Canada is CRASHING – Why I'm FRIGHTENED We're Next!

Jobs in Canada are vanishing. I'll show you why it's going to get worse and why I'm frightened that we're next. Now let's head over to Bloomberg where we pick today's story. But the headline is Canada unexpectedly sheds 40,800 jobs. This is now the most since the pandemic. And you're going to hear this term unexpected show up a lot when you see economic data over the next couple of months. Because the prevailing view was we were having a soft landing. It was all evident when you looked at payrolls because all of a sudden, due to front ring of the tariffs, businesses were hiring. We saw, of course, demand rising. And I warned you it was going to roll over. It wasn't going to stick. And now everybody's surprised. What they're really going to be surprised about is what's happening in Canada. What my fear is it's soon coming to America. Employment fell by 40,800 positions in July, driven by decreases in full-time work. Meanwhile, the jobless rate held firm at 6.9%, and likely for the same reason we saw that happen here in the U.S., because people are dropping out of the workforce because they can't find work. They know there isn't work out there. Not a reason why you want to see the unemployment rate steady. The number of job losses even surpassed the most pessimistic projections by a survey of economists because everybody bought into the narrative that the global economy was experiencing soft landing and was set to boom from here. But we've been warning, and you've heard me say, that paychecks relative to inflation were shrinking. We've seen consumers say, look, we can't afford higher prices. We've seen businesses try to raise prices and find out they're getting rejected. And all this is leading to is a further decrease in demand that was eventually going to hit the labor market. Now Canada finding out that this situation is getting worse. The problem is for Americans, it's coming here and soon. The monthly decline was concentrated among youth ages 15 to 24, who were usually among the first to experience a labor market downturn. And think about what's going on in China. In fact, Beijing suspended the publication of youth unemployment because it's gotten so bad. And again, this is a major warning sign. On top of the fact that over 40,000 full-time jobs were lost. Again, this is not a good sign for Canada's economy. The Canadian labor market failed to sustain a strong momentum from June when it surprisingly added the most jobs in six months. And again, this had everything to do with front running the tariffs. And we said, as soon as that ends, all this demand, all this boom, it's transitory. And watch out, things are going to roll over. And now they're rolling over in a major way. And as you're going to see, this is going to spread all across the global economy. The Bank of Canada held its policy interest rate at 2.75 for a third straight meeting last week, but said the labor market remains soft with the unemployment rate rising from 6.6 at the beginning of the year. And this makes absolutely no sense of what these central bankers are doing. We heard from the Fed that they're worried about inflation. And yet, what did we hear from Waller and Bowman? They said, no, look, it's inflation's not the issue. It's the labor market. And they're right. Because if you lose the labor market, which is exactly what just happened in Canada, 40,000 full-time jobs lost, what's going to happen to demand? It's going to drop. And when you lose the labor market, any inflation issues you have, they're transitory at best. But something that should be rising well is your trading account. Let's take a look at this CTA Timer Pro exclusive trade. This went on to our subscribers back on the 5th. We told them to buy large gold miners, that's GDX, at the open. Now the trade's up over 6%. And here's the best part. You can get on these trades for absolutely no cost. That's right. If you grab those links in the description below and you use the coupon code, you can get your first 30 days for free. Because we've got a major update. We're going to talk about our meta strategy. If you haven't heard about this, stay tuned to the end of the show because we have a lot more updates coming. And I want you to be a part of it because we're changing the way people trade in a major way. But let's talk about the fact that the central bankers continue to get this wrong. Let's look at what's going on here in the U.S. We talked about the nonfarm pay report, how we saw this surge in hiring. And then you see a big decline after that. And this is exactly what happens throughout history. As you see, a slowdown in the economy, labor slows down, and then all of a sudden it pops back up and everybody says, look, this is that soft landing narrative. And that's exactly what started to show up in the data due to front run of the tariffs. And again, I've warned. I said, look, this isn't going to hold. It's going to roll over. And sure enough, now it is. Indicating that the Canadian economy and economies all over the world are heading to recession. But what's driving this? Well, let's take a look at what's really going on inside Canada's economy. Let's turn to the S&P Global's manufacturing PMI. What do they note? That there's a downturn in the manufacturing sector that continued in July. Take a look at this. Slower but still marked falls in production and new orders. And what have we said? When new orders go down and production goes down, the demand for employees goes right alongside with it. And sure enough, that's exactly what S&P noted. They said, given the highly uncertain business environment, staffing levels were reduced further in July. There you see it showing up in their payroll report. Overall, the employment declined for a sixth success a month and to a greater degree. So as demand continues to evaporate, the demand for employees is going to accelerate. Again, this is a major problem facing the global economy right now. And check this out. Despite the reduction in labor capacity and excess production over new work inflows led to backlogs being reduced to the greatest degree since April. And what have I been saying for months and months and months now is that when the backlogs are gone, there isn't enough new orders to sustain the workforce. As they go down, more and more people are going to lose their job. And the next thing you know, the music's going to stop. And the evidence is very clear. Let's take a look at some U.S. data here as we turn to manufacturers, new orders of durable goods against the unemployment rate in red. And you can see when that blue line heads across that horizontal black line, that means new orders enter a contraction. When that happens, the demand for labor goes right along with it. And you can see throughout every cycle, the unemployment rate heads higher. Now, the risk here for the U.S. is we're going to see a big contraction in new orders. And that's going to fall right alongside what's happening in Canada. And now you're seeing why over 40,000 people lost their full-time job. The risk is it could be even more if the manufacturing sector continues to decline. Because right now, about 9% or about 1.9 million Canadians are employed by the manufacturing sector. And as we see new orders continue to slow down, as we see backlogs continue to get worked through, what it means is more Canadians are going to hit the unemployment line. And that's going to spread all across the world. And even it's going to have an impact on the services sector, which we're starting to see happen now. Because according to the S&P Global, they saw the slowest reduction in business activity in eight months, meaning it's still slowing down, it's just not slowing down as much. But is that a good sign? Well, we can tell you right now, if 40,000 people just lost their full-time job, it means they're spending in the services sector. It's going to decline immediately after that. With new orders declining at a softer rate, the pace of depletion in outstanding business also eased in July. The latest reduction in backlogs was only slight and the weakest since last November. But again, the point is they're seeing demand continue to go down. Where manufacturing goes, you're seeing the services sector follow. But the problem is the services sector in Canada is making a huge mistake. The same thing happened in Europe and it got rejected by consumers. Let's take a look at what they're about to do and why it's going to lead to more unemployment. Because service providers respond to higher input costs by raising their selling prices accordingly. Charges increased markedly for the third consecutive month at the start of the second half of the year. And we already know consumers can't afford prices where they're at now. They're most certainly not going to be able to afford higher prices. And what's going to happen is going to lead to a further erosion of demand. Again, more Canadians hitting the unemployment line. But the problem is you're going to see service providers all around the world facing the same dilemma. They're going to be forced to raise prices. The problem is they know if they do, they're going to lose business. When that happens, you get squeezed at the margin. The next thing you know, employees got to go. Boiling it all down, there are reasons to think that the recent increase in underlying inflation will gradually unwind. This is from Tiff Macklin. He's out of the bank in Canada. And yes, Tiff, inflation is going to come down. Why? Because your labor market is going right along with it. He noted that the recent rise in the Canadian dollar is containing import costs and that labor expenses have moderated as there's more available workers. So he admits that, look, our labor market is getting weaker here, but we're not going to lower rates. We're not going to do anything here. We're going to stay on the sidelines just in case inflation perks up. The problem is when it doesn't and their labor market blows apart, you're going to watch the bank in Canada right along a lot of other central banks chase rates back to zero. Macklin said there was clear consensus on the bank's governing council to hold the policy rate and to proceed carefully. Well, they're not going to be proceeding carefully a whole lot longer when you're losing 40,000 full-time workers. What do you think is going to come next month and the month after? You're going to be cutting, Tiff. You just don't realize it yet. And let's take a look at the U.S. data here because it's very clear. When the unemployment rate goes up, that's still shown in red, what happens? The Fed cuts rates, but they do it too late every time. And we're going to see the Fed make the same mistake that the bank in Canada is making right now and every other central banker around the world because they're worried about inflation. But as I've said, if you lose your labor market, inflation becomes transitory. And here is the evidence. Let's take a look at the Consumer Price Index. This is for the U.S., now overlaid against the unemployment rate, still shown in red. And you can see as the unemployment rate rises, even if you have an inflation problem, it goes away. The same thing happened during the global financial crisis when energy drove the CPI up. And right now it's very clear. The reason the CPI isn't jumping like everyone thought is because the unemployment rate isn't turning down. And that's a major risk because they said what's happening in Canada is going to spread to the U.S. And we're already seeing evidence of that. Let's turn to McDonald's, who now says they returned to sales growth with toys and budget meals. And again, it's all for the wrong reasons. It's for gimmicks and because there was price pressure here. They couldn't raise prices. That's the issue here. Canadian service providers are going to raise prices. They're going to find out consumers are going to reject them. And again, it's going to lead to a further decline in their economy. They changed second quarter efforts to bring customers included a meal time to the launch of a Minecraft movie and squish marshmallows themed limited time offer. In the U.S., the company launched chicken strips. Remember, we heard from Starbucks. They said, look, we've got to update our offerings and get people in here. We've got to give them something new. Well, chicken strips isn't going to keep things going for long because the real issue is McDonald's is trying to win over their budget sensitive diners with offerings on its lower price McValue menu. Remember when that $5 meal deal came out? I said at the time is no way this seems going to be tempering. McDonald's said, look, this is only for a limited time. I said, watch, they're going to extend it. Sure enough, they did, because what McDonald's noted in their earnings is they're losing the low end consumer, which is really where their bread and butter sales are at. Problem is low end consumers are facing a weakening job market. They're getting less hours and they're seeing their incomes drop. Means they're eating out a lot less. And what happened at McDonald's is they're really fighting to gain market share because as demand goes down, well, what you have to do is you have to steal it from your competitors. And they came out the winner. Who was the loser? Well, it was Wendy's. As Wendy's cut sales guidance, as US consumers tighten their belts. The problem is for Wendy's gimmicks didn't work. In the second quarter, Wendy's efforts to entice customers included deals for app users, new versions of his frosty treats and a meal tying in with Takis, a corn chip snack. And again, didn't work for Wendy's. Again, this is the issue is demand goes down. Everybody starts fighting for what's left. This is exactly what's happening with Chinese manufacturers. Remember, Beijing said, look, stop lowering prices. The problem is there isn't enough demand for all of them. So they start lowering their prices to keep the customers they have and to get more customers from their competitors. This is what's happening in the fast food world. Again, it's going to lead to less demand and less demand for employees. In July, Wendy's said comparable sales in the market fell five to six percent. Again, this is exactly what's going on all around the world. You know, we talk about what happened in China. Look at their manufacturing sector. Beijing came out and said, look, you all need to stop lowering their prices. But what really happened is prices on the input side for Chinese manufacturers went up. But on the output side, they went down. And why is that? Because there's not enough new business to support all the manufacturers. So not only do they have to lower prices to keep their customers, they're doing it to steal customers from their competitors. That's exactly what McDonald's did with their gimmicks and keeping their prices low. Wendy's was one of the losers this time. We'll see how they strike back. Will they lower their prices? Most likely they'll be forced to because, again, there's a limited number of consumers who are willing to eat out now. And that number is going to continue to decline as the economy weakens. But Raphael Bostic says this has not been a one time thing where you wake up on one day and everybody knows what all the tariffs are. And he's right. We didn't know what they are. The problem is they're not having the effect that you said they are, Bostic. And the Federal Reserve Bank of Atlanta president still views one time interest rate cuts likely for the remainder of this year and reiterated their reasons to be skeptical that the inflationary effects from the tariffs will be temporary. But Bostic, it's so obvious. Demand is going down. You're seeing this happen all over the world. Hours work are dropping. People cannot afford higher prices. And you know this. You know exactly what this means because inventory levels continue to build. And while you only see one rate cut, Goldman Sachs thinks that you're going back to zero. As Goldman Sachs says, U.S. yield curve shape looks like a zero rate era. And this is staggering because the defining feature of the Treasury market has been and remains how rich the belly is, as according to strategists William Marshall and Bill Zhu. And they're referring to the five year point. And their comparison was the two and 30 year Treasury yields. Let's take a look at this chart here, because what Goldman's saying is while the Fed is only talking about one, maybe two cuts by the end of the year, they're saying the bond market is pricing in all the way back to zero. Now, some of you may remember, I've been predicting this was going to happen. Let's take a look at Goldman's chart, because the Treasury's five year relative yield is now the lowest since 2021. What you're seeing here in black is the twos, fives, thirties, what they're calling the butterfly. And what they're saying is it leads to federal funds target rate. You see how it went down here going into the dotcom bubble and the Fed cut rates. It did the same thing going into the global financial crisis. It did the same thing again going into the pandemic. And look at what it's saying now. The last time it was this low of a level, the Fed was at zero. And this is the early stages here. Goldman notes in their report that they believe that the curve is going to continue to decline. And that's going to put pressure on the Fed to cut and in a major way. And the five year Treasury was around 3.78% on Wednesday, remains near the high end of its range since early of 2022. Again, the last time the low end of the Fed's target for the U.S. overnight lending rate, well, it was at zero. Despite the fact that Powell doesn't think there's going to be a reason to cut, what we're going to find out is the same thing that's happening in Canada's economy. They're seeing all those jobs lost. It's coming here, and this is the proof. Let's take a look at the yield curve. Now, this is the 10s, twos in blue against the unemployment rate. And you can see very clearly when you get a steepening yield curve, what happens? The unemployment rate goes up. And right now, based on Goldman's research, based on this chart, what you're seeing is a steepening in the yield curve. And what that means is exactly what's happening in Canada. All those full time job losses. Well, my friends, they're coming to America and a lot sooner than most people think. And even if our economy unwinds, it doesn't mean you can't make money trading the market. Let's talk about the trade on GDX that went out to our CTA Timer Pro subscribers. And that was one of our hot trades. And we publish a hot list each and every day. But what do we do with our CTA Timer Pro? Well, we take a look at machine positioning each and every day across the broad equity, bond, currency, and commodity markets. And we look for when those machines have to buy or sell. And we back tested all of our signals so we know what the high probability trades are. 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