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Ladies and gentlemen, with these tremendous real values we're seeing in the market, even without a declared recession, even without having actually gone through the worst, many analysts and professional investors are coming forward saying that the heavens are preparing, that what's coming is going to be huge, and one of them is Michael Barry.
And let's not set a precedent, but this time what he says, in my opinion, is quite right. Hey YouTube, how are you all doing? In this video, we're going to analyze Markel Bourdy's latest comments on what he's focusing on right now, as we've already discussed, and how we could indeed see extraordinary things in the markets again.
So I hope you're ready because here we go. Before talking about Michael Burgess, let's talk about something that, in my opinion, is more or less interesting, but more importantly, what I wanted to say is the bond market. If it weren't already a bond market, it would be boring because who buys bonds?
Many people buy them. The bond market is two hundred times larger than the stock market we have in the US, where we're seeing that the return is still at 2%. And 10 is inverted every time with an 80-90, almost 100% effectiveness rate. Every time this inverts, it leads to a recession in the next 6 to 18 months, and personally, I don't think this will be any different.
Okay, this is the first piece of data, and now we're going to see it in a graph. Consequently, something else we have to keep in mind—I don't know if we 're noticing—but if we realize that practically since April, okay, throughout the first half of the year, but from April to June, the market has n't had very good results, right?
There's been a contrast between Spain and the US. This is also due, among other things, to the Fed's monetary policy and, consequently, to the fact that bonds were becoming increasingly aggressive, putting more and more pressure on the markets. Markets don't tend to do exceptionally well during this period, with a bond yield of 10 above 3.
What's happening? Bond yields were falling during these weeks, these months. What's happening now? It's touched 250. If you look, on August 2nd, we already had some very nice days in the market, and little by little... It seems to be recovering; for now, it doesn't pose a great risk. 286 is above 3%.
I think we're going to see problems. However, the same thing is happening with the two- year yield. As we're observing, instead of falling and approaching the ten-year yield to divest this bond curve, what's happening is that the ten-year yield is more or less flat, advancing little by little, while the two-year yield is advancing considerably.
And as you can see right now in this chart, every time since 1980, the yields of ten-year and two-year bonds have inverted. This is what we can see in these negative numbers because it's the negative difference. Shortly after, it's inverted, inverted, inverted, and here very little has been inverted.
But well, this is how the situation was, how it remains somewhat the same. Shortly after, as we were saying, between 6 and 18 months, we end up having a more or less long recession, as you're seeing. Well, some last a year, others last a little more than a year or a year and a half, but nevertheless, we end up having one.
And this adds to what Michael Barry is saying right now, which is already... We were talking on the channel not too long ago about how consumer credit balances are rising to record highs because consumers are choosing violence, as in short, before cutting their spending in the face of inflation. You remember the problem we had where consumers were saving a lot?
The helicopter cash from the committee taught people to spend again, and it's addictive. Winter is coming, the photo, and he is... I don't know if they don't change it. And as you're seeing, this is the US Consumer Credit. We dedicate the graph we have to... well, how much is the consumer leveraging?
But without saying it, and from 1991, 1994, 1999, 2004, as you're seeing, this marks us in periods, if I'm not mistaken, also... well, four years, four years, four years, no recession, forget the cycles against the ground. As you're seeing, well, consumers spend, save, spend, save, save a lot. In the recession, they spend, save, save a lot.
They have little leverage during the situation, and suddenly, as we're observing, zoom in, it shoots up, and it doesn't shoot up. Any figure is... if we plot a The line right here at 27.5 is a record figure. Excuse me, this is a little low. There it is. It's a record figure for consumer spending. What does this tell us?
Well, it means more or less what we already knew: the amount of money Americans owe went above $16 trillion for the first time in history in June. Hey, well, it's not exactly good news. I don't know. It turns out that on the one hand, we have consumers who are going into debt, which is good because they spend badly, which is driving up inflation.
It's bad because the Fed is indeed raising rates. And then we have a market that's having a great time because, honestly, everything is working right now. Everything is working, and it's like the worst thing that's happened is that the Fed is going to reverse course. But we're not looking at the blow we could take.
More of the same. These are repeated charts. Here we have the debts, where they are located, especially in housing. We're seeing levels of delinquency, especially in prime housing, and the wing.com, these people who are borrowing, also on credit cards. Seeing that these crimes and these difficulties that we had before the situation are returning, economically we are not, we were not doing very well, and well, it also says that it aligns with what Walmart was saying, that this is having this effect on consumers, not only Walmart but as we were saying, we have Chipotle and Va Chip, I don't like this, Chipotle Mexican Grill, they were telling us, Starbucks was telling us, Walmart was telling us, Target was telling us what's happening.
There is n't much of a problem with the consumer in general. If we draw a line and let's say that the total consumer goes from here to here, there isn't much of a problem. However, here in general, we are seeing levels of crime at levels that they are already cutting back on spending because it is indeed affecting them.
This is another quite interesting graph. Personal 6 bean reduces the amount of money that Americans are saving, and as we are seeing, well, since 2017, the truth is that we were saving, we were saving, I'm not American, we were saving an amount, well, okay, I don't know, 7%, let's say, why not, 7% out of 5 And then suddenly the helicopter arrived from home, the faith in the goal arrived, the market figures, it doesn't matter, the printer arrived, and from then on, obviously, he started saving a lot, but what's happening now, what's happening, where are we?
We're quite a bit below this 7%, as we were saying, it would n't surprise me if things were a bit bad and we were actually talking about negative figures, which isn't helping, especially not because deflation is going up or down, but because we could start to see a domino effect when a sector or an industry starts to fall, like what happened in the great crisis of 2007-2008.
I don't think it will be as severe, but I wouldn't be surprised at all if we really suffered quite a bit, and what would happen then to the market? And this chart does n't sound good either. Well, the white line is what we're seeing now in the index. The truth is that the index has come a little further up here; we would now be at 4,000 and 4,200 if I'm not mistaken.
Let me do a quick check here. Take a look, it's piex at 4,250, perfect. Well, here we are at 4,250. We're right in the middle. Look how well it turned out, right in the middle, okay, here we are. So it's not like we're that far off. We're in the middle of this bull market rally, in this worse sea than before.
We're in the Istanbul Trap. Perhaps the market believes the worst is over, but the Fed is n't so sure yet. And it's the same old story. When we think the Fed is going to change and stop raising interest rates, the first thing is that the economy hasn't yet felt the huge interest rate hikes that just happened.
Nobody seems to be noticing, but historically, the Fed, if I'm not mistaken, I don't know, in Walker's time, had never raised rates consistently twice a month. 0.75, 0.75 has been hidden in September. The markets are waiting to do with five, but who knows. It's the same old story. Inflation has been very good, but even if inflation comes, we're going to end up with an annual inflation rate of 63%.
I mean, the Fed is going to stop raising rates. Guys, the market says that by 2023 the Fed is going to pivot. I suppose we've read a lot in the news about the Fed pivoting. I don't see it as very clear with at least 63 percent inflation in 2023. The Fed isn't going to be thinking about pivoting; it's going to be thinking about continuing to postpone economic growth, especially if we continue to have such a large and important market.
So, even though the markets are rising, and as an investor, a trader, and someone who has significant capital in the market, I'm glad, I don't quite trust this rally. And this time, as Michael Barry said, a winter is coming. The worst is going to come a little before winter, if not earlier. The markets are already anticipating it, not only because of the US crisis but also because of how the huge and deep recession could affect us.
I mean, the massive blow I think we're going to get in Europe with the energy issue, where Germany is already cutting off power to certain monuments at night and cutting off water. Hot to certain public buildings etc. etc. etc. Nothing good is coming and I find it fantastic and surprising at the same time that the markets are taking it too when we haven't yet seen the worst in terms of macroeconomics, consumer, Corning, etc.
etc. In my opinion, the surprise we could get in the links with this great crisis could be quite significant, especially considering that we are already at an extraordinarily rich valuation, based simply, for example, on Apple. Right now, Apple is talking about a forward pair of 28, about to put us in a recession.
Apple is at $10 and $11 of all-time highs and keeps going up. The best part is that it can keep going up, but sooner or later, in my opinion, we are also going to see a correction because it is not healthy for this market to recycle itself. Gentlemen, gentlemen, I would like to ask what you think about what the burn just signed and the worst is coming this winter.
We will have to wait a little more, a little less. Are you buying? Are you selling? Are you holding cash? Are you buying defensive positions with positions of Energy, like the deceased, Western Bronze, petroleum, I've already said it, they're comparing technology positions, Apple, Tesla, Microsoft's, it wasn't a trade, it's Google with L, in the end, what are they buying, or are they perhaps getting into short positions because nobody can trust this market as it's developing, obviously a crisis is becoming known little by little, as always, showing itself down here in the comments, seriously, I thank you from the bottom of my heart, I'm very curious to know what you think, gentlemen, gentlemen, I hope you enjoyed this video, that you are happy, that you smile, that you tell your loved ones that you love them, don't wait until tomorrow what I do in Asia, hit the like button and of records where every time I buy and sell stocks, doing almost intraday trading since March because we can't trust this market much, I let you know with the positions I enter, the ones I exit, exposures, hedging, options, if you don't understand anything about stock options, any story, you can ask me, it happened to me quite a lot Time spent within this group, plus we have exclusive content for it as always, sir. I hope you enjoyed it and we'll say goodbye until the next video.
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