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Holy smokers folks is ain’t no dang jokers wow do we have a lot to get into here today okay cpi numbers obviously came out um i’m going to talk about what’s actually going on there with the cpi numbers everybody’s looking at the stock market like wait a minute cpi came in much worse than expected highest numbers in like 41 years why didn’t we crash today right why
Why didn’t the whole stock market tank we’re going to talk about that as well we got a lot to get into i think the only thing higher than in the inflation rate right now might be uh the temperature here in vegas oh my gosh i went out running yesterday uh first off i got i left and i was like it feels like an oven outside okay and then i checked the temperature and
It was like 111 and so it was gonna be 114. jeez you’re pl hey remember okay if you’re planning to come to vegas hydrate before you dehydrate okay hydrate before you dehydrate we learned that here in the desert you gotta hydrate man because otherwise you’re gonna dehydrate and next thing you know you’re gonna be cooked like the stock market okay so consumer prices
Jumped sharply again in june 9.1 percent in june yes 9.1 uh just an extraordinary number uh wall street consensus was in the high eights so the fact that we came in at nine 9-1 is worse than expected not shockingly worse the shocking number as i stated before would be 10 plus if we had came in with a 10 number that would have been the shocking number that caused
Everybody to absolutely flip out in the financial markets and we would have seen a sell-off of the dow of probably a thousand to fifteen hundred points today and we would have seen you know bitcoin at seventeen sixteen thousand we i mean it just would have been absolute devastation out there nine point one bad worse than expected but it wasn’t it wasn’t the shock
And awe number like you know uh we could have had i guess you can say okay now in terms of why this happened quite simply food was up over 10 which is just ridiculous okay but mainly energy i mean we’re talking about over 40 percent increase year over year in energy which is obviously driven by oil which is obviously driven by gasoline prices and obviously if you
Go to the gas station ever you know the pain at the pump is ridiculous right now i mean i have friends that to fill up their trucks you know their pickup trucks it’s like 200 bucks 175 dollars you know let me know if you guys gas up and and how much it costs you to gas up you know your vehicle whatever vehicle you drive and how much it costs i mean it’s it that’s
Incredible numbers i mean you know i it was always it used to be like if you had to spend a hundred dollars to fill up your your vehicle that was a lot right and you know i know folks paying 200 to fill up their vehicles like this just extraordinary by the way i’m thinking about wrapping the s in a couple weeks let me know if you guys have a color in mind that
You think i should wrap that i want to do something different than the red but yeah i mean the numbers are extraordinary that’s why inflation is going mad right now is the food and at the end of the day energy as well everything else has gotten more expensive we know that but i mean these are the two musts for almost everybody right almost everybody has to gas up
Because almost everybody doesn’t have an ev as of right now right very small percentage of the population has evs okay and food is astronomically uh high right now i mean you know 10 plus it’s just insane you know to see food up that much i mean food it should go up very small amount over time just a little bit here a little bit nearer ten percent plus double digits
Come on man that’s just it’s out of control completely out of control now this is creating an interesting dynamic now because the federal reserve officials may debate a historic one percentage point rate hike later this month after searing inflation report piled pressure on the central bank to act everything is in play atlanta fed president bostic told reporters
In florida on wednesday so yeah everything okay they asked him about you know raising a full percentage point he said it would mean everything so now we’re at this point in time folks where we could very much be looking at the fed raising a full percentage point now at this point and um you know we haven’t seen that in the longest time i mean like literally you
Gotta you gotta go back to the 80s to see a move uh that drastic and so we’re we’re we’re at a crazy moment in the market where the feds you’re considering actually doing this and i i’ll be honest since we came in at 9 plus i think they’re probably gonna do it now in terms of what this does the economy it’s not good news i mean it’s not good news for the economy
You raise interest rates that much whoo it’s going to hurt business it’s going to hurt everything it you know getting an auto loan is going to get much more expensive in a situation where we already have a auto loan uh bubble popping right now as as we speak right that’s going on and so now we’re talking about a dynamic where you know if you want to go get an auto
Loan it’s going to be much more expensive credit cards going to be much more expensive than interest you’re going to have to pay on that taking out any sort of debt even a debt as a company it’s going to get more expensive this is just what happens if the fed just keeps raising rates raising rates right margin debt for stocks get more expensive if the fed raises
Rates like it has such a huge effect on everything debt related when the fed’s raising interest rates like this right and not only that but here’s the other dynamic as we’ve seen the fed raise interest rates you know what else has spiked up the 10-year treasury now the 10-year treasury has recently started to fall a little bit right but if i had to guess i think
It might spike back up especially if the fed’s going to raise 100 basis points and here’s here’s the situation okay the 10-year moves mortgage rates okay and so the 10-year matters in a significant way for the 30-year mortgage now we already hear about real estate’s being in a tough spot i mean you look at some of these markets i mean they’re already starting
To get hit hard it looks like it’s just going to get worse if you’re talking about piling on more interest rate hikes and you’re talking about the the 30-year because we get you know going to six and a half seven percent which is very definitely a realistic possibility on average by the end of the summer who’s going to be out there buying houses at a average 30 or
7 percent i just don’t see it happening and so i think we’re going to be in a situation where it’s going to be the real estate market is going to get very very ugly very very quickly and we’re already starting to see it play out in the numbers but i think over the next few months it’s going to get way worse and i just don’t see any way you can be bullish on real
Estate for 2022. i mean maybe 2023 uh but but you know i don’t even think 2023 i mean i think you know we might have to push out to 2024 for real estate now this is obviously more bad news okay the united states personal savings rate has dropped to just uh hovering a little above five right now at this point in time which is very very low on a historical you know
Average so here we are in this moment in time where personal savings is down huge inflation slicing and dicing people simultaneously you have the fed making all debt much more expensive with all these interest rate hikes and you can understand why there’s a lot of recession fears out there like it makes sense everything’s getting more expensive debts much more
Expensive right and going to get more expensive here over the next 30 days i can tell you that much and people’s savings are pretty low numbers right now this is why there’s so many recession fears right now and it makes a lot of dang sense honestly it makes a lot of dang sense now the only thing not feeling so inflation is stocks and bitcoin i mean stocks and
Crypto it’s like you know if you own either one of those you’re like come on man can we get some of that inflation over here man only thing we got is deflation going on in our markets man oh man okay now everybody wants to know what the heck stock market okay the dow or the dow was down about 200 points today the s p 500 was down 0.45 percent the nasdaq was down
0.15 percent and the russell was down 0.12 so everybody’s looking at this like oh my gosh okay highest inflation since 1981 they’re saying uh you know obviously the inflation was worse than expected and so why did we not tank this market here today okay and i want to show you guys a lot here in just a moment a lot of different slides i’ve prepared for you but i’ll
Tell you the core reason why the stock market didn’t have a massive sell-off today and to put it quite simply a lot of this was already priced in and the way most of wall street’s looking at this is this is the peak in terms of the rate of increase so i every single person possibly on wall street is expecting the july number to be lower than the june number was
So essentially almost everybody is expecting us to go down to the eights maybe even lower than that uh for the july numbers and i’ll show you exactly in detail why that’s expectation so being that we’re at the the worst it’s going to get at least that’s the view of wall street now in terms of the rate of increase they say okay the story’s already reached its climax
In terms of the bad part now in terms of inflation at least maybe not in terms of the economy but in terms of inflation the story is going to get better and better and better and we can slowly start to remove that piece of the wall of worry which is inflation now if you remove that you’re still going to have recession fears you’ve still got obviously russia ukraine
Still got you still got a lot of stuff to deal with in the wall of worry but if the worst of this is behind us now right and those numbers are start coming down and coming down over the coming months then we’ve removed a brick of of the wall of worry right and so that’s the way wall street looks at it and so that’s why this stock market was not uh down massively
Today and we didn’t tank through the floor or something like that here’s the deal okay first off the comps you know these inflation numbers are having to start to comp against year over year is ridiculous i mean we’re talking about you know 5.4 5.3 5.4 numbers over the next few months and then once we get into the fall and winter time you’ve got to comp against
These numbers of six to eight plus percent and so we’re in this dynamic now where the comps get so much easier to comp against year over year because they had already gone so insane right and so in this situation i mean it’s going to be hard to comp year over year and show another nine percent increase it’s not impossible but in if you’re going to talk about let’s
Let’s let’s assume we had still nine percent inflation at this time next year for cpi that would mean a situation where oil had to go dramatically higher from here rents had to go dramatically higher from here uh food prices had to go dramatically higher from here here right i think it’s a hard it’s a hard situation to kind of see play out especially when you’re in
A dynamic where you’re likely either in recession or you’re very very close to going in recession right and so that’s the way a lot of wall street’s looking at this also the way wall street’s looking at this is we’ve already peaked in terms of gas prices in the month of june right at over five dollars a gallon from let it that that peak to june 14th diesel peaked
Uh june 19th there since then obviously we’ve come down a decent amount we still got more to go right 4.63 cents is average as of today diesel 561 okay so what everybody’s looking at is they’re like gas prices have already peaked we’re already past july 4th weekend now at this point which is obviously a huge travel holiday and so most folks are expecting if anything
Oil prices to moderate continue to moderate or continue to downtrend which is what they’ve been doing which means the whole energy cycle uh you know gets it up it gets in a better place and we don’t have to deal with you know energy just going through the roof forty percent plus and maybe it comes down to thirty percent and then twenty percent and then ten percent
And who knows maybe at this time next year we could be looking at a situation where oil is actually below where we’re at so we could potentially keywords potentially have deflation going on in the energy market especially if we’re in recession at that time or we’re let’s say we’re already in we already came out of the recession but it’s like slowly coming out you
Know you could actually be looking at deflationary numbers when it comes to energy at that point time so that’s the way wall street’s looking at all this and they’re kind of judging this right now if you look at kind of wti this usually usually lags a bit for instance we reached peak wti on june 7th but then we ended up peaking in terms of gas station prices on uh
June 14th right so that was a weak lag there so you got to understand like you’re usually going to have a lag between what the gas stations are charging and essentially like like what what oil is doing so if anything oil as long as oil doesn’t spike up like crazy over the next few weeks you’re going to likely see gas station prices come down more and more and more
Over the coming weeks as they compete right and then this gas station decides okay we’re going to lower price a little bit and then they you know because you’ve got to stay competitive out there i’ve like i came from the gas station market i know how that is right and there’s always a there’s always a one to three week lag in there and so likely if anything gas
Station prices are going to get better over the next few weeks and so that’s good news for everybody outside of some major epic spike in crude oil or something like that no vixx you know vixx went down today there’s no volatility in this mark i mean i want to say there’s no volatility i mean because the 2627 is still fairly elevated for an average market but you’re
Not getting that insane epic moves and people are looking at vixx and they’re like come on man spike up we want to see that capitulation type vix and it’s just like you’re not going to get capitulation type vicks with inflation coming in a little worse than expected you’re just not going to get that sort of move especially when you already got a nasdaq that’s down
30 percent from highs and you’ve got a russell it’s already down 30 from highs and we’re already in a bear market in the stock market in order to get vix to spike to a 40 50 level you have to get a panic situation you have to get a shock and awe event that’s the only way you get that okay ronnie rona was a shock and awe event oh all cena was like normal economy
And then all of a sudden it was like oh we’re going to close down the economy for three years that we’re talking about right that’s a shock and awe event uh obviously the great recession when some of the biggest investment banks failed right and you had the aig situation lehman brothers and all those when you had all that going on it was a shock and all event like
Like you know investment banks wall street banks were going down that people just couldn’t even fathom these going under right there was a shock in all events so in order to get this vix that everybody wants to see of 45 50 55 you’ve got to have a shock and all event and if you don’t get that event we’re not going to see the vic spike up like some people wish it
Would spike up and you don’t need it to spike up like that to bottom out the market if it happens it happens but you don’t need that to necessarily happen you can have the market downdraft and vicks kind of be in a in a chill state nonetheless okay now well i was recording the video i had cnbc on the background and josh brown pointed out this says you know they had
Studied every recession since world war ii and every single time you get a triple digit return five years later from the lows of that uh you recession wherever the stock market was which just is very very telling to kind of understand like man you gotta you gotta buy in these sorts of markets at the end of the day like you’ve gotta buy like the the returns you get
Are absolutely astronomically high and um yeah i just i think that’s just one of those things to keep in the back your mind when you’re going through a bear market when you’re going through recession and the wall of worry and things like that is to keep things like this in mind and understand like what’s really going on here right i pulled up this and you know this
Just shows you obviously what the stock market’s done over time and all these little gray bars there those are all recessions okay every single gray bar is a recession and one thing we do know is gosh every single recession should have been a buyer right every single one of these opportunities throughout all of time like you should have been a buyer you should have
Been a buyer you should have been a buyer and to not have been buying during these recessions during the stock market crest is just a massive massive mistake the second worst decision you can make in the stock market in a recessionary scenario a bear market whatever you want to call it and usually bear markets and recessions kind of go together right the second
Worst decision you can make is sitting on your hands and not doing anything now some people feel comfortable by just sitting on their hands and they say things like all invest again when the coast is clear they say okay i’ll invest again when i feel like the economy is in a good place again i’ll invest again when a certain political party is in office right in
The white house i’ll invest again when you know there’s not so much fear in the market and you can do that it’s just the second worst mistake you can usually make in the stock market sitting on your hands and not deploying capital into a bear market and into a recessionary market uh you know it’s some short-term pain and some short-term scariness for a whole lot
Of long-term gain in the end but that’s the second worst you know decision a person can make in the stock market during this sort of time the absolute worst decision somebody can make is selling during a uh a crashing market and selling during a recession right i mean imagine selling during all these different time periods right and you sell and you sell and you
Sell like geez i mean just it doesn’t get worse than that like literally like and unfortunately in every single one of these scenarios how do you think the market goes down like that let’s ask that how do you get the stock market to go down 20 30 40 50 percent the only way you get that is through mass selling right people panicking freaking out i want to get out i
Want to get out let me sell sell sell that’s how you get that you get this overwhelming amount of selling pressure and that’s how the market can tank you know 20 30 40 50 right and so in every single one of those situations people chose to sell sell sell it’s just it’s literally the worst decision you could possibly make and you’re missing out on so much long-term
Gain all to sit on the sideline and be like oh you know oh i’m not going through the pain they’re going through now oh you know i took my loss and i got out of there okay and it’s just like gosh man that’s the absolute worst decision you can possibly make and you know i don’t know how many you guys have kids out there but you know obviously i have three kids and
Uh one i’m teaching to how to how to ride a bike without you know training wheels on right now and the other one i already taught you know a few years ago but it reminds me a little bit of teaching a kid how to ride a bike without trading wheels because you know kids for the most part are a little scared as they should be without the trading wheels right because
They’re going to fall over they’re going to get hurt they’re going to scrape their elbow whatever right and so they’re scared and they don’t but you got to kind of understand you got to explain them like hey once you get this down it is going to be so much fun this is going to be so fun for you like you’re going to love riding your bike around and you know you’re
Going to have years and years of fun ahead of yourself learning how to ride this bike you just got to get through this part of like learning and you’re going yeah you’re going to fall down a few times you got to get them to understand that right and the same with the same exact thing goes for adults in the stock market adults in the stock market look at it and
They’re like oh man i don’t know if i want to scrape my elbow and you know burn my knee here and it’s like dude you have so much long-term fun ahead of yourself if you can just get through this time period of the scrapes and falling off your bike and you know dusting yourself off dude there’s so much long-term fun in front of you but you know and you can even go
Back in history and like show every single one of these times document it and like listen you had to get through this short term pain yeah the market went down dot dot dot but gosh if you were just buying and holding during this time period you had years of fun ahead of yourself right and so that’s just kind of my view on the market and uh yeah it’s just you gotta
You gotta take advantage of the deals out there despite all the worries out there so hope you guys enjoyed today’s video as always i appreciate you guys joining me if you’re looking to actually access i made a couple courses free one’s a more a beginner course and one’s a little more of an advanced course i made both of those free right now if you want to book a
15-minute call with somebody from my team they’ll basically take you through ask a bunch of questions on you know what course is the right fit for you put you in that course absolutely free you don’t have to join the prep stock group to get access to that and i hope you enjoy that it’s pin comment much love as always and have a great day
Transcribed from video
Why Stocks Didn’t Crash | Why Cpi Went Insane By Financial Education
