Nasty LIE: The "Biggest Indicator of a Stock Market Crash."

hey everyone meek kevin here yesterday

multiple of you in my course member

discussions asked me about what i

thought about the quote

biggest indicator of a stock market

crash

naturally i wanted to know what this

indicator was i like being aware of

dangers as well as positive indicators

coming that way i can make sure to

flip-flop when i need to

well i was read the following quote

about stock market crashes and i want to

know what you think a quick note by the

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folks here's the quote

when you see a recession coming

it's most likely led by unemployment

when people lose their jobs earnings go

down people cut back today is the total

opposite it's a freaking booming economy

today we're off to the moon

those are two quotes uh the we're off to

the moon part is pretty close to this uh

but this was was the thesis here is that

okay when you see a recession coming

it's most likely led by unemployment and

i thought to myself okay so maybe we

should look at charts on unemployment to

see if unemployment's going up because

actually it sounds really exciting

my gut says unemployment's actually

really low if anything it's falling and

it makes me want to invest everything i

have and flip-flop and that way i can

also be on the rocket ship that goes off

to the moon see i know that everyone's

spending money like crazy i know people

are getting paid like crazy more than

ever before people are getting paid so

much so that household checking account

balances have never been this high it's

amazing things are booming right now

look at earnings from the fourth quarter

everybody's spending all the money they

got parks at disney had their revenue

beat expectations 17 because people are

spending so much money people feel so

rich that 50 percent of people are

upgrading to skip the line you don't

usually see that kind of stuff the per

capita spend at disney is the highest it

has ever been before that means even

though you could have less guests going

to disney world or disneyland people are

spending more money than ever before

the booming economy it's true

so when they say that a recession coming

is most likely led by unemployment

i'm curious about this so i think to

myself okay well i'm a numbers guy okay

i like

statistics and facts and logic

uh unfortunately those things are not

extremely popular on youtube but that's

okay let's go ahead and look at the

chart and let's see if we can

corroborate this thesis so this here is

a chart of our unemployment rate in the

united states the gray lines here are

when there were recessions and the

spikes in the blue lines here are spikes

in the unemployment rate so let's go

ahead and zoom in to let's say oh wait

obviously the pandemic was a little

interesting we could zoom into the

pandemic too so it looks like we

actually were in a recession while the

unemployment rate was still three and a

half percent let me hide myself there

look at this we actually entered into a

recession when we went from three and a

half percent to four point four percent

but we were almost done with the

recession by the time the unemployment

rate skyrocketed

hmm okay what about 2008 maybe that's an

anomaly okay 2008 looks like there were

recession started

technically over here in the early half

of 2008 we had a stock market crash in

september of 2008 the unemployment rate

had gone from five to six percent but

wait a minute it didn't actually

skyrocket until the stock market

until beyond like after when the stock

market already bottomed in the first

portion of 2009 it looks like it

actually peaked

in october of 2009 well after the stock

market had already substantially

recovered

here in in the dot-com bubble looks like

the the crash was really here end of

2000 2001 unemployment rate didn't

really start going up until the end of

2001. this is interesting it looks like

the same that's true of the

2020 recession the pandemic recession

the recession of oa the dot-com bubble

the 1990s recession

the early 80s recession the 70s

recession the 19 well we got that one at

both of the recessions in the 80s there

and uh and then in the 70s wait a minute

every single time

there's a recession

it looks like the unemployment rate goes

up

after we go into a recession

so but wait a minute the quote that i'm

being told everybody's freaking out

about and being so excited about is when

you see a recession coming it's most

likely led by unemployment but wait a

minute according to the statistics it

actually looks like a recession

happens first

and then unemployment goes up which

kind of makes sense because if you're a

business and you think things are

booming why would you lay people off

it's only when we're in a technical

recession

that's when businesses appear to start

cutting back at least based on the facts

let's see if we can learn a little bit

more here oh what's this

investopedia lagging indicators they can

clarify and confirm a pattern that is

incurring over time but lagging

indicators can only be known after the

event that doesn't make them useless but

they're known after an event the

unemployment rate is one of the most

reliable

lagging indicators oh crap so we

probably shouldn't be looking at the

best indicator of a crash ever the

unemployment rate because

then we'd be really far behind the curve

if the unemployment rate rose last month

and the month before it indicates the

overall economy has been doing more

poorly and we may continue to do more

poorly right the unemployment rate

is a lousy recession indicator if you

want to time the next recession the

unemployment rate is the worst place to

look the unemployment rate was low when

the market crashed in september 08 we

just saw that on the chart and kept

rising way after the recession ended in

march of 09 remember the fed bailed us

out in feb of 09.

the unemployment rate is such a bad

indicator of how well the economy is

doing that it did not start increasing

until five months after the official

start of the recession of december 2007.

here's some more research as well what's

this the unemployment rate is often used

to indicate economic strength but is

also a lagging indicator and low

unemployment is the result of economic

growth not a precursor

huh okay so wait a minute

then we're getting duped when we're

being told if we just look at the

unemployment rate we're good now that's

not to say that if unemployment is low

the opposite is true recession is coming

right it just means that if individuals

are telling us hey kevin everything's

fine there can't be a recession because

unemployment is low and unemployment is

a leading indicator it looks to me like

whoever's saying that is either wrong

uneducated or trying to deceive people

into thinking that we're actually

heading to the moon

when

that's not a fact or potential

rationalization to say we're even

remotely heading to the moon no other

things could say we're heading to the

moon but this is not one of them because

the last thing we want is to have a

stock market crash 25 to 40 percent and

then see the unemployment rate go up

we're in a recession but wait a minute

we're already down 25 to 40 percent keep

in mind recently the stock market is

only bobbed around five to ten percent

so what are actual leading indicators

that are relevant to us today

leading indicators things that tell us

something before it's likely to happen

not after well how about an

accommodative federal an unaccommodative

federal reserve that can't lower

interest rates and won't lower interest

rates because they're already at zero so

they can't accommodate us with lower

interest rates they've printed enough

money digitally printed enough money so

they can't print more money

we actually have an unaccommodated fed

that's so far behind the curve

businesses are raising prices creating

more inflation than ever before because

they realize that inflation is not

transitory that was a big mistake

and it because we have inflation

happening so much so right now the fed

has to fight it and the fed's already

told us they don't care about our stock

prices to the extent that they affect

jobs and inflation they care most drone

power was literally asked this in the

last meeting so don't kid yourself right

now he does not care about stock prices

he still thinks stock prices are

elevated

jerome powell is most worried about

fighting inflation and if that means

taking a little bit from the juicy wage

market and dealing with the inflation

issues that's what they're going to do

especially since a wage price spiral has

started to happen

the last labor report showed that wage

growth is up eight point eight percent

on an annualized basis which is faster

than the inflation rate is seven point

five percent that means that people are

actually getting paid more indicating

more than inflation indicating that a

wage price spiral has begun

the director of the university of

michigan consumer sentiment survey says

that now the wage price spiral is

actually decoupled

from supply chain issues meaning that

even if supply chain issues start

getting better the wage price spiral

could just take over

margin debt is 60 higher than at any

point in our history before

if we had any kind of bumps in the road

in the economy congress is unlikely to

be able to do anything to bail us out

why because

right now republicans believe the entire

reason we're facing problems is because

of the inflationary spending of

democrats

meaning it's unlikely that for at least

the next two years until potentially

certainly not this midterm election i

expect democrats to get reamed uh it's

unlikely that over the next two years

we're actually going to see anything

happen we're going to have a lame duck

congress so we're not getting bailed out

by the fed we're not getting billed out

by congress we're on our own here folks

at the same time we're in a rising

inflation environment rising price

environment which sure leads to higher

profits for businesses but that doesn't

matter if multiples for businesses go

down because the federal reserve is

jacking up rates to potentially high in

aggressive levels

creating fear in the market leading

potentially things like precious metals

which have kind of been lagging to go up

and stock multiples to come down

another leading indicator is that the

yield curve has flattened substantially

fast over the last eight weeks the

flattening of the yield curve could

eventually lead to an inversion of the

yield curve which is one of the best

leading indicators of a recession and

we're barreling right towards that

indicator inverting

so shoot

if somebody is telling you

that look how much our economy is

booming look how low unemployment is

you got your head in the sand you're

being lied to

now that just because the economy is

booming and just because unemployment is

low does not mean we are definitely

going into a recession right the other

indicators i talked about are risk

factors for recession so you can't say

oh well we're in a booming economy

what's next recession well sure

eventually that's always going to end up

being true eventually

so we have to look towards other leading

indicators to tell us if we've got

danger ahead but if somebody's telling

us don't worry we're definitely not

going into a recession because look how

much people are spending look how low

unemployment is they're lying to you

through their teeth to get more

subscribers because they're uneducated

because they want to raise money for

their fund and collect more fees from

you and they're deceiving you into a

false sense of security don't look at

today's spending don't look at today's

low employment to determine whether or

not we are heading to a recession these

are not

indicators get educated on better

indicators and if you want to subscribe

to the channel i'll keep bringing them

to you thanks so much for watching and

folks we'll see in the next one bye and

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