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The Big Inflation LIE | The Fed's Great Reset EXPOSED. — Transcript

by Meet Kevin · 2,818 words · 417 segments · language en · Watch on YouTube

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0:00is it possible that the Federal Reserve
0:02is making a massive mistake and that
0:04inflation is actually zero yes I know if
0:08inflation were actually zero we wouldn't
0:10be worried about diesel shortages we
0:12wouldn't be worried about Russia tearing
0:13up its Ukraine export agreement for
0:16wheat we wouldn't be worried about
0:18near-term inflationary pressures and
0:19quite frankly if inflation were zero we
0:22would not even be worried about those
0:24darn fomc meetings because we know at
0:27every one of these fomc meetings the
0:29Federal Open Market Committee meetings
0:31put on by the Federal Reserve we become
0:34fearful that the FED is going to tell us
0:37they have to raise rates more to tame
0:39inflation as they have done every single
0:43last report that we've had and
0:45unfortunately we know that the Federal
0:47Reserve is really sensitive to what's
0:50pronounced or at least outlined in these
0:53CPI reports and job reports in fact look
0:56here's an article from the Cato
0:58Institute which tells us that as soon as
0:59as we saw CPI data coming out you had
1:03articles in the Wall Street Journal and
1:06other sources immediately saying that's
1:07it this solidifies rate increases from
1:11the Federal Reserve in other words the
1:12FED likes to say oh no we have different
1:14metrics we don't like to use the CP lie
1:17either because really price has probably
1:20weren't up eight percent they're
1:22probably up more like 15 percent year
1:24over year let's be real but the CP lie
1:27could ironically also be keeping the FED
1:30even though it's not super accurate for
1:32us as individuals could actually be
1:35keeping the FED substantially more
1:36aggressive for a lot longer than they
1:39should be because of data that the Cato
1:41Institute breaks down we're going to
1:43talk about that data in this particular
1:45video now look there are a lot of
1:48different arguments about what's going
1:49on with the Federal Reserve and what's
1:50going on with interest rates and
1:52inflation most important thing to know
1:54is the next meeting from the FED is
1:57November 2nd and we actually won't even
1:59get get a lot of good Data before then
2:01we just had the employment cost
2:03indicator which did indicate that
2:05inflation and wages is still around
2:08which unfortunately wage-based inflation
2:11is probably one of the biggest concerns
2:13that we have if you jump over to a
2:16JPMorgan report here you'll see that a
2:18wage price spiral being noted as
2:20possibly developing is a real risk
2:22factor and something that the Federal
2:23Reserve is watching and being very
2:25careful of but one of the things to
2:27realize is for this next fed meeting and
2:30we're not expecting many changes why
2:32because between the next fed meeting on
2:36November 2nd and the one in the second
2:37week of December I believe it's right
2:40around December 13th you end up getting
2:43a jobs report on November 2nd you get a
2:46CPI report the week after that you get
2:48another jobs report the first week of
2:50December you get another CPI report
2:52after that so don't expect any changes
2:54from the Federal Reserve anytime soon
2:56this video is designed to be something
2:58for you to think about for the longer
3:01term because it could really change the
3:03way that you invest so let's go ahead
3:06and jump on into exactly what the Cato
3:08Institute says because for now we've
3:11already known that Goods inflation is
3:15expected to slow we're expecting to see
3:17not only Supply chains normalize but
3:20we're also seeing container costs
3:23decline we are seeing used vehicle
3:26prices decline we expect CPI to Trend
3:30down over time CPI is this white line
3:33but we do expect it to take time via
3:36this blue line which is a little
3:37frustrating because unfortunately even
3:39though inflation is expected and
3:41forecasts to drop this model here by the
3:44Bureau of Labor Statistics and the
3:46forecast by JP Morgan here we're still
3:49dealing with really high inflation now
3:51but is it possible the FED could be
3:55making a big mistake well take a look at
3:57this the Cato Institute just released a
3:59piece entitled CPI less rent was Zero
4:03for three months and basically
4:06suggesting that the CP lie is wrong to
4:09the downside now historically we've been
4:12thinking about the CPI being the CP Li
4:14because it's probably inflation's
4:16actually been a lot higher but what if
4:18it's actually now flip-flopped and the
4:20inflation that we've been experiencing
4:22is now behind us we're still stuck with
4:24higher prices but we're not getting
4:26increasingly higher prices and what if
4:28that means the FED would make a big
4:29mistake so you remember how inflation
4:31works if you have a widget that costs
4:34100 year zero and the next year that
4:38widget costs 110 dollars year one we're
4:42still dealing with 10 percent inflation
4:45that has not changed but if the year
4:48after that let's just call it the now
4:51that is still 110 dollars that being the
4:55now we technically have is zero
4:58inflation now don't get me wrong you're
5:01still paying the higher price but we
5:03have zero inflation so is there a case
5:06that there's actually zero inflation
5:08right now yes that is exactly what the
5:11Cato Institute is telling us let's take
5:14a look at their breakdowns oh right
5:16after I mention that we have a Halloween
5:18coupon code expiring for the programs on
5:19building your wealth uh there have been
5:21some questions on the differences
5:22between the courses we have a new course
5:24coming out called the elite Hustlers
5:27University course this is all going to
5:28be about entrepreneurship Business
5:30Development income growth and career
5:31growth that's coming soon it's not
5:33actually for sale yet but in the
5:34meantime we do have a Halloween coupon
5:36code therefore all of these programs
5:38right here real estate stocks and
5:40psychology of Money YouTube
5:41do-it-yourself property management and
5:43Rental Renovations of course for these
5:44you still get lifetime access to the
5:46course member q a fundamental live
5:48streams new lectures coming and there
5:50will be a price increase for these here
5:52so take advantage of the Halloween
5:53coupon code jump in on these and stay
5:55tuned for the announcement for the elite
5:57Hustler's program but for now take a
5:59look at this this is the core argument
6:02made by the Cato Institute they say if
6:06you look at this chart very very closely
6:08and you say hey wait a minute let's go
6:11ahead and zoom in here and say wait a
6:14second consumer price index for
6:18everything everything less shelter then
6:22we want to pay attention to these little
6:24bluish lines okay so let's do that where
6:28are the bluish lines wow they're right
6:31over here they're actually negative
6:34and see we can see that clearly when we
6:37zoom in here look at this here's the
6:40zero percent line right here and both of
6:44the all item lines less shelter that's
6:48the seasonally adjusted and the
6:50non-seasonally adjusted lines for the
6:52last three months
6:54have been below zero so negative or zero
6:58take a look at that right here July
7:01August September both of them seasonally
7:04adjusted and non-seasonally adjusted
7:06have completely collapsed
7:09so what's actually keeping inflation up
7:12well the only thing that's keeping
7:14inflation up in this recent trajectory
7:17here it's kind of like that 110 widget
7:19is 110 you look back a year ago you're
7:21like Kevin it's still more expensive I'm
7:24still paying more that's right but it's
7:28not going up anymore that is potentially
7:31a big game changer that the Federal
7:33Reserve appears to be blind to and
7:35that's a really big risk that the
7:37Federal Reserve could end up over
7:40tightening forcing a recession much more
7:43so than they actually need to the Cato
7:46Institute suggests the following and
7:48these are some pretty incredible notes
7:50okay look at this
7:52what makes three months of zero
7:56inflation in all items less shelter more
7:59remarkable is that listen to this folks
8:01it includes energy and food
8:06it also includes other CPI service items
8:09based on last year's data such as health
8:12insurance which is based on industry
8:14profits from 10 years ago and soon to
8:17fall the Cato Institute isn't the only
8:19one projecting that we're expecting to
8:20see large declines in health care costs
8:22remember that JP Morgan report right
8:24here look at what the JP Morgan report
8:26told us the largest likely decliner was
8:30going to be in September of 2023 look at
8:33that expecting a 39 percent decline in
8:36inflationary costs for health insurance
8:38while shelter Still Remains at seven and
8:43a half percent which is also look at
8:46this right on the right side here see
8:48this column that says share of core
8:50inflation
8:52negative 39 on health only makes up one
8:55percent of the CP lie whereas you jump
8:58over here seven and a half percent on
9:01rental inflation you're at
9:0341.6 percent of core now why is that
9:06such a problem well it's such a problem
9:08because the Federal Reserve even in the
9:11other indices that they use over weight
9:16shelter and not only do the CPI
9:19indicators and the measures via pce
9:23indices that the FED uses overweight
9:26shelter not only is that the case but
9:28shelter inflation has already started to
9:32Peak by most accounts if we stop using
9:35these measures uh like owner's
9:38equivalent rent we start seeing that
9:40inflation actually peaked around May or
9:42June so what is owner's equivalent rent
9:45and why does everybody keep talking
9:46about it well here's just basically how
9:49this would work
9:50if owners are surveyed and they're asked
9:53hey how much do you think your property
9:55could rent out for they might think well
9:58over the past few years we've seen
10:01properties in our neighborhood rent for
10:032500 a month so that might be your owner
10:07equivalent rent survey the problem with
10:10this measure is it doesn't tell you
10:12what's going on with current rents
10:14current rents are generally defined by
10:17asking prices that actually end up
10:20having leases associated with them in
10:22other words closed rental comps so
10:25somebody lists a property for three
10:27thousand dollars and then that leases
10:29and it shows up as a lease comp at three
10:32thousand dollars we know rent has
10:33actually gone up in this case by 20
10:36percent to three thousand dollars a
10:38month which is kind of what we've seen
10:40Nationwide
10:42however when you look at what Zillow and
10:44a core logic and almost every single
10:48leading indicator for rental inflation
10:50tells us almost every single one of them
10:53tell us we hit a Peak in May or June and
10:56we've already started to see the
10:58inflection to the downside the problem
11:00is
11:01the CP lie continues to focus on this
11:04and this number is still trending up
11:07from 2500 to 3000 very very very slowly
11:12so now we have a double problem we have
11:16a Federal Reserve that is giving way too
11:18much weight to these nasty matrices for
11:22rental inflation and yes it's catching
11:25up but the problem is there's so much
11:26weight on that rental inflation that
11:29we're actually telling the FED hey
11:30inflation is so high but the biggest
11:33thing that's really contributing to that
11:35rental inflation is right here it's rent
11:38because again if you look at all items
11:41less shelter what do you get all items
11:44less shelter there you go under zero
11:48percent inflation you could look at this
11:50on the St Louis fed website it's simple
11:53it's just sad it's sad because the
11:55Federal Reserve is doing us a dirty one
11:58and so unfortunately the Cato Institute
12:00suggests that it takes a lot long time
12:02to see notable changes in year-over-year
12:04inflation and the Federal Reserve is
12:06making a big mistake being as aggressive
12:07as they are hopefully this leads to some
12:10realization by the FED over the next
12:13couple months that hey we do realize
12:15that these owner equivalent rents are
12:17kind of skewing the numbers a little bit
12:18it's time for us to soften the pace of
12:21our rate increases this could be a very
12:23bullish indicator to markets because
12:25here's the thing the Cato Institute
12:27tells us that if monthly CPI did not
12:29increase at all in the next three months
12:32in other words month over month CPI was
12:35literally zero over the next three
12:37months year-over-year inflation would
12:40still sit at 7.3 percent in October
12:43which will be the November report we get
12:456.4 percent in November and 5.9 in
12:49December in other words we would have to
12:51actually see deflating prices those
12:54widgets going from 110 to 105 again to
12:57really see the uh backwards looking
13:00year-over-year number verse fall more
13:03quickly but we're not going to see that
13:05which is very unfortunate because now we
13:08have to wonder okay so the FED is
13:11looking at data that is substantially
13:13lagging reality how do we position
13:16ourselves in an invest for the potential
13:19that the FED realizes we screwed up we
13:22need to slow down
13:24well I think it's pretty obvious the
13:27more the FED keeps hiking so if you
13:30think the following that the FED needs
13:32to keep hiking because you actually
13:34think that inflation is going to get
13:36worse you don't even really care about
13:39this you just think inflation is going
13:40to get worse rental inflation is going
13:43to continue to get worse even if it
13:45inflected down a little bit everything
13:46else is getting more expensive and you
13:48don't see it going down then you want to
13:50be invested in things like cash or
13:52probably treasury bonds and bills
13:55cash-like instruments although these
13:58will lose value unless of course you're
14:00just sitting in them in an inflationary
14:03environment t-bills will lose value
14:04unless of course you're sitting in them
14:05just milking the yield and then it
14:07doesn't matter if their market value
14:08goes down generally cash is the best
14:11thing to have in an inflationary
14:13environment where the Federal Reserve is
14:15continuing to hike now I know that seems
14:17counterintuitive because you might be
14:18thinking oh but my cash is losing
14:19purchasing power well it depends what
14:21you're going to buy if you're going to
14:22buy things that are going up in price
14:25like food and gas yes your cash loses
14:28purchasing power but if you're planning
14:29to buy assets whether those are bonds or
14:32it's real estate or it's stocks your
14:35cash actually gains in purchasing power
14:37during an inflationary environment where
14:39the Federal Reserve is hiking now if you
14:41believe that it's possible in this
14:43November meeting and December meeting
14:45that the Federal Reserve finally comes
14:47around and goes hey you know we actually
14:49think inflation is meaningfully going
14:51down because when we start realizing
14:53that shelter is is sort of being Mis
14:56labeled here and being misread and this
14:58is something historically we haven't
15:00seen this is uh sort of like this time
15:02is different moment which are very
15:04dangerous words in investing but I mean
15:06the fact is you know this is pretty
15:07unique
15:08If the Fed comes out with that well then
15:10you're probably going to be looking at a
15:12fed that's more dovish and a more dovish
15:15fed would imply you probably want to be
15:18in things like cyclicals which could be
15:20Tech it could be growth however these
15:23are still sectors that could experience
15:25an earnings recession as we've already
15:28been seeing with Google ads plummeting
15:30with uh Facebook plummeting with Amazon
15:33seeing growth slow for the next quarter
15:34so you're still going to see that EPS
15:37risk and decline in potential margins
15:40which is a risk but a dovish Fed almost
15:43always pushes up those cyclicals it
15:45pushes up growth stocks generally good
15:47for stocks in general and you have to
15:50ask yourself as soon as we get a dovish
15:52pivot is it possible that spreads on
15:54mortgages come down and we actually end
15:57the real estate crisis and collapse
15:59before it meaningfully actually has a
16:01chance to decline If the Fed U-turn in
16:05let's say January and all of a sudden
16:07mortgage rates fell down to save four
16:09percent again is it possible then that
16:12the real estate market maybe sells down
16:14eight ten percent but then quickly
16:16rebounds another three four five percent
16:17as everybody comes out of the woodwork
16:19to go buy real estate absolutely
16:21possible so important things to keep in
16:23mind by the way we've got a big deadline
16:25for house hack coming up on the 31st
16:27make sure that if you are an accredited
16:29investor and you want to join house hack
16:31you join by October 31st assign your
16:34agreement you could wire within a week
16:36after that just make sure you sign by
16:38October 31st if you're not accredited
16:40yet don't worry stay tuned we will have
16:43our non-accredited round coming up
16:44hopefully within the next few months
16:45thanks so much for watching and good
16:47luck

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