This is BAD

Summary

The video discusses recent economic data, focusing on Nvidia's stock rise and AutoZone's financial report. It highlights a decline in consumer confidence, with discretionary spending and DIY spending plummeting in the US. AutoZone is seeking international growth due to weak domestic consumer spending. The speaker warns of a potential recession, noting that any negative job data could significantly impact the stock market. The report suggests consumers are worried about job security and price increases, with middle-aged consumers showing the most concern, recalling the 2008 recession.

Takeaways

• 📈 Nvidia's stock is moving up as people realize the potential in small caps and small businesses.
• 🚀 AutoZone reported a 10% year-over-year revenue growth, but the stock is down due to a reliance on international expansion rather than domestic.
• 📉 Discretionary spending and do-it-yourself spending have plummeted in the United States, causing concern for companies like AutoZone.
• 💸 AutoZone is hoping for inflation to return so they can raise prices and increase revenues, indicating a struggle with current economic conditions.
• 🛑 The company is considering 'rightsizing' (a euphemism for layoffs), reflecting broader economic challenges.
• 📉 Consumer confidence has weakened, with the index falling to 987 in September, nearing the lowest in the last two years.
• 📊 All five components of the consumer confidence index deteriorated, signaling a broad decline in consumer sentiment.
• 🏦 Consumers, especially those aged 35 to 54, are worried about job security and the potential for a recession, recalling the 2008 financial crisis.
• 💼 Labor market concerns are driving consumer anxiety, with worries about job losses, fewer job openings, and reduced hours.
• 📊 The Richmond Fed Manufacturing Index came in at -24, which is lower than expected, indicating a contraction in manufacturing.
• 💡 The speaker emphasizes the importance of monitoring earnings calls and economic indicators for signs of economic slowdown or recession.

Q & A

What was the main reason for Nvidia's stock moving up as mentioned in the script?

People are starting to realize the value in small caps and small businesses, and Nvidia's stock is being positively affected by this trend.

What did AutoZone report that was considered 'mindblowing' in the script?

AutoZone reported a 10% year-over-year revenue growth, which on the surface seemed positive, but the stock was down due to concerns about domestic discretionary spending plummeting and the company's inability to pass on price increases.

What does the term 'rightsizing' refer to in the context of the AutoZone report?

In the context of the AutoZone report, 'rightsizing' is a euphemism for layoffs, indicating that the company is planning to reduce its workforce.

What was the significance of the consumer confidence index reported in the script?

The consumer confidence index fell to 987 in September, which is near the bottom of the narrow range that has prevailed over the last two years, indicating a significant weakening in consumer confidence.

What does the decline in consumer confidence mean for the economy as explained in the script?

A decline in consumer confidence, especially when it's led by consumers who have lived through a recession, can indicate a potential economic slowdown or recession, as consumer spending makes up a large portion of the economy.

What was the Richmond Fed Manufacturing Index result mentioned in the script, and what does it suggest?

The Richmond Fed Manufacturing Index came in at -24, which is worse than the expected -12, suggesting a contraction in manufacturing activity.

What is a 'data double flash sale' as mentioned in the script?

A 'data double flash sale' is a promotional event that offers lifetime access to courses on building wealth, trade alerts, and course member live streams, with the sale expiring at a specified time.

What does the script suggest about the current state of the labor market?

The script suggests that the labor market is showing signs of weakness, with fewer job openings, slower payroll increases, and concerns about job losses, which are all contributing to declining consumer confidence.

What does the script imply about the future of the stock market based on job data?

The script implies that any bad data on jobs will likely cause the stock market to move rapidly and could push it towards a recessionary environment characterized by low liquidity and high volatility.

What is the significance of the yield curve's movement as discussed in the script?

The script discusses that in a recessionary environment, the yield curve can move from a positive slope to a steeper positive slope (bull steepening), which is an early indicator of a recession.

What advice does the speaker give to those who are interested in personalized financial advice?

The speaker advises those seeking personalized financial advice to visit stockhack.com, which is presumably a platform that offers such services.

Outlines

00:00

📈 Market Reactions and Consumer Confidence Insights

The speaker begins by expressing excitement about recent data that has caused Nvidia's stock to rise, hinting at the importance of small businesses. They mention a comprehensive report that they have highlighted extensively. Before delving into the details of the report, they discuss AutoZone's surprising announcement about their revenue growth of 10% year-over-year, which has paradoxically led to a stock price drop. The reason, they explain, is not domestic but international expansion, with a significant decline in discretionary spending in the U.S., affecting DIY sectors. AutoZone is so desperate for a price increase that they are hoping for inflation to return. The company is also considering 'rightsizing', which is a euphemism for layoffs. This situation mirrors warnings from the consumer conference board and aligns with the September consumer confidence report, which the speaker has highlighted. Consumer confidence has weakened due to job concerns, leading to a low liquidity, high volatility environment, where stock movements can be extremely rapid. The speaker also discusses the impact of bad job news on the stock market and the potential for a recession, as indicated by the yield curve. They mention a 'bull steepening' scenario where the yield curve goes from positive to a higher positive, signaling a recession. The speaker concludes by discussing the consumer confidence index, which has dropped to its lowest in the last two years, with all five components of the index deteriorating, reflecting consumers' concerns about the labor market and the economy.

05:01

📉 Declining Consumer Confidence and Economic Outlook

The second paragraph delves deeper into the consumer confidence report, highlighting a significant drop in confidence among consumers aged 35 to 54, who are likely recalling the 2008 recession. This age group is particularly worried about a potential recession, contrasting with consumers under 35 who lack the memory of economic downturns and remain more confident. The speaker notes a general decline in confidence across most income groups, with the largest drops among those earning less than $50k. Despite a slight uptick in anticipation of a recession over the next 12 months, the speaker emphasizes the concerns of consumers who have experienced a recession before. They discuss the impact of high prices, job security, and wage stagnation on consumer sentiment. The speaker also mentions companies like IBM, Amazon, and Salesforce, suggesting that quiet layoffs might be on the horizon. They reference the Richmond Fed Manufacturing Index, which came in lower than expected, indicating poor economic performance. The speaker concludes by emphasizing the importance of transparency in their trading alerts and the value they provide through their course member live streams. They also mention a flash sale ending soon and invite viewers to reach out for personalized financial advice.

Keywords

💡AutoZone

AutoZone is a leading auto parts retailer in the United States. In the script, it is mentioned as an example of a company experiencing challenges due to decreased discretionary spending and potential layoffs, indicating a broader economic trend. The company's situation is used to illustrate the impact of economic slowdown on consumer behavior and corporate strategy.

💡Discretionary Spending

Discretionary spending refers to consumer spending on non-essential items or services. The script discusses how discretionary spending has plummeted in the United States, affecting companies like AutoZone. This is a key indicator of consumer confidence and economic health, as a decrease suggests consumers are tightening their belts, which can further slow economic growth.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The script mentions that AutoZone is hoping for inflation to return so they can raise prices and increase revenues. This highlights how companies might use inflation as a strategy to offset cost pressures and restore growth.

💡Recession

A recession is a significant decline in economic activity that lasts more than a few months. The script suggests that consumers and businesses are concerned about the possibility of a recession, which would impact job security, consumer spending, and overall economic health. The mention of recession is central to the video's theme of economic uncertainty.

💡Consumer Confidence

Consumer confidence measures how optimistic or pessimistic consumers are about the economy. The script discusses a decline in consumer confidence, which is a significant factor influencing economic growth. When confidence is low, consumers are less likely to spend, which can lead to a slowdown in economic activity.

💡Stocks and Sight Group

The Stocks and Sight Group seems to be a community or service mentioned in the script that provides trade alerts and financial education. It is used as an example of how the speaker engages with an audience interested in financial markets and trading, emphasizing the practical application of economic insights.

💡Mega cap

Mega cap refers to very large publicly traded companies with a market capitalization of over $200 billion. Nvidia is mentioned as an example of a mega cap company that is still growing, suggesting that investors might look to such stable, large companies for safety during times of economic uncertainty.

💡Yield Curve

The yield curve is a graph showing the interest rates, or yields, of bonds with different maturity dates. The script discusses how the yield curve's shape can signal economic conditions, with a steepening yield curve potentially indicating a recession. This is a key concept in financial analysis and economic forecasting.

💡Job Market

The job market refers to the availability of jobs and the dynamics between employers and potential employees. The script highlights concerns about the future labor market conditions, which are crucial for consumer confidence and economic stability. A softening job market can be an early indicator of economic slowdown.

💡Deflation

Deflation is a decrease in the general price level of goods and services. The script suggests that some companies are facing deflation, which can be just as problematic as inflation, as it can lead to decreased spending and investment, further exacerbating economic decline.

💡Flash Sale

A flash sale is a limited-time promotion where items are sold at discounted prices. The script mentions a 'data double flash sale' as a marketing strategy to attract customers to the Stocks and Sight Group's services, illustrating how businesses use such tactics to drive sales and attract new members.

Highlights

Invidia stocks are moving up as people realize the importance of small business and small caps.

The speaker highlighted a significant report that seems to have impacted their trading decisions.

AutoZone reported a 10% year-over-year revenue growth, but the stock price dropped due to a lack of domestic expansion.

Discretionary spending and do-it-yourself spending in the United States have plummeted.

AutoZone is struggling to pass on price increases and is hoping for inflation to raise prices and boost revenues.

The company is considering staff reductions, indicated by discussions about rightsizing staffing.

Consumer confidence has weakened, with consumers worried about jobs and the economy.

A low liquidity, high volatility environment is predicted, meaning stocks can move extremely rapidly.

The 10-year bond yield steepened due to China's stimulus, but a recessionary environment could lead to a bull steepening.

Consumer confidence index fell to 987 in September, nearing the lowest in the last 2 years.

All five components of the consumer confidence index deteriorated, reflecting widespread economic concerns.

Consumers aged 35 to 54, who experienced the 2008 recession, showed the most significant loss in confidence.

Consumers under 35, who did not experience the Great Recession, remain relatively more confident.

Consumers are concerned about job losses, fewer job openings, and reduced working hours.

The percentage of consumers anticipating a recession in the next 12 months remained low but increased slightly.

High prices and concerns over job stability are the primary worries for consumers.

The speaker suggests that companies might be quietly laying off employees to avoid negative stock reactions.

The Richmond Fed Manufacturing Index came in lower than expected, indicating a negative trend.

Transcripts

boy oh boy oh boy oh boy you won't

believe the data that came out this

morning and there's a reason Invidia

stocks moving up and it's because people

are starting to realize I don't know man

there small caps the small business is

really the place to be but beyond that

you got to know what's in this report

that just came out this morning I

highlighted so much of it I feel like I

highlighted the whole dang thing but

before we talk about this I got to talk

about AutoZone and what they just said

because it blew my mind it was

mindblowing this report which we'll talk

about after autoone by the way is the

report that I traded this morning I sent

alert to course members right as the

data came out I'm like going short and

we doubled our option that's after our

first profitable trade of the day on

Tesla and then a second profitable trade

that was up almost double both two out

of two today sweet win you want to get

those alerts join the stocks and sight

group my team told me we got to do a

data double a data double flash sale

that'll expire tonight at 11 59 p.m.

California time so go check that out if

you want to get lifetime access to those

courses on building your wealth trade

alerts and course member live streams so

in our course member live stream this

morning I'll give you a quick preview

but AutoZone this is crazy AutoZone was

bragging about how they're having

Revenue growth about 10% year-over-year

and we're like huh well that doesn't

seem that bad why is the stock down okay

what is it because of international

expansion rather than domestic expansion

and when we get into the weeds we find

that discretionary spending is plummeted

in the United States do-it-yourself

spending is plummeted in the United

States and the company is so frustrated

that they can't pass on any price

increases that they're essentially

begging for inflation to come back

they're like we're looking forward to

some inflation so we can raise prices

which would then increase revenues and

bring us back to growth in the same vein

while they realize they can't they're

starting to talk about rightsizing

Staffing and that's all I mean we all

know this this is a euphemism for

layoffs that are coming it's a big big

problem and folks it's basically exactly

what the consumer conference board is

warning about but I just to hit the nail

on the head here when AutoZone is

telling you hey we're growing in Brazil

and South America and we're just going

to focus on international stores and

we'll eat the currency headwinds which

are massive Let's uh let's just uh

ignore the US consumer because things

are really bad right now well it's

basically what the September consumer

confidence board report says this is

nasty again I highlighted a lot of this

sorry but listen to this consumer

confidence weakened as consumers worry

about jobs realize anytime we get bad

news about jobs going forward we are in

a low liquidity High volatility

environment what that means is stocks

can move extremely rapidly this morning

we saw the 10-year bond yield you know

bare steepening again up six basis

points thanks to China's stimulus

bazooka but what people forget is in a

recessionary environment or slowdown in

jobs what we actually get is called a

bull steepening the yield curve goes

from positive where it is now 10 20

basis points to positive 50 to positive

90 but that's the beginning of the

recession not now when we're at 50 or 90

we are walking towards that number every

single time we've gone from inverted to

positive 50 to 100 we've been in a

recession we are screaming towards that

and anything any bad data on jobs is

just going to reiterate that the stock

market will move on that I think that's

why in part yes obviously the Chinese

stocks are doing well today uh because

of the stimulus bazooka of yesterday I

don't think that'll actually be enough

to Spur consumers I think consumers will

be like cool I'm going to take profits

now and not continue to trust the

Chinese government but anyway uh what

happens in America is people probably go

towards higher cash flow companies at

first back into the safer like Morgan

Stanley's Mike Wilson says Mega cap like

nvidia's I actually don't think nvidia's

valuation is too horrible so long as

they can hold up their growth which so

far it seems like they can but listen to

this report it's crazy the consumer

confidence board confidence index fell

in September to

987 this is a low by the way consumer

confidence dropped in September to near

the bottom of the narrow range that has

PR prevailed over the last 2 years so

basically the lowest in the last 2 years

September's decline line was the largest

since August of 2021 and all five

components of the index deteriorated

that's how they measure you know where

the spending is happening for consumers

remember folks the consumer makes up 70%

of our economy more some people say 72%

so consumer weakening whether it's

consumer goods or services very very

very bad so September's decline was the

largest since August of 2021 all five

components deteriorated consumer assess

ments of current business conditions

turned negative while their views of the

current labor market situation soften

further consumers were also more

pessimistic about the future labor

market conditions available and less

positive about future business

conditions the drop in confidence was

the steepest for consumers 35 to 54 now

what's fascinating about that that age

was just entering the job market or

barely in the job market during the 2008

recession so when you have 34 to

uh or sorry 35 to 54 year olds who lost

the most confidence because they're

worried about recession they're thinking

back to 2008 and rightfully so that's a

smart thing to do listen to those those

who had the uh uh most confidence were

consumers under 35 basically people who

were in high school middle school or

elementary school during the Great

Recession so they don't have the memory

of the pain they only have the market

opinion of by the dip everything's going

to go up confidence declined it's

September across most income groups with

consumers earning less than 50k

experiencing the largest declines and

the 6-month moving average uh for

consumers of over 100k remaining most

confident but uh obviously also

declining hold on a second let's give

this a little move here I got to turn

the page okay there we go deterioration

across the indices main components

likely reflected consumer concerns about

the labor market and reaction to fewer

hours being available slower payroll

increases fewer job openings even if the

labor market remains quite healthy with

low unemployment fuel layoffs and

elevated wages the proportion of

consumers anticipating recession over

the next 12 months remained low but saw

a slight uptick so let's try to distill

this what you're seeing is consumers who

have lived through a recession are

getting more nervous substantially more

nervous the worries across all of them

yes in part are still to some degree

higher prices because they also survey

in this report that I've read and just

going to bottom line on some of it they

talk yes high prices are still an issue

because even if we have disinflation

prices are still so high until we really

have deflation but what's most

concerning for people is their concerns

over wait a minute what happens if we

lose our job and then we can't get

another one look at the percentage of

people who have been unemployed for more

than half of a year Google this one St

Louis Fred with an R like your buddy

Fred 27 weeks unemployed

the only time that number goes up is in

a recession go look to see what it's

doing now anyway uh these are people who

are worried about not seeing increases

in their pay to try to catch up with

higher prices they're worried about

seeing fewer job openings they're

worried about seeing hours cut at jobs

that they're working or or companies

they're working for maybe they're even

seeing quiet layoffs around them this is

something else to keep in mind companies

like IBM and Amazon and this sort of oh

yeah Force everybody back to work even

Salesforce did it it's just a way of

quietly firing people right because

you're going to lose people through

attrition but no company wants to be the

first company to say oh yeah uh we're

doing layoffs because as soon as you do

guess what happens your stock tanks and

then you're the loser but if everybody

lays off during a recession it's okay

it's just a recession so this is some

really bad data the Richmond fed

Manufacturing Index also came in at like

-24 versus the -12 expected I can't

remember that number exactly but it was

also bad that's why I threw in the trade

that's why I sent an alert to people in

the uh stocks and site group and I

always like to say past performance

doesn't guarantee future results we

always try to do our best uh obviously

if uh uh if if we can do well uh trading

off data like this uh in the morning the

goal is to do it again but again can't

guarantee that you'll make money we

always want to be transparent about that

uh I'm just going to keep every single

day providing value to you I'd love for

you to be part of the course member live

streams you can come any day you can

watch the replays on them on days that

you're interested in seeing what my

opinion is or for all those of you in

the second wave of inflation Camp you

really got to ask yourself are you

reading earnings calls are you seeing

what the Auto Zones are saying are you

seeing what companies are saying say

look we are facing deflation not

inflation ask yourself that we do it in

the course member live streams almost

every single day anyway we'll uh end

that flash sale tonight at 11:59 p.m.

automatically if you have questions

email staff atme kevin.com and for the

uh last of you still remaining here if

you want actual personalized Financial

advice go to stock hack.com it's live

thanks so much we'll see you soon bye