Reaction & Commentary
Today from Business Insider which I’m taking a lot of this from them guys so it’s not like I’m some sort of Genius here that just invented all this stuff you know they have a great story out about how there are several different charts that we can look at that show
That the economy is heading into a downward spiral right now and the way that we can do this is by just looking at these charts and seeing how things reacted in the past and this is something that my friend Nick from reventure Consulting he does this all
The time he puts together different data sets and shows how things played out in the past which can give us a glimpse into how things might go in the future which I think is really smart and that’s basically what we’re doing in today’s video so let’s take a look this very
First chart here that we’re looking at is the yield curve or the gap between the yields on the three-month Treasury and the 10-year treasury typically yields on 10-year treasury notes are higher than those with shorter durations as investors seek greater compensation over longer durations but the yields are
Currently inverted at a deeper level than they have been in the last 40 years right now a three-month Bill yield 4.8 percent a 10-year note yields only three and a half so what that tells us is investors are completely scared right now you can get more interest on a
Short-term treasury right now than the long term because nobody knows where things are going to go and all those great lines that you guys can see from the Fred chart are previous recessions and every single time since the 1960s yield curve inversion like this has predicted a recession and what this
Yield curve inversion means is it means brakes on the economy okay means that you have more and more investors piling into the 10-year treasury because the future is uncertain and as more people pile into the 10-year treasury it forces the yields to go down and that’s why
We’re seeing such a massive yield curve inversion right now the FED also has their own chart that they use to predict recessions they have a probability of U.S recession predicted by the treasury spread chart here and what’s the first thing you notice guys when I looked at
This chart the first thing I notice is that the odds of a recession according to this chart right now are higher than they were in 2008 okay higher not lower high and the only times we can see it higher than that was you have to go way
Far back into the 70s and 80s to see it climb even higher than it is today and obviously this is a complete joke because most of us know that we’ve been in a recession for quite some time and to say that it’s not is basically just a
Cover-up at this point and a lie to make people feel good about spending and that the economy is still great so if you ask me so far just with these two shards these things already proved to me that we’re already in a recession but there are things that are causing us to feel
Like it’s not in some cases like some people are still doing really well pulling down really good incomes and can afford this recent inflation that we’ve had and depending on where you live you might be feeling inflation much more than others now this house here is a great example of how sometimes sellers
Just need to get real they decided to sell this house back in April of 2022 for 4.5 million but they just sold it in February of 2023 from 2.7 so as you can see that is a far cry from what they were originally asking but if they weren’t flexible on that price and
Didn’t come down to the real value it would still be sitting on the market now the next thing that we can look at is this chart that pretty much shows the volatility in the bond market and as we can see once again it hasn’t been this
High since 2008. now it was higher in 2008 than it is right now but that doesn’t mean that it still can’t climb even higher and reach those same Heights if not surpass them in the near future According to Jim Bianco who is the founder of the market research firm
Bianco research who put this chart together they’re saying the reason for this is because it’s so uncertain of what the fed’s going to do at their next meeting that it’s just causing all kinds of trouble right now because really nobody knows but if you listen to what
Jerome Powell has said time and time again it’s that the interest rate hikes are going to continue until inflation’s under control so I’m not sure why it’s so hard to guess what’s going to happen because they flat out told us what’s going to happen but hey I think these
Guys are just constantly praying for a faster and better recovery than just going into you know a full-on recession and Jim even says guys back to our credit crunch this uncertainty is a result of the bank’s growing reluctance to lend out money amid the liquidity scarcity a large enough pullback in
Lending is going to send the economy into a downward spiral guys and this is something we’re already seeing which we’re going to look at here in a couple more charts this seller is going to have to learn the same lesson as the previous one it’s another flip they bought it for
2.1 million back in 2021 and now have it listed for four million dollars and remember that previous house sold for 2.7 million and it’s just a few doors down and on top of that it’s bigger than this house so I don’t think there’s any chance they’re going to be getting
Anywhere near this amount but we’ll pass by again at some point in the future and see what they actually sell it for if they sell it because by looking at this next chart here is where things really start to get interesting this chart that we’re looking at from Fred shows the bank’s
Reluctance to lend to businesses now think about what I just said for a minute you don’t have to be an economy expert or business Expert to think about what this might do if businesses that rely heavily on getting credit having access to loans and lines of credit to
Conduct their business don’t have that well what do you think is going to happen with that business first of all they might be defaulting on some of their accounts payable they might not be able to pay some of their vendors they may have to start laying off employees
Because they don’t have the funds to pay everybody and they may have to start closing locations if a business has multiple branches and things like this and do anything they can to start cutting back on the amount of money going out the door each month and what
This chart shows is 45 percent of Bank are tightening their lending standards in 2020 right after this covid crisis it was 71 percent which was crazy and in 2008 it was 83 percent so it’s definitely not as bad yet as it was during those times but you guys can see
It can easily get there okay it’s already halfway there and to just say that there’s no way that it could continually go higher is just anyone’s guess right now and what does all this mean for the stock market well it means there’s going to be more pain guys
There’s going to be more losses likely throughout the rest of this year as things continue to deteriorate James Bianco from the research firm that we talked about earlier he says that he thinks the S P 500 will bottom out around 3 500 and right now it’s around 4
000. Bob Dahl from BlackRock he said that a mild recession would knock the S P 500 down to 3 400 while a deep recession like 2008 would sink it down to the 3000 Mark and then you have John hussman and Jeremy Grantham who think we
Could see it be much worse than that up to 50 percent declines from where things are at right now they’re saying things like this is bigger than 2 000 because it includes real estate and bonds and that one did not the economy had a gentle recession back then it had no
Problem with real estate it had no problem with markdown of debt and yet the NASDAQ went down 82 percent Amazon went down 92 percent and the S P 500 went down 50 percent and that was with a mild recession guys and then you just can’t help but laugh
Because you know as I’m putting together these stories of the things I’m going to cover in the videos it’s so funny to see things that are just complete contrast from each other because we talked about all these things here that are huge warning signs for the economy right now
And then the next story that I see is home prices suddenly jump after several months of declines just like this story we talked about last week from the National Association of Realtors this one’s also a joke but that’s why I want to cover this because after all the
Things that we just saw we know that this is a huge sham check this out home prices nationally Rose 0.16 percent guys so you’re talking a tenth of one percent okay which is negligible to say the least and this is according to Black Knight they’re saying how this is the strongest one-month gain
Since May of last year like big whoop guys the Market’s down year over year and is likely to continue to go that way and we know we saw this slight bump because of mortgage rates going down and the people who are actually able to get their hands on a good mortgage deal and
Close on a property are the reason why we saw that small uptick because even according to Black Knight’s data here home prices are down 2.6 percent from the peak of last June and in this same story it talks about how according to the National Association of Realtors in
February we saw closed sales go up 14.5 percent and they’re calling this remarkable and it’s for all these reasons that they’re saying the housing market has bottomed out and now it’s going to be in recovery mode well how can you say that when you just looked at
Everything we just saw guys and all these charts confirm that we’re heading into a recession if you don’t think that we already are in one and to avoid one at this point I don’t see how it’s possible even Black Knight themselves in this article says that they predict that home prices are
Going to continue to drop throughout the rest of this year you know every time that we might see mortgage rates go down you might see this uptick in the amount of closed sales for the people that can actually still qualify or get a mortgage under these tighter lending standards
But you’re not going to see this flood of closings throughout the year it’s just not going to happen under these conditions right now so if you ask me guys all this is it’s just another way to stoke the fomo fire you know you got to remember that these news agencies get
Paid to put out stories like this to help stoke the fomo fire and make people think that the market is still red hot and you better jump in now while you still can and I know there’s people out there that will believe that until the
Day they die and the best time to buy real estate was you know yesterday of course in hindsight that’s always the case but it only applies to people that hang on to properties long term guys and it also only applies if you’re financially stable and if you have
Enough assets and income to whether a severe downturn and hang on to those properties foreign KPMG they also came out this week saying how they think that home prices are going to drop an additional eight percent this year on the case dealer home price index Kate Schiller is
Already down year over year and they think it’s going to drop at least another eight percent and that’s just for the year 2023 guys we’re not talking about overall drops we’re talking about just this year and remember the FED wants home values to go down and rents
To go down right now because according to their CPI numbers this is one of the leading causes of the high inflation right now is the higher stated rents that they use for the CPI so that combined with you losing your job they want to see job losses and they want to
See rent prices and home prices come down to help with this inflation equation which is why I think that they’re still not done with the rate hikes and of course I could be wrong guys it’s just a guess but if they are done then we know that they were never
Really serious about getting inflation under control to begin with and you know this whole thing is doomed essentially and one thing to note here they’re citing the case Shiller home price index data the case Shiller home price index has dropped 5.1 percent seven months in a row it’s been falling so the most
Touted and used data to track the housing market is already down by five percent and if it continues to go down by another eight for the rest of this year that’s already 13 percent in about a year and a half guys and the case Schiller reflected about a 27 percent
Home price decrease throughout the last housing crash and that was over a span of several years that was not one year okay and when you look at it from that perspective you can easily see how we could end up with the same type of 2008 style crash as all these economic
Problems start to sort themselves out now one last thing to back up pretty much everything we’ve been covered covering here so far the week ending march 22nd depositors withdrew a whopping 126 billion dollars from the banking system according to the Federal Reserve data and interestingly enough we
Saw people running and pulling money out of the smaller Regional Banks putting it into the larger Banks because they thought that’s better for them their less chance of failing and not to worry about their money so much but interestingly enough the biggest of the 25 Banks lost 90 billion the smaller
Banks actually gained back 6 billion but overall Bank deposits now are down to 17.3 trillion Nationwide which is 4.4 percent lower than a year ago so people clearly do not trust the banking system right now which who could blame them given everything that’s been happening and they’re just looking for
Alternatives somewhere else to put the money where it might be safer and this puts a tremendous strain on banks guys that’s what everybody needs to understand from this the challenge for banks is that the more people that pull out money it puts pressure on the banks to give people a higher interest rate
For their deposits which is why you’re seeing CDs Now that are ranging above the five percent rain and even high interest savings accounts topping around the four percent because they’re trying to retain their deposits but as they do this their profitability goes down and at the same time if too many people pull
Out enough money it puts the banks in a vulnerable position where they need to sell assets add a losses to cover people that are wanting to get all of their money back and that’s why I’m telling you that this banking crisis has really just begun and it’s just another thing
That we need to keep an eye on throughout the rest of this year because there’s almost guaranteed to be more developments in this department in so once again you got to watch out for people coming out and talking about how everything is so beautiful right now and
That there’s just nothing to worry about because the real information and the real data paints a very different picture go back and reference these charts for yourself go to the websites that provide this data and look at these charts for yourself that we covered earlier in the video so you can see just
How vulnerable this entire system is right now and there’s holes being poked in it from almost every single angle and I don’t think it can really go on much longer without having some massive Corrections going forward all the links of the stuff that I talk about in these
Videos is down in the description below so if you want to go read some of this stuff in more detail for yourself it’s all there for you to check out and I suggest you do that if you really want to be in the know if you guys enjoyed
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