The End of Pain **Or** JUST the START | Answer.

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everyone meet kevin here we gotta talk

about the two big elephants in the room

the catalyst that are hurting

our markets right now now we have good

news and bad news the bad news is a lot

of stocks rotated down substantially

this morning stock indices fell

everything to the point where everything

was down almost over one and a half

percent

bond yields were down at the same time

signaling this flight to safety and

people are starting to talk about gold

again and you know when people are

talking about gold

it usually is a sign that you got a lot

of weenie baby pansy babies who are

trying to

sell out of their stock positions and go

to something that just feels a little

bit better i know this because literally

the same exact thing happened

back in march of 2020 back in march of

2020 literally we had a rotation to

people

getting so tired of pain in the stock

market that what did they do they

rotated over to gold and started

commenting that's it i'm getting out of

the stock market and rotating to gold

it's fine it's fine this video is not to

bag on gold this video is to talk about

the two big catalysts that we have

creating fear uncertainty and doubt in

markets right now

and we're bought beyond the level now of

really discussing interest rates we do

know that we have quad witching day

today which increases volatility and the

market increases volume in the market

but volume and volatility are not

necessarily associated with negative

days in fact the vast majority of

witching days that we've had over 70

percent of witching days that we've had

since the beginning of 2020 have ended

up positive so we have a greater chance

of having a a closing positive day on a

witching day than than you otherwise do

uh part of the reason why i bought the

tip this morning but anyway uh we do

have two large catalysts that we do have

to talk about and again they they rise

above and beyond uh interest rates now

i've regularly been saying that i think

we're mostly out of catalyst i've said

this the last few days and now i know

here i am talking about two catalysts

again and that's specifically because if

we go back to the beginning of december

so i date my little notepads here and we

go back to the beginning of december

we're like oh yeah that's right what

were the catalysts we talked about

november 29th will we know congress

cpi fomc profit-taking loss-taking and

omicron right now fortunately here we

are now three weeks down the road and we

know that omicron is one of the two

catalysts but we know that omicron leads

to more mild symptoms and we also know

that there's a chance omicron could be

the beginning of the end for coven so

yeah omicron is without a doubt one of

one of the concerns but take a look at

some of this okay this is just a quick

little consolidation of some of the core

facts that we have we know that omicron

is up to four times more transmissible

we got that we know that

and we also know that you have a 40-fold

reduction in antibody effectiveness from

the alpha varium we know that if you

only have if you're only double

vaccinated or you've had prior illness

you're really only 23ish percent

protected with antibodies instead if you

have a booster or recent illness you

could potentially be closer to 70 to 75

percent uh you know protected from

omicron now omicron fortunately though

is is leading to more mild symptoms but

it's creating a lot of fear it's

creating a lot of fear uncertainty and

doubt the the positive i see in all of

this is you do have disease modelers

like over at ha at harvard suggesting

that look omicron is likely to displace

delta and that would be a good thing why

could this potentially also be a good

thing well because the bloomberg just

reported this morning that south africa

is seeing hospital cases inflect down

substantially we actually started seeing

this inflection point four days ago i

reported about that on this channel that

hospital cases were going down in uh in

south africa and this is why i've also

been talking about this this weird

transition that we're going to see in

covet cases in america where you're

going to be in this situation where

you're going to see delta lead to

hospitalizations and deaths spike at the

same time as case counts spike but we're

going to see this taking over of omicron

the green being let's say omicron yellow

being delta

and that should lead hospitalizations

and deaths to actually come down even at

the same time we're peaking and right

this is going to be our opportunity in

my opinion to buy recovery stocks

especially if omicron does prove to be

the beginning of the end which who knows

maybe then there'll be another variant

that's more severe hopefully not

hopefully it's just omicron hopefully

it's just mild look you don't want it

but if you get it hopefully you don't

get long covert from it but yeah look

all me no matter what no matter how many

comments we get about it's just mild

99.95 all the crap we get in the

comments it is still something that

people are going to fear now why are

people fearing omicron well it has to do

with the second catalyst and that has to

do with global gdp gross domestic

product growth we have issues here

we've got many reports coming in that

economists are now reducing their

projections for global growth for not

only the fourth quarter of 2021 but also

the year of 2022

this is a problem because if global

growth shrinks and let's say you have

negative quarters in a row in countries

like germany and brazil which we're now

projecting negative a negative fourth

quarter for germany and brazil and then

maybe you get another negative quarter

for germany and brazil guess what you

get two negative quarters of gdp

essentially contraction in a row you

have a recession so you could literally

have this this post pandemic uh

recession

essentially following uh the the

recession that we had the um i mean it

was it was deep but it was short the

short recession that we had in march of

2020 and that's going to create and fan

the flames so to speak

growing the fire

of of of global growth concerns for

america for the united kingdom and and

really for uh for just countries

throughout the world

anytime you get gdp

inflecting down you get fears that gdp

is going to continue to inflict down and

then you're going to get people with

their creative uncertain minds who are

going to say things like wait a minute

if gdp falls

what if we have to go back to stimulus

and if we go back to stimulus is it

possible that we're going to fan

inflationary fears again right so you

get all this fud and when i say fun i

don't want to remember fudd is different

from

fake news right fud is real news but it

creates fear uncertainty and out and

people in markets hate uncertainty

that's something that's super super

important to know

but take a look at this some of this is

actually normal because if we look at

the san francisco fed

they put together this piece on how

markets respond after wars and after

pandemics oh but first a message from

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extra and what's really interesting is

if you look at the response of real gdp

after a pandemic

look at that we zoom in very closely

here the bottom one is is wars so after

a war you have devastation so you get a

longer term gdp decline

in the longer term you know five plus

years after a pandemic you tend to get a

substantial boon in gdp but it stays

flat and uncertain for quite a while and

and that to me is a little bit of what

we're seeing now is this continued and

these notes here just ignore them i

wrote them quite a while ago uh but

you also see wage growth after a

pandemic after a pandemic the real

natural interest rate this was

fascinating look at this the real

natural interest rate which which

basically means

you take what your interest rate should

be and then subtract inflation right so

the real natural interest rate

uh actually rotates up initially but

then you get this this inflection down

and what you're looking for is let me

try to highlight this what you're really

looking for is the blue line right here

inside the green let me circle it right

here and then if we go in a little bit

more here to zoom in look at that you

get the rate goes up this is kind of

like that inflationary impact that you

have initially and then you actually get

this flattening and decline and in the

longer term uh over 10 20 30 years i

know this sounds wild to think like in

that long scope oh i almost just

destroyed my desk

uh you you actually tend to have this

this decline of somewhere between one to

two percent and real natural interest

rates over time

because productivity's gone up people

have gotten like things have gotten more

efficient uh the the inefficiencies have

been removed from from society and

manufacturing processes by by force

because of the supply chain issues or

whatever now these

this research really goes back

i believe to about the 14th century so

we're really going pretty far back here

uh and i know you know all we all this

time is different but when you look at

this sort of research it's like okay

like

this is basically to say that in all of

these charts here no matter what after a

pandemic things tend to do well over

time but you're going to go through a

bumpy start

so wages expected to go up over the next

decade uh inflation expected to go down

over the next decade real gdp expected

to go up over the next decade and

decades

uh this makes sense again things have

become a lot more efficient but in the

short term

we can't look at these charts that give

us this zero to ten year outlook and

then ten to forty year outlook

because right now we care about oh my

gosh my amc stock is going to the moon

right now kevin that's all i want to

talk about it's amc going to move right

now and this is great don't get me wrong

like nfc is going up 20 this is great uh

and you've got you've got a lot of

volatility that you had today rivien

lucid falling substantially and a lot of

tech stocks starting the day out very

red only to recover substantially i mean

look at this arc

this morning was at 89. now it's at

96.60 you bought the dip this morning

you're up uh eight percent uh on an arc

from the bottom right

but

what is happening and these are the two

big catalysts is you have omicron

creating continued fear

that global gdp is going to decline in

22.

in fact if we look at an average of uh

global gdp estimates right now we are

expecting that global gdp

will actually only grow 0.7

in q4 that's right now

uh that is down from 1.4 percent of the

prior quarter that's half half of the

growth that's not good that's not

progress right

and uh this is lower than the one

percent of gdp growth that we had before

the pandemic

again you have contractions in germany

and brazil you have less than one

percent growth in mexico south africa

south korea italy france and the united

kingdom the united states is still

strong for now but we're going to see a

slowing of gdp even in the united states

the

federal reserve

sees gdp slowing from their projection

of 5.5 percent in 2021 which you could

see right here

to four percent they did revise up their

projections of gdp growth and so this is

good the bond market is also indicating

that there's going to be a limit to how

high interest rates are going to be able

to go in fact go back to that summary of

economic projections for a moment see

this over here under the 2023 chart see

that 1.6

the federal reserve thinks by the end of

2023 we're going to get to 1.6 percent

well according to the financial times

fed funds futures traders

right now believe that by the end of

2023 we're only going to get to 1.27

this is less than where we were when we

were on federal reserve day at 1.33 but

in both cases the bond market is saying

yeah no no no

we're not going to be able to raise

rates that much

part of that is because of the fear that

rates going up too fast is going to slow

the economy too much and we're going to

have to reintroduce stimulus measures

just like japan is doing and to some

degree like the ecb is doing the

european central bank

so

bottom line out of all of this

is you got to know a few things

the first thing

so multiple bottom lines the first thing

that you got to know

is all of the bears

come out when there's fud i shouldn't

really say bears equal fud i should say

fudd leads to bears there we go okay fud

creates bears

so when you're talking to other people

who tell you things like oh my gosh

you're catching a falling knife or oh my

gosh tesla's going to 200 or

uh oh you know this is the beginning of

the end welcome to a bear market you

know all these stupid comments from from

uneducated folks that we get uh all the

time uh it it it's important to to place

uh a chance on what they're saying this

is not me saying that we cannot have a

very bad bear market

but what are the odds right and so this

is i think the easiest way to evaluate

look at this what are the odds of a

5 s p decline a 10 s p decline a 20 s p

decline and a uh similar to pandemic 33

s p decline what are the odds of this

and so

when you hear the bears and you see the

red and you feel the fud it's like oh my

gosh i just i just got to sell i got to

get out i got to go get my gold

or

you could use

some logic

and try to assign odds to this five

percent uh five percent decline in the s

p quite likely we i i would say this

this has easily a fifty percent chance

of happening a ten percent decline in

the s p my guess somewhere around twenty

percent chance of happening could happen

absolutely but remember folks there's so

much money floating around in the system

remember how much uh how the federal

reserve chairman jerome powell tells us

that household leverage is actually at

historically low levels business

defaults are at historically low levels

that means there's still capacity for

borrowing we also know that yeah margin

levels are high but all levels levels of

everything are high right yeah yeah

valuations are still elevated but the

amount of money we've created is insane

so this money is floating around

somewhere

we know that reverse repos are at

all-time highs but remember that's

excess cash that banks have they want to

lend it out so they want to give people

money to go invest so anyway uh for in

my opinion the odds of us getting a

repeat of the end of 2018 probably

closer to like a 10 chance that we're

going to see a 20 selloff in the s p and

then to see something like a 33 off i

think we'd really need a severe variant

a severe black swan event i would i

would say this has less than probably a

three percent chance of occurring

so

this is where in my opinion

if i think there's a 50 chance that

we're gonna see a five percent uh

decline in the s p 500 or 50 chance that

we won't

to me it's like whatever i'm gonna take

advantage of buying the dip on my

favorite companies uh money losing

companies are going to get hit the worse

we've been talking about that for six

months six weeks here we know that

software companies are getting hit the

worst uh valuation compression is

hitting those hard but i'll tell you

there is a silver lining in software

evaluation that's going down because

what i want you to do is i want you to

look at a company like docusign

docusign shows you

the best example of valuation

compression

so valuation compression takes you from

a 285 share price

to about a 130 140. and over the last

two weeks we've had a lot of fear

uncertainty and doubt

but take a look at what docusign has

done it's hit a floor

and i think that's very interesting

docusign has hit a floor and it's not

exceeding even though fear it to some

degree seems like it was worse this

morning the floor is not getting worse

look at lemonade the so the 140 floor at

docusign is not getting worse the 40

dollar floor at lemonade is not getting

worse and the sofa floor is pretty solid

at 14 though we did hit 1366 briefly

this morning so i don't know that we

could say it's definitely hit a floor

here yet but it's it's finding its floor

here even though the fud keeps getting

worse and worse where some of these

stocks are finding their floors

and that's a good sign that some of that

software compression software valuation

compression is coming to an end uh elon

musk i think is probably done selling

for about a month given some share

blackout periods that tesla has

uh which is i think bullish for

something like tesla and we've seen a

lot of the deep red that we saw this

morning turn turn to pretty nice greens

uh so okay the first thing again in

terms of bottom lines is we got to

understand

the bear fudd and the odds of of real

pain it's always possible sure beginning

of the great reset all this garbage

whatever but personally i believe those

are low odds okay that's just me i i

could be wrong what do i know i don't

have a crystal ball i really got to buy

a crystal ball so i could say i have one

the second thing is

you have uh

you have to recognize the catalyst that

we have

omicron

is going to create a lot of fud

but in my opinion is going to actually

help us lead to hospitalizations and

deaths going down even as millions of

people potentially get omicron over the

next

month

now i think the end of the end of

december

and much of january is going to be

pretty nasty

and that's why i'm staying away from

rico's uh recovery stocks until we get

to sort of that peak level of fud uh

with with

recovery stocks which i think we still

have a way to go on those i could be

wrong i'm but i'm also not like

dying to get into recovery stocks i'd

rather buy some of the

tech companies that are at a discount

now remember you know what the market

always usually comes back to especially

if we have a slower gdp environment and

this is the next thing to know

right the next catalyst is really that

slower gdp growth you know what happens

when fear goes away so if fear gets

eliminated and you want more growth so

you're fighting a slower gdp or

potentially even deflationary concerns

you know what does well during those

times folks

it is tina

there is no alternative and tina

generally relates to growth stocks to

the mega caps to

uh tech stocks

so tina always seems to come back

and and it's times of pain that you want

to be building your position in in

growth stocks

not in times of euphoria

because you want to be able to get that

discount

otherwise you're you're going to end up

following the herd and and then you you

give up a lot of the potential returns

that you could be getting buying the dip

buying low so if i look at the stock

market right now look yeah a lot of

things doing really well right now i

mean amc up 20 is amazing but look at

some of the relative prices that we have

here yeah draftkings up seven percent

but look how far down this thing is i

mean draftkings you're selling on

draftkings you're selling for may of

2020 levels over here you got some

massive freaking fear over here

i mean tesla is down what 25 from some

of its some of its highs over here what

950

is the new number divided by 1243 yeah

you're down 24 from its peak look at

roku roku's had a big reset loaded the

boat on this one at uh at uh right

around 198 to 201

as always every time i buy or sell

something i send alerts to those of you

in the stocks and psychology of money

group which of course you could take

advantage of with that a coupon code for

xmas linked down below

but uh yeah i mean even sofa is still at

a relatively good price

uh sitting just around that 1470 number

it keeps rubber banding back to and face

bought this this morning in the dip at

180 it's sitting at 190 now but

beautiful beautiful valuation reset here

and i think it's valuation resets like

this that are going to really help us

rotate to new highs i even bought uh

bitcoin at peak fear this morning

bitcoin aida solana uh you know i don't

mind picking up kryptos during periods

of peak fun it doesn't matter i love

investing when there's fun and you want

to become that honey badger and that's

like peak fear

let's go give me the fallen knife you

know what i keep knives around with

poison tips on purpose to catch them

just feel it hold it

because then after the pain i'll take it

and i show off my attendees to everyone

because i can clean you know i can cut

my attendees really nicely

anyway

these are some of my thoughts uh on uh l

market

and uh be a honey badger

play some odds on your fud before you

freak out

and uh yeah let me know what you thought

about this one take rant all right we'll

see in the next one thank you bye