MARKETS ABOUT TO BREAK FROM PEACE DEAL COLLAPSE, FED SHOCK AND NEW INFORMATION...

[00:00:00] Speaker 1: hey everyone welcome to wall street truth bombs radar report i am mark malik although i can't read the word report properly i am the guy i'm the founder of wall street truth bombs this is where we cut through the noise my friends and we focus on what's actually driving the markets no spin no narratives no politics just policy just the data what it means for your portfolio you know how we do it over here uh last week the doubt closed at record highs and everything felt really easy but this week the middle east blew a hole in all of that calm oil's flying yields are hot and the mood flipped in 48 hours tonight we've got a stack lineup uh and we always do but tonight it's a stack lineup once again and every one of these matters for where markets go next and what that means most importantly for your wallet you want these things on your radar first we're going to talk about the hormuz oil shop the ceasefire is over and the tankers have pretty much stopped moving we're going to cover that in depth then the fed under the new guy kevin warsh where the real debate is no longer about cuts it's now about hikes we're going to talk about those hikes and those probabilities and finally the jobs market where a good looking headline is hiding a quiet crack we're going to focus a little bit on last week's job numbers these are really important things i'm going to try to get through these three items uh in the next let's call it 45 minutes to an hour uh my friends you've joined me in the past and you know that it's hard for me to fit in an hour it's very with a lot of stuff in there i'm going to try to cover it all most importantly i want to welcome you all i want to make sure that you drop your questions uh in the chat i'm going to take them uh after each segment i'm going to start off by answering one quick chat because someone jumped in before we even got started early bird here guys gets the worm uh and so i'm going to ask that question but i answer that question but i think it's a very important question right so i'm going to answer i'm going to answer z's question um z is uh zubin decide 9208 from uruguay so i'm going to start with that one right off the bat okay and z asked us this question right here it's a general question he says despite all the in-depth analysis and uh i'm reading right here and economic expertise i have i appreciate that why have i been hesitant to predict the market crash okay so it sounds z that you are predicting a market crash right because you said the market crash um so you know uh in my business we don't predict market crashes right uh what we do is we like to assess risk that's what my job is right so anytime we make an investment right there's a direct connection between risk uh or volatility and expected return right a lot some people look at the return first oh i think i can make 20 on this investment and then they think about the risk and the potential downside second but as you probably know if you've watched my videos i like to start with the risk first right i like to know what i'm getting into then once i understand the risk uh then i assess whether the potential return or the expected return on any of these investments uh is commensurate with the amount of risk that i'm taking so as such uh you would probably notice that i like to highlight a lot of these risks and the reason i highlight a lot of these risks is because they're what i call uh the convenient narrative in the mainstream media now i'm not trashing the mainstream media i spent a lot of time on the mainstream media you might see me you could just google me you'll see that i'm on tv all the time uh and i'm carrying along with them that what i call convenient narrative right we don't have time to get into a lot of the details uh so you basically get the highlights but i think that's great if you want to have a general idea of what's going on in the market uh but if you really want to you know if you really want to put your money to work you really need to look deeper uh than what the mainstream is basically putting up on the screen 24 7. and that was one of the founding concepts of wall street truth bombs we want to drop the real truths on you and we like to look at the shadow data and we like to shine the light on the shadow data right so that's what this is all about and so a lot of these i these these ideas that i bring in front of you uh these are these are the shadow data's and the truth bombs that i don't think you're going to get just by looking at the mainstream media so i like to highlight these types of things that also said there is absolutely z a wall of worry that's in front of us right now and there is absolutely a disconnect uh with where the market's trading uh and where the actual data is suggesting that the economy may be going and where the market will be trading now let's just say for instance we do see a lot of risk we do see some downside risk building up we're going to talk a lot about that in the segments today but that doesn't mean we're not buying stocks that doesn't mean we're not still in the market that doesn't mean that we're shorting the market that doesn't we don't do that type of stuff um so we're more long-term term investors right i i'm a money manager i manage about 20 billion dollars in assets um i don't i don't jump out of the market the first sign i see of volatility um and in fact we stay in the market for the most part uh and we do go to cash occasionally but we move around within the market uh to make sure that we have more upside uh than we have downside risk right so that's what the idea is all about but once again so let me sort of get back to the question why am i not predicting because i'm not predicting a market crash but i am predicting at this point lots of volatility and i am telling you that there are lots of risks out there that need to be considered see uh when you get involved in the market and so we cover a lot of the systematic risks or the macro risks that affect overall market overall markets and the economy uh but when you look at a stock right it goes beyond just the overall economy you've got to look at the risks of those individual stocks of course right that's the idiosyncratic risks that are associated with the individual investments so that said um i'm going to give you some stuff here that is definitely going to make you feel like oh this is negative it is it is these are the risks that you're taking this doesn't mean you're gonna you need to sell this doesn't mean you should be shorting the market it just means you need to consider these significant headwinds before you get in and let that temper the amount of a conviction that you have when you get in the market right if you're taking fresh cash and putting it in the market if you perceive lots of risk and you perceive the downside is bigger than the upside you invest less right but staying out of the market generally speaking is not a good idea if you're a longer term investor right uh so that's really important and there are all these sort of um you know if i if i got into that i'd have to go into all the fine detail of that uh but i'm going to point out some of these sort of risks that we're talking about right now and that as you probably noticed uh has been my style right here okay so i hope i kind of answered your question a little bit um over here um and so let's get into our first segment right let's talk about the hormuz oil shock okay interestingly my friends i i have two videos that i put out um that i recorded over the past two days and we haven't we haven't put them out yet right so we recorded them and we're holding them back because this is shifting so much i don't want to put a video out that is based on what i learned this morning and then of course by the time the afternoon rolls along uh the numbers are completely different crude oil has changed and something might have changed right that just gives you an overall view of how fluid uh this situation is with crude so let's dump it let's jump into it now and try to do our best based on the very latest that's going on right now so the first part of this headline is you know forget the headline about peace in the middle east right the ceasefire is clearly dead and the most important waterway on earth just froze up again i'll get into some more details about that let me set the table for you guys right three weeks ago we had a deal the 60-day framework you probably heard about that and everyone exhaled and the markets traveled up uh in response to that oil drifted lower uh stocks pushed to record highs and the middle east completely fell off the front page right every single day i kept looking at things saying do i need to put out a note on this do i need to respond to this uh there's stuff going on still um however the news hadn't changed and the market seems to pretty much have moved on now we know about that piece that it lasted for about a minute uh this week the whole thing came apart uh and it came apart pretty fast so let's walk through what actually happened over the last couple of days why the oil market's reacting the way it is and why the calm that we saw uh it is not the calm that you think it is right and if you guys follow me you'll see that i have been pretty skeptical uh about the process and i'm gonna give you some very interesting fun facts here uh let's let's start with this okay this is a really interesting one just to give you an insight into what i'm thinking at an institutional trading desk on a daily basis you probably can't see it behind my head but this is actually live this is my bloomberg behind me it's not a prop um but you'll see here there's a note here between me and one of my favorite uh reporters uh over at bloomberg right so you can check me out i'm in the press all the time pretty much on a daily basis and you can check out my quotes out there i've got nothing to hide on that kind of stuff uh that stuff is pretty consistent with the stuff that i report to you here uh in wall street truth bombs but i want to give you an idea because i got a query earlier today from one of my favorite reporters uh over at bloomberg and this is sometimes how it happens sometimes it's a it's a you know a voice call we set up and we speak other times it might be an email and other times when it comes from bloomberg um i get a query directly from the bloomberg reporters you know right here on my bloomberg uh chat so this is my friend matthew he's he's one of my favorite reporters because he's a hard-working guy and he digs up so many interesting things in a lot of cases some of the questions he asked me are things that i hadn't even noticed happen yet so i love i love talking to my friend matthew okay so here's what he says i'm going to read this to you because i want to give you an idea of the questions that i'm getting from the experts and how i answer on a daily basis so matt says to me earlier today hey mark quick question about the latest flare-up by the way uh between excuse me the us and iran uh if it continues our equity investor is going to need to reevaluate any strategies sector allocations or us versus the rest of the world that is a quote that is a question directly from a senior bloomberg reporter to me earlier today i'm going to tell you my exact answer and that hopefully will answer some of your questions and this might be the way you know we should just move on but i'm going to tell you exactly what i said i said to matt um i think that it goes without saying that the market the market even still is looking past the crisis which i think is a big risk miscalculation if crude starts to move up again if insurance stays elevated if crude transit slows then gas prices will certainly reverse and tail back up this is a double whammy this time around because now we have a hot and bothered warsh fed that is dedicated to two percent regardless of where the inflation is coming from that can't be helpful to a tech sector that wants to rally right now is rallying actually for the right reasons but will ultimately get held back by interest rate gravity the longer this goes on the messaging around it will be harder to mess uh harder to massage by the administration markets are surprisingly calm about this okay and i'm going to actually tell you a little more about that in a second so he says got it this is great thanks are you personally thinking you'll make any portfolio changes if poor moose traffic stays halted he asked me now i normally don't talk about stuff like this on the on the air i normally don't even talk about this stuff uh in my in my in my press but i'm going to give you an idea of this because you guys want to know what i'm thinking so here's my general answer that i gave him okay i can't share my positions with you but i give you an idea i said to him i've stayed long my energy hedge throughout but i have not made broader changes still carefully constructive that it very selectively in text and tech communication services and my regular diversification plays lower conviction though on discretionary much lower okay now i'm hoping you're wondering what i just said i'm going to probably try to first i'm going to try to decrypt some of it for you okay with what my answer was okay let's start i'm going to move back up to my quote so i said that the market's looking past the crisis so i what that really meant is that i believe that the um that the market was being a little bit um a little bit you know more positive than uh what the reality suggested right so yes there's an mou it's just an mou it was clear that it's very shaky we're not even sure what was uh who the mou is with if the whole country can keep it and we did see a couple of escalations along the way where you did see uh some ships being attacked to me that suggested that this crisis is far from over however you look at the markets and you see the markets trading close to all-time highs uh you don't see it in the news you don't see it on the tv uh people aren't talking about it anymore you see crude oil come down at one point it was right it was actually below where it was at the start uh of the crisis and so the markets were clearly looking past this assuming that this is just a typical situation uh where trump rattles his uh his um his uh saber maybe you know launches a couple bombs and that's it and we just go back to the mou and that has been the case right it's been by the by the dip kind of response to this whole thing however again what i suggested here um right here i think that it's been a risk miscalculation i believe there is a lot more risk in it i think when you hear by the way a lot of these quotes of crude oil on tv and everywhere it's crude oil futures it's not actual where crude oil is trading today okay the spot market the cash market is very different than the paper market and the paper market is where people are speculating it's going to go where people are hedging where they think it's going to go and that's based on gut feelings right they can get out of those positions but there are folks out there that are paying for actual crude oil physical crude oil and they are refining that crude oil into all the distillates and gasoline etc and they have to pay all of this all the freight and all of the insurance and all that kind of stuff they have to pay for all this stuff before they even get it to where it needs to get and they they start distilling it uh and that price is significantly higher than what you're seeing uh on the screens on the in the press or on tv but if you speak to somebody who is in the business in oil uh and in distillation in all that stuff they will tell you that the price is much much higher a lot of it has to do with insurance right because you have these boats they have to get insurance and the insurance rates are significantly higher um i put a video out on that i believe today you can probably check that out something in the neighborhood of three thousand percent higher than they were prior to the crisis uh so people are that were paying thirty forty thousand dollars for for uh for uh to to uh ensure a uh an oil tanker a transit prior to uh the crisis are now paying uh up you know close to over a million dollars to move freight okay so where do you think that goes that's a cost and that cost is ultimately passed down to you and me when we go to the pump right it takes a while to get through the system uh but those things have already been paid and they're being paid right now as we speak second let's also talk about what actually is transiting through the strait of her moves what is actually going you i'm sure you've heard and some people may quit back at me oh you know boats are going through uh yeah you want to see i don't know if you can see behind me uh but here i track how many boats are actually going through here's the strait of her moves live okay here are the actual vessels that have traveled through the strait of her moves every day east to west west to east completely through so we follow these things we see if they're trending up or they're trending down how many actually went through today i wish you could see this because it's kind of blurred out because my camera here but you could see on the left hand side of this chart before the crisis you see 80 ships pass through a day in late february and you could probably see this thing go down straight down and then it kind of flat lines right about right about zero until mid-june okay when the mou was signed and so that is when everyone told you oh everything's normal everything's great it's everything's flowing again the strait of her moves is open i saw the same headlines that you saw okay well you'll see how it kind of came back at its height right here by the end of june there were as many as 20 ships uh that transited the strait of her moves these are just tankers okay before 80 now we're at 20. now it seemed over here that it was going in the right direction if we kept going ultimately we get back to 80. but unfortunately that traded sideways and then it went back down to 10. and of course today we had 13 ships go through on seven nine today so three more than yesterday so okay i would say it's better than zero but it certainly is not 80. and so that just means that yes supply is it's trickling through and yes they and we have found other ways to get oil crude oil but we're still significantly lower than where we were prior to where uh when this conflict started okay which is why actual crude oil for delivery costs more uh than when it that it cost weeks ago despite what futures say despite how many people are going to say in my in responses oh crude is down at 65. that's futures that's what people think it's going to trade but none of those people are actually taking delivery uh of actual oil right because those people would have to pay again they'd somehow have to pay part or all that insurance they have to assume it gets there okay now this is the stuff you need to watch if you really want to know how crude oil is doing and you really want to know when is gasoline going to get back to where it was so let me go a little further here uh down with my response i talked about insurance i talked about crude transit i just explained that to you um gas prices uh gas prices are are definitely coming down uh they're still high in some places i think california is north of five bucks they're a standout because they have special gas over there um and uh but uh the rest of uh the country on average i think is in the mid high threes at this point i checked this morning and so that's significantly lower uh than where it was uh but you know i just want to say uh at the start of the at the start of the crisis uh the the uh the russian ukraine war when that those prices spiked over five dollars i don't know if anyone remembers that on average so even through this whole iran crisis uh gasoline prices didn't get as bad as they were uh during the the uh ukraine when ukraine war first kicked off so just an interesting point uh data point for you to think about over there um anyway it has come down but i can assure you uh it's gonna go up again if this continues to stay uh over here uh we saw crude go up the other day a little bit it's come down since but it's still slightly elevated it's interesting that it has come down today the crisis still exists but crude oil futures have come down a bit today um but uh and of course yields have come down a little bit so it's such an interesting thing uh you know how these uh prices what's happening on this screen is not necessarily what's going to happen at your local gas station uh and by the way when it happens at your gas station it's not just you paying for gas it's the people that deliver the twinkies to the grocery stores that you buy twinkies are going to be more money uh twinkies are probably made by from crude distillate i don't know what goes into a twinkie uh but the plastic certainly that it's wrapped in uh is made from a crude distillate so all that stuff it's already been paid for for month for for two months now so those prices have already been paid so any relief for any of that stuff has to wait for the conveyor belt as i like to call to get through so so that the input costs actually go down uh and ultimately they they come to back back to you and i uh so we can end up actually paying less um for you know the before gasoline at the pump uh etc now i also talked about a double whammy and i'm going to get into that i'm probably preempting myself here but i talked about the double whammy in the fed right so we have a new fed head and the fed is now doubled down on their commitment uh to focus on two percent inflation target uh clearly we're not at two percent i'm going to cover that in a second but this new fed is not worried about trying to fight crude uh energy-based inflation even though we know that rates can't fix a supply shock we know what the problem is we need these boats here on this map need to move through the straight of her moves and insurance has to come down and all those things have to happen before that type of inflation the energy inflation that has plagued the cpi and pce numbers that the fed keeps talking about and everybody's talking about that is not going to be fixed by higher interest rates higher interest rates are only going to give you and i more pain but uh this new guy uh kevin warsh um along with the fed has uh doubled down on their interest um you know in focusing on inflation so that just means that um if this persists we're going to have higher prices uh and we're also going to have a fed that is going to be again keeping rates higher for longer which is just a double whammy and it's not very good not only for you and i as consumers but also ultimately the stock market some one of these things they're going in opposite directions right now one of them is right um and uh at the end of the day either uh either i'm wrong about what's happening with crude prices uh or the risk or the stock market is going in the wrong direction and they're going to have to converge at some point right and so uh that reckoning will happen at some point um in in the future unless unless this thing is resolved in a snap and it doesn't look that way based on where we are today so that was my response to this i talked about the calm markets um you know you you're talking about the markets went up today uh they went up um they closed up let me see if i can get the uh the closes here on my screen yeah so markets closed up uh much higher today and of course uh the vix um the vix index um the volatility index is trading at 15 dollars a share 15.77 on this chart i think it might have even closed there um and uh no 15.84 close but you see how it's it's pretty low that's considered no volatility so from the equity markets perspective things are all good the the equity markets are looking past this right now and that's kind of why the crude oil went down a little bit futures went down and you saw stocks go up a little bit people are assuming that this is going to be a contained uh situation um and so we'll see we'll see how that works now let me get to the stuff that you want to know about where he asked me about what i'm doing uh here now i don't want to get too much into this because it's not the stuff we do but i do want to be i do want to give you full disclosure and let you know um that i said i've stayed long my energy heads throughout but have not made broader changes so before um before this whole thing took off and we started to get the impression that that there was going to be an attack on iran um what we did was uh and i put notes on that out on that and videos out on that uh you know as as um much earlier in the year uh we started to accumulate uh small positions uh in uh big name energy companies um just as a as a hedge right and we also believed that we were getting there was reasons behind it we weren't really hedging per se but we thought that it was a prudent investment at the time uh because any volatility and crude prices uh especially in an upward direction uh would have caused the chevrons and exxon mobiles to go up uh and they were also paying nice dividends and so it sort of made sense for us to buy some of that take a small position and that's what we did uh to you know to sort of um hedge ourself if you like uh and we kept those positions on and they went they went up uh in our favor significantly when the attacks happened um but um we didn't get out of those hedges because we believed that the volatility was still there they came they've come back down since of course uh but you know we're holding those things uh because we don't believe uh that the crisis has passed so that's what i meant there when i said we've held our hedges um and we haven't made broader changes right and i said that earlier when i answered z's question at the top um that you know yeah we make all these changes on a daily basis but no broad brush changes um since right so i said here next we're carefully constructive constructive is a wall street uh inside term meaning that we're buying or we like something um that's sort of a wall street inside term um so we're carefully constructive and i said we're selective right now in tech and comms right you know the tech that the usual suspects in technology uh which by the way look cheap relative to their potential growth um similarly with uh communications those are uh discussion for another day we're not talking about those but uh i have lots out on that as well and you can see my quotes and you can see me on tv talking about that stuff all over the internet uh that we like those types of things and even some of the companies that i like even though i'm not supposed to say those things um anyway um so and yes and by the way i don't only buy those things we have diversified portfolios right you know guys i always say on wall street there's no free lunch but i'm going to put out a video really soon about the only free lunch on wall street is diversification and you can quote me on that right because diversification uh allows you uh to in some way diversify some of the idiosyncratic risk that i talked about before the company specific risk but you cannot hedge against systematic risk right so that means if the market moves up or down uh then all ships go up and down right so even if you have the best stocks they're going to go down okay so that is uh something i want to say we're always diversified here so we have investments across all sectors we may be leaning harder into one sector or another based on our assessments um but we have investments across all sectors i like to say you always like to see some green on the screen um so we haven't made any broad moves there uh recently however i did point out here discretionary consumer discretionary that are we have lower conviction on discretionary consumer discretionary are things that are discretionary that we buy that we don't necessarily need uh flat screen tvs um are discretionary you don't need them uh but you do need to eat food you do need medication you do need certain things that is not discretionary purchases those are the things that we purchase in good times and bad um not surprisingly people stop purchasing the the wanna haves when things get rough and so we feel like the consumer is very very stretched right now you watch my videos you know our feeling on the consumer uh and how the consumer is very stretched and that those are very much hidden in the numbers uh that exist right now um have like again a couple videos on that come check us out at our home page i hate to keep pointing you to our home page this is not a marketing thing i really do put a lot of these this data out there i can't cover it in one live event but i do try to go through it methodically for you in our videos uh about the stressed out consumer i'm stretching this first piece out much longer than i anticipated but i'm hoping you find this interesting uh because this is really the stuff that i do every single day you see the videos where i explain everything but this is the stuff i'm dealing with on a daily basis making portfolio decisions taking this macro data responding to the press carrying the message out uh to the press uh but here at wall street truth moms i give you the story behind the story like i said i'm not doing this level of depth um in the videos that i put out with the press i'm not doing that when i'm on tv whether it's cnbc fox or bloomberg any of these i don't carry all this data with me this data i share with you guys right here on wall street truth bombs that was the whole reason why we founded wall street truth bombs uh was to get this this type of information out to you anyway okay i don't want to beat this too much we know that the situation is still very tenuous we know that there is no resolution just yet we know that there are bombs but we also know that the president uh is trying to lean on diplomacy uh hopefully diplomacy works but even with diplomacy we know that we're a long way away um from getting to the point where this really is not a factor anymore and it really won't affect um you know affect our stocks um and our uh and ultimately how we live as consumers right because i know you know because i feel it myself that this war has certainly had an impact on my budget my household budget um because i have to buy gasoline occasionally even though you know i don't drive i try not to drive uh but i still have to fill up a car now and again uh and i know it's a big deal um and i know it has uh interesting um side note um today we got uh pepsico earnings this morning um um you probably guys also know that i love watching um consumer based stocks i love watching retail stocks because that tells you a lot also about what's going on with the consumer not necessarily government data that like you guys all know that you know that can be read many different ways but what you hear from the walmarts of the world the krogers of the world and the pepsicos of the world right so pepsi a snack company and a soda company uh they came out today and one thing i noted when i looked at it they beat uh in earnings of course i was watching carefully uh and i listened to the earnings a call i listened to these and someone on my team listened to them uh we do it so you don't have to do it um but what i pulled out here was uh the ceo and i'm reading right from my notes right here in my in my my trusty rusty notebook um that the ceo said gas is eating into snack budgets that's what he said uh and you know i guess i kind of believe that right um because you know you don't need to buy snacks uh and we are spending a lot more on gasoline but uh so they feel like uh there is definitely a factor uh for gasoline we also got i believe costco today costco kind of sort of said implied something similar uh to that uh so gas is a factor but interestingly i had another one all right 7i uh that's the the company that owns 7-11 so 7-11 had a complete opposite take they knocked the ball out of the park and they said we did so well because you know 7i 7-11 in some cases they sell gasoline uh and they say they're doing much better because the margins on their retail gas have been great i'm sure you're not surprised to hear that right so uh yes these gas stations they do uh make more money uh in times when you see uh these prices go back and forth if they were smart enough to buy a lot of gasoline and fill up their tanks and maybe buy futures when it was cheaper then they own it at a cheaper price and of course they're getting higher margins they're selling it at four or five dollars a gallon when they paid probably the equivalent of you know significantly less maybe like two dollars maybe a dollar 95 a gallon i talk about my friend peter all the time i'm asking these questions all the time but don't get mad at them right because when it goes the other way they tend to be behind the curve and they tend to lose money uh on the way down uh but for now assuming this crisis remains elevated like this and assuming they were able to buy enough of this stuff cheaper they are doing well but at some point they're going to run out of gas that they paid a dollar 95 for and they have to go with the replacement cost and so they're paying the higher prices now still as i told you having nothing to do what you see the paper price the reality price of what they're paying for physical delivery of gasoline is not tracking what you're hearing on television reading in the newspapers that is the futures price so if you walk away with anything walk away with that um okay i'm not going to beat this up anymore here um just want to see if i have any more data points here that i want to share with you on this war risk premium um that i want to share with you here um oh well this is an easy one i'll just share with you my truth bomb that i jotted down here and this is my truth bomb on this uh the pump hasn't moved yet but the insurance market has already priced the war and the bill always arrives at the gas station last right of course i just told you that and could have told you all that in a few words and i just told it to you in so many words but i also want to share with you before i get further let's see if i have a shadow data here i think the shadow data here uh is this war risk insurance premium you could track this stuff it's not easy to find but you can find it online and you can see how this stuff works you can and some of the shadow data also i shared with you earlier i track the ship traffic over here so i see the ship traffic and these are the that's the that is the real shadow data that you want to track right because the stuff has to move and they have to pay insurance and when we see that stuff let up remember these insurance underwriters um they are they are underwriting the risks of getting this gasoline through the straight of her moves and they're going to continue to pay big premiums until there's an all clear of some sort so it has nothing to do with the messaging that's coming out of the white house uh the messaging you're hearing in the mainstream media the convenient narrative nor is it again the price that you think crude oil is trading at um and so let's get um back on that so when someone on tv tells you this oil spike is a one-day story remember what the insurance market's doing people who write the checks when a tanker gets hit they've already voted and they voted with their wallets exactly and this is one to watch so we're gonna have to watch this one much more closely now i want to see if i have any questions that i can answer with with respect to that i see my good friends um dylan and nico may have put some things in the chat that i can answer um yes someone said something this is a good one santiago la court 29 29 46 you brought up another point i kind of answered some of your question already but you mentioned here um you mentioned here um with the mou being canceled you mentioned reserve levels now that's something else that we watch okay this is something very interesting only and really mostly i'm assuming santiago knows a thing or two about this because that's an inside thing um so crude oil um it gets it moves out of the ground across the sea through pipes wherever it ends up in the in the uh in the crack towers they turn it into gasoline um but uh it doesn't always just go to you and me and to gas stations they fill strategic reserves so companies hold these reserves just in case you know what happens right all this stuff countries they hold reserves and uh in case you didn't know the reason that we have even though it's gotten bad for us it would have been a hell of a lot worse if the strategic reserves were not released by all the sovereigns out there including the u.s and including some of the oil companies and and the distillers that um basically emptied out all of their strategic reserves to make sure to stabilize supply and uh so those are actually dangerously low and so if you pay attention to the subtext you will see some of these companies getting very nervous and you can't drain these out completely you have to refill them uh because whatever's left in there kind of goes bad right that's a that's a question for a biochemical engineer not me but i can tell you that i know from the insiders that those are extremely low what does that mean that means the second this thing over here you see it over here gets back to here and it's a big difference if i hope you can see that right here okay until it gets to here when it gets to here all of this is not going to you and me it's going to go to fill strategic reserves too that means the guy who owns the gas stations like my friend peter but also governments and also distillers themselves and also um hedge funds they're going to be bidding they're going to try to buy this stuff because they want to fill strategic reserves up before it even gets to you so there's going to be a strong bid for this so supply is going to go up but demand is also going to go up and so that also tells us that prices are not going to come down so fast and this is basic economics but santiago i'm assuming that's your name that is a great question um that's a great question over there um okay the the next couple questions are about i see here they're really about um they're really about um about bond yields and about um i see um inflation cells so let's move on to the next sec segment here uh because i think i beat the living crap out of this one here but i hope you walked away with something get an understanding of how we're looking at things at an institutional trading desk and the stuff that i do every single day uh over here uh in my job um when i'm not bringing you truth bombs um so uh if you're just joining us uh in case you haven't figured it out yet by the bow tie and the shiny head i'm mark malik i'm the founder of wall street truth bombs we're covering the hormuz oil shock we just covered it ad nauseum the wash fed which i'm going to cover next and the crack in the jobs market so we're about halfway through so let's get back into the hawkish fed and we're still everyone's still waiting for the fed to cut rates right i think most people got the message they got the memo that i don't know rates are not coming down anytime soon i could tell you that um i would say that that people already know that the fed even my mother-in-law who i talk about all the time and knows so much about so many things she knows that rate cuts are kind of off the table at this point because she sees the inflation and she knows no fed in their right mind will cut in an inflationary environment okay however again look at the stock market look at even some places in the bond market they don't agree they don't agree if you look at these uh levels you would think that the the markets are still expecting the broader markets are still expecting a fed that's not going to be so aggressive so draconian with rate hikes and yet the futures numbers are telling us something different the fed themselves is telling us something completely different once again my friends a disconnect from reality one of them's right uh eventually they're going to converge on reality and we don't know what it's going to be uh if one if they don't both move to the middle one is going to fall one in the other direction or you know it's hard to believe uh that the fed is wrong uh about what what they're going to do next but you know we'll leave it right there at that so um here's why this matters to you guys for two years the entire market has been trading one story the fed has done hiking and the cuts are coming every dip got bought on that one assumption that's called the fed put and while uh for a long time that was a really good trading strategy i don't recommend it when i say it was good i'm just telling you that it actually worked okay but that might be changing because we have a new sheriff in town okay and his name is kevin warsh he's the new fed chair and the inflation data is not cooperating and he is a hawk certainly what he's saying he's speaking hawk talk he's also hedging himself a little as most hedge uh as most uh fed heads do but he is a lot more overt than his uh than his predecessor who by the way is still a voting member of the fed so let me show you what the fed actually said this week not the headline let's talk about the fine print a little bit because the fine print tells a very different story than the one that the market is pricing we had um we know that the fed last time they held their benchmark rate at three and a half to 3.75 percent we know that they've held that for four straight meetings uh this was kevin warsh's first meeting that was last month he took over in may we're now in july at the end of july in a couple of weeks we're going to have another fomc meeting and that is the one that we're paying very very close attention to just yesterday we got the minutes so they take notes from these meetings that they have these fomc meetings i put out a note on that today what was in those and i also put out a video uh earlier today on that so go check that out because there's some interesting findings in there i'll cover some of it here but if you want to look a little bit more into it uh go check out that video on our home page on youtube um so the minutes uh they showed a committee that split down the middle we know this a few officials argued um argued that there was a case to raise interest rates in june we saw that in the dot plot and we kind of suspected that but there were fed governors arguing to hike rates in the last meeting in june things haven't really materially changed certainly not on the uh certainly not on the uh inflation front uh certainly again there are going to be people who are going to you know sort of comment and say oh but crude oil is lower i hope you got that message what you're seeing on the screen what you're seeing on tv is not what people are paying and let me also tell you that people already paid those high prices two months ago on products that haven't even gotten to your shelf yet so these things are going to have to clear through the system before we see any of this go away the fed watching that stuff very very closely let's take a step back this new fed head wash okay fed chair he is again a guy who does not believe in uh forward guidance which means we're going to hear less from the fed they're going to give us less detail about what they're thinking and stuff that we're used to hearing for so many years since bernanke first initiated forward guidance we may lose that dot plot that where the fed tells us about where they think that rates are going to go in the future uh there's a lot of controversy around those dot plots but a lot of people use those dot plots as baselines and it's fair to use them as a baseline because those dot plots are made by the people who vote and they also tell us what their that those come out with this the uh the strategic projection reports where they tell us where they think inflation is going where they think the gdp is going etc warsh didn't even fill out his form so he is against this in fact these things may go away so we may not know what the fed is thinking but we do know one thing because he repeated it over and over and over and over at his first press conference that this fed is focused on inflation full stop they're worried about inflation they're going to do everything they can to give us confidence that inflation is their top priority that is what he said he didn't say he's worried about the job market he didn't say any of that stuff he didn't say he's worried about the economy he's worried about inflation and so is his fed and there are a few people according to the minutes that were there very worried about it too ready to hike rates uh in the next meeting um uh the fed um warsh was uh at a meeting um uh earlier uh this week um and uh or was the last week in central just recently he was in cintra and he was pretty vocal also about that right so he did say things are maybe going to improve with inflation he was referring to crude oil futures coming down um but he didn't make any details but he did tell us that he's focused on that he thought that rates could you know he didn't say specifically rates could go up but his talk was mostly hawkish over there was perceived as hawkish and he did warn that if people thought that rates were going to come down uh that they were going that they were actually going to possibly be disappointed so you know you could read that any way you want um you know this this guy is focused on inflation and inflation is still here inflation is not going away anytime soon and i'll talk about that in a second uh the driver uh the drivers of inflation uh the pce uh that's the inflation figure um the last one was at 4.1 year over year that was may it's the highest in three years i just want to remind you that the cpi 4.2 that's the consumer price index those are two different ways to measure inflation the fed likes pce but they also look at cpi we're going to get cpi next week so we're going to see what happens there and i'll talk about that in one second goldman sachs well-known bank they pushed their first rate cut call way out to 2027 so they're saying goodbye rate cuts are out of here nothing this year if we're lucky next year bank america also very well known bank they believe they're going to be three hikes before the year end of this year and they just recently uh changed that uh to three hikes from uh even right they were even and they went to three hikes i have videos out on those as well so scour us on our home page a little bit and i give you a lot more detail on that so if you want to talk about what the markets think so a lot of times we talk about what the market thinks a lot of people you'll hear talking about this uh the cme fed watch tool you can look that up online uh you can go to that website you can see the cme fed watch tool um and that gives you uh based on um based on where um where futures uh are thinking uh that the um that uh the fed funds or the overnight rates are going to be in months ahead we can come up with a probability and i could tell you that the probability right now for a rate hike at later this month um later this month i'm going to tell you to live for my futures right here i can tell you that um there is a 25 chance of a rate hike at the next meeting later this month that's a one in four shot um on wall street you guys probably heard me say this a number of times we don't consider that uh likely right 50 50 is kind of where we draw the line if it gets north of 50 we say that um we say that there's there's a there's a there's a good chance right and of course the higher it goes the more the better the chance uh so one in two good chance this is one in four so not likely to happen at least according to futures and swaps overnight swaps um and um and so that's coming up but 25 is not zero uh and this changes on a daily basis this was 30 this morning um and then crude oil came down a little bit for no good reason because we know that nothing has been resolved so crude oil came down a little bit and futures sort of adjusted a little bit so now it's 25 but as you go forward to the next couple of meetings if you look out to uh september there's an 80 chance of a hike and so of course that's going to change a lot between now and september but based on today uh people are still expecting a high probability 78 of a hike in september by the year end uh we're talking about a 100 chance of 25 basis point hike plus a almost uh 40 chance of a second hike and so you know it's pretty clear that the market certainly one corner of this market is thinking that the next move is up not down for interest rates and uh but not the equity markets because the equity markets closed up today um significantly higher uh as you probably already know so again this is all about this this divergence here uh so next week we're going to get more information uh in the from the cpi but i want to point out one thing on cpi um cpi we talk about core versus uh regular headline cpi and so uh the the core is uh cpi without um without um look i think someone asked that question uh look at core still running hot energy prices yes okay this is uh garrett smith 76 79 this is about what i'm just going to address right now so um this is the interesting thing um you know i in most cases i scoff at the fact that the fed likes to look at core it doesn't include food and energy and the reason they do that because core uh food and energy are volatile and if you're going to make policy you don't want to you know be aiming at a moving target so historically but there are other reasons for this the fed and a lot of economists focus on core inflation not figuring out figuring in energy or food but that doesn't mean anything to you and me because i don't know i have to buy food almost every day every day you can probably tell and we all have to buy gasoline because we need to get places or we take public transportation that needs gasoline so these are important to us so it is important to look at so i look at headline inflation however in this case here when we know a lot of the cpi um changes of the inflation inflationary movement that we've had is because of energy because of what's going on in iran so in this case we do want to take a look at what's going on with core inflation like if we stripped out energy forget about straight of her moves you want to assume everything's going to be fine i hope you don't walk away thinking that you can see that screen behind me it has not changed um and uh but if but if you believe it's going to all be better um in you know in the near term and that energy is not a problem it's going to go back to normal so we're not going to have inflation it will by the way once this does resolve you're going to see cheaper energy than we've ever had before that's another discussion when that happens and how long it takes to get to you and me that's another question that's far in the future from where we are today um famous economist once said who cares about the long run in the long run we're all dead uh i don't think that far in the future but certainly beyond the end of the year uh before we see any normalcy um over there so what are we looking at then when we look at cpi what am i going to be looking at next week when i look at cpi i'm going to look at the core because the core has nothing to do with what's going on in iran and i can tell you scarily so the last print saw the core number start to edge higher and i think that's getting to the question um that uh garrett smith asked me um because core has been ticking higher uh mainly in services inflation and insurance and things like that that is real hardcore sticky inflation and that is something that the fed does have to worry about and that is something that the fed is going to be very very sensitive to so in my opinion uh if the fed has any case uh of raising rates that is what they're going to be looking at and so my friend you should be looking at that as well housing costs are a big factor in that uh and they have as you all know uh they've been high and they were coming down very very very very slowly since uh since the last spade of inflation we had post-covid uh but they have uh tailed back up a little bit and so eventually these fuel prices and things like that they find their way back into other places of inflation it's just not the cost of fuel but all these people that have to use the fuel and things like that you start to see it show up in other places in the in the supply chain and so it takes time it takes time to keep talking about this conveyor belt remember it's moving through the system it's already on it it doesn't go in reverse so somebody paid some more for something uh whether it's a packaging with the delivery whatever it is it's already in the conveyor belt so it's going to take time to get through the system uh and there's no sign that that really is going to change anytime soon but even if it changed tomorrow everything was resolved hopefully it does get that way it's not going to hit you and me for quite some time and uh that that is something that we got to watch very very closely um we look at this i'll tell you one shadow data point here we look at this cleveland fed they have this inflation now cast you can look that up on the internet it's pretty cool uh they try to uh figure out based on statistics where they think the cpi print is going to be next week um and uh that is right now like slightly under four percent uh for next week so you can watch that stuff live so you don't have to wait for those numbers to come out i'm going to give you a quick truth bomb i'm going to move on uh the market's pricing the fed it wants that's the friendly fed uh not the fed that the inflation data is actually building and uh you know guys there is a lot of inflation data that is sort of showing up out there um that we have to be cognizant of and we certainly know it even if we don't see the data we know what we're paying um understand what that means for our money if the fed's even thinking about hiking then the rate cut that you've been promised keeps sliding further and further away the chances of that math uh that changes the math on everything the mortgage your bonds every stock that you owns that works well when money is cheap and so you know we can get a lot more into that right now but let's just keep that in our mind uh going forward let's just see if i have any more questions on this i can quickly answer got it all right so i'm just going to say this um let me jump into the next segment really quickly i'm just going to give you the intro it's really about the labor market we got a labor print last week i i can't i don't have enough time to get into it i respect your time here but we got a labor print last week that showed that there was jobs created um and uh there were jobs created last week um and we also saw the unemployment rate ticked down from 4.3 to 4.2 percent now guys you know i'm all about the truth bombs and i'm all about the data beneath the data uh you know i'm not telling you calling this a conspiracy theory or anything like that but what i will tell you is that the data is the data and the official data has all the answers in it except it's not always convenient for the mainstream to show you all that data you have to dig it up yourself and so in order to have that convenient mainstream narrative you just say oh well unemployment rate ticked down well you'll surely hear that from the administration uh that things are doing well but if you scratch just a millimeter below the surface you see something very very different and i have lots of videos out on that you go check it out you really should i just basically said something like the unemployment number lies right 57 000 jobs in june that's what the number came out as but wall street was expecting 115 000 uh jobs okay so it missed but hey it's still positive and the 4.2 print certainly made a bunch of people who wanted to give you a good narrative say oh well unemployment's coming down now there are a couple of things that we have to look into that about first of all remember headline unemployment is calculated very interestingly um if you're not looking for a job or you've given up looking for a job you're not counted you're not considered unemployed they don't even count you so if people are getting frustrated and leaving the search for jobs they're not counted in that and so if you really look at that number this participation rate it's called is different and so people have left searching and this participation that we like to look at this 61.5 percent it is actually the lowest since march 2021 so you see people that are getting frustrated they're not even looking for jobs they've given up search and that makes the headline number look better better than it actually is um okay so let's see um leisure and hospitality blah blah blah i don't want to get too much i want to hustle my way through this here guys the data really at this point is pointing to this low higher low fire um so there's a lot that's going on in the labor market you know wall street truth bombs we don't think the labor market's so strong we see a lot of stuff changing we see a lot of folks in jobs that are beneath uh their their skill levels um so these are people that may want full-time jobs but are taking part-time jobs because they just need to make money but they can and they want full-time jobs they're not counted as unemployed so you got to be really careful with looking at these numbers i don't have time to get too far into it we can do a whole session on this but look at my numbers on this check out the video on that i really go a lot into this but there's one more thing i want to talk about here that was a real interesting one there are actually two separate reports that come out when we get those monthly job numbers there's what's called the establishment data and the other one's called the household survey survey so the establishment data which goes into that uh the the unemployment rate that is people calling employers and asking questions and so um so that is one way to look at things but another way is to actually call households and say are you working have you been working that's the household survey survey many economists believe that that is the more accurate one of the two but that is not the act that's not the one that is frequently talked about in the mainstream media and so if you look at the household data what we basically saw is 507 000 fewer people were working in june than the prior month and that's based on the household data people just disappeared from the workforce now that number is not reported in the uh in the mainstream data but that's a very real number uh that is not a typo that is out there um and if you look at um and if you look at also the revisions revisions were down significantly so you saw a lot of what i perceived to be very very negative numbers so if you look at that last unemployment print uh you know yes we're adding numbers yes the unemployment rate came down but the real picture underneath the surface my friends is that the employment situation is very tenuous at best at this point fed is not focused on that whatsoever they've made it very very clear maybe they'll change their tune uh between now and next uh their next meeting later this month uh between now and the that next lfomc meeting we will get to uh inflation prints we'll get pce right as they're meeting i'm going to get cpi and ppi next week i'm going to tell you about that in a second i'm going to give you the truth bomb here uh by the way that um that household number that is your shadow data that i like to talk about all the time truth bomb here is falling on employment rate built on people giving up my friends is not strength it's the first crack before the break and i talk about this stuff all the time so put it all together the job market's not crashing but it's freezing and a frozen job market is a fragile one all it takes is one shock say an oil spike that squeezes businesses and the low fire half of the low higher low fire goes away in a hurry that's really important that's the part that i want you to be watching now um i'm gonna respect your time and um i'm gonna get just right into quickly what to look for next week as i said earlier we got cpi coming next week um it's expected to come in uh around 3.9 percent that's slightly better than it was in the last print let's see if that happens but you guys know we want to look at core here because we want to see if the real stick inflation changes um we're going to get pce later this month that's the one that the fed watches later this month uh the fed's going to meet the fomc meeting is going to be july 28th and 29th later this month we will most likely have one at least one more maybe two more live streams for that and you can bet that i'll put out videos on that um you know the fed is out talking frequently but they're going to be blacked out for the week prior next week is a very very interesting week because next week we'll have earnings season kicking off we have had a couple of earnings so far but in earnest we consider earnings season starting with the banks jp morgan um is the bank that will deliver its uh q2 earnings uh on tuesday and jp morgan is what we consider the one that kicks off the parade um and of course i'm not going to talk about what we're expecting from them but we learn from them you can bet i'm going to be putting out a video because they uh we learn about how healthy the consumer is from them because they issue credit cards and they see what's going on with savers and they see what's going on with their credit cards and so we learn a lot from jp morgan and the other banks that are going to announce next week city wells fargo uh also we're going to hear from them we're going to hear from goldman sachs they're not a retail bank but we're going to get all that stuff next week we're going to watch of course this straight of her moves as it continues to unfold that's extremely important i hope you know to try to look for the actual price of crude oil if you want to know what's going on to look at what's happening in the strait of her moves with actual ships 13 today versus uh 80 of them uh right at the end of the uh month prior to the uh prior to the uh the problems in iran so i'm going to give you an overall truth bomb here uh and i'm going to say that when you step back we had three stories right we talked about uh one squeeze a war premium is pushing oil and inflation back up a hawkish fed is stuck fighting prices instead of protecting jobs and the labor market is quietly weakening underneath both i'm so sorry i had to rush through that part but it's so important to get that labor market understanding it because you need money you need to work to pay for things and uh that is really really important right now and i think people are really struggling uh with their job situation and also obviously with prices that are not carefully reported either and unfortunately guys this type of environment implies stagflation setup which i hate to use that word but we can't ignore it we have to say the uncomfortable things that's what this is all about here at wall street truth bombs i can talk to you about the comfortable easy to read narrative or i can tell you about the uncomfortable one i prefer to give you the uncomfortable one and leave it in your able lap teach you what to look for so that you understand what's what's happening and you can make an informed decision about whether you think the market's going to crash or not i'm not going to predict any of that stuff but i did tell you an awful lot about what i'm doing right here behind the scenes this is exactly guys why we do the radar report we focus on what's matter what matters before it shows up in the headlines i want to remind you that if you found this helpful please make sure to subscribe turn on uh turn on alerts i want to thank you we have so many good followers now i get so many great comments of it of not just encouragement but very thoughtful questions uh we do our very best me and the guys that help support me and do this um you know i have great folks that i work with here right here with us right now we have dylan and nico these guys do so much work to help me get these videos out to you every day it's not easy for any of us but we're so passionate and you guys keep driving us with the encouragement um if you want the deeper dives and all that stuff please check out our home page at wall street truth bombs we put out easily three videos every single day even the weekends and we cover those those less convenient narratives so that you guys really know what's going on okay and so that i want to just remind you before i i jump off here uh to remember my friends this is what i always say uh that there is no free lunch on wall street don't forget that and uh however i did tell you something else today that the only free lunch on wall street is diversification we're going to get into that in another show and with that guys check us out every day at wall street truth bombs i drop them right here before the market figures them out