Okay folks, so in this video, I want to talk to you violently about a big warning that we got this morning, what it means, and what the data shows is going on this morning. If you went on any major financial media outlets website, you likely saw this story from Jamie Dimon. This ominous warning saying that you need to brace yourself for a hurricane. Not a small storm, not a trickle of water, but a damn hurricane.

On the very front page of Cnbc, they ran a story headline Jamie Diamond says, brace yourself for an economic hurricane caused by the Fed and the Ukraine War. Bloomberg: Jamie Dimon says Jp Morgan is bracing itself for an economic Hurricane Fortune Similar story, barons. Jamie Dimon changes tone on economy, saying he now sees a hurricane pretty much every major media outlet. And what's crazy is he is now predicting a hurricane.

when just a week ago, he was actually saying that these are just simply storm clouds over the Us economy that may dissipate. He has shifted from storm clouds to full-on hurricane. And to put that in a visual perspective, if you're expecting storm clouds, Bummer. If you're outside when the storm clouds roll in, you're probably going to get wet.

But use an umbrella and you're probably fine. But if you're expecting a hurricane, oh, there's no such thing as an umbrella that's gonna help you. Not only are you gonna get wet, but you're gonna be ripped off the street and thrown into that circular hurricane thingamajiggy. Quite frankly, I don't know about you, but I'm prone to nausea.

I don't want to Be spun around in a circle. Here's a quick clip of what he said: It's a hurricane. It's right now. it's kind of sunny.

Things are doing fine. You know everyone thinks the Fed can handle this. That hurricane is right out there down the road coming our way. The tonality that he uses when he describes this as a hurricane is pretty hefty.

It's a hurricane. He almost sounds like a madman yelling that the world is ending on the side of the street. It's a hurricane. This is coming from one of the most powerful Ceos in the world, and certainly one of the top five most influential people in the finance space, so it certainly is worth listening to.

his points. He says: Quote: Jp Morgan is bracing ourselves and we're going to be very conservative with our balance sheet. There are two main factors that has Diamond worried. Of course.

Number one is the unprecedented tightening of monetary policy. Quote: We've never had quantitative timing like this. so you're looking at something you could be writing history books on for 50 years. I don't need to remind anybody that when you've gone into these unprecedented periods of time where you had insane, insane monetary and fiscal expansion, when you start embarking on a mission to take all that back, you really don't know what's gonna happen until you do it.

He says, central banks don't have a choice because there's too much liquidity in the system. If you've watched any kind of tsunami video, you know when a tsunami hits any big area where you have a lot of residential buildings or commercial buildings. It plows through them and causes a lot of damage. But you can't really see the damage until the tsunami recedes again.

And of course, after a tsunami of liquidity hit in 2020, we are now waiting to see how bad the damage was when the tide goes back out. The other big problem worrying Diamond is the Ukraine war and its impact on commodities, including food and fuel. Now, interestingly enough, you've seen money managers and institutional players over the last two months, especially start completely dropping the Ukraine war off their fear list. But of course the war in Ukraine continues and it continues to have devastating impacts.

Obviously the worst impacts are human life in the region, but in terms of economic impacts which we talk about on these videos and which we all have to deal with in other countries, he says oil almost has to, almost has to. So not maybe, but almost has to go up in price because of disruptions caused by the worst European conflict since World War Ii. And this is contrary to a lot of other analysts who have said no oil prices have already gone up to factor in this Russia Ukraine situation. They're already up a lot and they're not going to go out much more.

But he's saying wait, no. Actually, potentially oil prices are going to go up as high as 150 or 175 a barrel. This morning, you're sitting at 115 dollars a barrel and we are already seeing huge, huge economic blowback. Just from that, you look at gas prices in La where Charlie is, you can now find stations charging over eight dollars a gallon in major metropolitan areas.

Triple A says the average gas price across the country is 4.67 and this is when oil prices per barrel are about 115 bucks. Imagine if it goes up to 150 or 175, which Jamie Dimon is predicting, gas prices across the country per gallon would probably be something like 550 to 6 dollars. And in La, you'd have to cut off your left foot to pay for the gas and your right toes to pay for the tax on that gas. And what's freaky is that at the end of the day, the Fed's main tool to curtail inflation is to bludgeon demand to make borrowing costs so expensive that it discourages people to spend money at the same rate they were before.

But it doesn't have much of an impact on oil supply chains. And if oil prices and food commodities and other commodities continue going up at the pace that we're seeing them go up, well, those are inflationary pressures that the Fed can't impact as meaningfully as ones that are more direct to borrowing costs. In some sense, low interest rates do subsidize oil, but not to the extreme extent that people think if interest rates cause a massive recession where people aren't spending as much. Obviously, people don't need to spend as much to transport goods and services because nobody's buying those damn goods or services.

But you have to really hurt the economy in order to get that indirect impact on oil prices versus if you want to get real estate down, you just have to raise rates a couple percent and all of a sudden boom. people can't afford as much house or people can't afford as much car or people can't afford as much leverage for the latest squeeze stock. He goes on to whisper during the response to the 2008 Financial crisis. Central banks, commercial banks, and foreign exchange trading firms were the three major buyers of U.s treasuries.

The players won't have the capacity or desire to soak up as many U.s bonds this time he warrant, and he even recommends creating a fortress balance sheet and says Jp Morgan Chase is going to be doing that. Jamie Dimon, also, of course, makes that statement where he's saying okay, well, it's sunny right now, People feel all nice and warm and cozy. Right now, it's kind of sunny. things are doing fine, and that's a lot of folks right now are thinking, oh well, it's sunny out, everything is going to be fine.

all berries and roses. but what is the reality? Well, let's talk employment. employment. is sunny right now.

It's certainly sunny. There are more jobs than people. Everyone likes to say: You can't have a weak economy if you have plenty of jobs going around, and that is certainly an important part of the puzzle along with things like salary and whether or not that's keeping up with inflation. But let's focus on employment.

We have a big employment data report coming on Friday, but today you also got an update from the Bls that said the number of job openings decreased to 11.4 million the last business day of April. That's a fall of 455 000 jobs or 7 month over month. But because it is still sunny outside, there's still a ton more jobs than people. And a lot of people right now are saying, hey, don't pay attention to that Gap closing.

Who cares, It's still sunny out here on the beach. Let's not talk about what happens if it keeps closing, but quite frankly, it's not hard to acknowledge that while they're sun right now, it's not hard to see a storm coming down the horizon when you get seven percent. half a million fewer job openings month over month at a period of time where you've barely barely raised interest rates or tightened financial conditions. A few more months of job opening losses like this at this level, or most likely an accelerated level, and you better bet people aren't going to be saying, oh, the job market's super super strong, They're going to be saying okay, well, it's under a huge threat and then very very quickly you go through threat and then all of a sudden you're in full-blown storm.

and unfortunately, industries that aren't getting as much capital anymore have to cut back on workforce. Businesses that rely on heavy debt are now priced out of hiring more people to expand, and all of a sudden boom they start laying people off. People start having less money to spend, People have already been eating into their savings, and all of a sudden you're in the situation where things start cascading downward. There's of course, no guarantee that that's what's going to happen, but that seems like the trajectory that we're on right now.

Sunny on the beaches, but you got a big storm on the horizon and it's unfortunate. But you got to be real and this is what Jamie Dimon is warning about. Let's talk real estate and how sunny it is over there right now. Corelogic went through U.s housing markets and came up with a graph that shows in red housing markets that are overvalued relative to underlying fundamentals aka income for the areas Whether or not people can afford to buy property to rent property to live in the city based on the income that they earn in that city.

If most people can't afford to live in the city, well, economic logic suggests that all of a sudden prices have to come down eventually, or they have to somehow get their purchasing power stretched through. For example, low interest rates, and that, of course impacts purchasing price. And ironically, pretty much every major housing market has gone to the overvalued category at this point pumped by Again, low interest rates, boosting affordability by quite a bit. Some of these markets have just been insane, and I'm not exactly a real estate pro or anything like that, But of course, I read and follow real estate trends and I am pretty familiar with the La market in the Miami Market.

Let's talk about La. I bought my house in La in August of 2020 at a time where housing prices were frothy. they had been frothy for years before that, and they were especially frothy around 2020 when rates had just dropped to nothing. And when I bought the house, I had an understanding that when rates go up again, it was probably gonna go down a decent amount.

It was just a matter of waiting, and at the time the Fed was saying that rates wouldn't go up again for three four five years later. However, then 2021 came and then 2022 came and things got even crazier. Many of the houses in my neighborhood are selling for 40 50 60 more per square foot than they were when I bought my house and what I bought my house for. overall, in California, Zillow says that California real estate prices went up 22.3 from April 2021 to April 2022.

Not to mention, California already had some of the most ridiculously priced real estate in the country for years before that. And it's like, how sustainable could this possibly be in any sort of logical economy? It's not like wages are going up that fast To support that, you go over to Florida and Miami. you look at Miami Real Estate. It's up 23.8 year-over-year Some specific markets like Miami Beach or Palm Beach, you're seeing some prices that are up like 50 in the last couple of years.

But this fundamental problem if you look at the statistics is in every market, you look at the biggest appreciating markets between Q4 of 2020 and Q4 of 2021 Mesa, Arizona went up 28 Phoenix the same rally up 20 Austin up 20 Vegas up almost 23 Bakersfield, California up 19. And it's like if you look at the population growth, especially a lot of the Midwestern cities, they're seeing a lot of people moving. But the population growth isn't growing at the same pace that prices are growing. And certainly the more important statistic and more relevant statistic is wages and wages aren't growing at the same pace that these cities.

prices are growing, but rates have made a lot of things affordable for people that otherwise would have never been able to afford it, which is great on one hand, but it's bad on the sense that when rates have to go up again, it's going to cause a lot of problems a lot of the markets have appreciated faster than the fundamentals of the city that they're in support. and as of the last couple of months, you've started seeing some big warning signs of a storm coming in for the real estate market as well. Cnet just reported that sales of new homes sunk to the lowest level in two years if you look at rates, 15 and 30 year rates dropped down to like nothing following Fed trajectory, but it's been on a huge increase in the last couple of months, going from 2.93 on a 30-year fixed at the end of 2020 to 5.27 That is a dramatic dramatic shift on what's affordable. That's nearly an 80 increase in the interest that you're paying.

And these rates are low compared to what you're going to be seeing if the Fed continues on this hawkish trajectory. And I think when you look at housing prices and how fast they've accelerated over the last few years, a huge part of that are interest rates, of course, and a huge part of that are changing consumer behaviors where they want to live if they want a house or not. However, there's of course, an underlying level of whether or not there's even supply, and in most markets there's just not enough supply. But still, when you completely kill the demand, it's going to be very, very difficult for prices And a lot of these overvalued fundamental markets to keep up.

If you're somebody with a low rate on a house, maybe you're not going to sell it so that you can go move into another house with a higher rate. But at a certain point, when demand for new houses dries up because people can't afford things anymore, there's got to be some bloodbaths in these overvalued markets. So it's like for me, I'm looking at that real estate market and I'm thinking there's definitely a storm coming there. Obviously, I don't need to remind you that the stock market has already factored in some of the storm, but with the recent correction, back to the upside: the S P 500 is only down like 14 year-to-date I think the scary prospect right now, and what Jamie Dimon, in my view, is warning us about, is that quite frankly, the fundamentals.

The fundamentals of the underlying economy that drives valuation For things like stocks for real estate for organic candles, which is a big bubble in my opinion, those are changing. What are those underlying fundamentals? Things like Gdp growth wages, consumer resiliency, consumer behavior, how much they're willing to spend, how much they're willing to borrow, so on, and so forth. If those things change, everything else has to change and adjust accordingly. And he's trying to say right now, we're on the beach where those things are seemingly very, very healthy.

But but there's a storm coming And he says a hurricane Anyways, I always try to end the more negative videos on a positive note. The truth is that markets tend to be very, very forward-looking Huge economic crashes of course, and I know I'm speaking to the choir tend to be some of the best opportunities to buy. But by the time you get into some of the worst parts of an economic situation, markets have already started bottoming. or getting close to that bottom right now while we're still on the beaches in the sun, enjoying and getting a little bit of a tan.

Although I tend to get burnt, I don't tan very well, But while we're on that beach, we're all sitting there speculating how bad things are going to get when the storm rolls in, and whether it's a terrible storm or a little poofy storm. Markets are tasked with how much things should be discounted, and once they've discounted them and the storm really rolls in, you're going to see some insane, insane opportunities that are going to be hugely undervalued if you adjust for when the hurricane eventually does pass. I am a believer in hurricanes, but I'm not a believer in eternal hurricanes. so when a hurricane comes, I say hurricane, not her A can't That was definitely the most cringy thing I've ever said.

But anyways, that caps off the video. Have a good one folks, and I'll see in the next one. If you're looking to learn how to trade rather violently with our step-by-step lessons, private chat, daily morning briefings, as well as our full price target list, I'll put a link to Zip Trader you below coupon code. Charlie Fever will get you a nice discount before checkout.

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