yikes... i didn't expect THEM to go bearish too. BAD.

well this is an unexpected State of

Affairs the market is falling you've got

Bitcoin down to my 575 58 line almost

perfectly this morning the nasdaq's down

over 2.2% nvidia's down 12% since it

reported earnings down just 7% on the

day today but that is still a huge

number what is going on today at the

same time as we've got oil down 3.9 to

4.3% you've got yields down about six

basis points my goodness this is not the

week I was expecting to come back to

especially since I just got back from a

really cool vacation actually at the

Kalahari Resort I I wasn't expecting

this but I have to say we we went in

with kind of low expectations but this

was one of the funnest places ever

here's Jack on this uh this rope course

with me I mean the these places are fun

uh so we had a really good time there #

notsponsored but uh what's going on with

the market right now let's talk about

that because now Tom Lee is also turning

bearish we'll talk about Tom Lee in just

a moment but I want to go through some

of the recession indicators that we've

been building up and I want to be very

clear about my positioning and I've made

this positioning very clear since about

June 10th June 11th I believe that we're

one market correction away from a

recession this doesn't mean I'm

convinced we're going to go into a

recession it just means if we have a

really bad stretch of Market where maybe

we have like two or three months of red

I think we're so close to a recession

that the negative wealth effect of

people seeing their stock accounts

basically lose value and then therefore

they spend less money they go on less

Vacations or whatever that will compress

consumers enough to the point where then

the layoff cycle begins and then we get

the self-fulfilling consumer-led

recession I'm not looking forward to

that I think everything gets harder in

uh in in society and business and

startups and everything when that

happens but look at some of the

indicators we have we have quite a few

so I'm going to rush through them

because you've heard a lot of these

individually before but it's nice to put

them all together sometimes too we know

we've got the S rule that's broken the 0

five level which has

consistently told us a recession was

either here or on its way there have

been very few cases where it hasn't been

accurate uh and one of the cases for

example where it wasn't accurate was

frankly after a recession that happened

right before that you had sort of a

double dip session the uh 102 we're

essentially about to un invert on the

102 which is usually the moment a

recession begins so when you get this

sort of

uninversity of 1990 it's usually coming

out of the inversion which is when

you're closest to the recession it's not

actually the inversion itself you could

see the inversion here in ' 89 the depth

of the inversion in March of' o02 the

depth of the inversion in November of

2006 there was still time there uh just

like our depth was around June of 2023

June July of 2023 we're now at that

uninversity Is This Real gross private

domestic investment growth that is like

the biggest nasty mouthful ever and it's

really hard to track on a chart because

they only update quarterly but I've been

watching the Atlanta fed and they show

that it's negative last read about a

week ago was - 2.4% now it's about

.1 the magnitude of negativity I didn't

notice was as big of a deal though just

that it was negative so when Real gross

domestic private investment growth goes

negative it's usually a sign of

pessimism by businesses and households

you also have the delinquency rate on

Consumer loans well not as high as what

we had in

2005 higher than anywhere before the

pandemic same thing goes for credit card

loans well above where we were before

the pandemic look at architectural

Billings which basically is sort of a

leading indicator Ator of hey you know

they say it's a 9 to 12 month leading

indicator but they say readings under 50

is contractionary and we've been under

50 uh for quite a while now uh sitting

here probably for about a year under 50

at this point and a lot of folks are

concerned that this is a

tell yet just another indicator that

we're knocking on the door of a

recession look at ISM Manufacturing it

really went negative in about December

of 22 it never actually went into

expansion with the exception of one

moment here in March of 2024 and it's

already right back to negative which

isn't great then you look at us

construction spending right back to

negative we can see how when we put all

this together it's just it's icky right

like I don't want to be bearish or come

across as negative I'm just saying I

think there are frustrations building

that can get worse if we drive further

towards a market correction look at just

some of the frustration that we're

seeing amongst Executives look at Dell

for example I wrote this on X shocking

lack of professionalism by Dell's senior

vice president and CEO as well as the

CFO when pressed on AI related margins

that's because Dell is known for doing

server racks as part of their

infrastructure solutions group uh and as

part of that they do uh AI server racks

well the AI server racks are expected to

lose money because they have to give big

discounts to cloud service providers

like The Meta Google uh Amazon to

actually get the business because it's

so it's such a competitive business so

rather than having their usual 11%

margins they might actually be negative

on AI related uh build outs basically

for Server Rex which is bad but take a

look at this an analyst here asks hey

why are AI server revenues declining

quarter over and why is your backlog

flat is it because of Blackwell delays

like what's going on why why are we

seeing bad numbers is it because you

suck or is this like an industrywide

issue and some of the responses you're

getting here are actually more telling

because of the tone and attitude you're

getting from the executive staff look at

this Robert Williams all right you are

all killing me on the multiple questions

here's another one an analyst asked

multiple questions about artificial in

elligence AI server margins and the flat

Q over Q backlog this is another analyst

right here was wsy here you have Ben

because they keep punting the question

like the executives are getting

frustrated because they keep getting the

same answer because they're refusing to

answer the question or they keep getting

the same question right look at this one

so here Ben basically asked the same

question again that somebody else asked

and was unanswered and the response they

get is from the CEO that was the

greatest one question at a time of five

I've seen Rob replies that was classic

Ben in other like they're literally

making fun of the

analyst and then they go on to still yet

not answer the analyst questions look at

the frustration here here's another one

the tone is just

ugly that's what's in front of us and I

think we've said each of the last

several calls and we'll say it again in

this call the margins selling to

Enterprises are better than the margins

selling to our largest customers the

cloud service providers again that

frustration over yeah the AI margins

just ain't that great right and

unfortunately AI is the thing that's

sort of like propping things up right

now it's probably one of the reasons we

didn't go into a recession yet so those

things make me nervous now you have to

add what's happening in China and which

is one of the reasons I think markets

are down today Manufacturing in China

fell to a six-month low in August which

is leading to some of the oil declines

we're seeing which is going to be great

for gas for your cars or otherwise but I

really want you to think for a moment

what does this mean well it means that

we have a Labor Day sale ending this

Friday and we just had a trade just this

morning up

69% I want you to see how I send these

alerts this morning 6:40 a.m. Tesla put

I send out the ticker I send out why I'm

sending uh I'm sending what what I'm

seeing uh and then 701 so 21 minute

trade stopped out up 69 9% those are the

kind of alerts my goal is to always send

obviously I can't guarantee they're

always going to be profitable past

performance doesn't guarantee future

results but my goal is when I see a

trend I send it to you if you want those

Trends make sure you're part of the

stocks and psychology of money group we

have uh the price increasing this Friday

and uh yeah this weekend I didn't really

pitch or do much at all because I was

just playing with the kids so sorry

about that we had a fantastic time by

the way really really enjoyable time at

Kalahari it's kind of like a cruise ship

on land which is really cool but anyway

I want you to think about this the

problem with China's manufacturing

slowing down is yes oil prices go down

which is good we expect OPEC production

to pick up in October fantastic but the

problem is when Chinese manufacturers

are starting to go broke as The

Economist has told us manufacturers may

start dumping Chinese manufacturing

prices leading to manufacturing

disinflation or straight up deflation

this is fantastic for companies that

manufacture in China like Tesla the bulk

of Tesla's car manufacturing is in China

however it makes every Factory that

isn't in China much less competitive so

the US version of Tesla Texas or Fremont

much less uh you know much less

productive basically uh look at

Volkswagen for the first time in I think

their 87y year history planning

potential shutdowns of their factories

that's bad that leads to an increase of

joblessness potentially in America as

American manufacturers are not

competitive European manufactur as they

don't become competitive against the

freaking out Chinese manufacturers and

so what do you end up having a lot of

joblessness what you're basically doing

is you're killing jobs in America and

Europe and you're trying to give jobs to

China where it's cheaper to manufacture

although those jobs will pay a lot less

it's not great now I understand

September and October are seasonably

very volatile they're usually very good

for bonds which is something I've been a

big proponent of for a while uh really

since about July uh and not so good for

stocks of course we are also going into

the election which is usually a terrible

time uh for for stocks going right into

an election and usually ABS a recession

we recover right after the election this

is why I personally like the idea of

more cash more bonds and go into the

election evaluate how data comes in over

the next few months obviously we got

jobs data coming again this week but I

don't think that's very useful I don't

think it's a leading indicator I think

it's a lagging indicator but once you

start getting this this unemployment

cycle the lack of investment the

unemployment cycle that's when things

just rapidly hit a wall and I'm worried

that this Chinese manufacturing slowdown

is going to hit us as well keep in mind

we just got manufacturing data and it

wasn't good ISM Manufacturing missed

again on manufacturing so manufacturing

came in slower than expected and prices

paid came in higher than expected which

is the worst of both scenarios and

construction spending came in at

negative .3 versus .1% positive expected

which is bad so I actually moved myself

on the bare bull scale down to a 3.1

versus a 3.3 that I was just a few days

ago so I've been sort of bobbing around

between 2 and 1/2 and 3 and 1/2 for

about the last month and it's not

because I want to be a bear it's just

because of what the data is showing and

so it's kind of interesting that now all

of a sudden you've got Mr Tom Lee who's

also like yeah the next seven to eight

weeks might suck I agree I actually

think the next 7 to8 weeks will be a buy

the dip opportunity if we don't indicate

a recession but if we indicate a

recession right before the election I

don't know that you want to even buy

that dip so obviously that's where we're

going to listen in and stay tuned and

pay attention but let's listen to just a

minute of this here this is one of those

where investors need to be cautious but

the back of their minds no this is a

strong Market how far down on

10% I think that 7 to 10 is possibility

and we've already had two 7% Corrections

this year so it's kind of it's been

testing investors patience but I I think

you know I think it should we should

expect

turbulence there you go should expect

turbulence 7 to 10% correction he

doesn't think a 2% drop is worthy of

buying wait for that at least 5% drop uh

I don't disagree with him here I

actually think going into an election

that's probably a very very easy call to

make that you're going to have

volatility going into the election

people and especially the stock market

absolutely hate uncertainty so very very

common very very normal uh the question

is will the pain of the next six weeks

push us into a recession again because

of the negative wealth effect of the

market selling off leading to worse

earnings for Q3 and in October when we

report Q3 earnings if we get companies

that are freaking out we could actually

accelerate the downturn in markets and

truly push us into a recession anyway I

try to be my I do my best to be balanced

out here really appreciate all of you do

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one thanks so much goodbye and Goa

advertise these things that you told us

here I feel like nobody else knows about

this we'll we'll try a little

advertising and see how it goes

congratulations man you have done so

much people love you people look up to

you Kevin PA there financial analyst and

YouTuber meet Kevin always great to get

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