Michael Burry's New Warning, Fed Flip, Cathie Wood, Bed Bath & Beyond BBBY, Chips, & Roku

this video we're going to cover a

substantial amount of information we're

going to start with a critical U-turn

that's happening within the Federal

Reserve then we'll touch on Bed Bath and

Beyond and their impending bankruptcy

we'll look at Michael Murray's latest

warning we'll touch on the new gold and

Ark invest's latest research letter we

have a lot to cover so let's get started

first the Federal Reserve is a very

important institution because obviously

their hiking of interest rates has led

to the most predicted recession ever in

the histories of recession it is why we

are all experiencing as much pain as we

are unless of course you're shorting and

celebrating with champagne because the

market has been trending straight down

and the real estate market is following

suit with about a seven month lag the

real estate market seems to have peaked

around May and the stock market seems to

have peaked in November of 2021 and both

of them continue to Trend it down though

there is hope but remember hope is not

an investing strategy and what I'd like

to do is look at ship with the

Philadelphia fed just set in terms of a

potential u-turn at the fed and this is

not the kind of U-turn you're thinking

of it's not the kind of oh let's slash

rates the bond market is already pricing

that in the bond market is already

pricing in 1.7 of rate cuts by the end

of 2023 and 500 basis points or five

percent of rate cuts by the end of this

cut cycle which will probably take two

or three years once rate Cuts begin in

other words yes we are probably going

back to zero but we don't have to agree

on what the bond market is projecting

right now what we want to do is start

looking at where are cracks at the

Federal Reserve and the Philadelphia fed

just gave us an example take a look at

this

Pat Hawker from the Philadelphia fed

just stated that hard data can be useful

like employment growth numbers and GDP

however there is a big issue with using

hard data exclusively or worse over

emphasizing hard data when you should

not consider what's happening in our

economy right now the Federal Reserve in

my opinion is over emphasizing the hard

data we're getting from the labor

reports which suggests that somehow

we're creating millions of jobs via the

Bureau of Labor Statistics labor reports

that hard data is actually leading

Jerome Powell in the Federal Reserve to

be more aggressive in fact the

Philadelphia fed just a few weeks ago

let's tangent for a moment here on this

this might sound familiar but it's

important to remind you that the

Philadelphia fed is actually the one

that has started waving the red flag

suggesting wait a minute the hard data

might be wrong we might actually be

overstating how many jobs the U.S

economy is creating in just one quarter

of 2022 by 1 million that's because

we're seeing less full-time jobs more

part-time jobs and more multi-jobs

leading to the indicators that at a

glance labor looks like it's so strong

but really what you're seeing are cracks

you're starting to see people have to

take multiple jobs because of the most

insane inflation we've seen in the last

40 years but why do we in part have some

of the most insane inflation in the last

40 years well because the Federal

Reserve over at in Philadelphia thinks

that there may have been an over

emphasis on hard data that actually led

to the inflation we're seeing today look

at this an over emphasis says Pat Hawker

candidly an over emphasis on hard data

like GDP and employment growth can lead

to policy errors

hard data last year suggested to us that

inflation would be transitory

that was obviously a big mistake but

what was Soft Data telling us last year

ah well Pat Hawker tells us Soft Data

said that we were actually seeing Rising

prices that were proving to be much more

persistent than had we than the FED had

expected now had the FED listen to the

Soft Data then they would have started

raising rates and stop the money

printing sooner potentially preventing

some of the most insane inflation that

we had to deal with in 2022 rising to

nearly 10 percent in America and over 11

percent in Europe and over 80 percent in

Turkey but that's the topic for a

different video

what is the Soft Data telling us today

remember Soft Data are survey results

that is ISM surveys uh s p PMI surveys

expectations from the University of

Michigan rent surveys labor surveys I

kind of scribbled this one over here all

of them are pointing to a deepening

recession

all of them now yes there is still mixed

data and Pat Hawker in this report talks

about how the data is mixed and that's

because we are still getting some hard

data that is saying maybe the FED needs

to be a little tougher and some soft

data that actually says uh hiring's

still tough you know still seeing that

we have to pay people more to come work

but are those potentially just more

blue-collar workers rather than white

collar workers and what difference does

that make for our economy well let's

pause for a moment before we get to this

Michael burry warning which relates

exactly to this question and ask

ourselves

if we're starting to see cracks at the

Federal Reserve where the FED is

starting to say wait a minute maybe we

are being too aggressively focused on

the hard data we might actually prepare

for a softer Jerome Powell come Feb one

the next fomc meeting there's a reason

the bond market is not only pricing in

just a 25 basis point hike at the next

meeting but a pause no later than June

and cuts by the end of the year it's

because the bond market is paying more

attention the big money the smart money

is paying more attention to these

leading indicators which suggest the FED

is going too far and the Philadelphia

fed is realizing the hard data is

starting to look misleading and it was

misleading last year and it's time to

start paying attention to what's

actually happening in the economy this

is a great thing but now we need to talk

about Michael Murray's latest warning

right after of course I mentioned that I

thank you for being here thank you for

watching this video and if you like this

longer form video let me know in the

comments down below I'm going to pay

specific attention to the comments on

this video because this is a longer form

video versus the usual 8 to 12 14 minute

video this video obviously a lot longer

with multiple different topics that are

connected with obviously an emphasis on

economic news

let me know in the comments down below

if you like this or you prefer the

shorter Style videos

Michael Murray believes that we are in a

white collar jobs bubble now this is

more fascinating than the announcement

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expiring January 30th for the programs

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okay so Michael Murray talks about a

white collar employment bubble bursting

right before our eyes and the longer it

takes for the redundancy to disappear

the more permanent the decline in

employment will be work from home will

in time be seen as the culprit I see a

bifurcated labor market developing as

unskilled and semi-skilled workers

remain in short supply but white collar

workers having proven their redundancy

during covet will find gross excess in

the labor market pressuring wages at the

end now this is absolutely fascinating

because it directly corresponds to what

Pat Hawker is telling us Pat Hawker and

the Philadelphia fed are highlighting

that the hard data suggesting that wages

are rising are not paying attention to

the fact that it's blue collar work

that's actually Rising White Collar work

it's blue color workers it's

manufacturing it's fulfillment it these

sectors are seeing wage growth it's

accommodations it's uh services for

travel Airlines that's where we see a

lack of employment and a white-collar

bubble bursting will be very likely to

lead to a decline in wages that means

disinflation in Goods a disinflationary

environment in housing could potentially

be combined combined with a

disinflationary environment for wages

now this is actually where Michael burry

and I begin to differ because Michael

burry then suggests that we are going to

see rapid deflation but because the FED

is going to rapidly U-turn and start

printing money again we are going to

create a second wave of inflation and

this entire disaster we've gone through

will all repeat itself so we actually

align with massive deflation coming

completely agreeing I defer with bury

personally in that I don't believe we

are going to see massive inflation again

just like we did not see massive

inflation again during the 2008 and 2019

era and I especially don't believe so as

we actually in my opinion re-globalize

where we actually have produced some of

the most efficient Supply chains in the

world and companies are actually scaling

back on manufacturing but they have the

capacity to rapidly expand with

machinery and the factories they've

built which suggests that when we

actually reopen when China reopens when

we as Americans start spending more in

the next bull market what happens

these companies are already hopefully

ready to fulfill in a high demand

environment because they suffered

through 2021 where they could not they

were not prepared for that sort of

demand they never want to be in that

position again I believe that sort of

re-globalizing will keep inflation low

but let's stick to some commentary from

Michael burry at the moment and could he

potentially be right well consider the

following Goldman Sachs is laying off 3

200 employees that amounts to about 6.5

percent of their Workforce that's a

little less than the eight percent they

were predicting but it's still a big cut

in finance White Collar jobs that's

actually a big deal for Real Estate as

well because if you're focusing on

white-collar jobs as potential tenants

and those are the ones getting laid off

you have to be careful for your real

estate startup which happens to be

called House hack if you're an

accredited investor make sure to check

out how sacvia the link down below

IPO issuance has dropped 94 from last

year uh Goldman Sachs scaling back on

consumer banking coinbase slashing 20 of

their Workforce cutting a fifth of their

workers that's after an 18 reduction in

June more white color jobs evaporating

expenses are being cut at White Collar

companies Microsoft is freezing the

expansion of offices in Seattle as I

learned in my real estate Explorations

yesterday in person Amazon cutting over

18 000 jobs scaling back on a lot of

corporate and recruiting jobs White

Collar jobs again having admitted hiring

too rapidly during the pandemic which

reiterates what Michael burry suggests

that white collar jobs are proving to

have been hired in EX in substantial

redundancy that is we have too many

people working in the corporate offices

his warning is aligning with what we're

seeing Salesforce cutting 10 percent of

its personnel more than 7 000 employees

and the co-ceo saying they're taking a

more measured approach in business

expenses this is a red flag for

businesses that rely on cloud services

because think about it as you look at

Cloud companies growing 30 year over

year what do Cloud companies rely on

they rely on seats subscriptions for

more white-collar employees but if we're

actually shrinking the white collar

Workforce

uh oh software as a Services Industries

could start shrinking that's a red flag

but it's also a red flag for companies

that rely on White Collar consumers I

hate to say it but your average buyer of

a Tesla is a white color purchaser it's

a red flag Tesla's got to get less

expensive vehicles to keep sales moving

and that's exactly what we're seeing at

Tesla but this is not to suggest that

all of the excess we are seeing is

exclusively in White Collar consider for

example the disaster that's happening at

Bed Bath and Beyond Bed Bath and Beyond

is a fantastic example of a company that

has failed in its corporate management

and guess what did not take the warnings

of JCPenney consider this the CEO of

Bed Bath and Beyond completely failed to

realize that removing coupons was a

fatal mistake for retail in 2012 CEO

Iran Johnson of JP Moore JCPenney came

from Apple a store that had limited

promotions and went and but also caters

to a higher income individual with a

higher margin product and moved from

Apple running stores to trying to run

stores at JCPenney Ron Johnson focused

on everyday promotions and a limit and

well everyday good pricing and

eliminated constant couponing eliminated

eliminated MSRP pricing and then showing

discounts underneath that and also

eliminated psychological pricing like

ending pricing at 9.99 and just going to

whole numbers like 10 dollars the result

of removing people's perception of value

that they were getting a discount off of

MSRP which we all know is an inflated

price anyway but yet people still go

into Macy's and go wow I'm getting 30

off MSRP and I can stack that with my

Macy's credit card benefits and I feel

like they're getting 45 off MSRP I feel

like I'm winning well when you remove

that psychology from people what happens

sales plummet JCPenney saw their sales

plummet 3.3 billion dollars over 15 in

just one year from growth to losses

losses ramping up so substantially that

that CEO was fired within a year and so

the Bed Bath and Beyond CEO apparently

didn't get it that one of the reasons

people actually like going to Bed Bath

and Beyond was because well a hopefully

they had stuff in stock but B those

white and blue mailers that gave you 20

off were a great opportunity

to induce sales

CEO didn't think so he thought no we

should focus on more Niche Brands and we

should focus on getting rid of of uh

couponing and let's just focus on brands

that we can promote as higher value and

higher margin so what happened sales

plummeted so much so that suppliers

actually refused to provide Supply to

Bed Bath and Beyond to where 43 of Bed

Bath and Beyond's product was out of

stock in October right before critical

Black Friday sales so what happened now

well now we're in a situation where

activist investors like Ryan Cohen

dumped their positions sales are down 33

percent year over year the stock is down

90 percent however it has rallied this

week they're running out of cash

substantially for the next quarter

they're reducing uh white-collar jobs by

laying off the uh corporate uh sector

and closing 150 stores nationwide

Shopper visits across the chain are down

26.5 percent and now they're considering

potentially a chapter 11 reorganization

bankruptcy filing personally I think

based on the latest number they may as

well just add numbers at least from

their financials they may as well

consider a chapter seven because the

numbers just are not good this right

here is the Bed Bath and Beyond latest

earnings filing and what I'd like you to

pay attention to is the massive massive

declines that we're seeing in assets and

revenues let's start with revenues look

at net sales here last year net sales

sitting at 1.87 billion this year same

period down to

1.2 billion unfortunately last year when

they had 1.8 billion in sales they were

already losing money 86 million dollars

gone now they've expanded that operating

loss to 450 million dollars this is a

company that is burning money the more

product they sell the more they are

losing money

now that mostly is because I mean even

though they still have a gross profit

they are too bloated with their SG a

expenses sgna alone being twice their

gross profit so the more this company

operates the more this company is

trending towards bankruptcy you don't

have to go far to understand that look

at their balance sheet understand that

inventories are going to get washed down

at least some part by uh gift card

liabilities that they have but let's

just focus on hard cash right now

because we already know that as a going

concern this company even as it sells

inventory is burning more cash on SG a

than they actually get from profit from

inventory so what I'm going to do is I'm

going to ignore looking at inventories

for a moment and I'm going to look at

actual cash they have 153 million

dollars now I'm going to look at actual

cash outlays they have over the next 12

months oh goodness accounts payable and

accrued expenses which are like paying

for the inventories they have these are

paying suppliers to get new inventory so

they can actually fill up the shelves

appropriately to make sure they can keep

attracting customers uh oh one billion

dollars of current liabilities they only

have 153 million dollars of cash they

have to sell product just to survive but

every quarter they sell product they

lose more money because of their

operations being twice as bloated as

their gross profit this company is a

walking zombie

and this was why when you look at the

cash flow statement what are they doing

to actually survive they're not

surviving with operations we already

know that because they're losing money

substantially from operations cash flow

statements shows a burn of 300 million

so anybody looking at well they have

inventory Kevin why aren't you using

that they're burning money on operations

300 million in the last quarter but what

do we have from financing to keep them

afloat oh dear okay they borrowed

another 375 million dollars and they

didn't at the market stock offering

diluting your shareholder interest by

119 million just to stay alive

increasing their cash position by 59

million strictly by borrowing and

issuing cash had they not borrowed and

issued or stock that is had they not

borrowed an issued stock this company

would have been out of money they don't

have enough money to survive this is not

the company to make a fundamental

investment in and it's certainly not the

company to speculate on believing that

it is going to be the next hurt

remember that hurts when they filed for

bankruptcy skyrocketed

but the reason hurts skyrocketed when

they filed for bankruptcy is because in

bankruptcy they had multiple bidders for

the used car company why

because used cars were skyrocketing in

value the product they had their

inventories was becoming more valuable

not less Bed Bath and Beyond's inventory

is becoming less valuable not more

valuable the company's liabilities in a

liquidity crunch in a recession are

becoming more damaging not less

hurts was a special scenario but however

it has led to meme movement in every

time a company is about to go bankrupt

like the Revlon group what do you end up

having you end up having companies that

Skyrocket you look at Revlon and Revlon

fell to about four bucks two dollars to

four bucks right as they filed for

bankruptcy and they rightfully filed for

bankruptcy their financials were a

disaster I warned of investing in this

company in a private course member live

stream as we did a deep dive fundamental

analysis on this company as it was

running to seven dollars eight dollars

nine dollars and I said this is pure

momentum and it's not going to last the

fundamentals will shine through on

Revlon and sure enough they did

stock that was ten dollars is now 50

cents the same is true of Bed Bath and

Beyond

these rallies are driven by temporary

momentum purchasing and if you don't get

out you're going to be left holding the

bag a stock that will probably be worth

well under a dollar

I would exercise Extreme Caution at a

company like Bed Bath and Beyond that's

not to say you can't play the meme game

but just zoom out at the chart and you

see this company only goes up when

volume goes up and otherwise it bleeds

down and lower and lower and lower you

don't even actually have to look at the

fundamentals to tell you Bed Bath and

Beyond is a complete disaster but what

is not a disaster in my opinion is the

future

of the chips industry now I have been a

big proponent of actually investing in

the crash of Chip stocks AMD Nvidia

Taiwan semiconductors I actually believe

these companies have ridiculous

purchasing and pricing power don't get

me wrong in a recession everyone shrinks

everything shrinks and it sucks nobody

wants their PP to shrink we want pricing

power to go up but companies that

actually have substantially High margins

like Nvidia AMD Taiwan semiconductors as

a manufacturer in my opinion fantastic I

personally think a lot of individuals

should consider investing in potentially

actively managed ETFs that have high

exposure to chips I think chips are

going to be explosive over the next 10

years and the reason I like actively

managed ETFs is because of the massive

tax benefits of holding an ETF ticker

rather than holding individual stocks so

that way when it's time for an active

manager to rebalance they could do so SO

trading stocks within the ETF without

passing on massive capital gains to you

when they sell a stock at a large gain

that is run above and out of balance of

the others it's a fantastic benefit of

an actively managed ETF and I personally

think pricing power style

ETFs are the ones to look for and what I

think is absolutely remarkable something

that a lot of us are not paying

attention to is this idea that look at

over the next 10 years the amount of

money in the United States that is being

announced for manufacturing capacity we

are looking at

[Music]

186.6 billion dollars to put that into

perspective of how much money is getting

thrown into the chip industry I want you

to think that an expensive gigafactory

for Tesla like the Northeast Mexico one

that is expected to be built will

probably first see an expensive about

four to five billion and maybe up to

nine billion dollars in the long term

now what I want you to think of is how

186 is 20 of those

the chips industry is expected to

explode and the United States wants to

fight

I hate to say it but Taiwan South Korea

and China an explosive chip growth the

United States and politicians are

jumping at the opportunity to expand

manufacturing for chips in the United

States that's why Joe Biden Biden

Administration and Congress in a

bipartisan manner passed the chips act

this year

however Taiwan semiconductors does give

a warning they say that it's still more

expensive sometimes 50 more expensive to

develop chips in the United States than

it is to develop and manufacture them in

the asia-pacific region now that in my

opinion gives me a reason for

diversifying my chip investments into

not just American companies like let's

say Intel who not only designs chips but

manufactures them but stick with

companies like Nvidia and AMD that

actually have strong exposure to the

asia-pacific region and use

manufacturers like Taiwan semiconductors

or Samsung to take advantage of their

scale and higher margins to continue to

deliver a product at lower prices than

more people can buy that's a form of

pricing power deliver more product while

manufacturing it as efficiently as

possible and do so more while

cannibalizing your competition

especially in a recession

now this particular uh Wall Street

Journal article suggests that oil was

the foundation of America over the last

100 years but they go on to say that the

semiconductor industry is expected to be

the new oil going forward they give

examples of how there are now so many

more chips in everything we use than

ever before like for example a 40 Cent

chip that left 40

000 Ford trucks stranded in production

because that 40 Cent chip for windshield

wipers was in short supply in my opinion

The Wall Street Journal here it makes it

very clear that the United States is

lagging to China and Taiwan and South

Korea but as an investor I look at the

broad chips industry and I look at

companies that are taking advantage of

what is happening not only in U.S

Investments think about how Taiwan

semiconductors is coming to Arizona and

building a massive plant here but also

in Asia and how can you get that sort of

exposure again in my opinion really look

at companies like Nvidia Taiwan

semiconductors and AMD now we've got to

talk about Kathy Wood she recently wrote

an investment piece that was very

optimistic on Roku and I'm going to dive

into some research that we did with

course members in our course member live

stream remember there is a coupon code

expiring soon make sure to take

advantage of that by January 30th that's

coming up soon but Roku in my opinion

while all these ships and seas may arise

as the rising tides of the stock market

go up roku's not exactly my favorite

play I'm going to show you here why take

a look at this we do see 15

year-over-year growth in Connected TV

spending on Roku

over the last year which is great 15

however that's actually a deceleration

of almost half from the prior nine-month

period That's not great we went from 25

point eight percent growth to 15 percent

year-over-year growth that's dangerous

in my opinion for a company that is now

losing money last year we were not

losing money at Roku and this year we're

losing

146.9 million dollars as look at this

research and development nearly doubled

but sales and marketing did well also

actually nearly doubled both of these

nearly doubled and this is crazy because

if your sales and marketing expenses are

doubling but you're only increasing

Revenue by 15 you've got yourself a bit

of a problem the trade desk increased

their advertising 44 over the same

period and revenues increased 30 percent

in my opinion the trade desk is a fidea

is substantially better investment than

Roku I've also come to question the

investment logic that some of the

managers at Roku use when they suggest

they want to get into TV Manufacturing

why would you get into something that

has virtually no margin there is no

pricing power in TVs I would never

invest in TVs but I would invest in a

company like the trade desk which helps

organize advertising on connected TVs

and works with companies like Disney

that's big especially since Disney is

expected to be more of an advertising

player than even YouTube and a big

competitor to Netflix Who currently does

use Microsoft for their advertising

experiment still not sure where that'll

go but we'll see now I do mention here

uh that their stock based compensation

did explode uh quite a bit but so there

is a potential for a little bit of a

one-time move in some of these numbers

at Roku but they still make me nervous

nonetheless especially since why are we

spending so much potentially on stock

based compensation for sales and

administration and research and Dev and

advertising

when revenues are only growing at a 15

year-over-year clip for a company that's

now losing money which means you have an

infinite PE ratio during a recession it

makes me nervous and it doesn't make me

very excited so there you have my

Saturday piece I hope you have found

this super insightful let me know if you

like this sort of longer form connecting

the dots a video versus sort of the uh

more individual piece uh videos that are

uh potentially a little bit shorter

hopefully this is a little bit more

podcastable and something you can enjoy

uh connected together and hopefully it

provides an extreme amount of value let

me know in the comments down below

thanks for watching check out the

programs we'll see you soon goodbye