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고용지표가 예상보다 강하고 CPI 기대치도 높아 연준이 금리를 더 올릴 것이라 보며 증시 하락을 설명. 시장은 12월 기준금리 3.25% 이상 가능성을 거의 반영하지 않아 재가격 조정 시 하락 우려. 시프트테크놀로지스는 현금 소진·이자비용 증가로 부실 위험이 크다고 평가. 양적긴축으로 국채금리 상승, 부동산에 역풍 예상. 2023년 초 경기침체 가능성 언급.
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what the heck happened in the stock market today folks i'm going to explain everything that's going on in the stock market why the market freaked out today after that jobs data and what tesla said we're gonna get into some details we're gonna go into some charts and we're even brought to you by tasty met kevin.com tasty make sure to get 200 totally for free with tastyworks when you sign up for their brokerage super easy to use amazing platform for options ta just know to get this you have to deposit two thousand dollars for at least three months but dude that's an actual 10 i spoke with the ceo myself to get this deal up on their website which i'm super stoked about hook it up go to medkevin.com tasty get your 10 it's 200 is free it's better than uh you know those offers where it's like mysterious amount of free stock it's just straight up 200 bucks okay we like transparency and that's what i told the ceo and they did it and i honor that kind of company hence tasty tasty little cherry right here don't pop my other cherry over here anyway let's talk about the market okay so january i said that good news was gonna be bad news and i said that bad news was going to be terrible news that's because when you miss earnings you drop like snapchat 50 when you beat earnings you send the signal to the federal reserve that they need to tighten more and that's bad news because then we have to price in higher interest rates and the market don't like that some market goes down and so we got things to talk about regarding this first thing is the jobs report which we covered this morning so we'll keep this brief we were expecting 318 000 jobs we got 390.
sounds good right wrong it's a disaster because it means the fed's still not tightening enough even though the adp report told us private company job losses at small companies were around 91 000 the other companies are still hiring like crazy and even though we've got a list of companies that uh let's see i posted about this on twitter there we go follow me at real meat kevin you've got a list of companies cutting paypal cut 80 jobs bolt carvana robinhood klarna netflix gemini loom all of them cut uh between 2500 to carvana down to 80 at paypal but hundreds at like klarna and some of these other companies and then of course you've got hiring freezes and slowdowns at nvidia uber lyft microsoft twitter salesforce coin tesla snap facebook these are the most uh you know freezes and layoffs that we've seen since may of 2020 but still despite all of that we still somehow beat on the jobs number maybe this is the last month that we're going to beat right but because we came in hot the market started selling off today no doubt about that now fortunately we're not seeing that wage price spiral remember the survey was for 4.8 percent annualized we got uh 3.6 so that's good and that's the wage growth it's not so great for individual employees but in terms of like preventing uh depression in the economy by getting paul volcker good cpi projections though they're hot the survey is hot and it's not good they keep getting revised uh and they're coming in hot okay month-over-month expectations for cpi 0.7 that's 8.4 that is way too hot at an annualized runway rate for cpi that does include food and energy though core point five percent annualized run rate that's six percent still too hot how the hell are we ever gonna get to two percent we're not with these numbers year over year eight point two percent get out of town so what happened today in the markets well the 10-2 break even has you know kind of gone up a teeny little bit over here this wasn't too much of a move here that big drop over there that's really where everybody's like oh my gosh they inverted yield curve the 10 2 has actually been pretty stable we've been uninverted at about 29 basis points but it did take up a little bit the one that actually had a little bit more of a problem is this bottom one right here okay this is the five year break even which is the projection for inflation this is how the market predicts inflation and if you look real closely to the end right there you can see oh oh there we go you can see we got a little spiky spike doodle there that's because of the jobs report just today we went back over three percent now at 3.07 obviously way down from the nearly four percent where we were after the whole ukraine disaster but still uh you know when we see a spike like that the market tends to trend down now regarding this here this is the 10-year treasury you can see we're almost peaking again we were up at almost 3.2 there a few weeks ago but now we're back right to about three percent terrible for the real estate market uh that's uh that's gonna be our next headwind right that's the big thing we're gonna be talking about for the rest of years the real estate market probably into next year so those are things to really pay attention to and we've got some some problems coming in this data not so much in that recessionary 10-2 spread but those break-evens going up the treasury yields going up why because the market's still moving too hot that's why we're seeing those break-even expectations go up but what's the market actually pricing in let's talk about what the market's actually pricing it a little bit so this is kind of what we already had we already had the market uh experience going to liftoff which reminds me we got to talk about quantitative tightening which we'll talk about in just a second we've already had liftoff in march this is the fomc rate right the fed funds rate federal open market committee sets these we went from 0 to 0.25 in may we bumped up 0.5 that's why we're at 0.75 on the lower bound right now right that's just those two numbers added together easy right great so what's next well we expect 250 basis point hikes this is pretty much guaranteed markets pricing in like a 99 chance of these right here that's not where the mystery is folks the mystery is what happens come december and here are the possibilities right above of course tastyworks which remember go to metkevin.com tasty to get two hundred dollars seriously deposit two thousand dollars within three months they give you 200 10 on your money and you get to learn a sick platform with options in ta check them out uh oh link down below too okay but mattkevin.com tasty so what do we got over here well this is one path okay this is what 28.7 of the market believes right now is that we're going to get a 50 basis point hike which we've already had plus two more and then we're going to go to 25 25 25 for the rest of the year so that we end at 2.5 this is considered the neutral rate where the fed is neither accommodative nor tightening however because inflation is running hot the federal reserve has told us we're likely to go above neutral potentially to like 2.75 that would mean a 0.5 hike in september and then down to 0.25 and 2.25 in december obviously this is all predicated on what happens with inflation now leading up to this well leading up to today we had a green week until today destroyed everything with this hot data that's why the market's having such pain today right is this new data the surveys for cpa a cpi consumer price index inflation right and the jobs report coming in hot those things hurt and yeah i mean tesla doing the layoffs and stuff that didn't help i mean coinbase down nine percent tesla's down nine percent is terrible but this right here is the base case for the market right now 50 chance that we get to 2.75 at the end of the year that would be 50 basis points of a hike in september followed by 25 and 25.
this right here is really being considered uh what some folks are seeing the uh some people are calling it the u-turn some people are calling this like the potential pause like maybe we get the pause in september only 28.7 percent of the market thinks we're actually going to get the pause in september some people say oh we'll get we'll get the u-turn of the pause in november or whatever a real i wouldn't really call this a u-turn i would call this more of a pause a real u-turn would be like if let's say in in january we're like uh-oh we have to go negative 0.25 in other words reduce rates again why could that happen well if inflation all of a sudden plummets which is entirely possible you know we go from eight point you know five-ish percent or whatever in in march of 2022 and that ends up being some form of uh of a peak and then we slowly and then quickly tick down on inflation we could actually be in an environment where we have to go back to negative rates in a couple years we're looking at the fed stimulating again negative rates and stuff like that would be a big u-turn and it'd be amazing for a risk-on rally we're not close to that right now okay so let's not even speculate about that kind of madness right now instead what we should focus on is really what the market's pricing in and it's an 18 chance that we get a 50 50 and 25 which would be three percent above the neutral rate there for the fed funds rate or the market really not pricing in 3.25 but here's the problem why do we have a red day today because when we get strong jobs data like this this number becomes much more likely and when 3.25 at the fed reserve rate becomes more likely which you can see if you add this up right now is not being priced in at all i mean that's almost 28 i mean this would be like a one percent chance right here if you roughly add that together maybe two three percent the more this becomes likely the more the market has to reprice and that means red market right okay so let's talk about some individual companies here because we've got some problems the first one i want to actually talk about is shift shift technologies okay let me show you how things can actually become a problem shift technologies we did th we spent probably 15 20 minutes doing a somewhat of a deep dive on shift as much as you can in 15 to 20 minutes you know you can't do a full fundamental analysis in 20 minutes but when we do this is on the course member live streams or the goal is to really give you as much exposure to fundamental analysis as possible so the last few days we've been doing like etsy nvidia we've done end phase we've done uh shift we've got like crowdstrike coming up and so we really try to explore uh different elements of fundamental analysis it's supposed to be to teach you what i know about fundamental analysis i'm a big fan of teach someone to fish feed them for a life rather than just here's a fish right tell them what to do okay so problem with shift technologies is is really something that you can see that is going to be a big risk for the rest of the economy first of all uh number one thing with shift technologies is they use credit lines called a flooring line of credit a flock and the interest rate on that when we were at zero percent was 3.8 we go over here to 3 at the fomc they're probably going to be paying somewhere around 7 to 10 percent on their flooring line of credit i don't know why they call it flooring line of credit don't ask me but that's just what it's called and that's what they use to buy cars and then they pay it off when they sell the cars right problem is used vehicle prices are doing this and shift has been collecting more inventory which it's important to have inventory so that way when people download the shift app or whatever they actually see cars they could potentially buy if there's no inventory and shift is advertising and people go to the app and they're like well i mean i saw your ad i downloaded your app but you have no cars and then they delete the app your roi on advertising goes down so you're literally burning money having uh on on cars that are losing value and burning money on advertising not so great if interest rates go up now you have even more of a burn right so you've got a lot of potential problems so this is just an example where you could see interest expenses potentially double at a company like shift and advertising obviously becomes less expensive if they have less inventories and so then it really hurts a company so then you ask yourself okay well if the company's gonna potentially get hurt with higher interest rate costs uh how much cash do they have to survive so that they can keep buying inventory keep their advertising effectiveness up right well not much they're down to roughly uh i believe it was roughly off the top of my head about 95.
you know what i'm just going to look really quick i have it here on my ipad so they are down in q1 to cash of yup 94. i was close 94.8 mil of cash so 95 basically anyway they're down to this well last quarter uh or or this yeah this last quarter their cash burn which was absolutely insane folks their net cash burn in the last quarter we'll go to the statement of cash flows here was 87.5 mil that wasn't their net loss their net loss was like 57 mil or something like that but they burned 87.5 million in cash just in the last quarter that burn rate is up like 50 from the quarter before that the problem with that is shifts out of money because they only got 95 mil left they've already used up about 100 mil on their flooring line of credit sure maybe they can continue to get debt but how are you going to raise money from shareholders with a one dollar stock price so the point is you can you know why are some companies dropping a lot that that have negative cash flows it's because in a recession when you have a lot of used inventory used car inventory and people stop buying used cars and you're out of money and you can't raise on the stock market a you potentially get de-listed from the stock exchange which makes it even harder to raise money and b you could just go bankrupt it's bad uh now i sold shift way back when it was like i don't know it was like six dollars and ninety cents six dollars and eighty cents or whatever i took about a ten percent haircut on it and i did that because i started seeing uh oh wait a minute there's there are no used cars there was no inventory back then to actually have used cars to sell and if you don't have inventory their advertising sucks right whole advertising should be again anyway big big big big big problem here with shift technologies right problem now a lot of people are complaining about microsoft and they're like oh but kevin you know microsoft also reduced its guidance well if you look at the earnings call for microsoft and the 8k and you compare them microsoft gave us a heads up of this back in april they're like hey heads up we're gonna have some foreign exchange risks coming up and market risks coming up and their entire lowering of guidance was based on foreign exchange that basically means if the dollar becomes stronger and their sales in other countries are now worth you know five percent less or whatever well they have to take a five percent hit to guidance and so they ate kade they gave the market an update that's when 8k means they gave the market an update and said hey we're getting hit by fx foreign exchange problems that does not actually mean that demand at microsoft is going down so that wasn't too big of an issue for me and we do have some good news at some companies like for example lulu man uh i think lulu's still in for some pain going forward but not right now operating margins at 16.1 percent same store sales up 24 at lulu really good they raised their fiscal year guidance really good air freight still remains expensive red flag though okay you want to know what the red flag is and this is why it's bad for the fed this is why the market's going down when you've got a company like lulu going hey we're still doing great everybody's still shopping over here our shoe sales are doing really well even though we only have women's shoes and no men's shoes hey men's you want a shoe just get the women's one like let's literally what they're doing um what the problem what they say is ocean shipping is not improving and still spending a lot of money on air freight in other words having to spend more money on these inflationary style costs and not seeing improvement in those supply chains yet while still having demand outpacing their forecast that's a problem because you still have a hot economy you still have people spending money like crazy when they probably shouldn't be oh well at some point that'll stop for example like what we're already seeing at the buy now pay later players the wall street journal did a big piece on uh the buy now play pay later players this week they said that the losses are starting to pile up and wholesale lines of credit are getting more expensive a firm holds about 50 of uh their own debt so when a firm for example does a buy now pay later loan they keep about 50 and then they securitize the other 50 klarna is now laying off some of their staff uh subprime loans for buy now pay later issuers make up 43 of their base that's sort of buy now pay later space as a whole a firm has always said that they try to appeal to a higher quality customer but that was back in the peloton days so i don't know how that has changed so maybe less subprime risk over there but wall street journal was not really happy about buying up later because delinquencies of 30 day lates are up almost double from a year ago we were at 1.4 30 day lates now at about seven percent and once somebody's 30 day late 30 days late good luck collecting oh but if you need some extra cash remember medkevin.com tasty you get 200 just deposit two thousand dollars go to kevin.com tasty all right credit card usage is also rising as people become more sensitive to price increases we know that crowdstrike increased their uh forecast but is actually still falling despite that they fell in after hours yesterday when they reported and then of course we had the whole jamie dimon hurricane comment that didn't help he says that consumers still have in his opinion six to nine months of spending power left in their bank accounts but after that he's warning of a hurricane brewing and that we should start bracing for impact and this is where a lot of the forecasts are still that maybe we're not in recession now but maybe that recession comes at the beginning of 2023.
i don't know i don't care but i keep seeing deals in the stock market i can't help myself but buy more we covered all of this this is the big reason markets are moving that's the projection of what the fed is going to do and there's a lot of expectation that the more hot data like this that we get cpi jobs reports like lulu microsoft's still killing it crowdstrike the more reports we get like this the more companies like shift go bankrupt and the fed hawks rates higher the more they hawk rates higher the more bankruptcies we'll see and ultimately the greater risk that the fed ends up putting pushing us into a a sort of larger recession than they expect because they over tighten at the same time as inflation comes down inventories rise and then they have to u-turn that u-turn will be really glorious when it comes but we're in the thick of it right now and it kind of sucks so anyway folks if you're nervous about it life insurance folks met kevin.com life in as little as five minutes you can sign up for a life insurance you can apple pay android pay for it go to medkevin.com tasty for tastyworks and we'll see in the next one thanks so much bye now another thing to consider is quantitative tightening that's making things worse now that started june 1st what does that mean it means the federal reserve is going to start rolling off the treasuries that they have and they might even consider selling some of them like mortgage-backed securities now the problem with this is when you dump treasuries or you stop buying them you lower demand for them when you lower demand for something the price goes down when the price goes down the yield goes up so that means the yield goes up on things like the 10-year treasury which is exactly what we saw happen today it's knocking on the door three percent it's going up again the more the yield for that goes up the more attractive bonds actually become over stocks so now you have people going over to treasuries picking up treasuries at a three percent yield instead of buying stocks so there's some more qt downside for you but that's just what we had to deal with also still not good for real estate
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