Posted trade ideas lowe's partnership saving people thousands actual posted trades live streams and and q. And a with kevin. Why are you not a course member yet taking of that 50 percent off coupon code link down below especially when the price goes up faster than inflation goes up boy wouldn't you rather buy here than here. Hopefully.

I see you use the link down below and join the programs on building your wealth. Hey everyone me kevin here this great reset and recession. Which is probably already here is confusing everyone and in this video. You're going to get a complete update on what's going on with the latest data we'll see the tension at the federal reserve and we'll learn what we just heard from earnings at companies like delta and jp morgan.

We'll talk to on trade desk and go ev as well and we'll touch on valuations. Let's get started first jobless claims came in at 244 000. This week. The estimate was 235.

This is the highest that we have seen in jobless claims since november and it makes sense because the federal reserve wants to see some tightening in jobs they want to put pressure on jobs. So that way they can try to put pressure on inflation. If people become less uncertain that their job is secure maybe. They'll spend less money.

And maybe we'll actually see demand go down. So that way pressure on jobs pressure on inflation. This is why you've seen companies like compass lay off 10 percent of their workforce redfin six percent of their workforce. Jp morgan laid off a thousand people and mortgages in june.

Which is actually no surprise because when they reported earnings today we learned that they lost a ton of money in their mortgage department. Tesla is laying out folks on their all autopilot team with mr carpathy now leaving who is essentially the de facto leader of the entire autopilot team leaving bulls and bears questioning does that mean autopilot is actually much further away from success or does it mean autopilot is much closer to success the debate will rage. But google is also essentially freezing hiring for the rest of the year and facebook has given us multiple warnings of layoffs coming so no surprise that we're starting to see the jobless claims number sneak up. Now jobless claims rising was just part of the problem that we got this morning.

Because the ppi or the producer price reading came in completely off of the chart. And this isn't good because it's just another inflation pressure look yesterday. We were expecting eight point eight percent inflation year over year. What did we get we got nine point one percent today we look at producer prices did we get any.

Con any sort of consolation anything to calm. Us down we were expecting. 107 what did we get we got 113. Which is the highest level since march.

Because remember we've kind of seen inflation do this weird thing. Where it's run up to this peak in march. Uh. And then it's kind of come down a little bit in april.

And then now. It's kind of shooting past. It and this is kind of reiterating now a lot of people's belief that oh no folks if inflation keeps pulling this off. And we don't actually get a strong u.

Turn down in inflation. This is kind of like what michael bury told. Us 50 to go. Which is also what we're seeing in documents like this which say phase.

One of the bear market might be complete. But we got phase two to go so naturally after these numbers yesterday. The swap market started pricing in this potential. For even.

A 100 basis point hike. Or a one percent hike now some of this has been walked back because even the federal reserve doesn't know how to respond to this mr. Bostic told us last night that after that cpi read everything is in play essentially implying that yeah 100 basis points is in play loretta mester. Tells us that we are going to go way beyond neutral and when the market freaked out and started pricing in 100 basis points.

The federal reserve sent out mr. Waller today to try to soothe everyone and calm everyone down. But every time the fed tries to calm something down. I feel like they're just getting ready to hit us over the back side of the head.

When we're not looking with some other bad news. Mr. Waller comes back and says well well well hey look. Let's not let's not get carried away here.

We're in a very unique situation. We're in a situation where if we hike too fast. We could actually end up to leading to very high unemployment and our nightmare scenario would actually be having very high unemployment. While we're trying to push down high inflation.

That would be the nightmare scenario. And so waller actually just supports a 75 basis point hike. Because he says that'll bring us to. Neutral right now we sit at.

15 hiking. 75 would bring us to 225 which he believes is the neutral level now most people actually believe that 25. Is the neutral level. All this does is just lead to more confusion in markets because it's like okay.

So what is it like some people. Say it's two and a. Half some say it's 225. J.

Pal. Says. It's i don't know it's somewhere around there. But we don't actually have a science that says what neutral is and again when you've got loretta mester and bostic saying.

Everything's on the table and we're going to go above neutral come on bro. What is the answer well all we know is what markets are telling us and markets are right now pricing in that we're going to get to. 37 as a fed funds rate by. December this 225.

Potentially via the next meeting. Which would be a 75 basis point hike. And we'll be there as soon as july and this is what markets are reacting to right now. This is why we're seeing qq back to that 280 level which seems to be roughly and i'm not going to use the word floor because every time.

I do we break it seems to be roughly a place that the qq just likes to relax a little bit now to some degree you can't really blame the federal reserve right now because they're trying to realistically fight extremely high inflation while unemployment is really really low. So. They don't actually have to worry so much about that nightmare scenario of having super high unemployment. So we don't really actually have to listen to waller.

We can just go ahead and hike hike hike because we're not even close to facing ultra high unemployment that would be very very bad. It's very stagflationary. But we're not facing that look at the u6 level of unemployment now the u6 measure is a broader measure of unemployment it includes folks who are marginally attached kind of like you know i don't really need to be working right now. But i am or i'm about to lose my job right that's your marginally attached folks.

It also includes people who are discouraged from looking for a job because they've tried and they just can't find a job anymore maybe because their skill set became uh you know useless or whatever they got replaced by a robot and they turned into a luddite. I don't know whatever anyway so you've got marginally attached discouraged and then you've got under employed that's your u6 measure. This would be like hey i'm not able to work enough to make enough money right this measure is at. 67 which obviously is higher than the unemployment.

Rate where it is now 36. It's quite a bit higher. But it's still the lowest ever on record. So this is why the market is so confused because it's like why well like yesterday.

We're good like the market was pricing in as high as high as an 86 chance of a hundred basis point hike. And i was all forward. I'm like just give it to us already just do it rip the freaking bandage off. Now you get waller to try to walk back this stuff going well.

We don't want to cause super high unemployment. We want to be careful we don't want to be too drastic here meanwhile. They can't get a grip on any kind of the inflation problems. We have and so now markets are only pricing in we saw a little bit of a rebound intraday in the stock market now markets are only pricing in a 50 chance of a 100 basis point hike.

So i don't really understand fully what the fed's trying to engineer. But it just seems like the fed is really really nervous about actually putting on their big boy pants and doing what needs to be done now to some degree and this is the other flip side to some degree. We actually do see a lot of measures of inflation that are kind of saying maybe. The fed's going to be right i mean after all you've got commodities falling.

Even iron ore is now following copper down and these are industrial metals which are waving flags of a recession red flags of a recession right supply chain constraints are relaxing and break evens are falling very very quickly you could see these graphically as well don't just take my word for it take the floating heads word for it which is supply chain pressures are easing and you can kind of see what supply chain pressures look like we can look at the cova disaster right here when we first had our supply constraints index spike then of course into 2021. We had omicron and delta roughly around here and then here we sit now sort of in the beginning of 2022. And yeah. We had a bump in supply chain issues because of the war.

But we're actually falling to levels that we haven't seen since roughly the first quarter of 2021 meaning supply chain constraints are beginning to ease graphic cards. I mean every single analyst that i read a report on is talking about how we're expecting a massive flood of graphic cards and a big oversupply of chips. Soon of course. We don't have that oversupply yet they just talk about it and who knows analysts aren't always right.

But here's the commodities price index you could see q2 compared to last year q2 we're actually seeing metal oil food prices. Commodity prices in general they're all going down to again so again to some degree maybe. The federal reserve is going to be right here. I mean this is that chart again with the 10 and five year break.

Even right. Here showing us that the bond market is saying. Hey cpi should be coming down soon. It just hasn't yet it's over here peaking at the same time we're seeing yield curves invert that haven't been inverting like the five year 30 year just inverted again this morning briefly and these are all recessionary signals.

So. The fed is really stuck between a rock in this hard place. Where if we have to keep hiking aggressively to deal with that high inflation number and we're going to keep hiking we might literally be hiking while we're in the midst of a recession and that's scary for markets. That creates even more uncertainty and maybe they think hey if they think we're so dead set on inflation and the market's like wow.

The fed's not even paying attention to the fact that commodities are getting less expensive or the bond market. Says inflation's going to go down. Well gee. They're going to be hiking substantially during a recession.

Let's lay off more people you know maybe they're playing 40 chess with us. The other example of what they could be is they could be this computer code id10ts. I don't know let me know in the comments. What you think but we got some really important things to think about and talk about right now starting with jp morgan.

So jp morgan is warning us of awaining consumer confidence and the largest quantitative tightening cycle. That we've ever seen along with a war and high inflation jp morgan's profit fell. 28. In the second quarter and they bumped their allowance of four losses more than they did in the first quarter.

I mean here's your q1 allowance for losses. Which is just under 500 million here. It is just above 500 million. Doesn't remotely hold a candle to the over 10 and over 8 billion dollars in losses and reserves that jp morgan took back at the beginning of the pandemic.

So really it doesn't seem like they see that big of fears. But then again even jamie dimon. Tells us they might just not know this first note was fascinating on the consumer from the jpmorgan earnings call. They note that yeah.

The consumer is spending 35 percent more year over year on gas and six percent. More on recurring bills and non discretionaries. But what they really want to point out is despite these greater spending areas the consumer has quote yet to pull back in discretionary spending. And this includes.

The lower income segments with travel and dining growing. At 34 year over year overall. This is incredible folks so even the lower income segments aren't pulling back on discretionary spending. Yet they're still spending on travel and dining let's go to the next one.

While home lending revenue was down 26 year over year and credit card outstanding balances were up 16. As folks probably had less stimulus money to maybe pay down their debt or keep their debt down. Jamie dimon seems excited. He says look even though we have storm clouds ahead of us even though we're going to be going through a storm.

We think that the storm provides us with opportunities. The economy is going to be bigger in 10 years. Our company is going to be bigger in 10 years despite all of this jamie dimon goes as far as saying right now. The consumer is in great shape so even if we go into a recession.

We're entering that recession with less leverage and in far better shape than we did in 2008 and 2009 and sure jobs may disappear because things happen. But the consumers are in great shape. So golly man. This is just you know i hate to say that this time is different.

But let's be real. We've got this insane inflationary environment. Where both cpi and ppi are off the chart. But the bond market is telling you no no don't worry just be patient inflation is going to go down.

But you've got investors freaking out going fed do something the inflation is running away like even i say fed put on your big boy pants. But i think the fed's not because they're trying to play this 4d chess of going uh. We actually think the consumer is pretty strong they're going to survive. We think that jobs are pretty strong and we kind of still even though.

We don't want to say it we kind of think that inflation is going to be transitory and we don't want to kill these. Things because these things are actually good and the last thing we want to do is get really aggressive against the consumer and jobs. If inflation does end up being transitory so let me put it this way if the federal reserve ends up hiking 75 in july even though everyone's screaming for a hundred the fed actually still believes that inflation is transitory. But there are some people at the fed who's like no just hike already and then wait.

But it's this kind of confusion that makes the market. So topsy turvy right now it seems like bad news is bad news. And good news is good news for a few minutes and then it turns into bad news and then we have a few days of a rally like what a week and a half ago. The nasdaq rallied five days in a row.

And everybody got excited and then oh it fell right back down. So then i figure okay well maybe. Maybe. The delta earnings will give us a little bit of insight and so delta by the way says they remain confident that they can earn seven dollars per share by 2024 now that i thought was really incredible because for a company with a 2928.

Share price at the time of this recording that seven dollars in eps works out to a multiple of 42 x. For 2024 earnings that's really really low. Now look they got a whole lot of debt and this is a company that tells us bluntly that they want to take their extra cash flow and pay off debt at the same time they're still buying extra planes. Though so they're also investing in their fleet.

But they make it very very clear that debt reduction is a big big big priority of theirs. But what else do they tell us and what do they tell us about the consumer are we seeing that recession yet over at delta. And what do they say is actually that looking forward quote. We are seeing strong or seeing demand and pricing strength carry into late summer.

And fall as demand remains strong well great the more these companies talk about pricing strength the more inflation. We're probably going to be getting from the airlines and that's probably one of the last places we need more of this and they also mention that what seems to be driving a lot of their revenue. Right now isn't main cabin purchases. It's actually their premium products which i thought this was really fascinating because if we jump over to this section.

Right here. They suggest that 60 percent of their revenue comes from premium products and non ticket revenue sources. This is incredible because if you think about it they and they say this just blows. My mind.

They say that only 10 of their total revenue comes from the main cabin. So if you're like one of those people who gets on a plane. And you're just like dude just give me like the 200 ticket to new york. I'm gonna sit back here i'm gonna bring my own peanuts.

I'm not gonna buy anything i'm not getting the extended leg room. I'm not checking a bag. I ain't doing jack squat. You're one of the people.

That's only contributing 10 or or to the 10 section of their revenue 60 comes from things like their credit cards. Where you know you they partner with american express for credit cards like the delta reserve card. Or or seed upgrades or baggage. Or other miscellaneous fees that get them more money this.

I thought was incredible and the fact that delta doesn't see demand weakening is a sign that people are still paying for these. Upgrades. People are still paying enough. They also acquired another record number of sky miles members in the quarter.

And achieved record spend on their amex co brand in fact they expect to get 14. Billion dollars from american express. Because again they co brand a credit card a few credit cards together. I think.

It's a platinum in the reserve. Which is 35 higher than june of 19. That's before the pandemic. So before the pandemic like comparing to right before the pandemic they're getting 35.

More money from their partnership with american express. Which just a fun additional note in the uh uh in an analyst review of american express. That i was reading. I was reading that american express excuse to its highest end customers with the highest fico scores and american express gets most of their money from transaction fees on spending volume versus other cards so in other words.

If delta is making a lot of money on the american express card and kind of a revenue share of how much people are spending on the american express card. Then that means people are still spending like crazy certainly in the premium sector. But then we combine that with jp morgan. We're like no even jp morgan says even the lower income demographics are spending more what's really happening is just everyone is spending more money and so then i decided okay well can i figure out like how much money do people have on hand right now in in their checking.

Accounts. And here you go top 25 percent. You actually have more you're actually almost at a peak here in terms of money on hand. Just above uh six thousand dollars for the four week rolling average for households in the bottom quartile.

You're not seeing a substantial decline in cash on hand in fact over here in the second quarter. You see a tick up in cash on hand for every single demographic of course. It's not as high as what we saw during the pandemic peaks here. But it's still ticking up not down.

So people have more money in their bank. Accounts like this is so weird. And i think the fed is looking at this going we don't want to kill this man. This is a good economy like if we could just get inflation to disappear.

This is a booming economy. It's kind of crazy uh now i mean that's not to say we're not gonna have problems because we're fighting the fed here but boy oh boy. This is somewhat of an interesting set of data. But then delta airlines analysts bluntly asked delta if they see any weakness in the consumer from the american express side in their discussions with american express and at delta and they see that we're not seeing any indicators.

Yet and we're looking for that again reiterating that the consumer remains strong and the fed behind closed doors is panicking because it's like got high inflation. But we don't want to crush what behind the closed doors what behind the curtains. It's actually still a pretty strong consumer now just a side note. I thought this was fascinating.

It looks like just the american express co brand deal that delta has with amex. It's probably going to end up working out to 10 of their total revenue. That's kind of crazy that literally just a credit card co brand makes up 10 of an airline's revenue. But uh.

It does so fun. Fact okay. Wow. Now you have to know this things are different in europe.

And the reason things are different in europe is why the us dollar and the euro actually fell below parity today that means the dollar at one point this morning was actually worth more than the europe right now they're teetering at basically a dollar is equal to a dollar. Which i haven't seen at any point in my life and i like traveling to europe and usually. I'm like i'm used to the euro being like a buck 30 or a buck 40 or whatever you know before the pandemic and and you know it cost you more money to trade the dollar for those. But no now they're at one to one and this morning.

The dollar was actually stronger than the euro at one point. The dollar is something that's very interesting right now and if you want to see something crazy about the dollar. I'll pull it up for you it is absolutely nuts. But the dollar is trading in this really really long term uptrend and this is probably going to beget a larger much larger video.

I would say but if you look at this crazy inverse etf on the dollar. This is what you get and this is the weekly inverse etf on the dollar. So as this chart goes down the dollar is actually getting stronger and you could see we are on this crazy trend line that goes all the way back to about 2010. And we're literally sitting at one of these bounces at the bottom over here absolutely wild how strong the dollar is right now pretty crazy now how much longer can i last who knows personally i don't think it's going to last for more than a year.

But it's something that could last for quite a while especially since we've got a lot of concerns that europe is going to go into a deeper scarier. Recession which is ultimately going to drive more people to the dollar and us. Denominated bonds as a flight to safety the shell ceo came out this morning and says worst case scenario. We might have to ration gas.

It's going to be a really tough winter in europe side note. The north stream. One is down for a 10 day maintenance. It's offline for 10 days.

So guess what germany is doing. Germany has to go into their stockpiles and when they go into the stockpiles depleting their stockpiles of natural gas. While the nordstrom. One is down for maintenance.

Putin's probably just laughing his butt off because he's like you go through your stockpiles. And maybe i won't even turn on the new stream. One again you'll just be screwed. Which is leading and helping lead german investor confidence to fall to its lowest levels since the debt crisis of 2011 that's way back when the acronym.

The pigs came up if you know what this means say it down in the comments. It's i'm just going to tell you portugal. Italy. Greece and spain right these are considered the depth pigs at least of europe or war back in 2011.

And so you've got a lot of uncertainty in europe and this means. We could actually end up being in this weird situation. Where while we face super high inflation and we have to hike rates here in the united states. We could end up being in a situation.

Where europe says you know what we just have to hold still because we're in a recession. And so that's why you're seeing more of that flight to safety again to the united states really really really weird times. But again the fed can't pay attention to europe. The fed has to focus on america.

We just know that we're probably going to see a deeper recession in europe than in the united states and but the fed doesn't want to make the mistake of trying to uh be so aggressive that we also end up in the muddy pit with europe like ideally. Which is very hard to do probably not gonna happen. But ideally we have a soft landing and i mean you know best wishes to the other folks. But if they have a hard landing.

It's not our problem if we can have a soft landing here in the united states and i think that's sort of where the fed's like uh. What do we do man like europe is having problems they got really high inflation. But they've got all these other things that basically are going to push them into recession. Especially these high energy prices.

Which they have really no control over because countries like germany are like oh let's shut down our nuclear power plants we don't need those we got cheap gas from russia and then putin goes crazy and what do you get you got oh no turn the nukes back on it's crazy. Okay. Now folks now this might leave a lot of you wondering what do we do jack. What do we do yeah.

I mean look you're either short the dollar or you're going long on equities. If you think the fed is going to be right. If you think they can actually engineer a soft landing or a recession that's not so bad if you think the fed is going to fail. If you think their confusion is because they're little pansy babies.

And they are going to fail. Then you should not be in equities. It's that simple now we just have to talk about a couple of other crazy things going on the first thing. That's going on is evaluations of private companies are likely to get slashed.

A lot now. The fed doesn't really pay attention to some of these things so probably done really talking about the fed. But these are just some other important things for you to know is that valuations at companies like stripe are getting slashed. A stripe just cut their internal valuation.

Twenty eight percent from forty dollars to twenty nine dollars. You've got uh about twenty five to thirty percent of americans saying their next vehicle will be an electric vehicle. Which hopefully is exciting for tesla. And there's a lot of excitement right now going around uh go ev go ev of course is canoe.

The stock ticker is go ev. They got signed up for a military demo. Which is really worthless like okay yeah show off your vehicle. But hey i don't want to sound like just a fudster bear or whatever on canoe.

But let me just say i know they got their little walmart partnership and stuff. But i'm just going to throw this up on screen. This is a company with 104 million dollars in cash and don't even bother going over their cash flow statement because they just burned 125 million dollars as a debt loss in the last quarter using 120 million dollars in cash. But having a net loss of 120.

The uh. Oh that's delta going over here though you look at canoe. It's like yikes ma.'am in my opinion. The only way this partnership makes sense is if walmart gets some kind of substantial stake in canoe and if they don't end up ramping their manufacturing walmart's going to get burned on the steel.

I think walmart had to have ended up giving canoe. Some kind of large set of money like maybe 200 million dollars or whatever just to fund. The next quarters of growth to actually start trying to see some vehicles come out of the factory line and if those don't come out within the next year. This company could go bankrupt or walmart will just own an ev company that's my expectation.

But at least. I will say it's better news than what happened to trade desk. Which is down a good chunk today what happened to trade desk. They didn't get the netflix partnership instead guess who did microsoft.

I don't know how many people saw that one coming especially since we saw the cfo from netflix end up working at trade desk. Maybe they didn't like that cfo. But folks were in crazy times check out the programs on building your wealth link down below and we'll see you the next one.