MASSIVE *Storm* Clouds | Flipping

hey everyone me Kevin here coming to you

from Florence home of the Medici family

and well Assassin's Creed 2 climbed that

building right there in that uh video

game which was epic anyway a ton of

updates today we got to talk about we

got to talk about Market valuations

capitulation Banks consumers multiple

different stocks including JPM Tesla

rivie and Sofia Farm we'll also talk

catalysts which means we'll be talking

about monkey box and some of the crazy

things happening this week and folks

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live streams okay so let's get into the

content so first let's talk about

capitulation and Market evaluation so

consumers Staples Consumer Staples were

supposed to be safe havens right

obviously not we know Staples have

gotten wrecked we saw what happened with

Walmart we saw what's happened with

Target which is kind of a blend of

Staples and discretionaries I personally

think it's more of a staple but anyway

uh we we knew that discretionaries were

going to get wrecked and they have but

what's crazy is retail keeps buying like

literally every time one of these

companies Falls retail Buys in fact when

we look at capitulation we've got a few

numbers to look at right now first of

all retail is Diamond handing overall

wallson uh systematic funds Mutual funds

and hedge funds are liquidating

systematic these are sort of your

economic uh prognosticators that people

kind of like me in January like oh crap

things are about to get a whole lot

worse before they get better uh then you

get sort of mutual funds generally they

tend to follow hedge funds we talked

about this in our last video uh mutual

funds tend to follow uh hedge funds and

all of them have essentially started

lowering their positions to equities so

uh retail however instead continues to

buy the dip Target and Walmart

specifically heavily at the end of last

week how about though in terms of which

of the two folks twice as much buying in

Target by retail compared to Walmart

Goldman Sachs in addition to Vander

track both are reiterating that retail

or the ones Diamond handing and actually

buying the dips Goldman Sachs came out

with this figure that 100 for every 100

that went into stocks the last 74 weeks

only two dollars ended up flowing out of

stocks and they say this is specifically

because retail capitulation capitulation

is really low in my opinion honestly I'm

kind of proud of this because this is

like really awesome now I know it's been

a really difficult period in the stock

market but I mean think about it that

means people aren't making the mistake

that everybody used to make during every

kind of Crash which was panic and just

sell and never get back in the hardest

problem the most difficult thing for

people who sell is buying back in they

almost never do they almost never do

this is why in January when I sold I

said I will be back within 60 days so

hey I avoided six million dollars in

losses I was able to make a few bucks

you know it was good that doesn't mean

I'm not hurting now right but the point

is like getting in and staying in so

important for most folks and really the

stats are showing that retail's doing a

really good job at this obviously

hedgies and everything they're dumping

on us and it sucks but take a look at

this if you need some motivation for

buying right now put call ratio lowest

level we have seen in two years that

means call volume is exceeding puts

right now by more than 2x this tends to

happen before big bullish reversals

fingers crossed so that might just be

hopium at the same time though listen to

this forward multiples for the S P 500

your forward price to earnings ratio for

12 months for the SPX S P 500 is sitting

at 16.4 The Five-Year average for the S

P 500 forward uh 12 month p e ratio is

actually 18.6 so we're substantially

under the five year average and get this

the 10-year average is 16.9 which we're

also below at 16.4 which is really

incredible really shows you that

valuations are actually great I'm happy

about this I mean to me it just

continues to reiterate that this isn't

the time to buy but folks we got to talk

about some stocks here as well we're

going to talk JPM firm so far we got to

talk Tesla we got a bunch of other news

to talk about in other news things that

move the markets today first we heard

that Starbucks will officially be

joining McDonald's and leaving Russia

permanently no franchises no businesses

see ya also we had word from Joe Biden

that the United States might consider

getting involved in defending Taiwan

against China implying that the United

States military would get involved the

White House later clarified that no what

Joe Biden actually meant was that we

would just send weapons to support

Taiwan if they needed to because

remember there are two kind of versions

of the one China policy this is not to

be confused with the one child policy

which expired this is the one China

policy One China policy is the policy in

which China believes there is only one

China and only one official regime that

can regulate both China and Taiwan

obviously Taiwan seeks its independence

and the U.S has its own one China policy

and it technically is a rule of

ambiguity where we're like eating and

we're just gonna stay out of this but we

respect and you know uh will support

Taiwan so we don't really officially

recognize anything so it's kind of like

yeah yeah one China One child Taiwan

keep doing you keep doing you man more

power to you we'll send you weapons it's

like okay come on Biden at least get

your story straight when you're gonna

you're gonna talk to us speaking of

which uh Biden's approval ratings lowest

levels that we have seen in this entire

Administration we are now at 57

disapproved this is up from 53 just last

month not so great but don't worry

Congress isn't doing that great either

48 of Americans distrust Congress to

actually help them through this

inflationary disaster that we have going

on right now Biden has also commented on

potentially changing the China tariff

rules these were tariffs that were

imposed by Donald Trump and lifting

those could be good news for certainly

chip supplies uh and and excess pricing

on shipments between China and the

United States which could be good for

bringing down some of those inflationary

pressures probably something they might

want to consider doing before midterms

anyway China is also working to

stabilize their economy China is now

offering 21 billion dollars in tax

relief to companies and consumers to try

to stabilize the economy in other words

they're making it rain with money to

stimulate things again because they

screwed things up when they rug pulled

the real estate market last August which

really hit every everyone pretty hard

November and December especially the

whole evergrant crisis we've also this

by the way now follows of course the

lowering of lending rates for Real

Estate last week and now creating a

model for uh refinances this uh just

this week here in China for real estate

properties on the baby formula shortage

before we get into some individual

company updates a plane loaded with 70

000 pounds of baby formula landed in the

United States Biden says this should

address about 20 15 percent of the

nation's needs for baby formula but boy

oh boy what a crappy situation to be and

especially since a lot of parents are

now resorting to trying to make their

own do-it-yourself formula

yikes I don't like hearing that we used

formula uh as well it's not every woman

can produce enough milk naturally and so

it's like well there are reasons we need

baby formula it's kind of crazy though

that it's gotten this I think the

government would be a little more uh

proactive I know 70 000 pounds sounds

like a lot but uh you know we need more

than 15 to play

all right let's get to some specific

stocks specifically Tesla Tesla plans to

restore production at its Shanghai plant

finally to pre-covered uh levels and

actually above pre-covered levels this

is really good especially since we've

been waiting for Tesla to get back to

these uh levels of production they

expect to be back to 2600 vehicles per

day by Tuesday which is tomorrow this is

big because again we have been at so

substantially miserable level of vehicle

production we've been uh only well we've

only sold 1512 electric vehicles in

China in April which is terrible that's

down from 65 000 the prior month and

we've probably only gotten about eight

to 16 000 Vehicles out of China when

usually we're producing somewhere around

2200 per day and that's now attempted to

be getting pushed to 2600 by Tuesday so

it'll be nice to see that uh production

come back to Tesla since the stock has

come under substantial pressure and I'll

link because of this but the Elon drama

with Twitter now harassment claims which

by the way it's an interesting note that

was circulating that's like why is it

that

it's kind of ridiculous but why is it

that for 25 years Elon Musk has had a

blemish free record of uh you know any

kind of sexual assault allegations and

uh all of a sudden they say the day or

within 24 hours of him announcing that

he's going to start voting Republican oh

that's it now all of a sudden he's a

sexual predator

uh Twitter drama though I don't know all

right so uh anyway uh then we've also

got news that Giga Berlin is adding a

second shift this is pretty incredible

on top of the fact that uh Tesla is also

hiring more researchers in Giga Shanghai

this is despite all the shutdowns

they're still going to invest heavily in

Giga Shanghai and so the Giga Berlin one

is pretty neat though as well because

gigaberlens only been open now for two

months and so after two months now we're

already seeing the second shift get

added usually when you get uh facilities

at full capacity you try to get to three

shifts so right now we have a 7 A.M to 3

P.M shift and they're just now opening

the 3 P.M to 11 p.m shift again the

first one being 7 A.M to 3 P.M now

they're opening the 3 P.M to 11 p.m only

two months after the opening it's

honestly quite impressive and the hope

is that geek of Berlin and uh Giga

Austin can ramp a little quicker to

where hopefully by the end of the year

we could still be on track for that one

and a half million vehicles of

production uh maybe even slightly more

as Elon Musk has alluded to so we'll see

it'd be great to have that 60

year-over-year growth because uh Tesla's

Peg Peg ratio looking so juicy right now

I mean it's under one if you believe

that Tesla can hit the 60 growth all

right this car is getting loud I don't

know what they just turned on on that

darn thing and I don't think it's the

engine it's some other motor in there oh

well we'll just keep going here so Banks

oh man we gotta talk about JPM so JPM

had a really big uh discussion uh

investor Day presentation and Jamie

dimon the CEO

a lot of people hold a lot of respect

for him he came out and said hey you

know there are a lot of storm clouds

right now facing our economy but one of

the things to know is that clouds can

disappear and when clouds dissipate

we're actually in a pretty strong

economy I kind of liked that analogy

because he's right like there's so much

freaking fear there's so much saying oh

no that's it inflation's not going to go

down inflation's going to be entrenched

forever I don't know man the bond

Market's not saying that the five-year

break-evens are down to 2.9 10-year

treasures at like 2.84 like big deal I

expect that to sit around probably under

3.25 but probably somewhere between 3

and 3.25 which we know that's going to

be bad for the real estate market which

will be bad for individuals wealth but

in terms of these storm clouds of

inflation

I don't know I'm pretty optimistic that

uh the inflation's going to go down and

I'll give you why this is not just my

gut right now we've got Commodities

experts talking to Bloomberg

substantially this morning about

starting to see commodity Supply

outweigh demand that's going to lead

prices to come down Morgan Stanley

released more research this morning this

is all consistent by the way with the

earnings reports that we're seeing

whether it's from Tesla or from Walmart

or Kohl's or whatever we continue to see

reports that inventory levels for

consumer goods are substantially

skyrocketing Morgan Stanley released a

report just this morning showing that

inventory real inventory levels for

consumer goods are now well above

average levels and have started spiking

the beginning of this year

so in other words impact here Kathy Wood

might be right we could actually see a

substantial build up of inventories

which will lead to price reductions

which we're already starting to see

especially in apparel we'll probably

start seeing it in things like computers

and actually we've already started

seeing price reductions in computers

based on CPI but we'll probably see

those more broad-based as well as TVs

and other really just consumer

discretionary Goods let's try to get

people spending again this is literally

what is confirmed not only in the

research reports but used car prices

earnings reports you name it which is

good because if we can finally actually

and meaningfully get inflation to come

down we're going to walk into the

craziest bull market because we're going

to have the most efficient companies

ever plus low inflation I mean consider

this GPM said that their Bank

productivity is now up 20

this is something that we've been

talking and this is compared to 2019.

this is something I've been talking

about since the pandemic started the

pandemic is the greatest weeding force

that we've ever had the pandemic allowed

businesses to fire tons of people just

hire back the best people and now you

have another sort of tightening period

where it's like oh no okay we did over

hire a little bit let's just do layoffs

again as you're seeing it sort of like

Amazon now suggesting they're going to

lease out extra warehouse space and not

hire as many people because they don't

have as much demand but the point is you

could keep the most efficient people

right and so you have these two cycles

the cycle the pandemic shock and now the

the inflationary shock where you're

getting this this massive filtering

effect for these companies that all at

the same time are becoming substantially

more efficient with their supply chains

and their processes for making money

like this is not the time to bet against

America this is the time to bet on

America and we're I'm so confident we're

going to look back in years and we're

going to be like damn I wish I bought

the dip every fracking day uh you know

of course then you get all the people in

the comments and stuff catching and

falling knife oh see I told you to sell

you shouldn't have bought back in

somebody got impatient man everybody's a

freaking keyboard [ __ ] in the comments

actually there are a lot of that leave

really cool comments that are really

nice and supportive but some of them are

just so jaded so jaded but anyway uh

what else we have oh uh so this is

interesting so JPM is launching pay in

four for debit cards soon this is a

really cool contrast to what we've been

seeing in the credit industry which is

just basically people getting into buy

now pay later for credit cards and debt

right but now offering that for for

debit cards kind of cool PayPal's been

doing this with credit cards expanding

it to debit cards by Chase I think is

really smart uh it's still different

from what a firm does and I think this

is a very important reminder that if

you're investing in a firm one of the

things oh look there's Lauren hey Lauren

you want to be in my video

she's just walking over no she doesn't

want to be in my video anyway one of the

things to remember with a firm is that

you're in it

one of the things to remember with a

firm uh is they have a lot of merchant

Partnerships tons of merchant

Partnerships this is what makes them

special to where rather than just doing

buy uh by now pay later and four you're

doing it in over the time of you know 12

months to 24 months to 36 months and

that's what makes the buy now pay later

services in my opinion actually valuable

because if you think about it pay in

four weeks I mean sometimes I think some

companies are starting to do four months

but if it's paying four weeks that's

basically no different than just you

know buying something on a credit card

and then just not paying your bill for

six weeks because it takes usually about

an average of two weeks for the bill to

come due uh or or for this building

cycle to end and then you have 30 days

to pay it right I mean that's kind of

like by now pay later if you think about

it so anyway uh that's uh that's JPM

they're also hiring thousands of so in

other words do I really think that's a

huge burn Catalyst for a firm not really

but I do think that some investors who

don't understand that difference for a

firm are not going to like that

announcement so it could be something

that weighs on a firm something that

does weigh on another fintech more I do

think though is what James PM is doing

to compete with Sofi so they're now

going to hire thousands of wealth

advisors up to 6 000 by 2025 this is

more than they previously expected and

in my opinion this is two things one

it's an opportunity for you to get job I

mean think about it like if you need a

job become a wealth advisor what do you

do just go past your series 65 or go

find out what JPM is hiring for and uh

go past the stupid series license test

it's not that freaking hard it'll take

you like two months to study to do it

and then boo you're good so uh then you

can get a job if you wanted to work your

way up at JPM and if you can become an

investment banker geez you can make some

big money I met some investment bankers

they're making like seven figures a year

in Investment Banking no guarantees but

I'm just saying like they're they're

huge opportunities but this is in my

opinion a direct attack on sulfi sulfi

remembers a company that uh has wealth

advising Services built into all the

things they do I mean they do ETFs they

do the Stark platform I think they've

got crypto involved in there as well

they do the student loans the Home Loans

they do so many different things and

wealth advising is one of them because

they're trying to provide everything

that banks are doing uh and jpm's like

oh no we don't see any competition from

fintechs yet they don't provide all the

stuff that we provide meanwhile it's

like I don't know GPM it looks to me

like y'all get nervous so you seeing the

competition heat up so now they're

trying to attract that Talent right

anyway I think it's smart by JPM and and

their prices have come down or their

stock prices come down so much uh yeah I

mean I think their Book value is like 80

bucks and they're like what 125 or

something like that it's no surprise

they're up like six percent today uh

it's not for me to invest in I I'm not a

big fan of investing in Banks but I

think

there can be money there's money to be

made as well there's money to be made

basically buying anything at this point

in the market I think but anyway

uh the Federal Reserve also released a

document showing that deposit growth for

uh consumer savings has kind of

flattened this is kind of in contrast

with jpm's earnings call a few uh a

couple months ago actually probably more

like six weeks ago when they were saying

that oh we still expect Bank balances to

go up this week a year so we'll see if

that does end up slowing that could be a

little bit of a red flag some people are

pissed that legard isn't hiking uh rates

high enough uh at the European Central

Bank if she wants to go for 225 basis

point hikes people want more than this

uh we'll see what happens here and how

that affects us in the United States

more important though is Bullard that's

our sort of Perma Hawk he's uh come out

and now suggested he wants to get the uh

not only to above neutral which we've

been talking about last week priced in

being somewhere between 2.75 to 3.25

Bullard wants to get to 3.5 if we got to

get to 3.5 Market still has to price in

some more pain so that's a little bit of

a problem

uh speaking about pain Peter Lynch had a

brilliant quote he says uh well I'm just

gonna paraphrase it here he basically

complained that people spend hours and

hours of doing research on like what

microwave to buy but when it comes to

doing research on their Investments they

won't spend a lot of time at all and in

fact they oftentimes refuse to spend

money for advice and they end up uh

spending too little time researching and

actually understanding what it is that

they're investing in uh it's so that is

something that Peter Lynch says is one

of the biggest mistakes is that it's

very important to research and one of

the things we talk about with course

members is that one of the reasons we do

substantial research on companies that

we're investing in is because when we go

through difficult periods of time we

feel we know them better than other

people and that's not to try to brag or

be right it actually just gives us the

confidence to get through the fud so

when we hear the fud we're like no we

know that fud is actually fake news not

just Bud because it doesn't matter like

here's the actual truth right the more

research you do want a company the more

confident you can be of that and so

research is very important which by the

way you don't want to be Pennywise pound

foolish if you still have not taken the

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what else do we have on uh we talked

about inflation oh yeah rivian and

monkey pox Okay so rivian the suits are

starting to suggest that rivian may end

up seeing a lot of cancellations as

individuals kind of stop uh going all in

on maybe more speculative or newer EV

Brands now I thought this was a really

interesting argument and it's one that I

had not considered before but I kind of

think about it now that what I want to

make a bet on a newer company right now

like remember I bought a lucid I bought

that for my father-in-law but that was

also in a very bull market right this

was like in October or November or

whatever we bought the car mark it was

doing really really well then and the

reason it's nice to buy a newer car in a

bull market when I don't Advocate buying

cars either I just it was just a gift

but anyway the reason I uh

you know you might want to buy from a

startup and bull market is because they

can just raise more money and they can

continue to make sure their customer

service is great and their r d is great

but I'm sorry but uh choking to myself

here but if you go into a recession and

all of a sudden they have to cut back on

R D they have to cut back on customer

service or they face a bankruptcy risk

well crap now you're potentially stuck

with a newer car and potentially a lack

of customer service or less r d or less

future development at least in the near

term for Technologies like full

self-driving or whatever right and so

that's a bummer so basically the note of

the suits is like oh yeah during a

recession people might actually be less

likely to speculate on purchasing a car

from a newer brand like again a rivian

because of those fears the fears that

they may not get the customer service or

or the other benefits that they're

seeking in the future because of

recessionary times and so that might

lead to more cancellations which would

then also hurt you know it kind of turns

into like a self-fulfilling cycle

because then people cancel then the

company has less money and then company

has less money and then they actually

can't do anything right it's like the

self-fulfilling recession anyway I

thought that was really interesting and

somewhat of a downside risk for the

smaller EV companies whether that's

neo-lucid uh rivian whatever but then

again you know the market already so low

it's like really how much more can we go

regarding monkey pox the EU Health

Administration says the risk of this

spreading widely in the general

population is very low there's a lot of

talk going around about Airborne

transmission for this and the

possibility that this virus can survive

in the air for up to 90 hours a lot of

research right now seems to contradict

this and says says that maybe but the

odds of you actually getting sick from

the Airborne transmission of monkey box

is extremely low that monkey pucks is

something that is much more

transmissible through bodily fluids or

or close contact with other individuals

excuse me uh not so much from uh from

Airborne transmission which I think

that's the last thing we want to hear

about right now is Airborne transmission

of anything

tired of wearing masks

all right then Catalyst to watch this

upcoming week here are some of them so

zoom and xping Report uh earnings today

the Atlanta fed president uh speaks at

some point a day we get minutes from the

fomc on Wednesday you know pay attention

for that really I think the big hints

we're looking for is where are they

going to go are we going to go to 2.75

are we going to go to 3.25 3.5 remember

the Market's really been priced again

somewhere between 2.75 and like

three-ish uh so we'll see if if we end

up needing to go higher than that I

think the market will uh will end up

having some pain although hopefully we

end up getting a bullish fed U-turn once

inflation actually meaningfully starts

coming down my guess sometime between

September and uh and October and

November pay attention to covet cases in

China obviously the lockdowns in China

are something that's definitely Weighing

on our markets numbers for U.S new home

sales uh come out on Tuesday US GDP and

initial jobless claims come out on

Thursday this will be an estimate for Q2

GDP so that'll be interesting to see

University of Michigan consumer

sentiment on Friday obviously pay

attention to Monkey pox and capitulation

but otherwise folks there you have it

thanks so much for watching the video

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bye