*This* SCARES Me | These stocks are SCREWED

hey folks in this video we're going to

talk about retail disasters and this

stands in contrast to for example the

macy's stock price action or earnings

report this morning which we're also

going to talk about in this video but

there is a big red flag hanging out

there and i really want to drill this

point home some of these things

you've heard me say before but the the

thing that i'm going to show you a

couple things i'm going to show you you

probably have not seen yet so we're

going to merge this all together we're

going to talk about these potentially

very dangerous stocks

and how maybe to play some of these so

first let's talk a little bit about

macy's so macy's is today being treated

as the inflation

god the reason they're up 12 percent and

they're being considered the retail god

is in an era where snapchat drops 40

percent best buy plummets and you know

you get you get this essential uh well

your target plummeted what you know 30

20 30 percent walmart plummets 20 30 and

all these retail stocks are completely

plummeting because retail stocks that

were thought to be

safe during an inflation environment you

actually have macy's here killing it

macy's their margin is up about five

basis points we're up to 39.6 versus

39.1 their net sales blew expectations

out of the water expectations were to

about 250 mil 249.3 came in at 3 315 up

12.4 in q1 the same quarter that we've

now heard about a potential negative gdp

print that actually got worse not better

okay despite prior revisions to other

reports we've seen and macy's is

actually suggesting that their guide

their fiscal year guide is going to be

10

greater

but when we dig a little bit deeper

there are some really important things

to notice here and this is what i kind

of call the retail disaster and i want

to show you a few charts and then i want

to show you what companies like even

macy's are saying and i think it really

helps paint a clear picture of what

we've got going on so the first thing

i'm going to show you is something that

we've actually talked about in the past

before

and uh it's sort of this this is a just

a little bit of a recap and i just want

to make it very very clear in terms of

where sort of my head is going into this

and we're going to compare so my head

going into this sort of inflationary

environment has regularly been that if

on the left side over here you draw

household incomes you know 50k 80k 100k

150k 250k

and then on the right you kind of draw

just various different companies so uh

for example here we put nike i'm going

to keep this a little short because i

have explained this before but when you

look at this it's like okay well who

buys a tesla well a person who buys a

tesla on averages has around 150 000 uh

dollar per year household income so

you're probably talking about your

wealthy individuals down to maybe about

100k right who buys apple products well

probably people not making 50k but

somewhere between say like 90 to

130 000 and then potentially up from

there right uh who buys nike well this

is your your lower kind of demo and up

you know wealthier people by nike as

well so this could probably extend the

point is when you go into an

inflationary recession you're what

you're kind of doing in my opinion i

want to show this visually here is

you're kind of taking like a saw blade

and you're going like this you're

starting at the bottom the poorest

people the people who spend like 50

percent of their income on food and and

30 or 40 of their income on on shelter

like food gas and shelter and like all

their income's gone they're totally

paycheck to paycheck to paycheck making

you know 20 thousand dollars you take a

saw blade to this area and you're like

yep you ain't buying new nike shoes

anymore yeah

and then that levels up and it's like

nothing you ain't buying apple phones

anymore

you know you ain't going shopping at

target and walmart as much as you used

to because inflation sawn that away

right and so obviously it takes longer

for for that kind of pain to get to more

luxury good companies and so what's

fascinating is if we actually look at

this chart which just came out from

morgan stanley take a look at this the

bottom quintile has less excess cash

than they did in 2019.

this is really interesting because let

me first give you this overall overall

so all consumers together have about 140

percent

more pp than they did in 2019

pp being purchasing power

we also believe

that on average households have roughly

15 000

more cash than they did before the

pandemic

but

this is an average it encompasses

everyone and it's really not until you

zoom out here that you realize oh crap

it's actually the lower income demos

that are getting rained here look at

this the people making zero to you know

uh uh 20 or the bottom the bottom 20

percent making you know

very little money have no excess cash

they're at zero dollars of excess cash

the people in the bottom twenty to forty

percent have three thousand three

hundred dollars of excess cash

the next twenty percent nine thousand

two hundred dollars but look at the top

20

how much excess cash the top 20 percent

has they have 56 000 extra like you

could buy a lot of ipads right

so one of the things that you can do is

you can google something called what

income percentile am i in

and you could throw in what your income

is

and calculate what percentage you're in

so for example if you make 63 000

you're about in the top 58 percent

if you want to be in the top

20

i'm going to take a guess here i'm going

to go with 140 000.

yeah you're at the top 12 then if you

make over a hundred thousand dollars a

year you're about in the top twenty

percent so the people who make over a

hundred thousand dollars a year

have an excess of about fifty seven

thousand dollars on average

the people who make virtually uh you

know or the bottom eighty percent which

is like a lot of people the entire

bottom eighty percent substantially less

money than than these wealthier folks

and so what does that mean for what

people are buying well listen to this

and this becomes important like if

you're picking stocks

macy's tells us something that we have

seen reiterated by jp morgan

visa

and almost all of the other retailers

including target and walmart target

walmart they talked about how we're

seeing it and so did lowe's in home

depot they all talked about this we're

seeing a shift away from landscaping

we're seeing a shift away from furniture

but people are still buying luxury

products they're just buying a lot less

of other things like apparel or sort of

general merchandise luxury products are

still selling

all the other stuff that bottom saw

blade of stuff

not doing as well

what did macy's tell us this morning

quote a noticeable shift to occasion

based apparel what that means is

that bottom threshold is like crap i can

only buy clothing when i need to like oh

i need to get a tuxedo i need to get a

dress or whatever for an event but

that's it i ain't buying clothing

anymore because i can't either i already

have or have no money left

they're also seeing a noticeable shift

back to in store that's kind of

interesting because i think after like i

thought i think after the pandemic

everybody's like oh retail's dead like

there's no way retail's ever coming back

uh everything's just gonna be online

apparently not people are still wanting

to shop in person but here you go quote

continued strength in luxury goods and i

thought that was fascinating because

this is the same kind of stuff we saw

from dick's sporting goods it's the same

thing that we saw from nordstrom's ralph

lauren and a lot of these other

companies that i mentioned already visa

jp morgan whatever that's the bottom

incomes of threshold of spending those

are the ones that are getting whacked we

kind of already knew that but let me now

show you mobility data that shows

potentially going forward because this

is like information that's probably like

yeah 30 days old you know these investor

calls they kind of get prepped

beforehand they don't necessarily have

to give us all of the latest info though

it's some of the most recent stuff that

we can get especially on the earnings

calls so i still really appreciate

looking at the earnings calls but i also

realized their sales pitch

this though was dirty okay this chart

that i'm about to show you this in my

opinion somewhat scary so

there's this thing called mobility data

and that's that when you use your cell

phone you're like a dot on a map and

your dot kind of flows throughout the

world the nsa and caa and fbi or

whatever they can follow your dot which

doesn't have your name on it but they

can assume it's you based on where you

live and where you work and then they

can pretty much track you wherever you

are so if you think you're

you have privacy you really don't

now what's interesting though about this

mobility data is it gives us a lot of

insight into where people are going for

the purposes of stocks and investing and

so

i like that because even though it kind

of makes you wonder about privacy it's

also really cool because

maybe it gives us a little bit of a

forwarding what's to come for future

earnings reports

so this chart here is broken down by

company and i'm also going to give you

some overall sectors

a sector declines i'm going to start

with the sector declines and i'm going

to show you the chart

so this number just came out this

morning

overall retail traffic fell

9.7 percent

in this last week compared to the same

week last year

that's

that's bad because everything so far has

been beating last year

now we've got a big plummet here in

retail traffic but you'll be surprised

how much some of these stores and

sectors are down i just have to give you

a quick reminder

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but uh we can take care of you there and

check out all the different things that

you have and

know that there's constantly new content

that gets added we've got a really big

batch of new content coming out in the

next couple weeks after that that

largest price increase at the end of the

month and then we've got a new content

dump coming so really really excited

check those out i think you'll really

enjoy them so

retail numbers here

the biggest hit by categories

a negative

24.6

decline to home improvement

and furniture

that does not surprise me at all because

people stop spending on their homes when

they're worried that real estate prices

are going to start ticking down

or when potentially they're fearful that

uh

that appreciation has stopped and home

appreciation is no longer going to

finance their their opportunity to just

spend money like crazy on their homes

also possible that you know people have

already bought furniture with their

second homes and all this kind of crap

for those fancy people but whatever

biggest hit 24.6

decline there department stores and

apparel this actually includes macy's in

aggregate down

13.8 percent on retail traffic data and

now i'm going to show you store by store

and it's kind of crazy who remembers

what i talked about a few days ago when

i talked about a certain company where

the ceo is like oh we are noticing a big

slowdown in consumer electronics like

not sure if we're going to see a

recession but

maybe maybe it'll be like a softest

recession well that ceo was the ceo of

best buy and take a look at their retail

trading data right here folks look at

this chart this is scary

best buy folks best buy

year over year retail traffic down

56 percent and change on the week down

4.9 percent bed bath and beyond year

over year down 36

ulta beauty down 31

lows in home depot down 30

target 27 kohl's 25 victoria's secret 24

gab 19

macy's macy's just killed it on earnings

but yet week over week they're down 5.5

percent and year over year their retail

traffic is down

19.1 percent folks this is a sign that

people especially that lower demo are

getting killed by inflation and it's

starting to show up in how often people

go to stores in the first place

people are even going to publix

17 less than they did last year and 6.8

percent less week over week now

i don't recall of any kind of like crazy

hurricane or anything that all of a

sudden made people stay home but these

are some bad numbers like i think the

only thing that went up was the beauty

sector uh year over year oh

categorically beauty went up point six

percent your year dollar general folks

the dollar store up 2.7 year-over-year

but still down 7.2 percent uh on the

week-over-week grocery stores are seeing

less uh aldi is uh fractionally up on

the week-over-week over here but all of

these numbers are terrible like i don't

want to invest in those numbers and it

also kind of makes me wonder like is

dave busters in that kind of similar

category here it's kind of scary so it's

something to keep an eye on that retail

does get crushed by inflation we know

that but specifically that lower demo

and this consistently makes me wonder

like are the companies that i want to be

in are they the teslas the apples the

the uh you know starbucks what appeals

to that higher demo where they're still

going to spend

so even though macy's is doing really

well today that chart was not very

exciting to me but there's also this

belief

that potentially the end is near that

inflation will end up being transitory

now i don't want to sound like a broken

record because i know when people hear

that they just roll their eyes and

that's fine but take a look at this

diesel prices although they're at

roughly an all-time high they're

starting to peak and inventories are

starting to climb we know that when

inventories go up prices tend to

eventually come down diesel prices have

finally hit that level no guarantees

they won't go higher but it's a good

sign

lumber prices are at the lowest level

they've been in since october it's been

straight down for lumber prices over the

last four months

you have a smoothing slash easing of

freight

fertilizer who remembers how fertilizer

was was you know essentially just going

to go to the moon because of uh ukraine

and russia where we have substantial

amounts of fertilizer exports somewhere

between 40 to 50 percent of the world's

fertilizer pot ash comes from this

region

well even though it's true those prices

have come up substantially fertilizer

prices are down 20

from their peak you can look it up green

markets north american fertilizer price

index

clearly

we know that there are going to be like

over over this next you know decade

we're going to look back at this era and

go holy crap that was a lot of inflation

the question is just how long does it

last

market expectations are that inflation

exp inflation is going to come down and

we're starting to see that you look at

the used vehicle index it's going to

probably be a drag on cpi numbers coming

out next month and it's a good thing

it doesn't eliminate the fact that lower

end retail is still going to get

absolutely destroyed by the higher

prices that we have now but not just by

the higher prices that we have now but

also by the fact that people have less

money we saw that when we looked at the

chart

of who has the extra cash who has the

extra wealth this chart right here it's

certainly not the lower income

demographics so i think we'll see that

pain coming in the lululemons and the

nikes and so on going forward but

haven't haven't really seen that yet

because we've been so focused on prior

quarters where people still had money

now the good news is companies are

raising wages and that can eventually

help that lower income demo but it takes

a while for you to actually get in your

job if you just start saving money for

you to get out of sort of the debts and

how far behind you are and then actually

spending money again and feeling

comfortable again for example apple just

announced that they're going to increase

pay for its workers

to 22 an hour that is up more than 45

from 2018 wages according to the wall

street journal that's pretty wild this

is also happening at the same time as

apple is actively discouraging their

employees from unionizing suggesting

that their employees might have less

flexibility less opportunities to work

from home and less opportunities for

promotions if they unionize now this is

sort of like unspoken and duh but

recently in the media it's been coming

out that apple like

like these things are getting leaked in

the media and people are kind of pissed

at apple over this idea because it

paints this picture of the big

corporation versus the employee and so

apple's trying to take this proactive

step of raising wages again and you see

this sort of increase in compensation

whether it's through stock based

compensation or hourly wages regularly

and regular like frequently now

including at companies like amazon and

facebook although both those companies

those latter two have frozen hiring

because they'd rather pay their existing

employees more

this is also by the way when we noticed

that apple and we're not sure if this is

like directly related to this sort of

retail destruction but look apple is not

like an extremely luxury brand it's a

more expensive brand right if the

average household income in america is

like sixty thousand apple probably

appeals to that eighty to ninety

thousand average income demographic so

android users are statistically lower

income than apple users we know that

those are facts

but apple now asking suppliers to make

about 220 million iphones

this year which is flat from last year

is also a little bit of a sign that

maybe you're starting to see that

shaving away from retail purchasing

interest

now

apple was expected to produce about 240

million iphones this year and so a

little bit of bad news there for apple

because that came in substantially below

expectations and flat and reiterates

concerns over what's going on in china

with the strict lockdowns softer

consumer spending and of course the

inflationary concerns

so all in all this is the kind of market

to just be careful with which stocks to

pick because i think a lot of bad news

for the lower end retail is actually

ahead of us

not behind us again nike lulu macy's

like these guys have all been killing

with their earnings

i'm just worried if this is the kind of

mobility data changes that we're seeing

coupled with who has the excess cash who

doesn't who's going to the store and

who's not who's spending it who's not

who has the capacity to spend who's up

the retail a lot of these are just

companies i just cannot get into and

that's what i've

really been trying to focus on i'm just

going to try it as much as possible park

money in uh the high income demos or uh

the more luxury goods okay good

that gives us an update on a retail make

sure to check out the programs i'm

building your wealth down below uh and

uh yeah look forward to seeing you there

let's go back to the sticks