Well break out the anti-venom for 2023. Welcome aboard and happy! New Year Michael Burry has yet another massive warning for us, coming right on the heels of a big warning from the International Monetary Fund and a lot of catalysts this week to kick off the year. Oh man, we've got some dirty ones this week, including from the Federal Reserve whom of course everybody is paying attention to. Hey, everyone meet Kevin Here we are changing the pricing for the holidays coupon code within the next 24 hours.

We did extend that briefly for the end of the year uh, in case anybody won an extra tax deduction now that we're in the New Year If you're looking to join me on a flight and Shadow me for a day as we explore for househack, We Are booking those into April and March now and we'd love to have you along. Uh, and folks, let's get into the content for today: Check out those programs on building your wealth. Link down below new lectures drop today totally for free for existing members. So the International Monetary Fund and told us that we should expect a tougher 2023 macro environment as at least one third of the world goes in recession, especially as the world's three biggest economies slow down.

specifically the Eus, the EU, the European Union, and China. It's have previously been said that if the United States sneezes, the world gets sick. That's because when you've got the personal savings rate for individuals in the United States now plummeting, it's not uncommon to see that uh oh well. We might actually end up having a Slowdown in the rest of the world as United States spending really slows down.

Now keep in mind this is motivated by this fall in the personal spending rate or savings rate. Take a look at this chart here. This is a chart of the personal savings rate and its average going all the way back to 2016 early part of 2016 here and it shows you really how if we draw really an average line here, we could see that even through the crazy spikes of the covet savings rates where everybody was getting stimulus transfer payments, we usually sit around a savings rate close to about seven to eight percent. Well, right now we're in that red circle in the bottom left where that personal savings rate is just plummeted in.

that personal savings rate often leads consumer discretionary spending. And remember, the consumer makes 70 of the market. So if the three biggest economies are slowing down heavily for 2023, yeah, Recession for a lot of the world is definitely likely because remember the velocity of money you spend a buck here? That could be five dollars that circulate throughout the economies of the world and a lot of those are Global And for the first time in 40 years, China is looking like it's going to be growing slower than the rest of the world. Again, that's the first time in 40 years that China is looking to be growing slower than the rest of the world.

job. This is probably also why they've been inspired to remove the Covid Zero restrictions that they've had for nearly three years of coveted restrictions. which is insane. They started in January of 2020.

you got 21, 22, 23. They're finally loosening up. It's pretty wild, but now they're threatening to respond to other countries, potentially with sanctions for countries who are instituting travel curbs like testing requirements. If you travel from China to the United States and now China's like hey, you can't do that Meanwhile, when people had to travel to China from the United States, they'd have to stay in Covid quarantine hotels for two weeks.

It's kind of a ironic, although it just seems to be a lot of talk right now. I Think they think if they saber rattle a little bit, people be less punishing to China BlackRock Also warns that hey, don't expect central banks to ride to the rescue you unfortunately here in 2023 as they fight stubborn inflation down especially Services inflation which we've got some numbers coming up for that soon, which that also leads us to Michael Burry's warning: take a look at this here. This is Michael Burry's tweet from just a couple days ago here. Actually, this is from late yesterday: Inflation peaked, but it is not the last peak of this cycle.

Ooh, we are likely to see a lower inflation reading, possibly negative by the second half of 2023. Michael Burry: Basically saying inflation's going straight down straight to negative within the next six months. Essentially, here, and the US will be in recession by any definition. This is kind of making fun of the idea that look, last year, we had two quarters in a row of negative GDP and the White House is like, well, that's not how we Define a recession.

You know we wait for the National Bureau of economic research to determine we're in a recession, but it takes them like a year to figure that out and everybody's like, well, technically, a recession is two quarters of negative GDP So it looks like we're in a recession anyway. Michael Murray says oh, don't worry, we'll be in a recession and inflation will be down, But that could lead the Federal Reserve to cut and stimulate along with the government to send those stimulus checks again and we will have another inflation Spike It's not that hard. Well, so let's touch on that because California sent out a nice little stimulus check in September and October and California represents about 11 percent of the country's population. Guess what happened? We saw a temporary surge in spending and potentially a little boost to inflation solely because California spent sent out stemi checks.

Imagine if the FED starts printing money again and the government sent me checks during a recession to prop up that lower income threshold. The people who are suffering the worst right now thanks to higher food and commodity prices like gas? well, yeah, maybe Michael Burry will be right. However, there is still the train of thought that maybe just maybe will actually be more likely to follow the pattern of the last 40 years. Since the late 1970s and early 80s, we've actually been in a pattern known as the Great Moderation And the Great Moderation is essentially a period of 40 years where inflation has been trending down actually towards zero or one percent, and that has motivated central banks to actually worry more about deflation rather than inflation, leading most central banks to adopt policies known as Zerp and Nerp.

Zurp is a zero rate policy, and Nerp is a negative interest rate policy. And all of this really, in my opinion, comes down to whether you think inflation is transitory. If inflation was truly caused by Covid Massive coveted and supply chain disruptions, massive money Printing and stimulus during the Covet era and the supply chain disruptions leading to a lot of demand for products and services just at a time more Supply chains were disrupted and war in Ukraine If those were the true causes of inflation rather than the entire collapse of our existing monetary system, then it would make sense that we would actually return to the Great Moderation era and maybe that trend line of inflation trending towards deflation will return. This would actually mean that Matthew Woods Kathy Wood is is most likely to be correct that if inflation does return to levels fighting deflation and we actually maybe do have to fight deflation over the next year as companies start competing and lowering prices, well, then Kathy Woods would Kathy Wood would be right.

We would be in a situation where we were back to money Printing and maybe no inflation. That would be wonderful. But Michael Burry warns of the opposite. He warns that no, we are potentially just going to go right back to another inflationary cycle and then the Federal have to get even dirtier because as soon as you go to another inflationary cycle now, you break what are known as inflation expectations and that's even more dangerous.

See now inflation expectations. While they're elevated or at least trending down, you break the reputation the FED has any control over inflation, then you could potentially really be looking at another other big short now. I Do want to point this out in our course member live streams. We regularly look at earnings calls to try to understand trends that are coming up and this is the Winnebago Earnings call and I Have to say I Thought this was a very interesting line.

On page 13 of their earnings call they mentioned that so certainly quote. If we were to see inflation or sorry. If we were to see significant deflationary elements within our building materials and our costs of goods sold, we would consider what that means, not just in the context of cost, but what our competitors might be contemplating as well in retail conditions. Let me just translate that fancy sentence there.

hey yo man. If prices continue to start trending down, we're gonna start thinking that our competitors are gonna drop prices. and then we're gonna have to drop prices. And because we think they might drop prices, we might try to drop prices before they do.

Basically, we're gonna start a race to the bottom to make sure people are buying our RVs and not someone else's now. I Personally thought that was incredibly interesting because you're actually seeing the opposite of what we saw last year last year. January I Was personally freaking out because every earnings call I was looking at I'm like holy crap dude. every company is talking about how big their PP is.

They all are bragging about the size of their PP They're purchasing power and their pricing power is off the charts. That's what everybody was bragging about last year now. I Think very few companies actually have pricing power left because you have to start cutting prices. We actually saw the same thing and it's weird.

but also on page 13 of the Carnival Cruise Lines earnings call, keep in mind that all the course member live streams are archived. so going back like three or four years so you could look at all of them, it's a benefit. Oh, you can see all my mistakes. All the things I've found correctly through fundamental analysis Everything.

It's actually really interesting. You could type in certain ticker symbols and see my analysis on them. The course member live streams are amazing. Uh, so take a look at those linked down below.

But look at what we have here. This is page 13 of the Carnival Cruise Lines Earnings Call and look at this. An analyst here says you guys have been discounting in such a way. Or I I know that I know criticism by at least one of your competitors.

A competitor is saying this about Carnival Cruise Lines is that Carnival has been discounting in such a way that it's going to be difficult to recover from that discounting anytime soon. And now you don't want to see the financial statements of Carnival We talked about those in the course member lives. Let's just say they're not looking good. But look at this.

This is the CEO of Carnival talking to. Hey, look, you know with respect to how we optimize Revenue Uh, you know our goal is basically to fill the ship because we need occupancy because occupancy leads to more onboard spending. If we already have the staff there, why would we not fill the ship right? And this, in my opinion, is actually a little bit more of a concern. That, at least in the near term.

Yeah, Michael Burries right Inflation's plumbing. and Kathy Wood also going to be right. Inflation is probably plummeting. We're going to see this deflationary cycle, but do we actually think that's going to lead to another inflationary surge? Well, if we're back to the trend of the last 40 years, no, if we break that.

Trend Hmm. Monetary policies is going to be in a whole new world and anything we've been used to in the last 40 years is going to be flipped. So really. Michael Burry here is fighting history by arguing that we're gonna have a second massive Spike of inflation.

But I guess we'll see. including I Guess what we'll see are some of the catalysts coming this week, including what the FED has to say. But first, let's go in order today at 6 45 a.m all times Pacific time We'll be getting the purchasers manager index. Uh, that is a pricing sort of a survey.

Inflationary survey for manufacturing tomorrow at 7 A.M We'll get the Joltz read. This will be really important. The Joltz numbers are going to be Huge because this is the job openings and labor turnover report. And what's very important about it is we want to know.

Hey, for that Jolts report, are we finally starting to see fewer job openings? That's actually what we want. We want fewer job openings. Uh, and so that Joltz report is expected to come in with a survey of 10 million job openings The Last Read was 10.3 million. if we come in hot again, it could be a red Catalyst For the market, that would be a larger number than the survey.

Again, that's 7 A.M The Jolts report that'll be at the same time as we get the Ism Institute for Supply Chain Management Prices Paid survey, another inflationary survey and tomorrow we'll also be getting the Fomc meeting minutes at 11 A.M from the last Federal Reserve Open Market Committee meeting. This is when Jerome Powell released the last summary of economic projections which were a lot more hawkish than expected and Jerome Powell was a little bit more hawkish during his discussion than expected. And so what I would like to see is are the minutes actually going to cool down, the aggressive Powell that we saw and the aggressive summary of economic projections? something in the style of Allah uh, in the style of uh, hey, look uh. You know the last couple reports were promising, but you know we have to be more aggressive based on what we've seen over the last say, six months and the trend.

Even though the last couple reports were promising, so we're going to go more aggressive. But hey, you know, maybe we could be less aggressive if reports continue to come in. Kind of like they have in the last couple reports. Remember, they always like to say what report doesn't make a trend and then two reports come out good and they're like two reports doesn't make a trend so we'll stay aggressive.

Hopefully the minutes are something in that style if the minutes are in the style of hey. We had two great reports, but even if we have another five great reports, we're still going to be hawkish. It could be could be setting up for a red day tomorrow. Let's just put it that way we'll see: Thursday We'll be getting the ADP report.

that's the private uh Jobs report. Uh, we found this one actually potentially to be a little bit more accurate than the Bureau of Labor Statistics labor report, which has been over counting a payroll substantially. Even the Philly Fed has found this out. uh, that were over counting jobs by potentially one to two million over the last nine months.

That's insane. ADP report is expected a read of 145 000 Jobs versus The Last Read of 127 000. We get us, uh, the S P and that's different from the Ism report. The SMP service Services PMI Rapport at 6 45 tomorrow I'm sorry that's on Thursday along with the ADP report and then Walgreens reports at 4am on Thursday Friday We'll get the Jobs report.

This will be a big one. I'll be live streaming 5 30 a.m For this one, we're expecting 200 000 jobs compared to the 263 000 in the last report, Expecting average hourly earnings to come in at point four percent that's 4.8 percent annualized. Still above the Fed's target, but it would be better than an inflationary spiral, which is a little bit of a concern like what we had last Jobs report where average hourly earnings actually popped up point six percent. We'll also be getting the uh, yet another ISM uh uh Purchaser's Manager Index PMI Index Prices paid report at 7 am.

So a lot of inflationary numbers this week. A lot of these surveys uh, whether it's the Ism prices paid, the S P price is paid manufacturing prices paid, but also on Friday We'll see what kind of orders we're getting from factories and durables, durables, or things like washing machines and appliances. These have been plummeting for like a year. so I would expect these to continue.

so we'll see and look. My Hope for 2023 is simply this: that the recession starts because once the recession starts, the stock market tends to bottom right around when the recession starts. I Personally hope that recession kind of is now, so that way we could really start that bottoming process for stocks and we can go up. So usually stocks lead us out of a recession.

lead keyword us out of a recession on unemployment lag substantially and Rises a lot later. Uh, and if that's the case, then I Believe the wealthy or individuals. so think top 10 top 20 of incomes, they'll be the ones who will start spending substantially again. First I Think you'll start seeing Venture Capital Investments You'll start seeing people buying more Teslas You'll start seeing longer wait times for Teslas You'll start seeing people buying private jets.

All that stuff will come back with the stock market recovering up all that sort of craziness. Anyway, thank you so much for watching. Consider our only sponsor for the channel the programs on building your wealth link down below or Shadow me for a day as we go explore real estate. If you are a real estate agent and you want me to visit your area and you're willing to show me around your town, please email me at Kevin Househack.com Thank you so much for watching! We'll see in the next one.

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