Folks, you should be pissed off. Yes, we got another 2022 slap down special. Yes, you had major indices just getting destroyed across the board. And yes, the S P 500 is closing in bear market territory again.

Nasdaq down almost five percent on the day. Yes, we are in a situation where the stock market is having its worst year to date since 1940 and perhaps soon 1929. And yes, we are watching day by day, week by week American household wealth get completely destroyed. But that's not the half of why you should be pissed.

You should be pissed because you are being lied to massively on a systematic level. Things are far worse than what government agencies would have you believe. Yes, folks, I know we've been talking about the bad macro environment that has consistently trended in the wrong direction over the last six months. Yes, there's certainly been pain, no one is unaware of that.

But the truth is that when you look at the continuation of how this is playing out, it becomes real apparent what's going on here. There is substantial reason to believe that a lot of the real pain is in front of us, and it's becoming apparent because the curved government data sets that are made specifically to make them look good and give them a lot of margin for error just can't hide the facts anymore. It can't hide the reality whether we're talking about deception when it comes down to inflation, Gdp, employment numbers, whether we're talking about wrong projection after wrong projection from the Fed, and whether we are talking about the complete ignorance of a new wave of layoffs that have started, there's a lot of reasons out there that you should be pissed at how your government is handling the situation. And just to be 100 clear, I'm not talking republican or democrat here.

I'm not playing any sort of blame game. I'm saying that you've had generation after generation of politicians who have gradually and consistently weared away at the type of transparency and honesty that we get from government. And guess who has picked up the check? Well, you and me, my friend, Quite frankly, you have a responsibility to know exactly what's going on right now. and you're not going to be told the truth in most places, especially if it's coming from a government agency.

Let me show you the evidence to back up my claims. And if you don't believe me, come to your own conclusion. But if you watch this video all the way through, you're going to have a completely different perspective on this market, the government data, and why the situation is so much freakier than even the constant fear-based headlines would have you believe. And this video is sponsored by that subscribe button down below.

In a time of whoa, the best prescription is really a subscription. Let's start with the trend of layoffs and see if you can connect the dots here. Robinhood announced last month they are going to lay off nine percent of their full-time employees. Coinbase is freezing hiring and rescinding accepted job offers.

Blockfi Reported today they are going to be cutting 20 of their staff. Crypto.com says they will lay off 260 employees or 5 of its workforce. Never forget the first three letters of Crypto or cry by now, Pay later. Company Clarina recently announced they are going to be laying off ten percent of its workforce.

Havel has been increasingly cutting staff In a desperate ploy to reduce costs. Netflix has started layoffs with around two percent of their total Us workforce already laid off. They say it's just making changes to how they support their publishing efforts. If you're laying off employees with the kind of numbers that Netflix is doing, it's definitely not because of publishing efforts.

Carvana fired 2500 workers last month citing a recession in auto sales. Startups everywhere are laying off employees. San Francisco Rental startup Saunder, which was valued at about 2 billion less than a year ago, has now laid off a fifth, a fifth of its corporate employees. Software Company One Trust just laid off 950 people or a quarter of its workforce.

Stitch Fix just laid off 15 of its salaried workers. It issued weak revenue guidance and says it's going to be seen weaker consumer demand. No Shite Bird The scooter company that offers these rental scooters and a bunch of cities around the Us just laid off 23 percent of their staff. 23 Desktop Metal A company that designs and markets 3d printing systems announced they are laying off about 12 percent of their workforce.

Cyber Security Company Deep Instinct went through with layoffs this week according to crunch based sources. Tesla. What about Tesla? Elon Musk got headlines a few weeks ago when he said he wants to cut 10 percent of Tesla jobs. He went on to clarify that he's talking about salaried employees, but this came with a message that he's worried about the economy and he said there's overstaffing in many different areas of Tesla.

Why is this coming out right now? At the same time, he's worried about the economy. Is that a coincidence or are his words about the economy driving decisions on whether or not to lay people off? How does that really help? If he hires more hourly people at his job fair in China and canned a lot of the higher paid salary employees in the U.s That may be a good cost cutting measure for Tesla who's trying to produce as much as possible. But what does that say about our labor situation when you start seeing more and more companies do that? Insider reported mortgage startups and even traditional lenders like Wells Fargo are laying off thousands of employees. Lyft and Uber aren't laying people off, but they are significantly slow in hiring and cutting budgets.

Credit Suisse is considering fresh layoffs after lost warnings according to Reuters, Intel is pausing all hiring and placing all job requisitions on hold. Meta is implementing a hiring freeze and you have some of the best capitalized and most powerful companies in the world all of a sudden saying, hey, you know what? We're not really interested in hiring anymore. Either we're going to dramatically slow down hiring or we're going to freeze it completely. Apple, Amazon, Microsoft, and Salesforce all went that route.

And now when you look at these announcements, maybe they sound a little bit scary, but not exactly alarming, right? Laying off five to ten percent of a workforce is pretty bad, but hey, contraction. It's not like it's 50 or 70 percent, which could get us in a depression. And if you look at the broader economy, it looks like a lot of the worst layoffs are coming from small to medium-sized businesses. I would argue that those are the backbone of American capitalism, but still, if you're just looking at those and you're like, oh, who cares Keep in mind though, across the board, you're seeing a contraction in economic activity.

A acknowledgement regardless of the company's size, with maybe the exception of obviously the energy segment you're seeing. Companies say, you know what, We don't want to invest more in this economy. We don't see a return for new people hired. In fact, in many cases, we think we should let go people because it's overstaffed.

We can't do much with the employees we have because there's just not enough business to go around. Consumer demands drying up. Consumers don't have enough money for our products, but keep in mind that this is happening before the blunt of the impact from Fed tightening has even occurred. and before the blunt of the impact from stagflation, Consumers are still figuring out ways to bail themselves out of rising prices and lower salaries relative to purchasing power.

Consumer spending rose at the last report, even adjusted for inflation. People are dipping into their savings and into debt to keep up with their spending. But guess what? There's only so much that consumers can dip in to debt. So much they can dip in to their savings before they run out of firepower.

So right now, with all the contraction that you're seeing, it's really still being propped up quite a lot by still relatively easy monetary policy, and by consumers that are still throwing their savings and throwing debt at a lot of these companies. If the economy is the Titanic, it's like the bottom floors are already flooding before we even hit the damn iceberg. Now, before we get into the main entree of this video, which is how the data is incredibly misleading and is misleading us: Wall Street. And I actually think the government is misleading itself with its own data, believe it or not.

But let me explain how the market consensus, even as of right now in this quarter, is far too optimistic when it comes down to how much money companies are going to be making. and it's actually pretty damn easy to spot the problem. Let me back up for a second. So as energy costs go up, as basic materials go up, as labor costs go up, and as consumer demand and consumer availability to pay increase prices goes down, what happens? Well companies profit margins get squeezed.

Okay, we understand that problem though, is the market has only been willing to sell off based on crunchit of multiples on earnings, not on the earnings themself. And you could say, charlie, that's ridiculous. But let me show you the proof of this. Look at the consensus Earnings estimates for the S P 500, supplied by fact set that I have right here In this: the S P 500 is expected to report earnings growth of 10 for calendar year 2022.

Which means what? Well, it means that even with the massive bludgeons that we've been seeing in the stock market, analysts are still still overestimating exactly how much growth and how big of an earnings companies can report by quite a lot. Look at this: For the first quarter, the S P 500 reported earnings growth of 9.1 percent. The first quarter is likely going to age to be the healthiest quarter of the year, and it couldn't even hit that 10 threshold for the first quarter. We need earnings growth to actually go to the moon in the next couple of quarters to hit the overall estimate.

And this is what they're saying now. Q2 analysts are projecting earnings growth of 4.1 percent. Q3: they're expecting it to pick up again to 10.1 percent. So magically somehow next Quarter, which starts in like two weeks.

All of a sudden, the economy's gonna go to the moon right when the Fed is starting to really yank at that damn rug. Then then Q4, they're thinking magically, 9.8 percent. This is like la la Land. This is a fairy Tale, A Disney movie.

It's like Wizard of Oz except that the Tin Man is made of plastic. because tin is too damn expensive. How do you get expanding profit margins and earnings growth like this? That should take place in a very, very healthy economy When the Fed has barely even started tightening yet and commodity prices are going to the moon, labor costs are going to the moon. Meanwhile, the percentage of companies reporting negative Eps guidance is 70.

Yet analysts are projecting what? What? Charlie 10 earnings growth on the year. And if you look at how that relates to consensus S P 500 actual price estimates? Well, it means that analysts are projecting a 31.5 increase in price. That's almost like a sick joke from a sociopath. Why do they believe that though? Why are they creating these price targets? And why are algorithms using this as the way to value companies? Well, they think it's going to go up this much because the models that they use are flawed.

It's based on this idea that earnings are going to grow at 10 percent year over year, which is just not the case unless something dramatically changes and tomorrow, inflation's done, the war is over and all the money that we printed in the last 50 years all of a sudden just disappears. So sure, there's a ton of fear in the market, but the models right now are extremely flawed. The models that people are making decisions based on are based on just the contraction of multiples and not the contraction of actual earnings. Yes, I know you're starting to see a lot of institutional investors say okay, wait, we actually see a recession coming.

A couple months ago it was only Deutsche Bank saying that and everybody else is like you guys are crazy Now you have even the biggest bulls saying oh, wait a second, No, I think there's at least a 50 50 chance of a recession and the next week is going to be about a 90 10. And the reason is because when analysts had made the decision that oh, the Fed is going to tighten this year, and inflation wasn't indeed transitory, they still didn't realize how bad inflation would end up being and how much the Fed was going to have to tighten. So they assumed okay, slowing down numbers on earnings, but not dipping to an extreme extent where inflation is still a big big problem. But now, as we head into what's clearly stagflationary environment and stagflationary territory, it's a whole different story and different ballgame.

and analysts haven't been fast enough to change their targets based on that. They're still too focused on the inflation side of the equation and not the actual recession side. Which means things are going to be a lot more painful when you actually start seeing the earnings that companies are based on start really dipping. especially considering that the Fed has changed and flip-flopped over and over again on what their approach to this issue is.

But the real issue here is that the data, the data that we get from the Federal government and related agencies, is riddled with what I call. Let's start with the Cpr report aka the Castration of Purchasers Index. When people say what the inflation rate is, they almost always refer to the Cpi. Here's the problem though.

the Cpi report is heavily curved in the government's favor. Charlie, Wait a second. How can that be The government? Cpr report says that it's at 8.6 year-over-year That doesn't sound like curve. That sounds like a disaster.

Well, actually, the real number is probably significantly worse. We are in such a mess that the curved system is failing to curve out the excess inflation. But let's back up for a second. Why is the Cpi curved? Doesn't real data help investors make better decisions? Doesn't it help businesses to make better decisions? Does it help consumers to make better decisions? If the Cpr report was wrong, how do we know that the government is handling our currency correctly? How would we know that? And why would governments be dishonest? If you can't trust a politician, who can you trust? Well, believe it or not, there's actually a few reasons that governments may want to manipulate the inflation data.

For example, Social Security Payment Cost of Living adjustments when they come out are indexed to the Cpi a version of the Cpi if true inflation is at say, 15, but the Cpi says it's at 8.6 Well, guess what, The Social Security people. They only have to pay out 8.6 which does destroy the purchasing power of those who paid all their life into the system, but allows the government to use that doe elsewhere. The Cpi also drives the amount of money that the government is obligated to give to different agencies. If you're paying billions and billions of dollars out to different government agencies, well, it's in your favor to be able to pay less.

And how do you do that? Well, you under-report inflation. That way you kill their purchasing power, but they still get their little cost of living adjustment. The other reason to lie is because whichever politician is in power doesn't want the inflation rate to be out of control. The public will notice when prices are going up, but if you could, just tell them, oh, you know, they're not going up as fast as you think.

Sally, That wonder Bread was always a hundred dollars a slice. Inflation's only about five percent across the board. On our calculations, it must just be something you're doing. Have you considered cutting back on bread and buying crackers? Moldy little crackers.

They're a lot cheaper. Not as cheap as they used to be, but they are cheaper than bread. Anybody that comes into power and has the ability to change this doesn't have the incentive to because it just makes them look worse. There's a motto that the government follows very well when people shout, calculated out, That's the wonder of data.

After the insane inflation of the 1970s and 1980s, the Cpi's methodology was adjusted to be more accurate. Notice how since around 1983, you saw a huge emerging divergence between the 1980 base Cpi and the post-adjustment Cpi. Over the last four decades, the Cpi we use has been consistently under reported inflation by a substantial and increasing margin, allowing the government to report what insanely low numbers year over year and adjust policies and handle the public accordingly. Right now, inflation on the Cpi that we use is registered at just under nine percent, which is pretty damn insane, but that's with the curve of a very selective Cpi index.

If you use the one from 1980, it would be around 16 or 17 percent, which would be a completely different level of panic right now. Why does the government believe this one's more accurate? Well, in my opinion, it believes it's more accurate because it's half as much. It makes things look half as bad. There were some improvements that made sense, but I think they took it way too far.

Do you not think it's strange that our new Cpi reports inflation at about half as much as the previous Cpi that we have used for much of modern history? Certainly makes sense that you would improve the way that you calculate things over time. But are we really supposed to believe that the calculation of something like a year-over-year increase has changed that much or needs to change that much to the extent that we're half reporting what it used to report. So the question becomes, well, how does the government actually manipulate this data? How does it actually under report? What does it change? Well, there's a few ways that the government can manipulate. Number one is weighting different areas.

Number two is by substitution substituting one item for another, and then number three is, of course, excluding massive sectors that are volatile. The first one waiting is pretty straightforward. Different items have a different weight in your cost of living. Housing is usually the biggest part of your cost of living, but you have other little costs of living that all add up, but governments have to figure out.

Okay, well, what is the number of waiting that we should wait each item to calculate the bigger picture. If one item is really hot, they can kind of soften the blow by underweighting the hot items and overweighting the ones that aren't as hot. Of course, they can only do so much of that. You can't wait Something like apparel 70 of your cost of living.

But the subjectivity in that means that you do have some wiggle room there. The other one is substitution. If a good is increasing, they can choose to say okay. well, the consumer saw that that good was increasing and they chose a different good as a substitution for that good and the other good.

It wasn't increasing at the same rate as the first good, So thus we don't recognize the full inflation of the first good because they just substituted it out. Good example of that is saying oh, I'm buying beef, but beef prices went up too much. So I went and bought chicken. And then the inflation report people are like, yeah, I don't think that beef increased much because chicken didn't No, that doesn't make any sense.

I just chose chicken because beef is too damn expensive. When you give this much room for Cpi bureaucrats to really pick and choose what inflation and true inflation means, there's a lot of wiggle room for error, substitution, and waiting leave endless amounts of room for manipulation. And that's just two of the primary ways if you look at the indexing and how they actually index different prices And different price appreciations, there's clear categorical and structural biases. And then, of course, the most atrocious way of manipulating inflationary data is right in front of our faces.

They don't even try to hide this one. How do they do that? Well, you know exactly what I'm talking about. They say, oh, don't pay attention to the full inflation, Pay only close attention to the core inflation. The core inflation is only thing that matters.

What is core inflation? Well, it's minus food and energy. Why do they say they remove it? Well, because those prices are too volatile. Aka, they can't lie about this. Let me tell you, there's nothing quite as core as the cost of food and energy to your day-to-day life.

But it's too volatile so you just can't include it. Imagine going to an Aaa meeting and they're like, are you sober and you're like, yeah, if you exclude the alcohol. I'm clean as a whistle. My alcohol usage is way way too volatile to be included fairly.

So Those are some of the ways that the Cpi numbers are fudged. and there's similar fudging that goes on with other data reports like the Gdp report, the employment reports. Okay, Charlie, fine. the government doesn't give the public the real data, but doesn't Wall Street know the real data? Well, No, they don't because the government doesn't really share it.

they have a monopoly over the data and they give you the cherry-picked version and given the fact that the politicians and government bureaucrats that have the real data don't themselves even seem to know what's going on, well, it paints the picture that it's kind of like the blind leading the blind, pretending they can see, but walking into walls. it's really, quite frankly, just a disaster when you're looking at the heat map of how much things are down, When you're looking at the Nasdaq, when you're looking at the dow. Whatever it is that you're looking at, everybody's trying to figure out what is going on. but they have data that just isn't accurate.

and the data that is driving the decisions at the government level and at the Fed itself, is probably pretty damn biased. When you have data sets that have been fudged over decades. it's very difficult to know real data from fake data, and good decisions are hard to make even with real data if you're reacting to employment reports, Gdp growth, and inflationary data. But all three of those things are heavily biased to under report everything.

Well, it kind of creates this situation where you're reacting to data that doesn't even match reality. You're creating problems and creating solutions that are completely unmatched for what's happening on Main Street. So anyways, folks, I just wanted to make sure that you were brutally aware of the situation that we were facing. What do you think about this market? Do you think the data that the government is reporting is misleading? Anyways, that concludes today's video.

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