WHEN the Recession Will Come | Odds & DATE.

hey everyone we kevin here in this video

we're going to talk about when a

recession is expected the odds of a

recession and how to prepare but first

i'm going to give you a little bit of

extra background information this

morning we got some information that

potentially the trucking industry is

already in recession now this isn't all

a bad news we'll talk about what that

potentially means but here's the

information according to transactions

between united states truckers and their

customers there's been a quote

unexpectedly sharp downturn in demand

from everything from food to furniture

and transportation is slowing and has

been slowing for truckers since the

start of march now this does coincide

with at the same time energy costs

started soaring for transportation gas

diesel oil all these energy costs became

a lot more expensive and if you take a

look at the chart right here

you can see that you have this very

sharp decline really begin right here

where that yellow is which if we line

that up with the date that's really the

beginning of march here which is

obviously right after that starting

point of the war right here on february

24th so entirely possible that you've

got a correlation

here between this decline in trucking

but the decline in trucking can

sometimes be a sort of a leading

indicator of uh basically well if

companies are shipping less than that

probably means people are spending less

money right now how reliable is this

potential indicator well about 50

kind of a coin flip so not the greatest

now we're going to talk about timing for

a potential recession with separate data

here but i want to get this trucking

info out of the way that since 1972

recessions have followed

6 out of 12 trucking recessions so that

means a real recession in the entire

economy has followed

6 out of 12 of the trucking recession so

it could be by some seen as an indicator

of sort of a canary in the coal mine

like oh no we've got issues here it is

worth noting that americans spend about

35

on goods right now and about 65

on uh services we might see a little bit

of a rotation in that where we see goods

spending maybe go down to like 30 and

services go up to 70

expectation is about 32.68 to be a

little bit more precise uh but really uh

if if trucking prices fall it could

ironically actually be a a good thing in

the short term because it could finally

take some pressure off of margins for

businesses who have to pay for trucking

like wholesale businesses or target that

has to truck in supplies for people to

buy right if trucking prices come down

because trucking demand goes down

yeah on one hand it's like oh no are

people buying a whole lot less but on

the other hand finally trucking prices

are going down again margin pressure

goes away from businesses who are trying

to pass on all the cost increases to the

consumers

and maybe you could be in this kind of

weird world where wait a minute if we

stop seeing price hikes we actually stop

seeing inflation right because remember

inflation is a year over year measure in

order for you to keep having inflation

prices have to keep going up but if we

slow price increases that can actually

help dampen inflation we're seeing that

same sort of thing happen in the gpu

market the graphics uh chips market

right we used to be sitting around

a 77 percent markup for let's say nvidia

graphic cards now they're at about a 41

markup so it's still a substantial

markup but

this is a sign that we're starting to

see some of those pricing pressures

relax which is actually kind of

good news uh and before we get into the

odds of a recession i want to talk about

coca-cola and we've got a quick word

from our sponsor and then we'll talk

about the odds and timing of recession

but look at coca-cola here okay i

thought this was really fascinating

because this is kind of what we're

actually trying to prevent is this sort

of price action look at this here

so

coca-cola talked about increasing prices

more but what i thought was really

incredible was this line over here we're

going to basically overly lean towards

increasing prices before a potential

recession quote as i said earlier not

seeing the cost go through and arriving

at a recession being behind the curve is

less desirable than embarking on price

increases and having to take a hit from

greater elasticity in other words people

spending a little bit less on coca-cola

and powder aid or whatever products

while they have higher prices in the

short term because of recession so in

other words coca-cola is actually

telling us hey um we're going to

aggressively keep raising prices because

as our costs go up we are going to pass

those along and we don't want to be

caught with our pants down so to speak

in a recession where not only do we not

have higher prices but now we can't

raise prices so there was a lot of talk

about making sure that whatever extra

costs they have they push to the

consumers see they even say here quote

you definitely this is a yellow you

definitely don't want to get to a point

where there's been a substantial cost

push which would mean like higher high

fructose corn syrup prices higher

trucking prices right

that has not yet been priced into the

market so in other words

coke is like hey we're still raising

prices because our costs are going up

but this is why it's actually a good

thing in my opinion that we're starting

to see those trucking costs come down

because that means less cost pressures

on companies like coke and then they

don't have to feel so aggressive at

those price increases but we're still in

this weird teeter-totter zone where it's

like ah kevin this feels a little bit

like a little bit of good a little bit

of bad and yeah it is because it's kind

of like okay cool trucking prices are

going down but if that means people are

spending less

that's a problem because people spending

less could put us into a recession

unless of course that spending is just

moving over to services that would be

best case scenario

good spending goes down inflation for

goods goes down the spending stays over

in services and we don't actually go

into recession because the services keep

us through so now we got to talk about

timing and the odds of a recession but

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stock advisor all right folks now let's

talk about when we actually think that a

recession could come and kind of look at

this graphically so i'll pull this up in

a moment but first

bloomberg intelligence just released

this information bloomberg intelligence

believes that according to their model

we have about a one percent chance of a

recession within the next 12 months

that's because the fundamentals of our

economy they say are still incredibly

strong however

bloomberg intelligence believes that the

peak recession chance will actually be

44

and that 44 peak recession chance occurs

before january 2024 so likely in 2023 is

when we could potentially face a

recession and that's because the federal

reserve's interest rates the discount

rate is expected to be at its highest

level in 2023 and peak out before

falling again

now we've got deutsche bank calling for

a recession in q4 2022 and in uh

potentially q1 2023 remember we need two

quarters of a negative growth to

actually hit a recession and uh deutsche

bank is calling for that in q422 q1 2023

but take a look at bloomberg's chart

they really pushed this into later in

2023 now who knows who's going to be

right right but take a look at that

recession probability rising sharply

going late into 2023

uh and uh really peaking out there in

january of 2024 so sometime between

there very very interesting so

absolutely incredible uh we'll see now

how do you prepare for a recession okay

so let's just do a quick look at that so

what i like to do is number one i like

to become a tracker look for the fed's

u-turn if we start hitting that

recessionary territory fed's going to

u-turn really quickly and the markets

right now are pricing in the fact that

the fed may make a policy mistake and

that companies are raising their prices

too slowly uh and and if companies raise

prices really quickly and aggressively

at the same time as rates are going up

then we could see boom a recession so

what do you want to monitor here well

you want to monitor economic data that's

leading not necessarily lagging data

right the best way to find leading data

number one inflation expectations

the higher inflation expectations go the

more likely the fed ends up making a

mistake by

tightening too much there are two types

of inflation expectations consumer

sentiment

expectations of inflation which you can

find via the university of michigan

survey of consumers or market

expectations of inflation measured by

the five-year break-even treasury rate

when the chart goes down it's a good

thing of the five-year break even here

is the latest uh five-year break-even a

chart right here and you can see that

we're trending down i like that uh we're

recently trending down after the hawkish

comments from the federal reserve so

that's a good thing uh then earnings

calls you're now able to take ceo and

executive c suite level or c-level

executives inputs into the state of the

market looking forward and not just

looking backwards people like to say oh

earnings are looking backwards wrong you

were actually getting the ceo and

executive opinions at that moment in

time okay then personally

as you become a tracker of the market to

prepare to be in this market or to

potentially buy during the depths of a

recession whether it's real estate or

stocks you got to make sure you get out

of debt eliminate your margin get your

income up but also make sure that your

income is insulated it's one thing if

your income goes up but it's another

thing if you get laid off then it made

you no difference that your income went

up right so you want to have insulated

income you want higher income you want

to get out of margin and debt we're

already seeing people pair margin down

down 14 since october if the market's

cutting down margin and deleveraging the

sign right

prepare to go shopping for real estate

how do you prepare to shop for real

estate stop taking out consumer debt pay

off credit cards student loan debt and

cars all of these things are going to

burn you when it comes time to try to

buy real estate every dollar of debt you

have means you have to have about two

dollars and 34 cents of income to

qualify for it potentially more as rates

continue to rise and then of course when

it comes to stocks by paying in quality

sectors etfs or companies the safest

method in my opinion is when there's big

pain in the stock market buy things like

a basket that's mixed with the qqq spy

maybe the russell 2000 this is not

financial advice i generally don't

recommend stock picking some people like

to pick stocks i like to pick stock but

that doesn't mean you should like to

pick stocks but i would say if your net

worth is under 500 000 you should most

importantly prepare to buy real estate

who knows maybe the end of this year

through 2023 could be a great

opportunity to finally get into the real

estate market thanks so much for

watching we'll see you next one bye