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er c or tweet me at Jim crer suddenly suddenly we have brown shoots everywhere and that's a good thing remember we would look out for a Slowdown that would justify the fed's position that we don't need any more raid hikes when we get brown shoots the opposite of green shoots Wall Street laps it up because it means the FED might win the fight against inflation and that's why the Dow gained 264 points today well they'll spe jumped 1.2% and then NASDAQ P to 1.59% that was easy it's been hard to parse this economy when we got the February employment numbers on 8 they were so Steam and hot that it felt like the Fed was blindsided because they've been talking about multiple rate Cuts this year and you don't do that when the job Market's booming anything that makes the FED look stupid hurts its ability to maintain price stability well was the FED really wrong just when Wall Street gave up on the possibility of Ray Cuts anytime soon and the FED then joined them we start getting actual signs of a weaker economy it makes sense interest rates have sword they're doing their job since that smoking hot February labor report which was followed by another hot set of numbers for March The Benchmark us tenure has gone up by more than 50 basis points since the February report making it more expensive to borrow money which tends to slow down most of the economy except parts of tech that have what would we call secular growth not bound by little fed raid hikes or cuts for that matter yep when they have the weakness what do we do when you have weakness in the economy you buy The Magnificent Seven and friends and that's exactly what we saw today so how do you know if there really is a Slowdown it is not easy but we've had some very big Ts of late JB Hunt the nation let's see the fourth largest trucking company had a solid J yeah fourth largest uh Commerce company let's call it that Transport company had a solid January and even stronger February but the business shrunk in March and the company's total operating Revenue dropped 9% JP hunt seemed almost mortified that it performed so badly prist world world leading owner of logistics real estate like warehouses was a lot less apologetic even though they lowered their guidance dramatically just a month after coming on the show where we heard a much more bullish story in that interview we were told that there was only weakness in Southern California a month later this week this in Seattle New Jersey and Savannah why these markets well Seattle's maybe where Amazon is I don't know Jersey's warehouse space for the whole New York area Savanah Georgia that's supposed to be where the toughest the best region is put it all together and vacancy rates for these warehouses are going higher because even e-commerce isn't safe and that is a big deal then we heard about a Slowdown story from CarMax the used car dealer they blame the economy and cut prices of used vehicles but they're still got hurt by financing charges that's the bomb Market taking care of business remember the bond market controls long rates and bond yields are now up huged which makes auto loans a lot more expensive because fewer people buy to buy cars Snap-on helps small business owners with fresh new tools and it got wob with some really weak numbers that's a genuine surprise from what's usually a very reliable company selling to decently capitalized M and pop companies we had what weak noers from RH Jo restoration Harware too the retailer talked about a big game really big game about how things were going to get better I think one day they will but higher rates and a lack of new homes for sale have hurt the business and the stocks been clock hey you know what today was Sheron Williams turn the paint maker said there was demand choppiness something that looked a lot that took a lot of people by surprise because anything home related had been quite strong so the stock it got clobbered then there's new quarter The Fabulous steelmaker which saw some of its grades go down in price first time I've seen that in a while miss their quarter sure volumes were up quarter over quarter but the price declines were Stark signaling the maybe broad weakness and con construction and heavy machinery we're going to talk to the CEO later but a miss here is a Miss even as there were many good things about it Cleveland cff had a miss too there's a steel company called Auto related on top of that we've had the collapse of Express the formerly trendy Mall based app paral chain with 600 stores it's agreed to close 95 group of investors led by Simon properties buying the rest if only so their moles don't have a lot of empty storefronts we even got two restaurant chain bankruptcy filings there's Tiana Flats as a south southern 90 store Tex Max chain along with the 40 store Ober Weise dairy in the midwest Red Lobster within 650 locations is also in financial trouble if disastrous all you can e shrimp promotion for 20 bucks they took a beating well I me that's fair for them they just hir a restructuring expert probably contemplating bankruptcy I don't know of course you can say this is all anecdotal the brown shoots are really all oneoff situations real estate small business high-end furniture paint Freight steel electric vehicles restaurant there's almost no pattern here so it's easy to argue that the econom is still humming but that's a pretty big Mosaic except today we got something different we got empirical Brown shoots to the form of the S&P Global flash us composite purchasing manager index an aggregate number and it was so weak that I think it actually put a near-term Fed rate cut back in the table SP spurred huge buying today in a two-year Government auction those people anticipating there could be a rain cut I'm going quote extensively from the port because it's so it's just so on point listen to this quote us business activity continued to increase in April but the rate of expansion slowed amid signs of weaker demand the latest rise in output was the smallest in the year to date reflecting reduced rates of growth in Falling orders in both manufacturing and services and wow that be a forest of brown shoots but could we now be seeing stagflation where business slows down but prices keep climbing no listen to this bit of positive news quote rates of inflation generally eased at the start of the second quarter with both input cost and output prices rising less quickly as the composite as the composite level end quote hey that's exactly what we wanted to see if we're going to get a Fed rate cut this PMI report showed for the first time a reluctance in hiring get this quote a number of survey respondents indicated that they had held off on backfilling positions following the departure of Staff as a result employment decreased for the first time since June 2020 end quote look we never want to be written for job losses right but if you want to beat inflation you need to have the pace of hiring to slow we saw job Cuts tonight at Tesla and the company had a declining number but for earnings per share but it was still better than expected that's in keeping with the brown shoots that I am talking about although uh there was no Brown shoot from Nvidia because there's a slide in the Tesla deck which shows a massive increase in the number of Nvidia chips used presumably for their cars I have been worried about Services being too hot okay it's something obviously a problem because most of the weekness I've seen came down to manufacturing but the PM report says quote the overall reduction in Workforce numbers was on Services where employment decreased solidly to the large largest extent since mid 2020 end quote now get on this is it get this the report goes on to say quote excluding the opening wave of the covid-19 pandemic the decline in Services Staffing levels in April was the most pronounced since the end of 2009 holy cow that's the Great Recession the house of pain but for the bomb Market House of pleasure you know they really Hammer this point home listen the more challeng alling business environment prompted companies to cut payroll numbers at a rate not seen since the global financial crisis Wow real bad news for the economy but remember we need bad news for the economy because that's what cools off inflation something that's also noted in this PMR report that's what brings us rate Cuts so let's think this through we have a host of companies that we know are doing well GE Aerospace American Express General Motors sa which is our Texas Instruments tonight which is uh by the way sap is on later in the show you'll love it but earnings have spotty oh a Spotify was good too but we know there's no let up in travel or housing py put up some very strong numbers today py being a big home builder but the bottom line when you combine the anecdotal evidence with the empirical PMI report you could see that right now at this moment the brown suits are infecting the green and that's exactly what we need for the FED to justify cut and race so of course it happens right as everybody's given up on the possibility of a rate cut Ryan in Washington Ryan Booyah Jim this is Ryan from Gig Harbor Washington show what's going on what's Happening Jim do you Jim do you still think there's more upside for Amazon yeah absolutely why not I mean Amazon is the uh great equalizer I think it's got the Amazon web servic is going to be incredibly strong and by the way just to know Amazon advertising is on fire I want to go to my name say Jim in Georgia Jim hey good afternoon Jim J booah booah back hope you're doing well hey just want great great glad to hear that what what are you what are your thoughts about this acquisition between Kroger and Al Albert I think the government's going to block it because they're still reeling from the day that they let that Safeway deal go through the one where they uh gave all the stores to Hagen and then it became a haway they actually call it that so they're not going to do that deal I think they'll block that one anyway right now the brown shoot are indeed infecting the green shoes remember we're favor of brown shoes cuz we want Ray Cuts it's exactly what we need for the FED Justified cutting rat just when everyone had given up well isn't that exactly the way it works may have money t ASP shot the lights out of the quarter with the stock soaring in response and I'm learning more about what's working for the software giant with the company top BR and nobody is is interested about it except for me but you ought to be interesting cuz it's really good then on the other side of the coin newort is melting down after reporting last night so our investors get and buying opportunity the steelmaker that was this a warning for what to come I got the exclusive and Matel is trying to find if it's footy in this post Barbie movie world and I'm hearing out the company fared last quarter one
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