Hey everyone Me: Kevin here in this video we've got to be real about the direction that our economy is facing, what it means for the housing market, what it means for the prices of things around us, and what it means for the stock market. Let's be crystal clear in this video with exactly not just what I believe, but why I believe it. Also to clarify why the lights are a little different, the power went out as you can see right here on my iPhone Not only is the power out, but they keep kicking back and down the road in terms of when they're actually going to fix this problem. So I'm running on battery power which I'm grateful we have it and the sun is shining for solar which is great.

They say the repair crew is on their way, but it took them 12 hours to determine the cause. So I'm not too optimistic that I'm going to actually get full power back anytime soon. With that said, let's actually talk about what's going on in the market. So we've got obviously catalysts coming up here in the near term, which we're going to touch on those catalysts in the very near term.

But what I think think is much more important is starting with the reality. the reality of the Federal Reserves dual mandate. There are a lot of folks first of all who are extremely pissed that there is a chance we might not have a deflationary recession that housing prices might not crash. That the good price of goods and services might not crash.

Now I'm going to be clear what my opinion is on this, but let's first actually determine what the facts are and then after the facts, we'll talk about my opinion and the next catalyst. So the first fact we have to understand is that the job market is coming into more balance. Not only are wage gains positive, real income has turned positive, but we're not seeing a wage price spiral, which is just an economic nightmare. We we don't want that.

we want to see wages going up slightly positively and above the rate of inflation. and right now they are real. Wages are positive. But in addition to that, we're seeing job openings come more into line with our pre-pandemic balance.

Prepandemic balance put us at a right around a 1.6 million job openings That puts us slightly above at just over 1.9 million job openings right now. And what we're finding is the spread between the two is actually narrowing a look at this piece right here from TS Lombard who's actually generally our resident B They suggest that the Federal Reserve is 75% of the way towards an ideal soft Landing where inflation compresses about to 2% which would be represented by the blue bars and the gap between unemployment and available jobs. Narrows Back to prepandemic Norms Both of these things compressing on the right side is exactly the fact of what's happening now. I Understand a lot of us look and we say, well, I mean the data is not accurate and in many regards, you're right.

It's not not only are survey responses the lowest they've ever been, but they're also likely skewed by the fact that we're trying to make adjustments in reporting to account for a postco world which we don't really have a precedent for unless we want to go Spanish Flu Depression crash of 1920 and 2021. But we're not seeing the type of unemployment yet at least that we saw in 1920 and 21 and we don't have the Catalyst to suggest we will see I know because I've said I've said this since January of 2022 that unemployment is lagging but so does the Federal Reserve And so what actually caused that unemployment surge of 1922? Because obviously if I said oh, it's not going to be like 1922 then that's playing the this time is different fiddle. But the reality is the surge of 1920 uh, 1920 to 2022 in availability of labor was because of the end of World War I and all of a sudden a bunch of veterans being available for the workforce and our economy not having enough room to support them. The job growth we're seeing is still getting us back to the unemployment we had before the pandemic.

So yes, of course jobs unemployment like people losing their jobs lags, but we're also still catching up to where we're supposed to be, which we're going to talk Catalyst because there are a big catalysts coming up here in the near term. But the point of this is to say not only are we playing catchup still, but the Federal Reserve also knows unemployment is lagging. which means they're very likely to print money well before we have a 1920 style dep. depression.

Depression Again, excuse me remember that was a depression. That wasn't a recession. That was a depression. It was bad.

People were miserable. Very miserable at the beginning of the 1920s, the end of the 1920s. And if you actually study it, a lot of people say, well, the Cultural Revolution of the 1920s created as Roaring 20s actual poverty was very, very high. A lot of people were very, very poor.

So then we look at the next thing. This right here is just Nick T, two of Nick T's favorite charts, which again show this ratio of job openings to unemployment. That's about the same thing as we see here, and it's really just to say Okay So we're trending in the right direction on jobs. But what about the inflation mandate? Well, the same thing is true on the inflation mandate.

Uh, not only on the inflation mandate, have we had this large sort of explosion of inflation, but we've seen a substantial decline in inflation. One of my favorite tools to look at. In addition to Nick T right here, this is Nick T's uh, Pce chart showing us, uh, the trend of inflation. What I like to do is pull out specifically multivariate core trend Pce multivariate core Trend Pce.

You could grab this as well by going to the Federal Reserve Bank of New York and what we find over here. If we go to the multivariant core, we could actually play with this chart and we could rip apart the pieces of it, which is fantastic. Let's just take everything off for a moment and try to understand what the facts are saying might happen in our economy. Well right now Goods Inflation is Zero Zero no movement in Goods prices.

So Goods prices are not going up I Actually do believe this is my opinion that this will probably go negative that companies like Walmart warning about deflation are correct that the company earnings calls we are hearing in them suggesting we have to be more price competitive. We have to provide more value. We have to be more efficient. Those are all red flags that deflation is coming on the goods side.

and I 100% agree with this and I 100% believe we will see this again. That does not necessarily mean though, we'll have to have a recession. In fact, if we jump back to 2009 I Want you to look at how deep of deflation we had a lot of people compare back to 2009. They're like, oh, we had massive deflation back then.

but look at how nominal it was. We were looking at maybe 4 to9 basis points at a time per month. That's like maybe 1% deflation over the year. Who cares, folks.

I Hate this too. But look at the inflation we had we had. If if you add up all of right, here, we had somewhere around 18% inflation, if not more in Goods We did not see that kind of deflation, even in the 2019 crash in the dot bubble. We got closer.

But even if we add up all of this in the dot bubble, maybe we got to about 4 to 5% deflation. Not 18% Now, technically, if we go up 18% we don't need a full 18 to go back down. but we'll certainly need somewhere around 15, right? Just think about the math of that 118 time 085 brings me right back to about 100. So you need 15% deflation.

We haven't seen that kind of deflation really, ever. At least not in the measure of multivaried core. Unless of course, you want to go back to the Great Depression which quite frankly, I don't think anybody does. That would be more of a punch in the face than being Paul Vulker.

Look during Paul Vulker, we still had inflation For 20 years. we didn't get Goods deflation until the the early 2000s. Well, that was all part of the opportunistic disinflation goal. Anyway, So now let's try Services X Housing Even this is rolling over now.

Services We might actually expect to get some more deflation from. But again, if you go into 2009, maybe you're looking at 2 or 3% but again, same problem we had about 18% of an explosion in Services Inflation? We're probably. and this is unfortunately, just the sad reality. We're probably not going to see prices go back to pre-co Why? Because again, the FED knows that unemployment is lagging.

They are going to print. They are going to print. That is my expectation. It is exactly what the Federal Reserve of Futures are pricing in that the Federal Reserve is going to start running the money printer again.

Not only are they going to run the money printer, but first, the F very first thing they're going to do is they're going to drop interest rates substantially next year. Followed by this, we expect them to stap with quantitive tightening right around the summer of next year. I would say probably between July and September is when we should be done with quantitive tightening. But as a result of the Federal Reserve indicating, they'll probably turn off the vacuum cleaner the money vacuum cleaner and they'll cut rates again.

you would probably expect that inflation expectations would rise in the market, right? They're not. And that's the thing that has a lot of people scratching their heads. is: most people believe that as soon as the Federal Reserve starts printing money again, inflation will come right back up. But that was not true for the 40 years post Paul Vulker.

it wasn't true then and it's unlikely to be true now. And you don't even have to take my opinion for it. Take the Market's opinion for it. What is the market saying about inflation? Keep in mind we're now pricing in as much as 1 and a half% of rate Cuts next year.

So if rate cuts are going to equal inflation, well, then we should see Inflation Expectations Skyrocket right? Wrong. It's just not what we're seeing. Inflation expectations right here, as measured on a 5-year inflation expectation path are actually the lowest they have been all year long. They are plummeting.

Inflation expectations are absolutely plummeting. So what is next for us to determine what direction to go and then what should we do about it? Well, the first thing that we should consider is that this video is brought to you by Streamyard. Go to Metkevin.com Streamyard to learn more. It's a fantastic streaming platform.

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But here's the reality. we can forget about my opinion. Let's consider data. So what's coming in the way of data? Well, data.

Tomorrow we're going to get a jobs report. We're expecting 185,000 jobs. That's actually more than we have last month last month. 150,000 jobs.

Now we're expecting 185. Even if it's rigged, the inflection is up, so it's probably all rigged, but it's all rigged up. which is wild now. I Know a lot of people are like, oh, it's because we're going into an election here.

That's fine. It doesn't matter what we think, it matters what the markets think, and the markets are going to cheer a labor report that is close to expectations. We want close to expectations. If we get a report that's over 200,000 jobs, the market will probably tank, yields, will rise, and that'll be a sign that the FED has to do more.

You do not want to see a two in the front. If we get a number that doesn't even have a one in the front, that is. We have like a 50,000 jobs report. Interest rates will instantly plummet on the 10e I expect to 3 and a half% and the market I actually don't know if it'll Rally or if it'll be upset because it could be a sign that we're walking into real recession.

The data will dictate the path for us if we get at expectations. Maybe just maybe the Atlanta Fed is right. You look at the Atlanta Fed GDP Now index which was correct for Q3. That's not to say it will be correct for Q4 but it was correct for Q3.

So what is it saying now? Well, right now the Atlanta Fed estimate suggests 1.2% that our economy is growing at about 1.2% which is roughly what the stock market is pricing in. There's for a while been quite a gap between these two and the stock market and the Atlanta Fed are pricing in about 1.2% for GDP, Which means the FED is actually succeeding in starting to crush the economy. We don't want to go negative here because that's really going to drive joblessness and we actually probably want this to go up, which is why I Think the Fed's going to cut rates very soon. But the next thing we're going to look at to reiterate what the Federal Reserve is going to do is, CPI CPI comes out Uh oh Well, in addition to the 185,000 jobs, we'll have average hourly earnings.

We expect those to be up about. 3% month over month. That's roughly in line with the Go Fed's goal of 3% The FED is a 3% Target for wage inflation, not 2% They want wages to grow a little bit above and that is consistent with 2% inflation because wages make up and and the consumer makes up about 70% of the economy. Now, now now now now what's the next? Big Catalyst Well, Oh, keep in mind you could also go 3% times 7% and you get about 2.1% Fun math.

Next Catalyst On the 12th next week we'll be covering CPI We'll be covering these live on the Uh Meet Kevin Live channel. Uh every single day the market is open by the way, I am live at 5:25 a.m. uh on the Me: Kevin live Channel I've been on time every single time with the exception of this morning because my battery was dead. uh, like my whole House's battery was dead I'm like oh dear, this is bad.

Anyway, CPI is expected to be 0.1% Core CPI expected to be 3% I'd actually like to see that com in at 0.2 but whatever. Uh, and then we've got Core year-over-year expected to be 4% Be nice to see that at 3.9 with year-over-year expected to be at 3.1 Uh, then we have the FED meeting which is kind of crazy. We are going to Fed rate decision the very next day after CPI comes out which is also the same morning that PPI comes out. So PPI comes out, it's expected to be 0.1% month over month Core 2% and then the Fed rate decision that's all on the 13th.

So we have a massive set of catalysts coming up and I can't wait to cover them Live! So what is my opinion? Like, what should we do about this? This is not personalized Financial advice for you. but let's be clear: I am a licensed financial adviser I'm becoming a stock broker I'm a real estate broker, been a licensed contractor license lender I've done a lot of different things I teach everything I know about entrepreneurship and everything in my courses I'm building your wealth link down below. The gold course is a massive hit right now. Everybody's trying to get into that because as we add more content, the price will go up.

What do I Think Well, I believe that we are going to have again this volatile Nike Swoosh But what does that mean I Believe that means we should allocate to Quality See in the housing market, we are seeing this same kind of recovery. The last 6 weeks have been very hot for the housing market. People are writing uh, multiple offers over comp value. Again, competition has exploded as mortgage rates have come down about 1% which isn't a problem.

We're still getting plenty of deals, but there is a clear difference in sentiment now than what we saw in October which makes me grateful for what we bought in September and October and November but exposing yourself, uh to Too Much Dare I say negative Nelly bearish sentiment without considering the fact that we could be hurting ourselves if we take all of this in and say yes, yes, yes, everything's definitely going to crash I Think there's a real chance we're going to be sorely disappointed if we're waiting for a real crash. I Think the reality is we got dips. We got dips in the stock market. Last year we've had dips in the stock market.

This year we've had dips in the real estate market at the end of Last year, and we've had Dips In the Real Estate Market At the end of this year. We've taken advantage of those dips myself. My companies, We've taken advantage of those dips. We've had dips in treasuries.

We've taken advantage of those dips. Every dip there has been. We have done whatever we could to take take advantage of, while at the same time building out the best possible teams we can to scale and grow. because I Think in a recessionary Time the best thing you should do is actually invest in yourself and do everything you can to grow so that when things go bullish again, you are most prepared to win.

I Think it's quite likely that in 3 weeks from now sorry, in in 3 years from now, we'll look back and go Wow. we should have been buying assets I Don't know that with certainty, but I believe that'll be highly likely. So that's my take on what's going on with Housing Market The Near-term FED Situation Stock Market It's slow up from here now. it's just on you to pick real estate in high quality areas and stocks in high quality companies that are going to survive in the long term.

Thanks so much for watching. We'll see you in the next one. Good luck and goodbye. 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 PA there financial analyst and YouTuber meet Kevin Always great to get your take.