Hey everyone kevin here in this video we are going to talk about retail capitulation. Is it coming? Is a recession going to come out of the stock market and what the heck are? Some things going on today. Well, first of all, gdp numbers came in slightly worse than expected. They came in for q1 with the uh, an expectation of 1.4.

We ended up getting 1.5 to the downside, so a loss of 1.5 in gdp for the first quarter. There was talk that, after some of the latest reports that we got over the last few weeks that we might actually see gdp revise up, especially when retail sales went from negative to positive. But they were nowhere near enough positive to offset the fact that wholesale trade uh and uh and imports so uh. Our trade deficit came in substantially worse than expected all weighing down our gross domestic product, our gdp, so still negative for that q1.

In terms of numbers that we're looking for jobless claims relatively stable coming in at about 210k, the estimate was for 215k, so slightly less than expected. A lot of folks are really monitoring that jobless number, which really right now is kind of a nothing burger. But a lot of folks are really monitoring that number, because they believe that one of the ways that we can actually predict a recession coming or or know that potentially the recession is here is by seeing jobless claims substantially start increasing, because remember what the federal reserve Is doing they're trying to take from the unemployment pool of having a really really tight labor market, where it's just like we've got so much excess demand for labor like even if we lost jobs and we took from the unemployment pool, we've lost jobs, there's so many Other job openings people can go get another job, but that would reduce the amount of openings we have because if you have job losses, that means some of the other openings start getting filled right. People don't necessarily leave the labor force entirely, although that would also be a problem as labor force.

Participation goes down, but the idea right now is that if we have 1.9 job openings per uh, a per unemployed person, then you kind of have two jobs for every person. Right now. That's unemployed and that's not balance, whereas inflation is really high. So the idea is well: let's crimp the economy to potentially create some job loss and bring inflation down, and the people who do lose their jobs.

Don't worry, they can go get another job. I know that's easier said than done. Obviously, but that's sort of like the monetary point of view, and so looking at jobless claims now yeah. We had a little bit of a spike last week and we got over 200k, but but we're really not seeing any kind of extreme job loss.

Yet, although we are starting to see a lot of freezing of hiring, you know, uber's freezing hiring you've got even a company like nvidia, freezing or slowing hiring. Obviously, the likes of snapchat also doing the same, and so you're kind of getting this across the board and you're starting to see the effect of that monetary tightening in real numbers, and this is where we're trying to predict like okay: do we have a recession potentially Coming looking at those jobless claims very, very important. Another thing that can be a very historically accurate predictor of recession is the spread between the 10-year treasury and the two-year treasury right now that spread is sitting at about 29 basis points so written as a percentage. That's 0.29: that's actually substantially higher than where we sat april 1st because april 1st we sat negative so in other words picture a chart that went negative and that chart has been going negative since the beginning of last year, like it's been trending straight down when negative April 1st that usually signals a recession coming within 12 to 18 months, but we have uninverted.

It was almost like an april fool's joke. We uninverted from april 1st and uh now we're sitting at roughly average levels of where we've been sitting the last two and a half months, kind of a good thing, in addition to a good thing - and this is another thing where folks are saying: okay. Well, maybe maybe inflation will be transitory and we won't end up having a recession, and we won't end up getting paul. Volcker is what the market's expectations of inflation are and those expectations skyrocketed to almost four percent uh in in uh about the middle of march.

This is after the war, uh started, uh the sort of invasion of ukraine started and the the what this is is the five year break. Even is the tool that the federal reserve likes to use as well, where they're, basically looking at the difference between the five-year treasury yield and the tips, which is an inflation-protected security, and by measuring that spread, we can determine okay. Well, what does the market think of market pricing relative to something that's inflation protected and thereby we could measure sort of the market's expectations super oversimplifying here. But the point is that spread went way high.

I mean the highest level that we've seen since, like probably 2018 or more, i mean i'll go back five years here, i'll, look really good. Actually, we haven't even seen inflation break evens that high in the last five years, the highest we saw in 2018 was a spread of about two percent. We got almost up to four percent, an extreme peak in uh right around the middle of march, and it is coming straight down which is really really good. We're under 3 right now, as a spread sitting about 2.94, really good sign and we're sitting at levels that are roughly in line of where we were in october, so we are now lower than the omicron inflation fear peak that we had.

So these are good signs right. It's a good sign that we're not yet seeing employment collapse very quickly right, even though hiring is slowing, uh yeah we've got a negative gdp print for q1, but really, i think, the market's almost going to brush that off, because it's really close to expectations. We didn't get a blow out in any wrong direction. 10-2 yield curve, looking good the more it steepens, the better the five-year break, evens, the more it goes down the better.

This sort of brings us to the question of well. Like can. Can the stock market predict? Recessions and what are retail buyers doing so, let's talk specifically about what retail buyers are doing and whether stocks can sort of predict a recession. I do want to give a quick shout out to do things number one.

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So that way, you make sure you get your free crypto. Every time you trade and i'll tell you crypto's been on sale, but if you want to use some good ta consider using that ftx web app as well, it's really incredible! So now, let's talk about retail and what retail is doing. One of the first charts that i want to use is this measure of how often the word bottom is being used in financial, social media, and this is really fascinating when you chart it over time, because i don't necessarily think that, like this is like a perfect Measure of a stock market bottom - and it hasn't been in the past, but it's also very, very fascinating in terms of when bottom has been mentioned. Take a look at this chart.

The purple line is the s p. 500. The blue line is the total of weekly mentions of bottom in social media. Now, what i'm going to do is i'm going to draw a green highlighter over when retail was right, at least in the temporary moment, right retail was right over here that the number of mentions of bottom nailed the bottom of the coved dip.

If you look sort of roughly into the pre-election pain period that we had over here, you kind of saw retail a little early here. Look at that. If you align that you kind of saw retail a little early on that one, we really kind of hit our lows a little bit after those searches and right before the election. When we had peak fear here, this right here was potentially, in my opinion, i'm going to call it hope - and i think retail missed here.

This was in the february crash. Remember when, in like february of 2021, we had this sudden like u-turn by jerome powell, and he was getting more hawkish and markets started falling there. You go retail, didn't you know really it's hard to say that retail kind of nailed it there, because we don't have that alignment there. Uh and same thing is true over here, and this is where it's like.

It's not a perfect chart. We fell a lot and the more we fall. The more people are searching for the word bottom right. So really out of these, i kind of give this more of like a coin toss of being accurate.

But i'll tell you this one, pretty dang strong in terms of a signal that when you get like a really big massive hit, maybe that's where the bottom finally is. Maybe because that's where retail capitulation finally happens - and maybe we haven't actually had that yet at this level of mentions, so it's something kind of interesting to keep an eye on again. I don't think it's a perfect tool, but it's something to pay attention to now. Here's another thing: that's fascinating about retail investors.

Retail investors are not capitulating. The grade line is the total value of money, that's being traded, so people who are trading traders, whether that's day trading swing trading, whatever you're methodically trading. There are many different kinds of traders right. Some people like to insult traders, some people who insult traders just don't understand traders and some people are traders and i think everybody can invest.

However, they want, but look at this total value traded has been on a downtrend, uh yeah i'd say, probably align it more. Like this, so that gray line has been on a downtrend, this makes sense this market's a little bit harder to trade in, because you can't just wait for things to get better because they don't necessarily get better. They could just get worse. But, what's really remarkable is net buying folks has actually been on an uptrend, which is the blue line, which means retail has actually been buying more than ever before.

Despite all of this disaster, you can see here. This right here is pre-pandemic. This is retail buying. In a three-month period, we were somewhere around 10 to 20 billion dollars of stocks being bought retail buyers.

Now, like most of us folks, y'all freaking, killing it you are buying and you're getting in there and you're increasing your quantity like that is so good. Let me put it this way: i've never had as many tesla shares as i have now. I have almost twice as many tesla shares now, as i've ever had before. It's really really incredible because, as prices come down, you can you could grab more right and it's so freaking remarkable, but this is great.

I i think this is actually a wonderful uh item here, uh now, that's what retail is doing. I'm going to give you some names in terms of what retail is buying, and then we want to talk about whether or not the market can predict a recession so uh regarding buyers. What we're seeing is the biggest net retail purchases in the last five days have been the following in order: apple, tesla, amazon, nvidia, microsoft, twitter, occidental, that's a very warren buffett. Ask bank of america coke both of those also vary.

Warren buffett ask ford, roblox, rivian and disney that's by volume. Now the biggest change of retail interest in the last five days versus 30 days ago have been the following stocks: coinbase unity, affirm, roblox, rivian, amc, home depot, merck, trade desk and cloudflare, so potentially you're seeing retail kind of look at those and go. Oh man. Those are gone real, cheap now now can bear markets, predict a recession.

Well, the average decline uh that we've seen in a bear market is 31 of the s. P 500, we're only at about 20 percent for the s p, 500 right now. So, there's a lot of fear that, oh my gosh well, this is going to keep going, but let's put it this way. Bear markets never historically have occurred since before recession started, so in other words, if you're in a recession, the bear market happens while you're already in a recession.

So, if we're in a recession and that's why we're in a bear market there you go, this is the bear market recession. However, there have been a lot of false alarms in 1987, 1966 1962. The s p fell more than 20 without an imminent recession, and stocks fell slightly less, but still dramatically less than 20, but still dramatically during uh the recessions and uh. These are the actual recessions of the early 90s, the early 60s and early 50s.

But we didn't actually go down below 20, so, even though that 20 number is kind of like okay, why that 20 threshold? It's just worth noting that, just because we have uh uh, you know the stock market falling doesn't necessarily mean the recession is going to come. After it could actually mean we're in a recession, or it could mean nothing, and so it's kind of an interesting update to think about. Can the stock market really predict a recession or not? The answer to that hardcore no anyway check out ftx in the link down below and the programs on building your long-term wealth, whether it's the real estate sales, making youtube videos or stocks all linked down below all right. Let's get the bell in short interest, so.