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i can't even go on a run without tesla and elon musk doing something to ruin the day tesla just fired 200 people on their autopilot teams the ceo of pinterest just quit and all the indices dropped like a rock today giving up the minor rally we started having it towards the end of last week nasdaq 100 down 2.98 almost a full 3 leading to plunge so what happened what's happening and why are there dangers that are becoming more apparent now that we've got to pay attention to well on this video we're going to talk about that just remember if you want to get 200 for free met kevin.com tasty to get 200 totally for free when you deposit 2000 with their trading platform all right folks first let's get some background on what's going on this is important right here this chart this is the consumer confidence chart i'm covering up exactly where we went on this consumer confidence chart and i've been listening to some of the complaints of some of you telling me that i need to get myself out of the bottom right corner so that is exactly what i am now going to do i'm going to put myself yeah i'll put myself right here how does that look i think that looks good all right yeah anyway okay so what do we have here look at that near decade low on consumer confidence here the white line is the index of consumer expectations uh and uh the the yellowish line is the index of consumer confidence so these are two different things consumer confidence interest in in their own personal willingness to spend money right and then consumer expectations are a little different they're kind of like well what do you think is going to happen in the market see like sometimes consumers themselves can be confident because maybe they have more savings but then when they're asked about the markets they're like oh no no but the market's on the other hand big problem and you're gonna see why this is actually starting to become a real danger in the stock market and no i'm not just talking about that earnings recession that's looming that's already starting basically at nike we're halfway there but uh towards the end of the video i'll be telling you this particular danger that is in part being caused by this consumer confidence drop that we got today pretty bad obviously it's also being you know we're seeing consumer confidence fall because well inflation didn't peak when we thought it would over here instead it you know now this is our forecast is that inflation is actually expected to potentially still continue to tick up a little bit before we actually start rotating down but even when we get to 2023 over here we still expect to be over six percent in terms of inflation look at that now i'm covering this area whatever we'll zoom in there you go still expect to be over six percent uh you know by the end of the year and this is a problem inflation is becoming very very sticky it's hard to get it down now something that's very good that's starting to be a sign that okay maybe we're going to get this actually down is we are seeing inventory skyrocket right this is a chart of inventory to sales ratio so the way that works is if you sell a hundred dollars and you have 140 of inventory you would have an inventory to sales ratio of about 1.4 well take a look where this inventory to sales ratio was in 2020 it was always over here the uh orangish line it was always in for general merchandise stores in this sort of 1.2 to 1.3 region here it's exploded over here towards the end of 2021 and into 2022 and hopefully this finally starts adding to some like downward pressure for inflation but again when we combine this terrible consumer confidence with how long it's actually going to take for these inventory levels to push inflation down people aren't really happy about what's going on and it's taking too long for even ppi numbers to come down first of all here's ppi it hasn't moved down at all yet sure we've got prices paid somewhat stabilizing here the pink line we've got supplier delivery delays slowly starting to inflect down we've got backlogs slowly inflecting down but price is paid the most important one we don't have the actual inflection point yet now people are still believing that inflation will come down the problem is at what cost and that's why consumer expectations are getting devastated and i'm going to show you exactly why this relates to big problems for the stock market we'll explain this and i'll tell you the big danger right after a message from our sponsor for today's video there is no reason we should not be using our sponsor today for trading and that is a moo moo because they give you what you need for trading research technical analysis or even posting and discussing our investments thankfully today our sponsor mumu is here to help consolidate these tasks into an easy to use one-stop trading app that makes it simple for traders to do everything we need all in one place moomoo allows you to share and discuss your trades with over 18 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going to do you could survey consumers to see what consumers think inflation is going to do and you could look at the bond market this is the bond markets version this is at the white line the five year break even the blue line the ten year break even we've got a very very powerful trend over here like this is phenomenal in fact if you take a look closely here you can see that where we sit right now on the five-year break even right here around that 2.8 level we have not actually seen since before the war in ukraine that's very very very good and we had a slight spike after the delta variant over here where we were higher and we're actually lower than all of these spikes right now this is phenomenal this is very very good so we like seeing these break evens come down so if the breakevens are going down people's inflation expectations are down why why is confidence so low well because we think we might end up having to push our markets into a recession whether it's an earnings recession or an actual recession by a gdp to get there and so what are people finally doing well folks this right here i hate to say it but this is a dirty chart this is a dirty chart i don't like this chart i'm gonna put myself over here and this is the big danger this is the point of this video take a look at this when we had our dip in january what did people do we threw 5.5 billion dollars into etfs these are etf inflows whether that's qqq or vti vt sacs whatever right 5.5 billion dollars of inflows right here on the first dip in january that's back when i'm like sell get it out right i bought uh a chunk here obviously things kept going down since then so i mean i did uh did do some saving over here because i also repositioned my portfolio which obviously you can get every single move i make in my portfolio by checking out the stocks and psychology of money group linked down below and you can get a little picture of it right yeah right behind me anyway so uh so right here in march we had 42 billion dollars of inflows very very important okay this is when people really went into buying the dip right that's great we also then had that end of march rally which people also bought not so good that part unfortunately now we're down at these lower levels here which i've also been buying these lower levels but there's a there's a difference between me and everyone in the market and that folks is that well now all of a sudden people are starting to pull money out of the market yes folks take a look at this even though at the end of may we had 30 billion dollars of inflows into etfs for the first time we sold this rally off this last little six percent move up from the bottom that we had in the s p 500 that rally got sold we sold the rip and it was a minor rip but we sold the dip instead of buying the dip and 10 billion dollars left the etf market now that's sad because if you if you had you know obviously a crystal ball the best way to actually have done this is the outflows should be here right you would want the outflows to be here and then we want to see lots of inflows over here because the prices are lower right but no people are finally saying look can't take it anymore consumer confidence is too low inflation is too high for too long we are no longer interested in investing in this market we're taking our money out and you know what this is folks this is the beginning of capitulation when we start getting outflows like this it is the beginning of capitulation and it's actually really bad news in the short term but it's also really good news because we need to finally just get people out when we're going to be the little paper hand in weenie babies and look i know i paper handed in january but i i got back in okay got back in about 60 days later do i wish i waited 90 or 120 days of course but hey point is rebalance my portfolio i would have been down another eight million dollars had i not made that transition so i'm extremely happy i did okay it worked out really really well uh now this though for those of you with cash on the sidelines this is good okay i'm probably in about two weeks i'm gonna be sitting on about 15 of my portfolio in cash and if this capitulation comes within the next few weeks right around hopefully we get peak inflation over the next two or three months that could be the juiciest buying opportunity who knows who knows you still got wall street suits saying oh you know we could see a potential bounce before the next earnings season maybe we'll get a 38 to 50 retracement or that's wishful thinking over here i think this is very interesting this is the atlanta fed gdp now estimate you know that's this is another potential reason for for the season good news actually and what we have over here if you look at this green line over here is this here is the zero percent line a little bit above that what i drew there and over here we went slightly negative with uh you know real gdp estimates but we're actually bouncing up off that floor there a little bit which is good maybe some signs for optimism but we have to balance like these nominal signs of optimism along with these capitulation signs of optimism we have to balance that with the fact of the matter that we still have ridiculous consensus estimates for earnings and that earnings recession is going to hit margins at a lot of companies and this is something it's going to be tough it's going to be tough to find companies that aren't getting eps revisions to the downside or guide to the downside personally i'm looking at sas and obviously tesla but that's you know more of a demand-driven thing that they have so much demand and they're so early in their growth curve their eps is going to grow but sas companies could be very interesting during this time where maybe you don't actually see big eps misses at some of the sas companies so those are some things i'm going to be paying attention to cyber security sold off a lot communications uh have sold off a lot so i think there's some opportunities out there we've been talking about some of these in the course member live streams and such but uh i'm very like i'm i i want to be as clear as possible because i think sometimes people get confused they're like well kevin a lot of what you're saying sounds like bad news yes and i'm not going to try to profess to perfectly time the bottom not happening okay i not this kind of market very difficult to time so my thing is just a little bit at a time as i get cash a little bit at a time bye bye bye bye bye now did a little bit of buying this morning and a little bit of options playing this morning check out those alerts if you haven't seen them yet and uh yeah some straddles we'll see what happens i'm kind of excited but anyway if we get capitulation in the next couple months here i mean hopefully sooner than later that'd be nice things are gonna get worse before they get better but boy oh boy it's gonna be a good old fight opportunity my take at least goodbye
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