Corporate Insiders Are Selling Like Crazy | Jesse Felder

**Jesse Felder** (0:00)
The corporate executives right now are saying over the next 12 to 24 months, economy is gonna slow and earnings growth is probably peaked and we're heading for another earnings recession over the next 12 to 18 months.

**Adam Taggart** (0:20)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. There's a lot of change in the air right now, in the economy, the markets, and of course, with the fast approaching US presidential election. There's so much change currently underway that today's guest titled his latest report, The Macro Winds Are Shifting. Well, how exactly? And what will the likely repercussions be? And how should investors consider positioning intelligently today for where the puck is likely headed? For guidance, we're fortunate to speak today with Jesse Felder, founder and editor of the respected market research firm, The Felder Report. Jesse, thanks so much for joining us today.

**Jesse Felder** (0:58)
Good to be back with you, Adam. Thanks for the invitation.

**Adam Taggart** (1:02)
Hey, it's always a pleasure.
You and I catch up after, but before we turn the camera on here, and in addition to your prodigious and excellent writings, it sounds like you're just making the most of your time in the world there. You're one of the guys I aspire to follow in their footsteps. So anyways, thanks for blazing such a good trail. All right. So lots of questions about the change that's in the air right now in your recent writings. But if we can, can we just kick this off with the regular general question I'd like to ask you at the start. What's your current assessment of the global economy and financial markets?

**Jesse Felder** (1:39)
Well, I think that Bill Dudley put out a piece in Bloomberg recently, and he's been kind of pounding the table, arguing for rate cuts for a few months now. His latest piece was arguing for 50 basis points. And whether we do 25 or 50, I don't think it matters too much. But I think he makes an interesting point about where we are in the economic cycle. And he talked specifically about the deterioration in the labor market. And historically, this has been something that is self-reinforcing.
So he talks about how people start to fear for losing their jobs, they start to spend less, that puts pressure on corporate profits. So hiring goes down and it just kind of becomes a vicious cycle. In his latest piece, came out yesterday, he suggests that he thinks the labor markets either crossed this tipping point or we're rapidly approaching it. So this has already kind of become a self-reinforcing deterioration in the labor market. And I think that's probably the best estimation of where we are right now, is that things haven't deteriorated enough, perhaps to decisively say, yes, we're in recession or recession is going to start in the next month or two. But it looks like we're rapidly heading in that direction. And the idea that things are just going to stop and kind of flatten out, argue is against what we've seen historically, which is once these things start to turn, they continue in that direction. And I think there's tons of data to support the idea that the labor market is deteriorating in a significant way. I think we've seen the unemployment rate tick up, but I think people really didn't pay much attention to the latest Challenger Grain Christmas report that showed job cuts in August hit the highest level for any August, going back to 2009 More importantly, I think job hires, new announcements of job of hiring, were the lowest level year to date that the firm has ever recorded. So the labor market, and that's back to 2005 So firms are hiring less than they have done in two decades. Labor market is rapidly weakening and we're seeing that start to kind of materialize in things like consumer spending. So I think we have come to the point where we fully priced in a soft landing in the stock market. And now, what we've seen over the last couple of months with the heightened volatility of things, the market may be going, wait a second, maybe a soft landing isn't, you know, pricing 100% probability of soft landing was not such a smart idea and having to kind of reconcile with the fact that it might not be so soft after all.

**Adam Taggart** (4:22)
Okay. I'm trying not to pat myself on the back here. But what you're talking about and what Bill Dudley seems to be warning about is what we've talked about on this channel a lot over the past two years, really, you're plus, and I probably to many people have sounded like a broken record, warning about the lag effect, right? That we raised interest rates very aggressively, really at a faster pace, I think, than living memory. They have held higher for longer, much longer than folks thought they would. And the warning that many folks, including myself, have said is, hey, that's not free. You eventually have to pay the price of those higher interest rates.