Folks personal savings rates are now at some of the lowest levels on record. The last time we had an inflationary crisis and fed hiking cycle back during the restrictive Volcker era, personal savings rates were more than four times as high as they are now. In the current day, we are hitting levels that quite frankly are well, well below the 50-year average and levels that are soon to drop below the levels right before the Great Financial Crisis. And I know we've been showing this personal savings rate every couple of months for the last year and every time I say it's going to be a problem eventually and folks, it just keeps getting worse and worse like a slowly bleeding wound that eventually kills the patient.

Personal savings rates start dropping dramatically when consumers are spending to the ceiling of their income and thus can't save for much else. Which means that if anything breaks or they lose their jobs, they now are under water and all of a sudden their life collapses and it Cascades throughout the entire economy. It's not a coincidence that personal savings rates tend to drop the lowest before the worst recession questions like they did right before the Great Financial Crisis, and then they tend to go up in the years after as people try to save everything they can to rebuild some semblance of resiliency. So the way that I'm looking at this rate is that an unprecedented amount of people are living paycheck to paycheck and not able to save for anything at the same time where the economy is about to be pushed off a cliff, putting them at a near guaranteed Peril Now it's not hard to figure out why this is happening.

Personal savings rates have dropped inversely to the CPI increase the last year. It's not rocket science, people who have had to spend more of their leftover money on everyday items have less money to save. But these people the majority of Americans are at risk of huge huge catastrophes if the economy just slows a little bit more. Now, if you're paying attention, you may think, wait.

Charlie Personal savings rates. Well, that's a percentage of the amount of income that people are saving. That's not the same thing as personal savings overall, and that is correct. What allows households to survive when income drives up is how much money they actually have on the sidelines, how much saved Firepower they have.

and guess what, folks that is being depleted rapidly as well faster than you can say. damn it. I'm broke. Okay Charlie But at least at least people have no debt in this economy.

Well, that's wrong as well. Household debt is skyrocketing. People think, oh well, when interest rates go up, people take on less and less debt. But actually you're seeing the opposite.

People are having to go to debt as a last resort. Bloomberg Just released a survey that showed more Americans are relying on money outside of their regular income sources to meet their spending needs. Since April of 2021, there's been a big a big uptick and people relying on credit cards or loans, money from savings, or selling assets, and even borrowing from friends or family. But credit cards and Loans are one of the biggest methods of getting Capital Right now, Have you seen the interest on credit cards though? I mean you only turn to that as a last resort.

You're basically signing your financial death certificate if you're carrying a balance on most credit cards, right? What about all the Americans that are going to these payday loans where they basically take your entire future and they give you a couple thousand bucks? People are taking on extremely high interest debt because there's no other choice and this is how bad things are at the same time, where everybody's trying to tell us that this is one of the strongest, most resilient economies ever. Imagine what happens another three, six, eight months from now, when all of a sudden things have gotten way way worse and the unemployment rate starts skyrocketing. These are the personal savings rates and amounts before the pandemic, both of which were substantially healthier than we were at right now. and even so, the government had to inject trillions and trillions of dollars in order to get the average household fed week by week.

Right now, we are in much worse shape and if anything, major cracks too fast. All of a sudden, many Americans are going to need more government and Central Bank intervention or they're going to go homeless and there's going to be riots on the streets which is one of the big arguments by the way that many on Wall Street are making when they say they expect a Fed pivot later this year A Lot of people are very, very confident that inflation or not, the Federal Government and the Central Bank will step in and throw as many Fugazi bucks into the economy as possible to get it working again once that collapse really starts becoming obvious. in other news, it was just revealed that in 2022, the IRS focused on going after the very poorest of taxpayers shocker. Despite the infusion of new funding earmarked for the IRS via last year's inflation Reduction Act, the agency continued historic trends of hassling primarily low-income taxpayers with relatively few Millionaires and billionaires getting caught up in the audit sweep.

So of course, despite politicians selling new funding as a way to reduce inequality by going after the so-called Rich tax cheats Well, guess what they are, as usual, going after the little guy, the Biden Administration and credulous journalists claimed that no, no, no, this would in no way increase audits for those making under four hundred thousand dollars annually, although of course they had no assurances of that in the actual text of the bill that provided the funding, but they promised that this increased capacity meant only those at the top would be targeted. The supporters of this bill insist that that was the case, but this of course ignored how the Irs's incentives work and how agency-wide reform might be too heavy of a lift. and quite frankly, it was pretty obvious this was going to happen. It's easier for the IRS to go after everyday Americans than it is for them to go after wealthy folks who have massive teams of lawyers and will fight tooth and nail.

The IRS Correspondents audit process is structured to expend the least amount of resources to conduct the largest number of examinations. so they're trying to get the most audits as possible. They're not trying to get the most money back as possible because getting the most money back as possible would mean having to go and spend a lot of time on one or two audits from a billionaire versus like thousands and thousands of audits on your everyday American right? The goal of using funding to do as many audits as possible results in the lowest level of customer service to taxpayers having the greatest need for assistance. You know, it is far easier to attack a million small mom-and-pop restaurant businesses and audit them and harass them for a year plus and perhaps get them for accidentally writing off one too many chairs than it is to attack wealthy people with many different tax structures.

Look folks. I Pay my taxes. You pay your taxes and it's ripping all of us off if other people cheat. but using money to harass tons of low-income Americans Who have the least to gain by cheating is a dumb, dumb priority.

and I've never been a huge fan of demonizing the wealthy and saying they're all cheats. A lot of them just use legal loopholes that the politicians put in themselves, usually because of political donations that they got. and if you really got down to it, I'm sure the government wastes far more money than rich people cheat out of the government's Pockets but at the end of the day, if you're going to have a policy, you have to enforce it and what they are doing is enforcing it on the poorest of Americans and letting everybody else run rampant. And this is not surprising.

Sending more money to poorly run government agencies almost always results in bad outcomes. The IRS is the same agency that sent 1.1 billion in child payments to the wrong people over the course of nearly five months during the pandemic. It's the same agency that got hacked in 2015 and compromised information on over seven hundred thousand tax payers. and it's the same agency that wants accountability for six hundred dollar electronic transactions and gig work when other agencies within the government have no accountability at all for billions and billions of dollars of public money.

So the idea that legislators would give them billions of dollars with little guidance and let them attack the American people is really, really atrocious. This is like letting a ferocious and hungry Bulldog loose on a playground of kids. It's just not going to end well. Look, I'm not saying that we should completely end the IRS or we shouldn't enforce our tax policy.

If you have a policy, it should be enforced or overturned or else your country is a joke, but all I'm saying is that if you're going to send billions to an agency, please fix the structural problems with it First, Please provide clear stipulations as to how the money is going to be spent. And please be honest with the American people. If you're a politician whose brand is all about yelling about rich people and inequality fine, but don't then go and use the Public's money to make the Divide even greater by harassing primarily the poor. And some people are going to say wait, but there's more poor people than there are rich people.

So obviously it makes sense that the IRS has primarily targeted poor people. Well, no, you could adjust the stats for that. The rate of income tax audits for those in the lowest income tax bracket hit 12.7 per thousand, compared to just 2.3 per thousand amongst those in the highest, a nearly five-fold increase. So the money sent to the IRS while Biden and everybody else was saying isn't going to hurt people under four hundred thousand dollars, Well, it has primarily hurt people making under 400 000 and significantly under four hundred thousand usually in the lowest of the low income brackets.

All of these people have to deal with all these new audits. In addition, of course, to all the other ways they're getting screwed. like the Cost of Living crisis. Meanwhile, the taxes that they do pay is going to fund more audits on them.

It's really fantastic. Next, what happened on the inflation report? Well, the inflation reports saw the first downtrending month, but most of it came from the energy segment, which as we know is extremely extremely volatile. It's certainly good news, but without seeing a lot of the other crucial segments get a downtrend, it's really, really difficult to be be super excited, which is why I'd say the market was fairly mixed on this report. We hit expectations, but nothing crazy.

Another downtrending month that will probably continue a downtrend through the recession and then see another pickup rapidly upward once the FED start stimulating Again, at least that is what has happened in the previous. Cycles That's that. I do see inflation becoming less and less of a problem in the coming months, and the downtrend is going to allow people to start focusing on the new problem, which is that earnings recession. Lastly, stifle stifle stifle stifle.

They are now saying that the S P 500 will gain almost nothing in the next decade. They think we are going to get a whooping, whopping 10 percent by mid-2023 But then a decade of flat markets. Flat markets for a decade. Oof, what a great time, right folks.

CNBC Reports stifle forecast that in 2031, the S P 500 will be about flat with its December 30th 2021 peak level. That's a sharp contrast from the more than 16 annual return seen in the previous decades bull market. Why Why did they see this coming? Well, they cite be run up to 2020 1 Heights as likely locking in a week 2020s decade. Their opinion is that at 2021 Heights we had already factored in a decade plus of gains at high multiples.

and as we move through this coming decade, you're going to see companies struggle for at least the full decade to catch up to that. at the same time, where multiples on earnings that investors are willing to pay continue to stay very, very low. They go as far as saying that they see the price to earnings ratio of the S P 500 cut in half over the decade as earnings per share double, leaving the index little change to overall. So they are saying hey, they expected doubling an S P 500 earnings over the next decade.

But if the earnings ratio is cut in half, well, all of a sudden the evaluation is flat, right? You're flat with Heights in 2021. So how crazy is the prediction of a flat decade? Historically, How often has that happened? Well, it's not that uncommon. Here's an inflation-adjusted chart of the S P 500 over the last 100 years say you bought in June of 1930 after a lot of the downtrend had already happened. Well, that was about here, and the S P 500 failed to to break above that point again until February of 1955..

that's 25 years of a flat Market If you bought the dip, you bought the heights of the Great Depression though it's even longer, right? But nonetheless, let's just say here: 25 years of a flat Market if you bought the dip I mean a good market for Traders because it was back and forth and very volatile. But still no new highs for 25 years and 25 years is a very, very long time in November 1968. If you bought, then you didn't see a new high until 1992. That's 24 years now.

It's worth mentioning: these are inflation-adjusted returns, which means if you take out the inflation, it's a little bit less Bleak. But with or without adjusting for inflation, you can easily have a flat decade or multiple decades. And one other data point is that the S P 500 relative to Commodities fell below its 122 year Trend which usually signals flat returns in the next 10 years. Now, all of this is not to say that there's no opportunity during a flat period.

Again, they tend to be incredibly volatile for Traders, but it is to say that it's not insanely crazy to expect affect a flat decade and at least historically they've been pretty common. So if you're somebody who was talked into buying stocks at all-time highs that you don't believe in and you don't believe will do well unless the overall Market makes new highs, well, this may be something to consider if you're deciding on whether or not to hold them now. One of the biggest wild cards, though with this prediction and whether or not it comes true is what the policy from the FED is going to be over the next decade. If The Fed so chooses we could hit all-time highs this year and continue going to the Moon Over the coming years, but that would come at a cost of another round of inflationary spiraling and more and more pain down the road.

which kind of just leads you to the same problem three or four years from now, right? On the other hand, If The Fed wants to go hard and make sure inflation is gone. We could easily see a extremely weak or completely devastated economy through much of this decade. It just really depends on what they decide and the level at which they implement it. However, my view and my bet here is that their game plan is to keep going with this restrictive policy until they push the the economy over the edge and then they're going to quickly come to the rescue.

In other news, we are continuing to see another breakout on Bbby. Let's see if we can get a breathing cycle that sees another new round upward. We got a nice take profit cycle on party. Let's see if we can get a residual rally early next week.

Here is a full list of the stocks from today's Daily Morning Briefing if you want to do some more research on different trends that we are following and so on and so forth. but that caps off today's video. Make sure to hit that ravishing like button and subscribe and today's video of course is brought to you by zip Trader You and our step-by-step lessons, private chat, daily morning briefings, and full price Target list which you can access using the link down below Coupon code hello 2023 will get you a sizable discount at checkout. Have a good one folks and we will see you in the next video.