The Coming, MASSIVE Fed Bailout | *Prepare to go to ZERO*

we need to talk about massive rate Cuts

coming from the Federal Reserve now this

might sound very premature just like

people thought in January of 2022 that I

was an idiot for selling because the Fed

was about to rug pull us and sure enough

they did now in this video I want to

seriously entertain the possibility of

massive rate Cuts coming much sooner

than we expect though we're also going

to entertain the risk factors associated

with both sides and I'll tell you which

side that I'm leaning to now this is as

convenient as it may sound this is not

inspired by it's this is just a

contribution to this this is not

inspired by Elon Muska tweeting

yesterday that this trend of rate hikes

is concerning and that the FED needs to

cut interest rates immediately because

they are massively amplifying the

probability of a severe recession

this is just a convenient addition to

the fact that

Elon might be right

now in order to break this down we need

to go through three pieces of this video

first I'm going to talk about history

how have rape Cuts played out

historically and where do they align

with what the bond market tells us this

is very revealing then I'm going to talk

about inflation the three critical

pieces we're gonna break down the

consumer rents and jobs because we have

a jobs report coming tomorrow then we're

going to make a conclusion what do we

think the dangers are

and what are the takeaways

let's get into the video note I've been

posting a little less and able to do

live streams a little less like I I

really want to do open and close Market

live streams but Lauren has covid and

I've been watching and taking the kids

to school and it uh let's just say my

heart goes out to moms out there or

full-time dads boy oh boy

it's very difficult to work and take

care of children isn't that right Max

he's on his iPad thankfully

let's see if I can get the video done in

the meantime

we are also offering a coupon code PP

that expires on December 9th when I will

be at the New York Stock Exchange for

the programs I'm building your wealth

remember those come with lifetime access

to all of the future content in those

individual courses a lot of which is

being released in December including a

trading challenge in our stocks and

psychology of money course new real

estate lectures and more lectures for

the elite Hustlers course with another

large batch already in production and

posting soon now let's get into the

content keep in mind the courses by the

way come with live stream access so you

can ask me questions directly and that's

uh that's access for as long as the live

streams continue so there's no monthly

fee and the prices aren't as expensive

as people think they are some people are

like Oh I thought the courses would be

like thousands and three thousand

dollars like no it's like a few hundred

bucks it's not that much money for the

courses anyway check them out linked

down below so first our massive interest

rate Cuts coming the inversion of the

yield curve suggests yes

in fact the inversion of the yield curve

is extremely important when we look at

the inverted yield curve we'll see that

we are so inverted that we have not seen

levels of inversion this bad I'll hide

myself so you can actually see the rest

of the chart we have not seen inversion

this bad over here at negative 77 points

on the three month ten year since

remotely close over here in the.com

bubble you could see around December of

2000 right here which we still had two

and a half years of pain in the stock

market when this uh time occurred here

and of course we had a pretty deep

inversion over here in 2006. we did have

a brief inversion before the covid

pandemic suggesting a recession was

coming of course nobody could have

predicted covet over here but what's

very important to know about these

charts is they actually tell us that

when we have inversion this deep

the pain of a recession is ahead of us

and not behind us look at this a little

bit more closely look at when you had

the inversion in December this the

deepest part of the inversion it was

around December of 2000 again you still

had pain for all of 2001 and 2002. that

pain was actually mostly felt during the

steepening phase not the inverting phase

it's the same in more recent memory over

here remember that yield curve drama in

2019 people like oh no the yield curves

reverted things were booming then it's

generally not the inversion that's

problematic it's the re-steepening which

most of that came around the uncertainty

of the covet pandemic

more recently uh as well than the 2000

crash is the Great Recession over here

in 2006 and seven where we saw the

depths of the yield curve inversion in

six and seven but most of the pain was

actually felt in 2008 9 and 10 and most

of the real estate pain was not actually

felt until 2011 when the curve had

already steepened substantially but

folks it's not just the threes and tens

it's the two's intense three month ten

year two year tenure these are two

different charts but you could see the

same pattern holds true here well the

only difference is we are most we are

more inverted now than at any point

since the 80s where we were

substantially more inverted now what's

remarkable about this though is we can

actually chart something really

phenomenal now this is a bit complicated

but I'm going to break it down as simply

as possible

the blue dots give us prior rate cut

Cycles see these here in 1980 81 2000

2007 1990 and 2020 right these are rate

cut Cycles

the zero line right here tells us how

inverted Are We Now inversion is usually

considered negative but this is where

the confusing part is this tells you

you're inverted by how many points and

it's a positive so that's why the

chart's a little confusing but once you

realize that numbers above zero are just

the depth of how inverted we are you'll

realize oh okay got it so the higher we

are here the more inverted we are okay

so we were really inverted in the early

80s right exactly that's why they were

that hot okay so where are we now well

on the twos and tens we're inverted by

about 77 basis points which is

approximately here

and if you plot this regression line

here don't worry if you don't understand

what that means if you plot this blue

line basically here

you can then predict how much the

Federal Reserve will have to cut rates

look at this folks if we're at 77 BP of

Max inversion draw that to the Blue Line

come down and what do you get folks

total federal reserve easing predicted

by this chart is five percent or 500

basis points this means the market is

pricing in that the Federal Reserve will

have to cut rates

completely back to zero based on how

inverted the yield curve is right now

and even though the Federal Reserve is

suggesting we're going to have rates

higher for longer which the market was

really believing see this black line

here this black line says okay got it so

rates are probably going to go up to

nearly five percent and then they're

going to stay higher for longer well as

of yesterday the Market's like okay so

rates are going to go up to about five

percent but uh we're probably going to

go down sooner in other words we're

going to start seeing that rate cut

cycle much sooner so in other words

higher but not for so long which is

really interesting because that's

actually not what the Federal Reserve is

saying right Jerome Powell right now is

saying yeah we're going to be higher for

longer we're going to maintain rates

higher for some time

but the market is actually starting to

say uh-uh talk is cheap the FED is about

to Institute not a pivot but a massive

potential U-turn where they go from

hiking to potentially reducing and

that's because they may have pushed us

so quickly into a deep and coming

recession that they have to cut to

prevent a real depression but we have

big risk factors including inflation

now let's talk about inflation and we'll

continue talking about these risk

factors because this is a pretty

critical video here uh and then I think

all my videos are important but let's

just say this particular one this one's

pretty important and I would share it

with your friends and family if I were

you because I think uh it's it's it

might change your mindset about where we

actually are like things are starting to

turn tenuous let's put it this way

notice how Rosy and optimistic Jerome

Powell was yesterday

in case you didn't watch my videos or

you didn't see how Rosy and optimistic

drone Powell was yesterday he was

glowing with optimism and I'd like to

translate that to glowing with hope

because he realized oh my gosh we may

have effed up again and gone too far

let's look at this let's understand the

three things that create inflation we

talked about these briefly yesterday but

we have some new numbers about these

there are three important things that

lead to inflation number one Goods

number two housing rents and number

three services services and wages

related to Services may be the most

important

but I want to show you something very

ugly but before I show you something

very ugly I want you to think logically

for a moment

how do you get service prices down

think about that what is a service house

cleaning Consulting Human Resources

recruiting cyber security Payroll

Services right Cooks real estate agents

lenders those are Services right

well what actually tends to happen first

when an economy goes into a recession

well generally we see Goods stock up

inventory stock up stuff stocks up

because people spend less money on stuff

like you know what I got enough stuff

I'm gonna stop spending money on stuff

and when people stop spending money on

stuff what naturally happens next well

you walk through stores and you're like

hot damn they got a lot of stuff around

here which is exactly what we saw on

Black Friday TVs and computers

everywhere at companies whose primary

business like Best Buy selling 50 of

their good or getting 50 of their

revenue from computers and phones

computers and TVs everywhere

everywhere shells are full and so what

happening that happens when people stop

buying stuff manufacturing slows when

manufacturing slows what happens then

well again you need less Consultants

Human Resources recruiters cyber

security Payroll Services accountants

company uh Services related to to

factory acquisition company cleaners

real estate agents lenders everything I

just mentioned and then you end up with

Services deflation so in other words

Goods drop first

then you get

Services deflation see as long as Goods

that is stuff has pricing power you

don't actually have to cut now it's

probably prudent to cut but you don't

have to as long as you stop pricing

power for your stuff but if people stop

buying then you look over here at the

manufacturing side and you're like okay

well we gotta cut over here

and the factory sector is preparing for

exactly this in fact the ISM

Manufacturing report today came in

substantially below estimates under a

read of 50 which is a level of

contraction coming in at 49 versus

consensus of 49.7 this suggests stronger

contraction happening in the quote

backlog backlog is future orders it's

also the first contraction that we've

seen in manufacturing ISM since May of

2020 and we're seeing citations of

layoffs and hiring freezing as well as

disinflation continuing in this good

sector

this is bad manufacturers are starting

to realize oh my gosh we are about to go

into a very dirty season of less Goods

Manufacturing and prices are likely to

come down consider this Dollar General

Dollar Stores places people thought

would flock to because of high inflation

are now losing market share on their

stock market capitalizations like Dollar

General down seven percent on higher

supply chain costs and a lack of pricing

power imagine that a dollar store with a

lack of pricing power but it kind of

makes sense because if people stop

buying the little dreidels and toys at

Dollar Stores which are actually high

margin products and start buying their

apples and expensive fruits from Dollar

Stores or Foods in general all of a

sudden their margins get squeezed they

have less pricing power so this

inflation is actually hurting companies

like dollar stores which is weird

because they've actually been performing

very very well but it's not just dollar

stores that are suffering Walmart is

having struggle trouble selling uh to uh

discretionary items to individuals again

computers and PCs Victoria's Secret is

having trouble selling lingerie Costco

had its slowest comp sales increase

since April of 2020 when everybody was

flocking to Costco

non-discretionary spending is plummeting

and when Goods plummets what happens

next Services plummet of course people

are still trying to extend their budgets

people are opting to pay now more with

buy now pay later services like a firm

Google search transfer a firm credit

implying they're curious if a firm is

going to run their credit or what credit

scores are required or at the highest

level ever people are looking for more

credit cards today than ever before and

it's likely because even though we're

seeing repayments on credit go up with

higher credit it's likely because people

are suggesting you know what I don't

mind if I spend some of my excess

savings you only live once and I may as

well just keep spending to maintain my

quality of life at this point

however a danger of the buy now pay

later platforms is their charge-offs are

nearly twice as high as that of credit

cards suggesting that the more people

flock to buy now pay later the more

risky consumers are resorting to a risky

form of lending a form of lending where

you might not actually see your credit

score go up but you might see your

credit score go down if you miss a

payment that could backfire for

consumers but in the meantime it tells

us uh oh the good side I think there is

no question Goods in manufacturing is

getting hip but what comes after this is

sluggishness in services and that's

really the last hold up and we have a

jobs report coming out tomorrow a BLS

jobs report but we don't even

necessarily need to wait until tomorrow

to get some more insight we can look at

the ADP jobs report and look at exactly

where we're seeing pain zoom in over

here service producing information

Financial activities and professional

and business services

all layoffs

and Across The Good Side manufacturing

plummeting by a hundred thousand jobs

however we're still seeing a prop up of

the you only live once mentality spent

Leisure hospitality and well health

services kind of still makes sense given

that we're coming out of a pandemic

now and then of course another thing to

consider is there were a lot of

discretionary surgeries that were held

off on because of the pandemic however

when these shoes drop the wage and

service inflation sector and the

unemployment sector

could see substantial pain and that's

the trajectory that we're heading in

right now we just haven't quite seen it

yet and this is important because look

at this chart here this chart is the

only chart that individuals who suggest

inflation is here to stay have going for

them that is because we know that Goods

inflation via the personal consumption

expenditures report that's the fed's

preferred inflation gauge compared to

CPI is plummeting what's next to plummet

though I believe is services and it's

coming The Five-Year Break Even rate has

historically always been correct the

five-year Break Even rate says that when

the rate trends down inflation Trends

down it's very volatile though when you

look at the micro or the smaller segment

here like when you zoom all the way in

you're like oh no after drone Powell's

hope yesterday is hopium we actually saw

break evens Trend up but look at this

downtrend we're on it's a solid

downtrend inflation is going to come

down now keep in mind we are still at

higher levels of Break Even than where

we were during the hiking style when

Jerome Powell was potentially going to

get fired in 2018

but all it's going to take is a few

nasty inflation reports coming in low

for these break-evens in my opinion to

absolutely plummet we're already seeing

the yields on treasuries plummet by

almost 15 basis points down to 3.55 on

the 10-year plummeting to levels we

haven't seen since September erasing

these real fears that inflation is going

to be higher for longer and that's

because the market is smart in

predicting what is potentially going to

happen in aggregate the trend is your

friend in aggregate inflation is going

to go down and it's going to go down

gloriously the question is and this is

the big problem is how quickly is that

inflation actually going to Trend down

and this is where we have to talk about

the problem and then we have to talk

about the conclusion now no I did have

one thing if you were paying attention

I'm going to be very quick about this

it's the rent side of inflation right on

the rent side of inflation now we are

starting to finally get fear articles in

Bloomberg apartment markets have turned

to ice over the past few months says one

Bloomberg article from today they say

that real sluggishness in rents is

coming usually rents fall between

September and November of 1.3 percent

this year they're down 2.2 percent

substantially higher and substantially

weaker than on average

the Federal Reserve themselves says that

they see real rents plummeting that is

new leases and not just inflation

adjusted leases but new leases nominal

and real are plummeting and even though

there are some lagging measures like

owner's equivalent rents that say

they're still Rising we know those are

looking into the past by six months to a

year the reality is as long as rents

continue to Trend down which they are

and vacancies continue to go up which

they actually are even though we have a

housing shortage

then we expect inflation to continue to

go down keep this in mind vacancies

right now have surged up to 5.7 percent

now while that's lower than what we've

seen before the pandemic it's definitely

up from last year where we were sitting

at 4.1 percent vacancies so you're

seeing a trend rents down vacancies up

how could that be with a housing

shortage well oftentimes less household

formation household closings which is

usually a way of saying a nice way of

saying people are dying or people are

moving in together like families or

they're staying together for longer not

replacing people or potentially selling

their homes because they're dead

now usually in these bus Cycles you see

real estate home prices come down car

prices come down rents coming down

rarely happens a 2.2 percent decline in

this season extended out for an entire

year would be very abnormal but it is a

trend that could be happening now and

fear and psychology could be the next

phase of the real estate cycle which is

bad for the housing market that is even

if mortgage rates come down there could

still be so much fear like what we had

at the end of 2008 that it could take

another three years for the housing

market to actually bottom like it did

that now

let's before we talk about the dangers

and conclusions let's think about what I

just said I just said that Jerome Powell

is spreading hopium because I think on

the inside he's starting to panic he

realizes they went too far he realizes

the yield curves have inverted so deeply

which are historically the best

indicator of how battle recession is

going to be that the FED is likely to

have to cut rates by five percent 500

basis points we saw that explained in

this particular chart here

so the FED is providing hope because

they're panicking this curve suggests we

are going to go back to zero percent

interest rates way sooner than we expect

and potentially a very stimulative

economy because the FED may have over

tightened and led to too much pain now

on one hand that's actually potentially

good for businesses as they lean out in

the near term become the most efficient

versions of themselves and that can lead

to wonders for stock market returns

going forward but that doesn't

necessarily help every individual it's

more likely to help you since you're

watching a finance Channel and you're

probably an investor of some sort that's

not going to help people who aren't

investing now before we talk about

conclusions it's important to consider

some dangers the dangers are very clear

the biggest danger is what if inflation

continues well this is extremely

unlikely commodity prices are rotating

down oil and energy is rotating down

almost every sector of inflation is

rolling over

and consumption is facing massive pain

manufacturing is feeling it Services is

coming and housing is already seeing it

with rent stalled the question now is

not so much will inflation go up again

don't really expect that the question is

how fast will inflation fall that's the

big problem is how fast do we start

cutting in my opinion the best case

scenario is inflation plummets and the

FED Cuts rates quickly so we can avert a

very dangerous recession remember what

the FED wants the FED wants our planes

so to speak as I said yesterday our

plane's attitude to be pointing down so

that we're above Trend we're above the

ground right we're not going negative

but we're flying above but kind of

trending down and below that growth that

we've had over historical time frame

right that's where they're trying to

keep us now for those of you who don't

fly planes yes I correctly said attitude

and not altitude you could Google that

one I saw a lot of confidence on that

yesterday and it's like all right now

next time I'll add some clarity a lot of

folks like to refer to this particular

chart which says when the FED pivots

stocks crash by more and what you could

see is that over an average of 13 months

from the federal reserve's pivot to the

bottom of the market we could see

another 22.2 percent decline over a

13-month period I first broke this video

or this chart down in a video I posted

on October 18th entitled the FED pivot

however in that video which is the same

thing I'm going to do now though I

encourage you to watch that video

because it's more in depth this chart

misses something extremely important

this chart misses that the Federal

Reserve in 1987 following Black Monday

created a policy of backstopping the

market entirely they did so in 1987 in

about March of 2003 you should be pretty

used to these by now if you've been

watching the channel they did so in the

spring of 2009 it was actually February

of 2009 it was March of 2020 and it was

also December of 2018. these are the

post fed Ed will bail everything out

bailouts and all of those bailouts

occurred at the same time as when the

stock market actually hit bottom the

issue is the only items on this chart

that actually show you

a post fed will bail everything out

period of time we're here

and here this is when markets have come

to expect that the fed's going to bail

us out the problem is this chart does

not tell you when the FED went all in

fact stop the FED did not actually

backstop markets is which is when the

actual bottom was in about February of

2009 for the Great Recession and the

stock market traded sideways here so

this chart's a little confusing but the

market was essentially near the same

bottom in March of 2003 when the FED

bailed out markets in 2003. this has

actually very little to do with the

fed's pivot You could argue that the

fed's pivot would be going from 0.75

basis points to 0.5 basis points that's

generally not what you're looking for

when you're looking for a Federal

Reserve U-turn a Federal Reserve U-turn

would be holy crap we have screwed up so

badly that right now we are having an

emergency meeting and we are going to

decrease interest rates to zero this is

somewhat similar to what they did during

the covet pandemic the covet pandemic

says hey you know what what are we gonna

do all of a sudden covet pandemic hits

rates are at two and a half percent fed

comes out in an emergency meeting Cuts

rates to zero instantly because they

realize oh my gosh we're about to go

into a deep deep dark recession so we're

going to turn the money printers on this

same thing could actually happen again

and the yield curves are saying that it

is a possibility

so let's talk conclusions and what

actionable steps and advice we could

take from this do keep in mind while I

am a licensed financial advisor that

means I can give licensed Financial

advice this video is not personalized

Financial advice for you there's a big

difference between broad Financial

advice and personal financial advice

because personalized Financial advice

depends on your unique circumstances so

I don't want any of this video to be

misconstrued as personalized Financial

advice it's not even though I'm a

personal financial advisor financial

advisor so what conclusions do we have

from all of this information Jerome

Powell is panicking that is conclusion

number one conclusion number two

inflation is going to plummet it's just

a matter of how long it's going to take

the longer it takes the worse it is for

markets the quicker it plummets the

better

then the FED will reduce rates

it's just a matter of time right so

you're not going to stay this High based

on what the bond market is telling us

the only way I believe and I could be

blind here

but the only way this video this thesis

could be wrong is if the bond market is

wrong and it's possible so this doesn't

mean when I say will I want you to be

clear it's Will based on what the bond

market is telling us there's always a

potential that maybe quote this time is

different but historically this time

ain't different in fact the four most

dangerous words in investing or this

time is different and the bottom Market

is telling us that drum pal is panicking

that inflation is going to plummet so

what do you do strategically well

strategically I believe the best thing

to do

is a as always stay out of margin and

lower your debts cash is King the time

for opportunity and to invest is when

there is panic and nobody else has cash

those are two things that are very very

important Panic it's nice to be able to

say oh buy when there's blood in the

streets but if you're also bleeding out

and you also have no cash what good does

it do you so increase your access to

cash make more money join the course to

be an elite Hustler make more money

learn how to increase your income lower

your debts be able to qualify for more

for Real Estate but also be careful

about speculating this is a very

uncertain time in the near term when we

zoom in the stock market feels like this

it's up and down it's emotional roller

coaster it's very different to

speculatively make short-term calls but

in the longer term I would be looking

for companies that have pricing power

through the recession those could be

smaller companies that are still growing

or essential companies that can grow

during the recession with pricing power

as people might consolidate to the

brands that they absolutely can't live

without those are companies that I would

really keep an eye on though not all of

them are guaranteed to do well I'm a big

fan of focusing on increasing your

income staying away from risk and margin

and focusing on pricing power because

when the federal reserve's money printer

turns on again those pricing power

stocks are going to kick the

competitions of booty and I believe that

those sorts of companies are likely to

outperform the market no guarantees

obviously so these are my expectations I

think this is a very big and critical

video and it's one that I expect will be

able to look on in the future and say

yikes that is what happened

no guarantees but inflation I expect to

be very very clear will plummet it's

just a matter of when

and the longer it takes for the Federal

Reserve to backstop the economy again

the more pain we likely have ahead

although the stock market might try to

price in that eventual U-turn because

they're finally smart to the fact that

ah the bottoms come around the FED

U-turn time and if the bottoms come

around fed U-turn time maybe we want to

pre-price that in anyway if you found

this video helpful make sure to share it

with anybody you love and care for and

folks we'll see in the next one and

check out those programs linked down

below and building your wealth the price

goes up over time and the sooner you get

in the better and the next coupon

expires on December 9th and the coupon

code is PP