Well folks, don't sue me bro. but we know it's on everyone's mind. And yeah, I Pressed the music button a little late, but you know what? We've all been worried about. a recession and in this video, we're gonna go through some unique recession indicators.

There are two. there are two indicators in this video that you probably haven't heard of before and then we're gonna look at a B of A piece on what just happened with something called Thrust in the Stock Market something we briefly touched on already, but with a different perspective here from B of A. So let's talk about those three things. The first thing that I thought was incredible was this piece here by TS Lombard Now keep in mind when you hear TS Lombard you should immediately be thinking bear, Okay, they are Burrs their entire staff I don't know what it is, but they're just Bears just like it's getting crashed, it's gonna get worse.

it's it's all getting good at crap, but for some reason they're also very balanced. so I like them because they they actually give some realistic povs of things to watch for. So I appreciate that. You know they make it very clear that their stances look, the credit crunch is going to probably crush us into a recession.

Okay, fine. However, they're also reasonable here and they say hey, look when you look at the U.S Inflation dashboard Basically on the left when it's very rare red it means inflation's going up and on the right when it turns blue it means inflation is going down and as you can see, it's starting to Trend down right so so they're realistic. They're like okay, things are getting better. That's wonderful.

Things are disinflating great. uh and uh and uh. they hold. They still hold their mid-year recession forecast, but take a look at this particular chart.

I Thought this was a very interesting one that I haven't considered at all yet when it comes to a recession or not and it's called The Well the title here chart. Four hotel room rates not yet signaling a recession and I Thought about this a little little bit mostly because of Ross Gerber every time I meet Ross Gerber and I just met Ross Gerber in Deer Valley Utah and Ross Gerber I sit down with him uh, as he's eating lunch with his family and he's like Kevin there's no recession look around I'm like it's pretty busy when we were there. Uh, but but it made it. Reading this chart right here made me think about my meeting with Ross because to some extent, yeah, when you're in a recession, hotel rooms tank and that hope because people travel less for vacation and people travel less for business.

this makes a lot of sense. So in a weird way, maybe you could look at the CPI report as a tool which is actually doing a really good job for you. I mean if you believe the government's work to that extent, if you don't then obviously it's CP lie. But anyway, every month they are looking at a basket of hotels and they're looking at the difference in pricing of those hotels.

And so far as you can see on this chart, Hotel Pricing is still recovering pretty well. Now it's possible that it's recovering because it went so deep into a hole. but then again, we've already had this recovery fall and then recovery again. See, we actually went negative on this chart without having a recession or an official recession.

Yet technically, last year we already had a recession, right? Let's jump over here to the CPI report because we had two quarters in a row of negative. GDP Jump into the CPI report. What do you have here? Lodging away from home? Let's understand the headlines of the CPI report really quick. So we're going to look at the right three to get our seasonally adjusted and then the left.

two to get are unadjusted. So if I type in lodging there, we go. So these are going to be the seasonally adjusted right? Here, That's your essay and these are your unadjusted. Okay, good.

So what do you have? Well, unadjusted, you got? You got some big numbers here for lodging away from home. Uh, these percentages Seven point? That's got to be year over year. Hold on a second. Let's go back to the front of the CPI report and the yeah, these are year over you.

Oh okay, it's year over year and then month over month Unadjusted. Okay, got it. I'm gonna say all right. So we jump on over here.

Well, that's actually still. Wow. What? No, That can't be possible. Hold on a second.

They both have to be year over year am. I Reading this wrong. No, I'm not. Look at that unadjusted percent change March 22 to March 23 and then Feb 23 to March 23, which is a one month change.

And uh, the CPI report here on the unadjusted side, is really suggesting lots of inflation over here on the unadjusted month of a month. But either way, on the right, you can see on sort of the seasonally adjusted yeah, you're still getting this explosion. I Guess it makes sense: 2.7 percent growth in lodging away from home, month over month. I Mean, think about what that is annualized.

2.7 annualized is a 32.4 percent increase. Uh, on a year-over-year basis. If that lodging away from home goes on like this and you can see, look, it's actually getting worse If I draw this as an orange highlight right here. Look at that.

We go from 1.2 to 2.3 to 2.7 The prices for hotels are going up. Not down. That's very interesting because according to T.S Lombard, that's literally the opposite of a recession indicator, where generally when you go negative, deeply negative on hotel room pricing, That's when you tend to be starting a recession. Now it's possible that you're already in a recession when hotel rooms go negative.

In fact, if I look at this a little a little more closely, you can kind of see here. the recession on the left in 21 or 2001 starts here just about where hotels are about at that zero point. The recession here has an inflection point first on hotel rooms, so you do see an inflection point down right. So you see an inflection before you get the recession.

You don't actually get the depth until you're in the recession. But look at that. even over here during the covet era, you see the full a few months before. So really, this is suggesting.

hey, in order for us to go into a recession, we need to at least see hotel room occupancy on CPI Report for April May June We could get those three months and if all of a sudden we get that in hotels, it could be a recession indicator. Kind of interesting. it's a good tool to pay attention to. It's not the only one though.

the second one and then we'll get into B of A the second one I want to look at is this: uh, oops, it's not that one. but I'm going to talk about that one as well. That one's pretty cool. this one, all right.

So this is from the Greed and Fear index which is a Jeffrey's piece. and uh, they talk about how small businesses have slowed hiring plans to the lowest level since May of 2020 and when we look at this index over here I drew red lines on it to make it a little easier to identify these areas of declines. but you can clearly see small business hiring goes down very slowly and it tends to lead to a recession when it goes down now. In Fairness, It really led to this sort of mild nonsensical recession over here in the early 90s, but it does appear that every time you have the small business hiring plan turned from growth to Bear mode, you do go into recession and that's what we're starting to see over here on the right.

We're just now starting to see this small business hiring plan rotate down. It's still way elevated though because if I take the bottom of where we are with with small business hiring plans, draw that across the board, we're still. we're still I would say the upper third of the historical average of this chart right? I Mean if I uh, draw across sort of a midpoint over here. this right? this top section here would be the top third.

This would be your middle third and this would be your bottom third here. And it we're clearly still at the top third. but that's because of this massive enthusiasm that small businesses had during the Uh Covet era. Uh, probably because uh, you know of all the stimulus money.

I mean starting a business in 2020 and 2021 was great. Here's your small business survey on wage hike plans and you see a decline on wage hikes. But again, if I draw from that low Point all the way over, we're actually sitting probably at the top 15 of plans. Plans to Raise wages? Uh, small Business optimism is one of the only things where we're actually starting to go low along with small business cap X Plans Which you can see these two charts here are at relative lows.

These are probably in the lower 20 percent uh threshold. So you kind of have mixed signals here from small businesses where everything is clearly declining right. Capex and optimism plans are down. Uh, wage hike plans are down.

Hiring plans are down. However, hiring plans are still Uh at highs when you look at the early 2000s or the mid-2000s So I think both of these indicators together suggest that we probably still have more time to go go before we're in a recessionary environment now. Barclays Did a phenomenal piece here on what happens with stocks in various different circumstances of, uh, of basically um, recession or not and I'm going to show you this in just a moment. But I Want to think about what these what these charts are saying for a moment? So a quick signpost here.

Really? What? I Think a lot of the data that we're getting today is saying uh is? First of all, don't sue me bro. But second of all, is patience. That has probably been the hardest thing for me to like Learn over the last years because everything's always been so fast and uh, since the beginning of 2022. Back in that January when I sold and then you know obviously later I started rebuying and then I launched an ETF and a real estate started myself.

overall that time I The biggest thing I Learned is like this: like these: Cycles take a lot longer than we think and yesterday there were actually some calls that we might not see a recession until 2024 and so what feels weird is it feels like we keep kicking the can down the road. I Mean yesterday in the course member live stream, we briefly went through some of the JPM numbers and I'll tell you those JPM numbers without going through and rehashing all of it. Now the GPM numbers were amazing. I Mean yeah, average deposits were starting to move down a little bit.

A lot of that has to do with people moving money over into money markets, but credit card and debit card data is still up substantially. Lending is up, revenue is up. I mean JPM was absolutely destroying it I Still don't want to be involved with JPM but when you look at credit losses, you're actually seeing credit losses decline at Industrials Like Fastenal you're seeing credit losses decline. like the rate of growth of credit losses, they're still increasing in some cases, but they're barely increasing.

Uh JPM barely increasing credit losses I Think one of the only places that I've actually seen increased credit losses has been CarMax But then again, you're dealing with used car buyers who are more likely to be subprime. Uh, which is bad credit score, right? So overall, I Have to say, like you know, here we are in: April We could potentially have another year of no recession I'm not saying there won't be a recession, it's just we keep kicking they damn something down the road. The more we kick it down the road, the better though, because the more we kick it down the road, the more the cancer of inflation is potentially negative and we just go back to cranking the money. I'm not saying that's exactly what we want because we don't want to just repeat this over and over and over again and end up with three waves of inflation.

Like the 70s, right? But I already debunked the three waves of inflation yesterday. You could type into YouTube Three waves of Inflation Me: Kevin You'll see what. but look at this. This is really fascinating.

Equities on average continue to rise after the last Fed raid hike. Oh wow, that was interesting. Look at that. Here's the end of the hiking cycle.

that middle line right there. You get some volatility going into it, but on average it looks like most equities tend to rise slightly after The last Fed rate height. However, on average you tend to get a fall on average after the first cut. Now, obviously I've made the argument many times before that the reason the FED is would it cut is because the cancer of inflation is gone.

They're not going to cut until that happens. and in my opinion, there's a chance the stock market could actually see through that. Uh, because again, once the cancer is gone, it's like, okay, yeah, we just have to go through a little bit of pain and then and then we're good again, right? Who knows. But that has happened before.

Look for example, at the stock market in 19 in the 1980 recession, which is interesting because that came right before the Paul Volcker. But they were raising rate to fight inflation without having to go Paul Volcker level yet. And look at what happened. It's this light blue line right here above that red line.

I just drew equities did very well. In fact, from the cut to the end of the 1980 cycle, stocks went up like 25. However, when we got Paul Volckerd stocks actually went down about I'd say about 15. and then the average is the red line.

here. Now the average is actually phenomenal. The average suggests flat. so that's weird because everybody's like oh my God the First Rate Cut's gonna crash the market.

Well, not really. The average is the red line right there. and it shows flat after the First Rate cut. but after the pause, you actually get about a seven to eight percent rally in stocks.

Kind of interesting. This is really interesting data. All of this data isn't very bearish. Combine it with PPI retail sales CPI uh, a PC from last month.

a lot of the data that we're getting just is not that terrible. now. Uh, this was the breadth indicator that we had talked about. Uh, and Bank of America is basically also reiterating how this is a bullish signal.

Basically, this was a the Bloomberg chart that I shared yesterday, essentially suggesting that oh, this is bullish. Like, usually when this indicator flips, it's very bullish for markets and uh, the that thrust indicator. it's left. We talked about it yesterday.

Bank of America did a whole piece reiterating how bullish it is now. I didn't want to get blindly. You know, bullish here I Feel like I'm already bullish enough. But I Think the the argument here is we might still have time.

We might still have a good chunk of patience ahead of us before we actually hit a recession. It might not be as soon as June or July. It could be a Christmas recession or a or a q1 of 24 recession. and by that point it could be so mild because inflation could be so low.

I mean who knows, but it'll be very interesting to pay attention to. And I think now we've got a couple good leading indicators. not only the small business leading indicators, but personally, if you want an easy one, look for that inflection in hotel rooms. Uh, because we have not seen that inflection in hotel rooms yet.

So I know it feels nuanced, but it it very much hits people's sentiment when they say or it's an it's evidence of people's sentiment changing when they stop traveling right? And I think that's really you know throws back to the Ross Gerber argument, which is there's no recession, you're looking around at basically what people are actually physically doing. Uh, so we we like to refer to that as our Ross Gerber research where you physically go somewhere like yesterday I went to Red Robin and I'm like oh my god, there are a lot of people here and I thought this was a charity because they lose money anyway. Uh, so that some of my thoughts on the recession here. Uh, if if you uh so please make sure to check out the programs on building your wealth link down below a lifetime access to the courses on building your wealth.

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So um, a pretty good trade the other day too. Hope to hope to do some more of those. uh so you could buy sell alerts as well on the stocks and site group. And folks, let's get to the next segment.