WORSENING: Why Stocks and Crypto are Falling A LOT

everyone meet kevin here in the past few

months i've been very focused on raising

cash and we've talked a lot about this

on this channel not only did i last week

make a video saying i'm going cash but

before that i've been talking about

raising cash through selling options

like selling puts or selling calls i've

also been talking about my interest in

rcc real estate cash crypto because of

the lack of deals in the stock market

well now we've got a whole lot of

uncertainty the s p 500 right now is

down 2.2 percent we've got a lot of red

in the stock market it was a 90 red day

for the s p 500 and in this video i'm

going to break down exactly why there is

so much uncertainty leading stocks and

cryptocurrencies to fall and when this

uncertainty will go away which we expect

that when we have uncertainty stocks and

cryptos to fall when uncertainty goes

away stocks and crypto should go back up

should no guarantees

but it's good to know what the

underlying uncertainties are and have

them all enumerated in a nice

comfortable list and then align these

with dates in terms of when we expect

these to go away so let's get started

right now right after i thank many of

you for joining my amazing programs

linked down below on building your

wealth many of you joined after

realizing that i did not win my election

for governor in california and so many

of you were like well that must mean

kevin's going to have lots more time to

hang out with us and uh you're probably

right this is so anyway thank you to all

those of you who hopped in and have been

taking advantage of that coupon code

that does expire this friday but let's

get to the list right now okay number

one the fed this week is not just

meeting and having their fomc meeting

but they're also releasing their new

summary of economic projections the sep

is a big deal because it shows what the

federal reserve's expectations are for

declines in things like the gdp and

increases in things like inflation we

expect the federal reserve to

substantially reduce the gdp forecasts

of the gross domestic forecast

product forecast and to increase

inflation forecast not just for this

year but possibly also going into 2022.

i also expect that the federal reserve

will have a hawkish tone on tapering uh

this year at some point probably not in

the september meeting that is probably

not going to hear about a taper

happening in in two or three days here

but instead

some kind of reiteration that the taper

will happen this year just not now and

obviously the next meeting is november

4th so that's really when the eyes will

be uh focused on the tapering actually

happening

point is though both of these items are

going to create uncertainty uncertainty

over how much the uh federal reserve

projections have changed how weak has

the economy really gotten has the

economy really started to decelerate in

terms of growth as much as we expect

and is the fed at the same time of this

weakening still going to be focused on

tapering which of course we expect that

they will not taper this month because

of weak jobs and higher inflation

readings but what are they going to tell

us about the next the outlook for the

rest of the year is the economy going to

be weaker while at the same time we're

still going to get a taper both of those

would be bad news and that's kind of

what we're expecting right now in fact

so many analyst firms including goldman

sachs and morgan stanley have

almost all across the board revise down

their gdp growth expectations to the

point where there are even some

estimates that for some quarters of next

year we might be growing at literally

zero an annualized rate of zero for our

gdp which is crazy uh so these these are

also negative catalysts these are things

that are creating concern in the market

morgan stanley says that their base case

scenario right now is a 10 correction in

the s p 500 with a bear case scenario of

a 20 correction in the s p 500 we're

still not even yet at a 5 correction

from highs that we had just a couple

weeks ago we're at like a 4.2 percent

correction

anyway though these create lots of

uncertainty

china

and its regulation

has created a lot of uncertainty in the

tech space and lately in casinos in the

gambling space or alibaba specifically

because china has been expressing

interest in regulating more

and let me ask you this what do you

think caused the ever grand crisis in

china where they have over 300 billion

dollars of debt that they're defaulting

on and they're the second largest real

estate developer in china uh was it

either a too much regulation or b too

little regulation

obviously here too little regulation

would lead a property developer to go

nuts with debt i'm not the biggest fan

of too much regulation at all but

china's not going to be looking at

evergrand going

we regulated too much and that's why

they failed uh-uh china's gonna be

empowered by this china is going to be

emboldened china's very likely to go uh

yeah y'all left up and this is just the

catalyst we needed to crack down on

everybody else so not too optimistic

here about chinese-related stocks and

i'm pricing in bigger discounts for more

regulation coming from the chinese

government they this is embarrassment to

them this whole ever grand contagion

it's a disaster now i do expect it to be

mostly contained i mean i did a whole

video on this you can check that out

just type in me kevin evergreen but i do

expect this to to be somewhat uh

contained but the fear of it will still

be here

then of course and we've touched on this

briefly but a little bit more detail

growth is decelerating people are saving

more money but consumer confidence is

declining leading to some lower spending

people like kathy wood are suggesting

that people already have the things they

wanted to buy like the cars the tvs and

the ipads the you know iphones and the

laptops and stuff and and now we're kind

of just waiting to watch if services are

going to inflate up but really that

we're seeing a growth deceleration note

that a growth deceleration doesn't mean

you're going to negative growth it means

you're growing but just at a slower pace

so like if it's all of a sudden it's

like wow we sold 30 more ipads compared

to last year well maybe now it's like

okay we sold like two percent more ipads

right that's growth deceleration it's

not not shrinkage nobody wants shrinkage

but anyway

so we don't really expect revenues at

companies to go down but at the same

time as you have growth deceleration

it's also likely that you could have

what's known as a margin squeeze or

margin compression occur this is

basically when companies become less

profitable because the input costs of

wages and products go up so let me

simplify that if you sell an iphone for

fifteen hundred dollars and it costs you

nine hundred dollars to manufacture it

but now all of a sudden the cost went up

to a thousand dollars but you can only

sell the iphone for fifteen hundred

dollars and twenty or fifteen twenty

five so in other words your costs went

up by a hundred dollars and your your

sales potential went up by 25

you are losing 75 dollars of gross

profit

and that is where margin compression

comes in because we calculate margin by

determining okay cool what percentage of

your sales were you able to bring

in as operating profit right and so if

your costs go up and the amount that

you're selling the product for can't go

up as much you end up with margin

compression so

this is actually something that's not

very good for corporations either

because ultimately we want cash flow

from companies that we invest in

uh anyway let's get to the next issue

this is an interesting one okay when the

delta variants started soaring in late

july and early august there was this

kind of international move into united

states stocks as a flight to safety

that's really because the united states

is seen as having uh you know probably

being one of the most advanced countries

in terms of covert vaccination compared

to of course developing countries right

it's certainly not as well as like

israel or the united kingdom but

compared to developing countries the

united states is pretty decent and we've

got a very strong stock market so that

made united states stocks attractive as

a potential flight to safety now though

as we're kind of seeing peak delta it's

possible that people are kind of

withdrawing their money from the u.s

stock market also helping kind of hurt

and push down the stock market which

the uh as i've been recording this video

the s p 500 has kind of just kind of

continued to go red here uh for what

it's worth this is kind of what it looks

like this is your day uh on the one

minute chart here on the s p 500 a

little bit of euphoria and then yep nope

just kidding

oh dear oh dear oh dear uh anyway that

led me to tweet which you should follow

me on twitter led me to tweet that uh

the black friday sale is just the

beginning

but anyway uh the next thing is look

valuations are high right now there are

few there are there are few few few

great deals in the market right now in

my opinion that's because of just

loftiness and valuations at the same

time we're seeing kind of a pullback as

folks are de-risking which is exactly

why stocks and cryptocurrencies are

falling in my opinion

now uh it is also a concern that we have

a debt limit debate coming up and that

it's possible the united states could

default on its obligations by

mid-october if we do not raise the debt

limit by september 30th

this will create a lot of drama in

congress over the next 10 days here

and we also expect drama around the

infrastructure package will we raise

corporate tax rates will we raise a

capital gains tax rates will we get that

three and a half trillion

dollar infrastructure package passed

which is basically and this is the part

that gives the market chest palpitations

it's kind of like

if if you have three and a half trillion

dollars of debt and then you give three

and a half trillion dollars of stimulus

checks today like that would be good

that would prop up the market today

right because people would be buying

stuff like crazy

but if you all of a sudden

say hey let's raise taxes today but then

spend three and a half trillion dollars

over 10 years

then

that's not as juicy

not as juicy at all especially again

taxes are going up while at the same

time you're not seeing the benefit of

that uh for quite a while so when you

put all this together you get this

basket or this this hodgepodge of real

like ugliness and uh uncertainty lots of

uncertainty people don't like

uncertainty

uh at all

anytime we have uncertainty markets fall

i mean think about the fact that right

before the election at the 2020 election

we had a lot of uncertainty in the stock

market had like a six percent correction

to the downside when we have uncertainty

stocks fall it's that simple uncertainty

stocks fall so

when will the uncertainty go away well

that's what we talk about this right now

i believe that uh let's see

ah interesting okay so uh yeah just

reading an update here about the sec

versus ripple case that's a whole

another discussion to be had all right

let's talk about the end to uncertainty

so number one the evergrand uh debacle

and the peak drama of this will likely

be over this week i think we will have a

resolution by friday in terms of how bad

it's actually going to be so we'll know

that doesn't mean the entire issue is

going to be resolved but i think we'll

have more answers by friday i also

expect that the debt ceiling will be

raised though i do think that's going to

take about another 10 days to get to i

think that's going to be a very last

minute event we'll likely have some kind

of stop gap bill or continuing

resolution we do have a vote in the

house of representatives for the

bipartisan infrastructure deal scheduled

for september 27th which is next monday

this could be a good opportunity for us

to also raise the debt limit

we'll see so next monday has the

potential for some optimism where the

evergrand deal is or debacle has

hopefully faded away the disaster of

this debt limit has faded away but we

also have the potential that by next

week we'll have new updates again to

covert numbers or covert numbers going

to continue declining down that would be

very positive for the stock market by

october 13th we'll have inflation

readings again which i expect to inflict

down i've always been saying that i

expect inflation to go down for

september and october which remember

those reports come out in october and

november so hopefully this is kind of

like the pain before the excitement

of of when inflation starts inflecting

down

or i'll just be wrong again but when you

put all this together here the fed news

this week

which once this week is over i expect

we'll digest the news and then we'll

move on this will be positive for the

stock market the ever grand debacle over

this week that should be positive stock

market debt ceiling getting raised and

the bipartisan infrastructure package

that one trillion dollar version getting

passed should be positive the delay on

three and a half trillion dollar deal

that could actually be positive as well

cove declining positive as well october

13th inflation data i expect to be

positive so when you put all this

together we actually in my opinion

should not have that long of pain

no guarantees though i mean look at what

happened in february we had like three

or four months of pain right

but it's worth mentioning that a lot of

the pain catalysts we have right now

are temporary

uh and temporary to the tune of really

like

one to four weeks max

so just my thoughts right now i am

looking for buy the dip opportunities i

have not bought the diff i have a lot of

cash sitting around and anytime i buy

the dip i will be sending alerts

immediately to all those of you in the

stocks and psychology of money group and

folks thank you thank you for watching

this video we'll see in the next one

thanks goodbye

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