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what year Mike Wilson one of the biggest

Wall Street Bears turned bull all has to

say about this latest stock market rally

that we're in and what year he Compares

it to we've got to talk about that but

we've also got to talk about big

catalysts coming up I'm also feeling a

little bit better which is great and I

want to start with a note of psychology

because in the program's in building

your wealth we regularly talk about

psychology for example in this morning's

course member live stream when we're

looking at consumer discretionaries

we're regularly analyzing hmm where

could the next play be but for

psychology of today's market I think one

of the best ways to think of how does

you know a company like Nicola go from

50 cents to 2.50 maybe it's a good thing

maybe it's fundamental maybe it's a

short squeeze maybe it's a combination

of both and how do some of these smaller

companies start taking off sometimes

even at a greater or faster clip than

companies with really strong

fundamentals like how does a carvana

burn its bondholders and go from your

bankruptcy at you know a few dollars

dollars per share to over 40 dollars per

share 10xing well one of the ways that I

like to think about this is stock market

Jenga think about this

2022 starts and you kind of have pulled

quite a few pieces out the tower is

starting to wobble a little bit and then

come about the summer of 2022 this

thing's really starting to shake pieces

are falling off the top and by December

you have a complete Jenga collapse well

in order for you to rebuild the stock

market you can't only have your favorite

stocks go up the stock market Jenga

doesn't work that way instead you need

pretty much everything to go up even the

crappy companies and the reason it works

that way is the more expensive the

really good companies become the more

people move across what they call the

risk curve and they start allocating to

some of these other smaller names and

those can induce short squeezes in fact

we'll probably make a video on some

potentially High short interest

companies especially since a lot of you

have been asking for those but before we

do that it's worth considering okay in

that case

even in a strongly built Jenga Tower if

you remove a piece in other words one

company like Yellow trucking goes

bankrupt doesn't actually mean you're

going to knock over the tower the tower

Falls when it starts wobbling and you've

had a lot of companies collapse that's

when the tower Falls not necessarily

collapse either but when Market fear at

least sets up such an element that oh we

think everyone's going to collapse much

like what we had in 2022 this thought

that we're gonna get Paul volcker

inflation will never be transitory this

isn't trashed we're back at the 1970s oh

my gosh we're all screwed that ended up

not being the case although that doesn't

stop other YouTubers today from

constantly making videos about how every

banking collapse is basically the end of

you but oh well I guess they can sit out

the stock market and miss out so what

does Morgan Stanley's White Mike Wilson

suggest at least what year does he

compare us to well it's none other than

2019. take a look at this Morgan

Stanley's Mike Wilson is now suggesting

we are in a 2019 style rally which is a

rally that's backed by basically policy

whether it's the Federal Reserve pausing

their rate hikes at the end of 2018

uh and uh you know basically going back

to QE which is kind of what we saw in

2019 and Mike Wilson is now suggesting

hey we've got some Eerie similar Eerie

similarities today uh just by looking at

some retracements here it's been a

little more aggressive now he's got

about a 28 increase over here whereas

we're at about a 36 percent over here

but he actually suggests that this kind

of rally can keep going and uh I find

this very fascinating because one of the

things that I mentioned at the start of

2022 was that the stock market likes

thinking ahead the stock market history

historically has pivoted in uh you know

times when the Federal Reserve has had

its emergency U-turn right we've talked

about this analogy before where we talk

about how the FED pivoted in February of

2009 or March of 2003 uh then we have uh

December of 2018 and then of course

March of 2020. these were some pretty

dramatic pivots from the Federal Reserve

and we've previously shown that when the

Federal Reserve takes these emergency

u-turns that it did during these dates

to bail out the market it's historically

a really good time to invest in stocks

and we made this comparison to this

cycle and said that well look as soon as

inflation starts coming down it's

probably going to happen gradually and

then we'll get a heads up that okay well

if inflation keeps going that way then

the Federal Reserve will pause and we'll

get a U-turn from the Federal Reserve

but it won't be as dramatic potentially

as one of these time frames because

inflation will probably gradually come

down so the stock market could slowly

price this in in the form of a Nike

Swoosh recovery that's the foundation of

how I came up with the Nike Swoosh

thesis back at the end of last year it

was that if inflation gradually comes

down the stock market will gradually

wake up to realizing that oh wow maybe

inflation will end up proving to be

transitory now a lot of people get

offended when I say that they're like

Kevin how could you say that have you

been to a grocery store lately we

understand

that inflation has raised prices for a

lot of things but we also realized that

the rate of growth for those things has

slowed dramatically in fact in the last

inflation reports it's gone negative for

food so we've started to actually see

not just disinflation but deflation for

a lot of food items that have run up so

expensively now that doesn't mean

they're less expensive than they used to

be they're still more expensive but from

a market point of view this is fantastic

so what else does Mike Wilson suggest

well there's some cool things here take

a look at this so Mike Wilson he

mentions that the next sectors that

could be interesting to pay attention to

are utilities energy and financials I

don't profess to be a utilities buff so

I want to look at the others energy I

think is right now at least you could

look at it as oil or renewable energy

I'm not much of a an oil bull although

if we have a recovering economy oil

could do well unless production

increases at a similar clip in that case

you're just speculating on a commodity

with China moving pretty slowly and

hopes that China is going to stimulate

more but so far ideas that no China

won't stimulate more because that could

take away some of their party power as

it empowers corporations in China more

which is something that China is

apparently worried about this is a

Goldman Sachs piece we addressed the

other week I'm kind of injecting this as

well anyway I I don't really want to bet

on oil so I'd rather look at potentially

cheap Renewables which just got a lot

cheaper thanks to end phase but you know

that could still be in a trough right

now right we have not seen Euphoria in

energy uh in the Solar sector at least

right so keep that in the back of your

mind what are two others potentially

well financials look at what sofa did

this morning Sofi absolutely exploded

why did sofa explode so if I exploded

because of a higher projected net income

in the next quarter and for the fiscal

year now that's interesting because

they're doing a lot more personal loans

they're doing personal loans at like

14.5 percent and I'll tell you there's

actually a lot of appetite for those

kinds of loans this is why we saw a

PayPal be able to sell off its buy now

pay later portfolio to KKR in Europe

because there's a massive demand for

higher yields and if the economy is not

going to go into a recession then those

higher yield loans could be less risky

hear me out on that for a moment

if somebody goes to you and says hey

I'll pay you five percent on a

government secured treasury bond that

has no risk of default then you're kind

of like Okay cool so my risk-free raise

five percent or four percent whatever it

is

then you compare that to okay well what

if I want more yield well then you have

to take on risk okay so how about you

take a whole buy now pay later portfolio

that's yielding like 15 and you slice it

up and you're like okay I just want a

slice of that which gives me a slice of

a thousand different people's Peloton

bikes or whatever right even if 10 of

them default you don't really care

because you have a slice of of everyone

you're not just having one person's

default

so you're somewhat secured because then

a 15 returns like 13.5 percent of 10

default big deal that's still way better

than five percent right so you have

Pension funds institutions and a lot of

money managers who are like let's buy up

some of these riskier loans so what does

so far I get to do well I don't know if

Sofi does this I could read a little bit

more into it and I probably will but my

suspicion is that Sofi is basically

refinancing People's Credit Card loans

from like 23 down to 15 and then they're

able to take those loans and sell those

loans to these money managers and so far

is taking basically a a fee in between

now a lot of people are going to have

heart palpitations when they say that

because they're like it's so bad does it

take fees no they're not taking fees

from the consumer but they take fees

when they sell the loan this is very

normal I'm not going to go into

institutional money management it's just

the way you discount the loan or the way

you sell the loan off what interest rate

you sell alone for all of that is built

in they make their money point is

they're making more of that money

because there's more appetite probably

for those loans right now because the

Market's going ah maybe we're not going

into a recession which is actually

probably really good for a company like

PayPal a firm or sofa so financials I

actually agree with Mike Wilson on

financials can be a fantastic place to

be right now

I don't know I've been saying for a

while I don't want to own financials

going into a recession but now that it

looks like we might not be going into a

recession and you're looking at sure

Yellow trucking laying off 30 000 people

but is that really going to affect

non-farm payrolls coming out this Friday

well I don't know let's see this survey

says 200 000 jobs expected for the

non-farm payrolls ADP is expected to

come in at 188

000 uh in two days on Wednesday so you

got ADP on Wednesday you've got jobs on

Friday so if you're looking to see what

happens with jobs pay attention to those

dates or look at the jolts numbers

coming out tomorrow we're looking for a

9.6 million what for job openings what

you really want is a little bit of a

lower joltz number not too low you still

want job openings so those Yellow

trucking people who just lost their jobs

can't get a new job although UPS doesn't

have a lot of job openings right now we

looked uh so joltz you want that to come

in slightly low and then you want jobs

to come and probably add estimate you

don't want to be too hot although even

if it does come in hot it's okay you

don't want it to come in low really low

on jobs would be bad because now you're

knocking on that recessionary door again

and financials will get punished again

so solar and financials interesting

space Mike Wilson does suggest there is

another space that is fascinating right

now and that other space is potentially

consumer discretionaries however he also

suggests that those consumer

discretionaries could be at most risk

although consumers are showing signs of

optimism so I wrote over here for the

consumer I was thinking well that's also

good for financials like sofa in a firm

but it's also potentially good for a

Disney a Nazi and then I wrote palantir

just because I wanted to mention

palanters killing it remember they got a

crazy robust bound sheet and a lot of

people see them as like one of the

strongest potential AI plays for

software although Bloomberg intelligence

doesn't think so Bloomberg intelligence

just did a piece on them I was just

looking at them this morning and

Bloomberg intelligence did a piece on

them and said that their uh commercial

segment remains pressured mostly because

companies are being a little bit slow to

renew some of these contracts didn't

stop them in their last earnings from

rallying though they went from like 7 to

11 in their last earnings and now

they're like 19. it's crazy really

really impressive so anyway uh there are

a few things to really think about here

of course we've got inflation data

coming out which I'll talk about in just

a moment but think about this for a

moment in this world that we're in of

stock market Jenga hopefully you use

that coupon code link down below by the

way great news coming on househack uh

knock on wood I don't want to reveal

everything yet but a certain

three-letter organization seems to be

very happy

so I'm happy

anyway uh so uh we'll leave that there

then we're going to talk about the CPI

data and projections for that in just a

moment which is on Lauren's birthday

but what I really want to hate on is

this Jenga analogy and the Jenga analogy

says first of all from a psychological

point of view you should not be

discouraged if not all of your stocks

are green all of the freaking time I

know there are a lot of people who are

like dude Kevin how is how is you know

so far up you know 20 or whatever and

Tesla's only up 0.4 percent and go stock

market Django it's totally okay it's

totally okay for markets to spread their

gains in fact a broadening rally will

support the growth of plays with really

really strong fundamentals and I will

say sofi's fundamentals actually look

better when you get away from a

recession in fact all financials

basically look better when you get away

from a recession so this broadening

rally is very very good so just because

your stocks aren't up every single day

that is okay it's okay to see the other

players win because the more the other

players win the more you can win

I I know there are a lot of people that

are like but but I mean there's only a

certain amount of money that could be

allocated to say not really be surprised

what will end up happening is companies

with poor fundamentals that rally

will eventually report bad earnings that

Capital will be removed from those

companies and those stocks will fall and

that Capital will be reallocated to good

place and those can then again help the

rest of the Jenga tower build so uh have

that Faith now uh I've already reminded

you about the coupon code linked down

below we did a short extension on that

uh sorry about that uh I was sick this

weekend I couldn't help with the emails

it's my bad like I think I had like the

Norovirus or something disgusting I had

like muscle cramps it was bad anyway so

CPI projections for August 10th which is

Lauren's birthday we're looking for a

0.2 on month over month 0.2 on core year

over year 3.2 uh which is actually a

little bit up from uh last month at

three percent but that's usually okay

because you're you're just putting in uh

you know some energy volatility there as

uh oil prices fluctuate so that's not a

big deal we're more interested in that

core number which is coming in expected

to come in year over year at 4 0.7 so

hopefully we can beat that that would be

really cool if we could beat that and

then as far as the federal reserve's

terminal rate projections I always like

looking at these too terminal rate

projections the highest rate the market

thinks the Federal Reserve is going to

end up getting right now being priced at

5.38 that's basically where we sit right

now that would be no more hikes right

now so we'll pay attention to that a

five-year break even last week was

moving a little bit uh to the upside

which isn't great because jpow tends to

beat us up when that five-year Break

Even takes off right now that five-year

Break Even is flat at about 2.31

we'll pay attention to it so anyway this

is all really actually fantastic and

Mike Wilson is talking more about his

bullishness and talking about how this

is fed pause bullishness and these are

some sectors to pay attention to

Consumer discretionaries with some risk

but financials

no recession those those get interesting

again and uh the moves you've seen so

far could just be the beginning so it

Bears some more financial analysis on

that and we'll be doing some more of

that so anyway thank you so much for

watching we'll see in the next one if

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