Could 2024 be different? That's what this video is about on New Year's Day We're going to go through what JP Morgan just showed us in terms of some charts. We're going to go through my money market magnet thesis which we posted about on Ec.com Together you're going to get all the insights and now keep in mind: Gold Course expiration I had to push it back a little bit because there have been so many emails and during New Year's Day I did I did I took Jack I took Jack skiing it was his turn Max was last week so we got Jack uh I I didn't know what size he was for his fitting so I actually used the iPhone measure tool which I thought was actually kind of funny. uh but uh this was us on New Year's Eve and uh it took him in the bus to go to The Fresh Market in Park City got himself Prime of course and uh yeah, here's here's a snowballing. Uh, not like in R but uh but otherwise yeah he's he's pretty excited.

so I got some videos here but that doesn't matter right now. What matters is what about 2024? Well let's go ahead and start with these yikes uh photos and then I want to talk about my magnet thesis. So the first Yikes photo that I really want to hit on is this one which shows us the top 10 stocks in the S&P 500 and uh what the trend line is looking like here? Let's just get Kevin out of here. I wrote Yikes in there and I threw a trend line on there and um, keep in mind this is not the share price of these stocks.

This is the weight of the top 10 stocks. So this could mean that the top 10 stocks either fall to get off that trend line or they do nothing. Yes, they could do nothing and everything else could rise in price. If everything else rises in price and these do nothing, then the weight of these would be lower, right? That's naturally how this would work.

Uh, now it. It is interesting because when when you look at the top seven like the one Lagard out of all of them has been Tesla under the weight of interest rates, We've talked about that one plenty of times. There's there's always something some drama going on with. Tesla Uh, interest rates and Elon put both of those together.

You gotta? you have entertainment But Elon's always told us hey, buckle up because entertainment is your only guarantee So In Fairness you had Fair Disclosure: Uh, this was another interesting one. Look at this corporate cash as a percentage of current assets by sector. Wow, Wow, This is insane when you look at the companies that have the most money. First of all, it's mostly your growth stuff that has the highest percentage lowest percentage would be your utilities.

Consumer Staples Materials Industrials This makes sense your greatest percentage of cash. Not a surprise. Comm Services and Tech real estate even Comm services and Tech that's going to be uh, well, basically those are your main growth plays right? So uh, keep that in mind. and yes, um, if you still want to email us because we're so behind on those, we did extend the gold coupon uh, until we get through all the emails.

so emails to staff atme Kevin.com We'll probably get through all of them tonight. uh, if not first thing tomorrow morning and then we'll change the price. So uh, if you did want to bundle up and you didn't get an email reply yet I'm sorry the entire team has been out I've been working on it I was I was up late last night in Park City waiting not only to, uh, celebrate the ball drop but also responding to emails. So uh, I was even trying to do it on the lift.

but I'll tell you that is a bad idea trying to do emails on the lift while you're holding your poles and and your glove that you took off and your SE Anyway, Okay, so this fascinating this massive amount of cash in Teeken com Services actually makes me feel very, very excited about many of the companies that could bet benefit uh, from where we're heading potentially uh with markets I mean look at what we wrote on Eack yesterday we wrote on Eack we we we had this large piece talking about uh, the Fed's manufacturing lag and we talked about ubiquity on there as well. And basically this was this massive argument that hey, there is a chance that we could basically have all of the manufacturing headwinds that we had during Covid, which turned into massive stimulus for the manufacturing sector lead to a massive manufacturing pickup in mid 2024. Which is interesting because that could be just as we start seeing a slowing of jobs, you could actually see a pickup in jobs for manufacturing and who would be manufacturing. Well, as usual your cashr companies see, it takes about 2 years.

We touched on this on on Ec.com Here you can read the full piece there, but it takes about 2 years to actually get a fact up and running. So what a lot of companies have been doing is really what this is too hot. Let me let me expose the dragon chain armor. Yeah, what a lot of companies have been doing is really the ubiquity approach.

So ubiquity, for example, They have this situation where they exploded their spend on inventory uh, to the tune of some $487 million where all of a sudden it looked like they were cash flow Negative they were negative Cash flow 10K Uh, in, you know, the quarter ending June 30th. That's actually when their year ends as well. At the same time, their stock based compensation was jumping. So you've got here stock comp jumping uh, substantially from $3 billion to 4.7 Those folks are likely selling because it's an uncertain time at the same time, the company's negative free cash flow.

Why? Because they're hoarding inventory. In fact, in their 10K they say, why did we do this? the increase in inventories as a result of the Strategic decision to secure inventory while components are available in an effort to increase product availability that I think is what a lot of companies are going to do in 2024. Make sure the shelves are stocked. Companies never again want to be in a place where you have a boom like 2021 and the government's throwing helicopter money around and you don't have enough Supply to deliver the goods.

So I Believe that cashr companies are going to do everything they can to make sure their supply chains are delicious, their inventory is stocked, and they're investing as much as possible into R&D and going forward expanding and growing and advertising. Uh, in fact, that was another thing we talked about on Ec.com Was this idea that companies, uh, in fact, we have a whole trade desk piece here. Uh, Barons for example, sees Trade Desk as a big beneficiary of what could be a 30% increase from the last presidential cycle in political ad spending 50 .9 billion in political spending, which is an insane number. But it's not just because of money that campaigns have, it's also because of all the super Packs and the corporations donating money into uh, you know, into Political campaigns for advertising or whatever.

So I think what happens is the following and then I really want to get into this piece right here. which is where we talk about my money market thesis. Okay, so I think you have companies that are relatively cash-rich dump money into advertising and Manufacturing pushing out more inventory like the ubiquity effect to make sure there's plenty of Supply Well, what happens when Supply skyrockets and now you're advertising more? Why are you advertising more? You're advertising more because you're trying to induce demand. And the best way to induce demand is by advertising that your prices just went down.

and I think deflation is going to hit hard in 2024 and the beneficiaries are going to be the manufacturers. Potentially, as they come out of the manufacturing recession, you've had 13 months of straight declines in manufacturing. and so if companies advertise more and lower their prices and potentially take it in the margin, who benefits consumers with lower prices but also the manufacturers? Nobody's touching the manufacturers right now. They're like China You know it's like I I don't I don't want to catch a fallen Knife Man China I don't know how low is it going to go manufacturing I don't know how low is it going to go I Don't know man.

I Think there is a chance you could see an advertising in manufacturing boom in 2024 which actually creates the jobs that help keep us out of a recession. But then you have the bare argument of who. Wait a minute. What about the inverted yield curve? You know there are a lot of people who think the inverted yield curve is going to reinert really quickly as we go into 2024 and we're going to see a stock sell off again.

Remember the last time the yield curve started going up Okay, we went from like Nega 80 basis points to -20 and when was that? July 19th through October 31st I Know very clearly because it was 3 months and a week of straight down in the stock market. And of course that's when we did our reggae fund raise for House Hack. Come on man, it's okay. it's okay.

Uh, you had to wait for the attorneys. It would have been perfect to do it in June or July it's okay. Uh so uh. Hey whoever got in, they get the Ono one valuation.

Everybody you know, everybody who didn't get in. they missed out because now the company's worth 50 to 100% more than what those shares went for. Go To the House Hack YouTube channel. You can learn about what where where we're coming from with evaluation everything.

just house hack homes. It's linked in the description down below Make it easy for you. Okay, so but what about this inversion? Are we going to reinert? Well, there are a lot of bears quite frankly right now who are arguing well. we're going to re invert and the Fed's going to cut rates and stocks are going to tank because of this reinversion.

Usually when we steepen, you know we we go up in the yield curve. Stocks go down. That's all you have to remember. Okay, more steepening means stocks go down usually.

I Actually wrote a piece on eack while I was on the plane back over here from Park City Hebrew actually. But anyway, as I was flying back over here like huh, you know, will we actually see the yield curve go positive again? And so I have this thesis. I Want to be clear? This is a thesis. This is not a guarantee, but it's a thesis.

I I Wrote this a couple hours ago I wrote I I Worry that the money market magnet might actually keep the yield curve inverted much longer? See and think about this. Just simply okay. In order for the yield curve to reinert, you really need people buying the one and twoyear treasury specifically the 2year because we look at the 102 inversion right? So you look at the two year. That thing's at like 4.25 right now.

Okay, the 10 at, uh, what? We were like, Uh, 3.85 So you're 40 basis points inverted, right? Because usually rates are higher on the 10 year. Okay, so so stick with this for a moment. Even if you're not super into bonds, just try to run with this for a moment. You need people to buy two years, but two years are almost like cash equivalents.

almost. You know, because they're such short-term bonds. So why would people buy a two year to get a 4.25% yield when they could just put their money into money market funds and earn up to 55% on banks, basically begging their customers to throw money into them? JP Morgan Is they beg me? They're like bro, please put your money with us, your House Hack funds. The other House Hack funds.

You already got a lot of your stuff here. Give us more and we will give you 5 and a half% on a money market. And so I Got to think about this because somebody actually asked me a question. I think it was on the house Hack YouTube Channel like Kevin Uh, is House Hack still buying short-term treasuries? I'm like, no, what? Like, why are we going to buy six-month oneye treasuries when we can get five and a half on a money market and have liquidity tomorrow? Like capital appreciation? I Understand I Make that argument all the time.

But really, the capital appreciation play is on a 10year. You know, on the shorter duration stuff. the capital appreciation I suspect won't be as desirable. So if you're really trying to invest in bonds for cap appreciation, you go 1020 bonds, right? 1020 year bonds now? Sure.

I Have also made this Argum, but wait, money markets won't last at 5% forever. Yes. But even if we get five rate Cuts in 2024, What? Who cares? we're still at 4% on money markets. Okay, well am I going to like assuming the two-year is still 4.25 which it probably won't be.

Am I Really going to dump my Money Markets to buy a two-year bond for an extra 25 basis point? No. Like money is sticky and so it sticks in the money markets. And so not only do you have companies that are cashr uh, and whoever owns all the money in these money markets is cashr. but the the question is, where does that money go well for investors who are in money markets I Actually think the money goes to buy the dip on stocks when stuff actually starts dipping because right now things are a little uh, on the expensive side.

I Mean take a look at this. Here is JP Morgan's S&P 500 valuation measures and as you can see, we're knocking on the door of a positive uh, one standard deviation on the right side. so we're a little elevated. Now you see that little red box there I drew that on there because I'm like yeah, I mean I I I Know we're elevated, but look at that period of time there where the red boxes.

We were elevated for basically 2 years where we were well over the one standard deviation line and then look at 1997 to 2001 that's called Euphoria Okay, that's Euphoria and we could be going back into Euphoria I'm not saying we should be there I'm just saying we could go back into euphoria and we could stay there for potentially two years and then maybe we'll get our recession in 2026 or 7. Eventually, there will be another recession. Okay, so so this is really interesting because wait a second. 10year yields falling.

Meaning, people who want capital appreciation in bonds who buy the 10-year they lead bond prices to go up on the 10year 10e yield. Falls That makes car loans. and Home Loans cheaper. Okay, car loans Home Loans cheaper.

That's good. 2year stays High Because nobody wants it because money markets are high. So what does that mean? We're still inverted. In fact, I Wrote on eack that there is a chance we could have headlines soon that are like the longest inverted yield curve ever.

Or since XYZ will finally come in 2025, recession will come in 26. Whatever. We'll just keep kicking the can down the road. But the point of this is there.

There's some really big takeaways from this. so number one. I Actually think it is entirely possible that we see money markets not flood the market and create Euphoria Although we could see Euphoria I Think money markets only move over. Not when the S&P 500 and the NASDAQ 100 the Tech index are at all-time highs.

I Think they move over to buy the dip. Think about that. that's juicy. You got money and money markets are you going to buy at all-time highs n man, you just can't wait to buy a dip.

And so in a weird way, you actually again reiterate the thesis that I've had for about 14 months now which has been correct so far. Knock on wood. Okay, I I'm I make mistakes too. But and if you want to learn about my perspectives, the Gold Course will tell you all about them.

Stocks, entrepreneurship, the mistakes I make and Llc's or corporate entities uh, tax benefits, not paying taxes in your life. The course member live streams, lifetime access all new content filmed this quarter including just a few days ago Gold Course: It's a bar bargain and if you need a bundle up cuz you're already a course member and you want this one as well all the new stuff in the Gold course. It's like a new new way of presenting. um email us staff ofm Kevin.com So now I kind of forgot where it was.

That's okay. Well uh oh yeah. yeah yeah. Okay so so you have this Nike Swoosh that actually gets supported because every time the stock market dips, the money market people come in and create a floor.

So you have a floor. Every time the market goes down, you have a floor and and so you. That's why you create the Nike Swoosh because there's so much cash on the sidelines. so there there's a lot in this.

Okay. I I I Don't mean to be here and try to overwhelm. So let me try to make some simple bottom lines here: I think that's why uh, folks like coming to the channel I I I don't know I I try my best I I Know it's not. you know, like I I don't do the the Market's going to crash every single Day stuff and that seems to be really popular right now.

but I don't I don't know these. just like people who are super short or something who need some confirmation bias. I I Don't get it. Uh, but anyway, it's okay.

if you're short, if you're short, you should be paying attention to this stuff too. So what are the conclusions on this? Well consider this. Okay, so I think Cashr companies. Okay, so Cashr companies? What do they do? Okay, one spend two.

Manufacture Okay now. uh uh, on ads. Rather spend on ads and manufact make more stuff. Okay, that creates disinflation.

Or or honestly, let's just stop footing here. It's going to create deflation because Supply uh, likely. uh, skyrockets. Okay, so the problem with this is as Supply goes up like and demand doesn't necessarily move up, Prices have to move down.

Price equilibrium has to come down and we believe by mid 2024, we have a lot more for manufacturing online. What does that? Additional manufacturing online mean? That means more jobs. Uh, more jobs. for economy.

More jobs for the economy means less chance of the dirty. R Okay, all right so at the same time as you get more spending on ads and Manufacturing uh, you know manufacturers that create deflation, What you get are people who want to speculate on Bond capital appreciation, Who What do they get? Well, they go for 10 years, 10 years fall. So what happens when the 10e? Falls Well, mortgage rates, helocs like credit lines, uh, and cars all become less expensive. So investing in things that homeowners buy or cars could potentially make really good sense.

For 2024, your Restoration Hardware Lowe's Home Depot Whatever. We we've broken all these out the trade desk for the advertising side and you go in expecting all the cash people on the side to just support or basically prevent the dips from getting too deep. As soon as the dips get deep, it gets bought. Obviously all of this would be wrong if we get Jobs data that comes out this week and you know we have some Poopsy doopsy or whatever that comes out on on jobs again.

I Go to Ec.com I Just type in Catalyst into the search. What do I get? We got Jolts numbers coming out in 2 days. We got ADP numbers coming out in three days. On the fourth, we got Jobs numbers on the 5th, CPI on on the 11th.

So there's a lot here. but I think this is really fascinating because when you put all these pieces of the puzzle together, it's kind of like huh. That is really interesting I I think especially. One of my favorites is this one.

Just because it really shows us that hey, you know just because things are elevated doesn't mean they can't be euphoric elevated for a while now I did see this I thought this was interesting S&P 500 Profit margins. Look what? what I wrote wow about was not that profit margins were near the bottom which I actually think that could get worse, but which usually it only gets worse in a recession. Worth noting, but the trend is up. like look at that long-term Trend Since 01 the companies are just making more freaking money.

Maybe it should go down. Oh man, uh so uh yeah. look uh. that's uh.

that's my take here. Email us staff ofme Kevin.com We're going to keep that pricing active. Uh, probably through tomorrow morning. Just catch up with all the emails I Appreciate yall staff atme Kevin.com See you in the next one.

Why not advertise these things that you told us here? I Feel like nobody else knows about this? We'll We'll try a little advertising and see how it goes. Congratulations man, you have done so much People love you people look up to you Kevin P there financial analyst and YouTuber meet Kevin Always great to get your take even though I'm a licensed financial adviser, real estate broker, and becoming a stock broker. This video is neither personalized Financial advice nor real estate advice for you. It is not tax, legal, or otherwise personalized advice tailor to you.

This video provides generalized perspective, information and commentary. Any third-party content I show should not be deemed endorsed by me. This video is not and shall never be deemed reasonably sufficient information for the purpose of evaluating a security or investment decision. Any links or promoted products are either paid affiliations or products or Services which we may benefit from I personally operate and actively managed ETF and hold long positions in various Securities potentially including those mentioned in this video.

However, I have no relationship to any issuers other than House Act nor Am I presently acting as a market maker.