fook... this is actually bad

Nick T frequently referred to as the

mouthpiece of the Federal Reserve over

at the Wall Street Journal just flagged

something quite dangerous for markets

and we need to talk about it because

this is something that I personally have

not been paying as much attention to as

I should it is a leading indicator which

is dangerous and not good because the

indicator is not going in the direction

that we want it is a leading indicator

on data that is usually a lagging

indicator in other words by the time we

usually see this lagging indicator show

bad things or already deep into a

recession but now we can start seeing

some leading tells that maybe we're

heading into a not so great environment

now I'm going to show in this video what

Nick T flagged first but I've gone a lot

deeper on what Nick T flagged and it

just gets worse the deeper I go so let's

Analyze This Together so what do we have

first this is what Nick T flagged on

Twitter he flagged this segment of the

zip recruiter Q2 earnings call so this

is a job placement company and what I

did is I went to two other job placement

companies uh the company that owns

monster and the company that owns indeed

and I went to those holding companies

earnings calls to see what they're

saying about Labor and I'll tell you

it's all not fantastic you ready for

this here we go so this is ZipRecruiter

employers continue to respond to

enduring macro economic uncertainty with

caution this enduring not not a great

phrase right if we're really bottoming

out in soft Landing whatever then we

should be seeing a trough in earnings

and this sort of U shape of earnings

right and we come out of that that pain

point but right here we see an enduring

macro level of uncertainty in addition

the number of job openings and employers

willingness to pay for these job

openings has been declining

significantly from the peaks of 2020 A1

in 2022 and this trend is consistent

amongst both small and Enterprise and

medium businesses geographies and

Industry so in other words everywhere

everything is slowing down in labor now

this is really interesting because we

just got a strong labor report and so a

lot of people are like oh but Kevin we

just had a strong BLS jobs report the

problem though is we and we knew this

going into this crisis jobs reports are

lagging data everybody and their

grandmother knows that jobs reports are

lagging data this is something that I

flagged way back in December of 2021

that like hey the way to go into a

recession is you you have a lot of

unemployment the problem is you don't

know that you're going to have a lot of

unemployment until you're in a recession

so I was going through this with course

members this morning along with real

estate and some fundamental analysis

that we were doing uh and I I noticed

there were some software engineers in

the group who've been saying hey like

usually I can get a job very quickly all

all of a sudden I can't get a job very

quickly anymore and then I think about

the BLS labor report and I'm like oh my

gosh the BLS labor report actually told

us that where people were able to get

jobs wasn't necessarily in retail

Hospitality or Tech anymore where people

were getting jobs was in education and

health care which is actually usually

late stage cycle employment also not

good so in other words you're seeing zip

recruiter flag issues you're seeing

people start flagging issues you're

seeing uh individuals on teamblind.com

start indicating that there are Amazon

silent layoffs and other companies like

Microsoft but and Dell potentially

cutting over a thousand employees how

more of these layoff rounds are coming

now but they're just not being covered

in the media which is really interesting

some are calling this the uh the silent

layoffs really just a way of attrition

in other words the companies Titan

Workforce policies squeeze people out

and then they're not really doing a

layoff people are just quitting and then

the companies aren't rehiring and so

putting all this together I'm like okay

all right let's get some actual data on

this now I want to show you the other

two earnings calls too but there's some

concerning pieces of data that I also

got from doing some more research I'm a

big fan of research and charts so I like

to go deep on this stuff and look at

this okay this is an interesting chart

so let me explain this one first so the

white line tells you the unemployment

rate

the red line shows you the moving

average of the unemployment rate and

what you're looking here or what you're

looking for is what in stocks we might

call like the Golden Cross right where

you move above the moving average like

you finally break out of a declining

Trend well in unemployment this is like

the opposite okay this is bad so take a

look at this this right here was about

2007. so this would be about May 2007

you get the unemployment rate slightly

above the moving average of unemployment

okay then uh you get recession obviously

and then in the recession you get this

massive Spike so that's 2007. look at

two thousand uh well the end of 2000 at

the beginning of 2001 right here what

did you get unemployment rate spikes

above the moving average which precedes

explosion in unemployment so you get

that here you get that here okay you

ready for this uh well covid was was

unique uh this isn't we don't have to so

much pay attention to covet because

everything kind of happened at the same

time that's not to say that time was

different like it obviously wasn't it

just happened so rapidly you didn't

really get much of a lead on that the

economy shut down okay that's not a

surprise look at this folks what just

happened in the last two months the

unemployment rate ticked up above the

moving average again and combine this

with somebody like the FED uh you know

yesterday who was at Hawker yesterday

the VP and the FED he goes look we think

unemployment's gonna go to four maybe

four and a half percent

okay but every time historically the

unemployment rate has risen one percent

so from like three and a half to four

and a half we go on to rise another at

least one percent if not more

so that's a problem but not only is that

a problem unemployment

destroys a lot of things it destroys

lending it leads to more personal

bankruptcies more business bankruptcies

it leads to credit defaults credits

obviously at an all-time high I don't

actually think credit is in a horrible

situation right now because the

percentage of people's disposable income

in other words people's capacity to pay

their debt is very high but that changes

when joblessness comes in right so

that's that's all of a sudden where you

compound the indicators in a bad way now

all of a sudden you take bad jobs data

add that to high debts now Your Capacity

to pay off debt skyrockets now we don't

exactly know when this unemployment

surge could occur but we would expect

that it would be in a higher interest

rate environment So within the next year

which is what the inversion of the yield

curve the difference between the 10 and

2 has been flagging it's also worth

noting that stocks basically hit their

Peak around June 19th and you know

what's kind of crazy about that is the

inverted yield curve started steepening

right after June 19th like the Monday

thereafter the inverted yield curve

became less inverted

in plain English usually when that curve

steepens things get bad and things have

gotten worse in the stock market and

that curve is deepening at the same time

now we're having these potentially

legitimate employment concerns but what

other leading indicators can we look at

well let's go into what is this one this

is randstadt this is another Employment

Agency I can't remember if this was

Monster or indeed and then I have the

other company as well but these are the

parent companies so look at some of the

things they've seen or are saying here

uh so um we found ourselves in q1 with a

decline

we and and these folks are like Dutch

okay so so the translations here aren't

great and we do see no sides of that

stabilization and normalization

[Laughter]

in other words

it's still bad and it's continuing to be

bad they also talk about these comps to

the great resignation where like you had

a lot of people quit and then they find

new jobs that was the great resignation

that gave them a big boost because

people were looking for new jobs but now

we're coming down from the great

resignation so the comps are terrible

for these companies but what are they

talking about well they're talking about

manufacturing getting hit the hardest

especially in Autos obviously we're

seeing that a lot of Autos either laying

off or quite frankly going bankrupt uh

France was the only positive area they

saw but Germany Italy the United States

Netherlands all negative slower hiring

environment for permanent placements

this is very similar to what you're

seeing with zip recruiter Automotive has

been particularly challenging no changes

of any sort instead we're just

deteriorating across the board

uh so uh you know listen to this so

they're talking about like hey we think

we'll be okay as long as demand comes

back but listen to this if demand comes

back I underlined that I read there uh

they also said permanent job placements

came down significantly more than we're

seeing in q1 okay that is worsening

things are getting worse not better like

I've been looking for bearish stuff and

I'm like no that's not bearish that's

not bearish like I feel like I'm going

through a newspaper right oh except like

more updates I feel like I'm doing this

through a newspaper I'm like no no

that's not good that's not good that's

not good now I'm like

oh like like I know this is where people

are like oh that's it Kevin's gonna

flip-flop again look I just react to

data that's I react to data and I look

every single day for data and I haven't

seen anybody cover all three of these

earnings reports or whatever I got

flagged to this by Nick T nobody else

has been talking about about it and so

I'm like let me look at the other

companies let me also look at some Bank

of America reports on this you want to

see what the Bank of America reports are

saying okay wait for this ready for this

all right so what do we have right here

labor momentum has been Cooling and in a

negative territory for 15 straight

months and when we look at this chart

where basically the light blue line is

under the zero level look at where we

were under the zero level before the.com

recession before the 08 recession going

into the pandemic uh that could have

been a coincidence or we were setting up

for another recession uh the current

levels notice how in expansionary times

like this number goes positive and it's

not In fairness this is really murky

here's another Bank of America piece

just out that talks about how hey maybe

we could actually see more wage

increases which would create more

potentially inflation and services as

maybe we're underestimating how much the

market could retighten but that's assume

assuming a soft Landing what if we go

the opposite direction using this chart

from Bank of America we're actually

potentially going in the worst Direction

well to get a little bit more of a

leading indicator I like to now jump

over to let's see here that's runshot

let's go to recruit I think recruit is

indeed and I'm going to shut his monster

I'm not exactly sure which but they're

all recruiting firms okay so what does

this one say this is now a third company

so we saw bad news from ZipRecruiter we

saw bad news from and uh now we're going

to look at uh news from recruit I don't

want to poison the well here okay as you

know Global HR matching business is

heavily impacted by economic environment

and therefore very important for us to

continue investing in the future while

conservatively assuming a downturn

followed by a period of economic

stagnation

uh what that doesn't sound very good a

downturn followed by stagnation sounds

terrible okay what do we have over here

historically speaking the type job

market has shown gradual improvement

over the past year as we assumed however

in comparison to the 2008 and 2009

recessions where approximately 2.7

million jobs were lost over a two-year

period the number of jobs already lost

in 2022 was 2.5 million so in other

words we're at the same levels as 2008

2009 what the f

it has been very challenging to predict

the speed of this decline it was also

difficult to predict companies

willingness to spend on hiring that it

would decline at a rate faster than the

decline in job openings based on such

rapid change we paused hiring in our HR

business uh in October of last year and

in March we announced a Workforce

reduction okay this is not good we

intend to provide fiscal year guidance

again when Outlook becomes clearer so in

other words recruit is withdrawing

guidance indeed is withdrawing guidance

uh you've got expecting a decline of

head counts through attrition rather

than Mass layoffs which aligns with

blinds indication that you know we're

getting these silent layoffs this is not

good

these are leading indicators of problems

that we haven't been paying attention to

before and I want to highlight them here

as like hey well I'm a big fan of

volatile Nike Swoosh okay we get

Fibonacci retracements in the stock

market yada yada yada I think lending is

actually going to expand rather than

contract that's all fine and dandy I

believe all of that stuff but what if we

actually end up getting up in jobs that

transpires in 2024 well then we need to

be prepared for such a potential

environment where the unemployment rate

skyrockets and everybody sort of has to

ask themselves what are you doing to

make sure that you're going to survive

massive layoff rounds right it's scary

uh now look practically what what is my

thesis of all this well practically I

think that patience is definitely

important for the real estate market my

real estate startup I think is going to

be in a phenomenal position to take

advantage of whatever happens that's

househack we'll be raising from

non-accredited investors probably within

the next two or three weeks here which

is very exciting I can't wait to

announce that go to househack.com drop

your phone number in your email if you

want a heads up otherwise just wait for

the videos househack.com but anyway uh

what's incredible here is I look at this

as okay look it's either soft landing

and we could go do wedge deals all day

long or people start paying excelling

and we buy those deals like either way

real estate startup totally fine

uh from a financial point of view like

financial news media that's already in a

recession every single Finance news

portion has seen you know sort of a

decline which comes with sort of the

cycle that makes sense uh that's not

much of a surprise we've been dealing

with that since the beginning of 2022.

uh I actually think there's probably

more demand now for potentially like

licensed financial services so stay

tuned we've got some announcements

coming up uh maybe even tomorrow by CPI

day so that'll be cool uh so then I also

look at okay what about software well

remember how software Engineers were

potentially complaining about not being

able to find a job that could actually

be accelerated by AI which means on one

hand you could have economic expansion

with layoffs that would be weird right

that's basically AI making certain

programmers more productive but closing

the door to others that would be bad for

people but probably okay for the economy

right you could get through that unless

the sign of these software Engineers not

being able to get work is a sign of a

broader economic pullback I I obviously

don't know yet what the answer is but uh

my take is that we want to pay attention

to this very very closely you should

subscribe for more information and more

updates on exactly this I don't care if

it's bad news or good news I'm always

going to do my best to provide value to

you so hopefully you uh you regularly uh

come back check in on these videos share

the videos I really appreciate you I

just do my best with the data I've got

and I keep looking for more leading

indicators I think those are very very

important and this one not great so

we're gonna pay attention to those

companies as well so anyway thanks so

much for watching really appreciate you

being here uh cheers I got the beautiful

RuneScape cup here and I guess I'm

entering the uh

the Wilderness see what I did there

anyway sorry I had to do that uh hey

when are they going to come out with a

new Splinter Cell by the way and can you

please leave a comment if you're seeing

any of this kind of joblessness or any

issues thanks so much goodbye now I want

you to know this when it comes to AI

time is what's going to make you money

and if you can prove that value to an

employer you'll always be able to be

employed so this is another way of

making sure that you don't get replaced

by artificial intelligence if you can

Master AI by starting on the ground

floor

let's go