Okay folks, so we've got lots to talk about. Number One: we got to give a violent update on the market in place number Two, I want to talk about what Kathy Wood just said. She has reiterated her talking point that deflation is the real enemy right now, not inflation. I see you rolling your eyes.

don't roll your eyes. We gotta talk about this. And then lastly, we gotta talk about what is happening tomorrow, what you need to know before it does, and an overall breakdown. And the only thing that I ask in return for all of this is that you hit that ravishing like button and also don't forget to subscribe either.

Okay, market Update: So another bit of a mass. Today you had some more of that fud based selling these days. Quite simply, you just have so many options for quality dips. whether you are talking a delicious jalapeno dip, a queso dip.

Don't get me started cause I'm cuckoo for queso, a creamy blue cheese dip, or a salty palanteer dip. I mean, I'm not a registered culinary advisor and this isn't culinary advice, but damn are there a lot of good dip options. But seriously, in terms of the obvious, there's a lot of overselling and fear in the small cap market. You have Palantir, which is right again near 52-week lows.

Your charge point is getting close to its own 52-week lows. Evie Go, which was one of our plays that went up way ahead of itself earlier in the fall on Ev Euphoria and news of partnerships with Gm and Uber also heading into very, very oversold territory This morning, I bought the dip on all three of these Palantir, Chargepoint, and Evie Go If you'd like to see a breakdown of all the stocks that I watch for dip opportunities based on my price targets and conviction list. I have that in Zip, Trader U, but these are ones that we've talked about on the channel quite a lot, and I've broken down extensively. my conviction in this, and I mean quite simply, I'm preaching to the choir.

Almost all of these look like obvious deals when looking at a broader term time chart and balancing that out with the company's potential, but whenever I buy a dip in the growth sector, I always think of this meme. The market's like you thought this was low. Oh, let me show you, I'm real flexible. I can go lower, but when it comes to finding deals on longer term conviction plays.

I tend to think about what is going to do well in the next cycle, the next narrative push what is going to do well over a few year time horizon. Even interest rates are certainly going to go up at least modestly next year, but companies and industries that are showing especially shorter term proof of concept are going to perform a lot better and out balance that negative impact. Most of the growth companies that I've liked over the years have had periods where they've had massive massive stagnation or even losing the value consistently before they then had a huge proof of concept stage or a market that was willing to reward them. And it's really the same thing.

When it comes down to a lot of our high conviction industries like the Electric Vehicle market, E-commerce Cloud software, Big Data A.i Fear and Euphoria cycles are a time to double down on your highest Conviction plays and cut out some of the ones that you don't have much conviction in at all. And then when the market randomly decides to swing into a euphoria cycle like we saw with Chargepoint and Evgo and say Lucid all of a sudden, hey, you have an opportunity to really trim some profits off the table and then replay the next cycle also keeping a long-term perspective. Very very relevant as well. But anyway, speaking of lucid, I want to talk about Lucid next.

So you had a nice sell-off from the 60s to the 40s, but in this case I can't argue that it's a great deal. My zip you price target on this has long been since before the rally 45 dollars and I explained back in October why that was on a video that we did. Even if they meet my delivery expectations fully in 2022 which are fairly bullish, the fair value that I see at earning would still be about 45 dollars. It's just right now in this honeymoon phase where all year people thought this was a trash company.

at 15, 20, 25 and then all of a sudden they start delivering. And electric vehicles actually aren't a scam industry and all of a sudden people want to pay any price possible for it. But in my view, the reason that I haven't upgraded the price target is because I know very, very well that if you're somebody that didn't have faith and lucid at 20 or 25, and all of a sudden, you got faith and lucid because they're delivering a few vehicles, Well, you're definitely not going to be the type of person that holds through inflation or interest rate scares. And you're definitely not going to be the type of person that holds when they have inevitable delivery hiccups.

So when I'm saying hey, this is worth 45 dollars, I'm not super excited when it's over that because I know that a lot of the people that are in it aren't really interested in the company or even really believe in it. They're just trying to ride the momentum and that's fine. Obviously, trading is great, but when you're talking about this from a high conviction standpoint, you have to be very, very real. The numbers here need to make sense in terms of an entry price point, that's possible.

I really think that something like authority or a sub 30 entry is still going to be possible in the upcoming months. In terms of other news lucid, Ceo recently dropped a few golden nuggets in an interview on Sunday. He said he said he doesn't only want to be doing wealthy people's cars forever, his goal is to start with what they're doing and get their models down from 169 000 to under 70 000 by the end of next year. And then he said efficiency is the key and our technology will drive down the battery pack size in this car and the driving of the pack size will drive down the cost.

That's where we get to a 25 000 car, and I think that could come three to four years from now. But he also said, and this is actually pretty damn important that it likely won't be a 25 000 Lucid, but rather it will be the other brand selling high volume models with smaller, cheaper battery packs. Based on Lucid's efficiency breakthroughs, he said many companies have approached him this year about potentially licensing Lucid's technology, so he is hinting that licensing revenue could potentially bring another stream of income and could even be a substantial driver for Lucid in the future. And he's also saying that they're not going to go as low, or at least they're not likely to go as low as 25 000 for their more mass-produced vehicles.

Someone like Tesla whose plan is to go lower and lower, Lucid is kind of keeping it in that luxury or at least mid-tier luxury range. And in terms of the licensing idea, we haven't heard about that for many other companies, many companies already contract out for technology and Lucy could be a very, very easy company to license from. Okay, Madame Kathy Wood. So Kathy Wood on a webinar today, said that she remains concerned about deflation, not inflation.

This comes in the context of Cpi price increases at 39 year highs, and even the Fed, the dovish fed deciding it's time to start tapering earlier. She has been saying this all year, so this isn't a new perspective. Unfortunately, the only thing that has consistently deflated this year is the Arc funds and not the actual pricing pressures. But hey, you know what? At least she's kind of right on the deflation so far.

And obviously, as a growth investor, Kathy Woods funds are going to underperform and get beat down like a rabid dog during periods of higher inflation and the subsequent tighter monetary policy. So by nature, if we do start seeing these deflationary pressures in our economy like she has been predicting all of a sudden, her stocks are going to start going back to the moon. But the question of time scale is certainly extremely debatable and the pain certainly could go on for much, much longer. I did a video breakdown a couple weeks ago talking about my breakdown on her biggest holdings and I'm not super thrilled about some of them, but overall I do really value her take and more than not, I think that she is right.

It's just that her time scale is very, very long term. I think that history will show that, especially in regards to industry projections, she's going to be very, very on the ball. I do think that the jury is still out in terms of some of her picks in the industries, but overall I have a feeling she's going to do very, very well. She says among the arguments for Innovation stocks are signs from the Bond market that inflation expectations are moderating and a broad decline in commodity prices.

And it is true that despite inflation concerns and interest rate hikes being cited as the number one reason to sell growth stocks, a lot of money managers aren't putting their money where their mouth is in terms of the actual bond market, bond yields have not yet to return to February and March Inflation Fear peak highs. Bond prices move inversely to bond yields. If you're actually worried about inflation or monetary policy tightening, what are you going to do? Well, you're going to short bonds, hardly sell your bonds, and that's going to cause the value of bonds to plummet and yields to go up. In that sense, the 10-year bond yields are the metric that allows you to actually see what the market is pricing in and the market today, just quite simply as a fact, isn't pricing in as much inflation as it did in February and March? So if you take that alone fears of inflation right now are actually lost than they were in February.

Which is really saying something because the conversation has gotten a lot hotter as of late. Keep in mind the trend has been down despite the talk of inflation being up. Don't get me wrong, consumers are getting squeezed more than ever. But when it comes to money managers, they don't seem to be as scared as they were in February, which is what Kathy what is referring to when she says that inflation expectations are moderating.

They are moderating in terms of what the big money is doing. They aren't moderating in terms of the consumer. She also said that she expects the Us economy will grow less than many economists expect in the year ahead, prompting a shift back to innovative companies that can grow regardless of the economic backdrop. If the economy grows less than expected, what happens while money circulates, less inflation gets tempered.

Big companies see revenue growth rates that are slowing down or even going negative. That leads to valuation drops from some of the biggest companies. And then where does the money go? Well, it's looking for a new home and something that actually has revenue growth. and what's going to have revenue growth and be beat down dramatically? Well, growth stocks.

Which brings you back to Kathy Wood, which is why she's making this statement. but her main argument for deflation over a longer term time horizon is we are going to see deflationary forces associated with innovation. Technology improvements that bring productivity up dramatically, lead to what a reduction in costs, giving you more value for your dollar, and helping counteract inflationary pressures. That's that.

I think that the average person reads these predictions and what do they think they think? Oh, she means that innovation is going to accelerate so dramatically that in 2022, 2023, all this inflation from all this damn money that we created and all these supply chain problems, and all these issues that are coveted based, it's all going to be counterbalanced. Because oh, we got a little bit of technological innovations. But no, she's not really saying that although people think she is. What she's saying is that over a longer term time, Horizon, Five, Ten Years.

you're going to start seeing that you look at some of the sectors that she's investing in: Fintech, Next-gen Cloud software, Artificial Intelligence, Energy storage, robotics, Dna sequencing, Blockchain technology. Are those really going to grow that insanely in the next year or two that it's going to actually counteract the massive inflationary pressures? No. I will say though, that her Robin Hood holding has been very, very effective at deflating the presence of the buy button this year. But other than that, I mean you're thinking five ten years minimum to start seeing a lot of deflationary effects from this? That said, I know Kathy Wood isn't exactly a popular fund manager this year, but it's very tough to judge a growth stock fund manager based on their one year performance.

Just like it may not have been super fair to judge her on her one year performance last year, which was insane, it's also not super fair to judge her based on this year. short-run performance in this fund is going to be based on what multiples the stock market is willing to pay for growth companies, but long-run performance is going to be based on what these growth companies actually create In terms of value. That's it. I certainly can't defend all of our picks, and some of the picks really just go completely over my head.

but she seems to be in the right places when it comes down to electric vehicles, blockchain, big data analytics, next Gen internet, and so on and so forth. She's even got some metaverse exposure with that huge unity holding. Okay, and finally, while we were on the topic of our favorite I word inflation in light of worsening inflationary pressures, the Federal Reserve is expected to announce yet another dramatic policy shift on Wednesday. This will be the first meeting since Powell signaled a policy shift.

After many, many months of Jerome Powell saying that inflation was transitory, he's recently changed his tone of conversation after his re-nomination and re-approval to being Fed Chairman. Don't you say that this is related to political pressure though? Because that's a conspiracy? But seriously, they've gotten a lot more hawkish over the last few weeks, but we haven't had much in terms of specifics, and markets are speculating that the Fed will wind down its bond buying program even sooner than expected. The end date of the program was expected to be June, but now the market's thinking, hey, it could be as early as March or April, so the market's thinking, hey, maybe we can get an extra rate hike next year because there's a lot more time for that to be solidified in. We also haven't had a real word on the Fed stance since the last bludgeon of an inflation report that we got on Friday, and likewise, we just don't have that many details about the trajectory for 2022.

and tomorrow will be a very important clarification day in terms of actually putting down concrete plans for 2022. and it's also going to be a very important forecasting day. Recently they said it's not transitory anymore. Well, they're going to elaborate on what that means, and the direction the Fed indicates tomorrow will indicate just how motivated they are going to be at fighting these pressures.

and tomorrow should be the biggest single escalation of rhetoric that we've seen so far. What we are dealing with right now is uncertainty in a hawkish direction. We just don't know how hawkish. Anyways, that caps off this video.

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