Hey folks in this video we're going to talk about retail disasters, and this stands in contrast to, for example, the macy's stock price action or earnings report this morning, which we're also going to talk about in this video. But there is a big red flag hanging out there and i really want to drill this point home. Some of these things, you've heard me say before, but the the thing that i'm going to show you a couple things i'm going to show you. You probably have not seen yet so we're going to merge this all together, we're going to talk about these potentially very dangerous stocks and how maybe to play some of these.

So first, let's talk a little bit about macy's, so macy's is today being treated as the inflation god. The reason they're up 12 percent and they're being considered the retail god is in an era where snapchat drops 40 percent best buy plummets, and you know you get you get this essential uh. Well, your target plummeted. What you know: 30 20 30 percent walmart plummets.

20. 30 and all these retail stocks are completely plummeting because retail stocks that were thought to be safe during an inflation environment, you actually have macy's here, killing it macy's. Their margin is up about five basis. Points we're up to 39.6 versus 39.1.

Their net sales blew expectations out of the water. Expectations were to about 250 mil 249.3 came in at 3, 315 up 12.4 in q1, the same quarter that we've now heard about a potential negative gdp print that actually got worse, not better. Okay, despite prior revisions to other reports, we've seen and macy's, is actually suggesting that their guide, their fiscal year guide, is going to be 10 greater, but when we dig a little bit deeper, there are some really important things to notice here, and this is what i Kind of call the retail disaster, and i want to show you a few charts and then i want to show you what companies like even macy's, are saying, and i think it really helps paint a clear picture of what we've got going on. So the first thing i'm going to show you is something that we've actually talked about in the past before and uh it's sort of this.

This is a just a little bit of a recap, and i just want to make it very, very clear in terms of where sort of my head is going into this and we're going to compare so. My head, going into this sort of inflationary environment, has regularly been that if on the left side over here, you draw household incomes, you know 50k, 80k, 100k, 150k, 250k and then on the right. You kind of draw just various different companies, so uh, for example. Here we put nike i'm going to keep this a little short because i have explained this before.

But when you look at this, it's like okay, well, who buys a tesla. Well, a person who buys a tesla on averages, has around 150 000 uh dollar per year. Household income so you're, probably talking about your wealthy individuals down to maybe about 100k right who buys apple products; well, probably people not making 50k but somewhere between, say, like 90 to 130, 000 and then potentially up from there right uh who buys nike well. This is your your lower kind of demo and up you know wealthier people by nike as well, so this could probably extend.

The point is when you go into an inflationary recession you're, what you're kind of doing? In my opinion, i want to show this visually here is you're kind of taking, like a saw, blade and you're going like this you're starting at the bottom, the poorest people, the people who spend like 50 percent of their income on food and and 30 or 40 Of their income on on shelter like food, gas and shelter and like all their income's gone they're, totally paycheck to paycheck to paycheck making you know 20 thousand dollars. You take a saw blade to this area and you're like yep. You ain't buying new nike shoes, anymore. Yeah and then that levels up and it's like nothing - you ain't buying apple phones, anymore.

You know you ain't going shopping at target and walmart as much as you used to, because inflation sawn that away right, and so obviously it takes longer for for that kind of pain, to get to more luxury, good companies, and so what's fascinating is if we actually Look at this chart which just came out from morgan stanley, take a look at this. The bottom quintile has less excess cash than they did in 2019.. This is really interesting, because let me first give you this overall overall. So all consumers together have about 140 percent.

More pp than they did in 2019 pp being purchasing power. We also believe that, on average, households have roughly 15 000 more cash than they did before the pandemic, but this is an average. It encompasses everyone - and it's really not until you zoom out here - that you realize oh crap, it's actually the lower income demos that are getting rained here. Look at this, the people making zero to you know uh uh, 20 or the bottom.

The bottom 20 percent making you know very little money - have no excess cash they're at zero dollars of excess cash. The people in the bottom twenty to forty percent have three thousand three hundred dollars of excess cash: the next twenty percent, nine thousand two hundred dollars, but look at the top 20 how much excess cash, the top 20 percent - has they have 56 000 extra like you? Could buy a lot of ipads right, so one of the things that you can do is you can google something called what income percentile am i in and you could throw in what your income is and calculate what percentage you're in so, for example, if you make 63 000 you're about in the top 58 percent. If you want to be in the top 20, i'm going to take a guess here: i'm going to go with 140 000. yeah you're at the top 12.

Then, if you make over a hundred thousand dollars a year you're about in the top twenty percent, so the people who make over a hundred thousand dollars a year have an excess of about fifty seven thousand dollars. On average, the people who make virtually uh, you know, or the bottom, eighty percent, which is like a lot of people, the entire bottom, eighty percent substantially less money than than these wealthier folks. And so what does that mean for what people are buying? Well, listen to this, and this becomes important like if you're picking stocks macy's tells us something that we have seen reiterated by jp morgan, visa and almost all of the other retailers, including target and walmart target walmart. They talked about how we're seeing it and so did.

Lowe's in home depot, they all talked about this - we're seeing a shift away from landscaping, we're seeing a shift away from furniture, but people are still buying luxury products, they're just buying a lot less of other things like apparel or sort of general merchandise. Luxury products are still selling all the other stuff. That bottom saw blade of stuff not doing as well. What did macy's tell us this morning quote a noticeable shift to occasion based apparel.

What that means is that bottom threshold is like crap. I can only buy clothing when i need to like. Oh, i need to get a tuxedo. I need to get a dress or whatever for an event, but that's it.

I ain't buying clothing anymore, because i can't either i already have or have no money left they're. Also seeing a noticeable shift back to in store that's kind of interesting, because i think after like i thought, i think after the pandemic, everybody's, like oh retail's, dead, like there's no way retail's ever coming back, uh everything's, just gon na be online. Apparently, not people are still wanting to shop in person, but here you go quote continued strength in luxury goods and i thought that was fascinating, because this is the same kind of stuff. We saw from dick's sporting goods.

It's the same thing that we saw from nordstrom's, ralph lauren and a lot of these other companies that i mentioned already: visa jp morgan, whatever that's the bottom incomes of threshold of spending. Those are the ones that are getting whacked. We kind of already knew that, but let me now show you mobility data that shows potentially going forward, because this is like information. That's probably like yeah, 30 days old.

You know these investor calls they kind of get prepped beforehand. They don't necessarily have to give us all of the latest info, though it's some of the most recent stuff that we can get, especially on the earnings calls. So i still really appreciate looking at the earnings calls, but i also realized their sales pitch. This, though, was dirty okay.

This chart that i'm about to show you this, in my opinion, somewhat scary. So there's this thing called mobility data and that's that when you use your cell phone you're like a dot on a map and your dot kind of flows throughout the world, the nsa and caa and fbi, or whatever they can follow your dot, which doesn't have your Name on it, but they can assume it's you based on where you live and where you work, and then they can pretty much track you wherever you are. So if you think you're you have privacy, you really don't now. What's interesting, though, about this mobility data is, it gives us a lot of insight into where people are going for the purposes of stocks and investing, and so i like that, because, even though it kind of makes you wonder about privacy, it's also really cool, because maybe It gives us a little bit of a forwarding what's to come for future earnings reports, so this chart here is broken down by company and i'm also going to give you some overall sectors, a sector declines, i'm going to start with the sector declines and i'm going To show you the chart, so this number just came out this morning.

Overall, retail traffic fell 9.7 percent in this last week compared to the same week last year. That's that's bad because everything so far has been beating. Last year now we've got a big plummet here. In retail traffic, but you'll be surprised how much some of these stores and sectors are down.

I just have to give you a quick reminder if you want to bundle code for the programs on building your wealth, use that coupon code link down below uh. There are a bunch of bundles listed and, if you want to email me for a special bundle code like if you're confused, like which bundle to get or whatever just send an email to kevin kevin.com, you got to give me about like a 48 hour response time. We're a little bit backed up with so many people emailing and asking like getting set up and getting started and stuff like that. But uh we can take care of you there and check out all the different things that you have and know that.

There's constantly new content that gets added. We've got a really big batch of new content coming out in the next couple weeks after that that largest price increase at the end of the month, and then we've got a new content dump coming so really really excited check. Those out, i think, you'll really enjoy them, so retail numbers here, the biggest hit by categories, a negative 24.6 decline to home improvement and furniture. That does not surprise me at all, because people stop spending on their homes when they're worried that real estate prices are going to start ticking down or when potentially they're, fearful that uh.

That appreciation has stopped and home appreciation is no longer going to finance their their opportunity to just spend money like crazy on their homes, also possible that you know people have already bought furniture with their second homes and all this kind of crap for those fancy people. But whatever biggest hit 24.6 decline, there department, stores and apparel, this actually includes macy's in aggregate down 13.8 percent on retail traffic data, and now i'm going to show you store by store and it's kind of crazy. Who remembers what i talked about a few days ago when i talked about a certain company where the ceo is like? Oh, we are noticing a big slowdown in consumer electronics like not sure if we're going to see a recession, but maybe maybe it'll be like a softest recession. Well, that ceo was the ceo of best buy and take a look at their retail trading data right here.

Folks, look at this chart. This is scary, best buy folks best buy year over year, retail traffic down 56 percent and change on the week down 4.9 percent bed bath and beyond year over year, down 36 ulta beauty down 31 lows in home depot down 30 target 27 kohl's 25 victoria's secret 24 gab 19 macy's macy's just killed it on earnings, but yet week over week, they're down 5.5 percent and year over year, their retail traffic is down 19.1 percent folks. This is a sign that people, especially that lower demo, are getting killed by inflation and it's starting to show up in how often people go to stores. In the first place, people are even going to publix 17 less than they did last year and 6.8 percent less week over week.

Now i don't recall of any kind of like crazy hurricane or anything that all of a sudden made people stay home. But these are some bad numbers like. I think the only thing that went up was the beauty sector uh year over year. Oh categorically beauty went up point six percent your year dollar general folks.

The dollar store up 2.7 year-over-year, but still down 7.2 percent uh on the week-over-week grocery stores are seeing less uh. Aldi is uh fractionally up on the week-over-week over here, but all of these numbers are terrible like i don't want to invest in those numbers, and it also kind of makes me wonder, like is dave busters in that kind of similar category here, it's kind of scary, So it's something to keep an eye on that retail does get crushed by inflation. We know that, but specifically that lower demo - and this consistently makes me wonder - like are the companies that i want to be in - are they the teslas, the apples, the the uh? You know starbucks what appeals to that higher demo, where they're still going to spend so, even though macy's is doing really well today. That chart was not very exciting to me, but there's also this belief that potentially the end is near that inflation will end up being transitory.

Now i don't want to sound like a broken record, because i know when people hear that they just roll their eyes and that's fine, but take a look at this diesel prices. Although they're at roughly an all-time high, they're starting to peak and inventories are starting to climb, we know that when inventories go up, prices tend to eventually come down. Diesel prices have finally hit that level no guarantees, they won't go higher, but it's a good sign. Lumber prices are at the lowest level they've been in since october.

It's been straight down for lumber prices over the last four months. You have a smoothing, slash easing of freight fertilizer. Who remembers how fertilizer was was. You know essentially just going to go to the moon because of uh ukraine and russia, where we have substantial amounts of fertilizer exports somewhere between 40 to 50 percent of the world's fertilizer pot.

Ash comes from this region. Well, even though it's true, those prices have come up substantially. Fertilizer prices are down 20 from their peak. You can look it up green markets, north american fertilizer price index.

Clearly we know that there are going to be like over over this next. You know decade we're going to look back at this era and go holy crap. That was a lot of inflation. The question is just: how long does it last market expectations are that inflation, exp inflation, is going to come down and we're starting to see that you look at the used vehicle index.

It's going to probably be a drag on cpi numbers coming out next month and it's a good thing. It doesn't eliminate the fact that lower end retail is still going to get absolutely destroyed by the higher prices that we have now, but not just by the higher prices that we have now, but also by the fact that people have less money. We saw that when we looked at the chart of who has the extra cash, who has the extra wealth this chart right here. It's certainly not the lower income demographics, so i think we'll see that pain coming in the lululemons and the nikes, and so on.

Going forward, but haven't haven't really seen that yet because we've been so focused on prior quarters, where people still had money now, the good news is companies are raising wages and that can eventually help that lower income demo. But it takes a while for you to actually get in your job if you just start saving money for you to get out of sort of the debts and how far behind you are and then actually spending money again and feeling comfortable again. For example, apple just announced that they're going to increase pay for its workers to 22 an hour that is up more than 45 from 2018 wages. According to the wall street journal, that's pretty wild.

This is also happening at the same time as apple is actively discouraging their employees from unionizing, suggesting that their employees might have less flexibility, less opportunities to work from home and less opportunities for promotions if they unionize now. This is sort of like unspoken and duh, but recently in the media, it's been coming out that apple like like these things, are getting leaked in the media, and people are kind of pissed at apple over this idea, because it paints this picture of the big corporation Versus the employee and so apple's trying to take this proactive step of raising wages again, and you see this sort of increase in compensation, whether it's through stock based compensation or hourly, wages, regularly and regular like frequently now, including at companies like amazon and facebook. Although both those companies, those latter two, have frozen hiring because they'd rather pay their existing employees more, this is also by the way when we noticed that apple and we're not sure if this is like directly related to this sort of retail destruction. But look apple is not like an extremely luxury brand.

It's a more expensive brand right if the average household income in america is like. Sixty thousand apple probably appeals to that. Eighty to ninety thousand average income demographic, so android users are statistically lower income than apple users. We know that those are facts, but apple now, asking suppliers to make about 220 million iphones this year, which is flat from last year, is also a little bit of a sign that maybe you're starting to see that shaving away from retail purchasing interest.

Now apple was expected to produce about 240 million iphones this year and so a little bit of bad news there for apple, because that came in substantially below expectations and flat and reiterates concerns over. What's going on in china, with the strict lockdowns softer consumer spending and, of course the inflationary concerns. So all in all this is the kind of market to just be careful with which stocks to pick, because i think a lot of bad news for the lower end. Retail is actually ahead of us, not behind us again.

Nike lulu macy's, like these guys, have all been killing with their earnings. I'm just worried if this is the kind of mobility data changes that we're seeing coupled with who has the excess cash who doesn't who's going to the store and who's, not who's, spending it who's, not. Who has the capacity to spend who's up the retail? A lot of these are just companies i just cannot get into, and that's what i've really been trying to focus on, i'm just going to try it as much as possible park money in uh, the high income, demos or uh, the more luxury goods, okay, good. That gives us an update on a retail make sure to check out the programs, i'm building your wealth down below uh and uh yeah, look forward to seeing you there.

Let's go back to the sticks.