Good morning, everyone welcome back to another market, open live stream, so today we've got a little bit of red in the markets. Uh we've got some uncertainties brewing again. We got the dow uh down 0.05 percent, mostly flat. Here, it's really technology.

That's getting beat up more here with 0.53 percent to the downside, uh oil up another uh 2.16 percent. Here, in fact, if we check out brent uh, we're knocking on the door 85 here soon we're at 83, 87 right now on brent and uh on our bond heels here, we're sitting at 161., uh, there's uh a crazy crazy divide in in the marketplace, as uh Has been true for the last six to eight months, a lot of fear about that inflation just staying longer and uh and being larger than expected uh, although we did just have uh someone from the ecb, the european central bank mentioned that they're not even close to The potential conditions for tapering, but that the market's just recalibrating, which makes you wonder, is this just sort of like a a new way to sort of describe. What's going on? Oh, don't worry, there's no inflation, we're just recalibrating who knows but uh markets a little tenuous because of that uh also seeing uh some pain at the airlines, a lot of cancellations. This weekend i flew out of vegas and there were.

There were many many many many people who were trying to fly out of vegas and uh. Their flights were just cancelled. I heard 27 percent of all southwest flights. Uh over the weekend were canceled throughout the united states that there were now sick outs instead of like walkouts having sick outs, where people are calling in sick in sort of a coordinated uh attack on on institutions as a way of expressing their frustration for vaccine mandates.

So uh yeah uh, you know that that uh certainly doesn't help get uh things moving more efficiently. As a result, you've got uh things like southwest and or stocks like southwest down 3.29 right now and uh. I would say another headwind: that's really coming to the market because we do have our cpi sort of lingering uh indicator this week of uh of what's. What's the what the rest of this year is going to look like right, but another thing that might be weighing on markets as well is the fear that okay well uh, we know we've got some inflation, that's lasted longer than expected.

How is this going to affect earnings earnings, obviously very important uh for the stock market we've had a year uh. Well, not a full year. Calendar year we've been 2021 so far where uh good earnings have been rewarded with stock drops, we've seen pretty nonsensical earnings in in maybe inflation uh safety stocks actually end up leading those stocks to do much better. In other words, the market was seemed much more willing to buy into any kind of hope for uh stocks that could be deemed an inflation hedge, whether that's uh, defensives or industrials, but uh.

We have seen some of that relax here, a little bit as we've gone into the fall thinking that technologies were uh their opportunity now or had their moment to shine as inflation wouldn't flack down. But again we just haven't seen that inflection uh to the downside. Yet so that's what we'll be waiting for if we'll get it this uh wednesday or not. But who knows at this point, it feels uh somewhat almost potentially unlikely uh that we'll see uh an inflection down just given how how much uncertainty there is uh in the market around uh, around pricing uh and remember too, we mentioned uh.

You know we have this uh. What's it called, we have a situation where companies can't uh can't raise prices as much as uh we've seen in um in terms of costs actually going up. So, for example, if companies raise their prices ten dollars for product, that's usually a hundred dollars - let's say maybe about 10 inflation, let's just say right, but if their costs actually went up by 15 and they'd really like to raise their price by 20 or 25, then We're in a situation where the company is taking more of a loss, margins are getting squeezed and when we look at earnings, we're looking at those that pricing power and we're looking at margins, we're trying to determine are companies able to raise prices to get through this Or are they not able to raise prices as quickly because see the thing about raising prices is in a free market? You have competition, so you kind of have to uh staircase up and what i mean by staircase up is one company. Let's say trying to raise prices 25 from 100 and another company from a hundred dollars is trying to raise 130.

well, the one at uh we both are at 100. One can't just go okay, we're 130, because then all of a sudden, the other competitor becomes much more desirable and uh, and that just shoots the uh, the company that went to 130 totally in the foot. So you kind of get this gradual increase where oftentimes both of the companies in this simplified example are raising prices slowly, but it almost in sync uh one 105, 106, 107 right and they're moving these products in sync kind of like gas stations sometimes do, but although They seem to be less competitive about each other and more competitive with uh, with what the actual market is doing. But the point is that uh, these pricing increases could last much longer because of this sort of stair-stepping effect of how corporations erase prices to stay competitive.

While at the same time trying to merge, uh or or uh to maintain their their uh profit margin, so uh all right, uh, let's take a peek here highly on uh down six point: five: two percent: there must be some news with hylion, not one of my Favorite companies - i i think the retrofit - the truck retrofit industry is uh going to be very short-lived, but uh hey. What do i know? I'm going to take a look at the news quickly for highly on. We have, let's see, ubs downgrade on slower, more costly ramp up and ubs now downgrading them to a five dollar price target. Ouch southwest uh down 3.69 percent nasdaq down 299, not the index cloud flare down: 2.48 arrival 2.14 robin hood's down almost two percent owlette.

Still bobbing around that 420 region here, lemonade 1.2 percent to the downside sitting at 62, 76 airbnb down 0.81 amc down about three quarters of a percent end phase down about three quarters as well, along with pinterest etsy sitting at point six. Five - let's see here, amazon docusign these guys down about point four with talent here: disney's down slightly target dave, buster's down marginally, getting closer to that zero percent level and have not yet seen where our tesla sits. Tesla is uh. Actually up 0.03 percent essentially flat looks like mad reports down about half of a percent to the upside.

You have uh shiba inu. What looked like it was starting to a recover somewhat uh. She right now, uh yeah, look at that. It popped up to uh about 3 500 sitting right now at 29 and uh.

This is uh. Let's go to the uh hour charts. This is usually a shorter chart. Here there we go so we've kind of been sitting in this trough over here, bouncing around between 20 24 and 25 for the last day, and a half here did go as low as 20 on the 7th, but slowly slowly coming up again here bouncing over its Support line here, a firm, this uh, pretty incredible firm's, actually up 0.42 percent.

Here in uh, it looks like the pre-market all right. So, let's uh, let's see what we've got uh on other headlines here. So, let's see here, let's jump on into the bloomberg, we'll just go to bloomberg.com for this part, and let's see what we have here so okay, surging oil, is what they're suggesting here as uh as one of the leading factors. Aluminum hits 13-year high wti crude rises.

Above 80 yeah there's always this fear about potentially a commodity super cycle and uh yeah alibaba was doing well as well. I think they were up like four or five percent see. Let's take a look, yeah alibaba we're covering more quickly than neo. Let's see here, baba uh, yeah baba about five percent right now very nice, very nice move by alibaba coming off that 138 low, pretty pretty solidly and fast neo up about point two percent uh, but gosh neo moves about one one point: two percent for every five Percent alibaba's been moving so good job uh for alibaba all right.

Let's see here all right, so then we've got hmm okay, yeah! Let's go back to bloom and see what's going on with it uh commodity talk here. Is china's coal futures reached a record as flooding shuttered mines? Aluminum rose to the highest level since july 2008, leading broad gains among space metals contracts on tech, heavy nasdaq, underperformed, the s p? Ah, that's true. You get nasdaq under the s p right now, which usually the nasdaq over performs or outperforms. I should say: fuel shortages in china and europe are bolstered by higher inflation or the case that higher inflation will persist beyond expectations of central bankers.

I think this is at at this point just a foregone conclusion that inflation's going to last longer. I i don't know that that necessarily means mr money. Printer jerome powell's wrong. I just mean things are means things are going a little slower uh in uh in inflecting.

The way jerome believed we see rising risk to global growth and evidence of more inflation, says someone here from fidelity international in a note to clients, earnings boost fading. Look at this earnings boosts global earnings revisions losing upward momentum, so less less revisions to the upside. In terms of forecasts and estimates, upcoming reports on third quarter, company profits are seen as the next potential pressure point in the market already under siege. Oh, the coming earnings uh season recession, whatever season in the us, will be heavily scrutinized for pricing powers, margins and clues on a shortage situation as well as wage pressures.

This is true when we review earnings, one of the beautiful things about reviewing earnings is we can read investor and investor call transcripts. I personally enjoy reading them versus uh listening to the calls, but sometimes the calls are worth listening to just to uh. You know hear the sort of reaction they're like how how do these executives live, react to some of the questions and uh so doing a mix of both, i think, is good, especially in the really juicy ones a lot of the manufacturers like 3m uh. Really, you know really procter gamble: ge general electric.

These are great ones to listen to because they always get asked about inflation. It's almost like that's! That's your like core inflation kind of segment, end phase, that's another one! Uh that'll get asked hard about inflation because it's uh the supply shortages and uh pricing power are going to be huge factors to their bottom line going forward, even though we know a lot of this is temporary. The temporary is lasting, quite a while any uh retreat in u.s stocks presents an opportunity to buy the dip. According to strategists of some wall street, big banks who argued inflation, fears are overblown, and this is uh.

This is that two-sided argument we have which actually creates opportunities for both sides right when you have uh sort of one side of people going, there's no inflation, another side going, there's lots of inflation that that difference, creates uh the tug and pull that we're seeing in The market it creates that um sort of uh - you can almost see it as like a magnetic force of of repelling each other and that that oscillation of back and forth creates uh, creates these opportunities in in lower stock prices and they come and go. It's kind of fun. The way i look at it, too is just build your exposure, build your build your asset base uh. My belief, certainly that um the goal is to own as much as possible in terms of shares and the stock prices vastly so dramatically.

In the short term, uh you know getting in at low entry prices is the goal all right. Let's see: crypto uh yeah 56 000 on btc btc. Let's see btc ethereum yeah, look at that bitcoin sitting at uh or just briefly hit 57 here and now sitting at 56, 600 and ethereum right now is sitting at almost 3 600.. We did briefly drop there for a moment to about 33.85, but that was uh about an hour yesterday, where we got down to these uh, this just below 34 figure and uh for a brief period of time as well.

So then, we've got cardano ada sitting at uh, 21, 221 good. So what else do we have uh yeah steve here says the the reserve bank should provide a timeline when they say transitory. I i think the problem is they. They just don't have a timeline uh.

It's what they're doing is they're saying: hey, look we're looking at the underlying aspects of inflation, the underlying pressures and we believe them to be in transitory markets. For example, uh used cars yeah. Let me see if manheim is updated at all. Take a peek here when you see that used car prices are up now.

You know that can't last forever, you can't get. You can't get a surge in used car prices month over month over a month of 10, 10 10, but wow right now, they're actually even higher now than where they were at their peak in may. That's incredible! It's uh! Gotten worse! So i last looked at this index: i'm going to put up a picture here one second, i last looked at this index in hold on a sec. There we go.

Let's see here, follow nancy pelosi's buys the problem with uh nancy, pelosi's, pies or or her buys. Not pies thinking of m1 finance problem with nancy pelosi's purchases is usually have a 45-day delay in when you actually see what those folks are buying but uh anyway. Yeah, take a look at this, so we've been thinking that used car prices would inflict downwards and and they have, but they started coming up again now they didn't originally go back to their may pricing. When we last looked at this manheim vehicle index, which is an index that tracks used car prices as of last week, is when we last looked at this index, and we thought okay, all right.

So there's an inflection back to the upside in the manheim used vehicle index, but that's okay! You know, so it came back up a little bit. It's not going to keep going. Is it well look at the look at the chart right now? So here's your may. Pricing, this was sort of that inflection point to the downside in the shelf we hit the used vehicle index, as of today is now actually a chunk above where we were in may in may.

We had a reading of two of three coming in now. At almost 205, which is incredible because we were expecting this to rotate to the downside, uh now right now, that is only a percent, but the chart gives us an idea of of potentially this inflection point again in the market, where we do see uh prices that That came down temporarily as expected, but then, as not expected, uh or or are skyrocketing back up and that's not good. Let's take a look at lumber. I just says another example here: ta yeah take a look at this wow uh, the lbs now uh back over 700, almost back to 725.

This is lumber if we zoom out to the sixth month, we'll see this massive plummet in lumber prices, but it's really not until when you go out to a year, or even the five year chart that you see this incredible spike here with the pandemic yeah the Pandemic, i would say, we'll see recession, let's see if we can find it so recession's right here where my mouse is where we went from lumber prices of about 446 down to about 300. lumber prices, then uh proceeded to skyrocket, uh excessively to about almost 1600. That has substantially fallen since in the last six months here, but which just drop was expected uh. The drop is definitely expected.

However, what again is not expected is the fact that look at the last month here folks, we've been straight up in lumber prices again, and this is the danger that we're facing right now is we're facing this. This scenario, where golly we thought prices were going to go down, they started going down. Everything started suggesting that uh central bankers were right, inflation was temporary, everything was going to be transitory uh. The re there were going to be two big sort of bouts of inflation.

There was going to be one when we compared base effects that was going to be april, may june, sort of data that came in and that's comparing to the whole of the prior year to see a year-over-year boost in numbers. And then the second was going to be the reopening that we would see a surge in spending at reopening, but then we would see a subsequent slowdown and we actually did. We saw a surgeon spending this summer and then, as we started, seeing delta come back, we actually saw a slowdown in consumer mobility in in spending consumer spending, consumer confidence. Everything really rotated back to the dark side around the end of august.

How uh the end of july to the end of august, however, as uh delta has vastly dissipated, we're we're again seeing somewhat of a resurgence and now we're seeing flight cancellations. Uh supply chains stressed more than ever before things aren't getting better and some in many cases, they're getting worse shipping time frames and freight time frames are worse than expected. You look at the port, of los angeles, usually has one docked. Uh freight ship now has uh somewhere around 80, docked freight chips waiting to be unloaded.

All of these things are driving prices up and again we're seeing this inflection here in not just lumber but in the used vehicle index aluminums, also at an all-time high right. Now. It's somewhat unbelievable how persistent the inflationary powers have been and uh earnings are going to reflect pain because of this, and i think this is why you are starting to get some more downgrades as well before we head into the earnings cycle, as uh institutions. Try to sort of call the uh the inflection to the downside, so they can show that oh we're right, but anyway uh so uh yeah, it's it's! It's gon na be a big issue that we're gon na have to pay attention to, or the inflationary fears.

Now i will say, the the markets are surprisingly resilient in how they're pricing inflation. If we go to the 10-year treasury bond and we look for rates, we can often times see this as a little bit of a forecast of what the market thinks inflation's going to do and what was very interesting was we spent some time kind of stuck at About 150 to 155 and uh, there were a lot of forecasters, suggesting okay, we're not going to go back to that 172 or whatever that we had previously uh we're just going to level out by one five to one five five, and that always seems like it's An argument of forecasters is that, oh, if things are going wrong, don't worry it's it's uh! It's just leveling out! It's just temporary yeah! Well, now we're at 1.61. Let's see what the 10-year break-even's doing, 10-year break even treasury rate, so 10-year break even nice way to to also look at what's happening in terms of inflation expectations and basically, as the sin flex up, inflation expectations are going up. So take a look at this right here.

You've been pretty flat here on the bond market uh, it's really from april, through about september, you've been relatively flat, with the exception of a little pop here in may and, of course, we're going into the beginning of the year. We saw a nice rise here in the 10-year break-even rates, we're finally starting to see an inflection up again in in how this is being priced, and when you see it's a little easier to see it here. You can kind of see this little trajectory here since about september 22nd, where the 10-year break even is moving up again and if i zoom in a little bit more recently here since the 22nd, you can really see this nice move to the upside here and again. This is the and here's may and again this is the 10-year break, even which tends to be a little bit of a forecast for what the market believes inflation's going to do, and we are getting a very similar, may ask style push which it's worth noting that In may, we had some pain in the markets.

Some stocks dramatically oversold, for example, take uh. Take a company like end phase that in may sold down to as low as about 108 120 as opposed to to really trading mostly sideways around that 150s, where we've kind of been and uh and - and this was actually such a low sell-off that you had uh The company itself buying a chairs back as they saw it as uh relatively oversold, so, which ended up, of course, being a wise play, but uh look, it's it's everything and, and now folks are even suggesting that biden's vaccine mandates for companies with over a hundred employees Are going to lead to even more worker shortages, more labor shortages, a lower labor force, participation rate and more service based price inflation, which one of the big fears for inflation is service based pricing. So we'll have to keep an eye on that as well. Service based pricing and rents are going to be two of major major factors that that lead inflation to potentially inflict up, plus, of course, uh.

Some of our ogs, like car prices, which we've seen car prices now move up. Here's actually a comment we'll throw it up on screen here. This is an interesting comment: sort of piggy piggybacks off of my talk about a lot of folks getting their flights canceled this weekend southwest having about 70 uh 20. Sorry, 27 of their flights cancelled on on this uh sick out movement, where people are calling in sick in protest to vaccine mandates.

Here's a comment both of my parents work for the airlines. I think it's funny that people in the industry say the airlines, american delta and regional air traffic controllers are planning more sick outs before they're laid off for no vaccines. Half of pilots are ex-military, something to think about yeah. That's incredible! So uh, let's see here, here's uh so, for example, some other comments here in the chat.

I would quit my job before i seeded to a vaccine mandate. It's going to be interesting. Folks, we've got, we've got some serious headwinds and the vaccine mandates certainly are not helping uh. It's also not great news that there was a headline this weekend that mercs red pill, their covid emergency pill might have to be partnered with uh with other drugs to be most effective.

Now that is pretty common to have some sort of cocktail of drugs, but it's not what was initially pitched uh or discussed, although that was deemed a possibility and some some see that, as as a negative catalyst is since the really the merck drug was seen as Such a potential boon for recovery stocks and and the reopening play anyway uh. Let's go ahead and take a look at some sticks and see what we've got but uh yeah lots of things to think about. So, let's see what what, if anything, is uh sitting green right now other than crypto, which we do of course expect crypto to continue to do well, as inflation fears mount uh and crypto does appear to, and it does tend to be, an inflation sort of um Hedge, at least that's what about fifty percent of those of you. When i survey you uh, seem to think uh or at least believe which, which is good good transparency.

We've got uh sophie up, uh four and a half percent here, very nice, dutch bros up three or three two hut, eight minings up a little bit. One point eight two percent uh, let's see here, we have uh hippos, actually up one point: four two: it's had a little bit of a red streak beyond meat sitting at just 101 for beyond meat kind of incredible xl fleet sitting at about uh 0.93 to the Upside interesting, with sort of the downgrade on highly on that excel fleet would still be doing well, neo sitting at about point six: nine percent to the upside, not even holding a candle to what bob was pulling off right now, baba pulling off 5.37 on uh on A very sort of epic rebound as those fears of uh china, evergrands contagion really beginning to subside. At least uh recovery plays dave and busters uh. Obviously, the airlines, a little bit to the downside, not much you know southwest, is really the one who was getting burned.

Most here, uh and - and i bet a lot of that - is really just fear - that these uh walkouts are or sickouts are going to continue happening, delta, airlines, 0.73 percent - to the downside spirit down point five: eight percent get two minutes to the bell. Let's take a brief lesson here to jim cramer: actually, it's not cheap. It is trading below where it should be. David, cole, brewed, cold, brew, cold, brew, cold brew, so you have this date.

So he's talking about starbucks all right, so uh all right. What else do we have? Let's uh, let's take a look at some other headlines, while we wait for the market to open, see if there's anything, uh interesting, uh. Look at that! Actually, this! This is a very interesting article. We'll look at that.

In just a moment. America needs higher, longer-lasting inflation, larger and longer-lasting. Yes, that is what we all need. However, grandes rags to riches founder is trying to save his empire.

World's energy. Chaos turns russia into top emerging market. Pick clinton. Energy stocks are being diluted by huge cash inflows.

Yeah you get big cash inflows into funds for emerging markets and uh. The potential returns for funds tend to uh disappear, uh all right, so california, fire threat returns with diablo, wins and power cuts. Ooh got ta love power, cuts in california, nothing like paying some of the highest taxes in the country and having your power go out, yeah that makes sense um all right. Let's see what sticks here so all right, all right! We are now uh about uh 15 seconds away from the opening and let's go ahead and actually switch in back here and listen in people not working today.

By the way it doesn't mean i mean a lot of people not in the office, but that's just that's so typical. Yes, all right here we go an s. P 500 heat map looks like it's about uh 50 feet. It's like yeah.

It's looks pretty 50 50. Today, maybe a slight red there: let's go ahead and see how individual stocks are opening up. Let's go to the minute chart here. Just to see the open looks like southwest pushing to the downside, uh i'll, let too soon to tell alibaba pushing to the downside right on the open here, but dq rotating up chinese energy and solar panel manufacturer here.

Uh you've got steel dynamics, uh rotating up and marathon hud 8 uh moving up slightly here. So you got your crypto miners moving up end phase, actually up 1.83. Somewhat of a surprise. You have draftkings going green.

This market tends to be pretty resilient on on red. Opens where it does like to try to go green looks like the s p. 500 is trying to do exactly that. A firm was green in a pre-market, looks like pretty flat right now in pre-market uh squares, trying to push for some green as well.

Let's get okay high leon's worsening now down 8.25, and so is southwest down about almost four percent here: etsy down 1.66 tmc, the metals down 5.7, a firm now down about 1.3 percent so for some reason a firm doing a little bit of the sell-off dance. Although it's hard to find it right now, because it's bouncing around so much, let's go take a peek at amc. Opening volume is always funny. Uh yeah there you go, amc started off tiny little bit green there now rotating down a little bit more sharply.

Tesla tesla in the green, but it uh it is red candle, sticking down shift technologies rotating down as well so far on a bit of a tear here up 5.25 percent dq 6.8, canadian, solar, 2.6 and phase 2.. I'm surprised a lot of the energy companies are moving together here. Look at that solar edge, end phase sun power dq some kind of real push here on on uh. The energy plays possibly as oil is skyrocketing, uh that uh that we're seeing an opportunity in uh.

In some of these stocks, i had eight mining all of a sudden up, uh four percent as well. So a nice little push here on hud, eight, hmm yeah! If you work for the government uh, i think a lot of a lot of people are off today, thanks to columbus day. I never got columbus day off as a child, so i ain't taking columbus day off today, ah looks like there may have been a price upgrade on sofi. Let's see if we can get a rationale pulling that data now so uh all right, selfie climbs as morgan stanley initiates an overweight 25 per share.

Uh. Let's see it calls it a revenue, growth story yeah. I i really really despise. When companies call a stock, a story stock like oh, it's a good story, because you know what company was also a good story.

According to jp morgan chase nicola nicola, the only way they could justify, having the damn thing in their portfolio was calling it a story. Stock and that's what i think is is just like, sometimes pathetic, about the marketing that we face, because it's like you, know ridiculous uh. It's like oh. I can't do a fundamental analysis on things so i'll just call it a good story: stock, yeah, whatever whatever yeah.

I i don't, i think it's stupid rationale, uh, but i do love the fact that en phase is up four percent right now, a lot of these solar folks moving moving moving right now, matterport moving uh again makes sense when you get sort of a potential uh Energy crisis like uh, what we're seeing in oil that you would see renewables move but uh night, it's been a while, since we've actually seen a move like this highly on down almost full 10 now and 9.2 southwest 4.2 etsy 2.81 to the downside and a farm Is down about two percent uh united airlines down 1.75 affirms one of those i'd like to add more to but boy, oh boy, it's gotten quite expensive, yeah where's disney sitting right now, that's another one! I want to grow in the portfolio a little bit disney's down about one percent. Let's take a peek at uh tesla stock here, tesla's actually running a little bit it's at 790 right now, stocks are looking or the sticks are looking good for tesla. Moving to the upside, probably probably also an anti-oil play on uh tesla you've actually got corsair gaming up a half percent today and uh charge point up: 1.8 percent um again matterport up 2.6, but also over 20 dollars and uh. The end phase run uh.

Oh, this is alibaba, actually the chart here, 4.4 to the upside on end phase, still doing well. The end phase run though uh at the moment, continuing sitting at 161 for end phase, not uh, not bad, and let's take a look at hippo stock. Not the warrants here, uh hippo itself is actually down, and so is lemonade and sure tech getting beat up a little bit lucid square airbnb. Google, these guys dragging the indus well they're, not all in the indices, but these guys dragging down a bit apple.

Barely green 0.06 yeah fangs really had a little bit of a rougher ride here, let's go ahead and look at uh the headline indices again here as usual: uh all red right now, including the uh. Well, it might be too early. It's too early to tell on the russell but uh worth mentioning that if you want to get up to seventy dollars and totally free stocks, go to met kevin.com public to get a free stock worth all the way up to 70 dollars. And if you want to join me in my course, member live streams where i talk options and trades check those out uh in the course links down below where you can get 41 off, using that coupon code diamond hands, check it out and again metcalf.com public.

For that up to 70 in free stocks, okay, let's uh, let's see what else we have on uh on news here uh. Yes, we were going to review what america needs. Let's go ahead and take a peek at what america needs, which i think is uh honestly somewhat hilarious, the way they've titled this but uh, you know they've uh. They got the good click bait, so we'll we'll give them a shot here.

So this particular article is called america needs higher longer-lasting inflation. It is an opinion piece by carl smith. Personally, i always like to look up who the authors are. This is a bloomberg opinion columnist and formerly the vice president for the tax foundation, which leans slightly to the right side and a professor of economics at the university of north carolina co-founder of the economics blog modeled behavior.

All right. Let's see what carl smith has to say, uh all right, so carl smith tells us. The administration of joe biden has repeatedly assured americans that a sharp uptick in inflation is transitory and temporary. Yeah.

Okay, not surprising that somebody from the tax foundation is starting off by bagging on byte, but it is worth noting how political inflation has gotten, and that is because of the infrastructure package debates in congress congress regularly uh tossing around inflationary concerns where you actually have people Like aoc, who, i believe, has essentially zero to negative financial education, uh or knowledge, er, saying things like: oh, it's transitory, don't worry. We can spend to the moon and and there's like no adjusting her opinion at all. And then you have uh people on the right who are saying hey. We we can't just go, spend trillions of dollars, we we're an inflationary environment, and the last thing we need to do is raise taxes to hurt the economy, the economic recovery and spend more at the same time.

But anyway, a survey suggests that the public is less convinced, but consumer expectations of inflation are notoriously fickle. Also true uh, the consumer expectations of inflation are a riot they're, not they're, barely worth mentioning, but anyway, all of this has economists and central bankers uh dutifully pouring over data for signs of weather inflation. Currently, it's just under four percent will well, i mean depends if you read cpi we're just over five percent, but okay uh, we'll drift back towards the federal reserve's two percent target. Instead, they should be considering a more fundamental question.

Whether the fed should strive to make four percent inflation permanent ooh, it's actually an interesting argument that what if you just raised your expectations and you left rates low longer and you found inflation to be more acceptable now inflation remember hurts individuals with consumer debt, so that Would be uh debt related to assets that do not increase in value? So if you have credit card debt or student loan, debt inflation hurts you, it makes it harder for you to pay off your debt because you're not earning as much money. You're, not net earning. As much money, whereas, if you own real estate and there's a lot of inflation, your rents go up, your your asset value goes up and your debt actually becomes a smaller burden relative to the debt that you originally acquired, which is a wonderful thing, and it's wonderful Reason that i love hedging my stock portfolio with real estate, i really think it's an under appreciated balancing factor, but anyway, four percent inflation is the argument. This particular professor is making here to be clear.

There's no doubt the recent rise in price growth has been an unpleasant shock. That's partly because it's so uneven prices on commodities like gas and lumber along with a few select goods like used, cars have risen by double digits. A sharp increase in the price of even a small set of products creates far more pain than a rise of overall inflation, which is averaged across thousands of products. It's true when we go through that inflationary list of of what the cpi is reporting, it's just some sectors like women's dresses.

Right like we see like. Oh my gosh, it's about eight percent. These things can have this disproportionate uh push up on inflation. It's incredible but narrow inflation is also the type of inflation.

That's more likely to reserve reverse itself, since it reflects supply chain disruptions. This is true. This is what jerome powell is regularly referring to is anytime. We have individual sort of sectors really showing inflation, but everything else more, broadly, not showing inflation.

Then that's good, and that reflects more of a sort of an acyclical type of inflation which which is basically a way of saying it's, not structural. It's not something. That's built into the economic cycle: instead, it's something that's here, because we don't have enough labor, we don't have enough uh, you know raw materials to make certain goods whatever or their shipping delays and and that pricing will will reflect back now. Remember some folks say: uh, hey how you know if you can raise the price of of gas to ten dollars and people buy it, why would you not keep selling it for ten dollars what's to ever make that go down remember this is where it's important.

To put your capitalist hat on that, the free market will push prices down as long as everybody as long as somebody can figure out how to manufacture something more efficiently or get something at a lower cost. Now the issue of longer lasting inflation is when everybody has is pushing pricing up. Analysts are concerned that the rise of inflation may be persistent because they see hints of a broader gentler rise in prices across a range of goods and crucially in wages. Wages is a great way to see prices go up on on everything right, because you need people to sell, essentially everything either sell or make higher rate of inflation, and correspondingly higher wage growth could be a net positive for the economy says this individual though uh.

He believes that an increase in both wages and prices can lead to the dreaded wage price spirals where, if you raise wages, you'll have your input, costs go up and the prices go up. This tends to be an oversimplified argument, though, that we really see uh, because right now we're not seeing much of that spiral yet we'll see if it happens, but right now, that's it's a little bit oversimplified in terms of what's happening. So this individual talks about the two big reasons here: debt dynamics and higher inflation makes debt more expensive but easier to manage. That's when rates go up.

A permanent increase in inflation from two percent to four percent would cause interest rates to rise by roughly two percent. As well as lenders sought to protect themselves from rising prices, interesting argument, uh, because in some sense, if, if this individual is saying that the fed should be okay with higher inflation like a two percent or a four percent inflation rate, then usually to accomplish that they Would keep rates low longer, but he's saying if inflation is running at four percent, then possibly private market lenders would would raise their rates because otherwise they'd be making essentially free loans. If inflation's four percent and you're lending it on a two percent, that's not going to make much sense. Uh all right.

One way to see how this would play out long term is consider the mortgage market. Higher nominal interest rates would mean higher monthly payments for any. Given loan that might seem to make houses less affordable, but what's been clear over the last two decades, and what economic theory predicts is that housing prices in the most desirable urban areas are determined by the maximum mortgage. An affluent urban family can afford buyers in those markets bid against each other for a relatively fixed stock of housing.

This is true, i mean, like you, look at like coastline real estate in california, for example. It's very difficult to build more building in california in general. Is a complete disaster, and, and so you get the sort of concentration of potentially higher incomes where people are willing to pay higher anyway higher prices anyway, and so maybe, even though interest rates go up, you could still see prices move up in some areas. It's an interesting argument.

Over the last decade, a nominal interest rate, uh nominal interest rates, fell, families were able to take out larger mortgages, so maximum bids rose overall buyers ended up taking on roughly the same monthly payment, yet wage growth has also slowed over the last decade. So we haven't seen mortgage payments decline as a fraction of income. A modest increase in inflation wages would reverse this process. Ah, this is where he's making the argument.

So his argument here in the uh is, is really that uh, as as we are able to increase wages, maybe we'll finally actually start to see housing become more affordable over time as as a percentage of individuals, income and that's actually just his first reason. Second reason he gives for higher inflation would be uh, let's see here higher interest rates, giving the fed more room to cut interest rates in the event of a crash. That's true! If you're sitting at zero percent, it's kind of hard to cut interest rates and goes on to say that the next recession, hopefully will not be the result of a pandemic. And that means that congress is unlikely to provide the same sort of level of stimulus.

And so, instead, we'll need higher interest rates to go into a recession, so that way we can cut rates if we need to inflation, in particular, when caused by a sharp increase in a few products is politically unpopular, a modest, sustained increase in prices and wages. However, would create a more stable u.s economy by improving debt dynamics? It's an interesting argument, so this this belief that hey you know if we, if we raise uh our inflation expectations and we allow inflation to run a little bit harder, then maybe we can allow wages to go up. People will be able to have lower payments as a percentage of their income kind of a an interesting argument and prep us a little bit better for a potential recession. If, if we end up heading towards one, but in the meantime, we have had a stocks run.

While we were taking a peek at this inflation dynamics argument and take a look at this, we've got sofi technologies now up about eight point, one one percent: that's an additional three percent, just in the last uh few minutes here of uh, of reviewing an article here And face up a beautiful five percent right now, very very nice. You've got a lot of the uh energy plays canadian solar moving up very nicely dq. Very nice matterport is actually up a nice three percent as well. Very good uh wind resorts coming up.

One point: eight, eight percent - that means wind sitting at 87.68 right now, let's take a look at wayfair. Wayfarer is actually down really sitting on this potential support line here down about 1.56, taking a peek at some of the things that are getting beat up at the moment highly on down about 9.72 uh owlette continues to bounce back to about four dollars i'll. Let down about four percent a firm down two point: nine percent. At about one point: three seven: we talked about wayfair shopify, upstart lucid.

These are some of the losing names today lion electric boy i haven't talked about that one in a while att sitting at just under 27, keep in mind, they did cut their dividend from some of those highs about a year ago. Uh boy 18t was something else. A year ago, the dividend yield was uh incredible yeah. Let's see here, arrival mp material, sos gamestop fastly up two percent starbucks up one point: five: six percent on tesla tesla, nicely bitcoin bitcoin right now, sitting at 57, 200 on this higher higher inflation, talk lots of uh lots of fears, lots of them.

I say all right so uh all right. What else do we have and let's go ahead and listen to jim cramer here for a moment what we got over here, you're skeptic, yes, is he i would call him a skeptic yeah. Well, roger mcnamee got the the front page story there too on time magazine. Well, that's facebook, but he does not influence the company.

He owns time magazine they're, not really saying anything. I i think, i think what they're saying is: uh check out kevin's programs on building your wealth linked down below including programs on making youtube videos, stocks in the psychology of money, options, trading, fundamental analysis or real estate. Investing property management check those out down below all righty, so uh yeah. Let's take a look at alibaba, alibaba alibaba i did uh.

I did invest a good chunk into uh neo for some chinese recovery plays, though i have to say, alibaba has been a little bit of the better play last three trading days, alibaba doing very, very well up 4.7 right now, neo uh trading at about 1.62 percent. Up so still up, just not as much we are seeing. Uh, chinese and energy stocks do very well today and phase, for example, sitting at just five percent at the moment, with uh sofa still sitting at about seven and a half percent slight minor little pullback here uh, but uh still doing extremely well with uh mad reports Sitting at that 3.75, 3.5, 3.75 level, very nice all right! So, let's see what other headlines we might have sue. Okay, we talked about america needing higher inflation for longer elon musk, tweeted, bezos silver medal yesterday, as they continued to poke each other.

It's kind of funny. Uh, how california lost a million jobs and gained three third yeah uh lost a million jobs by sucking and gained money by federal bailouts. Talk about that a different time so uh, let's see here, oh, would the charlie munger say something about alibaba. Let's take a peek ali baba - let's see here, i don't particularly see anything about that, but it could be a little early, okay, launch announcement, gosh, there's so much news on alibaba all the time.

My goodness, let's see yeah, i don't necessarily see anything particular um, but anyway, all right. So uh uh huh monger increased his baba position. Oh the monger thing was like five days ago. Ah, that makes sense.

Okay, alibaba, charlie munger, oh yeah barons. Look at that! Oh nice, charlie, munger's, firm, double down on this alibaba investment, ooh, so charlie munger. Obviously warren buffett's right-hand man here huge huge inspiration. A lot of people follow what monger does and uh it's uh.

It's worth paying attention to. What munger does i uh? I completely support that, especially as a truly legendary value investor. It's it's worth watching what he does and potentially you know some people even say it investing in some of your portfolio in some of the moves that he makes as a way to diversify your own portfolio. I personally was very tempted to buy alibaba.

I uh again i bought neo and said, but neo does not have that that uh terribly low valuation that alibaba does and if anything there might be a way to quite frankly, diversify your portfolio as with baba as a play and uh this. This is a huge uh. You know how should i say it endorsement by baba to er by monger for baba it worth mentioning that right now, alibaba is expected to have 27 percent growth next year, with an eps coming in at about uh 59, which means we're selling for about 3x uh. 2022 earnings, which is insanely low and 2025 eps expected to be about 104., so this it doesn't makes.

It makes sense to me that this is a an incredible uh. You know potential value play here. Yeah, let's go pull up baba here. I and i've been tempted to do this, and i've been mentioning it for about two weeks now, as the uh chinese evergrand situation in my opinion has been relatively overblown.

This is uh also just the day chart here before we go review. What uh, what monger potentially has said, but anyway we're sitting at 167, which it's worth noting at 167, is uh it's somewhere in line with levels that we saw pre-pandemic there have been some runs pre-pandemic and then, of course, during the pandemic, we had a nice run To about 300 on alibaba, but uh, a nice bounce here off of the 138 to about 168 one right now that works out to about a gain of about 21. So far, uh some folks mentioned that uh. It's it's too risky to invest in in chinese stocks.

Uh and there are a lot of of risks investing in chinese stocks. So there's there's no question about that, but uh let's go ahead and try to understand a little bit more about uh what uh, what monger's up to so, let's get in here warren buffett's, longtime partner, charlie munger, disclosed that his firm has nearly doubled investment into alibaba. So, let's see here, the daily journal provides uh. Okay, let's see here daily journal publishes newspapers and websites covering california; arizona produces okay, let's see here, munker uh, okay, he also invested in the daily journal.

I see uh or he's the chairperson he's the chairman of the daily journal. There we go a vice chairperson of berkshire hathaway, chairman of the daily journal, providing insights on investing expertise. The daily journal disclosed last week in an sec filing that it owns 302 000 shares of alibaba as of the end of september, which means it ended up buying 136 000 in the third quarter, interesting uh. So it's not like al uh, munger perfectly timed.

The dip here, if uh, which is fair, i mean you, don't necessarily expect, but really it sounds like he was buying a lot in between july august and september as this dip was occurring. So, quite frankly, if you were to buy now at 167, you're - probably paying about what monger was paying over the last three months, so that endorsement from baba is not necessarily dated to the bottom pricing that we saw around the fifth or the sixth worth mentioning uh And, quite frankly, i think that's uh, very interesting to me. Uh, it's usually you know you, it's frustrating when you see, oh somebody doubled their position and then it's up 21 from there or whatever. But that's not the case here with charlie munger.

So it does look like he declined to comment on those purchases and uh alibaba had fallen 35 during that third quarter, while the s p 500 was flat. A lot of folks do give charlie monger and warren buffett a lot of heat for lagging the s. P. 500 and wonder if they've lost their edge, but then again with uh in china.

You've had this insane ramp up of regulation, alibaba invested in a self-driving startup uh as well. Here they link an article. We can take a peek at that in just a moment. Last quarter alibaba started surging, possibly due to broader a broader relief value rally so far up nine percent in the quarter and as we saw 21 percent from its low there munger told the daily journal uh that they bought the stock with cash equivalents.

That would usually be invested in treasury bills, but returns on bills are now so low and its long-term prospects seem good, and it does also note that a common stock is generally not considered a good cash equivalent, even though he's kind of making that comparison he's. Basically, comparing investing in alibaba to treasury bonds, even though he's saying hey like don't, don't listen to this, it's not a cash equivalent, he's basically investing in alibaba as cash right now, just kind of an interesting uh way to think about it. So good job, charlie monger, on baba, although again he's kind of been averaging down, he's really been dca on this one uh averaging to the downside. Let's go ahead and see how the s p is reacting right now, let's go pop the spy spy sitting at about a third to the upside here, very very nice uh run here on the spy and uh we've got sofi technology still up.

Seven percent solar companies doing very well here around five percent up on solar edge, sun power dq. This is uh the uh asian uh or chinese solar company see here that they're some of their numbers. They are up at 9.93 right now on this broader energy bump and uh eps expected to be a little bit lower next year. Let's see 10.69 next year and actually decline, wow their eps somewhat declining bizarre.

They must get some large contracts that really skew their numbers. Okay, that's gon na mean analyzing. That was a little harder uh anyway, uh makes sense, charlie monger looking for some of those inexpensive opportunities, a firm still down about 1.9 percent nominal, but it is still moved to the downside. S p uh now nicely green.

Let's go take a peek and see how cnbc is reflecting the market right now. Wow, look at this folks. The market literally went green. We opened red and uh.

We opened pretty nicely red and uh good uh good good move here. Very nice point. Four, eight percent on the dow s p now point four three nasdaq point: four russell, two thousand point: two three good job very very cool sheep seems to be on a little bit of a run right now and uh markets uh nicely green again here again, led By energy stocks, not the airlines, tesla up 1.59 neo up 1.4 vehicle companies moving nicely yeah, lemonade's, actually positive, and so it's trade desk right now, very nice. All right, let's see if we got any other headlines here in the meantime, remember to get your free stock with public medkevin.com public uh worth up to 70 and, of course, check out the programs link down below on building your wealth price does go up over time, Especially since there's all this transitory inflation last time was about what 50 bucks all right, china's property market faces a 5 trillion dollar reckoning.

That sounds scary. Tariff relief plans fall short yeah. A lot of folks were really hoping. Biden was going to settle down some of the uh insane pressures with china, and things have potentially, as they're being interpreted now, gotten worse netflix, to sell squid game goods on walmart nice, so uh all right, well, uh, good recovery in the market very exciting.

I, like it, love buying the dip, and i got green now, uh, it's so folks, i would say uh, that's it for right now. Thank you. So very much for being here appreciate you and i'm gon na be going to the course member live stream after i make another cup of coffee and say hi to the little kids. So we'll see you soon thanks so much folks, we'll see ya.