Hey everyone meet kevin here boy. Oh, oh boy, the market has gone to poopy doopsies, we've broken the 23 6 on the fibonacci for the qqq spy's rotating right back down to those lower bounds as well. It's not a good thing, and it all has to do with the federal reserve, and i want to show you something. So we have all of this good news here right that we've talked about in my prior videos, that is flat consumer expectations of inflation, uh consumer confidence going up in the united states, though it's actually going down in the united kingdom, which is either either they're behind Us or it's a red flag right, well, tbd uh, you've got you know, travel spending like going up like crazy.

Even american express is saying that this morning, just like people aren't spending money at home anymore. A services pmi came in week, but you know: what's: booming? Is entertainment, travel restaurants, people are spending money like crazy. Now people tend to spend money like crazy right before a recession because they don't even realize it's coming. Yet they don't save and then you end up in bk with a lot of debt right.

So so it's it's a massive risk factor. I mean you look back at 2006. People are spending money like crazy right before the really bad times right, but anyway. So we've got this this a lot of this good news right.

The fact that banks think balances are trending up. We've talked about this, the no wage price spiral even bullard. The hawk is like wage price spiral, isn't causing the issues that we have right now. He just said that yesterday uh, the 10 2 has kind of started.

Flattening again, which is not uh, not great, so this is actually turning red again right here. Five year, breakevens are still stable and down and rotating down again they spiked for a half a moment yesterday, but then came right back down debt going down. The manufacturing beats. This is good.

You've got some problems in leading indicators like freight and rail, starting to rotate down uh, which are leading signs of uh, like consumers, purchasing stuff online, basically taking that back seat to restaurants and outdoor spending, and things like that. But all of this has kind of been turned on its head because of j-power now because see, even though we look at this as really good news for no recession. What this all of this green section here all of this green good news section, also tells us that hey fed this is your license to hike more, and this is unfortunate, because this is the federal reserve taking a u-turn on us to the negative side, and i'm Going to show you the disaster of the fed, so of course, we've had this on on the more bad side news here, but we're going to erase this just to have room over here and the fed would not go for a 50 basis. Point hike unless they thought the economy could sustain it.

The economy has stayed so hot that now we're in a situation where the fed is actually u-turning again. So what do we have? We have the feds being doves. We've got a dovish fed, basically starting uh march of 2020.. You get a really dovish vet, and this is your money printing line right.

So this is print and this is stimulate so you've got fiscal, that's fiscal and you've got monetary money, printing and stimulating right. So, in december, all the way in december of 2021, which means we had this 18-month regime really of of of just stimulation and pure pure euphoria, basically, which is really when the stock market was going sky high. What do we have in december of 2021? Well, you! Finally, get this federal reserve pivot, where the fed says - and we learned about this on january 5th, on the uh, the fed's minutes here - that the fed was starting to become hawkish and uh. What we learned was uh.

First of all, in january we were worried about things like a wage price spiral. We were worried about consumers turning inward and not spending more so the issues have changed since january, because the january's employment report said that wages were growing at an annualized pace of nearly nine percent. When inflation was back at like six point, nine percent, that's a classic sign of a wage price spiral which was really bad. Even the president of the university of michigan consumer confidence survey told us this is this is a disaster.

This is really bad uh. At the same time as we were worried about the wage price spiral, we were worried that the fed was going to come out and they were going to go for probably something like a one percent hike really quickly because of what we heard in january. Around january 5th - and this is how we got really to about those zero percent levels on the qqq and the spy qqq 0 fibonacci - would be like your 318 level right. I think we're at about 328 right now, which is under that 338 for the 23.6 line.

So we've we've had some on the technical, some real pain, we're retracing back to those zero levels which some of the days that we've had zero on qqq. I want to say the 23.6 just off memory. Jan 24 uh was one of those, and then you had three days where you had a zero percent fib bounce, and i want to say that was march 8, feb, 24 and march 14th, and we're we're heading back to those low levels. Right now, which is a little painful, this was that triple bounce that we had on qqq, hopefully that level at 318 remains stable, right brief on the stock market there, but anyway.

So all of this, this sort of the disaster and pain came out of the fed. Turning hawkish in january, the old, older lows that we had uh and uh and that continued hawkishness that okay, the feds, we're going up the fed's going to raise rates a lot here. But the course that we were told the fed was going to embark on. Especially come about feb 24 to feb, 28 was actually very motivating, because here the federal reserve told us hey, the economy is actually still really strong, we're actually not seeing a wage price spiral, so we're not going to rug pull with like a one percent hike or A two percent hike: remember: they cut rates back here in march of 2020 from like two percent to zero percent right, so you could easily just go instantly back to two percent.

That was really definitionally expected to be like the fed rug, pull right, uh and so the fed here when war started, told us that this is a game changer and we're going to hike similar to what we did in 2004 and 2004. We had 20 uh 25 basis, point hikes in a row, so basically rates just kind of did this. It's like a staircase, well uh. This is what jerome powell just told us about eight weeks ago.

He was going to do. This was the course, and so this is why we started getting. You know. We started bouncing off of some of the lows when we got our 25 bp hike over here on march 14th, because they're like okay, jerome powell u-turn, because the economy is doing strong.

Hopefully we don't get rug pulled here. He tells us no we're not going to rug, pull you, but today things have again changed because jerome powell has changed his mind again, and this is why the market is having such issues today, and i want to show you sort of that. Let's label this in terms of jerome powell's mood here: okay, a course member this morning in the course member live stream said this, and i thought it was hilarious. We've gone from transitory to uh, consistent 25 basis.

Point hikes to now: where we sit over here in uh in april, we have again had a little bit of a u-turn. Where do we sit now? Well now we don't sit at consistent, 25 basis, point hikes now: jerome powell saying hey, you know what guys uh. We have way more inflation than we did in 2004.. Inflation was around three percent now inflation's, like seven eight percent, even cores, elevated everything's, elevated uh, we're going to now front end our rate hikes.

So, instead we're going to not like fully rug, pull you but we're going to half rug, pull you we're going to move rates up faster and then stabilize. So this is what the market's pricing in right here this this right here is all of that lost opportunity of lower interest rates for longer right. If we go 25, 25. 25 25.

We still have accommodation for longer now they're saying yeah. Not only are we going to have to go 50 in may 50 basis points in may, which takes us to about 0.75 right in terms of rates. We're probably gon na have to do that again, uh in consecutive meetings, and we want to get above neutral as soon as possible, and then we want to wait. So the neutral rate is going to be somewhere around two percent and the fed's kind of projecting that they want to get to as high as maybe 2.5, maybe even as high as 2.9.

This this is pretty aggressive right, because when we, when we're below two percent, we have accommodation when we have above two to two and a half percent, we have tightening the this. Is the fed actually trying to purposely crimp the economy down, and so this is where we've gone from transitory inflation's, transitory it'll go away in fairness as as ridiculous as it sounds. I just want to give a quick little shout out to back then it it made sense right. It did the thesis made sense back.

Then you had covid19. Okay, we'll have transitory inflation. When cova goes away, uh the inflation will go away. Why didn't it go away? Well, it didn't go away, because what did we have as soon as inflation started? Going down? Look at the summer of 2021 inflation started going down, transitory was playing out.

People stopped talking about inflation and people who were like inflation's, never going to go down started talking about oh inflation's, going down well what happened delta in september of 21, and then you had omicron. All of these things exacerbated uh, the inflation issue, issues the supply chain issues and everything right, so you kind of kept reinflating transitory to where it just basically became entrenched. So they weren't wrong to think that. But i think this is a little.

I have to say fw j-pal, like kind of a big like u-turn here, and it's not good now. Why is he u-turning? It's because all the data that's been coming out has been phenomenal. The economy is really really strong, so this is where they're saying. Okay, we got to get to neutral as soon as possible, which is still like anything below neutral, is still stimulating.

They're still stimulating this economy. Once we get to neutral, then we're going to be data dependent and coast. Now, what does that mean for us? Well, unfortunately, what all of this means right now is uh the drop in everything here. Uh we've gone from transitory to consistent to uh hike, fast and uh, and and wait that's kind of where we've gone to uh, and so what this means is rather than the fed now waiting for data to come in, like they told us they were going to In february they're, like hey, we think inflational peak.

You know four months later, it'll peak in like july or august or whatever, uh and and then it'll start coming down now. Jerome paul's, like yeah, well we're changing our mind. Now we're just going to hike and if inflation comes down great, we could always pause in the future. So this is the new course they're giving us so we've gone from transitory to consistent to hike, fast and weight, and what does that mean for for our markets? Well, it means a few different things and they're, not good uh.

Here's the way i look at it. So the first thing we know we're gon na get is pain, a lot of pain. The second thing that you're going to get is you're going to get a sponsor because linked down below you'll find a link to ftx, which is an amazing platform for trading crypto. And you can use my code in that description below to make sure you get the best opportunities that ftx has for you to offer, and you want to follow those technicals to see when there's a good opportunity to get in on qqq spy or other related stocks.

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Third, what do we have uh you're going to see that 10-year treasury yield, i think, go higher than we've ever seen before now? This is a problem, see a lot of folks uh, and i see these on twitter all the time, they're charting that over the last you know, 20 years. The 10-year treasury yield has trended like this and that our 10-year treasury yield during the pandemic deviated from this and that now it's sort of coming back to that trend line people like oh it. It can't go above trend, it can't go above trend, yeah, it can and it will we're almost at three percent. I wouldn't be surprised now and i've been talking about us seeing uh 10 or three percent on the 10-year treasuries uh since january.

Now i wouldn't be surprised to see the 10-year hit something in the neighborhood of three and a half to four percent, especially when that fed funds rate goes above neutral. This is really going to drive mortgage rates up another, probably percent, or so so. Six percent mortgage rate uh is is, in my opinion, almost certainly now within our future, so uh that's going to lead to more real estate pain. Now sarah eisen, in her interview of jerome powell and other members of the international monetary fund yesterday and other central bank leaders, asked jerome powell directly.

Hey so do you need stocks to fall and then she pauses and says in order to reduce demand and jerome police and starts talking about financial conditions. It was like the best kill shot ever shout out to sarah eisen, really really incredible uh, but in some sense the answer to that is actually yes, jerome powell didn't want to say it, but i'll say it for him what the fed is trying to do with Tightening is there they've said this time and time again they're trying to take the fat out of housing. They want to see housing prices stabilized because it reduces that wealth effect from people which means, then they stop spending as much and it brings inflation down, because the one thing that destroys economies is inflation. If people lose faith in the dollar, which many people probably already have uh, if you lose faith in the dollar completely, then then your entire economic system just collapses and - and you you go to you know you watch a ray dally.

Video and everything starts over right and then you, then you just want assets like uh, like actually houses or stocks, but those are going to come under pressure during sort of that transition anyway, i don't actually think that's going to happen, because this inflation will go away. Two three years from now we'll look and we'll go wow. That was some crazy inflation can't believe it just evaporated so quickly it will and it will either evaporate via a recession or by them pushing demand down from the high levels. That is right now.

Housing first place you're going to see this well after the stock market ready. So the next place you're going to see it uh, but as housing prices come down there is this question or are people going to start spending less money on going to restaurants or entertainment or travel so tbd uh these consumers, where you've got about maybe 66 home Ownership rate in america - and these are the people with wealth - remember the average net worth of a homeowner somewhere around 175 thousand dollars and that's probably gone up now. Average net worth of a tenant is somewhere around six thousand dollars, so huge differences here in net worth, and so if these people see their net worths decline, they stop spending up money on home improvements, lows, uh, solar panels and eventually that turns into no more vacations Because they can't use their credit lines anymore, because they're maxed out or their credit lines are getting reduced whatever right all problems, but the next thing that you can pretty much guarantee is uh. Basically what sarah eisen said: continued pain in stocks.

Now this doesn't mean that i'm a seller, i'm not a believer that the wage price spiral exists to the point where the federal reserve has to force a recession uh. That was the belief that i had in january, which is why i stepped out of the market, because i expected there to be more fear in the market between january and february. Now, in some positions that worked out really well uh, you know i lost some money on matterport and in phase i'm sorry, i lost some money on matterport in a firm, again uh, but i made way more money on on a firm, i'm sorry on end phase. I made about seven figures on uh on end phase buying back in the market between february 24th and uh and mid-march same thing on tesla, i'm up somewhere around 30 or maybe somewhere in the tune of three to four million dollars on just tesla.

Having made my trade from january to uh, feb and march, so i'm really happy about that uh. That doesn't mean everything that i'm doing is perfect, but the move to tesla has been really phenomenal and the one of the reasons tesla is holding up right now is because if we didn't have this sort of pain in the stock market that we're getting right now, I would expect that after those earnings yesterday, tesla would probably be somewhere around fifteen hundred dollars. Uh so very excited about this, and and to me this is still a large hedge, because even if people end up spending less on entertainment, travel or whatever, there's still so much excess demand for tesla, it would take a prolonged recession for me to actually expect demand To go down on tesla, so i'll, take buying opportunities around a thousand dollars on tesla still so uh the rest of the stock market, though obviously very, very big, sad face. Why well uh people are not spending online anymore they're, not even spending as much time online anymore, so we're seeing these sorts of companies get destroyed.

Even brokerage companies. Look at sofi, uh snapchat etsy come on etsy under a hundred dollars. I mean it's insane. I don't own etsy anymore, i'm sad.

I sold etsy, i loved etsy, but i had to get out of that entire sector with profit still, which i'm very happy about, but golly. It's been a rough ride for some of these if you've held on to them, and so this is where i think that it's an important lesson to remember that you don't have to diamond hand stocks that just keep doing very poorly, especially if that trend is going To accelerate not decelerate, i don't think that brokerage stocks are going to get better anytime soon before they get worse. I don't think online retail is going to get better before it gets worse. Uh.

You know the the even like the paypal, so the squares and that they're not going to get more customers than they did during the pandemic. You've got some insane columns. It's going to be rough, so these are not companies. I really want to be in and that's why i've really concentrated my portfolio down to like google trade desk a little bit of crypto and tesla uh, but even advertising is getting hit.

We saw that with the snapchat earnings this morning. That's why google's down today also dragging the indices down but anyway. So what can we guarantee going forward? Well, we can guarantee even more volatility uh. I do think that once we get through these catalysts, which are we complete our earnings season, we get our 50 bp hike earnings stay strong, i think, will be a positive.

The 50 basis point hike will be a little bit of oh crap. Here it actually is uh, we'll get our jobs data here, which i expect to be positive. We get victory day on may 9th, which hopefully will be positive news for uh the ukraine conflict. Russia is going to declare some victory over eastern regions and then settle down the cpi data.

Honestly. We really really really hope that we get some good news here that maybe core is coming down right, stripping out energy and food uh. That's all hope, though i mean, if all those go bad, it's gon na be a lot more vol. Now i wan na be very clear what that means.

Vol is sad. Okay, because it's gon na mean that you're gon na have these days where all of a sudden, the qqq is up two and a half percent, and then three days in a row, it's down two percent. So it's like you're net down right, we're bouncing off these zero percent lines and we're bouncing off the 23.6 uh. Last time, i thought that when we ran back and we retraced somewhere around 66 to 70 percent, i thought in this region would be an opportunity to short, probably the times too short are actually going to be closer to around that 50 retracement.

Next time we have another run uh, because we did start having resistance uh around these levels, especially on qqq, so we'll see there will be runs again, always remember that uh we have bear markets, then we have rallies. Then we have bear markets. Then we have rallies. Unfortunately, right now that trend is down and it's not getting any love from jay pow.

We can't expect him to help us uh, especially with their u-turns, they're, getting uglier and not better right now. So these are some of my thoughts, i'm in i'm invested. I believe in the core of our economy and uh, i i still have faith that the fed can pull this off. It's just a little frustrating that they've flip-flopped yet again on their communications, that we were gon na, have consistent hikes and and now we're getting way front end loaded, so big bummer, but we'll ride through it.

I'm here with you thanks, so much for watching make sure to subscribe, check out, ftx and link down below and folks see the next one bye.