The Fed's Market Crash | How LOW Stocks Will Go.

hey everyone me Kevin here in this video

you're going to take away two things

number one you're going to find out how

much research suggests the market could

continue to fall and the second thing is

you're going to take away exactly what

the Federal Reserve is going to be

looking at in their meeting that starts

today and ends tomorrow and culminates

with the Federal Reserve telling us

exactly what they're going to do at 11

A.M Pacific time tomorrow so stay tuned

I'll be live streaming that it's going

to be huge tomorrow for the markets okay

the very first thing though before we

get into this is I just have to say two

things one this video is brought to you

by Titan link down below but also Andre

Andre how could you do this to me Andres

one of my buddies one of the homies and

a lot of you on the channel know that I

put together I'll put this together I

thought about it I edited it I put it

all together and I did it for free I put

together a video on the Titanic right

remember how the Titanic is kind of like

the analogy of the market or the

allegory of the market that video got

like 300 000 views but I got nothing for

it and that's okay that's okay I I made

the video expecting not to get anything

from it because copyright claimed it's

ineligible right but my boy Andre come

on dog come on made a video got over 200

000 views talking about what happens

next in the Super Bubble and uses my

entire Titanic clip without even as much

of a hey good video clip Kevin

now I still like you on trip but come on

man

come on man that is not cool

that's all I gotta say

I didn't even make a whole video using

the Titanic Club maybe I should have

let's talk about the fat it's more

important we gotta talk about the FED

all right uh first I said you'd get two

things out of this video number one how

much pain let's talk about that and then

the FED okay uh so according to research

when the NASDAQ drops more than four

percent in a day which only has happened

in.com bubble and during the Great

Recession uh and then reverses to a

positive that sort of big draw down and

quick reversal happens in Bear markets

it's very very bad I mean it doesn't

necessarily mean it will always happen

in Bear markets but it's a it's kind of

a bad signal for markets right and I

made a short on this you probably saw it

yesterday maybe you didn't but anyway

that is a statistic that came out uh

yesterday and the research that went

along with this was really interesting

when I dove deep into it the research

suggests that when we see the NASDAQ 100

go minus four percent to positive in one

day

the median NASDAQ return over the next

month or I should say how much is the

NASDAQ worth one month later the NASDAQ

tends to be worth 5.5

less one month later that's the median

term so that would be February 24th the

market might be worth about 5.5 percent

less

the three-month median so a longer term

mindset right longer term I mean look

years I'm bullish on this Market short

term I'm quite bearish anyway I think

that's obvious by now but anyway three

months decline the median expectation is

a 7.9 decline

uh after this sort of Correction and

reversal

first now I want to be very very crystal

clear because there's a lot of

misinformation uh I uh I'm only 0.6

short in the market lucid and RK that's

it uh 0.6 it's 120 000 my portfolio uh

nine percent long it's about 1.8 mil and

the rest is cash that's it okay so you

know sometimes people like oh Kevin's

just 100 sure this is not true uh but I

do send every single stock a purchase

and sale that I make in the stocks and

psychology money group link down below

okay now we got to talk about the

Federal Reserve because this is a big

deal so uh to understand the Federal

Reserve we've got to do two things one

we've got to look at the data that we've

recently gotten and then we have to

compare that to what the Federal Reserve

said in December because what we're

looking for is if the Federal Reserve

was disappointed in December then maybe

they've gotten happier and they're going

to be dovish tomorrow they're going to

U-turn and then the markets will be all

Rosy again right maybe maybe I hope so

because I want the Pain to End I want to

buy back in once I have the Catalyst

that says the pain is going to be over

and we go to the Moon

that's what I would love that's what I

want because I want to make money and

since I'm mostly cash and not long short

I don't benefit from the market going

down

okay so here's the latest information

that we know and then we're going to

talk about the Fed so the latest thing

that we know is that Banks expect

slowing customer deposits for 2022. all

of the banks basically said this and

their earnings calls I read the earnings

calls they also recognize that the

savings rate has fallen which which is

not good because that lowers the amount

of cash people have available

uh we had a survey and when I say survey

it's more like a study from the Federal

Reserve this matters the New York fed uh

came out and said look people are

spending more money on Essentials and

less money on non-essentials and plan to

spend less money on non-essentials

that's not good that's slowing consumer

growth right

the Netflix massive forecast reduction

is probably going to be considered a

coveted related drawdown so I'm not

going to focus so much on Netflix but in

my opinion the real issue is actually in

earnings that we got today and it's it's

a really big issue listen to this

General Electric is quote grappling with

worsening supply chain pressures and the

effects of the Omicron variant leading

the stock to fall six to seven percent

in trading today they're dealing with

supply chain issues across all

businesses and issues that are becoming

quote persistent that's a bad word

persistent supply chain issues which is

similar to persistent inflation right

and they can't get orders out of the

door due to component shortages and many

other issues yet at the same time

margins are expanding so the being the

company's making more profit so it's not

like the company's suffering or somehow

unable to hire folks if folks were

available to be hired but uh they're

having so many supply chain issues that

are getting worse because of Omicron now

this is going to be a big deal when we

talk about what the FED has to deal with

in just a moment but first I have to

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for zero fees now let's talk about 3M so

3M says they are so confused with what's

happening with Omicron and supply chain

issues that they are actually delaying

providing any forecasts until February

wild in addition to that Raytheon all

three of these companies reported today

so this is fresh information I reported

this morning Raytheon guided lower into

2022 does not believe that inflation

pressures will ease until quote late

2022 and took a 150 million dollar

expense in quote unexpected inflation

related cost increases

Labor uh shortages are also hitting

Supply chains that they say and the

supply issues will end up hurting

deliveries for their company however

demand is not slowing even despite

Omicron at Raytheon so that's actually

kind of like a worst case scenario where

it's like demand is still strong from

the fed's point of view right demand is

still strong but they're having these

labor and supply chain issues that are

making things worse not great uh okay

all right so these are from three

companies that reported today all three

of them in the industrial space which is

where manufacturing is very very

important this is different from like a

snowflake reporting they're selling

software or IBM who's now saying they're

you know 70 software whatever the IBM

earnings were like a nothing Burger they

were so confusing with their guidance

and I'm not the only one who's confused

even the analysts were like this is

weird y'all weird anyway

okay now let's understand the Federal

Reserve because this is a big deal here

so the Federal Reserve

uh in the last

notes from their last meeting said that

rates are their top priority as a policy

tool Jerome himself said that Federal

Reserve policy action with rates can act

quicker to slow the market and we know

that if we take like if we reduce the

balance sheet there's so much money left

in the system especially if you look at

the reverse repo Market basically

there's so much cash available that it

doesn't really matter if they take some

of the cash they start vacuuming up cash

from the markets we're not going to feel

that effect until like later in 2023.

the more immediate thing that's going to

slow this Market down a little bit which

is kind of what the FED believes we need

is rate hikes but that's also what the

stock market is afraid of is rate hikes

so Jerome Powell says rates are a top

priority

and that we are better positioned for

policy normalization than we have been

in the past so in other words rates are

our top priority and we're more prepared

now than ever to hike rates now they

don't actually expect to complete their

taper until mid-march they said this in

December so it would be a rug pull from

the FED if they ended their taper or or

sort of their their bond buying program

if they ended that they completed their

taper early in January that would be a

surprise that would mean the taper ended

two months earlier than expected that

would be a rug pull I would expect

markets to freak out tomorrow however

the market might be going as Extreme as

thinking that the fed's going to raise

rates tomorrow which I really don't

think is going to happen the FED has

said they will not raise rates until

they finish the taper so the expectation

is they're just gonna say tomorrow hey

look we're going to complete the taper

by March then we're going to raise rates

which kind of means they're kicking the

can down the road and all those fears

are getting kicked down the road a

little bit which is not great

okay then the Federal Reserve said that

one of their big goals and this is very

important one of their big goals is to

limit yield curve flattening by

potentially running off the balance

sheet versus just using rates so I

looked at what the yield curve is doing

and what it has been doing since their

December policy meeting and since their

December policy meeting the yield curve

has actually not flattened any further

so the yield curve fault like flattening

has stabilized so understand this for a

moment

If the Fed is worried about this line

over here going down

and maybe they won't raise rates if this

line goes down too fast

then it would be a problem if this line

were going down fast it might actually

be good news because the fan might say

oh that Line's going down too fast

that's a problem it's not high rates

but it's not going down

and If the Fed is saying they want to

limit yield curve flattening

and might you know not be so aggressive

on rates if the yield curve keeps

leveling then the reverse would be true

that if the yield curve stays stable

they could actually be set up to raise

rates

so look at the nastiness that we're

setting up for here we're setting up for

a big nothing Burger tomorrow kicking

the can down the road to March or in

March we hike rates and the FED says see

yield curve stable time to hike hike

hike maybe we even need to hike a little

bit more than we previously expected

that fear is going to eat away at this

Market it's gonna be a slow bleed uh now

the Federal Reserve is also calling for

modestly lower growth over time but as

they start raising the federal funds

rates but they're okay with that so

they're okay with slowing the economy to

raise rates and the way I look at this

is is by looking at their dual mandate

maximum employment and uh stable prices

well they're failing at stable prices

right so their success is like failure

failure inflation is a failure whereas

on jobs they've succeeded substantially

well so what they need to do is they

need to fight inflation so they need to

bring up their efforts against inflation

now when they bring up their efforts

against inflation they might actually

bring down how crazy this job market is

and businesses desires to keep hiring

hiring hiring and paying more and more

more more for people because there's so

there's so many job openings but not

enough people to actually take the jobs

right now that it doesn't really matter

you get so much meat on the bone so to

speak on the job side that even if we

fight inflation we can we can cool down

the amount of hiring a little bit and

not really affect the economy so the FED

has this really big buffer right here

whereas they're failing on the inflation

side so in other words when people say

oh no no the fed's not going to want to

crash the economy because that's going

to hurt jobs we have so much meat on the

bone in terms of the job market

that is there's so many job openings we

could literally have 50 less job

openings and still have a tight labor

market like the markets people would

still be able to get a job and still

have wage increases like that's not a

problem right now so the biggest problem

is inflation

and so wait a minute if you start

putting these things together their

priority is interest rates as long as

the yield curve is stable raise rates

we can raise rates without devastating

jobs

we don't mind if we have slower growth

we also don't mind if valuations in the

stock market come down because we

believe that high valuations lead to

excessive risk-taking excessive debt

taking excessive speculation and that

actually creates more of a risk to the

financial system

so when you start putting this puzzle

piece together here you're like oh my

gosh the FED is gonna in my opinion and

and I imagine that you would might think

the same way there's no way the fed's

not gonna want to raise rates

aggressively again raising rates is

substantiated by the yield curve not

falling more not flattening more uh the

the inflation problems we're having the

persistent problems we're having with

the supply chain issues if we take some

demand away we could finally give Supply

chains a little bit of time to grow

right or to just like breathe a little

bit doesn't matter if valuations come

down because that actually helps the

fed's mission doesn't matter if jobs uh

job openings constrict a little bit

because we've got more than we need

so all of a sudden when you put all this

together it's like they're gonna hike

rates a lot and this is going to be a

painful year at the same time business

mortgage card and Auto Loan defaults are

at record lows

there's more upside risk that inflation

is going to continue running

and put all together I think what's

crystal clear about what's going to

happen here as a bottom line is the

Federal Reserve is going to finish their

taper

probably by March if they finish the

taper early the Market's going to tank

if they they come out tomorrow and say

hey we decided to finish the taper early

we got big problems in the market that's

going to be a big issue

to all the people who think the Federal

Reserve is going to bail out the stock

market tomorrow because the NASDAQ and

the s p farted eight to twelve percent

Dream on I I like really Dream on I I

hope I'm wrong because again I want to

be in a bull market I want to throw all

my money back in and I want to ride the

rocket ship okay but I I think it's it's

totally wrong because if you go back to

those minute meetings uh minute meeting

notes from uh from December you could

see where their their head is they are

worried let's draw a little summary box

here okay they're worried about supply

chain constraints causing inflation

they're worried about broadening

inflation what did the uh IMF say today

inflation is broadening they're worried

about consumers spending more on

Essentials we just got that report

yesterday from the fed from the NY fed

right literally the FED uh is reporting

that on top of that they don't care if

prices come down in the stock market

it's a good thing next they don't mind

uh if if uh jolts or slash job openings

will say job openings decline because we

have plenty because we have plenty we

won't hurt the job market

uh and and then as long as

as long as the yield curve

does not flatten more rates are the

preference

I don't understand how much more clear

the FED could be like if I were like

j-pow and and people are like oh j-pow

you're going to bail us out tomorrow

right I'd be like have you literally not

paid attention to anything I've been

saying we are desperately concerned with

supply chain constraints being

persistent and causing more inflation

and broadening inflation which we got

from the IMF today and we're hearing

from earnings reports today I mean like

the latest information is that things

are getting worse not better and they're

probably going to be bad through the end

of 2022. consumers are spending more on

Essentials which means more inflation

right energy costs food so on and so

forth we don't really care if valuations

go down because that reduces risk in the

market

we don't mind if job openings decline

because we have plenty of job openings

and as long as the yield curve does not

flatten more rates or the preference

literally one two three four five six

all six of these reasons right here say

fed hike rates hike rates hike rates

hike rates and six times over right

it's gonna set us up in addition to that

price decline information that I

mentioned earlier for probably either a

slowbleed market over the next three to

six months or a lot of volatility so

don't be surprised to see your portfolio

swing in crazy ways now bottom line I

don't recommend you just pay an Excel

Don't Panic sell I did not paying Excel

I'm making a very strategic bet on

Jerome Powell but don't look I study

Jerome Powell I believe more than

anybody in the world okay maybe there's

some economists who study employment but

I I believe I mean this guy comes up in

my dreams uh and my nightmares okay in

both uh he's like the most recurring

character of of my dreams it's crazy and

Nightmares uh and it's really really

annoying but anyway uh look the bottom

line is I'm bearish in the short term

I'm bullish in the long term for most

passive investors you're better off just

buying the dip and dollar cost averaging

for active investors who want to make a

bet hey here's something to consider but

what you should also consider is using

that coupon code linked down below

before my birthday before that expires

and of course checking out Titan write

the link down below thanks so much bye