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What is going to happen next?
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The current employment boom is about to collapse!

The current situation is looking good:

  • The unemployment rate is at record lows
  • There are more job openings that people applying for them
  • The economy is still expanding
  • Wages are rising

However, there are some big warning signs that suggest we are about to turn the corner and start to see some bad numbers in the employment sector.

What are they?

  • Small business outlook is at record lows. Large businesses are not the drivers of employment, small companies are. So this is a precursor for a halt in hiring later in the year.
  • Rising wages are one reason why small businesses are so pessimistic. They can't afford to hire more people.
  • They will hang onto who they have and possibly just pay them for extra hours. They will also substitute capital goods for labor. Notice that McDonald's is replacing staff with kiosks around the world.

All of the above is related to some of the reasons I am looking for a recession to hit early next year.

Let me explain.business/credit cycle this time around.

Here's why.

Real wages are declining. Yes wages are rising at over 5% annual rate but inflation is rising faster. So people are seeing their paychecks decline.

In particular, they are seeing their daily needs jumping at rates often over 10%. I'm talking about:

  • Housing
  • Gasoline
  • Food
  • Aircon and heating

These are the things we all use every day. Inflation is being held down by services which are not yet climbing rapidly. So I would argue that real wages are actually declining faster than the official rate. And, for poor people, they are getting wiped out by inflation.

Which means that people will stop spending on things that are discretionary. Sure they will still spend on most services but goods will be shunned. I'd like to get a new car but I'll hang onto this one another year. I'd love to get an 80' TV but I'll hang onto my 55' one a little longer. And so on.

So manufacturers of discretionary goods, like my examples, are starting to be hit right now.

Here is the sequence of events that you will see as the recession unfolds.

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We will start to see all discretionary consumer goods, with the possible exception of luxury goods, start to slow and move into reverse. That would include things like:

  • Autos
  • Refrigerators
  • TVs
  • Houses but home improvement will likely do OK

So what that means is"

  • The manufacturing sector will go into a recession by the end of the year
  • We need to short the following:
  • Sector ETFS
  • Stocks in those sectors
  • Stocks that represent the suppliers to those sectors.

To see the specific stocks I'm shorting to make money from this sector, please click here to learn more about my weekly video newsletter, Wall Street Winners.

Thanks!

Good bummer trading,

Courtney Smith

Words To Live By

"Personal freedom is important to me. I always choose in favour of more freedom rather than less. I Old man Partridge's insistence on the vital importance of being continuously bullish in a bull market doubtless made my mind dwell on the need above all other things of determining the kind of market a man is trading in. I began to realize that the big money must necessarily be in the big swing. Whatever might seem to give a big swing its initial impulse, the fact is that its continuance is not the result of manipulation by pools or artifice by financiers, but depends upon basic conditions. And no matter who opposes it, the swing must inevitably run as far and as fast and as long as the impelling forces determine." Edwin Lefevre, Reminisces of a Stock Operator

Where to get more Courtney!

Youtube: Freebee Wall Street Winners

Podcast: The Courtney Smith Show

Substack: courtneysmith.substack.com

Medium: Courtney Smith – Medium

Profile Image COURTNEY SMITH
WealthBuilder LLC
Work (702) 761-6837 | Text Message (702) 718-8588
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