Welcome back to another meet! Kevin Report: Yesterday was January 28th and today is the 29th and I say that because yesterday was my 31st birthday. Paintball was absolutely incredible with the team and uh, apparently if you don't have uh, like a pre-established private uh party thing going on, they won't let you do just your team uh, like your employees versus you because that's what we wanted to do was Boss versus everyone for at least one round. So it basically ended up turning into Boss versus the entire world of everyone who was at that. Paintball Field versus Kevin So a little bit sore this moment morning.

but I think it's a great way to start. Uh 31. It was. uh, it was pretty awesome.

So uh, shout out to to the awesome team members Yesterday it was super awesome and uh it was. It was great fun! So uh, today, uh, we are. uh well, this is the final Sunday before the Federal Reserve gets together and does their yip copying. We expect that after January 31st's employment Cost Index report, we're going to be getting a big set of updates from the Federal Reserve and the big questions are circulating right now about how the Federal Reserve is going to reiterate or not iterate their prior summary of economic projections.

That's the big deal right now is paying attention to that Sep and what kind of reiteration we potentially get on that sap or not. So if you are a Fed Watcher I am a big believer that you want to watch, uh oh, what are they going to say about that? So there are a few things to look for from the Fed this upcoming Wednesday which is a February 1st. Obviously you already know that the coupon code expires tomorrow. that's January 30th I Can't believe January is already almost over.

That's insane. but join that for Lifetime Access and course member live streams and lectures on Building Wealth Ether through real estate stocks Elite Hustlers Group which will have custom live streams probably starting next weekend as well as the course member lives which is super cool. so check that out! link down below. So catalysts for the FED Number one.

Uh, we're gonna look at the Sep so we'll pay attention to Sap. This is number one number two. We want to see what their take is on transitioning from this idea of uh, how much they hike that is we already know or expect. I should say they're going to drop to 25 BPS but the question now is how long do they think they'll stick with 25s until they pause? So the first thing we want to hear from is the SCP.

The second thing we want indicators are are going to be any sign of a pause and then of course the third thing which I don't think will get anything of would be any kind of turn off for cuts. Uh so uh for this, let's go ahead and look at the summary of economic projections and and try to understand what we've got and see what kind of uh scenario do we think the FED might respond with so uh, the Federal Reserve indicating that our last summary of economic projections that economic growth potentially ended 2022 at just half of a percent of growth. That actually might make sense given that we did have a couple quarters of negative growth in Uh 2022, and that somewhat implies that you could have, uh, you know, or actual recession in 2022. Uh, of course most market indicators suggest no, no, it's actually going to be 2023 when we'll have a shallow recession.

uh, The Fad Things We actually could avoid a recession, but we'll get a lot closer than previously thought. Previously, they estimated in September that oh, 2023, we should end with GDP of around 1.2 percent, but they actually slowed that substantially to 0.5 And what I'm going to do is I'm going to Mark here it with a little green marker and point out which I think are going to be really important to see. Any kind of reiteration on from the FED uh, what I'd like to see is potentially a comment from from the FED on GDP and whether or not they still stand by this half percent in 2023 because if the Drone panel suggests that hey, since our last GDP forecast, things have actually improved for the economy, well, then on one hand that could be good for avoiding a recession, but on the other hand it could be bad for how long do they believe they have to continue with rate hikes? Remember, the Federal Reserve is projecting that interest rates are going to go from where they sit today, which is about 4.25 percent to about 5.1 percent. Now keep in mind that rate policy is made in increments of 25 basis points.

so 5.1 could just be the average of basically five, two, five, and a quarter percent, which is what Barclays is currently estimating. In many banks on Wall Street are currently estimating that the FED is going to raise rates three more times. So the expectation would be a 25 basis point hike in Feb March May and a pause thereafter. That's the current projection however, and again, the reason I Want to hear from Jerome Powell on how his mindset would have changed if he had to do the Summary of Economic Projections again, which he has done before in the past.

For example, in in our uh uh, a previous meetings, he's told us, oh, you know if I had to do a Summary of Economic Projections projection again today, I would have done XYZ differently. The most notable of this was in November when Jerome Powell suggested hey, if I had to do the Summary of Economic Projections again today instead of the last one we did in September I'd be a little bit more aggressive. That was sort of the Prelude to this summary of Economic Projections, which came out in December came out December 14th. Now what we want on uh, the next meeting which is uh, starting the January 31st and then we'll get the press conference on February 1st What we want is any kind of indicators on how potentially drone power would have revised this.

uh, it's so a projection on GDP I think is critical and B the Uh projection on rates I think is critical Uh, I wouldn't be surprised at this point for Jerome Powell to say something like hey, you know if I had to go back and redo the summary of economic projections, maybe I'd revised GDP up slightly, but I'd leave the terminal rate projection roughly in line with the last report. That's what I would I would think. Jerome Powell is likely to say I Do not think this. February 1st we're going to get any kind of indicator yet that the Federal Reserve is going to soften how many hikes they give.

And think about this because it's kind of like we're at the candy store and Mom and Daddy are already buying us some candy and we just want more. They're already widely expected to drop to 25 BPS of hikes, right? This is already getting candy from Mommy and Daddy from Daddy pal. So we're already getting a nice treat. Now the question is okay.

Daddy pal, we got a treat. You know, like what, what are the odds? You're gonna give us a treat going forward and that's why I think we're going to be looking very closely at any kind of commentary around the summary of economic projections. So that is the first most important thing that personally I'm going to be looking for uh in uh in this next Federal Reserve meeting. The second thing that I'm going to be looking for is uh, any kind of indicator on a pause which again I I Don't think that we're going to get as well as any kind of indicators on potential Cuts two and three which also I don't think we're going to get but take a listen to this story.

there's a story by Robert Heller He was a former member of the Board of Governors at the Federal Reserve and he wrote this piece in Barrens. Let's go ahead and take a look at this piece together because it's quite interesting. So we suggest that obviously inflation is the most important issue facing the economy today according to what people think, that's based on a survey by Gallup polls and Congress obviously gives the Fed the Dual main Mandate of stable prices and maximum employment and that inflation according to Milton Freeman is always and everywhere a monetary phenomenon. And so this author though makes the case that the FED should actually stop hiking.

Now this is quite interesting. Let's read a little bit here. One might assume that controlling the quantity of money should be a key mission of the FED but that is no longer the case. Keep in mind that the M2 money supply has actually turned negative.

Uh, in December That's the first negative read we've had I Want to say in over 20 years Or nearly 20 years? so the money supply is is absolutely tightening as we go through with quantitative tightening. It's also worth noting that Pension funds are expected to be big buyers of bonds, not necessarily stocks. Now that's interesting because at the same time as you have quantitative tightening, what you're really doing is you're offloading bonds. And unless Pension funds come in and start swooping up those bonds more, the FED could break something because money is getting really, really tight.

Uh, like that money supply is already like, uh, like the guy from Breaking Bad says anyway, uh, Pension funds reportedly, by the way, on a little tangent here, are sitting on a trillion dollars surplus of available cash for potential massive Bond buying spree. There's a suggestion they may reallocate heavily to bonds slash D risk and when rates rise, it's worth noting that it's easier for Pension funds to make the payments that they're obligated to make. Remember that a pension fund is really just a hey, I'm an employee and I want to pension you know, working for the railways or whatever and I'm gonna work hard in exchange I'm going to pay into my pension every year and y'all go invest the money and make sure you pay me for the rest of my life once I retire. Well, Pension funds when interest rates go up, actually have an easier time making those commitments because they could just park their money in Ultra safe bonds and actually make the investment uh, rates of returns that they expected to make and uh, end up funding their pension liabilities.

Right now, the average pension fund sits at 110 funded. That's the highest level in over two decades. And now there's an assumption that there could be a trillion dollar surge in a bond buying that would substantially more than offset the Federal Reserve's 80 billion dollars a month of quantitative tightening. In fact, if we got a trillion dollar surge that would represent to almost 12 months, uh, or offset about 12 months of Federal Reserve quantitative tightening that could actually end up leading bond prices to Rally substantially and yields to plummet.

Uh, if Pension funds were to come out and start uh, basically eating money into the bond market, it's entirely possible that would actually then and serve as sort of a Counterpoint to the idea that the FED should pause because the FED might look and go. Whoa. Y'all just eased Financial conditions so much, let's keep rates higher for longer. So there are things as usual going in both directions here, but it's worth paying attention to this idea that anyone talking about.

Oh, the Fed's gonna have to U-turn because they're doing quantitative tightening. Yeah, the pension fund's got plenty of money to fix that problem. Anyway, let's continue to see Robert Heller's a thesis on potentially why the FED might, uh, be destined to pause on the rate hikes. Again, that's sort of the title here.

The FED doesn't need more raid hikes to beat inflation. Uh, or at least that's what they're implying. So if you look at the Fomc statements published from each Fomc meeting for the last three years, you will search in vain for the word money. It's not even mentioned a single time in all these years, that was not always true and Paul Volcker was in charge of the Fed.

The FED considered controlling and steering money supply to be the most important policy tool. During the 1990s, the velocity the M2 money supply increased as money market funds and other near money substitutes were introduced. but this trend in the velocity of Money was reversed in the years since the 2000s and now, monetary velocity is below what it was in The Volt careers. Okay, before we keep going, it's worth understanding a little bit about the velocity of Money.

I'll make this very simple. So let's say you go, uh, to a paintball store and uh, you go buy a box of paintballs of PBS So they sell you a box of PBS I Don't know I Can't recall how much they are, but they're probably at least 50 bucks. Uh, Anyway, they sell you a box of 50 PBS or or if 5 000 paintballs or usually they come in 2500s sell you 2500 paintballs for 50 bucks. All right.

great. So they get the 50 bucks, they take the 50 and what do they do with the fifty dollars they pay their employees. What do their employees do? Well, they go buy Subway sandwiches. What do they do? They end up going to, you know, pay their rent and what is uh, their landlord do? well.

their landlord invested in Tesla stock and loses all their money. So that's just an example of how money over here can move through the economy multiple times. Money that is spent generally moves through the economy four to five times. So every time you spend a buck, it tends to move through the economy four to five times.

That is different from somebody who eventually puts the money into a savings account or stock account. Money then only tends to move through the economy about one to two times. probably an average closer to about 1.4 times. So in other words, the velocity of money really dies when people invest.

So if you want to do the right thing for the economy, don't invest. Just spend all your money. Keep that velocity of money going. If you want to do the right thing for yourself, don't spend money.

Invest it. Uh and if you want to go with with like a more neutral approach, uh, no. okay, never mind. I was gonna make a joke.

it's a bad idea, never mind. let's keep going. We we got. we got to make sure to keep serious news joke free here.

although we are already talking about the FED oh sorry, I had to do it while there are certain measures. Okay, so now now we understand the velocity of money a little bit and we know the velocity of money is plummeting. Let's go back over here. Uh uh.

While there are certain measurement issues that could certainly be considered, it would be fully. It would be a mistake not to look at the money supply as a key determinant of inflationary pressures, but it seems the current uh, but it seems to be the current policy stance of the Fed. Even casual inspection of graphs showing the growth rate of the money supply is measured by M2 and the inflation rate as reflected in the CPI reveals a correlation between money and prices that's still pretty strong in other words, as the money supply greatly expanded during the stimulus era of 2021. Certainly what ended up happening? Oh wow, We had massive inflation.

What's now happening? Well, the money supply is shrinking. Here is a chart of CPI starting to fall over year over year. That's fine, and nowadays the FED is mainly focused on interest rates and implementing its monetary policy says this former Fed Governor But that has not been a much easier task. Inflation sword from close to zero.

Okay, whatever. So we do a little bit of History over here. After the FED began to raise the FED funds rate. Uh, in March of last year, inflation also started coming down, but still exceedingly.

High Yes, Yes, at the present, the real or inflation corrected Fed Funds rate is still negative as the nominal Fed Funds rate is lower than the criminal current inflation rate. That's a simple way of basically saying look, the Feds Fed Funds rate is a four to four and a quarter and we have inflation that's in excess of six percent. That means we are negative when we consider inflation, but we expect eventually inflation to be below that level as long as we continue on that. Trend Hey, maybe the Fed's doing the right thing.

So the current policy debate within the FED is whether to continue to increase the Fed's rate to continue to rein in inflation. The Federal Reserve rate would potentially have to go above the inflation rate to accomplish their objective. Ultimately, and by following the interest rate strategy, the FED however, neglects to look at the money supply, which has already sharply reduced according to the most recent annual growth statistics. in actually declining in absolute terms, this is where I talked about.

the money supply has gone negative in December. However, the current monetary policy is already restrictive enough to ultimately defeat inflation, because from a monetary point of view, we're already negative. Unfortunately though, according to this former Fed board member, all it will take is a year or a year and a half of patience and no further growth in the money supply to accomplish the objective. In other words, here's somebody who used to work at the FED who says look, there are two big ways you could look at what the Fed's job is.

Way number one is high grades. way number two, like we used to do is control the money supply. Well, if the money supply is already negative, then maybe you all just need to be patient. This is really a lag argument, right? And it's a lag argument that the money supply going negative is already sufficiently restrictive enough to bring to basically Stamp Out inflation and we have to be careful not to end up uh, well, uh, with deflation which potentially could happen Now some folks will look and say, well, Kevin let's pull up a chart of the money supply.

It's already way higher than what it was in the prior decade. And this is true. It exploded. It ballooned in 2020 and 2021..

So how could we possibly say it's negative? Well, the way you say it's negative is you just look at it from a percent change from a year ago and there you go. Now the chart is negative. See, it doesn't take much to change your perspective on data a little bit, but this doesn't change the fact that it's still in the money supply is still substantially larger than what we've previously had. And this is true.

And this is where it's worth looking at the velocity of money to consider. Okay, well, if we look at the velocity money, all that extra money that's out there. How has the velocity of money changed? In other words, were people spending it more or using that money? Is that money circulating more or less now? And if there are a few measures you can look at? Um, let me give you just a very quick comparison over here if we go back to the paintball stand. Example: The paintball stand.

Example I gave you is more of the nominal money supply. This is generally actually what happens when people spend money. The velocity of M2 money supply is the green part which I highlighted, which is the part where basically people save or invest, not the spend velocity, but if we look at the velocity of the M2 money supply in respect of what's going on with uh uh with with the with that large increase, right? that large increase we saw in the savings and invested stock. Well, if we look at the velocity of that, it's actually come down substantially from levels where we were in the last decade.

and it's been on on this longer term era of falling, and even though it's ticked up a bit recently, it's still substantially lower by the tune of about 20 percent lower than we have where we have been. So really, you have an author here in in Bloomberg who used to work for the FED saying hey, hey, whoa, whoa, You know we're We're actually seeing a slowing in the money supply in the economy or the velocity of money. And maybe just maybe we don't need to. uh, keep hiking.

In other words, we should pause. Now again, you might say hey, but wait a minute. Kevin that's of the M2 money supply. that's of the saved or invested money supply.

What about the velocity of money of people who are spending? Yeah, well, don't worry. I Have that shot as well. That chart is right here and here you can see: the velocity of money in 2010 was as high as eight times. Uh, and it fell to about six to about five to about 4.8 Uh, before the pandemic.

5.2 4.8 before the pandemic and that number two has plummeted uh, quite well. If in fact, if you look at Q3 2022, it's at about 1.2 and that's relative to where we have been previously. And this is a symptom of yes, everybody has a lot more Capital than they did before the pandemic. but it's it's.

actually, even though spending is is slightly, you know, growing. uh, in nominal terms, it's negative in real terms, but people have so much more access to Capital than they previously did. It's not all actually getting spent the way you think. And so here you have a Fed Governor Actually saying we're good, we should pause and just be patient and inflation will plump.

It's an argue document we'll see because the other thing that could happen is people could just start spending again. if the FED is too soft and then what happens, well then you just explode inflation again. Continuing with EPS here: further tightening a monetary policy steering by the Federal Reserves rate would increase the chance of recession in the foreseeable future. Together with the two quarters of negative growth already experienced in the first half of last year, this possible recession in the middle of this year would essentially would be essentially a Repeat Performance of the early 1980s when the country also experienced a double dip recession.

Call the warning of the double Dip recession. You gotta love it. The good news is the money supply growth is now close to zero and is already influencing the inflation rate. Given the typical lag of 12 to 18 months in monetary policy, we can expect inflation will be defeated towards the end of the year or by the beginning of 2024, just like Friedman would have predicted.

And and I mean if we follow up based on you know data we reviewed yesterday: Procter Gamble United Airlines Southwest Airlines Uh, you've got a PG E. Well, that's Procter, Gamble, uh, Johnson and Johnson and 3M. They're all indicating this potential deflation coming towards the second half of the year, right? The FED will have to decide whether to Hitch its star and reputation to an almost exclusive focus on interest rates which would indicate a need for further tightening or whether to adopt a forward-looking policy and Trust in the future effects of the current money supply data. Such a policy stance would indicate no further tightening.

So this is very interesting because the FED essentially has a choice according to this former Fed Governor who wrote this piece in Uh in the Barons report here and He suggests the FED has two choices: You could pause completely and let the lags work, or you could keep hiking and continue to look in the rearview mirror. So my opinion is the Fed is probably likely to continue to look in the rearview mirror until they break something and or or inflation is so clearly down. So I don't think we're going to expect any kind of U-turn but anytime soon, obviously. But but we might get some talk or some more revisions into their policy statement about the lags And in an interesting way, if the FED comes out with a 25 BP hike which is expected and talks a little bit more about how they're watching, the lags of monetary policy could be enough to set a full uh a bull market uh into motion.

and I think the FED realizes that. so they're going to be cautious about that. But then again, they're also willing to create a bull market if it means no recession, right? The FED wants to be right, and if all they have to do is induce a little bit of a bull market and not like a V-shaped recovery, Larry Kudlow Inflationary bull Market. they're willing to do that.

So I I'm not. I Would not be surprised to see the FED be okay with additional stock market rallying, because in a weird way, stock market rallying while real estate is still falling could be sufficiently restrictive to keep inflation coming down. It's an interesting idea. Obviously, we'll see what's what happens, but uh, in my opinion, those are going to be things that I'm looking for in regards to what the FED is up to.

All right, that's some fed speak there for you. Let's go ahead and talk a little bit about. Uh, let's see. let's look at some commentary here: Kevin What do you think about EU Claiming that recession will not happen? Yeah, this is true.

You've got France and Germany saying we're going to avoid a recession. Uh, it's It's entirely possible. Uh, jobs can't be cut so easily I Fear that we can be the Grim Reaper I'm not sure what you mean with that second part here, but I think it's It's worth remembering that we do not need to destroy the jobs Market to end. uh, this this inflationary crisis.

If inflation starts disappearing, you don't need to kill jobs. If anything, you want to prevent so many layoffs and people leaving the you know, uh, people losing their jobs so you you potentially have to soften sooner to prevent that pain. Remember what? Jerome Powell Also told us he told us look I don't want to create pain even though I know I can tighten and if I need to I could just turn the printer back on I'm paraphrasing, but this is roughly what he said. He's like that can come with tremendous human hardship and I don't want to cause that so keep that in mind too.

Like he doesn't want that much pain just enough to get rid of inflation, he's still got a heart I Believe in the man. Anyway, uh, how is this guy going every single day Weekend included coffee step, bro, coffee in the morning, coffee 5 am, something else 5 p.m It's a very simple cycle. The employees are so awesome. uh yesterday.

um I mean shout out to everyone Michael Kincaid Nick Mark uh and then it gets funny with names Christian Tristan Tristan Okay Joe y'all are awesome Bob Kathy yell Rock uh Yellow Rock Mikey Thanks for being here as well. It's it's fun. Uh like uh, yesterday even Sam Thank you for for helping us yesterday. Boy yesterday freaking rocked.

Uh I mean what what a fun day it's It's nice to be surrounded by by so many great employees. Uh, four folks from the construction team have been here through through everything, uh, over the last few years and when I say everything I mean like a lot of different shifts in terms of where we are. Okay, what are we gonna do? which direction are we going? and uh, we can now be more excited to start working on uh, on househag uh this year. So uh, it's it's going to be a blast.

Uh, but uh, there's nothing like uh uh, going paintball and getting shot by your team and then uh, and then hanging out in the spa. after that, we get this massive Spa so we don't have to be too close together. uh, but uh yeah, maybe maybe I'm still contributing to inflation. sorry about that, but the spa is pretty dope.

Uh, my dad came over yesterday. he's like oh, I was in my spa earlier and he comes over and he's like oh my gosh, this is a huge spot. It's great. Uh, let me think of sleepy Powell what does that even mean? Uh, tips on playing Sofi before earnings, you know I don't I generally don't play earnings I'm a little bit too much of a baby I'm a little bit more of a buffet-esque in that style.

Um, let's look at what the implied volatility is I'm not optimistic about. uh, let me yeah. I'll put it this way: I'm not optimistic I think it's very difficult for you to continue to gain uh uh, sign ups in this sort of environment and the only way they're really able to do so is by paying a higher interest rate, but that's going to plummet their net interest Revenue You know I'd Probably if I had to lean in a direction I'd probably be more short than I'd be long. But that is very dangerous because if the market rallies broadly, any negativity would be limited.

Uh, right. So you have an implied volatility of 13.8 percent. That's insane. That's pretty high.

Ah, Kevin will be buying a 40 million house in the Hollywood Hills before long I Don't think I could live in Hollywood Honestly I Really like uh, where I live I think it's it's great. Uh yeah, it's It's really cool. Currently buying Luna classic dips oh my God Why I Really hope you're doing that with only a small portion of your net worth. Do you rent out your net jet? Do you rent out your chat when you don't use it? No way.

Dude, nobody gets to use my jet only Kevin gets to use this jet Nicole Harris Thanks for being a YouTube member. Now Well you start trading crypto again. Uh yeah, I would trade it Uh, but I would not hold uh crypto if we get deflationary with the administration. Could we stimulate the economy by giving stimulus to low-wage workers who will spend it? um and then Titan again.

Well, I think I think there are two differences there. There's there's monetary stimulus and fiscal stimulus. You're talking about fiscal stimulus. stimi checks.

uh I Don't think it's going to happen. Don't get me wrong, I would love to cover steamy checks. Uh, because I Honestly, it was very enjoyable I Loved being able to make videos going. Go here and get free money.

You know that was really enjoyable. but I don't think it's going to happen specifically because of the Republican Congress that we have. uh a that is the house. There's no way there's no way stimmy checks are coming.

uh I I'm I I I I'd love to give Hope on it, but I think it would be misplaced. Very misplaced. uh. oil prices going to jump next week due to strikes in Iran All right, let's go ahead and take a look at our Antelope let's see what's going on over there.

Let's see what you got. Steve Steve is uh we? uh I I'm starting a petition for Steve to uh oh Nicole Harris Here says how to renew my membership Kevin's dedication praise. Oh that's awesome. Thank you so much Nicole Nicole is shouting out uh Bitcoin Bitcoin stocks and Floki In You by the way, well welcome aboard Nicole Uh, all right.

uh and you know what they say, girl stands for right guy in real life. Anyway, all right anyway. Let's uh, let's see what we got over here. Oh I I Saw some news about this yesterday.

Actually, it was it was showing up on our Uh refinitive terminal. We Love Refinitive by the way. Shout out to refinitive Bloomberg I'll Reserve commentary on uh, but refinitive Reuters You guys are really good on the minute by minute news. So I saw the Uh blast news come across the terminal yesterday.

but but we weren't really in the right State of Mind to read it much more than the headline. All right. So here's what happened in Iran yesterday: a drone attack caused a heavy explosion at the defense Ministry Ammunition Depot in Central Iran State Tv said, resulting in a top diplomatic official warning about escalating tensions in the Persian Gulf Now obviously the question here is who launched the attack. The site located in is Fahan Province was targeted by Suicide drones at 11 PM local time and caused minor damage to the ceiling of a structure inside the facility.

A deputy provincial Governor said a drone was shot down by air fence air defense systems a one drone. Okay, so so multiple drones were launched. One of them caused minor damage at a facility. another one was shot down.

I'm actually surprised that drones were capable of being shot down at 11. PM I Know that sounds silly. like come on, they've got air defenses that operate 24 7. I'm just thinking like that's probably a good time to do that.

I mean most people probably aren't working around that time and and you probably have more of a bare bones staff on defense. so uh, good for them actually on on their defense now. I'm sure they're going to beef that up even more. A video published by the State Run Now or news shows a loud blast at a low-level building near a busy road causing a burst of flames.

and Sparks the state-run Republic news agency also released footage showing police cars and fire trucks at the entrance. It is not known who is behind the strike. There's no official statement casting blame, although one finger pointed at Israel for similar incidents of the past. I don't know about that uh coming after the Israeli shootings uh, terrible attacks in Jerusalem by the way.

uh, apparently. uh, a couple Palestinian Shooters taking the lives of at least nine individuals in Jerusalem Responding to an event the UAE sent in a tweet that the blast is not in the interest of the region are furthering the region. There is no alternative to dialogue. Uh, yeah, Well, that has not been true for the Middle East Unfortunately Iran blamed Israel for the 2021 attack on a key nuclear enrichment psych.

Well, that's because Israel is deathly afraid of nuclear enrichment. Uh, given that, uh, they're surrounded by Uh countries that aren't big fans of Israel Authorities also said they foiled a plot by Israel's Mossad spy agency in July to set off explosives at unspecified sensitive centers in a similar area. Saturday Strike comes amid continued Western condemnation of Iran's supply of military drones to Russia. Oh yeah, that's another big thing.

By the way, Ron is just pumping out military weapons to Russia So nice little profit Center for them, but you know that's that's the way the world works. So I I don't know Steve What? Why? Why are we thinking this is going to really hit oil Futures here. Uh, so that's that's the Drone strike. Um I'll go look at oil Baby oil.

We'll go see what's going on with oil. How about that? Apparently Five different attacks. Oh yeah, let's see here: Russia Can't replace the energy market Oil ends with weekly losses on Resistance and key level. Okay, um, now it's not that terribly much news in Iran on oil.

Hmm, you know what we could do is, uh, let's do a little bit of a look at uh, some Foreign Affairs sites and we'll see what we can find. And then there are a bunch of you talking about Bitcoin moving so we'll take a brief look at that as well. Oh Bitcoin it always likes to move. Yeah, it actually is.

Uh so Bitcoin at the time of this recording about 5 a.m California time has come off with him. just uh. basically exactly since I started live streaming it started running. so uh, feel free to send me dividends.

The best way to do that is buy one of the programs on building your wealth. Link down below. The content is phenomenal, more content is coming, and uh, the course member live streams were excellent as well. for fundamental analysis.

and Q A, However, it is now, uh, lifting off from a level of about 23 3 where we had been sitting for a few hours. It's now lifting off to about 23 6.. And this recent liftoff here really brings us higher than the Uh than the 21-3 level we've been sitting at for the beginning part of the third week of January And now we're really trending off that 22 to 23 run. That is absolutely sending some optimistic signals to Uh to the risk.

Market Remember that when Bitcoin runs, it usually excites the stock market. Uh, if people think of it as a substantially better Futures Market indicator than uh than the actual Futures Market So all right, let's see here: Foreign Affairs Let's see what we got. Um, I Think it's one of my favorite websites, Foreign Affairs.com They're great. Let's see what we have about oil at Ford Fast? Nothing? Yeah.

I Got nothing even on the first page at Foreign Affairs on Oil right now. So I don't I don't know how much fear there is right now? Yeah, Lucid Had one heck of an incredible rally last week. in case you you missed out. What happened with Lucid Lucid Uh, had basically pure rumors, just complete speculation Ron that maybe this Saudi private investment fund would would buy out the rest of lucid.

this is. It's very stupid for the stock to run on that because nobody knows at what price or if even that is true. In my opinion, it would be very easy for investors in Lucid to create this rumor, Knowing full well it would create a short-term meme rally. The stock ran about a hundred percent and then after it ran about 100 I'm looking at it I'm like I'm tempted to short this.

uh, the darn sucker just plummets and now and then it still ended up about 40. But it plummets because when there are no details or confirmations of these rumors, they really mean nothing. Really mean nothing. and I think that is very important to pay attention to.

you do not have news. If you do not know what this is going to happen at it, it's not. It is not something worth betting on. I'm not a big fan of speculating that, so pretty anti-uh.

running into Lucid right now I Think they need to continue to raise money? Although they did, they did already raise 1.5 billion dollars. They did a good job of that. Yeah, even The Economist isn't even talking about oil right now. The Economist Find them to be pretty good, although they do lean pretty far left.

Uh, although they try to be as Central as possible, they're just super anti-trump You? you can't You basically almost can't read an Economist article without. And this is not to be confused with all economists. This is just to say The Economist But anyway, you, you pretty much can't get through the Economist without getting a single slam on Trump. All right, that might be a little extreme.

but anyway, what do we got over? Here 's a piece from The Economist On the World's Econ: The world economy's inflation problem is easing. All right Economists, Let's see what you have about the world's inflation problem: Easing Investors have several reasons to be cheerful about the world economy. and America inflation is tumbling. Raising hopes of a soft Landing And China's economy is free of its covet zero policy.

Markets are joyous. American Stocks have risen five percent since the start of the Year Hey, see Steve see it, commodity Steve There's there's no fear about oil here yet. Alas, it's too soon to declare an end to the world's problems in America Consumer prices dip below two percent this year. Uh, or may dip on an annualized basis below two percent thanks to cheaper energy and goods.

Yet, price growth is plunging. So too is GDP Growth: Retail sales and industrial production fell in December and leading indicators point to a sharp downturn despite headline grabbing layoffs by big Tech firms, America's unemployment rate remains just three and a half percent. Annual wage growth has fallen by some measures, but remains around five percent as Walmart says they're going to raise wages. remember, I've kind of already debunked the Walmart lag argument.

In other words: I Think that this or that Walmart will create inflation with his wages I Personally believe it won't I think this is a lag. it's well below average wage anyway. and uh, Walmart basically had to wait to raise wages because, well, they were losing money I Much prefer to see what Chipotle is doing. Even though they're hiring, they're seeing it easier to keep their employees.

retention is at all-time highs highest seen at company history, and it's becoming substantially easier to hire people. That's a great sign that there's plenty of supply for people right now. Anyway, some policy makers hope that companies whose profit surged in 2021 can absorb rapid wage growth without prices having to rise further. Yet by last, Autumn higher profit margins accounted for only an eighth of the pandemic era.

Inflation: Given that Wall Street is expecting disappointing earnings for the fourth quarter, the suggest firms will raise prices in line with their labor costs. Markets expect the FED to start cutting within a year as growth slows. but if the FED is serious about reducing inflation to two percent and keeping it there, it will need to keep rates High until wage growth cools, even if that brings about a recession. That is true.

If if inflationary numbers come in bad, they will continue to hike even in the face of a recession, which that's the scary apart. Should America face a downturn, it's likely to take Europe with it despite falling Energy Prices the Eurozone as an underlying inflation problem. Christine Lagarde head of the ECB has warned that interest rates will have to rise significantly contrary to Devastation expectations of investors Do keep in mind that the FED is calling BS on the FED because of the leading inflationary data. If and the FED has to be very careful not to paint the picture that everything's fine, because if ever, if they paint the picture that everything is fine, markets are just going to take off so fast.

Oh, massive layoffs at Phillips Any thoughts: No, I don't have many thoughts, but that's quite interesting. Starbucks has the best benefits says the chat here. McDonald's gonna accept Doge You know I mean this is just like you realize, it's just like free marketing, right? Uh, it doesn't really mean too much, it's just free marketing. Once they start accepting crypto, it's like ah yeah, let's get all the kids and their crypto coming over.

It's a great idea, don't get me wrong, and and it gives more uh, clout to blockchain as well. So it's win-win It's win for McDonald's because it's like free advertising. It's win for blockchain because more people are using it. So I think it's great, but in in the short term it's just deploy anyway.

A stronger dollar which is likely If The Fed keeps raising rates. the Dollar's Gonna Keep Going Down Investors take fright of the consequences. would rise import, raise imported inflation. make the Ecb's job even harder still and it'll come down the end of Cove at zero.

in China has lowered the chance that Supply chains will come up. However, the rebound is not an alloyed what the heck? Its rebound is not an unalloid good for the rest of the world, which is an inflationary problem, right? Because spending from China might come out yeah. But we've also already debunked that. The Economist: We know they've got uh, 500 bucks to every six thousand dollars we had over here in America from inflationary spend.

So I don't know the economist, you all could have done better. That was a little boring. Yes, yes, we know the inflation problem is easing, Got it? But you know nobody here is complaining about oil. I Think the only people who have been complaining about oil have been uh, hedge funds who are trying to trade oil and they're trying to force force oil up and and any by any possible means that they can do so.

uh, this. I continue to get all these bets that oil is going to go to 100 bucks and maybe it is. but I think it'd be so short-term because by then they're just all gonna dump. Uh, let me see if I can get some oil insights.

Here's one from Marx which provides oil insights. We'll pull this up. see what you got? Let's see what Marx says about your oil. Here we go: Oil Markets Many Traders would agree.

Sometimes it's not data that's important, but rather price reaction to data. We believe this is the case with oil prices recently. Okay, so trade trading basically looking at U.S Inventory statistics Crude oil stocks have been built or have built by an incredible 27 million barrels over the past two reports. Yet, oil prices have rallied more than 10 percent over the same time frame as a classic case of sell.

The rumor by the fact. wait. so Oil stock up? Yeah, Oil price, right? So these are contrarian indicators of each other. Uh, again suggesting maybe a trade, But let's see what they're saying.

that's just my thesis. They could have a different opinion. Let's see. as for the sharp Rising crude inventories, it's not as if oil fundamentals have shifted.

Okay, so so no, no shift in fundamentals, but rather the result of extreme cold weather that has ravaged the U.S Energy Corridor in late December The cold: Force Major U.S refineries to shut down due to operational issues related to freezing temperatures. Additionally, at the end of the tax year on inventory in Texas and Louisiana caused oil imports to come onshore in early January. So despite what seems to be very bearish data points, the oil Market appears to be focused on China's abrupt reopening and improving macro backdrop as opposed to backward-looking inventory that was impacted by weather. In fact, spot Brent is now trading in the mid high 80s, mid to high 80s above moving average.

This is true. last few days it has been moving up. The oil rally has coincided with notable increases in future open interest and managed money buying. This sounds like hedge fund and and really institutional trading that oil is going to 100.

the combined aggregate Futures open interest for Brent climbed uh plus four four OMB since the start of the Year while net money managed position also increased plus six eight since last Tuesday the latest reporting period for the commodity Futures Trading Commission positioning data: About half of the net buying has come from short covering due to a big shift in momentum in the past two weeks. Okay, a lot of this so far just sounds like trading. This is what this is kind of what I started off with right? Like looking into these reports I Just see trading I Don't see fundamental reasons for the for oil spikes yet and I don't think China is good enough of a reason. Last week we discussed Momentum Traders how they're herd-like behavior Can impact oil prices at times.

Okay, so far this is pretty consistent I am looking for things that are not just trying to Echo chamber Kevin's opinion. so I'm more than willing to be wrong I'm just not finding them yet. today. we want to expand on the topic while discussing the impact the war in Ukraine has on the Momentum factor.

To reiterate our point from last week, momentum is very simple and straightforward trading strategy. A simple trading strategy. Buy commodity or assets with positive returns and selling those with negative returns over a predefined period of time. Yeah, this is what every institution did in 2020.

growth stocks go down. no problem. short all growth stocks. It's very simple, tactical trade, far removed from fundamentals.

This is why I've been buying them like crazy because the fundamentals are phenomenal. But anyway, for example, one year momentum signal Trends uh to a popular long-term indicator that measures of role adjusted return over the past year. Given that we are dealing with historical prices is possible, look at Price development of the prior year to formulated. With that in mind, we are all aware of how erratic oil prices were last year, in particular in the early stages of the Russian invasion.

In fact, prices on Brent spiked to about 135 huge Spike made for an increasingly High bar. With respect to Momentum signals. Fine. whatever.

Thinking ahead. all right, let's let's try to get their conclusion here. So thinking ahead, oil prices are now higher on the year. After a very sharp decline the first week of January and despite some sizable U.S inventory builds open interest has increased again, suggesting trading.

So far, there's very little in the way of commodity Index inflows this year, however, one would assume long-only investor dollars are likely chasing oil prices. Given the past two years of Stellar returns, this group of institutional investors should gain more influence as the war inspired volatility begins to filter out of risk models. This should become more apparent in the second half of 2023. Fundamentally, all eyes remain on Chinese reopening the potential demand implications.

Uh, let's see. this supports the notion that China will need record oil imports this year to meet refining demand. In addition, we believe the U.S will also increase its U.S Imports this year to fill the void left by the cessation of strategic petroleum reserves. Fine, that's it.

Okay, that was a little boring. They didn't actually tell us too terribly much there. They're basically like, look, there's a lot of trading going on and we have no damn idea what's gonna happen with demand in China. That's basically what they said, which was kind of our thesis going into it.

All right? Well, that's that's. not too entertaining. Okay, hold on a second here. Now this.

this could be entertaining what it says. All right, hold on. we're going to member only chat. There are plenty folks here now so we'll do member only chat.

but I'd like to point this one out here. Three Pharaohs Tower says Walmart must stop theft and making employees to supporting with ignorance of crime. Shoplifting is rebellion and Insurrection Walmart workers demand paid Hazard pay and Sue Walmart for Dangerous work environment good Lord You know whose job it is to make sure that there's no crime. It's the government's job.

That's their job The government is responsible for Law and Order And when there's crime, it's the government that's failing. Yes, businesses should have security. But now the you allege that all Walmart workers who barely provide value uh, on on the on the retail floor level above what they're being paid should also receive Hazard Pay means that your jobs are going to get automated way sooner than you think. This is the last thing you should be demanding because soon we'll just be replaced by robots on the floor now.

I'm saying that because I'm I'm hoping I'm not trying to offend anybody working in retail because I think retail is a great way to start working. It's a great way to make some extra money. It's it's it's a great way to it. It's very hard work.

It's very, very hard work I worked retail Uh I worked uh I folding clothes in retail worked at Hollister I worked at Jamba Juice I worked into Hospitality because I've done the jobs I worked for seven bucks an hour Okay, I've been in the jobs. Eventually, robots will replace these jobs And the more ludicrous arguments there are like yes, Demand We demand Hazard pay because people steal. In other words, because the government is failing. We want our jobs automated sooner.

You kind of forget how capitalism Works In America the companies would rather buy a 35 000 robotic arm than they would employ somebody working for minimum wage which probably costs about thirty five five thousand bucks. In other words, they could have a free robotic arm for every employee every year. So you have to be really careful with all these claims that oh, retail workers are entitled to more money. Don't get me wrong, it's hard work.

but if you want to get paid more money, you have to figure out how to provide more value to the world to the economy. And 17 bucks an hour is already pretty dang awesome for Walmart retail work. Uh, on the floor level. Maybe an unpopular opinion, but from a capitalistic point of view in the long term.

milk it as long as you can and use it to get you know to to elevate yourself to that next level of income because eventually those jobs won't exist anymore. Eventually, look, I'll give you an example. Okay, because again, maybe it's insensitive and people are going to be like Kevin hates poor people. That's what somebody's going to try to twist this into.

whatever. I went to Uh Munich and uh at um, about 11 p.m in Germany maybe it was a little earlier, might have been 9 P.M Anyway, I went to this Pharmacy and uh I uh I requested a specific drug uh for Lauren and uh they said all right sure that'll be three Euros I'm like are you kidding me three Euros this would cost forty dollars in America they're like yeah no they say in America this is not America this is this is less money here. we have better health care System you take it, you pay three Euros you'll get it. you don't like it, you go anyway I'm like okay I'll give you your three euros you take Apple pay.

It's like yes, all right great. So I pay with Apple pay. probably got my foreign transaction fee. no I'm pretty sure I used the card that didn't have this.

but anyway I paid my three euros and he's standing there smiling and I'm like are you gonna go get it and he doesn't say anything and I hear this rumbling behind him and I'm like it's it's we're having like the staring standoff like I paid and he's not going to get the drug I'm like dude like go go get the medicine and he's just staring at me smiling at me and his Rumble is going on and all of a sudden this this like drawer plops open and the medicine falls out and I'm like what the hell like I didn't just ask for Advil I asked for something really specific and he's like we have robots with 3 000 different medications back there I just pushed a button on computer and it comes out oh my. God Oh God People are going to be getting unemployed soon. Foreign robots are coming to take over the world. Uh, and and robots, Yeah! Nick M Power Here says the robotic arm basically is not going to cause problems like suing their employer for hazard pay because the government is failing at regulating the world and people are going into stores and stealing stuff.

That's look, people stealing stuff in San Francisco is an example of a failed government and you shouldn't look no further than the individuals with the names London breed and Gavin Newsom for why we have horrible crime problems in California And if there's anything to put the nail in that coffin, let's just suggest that Gavin do some things. Your constitutional rights are a suicide pact. His words, not mine. All right.

What else? We didn't talk about the robotic arm story. Oh my. God uh uh. Robots rarely get tired and and rarely basically rarely need maintenance too.

That's true. What do you think about the simulation? Theory Be a little weird. I I don't I don't think we are, but it would be quite ironic. And you know, as Elon Musk says, uh, the most ironic outcome is is usually the most true other governments.

Okay, yeah, this is a medical example here. Scitrix says, well, other governments negotiate on behalf of their citizens to drive down prices the U.S only recently allowed for this and some drugs On some drugs for some people. You mean to tell me that big Pharma keeps prices artificially high in America obviously? But yes, thank you for that. All right, let's see here.

what else do we have? Let's see what a Bloomberg has for us: Feds set to shrink rate hikes again as inflation slows. Yes good. Sam Bankman Free denies U.S Witnessing tampering claim witness tampering Glenn Apparently he's like texting people trying to get back on like they're in their good graces. and these are people who used to work for or with FTX And it's kind of remarkable because people are suggesting that he's basically trying to butter people up because when it's time for them to testify against him, he's hoping that they'll be friendly to him and testimony against him and basically argue that everything was good.

I was good person. Meanwhile, we know he's a total fraud and a total scam and a total manipulator Who Tricked everybody who was working with him. Uh, with the exception of people on the inside I Mean the fraud is so terrible the footsie. the UK Market is close to piercing a higher Watermark Uh, that capped the Ftse 100 since 2018, and technically impressive as it is, we continue to believe the index May underwhelm versus Pierce this year for Bloomberg.

We'll see Market rally in Bloomberg Medicine Shop in Daytona Years ago and they had automated counters then? oh that's awesome. My mom owned a medicine Shop in Daytona that's so cool. I That was the first time I had ever seen one. What if robots already took over crypto being the way to extract money out of people and use it to continue to develop itself.

Yes, the computers are, uh, what is it called sentient? I Think that's the phrase. The computers have become sentient. That's that's when they start having a brain themselves and they're like, hmm. humans are losers so let's take advantage of them.

Thank you for that five dollars. Mike Tom Baker Wants to remind you about the expiring coupon code tomorrow? 11 59 PM The final coupon code will expire January 30th Join the programs on building your wealth and get lifetime access to them. Tom Baker These jobs are held by low paid workers, which will cause more unemployment in crime. What will unions do about this? Yeah.

I Don't know that it's necessarily so much. What will unions do about it? I Think it's it's the job of government to provide proper a proper educated Workforce A properly educated Workforce And unfortunately, the government is terrible at educating its workers. Uh, for actual jobs, consider how many people can actually get a job coming out of high school. It's even hard to get a job at McDonald's now just coming out of high school like you got to have some skills.

Uh, now that is loosening a little bit. It's becoming a little bit easier again because of the economy. But you know it is the job of our school system to provide education for people. It is entirely the job of the government to educate the workforce and the labor force.

And individuals deserve to be educated in typing, programming Finance Accounting Uh, Real Business Development skills. They should be learning these in high school. In addition, they should also be learning trades. how to be a real estate agent, how to be an electrician, a plumber, or a carpenter everything.

If that does something happen in schools. In fact, what are most schools doing in California Oh, we don't have money to do shop class anymore, so they they cut these programs. It's ridiculous. The government is absolutely failing at educating the workforce.

It's embarrassing. especially in California is the worst. We don't have the workforce to sustain automation. Every industry sector is freezing hiring except for technology positions.

Uh, the workforce needs engineers. and Developers Yeah, but the the problem is, you know. look at Twitter For example, Twitter was supposed to die when half of its employees were let go. More than half of its employees were like, oh, Twitter's operating just fine with a fraction of the people open.

AI is changing the world of research with a Bare Bones Workforce And that's because a single engineer Canal create so much more value on a per person basis than hundreds of Engineers Previously, you're shrinking the need for so many people. eventually. that will lead to probably Universal basic income. Uh, you know you will own nothing and be happy.

Sort of. Uh, that that is probably the ultimate destination I Don't know if we'll get there in the next 20 or 30 years, but it'll certainly Trend in that direction, especially as as automation becomes more common. Even as an engineer developer, it is difficult to find new positions that pay more. A lot of Devs are getting chopped.

Yeah, and that that's likely because we are going into a recessionary environment, right? Do you have a course that teaches option Traders for beginning to master style? Uh I would say for beginning to moderate but not to master style yet I would like to do that? Uh, maybe maybe that's something we can plan for 2023.. if we do, it would be built into the stocks and psychology of money. Group Automation growth is exponential. Futbucker says.

A sad reality is that education teaches kids to continue useless to be useless and unable to think fend for themselves. Public schools are just a babysitter says ACB and B yeah, I mean to some degree the lack of skills that we get coming out of high school. This this is true. Uh, on another hand or another another argument that individuals will make is that well, you know you learn algebra and geometry and stuff like that to think in a different way to try to expand your mind and the ability to think in a different way.

But unfortunately, most people can Coast through high school, not even actually getting to the upper echelons of math to where they're barely getting through Algebra one and then they're graduating. And I mean algebra one is like bare minimum. That's not even like thinking more I think once you get into calculus which I feel like most people don't end up actually taking. but once you get into calculus, that's when you actually start thinking differently.

you start wiring your brain in a way that's like wow, Never thought about calculating the area of the slice of an apple before, right and then and then how to turn that into a formula. It's actually fascinating. like I was very interested in it I wasn't very good at it, but I was very interested in it. Um, but but yeah, you know this is this is where I think it's important to move over to.

uh, more technical Based training because not enough people actually get to the advanced levels of of Uh education to where education would actually rewire your brain to again make you think for yourself. Mercedes EV Sales makes Target by 2025. is admirable 50 Yeah, right. Uh, Bloomberg Intelligence 20 Global Bev mix estimate for 2025.

Yeah, Okay, so in other words, Bloomberg thinks that Mercedes is going to get to about 20 battery electric vehicle and Mercedes is trying to get to 50 percent. They only got to 16 in 2022 amid semiconductor shortages and Rising battery costs. the new Eqe SUV is a potential Catalyst along with a strategic update in 2022.. Hmm eqe I'm always fascinated by uh, what? Legacy Auto is up to.

The Eqe is Mercedes all electric Sedam see if it's even possible to buy right now. Oh look at that. A zero to 66.2 Second acceleration I mean that's embarrassing for for the EV world, that's embarrassing. Uh oh.

I Like the design though, looks nice. whoever designed it. Good job. dual digital displays.

Okay, well I don't know the whole thing isn't loading. but can I Can I build one? can I buy one? Let's see, let's see how much this sucker sells for the Mercedes Eqe? No, I can't I can't build it all right? anyway I I don't know who knows when Mercedes will, actually, uh, get with the program. Yesterday we were talking a lot about their full self driving program. Public School is child abuse.

Oh man, thank you June Bug for four dollar super sticker. All right, let's see what is new, What? what is Zero Hedge talking about today. they usually have some good news for us so let's see what's what's going on over here. Pfizer Response Oh really, this will be interesting.

This will be very interesting. Thank you. All Right here we go. Pfizer responds Pfizer Late January 28th Responded to comments from a director at the company about exploring ways to mutate the Covid-19 virus as a method to preemptively develop its vaccines.

Oh I am very fascinated to see this response. They have a lengthy written statement in an on in the ongoing development of Pfizer bio the Pfizer bioentec covet vaccine. this is a partnership between companies remember that you have Pfizer an American company and the Bioen Tech which is a German company Pfizer has not conducted gain a function or directed Evolution research Pfizer said in a length and lengthy written a written statement days after inquiries from the Epoch Times and other outlooks outlets. Now that's actually very interesting because yesterday I made a video uh, actually in our in our live stream yesterday morning uh before t