Oof, Is it possible that 2023 could be even worse than 2022? Well, Goldman Sachs says so. Citibank has three scenarios for us, which we'll be going through here. We'll talk a little bit about what CFOs are thinking, what are consumers doing and oh man, what are some of the charts tell us we might be facing? Well, let's get into this because uh, in one of the scenarios, we see a negative 90 percent number and it's just not that good. Okay, anyway, let's get right into it. So first, Goldman Sachs believes that the bear Market is not over. In fact, they expect that the stock market the S P 500 will essentially be flat all the way through to 2000 and 2023's end. Uh, that's because they believe that the S P 500 will end at 4 000 in 2023.. If you see here, we are presently within one percent of that level, and that's not very optimistic of an outlook for 2023. They cite the rapid deterioration of economic conditions. They suggest that this process is just now beginning and that potentially the bottoming of earnings per shares for companies isn't even in sight. That we might not actually see the bottom of earnings per share for companies until potentially late in 2023 or early 2024.. Now, do keep in mind that in other research Goldman Sachs Analysts have suggested that the stock market tends to bottom about six months before the bottom of an earnings recession as the bottom of earnings per share. But the question is, where is that bottom if the bottoms of earnings per share for companies doesn't actually come around until let's say Easter 2024, then we might not actually bottom out until November of 2023. So that's leading to a lot of Doom and Gloom. So much so that when you look at what CFOs is surveyed by Deloitte say 39, that's almost 4 out of ten. Actually expect stagflation in 2023. That means no growth and high inflation. Yikes. 46 of those. Chief Financial Officers expect a recession in 2023. which gosh, at this point seems like it's already kind of baked in the cake. but uh, then again, you looked at the stock market on The Daily It's like nope, nothing's baked in the cake. It just seems to get worse and worse. And then when you try to compare January of 2020 to what we're seeing now, you're actually seeing some serious changes in consumer Behavior As well. Just consider this: If we look at consumers personal savings rates and compare it to Consumers uh credit card spending. or I should say credit card debt rates. look at the inversion of these curves. It's not usually what we think of when we think of an inversion. but look at this. You've got the green line representing the personal savings rates. Uh, personal savings rate falling to 3.1 percent. That's the lowest level on this entire chart. And this chart goes all the way back to 2000. 16. 3.1 percent Personal savings rate. That is the lowest level. And then when we look at a total revolving debt based on data just released from the Federal Reserve what do we have? We have oh dear. Much more than where we were at pre-pandemic levels. Now if you adjust this for inflation, we're basically at the same trend line for pre-pandemic levels. So if you look at real credit spending, you see, oh yep, we're right back at 2019. levels of credit? Outstanding. Not so great for the consumers. And so that's leading some to say. Okay, well are we actually starting to see any stress in the consumer yet because it seems like you know earnings for last quarter were still pretty good, right? I mean 63 percent of companies in the S P 500 beat. So how bad could it be for consumers? Well, if you look at something that is held up really really well, we start seeing a little bit of an inflection point. Take a look at this. a little scary. Look at this. This is a chart showing you how many people are going through TSA checkpoints and all of the airlines have been telling us oh, demand has been so resilient. You know Airbnb is like oh, demand is so great Everything's going great. But look at what we actually have here which we have not yet seen. Look at that. a downtrend. If we actually try to get the angle here without the iPad correcting it. There we go. Look at that downtrend that we have on TSA Travel. Now, in case you're wondering about this dip over here that dips about a 60 drop just like what you could get with the courses on building your wealth including the new Elite Hustlers course which Launches on Friday That's this Black Friday when the largest coupon code we've ever had expires. So get into Lifetime access to the programs on building your wealth. That means if we add new lectures in the future, you're locked in forever. No monthly fees one time you're in and if you join before Friday even in that Elite Hustlers course, you'll get access for the Elite Hustler Scores to both live streams, the course member live stream, and the Elite Hustler one, but that'll go away after Black Friday unless you buy beforehand where you can lock it in. Now in case you're wondering about this dip over here. This is really your Delta variant right here, so you kind of want to take that out. and if you take that out out, what you see is actually a really nice uptrend recovering out of that pandemic, right? And we were kind of trending back to what we saw in those sort of pre-covered levels. And keep in mind, one of the reasons airports sucks so much is because right now the airline industry is basically running at like 95 of what it used to be. except there's a lot more demand today. or at least we were trending in that direction until just recently here, where we've kind of started seeing a little bit of a Slowdown Now this slowdown is a Slowdown that we've seen throughout 2022, but it does make you wonder. hey, is it possible though we've hit Peak earnings for the Airlines and potentially even Airbnb Now Vacasa will tell you. Oh yeah, Airbnb has hit Peak We are seeing short-term rentals dry up, but Airbnb will tell you. Don't worry in recessions, people want to rent out other rooms in their homes or maybe even their own home while they go on vacation. I Don't know about that, but we think we'll see more growth for people renting out rooms on Airbnb then uh, than in a normal environment I Don't personally agree with that I Think there's a potential here. We could be hitting Peak Travel and I think that's an important warning to watch for because if we align Peak Travel potentially with a peak housing market and Peak residential Investments we're going to see that consumer spend really plummet on residential Investments Solar Travel Consumer discretionary spend. And where are we starting to see real cracks of consumer discretionary spend? Well, how about Target consider what we heard from companies at the beginning of 2022. We heard, oh, we have pricing power. We have the most PP in the world. We have pricing power all day long. We can raise prices and people keep spending spending spending. What are companies like Target telling us now? Well, it's not good. This is something we went through with course members this morning. In more detail than we will here, but what you're seeing is: consumers are showing increasing signs of stress. They're pulling back on discretionary purchases. Later in this document, they even say that people are not only pulling back on discretionary purchases, but they're running so low on money that they're even starting to have to pull back on household essentials. Sure Beauty and food are still doing well, but sales Trends are softening. People are spending more money on like via debt and on their credit cards. Another thing Target talked about in their earnings call. We're seeing more theft and we're seeing more weakness in the last few weeks of October and the beginning of November What is that telling you? Well, it's actually telling you. Wait a minute. we just had Q3 earnings. But Target is warning about an inflection in Q4 October right? October November December That's Q4 So is it possible that we're actually about to get the really bad earnings in Q1 and Q2 for companies related to Consumer spend be it travel, discretionary spending like toys or apparel or bathing suits like what Target's talking about? Or are we also going to see pullback on things like buying Teslas maybe And that seems to be what the market is trying to try to. you know, parse out right now. Uh oh, maybe everything is going to go in the toilet in the first half of 2023 and maybe Goldman Sachs will be right. Kind of scary and so this is where when we look at the Federal Reserve we're like, hey, well, the Fed's gonna relax on their hiking Pace right and then then maybe maybe like the stock market can stabilize right. The problem with that is there's little indication of the market actually pricing in any kind of lid here on the Federal Reserves terminal Fed funds rate. In fact, we're knocking on doors of all-time high expectations for how high the FED is going to hike. So you've got a fed that's hiking extremely aggressively to levels that we have not seen in any other prior hiking cycle. Because folks, we are hiking at the fastest rate that we have seen since the 1980s. It's insane. now. Sure, we're seeing commodity prices fall. We're seeing the prices of freight start to plummet and inflect it down. This is great. These are disinflationary forces that could lead to a nice amount of uh, and falling inflation in 2023. And maybe we'll have a floor put under the stock market and we'll all be right back to the Moon. Maybe this is where we have to look at Citibank's three projections and potential targets. But let's just start by saying it very simply: there's a lot of uncertainty ahead and when we inflect from what we saw at the beginning of 2020 two which was everybody's got pricing power to where we are now, nobody's got pricing power. and all of a sudden prices are falling and all of a sudden, consumers aren't spending anymore. You get a lot of fear that earnings are all going to get revised down in Q4 including at a company like Tesla now I Believe or maybe hope I'm not quite sure that Tesla will be just fine, but what a Citibank thing? All right. Well, let's take a look at that city gives us three scenarios. In one scenario, they actually think that we have so much bearish sentiment right now that everybody is expecting everything to be so freaking bad that they're not actually considering that consumers are overall in a better place than where they used to be. Even though debt is rising, even though savings rates are low, we might be in a situation where inflation Falls very quickly and this coming recession ends up being a soft and shallow recession and we end up getting a short squeeze to the upside and we rebound nicely. It's one idea for the S P 500 in markets, of course. Then there's a counter argument that Citibank released, which is well, or we have to actually get through the real recession that the real recession hasn't happened yet, that quantitative tightening has barely just started to affect our markets, and that potentially some stocks being down over 90 percent. It's just the beginning Carvana being down over 97 percent. And really, it's not the inverting of the yield curve that hurts. We've got some of the deepest levels of inversion today than we've had in the last 20 years, but it's the subsequent steepening that actually leads to real pain for stocks as earnings bottom problem is all recession indicators are looked at in hindsight. and the fact of the matter is in the last 100 years, stocks have never bottomed before a recession has begun. So this kind of makes you hope that if you're a bull that we're already in a recession. But if we're not in a recession, that maybe that means we have another leg down as Goldman suggests in their bearish scenario, They do, though also have a balanced scenario. This is sort of the middle of the road scenario, and this is where they see earnings Falling by at least 10 percent in 2023. and the share price declines that we've already seen might actually be looked at as a down payment so to speak towards earnings per share declines. So it's kind of like if share prices are going down, don't worry, they're going down. but we're kind of already pricing in the earnings per share paying that we're going to see. So you may as well use that 60 off coupon code down below, because why not? The worst is over And what generally rallies first? Well, generally stocks do. Generally an economy rallies its way out of a recession with stocks leading the way. And there have only been two bear markets in the last 100 years that have taken more than two years to find a bottom, giving a lot of hope that maybe will get some green in 2023. Worst case, it's two years of pain, But then we're up from there. Who knows a lot of potential pain and this is where some folks say, hey, if we do get that sort of scenario where all of a sudden consumers you know, really do pull back, we see those EPS declines the Fed's potentially going to have to u-turn on either how high their hiking rates or they'll have to soften on their inflation Target and move their two percent Target maybe to something like a three percent Target Either way, Goldman Sachs and City give us plenty of warnings that earnings per share are coming down. We know this has been coming for probably the last six months. The question now is which companies and this is the hard part. Which companies are going to have the best opportunity to prove that their earnings per share already took the hit or are no longer going to take as bad of a hit as markets expect. Things won't be as bad as expected and could rebound out. Are those going to be companies like the Chips Nvidia AMD Tsmc? Are they going to be Autos Companies like Tesla pole Star Ford Not really good estimates looking out there for four right now, especially in that EV sector or is the best thing to do to just stick with oil even though oil prices are starting to decline? On the other hand, if we look at our sectors Consumer Staples the S P 500, they're only down three percent year-to-date Could that be the place to continue to hide? Or are those Consumer Staples going to start getting sold off like Walmart once we rotate back into maybe a tech rally which has fallen somewhere around 26 percent year to date I Don't know but what I do know is there's a lot of pain out there and I hope to talk to you in our course member live streams. Check out the links down below and folks we'll see in the next one. Good luck.

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