-34% Crash Coming | Near-Term Warning

Today I'm reporting on bare fodder. So

if you think somehow that's part of my

daily flip-flop, I suppose that's your

problem since we're covering what the

financial news media is talking about

and we're still a bit under the weather.

But the good news is we have a

Transformers coffee mug today. So what

could go wrong? Well, the QES could go

wrong. Q's are negative today. mentioned

in the alpha report today that there was

a high likelihood in my opinion that

maybe we'll see a deadcat bounce on uh

FICO which we did but that the Q's

probably wouldn't continue their rally

or momentum stocks wouldn't continue

their rally today because of Nvidia

nervousness that's exactly what happened

yesterday we were enthusiastic about

coreweave it skyrocketed today we're not

so optimistic on calls and things were a

little soft who knows maybe the alpha

report is driving the market and if you

want it you should sign up before Friday

you know Why? But that said, let's look

at the bare fer and get it out of the

way. Of course, people are going to be a

little hesitant today to get in on those

yolo weekly call options because well,

you got to wait for Nvidia earnings. We

already talked about my expectations for

Nvidia earnings yesterday and see that

in the morning meet Kevin report that we

posted, although it was posted a little

later yesterday. But

anyway, the bare fodder today is that

the median bare market going all the way

back to the Great Depression is 14

months long. And during that 14-month

period, there are multiple periods of

clims in markets that almost make it

seem like that the reasons for a bare

market don't exist. and they lull

investors into what reporters call and

analysts call a false sense of security.

That going all the way back to the Great

Depression, bare markets have witnessed

an average decline of

34%. And it's extremely rare for bare

markets to be extremely short. Well,

this last bare market has been very

short. We had a bearish market really in

about for March and much of April. Al

although by about the second to third

week of April, we were already on sort

of rebound mode. That's when we started

talking trailing stops and those have

basically just been killing it because

it's been going straight up. That said,

enthusiasm could potentially be momentum

based. Why is that? Well, it's because

remember that markets are all about in

the long term weighing out those

fundamental earnings. Jamie Diamond from

JP Morgan tells us, "Hey, hey, you got

to be careful. Markets are pricing in 5%

earnings growth this year. That's down

from the previous earnings growth of

around 10% that markets were expecting

for the S&P 500. But Jaime Diamond's

base case scenario is 0%. Now maybe he's

just a bearish shill and you shouldn't

listen to him. But if earnings actually

have a mild decline, according to these

analysts over at Duneberg, a 5% decline

in earnings for the S&P 500 for this

year could drag the S&P 500 back under

5,000. Now, right now, the S&P 500 is

trading for

5,900, which suggests that if we go to,

let's say, 4,900 divided by 5900, we

have another 17% drop. But that's in a

5% mild fall scenario. What if earnings

fall more than that? Are we being lulled

into a false sense of complacency? After

all, it's initial relief rallies like

this that could lull us into investing

more into markets at potentially high

valuations and getting more exposed to a

potential fall or tariffs are no factor

and everything will boom again. Well,

this is where we could take a look at

some of the data that we've started

getting over just the last few days and

see some of the trends that are going

on. So, we can kind of get an early look

at, okay, well, where do we maybe sit?

Take a look at this. So, the Richmond

Fed right here on the 3month moving

average for employment does show this

sort of postTrumpian boom, but you've

started to trend back down. Now, it's

too early to say that this fall in

employment is going to be long lasting,

but I'll tell you, when you combine it

with the conference board, the

conference board, at least the survey of

of consumers at the conference board,

with bullishness being noted as picking

up before May 12th and after May 12th,

which is interesting because that was

the day of the China tariff roll back,

the conference board suggested that

overall people were more anxious about

affordability, so prices, than job

security. Now, that's really interesting

because half of consumers said they're

concerned about not being able to buy

things they want or need, but just a

quarter are worried about losing their

jobs. Is this potentially a risk where

people are being too blas about the risk

of losing their jobs? And while they're

ignoring the real potential that yes,

either AI could replace their jobs or

some kind of S&P slowdown could replace

their jobs, what are they going to do

with their money in the meantime? Well,

compare it to April. Purchasing plans

for homes and cars and vacations have

increased notably with significant gains

after May 12th. Plans to buy big ticket

items including appliances and

electronics were also up. Likewise,

consumer intentions to purchase more

services in the months ahead with almost

all services uh service categories

rising based on their intentions with

dining out remaining amongst one of the

top spending intentions followed by

Netflix sorry um that says streaming

services while plans to spend more on

movie theaters, live entertainment and

sporting events increased the most

hugely bigly over the last month. So, in

other words, stalk market back up,

everybody go back to spending. And no,

we're not worried about losing our jobs.

Everything's fine. Ooh. Is that

potentially the exact contrarian signal

that you need to start going, "Ah, crap.

If everybody's going bullish again and

everybody thinks we're going to the moon

forever and everybody's going spending

again and they're not preparing for job

loss, is that spending going to

materialize in higher earnings or are we

going to see the ulting of the S&P 500?

All right, the ultanging that just

refers to this morning in the course

member live stream. We like doing a

fundamental analysis at least once a

day, every single day. Uh, and just a

quick little

spoiler, Ulta is really surprising

because they only grew their revenues

7%. Across the business while they added

4% in stores, topline revenue was up

like 78 or 78%. Which is crazy because

you added 4% stores, your topline

revenue only went up 78. Your comp sales

were also only up.7. That's basically

flat. And so it makes you wonder, is

there potentially a big sideways

movement to come or worse? I don't know.

But the conference board, take a look at

this. Conference board suggests that

based on consumer short-term outlook for

income, businesses, and labor market

conditions, we surged 17.4% to 72.8, but

remained below the threshold of 80,

which ding ding ding typically signals a

recession ahead. Very interesting. Well,

when we look at the Texas services

activity, we're still in a modest

decline. So, we're still in decline for

services. We had the same thing at uh

manufacturing, we had a vision business

conditions continued to worsen in May.

Uh and then, of course, you had a

similar kind of continued worsening,

although not as bad as April at the uh

Richmond Fed data, which came out this

morning. So, it does sort of make you

scratch your head and go, "Oh, man." you

know, are people getting a little blaz

with the stock market and risk on

attitudes? And obviously, the answer to

that is, of course, of course, it's

entirely possible. This is why I

advocate to everybody set trailing

stops, you know, and it doesn't have to

be on your entire portfolio. I'm not

saying paperhand your entire portfolio.

If you're in margin, if you're in credit

card debt, please set some trailing

stops. take money off the table when we

have that next fall because it's not a

matter of if we're going to have the

next fall, it's a matter of when. And

here is some data from some folks who

say, "Look, historically, absent the Fed

bailing us out, these sort of bare

market rallies don't last. Maybe this

time's different." The data that we're

getting still suggests both weakening

and slowing, which could suggest weaker

earnings by the end of the year. And we

haven't seen tariff impacts yet. That

said, is it possible, like we talked

about yesterday, that the only reason

we're seeing 27 weeks unemployed go up

is because of artificial intelligence?

Sure. But it's also possible it's a

combination of factors. It's AI plus

slower growth and weaker earnings, which

could induce that recessionary cycle,

which I'm most worried about. How do we

get jobs out of the next recession?

That's the biggest like lifetime call I

feel like right there is how do we

actually get companies to hire again

once we go through this next AI

recession. That's going to suck. Anyway,

if any of this makes you nervous, always

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Uh, we got about 13 mil to go shopping

and, uh, go developing the rest of this

year. We're going to, uh, post a lot of

development videos, so stay tuned for

those as well. And, uh, yeah, thanks so

much for considering House. Thanks for

watching the video, and we'll see you in

the next one. Goodbye.