The 2024 Recession Just Started... (Do THIS Now)

Summary

This video script discusses the rising unemployment rate, echoing historical patterns before recessions, and its impact on the stock market. It highlights economic indicators like the ISM PMI, which signals a contracting economy, and the inverted yield curve, a leading indicator of economic downturns. The speaker suggests that investors are shifting to Treasury bonds as a safe haven, evidenced by the rise in TLT ETF. Amidst market volatility and panic, the video identifies potential buying opportunities and recommends a subscription to their service for market guidance.

Takeaways

• 📈 The unemployment rate has risen by 50 basis points in the last 6 months, mirroring similar increases before previous recessions in 2007 and 2001.
• 📊 The most recent unemployment rate stands at 4.3%, signaling a potential economic downturn similar to historical patterns observed before recessions.
• 📉 The ISM PMI has dipped significantly below expectations, indicating a contraction in economic activity and aligning with past recessionary periods.
• 📉 The PMI is currently below 50, indicating that the economy is in contraction territory, which is a sign of struggling economic health.
• 📊 The yield curve in the United States is a leading indicator of economic direction, and its inversion has historically preceded economic downturns.
• 📉 An inverted yield curve has been present for the longest period since 1929, suggesting a high likelihood of an economic downturn.
• 📈 The TLT ETF, which tracks U.S. Treasury bonds, has seen a rise, typically a sign of investors seeking safety during economic uncertainty.
• 📉 A 'stocks down, bonds up' scenario is emerging, where investors are moving away from stocks and into bonds, a common pattern during recessions.
• 📈 The VIX, a measure of market volatility, has spiked to levels comparable to those seen during the 2020 pandemic and the 2008 financial crisis, indicating panic among investors.
• 📉 The S&P 500 has broken below a key price channel, signaling a potential breakdown and increased odds of a substantial market correction.
• 🤔 Despite high volatility, there are potential buying opportunities as past spikes in the VIX have often coincided with market bottoms, suggesting possible future market recovery.

Q & A

What does a 50 basis point increase in the unemployment rate indicate historically?

Historically, a 50 basis point increase in the unemployment rate in the 6 months leading up to an economic downturn signifies that the economy is showing signs of gaining momentum to the upside, which typically happens either right before or during economic recessions.

What is the significance of the ISM PMI survey in predicting economic activity?

The ISM PMI survey is significant as it measures economic activity in the private sector at a given point in time. A high PMI indicates rapid economic growth, while a low PMI suggests economic contraction, often coinciding with economic recessions.

What does a PMI reading below 50 imply about the economy?

A PMI reading below 50 indicates that the economy is in contraction territory, meaning it is not growing and is struggling, which can be a precursor to a recession.

How does the yield curve relate to the direction of the economy?

The yield curve represents the stance of the Federal Reserve's monetary policy. A steep yield curve suggests a loose policy and potential economic growth, while an inverted yield curve indicates a tight policy and potential economic weakening.

What is the current status of the yield curve in the United States?

The yield curve has been inverted for the longest time since 1929, which historically increases the odds of an economic downturn.

Why is TLT considered a significant trade in the current economic climate?

TLT is an ETF that tracks the prices of US Treasury bonds, which typically rise during economic downturns. It is considered a significant trade because it can provide returns even during periods of economic trouble.

What does a 'stocks down, bonds up' environment suggest about investor sentiment?

A 'stocks down, bonds up' environment suggests that investors are fearing weakening economic activity and are moving their investments from stocks to treasury bonds for protection.

How has the recent rise in TLT impacted the stock market?

The recent rise in TLT, about 10%, has coincided with a stock market freefall, indicating that investors are seeking safe-haven assets amidst recessionary fears.

What does a spike in the VIX index indicate about market conditions?

A spike in the VIX index indicates high market volatility and investor panic, often associated with fears of an economic downturn.

How do past spikes in the VIX index correlate with market bottoms?

Many past spikes in the VIX index have coincided with large market bottoms, presenting potential buying opportunities for investors.

What technical indicator has the S&P 500 recently broken below, and what does this suggest?

The S&P 500 has recently broken below a key price channel, suggesting a breakdown in technical structures and increasing the odds of a more substantial correction in stocks.

What potential buying opportunity is being considered for the S&P 500?

With high levels of volatility and the S&P 500 testing key moving averages, there is a potential buying opportunity for a short to medium-term rally, despite the recent correction.

Outlines

00:00

📉 Economic Indicators Signaling Recession

The script discusses the alarming rise in the unemployment rate by 50 basis points over the past six months, mirroring similar increases prior to the 2007 global financial crisis and the 2001 recession. The current unemployment rate stands at 4.3%, indicating an upward trend that historically coincides with economic downturns. The video suggests that this trend, along with other economic indicators such as the ISM PMI falling significantly below expectations and entering contraction territory, signals a potential recession. The yield curve, a reliable economic predictor, has been inverted for the longest period since 1929, further supporting the possibility of a severe economic downturn. The video highlights TLT, an ETF tracking U.S. Treasury bonds, as a recommended investment in such times, as it has historically risen during recessions.

05:01

📈 Market Volatility and Potential Buying Opportunities

The second paragraph delves into the market's reaction to the economic indicators, with the VIX, the volatility index of the S&P 500, spiking to levels comparable to those seen during the 2020 pandemic and the 2008 financial crisis. This indicates a state of panic among investors who are selling off stocks due to recession fears. The script contrasts this panic with historical data showing that such volatility spikes have often marked significant market bottoms, presenting buying opportunities. The S&P 500's recent technical breakdown, with a 5% correction following a break below a key price channel, is noted. Despite this, the high volatility and the index testing key moving averages suggest a potential short to medium-term buying opportunity, which the video's service, gameoftrades.net, is closely monitoring for its members.

Keywords

💡Unemployment Rate

The unemployment rate is a percentage that represents the number of unemployed individuals in the labor force compared to the total labor force. In the video, it is used to indicate economic health, with increases in the rate signaling potential economic downturns. The script mentions the unemployment rate rising by 50 basis points in the lead-up to past recessions and again in the last 6 months, suggesting a possible recession.

💡Basis Points

A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. One basis point is equivalent to 0.01% (1/100th of a percent). The script uses the term to quantify the increase in the unemployment rate, which is a significant indicator of economic conditions.

💡Global Financial Crisis

The Global Financial Crisis refers to the severe economic downturn that began in 2007-2008, affecting worldwide stock markets, investment banks, large financial institutions, and consumers. The video script mentions the unemployment rate rise before this crisis as a historical precedent for current economic trends.

💡Economic Recessions

An economic recession is a period of temporary economic decline during which trade and industrial activity are reduced. The script discusses the unemployment rate's rise before past recessions and suggests that current trends may indicate another recession is imminent.

💡ISM PMI

The ISM PMI (Institute for Supply Management Purchasing Managers' Index) is a survey that measures the economic activity in the manufacturing sector. A low PMI indicates economic contraction, while a high PMI indicates rapid growth. The video script notes the ISM PMI coming in below expectations, signaling a potential recession.

💡Economic Indicators

Economic indicators are statistics that inform about the economic condition of a country or region. They can be used to predict future economic activity. The script refers to the ISM PMI as an economic indicator that, when combined with other data, can forecast the direction of the economy.

💡Yield Curve

The yield curve is a line that plots the interest rates, or yields, of bonds across different maturity dates. It is used to predict economic growth and recessions. An inverted yield curve, as mentioned in the script, typically signals a coming recession because it indicates tight monetary policy by the Federal Reserve.

💡Federal Reserve

The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. It has the power to implement monetary policy affecting interest rates and the money supply. The script discusses how the yield curve represents the tightness of the Fed's policy and its impact on the economy.

💡TLT

TLT is an ETF (Exchange-Traded Fund) that tracks the prices of U.S. Treasury bonds. The script mentions TLT as a significant investment during economic downturns, as it tends to rise when other assets fall, providing a hedge against market volatility.

💡Stock Market

The stock market is a platform where shares of publicly traded companies are issued and traded. The video script discusses the stock market's reaction to economic indicators, such as the rising unemployment rate and the ISM PMI, suggesting that current trends may lead to a downturn in the stock market.

💡Volatility

Volatility refers to the degree of variation of a trading price series over time. High volatility indicates large price swings, often due to market uncertainty. The script mentions the VIX, a measure of the stock market's expected volatility, spiking to levels comparable to past crises, indicating current market panic.

💡VIX

The VIX, or Volatility Index, is a measure of market expectations for near-term volatility conveyed by S&P 500 index options. The script refers to the VIX spiking to its highest level since 2020, reflecting investor panic and concerns about a potential recession.

💡Technical Analysis

Technical analysis is a method used to forecast the direction of prices through the study of past market data, primarily price and volume. The script discusses the S&P 500 breaking below a key price channel, which is a technical indicator suggesting a potential market breakdown and further decline.

💡S&P 500

The S&P 500, or Standard & Poor's 500, is a stock market index that measures the performance of 500 large companies listed on stock exchanges in the United States. The script uses the S&P 500 as an example of market performance, noting its recent decline and testing of key moving averages.

Highlights

In 2007, the unemployment rate rose by 50 basis points in the 6 months leading up to the global financial crisis.

Similar to 2007, the unemployment rate also rose by 50 basis points in the 6 months leading up to the 2001 recession.

In the last 6 months, the unemployment rate has risen by 50 basis points, indicating a potential economic downturn.

The most recent unemployment rate is 4.3%, signaling a possible recession as seen historically before or during economic downturns.

The ISM PMI survey showed a significant drop below expectations, indicating a contraction in economic activity.

When the ISM PMI is below 50, it signifies that the economy is in contraction territory, which has coincided with recessions in the past.

The yield curve is a leading economic indicator, representing the Federal Reserve's monetary policy and its impact on the economy.

An inverted yield curve has historically preceded economic downturns, and currently, it has been inverted for the longest time since 1929.

TLT, an ETF tracking US Treasury bonds, is recommended for its potential rise during economic downturns.

Treasury bonds have historically risen during recessions, providing a safe investment during economic trouble.

A 'stocks down, bonds up' environment is a typical recessionary price action, indicating investors' fear of economic weakness.

The recent rise in TLT by about 10% signifies a change in market sentiment towards expecting a recession.

High volatility in the market presents opportunities, as shown by the spike in the VIX to levels comparable to the 2008 financial crisis.

The S&P 500 breaking below a key price channel suggests a more substantial correction in stocks.

Despite the recent market volatility, there is a potential buying opportunity for a short to medium-term rally, as observed in past market bottoms.

Game of Trades offers a subscription service to guide investors through market movements and identify opportunities.

Transcripts

in 2007 the unemployment rate Rose by 50

basis points in the 6 months leading up

to the global financial crisis in 200000

the unemployment rate also Rose by 50

basis points in the 6 months leading up

to the 2001 recession today over the

last 6 months we've seen the

unemployment rate Rise by 50 basis

points the most recent unemployment rate

number came in at

4.3% with us unemployment now clearly

showing signs of gaining momentum to the

upside something that history shows only

happens either right before or during

economic recessions in the US and as I'm

going to show you in this video that's

exactly the direction that we're heading

into which is going to have absolutely

massive consequences for the stock

market this recent unemployment rate

number is already creating Panic

something that we think can be taken

advantage of the unemployment rate isn't

the only economic data point that's

pointing to a recession right now a

survey called the ism PMI came in

significantly below expectations this

month showing a rollover in economic

activity this is actually a survey

that's done on private sector businesses

measuring economic activity at any given

point in time when it's high it means

the economy is growing very rapidly when

it's low it means the economy is

Contracting like in all of these

instances right here that happen to

coincide with economic recessions now

when the ism PMI is at 50 it means the

economy is neither growing nor

Contracting today we have the PMI below

50 so in contraction territory the last

few readings have shown the economy is

very much struggling and show a brief

extrapolation of this would quickly take

the US economy into recession territory

now you can see at the beginning of 2024

the ism PMI was showing signs of

recovering that was getting many people

excited about the US economy recovering

and heading into an economic boom if

you've been watching our videos you'll

know that we didn't believe this one bit

and this chart right here was the

primary reason for this this is a yield

curve in the United States and we use it

essentially to understand where the

economy is heading next because when we

add us econom IC indicators on top of

this chart that essentially show where

the US economy essentially stands we see

that the yield curve actually leads the

economy by a year this is one of the

most Flawless charts in macro if you're

not paying attention to this you're

missing a big part of the picture

because the yield curve essentially

represents how tight the Federal Reserve

is if the yield curve is very elevated

or steep it means the Central Bank

policy is very loose and that the

economy is very likely to perform well

looking forward and that's exactly what

happens in the year after the yield

curve has steepened you see the US

economy going into a massive boom when

the yield curve is inverted like in

these instances right here it means the

Federal Reserve the central bank is

keeping monetary policy tight and so

that the economy is likely to weaken in

the year that follows which historically

is exactly what tends to happen today we

know that the yield curve has been

inverted for the longest time since 1929

which was the year before the Great

Depression which to us significantly

increases the odds that we are heading

into an economic downturn and probably

quite a severe one which would mean that

the US economy begins to do something

that looks like this which is again what

has happened throughout every recession

in history this is why our largest trade

on our website is currently TLT with an

allocation of four out of five this is

an ETF that tracks the prices of US

Treasury bonds this is what the chart of

TLT looks like going back to 2000 and

you can see heading into enduring

economic downturns you see treasury

bonds rise in the last two downturns we

saw TLT Rise by 40% this is one of the

only assets that can actually rise

during these periods of economic trouble

which is why we've had a significant

allocation to them in fact seeing

treasury bond prices rise like in these

instances here is a recessionary warning

signal when you see treasury bond prices

rise with the stock market falling like

in 2000 or in 2007 that's called a

stocks down bonds up environment and

it's typical recessionary price action

it's suggest that investors are dumping

their stocks because they're fearing

weakening economic activity and instead

they're rushing into treasury bonds to

protect themselves in one of our recent

videos we mentioned that the market was

not yet showing signs of pricing in a

recession because treasury Bonds were

going down but as you can see that

situation has changed dramatically since

then with TLT Rising about 10% very

rapidly so despite the fact that the

stock market has been in freefall

recently our allocation to several

recessionary bets on the website like

Treasury bonds but also utility stocks

gold mining stocks shorts on the energy

sector has made the returns of our

trades incredibly resilient despite this

High volatility make sure to subscribe

to our service if you want to have

access to all of these trades we guide

you through all Market movements showing

you opportunities as they arise and it's

often with these types of large volatile

moves that you get the greatest

opportunities this is a short of the vix

it's the volatility index of the S&P 500

and it has spiked the highest level

since Co since 2020 it went from an

incredibly low level back in July to now

a level only comparable to 2020 and the

2008 financial crisis an absolutely

insane move showing us investors are in

a complete state of panic right now

dumping their stocks on recessionary

fears now the question is whether we

should be panicking along with all of

these investors there's actually been

quite a few volatile spikes like this

over the last years when we add the S&P

500 on top we see that a lot of these

spikes coincided with very large Market

bottoms that was the case for 1998 2002

2010 2011 and 2020 so these were all

instances where you could have taken

advantage of these spikes and volatility

to actually ride the stock market for

another move up now in 2001 you had a

spike like this that only caused a

short-term bounce in the market that

actually eventually turned around in

2008 was actually a complete exception

because this Spike right here occurred

towards the end of October of 2008 but

the stock market actually continued to

move down for another 30% until March of

2009 so another 5 months of violent

moves down in the market so although

2008 is an exception most of these

spikes and volatility were buying

opportunities for investors now from a

technical standpoint the S&P 500 has

broken below this key price channel that

we've been looking at for the last 6

months we've repeatedly highlighted that

if the S&P were to break below this

level that would Mark a breakdown and

increase the odd of a more substantial

correction in stocks a development that

would completely remove our short-term

optimism on the S&P 500 ever since the

S&P broke below this level we've seen a

rapid 5% correction on the index so

there is a clear breakdown in technical

structures today that being said with

these very high levels of volatility and

the S&P 500 often marking significant

bottoms and the S&P 500 testing some of

its key moving averages for the first

time since 2023 we are currently looking

at this very closely as a potential

buying opportunity with our members at

least for short to medium-term Rally

something we haven't done since April of

2024 you can follow our entire strategy

during this period of volatility at

gameof trades. net by buying yourself a

subscription and getting access to all

of our trades s