A Recession is Imminent.

a large firm on Wall Street just

released a document titled A recession

is imminent I'm going to go through the

highlights the most important parts of

that 18-page report with you in this

video but first we're going to take a

look into what Donald Trump actually

said because right now almost every

mainstream News company whatever is

running headlines saying Donald Trump

refuses to rule out potential recession

risk what I'd like to do is actually

listen to what Donald Trump says and

then comment on potentially what he

means and then let's get into the

recession risk document here's the

actual interview from Fox where the

interview actually occurred so we don't

have any overlay of another company

throwing in their Cuts I want you to

know this first portion over here you

can watch as well and at the beginning

about 1 minute in he does talk about how

a tax bill is coming an incentive bill

is coming uh and that we want to see

lower taxes in America and that could be

a Tailwind to the economy The Wall

Street Journal reviewed this video and

they didn't mention anything about those

potential tax benefits or anything about

the good they only referred to this last

two and a halfish minute clip so it's

worth mentioning that it is also worth

balancing that hey it does take a while

to get tax plans through Congress

because as we all know Congress is

frustratingly

slow let's get into what Trump just said

what you said and I want to ask you

about Ukraine and the blow up the other

day with with zalinski let me stay on

the economy for a moment because there

are rising worries about a Slowdown

you've got the Atlanta Federal Reserve

saying we're going to have a contraction

in the first quarter look I know that

you inhered a mess and you said that the

other only been here are you expecting a

recession this year um I hate to predict

things like that there is a period of

transition because what we're doing is

very big we're bringing wealth back to

America that's a big thing and there are

always periods of it takes a little time

it takes a little time yeah quick

interjection this is where a lot of

folks say all right you don't bring

wealth back to America by taking the

stock market out of uncertainty but

that's not what Donald Trump is

specifically referring to in fact Donald

Trump and letnik they argue they're

they're just blind to the stock market

that they don't watch it that this isn't

part of their their goal instead part of

their goal is rather to try to force

companies to come to America uh in

manufacturing America but as you'll see

in the the BCA research piece in just a

moment this becomes really complicated

because when you issue tariffs and then

in this video you're going to see Donald

Trump threaten even more tariffs you

know people are looking for Trump to

walk back tariffs he's threatening more

tariffs in this video uh BCA research

says look trade isn't black and white

it's not like hey okay okay you want to

buy this little $5 calculator from

Canada uh tariff you know 20% uh it's

even if we make the chip in America we

often send our chips that are made in

America to Canada for testing and then

back to America and then of course

people like all right well they test in

America that's fine but that's just one

tiny example of an intermediate trade in

other words an item that crosses the

Border potentially multiple times but

before it becomes a final product uh and

to rebuild Supply chains that have been

built over the last decades under NAFTA

and

usmca is very difficult it doesn't

happen overnight so I know Donald Trump

talks about bringing wealth back to

America because this his protectionist

view is we want to bring more jobs to

America the downside though with that is

that we have built decades worth of

infrastructure on free trade not on tax

trade and so that is what creates

problems in the near term and Donald

Trump is acknowledging this he is he is

like I'm happy he's not pulling the

lutnick and going yeah we're never going

to have a recession again you know

everybody's got a stock app on their

phone stock market only goes up I know

that's a thesis that people have out

there but it's also not realistic

related to the business cycle I'd love

to say hey yeah no there's no chance of

recession but I actually think that

Donald Trump takes a reasonable answer

here because yeah recession risk is real

and you'll see in the BCA research piece

in just a moment it's intense but I

don't I think it should be great for us

I mean I think it should be great it's

going to be great ultimately for the

farmer you know don't forget I made the

deal with China on a farmers where they

had to buy $50 billion worth of product

50 billion from 15 to 50 did they follow

up and do it they did it when I was

president what happened is when Biden

was President they didn't buy any longer

yeah because there was nobody to call

them I used to call President she I said

you got to do me a favor you got to you

know live up to that agreement and he

was great he did before you came into

the Oval Office the first time you were

a very successful businessman very

successful that's all related to the

2018 tariff War by the way that was a

great by the dip opportunity uh so I

just want to be transparent about that I

covered the 2018 trade Wars and what was

going on with the Federal Reserve at the

time but remember 2018 was a period of

time where the Federal Reserve was

actually also raising interest rates we

were moving up to oh my gosh 2 and 1 12%

in quote quote unquote normalizing

interest rates you got tariff

uncertainty uh and then at the end of

the year when there was a shock because

the market was just pissed and selling

off because rates were moving up uh we

actually had a crisis in the bond market

for a moment uh Jerome pal said we're

done we're done raising rates and you

sort of got the Powell put as we like to

say where Powell kind of saves the day

uh and and you had recovery again in

2019 so that 2018 experience was a great

by the dip opportunity that said we also

weren't

building uh the levels of uh recession

risks that we're seeing now we didn't

really see recession risks until Co and

obviously that was uh a quite a unique

shock let's continue real estate

executive and a lot of people said oh

this is the business president this is

it he's watching the stock market he

knows all about you know he doesn't want

the market to go she's purposefully

saying that line he's watching the stock

market when reporters do that it is a

cue to the interviewee to respond to

specifically that but they're doing

they're smart Fox is smart they want

Trump to keep coming back because we

know that fox and and Trump have

friendly relations so they're trying to

softly like please say something about

the stock market go down and now we've

got tariffs and the market has been

going down um well not much I mean in

offer it's not you you said look we're

going to have a disruption but we're

okay with that is that what you me I

guess it depends which stock you're

referring to Tesla like 50% the stock

market going down was the disruption

what other disruption were you alluding

to look what I have to do is build a

strong country you can't really watch

the stock market if you look at China

they have a 100e perspective we have a

quarter we go by quarters that's true

and you can't go by that you have to do

what's right what we're doing is we're

building a t this by the way is a a

great argument that people like Steve

Jobs also took which was look we're even

Warren Buffett takes this mentality

we're not not a quarter to quarter based

company or country right we have

long-term goals that's what Donald Trump

is trying to convey here the downside of

that is it does mean Donald Trump isn't

going to be affected by this sort of

Atlanta fed you Atlanta fed's super

sensitive okay like yes it's bad we

covered all the details of it but we

know it's very very volatile you get two

good reports like good reports pops

right back up I'm not saying I I can

predict what's going to happen with that

Atlanta fed reader but it's a very

sensitive ometer that's said uh yeah I

mean this this is a fair argument

tremendous foundation for the future

tremendous Foundation everything's been

taken away we don't make ships anymore

we don't you know you just saw one of

the biggest ship builders in the world

one of the biggest shipping people in

the whole world in the Oval Office with

you in the Oval Office he's announcing a

20 billion investment in the United

States which he would have never done

except for this but look at this Honda

Toyota they're all coming in you you

take a look at what's happened the

chipmaker the greatest chip Mr wayy the

biggest in the world by far is going to

spend $200 billion on making a massive

plant to make chips so that's your

message build it here build it here

there's no tariff yeah the the the

public companies want to make sure that

we have Clarity after April 2nd when

those reciprocal tariffs go in is that

it are you going to change anything

after that will we have Clarity you'll

have a lot but we may go up with some DS

it depends we may go a lot but we may go

up with some tariffs it depends we may

go up I don't think we'll go down but we

may go up see I like this idea of uh you

know building in America if if we could

do it better uh a lot of manufacturing

has gotten really good in other parts of

the world and that is why it is is

difficult for for people to say okay

yeah we'll do it in America but they

show up in the White House they say yeah

I'll I'll do a deal and they promise

this you know number you know and then

of course if there's a recession they

won't actually do that number but they

promise a number to get on Trump's good

side Trump can make the pr announcement

they didn't actually spend a dime yet

and then they get favors to you know try

to make that make Financial sense for

them fine but it also has to make sense

for us to manufacture certain things in

America we just can't do it all here

because things would just become

substantially more expensive the bigger

problem here is Donald Trump's comment

that oh they're not going to go down

they might go up

this is him negotiating with the other

countries but the stock market don't

want to hear that right now and but you

you're have there plenty of clarity they

they just use it that's like almost a

sound bite they always say that we want

Clarity

look our country has been ripped off for

many decades for many many decades and

we're not going to be ripped off anymore

on the tariffs what are the automakers

going to do for a month I mean you say

you wanted to help American Auto I did

you spoke with the a transition period

okay and it's a transition into April

and after that I'm not doing this I mean

I told them I said look I'm going to do

it this one time but after that I'm not

doing it they called me and they wanted

help during this little transition

period And I gave it to

them boom okay

so not helpful for the stock market

today but that's okay you know Donald

Trump himself said the goal right now

isn't to care about the stock market

okay well I mean just obviously keep

that in mind as as an investor but here

are the bigger problems let's look at

BCA research all right I'm just going to

give you the tldr on this okay first

recessions often begin when an economy

becomes vulnerable to a downturn and

then a shock all right something I've

talked about on this channel for a very

long time is the difference between the

10year and the two-year treasury yield

those don't like the the spread between

those two numbers doesn't Skyrocket

until you have a

shock when the economy starts slowing

down that's when you are vulnerable to a

shock and that's when things move very

very rapidly so I want to mention this

recessions don't come slowly they hit

hard and fast the market gets hit before

you even realize it's

come and by the time the worst is in

everybody's screaming recession the

Market's bottomed and you're already

recovering like the stock market tends

to recover three months before the end

of a recession

so there's an interesting timing thing

here where you you are going to have

some really incredible buy the dip

opportunities I want to I'll make a

video on

redin being acquired by rocket mortgage

but I think it is the wedge deal of the

century this is such a brilliant

acquisition H like this is the stuff I

want to do with house hack like that is

so smart buying redin uh because it's

like the worst time to run a a real

estate broker style Lending SL website

worst possible time and we'll talk about

that in a different video anyway us is

at the greater risk of recession than it

was in early 2022 why because people had

excess household savings then they don't

today job openings were plentiful they

are not today and you could refinance

low you can get cheap debt can you today

no okay those three things they say has

basically worn the insulation low on

this economy consumer confidence is nose

diving job layoffs are up new home

inventories are elevated all right in

other words in overbuilt areas there are

a lot of homes so in overbuilt areas you

might see prices come down all right

well we've known this was likely for 2

or 3 years already confidence goes up

and down it's a very volatile needle job

layoffs going up that's a problem now

part of this is due to Doge but they

mentioned this fancy thing called the be

Beaver curve I'm not going to explain

exactly all the details of this right

now but basically it is it is at a

Tipping Point the only thing holding the

beaver Ridge curve up right now which is

anything that changes on the layoff side

at this point pushes up the unemployment

rate almost one for one we're at the

Tipping Point of that curve pushing

unemployment straight

up the only thing that's been

missing the only thing been layoffs 27

weeks unemployed are elevated uh you've

got a lack of job openings you've got

Inc uh you know lowering of Labor quits

which is a sign of Market uncertainty

when people are confident about getting

a job uh they don't quit uh or sorry

they're more likely to quit when they're

nervous about getting a job they don't

quit because they don't want to lose

their money right they'll hunker down

and wait for a bit this will be a

terrible time to quit uh you know unless

you had some other crazy source of

income because you're going into a crap

job market right this is why I said to

the to people taking those layoffs at

Doge I'm like if you're going to do it

find a job ASAP because you don't want

to be the last person in line trying to

get a job somewhere else anyway so so

this is bad right okay uh now we don't

currently yet have a recession uh at

least according to the NBR signals most

people I see you in the comments I see

the pain okay I see it um they're like

where we've been in a recession we're

already in a recession these are at

least the metrics for this uh you know

whatever these are like charts who who

cares okay but basically could we turn

into recession yeah absolutely are we

there right now according to those

numbers and those charts no fine who

cares it's it's paper it's Wall Street

what about this oh this tariff thing is

going to be a little disruption okay

this is where they talk about the

intermediate Goods section I already

explained this uh you know about 10

minutes ago in this video but they talk

about the supply side impact of higher

tariffs could turn out to be quite large

this is where they say more than half of

trade in North America is based on

intermediate goods and here's where they

talk about uh you know testing

semiconductors uh in China or the

relations that we have with Mexico and

the halfhazard way that we're sort of

applying tariffs and like are we going

to get fewer tariffs are we going to get

more tariffs that creates a lot of

uncertainty for a very delicate uh

economy and in an uncertain time they

also talk about how because of tariffs

inflation is likely to overshoot

slightly in the near term especially

with inflation expectations going up

putting the FED in a place where the

fed's going to go yeah no we're not

doing anything everything's fine which

is exactly the opposite of what the FED

should be doing because they're going to

stall us into a depression a

deflationary spiral with 20%

unemployment and robot taking over the

world making it even damn harder for you

to get your job after you lose

your we don't have to get chill Kev

chill the higher tariffs will

temporarily push up inflation which

keeps the FED on hold okay what else

cautionary

savings they argue that $1 of a decline

in income is likely to decrease

aggregate demand by more than $1 this is

basically a way of saying when

uncertainty goes up and people are

nervous what happens in the economy is

they see sales down a little bit one

month and then they're like okay well so

let's make an example here let's say

you're selling lemons uh you know

lemonade and your your net profit every

single month is $2,000 and then the next

month your net profit is $1,500 so

you're down 500 bucks you might go out

and you know spend in restaurants or

discretionary spend or whatever the

equivalent of $1,000 less even though

you only took in 500 less you're like oh

oh crap and that oh crap when the

economy does that really really easy to

slip you into a recession on top of that

Financial conditions have not tightened

yet which is actually bad now okay

Financial conditions is a tough one I'm

going to explain that in just a moment

but then they talk about kir your

enthusiasm like European stocks are only

up because of the pull forward of

tariffs uh and you know we had a lot of

pull forward of front running in the

stock market because of trump coming in

blah blah blah blah blah okay they

recommend selling stocks fine this is

BCA

research Financial conditions okay this

is this one's a little more complicated

think of financial conditions as a

banker's willingness to lend to you all

right so let's put this as simply as

possible you run that Lemonade Stand

today you go to the bank you're like I

want $100,000 loan bank's like no

problem okay now you go into a period of

economic tightening contraction concern

uncertainty tariffs blah blah blah blah

hey I want a loan for $100,000 hell no

we ain't doing loans right now you got

to be kidding me we're a bank you think

we do loans it's like yeah that's

literally what Bankers do nah no no no

no no no no come back to us in a few

years or you know like sure $5,000 loan

right so it could be the availability of

loans but it could also be the size of

lending that gets crushed so that way

even if interest rates come down your

availability to get credit can collapse

now this is actually a personal warning

to folks and what I recommend people do

and this is not personalized Financial

advice but generally if you own a home

right now and home values are high in in

your area get a home equity line of

credit now yes rates are high but you're

not going to spend the money don't spend

the money yet just open the damn line of

credit it cost you like a hundred bucks

a year it's not a big deal but if you

open a line of credit for $100,000 let's

say in the equity on your home and

you're not spending any of that money

you have the capacity of writing a check

okay if home values come down you will

still have that $100,000

line yes they can freeze lines these are

rare things that could happen people

then often take that money and just put

into a savings account right they pay

the interest for a little period of time

uh and then they collect it in

savings but uh establishing it is very

interesting because if you do go into a

crisis you have something to pull from

whereas if you are in a crisis it's very

difficult to establish that credit

because Financial conditions type all

right there you have it that was a long

one uh but honestly I think this was

chalk full of information and this

should give you some insight into why

the stock market's like man this sucks

it does suck U but anyway I'll bring you

more updates as they come out so I'm

back in the studio I'm super happy to be

back I miss you all we'll see you all

soon bye good luck why not 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 go congratulations man you have done

so much people love you people look up

to you Kevin P there financial analyst

and YouTuber meet Kevin always great to

get your take