Welcome back to another meet! Kevin Report today we're on episode number 37. It is February 28th Five-year break-evens is sitting at Two Five Six, Two Point Five Six. That is the highest level that we've seen since about November 9th, but it is still substantially lower than uh, where we have sat at the beginning of 2022. It is up from December and January Goldman Sachs Financial conditions index still sitting at over a hundred also the highest that we've seen since the beginning of January late December and sort of a trending towards the financial conditions tightness that we saw in October, which in many regards might end up aligning with the bottom of the stock market.

Hopefully not bad. Wood oil is up today, with oil starting up about one to one and a quarter percent depending on if you're looking at the Western Blend or the Russian blend. If you look at bonds sitting up slightly as well, at about 3.93 spawns pretty stable, not great. Right For Real Estate Though it'll be really interesting to see is it high interest rates for longer that ends up hurting real estate more? or is it the change in interest rates that hurts real estate the most? In other words, is it possible that once we adjust to being flat at four percent, does the real estate market take its leg down and then essentially pause its fall and continue rising from there? Or to those High rates crimp and as more Supply comes on push real estate down even more, we'll see TBD.

So uh, we've got a lot to talk about today. Supply Chains inflation from Supply chains wages, supply chain uh or wage inflation we'll talk about uh Ukraine chat GPT Some some of the comments from Tucker Carlson and uh, hey, let's get into it. And then first and foremost also thank you so much for being here. Really appreciate having you here.

Uh, it's uh, it's always a pleasure to record this morning in the mornings. uh, some people think I'm crazy when I say that. but but it's actually true I like getting a lot of this uh, a lot of this coverage in in the morning because I feel I feel like the most awake and not only do I feel the most awake, but I'm so excited about sort of all the data that we have for the day. Uh, for me, it's it's really fun and enjoyable, so hopefully you enjoy it as well.

All right, the first thing we're going to talk about now is we're going to talk about Supply chains and supply chain bottlenecks and that good old crisis. So let's talk Supply Chains When our supply chains actually going to lead to any form of meaningful disinflation or is it possible that we're just going to continue to see inflation which is the last thing that we want. We want to see supply chain disinflation. We want to see that Supply chains are loosening and becoming easier.

So that way we can finally see pricing pressures go away. So what's actually happening statistically? Let's look at the charts are we are basically things getting worse or Supply chains telling us that it's time to buckle down for a double dip crash because we're getting a Resurgence of inflation. Well, let's see what Supply chains have for us by reporting over to UBS which has a fantastic piece. It's about nine pages long out.

Uh, just uh, within the last few days here, and it is. Global Financial Economic perspectives? Um, Supply chain bottlenecks? All right, let's take a look at some of the most Salient points here. First, Supply chain bottleneck stress is now close to the lowest level it has been in 10 years. Our national Global Supply Chain stress indicator has fallen negative 0.66 standard deviations below medium.

With the exception of one month in 2019. that's the lowest level of overall supply chain disruption that we have seen since 2013, which interestingly 2013. Oh wow, that actually is really interesting. So 20 13? Oh man.

I didn't even make that connection until I just I Just read that again. 2013 was a really interesting year because see, we came off the real estate market dropping from 2005 to about the end of 2011. the real estate market started its recovery in around November of 2011 and continued for about a year through 2012.. it wasn't until interest rates fell and all of a sudden we got this massive lack of inventory at the end of 2012.

basically 2012 was like a year of absorbing excess inventory. We went from for example, in my city, 400 homes on the market to like, uh, 80 homes on the market. Which is weird because that's about how many properties we have on the market right now. But anyway, once we got to about 80 homes on the market, and that Supply wasn't actually coming on the market anymore, all of a sudden, prices jumped about 20 percent in two months.

And what's really interesting is Robert Schiller who's created the case? Shiller index over at Princeton He suggests that the vast majority of household wealth effects do not come from stocks you don't. According to his research, you don't spend more because you have more money in stocks. You spend more money when you feel richer because of real estate. Now, that's actually really interesting because if the real estate market did indeed have that sort of Bounce in 2013, which we could look back and see that statistically, it did.

Is it possible then we actually had supply chain disruptions due to a peak in consumption in 2013. Uh, and that's why now we're looking at the lowest level of supply chain disruption since 2013, which was basically potentially where we saw an inflection point in other words, going from like crap. It's 2012, nobody's buying anything to in 2013. Oh, everyone's Rich Again, and it's like that marked the bottom.

and then you saw that that sort of surge in spending. again That's really interesting because I have the belief that the Federal Reserve and that's just my opinion that the Federal Reserve is basically saying hey, we need to crush housing to get people to stop spending just so you can see that graphically And then I want to keep going just to make sure I'm explaining this as clearly as possible. If Supply chains are becoming looser, looser, and looser and then they inflect here. in, let's let's just say May of 2013.

Okay, pick like a middle month or June or whatever, right? That means basically all of a sudden, people started spending again. That's what I'm aligning with. potentially that real estate market. Uh, because that's sort of marked the Bottom Now now we might be in a position where, you know Supply chains got really tight during Covid, but now they've fallen again to the lowest levels that we saw since then.

That's not saying we're necessarily another inflection point, it's just saying we've now hit low levels that we haven't seen in a very long period of time of supply chain stress. Uh, that's that's very good. It's a very good thing. So anyway, if supply chain stress was a source of inflationary pressure, could an overshoot in the other direction? Uh, as they're saying here, press disinflationary pressure And this is where what they're saying is, look, we're seeing costs of almost everything in Supply chains, whether it's Freight or container ships or inventory ratios.

all potentially rotate, not just to the level of normalcy, but potentially overshooting to the level of disinflation. Now, this is wild because a lot of the mainstream narrative today the bear narrative today, okay, is oh no. Inflation is going to last longer than we expect, and that may be true. It may take some time for the supply chain disinflation to actually work its way through the economy and for us to see rapid disinflation.

But think about what's already disinflating, you're already seeing a massive inflection in the availability of workers, which is a massive cause for wage inflation. You're already seeing rents plummeting in terms of uh, of what we expect for leading indicators for CPI disinflation on Housing Services So those are the two most sticky forms of of inflation, right? housing. And then of course, wage inflation, which leads to Services inflation. But then, of course, you still have that concern about supply chain nightmares and this continues to disinflate even more as time goes on.

So you're really creating anchor after anchor after anchor. The the only bear like the bear case, in my opinion, is not saying oh yeah, inflation's actually going to last very long. It's just a matter of how long does it take right? how long is that lag to actually see this come through? But some of these charts are actually really striking. So here's a chart of sort of your supply chain stress and uh, you I drew those yellow bars at the bottom just to drag over where we sit at the median and average.

Right now, you can see we're obviously substantially off some of the covet highs and even below some other levels. But look at this: delivery time Indices both well everywhere and the regional: United States via the Institute for Supply Chain Management via the United Kingdom Global measures Emerging Market Measures doesn't matter almost all of them. Negative, negative, negative, negative, negative in delivery times, orders, and inventory ratios. In other words, you're getting larger inventory buildups than you actually have of orders.

Uh, that's also very interesting. Uh, then what do we have over here? Uh, shipping costs plummeting and the shipping cost level in in the measure of a standard deviation coming down three to four percent via standard deviations, It's pretty remarkable. And then the empty container ratio is also a negative. And this is all data as of the last three months of indicators here.

So you're really seeing a plummet of supply chain stress now a lot of people and I was sort of pounding the table saying No This is ridiculous. It's not going to happen. A lot of people were making this argument that oh well. as soon as as soon as don't worry the moment China reopens, you're going to see a massive boost of supply chain stress again.

And sort of, you know, In addition to obviously research one of my base arguments was wait wait wait wait wait wait wait wait. Like China's been open for 40 years and we've been suffering from disinflation. like chill, right? Uh, and and so what do you have here? Oh, look at this. China's end to covet Zero had no aggregate impact on Port activity.

You don't even see a spike in a supply chain stress from Covid uh, In or the coveted reopening in China Nothing and yeah, attractivity recovered in early February But that activity was very, very short-lived In terms of some kind of surge. You can see that right here. The red line represents the Consumption and Services index, and you can really see the lockdown era over here and over here. Right? Like these bottom sections, those are are really your lockdown errors, right? Here, You have sort of the brief reopening until we got, you know, basically crushed by Delta again in China.

Uh, And then you have your sort of renewed lockdowns over here thanks to Omicron And then here's your temporary reopening. Okay, so you get this boost, but now you're basically just I Mean, if you draw a line across where we sit right now and this is plummeting, right? this level of economic measure is plummeting. Draw a line across. I Mean we're just basically at normalized 2019 levels, if anything, slightly below 2019 levels of Consumption and Services Indices for China.

So you're just. you're just not seeing this supply chain drama. uh, despite you know all of the these sort of Click bait that exists around. oh no Sublime chain nightmares and I think by the way it it is on on the viewer, it's it's on you to make sure that when you're reading because that's just the world that we're in right now.

you know we can kick and stream dream about it as much as we want. but I think it's on you the viewer to make sure that if you're reading like tweets which is basically like reading headlines or you're reading headlines for stories or videos or whatever it is, it's on you to make sure you're really going deep into the context. It's one of the reasons I Personally as much as I I like using Twitter just to kind of get an idea of sort of like okay well what are some of the headlines that are going on Twitter I think is is personally very very uh I found toxic for for Humanity in this and this is not to bag on Elon Musk but it's because it seems to drive that Sensational headline in this but only that right? It's very difficult to actually get deep perspective on Twitter because we're sort of programmed to only see the headlines on Twitter and and then there's no way to really deep dive on something. and I think it's very dangerous because you know we see people get canceled over a little out of context Clips or headlines and that.

And it's very sad because generally, in the context of of deeper knowledge, you know something that we can achieve either through a larger writing in in books or deep dive articles which nobody has time to read anyway or what? I like obviously, which is why this is one of my favorite forms of communication is is a video that you could play back on 2x right? I think uh, you know I think that's a phenomenal way to make sure you're getting all the perspective Beyond just the headlines and and I Think really, that onus falls upon uh, the viewer or the reader to make sure you're going to that deeper level of perspective. Most people won't do that, but I appreciate you for doing that. Uh, so keep it up I Think that's the way to ultimately build wealth the more perspective you have. So here's a sort of gap between export volume for Asian goods and US Goods That sounds extremely complicated.

Let me translate this to: English Basically, the red line says we bought more crap from China than normal. Okay, so the blue little dotted line says hey, look, that's normal Trend red line which exploded there during the pandemic, is basically saying yo, we buy lots of stuff from China And and that red line is finally falling back to the pre-pandemic trend line. We're not quite there yet, but we're getting dang close to matching that pre-pandemic trend line, which is absolutely fantastic. Uh, then over here you can again see a falling trade volumes rapidly pushing freight costs lower I Specifically want to drag you to this or call your attention to the left chart over here.

It really shows you that yes, while some levels are still elevated like China to Europe, in fact, if I just go ahead and draw a line of uh, you know we'll go ahead and pick I'm trying to pick a color here, they don't have. Let's pick Pink So If I drag the pink across, you could see the pink across is still slightly elevated and even the red to some degree is still slightly elevated over the pre-pandemic era. But but you can clearly see the trend that China to the U.S east, Coast China to the U.S West Coast Basically plummeted to pre-pandemic levels. You still get a little work to get the the global index down on the China to Europe index down.

but I mean the cost for Freight have absolutely plummeted. Not only that, uh, but it's worth noting that even though we're seeing Goods disinflation, U.S Core Goods spending. So in other words, you and I spending on crap is still elevated. And that's probably because as Bank of America told us and I'm sorry if this sounds redundant, but it's very, very important as a statistic that Bank of America tells us that people still people who had two And a half to five thousand dollars in the bank account pre-pandemic now have twelve point eight thousand dollars.

that's you know, on the low end, that's like five times as much money. On the high end, that's two and a half times as much money. So of course people are still spending money. You know I mean it is a reason American Express has people are spending through this recession is because we got more.

You know, everybody's just a little bit richer than they were before. Uh, and so unfortunately that does create some lags and how quickly uh, disinflation is going to happen. But uh, I mean based on let me just be crystal clear here. based on what I'm seeing with wages, earnings calls Supply chains, inflation is transitory like it's just gonna be a lot longer and more painful than previously thought.

And that's not what we want to hear. You know, stronger and longer lasting? You know that's something Jerome might want to hear in certain cases. But in in terms of his job, it's not something he wants to hear. Uh, slower momentum and good spending is mirrored in the decline in manufacturing order.

So yes, slower momentum basically means we're having less growth in spending, but actual spending is still elevated above trend reduce demand. However, uh. in in general, like sort of a a slowing of that increase of the rate of spending is helping clear inventory backlogs and inventory time. Uh, inventory Uh, inventory.

backlogs and uh, delivery times. Let me make that very clear. If you're Apple and you go from having demand for one million iPhones to 2 million iPhones you, you have you experience a whole lot of change, right? That's a lot of change. Very, very fast that inflection that rapid change in demand that is very inflationary because that's basically where all the goods producers are like, okay you you all of a sudden want to double how many chips you're ordering.

All right, we're raising prices, then Apple raises prices, and then people pay more. you know? And and that's how you get inflation. But once Apple's accustomed to 2 million and the momentum goes from doubling to basically being flat, that's a lot easier to deal with from an inflationary point of view than these rapid changes. Uh, and so as long as we're stable.

The interesting thing is, you could be stable at a higher level, but you're not actually creating rapid deflation because it's not like demands all of a sudden going from now two million iPhones back to one. Just as an example, right? That's totally a made-up figure, but it's just a way to show it's that it's those rapid changes that usually create rapid inflation or deflation. It's not necessarily, uh, that the fact that demand is going up or spending is going up like as long as things move at relatively constant Pace Businesses can slowly adapt Shipping cues outside of ports have mostly disappeared, which is absolutely fantastic. We want to hear that we don't want uh, there to be uh, large wait times and containers sitting outside ports which we had during the pandemic because mostly what that ends up sending the signal of is uh oh uh.

You know people have to wait longer for their goods and if people have to wait longer for their goods and potentially their services, well then people raise prices because you know well, because uh, Builders or suppliers are able to raise prices. you know, goods and service providers Merchants basically are able to raise prices because people will demand for for a quicker product or quicker service. but those pressures are really disappearing. Uh, here you could see chart wise shipping cues.

94 Reduction in containers in the port for more than nine days and that's for the Port of Long Beach Port of Long Los Angeles You're sitting at a 92 percent reduction over here. Global Semiconductor production Now this is really interesting for the chips, obviously. I Think many of you know that I believe that chips have sustained financially High Pricing Power I'm a big fan of believing and investing in what? I Consider pricing power stocks obviously that's not personalized Financial Advice for you. And while I do provide a lot of perspective on on finances whether that's here on the channel or in my programs on Building Your Wealth where we have a Tesla investor day flash sale going on, uh, basically, we'll expire that on investor day, which is tomorrow.

Um, you know you can learn a lot of perspective. but but the point is I Strongly believe semiconductors have massive pricing power. Unfortunately, semiconductor stocks have had a very, very hard 2022 specifically because of this return to Trend right here now that we're back at Trend I Actually believe the Bottom's already behind us on chips. and that's why I've really started increasing my investments into chips right around the end of November and December where I kind of thought we had relatively Peak pain for uh for the chip sectors.

Uh, so of course we still have in some cases, inventory gluts, most specifically in memory chips. So I'm saying if even within the chip space, I'm somewhat staying away, uh, from uh, from trips inventory for that reason. Uh, for in the memory sector. So how does this all fit together well I Think it's worth noting that if the supply chain pressures that were really so convincing to people that oh, this is going to cause the most rapid inflation we've seen in in 40 years, which It ultimately did.

if that supply chain impetus and pressure is gone, then maybe we. If we're you know, very bearish on inflation going forward, Maybe it's important that we revise our expectations and and yes, realize that okay, things might take a little bit longer than expected. uh, to normalize again. But so far, everything we can look at in terms of leading indicators again, whether it's uh, you know the availability of Labor or or Supply chains is moving in the direction of Rapid disinflation.

Again, though, that rapid disinflation might take until 2024 or 25 only the grand scheme of things looking back from 20, 20, 30 maybe will we be able to look back and go oh well duh. you guys printed funny money all over the place and he saw a rise and I fall? Well duh right. So it'll be a while before we can actually say oh, God inflation was transitory, but but again, the the data is reiterating rapid disinflation and I would I Would strongly caution against being terribly bearish here in 2023. I'm not suggesting YOLO margin and you know don't have a cash buffer but any more than than a 10 cash buffer again, not personalized Financial Advice I Have to say that because as soon as people start hearing like allocations that people people might misconstrue that potentially I don't think you do but but some random might uh and and that would be that would be very very bad to do.

it's not per I don't know what your personal financial situation is but for me I think any more than really a 10 cash allocation right now is is is a substantial risk of a very big opportunistic opportunity cost mask unless of course you're saving for Real Estate right? Look, if you're saving for Real Estate That's okay. You know it's still in in many regards after price adjustments have occurred. Uh, you know there's there's very little inventory I Think you have to wait for sort of a rise in inventory to really confirm a bottom. Maybe that Ryzen inventory will never come? It doesn't really so much matter.

But what matters is that you know you want to be cautious of potentially buying now and then and then having that leg down still ahead of you, right? I'd rather wait a little bit and have confirmation that that light down is behind me. Uh, specifically in real estate. Uh, anyway. where I Think the recovery will be a little slower given how long it'll take for rates to come down.

But we'll see, we shall see. this is not a real estate video. This is a subsidized change this inflation video. So hopefully that was, uh, insightful to you all right now.

let's move on. Uh, let's take a look at some commentary here for a moment. I Stand with Dilbrook. Just sold my home at Mysos.

You know it's very difficult to to. You know when people say that properties sell for over asking? uh, it means nothing, right it? I Think it's extremely important to remember that if you're not providing the data of here what the comps were three months ago, here's what the property was listed for. here's how much we got it. For anybody who tells you and I really want you to internalize this everyone and I'm not blaming anyone for thinking this way, uh, it's it's a very normal and American way to think.

oh, multiple offers. Oh wow. Great job. You know whatever right? It's I I Look, I've done this for a very long time now over 13 years.

I I Know the game. The real estate game is very, very simple. Although, you know I sold 85 of my real estate portfolio in 2022 at the beginning of 2022. Every single property sold with multiple offers because I know how to play the game.

If you got to sell real estate fast, you price it competitive and guess what it sells. It doesn't matter what the market is, it does not matter what the market is, and it has zero bearing on the direction of the market. Absolutely zero bearing on that. So it's very, very important to remember that just because somebody says oh, there are multiple offers, it means nothing.

You have to look at the comps. It's the same as listing my iPhone on eBay for a penny. Of course. I'm going to get multiple offers.

All right. Okay, is there an argument that the FED can actually choke Supply and create more supply-side constraints? No, no, there's not. Unfortunately, No, the Federal Reserve is extremely cognizant that they are unable to control Supply They are convinced that they are only able to control the demand side of the equation. And the best way to control the demand side of the equation is by crushing real estate because real estate is exactly how you reduce the wealth effect.

Now, how could you potentially actually let stocks rise while crushing real estate? It's very simple. you need to do whatever you can to make sure the 10-year treasury yield stays high and if stocks go up in the meantime, the FED don't care because the wealth effect is in real estate. Pushing the 10-year treasure yield up crushes real estate. It's simple, all right.

So let's go ahead and take a little peaky Deaky here at what's going on with uh some of the Uh Ukraine updates because we just had Janet Yellen visit Ukraine That was pretty wild. Oh good Lord. Okay, let me let me uh, address this really quick. Uh, because this I mean this.

This political stuff has got to stop. But I will address it. Stand by. So Mister it's uh, so so let me rephrase that.

so Mister The truth is out there says it's so sad that labor strength is considered negative. Labor is people. Okay, look, nobody is saying that it's bad for people to make more money. I'm a big fan of people making more money, but you've got to get it through.

The mentality of people making too much more money can actually be a bad thing because if everybody starts making a ridiculous amount more money just like we got when people were sitting at home getting 600 of unemployment with their state and federal benefits for doing absolutely nothing, guess what happens. You create a massive set of inflation And guess what happens when the economy because of that inflation is then forced by the Federal Reserve into a recession? Guess who gets effed Laborers people get laid off? So uh, like as usual, too much of a good thing is actually a bad thing. So you have to look at things if you want to have a smarter perspective. As an Aristotelian the there was a mean too little Wage growth is bad.

too much wage growth is bad, The right amount of wage growth is good, and the best way for you to grow your income is by figuring out how to provide more value, not begging for more money for doing the same thing that you've already been doing. That is the best way to grow your Wealth Beyond incremental mean-based wage increases rant. Over All right? So now we got to talk about Uh Ukraine All right, stand by. Oh boy.

here we go. All right, stand by I need to take a ship with us. Um, cold coffee? Let's go All right. let's talk about Ukraine Janet Yellen Just visited Ukraine and given that she is the Secretary of the Treasury Department guess what she did.

She brought the money bags with her. That's right, she took a train right into Kiev just like Joe Biden did. When Joe Biden showed up, they made sure to run those Air Raid Sirens to make Americans at home watching CNN feel bad to send more money over to Ukraine But this isn't an argument to be political. this is an argument to say hey, why was Janet Yellen in Ukrainian Was she actually delivering more money? Why yes, she was.

Let's talk about exactly that, because it's worth noting that tensions in the world are getting tougher and not weaker, and that's bad because it increases the risk of worldwide conflict. Consider the fact that the Wall Street Journal is now recording that on nearly a daily occurrence: U.S Fighter jets are being intercepted by China over the South China Sea as China increases its aggressive posture towards the United States not only intercepting our fighter jets, but now potentially threatening to supply lethal arms and ammunition To Russia in their support in the fight against Ukraine China Also being the same country who got the permissive heads up that hey, we're going to invade Ukraine and of course, China is now widely believed to have said hey, hey, you gonna do that, Can you at least wait until the Olympics are over And golly, that's exactly what ended up happening Now At the same time as this tension is going on with China, you've got Iran looking to set up a lethal drone making facility just outside of Moscow to manufacture billions of dollars worth of Kamikaze drones that are faster and stronger to send straight into Ukraine with no chance that they get confiscated because it'll go from Russian territory right into the battlefield. This is in sharp contrast to the weapons that are being supplied from Iran to Yemen. So that way the Houthis can continue their fight against surrounding countries like the United Arab Emirates the United States stealing, well stealing, seizing.

I should say those weapons from those who the rebels now threatening to send those weapons to Ukraine against U.N conventions to continue this essentially proxy World War But we have to listen. Janet Yellen Just went to Ukraine last week Biden made the announcement that he's going there and Janie Yellen just went there as well Janet Yellen What did she do when she was there? She just announced 1.25 billion dollars of another 10 billion dollar Aid package to Ukraine more money for Ukraine. Now one of the issues that you have with Ukraine is the fact that Ukraine's Financial competence is potentially being called into question. There are multiple allegations of rampant corruption in Ukraine.

Take for example this: p peace from the Wilson Center fighting corruption in Wartime Ukraine and to some regards you can't blame that there will be some level of corruption everywhere. After all, on a ranking of the 190 countries in the world, the United States Falls at somewhere around position number 26 which means even the United States is deemed to have a level of corruption in. But when you look at corruption surveys, there is no European country that is deemed by the public to be more corrupt than Ukraine. That's not me saying it, it's the European public saying that.

So it's worth noting that we've had multiple instances and also resignations, uh, or firings of people who have potentially engaged in corruption. Ukraine Now that's not saying that. Hey, if you know there's one rotten apple, everyone is. and it's not saying that we shouldn't support Ukraine It's just suggesting that we want to be careful about what is happening and we want to be away of the additional spending and where it's going and potentially try to be more careful about how money is being allocated.

Ukraine Look for example here, the ministry uh, the Ministry of Defense was accused of purchasing uh food at prices well above usual retail prices. This was from by January 21st expose by the Weekly Mirror. The investigation resulted in the resignation of the Deputy Minister of Defense was responsible for logistics for the Army and the firing of someone else at the ministry of Defense who had signed the contracts with the suppliers. The Ministry of Defense then quickly distanced themselves from those individuals.

There are multiple other counts and allegations here of avoiding taxation, tax, fraud, of potential Uh, malicious contracts signed with Airbus, the French company and potentially other contracts being signed with Ukrainian aircraft engine companies uh, and these companies potentially being ironically suspected of providing funding and support to Russian proxies in terrorists. So in other words, Ukrainian companies potentially sending money to Russian proxies. Then you've also got suspicion here by the prosecutor's general office suggesting that two former deputy directors of state-owned Enterprises had engaged in the export uh, and in import of military goods and Equipment basically, uh, let me rephrase that: the prosecutor General's office issued notices of suspension to a particular company that was supplying military goods and Equipment because of fears about either embezzling or just straight up corruption and this piece goes on and on and on. There's no question here that there are absolutely cases where in any government you're going to have levels of corruption.

The problem is the United States seems to be sticking its head in the sand. Look here. On January 31st, the U.S Treasury Department said that the Department the Treasury Department had quote no indication that U.S funds were being misused in Ukraine. You have to be a blind ostrich with your head in the sand to suggest or to lie to the American public that there is quote no indication that funds have been misused in Ukraine.

Let's be real. There are indications that funds are being misused in Ukraine and it would be much better in my opinion if we actually had a United States government that said hey, look, you know what? We realize some of the money in Ukraine is being misused and here's what we're doing about it rather than this blind. Nope, nothing's wrong attitude. This is a problem now.

Obviously there's an idea. Uh, that. Hey, maybe we could make progress over here. But look, here's that data that I was talking to you about.

Transparency International Recently published an index of Corruption Perception for 2022 and it showed that Ukraine despite some improvement, is perceived, is still perceived still as Europe's most corrupt country and is in a 33rd position worldwide. Yikes, That's not great. Unfortunately though, this war continues to rage on and money continues to be spent. You and and this money that continues to be spent makes it very easy for people like Tucker Carlson to make people even more angry about where money is being spent.

Look for example, at Uh, latest episode from Tucker Carlson And it doesn't help that when you have this kind of talk at the same time as our government saying oh, nope, we don't see any corruption. Well, of course if you have the government on one hand going, oh, we don't see any corruption in Ukraine and we know there is. Of course you're going to be able to now create this narrative that the U.S is blindly sending money over to Ukraine and isn't actually caring about it. Listen, in just for a moment, we'll only listen about 30 45 seconds in rural Alabama burning crosses in the front yards of terrified sharecroppers to amuse ourselves.

We don't have TV Biden gave a speech the other day in 2023 to denounce lynching as if lynching is still happening in the United States It all seems a little delusional. So it was with genuine relief that we saw today one of Biden's top cabinet officials Janet Yellen who runs the treasury Department sign off for Twitter account finally leave Washington and meet with actual flesh and blood human beings who are suffering. And not only did she meet with them to prove her sincerity, Janet Yellen brought with her a check for a billion dollars and we'll admit partisanship aside, we were happy to see that finally someone in the Bible Administration who actually cares who's getting on an airplane to show concern. That's the good news.

The bad news is Jenny Ellen was not an East Palestine she was in Ukraine watch and today I'm proud to announce the transfer of an additional program trillion dollars. That's the first charge of about 10 billion dollars in direct credit support in the United States will provide in the coming months. We love you so much that we will give you whatever you want anything. a new bicycle, a puppy, a pony.

it's yours. We love you billions more for Ukraine your tax dollars. but that money is not going to be going to the newly poisoned communities of Eastern Ohio Who cares about them? It's not going to be earmarked for the hundreds of thousands of American families who have lost loved ones to the opioid epidemic an epidemic that was created by Democratic donors at Purdue Pharma No, that money is going to Zielinski and his wife in Kiev And that money will complement the more than 100 billion in tax dollars they've already received from the U.S treasury. And you've got to think as they watch this tonight assuming there's still TV reception in East Palestine The people who are stuck there are kicking themselves: If Only They had paid Joe Biden's crackhead son 80 grand a month for a no-show job Jenna Yellen might be visiting them today.

It seemed like a lot of money at the time, but that turned out to be the best investment those Ukrainian oligarchs ever made. Was like buying Google stock 20 years ago. Talk about a jackpot. By the way, nobody understands the principles of political.

We'll come back. So look. another 10 billion dollars issued as direct budget support for Ukraine Why? Well, it's because Ukraine expects a 30 billion dollar shortfall for electricity, heat, and water in 2023. So yet again, the United States is expected to pick up the tab.

The European Union is also falling behind on its Aid promises. So while the European Union promises to send money to a European Ally who is In fairness not part of the EU but a European Union, the European Union who promises to send money to Ukraine is falling behind on doing so while at the same time Biden and Janet Yellen are visiting Kiev and delivering checks, new and additional 10 billion dollars of direct budget support while at the same time our Treasury Department pretends there's no corruption happening in Ukraine Look, I'm not here to say we shouldn't help, but I'm here to say some accountability and some recognition of accountability should be much more of a priority as should helping Americans where we need it. Whether it's with an unfunded social security safety net for the people who need it or our disability funds or Medicare funds, or how about homelessness? But no, with politicians who only care about getting reelected like Gavin Newsom whom I ran against for Governor in 2020 and came in second place against recall candidates Gavin Newsom would rather send stimulus checks to people making up to five hundred thousand dollars, then actually give a damn about homelessness or creating additional housing. Even his LA Times mouthpiece has criticized his Sb7 housing law is essentially worthless.

But back to Ukraine. What's most disgusting is the fact that the European Union and countries like Poland are saying oh, we'll send you tanks, We'll we'll help you crane They're making these grandiose claims of sending money in tanks, but what do we find out after the promises are made? Europe isn't actually sending the money because they're falling behind according to the Wall Street Journal they're making very clear in their expose. hey Europe you're not fault, you're not keeping up with your promises. And what does Poland say in interviews? Well, is it tanks V promised We don't know if they actually work.

Oh so Ukraine needs more help and who's paying for it You? Well, the 98 of you in America watching this video are paying for it so much for foreign aid, it's more like U.S Aid Now unfortunately what's sad about this is now you're continuing the proxy war of China supporting Russia more and the United States supporting Ukraine more. Everybody else is kind of watching. It's really turning into a war of the biggest powers. On top of that you do have in a surprise agreement and this is really to kind of smooth over relations with the United States We have to give credit to Saudi Arabia Saudi Arabia has announced a 400 million dollar agreement to support Kiev Now that sounds great but if we're sending over a hundred billion dollars, thank you Saudi Arabia for the 0.4 percent.

Now there is some good news at least in the war in that Russia is trying to prop up oil prices in that they've cut oil production by about five percent in an attempt to raise prices. Unfortunately, since their oil price cut oil prices or oil, uh, production cut, excuse me, oil prices have actually come down. Oil prices are now at lower levels than where they were before the War Began Russia Russia's control over the energy markets fortunately is waning now. At the same time, our Defense Department and our very strong lobby of the defense industry in the military-industrial complex is doing everything they can to make sure they can now produce weapons directly for Ukraine.

This also, according to the Wall Street Journal where the Wall Street Journal suggests that Lockheed Martin is expected to post Revenue declines ironically this year, but they have over 150 billion dollars of a backlog of production now producing military equipment directly for Ukraine. As we go through our own stockpile and the world starts running out of ammunition, there is now a 150 billion dollar backlog of military equipment production just for Lockheed Martin That's just one of the defense contractors at the same time. Germany is now preparing to start producing fighter jets after Decades of not producing fighter jets because the world doesn't need more weapons or doesn't need less weapons. It needs more and we're producing and going to produce now probably a decade worth of jets, military equipment, and weapons.

and I expect that production will continue even after the war in Ukraine either stagnates, drags on, or even ends. Nobody's going to want to be stuck without a massive stockpile of weapons, which unfortunately just sets up for stresses into the future. so I Hate to say it, but none of this sounds really fantastic and a lot of the fingers, in my opinion, just point to our politicians in Washington who don't seem to care about proper accountability to us as Americans I'm not here to say we shouldn't be helping Ukraine but I am here to say that maybe we should be more balanced at how we're spending money and demand better accountability because right now it just seems like we continue to Trend towards World War III And it's the last thing I want to worry about I Want to worry about stocks and real estate making sure people can get access to building their wealth in the easiest way possible. That's why I've programs on building your wealth with a flash sale that expires tomorrow linked down below.

Whether it's becoming a millionaire in real estate which is actually surprisingly easy to do zero to millionaire real estate, investing, stocks and Psychology of Money, or the programs on building your income, check those out a link down below because I Personally believe education is the best way to get ahead, especially if you're looking to build your wealth All right now. we've got to talk about Buffet Stand by for a talk on Buffett So let's see here now we've got to talk about Warren Buffett's annual shareholder letter and some very insightful comments that he made. Now we're not just going to talk about the only thing the mainstream media cared about which was talk about share BuyBacks We actually need to talk about some of the details in Warren Buffett's annual Shareholder letter. If you haven't read it before, it's probably one of the best reads that you can use on an annual basis to make sure that you're investing.

Theses and principles are aligned with a potential better reality. So let's go right into the Buffett annual Shareholder letter and let's look at some of the most Salient points first. Warren Buffett makes it very clear that our economy is designed for what's known as creative disrupt. Destruction and creative destruction is really where you have winners and losers in an economy.

This stands in complete contrast to Communism where everybody is a loser in capitalism. You end up having the best technology succeed. There's a reason Tesla has the market cap. it does because it's growing EV production at a rate of 30 to 50 percent.

whereas Ford and GM the Legacy automakers can't figure out how to be profitable in making AVS and are actually pausing. Both of them are pausing production because they have a glut of old school vehicles and it aren't actually capable of sticking with producing EV vehicles and certainly not profitable. Ford's not expected to be profitable on EV production until 2026 and it was only just recently that Toyota actually realized dang, maybe making electric vehicles is the future, not just sticking with hybrids at the same time. The company Nikola is a now warning of a going concern which is basically a fancy way of saying they might go bankrupt within the next 12 months because of why.

well, their products sucking. And when your products suck, you go bankrupt. That's the way America works. If you don't refine, you die.

and if you don't pay attention to your weaknesses, you fail now. Warren Buffett Here makes it very clear: the system that we live in creates a pile of losers while concurrently delivering a gusher of improved goods and services. That is the point of America The point of America is to make things more accessible and better to everyone, better quality and more available. For example, my real estate startup that I'm creating I'm trying to turn it into what I believe will be the Robin Hood of real estate.

Think about commission free trading and easy investing into stocks that Robin Hood created. Imagine that for real estate, low to no fee, easy and liquid real estate investing, That's the future that doesn't exist today. But it's something that I'm working towards and I'm betting my entire net worth on making sure that happens. But it's an example of of reiterating exactly what Warren Buffett says that creative disruption is actually a good thing.

It's a very good thing because it gives the consumer the end user a better good and service. And if you don't pay attention to the Austrian economic Economist you only pay attention to the key Keynesian Theory then unfortunately you might end up with an oopsie dupsy. Leaving that corporate welfare will end up saving you. The reality is, if you don't uh, adopt with providing future value, you'll go bankrupt.

The same is true for you as a laborer. You work whether you provide goods or services. Unless you're retired, you work. You put in time to create a result.

Now your goal is to make as much money as possible with as little time as possible. But the reality is, we'll talk about this later is that artificial intelligence will replace the vast majority of jobs. and if you're not getting what I call to a level three of competence in your industry, you'll end up getting placed if you're at level one two. Again, we'll talk about that later.

you get replaced. So you have to think about how could you be more efficient and provide more value to where you'll be Irreplaceable even the place in the face of AI. So uh, Warren Buffett here talks also sort of. So that's sort of a message to individuals and to businesses.

But Warren Buffett then talks about efficiency only existing in textbooks. This is a very common thesis and that is in theory that is told or taught in schools. and that is the efficient Market hypothesis. The efficient Market hypothesis says that at any given point, the market is appropriately valuing stocks or businesses and what their actual value is.

and Warren Buffett here says efficient Markets Quote unquote only exist in textbooks. In truth, marketable stocks and bonds or baffling their behavior is usually understandable only in retrospect. I'd Like to give my favorite example: Tesla Stock had absolutely no reason for selling off the way that it did in 2022. other than what do we know.

In retrospect, we know that Elon Musk sold 24 billion dollars of Tesla stock where retail holders holders of the stock only bought 15 billion. That created a negative 9 billion dollar pressure of the stock. and since that was spread over the years since people don't buy it a lump sum January 1st Just like Elon doesn't sell at a lump sum at one period he sold three or four times last year, you create a very easy downtrend that then becomes shortable. When that downtrend becomes shortable, it becomes very profitable.

Short to short, which encourages more shorting. What comes out of that an inefficient Market The company is not actually being priced on fundamentals, it is being priced based off of inefficiencies. And Trends So Warren Buffett here could not be more correct. The valuation of companies is not based on this this myth of an efficient market.

The market is extremely inefficient and you have to have faith in your fundamental analysis. Fundamental analysis, by the way, is something we do almost a daily basis in our course member live stream which I encourage you to join. You can get lifetime access if you join any of those links down below and you can pop in whenever you want a lot of people. What they do is they wait a few days and then they watch them back on 2X And they get the fundamental analysis because the only thing that should give you confidence in markets is not charts.

Even though there is a benefit to charting, the only thing that should give you confident in markets is fundamental analysis, because in the long term, fundamental analysis always wins. Now, people will make fun of fundamental analysis analysts when we have short-term term trends that rotate to downsides. and that's okay. There's short-term minded individuals in the world that like to make fun of other people when they have the opportunity to do so, but history has a tendency of ending up making those losers disappear.

The people who conduct real fundamental analysis end up being right in the long term over and over again. And this is what Warren Buffett is warning up here. And so Warren Buffett argues that really, your goal is focused on making really good decisions and few really good decisions. That's what meaningfully helped Warren Buffett become the successful investor that he is So uh, what? He then further encourages and we'll jump around some of the specifics of Berkshire Hathaway.

He then, and I'll briefly touch on this since this has been widely covered already. Warren Buffett briefly argues that when it comes to stock BuyBacks it's very beneficial for companies to conduct stock BuyBacks when stocks are trading for a below market value. But stock BuyBacks should not be conducted when the stocks are trading above a market value and that is a fundamental market value. The reason for that is Warren Buffett says if you conduct stock BuyBacks at below Market values, you're actually benefiting all of the owners of that company.

It's kind of like giving them more kinetic energy for future gains. But if you conduct BuyBacks at an over the market uh level, what you're really doing is you're cashing people out at an overvalued position, and you're unfairly transferring corporate assets to somebody who's taking advantage of a short-term premium. and that is very dangerous. So Warren Buffett makes a very important argument here that look: BuyBacks are great when they are done at a level that is fundamentally sound.

Now, the mainstream media really only quoted the following, which was that when you are told that all repurchases are harmful to shareholders or the country or particularly beneficial to CEOs, you're listening to either an economic illiterate or a silver-tongued demagogue characters that are not mutually exclusive. Very interesting. So in other words, uh, that that second that parenthetical line there means that you can be a silver tongue demagogue and economically illiterate and that's a nice slam there for one. But Warren Buffett Moving on.

Uh, Warren Buffett talks a little bit about do not bet against America Warren Buffett believes that the worst thing you could do is bet against America and this is actually one of the things that I regularly talk about and it's don't bet against America Train America is very important now Charlie and I uh, this is Warren Buffett Make the argument that near-term economic forecasts can be worthless and this doubles down the reiteration that is so important to make sure you have longer and medium and longer term fundamental analysis as part of your sort of repertoire of understanding of what's going on in the world. It's one of the reasons that I like to fundamentally look through the short-term noise of what's going on on sort of day-to-day economic data and I try to look at longer term fundamental analysis for companies certainly within our course member live streams, but also on the channel when we're looking for longer term trends of are we going to get Paul Volckert? What is disinflation? Actually doing? What are the longer term? Trends Let's keep going Warren Buffett in his letter, goes on to say that uh, the Uh will count on America don't bet against America However, you have to be careful because the world is full of foolish gamblers and they will never do as well as the patient investor. And if you believe that you're somebody who could see the world through some distorted lens, the very likelihood is you're probably going to end up getting killed in investing. And the most important thing that you could do is make sure you actually ask yourself, are you being rational or not and you have to work on your ability to find logic and truth because if you don't then you'll end up staying irrational and you'll end up getting lousy results now.

Warren Buffett Recommends that you learn a lot from both people you admire and you detest. Whether that's through reading or learning, you can learn a lot from people you like and from people that you don't like. But the worst thing you could do is try to blind yourself by investing in sort of mediocre Trends or mediocre companies because of short-term thinking. Now there are some arguments to be made that Warren Buffett in general is a long-term investor and stubbornly holds his long-term Investments for a long time.

Now it's In Fairness. We have to counter this a little bit, given that he pretty quickly quickly flip-flopped on Byd uh here more recently, although that was a relatively long-term hold, so we'll give that back to them. uh, and TSM which he really only held for about four to six months of relatively short long-term purchase there. Mr Buffett But hey, that's okay.

Everybody can make mistakes and the goal is that in aggregate, you're making more correct decisions than you were making bad decisions. So Warren Buffett says if you want to become a great investor, you must keep learning. That is very, very important to keep learning. and learn from perspective from somebody who might be slightly older than you or have slightly more experience than you.

That doesn't mean they have to be the absolute best in everything that they do, it just means learn for people who know even just a little bit more than you do, and make sure you catch up as quickly as possible. To a long-term perspective of Building Wealth and making sure you're always trying to find the truth and operating under the basis of Reason Warren Buffett gives a really good analogy. He suggests there are a lot of people who will believe so wholeheartedly in a in in a false truth that what they're really doing is getting off a ship of Truth to get onto a little Lifeboat of of not truth, a sinking Lifeboat of non-truth and they can't swim and they're trying to take that little Lifeboat to some other ship and they just don't make it. So in other words, that short-term gambling of ah, even though I can't swim I'll just take this Lifeboat over there.

Very, very, very dangerous so always seek truth. Probably one of my most favorite things that Warren Buffett one of my most favorite Uh letters here from Warren Buffett So fantastic job! Warren Buffett Really appreciated that letter. Hopefully you did as well. All right now we got to talk a retail inventories, wholesale inventories.

We are expecting an increase in inventory in the next 10 seconds here of 0.1 percent. The data is on Deck Okay, we get wholesale inventories month over month. Negative point Four percent. The expectation was point one percent.

That's a big Miss In wholesale inventories, wholesale inventories not being built up as much as expected. However, retail inventories being built up slightly more than expected, Retail inventories were expected to come in at point one percent. They actually ended up coming in at point Three percent. So retail inventories.

These both of these being on a uh, month-over-month basis for retail and wholesale inventories. month over month numbers here coming in a little bit hot on retail and a little bit soft on wholesale. Uh, now that's very interesting. The these reports.

Uh, the wholesale reports that for example, provide National estimates. Really, what they try to do is monthly sales estimates, inventory estimates, inventory to sales ratios. And really, this data is useful for trying to predict what's going on with GDP. So usually you'll see this sort of data move into your real now GDP data.

Uh, and with that real Now GDP Data you can see okay, hey, what do we actually think is happening with gross domestic product right now? The answer is, uh, really, just more. What? I'm going to call this noisy information I Don't really think this inventory number tells us much of anything I Just like to address it because these, uh, these month-over-month figures on inventories are so noisy. They're not something that I would heavily pay attention to as a real Catalyst or anything, but I do want to address them since the data just came out. Oh, excuse me.

All right, so that's retail inventories. Now what's our next topic? Let's see, We got a lot of things to talk about today. so we talked: Buffett talked Russia Ukraine Let's not talk wages Wages Mage Price spiral. Yes, let's look at the wage.

My rule standby: when I put it. Oh crap. Hmm, oh there it is. Got it thought.

I Lost it for a second. All right now we got to talk about the wage price spiral and the potential of a wage price spiral. continuing. Remember, a wage price spiral is the worst thing that you could experience because it leads the Federal Reserve to have to force a deep and dirty recession.

They will smack us up beside the head, the dirtiest with the dirtiest smack and dirtiest nasty sticky hand you could ever imagine. You don't want a wage price spiral. It's very important to remember. What you want is you want people to build their wealth and incomes over time.

Ideally, people build their income slightly due to inflation slight increases year over year, but mostly due to providing more value to wherever they are providing their labor. That is good, healthy wage growth. We want people to make more money over time to offset slide inflation, but we also want people to make more money when they provide more value. That is the American way.

Nobody is suggesting that we don't want people to make more money, but what we don't want is the growth of wages to be so rapid that all of a sudden we create unsustained inflation where people are being paid and compensated substantially more for working less or not working at all. A wage price spiral can then ensue, which leads to a nasty depression or deep recession, much like what we saw in the early 1980s when Paul Volcker had to raise interest rates to 20 percent to crush the wage price spiral, and that led to a lot of layoffs. Remember the goal of investing and the goal of economies and capitalism and government is to operate. In the mean, we don't want a government that has their heads completely in the sand and only does one thing.

We want a government that operates in the middle, much like we want wage growth to be fair and reasonable and in the middle, we don't want extremely high wage growth because that could lead to a wage price spiral and then job loss. We don't want really low wage growth because that means people are falling behind and suffering. So where do we stand today on wage inflation and what are the odds of wage inflation potentially falling? Well, this is very, very important and Goldman Sachs has just released a piece on three leading indicators of what caused inflation in wages and where those indicators are going. and we're going to go through exactly this: Goldman Sachs piece to see what their thesis is.

Now remember, if you like my perspective, make sure you join me in the course member live streams every day the market is open or on the weekend for the elite. Hustlers Courses on Saturday to build your income as an employee or as an entrepreneur. But Monday through Fridays we do the course member live stream where we do fundamental analysis on real estate and investing. We talk investing Trends and ideas and volatility and charting, you name it.

Also, it's an opportunity to answer q A I Also encourage you to check out the lectures on building your wealth that come with those course member live streams whether it's the Zero Millionaire Real Estate Investing course or the stocks and Site course. We've got a flash sale expiring on investor Day, which is tomorrow. All right, let's take a look here. So number one: Inflation expectations elevated inflation and inflation expectations over the last year likely drove workers to bargain for higher wages to make up for lost purchasing power.

It's difficult to identify the effect of inflation expectations on wage growth, as there is no way to disentangle the true inflationary pressures on wage growth. But basically leading indicators suggest that when we look at one year inflation Expectations by the consumer which this is not what's estimated by the Bond market like break evens, but rather we look to the one-year inflation expectations for the University of Michigan. When we look to short-term inflationary expectations, we could see that if it's possible that wages increase because consumer expectations of inflation were Rising therefore leading to them to in aggregate demand higher wages, then we should be able to look at that one year inflation expectation chart and also say that number one most important inflation expectations are starting to plummet. That plummeting of inflation expectations could reduce that upward wage pressure that we are seeing from individuals.

Individuals moving to lower inflation expectations could actually help us see a