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Almost everyone thinks massive inflation is coming, including Buffett, Dalio, Burry, and even normal citizens like you and me. With so much attention around rising consumer prices, many investors have concluded that inflation is here to stay. Cathie Wood is seeing something completely different. New economic data is showing that inflation is rapidly decelerating, and may only continue to quickly decelerate. This video will go in-depth on Cathie Wood’s contrarian stance and how the US economy is rapidly weakening.
From a broad perspective, it makes a lot of sense for inflation to start decelerating. Stimulus checks are no longer being given out. The Federal Reserve is starting to enter discussions to taper off as soon as this year. The delta variant is rapidly spreading across the US. Decelerating inflation, also known as disinflation, sounds logical because of the reasons I just mentioned. Recent economic data for the month of August also points towards disinflation. The most notable report that recently came out was significantly lower nonfarm payrolls. The number of nonfarm payrolls represents how many workers there are in the US, excluding farmworkers. Nonfarm payrolls are compared month over month or year over year so that economists can see the strength of the labor market. In the month of August, economists were expecting the labor market to be incredibly strong. The change in non-farm payrolls was expected to be higher by 733,000 in August compared to July. Contrary to expectations, non-farm payrolls only increased by 235,000. That difference is absolutely mind-blowing. Economists are usually off on their estimates, but not by that much. This is a strong signal that the economy is starting to weaken. There are several reasons why this could be happening. The two most obvious factors are that the chip shortage is worsening and the delta variant is quickly spreading. Both of these factors may be hurting employment numbers in the short term. Additionally, there could be a more frightening factor at play, which we’ll talk about soon. We can clearly see that the delta variant and the chip shortage are both serving a role in lowered employment numbers.
There could also be one more factor at play, which is that the economy is starting to weaken. Cathie Wood has been warning about a deflationary crash for a while now, and it may be starting to kick in. Auto sales are quickly declining, as total vehicle sales have gone from 18.7 million in April to 13.4 million in August. This is partly caused by the chip shortage, but may also be because of the transition to electric vehicles. As I’ve covered in a previous video, electric vehicles have taken off during the pandemic. The rise of EVs could be playing a role in slowing auto sales, particularly sales from legacy auto. Another factor at play is the growing inventory in consumers’ homes. Many people have already purchased vehicles during the pandemic to avoid mass transit. Because consumers purchased vehicles, chances are that they won’t need to purchase another vehicle for a while. All of these three factors, which include the chip shortage, EVs, and consumer car inventory, are slowing the overall auto market.
Outside of the auto market, inflation is definitely starting to cool down. M2 money, which is a tracker for the total money supply of the dollar, is currently decelerating by a substantial amount. M2 money growth has slowed down from 27% year over year in February all the way down to 12% year over year in August. This may seem like a large drop-off, but it’s only the beginning of much more to come. The money supply of the dollar is still growing at a rapid pace but is also quickly decelerating. Based on the current sentiment, it’s likely that the money supply will continue to decelerate even more. One potential catalyst for a further slowdown is the infrastructure bill coming in lower than expected. Consumers are very concerned with inflation and increasing US debt levels. This creates a situation that is the opposite of a self-fulfilling prophecy. Because US citizens are worried about inflation, politicians are now incentivized to control government spending.
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Almost everyone thinks massive inflation is coming, including Buffett, Dalio, Burry, and even normal citizens like you and me. With so much attention around rising consumer prices, many investors have concluded that inflation is here to stay. Cathie Wood is seeing something completely different. New economic data is showing that inflation is rapidly decelerating, and may only continue to quickly decelerate. This video will go in-depth on Cathie Wood’s contrarian stance and how the US economy is rapidly weakening.
From a broad perspective, it makes a lot of sense for inflation to start decelerating. Stimulus checks are no longer being given out. The Federal Reserve is starting to enter discussions to taper off as soon as this year. The delta variant is rapidly spreading across the US. Decelerating inflation, also known as disinflation, sounds logical because of the reasons I just mentioned. Recent economic data for the month of August also points towards disinflation. The most notable report that recently came out was significantly lower nonfarm payrolls. The number of nonfarm payrolls represents how many workers there are in the US, excluding farmworkers. Nonfarm payrolls are compared month over month or year over year so that economists can see the strength of the labor market. In the month of August, economists were expecting the labor market to be incredibly strong. The change in non-farm payrolls was expected to be higher by 733,000 in August compared to July. Contrary to expectations, non-farm payrolls only increased by 235,000. That difference is absolutely mind-blowing. Economists are usually off on their estimates, but not by that much. This is a strong signal that the economy is starting to weaken. There are several reasons why this could be happening. The two most obvious factors are that the chip shortage is worsening and the delta variant is quickly spreading. Both of these factors may be hurting employment numbers in the short term. Additionally, there could be a more frightening factor at play, which we’ll talk about soon. We can clearly see that the delta variant and the chip shortage are both serving a role in lowered employment numbers.
There could also be one more factor at play, which is that the economy is starting to weaken. Cathie Wood has been warning about a deflationary crash for a while now, and it may be starting to kick in. Auto sales are quickly declining, as total vehicle sales have gone from 18.7 million in April to 13.4 million in August. This is partly caused by the chip shortage, but may also be because of the transition to electric vehicles. As I’ve covered in a previous video, electric vehicles have taken off during the pandemic. The rise of EVs could be playing a role in slowing auto sales, particularly sales from legacy auto. Another factor at play is the growing inventory in consumers’ homes. Many people have already purchased vehicles during the pandemic to avoid mass transit. Because consumers purchased vehicles, chances are that they won’t need to purchase another vehicle for a while. All of these three factors, which include the chip shortage, EVs, and consumer car inventory, are slowing the overall auto market.
Outside of the auto market, inflation is definitely starting to cool down. M2 money, which is a tracker for the total money supply of the dollar, is currently decelerating by a substantial amount. M2 money growth has slowed down from 27% year over year in February all the way down to 12% year over year in August. This may seem like a large drop-off, but it’s only the beginning of much more to come. The money supply of the dollar is still growing at a rapid pace but is also quickly decelerating. Based on the current sentiment, it’s likely that the money supply will continue to decelerate even more. One potential catalyst for a further slowdown is the infrastructure bill coming in lower than expected. Consumers are very concerned with inflation and increasing US debt levels. This creates a situation that is the opposite of a self-fulfilling prophecy. Because US citizens are worried about inflation, politicians are now incentivized to control government spending.
Almost everyone thinks massive inflation is coming, including buffet dalio brewery and even normal citizens. Like you and me, with so much attention around rising consumer prices, many investors have concluded that inflation is here to stay. Cathy wood is seeing something completely different. New economic data is showing that inflation is rapidly decelerating and may only continue to do so.
This video will go in depth on kathy with contrarian stance and how the u.s economy is rapidly weakening. From a broad perspective, it makes a lot of sense for inflation. To start decelerating stimulus checks are no longer being given out. The federal reserve is starting to enter discussions to taper off as soon as this year and the delta variant is rapidly spreading across the u.s decelerating inflation also known as disinflation, sounds logical because of the reasons i just mentioned.
Recent economic data for the month of august also points towards disinflation. The most notable report that recently came out was significantly lower. Non-Farm payrolls, the number of non-farm payrolls, represents how many workers there are in the u.s excluding farm workers. Non-Farm payrolls are compared month over month or year over year, so that economists can see the strength of the labor market.
In the month of august, economists were expecting the labor market to be incredibly strong. The change in non-farm payrolls was expected to be higher by 733 000 in august compared to july, contrary to expectations. Non-Farm payrolls only increased by 235 000. That difference is absolutely mind-blowing.
Economists are usually off on their estimates, but not by that much. This is a strong signal that the economy is starting to weaken. There are several reasons why this could be happening. The two most obvious factors are that the chip shortage is worsening and the delta variant is quickly spreading.
Both of these factors may be hurting employment numbers in the short term. Additionally, there could be a more frightening factor at play, which we'll talk about soon. Today we got an employment report that was very weak relative to expectations: 235 000 increase in non-farm payrolls - the expectation i think was around 733 000 and last month it was revised up to over a million now we're trying to figure out okay. What what is happening here is it because of the delta variant of the coronavirus and the pulling back of activity associated with that.
Well, i guess this report corroborates that, because leisure and hospital hospitality, employment was flat and those numbers had been coming back very very strongly until this month. So that's a probable reason. Is it because of supply chain issues we're hearing about shortages, especially chip, related shortages, chips? That go into everything manufacturing. Well, here too, we have some clues.
Manufacturing hours worked we're down 0.5 percent, which is a very big drop month to month. That's um! That's about six percent! When you annualize it so again, a big drop in a real indicator not being influenced by inflation. Construction, employment was also down again. There could be supply chain issues there. We can clearly see that the delta variant and the chip shortage are both serving a role in lowered employment numbers. There could also be one more factor at play, which is that the economy is starting to weaken. Kathy wood has been warning about a deflationary crash for a while now and it may be starting to kick in. Auto sales are quickly declining, as total vehicle sales have gone from 18.7 million in april to 13.4 million in august.
This is partly caused by the chip shortage, but may also be because of the transition to electric vehicles as i've covered in a previous video, the sales of electric vehicles have taken off during the pandemic. The rise of evs could be playing a role in slowing, auto sails, particularly sales from legacy. Auto another factor at play is the growing inventory in consumers homes. Many people have already purchased vehicles during the pandemic.
To avoid mass transit chances are that they won't need to purchase another vehicle for a while. All of these three factors, which include the chip shortage, evs and consumer car inventory, are slowing the overall auto market. I think, what's beginning to happen. Is consumers having bought a lot of cars in the last year to avoid mass transit, a lot of them being used? They're now sitting back and saying, okay, i've already got my car, so the inventory is not on the dealer.
Lots. Many people were quick to tell me on twitter that couldn't i see the dealer. Lots are empty, of course, of course, there's a chip shortage, but maybe the inventory is in the consumer's driveway or garage. That's one thing that we think could be the case or and or maybe consumers are saying for my next purchase, given the total cost of ownership.
Has come down and is now below where gas-powered vehicles are, maybe i will buy an electric vehicle, and so there could be a pause in auto buying because of the technology shift that is underway outside of the auto market. Inflation is definitely starting to cool down m2 money, which is a tracker for the total money. Supply of the dollar is currently decelerating by a substantial amount. M2 money growth has slowed down from 27 year-over-year in february all the way down to 12 year-over-year in august.
This may seem like a large drop-off, but it's only the beginning of much more to come. The money supply of the dollar is still growing at a rapid pace, but is also quickly decelerating, based on the current sentiment. It's likely that the money supply will continue to decelerate even more one potential catalyst for a further slowdown is the infrastructure bill coming in lower than expected. Consumers are very concerned with inflation and increasing u.s debt levels. This creates a situation that is the opposite of a self-fulfilling prophecy, because u.s citizens are worried about inflation. Politicians are now incentivized to control government spending. Attention towards inflation, single-handedly lowers inflation, and that's just because of how politics works. One democratic senator from west virginia joe manchin believes that a massive infrastructure bill would be horrendous for the economy.
Kathy would seize this as a signal that inflation will cool down in the short term. I think we got a signal from senator manchin of west virginia this week that he and he is a very important vote in the senate. He thinks 3.5 trillion dollars is just ridiculous. Given that government debt to gdp ratio in the united states has already passed a hundred percent before the pandemic, we were in the 75 80 percent range.
So 100 is quite the marker and he's also concerned about inflation and that a fiscal package of that magnitude might aggravate some of the inflation indicators that have been flashing red recently. I think that's a very good thing if he is not for this package, it's not going to pass, i think, he's much more for the 500 to 1 trillion dollar pure infrastructure package. All of the indicators that we talked about just now are reflected in the bond market, which doesn't see inflation as a problem. What's even more worrying than inflation is actually deflation.
An upcoming deflationary crash may lead to serious economic issues, especially as the economy quickly loses its pace. Innovation benefits from low to moderate inflation because of lowered interest rates, lower interest rates lead to elevated levels of borrowing which causes more spending on future growth. On the other side of the spectrum, high inflation would be devastating for innovation, because higher interest rates lower the incentive to borrow money. Despite what we just talked about kathy believes that innovative stocks would still come out on top if inflation takes off, because in her words, innovation solves problems.
This can be seen with the rise of cryptocurrencies as a hedge against inflation uh. We really do believe that we're setting up for growth and particularly for innovation, to take off again now. Why are we saying this? Well, innovation solves problems, and we saw what happened in the coronavirus crisis. Innovation took off, and we've talked a lot about it, and we've moved into much more of a digital world much faster than otherwise would have been the case.
Well, what are the problems now? Well, price increases are a problem and consumers don't like them, so innovation does solve problems. I mentioned the electric vehicles they're coming down in price and they're, better performing cars, they're better for the environment and so forth. So we believe the price decline associated with evs is going to help solve the auto pricing problem. Cryptocurrencies have taken off, as inflation fears have flamed crypto is a better. Hedge bitcoin, in particular, is a better hedge against inflation. If that's the fear, then gold gold supplies will continue to increase over time as bitcoin's supply starts to diminish in terms of the rate of increase. The idea that inflation is about to accelerate has become a popular opinion lately. The most extreme example of this is michael bury who sees inflation, destroying the entire u.s economy, while cathy wood is going against the crowd.
Her argument does make a lot of sense. All of the indicators that caused high inflation in the first place are starting to cool down stimulus checks are no longer being given out the auto market is slowing down. Politicians don't want to spend as much money anymore, commodities are crashing and, most importantly, the labor market is slowing down with that being said, if you're interested in furthering your investment knowledge check out my research platform down below my platform includes my main portfolio, my 25 000 Portfolio my watch list research reports, strategic articles, valuation models and much more. All of this is available in the first link down below.
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Some arguments are weak, including some Cathie Wood directly bases her investment thesis on.
1· Why would the sales of electric vehicles bring down the total sales of automobiles? Do electric vehicles last longer than legacy cars, and in particular did they lasted longer in the timeframe during which their sales picked up?
2· “People bought cars during the pandemic to avoid mass transportations” > actually they did smart working so rather they were incentivized to NOT buy a vehicle during the pandemic.
3· “the bond market doesn't see inflation as a problem” > the “bond market” is completely artificial for the Fed purchases to manipulate rates so it can hardly even be called a market any more, the reason why bonds prices are low is not because buyers do not expect inflation, but because the Fed keeps buying to keep interest rates artificially low, since the debt to GDP ratio skyrocketed at a point where the US government cannot service its debt.
The Fed cannot raise rates because they moment it does so the stock market and basically all asset classes will immediately collapse. At the same time they cannot keep easing because inflation is growing too rapidly.
Finally, the argument on Bitcoin is valid, but an investor would pick a store of value in an inflationary scenario, not a deflationary one.
I came here to learn how to invest after listening to a guy on radio talk about the importance of investing and how he made $460,000 in 4 months from $160k, somehow this video has helped shed light on some things, but I'm still confused, I'm a newbie and I'm open to ideas.
Lower employment numbers are due to a ton of people taking advantage of the unemployment insurance. The 300 extra ontop of what was already given just ended not to long ago. People where making more off unemployment than actually working.
Meanwhile, oil is up, natural gas is up, there is huge activity in natural gas and oil exploration, there is a shortage of qualified labour in various fields. There will probably be deflation in some areas such as autos, but inflation in others such as food production, rare earth mineral extraction, delivery services etc. On balance, I expect the overall cost of living to maintain or increase slightly.
They're gonna fuck this up, yes the US economy is slowing down. M2 is slowing I'm sure, along with employment dropping, although this is stagflation. Not inflation, stagflation. Stagflation driven by deep structural problems in China. Economists are too divided, and frankly I have heard some well educated economic expert say some objectively stupid things about financial system risk. Let's hope smarter heads prevail and big spending does not happen.
The rules in investment is to better supplies and investors receive dividends. Could be weekly. While new machines help workers easy to get things done not very hard and extreme labor.
The more expensive stock must reach new level volumes and new market cap. That the reason issue more xtra shares for buyers and holders. And ensures our projects and developments no fail.
The businesses need monies so that they support the demand. But do things expensive the consumers and the workers alway look for alternatives. Because they are not rich. They want to save but they do not want to lost monies from the stocks because we have millionaires involve in the market cap and the volume cap. We will figure out the way for workers own more shares as buy high for workers hold long in volumes because the on project need more suppliers and control inflation and expansions request by demand. We will have those holders earn dividends 1 in every week. While tell them use the monies wisely not to cause environments fail and things become expensive. Because efficiency that majorities need.
We also need car move same direction to take care people same direction for faster rather than wait for Uber Then every thing more slow. We print monies. For Uber. Or Lyft etc. we will use Microsoft organizing. Because the car we make for carry more peoples rather than the single knuckle head.
They are sale auto for monies. If slow we print monies for them. The future growth is base on ideas how we have monies in the new arrangements. But also save the environments. Not to destroy all of the land for resources.
Even we need gold. To use for electronics devices. We print monies to support businesses and support workers. And those researchers. We just to ensure the country not become slump. That more things go wrong.
Our goal is the sufficiency while income more for workers to do the plan. While alway control the fail and the cheat cause businesses fail and buy and sale interruptions.
Every thing with high inflation there no speed. Look at the market cap rise and go side way. Before major withdrawal. If the consumers less need then we adjust the supply. If workers need as the consumers we need to increase supply. We need to expansion. There are more reasons why things slow. Rather than the virus alone.
Inflation might be slowing down, but it has still remained above 5% for the last three months. Americans are currently sitting at $2.5 trillion of savings and with the upcoming holiday season, higher consumer spending/demand – coupled with supply shortage – would push the inflation even higher.
If you double the volume of water to a fixed concentration volume of salt water, the salt concentration halves. Same with spending power of USD unless the author knows for a fact that the Fed is burning cash/removing digits at a rapid pace to CAUSE the deflation. Simple, even for a non expert like me.
There are many deflationary pressures but if the money printer keeps going it will be offset. The fed looks more likely to keep printing and amend the stats to hide inflation. Either way with the sheer amount of debt in the system it is at risk of great volatility.
All commodities are up, all food. Naturgas reservs in Europe is record low. Iron ore is the only commodity thats gone down. It's not dumb to think it will be deflation, it's retarded.
Sure month to month we could see a "transitory" deflation as Powell would say.
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Deflation is far more scary than inflation. But just look what idiot Biden and his moron cadre are doing: he wants to raise taxes on everyone, people, not just the rich. When taxes get raised people stop spending, holding onto their assets the best they can. The economy shrinks when taxes are raised sharply. Open borders, welfare recipients escalating, super high wasteful government spending on non productive activity, incompetent management of the armed forces. All this stuff adds up.
Starting out in these markets without proper guidance could mean FAILURE, I know a lot of people have a lot to say about a recession or a depression. but do you know how many years it's been since we started hearing about it?over 10 good years and still here we are. In just 4 months my portfolio has grown by $650,000 in raw profits, all this while a recession is 'imminent".got me wondering if imminent has two meanings to it. diversify your portfolio and you will see great results
DEFLATION ALWAYS PRECEEDS HYPERINFLATION.
Wood is trying to keep us calm during the largest collapse (series of disruptions) in human history. She will accumulate while we are ( she made us) complacent.
If he thinks market will tank he wouldn’t be holding long options or any long position.. he’s known to exit or not hold so he’s not a traditional hedge fund as he moves as he sees and won’t stay in regardless
The economy is bigger than a few indicators. Electric cars are not better than ICE cars for the environment …yet. Money, bitcoin are not real—realestate, gold and tangibles are. Inflation makes our world debt less but, get too much and we are in trouble. We are seeing a correction from years of low inflation. Prediction…leveling off of inflation 12 months but, no crash. Gold 2500 and up , bitcoin 25000 and down(great idea but, too many cyptos being made) , real estate level.
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