greetings everyone this is a very active time in the market I don't have to tell you uh but uh this week uh the vix crossed 65 um which uh is the fourth largest uh measure of volatility in the market uh really in the last 40 50 years and I've been around for all of them uh so it's Fourth after 0809 uh the teeken Telecom bubble in 2000 and 1987 now what does this mean this volatility alert it usually means uh the market is meet meeting a cathartic moment or is in a cathartic moment uh and it usually means something is changing uh and as you know we have believed for quite some time that the the US economy and maybe the global economy has going has been going through a rolling recession ever since the FED started raising interest rates uh well the other thing that was happening during that time apparently uh was an increase in the carry trade involving borrowing Yen so really shorting Yen and buying dollars and investing them them into higher yielding assets than uh in Japan so playing the spread uh the other reason this became a a very widespread trade is the Yen has been depreciating uh so shorting Yen meant uh that the investor or the Speculator was benefiting from the Yen going down well that changed abruptly this week uh as the bank of Japan increased rates more than expected and seemed more determent uh to continue increasing rates than many people expected so uh apparently lots of margin calls and uh and a selloff in a lot of assets uh and now the vix has calmed down now we're not sure if the carry trade has unwind completely JP Morgan is saying uh we're halfway there so perhaps we'll see some more volatility but uh I do believe that the FED now is on high alert uh because uh the stock market seemed to be encouraging the FED to hold tight higher for longer make sure that inflation was out of the system and as you know we've been saying for quite some time that uh inflation is unwinding much faster than we're seeing in the traditional indexes right now the CPI is at 3.1 but uh by other metrics we're seeing prices fall and we would not be surprised to see prices fall uh a little more broadly as the consumer weakens now why is the consumer going to weaken or continue weakening uh it we believe it's because corpor operations are losing pricing power and in order to salvage margins they're going to be doing two things they will be laying people off and uh they will be uh accelerating moves to increase productivity so the unemployment rate will go up that certainly uh is getting the FED to change its spots as we're listening to Chairman Powell and I think now that how old net worth being hurt by the stock market going down is another reason that the FED is uh going to relent now one uh last thought here interest rates coming down should be a very positive for the equity markets uh but uh they will not Arrest A recession very quickly in fact if consumers and businesses know that interest rates and maybe prices are coming down what will they do they will wait now the market in its wisdom uh we believe is already already understands much of what I have told you and so we do think uh that lower interest rates uh when this uh when this carry trade is completely Unwound that lower interest rates are going to be uh the defining factor in terms of a r ation in the market uh away from a very concentrated group of stocks to a much broader based group of stocks and as I just mentioned uh Innovation solves problems so productivity gains are certainly uh what we believe is going to happen as AI proliferates throughout the global economy so we just wanted to give you uh some insights uh based on lots of years of experience uh having uh experienced uh these volatility cathartic moments it usually means there is a rotation into a new kind of thinking underway and we do believe uh that that will play out during the rest of this year