thanks to both base effects this means

you're comparing

to last year which makes inflation look

like it's larger than it actually is

and keep this in mind we're probably

going to have literally the

opposite happen next year think about

this

and now i know this sounds a little

kooky but think about this for a moment

when you look at cpi data you look at uh

consumer price

index which is a number going up over

time it hit this

hole in 2020 because of the pandemic and

started going up

so when this was april of 20

and this was april of uh 202

or 21 over here when you're comparing

into a hole

you're artificially getting a larger

year-over-year comparison

than if you were actually comparing to

where you would have been headed not for

the

been for the pandemic right well guess

what's going to potentially happen

because we're seeing such an increasing

incredible squeeze

on on inflationary pressure so many

inflationary pressures right now

it's entirely possible that we've

actually seen inflation

temporarily inflect up a little higher

making this even worse this exact

exacerbating this

and it's entirely possible that when we

get used car prices and chip prices and

all this

sort of good stuff start inflecting back

down

and we get sort of a temporary downside

inflection we do a little bit more like

this

it's entirely possible that next april

so april 22

we look back to uh to april 2021

and we actually have a bunch of

inflation measures that

look negative that's crazy it's a total

mind twist and it's really hard to think

about right now

in fact i tweeted about this a couple

days ago

that it seems like a total mind twist

that it's

that maybe and this arc thing came out

today just so you know timing wise

but it seems crazy that possibly in the

future

we could see negative inflation readings

on a year-over-year basis i mean

consider this right here

this right here is my tweet see june

20th today is june 22nd follow me at

real meat kevin

anyway markets will continue to freak

out in different industries through

september and october i believe this is

my opinion

when inflation starts to inflict down

this fall guess what we look forward to

2022 comparisons to high 2021 prices

aka negative inflation doesn't that

possibility feel weird to consider and i

had a little bit more of a tweet storm

that you could kind of

look at here if you want to at realme

kevin on twitter is where you can follow

me

but the point here is whoa bass effects

you're gonna have the opposite probably

next year we'll see anyway back to the

arc letter hero

okay so thanks to temporary bass effects

that's what we just described

caused by price collapses last year

again right here boom

price collapses during the pandemic got

it okay

here we go are you ready for this this

to me was

the bombshell listen to this one i

thought this was great

and due to supply chain bottlenecks we

already know that

here we go that will cause double

and triple ordering of supplies and

a massive inventory overhang

mic drop oh my gosh hadn't even

considered that

this is so brilliant so brilliant i

haven't even considered it thank you

thank you arc invest this is brilliant

like seriously

i had not even considered that because

we're having so many supply chain

shortages

now companies could actually freak

out over the supply chain shortages

because supply chain shortages don't

just make it harder for them to deliver

products to their customers

but guess what supply chain shortages

also do they make it harder for

companies to

innovate because if a company wants to

innovate and release a new product

so let's say they have a version one of

a product and then they want a version

2.0 of the product

well if you have supply chain shortages

you might not have enough supply to

produce both products

so you might literally take innovation

in your 2.0 product

and put it into your back pocket for the

future don't believe me

read and faces earnings transcript folks

it's literally happening this fear

and this disaster of basically

preventing innovation from happening

because of temporary supply chain

shortages

could absolutely lead to what arc invest

is calling the double and triple

ordering of supplies

leading to massive inventory overhangs

where basically you fill up your

warehouse

with a bunch of extra supplies and you

kill just in time

transit or just in time inventory just

in time in

inventory by the way is like the

innovation

of capitalism j a or j

i t just in time why does oops that's

twitter again there we go

why does just in time inventory matter

because think about it folks

if you're assembling a car what that's a

pretty horrible car but whatever if

you're assembling a car

when do you want the tires to show up

when

you just put the frame on the

conveyor belt and you're working on

putting the seats in and the bolting the

roof

on unless you're tesla okay sorry bad

joke

uh and you're assembling the car or do

you want the wheels to show up

when it's about to when it's painted and

it's about to roll off the line and all

you need to do is put the wheels on

the brakes are in the axles and the

motors are and everything's in when do

you want the wheels to show up

do you want it to show up when you're

just at the beginning of the production

process or do you want the wheels to

show up

right when it's ready to roll off the

factory line well generally what you

want is you want the wheels to show up

literally the day like just in time

inventory would be the day you need the

wheels

they show up now obviously logistically

companies you don't generally perfect

this but you try to get to as much of

this as possible because what you don't

want

is to have a warehouse full of products

because those products

are money that you don't have invested

and they represent

products that get old you have inventory

management issues

uh you have quality control issues you

have theft issues you have a lot of

problem

inventor problems inventory on the shelf

is generally the kiss of death

well until of course covet came around

kovitt came around and killed just in

time inventory

and kovitt came around and said you know

who was really smart

toyota toyota was really smart for

hoarding inventory something that most

companies in capitalistic environments

haven't been doing well guess what

kovit just killed jit govind

made it so that jit is dead and we don't

want just in time inventory anymore and

this massive

inventory overhang uh it could

potentially lead to some big

fat fat fat earnings for suppliers over

the next few months

but will also potentially also lead to

large cash outlays for companies that

need to be buying chips and

products and things like this but will

make companies more resilient to future

supply shocks and

also lead to a reduction of prices in

the long run

because there is less pressure to buy

product exactly

when prices are high because you have no

other choice and this is in part

why it's very likely that inflation is

going to inflict downwards we're not

even talking about the fact that we're

in a deflationary society

that technology makes products not only

better to where we don't

need as good of a product anymore we

could do with a less expensive product

i can now do with a 500 phone instead of

a thousand dollar phone 10 years ago

back 10 years ago you want the iphone

you pay a thousand dollars not

considering the uh contract subsidies

that you initially got when you got

iphones

uh now you could do just as well with

the 500 iphone you don't need the most

expensive one you certainly don't need

the 1500

one unless you want those three cameras

because you're a youtuber or something

like that

point is deflation is part of our

society it's part of our future

a lot of these inflationary pressures

are temporary now about 55 percent of

you watching this probably believe me

and about 45 percent of you watching

this think uh i don't know kevin i

appreciate your insight but i still

think we're going to have high inflation

that's totally fine i respect you

because

all of you can equally join my courses

on the psychology of

stocks real estate investing property

management sales and making youtube

videos

via the link down below using that

expiring 40 off coupon code but folks

for right now let's keep going with this

letter here so moving on with the letter

here what do we have

with the exception of oh well they do

believe that commodity prices will begin

to collapse and they've already started

collapsing they talk about

lumber going down 46 percent copper

dropping about 12.7 percent

they believe that oil prices will fall

very soon helping lead to

inflation particularly or leading to

that inflation going away

particularly if drivers in ride sharing

in the ride sharing space take advantage

of the low total cost of ownership of ev

ownership

yeah i don't know about that one i think

we're a little early for um people

getting into eevee ubers

but we'll see maybe certainly hybrids i

could see that but uh

i think the downtime might be a little

bit of an issue still with charging so i

don't think we're there

yet on that but otherwise i have to say

this is very

very very interesting i appreciate this

from arc

thank you shout out to arc really good

job hadn't considered inventory

overhangs

uh certainly i'm on the same i'm on a

similar wavelength

as them on a lot of things some of our

stock picks are a little different but

that's okay hey you know what

everybody's got different opinions

but i've got a very similar outlook to

arc

with some differences this phenomenal

thank you thank you very much appreciate

you watching this video please if you

liked this kind of content

consider subscribing when you press the

subscribe button it sends a big signal

to me and the channel that you want more

of this kind of content

thank you so much for watching we'll see

you next time