Hey everyone me kevin here: let's talk about why the market is crashing because things are on fire right now in a bad way. Things are really red, there's only a little bit of green left over and i'm having trouble finding it. But folks, in this video we're going to talk about exactly what's going on right after i mentioned that you should get 41 off with the amazing programs on building your wealth link down below it's not just stocks and psychology money, but it's also real estate. Investing property management and do yourself rental renovations what to do? What not to do it's being a real estate agent, creating content as a youtuber check out those programs link down below on building your wealth and use that 41 off coupon code diamond hands all right.

Let's get into it, so why the heck is the market crashing? Well, this is the first trading day after the latest pce report came out. The personal consumption expenditures measure which lags the cpi report, came out with its inflationary reading for august higher than expected, pretty much beat across the board by about 0.1 percent on core inflation and headline inflation headline inflation coming at four point: three percent core coming in at Three point: six percent versus that three: five expected inflation in august climbed at the quickest pace. We pace we have seen in 30 years, but this isn't so much of a surprise because the base effects of us comparing back to a hole. So it's not that much of a surprise.

The problem is: when are we going to get the freaking inflection point in inflation? When is it finally going to inflect down? Now i have my bats placed on october 13th, but uh. You know, i don't think it's going to be as much of an inflection to the downside as we're hoping for. I do think there's going to be a rotation of the downside, i'm going to be blatantly wrong if october 13th inflation goes up, but i really do expect it to go down and i hope it goes down a lot, but if it only goes down normally it's Just going to be exhausting but what's interesting is even though oil prices and oil price futures, these things are going up as individuals expect uh potential inflation, which you know you kind of wonder like what came first, the chicken or the eggs. Some folks say that oh well, the price of oil is going up because inflation is potentially going up price of uh, the brent at 81.68 and regular oil.

Here's 78 and you've got natural gas up. Every everything energy wise is up which, unfortunately, when these things inflate, they actually increase the measure of inflation readings because cpi and pce read things like oil prices and gas prices to determine how much we're actually spending so inflation here or these prices going up potentially because Of inflation just leads to more inflation crazy, but one thing that's really interesting is even though the pce came in worse than expected, we're really not seeing a crazy surge in the 10-year treasury. We did have a surge in the 10-year treasury from about 1.3 to about 1.5 after the fed announced that they were going to try to finish their taper by the middle of 2022 and probably start at the end of this year. But we've actually come down since then, which was really surprising.

Usually, the 10-year treasuries are a good way to determine okay. What does the market think in terms of longer run inflation? You can even go to the five-year treasury, but it looks very, very, very similar to the 10-year treasury. The five-year treasury tends to be more sensitive to the federal reserve. Ten-Year treasury tends to be a little bit more sensitive for things like mortgages and mortgage interest rates, but again same exact pattern here as the 10-year, so we're not really seeing a lot of inflation baked into the market right now.

If we go to the 10-year break, even the 10-year break, even is, is pretty much at a similar place where it's trading flat, or at least it has been trading flat yep and it's certain oops. It certainly still is trading flat and a flat trading ten-year break. Even inflation rate is really a sign that the market again not necessarily pricing in substantially higher inflation. If we zoom out a little bit to around january to february, we really see this run starting in november.

You really see that 10-year break, even rate run, run, run, run run and then we actually fall to this plateau over here, and so this is sort of the market, at least the bond market, not necessarily pricing in runaway inflation. But maybe maybe this is a situation where bonds are pricing in inflation where it is and the stock market is pricing and inflation is not escaping as quickly that could be a possible symptom here. Is that bonds are pricing in okay? This is where we're going to be with inflation and the market's reacting going dang it. We thought it would fall sooner.

It's not! Let's sell uh technology stocks, that's entirely possible that a lot of people who thought there would that inflation would not be lasting as long as this are potentially becoming converts and now they're dumping technology stocks. As a result, uh we've also got. I mean raw materials like cotton and crude. We talked about oil, obviously have been spiking used.

Car prices inc. Interestingly, look like they may be beginning to spike again, at least in some of the latest inflation readings here. That would not be such good news for some of the used car companies or the car shortage, and although this could be a symptom of the car shortage and a sign that supply chain issues are actually getting worse, not better. This is despite the fact that barons last week had a big piece on you know: companies are ordering ahead they're doing whatever they can to beat supply chains.

Yeah we're going to have a volatile winter here, but things are going to get better over the next year. But now the stock market seems to be debating. Is that true? Do we actually think things are going to get better? We've got ism prices paid coming in higher than expected. It's worth noting that the ism is a manufacturing index, something known as the purchasing managers index a pmi reading above 50 indicates expanding manufacturing and below 50 or at 50 means no change in below 50 means a contraction.

The k ism came in at 59.5 uh, but what's fascinating is well i'm sorry. The ism was expected to come in at 59.5, but it actually came in at a beat at 61.1, which is good because that means manufacturing is doing better, but there's also the ism prices paid index and prices paid. The expectation was 78.5. As a reading.

We came in at 81.2, which means prices paid were much higher than people expected, even as analysts expected so still seeing that price growth reiterating that lasting inflation - and i think that's what the market is really reacting to. Is this potential for a lasting inflation, and that right here is my reminder to make sure to double check that you've gone down below and checked out those programs on building your wealth and using that coupon code make sure you use that coupon code? Okay? So that's interesting, and - and i think this is a really good way to sort of deduce what's happening in the market - is bonds again staying flat because we've built in the inflation rate we're expected to be, but the stock market was potentially expecting it to fall faster Because of random people on the internet, saying that maybe it'll fall by september october, readings which we'll see september readings come out october 13th. We'll see so obviously i'm referring to myself. But it does seem like there's some selling going into the cpi report coming out in october 13th or on october 13th.

Uh. Interestingly, though, the university of michigan one-year inflation expectation measure came in at 4.6, which is actually 0.2 percent less than the 4.8 expected so uh. This is uh. This is remember the consumer expectations from the university of michigan.

Personally, i don't really care so much about them. I find them to be a lagging indicator. I don't think consumers are the best determiners of what inflation is going to be, but it's still something that could weigh on markets uh where markets are like. Oh, my gosh ism price is paid up, which is inflation up, pc up, which is inflation up.

Bond yields stable up, okay, which is also a potential sign of inflation. Now uh oil and energy costs up. Okay, that's going to hurt inflation too supply chain issues lasting; okay, that's going to hurt inflation, ism prices paid up! Oh that's, not good! Right, like everything, is pointing in it's up or it's staying up and the staying up, i think, is becoming a little bit more of the issue again. Why aren't bond yields going up anymore? It's because the market's, like okay we've reached that level of inflation? Is it going to go down? Oh crap, it's not going down.

Okay, so bond yields stay stable and stocks sell off kind of interesting. Then we have uh yeah again. New reports coming out that supply chain constraints are still preventing some companies from meeting their revenue targets. It says here many earnings reports will be coming out.

Obviously later this month we know this. Investors may be fearing bad earnings reports caused by supply chain concerns. This is an interesting note here that uh and it's very, very true. Look investors could potentially start pricing in the fact, even more so that lasting supply chain constraints is is going to have a more long-term impact on earnings for companies.

It's not going to be as transitory. So why not sell now before you get those bad earnings reports coming up for q3? Remember. You do also have taxes due october 15th for a lot of people on extension, so a lot of individuals on extension, might be liquidating certain positions at potential gains or even losses just to prepare for their tax bills. Coming up, keep in mind last month, margin on account or outstanding, with finra did go down, which is a good sign of some safer, healthier deleveraging, but still uh.

You know you've you've got some some catalysts here that do suggest uh that this sell-off is rooted in uh in in fear. Now i personally believe these fears will evaporate, but then again, if they last longer, then they'll continue to cause pain for longer, which hey, in my opinion, means go, work more and use that extra money you're making plow it into the dip. But we'll talk more about that in a moment, so uh worth noting as well, that in vietnam, surges of coronavirus cases have forced factories to either close or operate at severely reduced capacity. Vietnam, by the way, keep this in mind.

Second largest producer of apparel and footwear. For the united states, this explains why nike cut its forecast last week, citing the loss of 10 weeks of production in vietnam. Vietnam makes up about 50 percent of nike's branded footwear, so, if you're investing in shoes, i wonder if foot locker will be exposed to this. As well, the vietnam shutdowns are going to hurt your shoes, obviously uh.

As a part of the three and a half trillion dollar infrastructure package. We are weighing the impact or the potential for the actual corporate tax increase or capital gains tax increase. We have fear over the debt ceiling. Will the debt ceiling get raised? Will that be connected to a two or three trillion dollar infrastructure package that increases taxes? This uncertainty is something we're following very closely on the channel and i make standalone videos about the stimulus and infrastructure and biden packages.

So if you want to know more about the size of packages coming out what what package size, you might be surprised with make sure to subscribe to the channel, because i'll be reporting more on those evergreen notoriously here. Well, evergrant is notorious, but uh. Evergren, surprisingly, has been a lot less of the focus right now in the news compared to inflation, debt ceiling supply chain constraints - evergrand i feel like is, is something that has really now faded into the background and we're about to even take it off the back burner Of the stove, if you know what i mean and if you don't, let me explain: uh there's we talked about this this morning in the live stream that evergrand it looks like, will potentially be acquired by uh hopson, another real estate, developer, hops and chew 51 stake, Which is a controlling interest in uh evergrand, which is big and uh. The hong kong stock exchange does currently have three three three three and six six, six six, those stocks uh suspended.

Those are evergrand stocks, however uh evergrand's new new energy vehicle stock is open and that particular stock is up 48 or closed up 48, which was pretty incredible, and it's a sign to me that the market is actually cheering evergrands uh resolution, although we do not yet Have confirmation on exactly how these things are going to close out because it has not been formally announced yet, however, the this is, what we are suspecting is that a developer is going to buy out evergreen, which is honestly best case scenario. This is what we expected. We expected the market to come in with a solution for evergrand. The reason for that is, the chinese communist party wants to promote common prosperity and punish corporate elitism, and so a failing corporation, even though that might have been caused by the communist party of china.

Thanks to their debt changes, uh, basically saying hey, take on lots of debt and then oh now you have lots of debt. Now we're going to change the rules on debt kind of pulling the rug on future borrowing hurting a company like evergrand substantially, but anyway now, when other companies get involved, if the chinese communist party helps those other companies, that's not politically unpopular, that's propping up the other Companies letting them be the white knights and sort of saving the day to uh ever grant's demise, but that's the way things work in china, so i do expect the evergrant issues to fade into the background. I do expect the debt ceiling crisis to end. We will it probably get some sort of breakthrough compromise deal that'll be.

My guess is like 2.2 2.4 trillion dollars, something in that neighborhood. It will include a lot of the initiatives that joe biden is seeking, but probably a shorter term for a lot of different things. I do expect the debt ceiling to be increased by a budget reconciliation that'll, be democrats only with this infrastructure package. I think they're going to plow this package through and uh and and uh we will not have a debt ceiling crisis expect that to go away.

I expect the inflation crisis to go away at some point. Hopefully it starts inflecting down soon evergren's going away, and we should be over our jobs, fears in the market to see how well jobs are doing this friday. This friday we do have the jobs report coming out kathy wood mentioned. She was surprised.

The jobs report didn't come out on october 1st. I was personally surprised. She said that, because almost always when the jobs report falls on or the first friday of the month falls on one of the first days of the month, they end up delaying the jobs report until the second week because they need more time to process the data. Because they usually collect that data the third week of the prior month, and that does not give them enough time to put the data together so anyway, so uh folks, i do believe.

I strongly believe that that fear will be going away soon. I am actively monitoring the market, i'm actively trading at this particular market, i'm buying the dip, i'm as as we like to say that i'm doing the btfd and uh. I will continue to do so because i've been sitting on cash for a very long time waiting for an opportunity like this and it's here, so i'm going to take it. Thank you so very much for watching and folks, we'll see the next one goodbye you.