The Market Crash has Begun.

holy smokes the stock market feels like

it just collapsed with apple falling

over

4.8 percent giving up its three trillion

dollar Royal Crown gone some say it's

anger some say it's profit taking some

say it's just a regular retracement bro

it's totally normal after all if we take

a peek at uh well the retracement lines

it's almost perfect look at that

retracement on Apple right back down to

where it belongs that support line it's

almost perfect you can't make it up what

if we look at the NASDAQ nearly perfect

as well right back down to those

retracement lines check out Tesla same

thing let's take a look at the S P 500

via the Spy same thing it looks like

we've just gone through a Fibonacci

retracement retracement

or have we is there potentially

something worse beneath the scenes going

on well some have analyzed take charts

which are a fancy way actually they're

not really fancy at all they're pretty

simple you just basically take net buys

minus net cells like the number of

orders for these and the tick charts are

coming in super low now to us that's

like who cares about the pick chart well

the implication of this the bottom line

of this is that when you have the tick

chart coming in super low you generally

suspect that it's algorithmic selling

driving the market lower and these two

things could actually align that

algorithms incorporating retracement

lines are pushing us right back to those

lines so the tick charts imply it the

technical analysis implies this is a

retracement

but there's still fear and there could

be legitimate fear let's talk about that

legitimate fear and is this stock market

mini crash this week just the start of a

bigger crash

has The Real Crash Just Begun or is this

part of what we've been saying since

about the end of last year I expect some

kind of volatile Nike Swoosh recovery

and this is the volatility after all

volatility has finally come off its

insane floor which is leading others to

say it's just about activity bro okay

fine so we've got some of the Bro ideas

out of the way let's now dive a little

deeper into what some of the facts are

of what's going on

the biggest thing that we've had this

week has really been twofold one we had

the Fitch downgrade which led to massive

Bond selling the massive Bond selling

some say was also algorithmic but it led

to higher yields higher yields compare

or combined with FIB retracements great

reasons for algorithms to sell

Bear say look ma'am the payrolls report

that we just got it's all lagging get

prepared for a massive collapse in fact

I haven't seen this many negative

comments on a payrolls report in years

people are very suspicious of the

government data they're pissed off

because the Market's read and they're

pissed because quite frankly the

government has revised down payroll's

data every time they've released it in

at least the last six months now Bulls

respond to this and say fine it may be

true that payroll's data is always

revised down even more than the reports

that we get but there was some good news

in the reports and we have to consider

Trend so what could possibly have been

good news we'll take a look at this this

is a Slowdown in the part of the economy

that Powell cares most about which is

private services

in other words are we finally seeing

that slowdown in something that has been

driving the bulk of core inflation

service inflation you already know this

you already know that the three things

that have led to uh inflation have been

Goods inflation housing inflation and

then Services X housing we already have

disinflation in Goods that means prices

are going up at a slower rate we are

seeing housing rents grow at a slower

rate as well now that doesn't mean

they're going down although they

probably should because they've gotten

ridiculous and then over here we are

waiting for this to occur Services X

housing that would be really your labor

and Hospitality or retail so on and so

forth and we are seeing that wage growth

decline substantially this is leading a

lot of bulls to say look this is good

the part that was hot for Powell is

softening that's great

but the Bears are saying bro Jay Powell

just jacked up rates again this is a

lagging chart it is about to collapse

and this is where the bears actually

have a potentially reasonable argument

payroll gains tend to go negative very

rapidly into a recession now anecdotally

according to the Wall Street Journal and

the beige book we see companies that are

still hoarding labor and in fact are

still fighting for labor and don't want

to retrain new workers instead are

taking cash that they have and are

spending it to what invest in their

companies and basically invest through

this recession

but as soon as fear strikes the labor

market that is company's willingness to

hire

job gains can erode rapidly and this is

where the Bears have a point take a look

at two thousand in the year 2000 we

actually had continuing Trend right here

continuing trends for labor gains it

wasn't really until the end of 2000 that

all of a sudden job gains plummeted and

they plummeted rapidly this by the way

uh in yellow let's go ahead and draw

yellow line here the yellow line I'm

about to show you is the negative line

so anything under yellow is negative

look how rapidly we collapsed into that

in 2000 then we also rapidly collapsed

at the beginning of 2008 you can see

this uh tick right here this top is

about November of 2011 and all of 2008

you had this extremely rapid decline a

lot of bears are saying look

the stats we're looking at suggests we

have a 100 chance of a recession in the

next 12 months and that means we're

probably going to see this big plummet

maybe it wasn't in 2023 maybe it all

took a little longer to come around but

it's coming and 2024 is right around the

corner so buckle up we're about to go to

hell that's at least the argument bears

are making Bulls on the other hand

counter and say but look the trend this

trend by the way from the beginning of

2021 to now has been relatively

reasonable in fact if we jump over to

the historic Norm of job gains the

historic average job gains is this white

line right here it puts you at about 176

000 jobs created per month that's

roughly the historic average flattening

out the highs and the lows well where

are we sitting right now well right now

the low level where we are is about 172

which as you can see we haven't actually

gone really with the exception of right

here we haven't really gone below trend

yet but then again the Bears respond and

say but bro when we do it happens fast

we could get a rapid deterioration and

this is where others say well not

necessarily see where this is going it's

a constant back and forth not

necessarily because bro look at the

below Trend jobs growth of the era of

2015 to 2019 where markets were still

essentially in a relatively bullish tone

the average if we just look at 2015 to

2019 is probably actually closer to here

which puts you closer to about 120 000

jobs gained per month so

short of seeing this rapid decline in

jobs so far it looks like payrolls are

moving as normal however and this is the

danger payroll jobs payroll gains tend

to collapse rapidly not briefly and this

is where it's nice to look at the

Federal Reserve well fed are you finally

relaxing or are you just going to keep

hiking well a lot is going to depend on

what happens with the next CPI report we

did get some commentary from uh Bostic

today and another member of the Federal

Reserve we got two commentaries we got

Bostic and goolspear was but Goolsby is

a dove boss takes a little more neutral

but both of them suggested that the

labor market was coming into better

balance more quickly now than expected a

lot of people looked at this and said

okay this is the Fed basically

forecasting that we're probably going to

pause in September doesn't mean rates

can't go up again in the future but

yesterday we were looking at somewhere

around a 16 percent chance of a hike in

September now we're only looking at

about a 13 chance and expectations are

that this number is going to fall even

more that we're probably gearing up for

a pause in September that would be at

least somewhat good Bears say it's a

little too late we're still going to

have a massive earnings collapse over

the next year and you're not going to

want to be in stocks although others say

they're just looking for a lower

opportunity to buy stocks but what's a

real Catalyst that we have coming up oh

and by the way the FED terminal funds

rate actually just fell as well at least

according to the Market's estimates now

in line with a pause it just dropped

over the last few hours from a few

little ticks towards a hike direction to

in line with a pause now sitting at

5.367 for those caring about the numbers

well the next big Catalyst of course is

CPI data and it could also be some

negative news coming for CPI data this

is also leading to heart palpitations

and potentially algorithmic selling what

do we have we have CPI month over month

estimates

to be 0.2 percent that's great CPI month

over month core 0.2 percent great those

would be roughly in line with what we're

looking for however that headline

year-over-year CPI thanks to base

effects and an increase in oil prices to

some extent more base effects though

because our month over month isn't

changing that much we're looking for a

3.3 read on the headline inflation uh

level The Last Read was three percent so

now we're going to the wrong direction

and all it would take is confirming that

wrong direction with a Miss on some of

these core numbers and you'll probably

set up for a really ugly August

that CPI report by the way comes out

August 10th so mark your calendar for

August 10th the day after that we expect

to get PPI reads and PPI final demand is

expected to move up from 0.1 to 0.7 so

still relatively close to zero

especially for a year-over-year number

but a little bit more pressure on some

of these numbers than we had in the last

reports so last reports could have been

some nice soft reports these a little

rougher so all of this combined with the

fact that hey some things in earnings

weren't perfect for everyone has given

us really what I call a give back look

for example at the give back of PayPal

if you jump into the charts here you can

see PayPal basically gave up all of its

recent gains after its last earnings

report not great I actually bought a

little bit of PayPal right around 63

bucks it went all the way to

77.76 Dollars there at one point and

look at that right back to sixty three

dollars oopsie Daisy I suppose now what

else do you have well you've got again

these retracements dragging down

Industries higher interest rates

dragging down Industries what do we

really need to confirm the official bull

market is back what we truly need is the

Federal Reserve to truly U-turn now

Bears argue the FED will only do that

once

something breaks

Bulls argue well the federal U-turn

officially and start cutting rates when

inflation confirms that it's down but

folks on the bare side Say by that time

it's going to be way too late and the

Crash will already be here so what's

your take on this do you align more with

the Bears or with the bulls obviously a

red week makes it much easier to align

with the Bears because the movement of

the stock charts really messes with

people's psychology people get sad when

stocks are red and they're in stocks and

they get happy when they're out of

stocks and stocks are red so you kind of

have this weird psychology at play that

generally when the stock market is red

either reiterates how the Bears feels

feel or makes the Bulls feel sad so it's

pretty common to have negative sentiment

compound into more negative sentiment

that's how you also get Euphoria in the

other direction anywho thanks so much

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goodbye now I want you to know this when

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