The Warning Shot | Stock Market Crash

hey everyone meet kevin we just got a

warning shot and we're going to talk

about that warning shot but first we got

to clear up a few things

the first thing we had to clear up is i

keep hearing about japan

why was japan's stock market flat since

the 90s

well how's this for you their gdp was

flat since the 90s

let's try to compare that to the gdp of

the united states

little different eh so this is the 90s

this is where we are now the charts

don't lie

and since the charts don't lie let's

take a look at a few extra charts before

we talk about the warning shot first

i'm tired tired of hearing about the

relationship between

bond yields the 10-year bond and tech

stocks

it is not as consistent as you think

regularly we hear

oh but bond yields go up because people

aren't buying bonds

tech stocks are going to sell off yes

sometimes that happens

when there is a spike in the velocity of

the rate

but which is exactly what happened uh

this morning take a look at this

sometimes this is exactly true we saw

right here

just so you can uh verify this right

here see this little blue

tealish line right here turquoise-ish

line tiffany blue line whatever

that's the treasury okay so we saw the

treasury yield spike

with real fur here that velocity of

spike that means it went up really fast

in a short period of time

it didn't cross the x-axis far but it

crossed the y-axis far right

when those crazy spikes happen yes we

can see stock sell-off

and that is what we saw this morning we

saw the tech sector the nasdaq

100 was down about 2 percent uh but

throughout the rest of the day what

happened

well from this point right here after

this jump

we had the bond yields essentially

continue to rise if we just draw an

average line here

but what did the stock market do what

did the tech stocks do the nasdaq 100

well after their sell-off they also rose

so the relation isn't as clear as people

like to make it out to be

what i keep referring to is something

known as the velocity that rate of

change

when we get these crazy spikes that's

often

not always but it's often when we see

more of a reaction in the stock market

but generally i strongly believe

the stock market looks at this and says

hey look the the bond yields are

going to go up again over time we are at

historically

low bond yields for especially for the

10-year treasury in fact take a look at

this

uh just to try to make us feel better

here a little bit this is the one year

we are right here at 1.62 it makes us

feel like we are at all-time highs right

oh my gosh but let's go to the max

this is the max view that we have here

these are the 80s right over here

if i just hide myself for a second you

could see the trajectory of bond yields

here has been straight down

so what we've got a little bit of a rise

over here

they're going to go up again even if

they go up here to three percent

big deal 2010 to 2019 was still a

phenomenal

time to invest in stocks so we got to

separate this whole

bond yield drama but another chart for

us okay let's talk about inflation

because that's really what we care about

right

i don't think anybody cares about the

10-year what we care about is inflation

folks this is inflation i just wanted to

show this in charts because

i feel like i'm talking myself until i'm

blue in the face like i can only have so

much coffee

talking about why i think this whole

inflation push is overblown

this is inflation since the 80s it's

pretty much straight down it's certainly

straight down over here

but even from these levels look you've

got inflation sitting around over here

at around five percent

we're way lower here's one point six

eight percent you know we were

higher over here this is about midway in

the chart here too

so with these red lines it becomes a

little bit easier to just see this uh

let's let's draw let's do a bright

green line here becomes a lot easier to

take these points here

and then draw a connecting dot and you

can see we have this consistent

downtrend

in inflation there's there's no secret

here oops that's definitely not the

eraser

there is no secret here that inflation

is trending down

the problem is and this is what freaks

people out and we're going to have

something exactly like this happen again

right here

see this look at this blue line here

that's cpi and the yellow line is

consumer price index minus food and

energy

and we can see the cpi pricing here this

is back when

gas i remember this back in like 2009

gas was like

550 a gallon was ridiculous well out

here in california it was like really

expensive like that but i think gas

prices everywhere just went up like

crazy

we saw this crazy jump we saw this crazy

fall and that's why you have a much

flatter line when you don't look at food

and energy

that's the problem we're having now too

right food is more expensive when you go

to the grocery store it feels like the

cost of living is higher because

energy costs are higher and food is

higher and a lot of this has to do with

supply chain disruption still from coven

and and so that can fluctuate more which

is why it's also nice to look at

the yellow line which shows us okay well

what's the measure of inflation without

those two things

uh and they both tend to average out

over each other right they're both going

in the same direction and that's down

are we going to get some more of the the

zigzagging over here

probably in fact what's very likely to

happen next

is we're probably going to see certainly

this this like teal-ish uh

tiffany bluish line let me try to grab

one that's similar but not exact

all right here we go so uh my

expectation is this line is going to go

up to somewhere around ah it's not going

to go as high as five percent but it's

probably going to go

up to that three and a half percent

range wouldn't

and the yellow line could honestly

probably chase that or trace that as

well

uh we might even see something like this

where we see it go to like

two and a half percent uh then it goes

up to like three and a half percent

stays at three and a half percent for a

bit uh and then and then comes down

again

back to uh somewhere maybe around two

percent so maybe we'll we'll erase the

tiny little bit here

this is maybe what we'll see and this is

like we've talked about this so many

times the base effects we won't

re-explain that comparing back to last

year

but even if i draw that in there come on

it's a drop in the bucket the market is

overblowing this inflation fear in my

opinion

my opinion i could be wrong dude i'm i'm

drinking out of a level 99

health cup and it's black coffee and i

just ate cookies it's the most ironic

thing

anyway this is inflation zoomed in this

is how we

panic more this is how we get the market

to panic

because when you zoom in over the past

nine months

it's a whole lot more

this is why i also like zooming out on

things oh take a look at this

may as well show you this arc uh this is

averaged

on a weekly basis so it's average

together here but remember

the last time i did a video on arc about

how we've got these massive

outflows happening how people were

dumping arc invest funds

and everybody's like ah kathy's there

has been it's over

these are paper-handing sissies who

dumped arkan vests

at the bottom of the market like let me

hide myself here okay this number right

here

this went down i want to say this is

somewhere around 660

million dollars of outflows in this week

right here

those same silly paper handing sissies

who sold out at the bottom of the market

which in my opinion were mostly funds

because funds can invest in kathy's atf

right it's not just retail investors

but certainly paper-handing sissies sold

at the bottom now keep in mind

if you go on urban dictionary okay i did

my research paper handing means you sell

when stocks are going down

just because you sell a stock doesn't

make you a paper-handing

paper-handing when you sell when

things are going down because you're

panicking

and if you did and like whatever it

happens you don't have to tell anybody

about it

like i i'm 100 transparent with every

trade i do so i have to

but uh yeah i i sell stuff

when it's up but anyway as is classic as

soon as the market starts recovering the

net inflows going into arc invest funds

have been through the roof which is one

of the reasons you tend to see the

smaller stocks that

kathy wood also invests in rise up

along with him all right so what is this

warning shot that we experience well the

warning shot is essentially what

happened early this morning early this

morning is

you wake up and you're like oh my god

all the tech stocks are down five

percent again

yesterday i gave the warning yesterday i

said

be careful these paper handing

suits

are going to be back and they're gonna

come back and go no

no i think inflation's coming again even

though yesterday i showed you a

bloomberg article

going oh suits overthinking

maybe overthinking treasury yields flood

back into tech stocks

i showed that video and then i said but

be careful these suits are so

emotionally broken

they can easily flip right back and a

little bit that's how we open the market

today tech was down

solidly i mean tesla neo some of these

stocks were all down five six seven

percent

now they recovered through the end of

the day as that relationship between

bonds broke apart again

and even though bonds were going up tech

stocks were covered but what was that

it was a warning shot for us i sound

like a broken record i feel like

but pay off your margin or pay down your

margin it's so so so important

so that would like i honestly would

rather

pay my margin down to zero and then

when we get this volatility come back

because the next three months are going

to be very volatile

the cpi data that's gonna be coming out

over the next three months very volatile

this month was benign it was a blessing

it was a bailout

next three months it's gonna be nasty

and uh

you wanna be prepared so personally i

think hey look if you can go

take an extra shift make some extra

money and

get some more money on the sidelines so

that when we have more of these dips you

can go shopping more hardcore

do that even if that means paying off uh

some more of uh

of your margin like get get to zero

it's okay it's a relief when you're at

zero that way when the market falls

you're like oh sweet i got 20

you know and when you're buying low

you're kind of hedging your position

anyway

so that's my take hopefully this update

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