Okay folks, welcome back to the Daily Dumpster Fire Report with Charlie. In today's Dumpster fire, the fire got slightly less dumpstery. You've had a continuation of the overall pausing of fear and return of some contrarian bullishness that we've seen since May 20th. And in the last video, we covered Jamie Dimon and his big prediction that a hurricane is coming our way.

Well, today, we've got a different kind of disaster predicted. An esteemed Quant research firm said that the conditions have now been met for a global stock meltdown to come our way as well. and I've been trying to think which is worse, A hurricane or a meltdown. I take all things literally and you would think that if you got a meltdown and then a hurricane came in, that the hurricane would put out the meltdown.

and then the inevitable conclusion of that would be bullishness. I was pondering on that this morning, and then I said to myself, okay, well Charlie, we need to have some technical proof in the charts to back this up. And so I went. And I used a Leonardo Fibonacci Da Vinci retracement and if you add just three, just three, not four, but three Mona Lisas to our directional moving average, it's clear as day that we have a lot of upside to realize.

And you could say charlie. Okay, that sounds perfectly logical. Obviously, a chicken could have done that. but what about the Fed? Couldn't Jerome Powell just totally screw up your great technical analysis there? Well, guess what I thought about that too.

So I went, and I took the square root of Jerome Powell's forehead and I added that to Treasury Secretary Janet Yellen, saying she was wrong about inflation. I then added in 75 years of flawed fiscal and monetary policy, subtracted Richard Nixon, taking us off the Gold Standard, and I came out to a concrete result that explains all of our problems: a National debt of 30 trillion dollars, a Federal Reserve balance sheet of 8.9 trillion dollars, and a currency with inflation at four decade highs. But then I looked at those numbers and I thought, oh wow, those are pretty big So I just went and I took them, and I threw them all in the garbage. But then I remembered back to high school geometry and the concept of different types of shapes.

And then I got pictures of three of the most influential people in our financial system: Jerome Powell, Janet Yellen, and Kanye West. I put them all together and I tried to make a shape out of them. and what shape did they make? Tell me what shape they made. They made a triangle, What kind of object is made up of several triangles? A pyramid.

And then I remembered, why worry about the financial system when it was always a pyramid scheme in the first place In this video we have a short one for you today, but in this video we're going to be talking about some deep deep stuff. I want to talk to you about the conditions that this firm said are going to lead us to a global stock market meltdown. And then I want to go through some data and pick your brain about some of this capital that's on the sidelines and growing. and when I think that capital is going to get back into the market what the data suggests based on past historical trends.

So this research from Gabe Call said there are five pillars for a stock market meltdown. Five conditions on these pillars that need to be met: A world dollar liquidity crunch, accelerating energy costs, international trade problems, inflationary woes, and fear. Let's talk liquidity first. Central banks around the world have been tightening for much of the last 12 to 18 months.

Our central bank and the most important one really just started tightening recently and hasn't meaningfully done much, but is expected to have some of the most aggressive moves very soon in the future. And as world liquidity dries up, what happens, Well, people and businesses have less capital and you start killing a lot of the weaker businesses in the economy that weren't built to last. And then if enough liquidity goes out, a lot of the stronger companies start seeing huge, huge pushbacks as well. The second pillar are energy costs.

Obviously, energy costs are in the area of spiking to unchartered levels, but the research funds U.s Energy Index rose by 150 in the last 12 months, which is the most inflation that this index has seen in 120 years. They also cited global trade being severely damaged. It's that the Dow Transportation Index is a good proxy for international trade health, and it has reached its lowest level in seven months. When international trade gets bludgeoned and weakens and you can see a new trend downward, this index is one of the clearest indicators to see that that's what's happening.

and right now we're in a multi-quarter downtrend in terms of international trade health. Next condition they have is inflation spreading globally. Their research fund takes 40 main countries and major economies and measures whether or not they are zero to a hundred percent at inflation. If half of them are at inflation, that's fifty percent.

If three quarters, that's 75 percent. They're saying that a hundred percent of their 40 major markets are in an inflationary environment, one that encompasses excess inflation and has only been hit once in the last 50 years. and that other time was in September of 2008. And then finally, the last pillar is the Fear index.

Is it measuring excess fear on a historical level? They said that on a scale from zero to one hundred percent, their Fear index is showing 70 fear in the 40 major markets. This is a quote that you want to pay very close attention to. They said quote. The Fear Index is a warning that Equity markets are ready to amplify bad news if they occur.

Not that bad news will occur. So right now this research firm is saying basically, hey, we have five pillars for what measure a incoming stock market meltdown. They're saying that every single one of them have been hit and that basically with the Sphere index, the market is locked and loaded to bludgeon very very quickly on any next bad news round. To make an analogy, it's sort of like every single leg and the stock market has a little grenade before it and in order to get to that leg, something needs to pull the pin out of the grenade to make it go boom Boom.

That could be a new Fed. Update: A Russia Invasion. Update: a Cpi report that could be something in terms of a missed earnings and a major company like a Netflix. Some sort of retail company like a Target, but something needs to pull it out for it to go boom boom And then you get another leg down in the overall market.

Okay, now optimistically speaking, you think about how much money has evaporated from the stock market. Back in early May, we talked about this famous article that said that more than seven trillion dollars had already been wiped out from the stock market this year, and that was at that point. Where does all of that go? Well, Some of it disappears completely to pay off margin debt and so forth. Deleveraging can really evaporate a lot of capital, but a lot of That capital, just goes back to the sidelines, waiting to be redeployed at later dates.

We talked about Jp Morgan Chase yesterday. They said that they're going to be building a fortress, a fortress balance sheet with a lot of cash, and they suggest that other banks and other money managers do as well. Are they saying that they're going to hold cash for entirety? No, They're saying okay right now because we're heading into a rough situation. We're going to be holding some cash, but they want to be able to deploy that cash at the right time, right? If you're an institutional big money player who is managing clients money, how do you make money on that? Well, you get a percentage of the total assets under management.

I'm generalizing right now based on the entire industry, obviously, especially in the hedge fund world. There's different performance boosts in other parts, it's just a flat fee. But generally speaking, if you're a big money manager, you get at least a percentage of your net assets under management. and regardless of other payment structures, that's almost always the main way you make money.

If you have 100 million dollars of assets under management, you get a percentage on that rain or shine. Of course, if you have a bad market and all of a sudden that goes down to 80 million, Well, yeah, you're making a little less, but you still get a percentage of that overall pie, right? Maybe no performance boost, but still percentage. So it's your goal to make sure that your clients keep their money with you. First and foremost, as long as you can keep them invested, you are golden.

And when market conditions are going up and everybody's making tons of money and clients are doing better at their jobs and making more money themselves, well, it's really easy to get people to invest in your fund. You could show them the last five to ten years of insane market returns and how well your fund did riding those trends and they could say oh, you're a geniusy genius and they go. And they throw tons of money in your fund. It's great, But then all of a sudden when markets start pushing back, well, your fun looks terrible.

Unless you're with a very small portion of Wall Street that focuses only on going short, which tends to do bad most the time you have to pitch new investors to invest in your fund during a time period where quite frankly everything's going down, your results are terrible and your clients probably have less money to invest anyways. So during the cusp of a bear market, if you can see it coming in the future like during a Fed tightening cycle, your goal is to figure out. Okay, well, how do I keep my investors that I already have happy and willing to stay in the fund and ride out these bad trends? well, you figure out. Okay, well, one way of doing that is taking some cash and putting it on the sidelines, selling out of positions towards the beginning of the cycle so that you can redeploy that at later dates and boost your future returns so that when things recover, you can look even smarter than the rest of the market.

If your fund goes down 40, 50, 60 percent during a downtrend and you had some cash on the sidelines, Well, not only can you brag about your returns on the way back up, but, but you can redeploy capital at those lower levels and your returns can be substantially accelerated on the other side, maybe you can't get new clients today, but you could certainly get them next year when things have already started bouncing right or whenever it recovers. Wall Street is a business and they're always trying to think, how do I make my returns look as good as possible so I can get more and more people to give me their funds to manage So you always have to think, okay, how do I make my phone look great For example, if your Fun matched the market in 2008, it returned negative 38, but the next year 2009 saw a return of almost 24 despite still being in a massive economic conundrum. But if you redeployed capital at Dips, you could tell your clients hey, we are getting out of this market swinging. We did bad last year like everybody else, but on the other side of this, we're going to be killing it.

Just look at the returns here. To date, it's just human psychology. Fund managers want to get back into the business of bragging about their returns and their prowess as fund managers, so they try to figure out. Okay, well, how do I do that as fast as possible? This data from Cfra research shows the last 13 or so recession years, the returns on that year and the following year returns.

So if you are a fund manager looking at these statistics, buying the Dip and strategically deploying capital in 10 out of the last 13 recessionary years aged extremely well, and you'd have been able to go back to your clients and brag that you came out of the recession looking like a beast. Part of that would have been based on your own intellect, right? Because you're buying the right stuff. But a big part of that is because markets over factor in fear and discount. Future right? And then the three that didn't work as well.

Two of them, the one in 1945 and the one in 1980 were after periods of huge, outsized returns in the recession year itself. So it's like, okay, well, you had bad returns that year, but the year that you're actually in a recession, the returns were pretty positive, so you average out the two and it's not terrible. The only period of time where buying the dip during a recession year aged poorly was 2001, and that was just an extended period of time. If you waited another year, you'd start seeing a green year and a green year after that and a green year after that and you could start bragging to your people again.

Wall Street pulls money out of the stock market during periods of time where they see bad headwinds on the horizon, and usually when they see everybody else expecting bad headwinds on the horizon. But if you actually look at the data when the headwinds hit, well, history shows that most of the time, even that same year that it's hitting, that tends to be some of the best time to actually buy the dip because the Ford returns are huge. The way that I see it is that Wall Street is always trying to predict when Main Street is going to see a ton of pain, and they tend to try to predict that about 12 to 18 months in advance. But by the time that Main Street is actually feeling that pain, Wall Street is now anticipating when Main Street is going to recover again.

And that's when you're at these very very low valuations. and that's when the business really starts going again and people start just deploying capital like crazy. Markets do the best with or without the Fed. When you have earnings that are beating expectations and growing on a trend that beats what makes sense based on the current valuations.

And so if you're asking yourself when capital is going to start strategically deploying back into the market, it's probably somewhere around where the worst economic numbers are reported and you're starting to see a little bit of a bottoming out in that economy. Inflation numbers are down, and maybe the Fed has started saying hey, you know what? We got to be a little bit more careful with these high key high keys that caps off today's video. Make sure to hit that ravishing like button and subscribe. If you're looking to learn how to trade, we do have coupon code Charlie Fever for zip trader you down below and that will get you lifetime access to everything we offer.

In the course, if you're looking to get up to five free stocks with Moomoo and try out a very, very powerful trading app, I'll put a link to Moomoo down below. Have a good one folks, and I'll see you in the next video.