Why the Stock Market is Falling Hard

can't blame the stock market for being

skeptical in late february of 2021

jerome powell testified before congress

and all of a sudden sounded a bit more

mean like he wanted to spank us around a

little bit he didn't come to tell us

that everything was okay this was even

after my bloomberg terminal code said

pray and the stock market started

falling after february 19 2021. in

november 2021 the fed dropped the phrase

transitory to describe inflation that

wasn't and in december they went full-on

meanie mode to work towards reigning in

inflation by talking tough to us about

how inflation was the number one

priority this talk turned into markets

realizing the fed was willing to risk

high unemployment and a recession to

eliminate inflation for fear of

returning to the 1970s style of

uncontrolled inflation and unanchored

inflation expectations well

this week the nasdaq via the qqq the

tracking etf returns to its famous 318

retracement level now that sounded

really complicated so simply put we

backed down four and a half percent from

highs that we hit just a week ago and if

you're wondering why the likely answer

is the fed but there is more which we'll

talk about that more as well hey

everyone meet kevin here in this video

we're going to break down some need to

know catalyst for this week for august

22nd and speaking of a date since i want

to simplify things and keep things a

little bit more streamlined now on this

channel i'm just going to put up on

screen all of the beautiful reasons why

you should be part of the programs on

building your wealth and using that

coupon code that expires on august 26th

which is just in four days for all the

programs whether it's stocks real estate

real estate sales youtube making youtube

videos property management or rental

properties all right folks let's get

into those catalysts we gotta talk about

so first jackson hole friday jackson

hole friday is a big deal because jerome

powell is probably going to talk mean to

us again it's going to continue to talk

about hey look we may have had good

inflationary numbers that came out here

in the last cpi report but we've played

this song before when we saw what we

thought was peak inflation in march what

ended up happening was we got a little

bit of a decline in april and then we

went to a new high right after that in

june and now this is really important

because the same thing could happen this

time we just came off a new high of

inflation we've inflected down and we

could be going right back up now it's

unlikely because commodity prices are

still trending in the down direction and

while there are a lot of fears that

commodity prices could skyrocket again

it's unlikely that we're going to see

oil go to the moon anytime soon with the

disasters going on over in china so it's

hopeful that inflation has peaked and

will continue to trend down for the rest

of the second half of the year leading

jp morgan to call for a very bullish

second half of the year after the

september federal reserve meeting note

that's because the federal reserve

meeting in september happens on

september 21st cpi data comes out about

10 days before that and that's really

important because we don't have that

data yet so what we're going to get this

friday is jerome powell who talks about

how they will be succeeding in their

inflation goal but they won't stop until

inflation gets back down to two percent

even if that means we end up facing a

mild recession i would expect that

jerome powell will drop all mentions to

a soft landing since we're technically

in a recession and he doesn't want to

seem like somebody who doesn't know what

he's talking about because let's be real

he knows that we're in a recession and

it's this fight against inflation that's

helping push the 10-year treasure yield

back to 3 percent that's actually a

pretty big deal since just about a month

ago it had fallen as low as two and a

half percent now usually a higher

treasury yield can lead to more people

going to buy bonds rather than investing

in stocks and so you could see some

weakness in the stock market compared to

your opportunity to get a risk-free 3

percent on 10-year treasury bills right

now unless you think america is going to

go bankrupt you could get a risk-free 3

yield every single year for the next 10

years buying us treasury bonds now when

we say risk-free that's because u.s

treasury bonds are deemed to be

risk-free by markets but anyway that

yield will probably lead to more real

estate pain now the higher and longer

real estate or 10-year treasury yields

stay high the longer we expect mortgage

rates to stay high and the more we

expect the fear of real estate

potentially peaking and coming down

to take hold and finally lead to supply

exceeding demand which will then likely

lead to price reductions so far though

we still have a supply demand imbalance

in favor of a lack of supply so we'll

see that transition continue to happen

this year either way friday's jackson

hole summit where jerome powell talks

dirty to us probably going to do not

much for that 10-year treasury yield and

we probably won't see any certain

optimism for markets until we get that

september cpi reading because markets

think we might just be getting click

baited like we did in march and april

tomorrow we'll get some manufacturing

and service pmis which are great for

some leading indicators on pricing

action but then again you have people

like elon musk raising the price of full

self driving again even though i still

don't have full self driving even though

i paid for it twice in two different

cars anyway on thursday we get quarter

over quarter gdp reads along with

personal consumption data this will be

really interesting because we'll see hey

it's the third quarter so far

potentially looking like it's continuing

in its track of being in a recession or

have we recovered out of recession and

how is that spending holding up so far

every quintile of a personal incomes

have more income and more savings than

they did at any part earlier uh in the

second quarter and they're spending more

money than they were in the second

quarter so hopefully that means we're

spending our way out of a recession

especially since the consumer makes up

70 of the economy we do have earnings

coming up which might give us some hints

into how things are changing and maybe

indicators that

the second quarter was a bottom

hopefully we'll get some dirty earnings

from nvidia which have already been

pre-released we'll get macy's nordstrom

dell salesforce and peloton and in my

opinion the longer we spend under 318

for the qqq is a perfect buying

opportunity not only for the programs of

building your wealth no but for actually

in my opinion getting great deals on

stocks i think 318 is the perfect level

to look and say okay the more we are

below this the better deal i'm getting

but even at 318 this is a good

opportunity to be looking at the fact

that we're in a recession at least a

technical recession and going you know

best time to buy is in a recession so

let's go thanks so much for watching and

i'll keep you updated with more news as

it comes in thanks folks bye