oh crap

oh man it's that time the market again

where the Bulls and the Bears are split

is the market crashing is it going to

crash even more are we going into

recession or is this chart something

that could mean we're at a turning point

yeah let's talk about exactly that first

of all Bank of America let's be very

clear there's an analyst that's kind of

like the Morgan Stanley of Bank of

America and he's called hartnet that's

his last name he is is somebody who is

regularly cited in the mainstream media

about his opinions of what is actually

going to end up happening in the economy

currently this person's opinions are

that we are going straight into a

recession for example here he says oil

up 30% after Russia Ukraine but flat

since Israel and Hamas therefore oil

pricing alone is telling you that we are

closer to a recession however and

unfortunately this is substantially

Complicated by the fact that every time

there's conflict with Israel and Hamas

whether they're Hamas Rockets or

conflicts around Israel oil usually

doesn't actually Spike longer term and

even for the medium term I mean

occasionally when we hear about attacks

we see temporary spikes and then

retracements much like we saw with this

last attack so a lot of analysts who

were going a little bit further into the

history of oil price spikes with

conflict in the Middle East suggest that

Israel isn't really a good Catalyst for

actually leading oil prices to spike

that's because even though production

could go down in certain countries

nearby like maybe if Syria reduces oil

production or Iran reduces oil

production you just end up having Qatar

or Saudi Arabia pickup production which

Saudi Arabia prod actually promised

exactly that when The Invasion began or

I should say when the attacks on Israel

began and then of course the

counterattacks started being planned

that commitment was already made so

likely because Palestine and Israel

aren't actually relied on as oil

producing countries in the Middle East

you don't actually use Israel as an oil

producing

Catalyst however Russia on the other

hand is a massive oil and natural gas

producer and the territory that they are

trying to take within Ukraine is known

as the Eastern portion of the denero and

the denque regions which happen to be

where 90% of Ukraine's oil production

comes from so I don't necessarily agree

with the Bank of America analyst here

that oh oil going down is definitely a

sign that we were going into a recession

now I will say there is a better sign

that we're going into a recession which

Bank of America could have used and it's

the Atlanta fed now real GDP report the

Atlanta fed now real GDP report used

uses multiple recent data points uh to

predict what GDP currently is we're

going to quickly Refresh on this and

then we're going to go into what's

likely actually coming ahead of us and

is there a signal in the market right

now that says oh this could be a really

critical moment that could be a big game

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uh this will be your last chance to get

in under $100 between now and Friday of

next week that is Friday the 10th so

what do we have over here with fed now

and what is it going to mean for our

portfolios well here we go so the

Atlanta fed now GDP forecast is

suggesting GDP is barely above 1% and

this fed now forecast was laughed at

because it was suggesting GDP for the

third quarter was somewhere around 5%

and GDP came in at 4.9% so this fed now

GDP analyzer is actually pretty dang

good if I was going to be Bank of

America and suggest that hey hey hey

we're going into a recession I Was the

Same analyst I would have preferred to

use this and that downward trajectory

rather than this oil argument because I

don't think it's as strong of an

argument as they actually think it is

now what some what is something that is

more critical to pay attention to is the

chart I'm about to show you worth noting

that hard net right now is suggesting

you are at a good entry point for things

like gold small caps value Banks Banks

are like at the freaking bottom right

now look at banks at an 80e low versus

the S&P 500 I wrote a little note that

this could be because of uh basal 3

concerns higher uh requirements for bank

deposits uh reserve requirements or it

could be because of another actual fear

about another banking Crisis coming

which personally I think is highly

unlikely since the Federal Reserve has

already turned on the money printer to

end these banking crises uh but anyway

they're talking about investing in

deflationary assets over inflationary so

that would be like gold some will make

the argument that you know Bitcoin could

be that but you know that's that's a

topic for a different video so what's

important now though to look at is the

chart right here look at this folks this

is Bank of America's private cash

allocation so this is going to be

individual depositors at Bank of America

how much money are they allocating to

Cash Plus treasury bills compared to his

history well the historical average is

about

13.6 13 to 13.5% you could see that as

the blue line going across okay great

where do we sit now at

15.8% where is the last time we had this

kind of high allocation 15.3% March of

2020 which was the bottom of the stock

market Yeah March 23rd and April 6th of

2020 were the bottoms and now we are

approaching the highest

levels of cash allocation yet again now

the question is how high does this Spike

go because if you compare to 2009 which

in 2009 in about February of 2009 you

last hit the market look at when the top

was relative to 2009 roughly February of

2009 and when uh that's the the spike of

cash allocation aligned with the bottom

of the market so in other words the peak

of the chart was the bottom of the

market once you start getting an

inflection point where people are moving

from cash and away from treasuries and

away from cash into stocks stock market

bottoms so the question is where do we

inflect down again it happened over here

in March of 2020 that aligned with the

bottom of the market it happened in 2009

that aligned with the bottom of the

market well there's another statistic we

can look at that help helps us get a

little bit more color on this and it's

actually in the Wall Street Journal it's

right here okay the Wall Street Journal

shows the following where I've already

drawn the lines for where the bottoms of

the markets were you could see the 2009

bottom of the market right in the middle

uh that's going to be right about here

I've already drawn that line in light

pink you could see the bottom of the

market again during that Co era right

here already drawn that light of pink

but we added one more we added mark of

2003 which was yet another bottom of the

stock market and this chart by the way

looks a little bit different from the

Bank of America one because this is

institutional allocation you could see

that here Institutional Investor cash

allocation how much are they allocating

to stocks and right now that's sitting

around 22% so about $1 in5 again that's

different from Bank of America which is

looking at their customers their

individuals how much are they allocating

to cash about little you know a little

close to 15.8% so what does this mean

well it means the same thing it

reiterates that we are on a spike up

look on the right side right here we are

spiking up and the bottom of the market

is usually associated with this starting

to turn down as soon as this starts

turning down stocks tend to hit their

bottom and so even though it's difficult

to say that stocks have hit a local

Bottom now it's certainly true that we

can say every time this Peaks the market

starts rallying and the question now is

is it possible that the market could

Rally from where we sit now and the

answer historically has been coming down

to treasury yields treasury yields have

come down about 43 basis points on the

10e within just the last week they came

down 9.2 basis points on Friday alone

that's because Drome Powell suggested

maybe Peak rates are in and if Peak

rates are in you start seeing some more

allocation from cash into treasury bonds

treasury bond allocating starts leading

treasury prices to increase yields to

decrease as that happens people can

borrow money more accessibly and have

confidence that at least the FED has

some confidence that maybe inflation

truly is starting to Trend down

the economy truly is starting to slow

down as we saw with GDP or the weak jobs

report on Friday with negative 348,000

household jobs created that's a lot and

if we continue that Trend with our next

Catalyst being November 13th which is

CPI day if we continue that Trend it is

possible we could see below 4% 10year

interest rates and a rally in the stock

market which then could become

self-fulfilling to where all of a sudden

the substantial cash that sits on the

sideline turns into pent up buying

demand and we go into an end of the year

rally now knock on wood that is a bull

case scenario what could unwind that

bull case scenario a hot CPI report I

think that's likely all it would take

and in fact that could be quite bearish

because if we get a hot CPI report then

what we're stuck with is not just High

rates that we have now but potentially

higher yields that then Skyrocket higher

than where they were before and if that

occurs people are going to start being

concerned about something called that's

very bad

stagflation that could actually lead to

an end of the year crash that some are

saying could be worse than what we saw

at the end of

2022 and that could then lead cash

allocation to actually Skyrocket and

when that inflects down then that's when

we truly end up seeing a bottom those

are the things that people are

speculating on it's worth remembering

all of it is speculation but what we do

know is that in the event reports

continue to come in soft like the CPI

report we're expecting and hopefully it

does come in soft then what we end up

with is hopium that we could go into a

bullish end of the year an end of the

year that actually ends up being quite

green now again that's hope but what you

should do in my opinion is pay attention

to those cash allocations and mark your

calendar for November Tuesday November

14th at 5:30 in the morning I'll cover

it live of course obviously also mark

your calendar for November 10th because

that's when your opportunity to get into

the crash courses for under $100 on

pre-sale ends after that it's over 100

bucks and they're expected to be over

$200 each in the future so your

opportunity to get into them now at a

very affordable price as they're on

pre-sale is expiring so make sure you

get in because after Black Friday I

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check that out again by going to

meetkevin.com now is there any other

data we should be paying attention to

well Catalyst coming up we have trade

balance on November 7th Consumer Credit

will be coming up with an expected

survey of $9 billion of consumer credit

growth we'll be looking at wholesale

trade inventories on Wednesday we'll get

jobless claims expected to be 220 on

Thursday no big change here we'll get

University of Michigan on the 10th again

that'll be when prices for those new

verse Pro courses jump uh and then we'll

be getting the CPI release CPI release

is set for November 14th so mark your

calendar for that and the initial survey

says. 1% on CPI month over month 3% for

core which excludes food and energy that

core read would be nice to come in soft

that headline read coming in soft is

certainly because of energy prices

falling in the last 30 days in October

thanks so much for watching good luck

everyone and we'll see you in the next

one 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 goes

congratulations man you have done so

much people love you people look up to

you Kevin paffrath there financial

analyst and YouTuber meet Kevin always

great to get your

take now I have to read you a legal

disclaimer even though I'm a licensed

financial advisor licensed real estate

broker and becoming a stock broker this

video is neither personalized Financial

advice or real estate advice for you it

is not tax legal or otherwise

personalized advice tailored to you this

video provides generalized perspective

information and commentary any third

party content I show should not be

deemed endorsed by me this video is not

and shall never be deemed reasonably

sufficient for the purposes of

evaluating security or investment

decision any links to promoted products

are either paid affiliations or products

or Services we may benefit from like my

courses or my actively managed ETF which

you could learn all about at

meetkevin.com I do personally manage an

ETF and I do hold various long positions

including those potentially made in this

video however I have no relationship to

any issuers nor am I presently acting as

a market maker