Hey everyone: we kevin here boy, oh boy, stocks might turn green once in a while, but we've still got three massive headwinds of first oh capitulation. We just reported the first net outflows ending wednesday for the us stock market, outflows from equity funds, hedge funds etfs. You name, it saw 16 billion dollars, leave the stock market ending wednesday. Now personally, this is i'd like to hear this kind of thing, because the more people capitulate the more it's a sign of a potential bottom, but it's also still a headwind.

In the meantime, we've got the largest outflows happening in the financials sector, which is really no surprise. I mean brokerages and brokerage revenue. These guys are the ones getting beat up, and this is why you got to get 200 for free, so you can keep beating them up too by going to medkevin.com tasty but yikes, okay, outflows, big, first negative outflows in seven weeks. In addition to that, capitulation, we're also seeing a lot of movement to cash, which is weird because, when we're sitting at like the 280s and the qq, why are we moving to cash? Then should have been moving to cash substantially earlier.

But then there's always the woulda coulda shoulda and according to bank america, we still saw 10.8 billion dollars, go to cash and only 0.6 billion dollars go to gold, so cash is definitely really being seen as the safe haven asset, though it seems like it's a little Bit late in the cycle really to be moving to cash, but then again you need capitulation to find a bottom. Let's talk about retail capitulation. This is debatable. Now jp morgan believes that retail traders sold a net negative 633 million dollars in the last week and that average retail volumes were down.

8.3 percent for large caps and small caps were down about 15, so you've got a move in not only funds but also with retail traders. If you take a look at some of the other charts that we have from banda track on what retail is doing, we have a retail tracker based on daily transactions, not for the week ending, but just for monday and just monday. You do also start seeing this purple line here on the right, we're trending down on retail trades and if we compare the retail investing at the beginning of this week compared to all other sessions, look at the red box. This is where we sit right here that i just colored green, that little red square right there.

That is a sign that potentially i wrote here, we're starting to run out of cash to keep buying the dip. And if you look at retail one thing, that's interesting that you can do is if you take the monday numbers and then you subtract the money that people put into like sqq the triple short nasdaq retail flows for monday on a green day were one of the Lowest positive figures we have seen in a while, but they're still positive. So, even though we're seeing outflows from stocks and even though we're seeing some lower volume from retail vandatrack believes, no retail traders have not yet capitulated, but maybe we're finally starting to get closer to capitulation. Here's your retail capitulation chart going back to december of 18.

The negative bars over here are signs of capitulation. Those are what you want to pay attention to. As you can see, we don't see that yet for etfs, the blue and then the light blue being single stocks, and over here we had that capitulation happening in march of 2020.. We still don't actually have that happening yet in this environment, so quite fascinating.

To look at this now, one of the other things that we've really got to pay attention to is spending and then some big other issue. Okay - but i do just want to remind you that yes, today is another price increase day, so you can take advantage of that coupon code expiring down below for the programs on building your wealth. We just invested another 25 000 into the studio to bring brand new lecture sets to every single course that we have and we're so excited to be producing those now and over the next few months. So super excited to share those with you join those remember you get lifetime access and use that coupon code before the price goes up again now.

The next one that i really want to pay attention to is real spending. Okay, real spending is a problem because when, when you have spending, you can compare it to last year and even though we might be seeing declining growth, we're technically still growing right, and so then that begged the question some of you asked rightfully asked this question in The comments yesterday you're like hey, how is inflation-adjusted spending all right? Well here you go inflation-adjusted spending according to bank of america. This morning the blue line is nominal spending. The red line is inflation adjusted compared to last year.

You can see. Furniture is almost down. 20 percent gas spending is down about 12 percent inflation adjusted even though nominally it's clearly making up a lot more of our spend. Clothing is down just like furniture, both nominally and inflation-adjusted same for jewelry, and then, if you look at over here, restaurants lodging in airlines, it looks like these numbers are absolutely blowing up on the nominal level and we know that it's mostly wealthier people that actually have The money to travel right now, but when you adjust for the inflation that we're seeing we're actually only seeing somewhere between six to ten percent more spending in these categories, so we're really starting to see that slow down in the consumer.

And it's worth noting: this is data based in may of 2022 and again numbers we talked about yesterday from barclays also started talking about slowdowns at the beginning of june, which also reiterates what lennar told us about the home building environment, seeing a lot more cancellations in June than in the actual quarter that they were reporting, that's a problem. What else is a problem is a potential for a labor disaster. Now now that might sound boring like all right. I want to hear about jobs.

It's actually a big issue for inflation. The reason we could have a big labor issue is take a look at this right here and no, it's not get life insurance in as little as five minutes. By going to mattkevin.com life, which is next, the link for the courses are tasty. It's this right here.

U.S moderation of wage growth is probably a mirage, and so we have this report that hey. Why is it that right here we have this black line, which represents the year-over-year growth for wages? Why is it that it looks like it's actually slowing down, and this report tells us that it's probably slowing down, because originally the jobs that we lost during the pandemic, when we had this fall over here, were probably low. Wage jobs like catering, hospitality, leisure and so on and so forth, and so now, as those jobs come back into the market, as we see substantial hiring in the service sector, we actually could be just adding more lower price jobs. Making it seem like wage growth is going down when in reality, wage growth might actually be going up, and this is a warning shot here.

This is a warning shot that says, we might think we don't have a wage price spiral when we actually do have a wage price spiral, and so the argument here is that hey fed good luck, getting inflation to two percent either wage growth must slow, or there Has to be a productivity surge or both neither looks to be in the cards right now or in the near future to some extent yikes. This is not the kind of stuff that we want to hear, and it's not just uh. You know something. That's going to continue to add to inflation dynamics over the next six months until we actually balance this out and really maybe start seeing inflation come down.

But you see the same thing at even fedex who just reported yesterday. Fedex reported about a 300 million dollar impact due to wage issues, higher wages and higher needs for compensation. Now they do also expect to see some level of slowing in their freight business, which is pretty high margin for them uh, and so that could see. We could see some slowing there at fedex again freight very high margins, like 22 margin, which is great and that's because they expect companies to actually order less, because they have so much inventory, which is actually a disinflationary dynamic right.

So we have these like balances that are like. Well, we have a lot of inventory, so that's disinflationary, but we might actually have secret wage pressures and then, of course, we have inertial inflation, which is what we talked about in the real estate and renting sector. So, even though you might see inflation come down in certain elements, if wages and you know start outpacing inflation and we see the inertial inflation of real estate, we're going to have big issues with the fed for a while longer now, if you don't remember what inertial Inflation is, it has to do with what what we got from j.p morgan over here, which is that evidence shows that when you have tighter monetary policy, what you do is you move people from home buying and you move them into renting and when renting supply can't Keep up rents go up, the problem is 30 or 33 percent actually of cpi. Around one-third right here of cpi comes from rent, so it's like the fed's trying to fight inflation by raising rates, but in doing so they make people buy less homes and they just drive up rent costs which drives up one-third of inflationary costs.

So again we can see disinflation from inventory, but don't get too excited yet that we're going to go into a disinflationary time anytime soon because of these wage pressures and then also the pressure of inertial inflation. So now we've got a little bit of an update that we just talked about regarding capitulation. We talked about fedex, we talked about inflation, inertial inflation uh on top of this we've also got some. We also talked about retail, spend mostly declining.

We uh now this morning heard that ballard thinks it's a good idea to front end load. That means hike a lot up front and then maybe pause later once we've hiked a lot up front. It's not a surprise when you have these sorts of wage and inertial inflation pressures that they're going to be more aggressive, although in the short term they could actually just make things worse, which is the problem. We do also see the spread on the a 10 2 curve down to just 3.85 basis points, that's pretty close to seeing the inversion of the yield curve again and we're starting to finally see a little bit of a flight to safety on bonds.

Again, you see the 10 year is down to 3.09. This is well down from the 3.4 that we saw a while ago, actually as recently as like nine days ago, and it's a substantial decline in rates, and it somewhat signifies a little bit of a flight back into the bond market that maybe we've finally seen total Bond market capitulation remember when we talk capitulation, it's usually a sign of a bottom. In fact, here's a chart on bond market capitulation. You can see.

We've got massive negatives over here on the right and it's really consistently. The first time we've seen that bond capitulation since the covet pandemic, and it makes sense that when you see full capitulation, that's when you start to see a bottom just like we did at the end of 2018.. So if anything, i'd be a little bullish on this right here check out the programs on building your wealth down below. Thanks for watching we'll see in the next one.

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