Hey everyone kevin here, happy sunday. I want to give you a synopsis of what kathy wood just told us about the economy in our latest 46 minute video, i'm going to give you a synopsis, along with my opinions regarding some of the things that she said. First, i thought it was very interesting that she mentioned that hey, you know when we have a fed funds rate at zero. We have an upper bound of 0.25 and we're expecting the fed to go to 2.5.

That's 10x, tighter than the accommodative policy that we had during the pandemic. She and presently we're already at an upper bound of one percent, which means the fed funds rate is already 4x tighter than what it was previously kathy. Wood here by argues that the fed has already tightened substantially, and maybe we don't need to be as aggressive and in fact, kathy goes as far as suggesting that the federal reserve's u-turn is around the corner and will be a boon for growth stocks. I'll give you a date that she gives us in terms of when she's expecting that u-turn.

But let me give you some of the facts. First, first kathy wood says: look m2 money supply, so money supply and checkings accounts, money, market so and so forth is not growing the way it was during the pandemic, which makes sense we're not printing money like we were doing the pandemic anymore, but it's certainly not Even growing like what we saw previously we're seeing uh, potentially a peaking of a top-line inflation numbers, we're seeing core cpi uh falling copper prices, lumber prices used car prices, things are falling much more than you would expect. Then, when you definitely need a very hawkish fed to bring inflation expectations back in line which inflation expectations are very very well anchored, and we know this if anything, inflation expectations have been falling short of this last jobs report we just had on friday when we had A little bit of a take up now the core falling argument. The survey right now expectations for the next cpi report we've got coming up this week, are actually expecting core to rise and see.

One of the problems is even though core strips out oil and energy price inflation. You still end up getting oil prices that show up in things like airfares or travel or rental cars or whatever, and you still end up seeing the costs of those goods go up which actually drive core up. So, with high oil prices, you could still actually get core up, even though we try to strip out oil from these estimates, which is a bummer, because we might actually that's why i put an asterisk there not continue to see core falling, but kathy really believes that We are also at peak demand for oil that we hit peak demand for oil in 2019 and that we're just going to see consumers transition away from oil over time here and we're going to see more electric vehicles, we're going to see people consuming less oil and That the peak for oil is in now she did make some comments about biden and thought. It was surprising that he wasn't encouraging the fed to be a little more dovish that usually democratic presidents do that and that letting the fed do.

Its thing is a little bit more republican, so she kind of scratched her head on that and scratched her head on on the argument that hey, we got ta focus on getting the debt down, because that's also a little bit more of a republican argument. Now she didn't mention that biden in this article totally dropped the whole buildback better plan idea, which uh it was is really shocking because he spent the first year and a half of his presidency. Well, probably a year of his presidency, up until just a few weeks ago, uh suggesting buildback better was the solution to everything. Oh well uh, going on to more interesting things, though, she did briefly touch on the fact that we're starting to see some ceo uh.

You know indicators that there are some concerns right, so we're seeing things like uh potentially, even though use or tesla car sales are up 60 in may year over year, maybe elon musk is noticing a decline on the margin that is potentially for orders or whatever, and Maybe that's leading elon musk to suggest that hey we got to trim some of the white collar fat that we have. She also, of course mentioned that jpm and goldman are seeing signs of stress and she believes all of that has to do with one particular issue. I'm going to explain that one particular issue and what that issue is it's almost the foundation for why she believes we're gon na have a big fed u-turn coming up here right after i shout out ftx make sure folks you go to metkevin.com ftx. You can get up to eight percent as a yield on your crypto and your fiat deposits with ftx.

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Now we've been talking and tracking inventory substantially on the channel. We've pulled up bloomberg retail sales data, we've pulled up so much data showing you that almost every single retail company that exists, whether it's amazon target walmart ross uh. You know tj maxx, whatever kohl's. All of them are seeing inventory explode, but she added something that was very interesting because we've been talking about this inventory explosion.

She added something very interesting. She mentioned that when walmart says inventories up 32, it's worth noting that 50 of their sales come from the grocery section and you generally don't have inventory build up in grocery. That means really the other 50 percent drove a 32 increase. That's like clothing apparel tvs, whatever that's going to lead essentially to price, drops and obviously we're seeing already price drops on used cars as we start seeing inventory build up, and she thinks that this kind of inventory buildup is actually probably what folks over at like goldman Sachs and jpm, and maybe even elon, it's it's potentially.

Why they're starting to see inflection points in the economy, because, as we see that inventory build up, we have to see prices come down. I just walked through target uh twice uh this week, which is the first time in a very long time. I've been to a target and there are 30 of stickers on just like everything, stuff toys on on clothing for sure, tvs, everything, price cuts, price cuts, price cuts. Now we know they run sales regularly, but you don't see any sales in the grocery section and you certainly don't see as the biggest sales on the or in the areas where inventory is less uh plentiful.

So, for example, you go into certain aisles and you see bare shelves uh empire shales, i'm not gon na, say the rest, you can. You can finish it in the comments uh. But anyway, you see bare shelves in certain areas: no discounts there uh, you see uh much fewer discounting on things like purpose wear, so that's gon na be like uh, tuxedos, dresses, uh, wedding, dresses. Things like that.

You see that because, well, you don't see price cutting there, because people are still buying that sort of stuff, but they're cutting out all the other discretionaries. We talk about that in almost every earnings call. We are literally seeing this happen, so i want to corroborate exactly what kathy's saying here: uh, but now what's also interesting. Is she read into the earnings or the jobs report in in a way that that i didn't - and i added my part here - uh i'm going to talk about my part here, but her part that was very interesting was she said that manufacturing jobs came in 50 As large as expected, we were expecting about 38 000 and we ended up getting 18 000 jobs in manufacturing.

At the same time as we saw the average hourly, our average hours worked and overtime, both decline in this jobs report come to compared to the last one. She believes this is because again, inventory is building up that not only is inventory building up, but now we're seeing manufacturing go down or hire less jobs, because there's less demand to keep propping up inventory because we got plenty of it at the same time, because we're Seeing inventory build up and it's harder to sell things, we're seeing retail jobs decline, which i'm going to add that the adp report also showed us that small business is the one. That's cutting the largest right two months in a row now of over 90 000 job declines by the adp report, which is the separate private payrolls jobs report that comes out usually a day or two before the government's jobs report. At the same time as we're seeing these inventory bills up, she sees big cracks in the consumer and she finds this really really confusing.

She says why is it that consumers are spending more, but consumer sentiment is low in 2008 levels? That credit is up and at the same time, the savings rates are down that we're sitting at a four point: four percent savings rate when we used to sit at about an eight percent, uh savings rate, pre-pandemic and so we're kind of in like 2008 levels. So, in other words, why, if people are spending less or sorry why, if people are saving less and sentiment, is so low? Why are people still spending money and she makes this argument that it's possible people fear that their credit is going to get frozen and they won't have access to their home equity lines of credit or to their credit cards, so they're doing the last minute spending, while, While the days are still sort of good, so to speak, which really kind of implies a substantial lack of future planning, but she's really suggesting that. Oh my gosh, if that's the case, then at some point that's going to hit a wall at some point. Those savings are going to be chewed up and now i'm going to add to kathy's argument here and suggest that she could be right in that, if you see slower savings at the same time as increased spending and low sentiment, you could also have these potential fears That maybe people think you know what let me take this vacation now.

Let me spend the money i've got now, because if i lose my job, i won't be able to take that vacation now. That seems really irrational in my opinion, to us in the finance community, because we should all be rolling our eyes at that and be going like what the f. Why would you do that, like you, should be preparing for a rainy day by increasing your savings, but statistically that's not what's happening, savings aren't going up, credit is going up, so people are getting into more debt wall sentiments down and spending is up, but at some Point that excess cash that people have saved up will evaporate will be gone and when that happens, the fed's going to be forced to u-turn, so in other words, she's suggesting that so far, everything we've talked about from inflation, somewhat peaking over here to inventory, blowing up, Which we've been covering so much on the channel to this sentiment change at the corporate level to uh the the jobs numbers which she expects are going to potentially go negative to this weirdness happening with the consumer. All of these things right here tell you one thing, of course, that's to go to medkkevin.com ftx, but after you do that this folks right here, look at this one fed expect the federal reserve to realize that they gave us a hard landing cars crashing jobs crashing Housing crashing stocks crashing and then expect the federal reserve to u-turn by july, with more dovish talk, so she expects we're going to get a 50 basis point hike in june.

The market thinks we're going to get a 50 basis point hike in july, but she thinks we're going to get a substantial u-turn in the way the fed is talking by july, which should be really good for growth, stocks and bad for energy and material stocks. She also noticed that it or briefly mentioned that ad rates are down now. I did a whole video on this yesterday about how like youtube ad right for news going down. It's not just my niche.

It's not just me. It's it's everyone! Everyone is seeing this across the board she kind of mentions this could be potentially because of a tick tock effect, but it could also be fundamental, the economy and she kind of thinks it's a little bit of a both. Obviously i i mostly focused on how this was a potential fundamental indicator, but the tick tock argument is is quite interesting and it's something that i have seen covered by other folks before uh. It also makes sense if we have less time for videos, but i i personally i don't know.

Let me know what you think in the comments down below but like personally, i don't know the stuff on tick. Tock is is like really entertaining and i can get lost in it, but at the value i extract out of it usually extremely low. That's just my take uh. Then she believes that oil production is going to skyrocket and then fascinatingly about btc.

She thinks that the biggest support bitcoin has is 22 000, which is the 200 week moving average. She believes that's the floor. She believes we've seen a substantial amount of short-term capitulation, but the largest amount of long-term holders ever it's possible that we could be hitting a bottom one. Short-Term capital age, which has happened or it'll take some more long-term holders.

People who have held bitcoin for more than a year to capitulate before we actually see a bottom, but one thing that she is concerned about. Is this broken relation to the nasdaq and she worries. Is that a sign that there's a fundamental problem with btc and she says well, it doesn't necessarily have to be, but it's definitely a problem and the reason this broken relationship with the nasdaq as a problem is because usually btc, green, nasdaq, green nasdaq, green btc, green. But this last week we actually saw break.

There were two days where the btc was actually down, while the nasdaq was rallying and that's potentially a concern - that's worth paying attention to, but she does not believe it's systemic and instead believes that there could be a lot of a relation to luna and the disaster That we had there, because the disaster and collapse of tara luna leads to substantial regulatory risks. Now she believes that algorithmic stable coins are a big no-no and she doesn't understand them. That was her words. She doesn't believe them.

She says they're a big problem because there's no backing now. I want to just clarify that there is backing. So when you have tusd you had luna that backed it. You know the algorithm would essentially just print more luna, and then you get massive hyperinflation here now.

Luna is a type of backing, however, the value of luna is backed by faith and and that's where you don't actually have that uh. You know outside of crypto backing like gold or dollars or whatever, but do keep in mind that dollars, for example, those are also only backed by faith. We just happen to have much more faith in the us dollar than we do in terra usd. Obviously, the market has spoken uh so anyway, i i do think there's a backing, but uh and i've done plenty videos and and a lot of research on algorithmic stable coins.

There is backing it's just. How strong is the faith of that backing and that's something you always want to remember when it comes to stable coins? That's why, when there's always this terror or not tara, tetherfud people question what's the backing, is it corporate junk bonds, treasury bonds? What is it right? Uh and uh, and, and she kind of ends by saying that hey hopefully all of this is over all the catharticism in the market, like the crappy feelings and all this, this bad news, hopefully, is all over by folks next month she says wild. So let me know what you think is kathy give oh yeah, and she also thinks that uh, like stocks like tdoc, are going to go to the moon um once republicans take over the house in in uh in the next election in november. But anyway, what do you think about all this is: is all of this a justification for a poor performance of her fund and growth stocks, and don't worry.

This is the time to be buying, because you know that the darkest times are before the darn dawn or that's her line to, or is she on to something uh i'd like to hear from you in the comments. Personally, i agree with kathy thanks for watching thanks to ftx for sponsoring the video and we'll see in the next one bye.