Hey everyone me kevin here boy, oh boy, i have figured out who is capitulating in this video, we're going to talk about exactly what the heck is going on: who's selling who's using margin, we're also going to get a bit more color from the fed, which adds To the video that we talked about yesterday, new information from this morning, we'll talk walmart, we'll talk, uh target, we'll also talk about some moronic statements from home depot, like absolutely ridiculous uh. I think you're gon na laugh over this one. All of this, while tesla was just kicked out of the s p 500 esg index, which is just like. Do you need any more evidence that it's rigged when tesla's like the leader in environmental efforts, of course uh? You know they're complaining, oh, but you know, teslas have crashes and then they're battery fires and stuff and uh.

You know their corporate governance isn't great for work-life balance or what geez? Oh, my gosh, it's raped anyway, uh, but first i i have to really quickly apologize. So we have a really large announcement that we're working really hard on coming within the next 30 days. It's that series a that we've been talking about. If you haven't put your info yet metkevin.com series, a those anybody who puts their email, there will be uh.

Second online course, members first for the uh for the series, a launch so that'll be really exciting uh, but i said i have to apologize uh. I have to apologize because uh we've been so freaking buried with like a pitch deck and attorneys, and all this crazy stuff we are just logistically so buried and i've got so many emails from people that are like. Please please uh, you know help us get an answer on which bundle to get or can you extend it a few days i'm getting paid in a little bit. So what we're going to do long story short is we're going to extend the coupon code for the programs before we have that largest price increase ever sorry about that uh to the end of the month.

It's just going to be easier. Logistically because then we'll be done with the attorneys and all our paperwork and everything and we can just go into june all set, so i just want to apologize. It's my fault uh. If i had more staff, it would be easier, but don't worry we will get that solved okay.

So now i want to talk about uh kind of what's going on in the market, because it's a mess and then we'll talk about the other things i alluded to. So first look yesterday i made this analogy that it's kind of like we're on this wave runner right, uh and uh. I think the easiest, i'm kind of adapting that analogy a little bit. They got wave runners down there by the way, i'm changing the analogy.

Just slightly, i kind of think that in this market you almost want to be like a volatility trader. I'm not, but you know some people. Are you almost kind of want to be a volatility trader where, like you're on the wave runner? And sometimes you go? Oh, you get hit and it hurts uh, but at least you're kind of moving around and dodging the waves as you can. But if you're a hodler uh just to give you a feeling as to what it's like imagine, you've got a volatility trader driving your wave runner and you're bobbing around all the waves and you're holding on to the back of it and you're just you're.

Just getting your face, slapped and pummeled in the water as all this stuff is happening and like your legs are flailing everywhere, that's kind of what it feels like to be a hodler right now. You know one day, tesla's up five percent. The next day. It's down five percent down five percent down: five percent up five percent: it's a disaster right! So if you're a hodler, it's a hard time, and so a lot of people are actually starting to capitulate because of this, because it's a very hard time, and so i want to talk about who's capitulating.

First of all, if we look at retail, you've got retail still buying about 1.1 billion dollars per day. Now, that's pretty consistent with uh the the daily buy volumes that we've had really for the last year, so you haven't seen much of a change there. No huge decline or increase, so retail is still buying together, but there's a massive difference in how people are buying, so retail younger retail buyers continue to use margin to buy the dip, especially folks over at schwab. They're noticing that margin account balances are going up while actual net account balances are going down.

That's because the market's going down and people are using margin to buy more stuff. Now. This is a sign that potentially younger, more aggressive retail investors are trying to make up for prior losses by either using more risky option trades or by just going into margin, to try to hopefully amplify their gains on the upside and make up some of the prior Losses now this is the complete opposite of apparently what's happening to older retail, older retail and wealthier retail. They tend to use mutual funds and we're seeing net retail selling in mutual funds, and so this is quite interesting because it reminds me of my family in 2008, when they're, like oh my gosh, our 401ks are getting decimated.

Let's sell everything, i'm like thinking to myself. Dude that was like the worst possible time to sell, and so it's kind of interesting that right now you've got younger retail being, in my opinion, stupid by using margin, you should not use margin to buy this stuff like we're, have patience 2022, it's gon na, be A long year, uh don't use margin, have patience uh but buying. I like, i think, that's a good idea, i think, selling by wealthier and older individuals to reduce their exposure to equities. I think it's stupid.

I mean it's also stupid, so i think everybody's stupid. How about that? No, i don't really think that, but in terms of flows uh, it's worth noting that amd seems to be having the most retail outflows, whereas apple seems to be having the most retail inflows, followed by tesla, nvidia, microsoft, amazon and then google, facebook, netflix baba and neo Sort of in those in those groups there now regarding recession, the suits seem to think some of them seem to think it's already priced in some of them think there's only about a 44 chance of a recession in the next 12 months. Uh others are starting to get upside hedges. I like seeing kind of what the suits start saying and what they start doing and when they start getting upside hedges, they start getting a little bit excited uh, no guarantees.

I mean. Obviously the nasdaq's down, like 3.2 percent of the time this recording, but that's that's a way of preventing fomo and i actually think it's a really good strategy. Now it might cost you a lot of money and it's worth noting that, and there are ways you can minimize that and for example, if you buy upside calls, you could also like sell some puts or sell some calls but uh and then that way, you're paying A little bit less of a debit right, so the big thing, though, is when people get upside hedges. I actually think it's very smart because usually upside hedges are designed to prevent you from taking on excessive risk when they're still downside, potentially left in the market.

So, for example, you get some out of the money, call options where you're like it's. Okay, if this goes to zero, i just don't want to have fomo if the market runs. The reason you do that is to prevent you from going like all in on margin and then the market plummets a lot more because you go all in a margin and then the market plummets you get liquidated. Now you go bankrupt, you uh have an upside call and the market plummets.

You uh, you, you lose the premium. You paid. Okay, big deal, that's better than going bankrupt and getting liquidated right. It's the same.

It's like, but if the market runs, you'd, make a lot of money being all in on stocks and margin, but you'd actually make potentially the same amount of money with your upside calls. So it's just it's just a safer strategy. If you are trying to prevent fomo to have some, you know out of the money upside calls. Uh just know.

Volatility is very high, so you're probably gon na get vault crushed as well. So it is a risky game to play so uh, you know, sell some calls and puts to kind of offset that a little bit now uh. It's also worth noting that remember that a bear market and a recession are different. In 1987 we had a stock crash nicknamed black monday, and we did not have a recession now, just like.

In 1990, we had a recession caused by an oil price spike, but we did not actually have a stock crash. So if you think about it, they're they're, just because we might be in a recession now or we might be heading into a recession. Recessions, do not necessarily have to correlate with stock performance, especially if those recessions are caused by things like trade deficits or wholesale inventories or things that are really disconnected from the consumer. So keep that in mind, uh we're pretty much.

You know right now: we've seen a sell-off, that's much more similar to 1973 in 1975. Personally, i think that's a substantial oversell. I think the market is quite oversold because i think the market believes that there's no way inflation is going to go down and uh they're winning the battle right now. Personally, the reason i'm buying stocks is because i believe that inflation will go down.

So you kind of have to make that expectation right. Remember if you think that we need to get paul volcker. Like i said in january, you should not be in the stock market if you think the fed's going to paul volcarus get the hell out of the stock market. Charles evans actually gave us a little bit of clarity this morning.

So yesterday we talked about how high i think, the federal reserve's going to go uh in terms of above the neutral rate and what the market was expecting so uh, mr evans, from he's the president of the chicago fed. He thinks that the neutral weight is somewhere between 2.25 and 2.5 and he thinks there's a chance. We might have to go half to three quarters of a percent above neutral to really be restrictive for a long enough period to get inflation down. That kind of implies going to about 2.75 to 3 percent at the fed funds rate.

That's roughly already priced in uh the odds of uh sitting at at 2.75. I believe we're about 36 percent and three percent were about 44, so the market's kind of already expecting that uh. This is good because, when the market already has that scenario priced in it means even when we get to that dew point: seven: five or three percent we've already seen damage in the market. Now we've got to talk about some of these crazy, crazy consumer numbers.

That came in this morning and the insanity, the absolute insanity of the uh, the home depot report, like you will not believe this, but before i tell you this, we got to get to a quick message from our sponsor for today's video. No, not the courses linked down below titan, let's go, but first i want to thank today's sponsor titan guys. The stock market is all over the place from the s p, dropping almost 13 from january to april to elon musk trying to buy twitter. There's a lot to consider when investing right now and that's where titan comes in titan is the first investment app that gives everyday investors access to an award-winning investment team who strategically manages your money.

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The expectation was two uh and two thirds billion dollars. Operating margin is forecast to be just six percent versus over eight percent expected we missed on adjusted eps and the stock has had the worst decline of over 20. That we've seen since 1987 in the black monday crash the executives say that their margin is being hurt by actions to reduce excess inventory. Folks, that's kathy woodian right there.

When you start seeing companies that are like okay, we have excess inventory that we got ta dump. That's kathy, woodyan, remember what she says she says: hey companies are going to see that supply chains and freight are going to ease and then they're going to end up having over, ordered and then they're going to have to dump this stuff they're going to have too Much stuff, and so that's what we're seeing here in addition to seeing over an excess inventory, they're still seeing higher freight and transportation costs, and they say quote, many of these costs will persist. That's like the worst thing you could say is that p word for the federal reserve. By the way, they also noticed a quote: dramatic change in sales mix in q1 to lower margin items.

They see people spending less money on listen to this apparel home and hardline goods, geez man. What have i been saying since january? I've literally been saying it since january, we're going to see people spend less money on stuff, like nike, under armour clothing and all that kind of stuff, even household goods. Why? Because the lower demographics get hit the worst when we have inflation people making under a hundred thousand dollars a year as a household income, are going to spend less on clothing and and the like. This is why i have always felt that tesla is slightly more insulated, because you actually appeal to a higher income demographic around that 140 000 range, those individuals, some people speculate - will also cut back, but that's not what we're seeing it's literally also, what target is saying Target is literally saying that we're still seeing higher end goods sell really well like gaming consoles, but at the same time, you're seeing the lower income.

Demographics spend more money on private label goods rather than brand labels, so in other words, store labels or private labels versus brand labels. This stands in contrast to what procter and gamble said in q1, procter gamble said: hey we're still seeing people go for the brand names like gillette or this that or whatever, but no this is a red flag for procter gamble if you're in it target and walmart. Both of them are saying: no, no people are starting to shift uh to cheaper stuff and they're, also shifting from goods and from goods to experiences, which is obviously outside of target they're, also seeing a reduction in big and bulky goods which would be like furniture beds, Gazebos, whatever walmart had a very similarly embarrassing, and i use the word embarrassing because that's literally what they described it themselves on purpose and uh, they complained about the first quarter, being a disappointment being embarrassing that labor and fuel cost spiked that inventories also aid into profits. Listen to that now.

Obviously, you had three major issues by them. One was expenses, number two was inventory uh and then number three was the same thing. That target saw freight and fuel costs. They also mentioned that uh.

What people are spending per cart is up, like think, shopping, cart, uh, but the number of items they're buying is lower and they're, seeing a quote shift away from discretionary more into food and consumables and wow surprise surprise same thing as target less apparel, less patio, less Landscaping stuff look at that, starting to see those cracks and people actually trying to spend on having their homes nice. This makes sense folks. This is literally playbook what happens with inflation. People stop spending money on stuff except the richer people who can continue to sustain until they can't.

You know at some point if a recession lasts long enough, wealthier people stop spending money as well too, where they start tightening their belts. So we'll see uh now, uh. Okay, yeah now home depot all right. This was an interesting one.

Okay, this was ridiculous. So, first of all, i just want to finish there on target at walmart. This is not a surprise. These are your lower end, consumers that are getting whacked.

We expected this to happen. It's literally what's happening. I think the same thing is going to happen with nike under armour lululemon, you name it consumer discretionaries. We already know that ecommerce consumer discretionaries are untouchable and there's a reason i have stopped using them.

Also uh. I was asked yesterday we did a course member meet up here in miami yesterday. It's really cool. I post a picture of it on my instagram story.

A lot of you came out. I was really surprised how many of you came out. It was really cool, but one of you asked - and i thought it was a great question: yes, hey well what about a firm uh? You know you had mentioned that in the earnings call. You know they say that uh, the usage of a firm actually goes up in a recession and i'm like yeah.

You know i thought about that. A little bit. It's true usage goes up during a recession, but maybe that was only during the 2020 recession see that's. When a firm's been around was during the 2020 recession - and maybe usage went up because people knew they were going to get their stemi checks or their unemployment checks.

So they're, like oh i'll, just use the firm now and pay it off later. Right buy now pay later, but what if this recession is different? What if this recession lasts substantially longer and people are like i'm not going to be getting a stemi check to pay this debt off? Let me just not buy in the first place, so i'm a little skeptical because of that and remember for me as much as i like, a firm and their business model and their partnerships, and i think they're great i i can't hold them in a recession, because What happens if this recession lasts for another six months? Well, if this keeps going for another six months or he's going for another year or two, what happens folks? Well, what happens? Is people stop paying and what's the what's, the recourse for something you bought on a firm and then you don't make a payment? Nothing i mean. Maybe they'll hit your credit, but if you're filing for bankruptcy anyway, your credit's gon na be screwed anyway. It's not like they're gon na, come to your house and pick up the peloton bike you bought like they have no recourse.

They can't. They can't take your plane ticket away from you that you already flew on you know. So what they do is they hit? Your credit and then they kick you out of the program well in a recession. If people are going bk anyway, who cares? Oh wow, i can't use a firm anymore.

Oh, you can't even take the stuff away. I bought. You know it's like you know it's it's! It's not something i could be in in a recession anyway, then we get to home depot folks. This was a disaster.

Okay, home depot. They were bragging about how good their report was, but i read the earnings call and i'm like y'all are dumb they're like oh well, uh 90 of our do-it-yourself customers are homeowners and most of our pro customers like contractors, work on behalf of homeowners, okay! Well, that's! No surprise to me, but then they're talking about hey a lot of our homeowners, have fixed rate mortgages and only like four to five percent of homes sell a year, so we're not really worried about home depot sales being affected by the real estate market. Even though people have more equity than ever before and people are feeling so happy about their equity in their homes, right now that they're spending more on their homes, i'm like geez, walmar home depot. You don't realize what you said.

They literally do not realize what they just said. They literally just said: hey. We are really really exposed to people's home equity going down. Well, what do i think is going to happen in the real estate market? I think equity values are going to go down.

Prices are going to go down, it's going to take a while it's going to take 6 to 12 months for comps to actually hit. First, we got to get to neutral levels of inventory. Then we got to get to excess levels of inventory and then we're actually going to see pricing potentially go down. If we do see that pricing go down home depot is going to be at risk.

They're literally telling you, oh yeah prices keep going up so much. That's how we continue to uh, you know, have more sales over at home depot and how we have such strong demand. Okay, great! Well! What happens when tucker carlson starts talking about prices going down and home equity evaporating? Guess what happens? Then? People ain't that happy anymore to go, spend in home depot. It was really moronic that they were so blind to that and i feel, like i honestly feel, like people on wall street just do not understand real estate, and i don't try to pat myself on the back here but, like i'm, a ground-up kind of real estate Person, i didn't go to some ivory tower to learn about real estate.

I learned real estate. You know workers selling, quonset huts and selling selling the bottom end stuff that exists to finally move up to expensive real estate. I've sold every level of real estate that exists and every type of real estate i've worked with industrial, commercial, you name it uh real estate is something i really feel confident about and i'll always feel that way. But anyway, i guess we'll see.

Okay good. So we talked about evans, yeah wow. Okay, very, very, i think thorough update, that's everything i got for you thanks so much for watching check out that coupon code. Yes, it's extended.

I apologize for that. It's my fault, email me. If you need help with those bundles. Okay, you can bundle up.

You get a special deal. Email me kevin me kevin.com, but give me time to reply like 48 hours, thanks so much bye.