Why They Just Crashed The Market | Do This Now

Well, folks, if you think the stock market's the scariest thing going on this year, no, it's, it's what I witnessed a few hours ago at my own house.

Look at this man. Look at this guy. Holy smoke is that ladder. I don't know how big that ladder is.

It might be 11, 12 feet. He got me. This man was standing on this thing. Just, I, I'm like, what?

Like what are you doing, man? Like, you, you crazy. That's all I gotta say about that already, folks, a lot to discuss in today's video.

We gotta talk about stocks, the market in general why Wall Street crashed the market here today. My opinions on, obviously the Powell comments, there was something very important he said that no one's talking about.

And I wanna make sure we talk about that in this video. I gotta discuss some things that are gonna transpire in the market next so everybody's kind of mentally prepared for what's coming here.

And those sorts of things. Hope you guys enjoy us. As always, I appreciate each and every one of you that subscribe the channel.

Thank you. Thank you for being here. And let's jump straight into this. So obviously mass of down, day to day, Russell down, huge Nasdaq down, huge s and p 500 down big.

I would describe it as that, but yeah, in terms of the Russell Nasc, those ones got hit the hardest. And in terms of when Jerome Powell started talking, you know, at first when they were just going over kind of the prepared remarks and those sorts of things, things were good.

Once the press conference got rolling in a major way, that's when things started to tank. And essentially Jerome Powell, he threw cold water on, on, on everything, okay?

You know, the market, a lot of Wall Street was starting to think like he would basically get softer and basically, you know, talk about, Hey, you know what, we're gonna, we're gonna, you know, potentially pull back rates here.

We're gonna take it easy. Any, any commentary in, And reporters definitely try to get 'em to trip up many times along the way when they tried and they tried and they tried and he just threw cold water on the whole situation and he basically said, Rates are gonna remain high for, you know, quite a while.

And essentially this, this makes a market look at this and be like, Ugh, okay, there's there's no pivot, there's no turn.

And now we gotta wait all the way till December at some point. And they're likely gonna raise rates again in December.

Right? And now people are looking at it and they were thinking maybe 50 basis points, but now people are thinking maybe 75 basis points after his commentary and the fact that he threw cold water on, on the whole situation and, you know, just seemed like he did not want this market to rally, to be quite honest.

And he doesn't want financial conditions to ease up whatsoever right now. And it, it, you know, as I was listening to him talk, I was watching the market tank, it brought me back to a great video Mav put out last month.

And, and I remember it so specifically cuz of the thumbnail of it was a great thumbnail and no rally allowed.

And I will say, as I watched J Powell talk, it felt this is very important. It felt like Jerome Powell does not want the stock market to rally at all.

That's the way he was talking because if you look at kind of the prepared remarks that that was almost a little softer in terms of just kind of the way, the way the Fed was talking in general.

But as soon as he really got in those questions, it seemed like he was doing everything to make sure the the market didn't rally.

And whether that's true or not, you will never know, right? But it seems like it really seems like he does not wanna give the market anything right now.

If anything, he would rather the market, it seems once again that if anything he would rather the market sell off.

People would be very scared and concerned and continue to pull back for right now in the financial markets and for financial conditions to continue to be very, very tight.

That's what it seemed like. But there was also, I think several important things he mentioned in, in his, in his remarks when he was being asked questions and things like that, One of the things I did not like is they asked him about, you know, are you afraid you're gonna go too far right in terms of raising rates?

And then he brought up, well, you know, if we do go too far, you know, it, it's not that big of a problem because essentially we saw what happened in, in Ronna, he, he didn't mention that, right?

But, you know, essentially we can, we can flood the market with liquidity and obviously help out, right? But I didn't like that comment.

The reason I didn't like that comment is that just felt like why is the Fed always feel like they've gotta be so dramatic, right?

Cause right now we're in an extremely dramatic fed situation where they're raising rates at pretty much the fastest clip in the history of the Fed.

I mean, if you look at how, how quickly they're raising these rates and you know, talking about we, we, we've gone up like 30 x we, we have like 30 x interest rates from where they were at the, at the beginning of the year in terms of Fed funds rate, right?

And when you look at something like that, right? I think it's important that we all kind of look at this and like, wait a minute, you know, going into this year Fed funds rate was at basically nothing.

Now, you know, by the end of the year we're gonna be at high fours likely somewhere in there, roughly. And I mean the, the way he was talking, it sounds like we could go higher.

Sounds like we could go definitely to the fives in terms of fed funds rate and who knows where it's gonna go at that point in time, right?

And that's once again, at the start of this year, Fed funds rate was about at about zero or maybe 0.25 or something like that.

So I mean, we're just talking about clips of raising rates like we've never seen certainly in, in the last several decades.

But if ever in terms of that rate of increase, right? And so I didn't like that comment. It just seems like was a fed got, oh, you know, we're pump the pump massive amounts of money out there and stimulus out there, or we're gonna be in a situation where we're raising rates at at the highest rates in decades.

It's like, it just doesn't seem right man. It's like, can we get some stability? Can we get some happy medium here without having to go so far this way or this way?

It just, it's just, it, it's a little frustrating cuz it almost makes the whole economy, it makes the whole market in general start to feel like it's only dependent upon the Fed.

And that's the only thing that matters. And it should not be that way. That means they have too much power at this point in time.

Okay? No, you, if you look at a stock like amd, I thought this was very telling in term terms of how it traded today.

Stock went up very nicely at the open. But basically after about 30 minutes after the open, the stock just tanked.

And for the rest of the trading day it tanked about 8% from the highs it reached within about a half an hour or so after the, the market opened there.

And that was very telling and the stock closed at $58 and some change here today. And this is one of those stocks that it's just like, you know, if if the market continues to go down, obviously this stock's gonna continue to get hit.

And AMD's definitely a stock I'm interested in buying in 2023. But here's something very important to understand about amd. Okay?

They bought XI links earlier this year and there was almost a, it was close to $50 billion move if I recall.

Okay, check out AMD's market cap right now. $94 billion. So now this, at this point in time, it's looking at least in the short term like, like AMD might have massively overpaid for xyx, right?

Because now look at AMD's market cap and think about what they just paid for xyx, which is a much smaller business.

They had an AMD not even close, right? And if this baby keeps tanking and all of a sudden next thing you know, it's in the forties and it's in the thirties, if the market keeps selling off, all of a sudden you're gonna be like, wow, is the whole AMD company gonna be trading at a, you know, a $50 billion mark cap or, so it's just, it's insane to kind of think that, right?

But that was just very telling in kind of the trading action today. If you look at a stock like Amazon, this is very worrisome.

This stock was down about 5% here today, about 5% for Amazon. This stock just continues to get hit time and time and time again.

And you know, it, it's starting to move toward where it was in the after hours lows that day, right? That that next trading day it got saved because Apple saved the stock, right?

But now it just continues to go down and down and down and it's like whoa, you know, this baby's basically almost back to where it was in the, that aftermarket lows back on, you know, after they reported earnings and this was stock.

Now at this point in time, that year to date is down about 46% and it's down almost 50% now from its 52 week high.

So this is, this is just shows you the level of devastation out there, right? Meta was down another 4% roughly here today and that stock is now down 73.2% from meta.

Absolutely incredible move the market cap now is, I believe cheaper than Pepsi. <laugh> incredible. You look at a stock like Google McDougal, this one is scary.

I mean, you know this one down about 4% again here today it's now down to 87 bucks. The stock's down about 40% year to date and it's getting close to down 50% from its 52 week high.

You get another couple down trading days from the Nasdaq and next thing you know, this baby's gonna be down 50% from, from 52 week highs.

And there was something that was thought as like, no way that could happen to Google, right? And you know, this is something I talked about in the video last week was when you see what happened with mea, don't think that can't happen to other stocks or something close to that happened with these other stocks, right?

A 50% type downward move. Meta is the scariest thing I think the stock market's seen in a long time. Cuz it's one of the biggest companies in the world.

There's no company that has more customers than Matta. They, they're the kings. So to see, see the king fall like that definitely makes you say who, who's to say Apple can't fall 50%?

Who's to say Google can't fall 50 plus percent? Who's to say Amazon, no stock is safe. And I've been saying that no stock is safe.

I don't care what their business model is, I don't care what their cash flow is, I don't care what their net income is, I don't care how good their management team is in this market.

There's no stock that is safe from a 50% plus fall, including even Mr. Softy, which is, in my opinion, if this one did hit down 50% from a 52 week high, this would be the most shocking stock in the stock market for me to see go down that much.

If it went down that much. And I mean you look at the way the stocks pulled down rain, it's down over 34% at this point in time, over 34% for Mr.

Softy. Come on. And that's year to date. That's not even from it's 52 week high. So that's just a shocking one to see that okay, Tesla may year to date now is down 46.2%.

That one closed at about two 14 here, day down five plus percent. And you know, I've, I spoke many times about Tesla recently and kind of my worries for 2023 for the company.

I don't really need to dig back up that that whole bunch, but I definitely do have concerns for Tesla in 2023 in terms of business model and being able to hit certain growth rates at the company has projected like 50%.

I have real concerns about that. All the smalls, ugh, you know, smalls are are devastated here today. You know, 8%, 6%, 5%, just all the smalls got hit very bad.

When you see Russell down three plus percent, all these small guys are gonna get hit, right? Only good news is they've been hit so hard that, you know, <laugh> at some point in time it's just like they're already dead.

You know, like, like what, what else are you gonna do to them essentially right Now I do wanna say this, okay?

Cause I know there's a lot of people, all those small caps are basically gonna be report and earnings over the next three weeks, right?

Here's what I'm looking for, for all the small caps. What I need to see from all the small caps is I need to hear them basically say that margins are gonna get much better for these companies over the next year.

I, based upon everything, I look into all the data, I believe margins are gonna get exponentially better for basically every single one of those small cap companies over the next 12 months essentially.

But I need to hear that from the companies. I need to have them walk us through the game plan on why that's gonna happen and why cash flows are gonna improve.

It's all about margins and cash flow for the next year, 2023 for these companies. Margins cash flow, okay? Wall Street no longer cares about just growing revenue to grow revenue for these companies.

It's just margins and it's cash flow. And they have to be able to lay us out a plan on why margins are gonna increase rapidly over the next 12 months and why cash flow is as well.

Okay? And if they do that, I will be happy shareholder. If they can't do that, they're gonna remain at these very, very ugly prices of two, three, $4.

That's the bottom line there, there. So that's what I'm looking for, for all those smalls. And once again, they're all pretty much reporting over the next few weeks as far as looking at the retail trader, investor stocks.

I mean they all got absolutely leveled today and you know, I don't even know how many retail folks are left in them.

Some market shout out to the people that, that are still left in this market at this point in time. It's obviously shaken out.

Basically almost everybody that is, was kind of a questionable person in the market, let's just call it that, right? And in terms of, you know, I look at real, real today.

Look at this, this stocks down to a dollar for real, real holy smokes. That's a real, real holy field. $1 a share.

You look at a stock like SoFi, you know, they come in and they report these, you know, actually impressive numbers in earnings time and time again, but yet their stock, it just can't do anything right now.

And then it's back to five bucks and it rallies and it's back to five bucks and it rallies and it's back to five bucks.

It can't get out of its own way in this market. You know, they might have a, a data shine, but it's not today in terms of a stock price goes.

And that's, you would basically say that for almost all the smalls at this point in time. That's just how it is.

Okay? Now check this out. So what you're seeing right now is kathy wood stocks.com, which tracks Kathy Woods's top 25 arc positions in our main fund on a daily basis and how much market value, the weight, all those sorts of things, okay?

And essentially Roku Roku's her third biggest position. It's almost 7% weight, right? I've never seen it with Roku. I've never been a fan of that one personally.

It's not my cup of tea, okay? This talks down over 18% after hours, which means there's more pain ahead for the Arc fund and for Kathy Wood.

And you know, she just, I don't wanna say she can't get a break, but it's just, it's, it's obviously been been very, very tough sledding there for basically all her stocks.

But specifically, I mean look at, look at Roku. It just broke through another 52 week low. It's at 44 bucks now at this point in time from a 52 week high of it was $314.

So those of you that, that might not be the best in math, okay? If this baby falls to 31 that's endowed 90% move there, very, very tough for Roku.

Apple is only down 20%. I say it's only down 20% cuz I really think it's gonna get a lot worse for Apple and I mean a lot worse.

And something just happened that is extremely scary for Apple, for Apple stock and it's very scary for the Dow and for the S 500 and the queues as well.

What is this? This is it. Okay? The world's largest iPhone assembly plant UN is now under new Rony ro lockdown in China, an industrial part park in China that is home to the world's largest assembly plant for apple's.

IPhones has been ordered to complete a seven day ROA lockdown according to a report by Reuters. And here's a, here's a problem, Okay?

It's supposed to be a seven day lockdown. Well, well here's a few problems. Okay? So some people say, well, haven't they been moving some production to India recently?

Yes, but they just started that. So you can't like, just magically like, oh are, we're gonna replace production that's just barely starting and that's a multi-year like project to hopefully get more and more, you know, factories up and running in, in India.

But that's multi years so it's not fixing things tomorrow. So we're starting with a seven day lockdown, okay? Now for folks that are Apple shareholders, you know, you've gotta almost hope that it's only seven days.

Cuz what we've seen from the Chinese government, what I've witnessed firsthand is they are not practical in these RO and lockdowns and I feel like sometimes they use these RO and lockdowns as potential to hurt whoever they want to hurt and cause damage to whatever they wanna cause damage.

And obviously the US made a move was about, about, about a month ago or so, right? To obviously, you know, restrict what type of chips China can get.

And obviously there's China, Taiwan that's floating out there and what could potentially happen there. So in terms of China, US relations, I would say they're probably at a multi-decade low right now.

Right now, okay? So is it impossible for China to keep this factory close? Then say, you know what, we, we noticed another case or two, keep it shut down or maybe it opens back up and then magically there's another case or two and then they shut it back down.

They're like, Oh, we're shutting it down for 14 days this time, 21 days this time, right? And all of a sudden, next thing you know, Apple's missing numbers massively because things are shut down, right?

Is that outta Alabama possibility? I don't think it's outta Alabama possibility at all. And you know, I've witnessed this firsthand.

Remember I just told you guys that, right? How have I seen this? Well, I own this stock called Win Resorts and as bad as I would love to buy the more of the stock, I can't because they are held hostage to the Chinese government right now because one minute the Chinese government's like, Oh yeah, we might open up more.

And then the next thing you know, they limit a massively travel again. And companies like Win have hemorrhaged ridiculous sums of money.

I think when has hemorrhaged over a billion dollars plus from their Macau resorts over the, the last number of you know, basically years.

It's been almost three years and Macau has not been fully open. And it's a joke, it's a complete joke. And so, you know, folks aren't really allowed to, to travel there the way they should be able to travel there, essentially.

And it creates a horrible dynamic. And there you got a company like Wind or Las Vegas Sands or other companies that are basically held hostage in a situation in how it's felt to me.

Is it, it feels like China's almost trying to get those companies to capitulate and sell their properties off, sell 'em back to China or to Chinese companies that are basically kind of run by the Chinese government and say, Hey, you know what where it's not worth us running these properties anymore, we're gonna sell 'em back to you.

Essentially. That's what I feared has happened there. And so China can make these decisions and make these moves and for them to cause real damage to the number one United States corporation, our darling, which is Apple.

It's not the realm of possibility at all. We already know they don't like big tech, right? We already know. They, they basically don't allow Google over there.

They don't allow meta over there, right? You know, Microsoft's <laugh>, very small market, if any market from Microsoft over there, right?

And Amazon is, is teeny in China. So we already know they, they don't really like our American big, big tech companies.

Apple's been the one that's been allowed. But at this point in time, I don't think China cares about anything. I I think they're gonna try to cause as much damage as possible.

So the hope is it's just a seven day lockdown things open back up and production resumes. But I have real fears that China has ulterior motives there and they'll use reasons to shut it back down, even if they do open it back up again and again and again to cause real damage there.

Let's hope that's not the situation. But nothing surprises me when it comes to Chinese government at this point in time.

Okay? Now be very careful if you're wondering like, you know where to go from here, right? Be, if you're thinking about the Dow stocks, be very careful.

All these stocks, basically, almost every single one of them in the Dow 30 are overvalued right now in extremely overvalued.

And the reason they got overvalued is some of these companies have held up very well cuz they're what I call late stage cycle companies.

So basically, you know, think about it like this. Remember in in roa, right? There were certain companies that you saw their numbers just ramp up, you know, very, very quickly their stock prices ramp up very, very quickly.

These are companies like obviously Amazon, Google meta stocks like that, right? Apple tech related companies, AMD and Vidia. And you saw their stock prices go up rapidly.

Well, stocks like Caterpillar, Boeing, many of those other companies, financials, fast food joints, things like that, right? A lot of them, let's just call it you know, didn't experience that type of growth, but a lot of those companies are a little later stage.

So then all of a sudden when tech's starting to feel was pain, those ones are still putting up really good numbers.

And so cause a confusing dynamic where people look at these stocks as safety, plus they're reporting good numbers while everything else is reporting bad numbers, especially lot tech.

And so people flood money there and it causes all those stocks to get, they're all almost every single stock. And the Dow is extremely overvalued right now.

And I'm not even talking about overvalued based upon today's market. I'm talking about even if this was a normal economic environment we're in and there weren't all these worries about what the fed's doing and you know, severe recessions and everything like that in China, Taiwan, blah, blah, blah.

Even in that scenario, we would still be very overvalued for these Dow stocks. So I'm telling you, be very careful with all these companies.

They're all extremely overvalued and almost all of 'em are gonna have a lot of pain over the next year. It would take a miracle, a miracle of life for them not to have a lot of pain.

And I mean almost for every single one of those Dow 30 stocks, okay? You know, we're in a state of delusion when it comes to many of those companies, right?

I mean, you're looking at some of these stocks trading at at or near all time highs, 52 week highs, things like that, that are Dow stocks, right?

And I, I drove out to Lake Las Vegas this past weekend. It was a beautiful day. It was probably 70 something degrees out there in lake loss, Vegas.

And I just saw them clearing massive amounts of land and you know, all this construction equipment's used for that, obviously John Deere equipment because John Deere has a construction business if you didn't know.

So a lot of Deere equipment, a lot of Caterpillar equipment obviously as well as a, you know, a Japanese company or two out there.

And so all this land's getting cleared for all these house homes they, they want to build, right? And I'm just looking at it and I'm just like, this is pure delusion.

Like they're gonna, these, these whoever's clearing all this land to build these homes, they're gonna be sitting on this land for years, I mean years and years and years and years.

They're not gonna move homes anytime soon out there. It's gonna be at a snails pace as soon as this land's ready at some point in in 2023.

Good luck, good luck selling any of that. And you know, this happened in Lake Las Vegas back in you know, prior to the great financial crisis as well where, you know, there was all this land that was cleared and they barely filled up that land over the past few years.

It took 'em like almost 15 years to finally clear, you know, basically fill in that land. I don't think it's gonna take 'em 15 years this time, but I'm just looking at this and I'm like, this is delusional.

They're clearing all this land. Like they think they're gonna build massive amounts of homes here over the next couple years.

And I'm like, it's not happening. That's not happening at all. But this is where the delusion and the confusion comes in, in, in terms of looking at these companies and you see, you know, some of these companies reporting really good numbers and it's like, oh, you know, everything's fine.

And it's like, no, no, we're in a kind of a delusional state and this isn't the first time it's happened.

Cuz if you go back to the great financial crisis, right, that was a moment in time. You look at new home starts in in permits during that time, right?

It was definitely in a state of delusion still even why everybody was starting to contract and why people were looking at it as like, you know, I think the real estate market's gonna get hit.

And you looked at permits and starts, they were still actually real relatively high even in 2008. Even in 2008, there was over 900,000 permits and starts in that year.

You would've thought it would've been like 500,000 that year. Nope. There's a lag on all this stuff, man. 2007 when there was already a lot of worries and fears about real estate being extremely overvalued, you know, things are gonna come down massively there.

Even in that year there was still 1.4 million permits, one point and 1.35 million starts in in 2007. Wow. Okay? And so here we are in this moment where, you know, 2020 two's been a year where massive, we, we should be on, on pace for doing somewhere between 1.6 million and 1.8 million permits and starts in 2022.

So, which is, you know, one of the biggest numbers in in recent times. And so we're in this very state of delusion right now when it comes to construction in in these sorts of things that I'm just looking at and I'm like, this stuff's gonna dry up, this stuff's gonna dry up in a massive way.

The way Powell's talking, he's talking about, you know, the way he, if you read through the tea tree leaves, he's talking about probably leaving rates at a very high level for all of 2023.

It's gonna kill construction, it's gonna kill it. All these projects that you see going on right now were all funded with, with money that was cheap money at interest rates of two, three, 4%.

And all that's gonna dry up man. When you, when you hear, when you just listen to how talk, it's like all this is gonna dry up massively.

And I mean absolutely massively. And you're looking at some of these stocks that are delusional. Caterpillars are a great example.

The stock is near an all time high. It's not at an all time high, high right now, but it's not that far away.

And I'm like looking at a sock caterpillar and I'm like with what's the mess that's in Europe, the mess that's in China, and then the mess that's gonna come to the states in terms of the construction in industry, obviously starting in 2023 and then it's gonna get worse probably actually unfortunately in 2024 as well.

I'm looking at that and I'm like, Caterpillar at two 14. I wouldn't be surprised if that's a hundred dollars stock at the same time next year.

I wouldn't be surprised. We'll see what plays out there, but I'm just like, nothing adds up, nothing adds up there when, when you're talking about the cost of capital being extremely expensive, when you're talking about interest rates very high, it's gonna hurt all these companies in a massive, massive, massive epic way.

And there's nothing a company like Caterpillar will be able to do about it essentially. Okay? I even look at a stock like Rh, I actually love RH for the long term.

I don't personally own the stock and I'm gonna probably own the stock at some point, but I'm probably not buying that stock until it's like 110 bucks, 150 bucks, 130 bucks, something like that.

And I wouldn't be surprised at all if it's going down there over the next six months or so, six to 12 months because I'm looking at a stock like our, I'm just like, high end housing's not gonna be in in a good place anytime soon.

I think that's gonna continue to be in, in a bad spot, right? So we have a, we have a market that is delusional in some, some, some ways specifically with the Dow 30 star stocks, right?

And it's in reality or maybe even overdoing reality when it comes to a lot of the NASDAQ stocks and the growth related stocks.

And so it's a very interesting dynamic that we're seeing out there in the market. But yeah, if you're thinking about any of those Dow 30 plays, because those have been the hot plays, those have been the plays that have been doing really good, they're gonna have to hold up in 2023.

Be careful, man. Be careful. That's all I'll say about that. Cause a lot of those companies have a lot of pain coming and they haven't really been hit with the fears, but they will start to get hit with the fears over this next year in my opinion.

And what a lot of these NASDAQ stocks have been going through, those stocks will go through it. And when you're, you, I've explained this many times in videos recently, so for my folks that that watch my videos all time, shout out to you guys, I appreciate each and every one of you, but for the folks that that haven't seen my videos, you know, when you're talking about one of these crashes, it's a process.

This is a major crash we're going through, right? Obviously you can see it in terms of the way these stocks have reacted, the index have reacted when you're going through one of these, it's a, it's a, it's a whole process.

The first that got hit was a small caps, the speculative stocks, then it was mid caps, then it was high growth, right?

Then now it's big tech. The last thing to fall always in the situation is the Dow 30 type stocks and those indexes in general, right?

And I just think that's gonna be something we're gonna see play out and it's just, it's a tick, tick, tick, tick, tick, tick, tick type situation guys.

So yeah, anyways, in terms of me and my focus, obviously my, my focus for the remainder of this year is kind of buying this, the same old stuff I've been buying this whole year.

In terms of me in 2023, I think I'm going to, I think 2023 is gonna be a major year of me investing in big, big dog stocks.

I'm talking Amazon, so I'm Talking, talking Metas, I'm talking Googles, I'm talking AMDs, maybe even Invidia, maybe even Intel at some point in time for my dividends only account.

I think, I think, you know, the way I'm looking at this, I think it's gonna be a lot of large cap stocks for me in 2023 in terms of where I'm adding major positions and, and that's just what I see kind of playing out there.

Much love is always, I appreciate each and every one of you guys for being here as always and have a great.