How BAD the Great Reset DEPRESSION could Get | Fed Disaster.

hey everyone me Kevin here I just came

from the Federal Reserve as you can see

I got my St Louis Fred shirt on here and

it is a disaster over there everybody's

freaking out their papers everywhere

things are on fire people are throwing

fire extinguishers instead of using them

because they've never been taught what

the hell to do they're behind on the

tightening cycle and Jerome Powell is

freaking the heck out and in this video

we are going to explain a few things and

they're going to be very powerful number

one we're going to talk about how much

we actually expect stocks to decline in

an earnings recession we're going to use

some insight from some really big firms

for this number two we're going to talk

about if we have those big declines when

do we generally see the bottom of the

market this is very critical information

so buckle up and we're gonna get right

into it of course I do have to mention

that this right here is brought to you

by Ray dalio's firm Bridgewater Capital

that is this piece of paper this this

PDF here this video is not sponsored by

them this video is however sponsored by

the courses on building your wealth

including the real estate and stocks and

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are bundling up on right now using the

coupon code we have it's our most

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fundamental analysis on stocks real

estate or answer your questions so Ray

dalio has the following piece which

we're going to be breaking down it's Ray

dalius firm that has this piece and it's

really interesting because it gives it

gives insight and some more color into

what we've previously been been

considering when it comes to investing

and that has to do with uh how much we

actually think uh the market could fall

and in what phases right so for example

when we go over here and we look at one

Goldman Sachs piece here we find out

that there are two phases of a market

crash number one is when multiples go

down so for example if you have a stock

that has ten dollars of earnings per

share and it's trading for one hundred

dollars well then that is trading for

what's known as a 10x price to uh or

earnings to price multiple price to

earnings multiple is what we call it p e

ratio right that's 10x well if the

multiple compresses to 7x and the

earnings stays stable now your stock

actually falls 30 to 70 dollars simply

by what is called a compression in

multiples now that's phase one of the

market cycle as Goldman Sachs tells us

here price to earnings ratios fall

unfortunately phase two is an earnings

per share crash now that is actually

where now you have this lower multiple

but then you also go over here and let's

say you cut earnings per share to say

five dollars five times seven is now

thirty five dollars look at that you've

got another fifty percent crash in a

stock price right that folks is scary

and what's fascinating is we actually

have some insight from Ray Dalia's firm

in terms of how bad they think the

market could actually get overall not

just company or example specific now

this is a very complicated read but I'm

going to simplify it as much as possible

because I've already gone through it and

done the hard part for you they start

off by talking about hey the stock

market has had a pretty crappy 2022. wow

if only somebody in like January of 2022

would have told us that 2022 is going to

suck oh wait that's what I did people

didn't like it people called me a

fudster when I warned but whatever man

whatever people are gonna leave whatever

comments they want and so this is the

2022 that we have experienced in

contrast to the two coveted years before

that uh we have had a pretty volatile

year in fact we are now within seven and

a half percent of the bottom of the

market on the NASDAQ 100 we're sitting

at 289 the low was 268 for like a day

and folks I didn't think we can get to

268 again unless we saw inflation go

over nine percent but because inflation

is broadening and it's staying higher

for longer and we think the FED is going

to have to raise rates for longer yields

on Treasury bonds are going up and the

stock market's going straight down you

can now get four percent on a six month

one year or two year treasury it's

absolutely insane that's risk free four

percent it's crazy it's actually what

we're going to be using for house hack

while we wait to deploy our money house

hack by the way if you're an accredited

investor is my real estate startup which

will be buying once the market crashes

and we're preparing now so we can go

bottom feet let's go if you're not

accredited we're working on that process

but anyway Weeble shows us very clearly

that we have had a beautiful Bull Run

that has turned into disgustingness and

now we have to deal with that

disgustingness to figure out how much

further is all of this going to fall

this by the way is Weeble you can go to

metcaven.com Weeble to get up to 12 free

stocks if you sign up and deposit some

funds with Weeble it's a great platform

I love it so going to Ray dalio here

what do we have well we have Ray dalio

telling us that if the tightening that

we currently have priced into the stock

market does not reflect uh enough uh of

fed action then obviously stocks are

going to go down more in other words if

if the stock market is mispricing how

much this uh the FED is going to do then

obviously stocks will go down right

that's that's obvious that's the easy

part but they make this really neat

argument that I'm going to distill on

this piece of paper here because it's a

little complicated what they basically

say is we

need an earnings recession I'm going to

nickname this ER because it's kind of

like we have to go to the emergency room

okay because it's gonna suck they're

saying we need an earnings recession

they also say that if we end up getting

inflation that comes down but we still

do not have an earnings recession and

inflation does not come down enough then

the FED will have to tighten more so

have to tighten more and they'll

actually end up having to cause that

earnings recession so in other words if

we have pain in the markets but we don't

have an earnings recession then the

fed's just going to end up tightening

more and they'll cause that earnings

recession that is what they say in very

complicated language right here which is

remarkably scary because in plain

English when you go to my bubble number

two right here and they say this in very

complicated words right here like

tightening Cycles are bad for all assets

because as discount rates rise the

present value futurecasters

price gonna go down folks price gonna go

down it's not good but it creates some

opportunity

and so this is where we want to know

well how much our price is going to go

down and when our price is actually

going to hit bottom well we have

research for you to tell you exactly

this take a look at this

Ray dalio's firm believes that the

markets are not pricing in a discounting

or decline of earnings and this is

consistent with what I'm seeing across

hedge funds uh and institutional

investors who are saying yeah we are not

pricing in an earnings recession this is

bad and so this is where Ray dalio gives

us the following potential scenarios and

his firm give us the following potential

scenarios in terms of how bad

the crash could be

so what they say is if we have a a crash

a PE multiple crash with no earnings

recession we tend to see a crash of 20

uh a correction

if however we have a multiple crash with

unearnings recession contrasted with no

earnings recession here then we could

potentially see a crash in markets that

is substantially higher than that in

fact here I should clarify with a price

to earnings multiple crash with no

earnings recession they see a 10 to 20

crash with a price to earnings crash and

an earnings recession they see an over

20 crash and they give us the scenarios

right here they think that if we have an

equity drawdown we could potentially see

a crash along with right so a price to

earnings multiple drawdown along with an

earnings recession we could potentially

see an average of a 37 decline

37 average that's pretty painful whereas

if we only have a correction and we

don't end up having an earnings

recession we might only end up seeing a

15 decline now generally when we talk

about market-wide declines like this we

just use the S P 500 so if you wanted to

look at the S P 500 right now all you

would have to do is type in spy stock

into Google you could press the little

year-to-date button and you can see that

the S P 500 is down right now about 19.5

percent which would be roughly

consistent with a correction only a

price to earnings recession with no

earnings recession

however we still have roughly twice that

to go if we do end up having to price in

an earnings recession and there's a very

specific reason that I wrote on this Ray

dalio piece right here Tesla no it's not

just because I'm biased and I own a crap

ton of Tesla shares and yes I know that

course member Steve who loves Dell

uranium and commodities shout out to you

Steve I love the contrarian opinions and

I respect them okay it's not just

because I had a debate with Steve this

morning that even Tesla could face an

earnings recession says Steve and to

which I replied and said I don't know

man last Q3 we delivered 250 000

Vehicles this Q3 we are expecting to

deliver 369

000 Vehicles okay going from 250 ish to

369 big bum then we got to like 306 000

deliveries in Q4 so this was q1 this was

Q4 last year so our year over year is

going to look good we're expecting to be

at about 460

thousand Vehicles by Q4 this along with

the fact that Tesla prices for their

cars have skyrocketed and commodity

prices are falling as Elon Musk tells us

on Twitter I don't know I don't see

Tesla having an earnings recession

especially with over 400 000 vehicles to

be sold in terms of excess demand that's

just the excess demand curve that's not

even the current demand curve it's

incredible so so in short I have this

whole tangent here on why I think Tesla

is going to be one of the few stocks

that is actually immune to an earnings

recession and in six months we're all

gonna go holy crap the only company that

or one of the few companies that's still

growing earnings and has a serious

growth rate during a recession is Tesla

oh well I mean whatever gives me more

time to buy shares the more people doubt

it but that's okay but anyway let's

let's keep going over here with what we

think about actual drawdowns so Rising

yields and expectations of the FED

having to hurt us are going to hurt the

market to the tune that we've already

described and tightening typically

becomes or ends once it becomes clear

that inflation is about to Peak this was

a really interesting lesson so basically

this chart is telling you that when it

looks like the FED is going to U-turn

that is when we actually see a

tightening end and the only way we see

that is when we see a peak in inflation

so basically in order you see a peak in

inflation the market expects the FED to

U-turn then the FED u-turns

okay that's generally when we have a Fed

U-turn good for stocks now what do we

think and what else can we get out of

this well first this was the chart that

we talked about in terms of equity

drawdowns I think we have one more note

here and then I want to talk about when

the market is actually likely to bottom

oh two more notes here okay two more

notes and then when the market might

actually see its bottom so this node

here

shows us the projected expectations

based on Bridgewater capitals

expectations of what earnings are

actually going to look like the earnings

growth rate and you can see that in

the.com bubble we bottomed in 2000

roughly in 2003 in terms of earnings

growth in 2010 we had roughly our

earnings growth bottom after the 08

recession so the earnings the the EPS

bottom tends to come after the bottom of

the market in fact keep in mind the the

stock market bottomed out uh in the 2008

example in February of 2009 which is

probably where that Green Dot is so you

have a delay

in when earnings growth bottoms and when

the stock market bottoms like the stock

market was already recovering when we

had a bottom here and so Ray dalio's

firm is anticipating we are going to see

a substantial decline here in earnings

growth rates

and that can lead to some pain in the

stock market for the short term but

we'll probably see a bottom at some

point

of course we're going to see a bottom at

some point but when is that bottom and

folks this is where we get to the next

part of the video and another piece of

research that is critical if you have

made it this far in this video you are

awesome first of all because some people

literally sign up for the notifications

just to leave a hate comment fortunately

it's a small group of people but imagine

how miserable you have to be in life to

take really high quality information and

just within the first minute leave a

hate comment like I want to just take a

moment and thank you for making it to

this part of the video I think you are

somebody who actually appreciates

perspective and knowledge and deep

information like I like to go above and

beyond just buy index funds or here's

what the CNBC headlines are I like to go

deep and I like to provide my own

conclusions unfortunately when I give my

own conclusions I can be wrong uh but at

least I give you my perspective and

that's my opinion and sure I'm becoming

a licensed financial advisor but that

doesn't mean anything in this video is

financial advice for you I'm just doing

the best that I can not only for myself

my family but also for our startup

because my reputation is on the line

with this company househack that I'm

going all in on so I need to do right by

every single investor in househack and

if you're an accredited investor I

invite you to check it out by going to

househack.com you all know me I'm a

workaholic I love working and I will do

whatever I need to do to make sure how

sex succeeds I'm very very excited about

that but anyway let's talk about this

potential for when do markets actually

bottom when we have an earnings

recession and folks I already have that

research for you because I'm the kind of

guy who stands around reading or sits

around all freaking day long to get this

sort of information take a look at this

folks okay Goldman Sachs

believes the bottom of the market will

occur

six to nine months

before

the earnings bottom

this means expectations following will

hurt the market more than the actual

earnings falling I wrote The Yellow Box

okay I translated the little X there

into my yellow box

this means we hit bottom about three to

six months before we have our bottom in

earnings growth so yes Ray dalio you're

correct but just like historically we

have hit a bottom beforehand we will

probably hit about that's probably not

the right place to draw that dot we'll

probably hit a stock market bottom which

we may already have three to six months

before Bernie's bottom so when would we

likely see the worst EPS Falls probably

towards the end of this year when we

start lapping the insanity that was last

Black Friday like when this Christmas

season sucks because Santa Claus ain't

coming because the housing market is

crashing and the stock market has

crashed we will have some of the worst

year-over-year earnings and so then

we'll get those reports and we'll see

massive negative earnings growth in

about January and February so in January

and February we're going to see probably

the worst of the earnings recession in

January and February

but if the stock market actually bottoms

three to six months before that

we could potentially be at the bottom

now

or it could be in a couple months based

on that sort of historical range which

makes me very excited to look at this

and go let everybody fear monger and

fight over the earnings recession but

I'ma buy a baby not only am I buying

stocks but I'm obviously also

diversifying into real estate and I'm

doing that via house hack now I will

never tell somebody not to buy their own

home I think you could do very well

buying your own home and you can learn

my ways with the real estate investing

course you can learn a download of my

entire brain and how I operate but if

you don't want to deal with that and

you're an accredited investor consider

investing in househack and maybe in the

future uh effort we'll have an

investment opportunity for

non-accredited investors as well I'm

still working with the attorneys on the

paperwork for that so stay tuned but

make sure you go to househack.com

because this video is not a solicitation

you have to go read the PPM that's your

solicitation alright folks good luck out

there what am I doing with my money

again

I think this could potentially be where

we're like look I'm not calling a bottom

here but I'm saying these are the ranges

that I want to be buying in in fact if

you just sort of look at the typical

cycle of prices going up and prices

going down let's make that a little more

extreme right over time prices go up

prices come down prices go up prices go

down right these are Cycles it's the

business cycle

do I want to buy here and sell here duh

everybody in your mom wants to do that

duh but what's realistic and what's

generally a better way to do it in my

opinion is you sell when we're here so

when we're above that line you sell that

is realistic when you're in these

euphoric times like in November you sell

and guess what I was saying in November

it's time to start selling some of our

positions and getting out of margin and

maybe even short Arc invest which I did

at the beginning of December of last

year

wish I held on to it for a lot longer

but the point is

I was one of the few people saying sell

around this period of time and I didn't

sell everything I wish I did in

hindsight but at least sell some you

can't be perfect at least sell some the

same is true over here is you can't be

perfect and nail the bottom perfectly

but at least be a buyer here

not Financial advice my opinion okay

thank you good luck there is coffee in

this for the losers who think I don't

have coffee in my mugs sometimes I do

finish the coffee right before and then

it's empty see

um

see that Liquid Gold there I don't think

you can really see it

is that obvious enough I don't know

okay I just spilled on my pants dang it

and they're white

um now it's empty so now the people who

don't like me can clip this and go oh

Kevin's mug is empty he's he's not

actually really drinking coffee

thank you to the supporters these some

people are just miserable people but

they have bad days often and I wish them

better days ahead