Top 4 Bank JUST Freaked Out | Major WARNING.

this has got to be the most bearish

report that I have read on the US Stock

Market and US economy quite frankly in

many months this is somewhat shocking

and I still haven't exactly figured out

how to adjust my own beliefs around this

2 and a half weeks or so ago I moved to

about a six on the bullish scale 10's

like all in margin one's like all cash

yeah I went to about a six still never

got out of that mid-range but this don't

know yet how this this is going to

affect things look at this folks City

the US economy is clearly slowing down

and in our base case it is headed for an

outright contraction that's a recession

mind you consumer spending declined .1%

month over month in April after q1 data

were revised down to show a more

dramatic decline in real Goods spending

core PC inflation slowed still elevated

but enough of a Slowdown to keep the FED

on track to cut later this year even if

hiring holds up better than we expect

which they don't they actually think

hiring and the jobs Market will

deteriorate so severely that the Federal

Reserve will cut 25 basis points in July

not because they want to but because

they have to and that they'll end up

cutting 200 basis points in the

subsequent eight meetings yikes okay

let's take a look at this for the last

two years the US economy has been

resilient defying forecasts of a

Slowdown but the cycle finally appears

to be turning a pullback in consumer

spending slowing inflation pricing power

rapidly dissipating oh nobody likes

small peee uh and a projected

significant softening in the labor

market is keeping us projecting the

first cut in July now I want you to

remember how like in terms of pattern

these things work people say oh

but the consumer is still spending why

does the consumer still spend I want you

to ask this of yourself do you know a

friend or a family member whatever who I

don't know just spent a bunch of money

on a new house right think about this

new house or new car new fancy clothing

uh new

vacation whatever it is were those

people people with substantial wealth

like do they come from having a lot of

money and they have a lot of Investments

or something maybe not let's say the not

scenario they just happen to be able to

afford all this stuff why are they able

to spend so much money on all this extra

stuff there has to be a reason yes

there's a very simple reason for this

and that is that the jobs Market is

still decent enough people still earn

sub substantial raises over the last few

years made substantially more money wage

inflation was significantly high but

what happens first friends what happens

first do people lose their jobs and then

stop spending or do people stop spending

because we're going into a recession and

then they lose their jobs because of the

velocity of money oh less people are

spending I I guess uh now we're going to

have to lay people

off well to some extent You could argue

both ways but for the vast majority

people specifically Americans I would

argue that as long as people have their

jobs and they have confidence in their

jobs they keep spending but as soon as

that confidence goes away or their job

goes away or they get laid off all the

spending goes away so looking at retail

sales data and consumer spending data is

even more lagging of an indicator in

America than the jobs

Market okay so what else do we have here

the economy has been overheating since

2021 the Tailwinds to consumer spending

have faded particularly for the lower

income and lower net worth credit card

delinquency rates by some measures are

at their highest levels on screen here

since

2007 and interest uh expense as a

outside of mortgages is at the highest

levels excuse me that we've seen since

uh quite frankly anywhere on this chart

uh rent as a percentage of disposable

income is rising to some of the highest

levels that we've seen since uh the

period right after the Great Recession

and City goes as far as saying that good

spending is already in outright

contraction they say q1 real good

spending was revised lower April is

showing another decline Services

spending supported consumption in q1 but

April real Services slowed to just

.1% month over month in April very very

very slow

and cyclically sensitive spending on

restaurants uh is is usually followed by

good spending has declined four out of

the last five months in other words

we're starting to see a flip and

consumer spending will pull back more

sharply if the labor market weakens more

sharply and there are already signs and

Survey data that individuals are

becoming more concerned take a look at

this chart the blue line which has a

line going down those are the odds of

you finding a new job if you lost your

job today and the light blue line going

up those are the odds that people think

they're going to lose their job over the

next 12 months yikes that fear alone

could reduce

spending and City Bank says look right

now you might be seeing a slowing in the

labor market but let's be real when the

economy actually flipped

it's not going to be a slowing anymore

I'll read you what they wrote and then

I'll translate it at some point there

will be a nonlinearity where firms

economize on labor through outright

layoffs rather than through slower

hiring the risks remain sharply to the

downside uh okay so what does that mean

in English in

English hey y'all we might be slowing

down higher right now but when poop hits

the fan we just going to fire everyone

going to go fast in other words yikes

yikes this is um unemployment rate

expected to rise to 4% consistent with

that and they expect that the fed's

going to move to two rate Cuts uh so

they're going to keep sort of pressure

on remember that American guy American

Airlines just guided weak summer travel

to start they expect to see a further

slowdown in Leisure and construction

especially less seasonal hiring into the

summer

almost all the data that they've look

they're looking at is starting to roll

over especially they say that sensitive

uh summer and seasonal data and they say

that uh they do give a quick election

update and they say that uh Donald Trump

has a little bit of a lead but on top of

uh the election update they say we

suspect slowing job growth in May will

largely reflect weaker hiring in sectors

where employment tip typically increases

into the summer the trend of gr job

growth in Leisure and Hospitality has

already slowed in line with softer

spending at restaurants after running

consistently at a 20 to 50K pace for the

previous 12 months uh we saw it full for

the first time in April since

2020 and construction employment could

also start to decline as a demand for

housing remains weak in other words

really sensitive portions of the economy

are going to start rolling in over very

dramatically and very quickly this is

scary and quite frankly jobs Market

rolls the Federal Reserve is going to be

forced to flip very rapidly on this

economy and unfortunately if they start

cutting rates a little bit at a time and

it comes too late well then you're

already in a recession in fact Bloomberg

economists just yesterday reported the

government is likely over stating the

jobs they created in 2023 by 1 million

jobs in fact they referenced October

223's job data and they said that they

can't rule out that the recession began

in October of

2023 but they said we won't know for

certain until revisions come out just

before the election in

August yikes that means half of all the

jobs we thought we had might just be

fugazi numbers now I mean Color Me

shocked okay government data being a

little botched but let's also consider

this the closing of the border to

migrants and Asylum

Seekers less people going to show up in

the jobs numbers so you got a lot of

things going against you potentially

overstated numbers the Border being shut

down which I understand people want that

anyway but it also contributes to lower

employment numbers yes they show up in

government employment numbers uh and

what cities here saying folks this is

starting to make me

nervous yikes what do you think let me

know in the comments down below and if

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building your wealth link down below so

this is exactly what we've been talking

about a slowing coming the ADP report

showing us look at this job gains it's

starting this report out minutes ago job

gains were slower in May due to a steep

decline in

manufacturing Leisure and Hospitality

also showed weaker hiring this is

exactly what some banks are starting to

warn of as the start of I hate to say it

but a

recessionary Slowdown people are like

wait but you know things are supposed to

be getting better right we're supposed

to be coming out of a hole uh and and

that's what I I've been wanting to think

after all these wonderful spectacular

earnings but again earnings are driven

by spending but spending really HTS once

people lose their

job or you go into recession or both

quite frankly look at this this is the

SNP Global us manufacturing PMI so

initially we're like yay new orders

return to growth in the US in May

supporting faster uh expansion and a

growth into the second quarter if you

only read the first few lines you'd be

like that's great meanwhile business

confidence picked up and positive

expectations regarding the future for

continued hiring uh renewed rise and

purchasing activity and a buildup of

stock of finished goods blah blah blah

blah that's great okay wonderful uh so

good news here on on uh manufacturing

right oh but wait let's get into some

more of the details input cost inflation

quickened to the fastest rate in over a

year cool so if you have a Slowdown and

inflation that's stagflation right

that's not good okay what about this we

saw a renewed expansion of orders

following a modest reduction in April uh

but what's this here while demand

improved during the month overall

economic conditions remained muted the

rate of expansion was only marginal in

fact the rise in total new businesses

was or business was softer than that

scene of new uh for the new export

reports or new export orders which

increased at the fastest Pace in 2 years

firms reported signs of improving demand

in Europe alongside growth in Asia

Canada and Mexico okay so good news on

that export but weaker than expected in

the US increase in new orders alongside

better material availability LED

manufacturers to expand production at a

solid Pace in May that's good firms were

also confident that production will rise

over the coming year thanks to optimism

that renewed expansion and new orders

will be sustained in the months ahead

plans to increase capacity also

contributed to positive sentiment okay

so so far it's kind of mixed right I

mean it's mostly good a couple little

bad lines there okay great what is this

employment increase for the fifth

consecutive month at the fastest Pace

since July 2023 great higher Staffing

levels reflected The Filling of previous

vacant previously vacant positions

meanwhile uh the rise in purchasing

activity uh was the first in 3 months

but only margin

the expansion and input buying was not

sufficient to prevent a further

reduction in the stock of purchases but

it was but it at least restricted the

pace of depletion to the weakest in the

current 3-month sequence of falling

inventories in other words companies

just aren't needing as much

product stock of finished goods on the

other hand increased for the second

month running expansion to capacity and

recent muted demand conditions meant

manufacturers continue to to lower their

backlogs of work the pace of defl

depletion rather was slight however and

the weakest since February the rate of

input cost inflation continued to

accelerate quickening for the third

consecutive month to the fastest since

April of 23 the latest increase was also

sh sharper than the pre-pandemic average

higher costs for aluminum and and uh

copper and particular and metals more

generally were reported as were

increases for fuel costs so

kind of a little bit of a mixed bag huh

so you're seeing a return to growth

following a blip in April although

modest the expansion of new work bodess

well in the coming months okay so this

is it's like trying to be optimistic I

guess so we'll callor that yellow here

uh and manufacturers cited confidence

but you're seeing that stagflation

potentially come along side a slowing

and the expansion of consumption so so

think about that for a moment it's kind

of a it's it's a nasty cycle if

consumption goes down while

manufacturing is still going up for now

but input costs are going up what

happens when that consumption finally

turns over to lower manufacturing while

at the same time you have lower input

costs it's a stagflationary kind of

recession it's not great and that ADP

report we just got unfortunately

contributes to this remember they said a

lot of the jobs filling that they did

was just filling vacant positions but

once those vacant positions are filled

now they're full now you don't have room

anymore from new people it's it's

interesting it's it's not like a a major

like major red flag on the manufacturing

side but what it is it's almost like

you're starting to see some cracks and

the whole story is starting to connect a

little bit better together that things

are slowing down or at least there are

some signs of red flags let's look at

this a little more so Goods producing

9,000 construction 32k that's actually

still pretty decent manufacturing 20K it

-7k Financial activities 28 55 over here

where's um Leisure Hospitality this

right here 12,000 Leisure Hospitality

that's low you're usually between 20 to

50K on this number so you're stting to

see this roll over and we're not even in

the summer yet when you're seeing

companies like American Airlines say uh

maybe our bookings won't be as great as

we thought it's kind of interesting uh

and then of course you get some Regional

changes here uh small establishments

down 10,000 medium up 79 large UPS 98 uh

so you still have growth obviously this

one this over 150k numbers is still

decent those job changer pay numbers are

finally falling down again from that 9%

which was crazy that we saw for a moment

but remember drum pow cast water on the

idea that he was really nervous about a

wage price spiral anyway I think the

biggest thing the fed's now concerned

about is that potential jobs and labor

market recession rolling over now of

course you have people on the internet

saying no there's no recession now

there's no recession there's not going

to be a recession in 24 there's not

going to be recession in

25 there are some economists which we

know you know economists have predicted

12 out of the last two recessions but

there are some who who say statistically

depending on how the numbers come in

with jobs a recession may have actually

started in October of

2023 yeah that's crazy so we'll see

we'll see but anyway uh that gives us a

little update on the good old jobs data

and it just contributes to some of the

fears of banks like City Group 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 how it goes

congratulations man you have done so

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you Kevin P there financial analyst and

YouTuber meet Kevin always great to get

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