11 59 PM Don't forget the flash sale ends for the programs on building your wealth. A link down below. Whether you're getting into real estate stocks, you want to earn more money and join the elite Hustler Live streams You want to get lifetime access to the programs, link down below: 11 59 PM Check them out, see what you like, and if you have questions, email us at Kevin Meet Kevin.com or if you'd like a custom bundle, email us as well at Kevin.com Now we gotta talk about The Madness of the.com recession and how it could potentially relate in similarity to the recession that we might end up seeing here. Obviously, we got a terrible PPI report which is very, very scary and suggests that when you have a bad jobs report bad CPI report a little bit hot on CPI with pretty sticky inflation in some of the parts and then a horrible PPI report.

It either says the January data is rigged thanks to seasonal adjustments or things are actually getting bad again. Maybe that second wave of Michael burry inflation is actually truly coming and something we have to look at is potentially this Jeffrey's piece which talks about the world of sticky tightening in the face of sticky inflation. and Jeffrey's aligns our potential recession that we're walking into now with the.com bubble. and I'll tell you there's nothing to ruin a bull's day more than you talking about the.com bubble in relation to today's potential bubble popping in 2023.

because we've only been suffering this pain for about one year and two months. 14 months relative to the over 30 month.com bubble. Which means you're potentially only halfway through the pain. and maybe when consumers do end up running out of money eventually.

That's when you end up seeing not only the revenue declines at companies, but you also see EPS declines as producer price inflation ends up remaining hot. Now again, it's weird. It's really weird because when you actually look at the earnings calls of some of these companies and you look at companies like Pepsi what are they they do. They complain about higher wages from a year ago, they complain about higher input costs into their sodium pops, but they talk about not actually being able to raise prices anymore, not planning on raising prices anymore, that they're just working through the lingering effects of the increases and the Embers of inflation.

But there's not enough elastic demand to continue to support higher consumer prices. But you know that's just trying to soften the bear argument. But let's see what the Bears are saying here: Jeff Reese says neither the labor market nor inflation is necessarily behaving as the equity markets would wish. Both are not cooling fast enough, and you have a deeply inverted yield curve and quite a weird correlation.

uh, between well in the bond market and that this cycle is oddly similar to the 2000 to 2002 Tech bubble crash. We bottomed and kind of drug along the bottom between September of 02 and March of 03 when the Federal Reserve finally broke things and actually fully had to U-turn and sort of bail out markets. And then we sort of hit a bottom. Uh, we hope we don't have to go through that again.

Where the Federal Reserve goes so far and breaks something? But so far, the bear case today. Pretty dang loud, especially after those PPI numbers. But what do you have here with Jeffrey saying Jeffries is saying that January Uscpi was mostly in line with expectations. although, uh, you did have year-over-year numbers slow just enough to still be considered in airbines.

Slightly disinflationary. However, they don't believe that's going to stop the Fed from hiking rates in March and probably or potentially in May. Instead, they actually believe that the CPI report points a picture of being very sticky at the core and no longer rapidly slowing around the edges. Now, you could end up hoping for more slowing around the edges if you actually get housing.

come down given that housing made up about half of all the inflation that we saw in the CPI report for the month of January. But you have declines in core Goods fall fading away, right? You don't have those declines coming in as fast anymore, and Jeffries warns about potentially the fact that we're going to end up going into a profit recession much like that of the 1970s. And when you start talking 1970s and.com bubble, you're basically a bear. But they could end up having a point, because consider the following: what they mentioned: I'm going to read this paragraph here because I think it's very useful.

Presently, the bulk of companies that are generating sufficient nominal profits to service debts and dividends are averting a credit recession, while at the same time, the labor market is slowly, uh, being shed to protect margin. So in other words, right now you're basically saying, look, companies are seeing revenues, maybe stall out. But the reason they're able to kind of keep going is because they're trying to do whatever they can to protect their margins. Fine, But how long does that last? Well, it's a concern.

It's a concern on twofolds. One is actually debt restructuring because of the substantially inverted yield curve. Any kind of debts that you had from before 2022 that have to end up getting refinanced in 2023, and four are going to lead to a lot more of a debt cost for you. So companies that have a lot of debt and at the same time are seeing their inability to potentially raise consumer prices more, but are seeing their producer prices go up could potentially end up facing bankruptcy or restructuring, particularly according to Jeffrey's along the lines of unlisted firms.

And they believe that because of this, you actually end up seeing a substantially strong argument. That said, and I'm kind of going to summarize this Jeffrey's article a little bit because they they talk in in tongue. That's a little bit complicated. It took me a few reads just to be able to try to simplify it.

Basically what they're saying is, look, companies expect companies expenses. Uh, in, even though they're cutting in some places, companies expenses are going to rise. That probably should look like that. There we go.

companies expenses are going to rise thanks to higher refi costs on debt and sticky inflation. uh, inflation at the core for uh uh, especially in in producer prices, right as we saw on the report today. On top of that, this Market is starting to look eerily similar to the 2000 to 2002 bubble, where basically we still have to face the EPS recession. That's what Jeffrey's arguing here.

This is very Michael burry-esque Michael Barry Still in another 50 percent to go. The second half is coming. The second wave of inflation is coming. That's going to actually end up pushing company earnings over the edge.

These Q4 earnings are an anomaly, right? That's sort of your bare argument right now. your bear case right now. Now, when you compare the 2 000 I think it's very useful to look at what I'm about to pull up. And no, it's not a reminder that this Friday at 11 59 PM the Programs on building your wealth have an expiring flash sale that we're doing just for this month.

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We start the Elite Hustlers Live stream this Saturday and that's a custom live stream that we do with just people trying to grow their business this. Saturday So that's coming up but before we, uh, keep going on El Corses and that's expiring Flash Sale I Want you to look at something here I put this together and it really again maybe I'm being Mr Mr bullish over here. but I want you to compare for a moment with me the NASDAQ in the.com bubble which the NASDAQ is Tech heavy right? So this is. Let me make this very very simple and very clear.

Blue line equals Tech Ndx 100 NASDAQ 100 White bars equal broad Uh US Market right? the S P 500. So what I also want you to know is that this represents earnings per share Eps. And when people compare the.com bubble to today I Personally think they're being slightly extreme. The reason I say that is because I want you to look at the earnings of the NASDAQ relative to the S P 500 in the.com Era So let's zoom in for a moment into the.com era.

Here is the.com Bubble in this red square right here. In fact, maybe I could even highlight it in red. No, it's not working. Anyway, the point is, the blue line right here is under and this is based on a factor of 100 starting here.

So in other words, they're scaled at a factor of 100 so they're scaling together. That's really important for those of you statisticians who want to know how I set this up set to a factor of 100 so we could see how they diverge in growth. But what I want you to see in the.com bubble is first of all, earnings in the NASDAQ started below the S P 500. Then earnings basically went to zero during the.com bubble.

This is not earnings growth. this is straight up earnings. So that means in the NASDAQ you had companies that were not very profitable. This was basically the.com bubble was an era of speculation of profitless tech companies.

That's what the.com bubble was. Now zoom out for a moment, look at what has changed. Look at that. You should be able to understand this graph yourself.

Look I'm going to hide myself so you can see it yourself. Go take a screenshot. Okay, now's your chance. Okay, good chance over what's the difference.

The Blue line has vastly exceeded the white bars. The NASDAQ earnings have gone up by a factor of 847, So call it 8.08 times on a factor of 100, right? So 8X earnings on NASDAQ and 5x on S P 500 relative to each other on a nominal basis, starting then adjusted to a factor of 100. So this isn't like growth, right? We're not comparing growth rates. Obviously, if you start at zero, the growth rate is going to be higher I'm actually talking net earnings.

You had almost no actual earnings. Now, when you compare the actual earnings between the two, the NASDAQ has over over 50 percent more earnings more EPS than the S P 500. So over time the NASDAQ has become the earnings Powerhouse 62.5 percent greater earnings today than the S P 500.. So when you look back to the.com era, you look at speculation in tech stocks where there were no earnings where earnings were below the S P 500..

today you look at big NASDAQ 100 tech Companies earnings are 62 percent higher than S P 500 companies. In addition to that, let's go ahead and compare ratios of the.com era to today. These are the forward P E ratios for the S P 500. in this case, so the S P 500 and this the whole point here is to compare to the.com Arrow right? I Want to compare to what's happening in the.com Era today? So again, we compare the NASDAQ and S P 500.

Now we're going to move away from that. We're just going to look at the S P now and compare it to the valuations we have today compared to the.com era. During the.com era, the S P 500 was selling for multiples between 24 and 26. we peaked out over here at roughly about 23..

But the point is, where do we sit Now on forward P E ratios for the S P 500. This is where we sit right now. I drew a red line taking you all the way across. On the S P 500, we're sitting slightly higher than where the S P 500 ended up bottoming out S P 500.

Forward P E ratios ended a bottoming in about 2002 in about at about 14 to 15 times earnings, which is a little bit closer to where we bottomed out at the end of 2022.. So you could potentially make the argument that if I draw a line across that we've already hit the worst. we've already hit that bottom. Uh, you can see what's slightly, maybe a couple points lower there in the.com Era So that's worth noting that did we hit the bottom already or are we gonna retest that bottom? We'll see over here.

If you look at the mid caps S P 400, you're actually aligning where we are now roughly with the bottom of O2 Look at Small Caps. Same story, All right. So that's interesting. So even though everybody likes to compare to the.com Bubble, we're actually not too far off on uh, the the A relative basis.

You know, comparing now to the bottom. Then in any of these charts, again, you look at. look at the S P 600 Small Cap 600 where we are now basically aligns perfectly with the bottom over here. In fact, we went lower on a forward P E basis on the weekly basis.

Uh, compared to the.com Bubble we've already been lower. Let's look over here at Peg ratios. This is a potential bear argument when you look at S P 500 growth rates. You are actually paying more for growth today than what you were paying there on the S P 500.

Now this is where you could potentially make the argument. Well, this is why you want to position out of the S P 500 and into Tech because Tech growth is more resilient than S P 500 in total, where you've got a lot of that consumer uh, staple. Uh, the consumer staple stock sitting in the S P 500. and we expect their earnings growth rate to falter relative to maybe Tech that could still recover.

We'll see, we'll see, maybe that's at its bottom, right? So you've got mixed signals. I'll give it that. you've got mixed signals. Here's another one forward.

PE Growth versus Value just gives you a growth versus value chart. Here you can see the bubble in growth. the bubble and growth. The bubble and growth then was a lot higher than what you have now.

and if you look at the bottom of the growth bubble, it actually aligns with where we are now. So conclusions Because there's a lot of information that I've provided here, right? I Think it's very difficult to make a perfect comparison to any prior recession. In uh, the 2000, or in the 1970s, you had inflation expectations that were substantially higher and unanchored than the inflation expectations we have today. Even though we're getting these crazy reports that are suggesting, you know.

Okay, in January we got some bad reports that's bad. that becomes a trend. It is going to unanchor inflation expectations. That would be bad.

But so far it seems inflation expectations are stable. So we do have some differences to the 70s, which is good. and I'm not here to say this time is different. I'm not here to say YOLO Everything on margin? Absolutely not.

I've been saying for weeks I'm most actually for months. Quite frankly I've been saying I'm mostly invested in this market. Do I think it makes sense to keep maybe 10 15 cash on the sidelines? Yes. Do I think it makes sense to stay at a margin? Yes.

Do I think it makes sense to YOLO call options? No only if you want to gamble, that's gambling. That could be fun, but it's game. So conclusions: The NASDAQ has substantially greater earnings today than it did in the.com bubble. So I think the comparison to the.com Bubble is somewhat unfair when you look at the NASDAQ.

Also, our Market has declined about three times as fast as the.com bubble, so there's an argument to be made that the markets have already bought them. Is it possible that we're going to continue to get good reports than bad reports? Go to reports and bad reports? Absolutely. What do I think? Bottom line: That's consistent with bottom line: I Personally think it's very consistent with. there's our 3x faster than the NASDAQ decline.

What does it end up being consistent with this? A very, very bumpy Nike Swoosh style recovery where we go up for a bit. we go down for a bit. We go up for a bit. We go down for a bit, but the trend line is likely in my opinion, to be up.

I Do not think that we have a larger down leg ahead of us than what we had in October I Could be wrong I don't have a crystal ball, but at least I'm going to have the balls to make a prediction and I'm making that prediction by aggregating all of the data that we do. And we're not always right. but as researchers trying to understand what companies are actually saying, we're looking at actual forward leading indicators and also aligning with what the Federal Reserve is saying that January tends to be the month of seasonal revisions, weight revisions, and it may as well suggest pretty volatile surveys that we kind of want to throw out. Now, if we get a second report in a row of a trend, that's a problem.

that's a potential red flag. So am I as bearish about this potential comparison to A.com recession? No, of course not because otherwise I wouldn't be putting my money where my mouth is. I'm in I'm in baby. So uh, but you know, does it make again sense to have a little bit of capital on the side for a little by the dip opportunities psychologically help you through this sort of.

Nike Swoosh recovery? Yes, of course you should form your own opinion with the research that I put together. Just because I'm a licensed financial advisor doesn't make me perfect just because I try to provide so much value every single day not only on this channel, but in the courses on building your wealth. and of course my live streams are on lectures to try to consolidate everything that I do to make it simple for you to get caught up with the way that I look at things you don't have to agree with all my moves, but get caught up with my perspectives. Uh, you know I hope you join those.

Use the flash sale link down below. explain Friday Uh, it doesn't mean I'm perfect about everything, but I do think I provide excellent perspective and uh, you know obviously I wish you the best in all of your Investments but I am bullish on stocks. bearish on real estate. Still, right now that's been that's been very, very consistent.

So I like to bring you what some of the Bears are saying though, because I don't want to be blinded, right? I don't want to be blinded and blindsided. So I got to pay attention to what the Bears are saying and right now they've got a pretty good argument that there's some things showing up a little bit more sticky than they should. That could be consistent with the Nike Swoosh recovery. We'll see, we'll see so far.

I Don't think there's enough of a suggestion that we deserve another leg down deeper than what we had in October.