The Worsening Recession & Fed Pivot Stock Crash [-50%].

well folks don't sue me bro but we know

it's on everyone's mind and yeah I

pressed the music button a little late

but you know what we've all been worried

about a recession and in this video

we're gonna go through some unique

recession indicators there are two there

are two indicators in this video that

you probably haven't heard of before and

then we're gonna look at a B of A piece

on what just happened with something

called thrust in the stock market

something we briefly touched on already

but with a different perspective here

from B of A so let's talk about those

three things the first thing that I

thought was incredible was this piece

here by TS Lombard now keep in mind when

you hear TS Lombard you should

immediately be thinking bear okay they

are Burrs their entire staff I don't

know what it is but they're just Bears

just like it's getting crashed it's

gonna get worse it's it's all getting

good at crap but for some reason they're

also very balanced so I like them

because they they actually give some

realistic povs of things to watch for so

I appreciate that you know they make it

very clear that their stances look the

credit crunch is going to probably crush

us into a recession okay fine however

they're also reasonable here and they

say hey look when you look at the U.S

inflation dashboard basically on the

left when it's very rare red it means

inflation's going up and on the right

when it turns blue it means inflation is

going down and as you can see it's

starting to Trend down right so so

they're realistic they're like okay

things are getting better that's

wonderful things are disinflating great

uh and uh and uh they hold they still

hold their mid-year recession forecast

but take a look at this particular chart

I thought this was a very interesting

one that I haven't considered at all yet

when it comes to a recession or not and

it's called The Well the title here

chart four hotel room rates not yet

signaling a recession and I thought

about this a little little bit mostly

because of Ross Gerber every time I meet

Ross Gerber and I just met Ross Gerber

in Deer Valley Utah

and Ross Gerber I sit down with him uh

as he's eating lunch with his family and

he's like Kevin there's no recession

look around

I'm like it's pretty busy when we were

there uh but but it made it reading this

chart right here made me think about my

meeting with Ross because to some extent

yeah when you're in a recession hotel

rooms tank and that hope because people

travel less for vacation and people

travel less for business this makes a

lot of sense so in a weird way maybe

you could look at the CPI report as a

tool which is actually doing a really

good job for you I mean if you believe

the government's work to that extent if

you don't then obviously it's CP lie but

anyway every month they are looking at a

basket of hotels and they're looking at

the difference in pricing of those

hotels and so far as you can see on this

chart Hotel pricing is still recovering

pretty well now it's possible that it's

recovering because it went so deep into

a hole but then again we've already had

this recovery fall and then recovery

again see we actually went negative on

this chart without having a recession or

an official recession yet technically

last year we already had a recession

right let's jump over here to the CPI

report because we had two quarters in a

row of negative GDP jump into the CPI

report what do you have here lodging

away from home let's understand the

headlines of the CPI report really quick

so we're going to look at the right

three to get our seasonally adjusted and

then the left two to get are unadjusted

so if I type in lodging there we go so

these are going to be the seasonally

adjusted right here that's your essay

and these are your unadjusted okay good

so what do you have well unadjusted you

got you got some big numbers here for

lodging away from home uh these

percentages seven point that's got to be

year over year hold on a second let's go

back to the front of the CPI report

and the yeah these are year over you oh

okay it's year over year and then month

over month unadjusted okay got it

I'm gonna say all right so we jump on

over here well that's actually still wow

what no that can't be possible hold on a

second they both have to be year over

year am I reading this wrong

no I'm not look at that unadjusted

percent change March 22 to March 23 and

then Feb 23 to March 23 which is a one

month change and uh the CPI report here

on the unadjusted side is really

suggesting lots of inflation over here

on the unadjusted month of a month but

either way on the right you can see on

sort of the seasonally adjusted yeah

you're still getting this explosion I

guess it makes sense 2.7 percent growth

in lodging away from home month over

month I mean think about what that is

annualized 2.7 annualized is a 32.4

percent increase uh on a year-over-year

basis if that lodging away from home

goes on like this and you can see look

it's actually getting worse if I draw

this as an orange highlight right here

look at that we go from 1.2 to 2.3 to

2.7 the prices for hotels are going up

not down

that's very interesting because

according to T.S Lombard that's

literally the opposite of a recession

indicator where generally when you go

negative deeply negative on hotel room

pricing that's when you tend to be

starting a recession now it's possible

that you're already in a recession when

hotel rooms go negative in fact if I

look at this a little a little more

closely you can kind of see here the

recession on the left in 21 or 2001

starts here just about where hotels are

about at that zero point the recession

here has an inflection point first on

hotel rooms so you do see an inflection

point down right so you see an

inflection before you get the recession

you don't actually get the depth until

you're in the recession but look at that

even over here during the covet era you

see the full a few months before so

really this is suggesting hey in order

for us to go into a recession we need to

at least see hotel room occupancy on CPI

report for April May June we could get

those three months and if all of a

sudden we get that in hotels it could be

a recession indicator

kind of interesting it's a good tool to

pay attention to it's not the only one

though the second one and then we'll get

into B of A the second one I want to

look at is this uh oops it's not that

one but I'm going to talk about that one

as well that one's pretty cool this one

all right so this is from the greed and

fear index which is a Jeffrey's piece

and uh they talk about how small

businesses have slowed hiring plans to

the lowest level since May of 2020 and

when we look at this index over here I

drew red lines on it to make it a little

easier to identify these areas of

declines but you can clearly see small

business hiring goes down very slowly

and it tends to lead to a recession when

it goes down now In fairness it really

led to this sort of mild

nonsensical recession over here in the

early 90s but

it does appear that every time you have

the small business hiring plan turned

from growth to Bear mode you do go into

recession and that's what we're starting

to see over here on the right we're just

now starting to see this small business

hiring plan rotate down it's still way

elevated though because if I take the

bottom of where we are with with small

business hiring plans

draw that across the board we're still

we're still I would say the upper third

of the historical average of this chart

right I mean if I uh draw across sort of

a midpoint over here this right this top

section here would be the top third this

would be your middle third and this

would be your bottom third here and it

we're clearly still at the top third but

that's because of this massive

enthusiasm that small businesses had

during the uh covet era uh probably

because uh you know of all the stimulus

money I mean starting a business in 2020

and 2021 was great

here's your small business survey on

wage hike plans and you see a decline on

wage hikes but again if I draw from that

low Point all the way over we're

actually sitting probably at the top 15

of plans plans to raise wages uh small

business optimism is one of the only

things where we're actually starting to

go low along with small business cap X

plans which you can see these two charts

here are at relative lows these are

probably in the lower 20 percent uh

threshold so you kind of have mixed

signals here from small businesses where

everything is clearly declining right

capex and optimism plans are down uh

wage hike plans are down hiring plans

are down however hiring plans are still

uh at highs when you look at the early

2000s or the mid-2000s so I think both

of these indicators together suggest

that we probably still have more time to

go go before we're in a recessionary

environment now Barclays did a

phenomenal piece here on what happens

with stocks in various different

circumstances of uh of basically um

recession or not

and I'm going to show you this in just a

moment but I want to think about what

these what these charts are saying for a

moment so a quick signpost here

really what I think

a lot of the data that we're getting

today is saying uh is first of all don't

sue me bro but second of all is patience

that has probably been the hardest thing

for me to like learn over the last years

because everything's always been so fast

and uh since the beginning of 2022 back

in that January when I sold and then you

know obviously later I started rebuying

and then I launched an ETF and a real

estate started myself overall that time

I the biggest thing I learned is like

this like these Cycles take a lot longer

than we think and yesterday there were

actually some calls that we might not

see a recession until 2024 and so what

feels weird is it feels like we keep

kicking the can down the road I mean

yesterday in the course member live

stream we briefly went through some of

the JPM numbers and I'll tell you those

JPM numbers without going through and

rehashing all of it now the GPM numbers

were amazing I mean yeah average

deposits were starting to move down a

little bit a lot of that has to do with

people moving money over into money

markets but credit card and debit card

data is still up substantially lending

is up revenue is up I mean JPM was

absolutely destroying it I still don't

want to be involved with JPM but when

you look at credit losses you're

actually seeing credit losses decline at

Industrials like Fastenal you're seeing

credit losses decline like the rate of

growth of credit losses they're still

increasing in some cases but they're

barely increasing uh JPM barely

increasing credit losses I think one of

the only places that I've actually seen

increased credit losses has been CarMax

but then again you're dealing with used

car buyers who are more likely to be

subprime uh which is bad credit score

right so overall I have to say like you

know here we are in April we could

potentially have another year of no

recession I'm not saying there won't be

a recession it's just we keep kicking

they damn something down the road the

more we kick it down the road the better

though because the more we kick it down

the road the more the cancer of

inflation is potentially negative and we

just go back to cranking the money I'm

not saying that's exactly what we want

because we don't want to just repeat

this over and over and over again and

end up with three waves of inflation

like the 70s right but I already

debunked the three waves of inflation

yesterday you could type into YouTube

Three waves of inflation me Kevin you'll

see what but look at this

this is really fascinating equities on

average continue to rise after the last

fed raid hike oh wow that was

interesting look at that here's the end

of the hiking cycle that middle line

right there you get some volatility

going into it but on average it looks

like most equities tend to rise slightly

after the last Fed rate height however

on average you tend to get a fall on

average after the first cut now

obviously I've made the argument many

times before that the reason the FED is

would it cut is because the cancer of

inflation is gone they're not going to

cut until that happens and in my opinion

there's a chance the stock market could

actually see through that uh because

again once the cancer is gone it's like

okay yeah we just have to go through a

little bit of pain and then and then

we're good again right who knows but

that has happened before look for

example at the stock market in 19 in the

1980 recession which is interesting

because that came right before the Paul

volcker but they were raising rate to

fight inflation without having to go

Paul volcker level yet and look at what

happened it's this light blue line right

here above that red line I just drew

equities did very well in fact from the

cut

to the end of the 1980 cycle stocks went

up like 25

however when we got Paul volckerd stocks

actually went down about I'd say about

15 and then the average is the red line

here now the average is actually

phenomenal the average suggests flat

so that's weird because everybody's like

oh my God the First Rate Cut's gonna

crash the market well not really the

average is the red line right there and

it shows flat after the First Rate cut

but after the pause you actually get

about a seven to eight percent rally in

stocks kind of interesting this is

really interesting data all of this data

isn't very bearish combine it with PPI

retail sales CPI uh a PC from last month

a lot of the data that we're getting

just is not that terrible now uh this

was the breadth indicator that we had

talked about uh and Bank of America is

basically also reiterating how this is a

bullish signal basically this was a the

Bloomberg chart that I shared yesterday

essentially suggesting that oh this is

bullish like usually when this indicator

flips it's very bullish for markets and

uh the that thrust indicator

it's left we talked about it yesterday

Bank of America did a whole piece

reiterating how bullish it is now I

didn't want to get blindly you know

bullish here I feel like I'm already

bullish enough but I think the the

argument here is we might still have

time we might still have a good chunk of

patience ahead of us before we actually

hit a recession it might not be as soon

as June or July it could be a Christmas

recession or a or a q1 of 24 recession

and by that point it could be so mild

because inflation could be so low I mean

who knows but it'll be very interesting

to pay attention to and I think now

we've got a couple good leading

indicators not only the small business

leading indicators but personally if you

want an easy one look for that

inflection in hotel rooms uh because we

have not seen that inflection in hotel

rooms yet so I know it feels nuanced but

it it very much hits people's sentiment

when they say or it's an it's evidence

of people's sentiment changing when they

stop traveling right and I think that's

really you know throws back to the Ross

Gerber argument which is there's no

recession

you're looking around at basically what

people are actually physically doing uh

so we we like to refer to that as our

Ross Gerber research where you

physically go somewhere like yesterday I

went to Red Robin and I'm like oh my god

there are a lot of people here and I

thought this was a charity because they

lose money anyway uh so that some of my

thoughts on the recession here uh if if

you uh so please make sure to check out

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get to the next segment

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