This is Unexpected | Prepare for Market Chaos This Year.

could 2024 be different that's what this

video is about on New Year's Day we're

going to go through what JP Morgan just

showed us in terms of some charts we're

going to go through my money market

magnet thesis which we posted about on

ec.com together you're going to get all

the insights and now keep in mind Gold

Course expiration I had to push it back

a little bit because there have been so

many emails and during New Year's Day I

did I did I took Jack I took Jack skiing

it was his turn Max was last week so we

got Jack uh I I didn't know what size he

was for his fitting so I actually used

the iPhone measure tool which I thought

was actually kind of funny uh but uh

this was us on New Year's Eve and uh it

took him in the bus to go to The Fresh

Market in Park City got himself Prime of

course and uh yeah here's here's a

snowballing uh not like in R but uh but

otherwise yeah he's he's pretty excited

so I got some videos here but that

doesn't matter right now what matters is

what about

2024 well let's go ahead and start with

these yikes uh photos and then I want to

talk about my magnet thesis so the first

yikes photo that I really want to hit on

is this one which shows us the top 10

stocks in the S&P 500 and uh what the

trend line is looking like here let's

just get Kevin out of here I wrote yikes

in there and I threw a trend line on

there and um keep in mind this is not

the share price of these stocks this is

the weight of the top 10 stocks so this

could mean that the top 10 stocks either

fall to get off that trend line or they

do nothing yes they could do nothing and

everything else could rise in price if

everything else rises in price and these

do nothing then the weight of these

would be lower right that's naturally

how this would work uh now it it is

interesting because when when you look

at the top seven like the one lagard out

of all of them has been Tesla under the

weight of interest rates we've talked

about that one plenty of times there's

there's always something some drama

going on with Tesla uh interest rates

and Elon put both of those together you

gotta you have entertainment but elon's

always told us hey buckle up because

entertainment is your only guarantee So

In fairness you had Fair disclosure uh

this was another interesting one look at

this corporate cash as a percentage of

current assets

by sector wow wow this is insane when

you look at the companies that have the

most money first of all it's mostly your

growth stuff that has the highest

percentage lowest percentage would be

your utilities Consumer Staples

materials Industrials this makes sense

your greatest percentage of cash not a

surprise Comm services and Tech real

estate even Comm services and Tech

that's going to be uh well basically

those are your main growth plays right

so uh keep that in mind and yes um if

you still want to email us because we're

so behind on those we did extend the

gold coupon uh until we get through all

the emails so emails to staff atme

kevin.com we'll probably get through all

of them tonight uh if not first thing

tomorrow morning and then we'll change

the price so uh if you did want to

bundle up and you didn't get an email

reply yet I'm sorry the entire team has

been out I've been working on it I was I

was up late last night in Park City

waiting not only to uh celebrate the

ball drop but also responding to emails

so uh I was even trying to do it on the

lift but I'll tell you that is a bad

idea trying to do emails on the lift

while you're holding your poles and and

your glove that you took off and your SE

anyway okay so this

fascinating

this massive amount of cash in teeken

com Services actually makes me feel very

very excited about many of the companies

that could bet benefit uh from where

we're heading potentially uh with

markets I mean look at what we wrote on

eack yesterday we wrote on eack we we we

had this large piece talking about uh

the fed's manufacturing lag and we

talked about ubiquity on there as well

and basically this was this massive

argument that hey there is a chance that

we could basically have all of the

manufacturing headwinds that we had

during covid which turned into massive

stimulus for the manufacturing sector

lead to a massive manufacturing pickup

in mid 2024 which is interesting because

that could be just as we start seeing a

slowing of jobs you could actually see a

pickup in jobs for manufacturing and who

would be manufacturing well as usual

your cashr companies see it takes about

2 years we touched on this on on ec.com

here you can read the full piece there

but it takes about 2 years to actually

get a fact up and running so what a lot

of companies have been doing is really

what this is too hot let me let me

expose the dragon chain armor yeah what

a lot of companies have been doing is

really the ubiquity approach so ubiquity

for example they have this situation

where they exploded their spend on

inventory uh to the tune of some $487

million where all of a sudden it looked

like they were cash flow Negative they

were negative cash flow

10K uh in you know the quarter ending

June 30th that's actually when their

year ends as well at the same time their

stock based compensation was jumping so

you've got here stock comp jumping uh

substantially from $3 billion to 4.7

those folks are likely selling because

it's an uncertain time at the same time

the company's negative free cash flow

why because they're hoarding inventory

in fact in their 10K they say why did we

do this the increase in inventories as a

result of the Strategic decision to

secure inventory while components are

available in an effort to increase

product availability that I think is

what a lot of companies are going to do

in 2024 make sure the shelves are

stocked companies never again want to be

in a place where you have a boom like

2021 and the government's throwing

helicopter money around and you don't

have enough Supply to deliver the goods

so I believe that cashr companies are

going to do everything they can to make

sure their supply chains are delicious

their inventory is stocked and they're

investing as much as possible into R&D

and going

forward expanding and growing and

advertising uh in fact that was another

thing we talked about on ec.com was this

idea that companies uh in fact we have a

whole trade desk piece here uh Barons

for example sees trade desk as a big

beneficiary of what could be a 30%

increase from the last presidential

cycle in political ad spending 50 .9

billion in political spending which is

an insane

number but it's not just because of

money that campaigns have it's also

because of all the super packs and the

corporations donating money into uh you

know into Political campaigns for

advertising or whatever so I think what

happens is the following and then I

really want to get into this piece right

here which is where we talk about my

money market thesis okay so I think you

have companies that are relatively

cash-rich dump money into

advertising and Manufacturing pushing

out more inventory like the ubiquity

effect to make sure there's plenty of

Supply well what happens when Supply

skyrockets and now you're advertising

more why are you advertising more you're

advertising more because you're trying

to induce

demand and the best way to induce demand

is by advertising that your prices just

went down and I think deflation is going

to hit hard in 2024 and the

beneficiaries are going to be the

manufacturers potentially as they come

out of the manufacturing recession

you've had 13 months of straight

declines in manufacturing and so if

companies advertise more and lower their

prices and potentially take it in the

margin who benefits consumers with lower

prices but also the manufacturers

nobody's touching the manufacturers

right now they're like China you know

it's like I I don't I don't want to

catch a fallen Knife Man China I don't

know how low is it going to go

manufacturing I don't know how low is it

going to go I don't know man I think

there is a chance you could see an

advertising in manufacturing boom in

2024 which actually creates the jobs

that help keep us out of a recession but

then you have the bare argument of who

wait a minute what about the inverted

yield curve you know there are a lot of

people who think the inverted yield

curve is going to reinert really quickly

as we go into 2024 and we're going to

see a stock sell off again remember the

last time the yield curve started going

up

okay we went from like Nega 80 basis

points to -20 and when was that July

19th through October 31st I know very

clearly because it was 3 months and a

week of straight down in the stock

market and of course that's when we did

our reggae fund raise for house

hack come on

man it's okay it's okay uh you had to

wait for the attorneys it would have

been perfect to do it in June or July

it's okay uh so uh Hey whoever got in

they get the Ono one valuation everybody

you know everybody who didn't get in

they missed out because now the

company's worth 50 to 100% more than

what those shares went for go to the

house Hack YouTube channel you can learn

about what where where we're coming from

with evaluation everything just house

hack homes it's linked in the

description down below make it easy for

you okay so but what about this

inversion are we going to reinert well

there are a lot of bears quite frankly

right now who are arguing well we're

going to re invert and the fed's going

to cut rates and stocks are going to

tank because of this reinversion usually

when we steepen you know we we go up in

the yield curve stocks go down that's

all you have to remember okay more

steepening means stocks go down

usually I actually wrote a piece on eack

while I was on the plane back over here

from Park City Hebrew actually but

anyway as I was flying back over here

like huh you

know will we actually see the yield

curve go positive again and so I have

this thesis I want to be clear this is a

thesis this is not a guarantee but it's

a thesis I I wrote this a couple hours

ago I wrote I I worry that the money

market magnet might actually keep the

yield curve inverted much longer see and

think about this just simply okay in

order for the yield curve to reinert you

really need people buying the one and

twoyear treasury specifically the 2year

because we look at the 102 inversion

right so you look at the two year that

thing's at like 4.25 right now okay the

10 at uh what we were like uh 3.85 so

you're 40 basis points inverted right

because usually rates are higher on the

10 year okay so so stick with this for a

moment even if you're not super into

bonds just try to run with this for a

moment you need people to buy two years

but two years are almost like cash

equivalents almost you know because

they're such short-term bonds so why

would people buy a two year to get a

4.25% yield when they could just put

their money into money market funds

and earn up to 55% on banks basically

begging their customers to throw money

into them JP Morgan is they beg me

they're like bro please put your money

with us your house hack funds the other

house hack funds you already got a lot

of your stuff here give us more and we

will give you 5 and a half% on a money

market and so I got to think about this

because somebody actually asked me a

question I think it was on the house

Hack YouTube channel like

Kevin uh is house hack still buying

short-term treasuries I'm like no what

like why are we going to buy six-month

oneye treasuries when we can get five

and a half on a money market and have

liquidity

tomorrow like capital appreciation I

understand I make that argument all the

time but really the capital appreciation

play is on a 10year you know on the

shorter duration stuff the capital

appreciation I suspect won't be as

desirable so if you're really trying to

invest in bonds for cap appreciation you

go 1020 bonds right 1020 year bonds now

sure I have also made this argum but

wait money markets won't last at 5%

forever yes but even if we get five rate

Cuts in 2024 what who cares we're still

at 4% on money markets okay well am I

going to like assuming the two-year is

still 4.25 which it probably won't be am

I really going to dump my money markets

to buy a two-year bond for an extra 25

basis point no like money is sticky and

so it sticks in the money markets and so

not only do you have companies that are

cashr uh and whoever owns all the money

in these money markets is cashr but the

the question is where does that money go

well for investors who are in money

markets I actually think the money goes

to buy the dip on stocks when stuff

actually starts dipping because right

now things are a little uh on the

expensive side I mean take a look at

this here is JP Morgan's S&P 500

valuation measures and as you can see

we're knocking on the door of a positive

uh one standard deviation on the right

side so we're a little elevated now you

see that little red box there I drew

that on there because I'm like yeah I

mean I I I know we're elevated but look

at that period of time there where the

red boxes we were elevated for basically

2 years where we were well over the one

standard deviation line and then look at

1997 to 2001 that's called Euphoria okay

that's Euphoria and we could be going

back into

Euphoria I'm not saying we should be

there I'm just saying we could go back

into euphoria and we could stay there

for potentially two years and then maybe

we'll get our recession in 2026 or 7

eventually there will be another

recession okay so so this is really

interesting because wait a

second 10year yields falling meaning

people who want capital appreciation in

bonds who buy the 10-year they lead bond

prices to go up on the 10year 10e yield

Falls that makes car loans and Home

Loans

cheaper okay car loans Home Loans

cheaper that's good

2year stays High because nobody wants it

because money markets are high so what

does that mean we're still inverted in

fact I wrote on eack that there is a

chance we could have headlines soon that

are like the longest inverted yield

curve ever or since XYZ will finally

come in 2025 recession will come in 26

whatever we'll just keep kicking the can

down the road but the point of this is

there there's some really big takeaways

from this so number one I actually think

it is entirely possible that we see

money markets not flood the market and

create Euphoria although we could see

Euphoria I think money markets only move

over not when the S&P 500 and the NASDAQ

100 the tech index are at all-time highs

I think they move over to buy the dip

think about that that's juicy you got

money and money markets are you going to

buy at all-time highs n man you just

can't wait to buy a

dip and so in a weird way you actually

again reiterate the thesis that I've had

for about 14 months now which has been

correct so far knock on wood okay I I'm

I make mistakes

too but and if you want to learn about

my perspectives the gold course will

tell you all about them stocks

entrepreneurship the mistakes I make and

llc's or corporate entities uh tax

benefits not paying taxes in your life

the course member live streams lifetime

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ofm

kevin.com so now I kind of forgot where

it was that's okay well uh oh yeah yeah

yeah okay so so you have this Nike

Swoosh that actually gets supported

because every time the stock market dips

the money market people come in and

create a floor so you have a floor

every time the market goes down you have

a floor and and so you that's why you

create the Nike Swoosh because there's

so much cash on the sidelines

so there there's a lot in this okay I I

I don't mean to be here and try to

overwhelm so let me try to make some

simple bottom lines here I think that's

why uh folks like coming to the channel

I I I don't know I I try my best I I

know it's not you know like I I don't do

the the Market's going to crash every

single Day stuff and that seems to be

really popular right now but I don't I

don't know these just like people who

are super short or something who need

some confirmation bias I I don't get it

uh but

anyway it's okay if you're short if

you're short you should be paying

attention to this stuff too so what are

the conclusions on this well consider

this okay so I think cashr companies

okay so cashr companies what do they do

okay one spend two manufacture okay now

uh uh on ads rather spend on ads and

manufact make more stuff okay that

creates disinflation or or honestly

let's just stop footing here it's

going to create deflation because Supply

uh likely uh skyrockets okay so the

problem with this is as Supply goes up

like and demand doesn't necessarily move

up prices have to move down price

equilibrium has to come down and we

believe by mid 2024 we have a lot more

for manufacturing online what does that

additional manufacturing online mean

that means more jobs uh more jobs for

economy more jobs for the economy means

less chance of the dirty R okay all

right so at the same time as you get

more spending on ads and

Manufacturing uh you know manufacturers

that create

deflation what you get are people who

want to speculate on bond capital

appreciation who what do they get

well they go for 10 years 10 years fall

so what happens when the 10e Falls well

mortgage rates helocs like credit lines

uh and cars all become less expensive so

investing in things that

homeowners buy or cars could potentially

make really good sense for 2024 your

Restoration Hardware Lowe's Home Depot

whatever we we've broken all these out

the trade desk for the advertising side

and you go in expecting all the cash

people on the side to just support or

basically prevent the dips from getting

too deep as soon as the dips get deep it

gets

bought obviously all of this would be

wrong if we get jobs data that comes out

this week and you know we have some

Poopsy doopsy or whatever that comes out

on on jobs again I go to ec.com I just

type in Catalyst into the search what do

I get we got jolts numbers coming out in

2 days we got ADP numbers coming out in

three days on the fourth we got jobs

numbers on the 5th CPI on on the 11th so

there's a lot here but I think this is

really fascinating because when you put

all these pieces of the puzzle together

it's kind of like huh that is really

interesting I I think especially one of

my favorites is this one just because it

really shows us that hey you know just

because things are elevated doesn't mean

they can't be euphoric elevated for a

while now I did see this I thought this

was interesting S&P 500 profit margins

look what what I wrote wow about was not

that profit margins were near the bottom

which I actually think that could get

worse but which usually it only gets

worse in a recession worth noting but

the trend is up like look at that

long-term Trend since 01 the companies

are just making more freaking money

maybe it should go down

oh man uh so uh yeah look uh that's uh

that's my take here email us staff ofme

kevin.com we're going to keep that

pricing active uh probably through

tomorrow morning just catch up with all

the emails I appreciate yall staff atme

kevin.com see you in the next one why

not advertise these things that you told

us here I feel like nobody else knows

about this we'll we'll try a little

advertising and see how it goes

congratulations man you have done so

much people love you people look up to

you Kevin P there financial analyst and

YouTuber meet Kevin always great to get

your take even though I'm a licensed

financial adviser real estate broker and

becoming a stock broker this video is

neither personalized Financial advice

nor real estate advice for you it is not

tax legal or otherwise personalized

advice tailor to you this video provides

generalized perspective information and

commentary any third-party content I

show should not be deemed endorsed by me

this video is not and shall never be

deemed reasonably sufficient information

for the purpose of evaluating a security

or investment decision any links or

promoted products are either paid

affiliations or products or Services

which we may benefit from I personally

operate and actively managed ETF and

hold long positions in various

Securities potentially including those

mentioned in this video however I have

no relationship to any issuers other

than house act nor am I presently acting

as a market

maker