🚨 It's OFFICIALLY a CRISIS and It's Spreading FAST!

0:00 The unthinkable has happened is the clearest sign yet that the next financial crisis has started. Now let's over to Bloomberg where we picked today start with a headline. As US manufacturing activity contracted May for the fourth straight month and the warning sign here is where the manufacturing sector goes in any economy. The rest follows and this is a dangerous sign because what the mainstream media did not put in this report is the biggest warning sign that indicates that a financial crisis has now started one that's going to impact every household all across the country. Truls's trade related indices highlight the widespread uncertainty caused by the uneven roll out and frequent changes in tariffs. The ISM's import measure dropped 7.2 2 points, one of the largest monthly slides on record to

0:46 39.9. And it's the relationship to imports in the economy that matters because we're the world's largest importer. And when imports go down, it has an immediate impact on the labor market, which is what the mainstream media doesn't want you to know. But wait till you find out. It's a clear indicator again the crisis has started. The gauge of exports fell to the lowest level in 5 years, possibly a reflection of retalatory tariffs from other nations on US producers. It's also a sign that the global economy is slowing down. And when the global economy slows down, well, so too does demand for workers all over the world. Now, let's take a look at the relationship between imports of goods and services into the United States. That's shown in blue against the unemployment rate in red. Let's go back to the late 1980s, and we can clearly

1:32 see imports are decelerating. At the same time, demand for US labor bottoms out and you can see the unemployment rate heads higher. And we could see this relationship going into every recession. When the economy starts to slow down and demand starts to wayne, whether it's just due to exhaustion, a slowing cycle, tariffs, you name it, it doesn't matter what the catalyst is. What you can see, imports go down and contract as they did here going into the.com bubble. And what do we find? The unemployment rate heads higher. You can see it happens during the financial crisis. And now what we're seeing is imports are coming down. And what we've been hearing from employers is they're going to hang on to employees. But we know that wasn't the case because they're not infinite money machines. They can't just keep idle employees around. We knew the first step

2:19 would be to cut hours. But what we're finding at the manufacturing sector is they're cutting jobs. Let's take a look at the ISM report. Again, this was not included in the Bloomberg article because the employment index registered 46.8 in May, the fourth consecutive month of declines. So, at the same time, we're seeing new orders and demand go down as the factory sector again contracts for four straight months. Their demand for labor has been locked step right with it. Again, this is a major warning sign. And as people lose their jobs, what does that mean? Well, we know they go on unemployment and next thing you know, they enter delinquency, eventually default, and what we're seeing right now is the beginning of the next crisis. Respond as companies continue to reduce headcounts through layoffs, attrition, and hiring freezes.

3:06 And due to the uncertain near to midterm demand, staff shrinking continues to be urgent. And again, this is a huge departure from what we've been hearing executives say. They've been telling us, look, we want to keep our employees. And at the same time, they're telling us they have a list of people that they'll fire if they have to. But what we're finding out is they don't have the money to keep people on the payroll. We're now seeing urgency at the top. They're panicking and laying people off and for good reason because when you see new orders decline, and that's really the issue here, the demand for labor goes with it. Let's take a look at manufacturers new orders of durable goods in blue against the unemployment rate still shown in red. And we could see clearly going back to the mid 90s there was a deceleration in demand and you can see the unemployment rate

3:51 flattened out. You can see going into the.com bubble it decelerated then contracted. Demand for labor went right with it. You can see the same effects in the financial crisis and you can see it now. This is what manufacturers are telling us is we don't have the work to keep people busy and we want to keep them on the payrolls but the reality is the unemployment rate likely to head up and something else that should be headed higher. Well, that's your trading account. Let's take a look at this trade we put back in April on uranium. Our CTA timer pro subscribers got stopped out for a monster 35.7% gain. And again, here's the notes we very clearly told them to buy it open. And here's a great thing. If you want to learn how to trade against the machines, all you have to do is grab the links in the description below. Use a coupon code for your free 30-day trial.

4:37 Stay tuned to the end of the show for more information. Because when we look at the details of the report, we clearly see the manufacturing PMI has been decelerating. But look at the link to new orders and employment. Here you can see new orders have been contracting for fourth straight months. And what do you see? An equivalent contraction in labor. You can see new orders now 47.6 continuing its downward slide. Employment going right along with it. But here's the real red flag. That's backlog of orders contracting now for the 32nd straight month at 47.1. The risk here is very clear. Manufacturers have been putting people on the backlogs for now nearly 3 years. And we've been wondering when they're going to run out. But the signs are clear because new orders are going away. And what that

5:22 means, demand for labor going away. And you can see we're now in the beginning stages. It's very clear. It's undeniable financial crisis has begun. The survey also indicated higher material costs remain an issue for producers. The group's price measure with little change and it still elevates 69.4. So at the same time demand is going down, prices are going up. And this is an issue because consumers have very clearly stated they want everyone else to absorb the price increases because they can't. The problem is manufacturers can't absorb them all either. So they only have one move left. That's to lay people off. And you can see here corporate profits after tax in blue against the unemployment rate again still shown in red. And when corporate profits decelerate inner contraction, well what

6:08 we know is companies will defend their margins and they get rid of their biggest expense. That's employees. You can see what they did here in the early 90s going into the 91 recession. The unemployment rate went up and what happened? Profits went right in line with it. You can see the same thing happened going into the dot bubble. The financial crisis. It happened right before the pandemic. And now we know that profits after tax are going to clearly decelerate, most likely contract. And again, to defend margins, you're going to see more employers lay off. The same employers have said, "We don't want to cut. We're going to do everything but." And now they're cutting people. And we know that this trade war isn't over. There's no signs it's going to end anytime in the near-term future. Nor is there any indication that if it did end, the economy returns to normal.

6:53 The problem is there's going to be a lot of people on the unemployment line and soon as we turn to South Korea, we see exports are dropping there on tariff and political risk. It's all about demand and what you see happening in the US as consumers lose their job hit the unemployment line. Well, their spending is going to drop. And for a lot of countries like South Korea that are heavily dependent on exporting, particularly the United States, you could see the risk to their economy is the same. It means lots of people all over the world are going to be out of work. The values of exports fell 1.3% from a year earlier. Overall imports decreased by 5.3% and this is the indication it's not just domestic demand as South Korea is going down. They know it's external demand from the rest of the world that's dropping because they

7:39 import things, manufacture things and then send them out the door. This is a very clear sign the global economy is in a dangerous place. Now, the early signs of a financial crisis have been confirmed. Sunday's release showed that auto exports fell 4.4% in May from a year earlier, while semiconductor shipments gained 21.2. Chips and automobiles are South Korea's big export drivers, and outbound shipments to United States dropped 8.1% while exports to China decrease 8.4%. So, you can see demand for labor in South Korea is going to drop as well as demand in the United States. Again, imports are key in terms of creating jobs. We know people all across that supply chain in the trade, transportation, warehousing, they're all going to be impacted and that's a

8:24 dangerous sign. And now what we're seeing is JP Morgan warning that US stock market go down next. As JP Morgan strategist warned, US stock rallies at risk from stagflation. And yes, while that may be true, I'm going to make a very bullish case of why the stock market could melt up despite clear evidence the economy is slowing. But remember, any meltup could get blown up real quick. The bearish prediction comes after the S&P 500 just finished its best month since 2023. But worries have returned about global trade tensions and a ballooning US budget deficit. The US benchmark is up half a percent so far this year, underperforming European and Asian shares. But that's not the issue because it's all about the labor market. And let's take a look at these next

9:10 three slides. It becomes very clear that the direction for the US equity markets is likely lower. But it doesn't mean we can't see a meltup before that happens. Let's take a look at the job openings and labor turnover survey or jolt that's shown in blue against the NASDAQ 100. And I want you to see the beautiful relationship between the labor market in terms of job openings and the stock market. But one thing we've noted is the job openings continue on a decline. Many people said, "Look, that's irrelevant." Now, stocks are in the early stages of a bull market. Based on this relationship, this gap at some point is likely to close. What we're hearing from the ISM is what we're going to see are fewer job openings, putting this equity market rally at risk for a monster reversal. But once job openings start to go away, next thing you know, it's hours work

9:56 that go. Let's overlay average weekly hours of production and non-supervisory employees. That's shown in blue against the NASDAQ 100. And what you can see, there's a threshold that gets hit. As hours drop, next thing you know, the stock market goes with it. And this makes perfect sense because as people have less money in their paycheck, they have less money to invest. And that means stocks start to get overvalued. And without people continuing to buy, it means they start to slide. And you can see that relationship happened going into every recession. As hours drop, the market goes with it. You can see it around 2015 to 2016 when the global economy was headed into a recession. You can see the relationship back in 2021 as hours dropped. People stopped investing and then the market took off, but hours have not recovered. Well, we know

10:42 they're likely to go down as well. But here's the big one. Because when people lose their job, well, the last thing they can afford to do is invest in the market. No more 401ks. In fact, people start to withdraw money. And that's why the unemployment rate now shown in blue, you can see when it heads higher, well, that means the NASDAQ 100 tends to come down. So you can see the real risk to the equity market here and that this early stage bull market that many people claimed was only going to go higher. Well, if the unemployment rate goes up, the risk to the market is to the downside. But again, it doesn't mean we can't have a meltup rally because the evidence is getting clear that that's actually the base case. Goldman Sachs strategists say that trading is close to fair value and expect valuations to be roughly unchanged in the next 12 months.

11:28 I don't agree with that at all. At Morgan Stanley, strategist Michael Wilson reiterated his bullish view on US corporate earnings and says stock valuations have likely bottom, meaning they believe stock prices only go higher here. But what it's going to take is someone to come in and be a massive buyer. Someone again who perhaps have been short this market may need to cover. And that, my friends, is hedge funds. As hedge fund bears capitulate by the most tech stocks on record and now we see they're ready to buy and perhaps could be massive buyers. So check this out. Asset managers who were roughly flat the prior week finished 4 billion net sellers. So one thing we can note is that asset managers still under pressure by their clients to raise cash here again. If the market rallies, they're going to have to take that cash and

12:14 redeploy it. They have to play chase or they end up getting fired. But investor fatigue is certainly mounting. But there are buyers here. It's not just hedge funds. US equities were net bond for the fourth straight week as we see notational US long buying led by single stocks. It was the largest since last November suggesting increased appetite by hedge funds to carry risk and for good reason because they're short this market. Not only are hedge funds long as we could see gross exposure but looking at the net exposure we can see that hedge funds are holding large short positions. If the market rallies here, they're going to have to cover those and that could be a catalyst to send markets higher. It's not just the corporate share buyback window that's largely over. It's not just corporates here who are buying. Check out the machine

13:00 positioning as we look at the systematic positioning across CTAs, risk parity, and vault control funds. We talked about this on Sunday's show that they're buyers now in all scenarios. And you can see they've got a long way to go to lever their positions up that could squeeze hedge funds, pull retail back in and force asset managers to come out of their cash positions and be buyers here. So despite the fact that there may be clear evidence that we're in the early stages of recession, even a financial crisis as you start to understand people are going to lose their jobs at a time when interest rates are high as well as debt levels. This is all the recipe you need for an all-out crisis. we could see stocks melt up before they crash. But if you're looking to learn how to trade against the machines, let's talk about our trade on uranium. Now, how did we

13:46 know this? How did we get our subscribers in? Well, we were looking at the machine positioning and we run a historical overlay and we told them to buy in the open right here, and next thing you know, it took off as machines were chasing price higher. We saw that it got stuck around a six-month volume profile. We told them to hang tight and next thing you know on news it drove uranium prices higher. We raised our stop-loss levels and got out. Now how do we do this? Each and every day we look at machine position across the broad equity, bond, currency, commodity markets, but our edge is we run a historical overlay. So we look to position our subscribers ahead of a big buying spree by machines. And again, we back tested all of our signals. And will we see something that has a high probability of generating positive return? Well, that shows up right on our

14:33 hot list. But in addition to the hot list, you get all the machine positioning across all of the broad asset classes. You get the daily report, you get all the tradable signals, you get my opinion on the best trades, you get risk control levels, a full tracking of trades and returns, a weekly update, and here's the best part. You don't have to put a dime out to try our report. That's right. You can jump in on our potentially next biggest trade for free. All you have to do, grab the links in the description below, use a coupon code, get your free 30-day trial. And with that, I'm Steve Meter. Thanks for watching. Thanks for being fans. Bye now.