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Toronto is in free fall and it's one of the worst slumps in years. The problem is, it's only going to get worse. But for the rest of the world, what's happening in Toronto is a warning. We can see this happening in Germany and even right here at home. Now let's turn to Bloomberg where we picked today's story up on the headline as Toronto retail sales are weak due to tariff damage and a real estate slump. And we have been warning that this was going to happen. As we look around the world, we saw a lot of front running the tariffs, not just from manufacturers, but from consumers as well. And we've been seeing the payback period was coming. And in Toronto, well, it's already begun. Sales receipts from retailers in Toronto fell 2.8% in May. Retail sales in the city grew just 2.4% from a year ago, less than half the nationwide growth rate. And the question is, what is different about Toronto compared to the rest of Canada and the rest of the world? Well, it's everything to do with the tariffs and their manufacturing base. A weak labor market may help just explain that, as Toronto's unemployment rate was 8.7% in June, up nearly one percentage point in a year. And that compares with a national rate of 6.9%. So the question is, why is Toronto's unemployment rate so high? And why is this having such an impact? Well, we do know when we take a look at this chart that we can see the effects of unemployment on demand. Let's take a look at this data from the U.S. of real retail sales in blue against the unemployment rate in red. And we can see exactly what's going on in Canada. As you see, the unemployment rate is rising. This is exactly what's happening in Toronto. What you see is a corresponding decline in real retail sales. We note this happened during the global financial crisis. But here in the U.S., we haven't seen retail sales drop off. Now, we did see them reverse direction from their upward trend. We note that most of that was due to tariff front running. The question then is, when are we going to face the same free fall event that Canada is having what's happening right there in Toronto? Well, we think it's going to happen in a matter of a month or two. And for really good reason. But let's zoom into what's going on in Toronto because the greater Toronto region is home to an automotive production hub that's feeling the hit from the trade war. And new vehicle assemblies in Canada fell to the lowest point in about two and a half years in June And we've been talking about on this show how the impact of the trade war was eventually going to hit. Because as demand goes down, that means production drops, utilization falls. And next thing you know, the demand for labor goes right alongside with it. And as more and more people go on unemployment, what happens, their spending power drops. And the longer they're on there, it declines even more. And this is exactly what's happening in Toronto. But the problem is, this is a warning not just for Canada, but for the rest of the world. But something you should be taking advantage of and making big money on, that's trading the markets. Check out this trade we put back on July 10th to our Momentum Timer Pro subscribers. We told them to buy Ethereum, the ETF, ETH on the open, and they were stopped out 12 days later for a monster 29.81% gain. Now, if you are a trader, we have made some major changes to our subscription. You're not going to believe what we're doing now. It's changing the game when it comes to trading. Now, stay tuned to the end of the show. I put a link in the pinned comment and description below. Grump on those. You're not going to believe what we're doing because it's going to change how you trade and make money in the markets going forward. But let's talk about capacity utilization because this is the issue that we mentioned yesterday when we were talking about Tesla. Because what happened there? They were seeing demand go down as well. Now, we can blame some of this from the EV credits are going away. But I think demand for automobiles as a whole has been going down. And Tesla is not immune to this. And what we were talking about in yesterday's show is exactly what's happening in Toronto. As capacity goes down, well, demand for labor goes right alongside with it. And here you can see the capacity utilization rate for the U.S. in blue against the unemployment rate in red. We can go back to the late 1980s. We see capacity utilization go down and we can see the unemployment rate goes higher. And you can see that relationship going into each and every recession, which is a dangerous sign for Canada because what it's suggesting is their economy is headed into a recession. The problem is the rest of the world is going right alongside it. Now, we're already hearing from a lot of manufacturers in the U.S. that demand is going down and that means capacity is likely to fall. But you can see in our data here, a lot of experts have been saying the continued claims data and the unemployment rate are going to drop. But yet, based on what you see in capacity utilization, what is selling us is the unemployment rate here in the U.S. likely to head higher. And so when we turn back to Toronto, we see the effects of the trade war, the lack of demand. We can look forward to what's going to happen here in the U.S. that means we're likely to see the unemployment rate go higher. And at the same time, we're going to see retail sales plunge. And again, this is a major problem, not just for the U.S. economy, but for economies all over the world, because due to all of the front running, there's now a massive inventory overhang building up and it's going to have a ripple effect all across economies all over the world. The slowdown comes after U.S. President Donald Trump imposed tariffs on imports of foreign autos. Canada's share of North American vehicle output slid a massive 7.6% in the second quarter. Want to see how big this was? It matched the lowest level in more than three decades. And so this is, again, a major problem, not just for the Canadian economy, not just for Toronto, but for the global economy as well. Because as demand goes down, and you can see that was a massive drop in output, but you're going to find out that a lot of manufacturers aren't going to maintain their staffing levels. They're going to cut hours, they're going to cut jobs, and they have absolutely no choice to do that. But as I mentioned, there's a knock-on effect to this that starts to spread throughout the economy. Let's take a look at what else happened in Toronto. Because a weakening in economic activity relative to the rest of the country is also seen in the Toronto housing market, where monthly sales flowed to a seasonally adjusted 6,243 in June, down 2.4% from the previous year. Benchmark home prices have fallen by 5.5% in the last 12 months. And again, this is a dangerous sign because we know that Canada's economy is likely in one of the biggest real estate bubbles in history. And as economies slow down and people go on the unemployment line, well, not only do they stop buying houses, but they start to struggle making payments on the properties they do own. The risk then is you start to see delinquencies stack up. We know some of those eventually turn into defaults. And the next thing you know, there's a massive financial crisis that starts to brew and pop. And that's the risk here. Because again, we look around the world. We see this happening in China. We see this happening in Germany. We see it happening in the U.S. We see it happening in Canada. And the problem is a slowing economy has spillover effects unless something changes, and fast. But we can also see the impact it has on retailers as a softer real estate market weighs on spending for housing-related goods like building materials and furniture and appliances in the greater Toronto area. And again, you start to talk about the effects here as people lose their job and production drops, their spending goes down. You see they're buying fewer houses. And we know that when people buy a new home, there's a lot of spending that goes on, not just to build the home, but when they move in and buy other things. And you can see the effects this is going to have on Toronto's economy. And then it's going to spread all across the world. Let's take a look at real retail sales, still shown in blue, now against new privately-owned housing starts. Again, this is U.S. data here, but you can see the very clear relationship going back to late 1990s. You can see the two again happening, going into the global financial crisis. And look what's happening now. We can see very clearly that this jump in retail sales was all due to front-end and the tariffs and not backed up by housing. Because what are we seeing in the U.S.? Well, we're seeing new privately-owned housing starts continue to decline. And this is a problem here because right now in the U.S., we have about a 9.8-month supply. Builders are sitting on a massive inventory of new homes. In fact, the largest amount of inventory since the global financial crisis. So you think about this. If homes here in the U.S. don't move, and remember, President Trump wants the Fed to cut rates because there's hope that if they did, perhaps it would spur people to go out and buy homes. We know a rate cut isn't really gonna cause that to happen. But again, you start to look at the issue here. If these homes don't get sold, what happens? Builders are gonna cut back. That means demand for labor is going to go. And you can slowly see how this whole thing comes unwound. In fact, as we look to U.S. factories, we're already seeing signs that what's happening in Canada is happening here. As U.S. core capital goods orders decline amid policy uncertainty, the value of core capital goods orders, a proxy for investment in equipment, excluding aircraft and military hardware, dropped a massive 0.7% last month after an upwardly revised 2% gain in May. And bookings for all durable goods items meant to last three years and including orders for commercial aircraft and military equipment fell 9.3%. Now, mostly that was due to Boeing, but nevertheless, what you're seeing is a slowdown in demand at the factory level. And we warned that this day was coming and we didn't see it in the data, but now it's starting to show up. And what we can expect going forward is exactly what's happening in Toronto is gonna start showing up in different parts of the United States, different countries all around the world. The first sign, manufacturing goes down. Then you're gonna see the unemployment rate starts to tick up and then retail sales are going to plunge in a big way. The figures wrap up the second quarter in which spending on equipment likely slowed sharply from an aircraft-related investment surge at the start of the year that was the biggest since 2020. Again, talking about front running the tariffs. And we take a look again at the relationship between new orders. And again, this is exactly what's happening in Toronto against the unemployment rate. And you can see here US data as manufacturers' new orders of durable goods decelerates and then contracts as it breaks below that horizontal black line, you can see the corresponding increase in the unemployment rate. You see it happen during the global financial crisis. And what's interesting now is we saw all this front running of demand. You see durable goods, new orders shot up, but it didn't lead to a decrease in the unemployment rate. And for one good reason, that's because manufacturers realized that this was transitory. They increased hours. They did do some increase in hiring, but you'll note it didn't change the structural issue on the unemployment rate. It didn't change continued claims at all as we looked at yesterday. So again, the risk is as demand goes down, what's going to happen is hours are going to get slashed. And next thing you know, paychecks are going to shrink. What then is going to happen is less spending isn't going to go on in the economy. And what's happening in Toronto then shows up here in the US. And again, you're seeing the early signs of it now. And small businesses also reported softening capital expenditures and investment plans during the month as the cost of import duties cut into profits and raised prices for inputs. The Durables report showed declines in orders of computers and communications equipment. So what we're seeing here is again, clear signs of a decrease in demand. And when businesses spend less in the economy, it back fees again into other businesses. And this is a major problem because we've been talking about the impact of profit margins. And you're seeing this happen in Canada. Why in Toronto is the unemployment rate rising? Is it just because demand's going down? It's also because you're seeing businesses fight to maintain what profit margins they can because in the end of the day, if they don't have the money to stay in business, a lot of people lose their job. And that's the risk of what's happening right now in Germany. It's Volkswagen cuts guidance after taking a one and a half billion hit from US tariffs in the first half. Europe's biggest carmaker posted an operating profit of 3.83 billion euros. Check this out. It's down 29% from 5.4 billion euros a year ago. That's a massive hit. And again, you take a look at how this impacts the labor market. Again, as profits contract, what's gonna happen? Businesses are gonna fight to stay in business. And that means they're going to lay off employees. You can see that very clearly in the corporate profits after tax. That line is in blue, shown on the year over year rate of change. You can see it contracts here in the late 1980s. What happens? The unemployment rate heads higher. You could see it going to the dot-com bubble. At first, employers hang on. They don't fire employees. But next thing you know, as the dot-com bubble bursts, they lay off in droves. Happened again during the global financial crisis. And now the risk is, we saw profit margins increase, but we didn't see it translate into hiring. The risk now is, as we start to see the trade war tariffs set in, and we see profit margins decline, it means layoffs are going up. And the evidence of that is very clear. As we now turn to Intel, who finally beats on revenue and gives an upbeat forecast. Well, but it's not an upbeat forecast for the employees. Starting with Q2 results, Intel reported revenue of 12.9 billion, up a mere 0.2% year over year. Now, I don't know about you, but in my book, that does not drive an upbeat forecast at all. But as I said, for the employees, they don't see anything that gives them any reason to be excited. Because Intel previously had planned to cut operating expenses. And again, you're going to hear this from a lot more businesses in the quarters to come, to about 17 billion this year. And there's no more blank checks, the CEO said. Every investment must make economic sense, meaning we can't afford to lose money anymore. And the reason why is, Tan, who took the CEO job four months ago, said his efforts to cut costs now include layoffs and the scaling back of a once massive factory expansion. They've already canceled projects in Germany and Poland. Again, Germany, the issue there, again, you see what's happening with Volkswagen. Now a lack of investment from Intel. The company will slow the pace of construction at a planned Ohio facility as well. And the cuts, they're going to include staff that are going to reduce them by 15%. And you start to think about why people are cutting their spending ahead of time, because they already know based on the data. And we saw this in the continued claims data that we looked at yesterday, is that if people lose their job, the likeliness of getting stuck on unemployment is high because the labor market isn't creating enough jobs for people to reenter the workforce. And again, this is a major problem as we look across the economy. Now, yesterday we talked about how President Trump went to inspect the Federal Reserve building that's under construction. He ended up meeting with Fed Chair Powell. The problem is he didn't walk away with a rate cut, which he thinks is necessary to save the economy, which is why all of a sudden he's changed his tune about what to do with all this money from the tariffs. As Trump floats giving Americans rebate checks from tariff revenues. Remember, yesterday I said this was all about the economy. It wasn't a political move here. And yes, on one level, he does want to remove Fed Chair Powell. Based on what we saw yesterday, there's absolutely no way that's going to happen now. But what he's realizing is none of these tax cuts, the trade war, nothing he's doing is changing the trajectory of the U.S. economy. Now, keep in mind, we said this was a likely outcome because it was already slowing down before he took the office of president. Now he's realizing that he's not going to get the rate cuts. So maybe he needs to put some money in people's pocket and get them to spend. We're thinking about that. Actually, we have so much money coming in. We're thinking about a little rebate, he said. A little rebate for people of a certain income level might be very nice. And you can better believe there's a lot of Americans that could use that right now. Trump also suggested that using revenue to address U.S. debt was another option. Adding that, the big thing we want to do is pay down debt. But we're thinking about a rebate. Again, yesterday I said it was all about the economy. Now you're seeing very clear signs. What's happening in Toronto is happening all around the world. They're just one of the leaders but based on what we're seeing happening in Toronto, we can see the early signs that happen here in U.S. manufacturing. We know it's going to lead to a decline in retail sales. We know when that happens, more people will lose their job. And so it starts to make sense. Why could a rebate check go out? Again, it's all about the economy. And U.S. revenue from customs duty this fiscal year surpassed $100 billion for the first time. Highlighting the higher tariffs, Trump is levying in his bid to reshape the global trade flows and bring home manufacturing to the U.S. The problem is, it's not bringing home manufacturing. We said it would take years for that to happen because it takes years just to build a factory to begin with. Not to mention all the planning that goes into putting the construction up and getting production moved here. The Treasury Department recorded $27 billion in customs duty revenue for June, bringing the fiscal year-to-date inflows from levies to $113 billion. So you can imagine a rebate check right now would be a welcome thing for a lot of Americans. The problem is, will that change the trajectory of the U.S. economy? I don't think it will, which is why what's happening in Toronto is a massive warning to the rest of the world and why I think for them it's going to get worse as well as I think for the rest of it. But something that we're doing is changing the game completely is how you trade. Check this out because I built a program and I start putting in all these different trading strategies. Now remember, I still have my core two reports and right now, this is being given to all my subscribers at no additional charge. So I built this program. I put all these different types of swing trades into it and then I built a backtest engine. 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