What Cathie Wood JUST Said | Weakening Market

hey everyone me kevin here in this video

i'm going to break down what kathy wood

just said i'm going to add perspective

and commentary as well as my opinion to

add to what she said to provide more

insights into what the heck is going on

so first things first and this is

expected m2 money supply growth is down

even though qe quantitative easing by

the federal reserve the buying of

treasury bonds and mortgage-backed

securities is still happening we are

seeing the money supply no longer grow

with the crazy rate it was growing at a

previously was growing at 27

and then now it's just growing at 12

which is still higher than pre pandemic

but m2 money supply does represent the

amount of money in the economy at any

given point in time and m2 is definitely

increased by things like stimulus

payments eidl grants the idea loans ppp

money unemployment money stimulus money

and even though we have things like the

child tax credit the monthly child tax

credit coming to individuals now the

unemployment boost is coming to an end

the 300 per week that comes to an end

this week and we don't have as many

stimulus programs as we previously had

ppp is over eidl is over uh stimulus

checks so far are over now when we do

get to the next sort of hopeful stimulus

package we look at the 3.5 trillion

dollar package kathy wood is not a big

fan here she echoes joe manchin that

centrist democrats arguments that we've

got to be careful about the potential

for inflation if we keep spending this

three and a half trillion dollars on uh

supposedly investments in america at a

time when our gdp uh or debt to gdp

ratio is over 100 now kathy wood is not

a big fan of the big infrastructure

package though it's worth mentioning our

debt payments as a level of debt that we

have are at the lowest they have ever

been in history obviously this has in

part to do with interest rates

but it is worth mentioning that the

federal reserve and the united states

government have kind of

re-jiggered how they look at the debt

instead of saying i forget about the

overall level we'll just look at the

interest rate payments which is kind of

concerning for when they do go up

but in fairness even if interest rates

went up to where our debt payments

doubled we would still have lower debt

payments than we had in the mid 90s and

this is something that kathy did not

mention is kind of something to keep in

mind when you're thinking about

government spending and the government

debt levels just perspective not taken

aside uh kathy does not think that

without joe manchin this package will

pass she believes that this three and a

half a trillion dollar uh proposed

investment by the government will just

end up being taxed away by job creators

well by the government and then if job

creators are taxed then then we'll

basically tax away the benefits uh and

so she sees a big boxing mat match

unfolding over this over the next month

which is something that we've been

covering as well we do expect pearson

cinema

joe manchin

democrats especially with this new

abortion law that is all going to be

duked out in the house of

representatives and the senate over the

next uh well three weeks here so things

to pay attention to now uh kathy wood

then gets to some statistics on what's

happening in the market she mentions

mentions that manufacturing hours worked

are down about 0.5 percent now sometimes

and this is my perspective sometimes we

can actually see a decline in

manufacturing hours worked when we stop

paying individuals overtime because we

finally can start getting other

individuals who do not be uh need to be

paid overtime which is obviously less

expensive and then reduces the average

hours worked per individual now i

believe we actually can get these

statistics pretty easily basically what

you would do here is you would just

google bls a labor report

give that a google you'll always get the

employment summary for the last date you

scroll to the bottom and what you're

looking for are the charts average hours

of uh or average weekly hours work and

so this is the particular chart here

that kathy

would have been looking at and so we go

over here to manufacturing ah yup see

not a surprise take a look at this you

can see that in july we were actually

working 40.5 hours which that that's

overtime right so businesses are

incentivized to reduce that and they did

they reduced that 0.6 hours so kathy i

don't know if that's so much of a

catalyst for uh for a shift in

manufacturing here as it is more of a a

shift towards uh people not getting paid

overtime which is very expensive when

you can find more labor you stop paying

overtime right this makes sense and you

can't salary manufacturing employees

unless they're like supervisors it's

also worth mentioning that because

that's why you would see average hourly

average hours worked up in my opinion

just because it's obviously way easier

to track your hours hourly than it is

with salary

construction employment she mentions uh

also down potentially due to supply

constraints here i agree with her

we are seeing a little bit of a hold up

at the new construction builders and

there are massive wait lists for new

construction homes right now because

well the real estate market is booming

and lumber prices are still extremely

high but so are other components like

appliances

furnaces whatever things have been

delayed uh now so she does say and i

thought this was interesting she

literally says quote the economy is

weakening fundamentally

okay i i i don't know if i so much agree

with this here but let's analyze a

little bit more here so she mentions

that we still have 10 million jobs

unfilled and that many maybe jobs just

don't pay enough money she references

walmart's pay increase uh then

references jerome powell's argument

saying maybe people have a skill set

mismatch which is basically what jerome

powell says every time he's at his

podium about how people have lost their

jobs in their own pandemic were

unemployed so long now it's harder to

get back into the labor force because

their skills have deteriorated or not at

least kept pace with the economy or you

know best case scenario actually evolved

with the economy and that's a problem

that makes it harder for people to go

back to work i don't know if

that's the economy fundamentally

weakening although i do believe that her

fundamental weakening is more of a

reference to this horrible

jobs miss that we had on friday i think

everybody was blown away it came in at

235 000 which was a very very low uh for

a jobs report missed all expectations

uh she does though mention that hey you

know there are some positives we've got

initial unemployment claims that have uh

peaked right we're down to uh 340

thousand it was much worse during the

pandemic we're much closer to normal

levels now we're still seeing a slight

increase in personal income 1.1 percent

uh still seeing a new and existing homes

go up in pricing but we are starting to

see inventory peak up or creep up she

mentions uh she mentions that in some

markets we've seen this panic buying now

uh in this i always like to go to the

redfin data center

because it is true that inventory has

creeped up but we've also started to see

that flip a little bit so worth

mentioning here just so you can see it

so first of all new listings are

following the typical annual trend here

you saw it in 2020 you saw it in 19 and

18. very worth comparing to 19 and 18

obviously so new listings doing the

natural rotation down new listing median

home prices

inflected down and i thought this was a

flattening and inflection down was a

little bit of a concern

for for the market but look at that new

listing median home prices are actually

going up again we had this little

inflection up again which i thought was

incredible uh and then pending home

sales are just kind of following their

their seasonal decline here so it's

worth noting that you are still seeing

new listings but you're seeing new

listings and pending sales at a lower or

slower rate

but yeah look in some markets is

inventory finally starting to catch up a

little bit yes now kathy doesn't make

any mention of the eviction crisis which

uh you know could end up leading us with

in my opinion somewhere between 7 to 12

percent more inventory on the market for

those that end up going through eviction

and those that end up selling unless of

course congress's rent relief actually

finally goes out to the freaking people

which governors like kevin newsom have

been abject failures at providing to

people

that's why he's getting recalled anyway

uh purchasing managers index kathy wood

says is a very strong 66.7 and

levitating she says businesses are

potentially here uh scrambling to catch

up now i actually um

take a little bit of a different stance

on this as well i don't consider massive

purchases by businesses businesses

scrambling to catch up though i do

believe that

maybe some of the reason is is a catch

up because we've had these shortages but

i think there's actually a bigger reason

for this uh and look i'm not trying to

discredit her reason as business is

trying to scramble to catch up i just

think that's maybe 30 or 40 percent of

the issue i think the bigger issue and

it's not really an issue is that

businesses got so screwed by not having

enough inventory on hand that they're

purposefully over ordering and

overloading up their inventories to

prepare for the christmas selling season

that's my take if i got screwed during

the pandemic for not having enough

inventory you can bet my next order is

going to be 30 larger just so i have a

little bit of a buffer or heck to exit

whatever you know what i mean so capital

spending she says has been very strong

tech spending uh shift uh to get in tune

with the digital age she very much

thinks that we are going to see this

continued shift to spending on stay at

home work from home digital age remember

investor and zoom it makes sense uh and

she's not wrong i do believe zoom

docusign these things are here to stay

to some degree

uh

well their growth is is going to be soft

when i say to some degree it's worth

clarifying i believe that they're not

going to grow with that exponential rate

we saw during the pandemic but i do

still think that they will grow

industrial production very strong 1.4

percent again businesses either playing

catch-up or pre-ordering you know okay

now she gets to the negative catalyst

which i thought some of the ones she

kind of lumped under positive for

overall were negative uh but but maybe a

little

overly negative i personally don't think

the unemployment number was

unnecessarily that horrible uh look i

wish more people were employed but i do

think it represents fears over the delta

variant because look you're still able

to spread delta uh when when you're

vaccinated when people go to restaurants

what do they do they take their masks

off so it's like the two defenses we

have for covet are gone right it's like

you're still spreading it and don't get

me wrong i'm for vaccination i

understand that vaccines help reduce

hospitalizations but if the covered

vaccine does not prevent the spread

university of oxford two weeks ago found

out the same viral loads same likelihood

of spreading right now you might be

contagious for slightly less periods of

time that is fair but if you're still

spreading it you're still spreading it

right

so you've got two things here that

that kind of hurt the pandemic right

especially then hurts those who are

either unvaccinated or

can't get vaccinated for medical reasons

or they have children and they're like

well i don't want my children to get the

potentially coveted delta variant

worth noting hospital admissions are

skyrocketing for children which is very

very sad

anyway uh kathy woods cites the

university of michigan consumer

sentiment uh she says that uh this level

dropped to 2011 levels uh back in 2011

by the way i made a video about this the

sentiment index by the way as well about

a week and a half ago uh and that's not

to slam kathy whatever i'm just saying

i'm not going to go into super detail

here uh but it is interesting to note

that in 2011 uh we were worried about

the double dip back then kathy mentions

we had a lot of fears about the economy

back then i remember that being defined

as the double dip recession which

obviously never came everybody's always

worried about the double dip i remember

in 2020 march people are like that's it

we're gonna have a double dip you just

wait you just wait and then we never

have a double dip

anyway like that that original peak fear

rarely comes back all right

retail sales we talked about these

plummeting and this is fair but i don't

know if this is the economy weakening i

think the economy is actually very very

resilient i think this is just a classic

delta shift and it's also an expected

shift after the explosion of reopening

that i think we had in the summer uh

remember we are also seeing it and we've

talked about this uh it's worth

mentioning that we're seeing the same

thing happen at hotels uh airlines foot

traffic at uh at outdoor malls these

things are declining so worth mentioning

specifically airlines and hotel bookings

more than seasonal declines we did a

video on this where uh hotels are are

saying wait a minute we're getting more

cancellations than usual now as well

this is odd so that could put a damper

on hiring as well obviously we're also

seeing less job postings

for things like child care and dental

offices also worth noting which those

are very

delta affected

now uh mentions that uh if if you

calculate with inflation uh hourly

earnings real hourly earnings are down

1.1 percent mentions that uh auto sales

have peaked at 8.5 million units in

february we're down to 13 million units

in august she believes that and i

actually completely agree with kathy

here she believes that look people

bought their cars they got their

stimulus money uh they they wanted their

own vehicle they were maybe commuting

more because or maybe now they're

commuting more because of the work from

home so people bought cars over the last

you know six eight months but now

they've bought their cars uh and so uh

you know she

alludes to these twitter wars that she

has of uh people saying oh well i mean

what do you mean the the auto sales have

hit peak have you seen car lots there

are no cars to be bought this is true in

fact i was reading a report yesterday

that uh over labor day weekend this

weekend some car lots are going to sell

down sat are going to close saturday and

sunday because they don't have any cars

to sell and this is usually the most

important time for car sales it's also

worth noting people keep asking me like

what do i think about shift well look

this car shortage and the fact that

people may have already bought their

cars i think it's horrible for companies

like shift i think it's horrible for

carvana and vroom or whatever just

because there's a car shortage and

prices are going up doesn't mean that

your revenue goes up because even though

your revenue might go up per vehicle

you don't have enough to keep making

money so i think it's a big problem and

we are seeing that decline in car sales

kathy's right about that now

obviously there's uh there have been a

lot of complaints about chip shortages

but kathy mentions no no for those

twitter warriors it's it's more than

that and she brings up the manheim used

vehicle index which she's right the

value of used car prices uh have have

inflected down now they have not

inflected down as much as what we had

here so we're seeing another little

inflection point here where prices are

are still maintaining pretty high levels

kathy wood mentions that this is very

similar to the fallen lumber prices but

kathy it's worth also mentioning

that

lumber prices hit a bottom

and uh now they're back they're trending

back up again which is crazy i thought

they would just go straight down but it

is worth mentioning that take a look at

the one month on lumber kathy did not

mention this look at the uh

the one month here we are higher than

where we were one month ago you go we're

at 576 go out to the sixth month yeah

look we we went down and this chart

sucks we went down to a low here of like

468 456 456 was the low uh certainly the

high was like 1600 or whatever but we

have inflected back up which is

it is hard to wrap your head around but

it's not as binary as it seems so i

don't know if we could say

things are things are particularly as

weak as they seem yes there have been

inflection points

but it is definitely hard to say with

certainty hey use car prices you're

going to plummet again well they're not

plummeting as fast as they did in that

one month reading uh and and lumber

prices are going back up which uh you

know initially the thought was oh well

if lumber prices go down then we won't

have inflation because well look

commodities went up and now they're just

going to go back down it was temporary

well now they're going back up again

right so there there's so many things

about this economy that are so freaking

complicated

now uh she also mentions that uh oh big

talk about how ev cars are gonna make

more sense used car prices are so high

you can't negotiate on new car prices

because well there's a lack of them so

you're paying sticker basically or some

people are even paying oversticker which

is nuts shows she actually thinks this

is going to help companies like tesla

she's bullish on tesla doing well for

this she believes that there will be a

brewing

buildup of gas-powered car inventory and

eventually we're going to see this

massive explosion of ev sales i agree

with her i do agree that ev sales are

going to explode over time

she does mention that if this was merely

because of a chip shortage we would see

the manheim index go up

but

again it's not falling as rapidly as it

was so i think i think you could have

two things i think maybe the numbers got

a little too inflated but they're

actually staying at higher levels

because of the chip shortage uh but yeah

look it is down from its peak so she's

not wrong she's also right about saying

that a lot of people have inventory at

their homes or in their driveways a lot

of cars are now in your driveway or in

your garage or you have maybe stocked up

on enough frozen meat in your garage

freezer you've uh

which maybe you've uh you've stocked up

maybe you've stocked up on enough clorox

in your garage and paper towels or

whatever that you don't need to keep

buying these pandemic related products

because you already have enough

and so now you're seeing big declines i

looked it up clorox is down 15.43 over

the year she's not wrong she says that

the fixed income markets in other words

the bond market is not worried about

inflation it's a very cathy woody an

argument of uh hey we're not going to

see inflation this is also where she

talked about lumber again i rearranged

that a bit she mentions that she's got

an employee or staffer who's tracking

the nvidia rtx 3070 pricing uh worth

mentioning that's one of the nicer uh

you know

chips that a lot of computers advertise

uh that they include

one of the things that i like doing is i

like looking at the availability of

computers that have that chip built in

and she mentions how the msrp for this

product is 500 but now the thing's

selling for prices that are

substantially higher somewhere in the

neighborhood of

1065 off of its peak but still selling

very high if you go to newegg right now

it's even a little bit higher this is

newegg where you can sort of track the

rtx uh 3070. worth noting here that best

buy has it for 4.99 price match

guarantee but what good does that do you

when it's sold out

uh so also recognizes an inflection

point there notices that prices of these

chips are going up as well now that

ethereum is is going back up now a very

interesting one was as she mentions that

the nxp ceo sold big shares not

according to a pre-plan she mentions

that uh well she didn't mention the

exact details but i i know this was

reported in barons this was a big story

in barons barons reported that the ceo

sold 29 million dollars worth of shares

and another co-executive sold 5.8

million dollars worth of shares this is

an auto group

and and potentially that's kind of the

the danger of what what i've been saying

with like potentially a risk in some of

the car manufacturers or auto groups

because there's not enough uh to sell we

might see depressing numbers

mentions that a fang stocks have become

very defensive i had a comment the other

day as well where i mentioned hey it

looks like people are going into a fang

again you know people are using apple

and google as safety stocks it's a

flight to safety these stocks and

somebody went off on me for saying that

fang could be deemed safety look kathy

wood she thinks they're cash parks so

yeah people think they're safety but

anyway uh says that people are going to

growth value defensive and real estate

she does believe that a rotation to

innovation is happening obviously that

would be very good for arc and the arc

index funds uh says that look we got to

get back to evs ev cars better for the

environment crypto's taking off as uh

inflation is taking off but uh remember

she's not a big fan of believing that

inflation is going to happen but she's

also a crypto fan i did run a poll about

this before kathy posted a video

i ran a poll and i asked on twitter are

you investing in crypto primarily reason

number one because of inflation and look

at this out of 4 000 votes i was

surprised 48 of you said yes and i said

if cpi misses on september 14th will

crypto fall 32.4 of you or a third of

you actually said yes on that

kathy then talks about the benefits of

dna sequencing sequencing cost declines

uh benefiting dealing with disease cost

of ai is coming down and the convergence

of these is going to help us a lot with

health care good for companies like

vertex crispr she says oil prices going

up helps evs

kathy's been talking about oil prices

coming down but obviously we've seen a

lot of volatility in oil prices

so uh you know sometimes we revise with

the market a little bit but uh yeah hey

look that gives us a thorough overview

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