*This* will Crash the Stock Market Rally.

well dang i think there's only one thing

that's going to keep this market down

and that's what we're going to talk

about in this video right after of

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to 41 off using that coupon code down

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october 29th so check that out before

the price goes up got lots of inflation

to deal with so cheers hop in now see

you soon what in the world is going to

be able to stop this insane market folks

i've been saying all year long that we

might see an end of the year rally and

while i was wrong about inflation

inflecting down this year and looks like

it will instead be beginning to middle

of next year the end of the year market

rally has decided to come anyway and

this is very very exciting especially

since we kind of dumped in all of our

money into the market uh in this last

sort of sell-off that we had here at the

end of september but boy oh boy now i'm

looking at the market i'm thinking

myself what is the one thing that is

going to be the catalyst that stops this

insanity folks it's not sustainable or

is it that's what we're going to talk

about in this video because folks when i

see dutch bros of nine percent a firm up

seven point one one so fies up seven

you've got amc up 5.6 neo up almost five

percent tesla of 3.42

to all the way over here

872. we're about to cross all-time highs

intraday at 904 on tesla docusign you

turning back cloudflare the amazing uh

cyber security company skyrocketing

owlette's up two percent and the things

that are down are down because either

valuations are a little stretched or you

had bad news uh like you did over at

zillow where they decided uh the biggest

the biggest piece of their business is

something that they're just gonna put on

hold but aside from that the market's

just going nuts we started the day

pretty negative now we're going very

green it's kind of ridiculous so is this

sustainable and what's happening in this

marketplace what is potentially going to

stop this insane rally because so far it

certainly isn't interest rates because

interest rates while they are closely

closely watched here the cnbc here's the

cnbc 10-year chart sitting at 1.58

we're not really seeing much of an

incredible run in fact we saw this

morning interest rates sit around 1.62

especially after the bank of england

suggested that they might raise rates

sooner than expected to combat higher

pricing pressures meaning that the bank

of england might uh and this is

according to jpmorgan chase by the way

not necessarily bank of england but it's

about the bank of england but anyway uh

that that would be a signal that wait a

minute if the bank of england is

starting to tighten here at the end of

2021 is the federal reserve potentially

behind the curve do they do do they need

to speed up the rate at which they're

tapering to stay at pace with what the

rest of uh the globe is essentially

doing in terms of starting to type or

tighten some of these easy monetary

policies well so far the treasury bond

market doesn't seem to be too fearful

we're sitting at about 1.58 on the

10-year yield so if we zoom into the one

month it looks like we're kind of

sitting around just below the resistance

levels of about 165 that's about the

highest level we got we go year-to-date

we're still not at the high levels that

we saw uh in around february and march

where we got to as high as 1.75 but we

are around those levels that we saw in

april and may which these were periods

when we had a lot of stress in the

market and now it's kind of like we're

not seeing a lot of stress in the market

but we're also seeing those higher rates

and it's potentially because the market

is just pricing in you know what hey

inflation's going to be here for longer

we're probably topped out in terms of

how high inflation is going to go but

this rate where we sit now this five and

a half you know four and a half to five

and a half percent this rate might stay

here longer

but we don't necessarily see it running

away from us and exploding and if that

is true then it kind of makes sense why

the stock market is rallying because the

stock market likes to react to new news

to new information to what i call

inflection points rates of change and

ironically i believed that a rate of

change would have been inflation

inflecting to the downside not inflation

staying stable but in a weird way since

we were expecting a change of inflation

either to the upside or downside no

change was actually a change so get that

logic for a moment and then i'll talk

about what could slow this market down

so here we had low inflation going into

the pandemic then we had very low

inflation then especially when we went

year over year we got high inflation and

now we're kind of sitting right over

here at the top of the line in terms of

inflation charts but we were expecting

in september and october look we're

either going to go one or two ways was

the thought we're going to go up or

we're going to go down

while inflation's definitely going to be

here longer we're seeing the wage

pressures we're seeing the shipping

container pressures we're seeing the

supply shortage pressures we think

they're going to be bare shells in many

parts of the country throughout

throughout this holiday season and even

though businesses have stocked up

shippers are still having a very hard

time dealing with all this madness in

fact i spoke with a wholesaler this

morning and it's worth just mentioning

what was said because in my opinion it

was it was mind-blowing he says that

container prices are through the roof 16

to 20 thousand dollars for container two

years ago you would have spent two

thousand eight hundred dollars to thirty

five hundred 500 for the same container

and even though ports are now operating

24 7 you still have a huge backlog of

ships

and and new ships still coming in

there's no way we're gonna get these

boats unloaded fast enough and we're

going to have empty shelves this uh this

holiday season which in my opinion is

bullish for etsy

but anyway he goes on to say that even

if we unload these containers we can't

get the stuff unloaded and distributed

through the country quickly enough

because we don't have enough drivers we

don't have enough stockers we don't have

enough workers whatever and so we're

going to see empty shelves on auto auto

replacement parts toys apparel getting

killed in wholesale this particular

person is a wholesaler and he literally

has people calling in saying what do you

have in stock we'll take everything

because they're at the lowest levels of

inventory that they've been in in the

last 20 years so it's insane you've got

these crazy crazy pressures and they are

lasting they are persistent this was the

word that jerome powell was concerned

about but this persistent inflation is

not right now at least suggesting

runaway inflation and that's this

inflection point right here and i

personally think this is what the market

is reacting to is that right now we have

indicators that all right we're just

we're just stuck here we're stuck in the

mud we're stuck in high inflation for a

little bit longer

and by a little bit longer that could

literally be six months that could be a

year longer who knows but we're not

seeing those signs of this sort of

rampant increase so now with the stage

set what what if anything

is possibly going to make this market

crash and slow down because folks right

now it is going absolutely nuts we are

making money hand over fist right now i

don't know when to sell calls or maybe i

do and we're going to talk about that in

just a moment because it's just too nice

seeing all the green coming in but folks

these are the times to be fearful when

people are greedy thinking now is the

time to bind no no no now is the time to

wait and prepare

right this is why i buy the dip and this

is why i love it when a month ago and i

was buying the dip like crazy people

like oh my god kevin's an idiot he's

catching a falling knife me me me i

heard the same bull crap in march of

2020 okay but

now while the market's zooming and it's

easy for any idiot to make money and

it's time for us to be cautious

so what is our next catalyst and this is

what we have to pay attention to folks

it is earnings the first set of earnings

were last week banks in the us have done

exceptionally well with their earnings

jpmorgan chase bank of america wells

fargo city group morgan stanley all beat

their guidance their guidance

it's really really good uh so so they

guided a certain number and they beat

those expectations jp morgan had profits

of 11.7 billion dollars an increase of

2.2 billion from a year ago quarter

recorder charles schwab had one of the

best winners ever this quarter net

income increased 1.53 billion up 119

insane

and the banks all as a whole these are

some of the important things because we

read all of the earnings calls which was

really really useful all of them

indicated that they are bullish on the

market as a whole

which feels good you know i i like

hearing that when things are going up

the banks think they're going to keep

going up uh but it also makes me uh you

know on the sidelines a little bit like

okay where are the cracks coming from so

some of the signs to look for increased

credit card spending bank of america

reported that credit card spending was

up 22 compared to 2019

credit card loans are up 7

from 2019 but delinquencies are down

these are both really good things i mean

i don't like seeing borrowing go up

necessarily but still this this is

pretty decent especially with

delinquencies down spending on branded

cards at citibank was up 24

jp morgan says credit card delinquencies

are extremely low

and loans are up

so we're also seeing consumer spending

that's skyrocketing we get a consumer

spending report retail sales numbers

last week that blew everyone out of the

water we were expecting a contraction of

0.2 percent we got a gain of 0.7 it's

mind-blowing bank of america sees this

consumer spending increasing credit card

late fees are going up and balances are

growing but again delinquencies are down

so this is interesting you want to look

for little signs of stress like this

we've got and

talk about a little stress there you

just you turn it with this we've got

increased checking account deposits some

of the highest savings rates that we've

seen in a while bank of america with 16

higher checking balances

jp morgan 20 up citibank 14 up wells

fargo four percent up lots of more money

lots more money sitting in people's

accounts jp morgan says the economy is

growing at four to five percent jp

morgan says we will probably uh

not not we will probably not be talking

about supply issues a year from now and

thinks that the economy is good and we

shouldn't focus so much on supply chain

issues in fact let me just read you his

quote because it's a good one all right

this is straight from his earnings skull

yes i'm not hearing much different than

you're hearing i'm just i know that over

the over the focus

i know the over focus over time is so

extraordinary sometimes in the press

that people forget about the big picture

the economy is growing at four or five

percent what people are buying has

changed which has also hurt supply

chains a little bit there's not one

company now that's not working

aggressively to fix the supply chain

issues in other words everybody's trying

to fix them sales are still up credit

card debit card spend is up consumers

are in great shape and capitalism works

i doubt we'll be talking about supply

chain stuff in a year i just think we're

focusing too much in simply dampening a

fairly good economy it's not reversing a

fairly good economy

i mean that's that's very very very very

bullish in terms of a line here from the

ceo of uh jpmorgan chase jamie dimon

he's basically saying

shut up about the supply chain issues

like we're golden here

then there's uh obviously investment

banking revenue has skyrocketed and so

now the question is okay great so the

bank's killed it uh retail is crushing

it consumers are crushing it people are

saving more than ever which is kind of

crazy because

i thought that once we got through the

um let's see money supply velocity

remember back in the pandemic we always

talked about the

velocity of money how many times money

would circulate through the economy and

we thought we would get massive

inflation and so as soon as we saw the

velocity of money come back up and

what's crazy is it just hasn't

it's been flat

it kind of blows my mind q2 2021 it's

still flat the m2 velocity of money we

thought this would go up

and it really just hasn't and part of

that could be because people are just

saving more money but um

and potentially even investing more

money which averages down the velocity

of money right

but uh the velocity of money was a big

conversation in terms of potentially

what would uh really push up inflation

and again just not seeing it right now

so kind of weird i'm looking for the

holes and quite frankly the biggest

catalyst that i could see right now in

the market for this market potentially

slowing down

is tech earnings that's it and what

we're going to be looking for are

margins it's that simple i think we're

going to beat a lot of top line revenue

numbers but the top line revenue numbers

aren't going to matter it's going to be

obvious people have more money than

they've had ever before and even though

some stimulus has been taken away like

stimulus checks and unemployment we now

have the child tax credit we've got

potentially more money flowing to people

than ever before especially folks with

children

as especially as a lot of folks are

going back to work not just necessarily

at jobs which we're seeing lower of that

but a lot of self-employed folks going

back to work which we're seeing more of

them

and or even creating new businesses and

new jobs which is incredible but really

what we're going to be looking for are

how much

these supply chain issues are killing

companies margins if at all and then in

the earnings calls we're going to know

how long are these this pain how long is

this going to pain going to last

essentially and how much of these

pricing

problems have we been able to pass along

to consumers so take for example a tesla

model three it used to sell for 39 000

and let's say prices went up five

percent for materials well elon musk

literally just raised the price of the

model three by five percent it's now

like forty 000 something something

so

personally to me i think the consumers

are paying more and they don't care they

just want the stuff which is kind of

crazy because usually we're like super

anti-inflation and it's kind of implies

that people just aren't going to buy you

know all the just wait or whatever maybe

wait for the future for things to settle

back down or whatever but i think people

are tired of waiting the pandemic has

led us to be tired of waiting tired of

being patient now we want to pay for

things faster and by paying for things

faster or at all because we have to wait

so long for some things now

we are we're paying a premium and we're

taking it we're accepting it so

that is potentially going to lead this

rally to continue but it is also

something that could slow this rally

down completely if we hit a wall at

earnings because uh margins get

destroyed which i don't really expect uh

then uh then the market could fall

substantially if we just get netflix has

bad earnings tesla has bad earnings

apple has bad earnings uh you know all

these companies that are expecting to

report very soon if we just get bad

margins across the board

it's not going to be so great because

people are going to be a little

concerned in my opinion in the market

about the overall profitability of these

companies and that means less cash is

coming to us in the long term and the

longer we have to wait and the higher

inflation is the less valuable that

money is which means we discount stock

prices

but if we come out like we did with the

banks last week and it's just like

supply chain issues smashed no problem

we raised prices and we dealt with the

issues and we still delivered this rally

could continue but i'll be real and

transparent

i am in margin i do not like being in

margin i am probably going to do a

little bit of trimming and uh some uh

call options selling to where i'm

willing to essentially trim certain

positions if they continue to run which

is fine taking a little bit of profit is

for you know frugal and and uh a smart

thing to do and rallies and not

necessarily everything and certainly not

on like long hold positions where you're

going to have massive tax implications

but you could be smart about what you're

doing

uh and so

you know i want to get rid of margin

again big priority and so i'm going to

be sending lots of alerts when i make

that transition in the stocks and

psychology money group link down below

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get access to uh the um

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uh check those programs out link down

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and uh use that coupon code before the

price goes up on the 29th thanks to all

this inflation that's happening and i'm

very excited for earnings season and

this is the only thing that could stop

this market right now in my opinion is

earnings all the other negative

catalysts are really out of the way debt

ceiling budget deficit taper big deal

like nobody cares about this of their

stuff right now now potentially we're

being blind to a black swan so we got to

be careful we got to be vigilant and

watch out but earnings that's the big

one right now and we could literally see

one company's earnings go very bad and

it could affect the entire market in my

opinion because hedges are gonna hedge

and it's gonna mean short selling and

it's gonna mean prices are going down so

keep these things in mind thank you very

much for watching and folks we'll see

the next one thanks again

[Music]

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