All right folks. so we are in a fascinating moment in time. We have been on a downtrending slope since recent cycle Highs at the end of July and we are about 3 to 4% away from entering correction territory. The S&P 5 hundo has lost some three trillion in value since the last Fed rate hike in July Markets have gone from a buy the dip attitude which we saw most of this year to a sell the rally attitude and it's been pretty damn bloody.

We have bond yields continuing to climb as markets anticipate higher for longer rates. On the other hand, you have crude oil Futures climbing aggressively and consistently since the end of June. If you look at the three-year the reprieve in pricing is over and we are on the pathway to $100 a barrel. Once again, you look at how that relates to gas pricing.

here in LA. In many neighborhoods, it's pretty common to see gas well over seven bucks a gallon. The whole state of California is averaging around six bucks. You look at the overall country.

the average is $383 but that's expected to move up aggressively as well just for comparison purposes. I Know they say comparison is the thief of Joy, but average gas price prices in January 2020 were $2.50 and that was before the pandemic. Now if you are a Pastafarian and break out the Ballinger bands, you are seeing an aggressive consolidation towards the lower band, marked by a failed reversal to the upper band in the last period, which historically has tended to mean you're going to see more consolidation and more lengthly downward pressure. In order to reverse the trend, you now would need to move aggressively upward over the course of four or five trading days, and then even then it would be a weak setup.

Probabilities are looking tilted towards more downward pressure heading into the early weeks of October and again, markets have gone from the buying the dip mentality which we saw most of this year to the selling the rally mentality. Chase's Jamie Diamond came out with another gloomy prediction and is urging Chase's clients to be prepared for rates as high as 7% I would be cautious. He said I think we are feeling pretty good because of all of the monetary and fiscal stimulus, but it may be a little more of a sugar high. He added that deficits can't continue forever, and as policy makers continue to face this alongside an array of other serious issues including the Waring in Ukraine and volatility in oil and gas markets, interest rates may need to go up even more than anticipated.

he sees rates potentially as high as 7% Markets have thus far been able to fight off much of the fear of record high interest rate increases, but it's unclear if they'll continue to do that as rates stay higher for longer. You look at the probability of a recession in 2024. as predicted by the yield curve. It just keeps going up and up and up and up.

And there's two big ways that people are looking at this one. One group one Camp is saying well, wait, it's been going up aggressively for this whole year, yet no massive economic collapse has occurred. at least not that the government is admitting, so who cares if this just keeps going up. Obviously, it's been wrong so far.

And then there's the other group, the other camp that knows that this increasing line doesn't guarantee that you're in a massive collapse, but it means that the probability of one is going up at a rapid, rapid clip. and it's more and more likely as the line goes up, because that's how probabilities work. Just because the economy hasn't Tak enough to trigger emmissions from the the government, doesn't disprove the long-term history and the long-term success of the yield curve in predicting recessions and recessionista. Speaking of government, another issue is the likely coming government shutdown.

If the shutdown happens, it will be the fourth in a decade, and will be just four months after a similar standoff between Republicans and Democrats which led the Federal government to being within just days of defaulting on its $31 trillion debt. It seems like every month now there's a new governmental crisis, and that's simply because spending is out of control. but any efforts to stop over spending get compromised away again and again and again. In fact, the US spends around 44% of its GDP per year on government, about the same levels we spent back in World War II which of course is a big stinking problem.

A government shutdown means a lot of federal museums will close, national parks will close or have reduced Services You'll have more flight delays FDA Food safety inspection disruptions infrastructure projects will be put on hold Transportation repairs put on hold food assistance and early childhood education programs will also be lost. But from a market perspective of the reason it is an issue is because it calls into question the stability of the United States I Know this has happened before, but every time the US shows political instability, its Financial Risk goes up. Credit Rating Agency: Fitch Already downgraded Us credit in August following the debt Cealing crisis, Credit rating Firm Moody said Monday that a shutdown would be credit negative for the US in their view, potentially endangering the country's last remaining AAA rating from the big three credit rating agency firms Us Credit ratings have been steadily going down decade after decade, and once they go down, they never reverse and worse. Credit of course means worse rates on loans and more financial instability in markets.

At the same time, around 2 million civilian federal workers at another 2 million military workers would face delays in getting their paychecks, and nearly 60% of federal employees are stationed at the Department of Defense Veterans Affairs and Homeland Security not areas you want to stop payments to folks and something that is extremely embarrassing for the world's richest country. Now, it's likely that the shutdown will result in a compromise that includes more excessive spending and a couple more months until you get another threat of a government shut down. The government is already borrowing 14 billion per day and spending 3 billion per day on interest expenses alone, and that is expected to continue to climb. Now when the government borrows money, that money is not free I Know the government tells you it's free I Know that a lot of politicians tell you it's free I Know a lot of people in the media swear that it's free, but that money is not free.

You and I will end up paying for it with a destroyed currency, higher future taxes, and worse institutional instability. Speaking about faulty government, there's also Al a fake out in data occurring pretty consistently, which is which is freaking out markets quite a bit because it's creating a huge area of uncertainty that markets used to not have to deal with. We keep having these government reports come out and they say one thing and then boom. it gets revised to be much much worse and markets get confused.

You look at personal consumption for example, which by the way is the value of goods and services purchased by and or on behalf of Us residents. You could see the pre-revision original reports in green and then the post Revision in turquoise and you could see that in all cases except one, there is a big discrepancy and over reporting in the pre-revision versus the post- revision. they'll originally say oh, we're all the way up here. Markets will rally and then boom few months later, they'll revise the data to be deep in the negative.

You've seen different variations of that almost every quarter for the last couple of years, and Q2 reporting is another pretty aggressive over reporting as well. So markets right now are freaking out: You got untrustworthy government data. I Mean it's always been pretty untrustworthy, but now it's a lot more untrustworthy. You got a potential government shutdown which is looking more and more guaranteed.

You got big dogs like Jamie Diamond Warning that not just the rates are going to go higher for longer, but but they're going to go up to 7% Perhaps you've got a lot of different indications in terms of recession indicators like the yield curve and I could go on and on and on, but that is the moment in time that we are in right now in the stock market. and that is the data that you should be looking at if you're trying to gauge whether you should be going long or short or whether you're trying to play off the overall Market's Trends with something like a triple Q or an SLE Q SLE Q Of course shorts the tech sector and Trip Q Of course longs it tle Q leverages the Longs on the tech sector. so different instruments that you could use to play off the overall volatility. But right now it's a very, very interesting moment in time.

and I'd be curious to know your thoughts on today's market. Do you think that we're heading up after this massive sell-off? Or do you think that we're going down? You think the trend's going to continue to be pointed to? The downside? Let us know down below: we love hearing from you and we'd love to have you sign up to get our completely free email reports. I'll put that as the first link Down Below Have a good one folks and I'll see you in the next video.