This NEW Hazard could Collapse the ENTIRE Economy

hey everyone me Kevin here welcome back

oh my gosh we've got a lot to talk about

because we just got some nasty numbers

that came out so breaking news on these

nasty numbers we're also going to be

talking about a lot of these ticker

symbols towards the latter part of the

video we also have a sponsored message

by aura.com meet Kevin but more on them

in just a moment first oh my gosh look

at this chart folks Consumer Credit holy

moly first of all we're up an annualized

10.1 percent since the last month that

is a lot of debt growth to be growing

debt at 10 a year at an annualized rate

but look at this on the far right there

you see that highlighting there at the

tippy top right over there look at that

folks we had 47.3 billion in increased

debt in March followed by now 38.1 in

April I drew sort of a yellow line there

to try to give us an average of the past

maybe 10 years although this chart goes

all the way back to the 90s early 90s

and boy oh boy these are some of the

largest drawdowns of credit that we are

seeing we've also seen revolving credit

look at this jump is 17.8 a billion

dollars after 25 the month before that

and I wrote some numbers on here look at

this folks

537 million credit cards opened in the

first quarter if you just assume people

who have social security numbers and who

can qualify and who are of age in the

United States that works out to two to

three credit cards open in the first

quarter per person and things just

started getting bad in the second

quarter like April and May so it's no

surprise that you're starting to see

banking CEOs u-turn on their argument

that oh yeah you know the consumers were

fine they've got plenty of savings but

don't worry we'll talk about what the

banks are saying we'll talk about what

is going on with the Atlanta real GDP

we'll talk about margin all in just a

moment but this Consumer Debt

information is scary and I mentioned

this not because we're trying to pass

Fudd on but it's weird and it's not

sustainable why is it that we have

consumer sentiment level levels of 2008

levels consumer savings rates under five

percent at 2008 levels yet all of a

sudden people are spending this much

money on debt why are they drawing down

debt do they think that debt is about to

get Frozen like what we saw in 2008 that

will have a credit crunch or are they

trying to sustain a previous lifestyle

that they had during the stemi days or

do they need to because inflation is

outpacing what their income is actually

growing at and therefore they have no

choice but to go into debt and this is

dangerous debt and credit cards folks

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welcome back take a look at this chart

folks it's ridiculous this chart right

here U.S earners High earners who report

living paycheck to paycheck what is this

folks people this is all people making

over six figures and what do you have 63

percent of Millennials making over six

figures living paycheck to paycheck are

you freaking kidding me have you folks

not listened to any of our videos on

trying to save and get a get out of debt

and building assets this is a problem

now I know this isn't you I know it's

not you it's the other folks so everyone

else who's not watching the channel this

is a problem but not only is this a

problem it's also a problem because

spending will be going down consumer

sentiment is at 2008 level savings is at

2008 levels we're seeing debt Skyrocket

we're seeing inventory pile up at stores

targets telling us basically looking

forward hey people just aren't spending

they're not responding to our price Cuts

anymore we're going to talk about takers

in just a moment because it's going to

be really interesting we're going to

talk about my opinions on some of these

but it's no surprise that when I pull up

the fed's real GDP estimate which is

right here look at this folks this line

here is the zero percent line and we are

sitting next to zero percent in Real GDP

this is the Atlanta estimate this is not

the actual estimate because obviously we

had a negative quarter that was not

revised upwards still a negative quarter

for the first quarter we're knocking on

the door of a negative quarter in the

second quarter which could mean we're in

a recession now if we're in a recession

now

and you've got Banks saying hey

consumers right now are pulling as much

credit as they can to continue spending

then maybe we'll be in a recession

throughout 2023. why do I say that well

I say that because Morgan Stanley tells

us consumers have three months left of

spending that's not uh I mean that

sounds pretty dire that's actually a big

problem Jamie dimon says people have

between six to nine months of spending

left and Deutsche Bank says we have

until the end of 2023 worth of savings

left now it's possible that Deutsche

Bank is saying this because if you jump

over to this particular chart here you

do see that higher income groups do have

excess savings left and so maybe this

group over here will stop spending early

this group will stop spending by the end

of uh 2023 this group will stop spending

or by the end of 2022. this group will

stop spending by the end of or let's say

the beginning so we'll put B 23 right

and 22 over here this is sort of your

now end of spending and then these guys

stop spending at the end of 2023. maybe

that's why you're getting this this

really Diversified range of what banks

think in terms of when consumers are

going to run out of money but let's just

put it this way it's not sustainable for

consumers to take on so much debt while

saving so little let's put it up again

right here look at the this folks this

is not sustainable do not be one of

these consumers do not be the consumer

that is going into debt really really

bad idea you want to make sure you get

out of debt now if there's something if

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times that's what matters most because

now you want to make money but why do we

have all these tickers up here folks

what do we got written here well first

thing Proctor and game gamble what do I

want to say about Procter and Gamble so

Procter and Gamble in their last

earnings call told us oh don't worry

everything's fine our consumers are

still preferring premium Brands what are

premium brands well they're things like

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anyway they mentioned that folks are

still spending money on Gillette

products or Brawn toothbrushes basically

the more expensive premium version of

things because they're used to the stimi

days maybe because they're used to the

stimi days they're still spending money

on these things but eventually that's

going to go away and these high margin

items are going to get killed people

have right now escaped to Consumer

Staples because they think this is the

place to be safe during periods of

inflation but no I believe that their

margins will get squeezed as people

start moving towards lower uh lower sort

of uh brand value products and start

going down in price to survive this is

actually where what does really well in

this kind of time dollar stores and

there's a reason that when we look at

retail foot traffic and Mobility data

the only category that's positive well

next to Fashion which is barely positive

like point two percent positive are

dollar stores like mega mega mega

discount stores which some of them are

now by the way because there's so much

inflation being called Five Below which

I think is kind of funny that dollar

stores are turning into five belows but

anyway target folks Target Walmart we

don't even need to talk about These Guys

these guys have lost the plot they've

lost pricing power Target especially has

lost their pricing power they've got way

too much inventory they've got a

terrible system in terms of inventory

management I mean they're just getting

creamed here and they're telling us yeah

we're getting creamed so we already know

this about Target we know Walmart is

experiencing similar rises in inventory

remember what Kathy Wood said Kathy Wood

says look 50 of Walmart is the grocery

store aisle and if they had a 32

increase in inventory you're not seeing

that inventory build up in groceries

you're seeing that build up in stuff

people ain't buying that stuff that's

bad keep this in mind this is a stat

from The Economist The Economist tells

us that 25 of all groceries in the

United States are bought at Walmart yeah

crazy but Walmart's nowhere near as cost

effective as companies like Aldi or

Trader Joe's because you've got super

centers too much Choice it's a disaster

anyway companies that I personally

really think are at risk going forward

into quarters I know Lulu did well okay

Lulu did well it's still kind of one of

the newer ones of these in the last

quarter I don't think it's going to last

but they are still a newer ones sort of

on the scene here and they're doing

really well as the Canadian company they

are they're kicking butt I'm going to

Canada soon so I'll see you there I got

my Canada shirt right here so I'm ready

to go but anyway all these these sort of

uh athleisure companies the Nike the

dicks The Outdoor sporting goods the

Lulu whatever I think we've got risks

here because I think people bought their

clothing for reopen and now they've got

to kind of do an inventory Check and Go

holy crap I got a lot of clothing I'm

gonna I'm gonna step back on the new

clothing here because I gotta be able to

buy some food now somebody in the course

member live stream this morning asked a

really good question I don't know the

answer to this but I want to hear I want

to survey all of you on their behalf so

in the course member live stream we were

talking about cyber security and we were

doing we did like a 30 minute

fundamental analysis on crowdstrike

which is really just a part one you

can't do a full 30 minute analysis on on

one stock and think that's it that's all

they know my full analysis takes hours

right but we learn these things or I

teach these things right and so one of

the things they asked is Hey Kevin if if

people spend uh less money at in places

like these discretionaries over here is

it possible that a place they might go

is actually fast food in other words

would it potentially make sense to

invest in companies like Coca-Cola or

McDonald's or whatever regarding Coke

it's worth noting that their ingredients

costs have shot up so much and they just

don't have the pricing power based on

their last earnings call to continue

raising prices catch up said the same

thing well Heinz Heinz who makes ketchup

Heinz said the same thing Kraft Heinz so

there's this risk factor about well I

don't know Ken Heinz and Coke keep

delivering when costs are going up but

and I don't know the answer to this but

I do think it's interesting and I want

to hear it from you do you think that

companies like McDonald's or maybe even

like a more fast casual restaurant a

step down from something like maybe

cheesecake or Olive Garden can something

like Red Robin do well because now

you're able to get a cheaper sit-down

meal or just even just a pickup to go

meal at McDonald's right fast food fast

casual I want to know what you think in

the comments down below personally I'm

not a big fan of the food industry so I

stay away from food I've worked in the

food industry I think it's the most

terrible industry to be in I would never

recommend somebody be in it it's the

lowest margin it's the highest risk in

liability it's a disaster other

companies I want to talk about you know

a firm tells us that hey we're we're

good you know during recessions we can

grow the most because well people will

borrow more and I think this is exactly

why Apple just released their pay and

for in terms of being able to do buy now

pay later now paying four is really just

pay over six to eight weeks which is

really just like having a credit card

and paying it off in 30 to 45 days when

the statement comes in so I don't really

think this is innovative like what a

firm does with the Partnerships where

you can buy now pay later for up to six

months to 36 months out right very very

different this is an actual Merchant

partnership this is just just pay us

back in four payments or whatever very

very different here you know this is

what PayPal does is what they all do

it's a big no big deal but uh it's

really the the risk factor you have here

especially at a firm is that they keep

50 of their debt so if you keep 50 of

your debt on your books and all of a

sudden your default rates are going up

which they are default rates were under

1.5 percent according to the Wall Street

Journal last year now they're sitting at

about 3.4 percent in terms of well I

should shouldn't say default rate I

should say 30 day late because that's

what it is that is a form of a default

though if you're 30 days late you've

somewhat defaulted right but this is a

more than doubling of of the rate of

lates here and once you get to 30 days

late the odds of you collecting this low

especially since it's not like they're

going to come to your house and

repossess your Peloton they they're it's

not like they have a car you have car

debt where they can repossess this thing

they can't you're screwed uh that is a

firm screw they take the loss on the

debt so you're going to see a lot more

of an allowance for doubtful accounts

which means they write those accounts

off or at least these expenses which is

going to affect profitability and won't

surprise me if they end up not going

profitable yet where you really want to

be here is when you're coming out of a

crash where they've got so much written

off for doubtful accounts and you're

coming out of the crash well I think

you're kind of going into it now or

you're already in this prolonged

recession right games is a question mark

for me games I wonder like hey can I

mean personally in my opinion games are

the best value per dollar that you spend

you go to a movie theater and you spend

you know 30 bucks on on tickets for for

you and and your girlfriend and I think

a popcorn or whatever that's 30 bucks

for an hour and a half of entertainment

you could each spend 30 bucks on a video

game like Age of Empires or whatever now

you spent 60 bucks so what does that get

you three hours of entertainment no I

mean it could get you hundreds of hours

of entertainment right so I wonder if

consumers will make that analysis and

realize wow we can actually save a lot

of money not going to Disney World not

going to the movie theaters not going to

the mall not buying this athleisure kind

of crap anymore and just play video

games at home and keep it relaxed

similar uh but uh but but sort of well

actually not similar it's similar to

these guys over here that discretionary

spend Etsy what did they tell us in

their last earnings call no pricing

power their Merchants don't have pricing

power to raise prices I don't know if we

did that on a live stream actually we

know we did this in the course member

live stream we're reading through their

earnings reports uh and their earnings

calls and we're like oh yep nope uh

anyway remember 50 off coupon code

linked down below okay shift technology

they're they're knocking on the door of

BK okay we did a probably a 20 to 30

minute analysis on shift right here the

cash flow that they have is terrible

right now big negative cash flows you

don't have but maybe one to two quarters

of cash left they're gonna have to get

on get a lot of high interest rate debt

or they're going to have to issue some

new stock to survive in my opinion what

else do people cut well again we talked

about movies potentially getting cut

subscriptions I mean that's a no-brainer

I mean all of this started with like the

Peloton and Netflix disaster right so

that's really no surprise Netflix was

like the canary and the coal mine

beginning of this year that oh crap this

is going to be a tough year Disney plus

still did well though they beat

expectations but one place that I

thought was very interesting is is it

possible that during difficult times

we're going to end up seeing more cyber

crime and if we see more cyber crime is

it possible that we're going to see more

spend on cyber security now I hate to

say it the price to earnings ratios of

companies like crowdstrike are freaking

ridiculous I mean you're talking about

over 100 p e ratios Peg ratios of three

to four but it's a SAS business SAS

business compared to like a Tesla where

you sell the car and it's not yet a SAS

business via FSD SAS business says man

you with 120 retention rate like what

you have over at crowdstrike I don't

know it's a head scratcher you know

these guys have come down a lot in their

pricing and it makes you wonder can

businesses spending on Cyber remain

resilient because look at Gemini for

example Gemini is getting sued for like

20 to 30 million dollars because they

lost a many millions of dollars in

actually I think it was about 30 million

dollars they lost about 30 million

dollars in a hack in people's retirement

accounts in Bitcoin and ethereum and now

they're getting sued for that money

which makes sense but hey you know could

it have been prevented with some better

cyber security you know software whether

that's uh like cloudflare's uh DNS

service uh or uh or what is it uh CD CDN

service that's what they do the CDN

service or uh crowd I'm not really good

at cyber security stuff I'm still

learning this but uh cyber security over

on crowdstrike some incredible Suites of

packages that you have over here for

detecting malware or whatever else with

their Falcon products there's some neat

things here so I recently have been

starting to scratch my head about the

Cyber industry because everything is

everything's kind of painful in a

recession I mean there's no doubt about

that but I'll tell you there's nothing

more painful than seeing the real GDP

and numbers next to negative seeing a

margin debt actually margin debt in

stocks is declining a little bit we're

about 744 million right now a billion

right now which is is way better than

like the 940 where we were before we

were almost at a trillion that was a

disaster but this uh buildup of Consumer

Debt

it's an issue and these are my thoughts

on these companies make sure to check

out aura.com matecav and the programs

linked Down Below on building your

wealth if you got questions leave a

comment or send an email over to

kevin.com thank you so much for being

here and we'll see in the next one bye