The Fed’s Coming Market Crisis | Warning for Next Week!

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below no one ever said being a diamond

handed would be easy well these are the

kinds of times that we find out yet no

no not easy at all in fact it's kind of

painful being diamond handler right now

because

well there's lots of pain in the markets

and there's a lot of things going on so

i figure hey you know what

let's talk about it right now hey

everyone meet kevin here so

there are three things that are

happening in the market right now that i

think are very useful for us to talk

about

and understand going forward in the next

few weeks number one

we've reached the end of don't fight the

fed we have changed our stock market

focus

in an entirety here by we i'm not really

including myself because i haven't

changed my focus but the market

has changed its focus rather than the

market trying to price in 18 months down

the road which is kind of like what

we've

talked about regularly since march like

if you looked at

2020 from march through december the

stock market was basically just pricing

in the future

it was pricing in one year to 18 months

out one and a half years out

but lately it feels like the market is

barely pricing in

six months forward the reason for this

is because

the market is so focused on short-term

fears and all of a sudden don't fight

the fed

which was literally a way of saying just

keep investing because

jerome powell is bailing you out which

is obviously not a strategy that i

endorse

but it is one that the market has been

doing has now transitioned into

don't believe a word the fed says they

have no idea what they're going to do

they are going to lose complete control

over inflation

they're going to have to change their

mind they're going to have to raise

interest rates by 2022 with the latest

and the market is pricing in all that

potential damage from the fed having to

get forced

into changing their opinion and their

strategy sooner than expected

that's basically what's happening here

is nobody believes

that the federal reserve is going to be

right about inflation and when i say

nobody i know there are some people that

do

believe that the fed is going to be

right inflation i kind of side with the

fed here

but the mass market the average of the

market

doesn't believe it like for example

goldman sachs for some reason some part

of goldman sachs

dumped 10.5 billion dollars worth of

stocks last week

which had an impact on the market of

somewhere around 35 billion dollars

specifically to companies like viacom

10 cent and baidu now some people say

hey well this is because of renewed

chinese trade tensions between the

united states and china

we've always had chinese trade wars and

these have always spooked the markets

others say no it's because inflation is

coming and we know it jerome powell is

just sticking their head in the sand

because

they don't want to be wrong yet but they

will be

others say no you know these are just

marked weenie babies

who are trying to follow the trends of

what their customers

want and this is what i call a switch

to the short term a switch and a

rotation

to cyclical and banking style stocks

recovery style stocks

that basically make fund managers have

the ability to say see look

we don't invest in tech stocks we invest

in

cyclical rotation stocks don't sell out

of our funds just yet

don't worry we're moving to lower beta

stocks

stocks that are less exposed to the

madness and swings of the market

we're getting out of those high beta

tech stocks we don't want to be around

those

and what's happening well when the

entire market does that

and the entire market starts freaking

out about short-term

changes in bond yields we get sell-offs

in higher value higher beta stocks

a.k.a tech selling off and some of the

other higher valued energy stocks

selling off it happens you get online

consumer retail even selling off in some

cases

and this despite people spending more

and more money at least according to

mastercard people spending more of their

stimulus money

than they ever have in the past you know

this is a good sign for the economy

unemployment rates are down month over

month inflation is down

but the market is so focused on what's

going to happen over this next six

months

and they're so worried about well fund

managers are so worried about losing

clients

because they're not exposed to the

recovery stocks

that we have undoubtedly a very very

very strong rotation to

fight the fed fed is wrong we're going

to be right let's rotate into value

recovery stocks that's what we're seeing

just is what it is and anything that

occurs in the news right now

any little bit of news because there is

very little news and interestingly when

there's little news

any news becomes important and that's

where we can talk about this

short-term transition to fears over

things like

yes the suez canal now look it's easy to

dismiss the fact

that the suez canal has a ship stuck in

it because people say things like

oh it's just one ship oh it's just

blocking 12 of the world's transit

oh it's just 9.6 billion dollars per day

not that big of a deal

but i think a fact that a lot of folks

looking at the market right now are

missing is the fact that

what's happening in the suez canal is

compounding

this short-term thinking rotation of

fund managers

and it's making it worse because the

crisis in the suez canal is not a crisis

about a

ship being stuck it's a crisis about

inflation

which the crisis over inflation is just

reiterating people's short-term fears

the market all of a sudden went from

being very very long focused

focused on 12 to 18 months out to focus

on the next

six months and i totally believe that

the next six months are going to be very

difficult in terms of inflation we're

going to see some

pretty high year-over-year inflation

data we're gonna see inflation data come

in from

the stimulus checks we're gonna see

another package pass probably

regarding the infrastructure plan which

might not just be three trillion dollars

it might be four trillion dollars

a lot of fears are going to come out

over the next four to six months here

personally i believe after this four to

six month period we're going to be

in a period of of realization that wait

a minute

really inflation was temporary it went

it went away again how is that possible

with all that money being printed

it's because our market's going to boom

our economy is gonna be on freaking fire

but right now the stock market only

cares about the next six months and

that's the pain we're seeing

so let me answer why why does the suez

canal matter well folks

we already have coveted hammered

logistic systems that helped us

get all of the things from cars chips

computer parts phones commodities

certain foods livestock coffee you name

it

like literally name a product and it is

screwed

because of the suez canal any product

you can think of is related to that suez

canal and people like other kevin it

only affects europe folks

yes the suez canal may only affect 12

of the world's transit but guess what

90 of the world's transit is done by

ship

90 of the world's retail trade is done

by ship when you get one ship stuck

guess what happens the price of

everything from the space at ports

to cranes to crane operators to

containers

skyrockets and not only have those or

will those prices skyrocket because of

these insane delays but the prices

have already skyrocketed if we go back

to the beginning of 2020 a 40-yard

container cost

fifteen hundred dollars to ship today or

before the suez canal disaster

it cost four thousand dollars to ship a

forty year container

that's a lot that's like two and a half

times as much money more than two and a

half times as much money that it costs

to ship a container now this suez canal

crap can make it even

worse we think about the fact that the

wall street journal last week reported

that a typical dealership in utah

usually has 200 ford ram pickup trucks

in stock

this week they only had 25. oh but the

suez canal doesn't matter no

it matters a lot when neo is having to

shut down part of their factory or their

factory entirely because they don't have

enough

chips you start realizing how tight

the logistics systems in our world are

and that's because the logistical

systems are tight

because of profit everybody wants to

maximize profit so everything is run

at the pace of what's called just in

time delivery

in other words if i am manufacturing a

car let's say this is a car

and i need a door handle i don't want

that door handle to show up two months

ago

and sitting on a shelf somewhere i want

that door handle ideally

showing up five minutes before i need to

install it that's called just in time

delivery now

obviously it's it's not down to the

minute like that but that would be the

ideal because then you're not

inventorying it like you receive the

product

boom you install it oh now we need now

we're two weeks down the road and we're

installing tires

oh look the tires just showed up today

like that's the ideal

capitalistic vision of having perfect

logistical systems

well when you have one ship blocking 12

percent of transit

in a realm that affects 90 percent of

retail transit

for for products you got big freaking

problems

now right now as i'm not just trying to

like flood this

right now the reality is is two-folded

one the reality is if this ship gets

freed up by

monday we should be able to get through

this with minimal

interruption there will be interruption

but if the global impact should be

minimal

if this ship stays stuck and look you

know we've got high tide coming on

monday or whatever

full moon water levels are going to go

up 12 feet they've already freed the

rudder they've already moved the ship

like a hundred feet

it's still stuck but they're making

progress it's

like they're just basically hoping at

one moment it kind of like

like freeze that'll be really awesome

but anyway right now

if that does not happen by monday we are

really going to start having some pain

and so if that ship does not free by

tomorrow

it would not surprise me for this ship

to actually

amplify those short-term inflation

fears which is causing these these

cyclical rotations to amplify and tack

to sell off even more and high p e to

sell off even more

high beta to sell off even more as

people flee to low beta safety

bitcoin actually is low beta if you have

not yet watched my

uh bitcoin beta video and what the heck

i'm even talking about with beta watch

that it's really really good

what kathy woods sees in bitcoin uh i

just posted a few days ago it's really

really good but uh not as many people

watch it as usual i think it

may be a little bit more detailed but

very very important if you're investing

in this market to understand that

but anywho the point here is there are

two things

that are going to happen the reality is

in a year from now

my opinion is nobody's going to care

about the suez canal

nobody's going to care about the

short-term inflation that happened

we're going to obviously care where our

inflation levels out for the long run

are we at 1.5 percent or are we at 2.5

percent are we at 2

right like that that range is what's

going to matter in the fringe cases i

think you end up with no inflation which

i don't think is going to be the case

and on the other fringe i think you end

up with hyperinflation you know four

five six ten percent inflation i think

those are really at the fringes of the

bell curve

i think the bell curve looks a lot like

one and a half

to two and a half like the likelihoods

of us having inflation next year that's

kind of the rate we're expecting which

is what the fed is expecting that's what

the fed's trying to create

but right now the next six months any

little thing that

sounds like it's going to make inflation

worse is going to have a

disproportionate effect on the market

that is this stupid ship as much as you

think this this

chip is just nonsense and fud

it actually matters for the next six

months the next six months these

inflation fears are just it's like

adding fuel to the fire

of inflation fears that's all the ship

is doing so until that ship is freed

expect to have even more volatility in

the markets going forward

now my strategy look here's a scoop i'm

probably going to be wrong

more than right for the next six months

but that doesn't mean i'm going to be

wrong

in the long term because guess what i

was made fun of for being really really

wrong

buying the dip last march because i

started buying like crazy around march

3rd which the market kept falling right

i was

catching the falling knife and i was

buying

stocks that mattered stocks like tesla

at 3 400

pre-split that's 5x

peloton at 29 fell to 19

and i was buying the falling knife oh my

gosh kevin you bought it at 29 you went

to 24.

you're an idiot now it's 100. oh my gosh

kevin how could you buy

etsy that's that's a stupid company why

would you buy etsy yet

at sixty nine seventy dollars a share

now it's at two hundred dollars right

and why would you buy the airlines and

the cruise lines why would you buy

carnival at ten dollars and

delta super cheap at nineteen twenty

dollars a share

why would you buy redfin at ten dollars

a share people hate it on me

for buying the dip and plowing money

into these dip stocks

it's the same thing that happened when i

plowed my money in

may and june of last year into real

estate i put over 10 million dollars or

acquired over 10 million dollars of real

estate finance of course i put over 10

million dollars into real estate

and real estate people were like come on

real estate is going to blow up real

estate's going to collapse what did i do

every single week in march and april of

last year

every single week here's the update on

the real estate market for some reason

prices aren't going down i don't know

what's happening but prices aren't going

down inventory's going down uh things

are selling faster this is really weird

for some reason prices aren't going down

and people like kevin just wait just

wait well when this kept happening in

may i'm like i should buy real estate

before the market realizes real estate

is blowing up

so i spent 10 million dollars

collectively with my lows buying real

estate

and so now real estate is up 15 year

over year which leveraged is probably

like

30 to 40 percent that's what on the

equity that i put in that's really

really good

for real estate you know i know stocks

you can make returns

sometimes quicker and faster sure in

hindsight would it have made more sense

to just plow all my money in in may into

certain stocks yeah of course but

hindsight's 20 20 right but i still made

really good decisions

and now i have a diversified portfolio

that's half real estate and half stocks

i'm really happy about that

so what's my expectation for the short

term we're gonna get yelled at

if you were gonna be pissed like oh my

gosh kevin why are you buying palantir

well because it's a revolutionary data

aggregator that's the backbone of

analytics that could save companies

billions of dollars

and probably help companies solve and

prevent issues like the suez canal or

being heavily impacted by the suez canal

ever again because of the data they have

that's just the company sound i'm not

even talking about the government side

or how about peloton

nobody's talking about peloton's

acquisition of pre-core and the fact

that pre-core is one of the highest

quality commercial gym products that

peloton now

owns and peloton's probably going to be

the first company to bring the smart gym

to the real gym people are like oh

peloton's going to die because cove it's

going to be over and who's going to want

to work out at the gym

people are going to want to work out

whether it's because they want to work

out at home because they want to look

good because they're going out again

or it's because they're going back to

the gym

and gyms are like we got to figure out

how to get customers back to the gyms

otherwise we're going to go bankrupt

let's let's invest in some new smart

products

or interactive products this doesn't

exist right now

how about tesla in the evs it's getting

slaughtered right now right

people make your phone laughing oh yeah

i catch the falling knife tesla's going

to 100 okay

whatever folks the evs are on a 35

mission towards electrification this is

a 35 year mission

can't just sit here and go oh cash for

the next six months it's gonna stop i

don't care

i wanna i'm looking at each one of my

tesla shares

being worth three thousand dollars in

the future three thousand dollars

folks if we get the three thousand

dollars of tesla i will have 45 million

dollars invested in tesla

obviously right now i don't because the

stock's like 620

but the point is i'm looking at every

little share of tesla i'm buying as

three grand

and it's gonna be big it's just gonna

take time so what let it go through the

crap

let elon musk have delays let neo shut

down some facilities

let all the short-term fud and fugazi

make my investments look like they're

stupid

that's fine i don't care i don't have to

sell

i love the things i'm investing in i

love that i'm investing in end phases

high quality mega high margin power

walls and micro inverter products

that are extremely profitable i love the

fact that i'm investing in square

the future disrupter in banking chase oh

jpmorgan chase watch out

i'm one of the first fintechs to get a

banking license and i'll have a credit

card soon

i'm diamond handing innovation and

growth

money big big money in the future people

by the way also right now

are terribly making fun of kathy wood

they're like oh kathy wood did did well

in 2020 but that ship has sailed now

she's down nine percent for the year

sure the year started out good for her

but now she's losing you got people on

cnbc making fun of her you got people

making fun of her in the financial times

in the wall street journal i read these

articles it's nothing but fun

kathy wood all she's doing is saying

look i'm doubling down i'm using this as

an opportunity to sell

my cash park amazon and go buy more

palantir

that's what kathy wood is doing and if

you need a guiding light

pick i mean look you actually don't have

to pick between us because you're

totally different but like

kathy wood is doing a similar thing to

what i'm doing

focusing on what i believe in and

focusing on what made me a lot of money

in march of last year and that's what

i'm continuing to do

right now so unfortunately you do have

to go through a period of

pain sometimes and it's hard it is hard

especially if you have margin because

it's like oh crap what if i what if i

get you know you gotta be careful of

margin

but beyond that who cares what the value

your portfolio is are you really trying

to cash out of this portfolio within the

next six months

i'd be very very very careful trying to

play this market in the next six months

look you want to take 10 15 20 of your

portfolio and swing trade it

hey fine by all means go for it go you

know

but like the best swing trades right now

hands down

gamestop amc some of the recovery place

great stocks to swing trade and maybe

you even turn gamestop into a long hold

in the long run i don't know be up to

your research and your belief

uh and your evaluation of the company in

the long long term

but in the meantime look if you're

intact high growth

don't feel bad it's an opportunity to

keep adding and ask yourself

who do you think's gonna be laughing in

two years the person

who is buying in two years going haha

i'm buying a tesla 3000 because

uh oh i can't buy anything else that's a

good deal right now

or you who bought tesla at 600.

anyway my take these are the hard times

where diamond hands really get tested

we find out who the weenie baby paper

handers really are thank you so much for

watching hopefully you found this

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thank you so much for watching

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