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[Music]
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there was a study published in 2020 that
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analyzed Los Angeles County's records of
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unclaimed deaths it found a significant
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relationship between economic hardship
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and the rates of unclaimed bodies that
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between 1976 and
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2013 high unemployment at the county
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level was strongly correlated with fewer
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family members collecting their deceased
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relatives and if you graph the unclaimed
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body rates with us recessions there's
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also a connection
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despite the limited data set it's an
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interesting insight into a more widely
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known phenomenon called the unclaimed
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corpse index an unofficial economic
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indicator that suggests dead bodies can
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be used to predict stock market crashes
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it sent me down a rabbit hole where I
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found all kinds of bizarre recession
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predictors from lipstick to exotic
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dancers and even mosquito bites as well
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as one indicator that's never been wrong
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and it's saying that in 24 we're on the
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cusp of the next
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recession but first let's go back to the
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morg the Wayne County morg in Detroit to
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be specific in 2009 CNN reported that
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the number of unclaimed bodies at the
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morg was at a record high tripling since
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2000 Albert Samuels the chief
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investigator said he's never seen
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anything like it in his 13 years on the
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job that some people don't come forward
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even though they know their people are
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there one Detroit couple had visited
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Wayne County to identify their aunt but
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didn't have the
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$695 needed to cremate her this report
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was done during the second year of the
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global financial crisis which brought
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with it the worst stock market crash in
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almost a
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century the correlation between the rate
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of unclaimed bodies and stock market
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crashes works because it's essentially
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just a slice of the broader correlation
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between consumer spending and economic
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downturns recessions can be caused by a
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wide array of things but they all result
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in a meaningful and persistent decline
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in spending businesses make less money
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and lay off workers to cut costs and
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when a higher number of people are
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unemployed they have even less money to
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spend consumer spending can be split
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into two categories essential spending
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and discretionary spending renting a
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home paying your electricity bill and
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putting food on the table are all
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essential expenditures okay eating food
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like that isn't essential but you get
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what I mean but we also spend a lot of
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money on things we don't actually need
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if push came to shove so it's in that
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discretionary category that we can find
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some pretty bizarre indicators that the
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economy is in the early stages of a
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downturn what if there was a group of
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people who are better Trend forecasters
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than anyone in the finance industry now
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this news is not something that people
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in the stripping industry can grind
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their way out out of the economy has
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drastically impacted their business
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funnily enough sex workers might
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actually be pretty good at predicting a
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downturn in the economy I figured the
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best way to find out would be to take my
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camera and microphone down to my local
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Club just kidding in 2022 a stripper who
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goes on Twitter by a username I'm not
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going to read out loud tweeted the strip
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club is sadly a leading indicator and I
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can promise y'all we're in a recession
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the post was made in May of 2022 and at
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the time there was still significant
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debate about whether the US was actually
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going to go into recession well just 3
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months later and the data revealed that
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GDP had declined for a second quarter in
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a row which is the definition of a
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technical recession and this isn't just
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a once-off story it's so common that
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it's been dubbed the stripper
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index it's the concept of using stripper
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cash tips as an indicator of the state
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of the economy not only is adult
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entertainment spending definitely a
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discretionary expense it's usually one
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of the first ones to go when there is an
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economic downturn Urban institute's
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analysis of the sex work industry found
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that five of The Seven Cities in their
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study saw Revenue declines from 2003 to
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2007 years in advance of the market
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crash which started at the end of 2007
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66.7% of sex workers receive cash tips
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so when their tips start declining it's
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extremely noticeable as strippers we
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always have to be aware of fluctuations
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in the market and how upper class white
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men are behaving and spending their
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money unfortunately the stripper index
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is basically just anecdotal the only
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publicly traded strip club company we
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could look at would be RCI Holdings
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their revenue fell 26.8% in the 2020
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recession but Co restrictions were
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likely the main reason for it but what
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about today is anyone sounding the alarm
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about a recession in the near future
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well an article published at the end of
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last year quoted one Vegas dancer who
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said her income was down by half in
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December year-over-year and had heard
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similar stories from other dancers in
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Vegas saying if Vegas girls aren't
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making money no one's making money when
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looking into recession indicators I
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fully expected there to be some clues in
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the ways we cut money that could
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indicate that an economic recession is
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around the corner but what I didn't
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expect to find was that there's actually
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one product that we buy more of when
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times are
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tough this is Leonard lorder the son of
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Joseph and Estee lorder his parents
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started producing skin lotion in the
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1940s and grew the company into one of
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the biggest cosmetic empires in the
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world and as the chairman of the company
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in 2001 Leonard noticed a rather unusual
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pattern in the sales of their products
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during periods of recession the sales of
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most products declined but there was one
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category that actually
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increased lipstick at the time the most
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recent recession had been in 1990 and
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sure enough lipstick sales had risen
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noticeably The Wall Street Journal
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reported Leonard's findings on the 26th
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of November 2001 this of course was very
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shortly after the tragic events of
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September 11 and there was a lot of
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speculation around whether the US was
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going to go into recession Leonard
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believed a recession was coming because
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his lipstick index which tracked the
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sales across Este La of Brands had gone
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up since the terrorist attacks and it
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wasn't just their company MAC lipstick
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sales were up 12% in 3 weeks and boresi
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cosmetics had also seen a 12% rise since
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midt when compared to the previous year
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but the most shocking part of this story
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published by The Wall Street Journal was
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that literally the next day the US was
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officially declared to be in recession
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the determination was made by the
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National Bureau of economic research
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which isn't a government agency it's
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just a nonprofit organization but its
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tally of us recessions is recognized by
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the Bureau of economic analysis Leonard
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Lord's explanation for this was that
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when women needed to cut back on their
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luxury purchases they tended to just
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spend more on smaller things like
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lipstick when lipstick sales go up
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people don't want to buy dresses but
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while certainly credited for coming up
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with the lipstick index Leonard Lord's
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index doesn't always work a few years
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later in the 2008 recession sales of
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lipstick contracted with the economy
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dropping 6% in a year and even worse for
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lip gloss market research firm NPD
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reported they fell 14% an indicator that
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did work in the 2008 recession is by far
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the weirdest one that I came across
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mosquitoes the collapse of the US
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housing market triggered a global
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financial crisis worse than any anything
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since the Great Depression it was of
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course predicted by a few diligent
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investors like Michael buy who looked at
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mortgages being sold by the Banks and
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found that anyone with a pulse could
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borrow hundreds of thousands of dollars
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even if you weren't human I'm looking
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for a harvey humpy you want my
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landlord's dog your landlord filled out
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his mortgage application using his dog's
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name but all of that analysis could have
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been avoided if they just looked at the
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mosquitoes in 2009 Maricopa County envir
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mental Services Department saw a 60%
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jump in the number of pools being
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treated for insects in Just 2 years the
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increase likely indicates two Clues one
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that there were lots of empty homes just
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sitting there degrading away and two
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owners were getting their pools treated
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because they were preparing their homes
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to be sold the award for the saddest
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indicator goes to the first date index
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in the fourth quarter of 2008 match.com
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said it had its best period in seven
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years as an increase in loneliness and
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anxiety leads to more online dating okay
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I know these last few indicators are
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ridiculous and pointless I just thought
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that'd be fun to include uh but what's
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not ridiculous is the last indicator
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that I'm going to talk
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about this graph has predicted every
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recession since
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1976 and when I say predicted I mean
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predicted like 1 to 2 years in advance
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every time it works every time because
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it shows how investor Behavior actually
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induces recessions in Cycles like
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clockwork every 5 to 8 years it's called
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the 102 Bond spread there's a little bit
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of explaining that I need to do but I
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promise it's worth understanding
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especially given what it's showing today
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a bond is an asset that pays a fixed
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payment called a coupon over a specified
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period if you take the annual coupon and
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divide it by the price of the bond you
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get the Bond's yield which is how much
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the investor would earn as a percentage
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of their upfront investment and since
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the coupon payment is fixed changes in
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the Bond's yield are caused by changes
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in the Bond's price higher price means a
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lower yield and vice versa the 102 Bond
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spread focuses on two specific types of
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Treasury bonds one's maturing in 2 years
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and one's maturing in 10 years when the
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US government needs to borrow money they
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issue and sell these bonds
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as well of ones of all different lengths
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as short as 1 month and up to 30 years
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the 102 spread simply takes the yield of
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the 10-year Government Bond and
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subtracts the yield of the 2-year Bond
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so we can track the difference in yield
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every day going back to
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1976 and as you can see most of the time
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the spread is positive meaning the yield
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on the 10year bond is higher than the
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yield on the 2-year Bond the most widely
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understood reason is something called
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the liquidity premium Theory which
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basically says that there's a risk
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associated with having your money locked
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away for longer and so you demand or you
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earn a higher yield to compensate for
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that risk but occasionally the spread
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briefly goes negative meaning the 2-year
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bond is offering a higher yield than the
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10-year
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bond remember both of these bonds are
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government bonds so the only difference
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to you as an investor is how long your
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money is locked away and so you might
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find it kind of irrational that during
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some periods of time people are willing
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to lock their money away for longer and
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accept a lower yield at the same time
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what's fascinating is that the gray bars
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on the chart reflect periods of economic
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recession there hasn't been a US
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recession that's occurred without the T
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to spread firsto negative and there
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hasn't been a negative 10 to spread that
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wasn't quickly followed by a recession
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both the 10 and 2year bond yields tend
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to move in the same direction but a
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negative spread can occur when the yield
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on the 2-year bond is rising faster than
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the 10-year bond or just to put it more
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simply bond yields across all different
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lengths of bonds are rising but the
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longer bonds are rising slower because
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more people are wanting to lock their
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money away for longer which they do if
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they believe an economic slowdown is
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coming but it's not just that the T to
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spread shows investor expectations it's
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also a self-fulfilling prophecy a higher
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yield on short-term bonds means a higher
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return for the investor but on the other
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side it means a higher interest payment
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for the borrower broadly this means less
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profits for companies and less money
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being invested in growth and every time
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since
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1976 that's produced a recession today
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the 102 spread is negative the 10-year
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yield dipped under the 2-year bond yield
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about 2 years ago the most important
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part to understand from an investor
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perspective is that you can't really use
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this in your investing process because
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every time the time frame has been
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different and so you can't really use
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this as a way to sell your stocks and
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then buy back in after the market
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crashes if you had sold your shares when
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the spread went negative in 2022 you
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would have missed out on about a 30%
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return plus dividends but regardless
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it'll certainly be fascinating to watch
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the tentu spread and the economy over
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the next year or so to see if it once
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again has predicted a recession if you
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