This Data Flip could PLUMMET us Into Recession | Great Reset

hey everyone me Kevin here something

just happened that has not happened

since April of 2020 and honestly if

you're investing in the stock market the

last thing you want to hear is anything

relating back to the depths of the

pandemic unless we're talking about

stock prices because well stock prices

as you know were quite low in April of

2020 but there was a lot of panic here

and data looked really bad in April of

2020 because it was before we actually

had our stimulus and our bailouts well

now we've got actual economic data

that's starting to look like April of

2020 at least it's the lowest data that

we just got since April of 2020 and it's

concerning for a particular breed of

stocks and I want to talk about those in

this video so keep this in mind about

April 2020 and what it's going to mean

for specific stocks we're going to talk

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getting started first we already know

some things here right we already know

that interest rates are skyrocketing

this is the 60 month which is five year

I know 60 month has written in a weird

way but 60 months is five year five year

new car interest rate and as you can see

it's

well let's just say it's getting uh it's

getting a little bit expensive again but

it's not a just car loans folks it's

also credit card interest which is

skyrocketing obviously as the Federal

Reserve started raising rates since

March of 2022 you would expect this keep

March of 2022 in mind because there's

going to be another aspect that relates

to March of 2022 as well let's keep

going with this data first and then try

to make some conclusions

we just today received this information

the change in revolving credit the

monthly change and revolving credit and

the monthly change came in uh for

revolving credit of somewhere around

8.49 so what is revolving Credit First

of all and how does that compare to

non-revolving credit well the way to

think about that is very simply so

revolving credit is going to be anything

that you can pull out on a regular basis

and you pay sort of variable uh payments

on so think about it like a credit line

or any kind of maybe personal line of

credit or even to some extent a business

line of credit would be a form of

revolver but uh since this is having to

do with consumers we're going to get rid

of the business line of credit here

blocks blocks he locks right we're just

going to be focused on these sorts of

things so these are going to be credit

cards which is a line of credit it's a

type of line of credit and personal

other personal lines of credit that you

can get at a bank or like a sofa

personal loan whatever right so those

are typically your revolving credit

debts and we can see those are

continuing at a regular Pace in fact

let's go back to that particular chart

right here and we can see revolving

credit while there's some volatility as

you could see in the variations here in

the different monthly reads it seems to

be relatively consistent people are

still borrowing money uh from revolving

lines of credit so credit card debt

still expanding to some level though

nowhere near as high as what we once saw

at the beginning around March of 2022

you saw this explosion in credit card

financing and that led a lot of people

to worry oh my gosh we're about to have

a poop show of people borrowing too much

you've actually seen that stabilize to

more recently normalized levels though

if you go historical you're still

relatively High you really haven't seen

this type of borrowing since over here

in about 07 which is also somewhat scary

because it means if we're borrowing like

we were back in 07 is that an indicator

that maybe we're going to Trend back

into a 2008 style recession where that

borrowing really plummets right so we

got to keep an eye on this right now

this is still mostly healthy so what

would that mean well that would mean

maybe your credit card type spending

your consumer goods your travel your

airfare your etsy's your Amazon you're

still getting that kind of spending okay

great so what's the surprise then well

the surprise is that we actually got a

pretty low in total Consumer Credit

monthly change this is the total chart

here and you can see that blue line just

carries a carries this over all the way

back to the end of 2020. you didn't

actually have this low of an increase in

consumer credit for roughly the last two

years and that's a little bit of a

surprise so some thing had to tank this

chart and what tank this chart was

actually this right here

non-revolving credit monthly change

there it is we have not seen

non-revolving change of credit go

negative since April of 2020 during the

covet era now this is a little weird why

would this go so negative all of a

sudden we're seeing this massive decline

in non-revolving credit what is

non-revolving credit well non-revolving

credit and all of this credit by the way

is not related to household credit

that's important that'll be part of our

conclusion in just a moment but

non-revolving credit has to do with

student loans and car loans generally

these are going to be things you take

out and then you pay a fixed amount for

until you've paid it off student loans

cars and household

but this is Consumer Credit so you

actually remove the household so it's

just cars and student loans which is

really interesting why would we

potentially see car debt plummet like

this

and there are two main arguments or

explanations for this but we're going to

look a little bit further by providing a

little bit more data first and I think

with a little bit more data we might be

able to find out what's going on before

we start coming to conclusions and

suggesting that's it the auto market is

dead there's some extra pieces we need

to pay attention to specifically the

difference between non-housing debt and

housing debt this gives us a Q4 2022 to

q1 2023 set of data so it's a little bit

dated but it shows us the trajectory

change and what you can see here is

you've really had this non-housing debt

slow down whereas household debt while

it's also slowing down it's not slowing

down as much in fact the growth of these

two lines I did the math for us the

growth in non-housing debt is point four

three percent and the growth in housing

debt is 0.98 percent which is roughly 2X

so in other words you're growing housing

debt at roughly twice the rate you are

now growing Consumer non-housing Debt

now why does that matter so much why

would I bring that up well I bring it up

to help us understand a potential

conclusion because there's going to be a

lot of

fear uncertainty and doubt around these

Consumer Credit figures and there are

two realistic explanations here one of

them is fuddy one of them is no or less

funny

what you're going to hear the Bears say

is that we are on the way back to 2008.

this is a credit crunch we are finally

seeing the impact of higher interest

rates affect the consumer because credit

card rates as we saw in the beginning

and car loans are so high

what are people naturally doing they're

reducing their borrowing

maybe that makes sense maybe that is

entirely the explanation and that would

be a negative factor for in my opinion

your consumer spend categories so these

are going to be your consumer

discretionaries again you're at Sea your

credit card companies your American

Express your Airlines like a United

Airlines

potentially even your travel sectors and

hotels your airbnbs whatever maybe we

get through the summer boom and then

what

oops now we're in recession Bloomberg

economists still think we're going to be

in a recession in Q4 that's how you

write now it doesn't feel like we're in

a recession a lot of people are thinking

we're not going to go into one but this

is at least the consensus and

potentially an argument that would make

sense it's expensive to borrow so let's

borrow less

there is however one other explanation

and I'm not by any means trying to come

across as okay let's just look for a

potential excuse and you know bull

excuse this is actually something that I

have seen anecdotally and then I've

started looking for data to either

confirm or dispute this

in English a few weeks ago I was talking

to some notaries and they're like we're

seeing an explosion in people borrowing

money through helocs

really helocs okay well what is a HELOC

a HELOC is a home equity line of credit

so in order to get a home equity line of

credit you have to have guess what home

equity but let's say this let's say you

owe four hundred dollars that's how much

you owe and you have a six hundred

thousand dollar property maybe that

property was worth 620 at the Peak in

May of 2022 it's come down to let's say

I don't know 560 and uh December of 2022

and it's gone back up to about 600

thanks to super low inventory still have

not seen an inventory surge mind you

even though rates are at the highest

level they've been at this entire

tightening cycle like 7.32 for a 30-year

fix right now prices have already

started trending up again uh from

December and January because inventory

is so low keep in mind that creates real

risks for the real estate market if

inventory starts Rising again because

that'll give more choice to buyers which

could press prices down again and you

potentially end up with a sort of nasty

looking real estate movement here but

ignore the real estate speculation for a

moment that's just speculation what does

this enable you to do well it enables

you to take out homeowner Equity again

now people are starting to see stocks

rise and there's a potential fomo of

wanting to get into stocks as well as

spend money on not credit cards or car

loans so what do you do you call up your

banker and say look I owe about 66 point

you know six seven percent on my house

right now I want to borrow up to 80 to

90 percent can you give me a line of

credit well what is that going to look

like well if you get an 80 loan to value

loan on 600k you're looking at about 480

000 which means you could pull out

eighty thousand dollars of new money

that you could just pull out on a line

of credit if you go up to 90 you could

potentially pull out a hundred sixty

thousand dollars so what does this mean

you borrow money here and then what do

you do then you pay cash for things that

homeowners pay cash for what is that

solar

cars

businesses

stocks so this way you actually maintain

your low interest rate on your original

loan and you're only paying higher you

know seven to eight percent interest on

the new money but now you take that

money as a homeowner and you spend it on

maybe a new rental property a business

stocks cars or solar that would actually

lower Consumer non-housing Debt so I

actually think a HELOC refinancing boom

is potentially causing these Consumer

Credit numbers to look really really

scary when the reality is we're just

using the piggy bank of our homes

now if you thought this was interesting

and you're like wow I haven't heard

anybody talk about this before imagine

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watching and we'll see you in the next

one goodbye