The Inversion and CRASH is Back | Why Markets are Falling.

hey everyone me kevin here do you know

what december january may and july all

have in common they're all months that i

went on vacation and crashed the stock

market and guess where i am today um

well folks we just broke the 280 line on

the qqq crypto's absolutely getting

rinsed especially as d5 platform celsius

decides to pause withdrawals that's

always a good sign the 10-year treasury

just skyrocketed 3.3

which is going to smash real estate

especially those mortgage rates

expect to see those skyrocket to the

highest levels tomorrow and stocks are

dropping so hard the tick index which

tracks positive minus and negatives

is negative two thousand a level we

haven't hit since september of 2011.

so what the heck is happening well let's

talk about it because there's a lot

happening we'll start with the fed

repricing the federal reserve's meeting

starts tomorrow it ends wednesday with a

release on rates at 2 pm and a press

conference at 2 30 p.m we're expecting

two wheel well i should say we were

expecting two 50 basis point hikes in

june and july and maybe a 25 basis point

sort of pause in september well now the

market is repricing all of this and it

explains exactly why the stock market is

falling because the higher terminal fed

funds rate we have the more the market

starts pricing in the risk that we're

going to have an earnings recession

while at the same time the federal

reserve is tightening too much

potentially leading to the federal

reserve's monetary policy crushing an

economy that's already slowing to a halt

now

the

250 basis point hikes and 125 basis

point hike has already been repriced

markets are now not pricing in but

potentially fearing a rug pull by the

federal reserve like 100 bp hike to

reduce inflation that's still spreading

in broad-based categories

everywhere

as based on our friday's report but

markets are not pricing in a rug poll

like 100 bp but they're fearing that

instead though we are pricing in now

175 basis points of hikes by september

that means the market now thinks we're

going to get two

75 basis point hikes not 250 basis point

hikes followed by a 50 basis point hike

not a 25 basis point hike

we have a 32 percent chance based on

markets readings that the first of these

hikes will be on wednesday and a 50

chance that it happens by july and then

obviously the assumption is that somehow

this combination will have happened to

where we have 275 bp hikes which is the

which will be the first time we'll have

a 75 basis point hike since 1994

sometime by september

now the cool thing about 1994 is it's

one of the times that the federal

reserve was actually able to achieve a

soft landing

but that is they were able to raise

rates without crashing the market but

don't bother looking what inflation was

in the mid 90s when they actually had

these hikes

there was very little

this increases the chances of those fed

policy mistakes but beyond that oh my

gosh we just had something happen again

that's also a very bad omen but first i

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right folks let's talk about yields so

we know that the treasury yields at

about 3.3 right now terminal rates are

being priced in about four percent the

five-year break-even rate fortunately

just inflected down we were down about

14 percent from its peak in march and

now we're down 16 percent thank goodness

we want to see those break events come

down because again we don't want to see

the markets of markets expectations of

inflation become unanchored because then

we're just literally screwed but guess

what is back the inversion the inversion

of the yield curve this morning at 4 am

the bond market plunged to a point where

the two-year treasury yield had inverted

with a 10-year once again the last time

we had negative like this was on april

1st which felt like a joke it had

inverted for 36 hours this morning we

hit negative 1.814

and we inverted for about 18 minutes

that's much shorter but we're also

sitting on the edge of inverting again

we'll see what the fed does and what it

pushes

yields to do but anyway

the yield on the two years are therefore

well at least were therefore this

morning higher than the 10 years

signaling that markets are trying to

raise as much cash as possible and

they're doing so by dumping the two-year

bonds more so than the 10 years

increasing the yields for the two-year

more so than the 10-year

all that cash could potentially be

obviously more valuable in the

short-term as asset valuations plunge

now remember that the federal reserve

meeting is uh starting tomorrow and so

markets presumably are going to be a

little bit light with purchasing power

before the fed meeting though remember

one of the lows that we had in march was

uh march 8th and march 14th literally a

week and a day before the federal

reserve meeting and then we had a three

week rally after the march meeting on

the 15th the it's march hopefully we can

have something like that again but then

again that might just be opium so i'm

obviously still recommending cash

lots and lots of patience

no debt

and then buy as you feel comfortable

quality companies that you know are

going to survive a recession and a

potential earnings recession which

morgan stanley and goldman sachs say we

are not pricing in an earnings recession

we're just pricing in that kevin's 50

off discount code on his programs on

building your long-term wealth

especially with real estate is the best

deal he's ever had so check that out in

the link down below but no morgan

stanley and goldman sachs are truly

saying we are potentially pricing in a

recession but not an earnings recession

this is really disastrous and it follows

the consumer sentiment missed on friday

which was measured before we realized

that inflation actually went up again so

much which actually means that consumer

sentiment could extend lower before it

goes back up that's scary now of course

you've got stanley drunken miller the

wharton provider oh well actually no no

you've got jeremy siegel the wharton

professor suggesting now's the time to

start deploying some of your cash

because the deals are just so good what

are you doing are you buying the dip or

is morgan stanley and goldman sachs

potentially correct that an earnings

recession could mean a lot more pain is

ahead let me know what you think in the

comments down below and check out public

and links on building your wealth