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this video i'm going to talk to you about a potential fear catalyst that could lead the market to fall first i'm going to talk to you about that catalyst then i'm going to break down why fear matters which you might think i already know why fear matters but listen to it and see how potentially this could be a little bit of a tipping point see what your thoughts are as well or i'll see in the comments down below let's get into it there is a possibility and i think this is this is something to consider as a potential market crash catalyst now i don't want to sound like fetish like okay here we go market crash again right but there there is a serious potential uh market crash catalyst that we really haven't been talking about and that is the potential that joe biden ends up not nominating jerome powell for the federal reserve again right now we do expect that uh jerome powell is going to renominate uh or uh joe biden is going to renominate jerome powell uh we expect that and uh the cool thing about jerome powell is we know jerome powell right we're very familiar with john powell we've gone through this entire pandemic with him we know that he's on the slightly dovish side we know where he stands on inflation he thinks it's going to be transitory eventually he thinks by q2 and q3 of 2022 inflation's going to go down that's going to happen at the same time as the taper completes and at that time we'll be able to assess if it makes sense to raise rates at that time or not and how quickly to raise rates there are expectations as of last month 60 percent of market participants expected interest rates to go up starting in june however we just heard on cnbc that that rate is now declining uh and that the market is beginning to potentially more so believe uh jerome powell that uh it is possible that rates could go down uh or maybe not rates go down but uh that that inflation does inflict down in q2 and q3 and the necessity to raise rates uh goes down in in the summer of 2022.
so uh that that is very clear and so when jerome powell changes his his tune a little bit we can really easily determine okay this is a huge shift this is a slight shift like we know jerome powell is really predictable he's really clear uh he's he's easy to understand i actually think he does a very good job now how could there potentially be a market crash uh catalyst uh well the market crash catalyst uh let's see here would essentially be that if joe biden says hey i'm going to pick somebody else the market could temporarily freak out because the market's going to have uncertainty every time the market has uncertainty stocks seem to fall and the uncertainty would be what if we get somebody who is a real hawk who wants to raise rates like crazy starting now what if we get somebody who's a real dove and doesn't raise rates quickly enough and we end up getting hyperinflation fears of both extremes in my opinion will happen or be amplified if joe biden ends up not renewing jerome powell as chairperson of the federal reserve i think the best and smartest thing for joe biden to do would be to renominate jerome powell because it'll keep stability and so that's why i say it's smart because the last thing joe biden needs right now is more political instability thanks to the disaster that we've had on uh with this infrastructure package and infrastructure negotiations uh so if joe biden really cares about the infrastructure package and keeping the economy somewhat you know on the on the skinny path to to normalcy please renominate j pal oh the market has this funny funny tendency about going in cycles of fear and it's really important to consider that and my economics teacher back a long long long time ago always said that a stock market is a graph of human emotion and what's fascinating is every time you look around at our stock market and you look for when were the best buying opportunities you consistently find that the answer was when there was fear think about it for a moment last uh last march we had the recession uh the covet pandemic that was a massive amount of fear right that was an obvious one massive amount of fear stocks go down then you think about the summer people think okay covet's going to be over everything's going to be good recovery stocks are going up all of a sudden looks like we're going to go into a coveted winter all the restaurants hotels everything plummets to lower levels that we've ever seen before because of fear of the virus right that was the the winter wave that we had you look at what happened in october of 2020 it was pure fear people were fearful that we were not going to have a peaceful transition of power that we were not sure who was going to be president we weren't sure what policies were going to get enacted massive fear same thing regularly happens over and over again it happened uh this uh this spring and people are asking me kevin how how do you know how did you know there was going to be an end of the year rally people all the time i'm getting this in the comments all the time and it's i don't have a crystal ball i just made an educated guess my educated guess was such that i looked at when is most fear likely to subside see in uh we knew we already knew going into like november december of 2020 that we were going to have massive inflationary fears in 2021 in fact i wrote a tick tock or made a tick tock about a bitcoin price prediction and uh and in it uh it was from a course member live stream grouped out of it uh it was on jane in was like january 5th or january 6th and uh in it i said there's going to be a lot of inflation click bait next year inflation's going to go up but there's going to be a lot of fear uncertainty and doubt around inflation and sure enough there was it came a little earlier than expected rather than coming in march april and may people start getting fearful in february around february 19 markets started falling and selling off right so you had a lot of fear around inflation fear around inflation started subsiding a little bit in the summer and then came back in august and september and then in september we had this combination of inflation fears with oh no what's the fed going to do with the taper oh no the ever grant crisis the market's going to collapse uh and on top of that the debt ceiling the budget deficit and the reconciliation infrastructure packages lots of fear or i should say lots of uncertainty leading to a lot of fear if you look at those moments throughout the last year and a half you can see the best times to buy were when fear was most extreme now you look at the market why is it rallying well there's no fear what what possible fear do we have now look sure we have an inflation report coming out next wednesday but look at what we got today we got a jobs report that wasn't overly hot it wasn't bad it was actually slightly better than expected and the inflation readings within it came in slightly lower than expected so all of a sudden it's like wait a minute what what fear catalysts are left uh and very very few uh and so in my opinion until we have another big fear catalyst not necessarily we're not necessarily going to be in a type of market where we're going to have the best buying opportunities now don't get me wrong we're still going to have stocks that are red and green right every single day you're going to have that you're going to have stocks that went up 15 one day and then they pull back five percent but then when you zoom out and you look at pricing it's things things have pretty much all elevated a chunk not everything there's still some things that have lagged behind but worth noting right i mean look at this the dow jones industrial up 0.59 percent the s p at 0.42 percent of the nasdaq 0.22 the russell up 1.27 uh the bond market down all of these things our representation uh yields down that is all of these are a representation of fear going down but the exception of gold being up because usually people see that as a fear-based medal but i think gold has kind of lost itself as as the the sole fear hedge so i prefer to look at the 10-year treasury and the 10-year break-evens 10-year break evens but remember yields go down when more people feel comfortable generally institutions when more uh institutions feel comfortable purchasing uh bonds and if you think we're going to have a highly inflationary period coming up ahead you're not going to buy bonds that are going to pay you 1.49 or 1.439 percent it doesn't make gosh we're down to three nine holy smokes we're yeah we're basically 1.44 right now wow yields plummeted so wide yields plummet because we're we're not we're not seeing massive crazy fears of of potential hyperinflation staying and so the bond market's becoming more chill about the idea of buying bonds again you get bond buying pressure what happens bond yields fall same thing we saw this morning on the 10-year break even 10-year break even we've come off some of the peaks that we had at the end of october so anyway things to pay attention to but a lot of fear missing in the market not a lot of fear catalysts left and i think that's why we're seeing a pretty dramatically positive market along with a bond market that is uh is is leading yields to fall uh the way that works of course more people buy prices go up yields go down so the question for you is is it possible that jerome powell and this nomination or potential mystery around nomination will be the next big fear catalyst for the market taking our lofty valuations and prices down a notch
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