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After the news, as we know, the CPI or IPC inflation figures of 5.4% over the last 12 months are the highest levels since August 2008. If we compare it quickly to April 2021, we see it was 4.9%. We're seeing that we're still rising. Now, after these figures, we have the so-called benefits, as we 're observing that bond yields are falling.
Obviously, this will be positive for many companies in the market, as we know they have compressed valuations, and it seems like they can decompress for free. But nothing could be further from the truth because I undoubtedly believe we're entering a rather tough trap, and the fall is going to be frightening.
I'm not the only one who thinks so. Thank goodness Druckenmiller thought the same thing in an interview I gave him while cycling. Today, in this video, we're going to take a look at this inflation data. We're going to compare it, as we just did, but in a slightly slower way, with the inflation data from last week and last month.
We're also going to see what What's happening, let's say, in this international environment with central banks, is how the Fed, in one way or another, isn't fooling itself, isn't being seduced, and is saying, "Nothing's wrong, nothing's wrong, we're going to keep buying, we're going to keep buying," until suddenly it turns out we have to stop.
And this is where we're going to run into problems. Besides, what am I personally doing, or what do I think is the most interesting thing to do now? What kind of companies or what kind of industries am I looking at much more closely? Having said all that, let's start from the beginning. Okay, we have to realize that today we had this kind of news where it said, "Well, inflation is hot, it 's hotter, but it seems transitory," and how is it not going to affect oil policy?
This is like if it does affect it, it says, "It gives you a little pill and says, 'Look, this is called inflation, and this inflation is going to pass through you, you're going to go inside it, and it's going to pass through you,' and you don't want to take it. Obviously, you don't want to take the Fed's little pill, but faith tells you to take it, and you say no, until faith is going to get you, or if you go..." From the little game, and it's going to tell you in the end, you see how inflation was transitory.
This, we can say that at some point, inflation can be transitory, what we're not so convinced about is that it can really last so long without this, and Portosín effectively stops buying assets, but the worst thing is that it's not just faith, the worst thing is that this is spreading to the remnants of the central banks we have today, or Miss Lagar, who says, "I don't care about the horse, I don't care, everything's fine." Very soon we're going to wait until we crash and burn, and then we're going to beat her.
We can't just use tablets against her; we're going to have serious problems, not only with the market, the stock market, the shares, but with the economy. This letter, as he was saying in an interview, Vice, and I couldn't agree more, that the Fed is putting us in a situation where, well, money is very easy, Baker is going to keep going up, and we're going to trust you.
Obviously, I don't like to go against the Fed and I don't recommend doing it, but simply Looking a little further ahead, we can see that this good time is n't going to last forever. At some point, we're going to have a correction, and it's going to be quite significant because the Fed is going to say, "Okay, we're going to stop buying these 120 billion." And today, look, 2023 is already here, just 6, 8, 12 months away.
We're going to announce that we're also going to raise interest rates by this date, and we're going to do it gradually. So, the shock could indeed be impressive. But thankfully, it doesn't end there. We also have news right now about central banks, and they're, let's say, taking aim at the Fed. In the same way that oil is warning, well, the macroeconomic figures seem to show that the job recovery wasn't there last week.
These inflation figures were very high, but we're worried. We're still buying. I 'm here with my money and my printer. Do n't worry until we run out of paper or ink. Mind you, not everyone is commenting. In this way, I notice the Fed says that if we have to keep buying and nothing happens, we're pushing the problem forward.
We have Mr. Kaplan, who is one of those most pushing for us to see, ladies and gentlemen, if we are deceiving the market. We are not letting the market flow freely. We are directly buying $120 billion in government bonds. With these purchases, well, $80 billion in government bonds, really, with these purchases, it will be impossible for the inflation figures to come out, whatever comes out in the market.
And if the economy is about to collapse, well, we simply buy more. Well, here we have the bond yields at 1.47, 1.47. Well, nothing to do but buy tech stocks because we are not going to raise interest rates. We are not going to stop buying bonds. These bonds, their yields, are going to continue falling because they are going to be so hot, and everyone wants to buy US bonds.
Ladies and gentlemen, forget about buying stocks in crypto. The hottest thing is US government bonds. Do you understand? Obviously not. Obviously, I think almost the opposite. We're walking right into the lion's den. This could go as we're discussing, or as Jack Miller was saying, "Hey, the Ys on bikes," or it could turn out completely the opposite.
Or perhaps we can imagine that if faith is magically present, it will tell the markets, "Look, we're going to stop buying little by little, we're going to raise interest rates," and the market will agree. " Let's trust your faith, this is going to open up to the downside." Well, personally, I think something else entirely.
On the contrary, we'll see inflation well above 2%, even this year, because the Fed won't be able to keep buying anything. And if they do, it will only pull the economy down and destabilize it. We know the Fed is an independent body, and we also know that Kaplan does n't necessarily share the same opinion as the rest of the Fed.
And I probably expect that in the coming weeks we'll start hearing harsher talk about having to stop buying, ladies and gentlemen. And let's see this rebound, now unfair, reaching this point. And now we're going to quickly move on to inflation, but... I don't want to stop here; we've reached this point of seeing this rebound.
Which stocks, which industries, which markets, which sectors are falling in the market today, and which are benefiting from these rises? Because, as we're observing, there are certain movements coming in. There are certain sectors that are rising that haven't been seen in our portfolio for a long time, and there are certain sectors that are falling in which we might also have positions, and we say, "Oh, what a surprise!
Maybe it's time to sell." Well, let's look at it: real estate, communication services, material goods, consumer goods, healthcare. I didn't imagine technology, but we have it here now. We have YouTube, conversions technology, and we have 069 healthcare. Another river, but well, the historical data is very unrealistic.
But now, who's at the bottom of everything? Financials. And why is financials at the bottom of everything? Because we know that with the rise in interest rates, this is going to affect the banks precisely because they wo n't be able to generate as much money with the loans they make. Now, do we really believe that these 10-year bond yields are going to stay here and continue to hold, or do we really think That inflation will be temporary, or as we announced on Twitter, a rather interesting poll, and I asked, well, understanding that both are lying to us, but which of these two macroeconomic data points is lying to us more blatantly?
Will inflation be transitory, as it says, and will the effect remain, will there be remnants of it for several years? Or perhaps the yields on 10-year bonds—do you think these are telling us a story that will adapt, that we will be able to live with it, and that they will continue to fall as they have historically done for the last 20 or 30 years?
Personally, obviously not, because people are buying 80 billion dollars every month, and it seems to have convinced the market that, ladies and gentlemen, not to worry because we wo n't move from here until 2022. And I'm not saying it can't move until 2022, but I'm just saying how dangerous it will be for the entire US economy in general, starting with the currency and ending with the fact that we are manipulating it.
The market, with these purchases that I don't really think it needs given the economic recovery we're experiencing, let's now turn our attention to inflation and other data that have taken a bit of a backseat but are also very interesting, namely the double claims index. We were remembering that in the first quarter, almost everything we're focusing on suddenly saw inflation knock on our door, and we thought, "Oh my God, what's coming?" Well, having said all that, let's start with inflation.
As we're observing, we're at levels that don't look good at all, precisely at levels, as we mentioned, of the 2008 highs. Now, what's the main problem we're seeing in this chart? After having this huge spike that came right after a deflationary period, a real blow, it meant that we were getting out of a very hot zone, but we could choke on it very badly because, obviously, if the Fed is still adding fuel to the fire, buying more and more bonds, more and more good ones, buy, buy, buy, buy, we have to recover.
Well, obviously, this could cost us more than... which cost us in 2009. In fact, we also have to look at this other chart, and these are our double-ended clients. Okay, these are, let's say, the macroeconomic data that we're always looking at every Thursday. And well, I know we wo n't be able to observe it, but the first thing we can see is the trend we're having, which is quite negative, and right now in these last few months.
It's what matters a bit. During these last few weeks, the month of April has ended, and we're seeing that we're continuing downwards. Obviously, we still have a long way to go to reach pre-pandemic levels, but with the pace we 're going, well, we can be sure that we're on the right track. Does this mean that now is the time to stop buying these 120 billion dollars in bonds and...
well, suddenly. Obviously, we do n't think the Fed will announce it and then the following week unplug it and go to zero. That would be a tremendous blow. Probably what the Fed will do, and I hope they can do it before it's too late, is that during the next few weeks, or perhaps during the next ten, it will be best for next week to continue.
Here's an announcement, well, ladies and gentlemen gathered here, we're going to announce that we're going to stop buying so many bonds and gradually reduce our purchases. This would eventually, let's say, scare the markets, and what would almost certainly happen is that these yields would end up recovering completely, but that recovery would be significant.
They would skyrocket, and then little by little, as the economy continues to stabilize and inflation, very importantly, continues to fall, we're going to see them fall again. First of all, interest rates will have to rise above 2%, practically to 2%, which we know will put pressure on our technology companies, the same companies that are currently enjoying this real estate, and specifically, well, more specifically, real estate and technology.
On the other hand, raising interest rates will benefit the financial sector tremendously. Furthermore, if we have an interest rate hike, we can say that the dollar will end up strengthening, which, well, will benefit industrial, commodities, and all these cyclical sectors. Or energy, they'll also be able to see it coming, whether upwards.
Now, having said all this, let's take a quick look at these macroeconomic figures that hadn't quite arrived yet, which, well, perhaps is a bit what was coming, and all of you, and that just swallowed a long-winded explanation from Bernardo that interested us, well, as we have it here, 5.4 percent, the largest period of inflation since August 2008, and as we can see, we have here the inflation for the month of April, as we said, it was 49, and we were already afraid, we were afraid of reaching this zone and saying, "Oh my God, what's coming?" But well, observing, well, if we have already, let's say, eaten away, so to speak, this minus 0.7 percent, we have ended up at 0.6, the truth is that it's not bad at all, in quotes.
You know that personally I thought, "Good," and we are going to end up, I'm going to step out just in case, it seems that it's coming and we are going to end up at 0.70, 8 or even touching 0.9, mons or ven mons, but well, the truth is that apparently things can Stop overheating so much, indiscriminately inflation falls, it overheated, it just got hot, I mean, let's say stop buying all these bonds and MBAs, it's going to have to be something quite immediate.
Look here too, how we have our vehicles again, new and score Suntracs, we have it again, last month we had it, this month we have it at 7.3. Also, if we look at items that include, let's say, food and energy, we end up at 106 versus 108, which is what we ended up with last month, as we saw. Okay, and well, in general we had some inflation data that ended up surprising analysts who were estimating 0.40-5%.
Now what's going to be next? We believe, then, I'm going to go back here, we want to say that we have already reached highs in April, and now in May and June we are going to come down. We can see it in two ways: probably in June I don't think we will have movements, we can end up at another 0.6%. The main reason is that at least until August or September we are not going to be able to stop seeing all these benefits of Unemployment, which means that when we try to find someone to work for our company, it's going to raise our costs, and we're obviously going to pass these costs on to our customers.
And the customers are going to end up paying for everything, and we're going to see this figure rise again here in White, specifically in food and in the Vision Food and Energy viewer. Furthermore, we also have to realize that for the first time, we're not going to have a deflationary month, so it's entirely possible that this is the highest level we'll reach in the entire year of 2021.
And this is where we have a big concern because if we see that we can still see it rise by 10.006 month after month and that we can still rise by 5.4 percent year after year, then the fair won't have any option left to say this is transitory. We're going to take a big hit, regardless of the situation.
And personally, as I mentioned a little in the middle of the video, you know what interests me most right now It's a bit of this whole river of Perdiz taking out and utilities, which is flexibilization according to energy, industrial materials, but specifically finance, the finance sector, we've been talking about this same sector for several weeks now, practically any bank that comes to mind, Goldman Sachs and Morgan Stanley, is even catching my attention in case we do n't want to have a lot, indicating a large, too risky exposure, so to speak.
If we don't already have this, I advocate, and I really think it can easily stay at $60, we can increase or start positions in Wells Fargo, we can look at Goldman Sachs, I can look at Morgan Stanley, we can look at Bank of America, and I'm not sure. There's a bank right now, there are many banks, you know what I mean, there aren't any of these big banks that do n't seem like a good position to me because we're also seeing that they've been coming down for the last 34 days, well, between talks by the Fed and the Fed itself, which at first said yes and then no, you know, it never decides, well, we're observing that bond yields are indeed coming back down.
Animal lows of less than March, which was when we had our peculiar rally. Now, taking March out of the equation, we're observing that perhaps the last time we saw these bond yields of 1.47 on February 25th, and well, you know where we were on February 25th, 2020? Yes, indeed, we went through our Down Jones on February 25th, 2020.
We were facing a situation that many of us remember, and the truth is, I quite liked it, I won't lie to you. But well, perhaps we don't want to, or we don't believe we'll get there again, although it wouldn't surprise me if we saw another correction like the one we were seeing here, where in mid-October, up from 28,000 to 26,000, a correction of a little over 10%.
I wouldn't be surprised at all to see it, especially for our beloved Nasdaq, which is finally selling upwards. But they do n't even have to hold on in a slightly longer-term way because we know, as we indicated a bit from the beginning of the video, that the Fed At some point, the Fed will have to stop buying these assets, and the Fed will have to raise interest rates sometime before or before early 2023, pushing all these companies down.
And yet, in my opinion, the market isn't pricing in these risks we're going to face. These threats aren't just a question of whether it will happen or not; the question is when. What we 're seeing now is people trying to time the market and profit from these movements, perhaps in a couple of weeks or a couple of months, before there's another reversal in technology stocks and, more specifically in this case, in banks.
Having said all that, ladies and gentlemen, I hope this video, this opinion of mine, has been helpful. If so, don't forget the subscribe button, the bell icon, and the like button. Also, let us know below what you think about all these movements and all these comments from the Fed. And as always, I'll say goodbye until later.
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