Why the Fed is Crashing Stocks Again | What they Said.

everyone meet kevin here let's talk

about why jerome powell is crashing the

market

after all jerome powell and janet yellen

spoke this morning jenny yellen treasury

secretary jerome powell over at the fed

so look both of them as usual say we see

positive signs in the economy but

we still have a long way to go this is

the same thing that they've been reading

from their stupid script

for many many many months now and it's

kind of getting old

now currently they are optimistic though

because they believe hey look

as things start turning more positive

more people are actually and this was a

pretty interesting note

more people are actually joining the

labor force which

increases the pool of people looking for

employment but actually does not drop

the unemployment rate as fast

so the unemployment rate might be slower

to fall

because more people are joining the

labor force but jerome powell is going

look

more people joining the labor force is

actually a good thing

more people getting back to work is a

good thing

the economy is on a good path

it's uncertain but we're on a good path

and we're optimistic that's kind of what

jerome powell was saying

throughout his meeting gone through the

meeting uh there's some other salient

points as well but i specifically in

this video i want to focus on

why the heck would the market be

crashing after what

you know happened with jerome powell and

jenny yellen or what didn't happen

well the reality is most of this is

because of

what didn't happen see jerome powell

reiterated his belief that look

we believe the economy is going to do

better in the long term we think growth

is going to be amazing in 2021

and interest rates going up or the yield

rather going up on the 10-year

and the 5-year treasuries is a symptom

of the market saying yeah we agree with

you powell

the market's going to do great because

drum powell was asked hey like

what are you gonna do yields are going

up and this is hurting stocks and that's

bad

trump's kind of like no i mean i don't

think so i actually think

it's a good sign it's a sign that not

only the economy is improving but it's a

sign that

the market believes the economy is

improving but it's also a sign that the

market believes we're going to get to

two percent inflation and jerome

powell's like

this is great this is what i want my job

is becoming a success

and unfortunately with this kind of

attitude

jerome powell is doing the opposite of

what he did to in some sense

prop the stock market to the levels

where it had been

and that was we'll backstop everything

and if we need to we'll just come in and

start buying stocks because we're not

going to let them fall that much

which now john powell never did actually

buy corporate stocks but they did buy

corporate bonds which was pretty

unprecedented

in the united states and if you buy

corporate bonds well that kind of is a

almost a direct bailout of certain

companies but anyway

you know you buy like apple bonds and

verizon bonds you know it kind of gives

those companies liquidity right

and also uh it also drives up the price

of those bonds

which is good for the companies when

they need to sell bonds

but anyway the point is jerome powell's

attitude is such that look it's actually

like his attitude is actually good news

his attitude

is look bottlenecks this is another

thing he said bottlenecks

in supply chains will be short-term

bottlenecks in

ships for example will be short-term we

will not have a supply shortage forever

the economy will be resilient and will

respond

the economy is on a good path it's going

to take time

and more time with support so don't

worry we're not going to raise rates

until 2023 2024

it's roughly his implication that's his

regular implication but

jerome powell is actually happy he's

cheering

the current progression of the market

but

wall street doesn't want to hear that

because when jerome's like

this is great the economy is doing

better more people are getting back into

the workforce

money is flowing properly the system is

greased again

banks have the correct reserves

everything's looking good

people in stock market are like wait a

minute that means this is kind of

potentially the end of easy money and

this is painful

and so that's why we're seeing the

substantial rotation

really just out of equities in general i

mean yesterday everything was down

recovery stocks were down

and tech stocks were down today we've

got recovery stocks that started the day

out stronger

but they've also started consolidating a

little bit i mean at the time of this

recording

we've still got carnival uh we've got

oil

our uso rather norwegian cruise lines

dave and busters cheesecake

delta american express all these

companies up between two and a half to

five percent

that's great now within the last you

know 20 minutes of filming here

somewhere

around 1 30 eastern time we have had a

little bit more of a pullback in the

market for example

api the backbone for clubhouse is down

11

x ping motors is down 12 neo is down 8

and it we're kind of trending towards my

suspicion that we are seeing this double

dip in a short period of time here

where we had a few days of reprieve last

week we had some nice green

uh quite a few days of green we were

happy we bought the dip

but we warned that hey just be careful

you don't want to go crazy buying the

green right now because we could see a

double dip

within 10 of the prior dip well that's

kind of what we're gearing up for right

now when we're

trending into that direction where maybe

tesla goes within 10 percent of its

previous bottom which previous bottom

was like 5 30.

maybe tesla revisits 580. i don't think

we have a catalyst

for really pushing stocks down lower

than the march 5th to march 8th lows and

the reason for that

is simple fear peak fear was around

march 5th and march 8th

because jerome powell's comments about

this is good yields going up is good

it's a sign the economy is doing well

those were fresh comments then those

were new now the

markets are kind of just like he said

the same thing again and we still don't

like it

but the fervor the fear is not at that

same peak level we had before

so if you didn't get margin called

before i i don't

think we're going to be seeing margin

calls going forward if you didn't get

margin called before now i could be

wrong

stocks could continue to fall past our

march 5th and march 8th lows

and that's one of the reasons i've been

hoarding cash over the last

uh week as stocks turned green we've

documented this obviously

and i haven't really been buying but

kind of quiet on my alerts because i'm

like i don't know i'm gonna wait for

that w

shape dip and that's possibly what we're

seeing right now

again no guarantees it could go down

lower but i think we would need a worse

catalyst for it to go down lower

and i think the next big catalyst is

getting cpi data

next month now personally i think this

is going to be like the opposite of buy

the rumor sell the news

uh and what i mean by that is i think

people's anticipation

of this march reading of inflation the

month where

stimulus checks are coming up i think

people's anticipation is going to be

oh my gosh this is going to be horrible

for the market

we're going to get such a horrible

reading on cpi it's going to basically

guarantee that inflation is happening in

the same month that stimulus checks

started going out

and then the market's going to sell off

i believe that is a possible

assumption of the markets and

i personally believe that when that cpi

data comes out

year over year it's not going to look

pretty but smart investors and funds are

going to look past that and they're

going to look at the month-to-month data

they're going to chart a line between

january to feb and feb to march

and if that inflation data isn't scary

which we do expect that

temporarily it might be higher but as

long as it's not scary

then in my opinion it's likely we'll

we'll see that rotation

back we'll see rotation back to tech

and back to growth as opposed to

the current present day trade which is

rotating into value

which personally i agree with kathy wood

on i think a lot of value

is loaded up with value traps as things

look cheap they're really high in debt

their growth potential is

horrible but people are buying them

because they look cheap and look that

rotation trade has been working out very

very well

for the last few months really since

november and quite frankly since

november it would have been better to

just be

all in on recovery stocks than in

because the vaccine came out in november

right or was approved in november

it would have been better to just be all

in on recovery stocks than in tech

because a lot of tech and energy is

selling off back to

november levels december november levels

anyway

but that's hindsight so now we have to

look going forward

what's cheap right now well tech and

energy looks relatively cheap

price to earnings ratios are still high

but relative to the prices we have seen

over the last six months well the stocks

haven't moved much there are a lot of

stocks that have been flat since

august through september a lot of them

are flat through november

this feels like a nice opportunity to

pick up some more and concentrate more

into some of the stocks we have really

high conviction in for example this

morning

in the stock and psychology of money

course in

our private livestream we did a solid

dive

into the uh annual report from palantir

and we made associations between

the acquisition customer rates versus

scale rates

at palantir and how how much potential

growth and how much growth we're already

seeing not just potential growth but how

much growth we're already seeing

and so to me when i see palantir at 22 i

get excited it's an opportunity for me

to grow a company that

every time i dive deeper into it i get

more and more enthusiastic about and my

conviction grows

well golly i'm happy i'm happy to buy at

these prices

and i did in fact this morning i spend

just over a hundred thousand dollars

nibbling on stocks because we've had a

nice solid sell-off here

now this is a dip that could keep going

remember my rule of thumb i think we're

going to potentially go

to within that 10 range could even

compress could even go within that 5 to

10 percent of previous march 5 to march

10 bottom

or bottoms for multiple different stocks

but i don't think we're going to go past

that

and so this is really going to be my

trigger point to go shopping out there

and we're getting close to that trigger

point

my current expectation is thursday or

friday might be some of the worst of it

hopefully then weekend effects set in

and we have a green next week we'll see

no guarantees as usual but that's the

way i'm planning

my strategy right now now what else did

jerome powell and janet yellen say well

not much in fact beyond talking about

bottlenecks

and unemployment and how they're looking

forward to getting to this two percent

inflation and that yields going up is

exactly what they're expecting

they did mention as well that inflation

has only averaged 1.7

over the last 10 years and that despite

even all this money printing

they believe it's going to be a little

bit of a struggle for us to get over and

maintain over two percent

so that we can average up to two percent

we'll see

keep in mind though you want to also be

careful of options

right now mostly because a lot of people

view

leaps as very secure as secure ways to

build wealth because hey

the expiration's in two years we should

be good you never know

the market could potentially trade flat

for a couple years so the money you're

investing today

don't expect it to go up like crazy

tomorrow but i would rather be in

than not so some of my thoughts right

now now keep that uh keep all this in

mind obviously uh

think the thoughts through yourself and

see where you align

on some of the things that i'm talking

about uh in these videos or on the

channel or in the live streams

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