Everyone me kevin here. A couple weird things happened in the stock market today in in addition to the fact that some stocks ended up green tesla and nasdaq ended green. So what happened what's going on a couple weird things happen and warren buffett's up to his old antics. Again.

What are those well let's talk right after i mentioned that this video is brought to you by public go to medkevincom public deposit. Any amount of money and they don't even use payment for order flow and they'll give you a stock worth all the way up to a thousand dollars go to medcamcom public to learn more okay. Folks what happened today well one of the first things that happened is we had the biggest falls in the 10 year. Treasury yield in decades any number above this zero line here would represent an increase in yields any number below that represents a decrease and what do we see right here look at this massive plummet.

We had the only time we had this before was over here in the covet pandemic and over here in the great recession. And then the residual of the great recession over here as we started sort of the taper tantrum. But this is quite remarkable that we have seen such a plummet in the 10 year treasury at a time where the federal reserve is trying to tighten financial conditions. This is a representation of a loosening of financial conditions.

Which is really really bizarre because over here you were in a recession you were in a recession. But you also had the federal reserve at the same time saying hey we're going to try to help the market smiley face. We're going to help the market smiley face over here you've got the fed going no no no we don't want tighter financial conditions. We want to tighten things up we don't want to loosen things.

So. Why is the bond market loosening at the same time. As the fed is trying to quell inflation. Well.

It seems to be that the bond market is convinced that we already have a resa recession on its way. We know that the 10 2 yield uh. The spread between the 10 year. Treasury.

And the two year already inverted once on april 1st and once again a couple weeks ago. But only for about 18 minutes a couple weeks ago and for about a 36 hours on april 1st which we thought was a joke until it reinverted. But anyway. What's really staying inverted right.

Now is the twos and the fives and they tend to invert prior to a recession. Here we are folks look at that we are inverted here. Just like we were inverted over here. Before the red bar.

Red bar represents recession look at that we were inverted over here. And we were inverted over here it happens every single time. It's not magic the market's telling us bluntly. Hey.

We're now more worried about a recession than we are about inflation. There's a reason why every time. We look at the ten year break evens or the five year break evens. Which is the market's expectations for inflation.

There's a reason every single time. We're seeing this over the last couple months because now markets are actually concerned that the federal reserve is going to make a policy mistake now of course you've got folks like bill ackman. Saying. Hey.

We've got to get to four and a half or four to five percent on the federal funds rate to get rid of this inflation and that might be true. But folks the markets today are reacting that hey we're way not worried about inflation today. We're actually just more worried about being in a recession. Because what do people do when we go into a recession is well generally they try to flee to safety bond market.

If it's paying you three percent yields. Why bother being exposed to the stock market. If you could get three percent for the next couple of years each year and boom. You're done right forget about it.

But what else happened today and this was the other thing. That was weird is we actually saw oil futures plummet during trading today. The white line here represents oil futures so the blue line represents the dollar as the dollar strengthens. It's usually because there's more demand for the dollar oftentimes.

More people buying bonds more people are buying bonds and that's one of the reasons. We're seeing bond prices go up and yields go down. And so people people want these bonds right now because they're worried about a recession. But what also happens in a recession well we start seeing commodities that are used for production go down like oil oil not only used for production.

But also important for consumer spending and travel and plastics and many other things in our lives. And so the market today is taking the stance that folks we don't even care about inflation right now we're more worried about the fed over tightening and us actually going into a recession. Now you can see that here. As well.

Because this folks is a chart of copper. This is a chart of copper pricing. It is a year to date chart. So we've got january 1st on the left side and then over here we are in july.

And you could see that in just the last couple months over here we have seen oil plummet uh. I'm sorry copper plummet uh. We've obviously in the last couple days seen oil plummet. But copper one of your most important industrial and production metals.

Especially important in evs evs use somewhere around four times as much copper as uh gas powered vehicles do but we're seeing copper plummet in price. And this is following nickel and some other futures uh for other commodity contracts as well whether it's fertilizer is coming down you name it we're seeing commodities rotate down baskets of commodities are they're all rotating down. And this is where the market seems to be screaming at us hey look what we really need to understand is we're in a situation. Where stocks are going to continue to go down.

They might bounce around and go down bounce around and go down. We're going to continue to have this pain until we hit some kind of floor. Which who knows maybe that floor is qqq you know 278. Which is roughly.

Where we were this morning right we need to hit some kind of floor and the only way we get off that floor is when the market believes hey we finally finally are actually responding to the fact that we might be inducing a recession because until the markets tell the federal reserve hey we're going into a recession. Y'all are tightening too much how do they do that they do that with oil coming down. Which is actually disinflationary that's good right they do that with commodities coming down with copper coming down. And this is what's so confusing about this market right because we're waiting for the fed u.

Turn. Uh. And and there are a lot of things. That say hey fed you know we've got.

Cpi. Coming in. Hot. Cpi is probably expected to come in at 88.

Percent. Uh. Which which is crazy this month. It's going to be an insane read we thought last month was bad it could be worse this month.

So that's hot this would be cool cooling would be oil coming down commodities coming down copper coming down hot. Would be cpi coming in higher than usual again. We still got that lagging impact of owner's equivalence rents in there. But what's so crazy is even though we're getting all these hot reads on inflation.

The bond market and commodities markets are telling us no no no no the recession is the bigger issue here and the way stocks react to this is fascinating stocks hate this because it means. The fed has to get more aggressive stocks actually like this because it means. The fed might not have to be as aggressive. So again.

The hot side stocks hate. The cool side stocks like why because if oil and commodities come down. Then input costs go down. And eventually inflation will cool.

And the fed might react. And say hey look if commodities start coming down on their own and some of these these uh items start becoming less expensive then we will naturally see cpi both core uh and headline cpi come down and that could mean a softer reaction from the fed and the market is not necessarily in my opinion and i know the phrase this time is different is a dangerous phrase to use. But i think there's a potential that this time is different and the fed is going to have its actions priced in well. Before the fed actually u turns usually markets bottom.

When the fed u turns. But if the markets start pricing. In this cooling. And a fed u.

Turn. We could have potentially already. U. Turned to let's say here by the time.

The fed actually says uh. Oh. We need a u turn that could be a 38 retracement. A 50 retracement.

I don't think it would be as high as like a 78 retrace but somewhere in there right so this is fascinating in my opinion because really why when we're expecting such bad inflationary data to come up and treasuries are falling. Why would we potentially see stocks go green well again. It's because even though. We think.

The fed has to spank us to contract the economy. This might be doing more work for the fed than the fed just talking up yields. However. I think there are really huge risks here and i don't want to say that we're for sure like at the bottom here.

Because the big risk is the fed says. We can't rely on this. This is a problem yields should not be falling. Let's go.

Crazy. Fed. Speak. Let's hike.

Faster and let's basically talk yields back up to like a 10 year three and a half percent. Where we were uh you know a couple weeks ago. It's crazy that yields have fallen so quickly in such a short period of time and to some degree. I think the federal reserve is looking at that going uh oh uh we're actually seeing the market loosen again.

They don't think we're serious time to go give them a spankings. So i'll give you my thoughts towards the end of this video. But i want you know some people think it's just flip floppy to talk about different things. But the market does weird things that's why it's a market.

But it's very interesting to read in my opinion. Another thing that i think is very interesting to read is seeing what warren buffett is up to and here. You go folks. Oh.

Warren. What are you doing. Oh. Okay well you're.

Buying oscidonal. Petroleum right. Now his stake is above 176. Ownership.

In this company. Folks look at this. He bought 30 million shares at the beginning of the year over here bought the dip with 18 million shares here buys the dip again over here as we start getting a rebound. When the stock looks like a little bit of ta.

There even though we know warren's not too much of a ta or look at these timings. Though buys over here buying right now. I mean you look at the chart. It's like it's not that bad i mean we've been interesting if you did a little bit more buying over here right.

But still some of these other timings not too bad warren buffett is a pain buyer. But it's also interesting that if the market. This is why everything's so confusing and i mean i hate to say it but warren like i get it like oil definitely surged over here and this is when you went crazy for oil. But at the same time.

Mr. Buffett. We're seeing a nice little drop off here in oil uh. And it's it's been a pretty sustained drop off here.

I know we see this volatility here. But uh back over here back in april and march. What did we have we had this inclining trend now we're on a substantially declining trend. So and i mean look let's be real even.

The oil companies know that these high oil prices aren't going to last forever. This is why they're paying down debt and returning cash to shareholders in the form of dividends or buybacks uh to promote equity appreciation and maybe. That's what warren buffet is going for using cash to essentially create cash via his investments. Which is what you want during recessionary time is cash.

So maybe. That's the play not necessarily a play on the price of oil so what do we do i mean how do we play through all of this noise. Well i mean there are a few things that we can do the first thing that we could do is we could short oil. If you do think the market's going to continue to price in a recession.

We could short oil you could do this by uh you know shorting something like united states oil ticker symbol uso. Now this is something that i've been talking about for the last couple weeks. And would have paid off very well today. If somebody went heavy on this i've been talking about shorting oil for quite a while especially since we're so high on the retracement levels for uso.

However this could also explode right back to the upside. So you have to be quick on this one maybe set some stop losses right number two probably the biggest thing that you can do if we are potentially bouncing around the bottom is either start or continue dollar cost averaging in and one of the things that i'm establishing right now which i would recommend you do as well is and you could do this on any brokerage platform. But an easy thing to do is go to like something like let's say. An m1 finance or public or whatever.

But on m1 finance. You can make yourself a nice basket of some of the favorite companies that that you really want to invest in so for example those might be companies like nvidia. Or it might be n phase. It might be some tesla.

Who knows maybe you want to get some more value style plays in there or you want to get apple. Whatever now might be a time to take advantage of at least some of the deals now again like i said this morning. That doesn't mean you want to be a hundred percent in in fact a lot of people are playing a 50 50 portfolio right now and i think that's quite respectable. I think patience gets rewarded in 2022 and by no means do i think the pain is over.

I think we're going to continue to see the market vacillating and trying to figure out okay. What's more important is inflation more important is a recession. More important to us is earnings per share more important to us nobody really has the answer and that's why there's so much confusion. And that's why when you have these weird things happen in the market.

You can actually see green days. And you have things that appear to be good happen in the market and you have red days it's like it's super super bizarro. But hey at least for me my thesis right now is 80 to 90 percent in dca dca dca into my favorite companies uh sure look i sold in january. But the only reason i sold in january was to buy lower that's what we can do right now we can buy lower is it absolutely the bottom nobody knows nobody knows.

But it is very interesting to see this the market go from inflation's the worst thing ever to wait a minute. Oh man maybe we do have to price in a recession. Which forces commodities down. Which actually lowers inflation and when inflation lowers.

Then it speeds up the odds of the fed u. Turning and ending the recession. So it's pretty remarkable and now folks you've been asking for it one more thing. Yes folks one more thing take a look at this from bank of america.

Facebook. Warns employees on second half advertising. Slow down. I've thought that if inventories went up without a recession.

We'd be seeing a lot more advertising. That was my thesis at the end of the year before we were really concerned about a recession. When you go into a recession. Spending gets cut and the opposite happens people spend less on advertising.

And this report just out from bank of america. Tells us the following. According to various media reports a late last week. Facebook.

Warned employees to brace for a tough second half as the company copes with macroeconomic pressures on core ads business. We see this news as amounting to a second half revenue warning. Which may have been expected by wall street. Especially.

How much meta has fallen recently and meta. Facebook. Is preparing for another round of expense cuts. After initial reports of cost cutting surface this might mean more employee cuts coming also mark zuckerberg seems to anticipate this will be one of the worst downturns in recent history and facebook could weed out underperforming employees and reduce hiring for the rest of the year in a separate memo.

A meta stated they face serious headwinds and would need to execute flawlessly in an environment of slower growth. Wow folks okay well you got a lot a lot a lot of talk right now about recessionary fears less so fears about inflation. Well folks. This is quite consistent with what we've been seeing again those break.

Even inflation rates. The white line up here trending straight down. Which is phenomenal. But also those commodity prices trending down.

All of these things are pointing to we're in a recession. And quite frankly i love saying it but the best time to buy stocks tends to be in a recession will things go lower probably anyway if you want to see exactly what i'm doing with my portfolio make sure to go to medkevincom join use the coupon code fireworks and take advantage of getting 50 off on the program so i'm building your wealth. We'll see you soon thanks bye.