Hey everyone we kevin here in this video we're going to review my investing concerns for march and april of 2022. we're going to review quite a few things. Number one we're going to start with the war in ukraine. Note we're going to touch on some brief things.

Regarding current events, but mostly we're going to be talking about five to six broader concerns and implications out of the russia, ukraine, net conflict and we'll also be talking about some stocks and sectors related to this conflict. Then we'll move on to talking about inflation, especially concerns amongst food, oil, fertilizer and so on, and then we'll talk about stock sectors and how i'm allocating i'm changing some allocations. These are all, in my opinion, very important topics and let's get right into them after two quick messages, one that this video is brought to you by public.com and number two: the programs on building your wealth via real estate stocks, sales, property management and, more all linked Down below with a coupon code expiring for those programs in five days check those programs out linked down below next to the link for public dot com. Now, let's get into ukraine.

Okay, i'm going to start by talking about the six bigger issues that are being talked about now that could last over the next couple months. Here then, we'll talk about some more current events, so first we've got concerns over the type of weapons that are being used in ukraine and the more and more we hear about the potential use of either cluster munitions hypersonic missiles. These are missiles that travel four to five times the speed of sound and all give rise to the theory that maybe putin will lose his mind just far enough to start using smaller scale nuclear weapons. I believe this to be a relatively smaller risk, but it is one that i have to mention that i do believe.

The market is pricing in at least 10 percent of fear of what i think will create more anxiety for markets, though, is a second risk, and that is the polish proposal. The government of poland is formally expected to propose this upcoming week. That is the week of march 21st that polish troops should begin to control western ukraine, or at least peacekeep in western ukraine. This would be a way for poland to essentially create a buffer between themselves and the russians who have already invaded substantial portions of eastern ukraine and are starting to slip into the territories of western ukraine with attacks already starting in areas like leviv, not too far from The polish border - now this is, in my opinion, not likely to actually be approved by nato members, because this would essentially put poland a member of nato in direct uh potential confrontation with russians, which would then be a confrontation between nato and russia.

So, in my opinion, this is unlikely just like a no-fly zone is highly unlikely, but and of course, it's also worth noting that poland originally joined nato in 1999, specifically to protect it from russia. But as this polish proposal is made and then discussed, it wouldn't surprise me to see some near-term uncertainty around this. Just in the event that nato, for example, says okay, sure yeah, let's get polish troops in western ukraine markets are probably unlikely to appreciate that we'll see. Now number three: an unified economic response is another broader issue in the global environment, for fighting essentially against russia.

So far, the united states and other countries have been vastly united. We only had two representatives corey bush and elon omar, who were against essentially multilateral sanctions against russia for their invasion of ukraine. The argument that ilhan omar gave was that sanctions will lead to too much economic damage and really are just a moral evil, especially to poorer folks worldwide, but otherwise. So far, the world has been quite united against russia, and so, even though there's this slight risk that we're going to start seeing some countries potentially take the foot off the gas in terms of being aggressive towards russia.

So far, we haven't really seen any of that, with the exception of in the fringe of some politicians, in this case the further left politicians in the united states. This does, however, bring up concerns about china, and this is probably one of the more realistic concerns that individuals have, and this is the concern that all of this this crisis in ukraine could potentially embolden china to start taking over aspects of taiwan or potentially just invade Taiwan, for example, as russia, began their invasion in ukraine. China flew some chinese aircraft military aircraft in taiwanese airspace. Of course, taiwan is seen as somewhat of a separatist or cut out region or carved out region of china.

Much like individuals in russia believe that ukraine is a section that originally belonged to the soviet union and should go back to the greater republic of or sort of russian federation. If you will no longer the republic, that's more early 1900s issue, but anyway, china. In my opinion here is is really unlikely to do anything, because, as long as we have what we just talked about in the last issue, a united front against russia, china realizes that the world's unified response would be a disaster. And travesty for china see remember this.

China's smart and they're quietly, probably pressuring russia for an end to this conflict without escalating tensions globally, because they recognize how interconnected the global economy is. China's suffering substantial declines in consumer sentiment, a real estate bubble, consumer spending, declines and upheaval from technology companies in china and, of course, china has done their best as a sort of a one-party rural leadership to intervene to try to reduce some of these issues. But the last thing they need are really more issues showing a potential failure of one party rule right now. They have actually what a lot of folks see as a great opportunity to compare how strong one party rule is against democracy in the west and really the best thing for china to do here is really just lay low and be as neutral as possible, and that So far is exactly what they're doing so.

Individuals who say the russian invasion of ukraine is likely to embolden china to invade taiwan, and that could lead to a greater conflict with america. I think is highly unlikely, just like i believe the rumors that china might want to take over taiwan. Semiconductors is also equally unlikely. Sure, putin and xi jinping see themselves as allies.

They've together declared that there will be a rising east as the west declines, but the reality is. China does not want to further conflicts with the global economy, because we all know that compresses, consumer spending and growth - and china, like i said, is already having issues with exactly this now. Something that was very interesting is in research about this chinese risk. I i found a quote from henry paulsen, who once said back this is years ago.

Henry paulson once said that a chinese official came to him and said you have quote all the good allies, and this is really interesting, because when you look at all of these things in the context of the globe, china and russia, sure they're powerful, but their allies Together are nowhere near as powerful as western allies, and this is another reason why i believe that china is likely to lay low here. Think about it. This way, if you look at china's global gdp or their impact on global gdp, china makes up about 18 of global gdp. Even though they've got you know the largest population in the world with their allies, russia, kazakhstan, belarus, pakistan, north korea, cambodia, laos, maybe you get up to 20, but the problem is a lot of these countries are poor countries or have slow or slowing growth.

This is not ideal, and this is what motivated this quote: that of china essentially saying you have all the good allies. Why? Because, when you look at the united states and their allies, you go okay. Well, united states itself accounts for 24 of global growth, but then you combine them with their allies. What do you get? You get the united states, the european union, japan, taiwan, australia, canada, britain, new zealand and now guess what you're at 59 of global gdp.

So you have the western bloc that is substantially stronger than the eastern bloc and the eastern bloc. China knows they're reliant on the western bloc, especially for exports. So sure is there this this concern that these actions of russia to invade ukraine will somehow embolden china to take uh some form of wild action? Yes, is it likely? No? So so far, a lot of the larger concerns, in my opinion, are concerns that are being priced in the market, but are not ones that are highly realistic. Again hypersonic, you know nuclear weapons.

Yes, the we've seen the potential use of hypersonic missiles. We've seen cluster munitions used and we've seen this lashing out by putin. Is that likely to lead to nuclear weapons being used? Probably not. Are we likely to see that polish proposal go through? Probably not? Are we likely to see an unified economic response from western nations? Probably not are we likely to see china lose its cool and try to join russia and its military, or do something crazy with taiwan? Probably not it's possible, but it's not probable.

What's more! Actually, probable is that russian chip manufacturing is going to get screwed and that's because they pretty much don't manufacture their chips, and maybe that actually creates more of an investment opportunity into companies that do manufacture chips, see russia itself produces too few chips themselves, especially on the High end, taiwan's semiconductors produces a lot of those chips, but taiwan's semiconductor's peak export to russia was about 33.8 million dollars in 2018 and it's only declined since then uh and really that's a fraction of the revenue that taiwan semiconductors makes taiwan semiconductors last year at somewhere. Around a 50 billion dollar year, so you're talking about less than one percent of their revenue actually going to russia. This is really quite frankly non-issue. Should we put it it's actually less than one-tenth of one percent.

Let me correct that. Another option potentially for russia could be getting chips from samsung, but south korea also has an export embargo to russia. That kind of closes the door on that and taiwan. Semiconductors and samsung have a monopoly on five nanometer chips.

So really, russia's reliant now, maybe on lower-end chips that could come from china, but that's not going to help russia get ahead with ai and quantum chips. What is that, instead, going to do it's probably going to increase the dominance of again western countries via amd nvidia? Qualcomm and taiwan semiconductors in their advancement of ai and quantum chips to the demise of the eastern bloc, china and russia. Unfortunate, what's not unfortunate, though, is that russia does have power in some key supplies like palladium and neon gas, both needed in chip making ukraine, for example, controls about 70 percent of the market for neon gas, so we're likely to see a rise in semiconductor prices. But these rises in semiconductor prices are probably you know, we're going to see that inflation here, probably being conducted in industries that have substantial pricing power.

These ship manufacturers are going to continue to be able to sell their products, in my opinion, at increasingly high prices, making really buying the dip in the chip manufacturers - probably a good idea, not financial advice, but personally, i'm looking at increasing my allocation to industries with pricing Power - and i believe that to be taiwan semiconductors, which is narrowly impacted by russia, narrowly impacted by this potential china, taiwan takeover and any increase in input costs would probably just be passed along to the consumer, and i don't see the semiconductors having that big of an Issue, i think a bigger driver in the semiconductor pricing or performance really comes down to what's happening in crypto currencies, especially since that's a very common use of of sort of over-the-counter asics or graphic cards that we can buy, but because crypto prices have come down. They're you're seeing a potential weakness in current sales, but that weakness in my opinion will probably be temporary. Creating a nice buy the dip opportunity for this for the semiconductors uh. Okay great.

So in my opinion, not a big concern here either. What's another potential concern? Well, this is probably the realistic and most scary risk and we've got to talk about that, but we before we talk about that, we have to get in a message from our sponsor and that today is public.com. When you go to meet kevin.com public, you will receive a slice of a stock value between three dollars and one thousand dollars once you open an account and make a deposit go check it out for yourself and start investing for your future. Public puts investors first and doesn't sell trades to market makers.

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All within a single platform go check out: meetkevin.com public okay. Let's talk about the sixth and largest potential issue from this ukraine crisis and in my opinion, that has to do with the disaster of food supplies, and this, i think, is probably the most realistic issue out of all of the six that we've discussed in terms of Being an investor in global markets right now, because we have massive massive issues in not just wheat but corn and fertilizer and, of course, the highest food insecurity in over a decade. Not only are we at the highest levels of food insecurity in a decade, but we reached these levels really before the invasion of ukraine, so this is likely to get substantially worse and be substantially worse than we've ever seen it before, and there are going to be Some larger implications to how this ultimately ends up unfolding for global markets. The biggest harm, though, according to the economist, is likely going to be concentrated in parts of north africa, the democratic republic of congo, ia and southeast asian countries.

That's because they rely directly on russia and ukraine for a majority of their staple crops. For example, egypt imports 85 percent of their wheat from russia and ukraine. Brazil will also likely be substantially impacted, as they are very reliant on the import of fertilizers, a lot of which are now banned from russia. This is a problem because brazil is a large exporter of coffee, sugar and soybeans, and all of these foods and inputs will likely see inflation thanks to this crisis.

Now there are some historical implications to this, which just kind of give you an idea of how bad things get when food prices rise in world war. One in 1918, we saw food rationing, people, starved in countries like turkey. The russian revolution had its roots in food riots, which began in 1917 and lasted six years through 1923. It ended the russian monarchy back in world war, one the bolshevik victory or the majority victory uh, which was founded by vladimir lenin, had its roots in this food crisis and we're seeing a similar food crisis now, which is kind of scary, because this food crisis also Helped set the stage for the massive over-expansion of production of food commodities which helped lead to the great depression in 1928 and 29.

In the turn of the 1930s, the food crisis of world war, one also helped establish the soviet union, but less of the historical context. Let's consider the current you've got ukrainian ports being bombs, bombed ships that are picking up grains, getting hit by missiles from russia in the black sea. Future harvests are a problem because we now think that only about 30 of the farmland or cropland in ukraine will actually be planted this year. So we're going to see food-based inflation, probably coming for the next 6 to 18 months, and this all comes after already.

Poor harvests in recent years, especially during the pandemic, which have lowered stockpiles, making it harder to offset the temporary inflationary impacts of war. This is terrible, especially when you consider that fertilizer comes from two things. Well, it heavily relies on two things: one form of fertilizer is made using natural gas and, of course, russia is a key supplier of natural gas. This is why europe is trying to become substantially less reliant on russian natural gas and potash, which is a potassium type.

Fertilizer uh 21 of this comes from russia and another 18 comes from belarus, which is a russian proxy, and both of these have limited their fertilizer exports. So now you are left with three massive impacts that are real here. These these aren't like perceived fears. These are real big issues.

You've got export issues it's hard to get commodities out of ukraine and the russian area, whether by military blockade or actual sanctions or restrictions by putin or whomever you've got future harvest issues that we're not planting as much because now farms are becoming battlefields and you're. Getting lower production in other parts of the world because of fertilizer problems as input costs go up right. This is going to have a substantial impact on the price of food and, in my opinion, there's going to be a shift in the kind of spending that we see and potentially the kind of stocks that individuals want to to invest in. I mean consider this when it comes to food.

If you break up people in america into five buckets of income or quintiles, then the top 40 percent, like the richest 40, spend less than 10 of their wealth on food. But the bottom, the poorest quintile 20, spends about 27 of their income on food. And so what happens? Well, poor individuals are moving to less nutritious foods, they're cutting back on fruits and vegetables, potentially they're going to cut back on staples like corn and wheat, which are huge sources, sources of calories and starch, and essentially energy in our foods. Right and maybe they have to move over to other things like frozen chicken, who knows, maybe that's a good thing for tyson foods or they'll, just have to pay the higher prices but potentially shop at cheaper stores.

This is where stores like consumer staples, like dollar general, costco and walmart, become very interesting as opposed to more expensive companies that might sell these commodities like target and whole foods, and that's because food commodities like corn or wheat, are essentially griffin. Goods griffin goods are a type of good that, as the price goes up, people actually have to buy more of that, that is, they end up having to cut back on other things in their life and buying these non they're called non-luxury goods griffin goods, where, when Price goes up, demand goes up well, as the price of these commodities potentially goes up, people might have to cut back on other spending like buying nike clothing or under armour clothing, or subscription models or trips to disney or or fruits and vegetables, and things like this And instead become more reliant on paying the higher prices of corn and wheat products and potentially trying to shift towards more, maybe even slightly unhealthy products like frozen foods from say a company like tyson foods. So, interestingly, companies, in my opinion, like grocers, like albertsons or kroger, won't necessarily see a shift here in broader revenues, because money will just go from one section to the other. But i do think that you could end up seeing higher revenues for companies like a tyson food or general mills and potentially costco and walmarts, and so these become interesting in this sort of environment, where you're going to see a lot of food inflation and that food Inflation will get passed on to consumers.

Consumers will be forced to pay those prices because again these are griffin goods and what happens consumer spending in other areas goes down now. Of course, individuals in america, for example, have substantially more savings than individuals around the rest of the world. This is why a lot of this impact is probably going to be. You know sort of more localized, i would say to areas like we said, southeast asia or africa, which, quite frankly, could create famines.

I mean you could see horrible food insecurity around much of the world, but when it comes to the point of view of an investor, these are some of the thoughts. Some of the initial thoughts that run through my mind when i think of companies and where to invest again, potentially the walmarts, the cost, goes less of the targets. Less of the whole foods, of course, owned by amazon and and potentially those food substitutes where people are going into the frozen food aisle more uh, specifically not the expense of frozen food aisle so probably not so much the lower calorie. You know vegan style options or vegetable style options, but more of that higher calorie chicken and lower quality food like tyson foods might offer, unfortunately again less nutritious.

But i mean when you look at the type of food inflation we're already seeing it's probably just going to get worse. If you look at core inflation, which is when you look at all the inflation that we're seeing less food and energy, it's it's not horrible. It's! I mean it's still very high, but it's like five to six percent right. If you do the opposite, and you just look at essentials, which is looking at like food, shelter, utilities, gas, meat, bread right things like this you're up 16 year over year on inflation, it's insane, you have an insane inflation rate month over month, you're up 2.2 percent.

That's a 26.2 annualized inflation rate. I mean the the nutrition part uh globally. Of this, ukraine, crisis is probably going to be one of the biggest implications, and it's one that i think investors should pay attention to, because you're going to see a sectoral shift, especially amongst poor individuals, going away from spending on consumer goods because they're spending more money On gas and foods now that's going to be different for luxury buyers, or i would say that maybe the upper 50 of individuals, so the upper 50 percent of individuals are probably still going to be buying teslas they're still going to be buying apple products. It's the bottom 50 percent, we're probably going to be less likely to buy those acer, computers or nike or under armour or go shopping at target because they just have less money left over just examples things to think about now.

This, of course, you know, is all exacerbated by the fact that we still have these oil problems right. Consider the fact that biden is now looking to saudi arabia to pump more oil, maybe ease sanctions on iran and venezuela to pump more oil while at the same time just arguing that. Well, we have 9 000 permits here in the united states to ramp up oil production, but i don't think quite frankly, the biden administration realizes that we have some massive challenges when it comes to oil production. First of all, it's very difficult right now for oil companies to open up new pumps, because we have huge supply chain issues to actually create them, and even if we could, it takes six to eight months to bring a new rig online.

The supply chains are making all of this more difficult. This is why we're only producing 11.6 barrels per day today, down from 13 million barrels per day since march of 2020., it's slowly gone back up, but it's going slow because supply chains are really hurting the oil production industry. On top of that, we got a worker shortage. I don't think the biden administration realizes this - that employment in the oil and gas industry fell from 137 thousand workers to about 125 000 workers, so we're short about 12 400 workers.

This makes it harder to staff oil rigs. That's 12, 400 workers. Think about it! That's a lot. I mean if you had, let's say a hundred workers per rig.

That's a lot of rigs. Twelve thousand four hundred twelve thousand four hundred divided by a hundred workers. Let's just say per rig is a hundred and twenty four rigs that you can't staff, because those workers are now gone, doing other things or no longer in the workforce right, big problems on top of that you've got this. This concern that hey well.

What if we just have a shorter term boom in oil prices, and then we crash again kind of like we did in 2014 when or you know, oil production exploded, but then that led to a crash in oil prices? You know oil companies don't want to lose investor money again like they did during the last 2008 2009 boom and then crash. So you've got some hesitancy here to use those permits as well. All in all, all this leads into is you're, going to see more inflation and food and oil longer the longer the war goes on the worse. This gets so of the issues that we're talking about when it comes to ukraine and investing i'm less concerned about nukes, i'm not so concerned about the polish proposal, i'm not so concerned about an ununified economic response, not concerned about the china risk, i'm not so concerned About the chip manufacturing risk, because i do think that these industries have pricing power and that makes me interested investing in them under this regime of fear.

I like it when there's fear, because i like to invest when there's fear, but we do have extremely important and massive issues in food, inflation and energy inflation, and these things are going to sap consumers ability to spend specifically poorer individuals, the bottom 50 percent of individuals, Whatever they spend money on - and you could think about this yourself, what is it that they're buying? Are they buying private rides in a private jet? Probably not? Are they buying lower end stays in hotels or motel chains or uh? You know less expensive cars, less expensive computers, less expensive phones right these, these markets less expensive clothing. These markets are the ones that are going to get hit more target by the way. Has some great clothing and they've also been undercutting the spend on on uh products, or, i should say, they've been uh. Trying to take market share from companies like under armour and nike, so maybe maybe - and this is kind of a weird twist.

Maybe you end up actually seeing more people shopping for clothing at target, rather than at the big name, brands uh like under armour and nike, or the lulu's right things to pay attention to so those are areas. I'd be a little bit more concerned now uh. I i'm going to talk a little bit more about uh some catalysts and uncertainties, but i do just want to quickly give a shout out to obviously some of the recent things that are happening in ukraine. This section here will be a little bit more current event style, so keep that in mind.

So right now, today, as of march 20th, there is a substantial advancing of russian troops in mariopol. In fact, uh russians have given ukrainians a deadline within the next 12 hours to throw down their arms and essentially surrender. This comes after a theater and arts center holding hundreds of civilians were shelled. This is despite the fact that the theater in mariopol actually had the words kids or diti in russian written outside of the building.

Didn't stop russians from leveling it, which is terrible unclear about survivors from this, because there was a bomb shelter underneath that building. That was leveled uh, of course, you're still seeing images of buildings on fire or blown out windows bodies on streets destroyed, russian armor endless endless horror scenes here. Death toll currently 847 civilians, dead, 64 children's dead. So far, according to the united nations, 1399 wounded 3.3 million refugees.

Europe's complaining about running out of space - i mean add this to all the other issues that are going on right. Ukraine claims 14 000 dead. This is russians are dead. This is twice the pentagon's estimate of about seven thousand, but now there's discussion that russians are taking people from eastern ukraine and throwing them into filtration camps where their phones are being seized.

Their documents are being seized and russians are essentially forcibly deporting people from poorer regions of ukraine to poorer regions of russia. This is ridiculous. At the same time, people who are being evicted essentially from ukraine or leaving ukraine are walking and driving past bodies littering the streets because there aren't even ambulances or workers or water and power in certain regions. It's terrible on negotiations.

Turkey's present, mr erdogan, is probably the the biggest negotiating support here, along with individuals like emmanuel, macron and, of course, olaf schultz from germany. Turkey says that russia's putin isn't ready, yet that positions are not close enough to have a face-to-face meeting between the two. It is worth noting that turkey is in nato, but still a close ally with russia, but uh. It does appear that uh putin right now recognizes the power of zelinski and respects that zelinski is the ukrainian's leader and it's unlikely that we would see some form of zelinski overthrow unless, of course, some form of accident happens, which is always possible.

But in terms of negotiations, his stepping down does not appear to be a priority. What appears to be more of a priority for putin? Is the recognition of the russian annexation of crimea largely seen as illegal in ukraine, neutrality, no nato for ukraine and some form of carve out for the donbass, we'll see, of course, in conversation with olaf, schultz putin says ukraine, though, in the meantime, is making unrealistic counter Proposals, so there's clearly still work to be done here so in in you know, this is where we can move towards catalysts and we have to evaluate these catalysts of uncertainty and the first one is. How long is this war going to last? I i'm personally expecting that this war comes to some form of a conclusion by may 31st, hopefully by the beginning of may, i do believe that is likely still and i'm investing as such, but there's always a likelihood of a cons. You know some form of a flip to death to the downside.

Again, i think my biggest concern has to do with food and energy inflation, though this is a new form of transitory inflation, and i'm not so worried about the other issues that i outlined in terms of catalysts for concerns, and - and i do think that these issues Will will collapse as soon as uh war ends in ukraine, though uh food and energy inflation will likely remain for some time the pressures the upside pressures on them will begin to wane when war ends. So we've got to evaluate this uncertainty and really find companies with pricing power. In my opinion, when it comes to oil, there really is no pricing power here when the fear goes away. I do think we're going to see prices crash here on on food.

Look, i already talked about this idea when it comes to walmart and costco versus some of the others, but another one to consider is potentially starbucks. Starbucks has substantial pricing power and, ironically, even though starbucks continues to raise their prices they're, not at least according to the their last earnings, call seeing any kind of meaningful decline in consumer spending. So that shows you how much pricing power a company like starbucks actually has now, of course, another form of speculation could be investing in companies like well etf's rather exchange-traded funds like wheat, w-e-a-t and c-o-r-n corn, but uh these are likely to fall down once war ends. I'd be much more prone to investing in a company like starbucks or costco or walmart.

Again, we've talked about taiwan semiconductors nvidia, the chips maybe buying the dip on some of the chips, of course not financial advice, but i am more interested in potentially preparing to short oil, whether xle or uso, in the event that we start getting closer to a resolution With russia and ukraine than with each other at the same time as potentially prices are elevated, which i believe that anything over 105 under or on over 110 dollars per barrel for oil on brent is, is relatively uh inflated. So we'll see a quick note, there is a note that just came through that russia, i'm sorry ukraine has rejected russia's call for surrender in mercr. This is probably likely to, in the short term at least, weigh on concerns for the market uh. A lot of folks are also asking me what i will feel about the the fed and the reality is.

The fed has been very, very consistent here, uh, and i don't believe that the federal reserve is going to react to inflation, especially the forms that i've discussed here really until september and don't get me wrong. Volatility will remain, inflation will go up, the concerns will rise, but i don't see a huge shift from the federal reserve here until september regarding the inverted yield curve uh. I i do think that there is a lot of uh dumping of bonds happening right now, to the extent that some uncertainties in the market are beginning to fade. This means that people are dumping their flight to safety and bonds, so both 10 and two year bonds are being sold more than they're being bought and that drives yields up.

But unfortunately, the two year is being sold more than the 10 year and this is likely because, as the war in ukraine started, investors fled to short-term bonds for safety like two years more than they fled to 10 years because worst case they hold on to them. They get their yield, they get their money back right, they don't have to trade the contract, but now because they're dumping out of those because we're seeing some fears start, you know lifting as we saw in the stock market last week, then uh. Then this somewhat implies a flatter. Yield curve makes sense uh, but it's i think it's too soon to really determine how long the inverted yield curve will remain uh.

Well, it's not inverted yet, but the ten-two yield curve will potentially uh remain as as flat as it is. We know that there have been some inversions already in like the three and the five, but i think the ten two is much more of a predictor and uh. While it's worth paying attention to this, it's it's not personally. What i i paying much attention to, because i do think there's a lot of manipulation happening in bonds here.

So for me, i have a much better, in my opinion, focus on what's important in the market here, and this has to do with inflation expectations. This, i think, is where the real downside risks are. So you want to write down these five things to pay attention to number one five-year break evens. These are market expectations right, uh five-year break evens are: are the difference between the five-year treasury bond and tips? Here's just a quick example of what that chart looks like not the best picture here, but it gives you the idea here.

We peaked around march 11th and march 17th here, so we're hoping to see that this this level around 3.6 does not get exceeded here or 3.6 3.7 right here does not get exceeded. Otherwise that means inflation. Concerns are actually getting substantially worse, which would be bad. The biggest spike here came during the invasion of ukraine, otherwise we had actually been relatively flat that inflation expectations were, if anything, starting to somewhat rotate down.

Of course, war with ukraine has screwed this up. Some markets have priced this uh, this higher inflation expectation. In now, the question is: will it continue to rise or will we stay flat? I think this is the market telling you what to expect in terms of inflation. I think it's very important to pay attention to that monitor.

Consumer inspections. Number two monitor month-over-month changes in cpi by the way consumer expectations for number two, that would be consumer inflation expectations monitor the longer term ones if those get unentrenched like they got unentrenched in the 70s. Well then, you're going to have big issues. In fact.

Take a look at this: this is a note from the 70s. This is from look at that july august edition from the philly fed of 1977, and one of the quotes here was mushrooming. Inflationary ins expectations, however, are only part of our problem, and that's because there was more inflationary uncertainty and losing control over inflation, and things like this, and so the last thing we want to see is any kind of mushrooming of inflation expectations which we're not seeing it. Fortunately, of course, we want to watch for a wage price spiral which we're also not seeing and then of course, watch for earnings forecast revisions down, especially in the consumer discretionary sector, and this is why i personally am increasing my allocation to consumer tech, especially the the Higher end, which is less affected by energy and foods, the uh i'm putting more of my money into services, consumer services, it's like advertising and i'm considering larger investments into staples than i ever have before.

So we'll keep an eye on those either way we're on a massive tightrope, and this gives you a broader kind of view of my thesis here, a lot of the things that i'm not concerned about with ukraine. A lot of things that i am concerned about with ukraine of the things that i am concerned about with ukraine, where i think that impact will actually be placed which stocks i find interesting in those markets and then, of course, my broader outlook in terms of uh. The five things that i'm paying attention to for uh the potential downside risks to the market. So we'll see we're not out of the woods we're still.

You know in a big mess and poop show here, but this gives you a very thorough outlook for uh what my thoughts are over the next couple months here and we will be revisiting these parts. I highly recommend that, as you go through this potential video or even if you watch certain parts again write down your own expectations, it's always important to write down your own predictions, because if you do not make predictions, you can become a victim of the future, because You have no way of seeing changes and if you become blind to changes, then you become a victim of the future rather than somebody who can prepare for the future anyway, thanks so much for watching check out that coupon code for the programs linked down below on Building your wealth make sure to check out public by going to mattkevin.com, public and folks, we'll see the next one thanks so much goodbye.