The 2024 Recession Just Started... (Do THIS Now)
Summary
TLDRThis 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
📉 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.
📈 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.
Mindmap
Keywords
💡Unemployment Rate
💡Basis Points
💡Global Financial Crisis
💡Economic Recessions
💡ISM PMI
💡Economic Indicators
💡Yield Curve
💡Federal Reserve
💡TLT
💡Stock Market
💡Volatility
💡VIX
💡Technical Analysis
💡S&P 500
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
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