Yikes. Fed JUST issued ANOTHER Warning.

oh boy it's getting hot in here we just

heard from the fed and we got some

valuation numbers to talk about as well

as what else is going on in this economy

and what to expect in the coming weeks

it is a doozy let's go through all of it

uh first S&P 500 PE ratio is at

21.6 that's the highest we've seen since

around the end of 2021 you know that

last major runup we had before the

substan IAL 30 to 40% sell down in

2022 the S&P 500 mag 7 sits over 27 with

a PE ratio and the S&P 500 price to

sales ratio just logged its highest ever

figure at 2.87 times we've never seen a

number higher than that on a price to

sales valuation now part of that could

be because frankly you get a lot of

software service businesses that well

let's just put it this

way they don't take a lot to the bottom

line of earnings but they still collect

money in terms of sales it's kind of

like micro strategy this morning briefly

on the opening live stream and then more

in detail in our course member live

stream we went deep on micro strategy

and we're like hm this company's losing

money Handover fist on its

services and its Book value is sitting

at more than3 three times in terms of

market cap what it actually has in book

in Bitcoin net of debt in English

Bitcoin dollar here at like 11 market

cap here at like 40 and then use losing

money to make up that $30 billion

valuation differ okay uh anyway uh it

seems like after that course member live

stream the market actually started

finally turning on micro strategy I

don't have any shorts on it but I did

see it go from uh positive to negative

pretty rapidly uh in just the last uh

few hours actually conveniently right

after the course member live stream it

seems like it just tanged but anyway we

did also have Governor Waller come out

with some numbers

and this is uh setting up for a little

bit of a doozy here Mr Waller from the

Federal Reserve just warned that

payrolls in part due to layoffs we're

hearing about over at B which

substantial right weaker companies issue

layoffs first because their stock is

already hammered stronger companies

quiet layoff and then layoff in effect

later than uh weaker companies this this

makes sense Governor Waller sees

payrolls at the beginning of November

coming in 100,000 lower and even though

the labor market right now at a snapshot

is healthy it's important that we keep

lowering rates and the direction is

clear we're going to go down with rates

that there's a long way to go between

now and neutral which is probably

somewhere between 3 and 3 and 1 12% per

the FED lower in my opinion uh and he

indicates the direction is clear the

problem is how much is the labor market

going to weaken and and this is

obviously you I mean you already know

this this is where I'm like um y'all

flying really close to the Sun let's

just put it that way uh this next Labor

report that I'll read you out the you

know prediction right now it comes out

November 11th which is crazy to say but

that's just a little bit more than 2

weeks away that means we'll be going

through Halloween already in about 2

weeks and 3 days crazy so I got my

little uh woke Halloween cup here what

do you think about that look at that

woke Halloween my friends mhm #

notsponsored they can't afford it anyway

uh November 1st change in non-farm

payrolls expected to come down from

254,000 to 110,000 so that $100,000 drop

is being picked up by markets uh now the

or the 100,000 job drop there is being

picked up by markets the question is

will it come in even lower than that and

how much are we going to revise that

prior 254,000 report of course we also

get a lot of earnings between now and

then so we have to be cautious to not be

too much of a bear here I mean after all

hey you know things might be slowing

like advertising demand at Google is

slowing but they're still making money

hand over over fist and yeah I know

numbers might be a little weird like the

bull case for NVIDIA is so high it's

literally triggering hope and dream

charts and the fact is the numbers are

going off the

chart let me translate that this is a

fancy way of saying right now we're

seeing the highest ratio of valuation at

Nvidia that is not explained by its

forward three years earnings projections

that we have seen since September of

2000 translate it just one more time I

feel like I'm kind of just like running

it through the filter okay Nvidia damn

expensive and it hasn't been this

expensive since September of 2000 now I

actually when I calculate it on a PEG

ratio I don't see it as as horribly uh

explosive so it depends on sort of what

metrics you're looking at it from I

think a lot of people are very enthused

by nvidia's blackw chip and

understandably so I mean there were

originally concerns that Blackwell was

being delayed uh and uh this was sitting

around basically $110 $108 as a stock

and now it's sitting at

$139 so when you divide that you're up

275% wow uh since concerns about

Blackwell and really you started Rising

when Jensen went on Jim Kramer's show on

CNBC and said oh demand is infinite

there's there's no limit to the amount

of demand demand is so huge for the

Blackwell chips nobody knows Blackwell

better than I

do H I've heard that before uh and then

the stock traded sideways and down for

the next three years but what is really

interesting is I've been reading this uh

and this is not not sponsored here but I

I've been reading this and I found it

very interesting because to me uh this

book is kind of given me a little bit of

um how should I put it uh perspective uh

I really enjoy it The Art of War a lot

of people have been recommending that I

read it probably because some people

have heard uh you know how I you know

internalize things or look at life and

uh one of the things that I just came

out of it was this idea

that if you are true to yourself you

will win battles and you will lose

battles but if you don't know what your

truth is you will always lose and I

thought that was really interesting

because honestly I feel kind of lonely

I've been a bull since like November of

2022 and I'm like Nike Swoosh volatile

Nike Swoosh we're going up up up up

we're going to the Moon baby and I've

been so excited to be a part of that

runup but but since like July I've

turned a little bearish and it's very

very lonely now I recognize that comes

across as like okay well maybe that's

just like you're losing battle period of

time but I like I haven't changed my

mind I haven't changed my opinion since

July people know this people who watch

the channel they know this and every

single day I'm like okay like is this

good or bad or how you know where does

this fit in does this make me more

bullish more bearish uh and this was a

really interesting uh quote so in honor

of that and there's no pressure but you

know you want my analysis or whatever on

like oh look Celsius is really expensive

and then it drops uh what 50% in value

it's crazy after a course member

analysis plummets in value after our

course member analysis on McDonald's a

few months ago the sucker up like 20%

it's amazing also invested McDonald's

but uh I know it's kind of crazy to hear

right but yeah I mean we saw Celsius

pricing power going down and McDonald's

pricing power go up and wow surprise

surprise McDonald is doing really well

but uh in honor of this book again not

sponsored here but we made a uh coupon

code called Art of War that you could

use on the courses we haven't actually

had a sale in like what feels like a

week or two certainly at least one week

so if you want to check those out over

at meetkevin.com and be part of all the

course member live streams and the

entire archive going back to what 2017

or 18 or something like that go to me

kevin.com but anyway I do want to just

sort of add my opinion here I do think

that the market is trading on borrow

time with where these S&P 500 and NASDAQ

uh valuations are uh I do recognize

because you know I was one of the the

earliest people to S Suggest this I do

recognize that if you take the NASDAQ

and you take the prior all-time highs uh

which would be right here about 404 if

you just sort of look at it this way

right uh and then what you do is you add

in inflation so you basically multiply

it by you know maybe 28% you get to

about

517 which gives you like maybe another

four or 5% upside from here just in

inflation adjusting now usually earnings

should be catching up with that

and they're not they're not keeping up

with the same pace of inflation because

earnings are getting squeezed and that's

what makes the market feel expensive

earning should be catching up faster but

they're not because companies are losing

their pricing power there are very few

companies with really good pricing power

right now everybody's really struggling

and even though McDonald's has shown

signs of increasing pricing power it's

still a little floppy I mean it's still

a little you know it leaves something to

be desired okay it's like is is this

working or not anyway what I sort of

have believed and I watched for this

every day is are are we really flying

with a gas tank that's still pretty full

to where we could price in a no Landing

or are we flying on Vapors like we're

out of gas and it's just sort of like

the vapors that are left in the engine

that are burning or in the tank uh and

and it's really hard to know what's

going on because the engine's starting

to sputter in some places and you know

the seats on the plane are starting to

Rattle a little bit and it's kind of

like okay it's like do they just kind of

need to hit the thrust and go oh okay it

feels a whole lot better or or you know

are we going down nobody really

knows but what seems to be based on

where evaluations are it seems like we

are pricing in the usual postelection

upside and we're pricing in artificial

intelligence fully we're pricing in

energy upside fully for artificial

intelligence nuclear energy is getting

priced in as well uh and even though

we're seeing

earnings projections for this next

quarter coming up here get revised down

we think we're going to beat those

handsomely so you know you kind of look

at the market and you go Okay cool so

like you're kind of not pricing in a

recession you're pricing in a no Landing

you're pricing in AI keep growing

forever and energy upside keeps going up

forever where's the downside prot

protetion and so I was studying this a

little bit and we actually are starting

to see downside protection finally start

Rising again it's one of the reasons why

despite stocks going up we've actually

over the past few days seen the

volatility index move up uh this is

pretty rare if you look at the vix uh

you'll find the bottom was around uh

September 27th and then again the second

week of August but the volatility index

has risen throughout really the end of

September and first week of October and

people are like why is volatility going

up stocks are just going straight up

it's that hedging that's starting to

come into the market now some people say

that another thing that we're seeing

right now is a little bit more of a

pricing in of Donald Trump potentially

winning Bitcoin for examply examply wow

I just made that one up Bitcoin for

example might actually be moving up for

this idea that markets are pricing in

some more Donald Trump now uh you're not

going to find that on the average of

polls though a lot of people just say

the polls don't matter they skew uh

Democratic in terms of a survey

participation uh I I don't know why that

changed over here when Trump was leading

for all these polls but whatever another

thing people do is they say well you

know Trump's now leading and these polls

haven't shown it yet because of the

government's lackluster hurricane

response you go to the Electoral College

map and we've still got a lot of these

swing States up in the air Georgia North

Carolina Pennsylvania Michigan Wisconsin

Minnesota

uh you know you've got Nevada and

Arizona over here so still TBD on some

of these uh but uh we'll see where those

end up and then if you look at the

betting markets you actually see Trump

at 53 and poly Market taking the lead at

about 55 to 45 now what's interesting is

if you actually look at the volume of

these and you click on let's say Donald

Trump uh the top 10 holders of votes Pro

Donald Trump make up about $34 million

in bets like this one Freddy guy has

like 14.6 million uh and you only have

about 19 million in bets on Harris and

we started seeing volume explode for

these sort of bets right like the two

days after Elon Musk met Donald Trump on

stage there we go uh right here he met

him on stage on the sixth and then like

right when the news cycle starts on the

8th volume spikes and it stays elevated

now that's either elevated we're getting

close to the election or who knows maybe

somebody is trying to rig these markets

by buying up the order book cuz really

these predicted markets yes people put

their money on it but it'd be really

smart for these you know super packs or

whatever to just throw money at this

because the mainstream news covers this

stuff daily and if you just buy out the

order book uh you know you you pretty

much always be in the lead uh anyway so

keep that in mind when it comes to some

of these polls but I I do think you're

getting some Trump pricing right now uh

and and what's interesting is I think

this cycle rather than having election

uncertainty in September and October

before the election we actually might

have it after now I know that sounds

crazy because usually you have less

uncertainty after but I think everybody

has sort of been brainwashed and I'm

partially responsible for it uh to think

that the market goes up after an

election well now the Market's

skyrocketing like crazy before the

election I'm like okay does everybody

know the Market's going to go up after

the election so now everybody's buying

before which means how many buyers are

left left after the election if

everybody's expecting the same thing so

it is really interesting what what are

people pricing in you know wall Street's

now offering a

1.75x leverage product on micro strategy

which is basically already three times

uh the market cap of its underlying

Bitcoin it's basically already 3x

leveraged uh and so now you have more

leverage coming through this this

leveraged ETF which is wild I mean it's

down a chunk right now you know if you

want to buy the dip or look at it it's

mstx but uh to me it just sort of

Screams that the market is pricing in no

landing and uh it feels like Wall Street

greed is coming out going okay cool what

products can we sell people to get them

to you know speculate more on on

basically an order book of euphoria and

I hate to say it but Micro strategy is

an order book of euphoria it probably

won't fundamentally last

in fact I would be very concerned with a

micro as a micro strategy investor I'd

be very very concerned with how wide

we've gotten with the spread and again I

have I have no position on micro

strategy it doesn't matter to me if it

goes up or down I'm just trying to

provide a service here but year to date

this suckers up like 200% which don't

get me wrong congratulations it's

freaking amazing I'm just saying like

maybe tax loss Harvest something else

and take some profits here and just

diversify a little bit you know just

take off the tip not personalized advice

but just think about this from the POV

of just logic okay why why is it

outpaced Bitcoin on a rate of 4 to1 I

don't want that downside to hit like

what if Bitcoin sells down 20% because

we go into a recession or like 50% and

then this is down like 90% I I you know

let's just put it this way I wouldn't be

buying it at this point I'd certainly be

thinking about profit taking but then

again who knows you know maybe it goes

to 250 or whatever and that's uh that's

a stupid thing to suggest so I think

that's where a lot of people will say oh

I'll just take like my investment off

the table and then let the rest run so

I'm playing with The house's money fine

uh so find that interesting now uh I do

think that uh analyzing pricing power

stocks has gotten a little challenging

because so few companies truly have

pricing power right now it's sort of

like you're just picking amongst the

worst uh and bonds are probably getting

close to a bottom here it's still

remarkable and blows my mind that yields

could go up 50 60 basis points on uh

this this you know recent data that

we've gotten after the FED Cuts 50 while

the oil Market is screaming things are

slowing down China's exports are slowing

down you've got the quits rate falling

you've got the job openings rate falling

you've now got layoffs at some of the

weak companies getting revi like pushed

out on top of that you have hurricane

related layoffs that are going to show

up in the October numbers they might

even start showing up and continuing

claims this Thursday and then of course

November 1st and the reality is the last

Labor Market data we looked at was total

bull crap I you know that uh like and

I'm not I'm not trying to sound Jaden on

the data but let's be real you had

785,000 government workers added and you

lost over

253,000 private workers so in other

words if this is zero the government's

like we got lots of jobs and the private

sector's like we lost some jobs and then

you average it together like oh the

unemployment rate went down that's nuts

and that doesn't even count teachers

going back to school it's just somehow I

guess governments hired another 785,000

people seasonally adjusted not

seasonally adjusted was closer to 1.4

million which is just absolutely nuts

but that's okay that's okay I I'm just

going to continue to let you know on a

regular basis where I stand and I'm

sorry I'm still on like a four on the

bare bull scale you know which which has

me looking at these numbers and being

somewhat uninterested you know I am kind

of interested in the end phase dip that

we've seen it's trading at 101 right now

but the problem is you know part of the

reason it's trading down is because

people are pricing in Trump so you got

that whole election trade going on and

if that happens at the same time uh as

uh you know potentially a market

slowdown in bad jobs yikes it's possible

honestly the way to play this would be

see how bad the jobs report is November

1st and then decide how how much of your

cash you want to deploy into the stocks

or uh you know if a market crash starts

then although I am going on vacation

next week so get your puts uh I'll be

gone uh you know Friday midday probably

after the market closes so uh you still

have time this week but anyway uh you

know th this this to me is very

reminiscent of 2021 it's a market that

feels euphoric uh except in 2021 we were

printing money and we were expanding

employment today we're tightening and

we're not expanding so I recognize this

is unpopular you know nobody likes a b

you know a bear uh everybody wants to be

a bull even in bad times everybody likes

the Bulls I just i' I'm always going to

come to you with my most realistic

opinions and when I see research that

makes me nervous I'll tell you about it

if there are things I'm excited about

I'll tell you about it and look I I

honestly I'm I I am excited about AI

long term I really am I am excited about

Tesla long term I'm excited about so

much long term I'm I've been like

killing it in terms of uh the work over

at house act that I'm putting in that

the team's putting in everybody's

killing it really uh there there's so

many things long run I'm excited about I

just um don't feel good encouraging

buying these prices right now maybe

that'll change when some of this data

clears and if the data clears and it's

all good yeah you know the buying cost

might be even higher than it is now but

I just know the psychology of what

happens when the market starts falling

is really nasty so you peek out the

market starts falling and people are

like I'm still up a lot I'm still up a

lot I'm still up a lot okay I'm Break

Even okay I'm only down a little okay

I'm well at this point I may as well

just huddle and then eventually get to

this sort of capitulation state which uh

you know I think as we as we Trend

towards that

bonds will Skyrocket in value yields

will plummet uh and we'll actually be

trying to pull our Market out of

deflation much like China is although

prices are still declining at the

fastest Pace that we've seen since the

990s in China and for the longest period

of time so even with their well I mean

it's probably too early for the stimulus

to really hit other than the uh you know

super or other than the what am I trying

to say uh the stock market we'll see

we'll see so um anyway that's my take I

hope this is useful do check out that

coupon code link down below Art of War I

think it's really really cool Art of War

is the coupon code for the courses on

building your wealth and uh I would love

to see you there thanks so much and

we'll talk to you in the next one

goodbye and good luck out there can 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

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