Okay, folks, what about this recession will recession come well? According to the bank of england, a recession will come, laugh because it's like: why do we care about the bank of england going? Oh, no, no! There's going to be a recession! Well, we care about that, because a slowdown or recession in china and in europe could lead to a slowdown or recession in the united states. Now janet yellen doesn't doesn't think so. She believes that while we are going to face a slowdown in the united states, we're not going to fall into that recessionary territory, and this is despite the fact that she says inflation is too high and we've got to work harder, but what's happening in europe. Well, three of the nine members of essentially their central bank voted today for a half point increase in their sort of fed funds rate.

If you will uh and the rest voted for 25 basis points, so they ended up getting a 25 basis point. But the big thing came out of what they were talking about and they talked about how they are unable to prevent inflation. And this makes sense because they're citing things like gas and electricity prices, which ilan and jerome powell yesterday told us, the federal reserve can't affect commodity prices. We can't change top line inflation.

We can only affect demand for things that are measured by core inflation, so the essentially fed the bank of england in england. They are telling us hey. We are sorry we're not going to be able to control inflation to the point where we think we're going to be over 10 inflation by the end of the year, and we don't think we can engineer a soft landing. We'll have a recession, and this is why the bank of england now forecasts a recession by the end of 2022..

This means and and look well sorry, sorry, uh, xi, jinping, sorry, china, but i kind of think china's already in recession and europe's about to fall into recession. Maybe there's a chance. The united states can soft land and get by if you listen to j-pal from yesterday, if you believe what he says: hey, it's possible the bank of england, nowhere near as confident they think it's essentially going to take a recession to get to their two percent. Inflation target - this is pretty gloomy, and this really led pre-market to have a little heart palpitations this morning.

In addition to this, germany warns that eu consumers should basically batten down the hatches and brace for a big economic hit, because these these higher energy prices are not going away. In addition to the fact that germany is now willing to bark an embargo of russian oil to punish moscow now this is bad, because, if that happens, and and germany relies on nearly half of their oil imports, uh from russia, they're you're, going to see gas prices And heating costs substantially increase substantially more than the increases that we've already seen and unfortunately for germany and unfortunately for uh, the well the entire eurozone. Given that germany is the eurozone's largest economy, it's likely that the entire eurozone will fall into a recession by the end of the year. This is why the european central bank executive board member fabio panetta this morning said that the economic expansion has almost ground to a halt in the euro era like this is.

This is like i'll. Just like tear like we thought, jay pal yapping after the fed meeting, was bad and then it's like, but no problem. He did that in march. Okay, we got over it.

You know right around april when stocks started falling. Now we get to deal with europe yapping after the fed meeting. It's someone's always yapping, but anyway, uh vera believes that we are already in europe facing quote de facto stagnation, and that's like the worst thing you want to hear. Nobody wants to hear stagflation because again, central banks can't do anything against stagflation when the economy's stagnating, usually central banks like to stimulate by lowering rates, but that just increases inflation right, the inflation part, and in order to deal with inflation, you need to raise interest rates Which continues a stagnation or decline and you're already seeing that, in fact, germany factory orders came out this morning, demand was expected to drop 1.1 percent.

This is because of war, obviously in ukraine, causing disastrous implications not only for energy costs and transit costs and shipping costs, but also making it virtually impossible to get certain supply products that were that were came from regions around or in ukraine or even russia. This is a problem, and so what happened? Well, german manufacturing actually plunged 4.9. The expectation was for a one point: one drop. They got a four point, seven.

So right now, four point four point: seven percent drop - and so all of this ecb talk in addition to the fact that turkey, just this morning, reported an annualized inflation rate. Remember annualized means they multiply it by four right, an annualized inflation rate of 69.9. I don't know why they had to pick 69. Maybe that was actually what the number was, but you look at europe.

You look at turkey. This is a complete disaster, and so you've got this disaster that we're not being told about in china. Although the consumers in china know about it, we've got this disaster happening in europe, where the ecb, the the german folks and the bank of england, all of them are like yeah, this year's gon na suck. Okay, oh that's happening, and then here in america.

What do we do? We look at our lord and savior jerome powell and we're like oh gosh. This is all we got so i ran a poll yesterday and said uh. Would you support uh investing in twitter if elon musk appointed jerome powell, as ceo and 51 of you said yes and 49 of you said hell no, and so it shows you that trust for jay pow is literally at like 50 50.. I mean it's not as bad as like biden's approval ratings, but it's still pretty bad like if 50 percent of people are hell no to to you, that's bad, and so that's probably some of the pain that we're seeing in the market.

Now, on top of the fact that you've got folks like this lady nancy davis, founder of quadratic capital management, quote, we see inflation as driven by massive government spending supply chain disruption more recently by russia's invasion of ukraine, and therefore we are puzzled. Why the market thinks that the fed rate hikes are actually going to stop inflation, because in her argumentation, the fed rate hikes are not going to fix supply chains. They're not going to fix the fact that the government spent all this money and they're certainly not going to fix or end the in russian invasion of ukraine. Again, we've got janet yellen who's, optimistic that inflation is not ingrained and therefore it'll go away.

This is the same thing that jerome powell told us yesterday, essentially that inflation expectations are stable and as long as we walk the walk now and prove that we're willing to fight inflation, inflation should come down and by some measures it's already come down, use car prices. Freight and rail you look at uh core cpi over the last couple months. As long as that trend continues, we could have a soft landing in the united states unless, of course, we get other bad numbers like. Oh, no really bad productivity numbers which is kind of exactly what happened this morning see job productivity is really important, but in q1 productivity fell by 7.5 and see when you have negative productivity plus high labor costs.

You equal, really high unit costs for labor. You think about it's: like people already cost you more. You hope that they're going to be more productive, but if, like they cost you more and they're way more like unproductive and you're just getting screwed and gdp weighs under that terribly. In addition to that, we had a little higher than i expected print for jobless claims.

This morning, 200 000 jobless claims thursday. We get jobless, claims fridays, we get the actual job reports that's tomorrow and we had a big adp miss on wednesday yesterday morning, because of small businesses being unable uh to actually hire talent and losing a lot of talent. Lots of people quitting a lot of job openings, though so it's kind of a really mismatched economy, but are these signs of potentially cracks in our labor market in the united states and gee? Don't look at e-commerce because shopify dropped as much as 16 etsy missed guidance. Wayfarers down like 10, these are rough issues.

Now we already we've known - and i've been saying this for for months - that e-commerce is going to be a problem, but i'll tell you. There are serious concerns that the federal reserve is not going to be able to pull off a soft landing. That's what we're seeing priced in right now! That's why we're seeing the market turn red people just are not believing the fed, and you know what you can't blame them, because what did they do to us in march? Well, in march, they gave us a story, and then, two weeks later, as soon as the market started, going up they're like just kidding, we are going to change the script anyway. Those are my thoughts on everything.

That's going on in terms of why the market's turning red this morning.