Hey everyone me kevin here boy, oh boy. We finally got some good news because we have had nothing but bad news. Uh lately, which the bad news lately has made it kind of enjoyable to go shopping for stocks at lower valuations, which is part of the good news. We're also going to talk about in this video.

In fact, if you can believe it, there are two really good news pieces in this video one has to do with a very important piece of data to the federal reserve, and the second has to do with valuations, which we'll talk about both of those uh and That doesn't even mention the fact that you still have an opportunity to check out the courses on building your wealth before the price goes up later in the day uh today, which, by the way somebody asked me hey, how could a bigger investment into our studio help Uh provide more value to lectures. This was actually a very good and fair question because, like what does it matter to you, if i'm recording on an iphone or camera well, the answer to that is, we are investing in a new piece of visual technology. That'll actually be between me and you and it's gon na, be really awesome, so stay tuned on that, okay, so uh. First, we need to understand this.

This is really important. This is from goldman sachs and they say something that we already know, but i just want you to see it in writing that listen to this line here, the jump in long run, inflation expectations last month was uh or earlier this month. Rather, rather i thought not in july yet kevin earlier this month was the main reason why the fomc hiked by 75 basis points in june and that's true. We saw consumer expectations for inflation rise, and that was on the same day as we got cpi data which ended up being a problem just a couple days before the federal reserve ended up having to hike rates because the fed does not want the consumer expectations for Inflation for inflation to become unanchored, because if these expectations become unanchored, we're screwed, then we've got really big problems.

Then we go back to the late 70s and early 80s, where inflation expectations were unanchored and what do we get? Well, we end up getting paul volcker. So we had a few things in the sentiment release this morning in a sentiment released this morning. The first thing we saw, which wasn't the greatest, was that consumer sentiment suffered one of its steepest declines in the year ahead outlook for the economy. That means hey.

How do you think the economy is going to do in a year from now, and we saw a 24 decline in that reading, which that's not such a good news part. You can kind of see that visualized here in the chart, uh may being the top red box and presently being the lower red box. So people feel like crap right, and this makes sense i mean all you have to do - is look at the comments. Since you see people relatively frustrated about the state of the economy and the state of uh, the bad news that we're getting, but let's get to the right report over here - i've got so many reports up.

Let's get to this one over here. This is what i want you to pay attention to: that's not the best news, the sentiment, but this right here is good. First, we know that and they're reiterating here that inflation continues to be of paramount concern to consumers. This is important by some accounts.

People talk about inflation now as much as they actually talked about covet, which is pretty incredible. The researchers are even making that kind of comparison, but still kind of neat, but anyway, now listen to this. The final read for a june expected that consumers thought that inflation in the year ahead would be 5.3 percent. That's actually back down from that higher level where we thought inflation expectations for the year out were going to rise.

This has been pulled back down to 5.3. That's good we've seen this re-anchor and longer run expectations had a reading of 3.3 percent at the middle of the month and they've settled back at 3.1, which is that good range that we've been in for literally the last 10 months, 2.9 to 3.1 percent. So think about that, for a moment for the last ten months, despite all of this inflation insanity, consumers longer run inflation expectations like five years out three to five years out, are anchored in the 2.9. The 3.1 range now that's still above the fed's target of 2, but it's way better than these numbers becoming unanchored, and it's good that we saw both of these numbers come down, especially after, as we saw goldman say, the last sentiment read was probably why we saw The fed raise rates by 75 basis points.

In fact, you see it here since the preliminary reading, the fed hiked by 75 basis points they're, even mentioning it, and that was higher than the 50 basis points. They telegraphed now a downside potential risk for this going forward, and this was really weird. I had never thought about this one before, but look at this one here, a key upside risk, so an upside risk to consumer sentiment is actually a barrage of political advertisements highlighting high inflation ahead of the midterm elections, and they say that inflation expectations have historically been Quite sensitive to political outcomes, however, we don't actually have a lot of data of elections and political advertisements and people's inflation sentiment, because we generally in the last 40 years, have had pretty low inflation. But if inflation is a core issue going into the midterm elections, what happens if all of a sudden all we get are a barrage of inflation, uh style ads everybody's complaining about inflation, especially republicans, who have much higher inflation expectations than democrats? Take a look at this.

You can kind of see you've got republicans over here with the expectation that inflation in a year is going to be around seven percent. Where democrats see inflation as only around three point: nine percent in a year and then independence right here in the middle. So you could see, there's an uh, an element of democrats thinking, inflation is transitory and republicans thinking we're screwed right and an election cycle with everyone talking about inflation could actually lead people to have more salient present information about how bad inflation really is and how to Fight it and it could actually make people feel less faith in the political process to actually solve inflation, as they should, because congress doesn't get anything done anyway. Neither does our administration really at this point, but anyway, oh not going to get political here anyway.

Point is inflation. Expectations could actually turn ugly towards the election cycle, and goldman sachs believes that the fed might feel compelled to respond forcibly to those increases in expectations which might just be temporarily fueled by election ads. How crazy is that like? I would have never considered that oh yeah political ads are all of a sudden going to screw our inflation expectations, but it kind of makes sense. It's pretty wild anyway.

Folks remember now: we've got something else important to talk about as well as valuations, but remember folks. Yes, the coupon down below no, no okay, remember uh. I think these are all opportunities to buy uh and so i'm a big fan of of buying when there's pain and stress, i'm not a big fan of margin, though right now stay away from that. So i do want to take a look at this, though i wanted to show you this look at the forward.

P e ratios, just as this is the s p 500, the large cap index and take a look what we've got over here. This is where we sit right now and uh. That's a p e ratio of about 15.8, a forward p of 15.8. You can see that's still above some of the lows that we saw during the pandemic lows in the end of 18..

If you go over to mid cap at 11.3, we're actually kind of in line with what we saw during the pandemic and what we saw well. 2008 was still lower, but look at small caps over here folks, small caps. They seem to have hit a historic bottom in small cap. Pes measured by you, know the s p 600.

Is your small cap uh s, p 400's. Your mid cap and 500 is your large cap, but anyway uh for for the best potential deal. It seems like the s p. 600 is, is an interesting potential play, maybe for uh, even like an upside hedge, or something like that.

So i thought that was fascinating and we'll be talking about that a lot in the course member live stream later today. So i look forward to that now uh. If you need a ticker symbol for that, the s p 600 can be traded with v. I o o.

That's your uh vanguard and uh vio. Let's see how it's done here today. Let's see v-i-o-o stock year-to-date down 18.44, which actually, i think that's less than the spy, is down yeah, spy's down 18.93, so really interesting, but anyway v-i-o-o that uh, that's you know. Valuations have gotten quite depressed there.

It's up about five percent from bottom right now, but still nominal, given that you're down 18.4 percent on the year anyway, just a trade idea. Thank you. So much for watching folks check out the programs link down below with that expiring coupon code. Folks, we'll see in the next one thank you bye,.