Stock Market Crash Is Nearing The End! (Here's Why)

[00:00:00] Speaker 1: everyone wants a market pullback until the pullback actually happens and then we start complaining and we say we're not buying this yet we're not buying no stocks or going down a lot and we get scared away from the market i think this is what's happening right now we've had a decent sell-off on a lot of stocks especially these ai names down 5 8 10 some of them 15 20 percent in one day we're at fear territory on the fear and greed index we're about to hit extreme fear on the fear and greed index the market has bottomed previously at extreme fear territories but i personally believe this whole sell-off is nearing the end it's hard to call it a crash or a sell-off because the sfp is still at all-time high but you have a massive dispersion where there are so many stocks trading near their 52 week lows i personally believe we could be entering the end of this mini pullback or mini sell-off and i'm gonna tell you why in today's video now the market sold off on wednesday largely due to the cpi report it came in worse than expected but most of the increase was attributable to much higher oil prices which is mostly temporary and is going to end whenever the war eventually end fuel oil has increased 74 percent year on year gasoline 34 percent airline 22 percent tobacco smoking products 6.4 percent some of those things will increase if shipping and oil is increasing that will cause some broader increases in general but things like electricity 4.4 percent uh fruit and vegetables food like three and a half percent a little bit above two percent not too much rent was 3.3 percent so it wasn't really a bad report in my opinion if we didn't have the whole war in iran that started out i think it would have been much better in general but this cpi report has caused the market to price in a 37 percent chance of a 25 basis point rate hike and 25 basis point is 0.25 percent but you have many stocks selling off 20 and 30 percent like how stupid it is to imagine that a 25 basis point could actually cause a company to change in its fundamentals 30 40 or even 50 percent but what's interesting about this whole report is the fact that the 10-year yield actually came down it initially went up and then it came down which means some buyers are stepping in i pretty much called it in my last video because the real yield was approaching two percent once the real yield meaning the 10-year minus inflation approaches two percent buyers have been historically stepping in they stepped in again and i take it as a bullish sign i take it that the bond market has somewhat priced in a little bit higher inflation that's why bonds have been going up as yields in anticipation of higher inflation inflation came in and then they pretty much bought bonds and yields have been coming down this is a very bullish sign for me that it has been priced in the bond market and now the stock market is pricing it in and once we do have a rally i think it's gonna be amazing which potentially much lower bond yields in general now in terms of the market itself it's really not expensive over here and we're trading at 19 times forward earnings the average p was 16 times but we have much higher margins operating margins then historically we had much higher earnings growth over 20 percent this year in 2026 so we're actually trading below the smp 500 earnings growth or below a one peg ratio this is not an expensive market at all but you unfortunately have some trouble with ai companies you have entropic they posted 16.8 billion in q3 and they posted a quarter on an adjustable quarter on an adjusted basis now i don't know what they adjusted for you know it's like saying some people said the cpi would have been two percent if you exclude energy and all these things would be two percent i don't know what they're adjusting for but 16.8 billion if you annualize it this is about 70 75 billion i think some people were targeting like a hundred billion dollars this is unlikely to happen in the near term and the total growth of the revenue so the revenue growth has been decelerating in general now what you guys have to understand is that a lot of those companies they overstate what they believe they could achieve the reason why they overstate it is because they want to get a high valuation on their ipo or a high valuation in the private market and if they get a high valuation then they can raise more money without issuing much in shares this is why ipos are terrible investments because they always sell you a story why because the company benefits they can raise money the banker benefits because they get a percentage of the two trillion dollar spacex ipo or whatever it was and entropic and all of them so they always gonna pump up the numbers before they go public and then once you go public you pretty much see who's swimming naked so that should not really be a surprise but you know what's surprising is revenue growth decelerating as much as it has been decelerating a lot of people are calling for the popping of the ai bubble that the ai bubble is gonna pop now if you pay attention to what has been happening this has been pretty much in the green out call it the ai trend and the ai trend has been very strong backed by fundamentals earnings growth it's it's a pretty healthy trend amazing technology but this trend has been getting retested every three to six months we have some kind of a story that causes a major sell-off an ai name it gets retested and retest gets bought and then we go higher we make a higher high and then something happens we retest the trend and we make it higher high we had kind of the same thing in the internet rally but the internet bubble or dot-com bubble pretty much eventually it popped out now a lot of people are calling right now for the popping of the ai bubble i personally don't believe that's gonna happen because now companies can still spend on ai the mag 7 still have 80 100 150 billion dollars in cash and veria is flushed with with cash they can help out coreweave they can help out nebius a lot of other companies would love to acquire those neoclouds they are struggling because they need the compute maybe in two years if we have a different president different administration they can't spend as much on compute this compute will become scarce so my thesis is that the ai bubble is not going to pop before companies can stop spending on ai as long as they can keep spending on ai as long as they're buying chips building data centers the ai rally will be fine but if they can no longer spend on ai if we have a new administration a new president in 2028 and they have an anti-ai anti-banning data centers and all these ideas then the companies can spend on ai and the chip companies will struggle which means nebius and coreweave would struggle which means entropic open ai will struggle and the whole thing starts falling down but i don't believe this is going to happen right now in 2026 because companies can still spend on ai and we have a lot of money and a lot of liquidity in the system that's ready to step in help out and invest on those companies in general now we have a very important catalyst coming up which is source day night kevin warsh is being at the imf meeting in bangkok uh i don't know if he's gonna say anything about inflation but this is his last chance to say anything before the blackout into the fed meeting in late october so we're gonna see what will happen with kevin warsh maybe they're gonna raise rates one more time and this will be it in terms of the market in general uh we're so far you know sitting on this support pretty much we might hold it or break it tomorrow and i think if we break the support around 720 721 on nasdaq we could potentially retest 661 which was the bottom from 2025 and then we bottomed there in early 2026 we could potentially test it again it has been a very strong support line for the market but this is only like eight or eight and a half percent lower so this is like two or three days like today and will be over i'm not really seeing a popping of the eye bubble and a massive market crash especially not into the midterm with this administration that's you know we're one tweet away from some kind of a mou of understanding and then the war maybe is gonna end that's how we bottomed in 2025 guys the world didn't end but we bottomed on hopes of it potentially ending that could happen tonight tomorrow next week next months we don't know when that's gonna happen but i think the fundamentals are great the market is very healthy we have some excess it's getting wiped out some overvaluation but i'm not seeing more than a seven eight percent pullback at most and i think we'll do fine after that we'll see what happens with the elections but we're expecting to have a split meaning one party controls the house the other party controls the senate this is very bullish for the market because you can't really pass a lot of new legislation it reduces volatility in the markets and historically speaking uh has been the best period for stocks when we had a split system when we had the unified system you had a lot of changes a lot of volatility and the market didn't like it so we're sitting in a pretty good spot in my opinion i'm personally not shying away from this pullback i'm personally buying the dip on a few stocks that i'm looking at looking at new stocks as well if you're interested in knowing what i'm buying what i'm selling or if you have any questions any stocks you want me to analyze i do all of this in my group and this is the link if you're interested but thank you very much for watching hope you enjoyed it it was not financial advice if you did enjoy it please press the like button and maybe consider subscribing so i'll talk to you in another video