**THIS** Inflection JUST Happened in the Market

hey everyone me kevin here market update

okay we've got to talk about consumers

we'll also talk about extra because this

video is brought to you by extra but

first let's get into consumers i want to

talk about the federal reserve regarding

their view of consumers and information

that they just released and also some

recent earnings calls because i think

they're really important watching the

consumer is really critical right now

and a course member uh wanted to point

out this point this particular line out

to me and i thought it's great so every

thursday the federal reserve releases

which what's known as an h8

and they noticed that in the month of uh

march here uh consumer loans in the form

of credit cards or other revolving plans

had jumped 34

uh and this was really interesting so we

pulled this report up in the course

member live stream which if you ever

want to join there's a link down below

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building growth uh and overall consumer

loans went up at about a rate this is an

annualized rate so when you see these

numbers this is not how much they went

up in a month it's the annualized rate

that they went up and so we went up at

an annualized rate of consumer debt of

23 in march and 34 in credit card and

revolving debt now i don't know if

that's like i mean to me it sounds like

good news for a firm but it also sounds

like there's a little bit more pressure

on the underlying consumer for

potentially lower income individuals

right this morning we talked about visa

earnings and what we learned from visa

was actually really really shocking and

just to sort of digress to that for a

moment uh visa told us that pent-up

demand for travel is very very high that

there are early indications that

spending is going to be very good that

they're bullish on how fast things have

recovered and as you saw in in january

the recovery has been very robust but

beyond that some of the shockers from

visa which relate to this kind of

spending where that debit and credit

card spend was up 45 percent uh from

sorry what do we got here uh april spend

was up 45

from three years ago this is incredible

three years ago uh being not 21 20 but

19 right we're comparing to 2019 it's

crazy to think that that's uh uh you

know three years ago but anyway look at

this e-commerce spend e-commerce folks

both domestic and cross-border has

remained strong and stable relative to

trend lines and the other thing they

talked a lot about in their earnings

report was that affluent customers were

spending more money so it kind of makes

me wonder is there this possibility

that uh the affluent customers are

spending more and that poor customers

are spending less right here it is in q2

affluent credit card spending was well

above 2019 levels and this is what they

regularly talked about in their earnings

report and so when we look at this fed

report here it's kind of interesting

because it's like well consumer loans

are going up at the fastest annual pace

we've seen this year sort of we zoom out

over here when we look at the prior

quarters of the annualized rates of

increases in loans

nowhere do you see anything even over 20

percent and all of a sudden you see an

explosion over here in consumer debt

even as affluent customers are spending

more so it's probably those making less

than seventy thousand under fifty

thousand dollars a year those are

probably the ones the individuals

unfortunately getting saddled with more

debt here

which is not good but then makes you

wonder like if the wealthier people just

keep spending could that keep us out of

a recession i have no idea you know but

these are things to pay attention to

this is an inflection point that i

definitely want to pay attention to but

i also want to pay attention uh to what

we're hearing from uh from other sort of

maybe more discretionary purchase items

right because we look at the manheim

used vehicle index what do we see we see

used car prices going down the manhunt

vehicle index was one of the reasons we

saw uh

inflation core inflation cpr

fall well not fall but but

inflate at a much lower rate we were

going up at a rate of an annualized rate

of about 3.6 percent which is really

really low and a lot of that was almost

entirely uh it was this was below

expectations was driven by used car

prices falling they've been falling for

about the last uh two months or so so

very interesting that you've got these

used car prices falling you see which is

deflationary right you see or

disinflationary you should say you see

consumer debt going up while at the same

time people are still spending money

like crazy but i want to show you this

other earnings report because it tells

us something interesting as well but of

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uh instead kevin.com extra okay so

the earnings report uh a call that i

want to refer to uh has to do with

harley davidson now there are a few more

reports we're going to look at here i'm

going to talk about chipotle i'm going

to talk about craft and t-mobile and and

some others brief touch on end phase and

google but i really want to talk about

uh what we saw going on at

harley-davidson so uh first of all

harley-davidson is not yet seeing a

decline in in or an increase in

inventory in fact inventory levels are

still down 24

and they're getting so much demand uh

that they're actually really confident

about uh

their business going forward now see

some folks like to say oh but kevin

earnings reports are lagging indicators

i'm like maybe the earnings report

themselves are because that makes sense

you know here we are on april 27th

talking about jan 1 to jan or to march

31 right that's old news but you know

what's current news is when you get this

demand signals are strong we're getting

from our dealers that confirm the

signals we're getting from our dealers

confirm that demand for product is very

strong these are leading indicators or

or at least current indicators right

they're telling you that right now at

this moment us as executives of a

business that sells goods and services

are seeing spending go up which

reiterates what we saw at jpmorgan it

reiterates what we saw at delta

reiterates what we saw at american

express

visa everyone who's reporting is like

the consumer spending more now part of

me gets concerned that does that mean

we're like an o6 all over again right

but in addition to seeing this demand

what i thought was quite fascinating

was uh they talk about continuing to

deal with the semiconductor shortage and

dealing with those cost inflationary

pressures which are actually what they

call similar or consistent with what

they experience in the back half of 2021

so in other words no big improvement

there yet on the semiconductor

front and they do show that there's a

continuing high demand and reservation

request for their products so this is a

really good sign that

you know people are not fully cutting

back on those discretionaries yet now i

know consumer discretionary stocks are

getting destroyed because everybody

thinks the consumer is going to pull

back but like visa told us e-commerce is

still doing well and this is so weird

because it makes me wonder like is this

an opportunity to get into uh you know

ecom stocks that have just gotten

decimated i don't know yet uh but it's

something i'm paying attention to

because look at this it's a mix because

e-commerce turns out oh well this has to

do with ticket sizes we talked about

that a little bit this morning

but look at this regarding inflationary

times right

quote net net

it's a positive for us inflation we have

not seen any impact on discretionary

spending that we can discern keep in

mind they make up 43

of the markets spend on cards that's

insane if anything discretionary

spending especially from affluent

customers and credit card holders has

been going up quite healthily it's crazy

absolutely crazy so what do we learn

when we go to some of the others i'm

going to give you a little bit more of a

summary over here uh first craft

confident about our production but we

are also growing consumption that is for

their warehousing and rebuilding their

inventory levels and they believe that

by rebuilding their inventory levels

they're actually going to be able to

sell more product because demand is

still consistent despite the fact that

they're raising prices so they see a lot

of elasticity of demand in other words

people are not dropping off uh because

of of their pricing now another thing

that's really cool that or i don't know

if it's cool but it's happening

is businesses are actually pricing ahead

of inflation a little bit so let's draw

that out for a minute and try to

understand that so watch this okay so

let's say this is january right here and

and you're the ceo and you're like ah

crap inflation's doing this

uh why don't we set a pricing uh regime

that says hey we're matched with

inflation let's say right now why don't

we just shoot ahead of the running gear

so to speak and uh and start

raising our pricing like this so that

way when we hit these inflationary times

rather than reacting to the higher

inflation we've already raised our

prices and we can kind of like let the

inflation grow into our pricing and then

hopefully that that inflation comes down

and then we're good with our pricing

right that's crazy that craft is telling

you that they're doing this but they're

not the only one tesla does the same

thing elon was just saying that on his

earnings call that they're pricing ahead

of inflation they're anticipating the

inflation and pricing in uh hopefully

that's good news that in the future we

would get some kind of like reduction or

fall right uh but uh who knows so anyway

that's that's quite interesting for

kraft

for uh chipotle

uh same thing over here they're seeing a

lot of commodity inflation to the tune

of 12 to 13

food inflation is in the 31 range which

is uh also quite uh quite wild there it

is a 31

uh another thing from chipotle's report

that was quite interesting was over here

which was that chipotle's margins

at 25

dude that's incredible now i they do

mean gross margins right because usually

with a business you're taking down like

10 to the bottom line let me give you

their current bottom line margins but

still that's a pretty amazing margin

yeah okay so they're aiming for 25

wall street has them at 23.4 gross

profit their net margin is closer to

10.2 so that's a little bit more along

expectations a lot of higher costs for

beef avocados paper labor costs going up

about 140 bips

they repurchase stock at

14.90 so it gives you a little bit of a

feeling in terms of where the executives

feel the value might be

for for the company

and then they're also working on an

autonomous robot called chippy which

makes chips because i guess the

employees don't like making chips so

they're like fine we'll we'll make a

robot that'll make the chips for you but

here's a big one right here look at this

and this right here is the big one for

consumers i mean obviously says the ceo

what we've seen is very little

resistance for pricing so far the

consumer's like

all right inflation stuff's getting more

expensive yeah this is annoying but

still gonna spend broskie

it's uh remarkable so look none of these

are recessionary indicators right these

these could be cons there could be

concerns that maybe this is the big

spend that happens before a recession

but remember for you to get a recession

you need you need negative spend you

need people pulling back uh and we're

not seeing it yet so far and that's why

i tweeted something i made this i mean i

stole the picture but then i put the

text over it okay so i'm trying to take

credit for this because i thought of it

but i like it i actually think it's very

appropriate so the left here is what we

saw in 2020. i remember making videos in

2020 and people like kevin this is

stupid like the economy is on fire and

the stock market's acting like a child

on a swing like why is it so

disconnected from reality right and uh

what do we have right now look at this

2020 stock market on frickin fire

as in bad and the economy is what's

doing well anyway check out extra via

the link down below in the programs and

building wealth and we'll see in the

next one bye