The Fed's Engineered Economic Collapse | -50% more to Go.

well if it isn't obvious by now I think

at this point it's pretty dang clear the

Federal Reserve is going to do us in for

a world of pain and the best we could

hope for is they start listening to some

of the reports they're releasing like

the Dallas fed report that we're going

to look at in this video or potentially

start looking at things in the bond

market that suggest oh boy things are

getting quite dirty just consider for

example the following the 10-year

three-month a treasury curve yield

spread this has regularly been the most

reliable indicator for stock performance

and the economy going forward this

inverted pretty dramatically in the

fourth quarter of 2022 we're expecting

that it could remain inverted for up to

two years but unfortunately the actual

inversion isn't the bad part It's

usually the subsequent steepening of the

inverted yield curve that's the most

painful consider the following if we go

ahead and plot this green arrow here we

can see that the low points of the 10

year yield curve actually sat around the

end of 2006 and the beginning of 2007

and I hate to say it but the last thing

I really want to think is that today we

sit somewhere around the end of 2006.

I'd much prefer the here that we're

sitting at the end of 2008 but as you

can see at the end of 2008 the yield

curve had already substantially

re-steepened now you could see something

similar over here when you look at the

beginning of 2021 which is right behind

me there we go let's hide this a little

bit if you look at the beginning of 2001

not 21 beginning of 2001 over here you

can see the yield curve was also at a

relatively low level the stock market

did not not actually bottom

unfortunately though until about here

which was March of 2003 which is quite

disappointing because it meant that you

had to wait from here to here to

actually see the bottom of the stock

market much like you had to wait from

here around the end of 2006 to around

February of 2009 to see a bottom in the

stock market and hate to say it but come

over here to the pandemic one of the

only reasons we saw this very quick

re-steepening here and a recession that

wasn't actually that painful was because

of the vast amount of money printing

that we did to bail basically everything

out so what's happening now well it

seems like maybe we have hit a bottom on

the yield curve inversion and we're

starting to re-steep him but

unfortunately again that re-steepening

can be very painful this is why I highly

implore you to be out of margin debt and

prepared to buckle up for the ride see

usually the yield curve inverts about

340 days before an official recession is

declared that has been true with only

two false positives going all the way

back to 1962 and and has caused an

average downturn of 8.3 percent in the S

P 500 now we sit about twice as deep as

that right now but let's just say even

though we're starting to get some dirty

indicators for how much the FED is

actually starting to hurt the economy in

terms of the stock market things don't

look that peachy in fact if we go to the

next preferred measure from the Federal

Reserve on what kind of impact they're

having on markets

the Federal Reserve is probably not

going to be happy to see that the

five-year break-even rate is once again

trending up just two weeks ago we were

actually trending down and there was

some hope that if we continue to Trend

down the Federal Reserve might be able

to relax

in their push or fight against inflation

unfortunately there's more bad news that

chart is moving up so in other words

you've got the Steep part of the yield

curve inversion ahead of us not behind

us that's bad uh you've got a lot of

Hope going into 2023 that 2023 is going

to be different but we aren't actually

seeing break evens fall the way they

really should now one Saving Grace here

is that if we kind of just draw a trend

we can clearly see that the trend of the

break-even rate is down which is great

and I believe as long as we maintain

this trend potentially we could see the

Federal Reserve relax as they realize oh

crap the steepening of the yield curve

is starting to become really painful

remember after all when we peaked around

these levels where I'm about to draw

this green line here when we peaked

around 2.2 in inflation break evens back

in 2018 interest rates were 2 and a half

percent now we sit at four and a quarter

on the way to five and a quarter percent

so again more pain ahead of us not

behind us but what else is going on well

we got two other big things going on

we've got the Dallas fed report that

just came out and we've got the housing

market and what's going on with bonds

those being associated together so let's

go ahead and take a look at the Dallas

fed report because let's just say

some of the comments are really scary

and they're kind of a disaster so let's

talk about those and how those can

impact the market do remind you though

that today is December 27th that is the

release of the FED day but it is also

the expiration of the holidays coupon

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all right so Texas manufacturing Outlook

survey so the actual manufacturing

report was quite interesting because we

noticed that in the Texas manufacturing

report we see a little bit of an uptick

in output growth which suggests maybe

improving Supply chains especially since

new orders are actually showing negative

reports now for the seven month in a row

suggesting a continued decrease in

demand so you're seeing output up

potentially a supply chains improved but

again demand moving down and perceptions

of what's happening in the business

conditions in the economy continue to

worsen in December with company Outlook

posting their 10th straight negative

reading however despite this negative

outlook what do we have here 24 percent

of firms noting net hiring while only 10

percent are actually laying off

individuals now we don't necessarily

need layoffs to see where wages

stabilize we just need to see wages

stabilize fortunately that we have a

little bit of a good news here in that

prices and wage indices saw little

movement in the aggregate when they

averaged everything together little

movement and prices and wages which is

good it suggests that Supply chains are

loosening and that prices are stable in

the face of weaker demand than expected

but some of these comments are a little

bit nerve-wracking that the Federal

Reserve may have gone too far consider

the following business has picked up

from a lull in October November says the

food manufacturing business however they

see a lot of illiquid customers that is

businesses and wholesaling companies

that don't actually have a lot of cash

and they have a slam for Biden over here

as well coupling this illiquidity with

the Biden political mentality of things

which is unhealthy for businesses I

think this is very interesting in a

federal reserve report a slam on the

Biden him in in a Fed report now In

fairness it is from Texas but still

pretty shocking to see a slam on the

Biden Administration in a Fed report but

these are the summary of comments from

some of their manufacturers not the FED

right

seeing a significant downturn and a

recession now being planned for in the

paper manufacturing industry so think

office education newspaper towels right

potentially things that could be cut in

a recessionary environment that's it

we're going all digital whatever to try

to minimize spend so it doesn't surprise

me to see maybe larger pain here in

paper manufacturing estimated activity

is really down from previous months when

it comes to printing when it comes to

Mineral product manufacturing home

construction goes down as interest rates

go up and they expect that for the next

six months home construction will

continue to Trend down metal fabricating

demand decreasing oil companies are

spending a little bit more but that

makes sense because oil prices are going

up and they see a lull in year-end

business activity with really no color

into what to expect for next year no

doubt or they say never doubt the

federal reserve's ability to crush the

economy when they intervene to stop

inflation scary take a look at this a

miscellaneous manufacturing does

indicate there is still significant

price pressure from wage growth and a

desire to maybe Outsource to without or

to outside the United States but when

you look at everything in aggregate it

does seem like wages are holding firm

which is good not an overall red flag

here but it does show you that look at

this Transportation equipment

manufacturing there is nothing positive

in the economic data the FED should

pause to let prior rate increases filter

through the economy to avoid overdoing

it and Contracting and here we see a

small decrease in new orders but again

wages and other costs continuing to

increase investing more in automation to

increase the Reliance on labor yeah

think about McDonald's just came out

with a completely automated McDonald's

quite remarkable but it shows you

through this Dallas fed report that look

demand is weakening come companies are

preparing for a recession and in

aggregate we're not actually seeing

pricing pressures on the wage front so

it makes you wonder what reports does

the Federal Reserve looking at because

when we saw the Philly fed release their

labor report they clearly saw the FED is

over counting jobs by in excess of a

million jobs in just the second quarter

which means they're over counting for

the third and fourth quarter as well but

we won't see those numbers for another

three or six months which is crazy

because at some point the FED has to

wake up to realize they're causing a

world of pain I mean just consider

housing from an existing home sales are

now down 10 months in a row down 35.4

percent in just the last 12 months

homebuilders sentiment is down 12 months

in a row and home construction costs are

up 30 percent it's a huge squeeze on

home builders on top of that permits for

single-family homes are down nine months

in a row and we now have more data that

in the last month what did we see the

fourth consecutive monthly decline in

the k-shiller 20 City index of home

prices with a fall of one half a percent

in just a month over a month reading

ending in October now I know we're in

December now a lot of that data can lag

and we know that rates were high in

October sitting around 7.08 and they've

come down recently in November and the

beginning of December we actually saw

interest rates meaningfully rotate down

but I hate to say it we have some bad

news here as well see interest rates for

Real Estate regularly follow the 10-year

treasure yield and I hate to say it

while it had fallen nicely to about 3.5

at the beginning of December the 10-year

treasure yield is starting to Peak again

now on recessionary concerns that uh oh

we might actually be going into a

recession now what's interesting here is

I believe

and it's going to take a while for this

to plan a pan out so I just want to be

very clear about that don't expect this

to pan out tomorrow it's going to take a

while I believe that we are likely to

see stocks start bringing us out of a

recession potentially before we actually

enter an officially declared recession

so if let's say we're in a recession in

q1 2023 we might not officially hear

about that until Q4 2023 but in q1 2023

we could actually be in a recession

stocks could start pulling us out of

that recession but because we're in a

recession we see 10-year treasure yields

stay high or continue to rise which

continues to Pro put substantial

pressure on the real estate market which

means we could end up being in a

situation where the stock market

actually rallies towards the second half

of next year where the real estate

market actually hits bottoms around

those periods of time which is exactly

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shadow Kevin as we go hunt for Real

Estate thanks so much and we'll see in

the next one goodbye and good luck