TRANSCRIPT
good morning sense of things it’s Jeff
and Ron here once again and another
episode of the sense of things podcast
and we have been in a crazy week over
this last week here we’ve seen the
market drop a thousand points in a
matter of hours we’ve seen all kinds of
crazy stuff going on in the economy and
hiring and everything else so we’re
going to cover that a little bit today
Ron’s going to take the the re on that
so stay tuned we’ll be right
[Music]
[Applause]
back all right folks welcome back we are
so excited to be here today Ron how you
doing my friend good morning doing well
I gotta tell you
you and I have been bears for 18 months
now I don’t know I thought we had a
sniff of this a year ago almost the
exact same time of the year yeah and now
we see it again and we got the Cycles
with the presidential election so I
wanted to talk about some recession
indicators because even though the
market has been melting up the economic
trend has been going down on many key
things just but nothing is broken but
before we get to that let’s have a
little bit of fun uh in a prior podcast
we had talked about uh movies from 40
years ago and just classic movies and we
talked about how much I’m a movie guy
you’re a movie guy and I thought it was
interesting but let’s go through some of
the movies from
1994
movies like you could turn on at any
point know what’s going on and just sit
down for 15 20 minutes because you’re
engaged yes even speed which had Kean
Reeves are not the biggest keano Reeves
but that was a good movie for him and
over it was terrific Speed 2 was just a
prostitution to to try and get some be
to get some money extra money yeah Shank
Redemption please pul fiction was just
on last weekend I watched the whole
thing from beginning to end True Lies
you could turn that movie on at any
point
I don’t know which why there I don’t I
forgot what won the Academy Award that
year here are some of my honorable
mentions clear and presid danger Great
the book was even better yeah now did
you ever see I didn’t see this to many
years later did you ever see disclosure
yes that was a it was a very strange
movie yeah but I gotta tell you it was
about silicon B was actually up in
Seattle but it was about the tech world
just when the internet was burgeoning
although this really didn’t have have a
lot to do with the internet but it was
about state-of-the-art bleeding edge
technology obviously there was some
salacious stuff in there
but it still holds up today yeah and
then of course for crying out loud
here’s the funny thing out of all these
movies I have never once seen sha Shank
Redemption ever what’s wrong with you I
don’t know I think I’m the only human in
in the United States that never seen it
and I’ve only seen the hudsucker proxy
one time I was just it that one just
never did it for me um Ace Ventura the
butt humor just doesn’t do it for me and
pulse fiction was just
weird but you know what the one thing I
left off and I didn’t realize this was
Forest gum was also 94 yep and another
classic movie you could turn that on at
any point you know they to do a remake
of that Winston groom wrote hor scump
and the followup so Forest gum was this
rise of forest gum and the sequel book
to it was how everything he did after
that turned CP okay and I understand why
they didn’t make the sequel because the
first one was uplifting and you’re
rooting for this guy why would you want
to want something about everything he
does turns to crap yeah yeah and why
would you write yeah and why would you
even write a book about it every in his
life turning into crap you built this
beautiful character why on Earth would
you do anything that that just makes you
can’t make a movie you can’t really even
write a book that doesn’t have any kind
of redeeming anything it’s just it
doesn’t even follow the right
storyline not at all but I can’t believe
you know what it doesn’t have any butt
humor but you better watch sha Shank
Redemption this weekend yeah I’ve I’ve
needed to watch it I just haven’t there
was just one of those things where I and
I love love love Morgan Freeman anything
that he’s in I Abol he’s fantastic in
that movie yeah but you know like I said
like clear and present danger I think is
it out of all the movies it was one of
my favorite movies because I thought it
just was one that was extremely well
done Tom beat the Hun fored October 1990
when that came nope and they couldn’t
come the terms on a contract with Alec
Baldwin so they said screw you and they
hire us some
and Harrison Ford leaped at the
opportunity and just crushed the role
you know I think I’m not a big Harrison
Ford guy either but he was very good
yeah he was very good I a couple movies
with him in there and he just did an
exceptionally good job I gotta all right
you got I have a movie bucket list that
I send out to all prospective clients
and clients and I it’s great for great
conversation and F and I have check
boxes so they could check off what they
did you’ve got to watch sherad my God I
I thought you were one of my best
friends now now I don’t even know know
who you are
anymore okay have you watched the entire
Six movie Thin Man movie series which
one the Thin
Man thin man no yes they’re from the
1930s and 40s possibly the best movies
that were ever made hands down fi no th
Thin Man th i n Thin Man moloy and crap
what’s his name I don’t know we could do
movies every epode there we go I love it
no doubt about because there’s always a
good behind the scenes conversation
about half this all right let’s get into
it all right guys part one
one recession indicators and again Yahoo
finance had some good step we’re going
to talk about the S room s rule here
that just triggered so stocks
outperforming the S&P 500 at a historic
low here we are were high right the
first part of July yep but meanwhile the
highest
percentage of the S&P 500 stocks were at
lows historic lows so again we kept
talking about how it’s the top 10 stocks
that are just outperforming the market
and we realize that over history in the
market there’s always 10 stocks that are
outperforming the market but the
disparity
the percentage breakout was just too
much you know I know you’ve we you and I
have talked about this in the
past ignore
that never
mind you
pause yep
go all right so the recession so another
recession indicator is the S rule that
must be Claudia s calling in to do her
slide right now there we go so this is
interesting CL I didn’t realize she’s
actually a younger lady I thought she
might have been like the Janet Yellen
type but she’s actually pretty young and
she actually developed this indicator
2019 I just saw her on a podcast about a
week ago and she worked for the fed and
she came up with this role she’s a PhD
and I won’t go through everything
there’s a couple of nuances to this but
essentially when it when the
unemployment rate is 50% of B the thre
Monon moving average of the national
unemployment rate it triggers and it
just triggered it hit
.53 now I have a longer term data chart
because it goes back to the 60s and any
time it hit above that 0.5 trigger there
was typically a recession within three
to months okay okay and I had six to
nine here but when I actually went back
some of these things happen within a
month or two months but I would say the
average of the medium is within six to n
months that almost a certainty of death
and taxes that there is a recession now
in these podcasts she’s been interviewed
she says that there’s a lot of other
underlying or underpinning factors here
that may not apply this time because of
all the immigration and them getting
jobs and all this other stuff she went
into oh I always hear the info saying
This Time It’s Different okay tired of
hearing that crap this time every time I
hear that the hair in the back of my
neck oh God I I get more than just the
hair in my back you look at this and
you’re just like all right look for the
last 60 plus years this has been a
pretty damn good indicator above and
beyond the 210 inversion right which we
are now in the longest period of the 210
being inverted in history and it’s been
shown the longer inversion the worse the
recession is we’ll see we there’s got to
be a catalyst we’ve seen all the
economic numbers coming down over the
last 12 to 18 months we’ll have to and
then obviously this may be the denum M
this may be the final nail that says
yeah there’s a recession I don’t hope
for it I know you don’t hope for it but
but we know it’s going to happen that’s
the thing we know it’s going to happen
and
it’s the market cannot just keep going
forever it it is a normal thing for us
to go into recession it’s a normal
period of throughout time we’ve seen
this it flushes the market out and if
you look at the the chart that’s on here
for those of you that are listening you
you can’t see this but you might want to
look up the Som rule chart and we can
put a link to that the one that’s in
here in the show notes it’s the St Louis
fed yeah Fred all right we’re not seeing
it at those Peaks but look at where
those Peaks typically happen the Peaks
typically happen as the recession is
ending the recession typically starts
when it’s relatively low and we’re just
now spiking upward and heading upward in
that at some point in time here I would
think relatively soon I I believe that
three to six month is a possibility we
could be in recession and I think some
of the numbers coming out of the Fed and
some of the numbers coming out of the
government with GDP and things like that
I just they go back and they revise them
and it’s not the headline numbers I I
don’t know if they’re really wrong or
they’re really just not wanting to
report what’s happened at this point but
I yeah I believe it yeah Cameron Howard
I got in part two I have one of his
slides he’s an economist and I started
learning a little bit about him he
believed that the FED should have cut in
January that we’ve literally been in
even a mini recession the end of last
year to the beginning of this year yeah
and that they should have caught there
that they’re now they’re not just behind
but they’re way behind so in part two
we’ll go through some of those other
indicators but if if you look at history
of the FED they’ve always been behind
they’re always behind yeah yeah they’re
always late to rise to to raise rates
and they’re always late typically way
too late to lower rates yeah look I’m
not going to say that I would have been
disappointed if they would have even
lowered even a quarter of point this
month or I’m sorry in J was July right
the end of July but like I said what is
a quarter point going to do nothing but
psychologically it’s begun it’s begun
that means the econom is getting worse
well but but the problem is the market
will probably go down because they’ve
been pumping they’ve been expecting this
for months and now all of a sudden it’s
oh it’s gone down that was the the part
the FED chairman last week Powell he
said we probably will start in September
and then if course the market gets un
Unwound the next few days because oh now
it’s actually happening we’ve got to
sell because we pumped this thing up at
this point so it’s like a a combination
of a bunch of things that all happened
at one time so quite frankly we’re still
under the 100 day on the on the S&P and
under the 100 day on the NASDAQ I still
don’t believe that we’re this is oh it’s
all over and it’s going back up I think
we’re going to hit the 200 day on the
S&P which is around 5,000 is Plus or
minus but we’ll have to see there’s no
doubt we need a bit of a flush out yep
we’ll see what happens here September is
historically the worst month of the
August and September are the two worst
month but October is typically the the
month of bottoms like it has been the
last two Octobers I think history is
going to repeat itself in the third year
in a row y I’m right there with you all
right so that’s part
one all right folks uh thanks for
joining us on this make sure you join us
for part two of this it’ll be right
after this one so make sure you join us
and we will see you guys back here the
very next time