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holy smokes this could be bad for the market and for your money so today in meat heaven report four we're gonna analyze the market and something that kind of scary just happened been like really scary I feel like it almost had a heart attack Thursday morning okay the heart attack was possibly a little unrelated because I think that was a mistake but maybe it wasn't let's analyze exactly what happened there and why this confusion is causing a lot of turmoil in the marketplace right now this weekend and why you should be paying attention to what happens over the next week or two let's get started with me Kevin report number four there was a massive shift in the market place Thursday the day after the Federal Reserve announced theirs keeping rates as steady but what happened on Thursday and what happened on Friday are incredible pieces of news that we need to pay attention to and they're going to open up the door to what we should be doing right now the different scenarios that could be playing out over the next few years we're gonna look at the likelihood of each of those and then we're gonna decide based on those scenarios what should we do to stay safe and what's about to happen we thought the problem in the marketplace was going to be even ten - that is the inversion of the yield curve between yields on ten-year Treasury bonds and two year Treasury bonds but we were wrong apparently the indicator that everybody is concerned about now is actually the one that inverted the ten to folks is fine we have no inversion of the yield curve in the ten - which tends to be a predictor of recession but unfortunately now we have professors and the Federal Reserve of San Francisco chronically indicating that it's actually the 10-year yield compared to the 3 month yield on Treasury bonds that is really going to be the indicator of the next recession but fee or not that inversion did happen on Friday but we know that after an inversion happens it has to stay inverted for three months before technically or at least in theory will see a recession within the next 18 to 24 months so this goes to how much time do we have left when is the market going to crash well that's what the theory is we look at people like Harry Dent who tell us on Robert Kiyosaki's Rich Dad Poor Dad come podcast that we have maybe one more bubble left in us that is mr.
dent thinks the bubble is going to balloon one more time before it pops and that could start ballooning at the end of 2019 and early 2020 which really gets us wondering do we do we want to be on that ride or so just gonna blow up in our face what should we do and how do we handle this a new news this new inversion of the yield curve that maybe matters more than the 10 - and what does it mean for your investments so let's give you a little bit of a backstory in 2016 and 2017 the Federal Reserve finally started talking about tightening monetary policy which is just sort of a fancy way of saying they want to stop stimulating the economy so much to prevent it from overheating because we you know we don't want things to bubble up and balloon and I get that and I think the marketplace as a whole saw that as reasonable a slow kind of tightening well when 2018 came around the Federal Reserve got maybe a little too hawkish that is they started raising rates a little crazy fast and that led to a plummeting in real estate values in the summer of 2018 and towards the end of 2018 the stock market really plummeted about 30% now we've seen rebounds and we've kind of gotten a little bit more comfortable in the market place but that comfortability in the market place has now just this week turned into confusion and I want to talk to you about that story that story of the heart attack feeling and really what all of us maybe should start internalizing at least over the next few weeks let's go on a walk and let's talk about this together so I just told the story of basically what happened from sixteen seventeen to eighteen we've talked about what happened in the marketplace pretty regularly on this channel but what's so important is understanding the marketplaces expectations you know last year we were expecting the Fed to continue raising rates so the market pulled back we saw a pullback in values well this year we expected the Fed to maybe be a little bit more cautious but we didn't expect the Fed to be as extremely cautious as they have now turned and that is a turning point that has led to one of our yield curves to inverting now we'll talk a little bit about what that means in just a second but this is really scary because usually when the Fed says okay all right we're good we're just gonna wait we're gonna be patient let's see what happens in the marketplace usually when the Fed does that everybody rallies stocks go up you know if everything kind of you know the market stays jubilant confidence stays up well unfortunately that did not happen this week instead what happened this week is the Federal Reserve was so cautious so almost like worried filled in their demeanor which is really just the words on paper but what they said and their indications for GDP growth of the United States economy that actually left stocks down for the week and yield curves inverting let's talk a little bit about strategy what you should be thinking about let's talk some scenarios as far as what could be happening in the marketplace talk three different scenarios and then we'll talk about possible solutions for all three of us this week should have been good news mortgage rates went down the Fed said they weren't going to raise rates but everybody sees what happened as bad news because it's way too conservative and now it's scary before I get into those scenarios let me just quickly say why I pretty much almost had a heart attack this week and how it made me feel and I think that's probably how the entire market feels so here's the thing Thursday morning and this cherished soaking wet oh well too late now Thursday morning I woke his cold my butt's freezing their Thursday morning I woke up and every morning I look at the Zillow mortgage calculator app because it tracks interest rates and I knew when I went to wake up Thursday morning that I would expect to see the change in interest rates and I was expecting to see a plummet because I wanted to lock in a refinance that morning well instead what I saw was actually that interest rates were up seven tenths of a percent immediately had this heart attack I'm like oh my gosh this is it like the market is plummeting because of what the Fed said it is that unclear what is happening in the marketplace and now Zillow did seem to correct that later and I reached out to multiple different lenders to say like why did this happen why did the Zillow chart say this and I think I finally got to the bottom of it the reason the Zillow chart actually showed this massive spike and then this sort of volatility and then this plummet in mortgage rates was because the marketplace was that clueless as to how to react that that is actually the turmoil we saw and later in the day yes rates settle down lower but what it's signaled to me and obviously that's what we're seeing now in the stock market and the bond market was that maybe it's time to be a little bit more conservative now being a little bit more conservative sort of harkens back to what we've been saying on this channel for the last you know whatever I don't know six seven months pay off high interest rate debt maybe start collecting cash and take a little bit less risk in the marketplace because maybe now's not the time to start getting into flips and short term private money loans even though there are a lot of short-term private money lenders offering a lot of money right now maybe it's not time to take up kind of debt but you know as far as the marketplace well it's getting a little crazy out here to say the least certainly with uncertainty there is one thing that I could tell you that is certain right now the 737 has two optional features that you could buy if you want more safety features on your plane maybe that's too soon okay let's get back to uncertainty and let's get back to scenarios so here's the thing we're gonna open up here to three possible scenarios that I think are going to happen in the marketplace let's start with the worst-case scenario option one oh [ __ ] this is where literally we go into a deflationary spiral that is rather than having inflation we suffer from possible deflation the Federal Reserve cuts rates to zero or possibly a negative territory government debt debt balloons and all of a sudden the entire marketplace moves to a position of hoarding cash because everybody is fearful of making any kind of business and any kind of purchases people start cutting discretionary and household spending and all of a sudden we basically self fulfill the worst possible recession that we may have seen since the Great Depression that is what I'm calling scenario one the oshit scenario and we'll talk about maybe how to handle scenario one two three after we get through the scenarios but let's talk a little bit about scenario - because scenario one not so good in fact it's an area one might lead you to question fiat currency in total that is our paper money that's not backed by anything any warmth is it all just going to disappear like the Bears have been saying for years now leading up to scenario one if we think scenario one is possible we're actually going to want to take money off the Vegas table and run so keep that in the back your mind if you think scenario one is possible yeah taking money and running is probably the way to go but we'll touch a little bit more on where to go shortly the scenario - is you know going to go in the direction of scenario one without the extremeness so rather than going into the deflationary spiral where you know people with debt actually get punished which is the opposite of what happens in the marketplace now if you have debt and there's inflation it actually rewards you to have debt and pay it off easier but anyway number two is we we see this sort of new normal of maybe inflation around 1/2 percent to one and a half percent which is very very low but we see growth in the neighborhood of maybe only one to two percent slightly above inflation we're gonna try to think of different scenarios and options as far as what's the best play for option two and option three it's gonna be different for option one but option two is really just are we going into this you know recessionary rollercoaster where we're constantly on the brink of recession and we might think well has this ever happened before well it's actually happening right now in fact if you look at Europe we can see exactly this sort of teetering are we in recession are we not in recession are we in recession are we not in recession to where the ECB has a negative interest rate so we're really in a position of oh like is the European Union ever going to get out of this teeter-totter that's what's next for the United States as well and we're just going to be on this teetering roller coaster for the foreseeable future option three is probably the most optimistic of all scenarios and it's probably the one that I really want to be true and that is that we're not going to hit our inflation target of 2% we'll probably stay around inflation of really one-and-a-half to two percent slightly under 2% we stay there and we see mild growth that is no longer are we going to see this 7 to 12 percent growth with companies or stocks we're not going to see the long-run SP average of 8% growth we're not going to see the long-run Dow Jones with dividends reinvested average growth of 11% nope instead we're just not gonna go towards a deflationary option one we're not gonna go towards a super low growth European Union option number two instead we're gonna bounce around growth of a new normal of 3 to 4% see a little bit of inflation but everything will just sort of Teeter at slower growth levels and as we get used to slower growth over the next decade without seeing massive ups and downs maybe then we settle into an environment where we realize ok look we had a big run coming out of the recession now we're just plateauing and the plateau is just the environment that we need to invest with him well that's it for three scenarios now let's talk about maybe what to do within those three scenarios but only after a commercial break if you are not yet make sure to join so UK we got private mentoring with me at least four times per week through our private live streams at least through 2019 you will have access to me as your private mentor twice to four times a week depending on if you're in one or both of the courses and you'll get all of my insights access to me in questions and all of the course content so make sure to check out the links below use coupon code st.
Kevin and DM me on Instagram if you have questions now let's talk about what you should be doing in these scenarios ok the part you've been waiting for what should you do depending on where you hang your hat that is where do you believe the market is going to go which scenario do you think is going to play out do you think option 1 the deflationary spiral is going to play out do you think option 2 the extremely low growth European or Japan and the 90s growth is going to play out or are we just going to adjust to a new normal of well more hopefully normal growth in the United States over the next ten years as we Plateau well please let me know in the comments which option you think and what safety measures you would be taking for various different options option number one for deflationary spiral I would highly suggest finding a safe harbor asset which might be gold although there are some people that think gold is also going to get punished and slapped maybe you think it's Bitcoin or maybe you think it's cash that is hoarding some sort of asset that would be good in a deflationary time and usually assets that are based in savings do well during deflationary times because you are rewarded to save and you're not rewarded to have a debt in fact you get punished if you have debt so low debt high savings would probably be a great strategy if you think option one is going to play out option two or three or to me somewhat going to be based in a similar strategy because both of them are going to have some inflation and both of them are going to have some growth neither of them are going to have extreme growth you'd probably want to do what we always recommend that is getting discount deals on stocks and companies or by wedging real estate and understanding the three different ways to wedge real estate through what I call the core method of wedging real estate or by pulling off the Warren Buffett or Charlie Munger cigar butt method and finding deals on stocks and insulating yourself by buying good discount deals and only buying when you can find things at a discount never overpaying learning how to do that will protect you in option two and three no matter how much the roller-coaster goes up and down now that I didn't have a heart attack I would just appreciate because the fact that I almost did and you listened to me for all this time you press that little red button and you join the pre 100k crowd thanks for watching everybody we'll see you around what's up man yeah I'm a boss who are you nice to meet you Giovanni Thanks and towards the end of 2018 and I think that odd you know
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