HOLY CRAP | Economic STAGNATION is HERE - PREPARE NOW!

hey everyone me Kevin here is the United

States consumer absolutely screwed and

could we be walking into economic

stagnation the answer is yes and in this

video we are going to break down some of

the latest drama from company earnings

and the red flags that we're seeing

their Executives tell us we're going to

go right to the bottom lines first it's

worth noting that today we did get a

negative 306

000 job revision for the amount of jobs

that were added in the United States

over the last year from March to March

yeah it takes them like another six

months to figure this stuff out it's

wild but what does that mean means less

people earning money who can contribute

to the economy and one of the things

that's cropping up this economy right

now potentially one of the only things

are jobs and so a Slowdown in jobs along

with potentially labor attrition

could lead to an even weaker consumer

this isn't even looking at what happened

to Peloton today with another 25 decline

glad we sold them over a hundred dollars

a long time ago it's not to mention

what's happening with a Foot Locker

where their fiscal year guide came in 34

lower than expected leading their stock

to sell off about 30 blaming softening

in consumer Trends we're gonna go even

deeper so let's try to understand what

exactly is going on here and get started

right now a quick note I will shout out

that our trade on TMF is working out

great a couple days ago I sent out a buy

and sell alert as I do every single time

I trade uh to basically go long TMF as

in that's what I was doing I was going

long you know what you do is ultimately

up to you but I send this to all my

course members and that trade is up

about 20 in a matter of just two days

that's basically betting that the

10-year yield drops so we'll keep

playing that we've got other trades

going as well so we'll see how those all

go now let's go jump on into these

earnings figures why not advertise these

things that you told us here I feel like

nobody else knows about this we'll try a

little advertising and see how it goes

congratulations man you have done so

much people love you people looked up to

you financial analyst and YouTuber meet

Kevin always great to get your take

take a look at this this is Macy's and

what's important here is the following

Macy says what we saw is the speed of

delinquencies across all balances

accelerate after q1

primarily in June and July now this is

really interesting because we have had

other earnings calls warn us about June

and July look at Capital One when you

look at spend per customer this has

moderated and is now generally flat from

a year ago and the moderation and

spending appears to be broad based we

observed it across income bands and card

segments we've also seen it across both

discretionary and non-discretionary

categories okay in English they're

seeing people spend less money on stuff

they need and stuff they want and it's

not just poor people or it's not just

White Collar people getting laid off

it's everyone and just wait for the

stagnation argument that's coming up

when you see a corporate executive say

we might be going into stagnation

you better put some red flag antennas up

in terms of how you're investing we'll

talk about that in just a moment but

anyway we've I'm going to continue

reading this because it's impactful by

the way it's not surprising at all that

this would sort of level out this by the

way is an executive way of saying look

you know we had a big boom of course

we're having a return to normalcy so

some leveling out that's fine that is

expected but at what point does that

become self-sustaining we actually go

into stagnation stagnation is not

necessarily a decline but a flattening

and then you stay flat let's keep

reading the consumer pulled way back in

the pandemic just an unprecedented

amount of pullback now this sort of has

come roaring back on the other side that

I think for the individual things are

settling down basically everyone's shut

down then everybody spent a lot now

things are flattening out okay that's

fine is that maybe a leading indicator

of concerns or is it just sort of a

reversion to the meme well TBD we see

here Macy's goes on to say in addition

to this wall of June in July that these

are things that we can't control and

that is the consumer's Health that macro

is really having having an impact on the

consumer and we know that the consumer

is coming under pressure that we believe

the consumer has new realities such as

higher interest rates on auto loans or

credit cards or student loan repayments

coming due now keep in mind I personally

don't think the student loan repayment

issue is going to be as bad as people

expect

it all at once like people expect oh no

students are going to have to start

repaying loans that means somewhere

around 30 to 40 million Americans are

going to have to pay about 383 dollars

more per month and that's going to have

this wall of consumer spending stopping

I don't think it's going to be like that

mostly because the Biden Administration

has enabled people to essentially take a

free loan for the next year now I want

to be clear about what I mean when I say

free loan the Biden Administration has

said you can have essentially your loan

pay interest on it and not make and

actually not make payments on it so owe

interest on it but not make any payments

at all if you don't want to for the next

year so you're still going to owe the

interest so you're still paying interest

so it's not free in the regard of

interest but if somebody came to you

right now and said hey you got thirty

thousand dollars of student loan debt

you don't have to make payments for

another year

but you have to pay interest on it

which means you could delay when you

start repaying for another year A lot of

people are going to take that choice

that is in essence a freely created Loan

in other words somebody comes to you and

is like hey no application fee no

underwriting fee no appraisal fee we'll

give you a loan right now for 30 grand

you don't have to make any payments for

a year on it but you owe interest in the

meantime like eventually you'll owe that

it's not free in the sense that you're

paying any interest but the point is you

can delay for free for another year

essentially right and I'm going to

confuse some people with this because

people you're still paying interest I

come from the loan originating world

where you know as a mortgage loan

officer when we made a loan there was a

charge underwriting fees processing fees

origination fees to create a loan people

just people don't have to pay anything

it's just like all right I feel like not

making payments for another year you can

do that you have that choice with no

impact to your credit and so that's why

I actually believe what will happen with

that group of consumers who are spend

money or potentially not going to spend

money is you'll kind of see this you'll

see this stair stepping down of people

being able to spend that 383 bucks a

month or whatever rather than this wall

that people are anticipating so you have

kind of this slower drawdown of that

consumer spend when it comes to debt uh

and student loan repayments okay great

now what else are we seeing though about

jobs well let's go to runstadt which

actually owns uh you know these these

companies own like the indeed.com the

monsters.com the zip recruiters right

and what do they say they say they're

not seeing demand coming back anytime

soon and they're wondering when is the

demand going to come back for hiring

people and what are what is the CFO here

saying Trends have decelerated

significantly more than we're seeing in

q1 in other words less people are

getting jobs because less people or less

companies are looking for more employees

in fact you're seeing more layoffs

especially especially in the white

collar segments and that really hurts

the job placement companies who can skew

to that office worker rather than just

the Floor Store retail worker right

here's recruit.com and what do they say

our Global HR business is heavily

impacted by the economic environment it

is very important to continue investing

for the future and improving the

efficiency of our business while

conservatively assuming a downturn

followed by economic stagnation this is

the CEO of a hiring firm saying we could

be facing economic stagnation I actually

wrote this down that this is much more

likely than stagflation I don't believe

we're facing stagflation because

stagflation implies that inflation is

still running up and really running amok

well let's understand why I don't think

stagflation is the issue take a look at

John Deere right here

here's a return to normal seasonality

but listen to this importantly this is a

real Testament to our Factory teams and

the real story is around margins right

all three divisions saw lower than

expected production cost inflation as

our operational teams continue to

deliver on Real Cost reduction

activities having eliminated many of the

inflationary and disruption-driven costs

over the last couple years less

inflation than expected a lot less than

expected we've seen material cost

inflation come down meaningfully

throughout the year we expect this trend

to continue what about Walmart Walmart

is worried about the consumer balance

sheet weakening and yes we've seen

inflation and wages go up but listen to

Walmart there are reasons to be

optimistic and employment and wages in

terms of inflation that is we're not

seeing those inflation pressures anymore

but the concerning side is the concern

tumor balance sheet weakening this is

stagnation folks this is flat growth of

of company earnings and revenues not

supported by inflation anymore inflation

going away but an economy that's just

going flat basically which is weird

because you still have the Atlanta fed

real you know GDP estimates coming in at

nearly six percent seems a little lofty

and excessive but let's keep looking at

examples here and then we'll draw some

conclusions here's Home Depot they

literally say inflation has certainly

abated commodity is certainly down

meaningfully from the peak year over

year we don't have increased inflation

now we're not expecting a deflationary

environment where prices are going down

but the cycle of inflation is

essentially behind us these are huge

statements here here's Target

we're happy to see inflation rates begin

to moderate that's going to create some

pressure on our headline numbers because

we can't just rely on inflation to

create some growth anymore right so what

are we seeing across the board here

well we're seeing a very clear and

consistent story we're seeing hiring

slow down this is zip recruiter

employers continue to respond to the

enduring macroeconomic uncertainty with

caution in fact we expect to see

attrition say some of these job

placement firms attrition is basically

where you say hey we don't think people

get laid off but basically companies

will stop hiring so when people leave

because they're done working at the

company or want to move on or whatever

those jobs don't get refilled

that pushes pressure on consumers so I

want to be crystal clear here well I am

over along the stock market I do see

near-term headwinds in stagnation I

don't see them in inflation I don't see

them in some massive breaking like a

2008. so I don't see a 2008 but that's

my opinion you could have a different

opinion and that's okay I don't see

inflation coming back up based on the

data that I'm looking at and and you can

make your own conclusions based on what

you're seeing here but let's talk about

the implications for this the

implications are

and this is my belief we are going to

see

flatness in many S P 500 companies

Consumer Staples companies and

the discretionary of the discretionary

that is like the most choice of the

discretionary companies are going to

have the most pain so it's like your TV

companies your PC companies right the

companies that are really going to win

in a low growth or flat growth

environment I think are the pricing

power companies now I understand those

have had some relative weakness over the

last few weeks as we've had a little bit

of a correction here not a big deal in

my opinion I actually see it as an

opportunity because I think over the

next few years we're going to be in a

stock market that says we need growth at

like any growth we can get our hands on

and where is that growth going to be

well I think that growth it's going to

be smaller than expected don't get me

wrong it's going to be smaller but it's

not going to be in the targets the

Walmarts and the Home Depots anymore or

the John deers it's going to be in the

end phases massive price correction huge

opportunity in my opinion at these low

levels stimulus funding the micro

inverter tax credits it is going to be

in the Teslas the apples the products

that people are willing to go out of

their way for those pricing Power

Products will show the stock market this

is where there is growth in a stagnated

economy everything else I think will

suffer that's why Macy's and Footlocker

are suffering the way they are their

stocks are going miserable why because

the markets will likely shift to a

growth at any cost mentality

that's my belief so again you can invest

differently but let's be very clear I'm

bullish on that segment the growth

segment of the economy because when

everything else goes flat this will be

the only place with a heartbeat in my

opinion so I'm not here saying

everything's great and all Rosy and

perfect

but do I believe in the super bear

narrative narrative that inflation is

going to destroy us the fed's going to

break everything and we're going into

the great reset no I don't believe that

I do believe there are hardships but I

look at this economy and this data

through what I believe is a realistic

lens and that's why I position for

companies I think are going to have

pricing power in a stagnating economy

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