Well, markets are collapsing today under fears that the Federal Reserve is going to have to rug pull us and pull us straight into a recession. In fact, that is exactly what a recent article from Nikki Leaks tells us. Now, we're going to learn a lot about Nikki leaks in this video because it's basically the mouthpiece for the Federal Reserve Before we do, let's understand the things that are leading to the market pain today. So the order in which we're going to talk about this is, we'll look at a brief survey of what's going on in the market.

We'll look at investor positioning. We'll look at the reports that came out today, as well as one that came out last week. We'll look at some of the problems with these reports, and then we'll look at what's actually happening with prices in terms of inflationary moves. And then we'll talk Nikki leaks and the fact.

So folks, the only thing that's really, uh moving today that is, uh, moving green is uh, well, the volatility index which is not great volatility is up about nine percent today though only a 20. so by no means at a level where you would expect Mass capitulation. In fact, when you look and zoom out here, we're actually at the lower end of volatility except stocks just continue to bleed down. So the volatility isn't there because we're not getting moves.

really. To the upside, at least not moves that are sustain. Instead, you've got pretty much risk assets falling off a cliff. Tesla Down seven percent trade desk seven percent open door which is probably going to be closed door soon.

Watch my video this morning where I suspect they are knocking on the door of bankruptcy. down 10 percent cloud flare a firm Carvana down 10 11 Twilio five percent tattooed Chef Matterport Four five percent Disney Three and a Half. you name it. Today is a day of pain, and it's not terribly much a surprise because investors are really not happy about stocks right now.

If you jump over to this chart here, you can see that about 25 percent of investors in the stock market right now surveyed between November 28 in December 2nd before the bad report that we got this morning want to actually cut their exposure to stocks. That means investors want less exposure to the stocks that are all going down, which you can't really blame them right now. In addition to that, the Wall Street Journal also has a similar chart suggesting that U.S Equity Positioning right now is a a percentage of open interest is essentially at all time lows going all the way back to 2007. In fact, look at this: Investor Positioning for Equities.

You get a bottoming of Investor Positioning for Equities over here in about 2011. Like towards the end of 2011. You get this weird bottoming of investor positioning here in 2016.. This is right around when we started the FED hikes.

Uh, the FED hiking cycle. You had a brief dip of investor positioning here during the covet pandemic. Folks, look at where we sit. Now we are in the negative territory.

Well, I guess we're do you need a little bit positive right there, but we are at the lowest levels of equity positioning. Uh, this means that right now, investors in the stock market are extremely extremely bearish. And there's a reason for that, because when we look at this particular chart here, you're going to see this beautiful teal line right here. That beautiful teal line that I just highlighted in red is the line of the Federal Reserve hiking interest rates.

And folks, what's important about this is the flat line right here. See how the Federal Reserve held rates flat after the 2005 six and seven hiking cycle, and then all of a sudden they rapidly reduced rates because they realized they forced the economy into a glorious and deep recession and a complete housing market collapse. Well folks, fears are now that the FED is about to make exactly the same mistake, because when you zoom out a little further, look at how steep this hike taking cycle looks right here. This is one of the steepest hiking cycles that we have ever seen from the Federal Reserve Ever.

Like historically, this is some of the fastest rate increasing that we have seen ever from the Federal Reserve. It is very Steep and the concern is that if the Federal Reserve keeps rates high like they did over here in 2006-7 before cutting and they will cut massively and gloriously very soon I expect. But between now and then, they could put the economy through a world of hurt and glorious pain. Unfortunately, there are reports that continue to come out that reiterate the Federal Reserve's Behavior and the first one that came out terribly this morning was followed by the payrolls report last week and it was the ISM report on services.

This was bad, the Services report Rose to 5 56.5 as a read for last month in November rising from 54.4 in October. This is the highest level since the end of 2021, which is when we had a pretty strong bull market. It cited firmer Services which is totally in contrast with manufacturing data which is coming in Weak And the sectors that are growing are kind of odd. like real estate, rental and leasing, buying, agricultural, forestry, fishing and hunting.

These are the sectors that are driving up services. But it's not just that. it's when you actually zoom in to look at where the pain is. They're very.

There's very little pain in the Ism Services report. In fact, business activity came in at the highest level of the Year 64.7 This doesn't suggest a slowing economy at all. When we look at the actual ISM report and we look at the expanding versus Contracting sector, this is what it looks like. This chart is just absolutely terrible.

Look at these different segments here. year when we don't just Look specifically at categories of businesses, but we look at: Services PMI Growing faster, Business activity and production growing faster. New orders growing Sure slower, but still growing employment Growing backlogs of orders growing slower Imports Growing faster Overall economy and services growing faster. This is Not a report that tells the Federal Reserve hey, you're overdoing it even though that's what pretty much everyone's feeling feels like.

it's being overdone. This report is in complete contrast. Now, this report is heavily exposed to Services Where right now in Services we're only seeing contraction in inventories and some contraction in new export orders Where you're actually seeing export orders to Europe and China Contracting at the fastest speed in this report. This makes logical sense.

Now, the only way to potentially explain this kind of report away. Where sir. Seriously, every sector is like, you know. Sure, business volumes appear to be leveling out on a month over month comparison.

Although we're up significantly to where we were last year, right, and you're seeing this all across this report, demand for top talent is still high. Availability is scarce. That reiterates wages potentially going up. You see this mentioned in multiple different areas: still struggling with recruitment, still experiencing supply chain shortages and delays.

This entire report is inflationary. It's a terrible, terrible, terrible report. and that's why the market is plummeting today. But it comes on the heels of another bad report.

But let me first try my best to in a bullish and biased manner explain this report away. You really can't. It's just a bad report. The only thing you could potentially say about this report is that this report is a Services report and services always contract after Goods contract.

That's the only explanation you could give this that it's too soon to actually expect a contraction in Services That's all you could say about this ISM report is that don't worry, it's going to U-turn soon. But the problem is, it's not yet and we'd like to see some form of inflection report because when you see that economic activity in the service sector grew in November for the 30th month in a row reading at 56.5 percent, that's pretty strong. And listen to this: the business activity index registered is 64.7 growth, a substantial increase of nine percentage points from the October report, This is terrible. That's I mean it's great for for the people in that business I guess.

but it's terrible for the Federal Reserve because it's basically slapping the FED in the face going. nope. Your third concern. Remember the two The three concerns they had okay jobs.

They had three big concerns: they want. Uh, they want uh Goods inflation to go down. We got that check. Goods Goods Prices are falling.

We got that. We got disinflation here. No problem. We want rental inflation and Housing Services to go down.

No problem. We got that new lease signings are declining. We got that, hands down. no problem.

Okay, but what else? What else? You have to get wages down and wages are mostly dictated by services. And the services industry apparently is still booming based on this ISM report. Again, the only way you can explain that away is saying that. All right.

Well, the Ism lags. That's it. That's the only thing you could say is that ISM lags? Then you can look at the payrolls report. Okay, so the payrolls report.

We talked about this a lot last week. But to catch you up to speed last month, Uh, apparently we grew 263 000 jobs in November with an average hourly earnings increase of an annualized rate of 7.2 percent. Also, very bad. These are two terrible reports in a row.

Now, what's interesting is this last payrolls report at a terribly low response rate. The response rate was just 49, a 30-year low compared to the typical response rate of 70 to 75 percent. Now, that's possibly because companies are embarrassed and the ones that are actually cutting jobs are not answering the phone and getting back to the Bureau of Labor Statistics. And there's a statistical basis to what I just said.

It is this particular chart right here: Negative payroll revision bias after Poor survey response. In other words, when the Blue Line plummets, you tend to see the black line come down. In other words, when the black line goes down, you see payrolls revised down. Which actually means that this last Strong Jobs report could end up getting revised down.

So if you're a bull, what you're trying to say is that ISM report is a lagging indicator. We are not yet at the contraction phase for services. and if you're a bull, What you're also trying to say is that survey response was low, that payroll's report is rigged and the numbers will get revised down. This chart does provide evidence for that potentially happening.

In addition to that, we have about a 2.4 million jobs gap between the payroll survey which counts payrolls and the Household survey which counts people. The explanation for this difference could be that people are having to take multiple lower paying jobs just to get by. You have to take multiple jobs. What happens, you show up on more payrolls, but you don't show up in the household survey as multiple payrolls because that counts people, right? That's a big potential issue.

Another potential issue is we've had one of the largest birth death rate adjustments. This is a spreadsheet adjustment which basically suggests that we added about 1.4 million jobs that we actually didn't add to the establishment survey. and this is where some people put on potentially rightfully so their tinfoil hadn't say dude, this is rigged like this is a nonsensical adjustment. We are creating numbers that make politicians look good but are unrealistic and these will be revised away.

We'll see now. this payrolls report is a disaster. and the Federal Reserve realizes that the payrolls report is a disaster. They realize the Payrolls report is a disaster.

So much so that of course we have yet another Nikki Leaks article that the Jobs Report keeps the Federal Reserves on the Federal Reserve on track for a 0.5 percent Point rate increase. At least we're not getting 75. BP Now I Want you to know a few things that most folks aren't aware of yet? Uh, it's because nobody's talking about it yet. The next meeting after December is actually not until February 1st.

That is a one week later meeting than usual. Usually we get it in the third week of January. We're getting it later than usual and the next report doesn't actually show up until March 22nd. Keep in mind the current Fed funds rate is 3.75 to 4.

That's the range 50 basis Point hike puts us at four and a quarter to four point five. The FED wants to probably get us to about 5.25 This is probably where the FED is going to end up right now. Markets are pricing in a terminal rate of 5.18 But again, the concern isn't so much getting to 5.25 because the FED might go up and we might have a V-shaped plummet in that rate and get massive rate Cuts. But unfortunately, that's not what history tells us.

And remember the four most dangerous words are you forgot to use the coupon code PP Link down below with the coupon code expiring. Friday When we go, ring the bell at the Stock Exchange. That was way more than four words. No, the most dangerous four words in investing or this time is different.

and last time they kept rates way too high for too long. Remember folks, the Federal Reserve is not exactly the best at reacting. They reacted extremely slowly when it came time to raise interest rates. Now they're potentially reacting extreme family slowly when it potentially becomes time to reduce rates.

And this creates that 2007 fear that we're raising rates very very quickly to prevent wages from setting in a wage price spiral. Now, in case you want to celebrate this hell a little bit, let's at least take a 10 second moment here to honor the Bell which we will be doing Friday I'll be there I'll be there Friday How cool is that with stopwatch? I Want to do the hammer? Thank you very much. You're welcome I Hope they don't cut me off. Uh, anyway.

okay. I'll be there Friday You're welcome to meet me by the way outside the New York Stock Exchange 5 P.m Friday All right. Anyway, let's get back to Nikki leaks because this is a complete disaster. Okay, so look at this: Jerome Powell says we want wages to go up, but what we don't want is a wage price spiral.

That's obvious. We already know that the wage price spiral means they have to rug pull us. But listen to this folks. this yellow line here is critical right here.

Economists said: Friday's report raised the risk that income growth and inflation would remain elevated through 2023 unless the economy enters into a recession. Let's be crystal clear here folks, the FED has to pull us into a recession. We are going to go into a recession. It has to happen.

That's the only way they can get the wage inflation away. A recession is basically guaranteed. Let me also be very, very clear. We just had a report from Moody's come out and they've been wrong all year long about real estate because they're like, oh, real estate will go up five percent next year and then they're like, no, we think it'll be flat and then they're like, okay, now we think real estate's gonna fall 15 as long as there's no recession and I'm like, dude, it's gonna go down like 50 to 25.

That's probably where we need to be for housing prices and quite frankly, real estate prices probably have to fall 35 for housing to be affordable again, which is going to be a great opportunity for house hack to go shopping, but it's going to suck for people who own homes and I realize that and I respect that. But folks, they are going to pull us through a recession because they have to. It's in the Nikki Leaks article. It's not my opinion.

Well, I I reiterate the opinion of The Economist but they have to pull us through a recession. In fact, this is what I said in January Now I didn't behave perfectly with my personal stock moves I Realized that. but I'm not here to to defend or talk about my personal portfolio. I'm here to talk about what we're seeing in the macro and the fact of the matter is in January I Said we're probably going to go into a technical recession and if there's any sign of a wage price spiral, the FED will force a recession to end it.

And this last payrolls report basically says the FED is just going to keep going. Keep going, keep going. Force The recession and then they will massively cut rates. Now some people are very confused because I think they only read the titles and they're not like you.

Okay, you so far have made it into a 17 minute video and I think you are much more intelligent than some of the people who write moronic comments. I Want to be very, very clear I Personally am very hopeful that the Federal Reserve will realize their mistake and quickly cut rates. I'm very hopeful that we are going to get substantial deflation very very quickly and we are going to go back to a glorious run for America for the rest of the decade. I Really believe that? And so my personal positioning aligns with my personal belief.

That does not mean in the next few weeks or even few months, things are going to be glorious. Of course, people in the comments sometimes don't understand that. uh, but then sometimes I I Wonder if there's a difference in like the IQ of people who comment within 10 seconds of a video on the people who uh uh, who who watch the whole video and then comment with the exception of the people who are like hey, how you doing Kevin first like that I respect that. It's it's the The people who make a conclusion before they even watch the video is pretty incredible.

But anyway, look at Gasoline Plunging Gasoline prices are almost at levels where they were one year ago. Look at lumber prices. Lumber prices almost back to the low of where we were in the pandemic. Look at that in the pandemic.

folks. lumber prices were right here. Look how low they got because housing hit like froze, housing froze over, and then of course it skyrocketed. We had shortages and we had this crazy inflation right.

But look at where Lumber's gone now. it's absolutely collapsed and so this is where. I Also think it's worth looking at the next. Nikki Leaks are article because even though I believe disinflation, massive deflation, massive rate cuts are coming, it doesn't necessarily make the most sense to be heavily exposed to the stock market until that massive Fed U-turn comes, which is also something I said until since January.

However, I do think there is a potential that the reason to be in the market before that U-turn is that maybe the markets will try to anticipate that U-turn before it actually happens. Which would mean that this time is different. But then again, as we've talked about, those are dangerous words in investing. So what do we have in this next Nikki Leaks article from today.

of course, a reiteration that elevated wage pressures could continue, the FED to raise higher rates higher than what the markets currently expect. Remember what the market is currently expecting and the FED knows this. They could pull up the Bloomberg terminal very easily. type in Period Fed term, enter and what pops up 5.18 If The Fed is telling Mr Nick T Nick T Okay, this is Nikki Leaks Okay, he's the one who gets the text messages from Jay Pal and the boys and ladies, whatever.

Uh, from the crew he gets the text messages hey man, uh, we're gonna have to go higher uh than the market is expecting and then he puts together an article on it. Okay, he is the mouthpiece of the Fed. This is how the FED communicates through this guy. Nick that's Jay Pal Nick Nick Nikki Leaks Okay, Anyway, so Brisk Wage Okay, and look at what they are already considering.

the FED is all ready right here. Talking about the brisk wage growth in the labor report that we saw last week and the labor intensive Services sector. based on that ISM report disaster that we got this morning. This is a complete disaster now.

the FED right now is only expecting to raise rates to again that range of 4.25 to 4.5 percent if we go at 50 basis point Heights look at the path 4.25 December If we go another 50 basis points, where do we get 4.75 on the lower bound when Fab one the next meeting I believe is Feb 22 or 23. One of those days I'm sorry March 22 23. uh, the next one. The next 50 basis point hike would get us to five and a quarter March 22 and this is then where I think the FED pauses and potentially you actually don't see the FED U-turn until maybe you turn in Q3 Q4 In other words, everything's just taking a whole lot longer than expected I Hate to say it, but I Personally thought the Fed was going to U-turn way faster and it's all going way slower.

sucks. Anyway, officials will see another inflation reading on December 13th. You better have your calendar marked for that. That's a week from tomorrow and that is going to potentially give us breathing like relief about this last ISM report and payrolls report.

Or we're going to hell. We could be going to hell like a week from tomorrow if we get a bad inflation report, it's over. Like if investor sentiment is going to go, we will probably see. Mass Capitulation I Think if we get to December 12th uh sorry December 13th, December 13th and we get a bad inflation report Mass capitulation cups.

That's when the vix goes over 40. that's when the people who are like let's buy the dip are like let's get the hell out. Next week could be absolute health or or or it could finally be calm. We'll see but it's it's going to be wild anyway.

um Kansas City President Esther George Says this is not the time to speculate because we need to see the evidence first. This is the nice reminder to stay out of margin. Anyway, the rest of the article is really boring so wow, that was a lot that we just covered and we did all that live and with no Cuts So if you appreciate my service which is completely free, just share the video and subscribe. Thank you I Appreciate you all did I Just call you smart I Appreciate you thank you for being here.

Appreciate all of you members here. Four Just said seven point percent Seven point nine percent less sales in November it's starting to slow down I think December maybe 10 less sales Wow Yeah well it's so hard. I mean I'm talking to car dealers and they're just seeing everything seize up. Seize up! It's so hard to sell cars right now.

Uh, real estate agents can't even pay their rent right now. It's terrible, terrible. uh. you know it's a good video when it has WTF it? Yeah, no kidding.

What do you mean going to hell? uh, price is going way down. Uh, why even play Well, That's actually what a lot of people are doing is they're like, why do I even want to be in this market what? For the hope of it rallying a little bit? Who cares? Just sit out. I'll just sell, take my tax laws harvesting for the year, I'll sit on the sidelines and I'll get back in when the FED u-turns That's what a lot of people are saying. A lot of people saying that.

Okay, anyway, good luck everyone.