Now we're talking stagflation light. Yeah, like Miller Lite not Bud Light because no, uh, you know, maybe like a Diet Coke Kind of like a diet version of stagflation. And how does that potentially lead some stocks to fall as much as maybe 87 if we end up in that sort of environment? Well, in this segment, we're going to break down two pieces. We're going to go through what the European Central Bank just said specifically Christine and then we're going to compare what she said to an estimate that just came out on speculation light.

And we're going to compare that to what has happened historically in periods of diet stagflation. It's not great. Now, so far, the Atlanta GDP measures our economy at growing in about a two and a half percent Pace right now, which is great. It doesn't feel very stagflationary, and we've certainly got some incredible numbers coming up of the travel segment, especially with that wealthier cohort.

But what if that last remaining leg supporting the table Falls away and the table Falls over and we plummet into stagflationary environment of faltering growth. And then we're left holding the bags on mispriced assets like stocks and real estate? It's possible. and Christine like God gives us a warning as to how to potentially prevent that. and then we'll compare.

If the governments fail and Christina God fail What we should be preparing for. So first, Christine Lagarde's piece. She wrote a piece on essential banks of fragmenting the world which initially sounds like okay, like why do we care about this Who is this lady anyway? Well, she's kind of like your Jerome foul, except she's the Jerome Powell of Europe Remember, Europe's like the number two currency in the world, so it's a big deal. We want to pay attention to what they're saying, because well, hey, sometimes they can give us some insights on potential red flags that we ought to pay attention to.

And her biggest warning in the vision she has for a changing World economy is actually quite the following: boom stagflation, a changing global economy. In a time after the Cold War the world benefited from a remarkably favorable geopolitical environment under the hegemonic leadership of the United States Okay, in English Yo, things were great. When the United States was running the show, everybody was getting along just peachy. After the Cold War we didn't really have that massive of issues.

Yeah, we had Regional conflicts in the Middle East but you know what? things were generally pretty good. China was still a baby and they were growing up and look how? Oh uh yeah. Anyway, so as a result Global Supply became more interconnected. We had relatively low and stable inflation along with long periods of growth.

That was wonderful. Oh no, but that period of relative stability uh oh, what is this may now be giving way to one of lasting instability, resulting in lower growth, higher costs, and more uncertain trade. Partnerships Instead of more Global Supply growth and flexibility, we could face the risk of repeated Supply shocks. Recent events have laid bare the extent of which critical Supply chains depend on stable Global comma conditions.

Today the United States is completely dependent on Imports for 14 critical minerals and Europe is dependent on China for 98 percent of its Rare Earth Supply One Recent study Based on data since 1900 finds that geopolitical risks lead to high inflation, lower economic activity, and a fallen international trade which again, Lower GDP would be recessionary or stagflationary right? Stagflation is an environment where inflation is high, but growth is actually potentially turning negative I Hate to say it, but you could look at potentially some Americans favorite electric vehicle company and go oh damn I see some negative growth over there because after all year over year, earnings per share for Tesla just went negative. You look year over year at even other growth companies like Nvidia And what do you get? negative I Hate to sound like a negative Nelly But numbers are not looking fantastic for massive growth. and unfortunately, there's one thing a growth stock hates. it's no growth that's really bad.

So anyway, uh, Christina guard him suggests that their analysis comes to similar expectations for the future under geopolitical risks that we could face: High Inflation, lower economic activity basically basically stagflation if the global value chain fragments along geopolitical lines. which is a fancy way of saying yo If all of a sudden, China Russia Saudi Arabia and Iran and maybe North Korea are all buddy buddy and friends and they don't like us anymore. And then all of a sudden we're stuck with Ukraine We're screwed. That's basically what she's saying.

The ECB Analysis: A recent ECB analysis suggests similar outcomes may be expected for the future. If Global Supply chains fragment along geopolitical lines, the increase in global level of pro consumer prices could range around five percent in the short run. What she's saying here is: sticky inflation is possible, followed by lower inflation in the future. That's a problem because sticky inflation means higher rates for longer than people expect.

That's potentially bad for company earnings today. Now there's a way to solve this and prevent this Now before we continue. A quick note from the sponsor for this video: the Ft Edit app. Huge shout out to the Financial Times and the award-winning journalists at the Financial Times.

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But right now if we continue through this fragmentation path which again is kind of like we get Ukraine, you guys get China Okay, we continue in that sort of path and we enhance these trade Wars that we're facing I mean just today? literally? Just this morning there are headlines that the Biden Administration is considering cutting off all exports to China or sorry to to Russia not just what we've already limited going to Russia, but literally everything. Well guess what literally happens every time we sanction something in Russia Turkey and Kazakhstan just end up buying the crap from us and then selling it to Russia at a profit. So in other words, Russia still gets the crap they need. Their economy is still marching forward, but what we do is create more divisiveness between countries in the global sphere and we create more inflation just like Christine Lagarde is.

Warning: Five percent inflation in the short term is a bad thing. I Don't know why all of a sudden she turned Italian but it would be a very bad thing because we don't want more short-term inflation because again, meets higher rates for longer, higher rates for longer hurts poor people more. Because food becomes more expensive, energy becomes more expensive. uh, wages potentially stagnate, and then on top of that, what are you stuck with? Well, you're stuck with like a tighter consumer lending.

not for the rich people, but guess what? for poor folks, subpride loans for Autos are already getting cut off and that kills earnings for a lot of companies as the lower tier of customers becomes basically less capable of being able to operate in this environment. This is why they always say the rich get richer and the poor get poor. Yeah! So Christine The guy goes on to talk about this multiple world and these new trade Partnerships that can lead to new alliances and blah blah blah blah. And she talks about China and Russia and the new monetary regime.

All right. I Basically already summarized all that. So how do you potentially stop this? How could you prevent this? Well, Fortunately, she gives a solution. She's not just that kind of jerk who shows up at the office meeting, crosses her arms and goes, nah nah nah nah, it's not gonna work.

Nope, Nope. not gonna work well. Do you have another idea? Nope, Nope, Nope. But that that idea.

Definitely not gonna work right? She's actually got a solution. and her potential solution is that government has to step in to make sure we do everything we can to remove Supply constraints created by the New World that we have the New World order. This is a way of suggesting what we're doing is go going through a phase of re-globalization and in order to secure resilient Supply chains we need governments to invest in, making sure that the higher costs of creating these new Supply chains are offset basically with stimulus checks. Now that unfortunately could in the short term lead to slightly higher inflation, but in the long term tends not to lead to stagflation.

Notice How now in both scenarios, in the short term, you have more inflation, in stagflation, you have more inflation. and if you fix the supply Problems by having government invests who tend to create inflation a short term. but in the long term, you end up creating less volatility, lower inflation, higher investment, and higher growth. Which fortunately, that's roughly what our governments are trying to do now at least in America that's what we're trying to see.

We're trying to see. via the chips Act 80 billion dollars which would probably be 3x the size according to Goldman Sachs Same thing for the Inflation Reduction Act probably instead of being a 389 billion dollar plan will be more like a 1.2 trillion dollar plan to basically support the building out of manufacturing in America for advanced chip making sets for a Green Energy projects for uh, electric vehicle chargers for electric vehicles in general. whatever it may be, the government is running the money printer essentially for stemi checks for these industries. That's what the government is supposed to do during this time.

according to casino of course, everybody's going to have their opinion on this and we might still follow the stagflation which we got to talk about how that could potentially lead to a certain segment of stock dropping 87. We'll talk about that in a moment. But first, we gotta stop because they're finished with this. Christine Like, ah, the peace, less volatile growth and inflation will be key to continuing to attract International Investment And this is where she talks about how important it is that central banks coordinate to provide stability for the US dollar as well as for potentially a digital Dollar In the future that is potentially starts a totally different video where everybody starts freaking out over the idea of a Fed coin.

or recently there was an announcement of an IMF coin potentially in development. and here the ECB suggests how central banks navigate the digital era such as innovating the payment systems and issuing digital currencies will also be critical for which currencies ultimately rise and fall. An important reason why the ECB is exploring in depth how a digital Euro could work best if lodged. Oh, the digital money is coming.

Enjoy the paper while it lasts because then they'll be able to digitally print some more money. But anyway, how can all of this lead to stagflation? And is gold? Gonna Save You or is gold gonna get whacked in a stagflationary situation? And what stock sectors could do well? Tech Growth growth at any cost? What about Staples We're going to talk about exactly that by presenting to you a chart now before I explain this shot and then the result of what it could mean I Must remind you that today is 420, which means the price is on. The courses on building your wealth go up substantially tomorrow. This might be the end for the lifetime access for the programs that we have.

So that way anybody who joins in the future doesn't have that anymore. So in other words, they'll probably be a really good day to check out by going to meet Kevin.com The programs on Building Your Wealth Whether it's zero to millionaire real estate investing, you still get lifetime access. You get lifetime access to the course member live streams, new updates, the stocks and Psychology Money group Uh Elite Hustlers If you're looking to increase your income and as an employee or an entrepreneur, check them out. Link down below Big Deadline tonight on for 420.

So staticflation light regime. We've got to talk about this and what it could mean for particular stock segments. So first, it's worth noting that we're already in an era where growth is starting to falter. Though there are some indications that growth may actually be holding up the Achilles heel to everything right now is obviously inflation.

If we don't have inflation, we don't have stagflation because you don't have deflation part. you just have the Stag Okay, so it's really important that inflation goes down as soon as possible. Kevin's Achilles heel for his Nike Swoosh recovery is inflation staying hot for too long? We don't want what Christine Lagad talked about which is stakey inflation. We do not want that.

We can't have that at any cost. It would be very bad. We need massive disinflation so we could support the Nike Swoosh recovery. It's going to be volatile.

It's going to be painful, but hopefully it is higher and higher rather than and lower and lower. So what do we know about what's going on in the economy right now? Well, once again, like I alluded to earlier, the rich are still doing just a fine. American Express Just announced that spending volumes skyrocketed 14 in the first quarter. when you consider foreign exchange.

that was actually 16 growth in spending volumes in the first quarter according to American Express which Services a more premium customer quote. Our customers have been resilient thus far in the face of slower macro growth gain the lead. Yeah, so Travel and Entertainment according to American Express In other words, what are the rich people up to? Travel and entertainment grew by 39? This is insane. It comes at the same time as companies like Synchrony are saying more pain for lower credit to your customers.

You've got companies uh, like smaller Banks like or even bigger Banks like Citibanks starting to cut off subprime Auto Lenders because they're worried about defaults from Guess whom poor people and the rich people are still spending like crazy Fueling spending like this is potentially inflationary, but it is potentially a way to guard yourself from the Stag part of stagflation. You do not want companies that are stagnating. A lot of companies though, will go through a period of an earnings recession where you will see a couple quarters of negative year-over-year growth in earnings and then hopefully from there the companies pick up the pieces and return to growth. Nike was one of the first to go through it Nvidia has gone through it and quite frankly now Tesla's going through it.

But what do we know about the history of stagflation? Light. and is it possible that this earnings recession stays in Anchor at the same time as inflation remains High much like Casino Warn Well, if you look over here, you could see some of the historical periods where we've had stagflation light before and this is going to lead us into what kind of stocks usually experience the most pain in this sort of environment. So stagflation light environments here show you that you've seen these periods of stagflation in other words, higher inflation which is the white line here CPI along with anemic growth in around the 1990 to 91 era of the early 80s, Paul Volcker era and the second Oil Rush, the first oil rush of the 1975 era, and then the loose money printing era uh, of uh of the late 1969 era. So we've had this sort of stagflationary environment many times before and there are some stocks that do well in this environment and some that just do really poorly.

And so what? I've gone ahead and done is broken out a chart showing you exactly this stagflation light fear which stocks tend to do well and then what we're going to do is we're going to compare this particular chart to what that might mean for the returns we've already seen so far this year because so far this year we have not seen stagflation like pricing. But if we end up needing to see stagflation light pricing, let's just say it's going to be an Sh9t show and you're going to want to have life insurance paid sponsor on the channel. By the way that you could get in this wrong button that you could get in as little as five minutes by going to Metcava.com life because it's going to be quite painful. and there's a particular category that gets the most pain in stagflation and it's not good.

So first, median asset returns in stagflation regimes. Here you go in an era of stagflation which is not my base case and would destroy my Nike Swoosh recovery. you can see Staples tend to return the largest benefit. That's your Procter Gamble your Johnson and Johnson your L'Oreal whatever.

Uh, these These are the companies that perform the best Staples followed by retail clothing and value as well as foods and inflation-protected securities and treasuries that compares to the ones that suck in a stagflationary regime. This was a shocker. Look at the bottom here of what sucks in a stagflationary regime: Uh-oh Gold Info Tech technology Machinery Commodities And Cars that's not great. So Cars technology.

Well, that's two categories that says middle finger to Tesla and a stagflationary environment. Gold 15 To the downside, seems crazy. gold. It's supposed to be a hedge against Bad Economic Times and it's supposed to be a protector against inflation.

But according to this Bloomberg piece, gold actually performs poorly in a stagflationary environment. That was, in my opinion, somewhat shocking. Gold apparently does better in a um, what should we say? a Uh in in an environment of uh of basically depression or recession rather than stagflation. Now, stagflation can still be recessionary.

Problem is, we're just fighting inflation more. So interesting. Now, what happens when we take that chart and we annualize it, Responding basically to the numbers that we've already seen so far this year. In other words, how much of a correction might some of these segments have to go through? Well I Hate to say it, but look at this.

this chart is scary as hell. This chart says oil could rise 23.6 from where we are now. Financials could rise 17.8 percent. good old Steve and his Commodities and his rocks could end up seeing a 7.3 17.3 rise REITs are basically flat along with chemicals.

Uh oh, but what do you have down here? Gold down 42.6 percent, technology down 87.6 and even worse cars. oh negative 176 and I don't know what Tesla screwed. So in an environment of stagflation which is one that Christine just told us about, uh, you are, um, gonna have a bad time? You're not gonna like stagflation And you could think her for warning you about stagflation and stagflation light. Now Maybe maybe we won't end up seeing stagflation.

Maybe we'll have a little bit of an earnings recession. Companies will end up. uh, you know, coming out of this earnings recession as wealthier people continue to spend and inflation magically goes away like the Goldilocks scenario we're all praying for. So in other words, maybe we just won't have any inflation.

and maybe just maybe the government's stimulus checks won't hurt inflation in the short term and instead will help prevent the global Supply disaster that we're seeing in this mode dibolo world and the fears that we may have of a multiple world. And maybe we just don't end up having all the pain. But if we do end up having the pain of stagflation, let's just say cars gold Tech Tesla Tech Tesla Tech all sucks and the Nike Swoosh dies. So if you want the Achilles heel for the Nike Swoosh, don't worry, it's just stagflation.

And the nice thing about stagflation is really, if you look at history, it's not like there have been any blue bars and this has happened before. It's not like it can happen again. or maybe it's already starting to happen. Yeah, Anyway, uh, that's where I'm just gonna go ahead and end the video because that sucks and I don't really want to talk about stagflation anymore.

Oh yeah, at T shares slump on Q1 results. one billion dollars of free cash flow and still missed estimates. Hmm. still twice the free cash flow Tesla at last quarter.

not bitter coffee stuff cooked that too long. foreign.