Folks go ahead and sound the alarms because it's about to get unhinged. Number One: new data from Banks warn that U.S stocks are facing a high risk of another imminent and massive dump. Number two: many rich people are still spending like never before. What does that say about the part of the cycle that we are in? And lastly, my favorite number three: the top trade ideas including a heating up short squeeze candidate that has a hidden reason that it's exploding.

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so make sure to check them out. Okay, so let's go ahead and start with what Morgan Stanley is saying. They are warning that U.S stocks risk another 22 percent slump. In fact, back things are going to get so bad that Morgan is going to divorce his wife and they are both going to share Stanley's I hear she makes the better casserole Bloomberg reports quote U.S Equities face much sharper declines than many pessimists expect with the Specter of recession likely to compound their biggest annual slump since the global financial crisis, much sharper declines than even pessimists expect.

Oof. Now, what is the reasoning here? Well, their strategist Michael Wilson cites his opinion that the corporate profit estimates are still far too high, and the equity risk premium is at its lowest since the run-up to 2008.. Okay, so we know we know that earnings estimates for the coming quarters have barely budged. But what is this? Equity risk premium you speak of Charlie Well, an equity risk premium is the expected excess return you get for investing in equities instead of risk-free assets.

For example, in August of 2020, 10-year treasury yields were in the half percentage Point range, and the average stock market performance was 10 percent over the last 100 years. So in that case, the expected Equity risk premium is substantial. It's like 20 times higher if you just get an average year. Thus, there's huge incentive to invest in equities versus risk-free assets right now, though the 10 years at 3.5 percent, and if you wanted to, you could use short-term instruments like T-bills to get very, very close to five percent.

Treasury bonds and bills are exempt from state and local taxes, so the effective return is essentially much higher depending on your tax bracket and state. That could mean the effective return is like six or seven percent, and that's risk free. Treasury bonds and bills are allowed to be called risk-free because quite frankly, the government just prints more money if it can't pay the liabilities on these. Remember, the government has a endless supply of Fugazi bucks and the ability to create more Fugazi bucks.

So if you're somebody with capital right now trying to decide what to do with it, well, you have to go. And you have to look at the stock market's expected returns over the next year and then compare that to what you would get in a risk-free asset. And quite frankly, a lot of big money is doing that right now and is coming to the conclusion that that, hey, the market is unlikely to outperform these risk-free assets, and even if it does well, it might go down a lot more before that even happens. So going back to Equity Risk Premium: The whole idea with why someone would invest in the stock market in the first place is because there's a lot more money to be made over anything else.

But if that is no longer the case and there's no longer an equity risk premium, you're not getting paid much extra versus the risk-free alternative. Well, then people are going to wait. And Morgan Stanley is kind of making the case that not only do people expect risk-free assets to pay more than equities, but they actually think that equities have another 22 percent to fall. Now in other news, you are starting to see the analysts finally start lowering their bar for the coming earnings season.

We've been talking about this forever and analysts would say oh no, there's no reason to downgrade earnings blah blah blah blah. And now all of a sudden, right before earnings season, they're doing it. Quote analysts mark down their earnings expectations during the fourth quarter by 6.5 percent. a much sharper revision than average according to facts that that gives companies a lower bar to clear to give investors greater cost confidence to scoop up shares.

The problem though? this is too little too late. Wall Street needs to lower its bar. Not six and a half percent, but rather like six and a half feet underground or else it's far too. Rosy If the companies are not in the ground, buried and expected never to come back to life, then I Think that Wall Street is pushing way way too bullish of an estimate.

That aside, the problem with the analysts at Big firms right now is that the firms still want to attract clients and their sweet sweet Capital They're telling their clients right now. Oh yeah, this is the time to buy. This is the time to invest in us and the certain stocks and funds that we've picked because they're all down from highs and earnings are only going to see a shallow recession. A shallow, slow session problem, though, is that the numbers are all in likelihood going to get far, far worse before they get better.

But if these firms told their clients the truth, the clients would wait before they invest with them, right? So that's why it's against most firms best interest to downgrade individual stocks and individual funds that they are pitching. They might downgrade them a bit just to acknowledge the overall economic catastrophe so they don't look like they're completely naive leave, but only to the extent that they can talk their customers into buying the dip with them. Let me guess, you also have a magical profit pooping llama that we can buy and get endless returns from as well behind the scenes. What are they doing? They're going and laying off all of their employees because that is how optimistic they are.

Hey, I'd be more likely to buy a profit pooping llama than believe any of these banks at this point. Next A Tale of Two Cities The rich are spending like crazy and a CIO of an investment firm came out and said Powell won't stop rate hikes until he terrifies the wealthiest of investors. And obviously in the current economic crisis, the lower and middle class have just been really gutted. Inflation, uncertainty.

Paycheck to paycheck. All things that have just destroyed the middle class and the wealthiest people have been hit hard too, since they own most of the assets that have been tumbling alongside all of this. But they just have such a magnitude of dough that their spending behavior isn't adjusting that fast. And when it does adjust.

Oh, if you're going to see massive, massive, massive, amounts of just different types of assets that that you never thought would appear on the market again, and it's going to bring the final blow to the overall economy. And this is what the CIO here is saying that the FED is waiting for now. There's no shortage of guys that made tons of money in the tech boom like the Muskmeister losing unprecedented amounts of capital in the crash, but few of them have lost enough to actually change their spending. Behavior They simply aren't scared enough.

Yet when you start spending a lot of money and you get your family used to that, it's not that easy to cut back. Pre-pandemic a heavy jet costs seven to nine K an hour to Charter now it costs 18 to 20K All these guys worth a hundred million dollars got sucked into a portfolio mix with 75 Illiquid Investments 25 liquid guys like that, spend three to five million dollars a year and make just 2 million after taxes. They're slowly bleeding, but even after last year, they are not scared. So consumption is still really high even though portfolios have dumped in.

income is coming in below expenses for more and more of them. But they have enough cushion to blow still and thus they are still spending like animals. For example, it just came out up that Rolls-Royce saw record sales in 2022. The company said the average price of a Rolls-Royce is 534 000 right now.

I Mean if you're making a few million dollars a year and you're going out and blowing 500k on a Rolls, you're clearly not too worried about anything, right? I'm staying in this little town in Alabama right now called Fairhope and in Fairhope that can get you a beautiful house with a nice Golf View But they're just going out and blowing all that cash they could buy a house here with on Rolls Royces. I mean the CEO of Sac said the same thing. He just explained that rich consumers are unfazed by the market turmoil and his theory is that it's really hard to move off luxury once you've gotten used to it. Now here's the thing about this.

It's not like the consumption of these high ticket items is driving everyday inflation for everyday consumers. If the price of Lamborghinis or private jet trips drop slower than others, it doesn't really matter to the everyday consumer or is something that the FED is worried about. But here's when that changes when the clients in these very very expensive Niche markets start selling their substantial assets to continue to fund these. Lifestyles Well, that that is where it gets hair.

And it's not just the ostentatious lifestyle expenses that are a risk. A lot of wealthy people have really high fixed costs that require constant income to maintain staff, property taxes, multiple property maintenance, huge interest on loans. All of this requires a fair amount of cash, liquidity to upkeep or else you have to sell by assets and that becomes a problem when your income starts to dry up. On top of that, the CIO said a lot of wealthy people get told by their financial managers to put all their money into these locked up real estate funds or elongated hedge funds or private Equity Venture Capital funds which are very, very difficult to get your money out of unless you're going to sell your steak for a huge haircut.

All of these assets are very, very illiquid that you bought when you thought you had tons and tons of money. that would never end. But now all of a sudden, hey, you need the cash and you have to take a haircut and they have to dump all of these assets back onto the market. If your family is accustomed to and addicted to spending 5 million a year and you're potentially now making nothing but you still have 50 million in these random liquid funds, Are you going to substantially scale down your lifestyle or are you going to dump your investment assets first? Well, you'll probably scale down a bit, but you're mostly going to start by dumping these assets and that is just not what is happening yet.

So the CIO said quote: Powwow won't finish tightening the tourniquet until he terrifies these guys. They need to feel like their portfolios won't come back. They need to see their liquid portfolios lower. Still, they need to take losses to raise liquidity.

It happens every cycle. We're clearly not there yet. So here's yet another indicator to watch if you want to see how far the Fed's going to go. Now let's talk trade.

So Bbby is an interesting story right now. Last week they reported they could be filing for bankruptcy within weeks Now of course, the ever-efficient market loves to make contrarian trades and screw highly leveraged short Sellers And if you're in our briefings, you've noticed we've been talking about that and the reason it ran today was because of a cryptic tweet from Ryan Cohen who was a big part of the previous Gme and triple by squeezes. He said Jack I want you to draw me like one of your French girls wearing this wearing only this. What's he mean? Well, this is a quote from the Titanic when Rose was telling Jack to draw her wearing only this diamond necklace presumably referring to Diamond hands and some people are speculating that that means that Ryan Cohen is suggesting people to buy and hold Bbby because something big could be happening very very soon.

As somebody that looks at everything from a trading perspective, this is obviously very, very interesting to me that he's telling people to buy and hold it because that means you can get a little rally rally toe. Imagine though, if you're an Ivy League graduate working at a hedge fund shorting this and your job is literally to decipher this and advise your firm on when to cover and when to shorten more. I Mean what a joke. This is fantastic.

But anyways, my take on this moving forward: While contrarian rallies in the stock can be really, really intense because the high short interest is extremely Justified Here, this stock is down a lot and it deserves to fall a lot further if it goes bankrupt, right? So I think Ryan Cohen wants to screw the shorts by pushing attention back into the stock and if this gets enough people to buy in, it could cause Shorts to get margin called out of it before the company ever goes bankrupt. Basically, I'm looking for more contrarian rallies on the stock I Am looking forward to see what happens to it when and take a lot of buying pressure to really cause this to go skyrocketing just because Shorts are basically trying to throw the book at this, expecting it to go bankrupt any day now. Not to mention, earnings are tomorrow, so probably a timely time to pay attention. next.

Apgn. So Apgn. We briefed on it roughly at 159 a share and it ran to 241 at highs, which is a roughly 51 run. It wasn't as good as the 100 Runners we found in other trading days so far this year, but that is a solid opening run.

The Takeaway: One of the things that I've been looking for in the pre-market is that stair step pattern. This is where you have this waving back and forth momentum that steps higher and higher and higher. The idea is if you can scout out an entry during one of the dips, you can play the next leg up right. So look for this pattern because I've been seeing more and more of it in the pre-market sessions.

This is the total list from this morning's morning briefing and several of these I continue to believe will be relevant trade ideas and battlefields throughout the rest of this week. Triple by again, which we just talked about and also party had some fun contrarian bankruptcy runs today, probably more more coming for both of them. HKD Still trying to find some new momentum. it ran a lot last week.

Looking forward to seeing if it can pick up some new Steam and continue that overall momentum this week. It might not though, right? And that's why we have to look at both sides of the move. Ocgn was a positive result play, but it flopped out at open. It was a C19 vaccine plan.

those just don't run like they used to. Makes sense kind of old news at this point. Cntx looking for residual runs tomorrow or the next day. Anyways, if you'd like to join us for our daily morning briefings tomorrow morning, you can join the team with coupon code hello 2023 and the link down below joining us in ziprader.

you get you access not just to our daily morning briefings but also to our step-by-step lessons, private chat, and of course price Target list and all other resources that you can find with that link down below. Looking forward to seeing you there Anyways, that caps off today's video. Make sure to hit that ravishing like button and subscribe and we will see you in the next one.