The American Consumer is RUINED | EXPLOSIVE RECESSION Coming.

consumer is going to hell now how do we

stack this up with the potential for

massive disinflation the lack of pp the

lack of pricing power consumers rushing

back to get jobs whether it's that lift

at Chipotle or Starbucks and yeah I'm

hoping you leave a comment correcting my

pronunciation because we upped the

engagement anytime we talk about PP but

we've got to talk about the reality

which is a massive problem facing the

consumer and what could potentially drag

S P 500 earnings down in the toilet with

it and that after all is the second

phase of a recession first you get

multiple compression then you get EPS

fall earnings per share falling happens

when the consumer spends less money and

what did we just find out from the

consumer well total credit increased

11.6 7. sorry 11.6 billion dollars in

January from the prior month this is the

smallest increase in two years well

below estimates and it goes to show that

even though in Prior months consumers

have been supporting their spending with

credit cards we have had a massive

decline of spending in January it's

almost like in January consumers finally

have hit a wall that potentially

consumers have been supporting their

lifestyle much like American Express

warns that the high income consumers are

supporting their Lifestyles through this

recession by spending more on credit

cards and taking out more small business

loans we are saying what more spending

going through December but what's

happening in January oh consumers

potentially finally hitting the wall as

they have maxed out their ability to

borrow on either credit cards or buy now

pay later now PayPal is bragging about

buy now pay later rising in the fourth

quarter for the forecasts a little bit

more murky but where we could really see

where the forecasts are murky are at a

firm consider folks that a firm is a a

company that bragged for months that

they would do well in a recession a firm

is a company that I have since the day I

first looked at a firm said do not touch

a firm with a 10-foot pole if you go

into a recession

I've said that a million times and I

will stand by it a firm has

unfortunately changed their tune on the

consumer though not only are they now

talking about economic uncertainty and

no longer talking about how great it is

that a firm offers buy now pay later

services in a recession but all of a

sudden when we actually look at their

earnings we see a giant L it is a bad L

now we talked about some of this in the

course member live stream yesterday

because that's what we do we talk

fundamentals and business and Q a and

our course member live streams every day

the market is open link down below for

those but what did we learn from a firm

we learned that their revenue increased

10.6 percent but while their revenue

increased 10.6 percent their gross

payment volume increased 27 percent what

does that tell us it tells us they have

a lack of pricing power now part of that

lack of pricing power could be because

Amazon now represents 20 percent effect

of a firm's sales and we've all been

worried that Amazon would end up

compressing a firm's margins basically

making a firm take all the risk without

actually getting a lot of the dough a

lot of the profit and that appears to be

exactly what's happening even though

Grace gross payments are up 27 revenue

for a firm is only up 10 that's bad that

means a third of their increase in

payment volume went to revenue which

means they're basically having to

Discount how much they're able to charge

to make these loans to convince people

to actually make them that is a lack of

peepee in addition to having a lack of

PB they are now having gross PP B and

dirty PP because they have increased

their allowance for credit losses

twofold so in other words their revenue

went up 10 percent

and their credit losses doubled think

about that for a moment Revenue up 10

loss projections doubling

that's what happens in a recession you

have the riskiest form of lending why

would you touch a firm with a 10

football I don't know maybe to speculate

in the short term that Rising Tides lift

All Ships and sure the the ship of uh

you know it's kind of like uh like the

arc that carries all the animals right

even on profitable companies can lift up

as the sea goes up but that doesn't make

it a quality ship anyway this was a big

red flag and then their earnings call

they actually reiterated that they are

lacking pricing power they are vacating

a portion of their San Francisco office

they're letting 19 of their staff go and

what else are you seeing well you're not

just seeing weakness at a firm Dell is

laying off five percent of its Workforce

lowest head count in six years as they

continue to quote experience market

conditions that erode with an uncertain

future and 55 percent of Dell's Revenue

comes from PCS and we all know the PC

market has been getting whacked this

comes at the same time as we know that

64 percent of individuals are living

paycheck to paycheck and now we've had a

nine percentage Point increase in those

making over one hundred thousand dollars

living paycheck to paycheck yes even

people making over six figures are

living paycheck to paycheck much more

today than last year Appliance demand is

weakening even more substantially and is

expected to weaken through

2025 which is absolutely insane and this

increases fears that maybe maybe we will

end up hitting a recessionary

environment you're also seeing a massive

inventory overhang Under Armor is

cutting prices like crazy to get their

goods sold which is actually putting

pressures on companies like Lululemon

who basically lost their PP Lululemon

bragged that one of the reasons they

didn't have to cut prices was because

they didn't raise prices as much as the

competitors which is insane because

that's your first red flag that they

don't have be any more pricing power

right they didn't raise prices like the

competitors did but then guess what's

happening now now even though the

competitors raise prices and Lulu didn't

raise prices and Lulu's like see we

won't have to cut prices because we

didn't raise prices everybody else is

cutting prices under armor is slashing

prices what's happening at Lulu now oh

no Lulu is also discounting oh dear lord

and they're discounting from a lower

base consumers have hit a wall and this

is bad news this is exactly why we are

seeing a Slowdown uh in spend look at

for example Newell Brands Newell Brands

just reported new All Brands you don't

have to even look at the report to know

how they did because you could just look

at their stock their stock in pre-market

is down six percent at the time of this

recording after they reported they

actually fell as much as 12 instantly

because their forecast was so bad on the

consumer Newell Brands is a company that

makes company or that that owns Brands

like Rubbermaid or crock pot I mean they

got a ton of goods for babies and

household goods and that and you're

seeing a massive slowdown not only

because of an inventory build up I mean

even Energizer batteries was complaining

that companies like targeted Walmart are

buying as many new batteries because

they're looking at all the shelves and

trying to find where all the batteries

are and instead of having batteries on

every damn aisle at targeted Walmart

they're starting to take the batteries

and consolidate them to fewer places

because they're just running through

their inventory they don't want to spend

the money they don't want to burn the

cash on getting more inventory

you are also seeing a Slowdown in

Warehouse construction because people

are buying less junk and you have an

inventory pile up not at warehouses

which is in transit Goods but instead at

actual stores Amazon is now reportedly

subleasing some of its warehouse space

because of a Slowdown in logistics and

ordering e-commerce software provider

inventory planner says 50 percent of

survey respondents from their survey are

having trouble getting inventory even

after post Christmas and January

discounting

sixty percent of companies that were

surveyed by inventory planners say they

are worried they need to liquidate

excess stock which means prices go down

folks if you watch my channel I don't

know how how you could possibly make the

argument that inflation is still going

up okay like we've talked about wages on

the path to plummeting we've talked

about goods and services on the path to

plummeting yes there are Embers but show

me prices actually still going up

somewhere other than lagging data it's

so freaking obvious but but whatever

I'll just keep pounding the table and

and people can do whatever they want

anyway

baby and toddler retail sector most

impacted by excess inventory with 92

percent of respondents complaining about

baby and toddler uh inventory 55

complaining that luxury is getting hit

that's bad for William Sonoma 50

complaining that homeware and gardening

is doing poorly that's what we just saw

with Newell Brands 44 complaining about

retail and retailers are now having

trouble projecting their required

inventory because there's so much

liquidating and so many price Cuts going

on that they're freaking out and they

don't even know what the hell to do part

of this could be because you're seeing

people run out of money and you've seen

less borrowing which is exactly what

we've seen you're also seeing

substantially more price competition

right consider again lower prices at

Lyft lower prices at a firm what's

happening at Disney Disney

every quarter bragged bragged about how

per capita spend at the parks and cruise

lines was going up and they would give

you a percentage they would say oh it's

up 50 oh it's up 40 they always gave you

a percentage this time yeah it went up

yeah probably because it only went up a

few percentage points you didn't

actually give us the data point anymore

and in my opinion when you read earnings

calls because this is what I do all day

long I think that's why you come here to

get a Consolidated set of all the

information I read the earnings calls

and I'm like hmm the stuff you're not

saying anymore is generally a red flag

this is exactly what we've seen at many

other companies before Google is seeing

their PP for ads fall almost every

single advertising sector is seeing ads

fall Yahoo is laying off 50 of their ad

business staff because the ad business

is turning to crap Amazon AWS

complaining about falling PP Unilever

can't keep up with all of the increasing

uh it costs that they've had over the

past year for Commodities and other

things that have sort of already been

baked into inflation reports but they

can't raise prices anymore because

people ain't buying anymore

the same exact thing is what we're

seeing at companies across the United

States look at Mattel down 12 on worse

than expected toy sales massive slowdown

in toy sales even end phase is going

from massive quarter over quarter growth

to potentially contraction in spending

that's why they got hit Uber gave you

the warning about Lyft you have 34 more

drivers at Uber that's because people

are going to work because they're out of

freaking money

now Simon Property Group also complains

about the same thing even though they're

seeing positive rent spreads and

renewals they're seeing a lot of their

customers complain about a softening

economy and lower revenues now keep in

mind that when consumers spend less

money Simon Property Group makes less

money

because Simon Property Group actually

takes a royalty fee off of the earnings

of companies in their malls that's a way

of them basically incentive being

incentivized to actually keep the malls

looking nice because if they don't keep

the balls looking nice then what happens

well then people don't come and if

people don't come then the revenues and

stores go down so you kind of sort of

like align incentives that way right

but it's not just that it's also that we

are seeing a reduction in people's

pent-up savings and that's another

potential issue now JP Morgan thinks

people aren't actually going to go

through their uh post pandemic savings

until probably the second half of the

year but you're actually seeing a more

of a burn through I think than JP Morgan

is projecting uh happening based on

articles like this this is the Wall

Street Journal households burn through

pandemic savings the cushions of savings

many built up during the pandemic is

thinning out Americans have spent down

about 35 percent of the excess savings

they've accumulated as of mid-January

according to Goldman Sachs by the end of

this year so they kind of a line

actually here with JPM by the end of the

year forecasts estimate that pandemic

savings will be roughly 65 gone

today some people are having to cut back

on their spending or add to credit card

balances except we've already added so

much to credit card balances at the end

of last year then now even you're seeing

credit card balances go down the

government's pause on student loan

payments helps a little bit but the

point is what are you seeing you're

seeing scaled back household spending

people are dining out less often

actually uh Chipotle having like this is

a little weird because it seems

contradictory but it basically aligns

when people dine out less often they

spend less money on food obviously

dining out is very expensive but in

addition to that listen to this Chipotle

actually sees that wealthier people are

coming in store more because they are

downgrading from restaurants or from

ordering at home so they eat the crap

they have at home because it's cheaper

the delivery fees are expensive so they

go into Chipotle or they don't they they

don't go to a restaurant and they go to

like a Chipotle which obviously a 14

burrito is less expensive than a 25 miso

salmon at uh at the Cheesecake Factory

uh and uh Chipotle can still sell you

beer so if you're into that you could

still go to Chipotle just make sure you

wait at least 24 hours after having a

beer uh before you drive because

obviously nobody in their right mind

would ever have a single sip of alcohol

uh and then drive that's very bad never

ever drink and then drive very bad

anyway so uh look the the numbers here

are very very convincing it's very

obvious that people's disposable income

is evaporating it's very very obvious

that consumer spending is plummeting but

the decline of consumer spending leads

to the decline of PP and many companies

and so your goal in my opinion as an

investor is trying to figure out where

do you invest do you just stay in cash

where do you invest in my opinion you

look for PP massive PP massive pricing

power stocks and in my opinion where

those pricing power stocks are is very

simple they're companies that can demand

a high margin margin that's important

not necessarily saying prices don't come

down but they can demand a high margin

even in the face of a recession those

are companies you want to look for

personally I think that's mostly in the

chip sector away from memory so you have

to get away from memory and then look at

the ship sector Advanced microchips

three nanometers four nanometers five

nanometers Advanced chip makers ship

equipment manufacturers yes Tesla's in

there as well as a chip in robotics

manufacturer but also a company that has

substantial margins in the Auto industry

Apple has preservation of substantial

margins even though they too are

starting to cut the price of iPhones in

China because there's even a lack of pp

in China

so folks these are things to pay

attention to but in my opinion you've

got lots of deflation coming this is not

going to be a disinflation story in a

few years anymore I think you've gotten

massive disinflation coming at least

that's what the data is saying now is it

possible data starts coming in bad and

maybe one day I'll actually wake up and

read a single earnings call this quarter

that says prices are going up which I

have not yet seen

oh damn then I'll tell you about it but

that's where I'm sitting right now I

think the consumer is screwed and

because the consumer is mostly screwed

Price Is Gonna Come Down