Yikes! New Scary Report JUST Out MINUTES Ago!

the Holy Smokes we just got some numbers I just finished the course remember live stream and then I look and I go oh my gosh we just got these numbers here we've got to go through them this is actually a big deal for the economy we'll go through the actual report as well let me just get started with the numbers because oh boy okay you ready for this first of all construction spending was revised down in the prior report construction spending month over month up 0.9 in this report this is generally driven by real estate uh building and investment uh you're seeing a lot of residential construction starts we had a blowout last month because there's so little housing inventory so Builders are like okay we'll build more than if people are going to keep paying for these houses that's on the real estate side of things which is actually a good contributor to GDP helps keep us out of potentially recession but more importantly these ISM numbers you ready for this ISM Manufacturing seventh month of contraction in a row comes in week at 46 versus 47.1 a number under 50 is recessionary contractionary not good uh so less manufacturing not so great for the economy however some good news ISM prices paid huge Miss Hugo Miss I mean we were looking at a 44 read a number under 50 is contractionary right we're looking at 44 for prices paid so contractionary we got 41.8 big Miss look at some of the quotes from the actual report and it'll really give you an idea of sort of this mixed economy where where we're trying to stabilize like land the plane or keep flying the plane who knows about the analogies anymore these days but listen to some of these quotes here and I think they'll give you some insight into what's going on out there and then we'll uh we'll add some commentary obviously after the fact so all right you ready for this here we go uh seventh month of contraction after 30-month period of expansion for manufacturing the price index Inc it registered a 41.8 percent down 2.4 percent compared to May that's good we want prices to go down the U.S manufacturing sector shrank again losing ground indicating a faster rate of contraction not great so faster kind of collapse in manufacturing not good as a potential leading indicator for those recessionary concerns right and ultimately we don't want to go into a recession right that's a problem now there are some bright spots in this as well softness continues and optimism about the second half of 2023 is weakening okay that's not good this is not a good report not good so far demand eased again I mean clearly price pressures are gone in manufacturing right because obviously demand is is weakening here now take a look at this a potential bright spot customers inventory index drop to the too low territory now this is for leading orders so there's a potential leading indicator that you're going to see a turnaround in inventory where companies start buying inventory again which contributes to GDP but also increases the expenses for those companies right EPS goes down potential bright spot though again for manufacturing if you get new reordering okay of the six biggest manufacturing Industries Only One Transportation equipment registered any growth in June and suppliers have capacity this is not an inflationary Market that we're in this is an absolutely slowing down economy the question is can we slow to a level where we're not in recession and just get through this nasty period of high interest rates that's the tough part and the slowing is clearly here like If the Fed only read this report there's no way in hell they should raise rates again customers are less inclined to purchase far in advance according to the computer and electronic product segment yeah keep in mind this is the problem that you had with end phase as well there excuse me their wholesale buyers pause buying because they just sold through the inventory they had remember nface doesn't sell directly to a customer they sell to a wholesaler and then the wholesaler sells to a customer uh or or you know individual like electricians maybe who then install you know install the equipment on behalf of a customer so you have these multiple different layers in between when you get that order reordering that's when a company like Enphase does well and so it looks like maybe that Supply capacity is available but you're not getting as much wholesale buy-through because people are sort of delaying these purchases they don't want as much inventory on hand anymore because they figure ah the manufacturer will have it why did you have a lot of that during covid where people were hoarding inventory because it took forever to get a new shipment because of all the supply chain snarls now you don't have supply chain Styles you want a product snap your fingers it shows up the suppliers are like we're ready we're ready to ship it when do you need it you know it's a totally different environment now you don't have supply chain supply chain shortages you don't have an indicator here of an inflationary explosion this is this is a reiteration that inflation is not the problem the problem is how much is this economy going to slow down uh and does it crash land or do we keep going and so you get some mixed commentary here listen to some of this commentary our company thought the second half would be better than the first half but that doesn't seem to be the case customer orders have definitely slowed down that's in chemicals there were concerns the second quarter was going to fall whether it was a softer second quarter however demand has remained stable this is in transportation equipment so kind of a little bit of both sides here right there's an elevated level of capital uh review that's going on because of the recession well not delayed spending and planning or being prioritized that's for more restaurants Market is stabilizing for petrol healthy backlog for Machinery North America demands stabilizing but European markets showing slowing for fabricated metal halfway through the year while things are challenging we may be doing all right non-metallic metallic material mineral products input costs for materials continue to decline again deflationary deflationary deflationary deflation everything is deflationary with exception of wages see pricing is stabilized but labor costs remain high demand is trending to about 2019 levels adjusting for inflation covid driven demand has moderated in paper products so what do you what do We Gather from this sort of Rapport uh well what we're really hearing is things are returning to a mean this is very normal keep in mind what a return to a mean looks like if this is your economy like this and then you get a massive stimulative well you get a shut down the economy moment then you get a massive stimulative economy now you're getting this sort of return to mean the goal is not going negative that's the goal we don't want to go negative but if we're just returning to mean of course things are going to slow down when it gets really dirty is if we start seeing inflation take off and while we might see core inflation stay hot because the summer travel and the Tremor travel season although hopefully CPI sort of adjusts for that after all they do seasonal adjustments because of that this summer travel season might be particularly hot though we'll see but anyway other than that core inflation potentially popping up from travel it does not seem like there's really any lingering inflation yes wages are still higher but the there's certainly no wage price spiral and if anything demand is really suggesting a a normalization uh is is this are these commentary items here a sign of definitely recession no absolutely not but there's definitely a sign that the fed's slowing of the economy is functioning prices are stable so while I'm gonna pay attention to this to see if things continue to Trend worse for some of these industries which could be a recessionary indicator this report on its own I think is great news for inflation and okay news on the economy it might be a little tilted bearish here but otherwise okay I'm okay with this since there will be a normalization expectation so my take fascinating report just out minutes ago thanks now I want you to know this when it comes to AI time is what's going to make you money and if you can prove that value to an employer you'll always be able to be employed so this is another way of making sure that you don't get replaced but [Music] foreign

Channel: Meet Kevin

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Keywords: investing, stocks, stock market, real estate, money, making money, passive income, wealth, starting to invest, meet kevin

Id: 0V1-hOsDGKs

Length: 9min 12sec (552 seconds)

Published: Mon Jul 03 2023